Assistant Commissioner of Income tax, Pune V. Om Associates, Pune

ITA 438/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1536 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJEEV THAKKAR
• Keywords: Valuation report; Set aside
• Section: 143(3); 80IB

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.438/PUN/2017 / ASSESSMENT YEAR : 2012-13 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 12, PUNE. . / APPELLANT V/S OM ASSOCIATES, 383/A, SHANIWAR PETH, PUNE 411030. PAN : AABFO6002D. . / RESPONDENT ASSESSEE BY : SHRI RAJEEV THAKKAR. REVENUE BY : SHRI SANJAY PUNGLIA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY REVENUE IS EMANATING OUT OF ORDE R OF COMMISSIONER OF INCOME-TAX (A) PUNE 5, PUNE DATED 24.10.2016 FOR A.Y. 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN T HE BUSINESS OF DEVELOPMENT OF HOUSING PROJECT AT PUNE. ASS ESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2012-13 ON 21.09.2012 DECLARING T OTAL INCOME AT RS.37,14,667/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER / DATE OF HEARING : 27.02.2019 / DATE OF PRONOUNCEMENT: 19.03.2019 2 ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER D T.27.03.2015 AND THE TOTAL INCOME WAS DETERMINED AT RS.4,92,99,970/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFOR E LD.CIT(A), WHO VIDE ORDER DT.24.10.2016 (IN APPEAL NO.PN/CIT(A)-5/DY.CIT, C IR-12, PUNE/130/2015-16) GRANTED SUBSTANTIAL RELIEF TO THE ASSES SEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND I N T HE C IRCUMST A NCE S OF TH E CAS E, THE LEARNED CI T (A) H AS ERRE D IN A LLO W ING THE PRO - RATA DEDUCTION U/S 801B(10) OF THE INCOME TA X A CT, 1961 A MOUNTING TO RS.4 , 55 , 85 , 304/ -. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE DEDUCT I ON U/S 80IB(10) IS ALLOWABLE FOR THE PROFITS OF THE PROJECT AS A WHOLE AND NOT FOR PART OF THE PROJ ECT ON PRO-RATA BASIS AND THERE IS NO CONCEPT OF P ROPORTIONATE DEDUCTION U/S 80IB(10) OF THE ACT FOR THE COMPLE T ED BUILDING OR BLOCK OF THE PROJECT . SECTION 80IB(10)(A) STIPULATES THE CONDITION FOR THE PROJECT A S A WHOLE A ND NOT INDIVIDUAL UNITS OR FLATS OF BUILDINGS. 2. THE ORDER OF THE LD.CIT(A) BE VACATED ON THIS IS SUE AND THAT OF THE AO BE RESTORED. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT IN A.Y. 2011-12 ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT FOR THE PROJECT FAITH CONSISTING OF BUILDINGS A, B, C & D , WHICH WAS DEVELOPED AT BALEWADI, PUNE. THE CLAIM OF DEDUCTION WAS DISA LLOWED BY THE AO. AO NOTED THAT THE FACTS OF THE YEAR FOR THE YE AR UNDER CONSIDERATION ARE SIMILAR TO THAT OF A.Y. 2011-12. THE AO THEREFORE ASKED THE ASSESSEE AS TO WHY THE CLAIM OF DEDUCTION U/ S 80IB(10) OF THE ACT NOT BE DISALLOWED. ASSESSEE MADE DETAILED SUBMISSIONS WHICH WERE NOT FOUND ACCEPTABLE TO THE AO. AO NOTED THAT AS PER THE BUILDING PERMISSION ISSUED BY THE PUNE MUNICIPAL CORPORATION (PMC), THE COMMENCEMENT OF THE PROJECT WAS 29.03.2007. AO NOTICED THAT BUILDING A WAS NOT COMPLETED. HE WAS OF THE VIEW THAT FO R BEING ELIGIBLE TO CLAIM DEDUCTION U/S 80IB(10) OF THE ACT, THE COMPLE TION OF THE HOUSING PROJECT AS A WHOLE IS NECESSARY. IN THE CA SE OF THE ASSESSEE AO NOTED THAT BUILDING A COULD NOT BE COMPLETED EVEN BY 31.03.2012 3 WHICH WAS THE PRESCRIBED DATE FOR COMPLETION OF THE PROJ ECT AS A WHOLE AND THEREFORE ASSESSEE HAD VIOLATED THE MANDATORY COND ITIONS FOR BEING ELIGIBLE TO CLAIM DEDUCTION. HE WAS FURTHER OF THE VIEW THAT DEDUCTION U/S 80IB(10) OF THE ACT IS ALLOWABLE FOR THE PROFITS OF THE PR OJECT AS A WHOLE AND NOT FOR THE PART OF THE PROJECT ON A PRO-RAT A BASIS. HE THEREFORE HELD THAT ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTIO N U/S 80IB(10) OF THE ACT FOR THE HOUSING PROJECT FAITH AND ACCORDING LY REJECTED THE CLAIM OF 4,55,85,304/-. AGGRIEVED BY THE ORDER OF AO, ASSES SEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO GRANTED PARTIAL RELIEF TO TH E ASSESSEE FOR BUILDING NOS. B, C AND D WHICH WERE CONSTRUCTED AND CO MPLETED BY OBSERVING AS UNDER : 8 . 5 1 TEN D TO AGREE W I T H THE APPELLA N T ' S I N T E R P R ETAT I O N AB OUT THE FAC T UAL AND LEGAL MAT RIX OF THE CASE OF BRAHMA ASSOCIATE S & OTHERS (SUPRA) . FU R TH E R , NOW H ER E IN THE SAID CASE HAS IT BEEN STATED THAT , WHEREIN A PROJECT IS SANCTIONED AS A RESIDENTIAL PROJECT AND COULD BE CONSIDERED AS A RESIDENTIAL PROJECT ON A STANDALONE BASIS, COULD NOT BE GRANTED PROPORTIONATE DEDUCTION U/S 80IB (10) OF THE ACT. O N THE OTHER HAND, THE SAID CASE CATEGORICALLY HAS GIVEN FINDINGS FOR ALLO WING PROPORTIONATE DEDUCTION. THE INTERPRETATION, THE AO HAS GIVEN TO THE D ECISION OF THE SAID CASE AND THEREBY DENIED THE APPELLANT ITS CLAIM OF DEDUCTION U/S 80IB (10) OF THE ACT, AS FAR AS THE 108 RESIDEN TIAL FLATS IN BUILDINGS 'B', ' C ' AND ' D' ARE CONCERNED, IS ACCORDING TO ME A MISCONSTRUED INTERPRETATION. THIS IS ESPECIALLY SO, WHEN THE APP ELLANT HAS FULFILLED ALL THE PRESCRIBED CONDITIONS LAID DOWN IN SECTION 80IB (10) OF THE ACT FOR THE SAID FLATS AND WHEN THE COMPLETION CERTIF I CATE FOR THE SAME WAS ISSUED BY THE LOCAL AUTHORITY INDICATING COMPLETION PRIOR TO 31-3-2012.THE AO REFERRED TO THE RELEVANT PARA OF THE SAID DECISION APPLICABLE TO THE FACTS OF THE SAID CASE BUT FAILED TO QUOTE THE RELEVANT PARA WHEREIN THE TRIBUNAL HAS DIRECTED TO ALLOW THE DEDU CTION FOR THE RESIDENTIAL UNITS, AS APPLICABLE IN THE APPELLANT'S CASE UNDER CONSIDERATION. MY VIEW, REGARDING THE MISCONSTRUED INTERPRETATION BY THE AO, IN THE CASE OF BRAHMA ASSOCIATES & OTHERS (SUPRA) IS FURTHER FORTIFIED BY THE ABOVE JUDICIAL PRONOUNCEMENTS REFERRED TO BY THE APPELLANT AND THUS, DENYING THE APPELLANT PROPORTIONATE DEDUCTION U/S 80IB (10) I S NOT JUSTIFIED. THESE JUDICIAL DECISIONS HAVE GIVEN CATE GORICAL FINDINGS, THAT, FOR A HOUSING PROJECT, IF ALL THE CONDITIONS AS LAI D DOWN IN SECTION 80IB (10) OF THE ACT ARE FULFILLED, THE ASSESSES ARE ENT ITLED TO PROPORTIONATE DEDUCTION AND/ OR DEDUCTION ON PRO-RATA BASIS FOR T HE PART COMPLETED BY IT WITHIN THE PRESCRIBED T IME LIMIT. IN THE CASE OF THE APPELLANT, IT HAS BEEN SEEN, THAT THE APPELLANT'S PROJECT 'FAITH' COM MENCED ON 29.03.2007 AND THE FIRST AND SECOND COMPLETION CERTIFICATES FO R BUILDING 'B', 'C AND 'D' WERE ISSUED ON 31.03.2010, AND 24.03.2011 WELL BEFO RE THE DUE DATE OF COMPLETION OF THE SAID PROJECT I.E. 31.02.2012. THE APPELLANT, HAD OBTAINED THE COMPLETION CERTIFICATES FOR 108 RESIDE NTIAL TENEMENTS (EACH BUILDING HAVING 36 RESIDENTIAL TENEMENTS). IT IS AL SO SEEN THAT THE APPELLANT HAD COMPLIED WITH ALL THE CONDITIONS TO B E ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT, IN RESPECT OF AFORESAID 3 BUILDINGS CONSISTING OF 108 FLATS. THE COMPLETION OF THESE 108 FLATS HAS NO T BEEN DISPUTED BY THE 4 AO WHO HAS CATEGORICALLY SO STATED IN THE ASSESSMEN T ORDER BY RELYING BOTH, ON THE CERTIFICATE ISSUED BY THE LOCAL AUTHOR ITY AND ALSO BY THE REPORT OF THE VALUER APPOINTED BY THE AO. THE VALUA TION OFFICER APPOINTED BY THE AO HAS ALSO CONFIRMED, THAT THE ASSESSEE COM PLIED WITH ALL THE CONDITIONS FOR GRANTING OF DEDUCTION U/S 80IB(10), AS SUBMITTED BY THE APPELLANT BEFORE HIM. THOUGH THE AFORESAID FACTS WE RE CONSIDERED BY THE AO IN PARA 16 OF THE ASSESSMENT ORDER, THE AO HAS C OMMENTED ON SUCH THE VALUATION REPORT INTER ALIA STATING THAT' VALUA TION OFFICER HAD MERELY GIVEN THE FACTUAL REPORT' AND 'HE HAS NOT OFFERED A NY COMMENTS ON WHETHER THE PROJECT IS ELIGIBLE FOR CLAIM OF DEDUCT ION U/S 80IB(10)'. THIS CLEARLY INDICATES THAT EVEN THE REPORT GIVEN BY THE VALUER APPOINTED BY THE AO HIMSELF, WAS BRUSHED ASIDE LIGHTLY BY THE AO . IN VIEW OF THE DISCUSSIONS IN THE PRECEDING PARAGRAPHS AND AS THE APPELLANT HAD COMPLIED WITH THE PROVISIONS LAID DOWN IN SEC 80IB( 10) OF THE ACT IN RESPECT OF 3 BUILDINGS FOR 108 RESIDENTIAL FLATS CO NSTRUCTED, AND THE PROJECT WAS ENTIRELY A RESIDENTIAL PROJECT, RELYING ON THE RATIO OF THE DECISIONS OF THE PLETHORA OF JUDICIAL PRONOUNCEMENT S CITED BY THE APPELLANT. I DO NOT FIND ANY REASON, NOT TO ALLOW T HE APPELLANTS CLAIM OF PROPORTIONATE DEDUCTION U/S 80IB(10) OF THE ACT. TH E APPELLANT IS THEREFORE, ENTITLED TO PROPORTIONATE DEDUCTION U/S 80IB(10) FOR THE 'B', 'C', 'D' BUILDINGS CONSTRUCTED AND COMPLETED. THE AO IS DIRECTED TO ALLOW DEDUCTION U/S 80IB(10) OF THE ACT ON THE PROFIT EAR NED BY THE APPELLANT FROM THE SAID BUILDINGS. THE ADDITIONAL GROUND RAIS ED BY THE APPELLANT IS ACCORDINGLY ALLOWED.' FOLLOWING THE ABOVE, THE AO IS DIRECTED TO ALLOW DE DUCTION U/S 80IB(10) OF THE ACT ON THE PROFIT EARNED BY THE APPELLANT FR OM THE SAID BUILDINGS FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, GROU ND NO.3 RAISED BY THE APPELLANT IS ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 4. BEFORE US, LD.D.R. SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AN D LD.CIT(A). LD.A.R. FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE IN A.Y. 2011-12 ON IDENTICAL FACTS, REVENUE HAD CARRIED THE MATTER BEFORE TRIBUNAL. THE TRIBUNAL (ITA NO.1031/PUN/2016 ORDER DT.06.06.2018) HAD DISMISSED THE APPEAL OF THE ASSESSEE. HE PLACED ON RECOR D THE COPY OF THE AFORESAID DECISION. HE FURTHER SUBMITTED THAT SINCE T HERE ARE NO CHANGE IN THE FACTUAL POSITION IN THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION AND THAT OF EARLIER YEAR AND THEREFOR E NO INTERFERENCE TO THE ORDER OF LD.CIT(A), IS CALLED FOR, MORE SO, WHEN THE 5 TRIBUNAL HAS DISMISSED THE APPEAL OF REVENUE IN A.Y. 2011-1 2. HE THUS SUPPORTED THE ORDER OF LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPEC T TO ALLOWABILITY OF DEDUCTION U/S 80IB(10) OF THE ACT. WE FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2011-12 AS AO WHILE DECIDING THE ISSUE HAD FOLLOWED THE ORDER OF AO FOR A.Y. 2011-12. WE FIND THA T IN A.Y. 2011-12, LD.CIT(A) HAD DECIDED THE ISSUE IN FAVOUR OF ASSESS EE AND AGAINST THE ORDER OF LD.CIT(A), REVENUE HAD CARRIED THE M ATTER BEFORE TRIBUNAL. THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE APPEAL OF REVE NUE BY OBSERVING AS UNDER : 6. WE HEARD BOTH THE SIDES ON THE LIMITED ISSUE OF ALLOWING DEDUCTION U/S.80IB(10) OF THE ACT AND PERUSED THE ORDERS OF A O AND THE CIT(A) AND THE DECISIONS RELIED UPON BY THE ASSESSEE. ON GOING THROUGH THE FINDING OF CIT(A) ON THIS ISSUE, WE FIND THE CIT(A) HAS RIG HTLY ALLOWED THE DEDUCTION U/S.80IB(10) OF THE ACT TO THE ASSESSEE A FTER CONSIDERING THE FOLLOWING IMPORTANT ASPECTS : 1. IT IS UNDISPUTED FACT THAT THE ASSESSEE COMPLETED C ONSTRUCTION OF 108 FLATS AND OBTAINED COMPLETION CERTIFICATE FO R THE SAME. 2. AS PER THE VALUATION OFFICERS REPORT, THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS PROVIDED IN SECTION 80 IB(10) AND AO IGNORED THE SAME AND FAILED TO COMMENT ON THE EL IGIBILITY OF SECTION 80IB(10) OF THE ACT. 3. AO FAILED TO APPRECIATE THE JUDGMENT OF JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES (SUP RA) IN THE RIGHT PERSPECTIVE AND CHOSE TO REPRODUCE PART OF THE JUDG MENT TO HIS CONVENIENCE TO DENY THE CLAIM OF THE ASSESSEE. IT IS A SETTLED LEGAL PROPOSITION THAT THE CLAIM OF DEDUCTION IS ALLOWABLE ON PRO-RATA BASIS QUA THE COMPLETE PART OF THE PROJECT . CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE ASSESSEE IS E NTITLED TO PRO-RATA DEDUCTION U/S.80IB(10) OF THE ACT FOR THE BUILDINGS B, C AND D. WE THEREFORE, UPHOLD THE ORDER OF CIT(A). THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. THE AFORESAID DECISION OF THE TRIBUNAL HAS NOT BEEN SET ASIDE, STAYED OR OVER-RULED BY HIGHER JUDICIAL AUTHORITIES. BEFORE US, REVENUE 6 HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE AND THAT OF EARLIER YEAR NOR HAS PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2011-12 AND FOR SIMILAR REASON S FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THE GROUNDS OF THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON 19 TH DAY OF MARCH, 2019. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 19 TH MARCH, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-5, PUNE. PR.CIT, PUNE-4, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $,-./ GUARD FILE. / BY ORDER , // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE