INCOME TAX OFFICER WARD-8(1), Nagpur V. M/S ADITYA DEVELOPERS, Nagpur

ITA 406/NAG/2014

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8861 (ITAT-NAGPUR)
• Duration Of Justice: 13 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 27-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-10-2014
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: MUKESH AGARWAL
• Keywords: Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.406/NAG/2014 (ASSESSMENT YEAR : 200708 ) INCOME TAX OFFICER, WARD 8(1),NAGPUR . APPELLANT V/S M/S ADITYA DEVELOPERS, JANKI BHAWAN, DHARAMPETH, NAGPUR. . RESPONDENT REVENUE BY : SHRI A.R. NINAWE ASSESSEE BY : SHRI MUKESH AGARWAL DATE OF HEARING 23.03.2017 DATE OF ORDER 27.03.2017 O R D E R PER RAM LAL NEGI, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE APPELLANT/REV ENUE AGAINST ORDER DATED 16.6.14 PASSED BY THE CIT(APPEALS)-II NAGPUR PERTAINING TO THE ASSESSMENT YEAR 2007-08, WHEREBY THE LEARNED CIT(A) ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 28.3 .2013 PASSED U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961, HEREINAFTER TO BE REFERRED AS THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE EN GAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECTS FI LED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING NIL INCOME A FTER CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT, AMOUNTING TO RS. 56,91,418/-. THE RETURN WAS PROCESSED AND AFTER SCRUTINY THE SAME WAS ACCEPTED AND ASSESS MENT ORDER WAS ACCORDINGLY PASSED. 3. THE ASSESSEE WAS ENGAGED IN DEVELOPMENT AND CONS TRUCTION OF HOUSING PROJECT ON A LAYOUT COMPRISING OF RESIDENTIAL BUILD ING ON PLOT A,B,C,D,E,H,I AND J AND THAT DURING THE YEAR THE ASSESSEE FIRM CARRIED OUT WORK IN PLOT NO A,B,D&F. AO FURTHER NOTED THAT THE ASSESSEE HAD OBTAINED APP ROVAL OF BUILDING PLAN ON PLOT A,B AND D BEFORE 31.3.2004 AND OBTAINED COMPLE TION CERTIFICATE ON 31.3.2008, WHEREAS BUILDING PLAN IN RESPECT OF PLOT E WAS APPROVED ON 27.8.2004 AND COMPLETION CERTIFICATE WAS OBTAINED O N 31.3.2009. DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDER ATION, THE ASSESSEE DEVELOPED TOTAL 86 UNITS AND CLAIMED DEDUCTION OF R S.56,91,418/-UNDER SECTION 80IB(10) OF THE ACT. THE AO HOLDING THAT THE SAID S ECTION REFERS TO HOUSING PROJECT AND NOT THE BUILDING, ISSUED NOTICE U/S 148 OF THE ACT. THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN FILED MAY BE TRE ATED AS THE RETURN FILED IN RESPONSE TO THE NOTICE AND ALSO OPPOSED REOPENING. HOWEVER, THE OBJECTION FILED BY THE ASSESSEE WAS REJECTED BY THE AO. 4. ON MERIT THE AUTHORISED REPRESENTATIVE CONTENDED THAT THE CASE OF THE ASSESSEE IS COVERED BY THE JUDGMENT OF HONBLE BOMB AY HIGH COURT PASSED IN CIT VS. VANDANA PROPERTIES (2013) 353 ITR 0036 (BOM ) IN WHICH THE HONBLE COURT HAS DECIDED THE ISSUE IN QUESTION IN FAVOUR OF THE ASSESSEE. HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND ADDE D THE AMOUNT OF DEDUCTION CLAIMED TO THE INCOME OF THE ASSESSEE. 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LEARNED CIT(A). THE ASSESSEE REITERATED ITS CONTENTION BEFORE THE LD. CIT(A). THE LD. CIT(A) RELYING ON THE VARIOUS JUDIC IAL PRONOUNCEMENT INCLUDING THE LAW LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. VANDANA PROPERTIES(SUPRA) ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDE R SECTION 80IB(10) OF THE ACT. THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN SETTING ASIDE THE REOPEN ING ON THE GROUND THAT THE REOPENING HAS BEEN MADE ON THE BASIS OF CHANGE OF OPINION? WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW,THE LD.CIT(A) WAS JUSTIFIED IN IGNORING THE FACT THAT T HE BUILDING E WAS APPROVED ON 27.08.2004 I.E. AFTER 31.03.2004 AND TH AT THE AO HAD PASSED HIS ASSESSMENT ORDER ON THE ASSUMPTION THAT ALL THE BUILDINGS VIZ, A, B, C, D & E HAVE BEEN APPROVED PRIOR TO 31.03.20 04? WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW,THE LD.CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 8 0IB(10) ON THE BASIS OF DECISION OF HON,BLE BOMBAY HIGH COURT IN THE CASE O F M/S VANDANA PROPERTIES WHICH HAS NOT BEEN ACCEPTED BY THE DEPAR TMENT AND SLP HAS BEEN FILED AGAINST THE SAID DECISION BEFORE THE HON BLE SUPREME COURT? 6. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE HON,BLE BOMBAY HIGH COURT IN THE CASE OF M/S VANDANA PROPERTIES (SUPRA) . SINCE THE LD. CIT(A) HAS PASSED THE IMPUGNED ORDER BY FOLLOWING THE LAW LAID DOWN BY THE BOMBAY HIGH COURT IN THE AFORESAID CASE THEREFORE, THERE IS NO MERIT IN THE APPEAL. 7. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENT ATIVE RELIED ON THE ASSESSMENT ORDER. 8. WE HAVE GONE THROUGH THE MATERIAL PLACED ON RECO RD INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BELOW AND THE CASES RELIE D UPON THE LD. CIT(A). WE NOTICE THAT THE LD. CIT(A) HAS ALLOWED THE DEDUCTIO N IN QUESTION FOLLOWING THE JUDICIAL PRONOUNCEMENT INCLUDING THE LAW LAID DOWN BY THE HON,BLE BOMBAY HIGH COURT IN THE CASE OF M/S VANDANA PROPERTIES (SUPRA) . THE RELEVANT PORTION OF THE ORDER READS AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE WRITTEN SUBMISSIONS OF THE APPELLANT. EVEN ON MERIT THE APP ELLANT DESERVES TO SUCCEED. THE CLAIM OF THE APPELLANT HAS BEEN CONSIS TENTLY ALLOWED IN EARLIER YEARS. FURTHER, ON SIMILAR FACTS, THERE IS A CLEAR FINDING OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS VAN DANA PROPERTIES (SUPRA) WEARING THE ASSESSEE FIRM WAS ENGAGED IN THE BUSINE SS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECTS AND ON A PLOT O F LAND ADMIT HEARING 2.36 ACRES IN MUMBAI THE ASSESSEE HAD CONSTRUCTED B UILDINGS A, B, C AND D OVER A PERIOD OF YEARS, IN RESPECT OF WHICH NO DE DUCTION U/S 80 IB (10) OF THE INCOME TAX ACT, 1961 AS CLAIMED. IN THE YEAR 2001, THE ASSESSEE BECAME ENTITLED TO CONSTRUCT AN ADDITIONAL BUILDING EON THE SAID PLOT OF LAND. IOD WAS APPROVED BY THE MUNICIPAL CORPORATION ON11-10-2002 AND THE COMMENCEMENT CERTIFICATE WAS ISSUED ON 10-03-20 03. FOR THE A. YS.2004-05 AND 2005-06, THE ASSESSEES CLAIM FOR DE DUCTION U/S 80 IB (10) WAS REJECTED BY THE ASSESSING OFFICER. THE TRI BUNAL ALLOWED THE ASSESSEES CLAIM. ON APPEAL BY THE REVENUE THE FOLL OWING ISSUES WERE CONSIDERED BY THE BOMBAY HIGH COURT: (I) WHAT IS A HOUSING PROJECTU/S. 80 IB (10)? (II) WHETHER, IF APPROVED FOR CONSTRUCTION OF EBUILDIN G WAS GRANTED BY LOCAL AUTHORITY SUBJECT TO THE CONDITIONS SET OU T IN THE FIRST APPROVAL GRANTED ON12-5-1993 FOR CONSTRUCTION OF A AND B BUILDINGS, CONSTRUCTION OF E BUILDING IS AN EXTEN SION OF THE EARLIER HOUSING PROJECT FOR WHICH APPROVAL WAS GRAN TED PRIOR TO1- 10-1998 AND, THEREFORE, BENEFIT OF SECTION 81 IB (1 0) CANNOT BE GRANTED? (III) WHETHER THE HOUSING PROJECT MUST BE ON A VACANT PLO T OF LAND WHICH HAS MINIMUM AREA OF ONE ACRE AND IF THERE ARE MULTIPLE BUILDINGS AND THE PROPORTIONATE FOR EACH BUILDING I S LESS THAN ONE ACRE, DIRECTION/S 80 IB (10) CAN BE DENIED? 8.1 THE BOMBAY HIGH COURT UPHELD THE DECISION OF TRIBUNAL AND HELD AS UNDER: (I) AS THE EXPRESSION HOUSING PROJECT IS NOT DEF INED, IT MUST HAVE THE COMMON PARLANCE MEANING AND MEANS CONSTRUC TING A BUILDING OR GROUP OF BUILDINGS CONSISTING OF SEVERA L RESIDENTIAL UNITS. THE APPROVAL GRANTED TO A BUILDING PLAN CONS TITUTES APPROVAL GRANTED TO A HOUSING PROJECT. CONSTRUCTION OF EVEN ONE BUILDING WITH SEVERAL RESIDENTIAL UNITS OF THE SIZE NOT EXCEEDING 1000 SQ.FT. WOULD CONSTITUTE A HOUSING PROJECT U/ S 80IB(10). (II) E BUILDING IS AN INDEPENDENT HOUSING PROJECT AND NOT AN EXTENSION OF THE HOUSING PROJECT ALREADY EXISTING O N THE PLOT, BECAUSE WHEN THE EARLIER PLANS WERE APPROVED E BU ILDING WAS NOT EVEN CONTEMPLATED AND CAME INTO EXISTENCE MUCH LATER. THE FACT THAT THE APPROVAL WAS GRANTED ON THE SAME TERMS AS THAT GRANTED TO THE OTHER BUILDINGS DOES NOT MAKE I T AN EXTENSION. (III)SECTION 80 IB (10) (B) SPECIFIES THE SIZE OF T HE PLOT OF LAND BUT NOT THE SIZE OF THE HOUSING PROJECT. WHILE THE PLOT MUST HAVE A MINIMUM AREA OF ONE ACRE, IT NEED NOT BE A VACANT PLOT. THE OBJECT OF SECTION 80 IB (10) IS TO BOOST THE STOCK OF HOUSES. THERE CAN BE MULTIPLE HOUSING PROJECTS ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE 8.2 IN VIEW OF THE CLEAR FINDING OF THE JURISDICTIO NAL HIGH COURT, IT IS EVIDENT THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTIO N U/S 80 IB (10) AND THE SAME IS THEREFORE TO BE ALLOWED. THESE GROUNDS ARE THEREFORE ALLOWED. 9. SINCE, THE IDENTICAL ISSUE HAS BEEN DECIDED BY T HE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS VANDANA PROPERT IES (SUPRA) IN FAVOUR OF THE ASSESSEE AND THE LD. CIT(A) HAS PASSED THE IMPU GNED ORDER IN ACCORDANCE WITH THE LAW LAID DOWN BY THE MUMBAI HIG H COURT, WE DO NOT FIND ANY FACTUAL OR LEGAL INFIRMITY IN THE SAID ORD ER TO INTERFERE WITH. THOUGH THE LD. CIT(A) BROUGHT TO OUR NOTICE THAT TH E DEPARTMENT HAS FILED SLP AGAINST THE AFORESAID JUDGMENT OF THE HONBLE B OMBAY IN THE HONBLE SUPREME COURT , HOWEVER, NO STAY WAS PRODUCED BEFOR E US. UNDER THESE CIRCUMSTANCES, WE UPHOLD THE ORDER OF THE LD. CIT(A ) AND DISMISS THE APPEAL OF THE REVENUE. SINCE, WE HAVE DECIDED THE A PPEAL ON MERIT, WE DO NOT CONSIDER IT NECESSARY TO ADJUDICATE GROUND NO 1 OF THE APPEAL WHICH HAS BECOME ACADEMIC. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2007-08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.03.2017 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER SD/ - RAM LAL NEGI JUDICIAL MEMBER NAGPUR, DATED: 27.03.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR