ITO WD 2(3), KALYAN V. RELIANCE ENTERPRISES, AMBERNATH

ITA 4148/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3769 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 06-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIYA

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE SH. SHAMIM YAHYA , AM & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 4148 & 4149 /MUM/2017 ( / ASSESSMENT YEAR: 2013 - 14 & 2014 - 15 ) ITO WD 2(3) 2 ND FLOOR, MOHAN PLAZA KHADAKPADA WAYALE NAGAR KALYAN(W), KALYAN, PIN - / VS. RELIANCE ENTERPRISES, SURVEY NO. 58 HISSA NO. 1, COMPLEX, BEHIND SHIV MANDIR, AMBERNATH, PIN - 421501 ./ ./ PAN/GIR NO. AAIFR7851A ( / APPELLANT ) : ( / RESPONDENT ) & CROSS OBJECTIONS NO . 292 & 293/MUM/2018 ( / ASSESSMENT YEAR: 2013 - 14 & 2014 - 15 ) RELIANCE ENTERPRISES, SURVEY NO. 58 HISSA NO. 1, COMPLEX, BEHIND SHIV MANDIR, AMBERNATH, PIN - 421501 / VS. ITO WD 2(3) 2 ND FLOOR, MOHAN PLAZA KHADAKPADA WAYALE NAGAR KALYAN(W), KALYAN, PIN - / APPELLANT BY : SHRI CHAITANYA ANJARIYA, DR / RESPONDENTBY : NONE / DATE OF HEARING : 11 .12.2018 / DATE OF PRONOUNCEMENT : 12.02.2019 2 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE PRESENT TWO A PPE ALS AS WELL AS TWO COS HAVE BEEN FILED BY THE REVENUE AND ASSESSEE RESPECTIVELY AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3, MUMBAI DATED 20.03.2017 & 05.03.2017 FOR AY 2013 - 14 & 2014 - 15 RESPECTIVELY. 2. AT THE VERY OUTSET, IT IS NOTICED THAT NONE HAS APPEARED ON BEHALF OF ASSESSEE IN SPITE OF CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED. FROM THE ORDERSHEET, WE NOTICED THAT NOTICES WERE OR DERED TO BE SERVED SUCCESSIVELY ON THE ADDRESS GIVEN BY THE ASSESSEE, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. ON THE OTHER HAND L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CA SE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES 3 . SINCE ALL THE ISSUES INVOLVED IN THESE APPEALS AS WELL AS COS ARE COMMON, THEREFORE, THEY HAVE BEEN CLUBBED , HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR TH E SAKE OF CONVENIENCE AND BREVITY. ITA NO. 4148/MUM/2017 (AY 20 13 - 14) 4 . FIRST OF ALL WE TAKE UP REVENUES APPEAL IN ITA NO. 4148/MUM/2017 FOR ASSESSMENT YEAR 2013 - 14 AS LEAD CASE. 5 . THE SOLITARY GROUND RAISED BY THE REVENUE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN ALLOWING DEDUCTION U/S 80IB(10) OF THE ACT ON PRO - RATA BASIS INSPITE OF THE FACT THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 80IB(10)(E) AND 80IB(10)(F ) OF THE I.T. ACT. 6 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND FROM THE RECOR D THAT LD. CIT(A) HAD DECIDED THIS GROUND IN PARA NO. 4 AND 5 OF ITS ORDER AND TH E RELEVANT PORTION IS CONTAINED IN PARA NO. 5, WHICH IS REPRODUCED BELOW: - 4 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES 5.0 GROUND NOS..1 AND 2 ARE DIRECTED AGAINST THE DISALLOWANCE OF DEDUCTION CLAIM OF RS. 96,53,292/ - U/S 80IB(1), THEREFORE, BOTH THE GROUNDS ARE TAKEN TOGETHER FOR THE SAKE OF CONV ENIENCE. (I) IN THIS CASE, THE AO DISALLOWED THE ENTIRE CLAIM OF DEDUCTION OF RS.96,53,292 / - U/S 80I B(10) IN VIEW OF THE PROVISIONS OF SECTION 80I B(10)(E) OF THE ACT, SINCE TWO FLATS I.E. 603 & 604 AT FLORANTINA WERE SOLD TO THE SAME PERSONS I.E. IN JOINT NAMES TO MR. PRADNESH PANDIT & SUBHASH PANDIT. THE DETAILS OF THE FLATS ARE AS UNDER: NAME OF BLDG FLAT NO NAME OF PURCHASER DATE OF BOOKING DATE OF AGREEMENT FLORANTINA 603 PRADNESH PANDIT & SUBHASH PANDIT 12.04.2012 18.04.2012 FLORANTINA 604 PRADNESH PANDIT &SUBHASH PANDIT 12.04.2012 18.04.2012 (II) ON THE OTHER HAND, THE APPELLANT CLAIM THAT THE ENTIRE DEDUCTION SHOULD BE ALLOWED, IF NOT ENTIRETY, WITHOUT PREJUDICE, THE CLAIM OF DEDUCTION SHOULD BE ON PRO - RATA /PROPORTIONATE BASIS. THE APPELLANT HAS GIVEN ITS REASONS THAT THE PROVISIONS OF SECTION 80 1B(10) (E) ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT AS SUB - CLAUSE (E) DOES NOT COVER CO - OWNERS/JOINT OWNERS. AND EVEN IF BOTH THE FLATS COMBINE TOGETHER, THE BUILT UP 5 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES AREA OF BOTH THE FLATS DOES NOT EXCEED 1500 SQ FT FURTHER STATED THAT, AS PER SUB CLAUSE (C ) OF SECTION 801B(10), THE DEDUCTION IS ALLOWABLE ON RESIDENTIAL UNIT WISE. ALSO, THE APPELLANT FURTHER ARGUED THAT, THE RULE OF LIBERAL INTERPRETATION HAS TO BE APPLIED IN THE CASE OF THE APPELLANT AS HELD BY THE HON'BLE SUPREME COURT IN VARIOUS JUDGMENTS. (III) AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, I AM OF THE OPINION THAT THE ASSESSING OFFICER IS NOT CORRECT IN DISALLOWING THE ENTIRE DEDUCTION CLAIMED U/S.801B(10) OF THE ACT AND THEREFORE, THE IS DIRECTED TO DISALLOW THE CLA IM OF DEDUCTION TO THE EXTENT OF TWO FLATS I.E. 603 & 604 AT FLORANTINA SOLD TO THE SAME PERSONS AS CO - OWNERS/JOINT OWNERS ON THE FOLLOWING GROUNDS: - (A) THE APPELLANT HAS FULFILLED ALL THE CONDITIONS AS PRESCRIBED IN SECTION 801B(L0) OF THE ACT EXCEPT TH AT THE TWO FLATS LE. 603 604 AT FLORANTINA WERE SOLD TO THE SAME PERSONS AS CO - OWNERS/SAINT OWNERS. B) THERE ARE VARIOUS COURT'S DECISION INCLUDING JURISDICTIONAL, WHICH HELD THAT THE DEDUCTION HAS TO BE DISALLOWED ON PROPORTIONATE/PRO - RATA BASIS AND CANNO T DISALLOW THE ENTIRE DEDUCTION CLAIMED U/S.80IB(10). 6 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES C ). THE FOLLOWING JURISDICTIONAL JUDICIAL PRONOUNCEMENTS ARE AS UNDER: I) THE JURISDICTIONAL ITAT IN THE CASE OF M/S.EMGEEN HOLDINGS PVT. LTD. VS. DCIT RANGE - 9(1), MUMBAI, IN ITA NO. 332/MUM/2010 A.Y.20 03 - 04 ORDER DATED 11TH MAY 2011 HAS HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) ON PRO - RATA BASIS; II) LN THE CASE OF M/S.EKTA HOUSING P.LTD. REPORTED IN ITA NO.3649/MUM/2009 ORDER DATED 20.05.2011 HAS HELD THAT PROPORTIONATE DEDUCTION C AN BE ALLOWED U/S.80IB(10) IN RESPECT OF THOSE FLATS, WHICH FULFILLS THE CONDITIONS OF SECTION 80 - IB. THIS DECISION HAS FOLLOWED THE DECISION OF CALCUTTA ITAT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD., WHICH IS ALSO ENDORSED BY THE CALCUTTA HIG H COURT. THEREFORE, IT IS NOW CLEAR THAT THE APPELLANT IS ELIGIBLE FOR PROPORTIONATE /PRO - RATA DEDUCTION OF 80 - IB(10); I II),FURTHER, IN THE CASE OF M/S.EKTA SANKALP DEVELOPERS REPORTED IN ITA NO.3276/MUM/2010 ORDER DATED 28.09.2012 BY FOLLOWING THE DECISIO N OF HON'BLE KOLKATA HIGH COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. DATED 5.1.2007 IN ITA NO.458 OF 2006 & ITS DECISION IN THE CASE OF M/S.EKTA HOUSING PVT. LTD.HELD TO ALLOW DEDUCTION TO THE ASSESSEE U/S.80IB(10) ON PRO - RATA BASIS FOR TH E FLATS HAVING BUILT UP AREA LESS THAN 1000 SQ. FT. 7 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES IV) IN THE CASE OF ACIT CENTRAL CIRCLE - 2, THANE VS. SHRI. HEMENDRA P. BOSMIYA IN ITA NOS. 2154 TO 2157/MUM/2010 A.YS. 2003 - 04 TO 2006 - 07, ITAT BENCH 'H' , MUMBAI ORDER DATED 3RD JUNE, 2011 HAS HELD THAT THE PROPORTIONATE DEDUCTION IS ALLOWABLE BY PLACING RELIANCE OF THE DECISION OF 'J' BENCH OF THE TRIBUNAL IN ITA NO. 3649/MUM/2009 DATED 20.5.2011 HELD AS FOLLOWS: ' III)THE NAGPUR BENCH OF THIS TRIBUNAL IN AIR DEVELOPERS (SUPRA), HELD AS FOLLOWS: - THER EFORE, A. 0. IS DIRECTED TO DETERMINE THE BUILT - UP AREA OF THE RESIDENTIAL UNITS BY APPLYING THE DEVELOPMENT CONTROL REGULATION, 2000, AND TO ALLOW PROPORTIONATE DEDUCTION UNDER SECTION 801410) IF HE FINDS THAT THE BUILT - UP AREA OF SOME OF THE RESIDENTIAL UNITS EXCEEDS 1,500 SQ.FT.' IV) BANGALORE BENCH OF THIS TRIBUNAL IN DCIT V/S BRIGADE ENTERPRISES PVT. LTD., HAS HELD AS UNDER: - ' THEREFORE, IF A PARTICULAR UNIT SATISFIES THE CONDITION OF SECTION 80IB, THE ASSESSEE IS ENTITLED FOR DEDUCTION AND IT SHOULD BE DENIED IN RESPECT OF THOSE UNITS ONLY WHICH DO NOT SATISFY THE CONDITIONS - AGAIN, THE ACCOUNTING PRINCIPLES WOULD ALSO MANDATE RECOGNITION OF PROFITS FROM EACH UNIT SEPARATELY.' V) MUMBAI 'G' BENCH OF THIS TRIBUNAL IN SHETH DEVELOPERS PVT. LTD. (SUPR A), HAS HELD AS FOLLOWS: - 8 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES ' AS REGARDS THE A PROJECT ASSESSEE IS ELIGIBLE FOR RELIEF ON PRORATA BASIS IN RESPECT OF THE FLATS WHICH DID NOT HAVE A BUILT - UP AREA EXCEEDING 1,000 SQ.FT. - QUANTUM OF DEDUCTION IN RESPECT OF THE FLATS WHICH HAVE BUILT - UP AREA LESS THAN 1,000 SQ.FT., HAS TO BE WORKED OUT ON PRO - RATA BASIS - A.O. ACCORDINGLY DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE AND ALLOW THE DEDUCTION ON PRO - RATA BASIS IN RESPECT OF FLATS IN A PROJECT.' V) KOLKATA 'C' BENCH OF THIS TRIBUNAL IN BENGAL AMB UJA HOUSING DEVELOPMENT LTD. V/S DCIT, ITA NO.1595/KOL./2005, VIDE ORDER DATED 24TH MARCH 2006, HELD AS UNDER: - 'IT IS APPARENT FROM THE PERUSAL OF SECTION 8018(10) THAT THIS SECTION HAS BEEN ENACTED TO SUCH CONCLUSION, WE ALSO FIND SUPPORT FROM THE ORDER OF THE HON`BLE SUPREME COURT IN CASE OF BAJAJ TEMPO, LTD. (SUPRA) WHEREIN IT WAS HELD THAT PROVISIONS SHOULD BE INTERPRETED L IBERALLY AND SINCE IN THE PRESENT CASE ALSO, THE ASSESSEE BY CLAIMING PRO - RATA INCOME ON QUALIFYING UNITS HAS COMPLIED WITH CLAIM OF THE ASSESSEE WAS RIGHTLY ALLOWED BY THE LEARNED CIT(A) B Y REVERSING THE ORDER OF THE A.O .' V) BANGALORE 'A' BENCH OF THIS TRIBUNAL IN SJR BUILDERS (SUPRA), HELD THAT 'MERELY BECAUSE SOME FLATS ARE LARGER THAN 1,500 SQ.FT. THE ASSESSEE WILL NOT LOSE 9 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES THE BENEFIT IN ITS ENTIRETY BUT ONLY WITH REFERENCE TO THE FLATS WHICH HAS MORE THAN PRESCRIBED BUILT UP AREA, THE ASSESSEE WILL LOSE THE BENEFIT'. VII) THUS. VIII) WE NOW EXAMINE THE APPLICABILITY OF THE DECISION OF THE HONIBLE BOMBAY HIGH COURT IN BRA HMA ASSOCIATES (SUPRA) TO THE FACTS OF THIS CASE. ON A CAREFUL READING OF THIS JUDGMENT, WE FIND THAT NOWHERE IT IS STATED THAT PROPORTIONATE DEDUCTION SHOULD NOT BE ALLOWED, IN CASE CERTAIN RESIDENTIAL UNITS HAD BUILT UP AREA IN EXCESS OF PRESCRIBED LIMIT OF 1,000 SQ.FT. IN FACT, THIS ISSUE WAS NOT BEFORE THE HON'BLE JURISDICTIONAL HIGH COUR T. THE QUESTIONS BEFORE THE HONB LE JURISDICTIONAL HIGH COURT WERE DIFFERENT AND, HENCE THE JUDGMENT CAN NOT BE SAID TO BE ON THIS ISSUE.. RESPECTFULLY FOLLOWING THE VARIOUS JURISDICTIONAL ITAT'S ORDER AND ALSO ON SIMILAR ISSUE, IN APPELLANT'S OWN CASE FOR A.Y.2012 - 13, IN APPEAL NUMBER:19 - THN/15 - 16 A.Y.2012 - 13, ORDER DATED 10.10.2016, THE CLAIM OF DEDUCTION HAS BEEN ALLOWED ON PRO - RATA BASIS. DURING THE YEAR UNDER APP EAL, THE APPELLANT HAS SOLD TWO FLATS AND THE APPELLANT HAS WORKED THE PROPORTIONATE DISALLOWANCE/ALLOWANCE AS BELOW: - NET PROFIT AS PER AUDITED PROFIT & LOSS ACCOUNT 96,53,252 SALES AS PER AUDITED PROFIT & LOSS ACCOUNT 3,30,57,632 NET PROFIT RATIO (I.E. NET PROFIT /SALES) 29.20 SALES VALUE OF FLAT NO. 603 FLORANTINA 30,67,861 FLAT NO.604 FLORANTINA 30,67,861 61,35,722 10 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES PROPORTIONATE NET PROFIT ON 61,35,722 29.20% 17,91,631 IN VIEW OF THE ABOVE, THE PROPORTIONATE DISALLOWANCE ON THE TWO FLATS MAY BE CALCULATED ON PRO - RATA BASIS AS PER LAW. THEREFORE, THE AO IS DIRECTED TO DISALLOW THE CLAIM OF DEDUCTION ON PRO RATA BASIS OF THE TWO FLATS AND ALLOW THE CLAIM OF DEDUCTION ON THE BALANCE AMOUNT. ACCORDINGLY THE APPEAL OF THE APPELLANT ON THIS GROUND I S PARTLY ALLOWED. 7. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES, WE FIND THAT LD. CIT(A) HAD DECIDED THIS GROUND IN FAVOUR OF ASSESSEE BY RELYING UPON THE VARIOUS JUDGMENTS OF JURISDICTIONAL ITAT MENTIONED IN ITS ORDER AND ALSO THE ORDERS IN ASSESSEES OWN CASE FOR AY 2012 - 13 IN APPEAL NO. 19/THN/2015 - 16, WHEREIN THE CLAIM OF DEDUCTION HAD BEEN ALLOWED ON PRO - RATA BASIS. EVEN DURING THE YEAR UNDER APPEAL, THE ASSESSEE HAD SOLD TWO FLATS AND HAD WORKED THE PROPORTIONATE DISALLOWANCE. HENCE, LD. CIT(A) HAD RIGHTLY DIRECTED THE AO TO DISALLOW THE CLAIM OF DEDUCTION ON PRO - RATA BASIS OF THE TWO FLATS AND ALLOW THE CLAIM OF DEDUCTI ON ON THE BALANCE AMOUNT. 11 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES 8 . EVEN BEFORE US, N O NEW FACTS O R CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIA TE FROM THE FINDINGS SO RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED . 9 . IN THE NET RE SULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED . ITA NO. 4149/MUM/2017 FOR AY 2014 - 15. 1 0. NOW WE TAKE UP REVENUES APPEAL FILED IN ITA NO. 4149/MUM/2017 FOR AY 2014 - 15 . SINCE WE HAVE ALREADY DECIDED THE MAIN APPEAL FILED BY THE REVENUE IN ITA NO. 4148/MUM/17 FOR AY 20 13 - 14 ON MERITS. THEREFORE , FOLLOWING OUR OWN DECISION IN ITA NO. 4148 /MUM/17 , WE APPLY THE SAME FINDINGS IN THE PRESENT APPEAL IN ORDER TO MAINTAIN JUDICI AL CONSISTENCY 12 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES WHICH IS APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. T HEREFORE IN VIEW OF OUR DECISION IN THE REVENUES APPEAL, WE ORDERED ACCORDINGLY. NOW WE TAKE UP C.O. NO. 292 & 293 /MUM/2018 FILED BY ASSESSEE. 11 . SINCE WE HAVE ALREADY DE CIDED THE APPEAL FILED BY REVENUE IN ITA NO. 4148 & 4149 /MUM/2017 ON MERITS AND UPHELD THE ORDER OF LD. CIT(A) , T HEREFORE IN VIEW OF OUR DECISION OF UPHOLDING OF ORDER OF LD. CIT(A), THE PRESENT C.OS. FILED BY TH E ASSESSEE STANDS DISMISSED. 12 . IN THE NET RESULT, ALL THE APPEAL S FILED BY THE REVENUE AND ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEB , 2019. SD/ - SD/ - ( SHAMIM YAHYA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 12 . 02 .201 9 SR.PS . DHANANJAY 13 I.T.A. NO. 4148 & 4149 /MUM/201 7 & CO NOS. 292 & 293/MUM/2018 RELIANCE ENTERPRISES / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI