M/s. Param Corporation, Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 3827/AHD/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72884 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 25-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: S N DIVETIA
• Keywords: Retrospective amendment
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 3827/AHD/2008 (ASSESSMENT YEAR: 2005-06) M/S PARAM CORPORATION PAVITRA TOWSHIP, MANEJA CROSSING, MAKARPURA, BARODA V/S I.T.O. WARD-2(2), BARODA (APPELLANT) (RESPONDENT) PAN: AAHFP 2197G APPELLANT BY : SHRI S.N. DIVETIA RESPONDENT BY : SHRI D.K. MISHRA, SR. D.R. ( )/ ORDER DATE OF HEARING : 06-01-2014 DATE OF PRONOUNCEMENT : 17 -01-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-II, BARODA DATED 18.09.2008 FOR A.Y. 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BU SINESS OF CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL HOUSES. IT FILED ITS RET URN OF INCOME FOR A.Y. 05-06 ON 21.07.2005 DECLARING TOTAL INCOME AT RS. NIL. TH E CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) VIDE ITA NO 3827/AHD/2008 . A.Y. 2005- 06 2 ORDER DATED 28.12.2007 AND THE TOTAL INCOME WAS ASS ESSED AT RS. 89,15,660/- AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 18.09.2008 PARTLY ALLOWED T HE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A ), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN DS:- 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE REJECTI ON OF THE CLAIM OF YOUR APPELLANT U/S 80IB(10) OF THE I.T. ACT, ON THE GROUND THAT THE COMMERCIAL ARE A IN THE PROJECT EXCEED THE MINIMUM LIMIT OF 2000 SQ. FT. THE LD. CIT(A), IN THE FACTS AND CIRCUMSTANCES MENT IONED IN THE STATEMENT OF FACTS, OUGHT NOT TO BE HAVE CONFIRMED THE REJECTION OF THE CLAIM U/S 80IB( 10) OF THE I.T. ACT. 2. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLO WANCE OF RS. 2170890/- UNDER THE COVER OF SECTION 40(A)(IA) OF THE I.T. ACT ON THE GROUND OF NON DEPOSITION OF TDS IN GOVT. A/C WITHIN THE PRESCRIBED TIME. THE LD. CIT(A) IN THE FACTS AND CIRCUMSTANCES MENTI ONED IN THE STATEMENT OF FACTS, OUGHT NOT TO HAVE CONFIRMED THE DISALLOWANCE OF ANY AMOUNT UNDER THE COVER OF SECTION 40(A)(IA) OF THE I.T. ACT ON THE GROUND OF NON DEPOSITION OF TDS IN GOVT. A/C . 3. WITHOUT PREJUDICE TO THE FOREGOING CONTENTION, THE LEARNED CIT(A) OUGHT O HAVE GRANTED DEDUCTION U/S 80IB(10) OF THE I.T. ACT OF THE AMOUNT OF ADDIT ION MADE UNDER THE COVER OF SECTION 40(A)(IA) OF THE ACT. YOUR APPELLANT RESERVED TO HIMSELF THE RIGHT TO ALT ER AMEND OR ADD TO THE EXISTING GROUNDS OF APPEAL AND ADVANCE FURTHER ARGUMENTS AT THE TIME OF HEARING OF APPEAL GROUND NO. 1 IS WITH RESPECT TO DEDUCTION UNDER 80I B(10) OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O . NOTICED THAT ASSESSEE HAD CONSTRUCTED HOUSING PROJECTS AND THE TOTAL NET PROFIT OF RS. 25,68,930/- WAS CLAIMED AS DEDUCTION UNDER 80IB(10) OF THE ACT. THE A.O. DISALLOWED THE CLAIM OF THE ASSESSEE OF DEDUCTION UNDER 80IB(10) FOR THE REASON THAT THE ASSESSEE WAS NOT THE OWNER OF THE PROPERTY, PERMISS ION AND APPROVAL BY THE VADODARA MUNICIPAL CORPORATION WAS IN THE NAME OF O RIGINAL LAND OWNER AND NOT IN THE NAME OF THE ASSESSEE. THE A.O. WAS THER EFORE OF THE VIEW THAT THE FUNDAMENTAL CONDITION THAT THE APPROVAL MUST BE ACC ORDED IN THE ASSESSEES NAME WAS NOT SATISFIED AND THEREFORE DENIED THE CLA IM OF DEDUCTION UNDER 80IB(10). AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE ITA NO 3827/AHD/2008 . A.Y. 2005- 06 3 CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE NOTED THAT ALLOWABILITY OF DEDUCTION ON THE ISSUE OF OWNERSHIP WAS COVERED BY THE DECISION IN THE CASE OF RADHE DEVELOPERS AND ORS. I TA NO. 2428/AHD/2006 DATED 29.06.2007 AND THEREFORE THE ASSESSEE WAS ELI GIBLE FOR DEDUCTION. HE HOWEVER NOTICED THAT THE ASSESSEES PROJECT WAS NOT APPROVED AS HOUSING PROJECT BUT WAS APPROVED AS RESIDENTIAL-CUM-COMMERC IAL PROJECT. CIT(A) WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 80IB(10) BECAUSE THE PROJECT WAS APPROVED AS RESIDENTIAL-CUM -COMMERCIAL PROJECT AND THE TOTAL COMMERCIAL CONSTRUCTION APPROVED BY LOCAL AUTHORITY WAS OF 7397 SQ. MT. WHICH WAS MORE THAN 2000 SQ. FT STIPULATED U/S. 80IB AND THEREFORE IT DID NOT FULFILL THE CONDITION OF BUILT UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENT NOT EXCEEDING 5% OF TOTAL BUILT UP AR EA OF HOUSING PROJECT OR 2000 SQ. FT. WHICHEVER IS LESS. THE ASSESSEES SUBM ISSION THAT IT HAD NOT UNDERTAKEN ANY COMMERCIAL CONSTRUCTION AND THAT ITS PROJECT WAS APPROVED IN MARCH, 2004 I.E. BEFORE THE ENACTMENT OF NEW PROVIS ION WAS NOT FOUND ACCEPTABLE TO CIT(A). CIT(A) WAS OF THE VIEW THAT T HE AMENDED PROVISION WITH RESPECT TO THE SIZE OF PROJECT APPLIES TO ALL THE P ROJECTS WHETHER APPROVED BEFORE 01.04.2004 OR AFTER 01.04.2004 AS THE APPLIC ABILITY OF NEW PROVISION WAS WITH REFERENCE TO THE ASSESSMENT YEAR AND NOT W ITH RESPECT TO THE APPROVAL GRANTED BY MUNICIPALITIES. HE ACCORDINGLY HELD THAT SINCE THE ASSESSEES CASE WAS COVERED BY THE NEW PROVISIONS O F SECTION 80IB(10) AND SINCE THE MANDATORY CONDITION OF COMMERCIAL CONSTRU CTION BELOW 2000 SQ. FT. WAS NOT SATISFIED BY THE ASSESSEE, THE PROJECT WAS NOT ELIGIBLE FOR DEDUCTION UNDER 80IB(10) AND HE ACCORDINGLY CONFIRMED THE REJ ECTION OF DEDUCTION UNDER 80IB(10) OF THE ACT. 5. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, AT THE OUTSET, THE LD. A.R. SUBMITTED THAT THE AMENDMENT TO SECTION 80IB(10) AND INSERTION OF CLAUSE (D) IS PROSPECTIVE AND SINCE THE ASSESSEES ITA NO 3827/AHD/2008 . A.Y. 2005- 06 4 PROJECT WAS APPROVED PRIOR TO 01.04.2005, THE AMEND ED PROVISIONS OF THE ACT ARE NOT APPLICABLE AND FOR WHICH HE RELIED ON THE D ECISION OF GUJARAT HIGH COURT IN THE CASE OF MANAN CORPORATION VS. ACIT IN TAX APPEAL NO. 1053/AHD/2011. HE ALSO PLACED ON RECORD, THE COPY O F THE AFORESAID DECISION. IN THE LIGHT OF THE DECISION OF THE HONB LE GUJARAT HIGH COURT HE URGED THAT THE ASSESSEE BE ALLOWED THE DEDUCTION UN DER 80IB(10). THE LD. D.R ON THE OTHER HAND STRONGLY SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THE PRESENT CASE, CIT(A) HAS DENIED TH E CLAIM OF DEDUCTION U/S. 80IB(10) FOR THE REASON THAT THE AREA APPROVED FOR COMMERCIAL CONSTRUCTION WAS IN EXCESS OF THE LOWER OF LIMIT OF 5% OF AGGREG ATE BUILT UP AREA OF HOUSING PROJECT OR 2000 SQ. FT, IT IS NOT IN DISPUTE THAT THE PROJECT OF THE ASSESSEE WAS APPROVED PRIOR TO 01.04.2005. CLAUSE(D) OF SECTION 80IB(10) DURING THE RELEVANT PERIOD READS AS UNDER:- THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIA L ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PERCENT OF THE AGGREGATE BUILT -UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHEVER IS HIGHER. 8. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF M ANAN CORPORATION VS. ACIT (SUPRA) HAS HELD THAT THE AMENDMENT TO SECTION 80IB (10) AND INSERTION OF CLAUSE (D) W.E.F. 1 ST APRIL, 2005 WAS PROSPECTIVE. WE ALSO FIND THAT THE AFORESAID DECISION OF HON. GUJARAT HIGH COURT IN TH E CASE OF MANAN CORPORATION VS. ACIT IN ITA NO. 1053/AHD/2011 ORDER DATED 3 RD SEPTEMBER 2012 REPORTED IN (2012) 78 DTR (GUJ) 205 WAS DELIVE RED AFTER THE DECISION OF CIT(A) AND THEREFORE IT WAS NOT AVAILABLE BEFORE CI T(A) WHEN HE DECIDED THE APPEAL. WE ARE THEREFORE OF THE VIEW THAT THE MATTE R NEEDS RECONSIDERATION AT THE END OF CIT(A) IN VIEW OF THE AFORESAID DECISION OF HONBLE GUJARAT HIGH COURT. WE THEREFORE REMIT THE ISSUE TO THE FILE OF CIT(A) TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE AFORESAID DECISION OF HO NBLE GUJ. HIGH. COURT AND THEREAFTER TO DECIDE THE ISSUE AS PER LAW. NEEDLES S TO STATE THAT CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE P ARTIES. ITA NO 3827/AHD/2008 . A.Y. 2005- 06 5 9. IN THE RESULT THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 2 ND GROUND IS WITH RESPECT TO DISALLOWANCE U/S. 40(A)( IA). 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A. O. NOTICED THAT ASSESSEE HAD DEBITED EXPENSES ON ACCOUNT OF LABOUR CHARGES A ND TRANSPORTATION CHARGES AGGREGATING TO RS. 63,46,738/-. HE ALSO NOT ICED THAT THOUGH THE ASSESSEE HAD DEDUCTED TAX AT SOURCE FROM THE PAYMEN T BUT THE SAME WAS DEPOSITED IN THE GOVERNMENT ACCOUNT AFTER THE DUE D ATE PRESCRIBED UNDER SECTION 200(1) OF THE ACT. A.O. WAS OF THE VIEW THA T AS PER THE PROVISIONS OF SECTION 40(A)(IA), IF THE TAX DEDUCTED AT SOURCE HA S NOT BEEN DEPOSITED IN THE GOVERNMENT ACCOUNT WITHIN THE DUE DATE, SUCH EXPEND ITURE WAS NOT ALLOWABLE AS DEDUCTION AND HE ACCORDINGLY DISALLOWED THE AMOU NT OF RS. 63,46.728/- UNDER SECTION 40(A)(IA) OF THE ACT. AGGRIEVED BY TH E ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A). BEFORE CIT(A) IT WAS SUBMITTED THAT OUT OF THE TOTAL AMOUNT OF RS. 63,46,728/-, RS. 41,75,818/ - WAS CREDITED IN THE MONTH OF MARCH AND AS PER THE AMENDED PROVISION OF SECTIO N 40(A)(IA), THE EXPENSE FOR THE MONTH OF MARCH ON WHICH TDS WAS DEDUCTED AN D PAID BEFORE THE DUE DATE OF FILING OF RETURN WAS ALLOWABLE. IT WAS FUR THER SUBMITTED THAT THE TAX WAS DEPOSITED ON 19.05.2005 AND THEREFORE NO DISALLOWAN CE WAS CALLED FOR. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNSEL AN D FACTS OF THE CASE. IT IS NOT IN DISPUTE THAT APPELLANT WAS LIABLE TO DEDUCT TAX ON LABOUR AND TR ANSPORT CHARGES. APPELLANT DEDUCTED THE TAX ALSO BUT PAID THE SAME ON 19.05.2005 WHICH IS AFTER THE DUE DATE. APPELLANT SUBMITTED THAT SUBSTANTIAL AMOUNT OF EXPENSES WAS CREDITED IN THE MONTH OF MARCH HENCE THE SAID EXPENSES IS ALLOWABLE IN VIEW OF THE FACT THAT TDS WAS DEPOSITE D BEFORE DUE DATE OF FILING RETURN. I AGREE WITH THE APPELLANT THAT AS PER AMENDMENT TO SECTION 40(A )(IA), THE EXPENSE PAID OR CREDITED IN THE MONTH OF MARCH IS ALLOWABLE IF TDS IS DEPOSITED BEF ORE DUE DATE OF FILING RETURN. APPELLANTS CLAIM THAT ONLY RS. 21,70,890/- IS DISALLOWABLE, NEEDS VE RIFICATION BY THE ASSESSING OFFICER. IF THE PAYMENT IS MADE BEFORE MARCH AND CREDIT IS MADE IN MARCH, THEN ALSO THE LIABILITY TO DEDUCT TAX RELATES TO EARLIER MONTH AND NOT MARCH. ASSESSING O FFICER IS THEREFORE DIRECTED TO FIND OUT THE ITA NO 3827/AHD/2008 . A.Y. 2005- 06 6 EXPENSES PAID OR CREDITED ON WHICH TDS WAS TO BE DE DUCTED IN THE MONTH OF MARCH AND ALLOW THE SAME AFTER CONSIDERING THE AMENDED PROVISIONS OF SE CTION 40(A)(IA). AS REGARDS APPELLANTS CLAIM OF DEDUCTION U/S. 80IB(1) ON THE ABOVE ADDITION, THE SAME CANNOT BE ALLOWED IN VIEW OF THE DECISION IN PARA 3 EARLIE R. SINCE APPELLANTS PROJECT WAS HELD TO BE NOT ELIGIBLE FOR DEDUCTION U/S. 80IB(10), THERE CANNOT BE ANY DEDUCTION FOR THIS ADDITION. 11. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 12. BEFORE US, AT THE OUTSET THE LD. A.R. SUBMITTED THE AMENDMENT TO SECTION 40(A)(IA) BEING PROSPECTIVE, THE ENTIRE AMOUNT OF E XPENSES NEEDS TO BE ALLOWED AS THE ASSESSEE HAS DEPOSITED THE TDS BEFOR E FILING OF RETURN AND FOR THIS PROPOSITION HE RELIED ON THE DECISION OF HONB LE GUJARAT HIGH COURT IN THE CASE OF PRAFUL KANTILAL SHAH TAX APPEAL NO. 973/AHD /2013. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION. HE T HEREFORE SUBMITTED THAT NO DISALLOWANCE UNDER SECTION 40(A)(IA) IS CALLED FOR IN THE PRESENT CASE. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE DECIDING THE APPEAL HAS GRAN TED RELIEF TO THE ASSESSEE WITH RESPECT TO THE AMOUNTS OF RS. 41,75,818/- WHIC H WAS CREDITED IN THE MONTH OF MARCH AND THE TAX ON WHICH WAS DEPOSITED O N 19.05.2005. WITH RESPECT TO THE BALANCE AMOUNT OF RS. 21,70,890/-, C IT(A) HAD DIRECTED THE A.O. TO DECIDE THE DISALLOWANCE UNDER SECTION 40(A) (IA) AFTER CONSIDERING THE AMENDED PROVISIONS. WE FURTHER FIND THAT IN TAX AP PEAL NO. 973/AHD/2013 IN THE CASE OF CIT VS. PRAFUL KANTILAL SHAH ORDER DATE D 25.11.2013 ONE OF THE ISSUE BEFORE THE HONBLE GUJ. HIGH COURT WAS WHETHE R THE AMENDMENT TO SECTION 40(A)(IA) BROUGHT OUT BY FINANCE ACT 2010 W ITH EFFECT FROM 01.04.2010 WAS HAVING RETROSPECTIVE EFFECT? THE HONBLE GUJAR AT HIGH COURT HELD THAT THE ISSUE WAS COVERED AGAINST THE REVENUE BY THE DE CISION OF GUJARAT HIGH COURT IN TAX APPEAL NO. 413/AHD/2013 AND OTHER CASE S WHERE IT WAS HELD THAT THE AMENDMENT UNDER SECTION 40(A)(IA) OF THE I NCOME-TAX ACT BROUGHT OUT BY FINANCE ACT, 2010 W.E.F. 01.04.2010 WAS HAVING R ETROSPECTIVE EFFECT. ITA NO 3827/AHD/2008 . A.Y. 2005- 06 7 14. CONSIDERING THE FACT THAT THE DECISION OF HIGH COURT WAS DELIVERED AFTER THE ORDER WAS PASSED BY CIT(A) AND THEREFORE SINCE THE BENEFIT OF THE AFORESAID DECISION WAS NOT AVAILABLE TO CIT(A) AS IT WAS DELI VERED AFTER THE DECISION OF CIT(A), WE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE RECONSIDERED AT THE END OF CIT(A). 15. IN VIEW OF THE AFORESAID DECISION OF GUJARAT H IGH COURT. WE THEREFORE REMIT THE MATTER BACK TO THE FILE OF CIT(A) FOR HIM TO DE CIDE AFRESH THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF RS. 21,70,890/- IN THE L IGHT OF THE AFORESAID DECISION RELIED BY ASSESSEE. NEEDLESS TO STATE THAT CIT(A) S HALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES AND THER EAFTER DECIDE THE ISSUE AS PER LAW. THUS THIS GROUND OF ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 17- 01- 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD