DCIT CEN CIKR 2, MUMBAI V. PURVANKARA PROJECTS LTD, Bangalore

ITA 4348/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8316 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 31-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 26-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Assessee Lawyers: RA JEEV WAGLAY
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Additional evidence; Valuation report; Competent authority
• Section: 80IB; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , ! '#$% , & ' BEFORE S/SHRI DINESH KUMAR AGARW AL, AND N.K. BILLAIYA, AM ./I.T.A. NOS.4347 TO 4351/MUM/2010 ( ( ( ( ( / ASSESSMENT YEARS :2004-05 TO 2008-09 THE DCIT, CENTRAL CIRCLE-2, OLD CGO BLDG. ANNEXE, 9 TH FLOOR, M.K. ROAD, MUMBAI-400 020 / VS. M/S. PURAVANKARA PROJECTS LTD., 130/1 ULSOOR ROAD, BANGALORE-560 042 ) & ./ *+ ./PAN/GIR NO. : AAACP2550R ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI P.K. SHUKLA -.), 0 / / RESPONDENT BY : SHRI RAJEEV WAGLAY 0 1& / DATE OF HEARING : 05.11.2012 23( 0 1& / DATE OF PRONOUNCEMENT : 07.11.2012 4 / O R D E R PER N.K. BILLAIYA, AM: ALL THESE FIVE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE FIVE SEPARATE ORDERS OF LD. CIT(A)-36 MUMBAI AND INVOLVE COMMON ISSUES. THEREFORE, WE HEARD ALL THESE APPEALS TOGETHER AND DISPOSE OFF THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS RAISED 6 GROUNDS AND ONE ADDITIO NAL GROUND. THE SUM AND SUBSTANCE OF THE GRIEVANCE RAISED BY GROUND NO. (I) TO (V) IS THAT THE LD. CIT(A) OUGHT NOT HAVE ALLOWED THE CLAIM OF DEDU CTION U/S. 80IB(10) FOR ITA NOS. 4347 TO 4351/MUM/2010 2 THE PROJECT PURVA RIVIERA WHEN SEVERAL FLATS HAD A BUILT UP AREA EXCEEDING 1500 SQ.FT. 3. THE FACTS GIVING RISE TO THE DISPUTE SHOW THAT A SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CONDUCTED IN THE CAS E OF THE ASSESSEE COMPANY, ITS GROUP CONCERNS, DIRECTORS AND RELATED PERSONS ON 15.11.2007. THE ASSESSEE COMPANY IS A BUILDER AND DEVELOPER. I T HAS DEVELOPED PROJECTS IN BANGALORE. THE ASSESSEE FOLLOWS PERCENTAGE COMP LETION METHOD OF ACCOUNTING. DURING THE COURSE OF THE ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDU CTION U/S. 80(IB)(10) OF THE ACT FOR ITS PROJECT PURVA RIVIERA. DURING THE COURSE OF INVESTIGATION, PHYSICAL INSPECTION BY THE GOVERNMENT APPROVED VALU ER, STATEMENT OF THE SITE ENGINEER AND STATEMENT OF THE RESIDENT OF THE PROJE CT PURVA RIVIERA , IT CAME TO THE NOTICE OF THE DEPARTMENT THAT THE ASSESSEE H AS CONSTRUCTED HOUSES WHICH EXCEEDED THE PRESCRIBED LIMIT OF 1500 SQ.FT O F BUILT UP AREA. THE AO CONSIDERED THE MATERIALS GATHERED AND ANALYZED THEM BEFORE CONCLUDING THAT THE ASSESSEE IS NOT ENTITLED FOR THE CLAIM OF DEDUC TION U/S. 80(IB)(10) AS IT HAS FAILED TO COMPLY WITH THE CONDITION PRECEDENT I.E. THE BUILT UP AREA OF EACH UNIT SHOULD NOT EXCEED 1500 SQ.FT. THE AO BASED HI S FINDING ON THE FOLLOWING: 1. BROCHURE : THE SALE BROCHURE OF PURVA RIVIERA PROJECT CLEARLY SHOWS THAT THE ASSESSEE HAS CONSTRUCTED PENT HOUSES CONSISTING OF 4 BEDROOM UNITS WITH AN AREA OF 2513 SQ.FT. 2. STATEMENT OF THE DIRECTOR : THE DIRECTOR SHRI CHOUKSEY HAS HIMSELF OFFERED FOR TAXATION THE INELIGIBLE DEDUCTI ON U/S80IB[10] IN HIS STATEMENT U/S 132[4] OF THE ACT. 3. MEASUREMENT OF FLAT NO. J 907, PURVA RIVIERA BY GOV T. APPROVED VALUER: AS PER THE VALUATION REPORT DT. 7.12.2007, FLAT NO. J 907, IS A SINGLE UNIT OF 3 BHK FLAT AND ITS B UILT UP AREA COMES TO 1514.46 SQ.FT. 4. STATEMENT OF MD. MASROOR AHMAD, SITE ENGINEER, PURV A RIVIERA : THE STATEMENT OF MD. MASROOR AHMAD WHO IS THE SITE ITA NOS. 4347 TO 4351/MUM/2010 3 ENGINEER AT PROJECT PURVA RIVIERA REVEAL THAT TWO FLATS ON EACH FLOOR OF J&K BLOCKS ARE OF 1625 SQ.FT BUILT UP AREA . 5. STATEMENT OF SMT. SHRAVANI PANDIT RESIDENT OF FLAT NO. 205J BLOCK: THE STATEMENT OF SMT. SHRAVANI PANDIT RESIDENT OF F LAT NO. J 205 REVEAL THAT FLAT NO. 205 IS A THREE BED ROOM, T HREE TOILETS, THREE ENCLOSED BALCONIES, ONE UTILITY SPACE ALONGWITH KIT CHEN HAS SUPER BUILT UP AREA OF 1780 SQ.FT. THE STATEMENT ALSO RE VEALS THAT THE OCCUPANTS HAVE NOT MERGED OR CHANGED TWO FLATS AND SINCE ITS INCEPTION THIS FLAT NO. 205 HAD SUPER BUILT UP AREA OF 1780 SQ. FT. 6. CONSTRUCTION PLAN OF FLAT NO. 205 AND 206: THE CONSTRUCTION PLAN OF FLAT NO. 205 AND 206 SHOW THAT BOTH ARE A S INGLE UNIT ONLY AND IT HAS BEEN CONSTRUCTED AS SINGLE UNIT OF 3 BHK ONLY. THEREFORE, IT CANNOT BE SAID THAT RJ 205 & RJ 206 A RE TWO FLATS. 4. IN THE LIGHT OF THE ABOVE FINDINGS/OBSERVATIONS, THE AO CONCLUDED THAT THE ASSESSEE HAS VIOLATED THE CONDITION PRECEDENT F OR THE CLAIM OF DEDUCTION U/S. 80 IB(10) OF THE ACT. 6. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(AQ). IT WAS STATED BEFORE THE LD. CIT(A) THAT THERE IS NO VIOLA TION OF THE CONDITIONS LAID DOWN U/S. 80 IB(10) OF THE ACT. IT WAS CONTENDED BE FORE THE LD. CIT(A) THAT THE BROCHURE WAS PREPARED PRIOR TO THE PLAN SANCTIO NED AND APPROVED PLANS DO NOT HAVE ANY PENT HOUSE AND THEREFORE BROCHURE C ANNOT BE RELIED UPON. IT WAS FURTHER POINTED OUT THAT THE PHYSICAL MEASUREME NTS WERE NOT CORRECTLY TAKEN AND FURTHER THE SITE ENGINEER WAS NEWLY APPOI NTED AND HAD NO IDEA ABOUT THE PLANS AND CONSTRUCTION IN CERTAIN BLOCKS. IT WAS ALSO SUBMITTED THAT THE ASSESSEE WAS DENIED THE OPPORTUNITY TO CROSS EX AMINE THE SITE ENGINEER. SIMILARLY, THE ASSESSEE WAS NOT AFFORDED ANY OPPORT UNITY TO CROSS EXAMINE MRS. PANDIT REGARDING CONSTRUCTION PLAN FOR RJ 205 AND RJ 206. THE ASSESSEE STATED THAT THE FLATS WERE INDEPENDENTLY SOLD AND T HE ASSESSEE IS NOT A PARTY TO ANY ALTERNATION DONE AFTER THE POSSESSION WAS GI VEN. ITA NOS. 4347 TO 4351/MUM/2010 4 7. AFTER CONSIDERING THE FACTS IN TOTALITY AND THE SUBMISSIONS MADE BY THE ASSESSEE INCLUDING THE ASSESSMENT OF MUNICIPAL TAXE S OF THE FLATS, WHICH WAS AN ADDITIONAL EVIDENCE , THE LD. CIT(A) THUS HELD AS UNDER: IT CAN THEREFORE BE SUMMARIZED THAT THE APPELLANT HAD CONSTRUCTED FLATS WHICH WERE IN COMPLIANCE WITH THE PRE-REQUISITES OF THE SECTION 80 IB(10) AND HAD GIVEN POSSESSION IN TH AT MANNER HOWEVER, SUBSEQUENTLY, THE FLAT OWNERS CHANGED THE CONFIGURATION OF THE FLATS AND CONVERTED TWO FLATS INTO ONE FOR WHIC H THE APPELLANT CANNOT BE PENALIZED BY NOT ALLOWING THE DEDUCTION U NDER SECTION 80 IB (10). THE APPELLANT HAD RELIED ON THE FOLLOWING DECISIONS , WHICH WOULD ENTITLE THE APPELLANT TO GET DEDUCTION U/S. 80IE. (I) VANDANA PROPERTIES VS. ACIT, ITA NO.1253/MUM/2007 D ECIDED ON 29/04/2009 BY HONBLE ITAT, MUMBAI. (II) BRAHMA ASSOCIATES VS. JCIT, PUNE (122 TTJ 433) LAID DOWN BY SPECIAL BENCH OF PUNE TRIBUNAL. (III) ITO V/S. AIR DEVELOPERS, ITA NO.477/NAG/2007 DECIDE D BY HONBLE ITAT, NAGPUR. (IV) CIT V/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. ITA NO.1733/KOL/2005 DECIDED BY HON. ITAT, KOLKATTA. (V) ACIT V/S. SHETH DEVELOPERS PVT. LTD. (2009) 30 SOT 277 (MUM) DECIDED BY THE HONBLE ITAT MUMBAI BENCH AND (VI) BRIGADE ENTERPRISE LTD. VS. DCIT (2008) 110 TTJ (BA NG) 269. I FIND THAT THE DECISIONS IN THE CASE OF VANDANA PRO PERTIES VS. ACIT (SUPRA); ITO VS. AIR DEVELOPERS (SUPRA) ARE BRIGADE ENTERPRISES PRIVATE LIMITED VS. DCIT (SUPRA) COVER THE ARGUMENTS TAKEN BY THE APPELLANT TO BUTTRESS HIS GROUNDS OF APPEAL. I AGREE WITH THE AFORESAID DECISION AND HAVE CONSIDERED THEM IN REACHING THE CONCLUSION . THEREFORE, IN VIEW OF THE ABOVE, IT CANNOT BE STATE D THAT THE APPELLANT HAS VIOLATED THE AREA RESTRICTION AND THE DEDUCTION U/S. 80 IB (10) SHOULD BE DISALLOWED. HENCE, THE APPELLANT IS ALLO WED DEDUCTION U/S. 80 IB(10) AND THE GROUND OF THE APPELLANT IS ALLOWE D. 8. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY CON TENDED BEFORE US THAT THE ASSESSEE ITSELF HAS WITHDRAWN PROPORTIONAT ELY THE CLAIM OF DEDUCTION U/S. 80 IB AS PER THE STATEMENT OF THE DIRECTOR OF T HE ASSESSEE COMPANY SHRI NANI R. CHOKSEY. THE DR FURTHER POINTED OUT THAT T HE ASSESSEE HAS OFFERED ITA NOS. 4347 TO 4351/MUM/2010 5 THE CLAIM SO WITHDRAWN PROPORTIONATELY FOR TAXATION IN THE STATEMENT U/S. 134(4) OF THE ACT FOR WHICH THE AR DREW OUR ATTENTI ON TO QUESTION NO. 3 EXHIBITED AT PAGE 12 OF THE PAPER BOOK. IT IS THE SAY OF THE REVENUE THAT THE ASSESSEE HAS NOT HONOURED ITS STATEMENT AND AT THE SAME TIME HAS NOT WITHDRAWN OR RETRACTED FROM THE STATEMENT BY BRINGI NG ANY COGENT MATERIAL EVIDENCE ON RECORD FOR THE SAME . THE DR STRONGLY R ELIED UPON THE DECISION OF BRAHMA ASSOCIATES 383 ITR 289 [ BOMBAY ] 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THAT THERE IS NO VIOLATION OF ANY OF THE CONDITIONS PRESCRIBED U/S. 80IB(10) OF TH E ACT. THE COUNSEL POINTED OUT THAT THE STATEMENT OF SHRI N.R. CHOKSEY REFERRED TO BY LD. DR ITSELF SHOW THAT THE DIRECTOR HAS CATEGORICALLY STA TED THAT THE FLATS SOLD ARE WITHIN THE NORMS OF SEC. 80IB(10) EACH MEASURING L ESS THAN 1500 SQ. FT OF BUILT UP AREA, IT IS ONLY TO BUY PEACE OF MIND , TH E DIRECTOR OFFERED TO WITHDRAW THE PROPORTIONATE CLAIM U/S. 80IB(10) OF TH E ACT IN RESPECT OF PURVA RIVIERA PROJECT. THE COUNSEL FURTHER ARGUED THAT E VEN ASSUMING THAT CERTAIN FLATS VIOLATED THE BUILT UP AREA , EVEN THEN THE AS SESSEE IS ENTITLED FOR THE CLAIM OF DEDUCTION U/S. 80IB(10 IN RESPECT OF ALL T HOSE FLATS WHICH COMPLY WITH THE MANDATORY CONDITION OF THE SAID SECTION. TO SU BSTANTIATE ITS CLAIM, THE COUNSEL RELIED UPON VARIOUS JUDICIAL DECISIONS. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE AO HAS REJECTED THE CLAIM BASED ON 1) PHYSICAL VERIFICATION AND REPORT OF GOVT. APPROVED VALUER 2) STATEMENT OF THE DIRECTOR U/S 132[4] OF THE ACT. 3) STATEMENT OF SITE ENGINEER 4) STATEMENT OF ONE OF THE OCCUPANTS SMT. SMT. SHRAVAN I PANDIT WE ALSO FIND THAT LD. CIT(A) HAS BASED HIS FINDING ON THE LETTER ISSUED BY MUNICIPAL CORPORATION, BANGALORE , FIXING THE MU NICIPAL TAXES AS PER THE ITA NOS. 4347 TO 4351/MUM/2010 6 CERTIFICATE OF OCCUPANCY , WHICH APPEARS TO BE FI LED AT THE BEHEST OF THE CIT[A] , WHICH HAS ALSO BEEN CHALLENGED BY THE REVE NUE AS ADMISSION OF ADDITIONAL EVIDENCE , IN ITS ADDITIONAL GROUND OF APPEAL. THE AO BASED HIS FINDING ON THE STATEMENTS OF THE SITE ENGINEER AND ONE OF THE RESIDENT OF J BLOCK WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASS ESSEE TO CROSS EXAMINE THE WITNESSES THEREBY THE AO HAS VIOLATED THE PRINCIPLE S OF NATURAL JUSTICE. AT THE SAME TIME, THE LD. CIT(A) HAS CALLED FOR DETAILS OF MUNICIPAL TAXES WHICH MAY NOT BE TERMED AS ADDITIONAL EVIDENCE IN STRICT SE NSE YET THE CIT [A] HAS BASED HIS FINDING WITHOUT AFFORDING ANY OPPORTUNITY TO THE AO TO EXAMINE THE SAME. AT THE SAME TIME THE CIT [A] HAS NOT DISCUSSE D THE EVIDENCES / STATEMENTS BROUGHT ON RECORDS BY THE AO, TO DISCARD THE FINDINGS OF THE AO. INCIDENTALLY, THE AO AND THE CIT(A) BOTH HAVE VIOLAT ED THE PRINCIPLES OF NATURAL JUSTICE THEREFORE IN THE INTEREST OF JUSTIC E AND FAIR PLAY, WE RESTORE THIS ENTIRE ISSUE BACK TO THE FILE OF THE AO. THE AO IS DIRECTED TO TAKE UP THE ASSESSMENT PROCEEDINGS DE NOVO SO FAR THE CLAIM OF DEDUCTION U/S 80IB[10] IS CONCERNED . IT IS SUGGESTED THAT THE AO SHOULD GET THE PHYSICAL VERIFICATION OF THE FLATS AT J AND K BLOCK OF THE PROJECT THROUGH T HE DVO .IT IS ALSO SUGGESTED THAT THE EACH AND EVERY OCCUPANT OF THE FLATS SHOUL D BE CONTACTED TO VERIFY WHETHER ANY ADDITION/ALTERATION WAS DONE BY THEM OR THE BUILT UP AREA IS SAME AS IT WAS PURCHASED ORIGINALLY, THIS CAN ALSO BE VERIFIED FROM THE MUNICIPAL AUTHORITIES WHO HAVE FIXED MUNICIPAL TAXE S FOR EACH UNIT SEPARATELY. IF THE BUILT UP AREA OF SOME OF THE FLATS ARE FOUND TO BE IN VIOLATION OF THE PRESCRIBED MANDATORY LIMITS, THEN TO CONSIDER THE C LAIM OF PRO-RATA DEDUCTION OF THE ASSESSEE IN THE LIGHT OF THE JUDICIAL PRONOU NCEMENT RELIED UPON BY BOTH THE PARTIES. IT IS ALSO SUGGESTED THAT IF CERTAIN U NITS ARE FOUND IN EXCESS OF THE PRESCRIBED LIMIT, THEN THE LAND AREA CONSUMED B Y SUCH UNITS SHOULD ALSO BE EXCLUDED FROM THE ELIGIBLE PROJECT AND THEREAFTE R THE AO HAS TO SEE WHETHER THE ELIGIBLE PROJECT STANDS ON A LAND AREA OF ONE ACRE OR MORE. 11. BEFORE PROCEEDING FOR DENOVO ASSESSMENT, THE AO MUST GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE ASSESSEE IS FREE TO ADDUCE ANY OTHER EVIDENCE WHICH IT WANTS TO SUBS TANTIATE THE CLAIM OF ITA NOS. 4347 TO 4351/MUM/2010 7 DEDUCTION. THE AO IS ALSO FREE TO BRING ANY COGENT MATERIAL EVIDENCE ON RECORD TO DISCARD THE CLAIM OF THE ASSESSEE, AFTER GIVING A REASONABLE OPPORTUNITY OF REBUTTAL TO THE ASSESSEE. 12. GROUND NO. 1 TO 5 AND THE ADDITIONAL GROUND ARE ALLOWED FOR STATISTICAL PURPOSES. 13. GROUND NO. 6 RELATES TO ALLOWING THE DEDUCTION U/S. 80IB IN RESPECT OF PROFIT FROM SALE OF CAR PARKING AREA. 14. THIS ISSUE FIND PLACE AT PAGE 16 PARA-7 OF THE ASSESSMENT ORDER. WE FIND THAT A SIMILAR ISSUE CAME UP FOR CONSIDERATION IN A.Y. 2001-02 WHEREIN THE DISPUTE TRAVELLED UPTO THE HONBLE JURISDICTION AL HIGH COURT IN ITA NOS. 4975/4976 AND 4977 OF 2010, WHEREIN THE HONBLE HIG H COURT OF BOMBAY HAS THUS HELD AS UNDER: THE FINDING OF FACT RECORDED BY THE COMMISSIONER O F INCOME TAX (APPEALS) AND APPROVED BY THE INCOME TAX APPELL ATE TRIBUNAL IS THAT IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ENTITLED TO 801B DEDUCTION. THE ONLY DISPUTE IS WHETHER THE ASSESSEE IS ENTITLED TO THE DEDUCTION IN RESPECT OF THE AMOUNT RECEIVED TOWARDS CAR PARKING SPACE. THE FINDING OF FACT RECORDED BY THE COMMISSI ONER OF INCOME TAX (APPEALS) AND APPROVED BY THE INCOME TAX APPELL ATE TRIBUNAL IS THAT THE CAR PARKING SPACE FORMS PART AND PARCEL OF THE HOUSING PROJECT, WITHOUT WHICH EVEN APPROVAL FOR THE HOUSIN G PROJECT COULD NOT HAVE BEEN OBTAINED FROM THE COMPETENT AUTHORITY THE REFORE, THE DECISION OF THE TRIBUNAL IN HOLDING THAT THE ASSESS EE IS ENTITLED TO SECTION 801B DEDUCTION IN RESPECT OF HOUSING PROJEC T INCLUSIVE OF THE AMOUNT RECEIVED ON ACCOUNT OF CAR PARKING CANNOT BE FAULTED. 3. IN THIS VIEW OF THE MATTER, WE SEE NO MERIT IN T HIS APPEAL. THE APPEAL IS ACCORDINGLY DISMISSED WITH NO ORDER AS TO COSTS. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, GROUND NO. 6 IS DISMISSED. ITA NOS. 4347 TO 4351/MUM/2010 8 15. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5 16 51 70 89: 4 ;1 0 *1 <$ ORDER PRONOUNCED IN THE OPEN COURT ON 7.11.2012 . 4 0 3( & = > 6 7.11.2012 3 0 ? SD/- SD/- ( DINESH KUMAR AGARWAL ) ( N.K. BILLAIYA ) / JUDICIAL MEMBER & / ACCOUNTANT MEMBER MUMBAI; > DATED 7/11 /2012 . . ./RJ , SR. PS 4 4 4 4 0 00 0 -1' -1' -1' -1' '(1 '(1 '(1 '(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. @ ( ) / THE CIT(A)- 4. @ / CIT 5. 'A? -1 , , / DR, ITAT, MUMBAI 6. ? B / GUARD FILE. 4 4 4 4 / BY ORDER, .'1 -1 //TRUE COPY// 8 88 8 / < < < < * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI