ITO, Ward-8(1), Hyderabad V. M/s Prashant sai Builders, Hyderabad

ITA 416/HYD/2014

• Counselvise Citation: 41622514 RSA 2014
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Section: 143(3); 80IB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 416 & 417/HYD/2014 ASSESSMENT YEAR : 2006-07 & 2009-10 INCOME TAX OFFICER, WARD 8(1), HYDERABAD. M/S PRASHANT SAI BUILDERS, HYDERABAD. PAN AAHFP6577A (APPELLANT) (RESPONDENT) REVENUE BY SHRI KIRAN KATTA ASSESSEE BY SHRI K.C. DEVDAS DATE OF HEARING 19-06-2014 DATE OF PRONOUNCEMENT 30-06-2014 O R D E R PER SAKTIJIT DEY, J.M.: BOTH THESE APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST SEPARATE ORDERS, BOTH, DATED 04/12/2013 OF CIT(A) , VIJAYAWADA FOR THE ASSESSMENT YEARS 2006-07 & 2009-10. SINCE ISSUE IS IDENTICAL IN BOTH THE APPEALS, THEY WERE CLUBBED AND HEARD TOGET HER, THEREFORE A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. AS GROUNDS RAISED BY THE REVENUE IN BOTH THE APP EALS ARE COMMON, WE REFER TO THE GROUNDS AND FACTS FROM AY 2 006-07, TO DISPOSE OF THESE APPEALS. THE EFFECTIVE GROUNDS ARE AS FOLLOWS: 2. WHETHER THE CIT(A) IS CORRECT IN HOLDING THAT TH E ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(1) DESPITE THE F ACT THAT PROJECT WAS NOT COMPLETED BY THE STIPULATED TIME I.E, 31/03 /2008. 3. THE HONBLE CIT(A) ERRED IN LAW IN GRANTING RELI EF TO THE ASSESSEE BASING ON THE CERTIFICATE ISSUED BY THE ZO NAL 2 ITA NO. 416 & 417H/14 M/S PRASHANT SAI BUILDERS COMMISSIONER OF GHMC, WHICH IS AGAINST THE BASIS ON THE INFORMATION FURNISHED BY THE ASSESSEE. 3. BRIEFLY THE FACTS OF THE CASE ARE, ASSESSEE A FI RM FILED ITS RETURN OF INCOME FOR THE AY 2006-07 ON 31/10/2006 ADMITTIN G AN INCOME OF RS. 3,94,440/-. IN THE RETURN OF INCOME, ASSESSEE C LAIMED DEDUCTION U/S 80IB OF RS. 90,37,419/- ASSESSMENT IN CASE OF T HE ASSESSEE ORIGINALLY WAS COMPLETED U/S 143(3) ON 02/07/2007 ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB(10). SU BSEQUENTLY, AS NOTED BY THE AO, HE NOTICED THAT ASSESSEE IS IN THE ACTIVITY OF CONSTRUCTION AND SALE OF FLATS AND STARTED A VENTUR E BY NAME BHANU TOWNSHIP AFTER OBTAINING THE MUNICIPAL PERMISSION V IDE APPROVAL ORDER DATED 04/11/2003. FURTHER, HE NOTED THAT THE ASSESSEE FIRM SHOULD HAVE COMPLETED THE PROJECT WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PERMISSION WAS TAKE N I.E. ON OR BEFORE 31/03/2008 FOR ELIGIBLE TO CLAIM DEDUCTION U/S 80IB . THE AO RELYING ON THE OBSERVATIONS MADE IN THE ASSESSMENT YEAR 2008-0 9, HELD THAT SINCE THE ASSESSEE HAS NOT COMPLETED THE PROJECT WI THIN THE STIPULATED PERIOD OF FOUR YEARS I.E., 31/03/2008, T HE DEDUCTION CLAIMED U/S 80IB(10) OF THE ACT OF RS. 90,37,419/- CANNOT B E ALLOWED. ACCORDINGLY, AO INITIATED ACTION U/S 147 OF THE ACT AND ULTIMATELY PASSED AN ASSESSMENT ORDER U/S 143(3) READ WITH SEC TION 147 WITHDRAWING DEDUCTION CLAIMED U/S 80IB(10) OF RS. 9 0,37,419/-. 4. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE AR OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE COMPLIED WITH ALL THE CONDITIONS LAID DOWN U/S 80IB(10) OF THE ACT AND THEREFORE, ASSESSEE WAS ELIGIBLE FOR DE DUCTION U/S 80IB(10) OF THE ACT. . THE OBJECTION OF THE AO FOR ALLOWING DEDUCTION U/S 80IB(10) WAS THAT THE PROJECT WAS NOT COMPLETED BY 31/03/2008. THE AR CONTENDED THAT THE AO REJECTED ALL THE DOCUM ENTARY EVIDENCE PRODUCED BY THE ASSESSEE AND ARRIVED AT A CONCLUSIO N BASING ON 3 ITA NO. 416 & 417H/14 M/S PRASHANT SAI BUILDERS CERTAIN PROBABILITIES AND PRESUMPTIONS WHICH CANNOT BE A GROUND FOR REJECTION OF A GENUINE CLAIM OF THE ASSESSEE. RELY ING ON VARIOUS DECISIONS OF THE ITAT/HIGH COURTS/SUPREME COURT, TH E LEARNED AR ARGUED THAT BENEFICIAL PROVISION APPEARING IN THE S TATUTE SHOULD BE INTERPRETED IN SUCH A WAY THAT THE SAME WOULD BE BE NEFICIAL TO THE ASSESSEE AND HELP IN THE ADVANCEMENT OF THE INTENTI ON OF LEGISLATION. 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FOLLOWING THE DECISION OF HIS PREDECESSOR IN AS SESSEES OWN CASE IN AY 2008-09, DIRECTED THE AO TO ALLOW THE CLAIM O F DEDUCTION U/S 80IB(10) OF THE ACT. 7. AGGRIEVED AGAINST THE AFORESAID ORDER OF THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE RECORD. AT THE OUTSET, LEARNED AR SUBMITTED BE FORE US THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE TH E COORDINATE BENCH OF ITAT, HYDERABAD IN ASSESSEES OWN CASE FOR AYS 2 007-08 AND 2008-09 IN ITA NOS. 696 & 697/HYD/2013 AND THE ITAT VIDE ORDER DATED 22/01/2014, ALLOWED CLAIM OF DEDUCTION U/S 80 IB(10), A COPY OF WHICH IS PLACED ON RECORD. THIS FACT HAS NOT BEEN C ONTROVERTED BY LEARNED DR. ON A PERUSAL OF THE AFORESAID ORDER OF THE COORDINATE BENCH IT IS TO BE SEEN, DEPARTMENTS APPEAL AGAINST ORDER OF CIT(A) ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) WAS DISMISSED WITH THE FOLLOWING OBSERVATIONS: 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE HOUSING PROJECT PLAN WAS APPROVED BY THE CONCERNED AUTHORITY ON 10.03.2004 AND DUE DATE FOR COMMENCEME NT OF PROJECT WAS 31.03.2008. SINCE THIS IS A CRUCIAL DATE, THE PRE-A MENDED SECTION 80IB OF THE ACT AS STOOD AT THE TIME OF GETTING APPROVAL FR OM THE LOCAL AUTHORITY IS APPLICABLE. AS PER PROVISIONS OF SECTION 80IB(10) I NCOME-TAX ACT, 1961 AN UNDERTAKING WHICH DEVELOPS AND BUILDS HOUSING PR OJECTS APPROVED BEFORE 31.3.2007 BY A LOCAL AUTHORITY IS ELIGIBLE F OR DEDUCTION U/S. 80IB(10) OF THE ACT SUBJECT TO THE FOLLOWING CONDIT IONS: 4 ITA NO. 416 & 417H/14 M/S PRASHANT SAI BUILDERS 'I) IN A CASE WHERE THE HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY BEFORE 01-04-2004, THE CONSTRUCTION SHOULD BE COMPLETED ON OR BEFORE 31-03-2008. IN A CASE WHERE THE APPROVAL FROM LOCAL AUTHORITY IS OBTAINED ON OR AFTER 01-04- 2004, THE CONSTRUCTION SHOULD BE COMPLETED WITHIN 4 YEARS FRO M THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. II) THE HOUSING PROJECT IS CONSTRUCTED ON A PLOT OF LAND WHICH HAS A MINIMUM AREA OF 1 ACRE. III) THE RESIDENTIAL UNITS CONSTRUCTED IN THE HOUSI NG PROJECT HAVE A MAXIMUM BUILT UP AREA OF 1500 SQ. FT. WHERE SUCH U NITS ARE SITUATED IN PLACES OTHER THAN DELHI OR MUMBAI. IV) THE BUILT-UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECTS DOE S NOT EXCEED 5% OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PR OJECT OR 2000 SQ. FT., WHICHEVER IS LESS.' 18. IN THE PRESENT CASE, THE BUILDING PLAN APPROVAL WAS OBTAINED ON 10.3.2004 AND THERE IS NO DISPUTE ON THIS ISSUE. BE ING SO, THE PROVISIONS AS STOOD DURING THE A.Y. 2004-05 ARE APPLICABLE WHI CH READ AS FOLLOWS: '80IB(10): THE AMOUNT OF PROFITS IN CASE OF AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PREVIOUS YEAR RE LEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE; AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSA ND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE.' 19. AS IS EVIDENT FROM THE SUBSTITUTION OF SECTION 80IB(10)(A) OF THE ACT, PRIOR TO THE AMENDMENT, THERE WAS NO SUCH REQUIREME NT AS REGARDS FURNISHING OF COMPLETION CERTIFICATE AND THE DEDUCT ION PROVISION POINTED OUT TO THE GRANT OF 100% DEDUCTION ON THE PROFITS D ERIVED FROM A HOUSING PROJECT, IF THE UNDERTAKING HAD COMMENCED DEVELOPME NT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1S T OCTOBER, 1998. THUS, TILL 2005, THERE WAS NO CLAUSE DEALING WITH COMPLET ION, IN WHICH EVENT, 5 ITA NO. 416 & 417H/14 M/S PRASHANT SAI BUILDERS ONE CANNOT READ INTO THE PROVISION AS A CONDITION, WHICH IS NOT SPECIFICALLY PROVIDED FOR THEREIN. 20. AS FAR AS THE PRESENT CASE IS CONCERNED, THOUGH THE ASSESSEE'S CASE IS RELATED TO A.YS. 2007-08 AND 2008-09, THE PROJEC T WAS GOT APPROVED BY THE CONCERNED LOCAL AUTHORITY BEFORE 1.4.2004. T HE PROVISIONS OF SECTION 80IB AS STOOD PRIOR TO THE AMENDMENT ARE AP PLICABLE TO THE ASSESSEE'S CASE. AS THE SUBSTITUTION OF EXPLANATIO N TO CLAUSE (A) TO SUBSECTION (10) OF SECTION 80IB OF THE INCOME-TAX A CT, 1961 WAS BROUGHT IN UNDER FINANCE (NO. 2) ACT OF 2004, EFFECTIVE FRO M 1.4.2005. THUS, IN THE ABSENCE OF ANY SUCH REQUIREMENT READ INTO THE S ECTION, WE FIND IT DIFFICULT TO ACCEPT THE OBSERVATION OF THE AO THAT THE CLAIM FOR DEDUCTION WAS REJECTED ON THE GROUND THAT THE ASSESSEE HAD NO T FURNISHED THE COMPLETION CERTIFICATE. BEING SO, IN THE ABSENCE OF ANY REQUIREMENT U/S. 80IB(10)(A) OF THE ACT AND GOING BY THE PROVISIONS AS APPLICABLE TO THE RELEVANT ASSESSMENT YEAR, IT IS DIFFICULT TO ACCEPT THE CONTENTION OF THE DEPARTMENT THAT THE CLAIM OF DEDUCTION HAS TO BE AL LOWED TO THE ASSESSEE ONLY ON PRODUCTION OF COMPLETION CERTIFICA TE. 21. FURTHER, OUR VIEW IS SUPPORTED BY JUDGEMENT OF MADRAS HIGH COURT IN THE CASE OF CIT VS. JAIN HOUSING & CONSTRUCTION LTD ., REPORTED IN 214 TAXMAN 178, WHEREIN THEIR LORDSHIPS HELD AS UNDER: '9. AS IS EVIDENT FROM THE SUBSTITUTION OF SECTION 80IB(10) (1) OF THE ACT, PRIOR TO THE AMENDMENT, THERE WAS NO SUCH REQUIREMENT AS REGARDS FURNISHING OF COMPLETION CERTIFICATE AND THE DEDUCTION PROVISION POINTED OUT TO THE GRANT OF 100% DEDUCTIO N ON THE PROFITS DERIVED FROM A HOUSING PROJECT, IF THE UNDERTAKING HAD COMMENCED DEVELOPMENT AND CONSTRUCTION OF THE HOUSI NG PROJECT ON OR AFTER 1 ST OCTOBER, 1998. THUS, TILL 2005, THERE WAS NO CLAUS E DEALING WITH COMPLETION, IN WHICH EVENT, ONE CANNOT READ INTO THE PROVISION AS A CONDITION, WHICH IS NOT SPECIFICALLY PROVIDED FOR THEREIN. 10. AS FAR AS THE PRESENT CASE IS CONCERNED, IT REL ATES TO THE ASSESSMENT YEAR 2004-05. THE SUBSTITUTION OF EXPLAN ATION TO CLAUSE (A) TO SUB-SECTION (10) OF SECTION 80IB OF T HE INCOME TAX ACT WAS BROUGHT IN UNDER FINANCE NO.(2) ACT OF 2004 , EFFECTIVE FROM 01.04.2005. THUS, IN THE ABSENCE OF ANY SUCH R EQUIREMENT READ INTO THE SECTION, WE FIND IT DIFFICULT TO ACCE PT THE CASE OF THE REVENUE THAT THE CLAIM FOR DEDUCTION HAS TO BE REJE CTED ON THE GROUND THAT THE ASSESSEE HAD NOT FURNISHED THE COMP LETION CERTIFICATE. LEAVING THAT ASIDE, AS IS EVIDENT FROM THE READING OF THE COMMISSIONER'S ORDER, IN ANY EVENT, THE ASSESSE E HAD PRODUCED THE COMPLETION CERTIFICATE IN RESPECT OF T HE PROJECTS JAINS SAGARIKA, MRC NAGAR, CHENNAI AND JAINS SWARNAKAMAL, VADAPALANI, CHENNAI AND THE PROJECTS AT VELACHERRY, CHITLAPAKKAM AND VIRUGAMBAKKAM. AS FAR AS THE PROJE CTS AT 6 ITA NO. 416 & 417H/14 M/S PRASHANT SAI BUILDERS MANAPAKKAM AND PALLAVARAM ARE CONCERNED, IF THE ASS ESSEE HAD SUBMITTED CERTIFICATES FROM SEWERAGE AND ELECTRICIT Y BOARD, WHICH ACCORDING TO THE COMMISSIONER WOULD NOT SATISFY THE REQUIREMENT OF THE RULES, AS ALREADY POINTED OUT, IN THE ABSENC E OF ANY REQUIREMENT UNDER SECTION 80IB(10)(A) OF THE INCOME TAX ACT AND GOING BY THE PROVISION, AS IT STOOD DURING RELEVANT ASSESSMENT YEAR, 2004-05, IT IS DIFFICULT TO ACCEPT THE CONTEN TION OF THE REVENUE THAT THE CLAIM FOR DEDUCTION RESTED ON THE ASSESSEE'S PRODUCTION OF COMPLETION CERTIFICATES.' 22. IN VIEW OF THE ABOVE DISCUSSION, THERE IS NO IN FIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME IS TO BE CONFIRMED. 23. FURTHER THERE IS A CONTROVERSY REGARDING ISSUE OF COMPLETION CERTIFICATE BY THE ZONAL COMMISSIONER, VIDE HIS LET TER DATED 26.2.2010. ADMITTEDLY, THERE WAS A CERTIFICATE ISSUED BY ZONAL COMMISSIONER, GHMC, WEST ZONE, SERILINGAMPALLY WHICH WAS DISCUSSE D BY THE CIT(A) IN PARA 6 OF HIS ORDER FOR A.Y. 2008- 09. CONTRARY TO THIS, THERE IS ONE MORE LETTER ISSUED BY THE DEPUTY COMMISSIONER, CIRC LE 12, WEST ZONE, SERILINGAMPALLY VIDE HIS LETTER DATED 22.3.2010. AC CORDING TO THIS LETTER, THERE WAS NO COMPLETION CERTIFICATE ISSUED BY THE A UTHORITIES CONCERNED. IN OUR OPINION, THE CONTROVERSY ON ISSUE OF COMPLET ION CERTIFICATE IS IRRELEVANT AT THIS POINT OF TIME IN VIEW OF THE JUD GEMENT OF MADRAS HIGH COURT IN THE CASE OF CIT VS. JAIN HOUSING & CONSTRU CTION LTD. (CITED SUPRA), THOUGH THE CERTIFICATE ISSUED BY THE ZONAL COMMISSIONER IS TO BE CONSIDERED AS PROPER. 24. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 9. IN THE APPEAL BEFORE US, THE AO HAS WITHDRAWN DE DUCTION U/S 80IB(10) FOLLOWING THE ASSESSMENT ORDER PASSED FOR AY 2008-09. HOWEVER, SINCE THE COORDINATE BENCH HAS UPHELD ASSE SSEES CLAIM OF DEDUCTION U/S 80IB(10) FOR AY 2007-08 AND 2008-09, WE DO NOT FIND ANY REASON TO DENY SUCH CLAIM OF THE ASSESSEE FOR T HE IMPUGNED ASSESSMENT YEAR. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH REFERRED TO ABOVE, WE UPHOLD THE O RDER OF THE LEARNED CIT(A) BY DISMISSING THE GROUND RAISED BY D EPARTMENT. 10. SINCE THE ISSUE IS SIMILAR IN AY 2009-10, FOLLO WING THE DECISION IN AY 2006-07 (SUPRA), WE DISMISS THE APPEAL OF THE REVENUE IN THIS YEAR ALSO. 7 ITA NO. 416 & 417H/14 M/S PRASHANT SAI BUILDERS 11. IN THE RESULT, BOTH THE APPEALS UNDER CONSIDERA TION ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30/06/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 30 TH JUNE, 2014 KV COPY TO:- 1) ITO, WARD 8(1), D-BLOCK, 8THFLOOR, IT TOWERS, AC GUARDS, HYDERABAD. 2) M/S PRASHANT SAI BUILDERS, 3 RD FLOOR, WHISTLING WOODS, BHANU TOWNSHIP.HAFEEZPET, HYDERABAD. 3) CIT(A), VIJAYAWADA. 4) THE CIT-II, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.