Cherukuri Swapna, Hyd, Hyderabad V. DCIT, Circle-1(3), Hyd, Hyderabad

ITA 412/HYD/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0369 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2015
• Court: TRIBUNAL
• Department Lawyers: B RAJARAM
• Assessee Lawyers: J J VARUN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 412/HYD/2015 ASSESSMENT YEAR: 2010-11 M RS . CHERUKURI SWAPNA, HYDERABAD [PAN: ACGPG3296C] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, [(PRESENTLY CENTRAL CIRCLE-1(3), HYD)] HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : S HRI J.J. VARUN , A R FOR REVENUE : S HRI B. RAJARAM , DR DATE OF HEARING : 2 4 - 0 6 - 201 5 DATE OF PRONOUNCEM ENT : 26 - 0 6 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL FILED BY ASSESSEE DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XI, HYDERA BAD DATED 26-02-2015. THE ONLY ISSUE ARISING OUT OF THE APPE AL IS WITH REFERENCE TO DISALLOWANCE OF DEDUCTION OF RS. 1,00,23,576/- CLAI MED U/S. 80IB OF THE INCOME TAX ACT [ACT]. 2. ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WH O IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT IN HER PROPRIET ARY CONCERN, M/S. LAHARI CONSTRUCTIONS. THE RETURN OF INCOME FOR THE YEAR WAS FILED 'NIL' INCOME AFTER CLAIMING DEDUCTION OUT OF THE PROFITS OF THE YEAR. THE I.T.A. NO. 412/HYD/2015 MRS. CHERUKURI SWAPNA :- 2 -: DEDUCTION WAS CLAIMED IN RESPECT OF PROFIT DERIVED FROM HOUSING PROJECT DEVELOPED AT BHANOOR VILLAGE IN MEDAK DISTRICT ON A N AREA OF 16 ACRES AND 7 GUNTAS. THE CLAIM WAS MADE IN THE YEARS 2009 -10, 2010-11 AND 2011-12 AS VARIOUS UNITS ARE SOLD IN RESPECTIVE ASS ESSMENT YEARS. IN THE IMPUGNED ASSESSMENT YEAR, FOLLOWING THE FINDINGS IN AY. 2009-10, ASSESSING OFFICER (AO) DISALLOWED THE CLAIM OF DEDU CTION. LD.CIT(A) ALSO GIVES A FINDING THAT FACTS ARE SIMILAR IN THIS IMPU GNED ASSESSMENT YEAR AND VIDE PARA 6.1 RECORDS THAT ON IDENTICAL FACTS, CIT(A)-I, HYDERABAD VIDE ORDER IN ITA NO. 0319/CC-6, HYD/CIT(A)-I/11-12 DT. 23-01-2014 FOR AY. 2009-10 HAD EXAMINED IN DETAIL THE REASONS FOR DISALLOWANCE OF CLAIM U/S. 80IB(10). FOLLOWING THE SAME, AS THE FA CTS AND GROUNDS ARE IDENTICAL, LD.CIT(A) AGREED WITH THE REASONS ADOPTE D BY THE CIT(A) FOR UPHOLDING THE ACTION OF AO IN AY. 2009-10. ACCORDI NGLY, THE DISALLOWANCE OF 80IB WAS CONFIRMED. 3. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT APPEAL IN AY. 2009-10 WAS CONSIDERED BY THE ITAT AND VIDE ORDER IN ITA NO . 183/HYD/2014 DT. 12-06-2015, THE CONTENTIONS OF ASSESSEE WERE ACCEPT ED AND DEDUCTION U/S. 80IB(10) WAS ALLOWED. IT IS FURTHER SUBMITTED THAT THE ASSESSMENT YEAR THERE IN WAS WRONGLY MENTIONED AS AY. 2008-09 WHEREAS THE APPEAL WAS FOR AY. 2009-10. 4. WE HAVE CONSIDERED THE CONTENTIONS AND PERUSED T HE RECORD. THERE IS NO DOUBT WITH REFERENCE TO THE FACT THAT A SSESSEE'S CLAIM PERTAINS TO AYS. 2009-10 TO 2011-12 AS RECORDED BY THE REVENUE AUTHORITIES. THE LD.CIT(A) ALSO GAVE A FACTUAL FIN DING THAT ISSUES ARE SIMILAR TO AY. 2009-10, THEREFORE, SINCE THE ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE IN AY. 2009-10, WE DIRECT THE AO TO GRA NT DEDUCTION U/S. 80IB(10). FOR THE SAKE OF RECORD, THE ORDER OF ITA T IS REPRODUCED AS UNDER: I.T.A. NO. 412/HYD/2015 MRS. CHERUKURI SWAPNA :- 3 -: '13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS O BSERVED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCO UNT OF ASSESSEES CLAIM FOR DEDUCTION UNDER S.80IB(10) IN RESPECT OF PROFIT DERIVED FROM THE HOUSING PROJECT UNDERTAKEN BY HER WAS CONFIRME D BY THE LEARNED CIT(A) BY HIS IMPUGNED ORDER ON TWO GROUNDS. FIRST LY, HE HELD THAT THE COMMERCIAL SPACE OF 11,913 SQ. FT. IN THE PROJECT DEVELOPED BY THE ASSESSEE WAS MORE THAN THE PRESCRIBED LIMIT OF 5% OF THE TOTAL BUILT UP AREA OF THE PROJECT. SECONDLY, HE HELD THAT THE OUT OF TOTAL 136 UNITS CONSTRUCTED BY THE ASSESSEE IN THE PROJECT, TWO UNITS BEARING NOS.118 AND 121 (CORRECT NO. IS 21, AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE) WERE HAVING BUILT UP ARE A OF MORE THAN THE MAXIMUM AREA OF 1,500 SQ. FT. PERMISSIBLE AS PER T HE RELEVANT PROVISIONS. THE LEARNED CIT(A) HELD THAT THERE WAS THUS VIOLATION OF AT LEAST TWO NORMS IN THE RESPECT OF PROJECT DEVELOP ED BY THE ASSESSEE TO BE ELIGIBLE FOR DEDUCTION UNDER S.80IB(10) AND THE SAID PROJECT THEREFORE, WAS NOT ENTITLED TO DEDUCTION UNDER S.8 0IB(10), AS RIGHTLY HELD BY THE ASSESSING OFFICER. 14. IN SO FAR AS THE NORM RELATING TO COMMERCIAL AREA IS CONCERNED, THERE IS NO DISPUTE THAT THE RELEVANT P LOT OF LAND ON WHICH THE COMMERCIAL COMPLEX WAS BUILT HAD ALREADY BEEN SOLD BY THE ASSESSEE TO MD. ZAHEERUDDIN AND MD. ZAMILUDDIN VID E SALE DEED DATED 13.9.2007 AND THE PROFIT ARISING FROM THE SAID SAL E WAS DULY OFFERED TO TAX BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YE AR, I.E. ASSESSMENT YEAR 2008-09. THERE IS ALSO NO DISPUTE THAT THE CO MMERCIAL COMPLEX ON THE SAID PLOT OF LAND WAS CONSTRUCTED BY THE OW NERS AND NOT BY THE ASSESSEE AND THE PROFIT ARISING FROM THE SALE OF T HE COMMERCIAL COMPLEX SO CONSTRUCTED WAS DULY OFFERED TO TAX BY THE SAID OWNERS IN THEIR RETURNS OF INCOME. THE LEARNED CIT(A), HOWEV ER, STILL CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSEES CLAIM FOR DEDUCTION UNDER S.80IB(10) ON THE GROUND THAT THE PLOT OF LAND ON WHICH THE COMMERCIAL COMPLEX W AS BUILT WAS PART AND PARCEL OF THE PROJECT OF THE ASSESSEE, AS APPR OVED BY THE CONCERNED AUTHORITIES. HE ALSO NOTED THAT THE SAI D PLOT OF LAND WAS FOUND MENTIONED EVEN IN THE COMPLETION CERTIFICATE DATED 12.3.2012 ISSUED BY THE CONCERNED AUTHORITY, WHICH AGAIN STR ENGTHENED THE FACT THAT THE LAND ON WHICH THE COMMERCIAL COMPLEX WAS BUILT UP WAS A PART AND PARCEL OF THE PROJECT DEVELOPED BY THE AS SESSEE. IN THIS REGARD, IT IS OBSERVED THAT A SIMILAR ISSUE HAD C OME UP FOR CONSIDERATION BEFORE THE CHENNAI BENCH OF THIS TRI BUNAL IN THE CASE OF LAVANYA PROPERTY DEVELOPERS PVT. LTD. V/S. ACIT ( ITA NO.148/MDS/2010 DATED 16.9.2011), WHEREIN THE ASSE SSEE HAD OBTAINED APPROVAL FOR THE PROJECT COMPRISING OF FI VE BLOCKS TO BE DEVELOPED ON THE LAND ADMEASURING 1.445 ACRES. HE , HOWEVER, SOLD PLOT OF LAND PERTAINING TO ONE BLOCK AND DEVELOPED ONLY THE BALANCE AREA OF 1.2 ACRES AND CLAIMED DEDUCTION UNDER S.80 IB(10) IN RELATION TO THE FOUR BLOCKS ONLY, BUILT BY IT. THE ASSESSIN G OFFICER DISALLOWED THE I.T.A. NO. 412/HYD/2015 MRS. CHERUKURI SWAPNA :- 4 -: CLAIM OF THE ASSESSEE ON THE GROUND THAT THE PLOT OF LAND PERTAINING TO ONE BLOCK SOLD BY THE ASSESSEE WAS PART OF THE ORI GINAL PROJECT AND THE AREA OF THE FLATS IN THE SAID BLOCK EXCEEDED 1,500 SQ. FT. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE ASSE SSING OFFICER, OBSERVING THAT THE APPROVAL OBTAINED FROM THE LOCA L AUTHORITY FOR DEVELOPMENT OF THE PROJECT INCLUDED THE LAND IN R ELATION TO ONE BLOCK WHICH WAS SOLD BY THE ASSESSEE. ON FURTHER APPEAL, IT WAS HELD BY THE TRIBUNAL THAT JUST BECAUSE THE ASSESSEE HIVED OFF ONE BLOCK IN THE PROJECT AND HIVED OFF BLOCK HAD VIOLATED THE CONDI TION PRESCRIBED UNDER S.80IB(10), IT WOULD NOT DISENTITLE THE COMPLETE PROJECT FROM THE DEDUCTION UNDER S.80IB(10) ESPECIALLY WHEN THE HIV ED OFF BLOCK WAS NOT IN ANY WAY CONNECTED WITH THE ASSESSEES BALAN CE PROJECT AND THE BALANCE PROJECT ON ITS OWN COMPLIED WITH ALL THE CONDITIONS UNDER S.80IB(10). IN THE PRESENT CASE, THE PLOT OF LAN D ON WHICH THE COMMERCIAL COMPLEX WAS BUILT HAD ALREADY BEEN SOL D BY THE ASSESSEE AND SINCE THE COMMERCIAL COMPLEX ON THE SAID PLOT OF LAND WAS DEVELOPED BY THE OWNERS OF THE LAND AND NOT BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE SAME COULD NOT BE CONSIDERED AS PART OF THE PROJECT OF THE ASSESSEE, ESPECIALLY WHEN THE PROJE CT OF THE ASSESSEE EXCLUDING THAT PLOT OF LAND INDEPENDENTLY COMPLIE D WITH ALL THE CONDITIONS FOR CLAIMING DEDUCTION UNDER S.80IB(10) . IT IS ALSO PERTINENT TO NOTE HERE THAT PROFIT ARISING FROM TH E DEVELOPMENT AND SALE OF COMMERCIAL COMPLEX WAS DULY OFFERED BY THE OWNERS TO TAX IN THEIR RETURNS OF INCOME, AND NEITHER THEY NOR THE ASSESSEE CLAIMED ANY DEDUCTION UNDER S.80IB(10) IN RESPECT OF THE S AID PROFIT. 14. IN SO FAR AS THE RESIDENTIAL UNITS NO.21 AN D 118 ARE CONCERNED, WHICH ALLEGEDLY WERE HAVING MORE THAN THE PERMISSIBLE MAXIMUM BUILT UP AREA OF 1,500 SQ. FT. EACH, THE L EARNED COUNSEL FOR THE ASSESSEE HAS FILED BEFORE US A COPY OF THE REL EVANT SALE DEED DATED 11 TH SEPTEMBER, 2008, WHEREBY THE RESIDENTIAL UNIT NO.2 1 COMPRISING OF PLOT OF LAND AND DUPLEX HOUSE BUILT THEREON WAS SOLD BY THE ASSESSEE. A PERUSAL OF THE SAID SALE DEED CLEARLY MENTIONS THE BUILT UP AREA AS 1,364 SQ. FT. IN THE DESCRIPTION OF THE P ROPERTY SOLD AND EVEN THE BUILDING PLAN ANNEXED TO THE SAID SALE DEED AS APPROVED BY THE CONCERNED AUTHORITIES, SHOWS THE TOTAL AREA OF TH E GROUND AND FIRST FLOORS AS 1336 SQ. FT. IT IS OBSERVED THAT THE A SSESSING OFFICER, HOWEVER, PRESUMED THE AREA OF THIS UNIT AS MORE TH AN 1,500 SQ. FT. MERELY ON THE BASIS THAT THE DUPLEX HOUSE WAS HAVI NG TWO FLOORS. AS EXPLAINED ON BEHALF OF THE ASSESSEE BEFORE THE AUT HORITIES BELOW AS WELL AS BEFORE US, THE SAID UNIT WAS BUILT ON A CO RNER PLOT AND KEEPING IN VIEW THE LOCATION AS WELL AS THE SIZE OF THE PL OT, DUPLEX HOUSE WAS CONSTRUCTED, HAVING A BUILT UP AREA OF LESS THAN 1 ,500 SQ. FT. IT IS ALSO OBSERVED THAT A COPY OF THE SALE DEED FOR RESIDENT IAL UNIT NO.21 WAS FILED BY THE ASSESSEE EVEN BEFORE THE LEARNED CIT( A), BUT STILL THE LEARNED CIT(A) BRUSHED ASIDE THE SAME, BY OBSERVIN G THAT THE SAME WAS NOT SUFFICIENT TO PROVE THAT THE BUILT UP AREA OF THE UNIT WAS LESS THAN THE LIMIT OF 1,500 SQ. FT. PRESCRIBED UNDER S .80IB(10). IN OUR I.T.A. NO. 412/HYD/2015 MRS. CHERUKURI SWAPNA :- 5 -: OPINION, THE SAID SALE DEED WAS SUFFICIENT TO SHOW THAT THE AREA OF THE DUPLEX UNIT CONSTRUCTED BY THE ASSESSEE AS RESIDEN TIAL UNIT NO.21 WAS HAVING LESS THAN 1,500 SQ. FT. BUILT UP AREA AND T HE APPROVED PLAN ANNEXED TO THE SALE DEED FURTHER ESTABLISHED THIS POSITION. 15. AS REGARDS THE RESIDENTIAL UNIT NO.118, IS OBSERVED THAT THE BUILT UP AREA OF THE SAID UNIT WAS CONSIDERED BY THE ASSESSING OFFICER AS IN EXCESS OF 1,500 SQ. FT. ON THE BASIS THAT IN ADDITION TO THE GROUND FLOOR, THE FIRST FLOOR WAS ALSO CONSTRUCTED AS FOUND DURING THE COURSE OF THE VISIT OF THE DVO TO THE PROJECT SIT E ON 17.12.2011. IN THIS REGARD, THE CLAIM OF THE ASSESSEE RIGHT FROM THE BEGINNING WAS THAT THE RESIDENTIAL UNIT COMPRISING OF PLOT OF LA ND WITH ONLY GROUND FLOOR CONSTRUCTED THEREON WAS SOLD TO THE CONCERNE D BUYER VIDE SALE DEED DATED 3 RD SEPTEMBER, 2010, HAVING BUILT UP AREA OF 1,475 SQ. FT. AND THE CONSTRUCTION OF FIRST FLOOR AS FOUND B Y THE DVO DURING HIS VISIT ON 17.12.2011, WAS BEING DONE BY THE OWNER O F THE SAID PLOT AND NOT BY THE ASSESSEE. AS DEMONSTRATED BY THE LEARN ED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US, THIS PO SITION IS DULY SUPPORTED BY THE COPY OF THE SALE DEED DATED 3.9.2 010, PLACED AT PAGE NOS.67 TO 78 OF THE PAPER-BOOK, WHICH CLEARL Y SHOWS THAT THE RESIDENTIAL UNIT NO.118 COMPRISING OF PLOT OF LAND AS WELL AS A RESIDENTIAL UNIT HAVING ONLY GROUND FLOOR WITH BUI LT UP AREA OF 1,4765 SQ. FT. DULY COMPLETED, WAS SOLD BY THE ASSESSEE. THE AREA OF THE SAID UNIT SOLD BY THE ASSESSEE ON 3.9.2010 WAS HAVING A BUILT UP AREA OF 1,475 SQ. FT. ONLY AND THE ADDITIONAL BUILT UP ARE A IN THE FORM OF FIRST FLOOR WHICH WAS UNDER CONSTRUCTION AS FOUND BY THE DVO ON 17.12.2011 WAS DONE BY THE OWNER OF THE UNIT AND N OT BY THE ASSESSEE. BOTH THE RESIDENTIAL UNITS BEARING NOS . 118 AND 21 THUS WERE HAVING BUILT UP AREA OF LESS THAN1,500 SQ. FT . AS DEVELOPED AND SOLD BY THE ASSESSEE AND IN OUR OPINION, THERE WAS NO VIOLATION OF ANY CONDITION AS ALLEGED BY THE AUTHORITIES BELOW, FOR CLAIMING DEDUCTION UNDER S.80IB(10). WE ALSO FIND MERIT EVEN IN THE A LTERNATIVE CONTENTION RAISED BY THE ASSESSEE THAT EVEN IF ONE OR TWO UNITS OF THE PROJECT ARE FOUND TO BE HAVING BUILT UP AREA OF MO RE THAN 1,500 SQ. FT, THE DEDUCTION UNDER S.80IB(10) IS LIABLE TO BE DI SALLOWED ONLY ON PROPORTIONATE BASIS AND THE CLAIM OF THE ASSESSEE UNDER S.80IB(10) CANNOT BE DISALLOWED IN ITS ENTIRETY, AS DONE BY THE AUTHORITIES BELOW. 16. IN THE LIGHT OF THE ABOVE DISCUSSION AND CON SIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THERE WAS NO VIOLATION OF ANY CONDITION IN RESPECT OF TH E PROJECT DEVELOPED BY THE ASSESSEE FOR THE PURPOSE OF CLAIMING DEDUCT ION UNDER S.80IB(10) AND THE LEARNED CIT(A) WAS NOT JUSTIFIE D IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCO UNT OF ASSESSEES CLAIM FOR DEDUCTION UNDER S.80IB(10). WE THEREFOR E, SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE , AND DIRECT THE I.T.A. NO. 412/HYD/2015 MRS. CHERUKURI SWAPNA :- 6 -: ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESS EE FOR DEDUCTION UNDER S.80IB(10)'. 5. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW ASSESS EE'S GROUNDS AND DIRECT THE AO TO ALLOW THE CLAIM. 6. IN THE RESULT, ASSESSEE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 26 TH JUNE, 2015 TNMM COPY TO : 1. MRS. CHERUKURI SWAPNA, HOUSE NO. 723/A, ROAD NO. 37, JUBILEE HILLS, HYDERABAD. 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, [PR ESENTLY CENTRAL CIRCLE-1(3), HYD],HYDERABAD. 3. CIT(APPEALS)-XI, HYDERABAD. 4. PR. COMMISSIONER OF INCOME TAX (CENTRAL), HYDERA BAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.