M/s Gee City Builders (P) Ltd., Chandigarh V. DCIT, Ludhiana

ITA 422/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9954 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Assessee Lawyers: N K GARG; VAIBHAV GARG
• Keywords: Business income
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NOS. 422 & 423/CHD/2016 A.Y. : 2008-09 & 2009-10 M/S GEE CITY BUILDERS P.LTD. VS THE DCIT, # 1664, GROUND FLOOR, CENTRAL CIRCLE-I, SECTOR 43B, LUDHIANA. CHANDIGARH. PAN: AACCG0887A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.GARG & SHRI VAIBHAV GARG RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 19.05.2016 DATE OF PRONOUNCEMENT : 01.06.2016 O R D E R BOTH THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST COMMON ORDER OF LD. CIT(APPEALS)-5, LUDHIANA DATED 10.02.2016 FOR ASSESSMENT YEAR 2008-09 AND 2009-10 ON THE FOLLOWING COMMON GROUNDS OF APPEAL : ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AN D IN THE LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE LEVY OF MINIMU M ALTERNATIVE TAX (MAT) U/S 115JB OF THE INCOME TAX A CT WHEREAS AS PER SUB SECTION (6) OF SECTION 115JB OF THE INCOME TAX ACT, THE PROVISIONS OF MINIMUM ALTERNATI VE TAX ARE NOT APPLICABLE TO THE ASSESSEE APPELLANT. 2 2. THE ISSUE BEFORE LD. CIT(APPEALS) PERTAIN TO LEV Y OF TAX UNDER SECTION 115JB (I.E. TAX UNDER MAT). THE ASSESSING OFFICER HAS ASSESSED THE TOTAL INCOME FOR ASSESSMENT YEAR 2008-09 AT RS. 12,74,720/- WITH TAX UNDER MAT AMOUNTING TO RS. 96,28,336/- FOR ASSESSME NT YEAR 2009-10, THE INCOME HAS BEEN ASSESSED AT RS. 9,36,310/- WITH TAX UNDER MAT AMOUNTING TO RS. 1,32,01,988/-. THE ASSESSEE WAS AGGRIEVED AGAINST LEVY OF TAX UNDER SECTION 115JB OF THE INCOME TAX ACT IN BOTH ASSESSMENT YEARS UNDER APPEAL. 3. THE ASSESSEE FILED WRITTEN SUBMISSIONS BEFORE LD . CIT(APPEALS). THE SAME IS REPRODUCED IN THE IMPUGN ED ORDER, WHICH READ AS UNDER : THE BRIEF FACTS ARE THAT THE ASSESSEE COMPANY IS A DEVELOPER OF HOUSING PROJECT UNITS. DURING THE YEAR ASSESSEE COMPANY WAS HAVING INCOME FROM THE SALE OF ITS FLATS. THE INCOME OF WHICH EXEMPTED UNDER SECTION 80IB(10) OF THE INCOME TAX ACT AS EACH UNIT IS HAVI NG AREA LESS THAN 1500 SQ. FEETS. THE ASSESSEE COMPANY CLAI MED EXEMPTION AND FILED RETURN DECLARING NIL INCOME AND FURTHER CLAIMED THAT THE PROVISIONS OF SECTION 115J B ARE NOT APPLICABLE TO THE DEVELOPER COMPANY BUT THE CLA IM OF THE ASSESSEE COMPANY WAS DISALLOWED THE AO. HENCE T HIS APPEAL. THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE COMPANY CLAIMED THAT THE PROVISIONS OF SECTION 115J B ARE NOT APPLICABLE TO THE ASSESSEE COMPANY AS THE INCOM E OF THE ASSESSEE COMPANY IS FROM THE BUSINESS CARRIED A S A DEVELOPER. THE CLAIM OF THE ASSESSEE COMPANY IS IN- ACCORDANCE WITH THE PROVISIONS OF SECTION 115JB(6) OF THE ACT RE-PRODUCED HERE AS UNDER:- 3 SECTION 115JB(6): 'THE PROVISIONS OF THIS SECTION S HALL NOT APPLY TO THE INCOME ACCRUED OR ARISING ON OR AFTER THE 1 ST DAY OF APRIL, 2005 FROM ANY BUSINESS CARRIED ON OR SERVICES RENDERED BY AN ENTREPRENEUR OR A DEVELOPER, IN A UN IT OR SPECIAL ECONOMIC ZONE, AS THE CASE MAY BE, ' THE PROVISIONS HAS BEEN BIFURCATED INTO THREE PARTS. EACH PART IS EXPLAINED AS UNDER : BUSINESS CARRIED ON, OR SERVICES RENDERED AN ENTREPRENEUR OR A DEVELOPER A UNIT OR SPECIAL ECONOMIC ZONE. IN ALL THE THREE PARTS A WORD OR HAS BEEN USED WHIC H SHOWS THAT THE PROVISIONS ARE APPLICABLE EVEN TO TH E ASSESSEE HAVING FULFILLED ONE PART OF THE ABOVE. TH EREFORE, AFTER REMOVING THE OTHER PART THE PROVISIONS IF REA D SHOULD BE AS UNDER :- SECTION 115JB(6): 'THE PROVISIONS OF THIS SECTION S HALL NOT APPLY TO THE INCOME ACCRUED OR ARISING ON OR AFTER THE 1 ST DAY OF APRIL, 2005 FROM ANY BUSINESS CARRIED ON, BY A DEVELOPER, IN A UNIT AS THE CASE MAY BE. ' ADMITTEDLY THE ASSESSEE COMPANY IS HAVING BUSINESS INCOME AS DEVELOPER IN A UNIT (DEVELOPMENT OF RESIDENTIAL UNIT). AS SUCH, AS PER PROVISIONS OF SECTION 115JB(6) OF TH E I.T. ACT. MAT IS NOT APPLICABLE TO THE CASE. FURTHER, IT IS A WELL SETTLED LAW THAT IF THERE IS SOME AMBIGUITY IN THE INTERPRETATION OF LAW THE AMBIGUIT Y OF INTERPRETATION BE RESOLVED IN FAVOUR OF THE ASSESSE E AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. PODAR CEMENT PVT. LTD. (1197)226 ITR 625, 648 (SC). THE H ON'BLE SUPREME COURT HAS HELD THAT IF THERE IS TWO POSSIBL E INTERPRETATION, IT IS WELL SETTLED THAT THE ONE FAV OURABLE TO THE ASSESSEE HAS TO BE PREFERRED. IN VIEW OF THE AB OVE, THE ASSESSING OFFICER IS NOT JUSTIFIED BY LEVYING A TAX TO THE ASSESSEE DEVELOPER COMPANY ON THE EXEMPTED INCOME U NDER SECTION 115JB OF THE INCOME TAX. 4 4. THE LD. CIT(APPEALS), CONSIDERING SUBMISSIONS OF THE ASSESSEE AND MATERIAL ON RECORD, DISMISSED BOTH THE APPEALS OF THE ASSESSEE. THE FINDINGS OF LD. CIT(A PPEALS) IN PARA 5 OF THE IMPUGNED ORDER READ AS UNDER : 5. THE FACTS OF THE CASE, THE CHARGING OF MAT U/S 115BJ BY THE A.O. AND THE SUBMISSIONS/ARGUMENTS OF THE AR DURING THE APPELLATE PROCEEDINGS HAVE BEEN CONSIDERED. IT IS TO NOTE THAT THE PROVISIONS OF SU B SECTION (6) IN SECTION 115JB HAVE BEEN INSERTED BY THE SPEC IAL ECONOMIC ZONES ACT, 2005 W.E.F. 10.02.2006. UNDER T HAT ACT 'UNIT' MEANS A UNIT SET UP BY AN ENTREPRENEUR I N A SPECIAL ECONOMIC ZONE AND INCLUDES AN EXISTING UNIT , AN OFFSHORE BANKING UNIT AND A UNIT IN AN INTERNATIONA L FINANCIAL SERVICES CENTRE, WHETHER ESTABLISHED BEFO RE OR ESTABLISHED AFTER COMMENCEMENT OF THIS ACT. AND 'SP ECIAL ECONOMIC ZONE' MEANS EACH SPECIAL ECONOMIC ZONE NOTIFIED UNDER THE PROVISO TO SUB-SECTION (4) OF SE CTION 3 AND SUB-SECTION (1) OR SECTION 4 (INCLUDING FREE TR ADE AND WAREHOUSING ZONE) AND INCLUDES AN EXISTING SPEC IAL ECONOMIC ZONE, FURTHER, THE DEVELOPER HAS BEEN DEFI NED AS 'DEVELOPER'' MEANS A PERSON WHO, OR A STATE GOVERNMENT WHICH, HAS BEEN GRANTED BY THE CENTRAL GOVERNMENT A LETTER OF APPROVAL UNDER SUB-SECTION ( 10) OF SECTION 3 AND INCLUDES AN AUTHORITY AND A CO-DEVELO PER; AND ' MEANS A PERSON WHO HAS BEEN GRANTED A LETTER OF APPROVAL BY THE COMMISSIONER UNDER SUB-SECTION (9) OF SECTION 15. 5.1 IT IS SEEN THAT THE AR'S RELIANCE UPON THE EXCEPTION CARVED OUT U/S 115JB(6) IS MISPLACED AS IT IS QUITE APPARENT THAT THE EXCEPTION ARE IN RESPECT OF CONCERN ENTREP RENEUR OR DEVELOPER AS DEFINED UNDER THE SEZ ACT) SITUATED IN A UNIT OR SPECIAL ECONOMIC ZONE, (ALSO DEFINED UNDER THE S EZ ACT) AS THE CASE MAY BE. THE ASSESSEE IS NOT SITUATED IN A UNIT OR SPECIFIC ECONOMIC ZONE (WHICH ARE DEFINED UNDER SEZ ACT, 2005). THEREFORE, THE CASE OF THE ASSESS DOES NOT F ALL UNDER 5 U/S 115JB(6). THE INTERPRETATION GIVEN ON BEHALF OF THE ASSESSEE DEFIES THE LOGIC OF ENACTING THE AMENDED PROVISIONS OF SECTION 115JB. THE EXCEPTION CANNOT B E AS LARGE AS THE MAIN PROVISION SO SUCH SO TO NULLIFY T HE LEGISLATIVE INTENT OF IMPOSING TAX ON SPECIFIED COM PANIES U/S 115JB. IN THE CIRCUMSTANCES, THERE IS NO MERIT IN ARS CLAIM ON THE ISSUE. HENCE THE ACTION OF THE A.O. I N CHARGING THE MAT IN THIS CASE IS SUSTAINED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 5. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. THE LD. COUNSE L FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSE E ADMITTED THAT ASSESSEE IS A COMPANY HAVING BUSINESS INCOME AS DEVELOPER. THE LD. COUNSEL FOR THE ASSES SEE ALSO ADMITTED THAT ASSESSEE DOES NOT EXIST IN SPECI AL ECONOMIC ZONE AND NO BUSINESS HAVE BEEN CARRIED OUT IN ANY SPECIAL ECONOMIC ZONE. THE LD. COUNSEL FOR THE ASSESSEE ALSO ADMITTED THAT ASSESSEE BEING A COMPAN Y IS LIABLE TO PAY TAX UNDER THE PROVISIONS OF SECTION 115JB(MAT). THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT COMPUTATION OF DEDUCTION UNDER SECTI ON 80IB(10) OF THE ACT IS NOT IN DISPUTE AND COMPUTATI ON UNDER MAT PROVISIONS ARE ALSO NOT IN DISPUTE. THE LD. COUNSEL FOR THE ASSESSEE MERELY SUBMITTED THAT ASSE SSEE CARRIED ON THE BUSINESS IN A UNIT. THE LD. COUNS EL FOR THE ASSESSEE, HOWEVER, COULD NOT ESTABLISH FROM ANY EVIDENCE OR MATERIAL ON RECORD AS TO HOW THE ASSESS EE HAS CARRIED ON BUSINESS AS A DEVELOPER IN ANY UNIT. 6 6. THE LD. CIT(APPEALS) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND NOTED THAT PROVISIONS OF SUB-SECTI ON (6) OF SECTION 115JB HAVE BEEN INSERTED BY THE SPEC IAL ECONOMIC ZONES ACT, 2005 AND REPRODUCED THE DEFINIT ION OF UNIT FROM SAME ACT WHICH MEANS THE UNIT SET UP BY AN ENTREPRENEUR IN A SPECIAL ECONOMIC ZONE. NO OTH ER DEFINITION OF UNIT UNDER ANY CENTRAL ACT HAS BEEN PROVIDED BY THE LD. COUNSEL FOR THE ASSESSEE AND EV EN NO CASE LAW ON THIS ISSUE HAVE BEEN CITED. THE LD. CO UNSEL FOR THE ASSESSEE HAS GIVEN A DICTIONARY MEANING OF THE WORD UNIT AND SUBMITTED THAT THE WORD UNIT IS N OT RESTRICTED TO THE UNITS IN SPECIAL ECONOMIC ZONE AC T, 2005 BUT IS APPLICABLE TO UNITS AT ANY PLACE. THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE HAS NO M ERIT BECAUSE THESE ARE THE SPECIAL PROVISIONS PROVIDED F OR EXEMPTION TO THE BUILDERS ETC. WHO HAVE RAISED THE CONSTRUCTION OF UNITS IN SPECIAL ECONOMIC ZONE ONLY . SINCE THE ASSESSEE HAS NOT CARRIED ON ANY BUSINESS AS A DEVELOPER IN A UNIT ESTABLISHED IN SPECIAL ECONOMIC ZONE OR SPECIAL ECONOMIC ZONE, THEREFORE, PROVISION S OF SECTION 115JB(6) WILL NOT APPLY IN THE CASE OF THE ASSESSEE. THE LD. CIT(APPEALS) GAVE A SPECIFIC FIN DING OF FACT THAT THE ASSESSEE IS NOT SITUATED IN A UNIT OR SPECIAL ECONOMIC ZONE, THEREFORE, THE CASE OF THE ASSESSEE DOES NOT FALL UNDER SECTION 115JB(6) OF TH E INCOME TAX ACT. FINDING OF FACT RECORDED BY LD. CIT(APPEALS) HAS NOT BEEN REBUTTED THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. 7 7. IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL ON RECORD TO REBUT THE FINDING OF FACT RECORDED BY THE AUTHORITIES BELOW, I AM NOT INCLINED TO INTERFERE W ITH THE ORDER OF LD. CIT(APPEALS) IN REJECTING THE CLAIM OF THE ASSESSEE. THE APPEALS OF THE ASSESSEE HAVE NO MERI T, SAME ARE ACCORDINGLY, DISMISSED. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 1 ST JUNE, 2016. FIT FOR PUBLICATION (BHAVNESH SAINI) JUDICIAL MEMBER