ACIT, Hyderabad V. M/s Annapurna Shelters, Hyderabad

ITA 388/HYD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3175 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: A V RAGHURAM
• Section: 80IB; 10B; 254(2)

Judgement Text

ITA NO.388/HYD/10 M/S. ANNAPURNA SHELTERS, HYD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHR I AKBER BASHA, ACCOUNTANT MEMBER . ITA NO. 388/HYD/10 : ASSESSMENT YEARS 2006-07 ACIT, CIR-6(1), HYDERABAD. VS M/S. ANNAPURNA SHELTERS, ROAD NO.2, BANJARA HILLS,HYDERABAD. PAN:AAGFA4231M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N. CHARYA RESPONDENT BY : SHRI A.V. RAGHU RAM O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT (A)-IV, HYDERABAD DATED 29-12-2009 AND IT PERTA INS TO THE ASSESSMENT YEAR 2006-07. 2. SHRI K.V.N. CHARYA, LEARNED DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT THE ASSESSEE HAS CONSTRUCTED FLATS H AVING BUILT UP AREA OF MORE THAN 1500 SQ. FT. HOWEVER, THE CIT (A) DIRECT ED THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB OF TH E ACT IN RESPECT OF THOSE FLATS WHOSE BUILT UP AREA DOES NOT EXCEED 150 0 SQ. FT. BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CA SE FOR ASSESSMENT YEAR 2005-06. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED 2 THAT THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF VISWAS PROMOTERS PVT. LTD., IN ITA NO.1912/MAD/07 DATED 13-10-2008 C ONSIDERED THIS ISSUE ELABORATELY AND FOUND THAT THE CONDITION FOR GRANT OF DEDUCTION UNDER SECTION 80IB IS TO BUILD UP RESIDENTIAL UNITS NOT EXCEEDING 1500 SQ. FT. THE CHENNAI BENCH FOUND THAT IN THE CONTEXT OF CITIES OTHER THAN DELHI AND MUMBAI, NOT EXCEEDING 1500 SQ. FT., IS AP PLICABLE TO THE ENTIRE PROJECT. THE LEARNED DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT IN VIEW OF THIS DECISION OF CHENNAI BENCH WHICH WAS SUBSEQ UENTLY CONFIRMED BY THE MADRAS HIGH COURT IN WP NO.3686/09 DATED 11-9-2 009 (NOW REPORTED IN (2010) 323 ITR 114) THE CIT (A) IS NOT CORRECT IN DIRECTING THE ASSESSING OFFICER TO GRANT DEDUCTION UNDER SECT ION 80IB OF THE ACT IN RESPECT OF THOSE UNITS WHERE NOT EXCEEDING 1500 SQ. FT. 3. ON THE CONTRARY, SHRI A.V. RAGHURAM, THE LEARNE D COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS TRIBUNAL IN THE ASSESS EE'S OWN CASE FOR ASSESSMENT YEAR 2005-06 CONSIDERED THIS ISSUE ELABO RATELY AFTER FOLLOWING ITS EARLIER ORDER IN THE CASE OF SAKET ENGINNEERS P VT. LTD (ITA NO.40/HYD/2003) AND IN THE CASE OF NAMAHA ESTATES I N ITA NO.797/HYD/07 FOUND THAT THE ASSESSEE IS ELIGIBLE F OR DEDUCTION UNDER SECTION 80IB IN RESPECT OF THOSE UNITS WHICH DOES NOT EXCEED 1500 SQ. FT. THE LEARNED COUNSEL A LSO SUBMITTED THAT THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BRIGADE ENTERPRISES (P) LTD. (2008) 119 TTJ (BANG) 269 HAS ALSO TAKEN A SIMILAR VIEW BY FOLLOWING THE DECISION OF THE CALCUTTA BEN CH OF THE TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 3 4. REFERRING TO THE JUDGMENT OF THE MADRAS HIGH COU RT IN VISWAS PROMOTERS (P) LTD., (SUPRA), THE LEARNED COUNSEL PO INTED OUT THAT THIS WAS ON THE ISSUE OF RECTIFICATION UNDER SECTION 254(2) OF THE ACT. THE MADRAS HIGH COURT ITSELF HELD THAT THE JUDGMENTS OF THE OT HER HIGH COURTS ARE NOT BINDING ON THE TRIBUNAL. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE MADRAS HIGH COURT HELD THAT THE JUDGM ENT OF THE JURISDICTIONAL HIGH COURT ALONE IS BINDING ON THE T RIBUNAL. THE MADRAS HIGH COURT DOES NOT DECIDE THE CASE ON MERIT. THER EFORE, THIS JUDGMENT OF MADRAS HIGH COURT WOULD NOT BE ANY ASSISTANCE TO THE REVENUE. SINCE THE MAJORITY BENCHES OF THIS TRIBUNAL HAS TAKEN A V IEW IN FAVOUR OF THE ASSESSEE TO GRANT DEDUCTION UNDER SECTION 80IB IN R ESPECT OF HOUSING UNIT, WHICH DOES NOT EXCEED 1500 SQ. FT. AND THE SAME WAS FOLLOWED BY THIS BENCH OF THE TRIBUNAL, ACCORDING TO THE LEARNED CO UNSEL FOR THE ASSESSEE, THE DECISION OF THE CHENNAI BENCH OF ITAT IN THE CA SE OF VISWAS PROMOTERS PVT. LIMITED (SUPRA) MAY NOT BE APPLICAB LE TO THE FACTS OF THE INSTANT CASE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS CONTEN DED BY THE REPRESENTATIVE FOR THE REVENUE, THE CHENNAI BENCH OF THE TRIBUNAL CONSIDERED THIS ISSUE AND FOUND THAT THE HOUSING PR OJECT CANNOT BE APPROVED IN PIECEMEAL AND THE APPROVAL HAS TO BE AC CORDED FOR THE ENTIRE PROJECT OF THE RESIDENTIAL UNITS. THEREFORE, THE B LOCK OF THE RESIDENTIAL UNITS CANNOT BE CONSTRUED TO BE A SEPARATE PROJECT FOR THE PURPOSE OF 4 DEDUCTION UNDER SECTION 80IB OF THE INCOME-TAX ACT. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF M/S. VISWAS PROMOTERS PVT. LIMITED RELIED ON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE NOW REPORTED IN (2010) 323 ITR 114. AS RIGHTLY SUBMITTED BY THE LEARNED COUNSEL FOR THE AS SESSEE THAT THE MADRAS HIGH COURT CONSIDERED THE ISSUE OF RECTIFICATION OF ERROR UNDER SECTION 254(2) IN THE WRIT PETITION. THE MADRAS HIGH COURT AFTER CONSIDERING THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL FOUND THAT THE TRIBUNAL HAS EXPLICITLY TAKEN NOTE OF THE SUBSTANCE OF THE I SSUE DECIDED BY THE CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BE NGAL AMBUJA HOUSING DEVELOPMENT LTD. ACCORDINGLY, IT WAS HELD BY THE M ADRAS HIGH COURT THAT THERE WAS NO ERROR WHICH NEEDS TO BE RECTIFIED UNDER SECTION 254(2) OF THE ACT. HOWEVER, THE FACT REMAINS THAT THE CHE NNAI BENCH OF THE TRIBUNAL AFTER EXPLICITLY TAKEN NOTE OF THE SUBSTAN CE IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD., (SUPRA) HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB IN PIECEM EAL. THE CHENNAI BENCH OF THE TRIBUNAL FOUND THAT THE ENTIRE BLOCK O F RESIDENTIAL UNIT HAS TO BE CONSIDERED AS A SINGLE UNIT FOR HE PURPOSE OF DE DUCTION UNDER SECTION 10B OF THE ACT. 6. IT IS ALSO A FACT THAT THIS BENCH OF THE TRIBUNA L IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2005-06 FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN PIECEMEAL IN RESPECT OF THE HOUSIN G UNIT WHICH DOES NOT EXCEED 1500 SQ. FT. THIS DECISION WAS APPARENTLY T AKEN BY FOLLOWING ITS 5 EARLIER DECISION IN THE CASE OF SAKET ENGINEERS (P) LTD WHEREIN THE DECISION OF CALCUTTA BENCH OF THE TRIBUNAL IN THE C ASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD., (SUPRA) WAS FOLLOWED. T HE BANGALORE BENCH OF THE TRIBUNAL WAS ALSO AFTER TAKING NOTE OF THE DECISION OF THE CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BENGA L AMBUJA HOUSING PRIVATE LIMITED (SUPRA) DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB IN RESPECT HOUSING UNIT WHICH IS LESS TAN 1500 SQ. FT. A SIMILAR VIEW WAS ALSO TAKEN BY THE BOMBAY BENCH OF THIS TRIBUNAL IN THE CASE OF OSTWAL BUILDERS LIMITED. THE ASSESSEE HAS FILED A COPY OF THE DECISION OF BOMBAY BENCH OF TRIBUNAL IN THE CASE OF OSTWAL BUI LDERS LIMITED (SUPRA). IT APPEARS THAT THE CALCUTTA HIGH COURT BY JUDGMENT IN ITA NO.458/H/06 DATED 27-3-2007 UPHELD THE DECISION OF THE ITAT, CALCUTTA BENCH ON IDENTICAL CIRCUMSTANCES. IN VIEW OF THE A BOVE, IT IS VERY CLEAR THAT THE DECISION OF CALCUTTA BENCH OF THE TRIBUNAL FOLLOWED BY THIS BENCH OF THE TRIBUNAL WAS UPHELD BY THE CALCUTTA H IGH COURT. THE MUMBAI AND BANGALORE BENCHES OF THE TRIBUNAL HAD TA KEN A SIMILAR VIEW BY FOLLOWING THE DECISION OF THE CALCUTTA BENCH OF THE TRIBUNAL (SUPRA). NO DOUBT, THE CHENNAI BENCH OF THE TRIBUNAL IN VIS WAS PROMOTERS PVT. LTD., (SUPRA) HAS TAKEN A CONTRARY VIEW, HOWEVER, IN W.P. FILED AGAINST THE ORDER PASSED BY THE TRIBUNAL UNDER SECTION 254( 2) OF INCOME-TAX ACT, THE MADRAS HIGH COURT HELD THAT THERE WAS NO ERROR IN THE ORDER OF THE TRIBUNAL WHICH REQUIRES RECTIFICATION UNDER SECTION 254(2) OF THE ACT. THE FACT REMAINS THAT THE VIEW TAKEN BY THE CALCUTT A BENCH OF THE TRIBUNAL, WHICH WAS FOLLOWED BY THIS BENCH, BOMBAY BENCH AND 6 BANGALORE BENCH OF THE TRIBUNAL WAS UPHELD BY THE C ALCUTTA HIGH COURT. THE DECISION OF THE MADRAS HIGH COURT IS ON DIFFERE NT ISSUE NAMELY RECTIFICATION OF ERROR UNDER SECTION 254(2) OF THE ACT. MOREOVER, AS HELD BY THE MADRAS HIGH COURT EVEN THOUGH THE JUDGMENT O F CALCUTTA HIGH COURT MAY NOT BE BINDING ON THIS BENCH OF THE TRIB UNAL, IT WOULD CERTAINLY HAVE PERSUASIVE VALUE. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN SAKET ENGINEERS (P) LTD. (SUPRA) HAS TAKEN A VI EW BY FOLLOWING THE CALCUTTA BENCH DECISION, WHICH WAS SUBSEQUENTLY UPH ELD BY THE CALCUTTA HIGH COURT HOLDING THAT THE ASSESSEE IS ENTITLED FO R PROPORTIONATE DEDUCTION IN RESPECT OF HOUSING UNIT WHICH DOES NOT EXCEED 1500 SQ. FT. MOREOVER, THE CHENNAI BENCH OF THE TRIBUNAL IN ARUN EXCELL FOUNDATION (P) LTD. 108 TTJ 71 HAS HELD THAT DEDUCTION U/S 80I B(10) CAN BE GIVEN ON PRO RATA BASIS. THIS DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL WAS APPROVED BY THE SPECIAL BENCH OF THE TRIBUNAL IN BR AHMA ASSOCIATES VS. JCIT (2009) 119 ITD 255 (SB). IN VIEW OF THE ABOV E, IN OUR OPINION, THE DECISION OF THE CHENNAI BENCH OF THIS TRIBUNAL AND THE MADRAS HIGH COURT IN THE CASE OF VISWAS PROMOTERS PVT. LTD.(SUP RA) MAY NOT BE OF ANY ASSISTANCE TO THE REVENUE. THE DECISIONS OF T HE CALCUTTA BENCH WHICH WAS UPHELD BY THE CALCUTTA HIGH COURT WHICH WAS SUBSEQUENTLY FOLLOWED BY THIS BENCH OF THE TRIBUNAL IN SAKET ENG INEERS (P) LTD SUPRA MAY BE MORE APPROPRIATE IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE. ACCORDINGLY, BY FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL IN SAKET ENGINEERS (P) LTD. (SUPRA) AND THE REASONS STATED THEREIN, WE UPHOLD THE ORDER OF THE CIT(A). 7 7. IN THE RESULT, THE REVENUE'S APPEAL STANDS DISMI SSED. ORDER WAS PRONOUNCED IN THE COURT ON 25 - 6-2010. SD/- SD/- (AKBER BASHA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 25 - 6-2010. COPY FORWARDED TO: 1. THE ACIT, CIRCLE 6(1), IT TOWER, MASAB TANK, HYD ERABAD 2. 3. 4. M/S ANNAPURNA SHELTERS, D NO.8-2-120/66/80B (NEW), SUB PLOT NO.1&2, PLOT NO.1, ROAD NO.2, BANJARA HILLS, HYDERABAD. CIT(A) IV, HYDERABAD CIT, A P, HYDERABAD. 3. THE D.R., ITAT, HYDERABAD JMR