DCIT CEN CIR 6, MUMBAI V. CHEMBUR TRADING CORORATION, MUMBAI

ITA 4517/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62503 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-05-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Keywords: Maximum Marginal Rate
• Section: 80IB; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 4517/MUM/2011 ASSESSMENT YEAR : 2008-09 DCIT, CENTRAL CIRCLE -6, OLD CGO BLDG. ANNEXE, 9 TH FLOOR, M.K. ROAD, MUMBAI. 400 020. VS. M/S CHEMBUR TRADING CORPORATION, PLOT NO. 219, LAALASIS, 11 TH ROAD, CHEMBUR, MUMBAI- 400 071. PAN : AADFC 2722Q (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A.C. TEJPAL ASSESSEE BY : SHRI J.P. BAIRAGRA DATE OF HEARING 30.5.2012 DATE OF PRONOUNCEMENT 06.6.2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 28-03-2011 PASSED BY THE LD. CIT (A) - 36, MU MBAI FOR THE A.Y. 2008-09. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE CARRIES ON THE BUSINESS OF BUILDERS AND DEVELOPERS. THE RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961 (THE ACT) OF THE ENTIRE AMOUNT OF RS. 48,27,70,646/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ITA NO. 4517/MUM/2011 2 ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF DEDUCTIO N U/S 80IB(10) OF THE ACT. IT WAS STATED BY THE ASSESSEE THAT (PARA 8 OF THE ASSESSMENT ORDER): I) THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPERS AND HAS CONSTRUCTED THE SRA PROJECT SITU ATED AT CTS NO. 262A & 262B, VILLAGE ANIK, CHEMBUR, N.E. WARD, MUMBAI. II) THEY HAVE ENTERED INTO THE AGREEMENT WITH SRA & MMRDA FOR EXPRESS HIGHWAY DTD. 16.9.99. III) THE SIZE OF THE PLOT IS MORE THAN ONE ACRE AND BUILT UP AREA OF EACH PREMISES IS 225 SQ. FT. IV) THE COMMERCIAL PREMISES DO NOT EXCEED 5% OF THE BUILT UP AREA OF THE PROJECT. V) THE BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB OF TH E ACT AND FORM NO. 10CCB HAS BEEN OBTAINED FROM AUDITORS. THE A.O. HOWEVER NOTED THAT AS PER CERTIFICATE DTD. 28.3.2008 ISSUED BY THE ARCHITECT SRI P.R. DOSHI OF M/S PYLON PROJECTS CONSULTANTS, ARCHITECTS, NON-RESIDENTIAL AREA I.E. COMMERCIAL AR EA CONSTRUCTED WAS SHOWN AT 1020.30 SQ. MT. EQUIVALENT TO 10982 SQ. FT . IN THIS CONNECTION, VIDE LTEER DTD. 21.9.2010, THE CEO, SRA WAS REQUEST ED TO PROVIDE CERTAIN INFORMATION U/S 133(6) OF THE ACT RELATING TO THE P ROJECT UNDERTAKEN BY THE ASSESSEE. THE DY. CHIEF ENGINEER VIDE HIS LETT ER DTD. 19-10-2010 PROVIDED THE RELEVANT DETAILS AS FOLLOWS: I) DETAILS OF TOTAL BUILT UP AREA CONSTRUCTED 50414.6 0 SQ.MT. =542461 SQ.FT. II) AREA CONSTRUCTED FOR RESIDENTIAL PURPOSES- 49242.63 SQ.MT. = 529850 SQ.FT. III) AREA CONSTRUCTED FOR SHOPS 1171.97 SQ.MT . = 12610 SQ.FT. IV) AREA CONSTRUCTED FOR PURPOSES OF BALWADI, SCHOOL, HOSPITAL, SOCIETY OFFICE, ITA NO. 4517/MUM/2011 3 FIRE BRIGADE, WELFARE CENTRE ETC. 1082.2 8 SQ.MT. = 11645 SQ.FT. IN VIEW OF THE FACT THAT THE AREA CONSTRUCTED FOR S HOPS WAS MUCH MORE THAN 2000 SQ.FT. AND AS SUCH PROVISIONS OF SECTION 80IB(10)(D) OF THE ACT ARE ATTRACTED. THE ASSESSEE WAS AGAIN ASKED TO JUST IFY ITS CLAIM. IN RESPONSE IT WAS INTER ALIA SUBMITTED BY THE ASSESSE E THAT PROJECT WAS COMMENCED IN THE YEAR 2000 AND THERE IS NO DISPUTE FOR THE SAME. HENCE, THE CLAIM FOR DEDUCTION IS ELIGIBLE AS PER P ROVISIONS OF SECTION 80IB(10) OF THE ACT AND IN SUPPORT RELIANCE WAS ALS O PLACED IN THE CASE OF SAROJ SALES ORGANISATION V. INCOME TAX OFFICER IN I TA NO. 4008/MUM/2007. HOWEVER, THE A.O. DID NOT ACCEPT TH E ASSESSEES SUBMISSION. HE WAS OF THE VIEW THAT AFTER THE AMEN DMENT TO SECTION W.E.F. 1-4-2005 THOSE PROJECTS ARE ELIGIBLE FOR DED UCTION WHOSE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMEN TS INCLUDED IN THE PROJECT DOES NOT EXCEED 5% OF THE AGGREGATE BUILT U P AREA OF THE HOUSING PROJECT OR 2000 SQ. FT. WHICHEVER IS LESS. SINCE I N THE CASE OF THE ASSESSEE AS PER CERTIFICATE DTD. 28-3-2008 (SUPRA) THE COMME RCIAL AREA CONSTRUCTED BY THE ASSESSEE IN THE PROJECT AS PER THE ASSESSEE S OWN ADMISSION IS MORE THAN 2000 SQ. FT., HENCE, IN VIEW OF THE PROVI SIONS OF SUB-CLAUSE (D) THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB (10) OF THE ACT AND ACCORDINGLY THE A.O. AFTER DISTINGUISHING THE DECIS ION OF THE TRIBUNAL CITED BY THE LD. COUNSEL FOR THE ASSESSEE DISALLOWE D THE CLAIM OF THE ASSESSEE. ITA NO. 4517/MUM/2011 4 3. ON APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT T HE PROJECT OF THE APPELLANT WAS STARTED IN 1999, THE FIRST PHASE WAS COMPLETED ON 1-10-2005, THE SECOND PHASE COMMENCED ON 6-9-2005 A ND WAS COMPLETED ON 28-5-2008. THE ENTIRE COMMERCIAL AREA IN THE FIRST PHASE WHICH WAS APPROVED AND MORE OR LESS COMPLETED BY TH E TIME THE AMENDMENT TO SECTION CAME INTO FORCE, THEREFORE, SI NCE THE ENTIRE SCHEME WAS APPROVED BY THE GOVERNMENT OF MAHARASHTRA AND S RA AND A TRIPARTITE AGREEMENT SIGNED ON 10-9-1999 THE APPELL ANT IS ELIGIBLE TO CLAIM DEDUCTION U/S 80IB(10), FOLLOWING THE DECISIO N OF HONBLE BOMBAY HIGH COURT AND ITAT CITED BY THE LD. COUNSEL AND AC CORDINGLY HE ALLOWED THE CLAIM OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUND OF APP EAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION BY WA Y OF DISALLOWANCE U/S 80IB(10) BY HOLDING THAT THE LAW AS IT STOOD ON THE DATE OF COMMENCEMENT OF THE PROJECT WOULD APPLY INSTEAD OF THE AMENDED PROVISION THAT WAS IN FORCE IN THE YEAR THE PROJECT WAS COMPLETED ACCORDING TO WHICH THE BUILT UP AREA FOR COMMERCIAL ESTABLISHMENTS SHOULD NOT EXCEED 2000 SQ. FT. OR 5% OF THE AGGREGATE BUILT UP AREA, WHICHEVER IS LOWER. 5. AT THE TIME OF HEARING, THE LD. D.R. SUBMITS TH AT FOR THE REASONS AS MENTIONED IN THE ASSESSMENT ORDER AND KEEPING IN VI EW THAT AGAINST THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT V. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM), THE REVENUE HA S FILED SLP BEFORE THE HONBLE SUPREME COURT, THE LD. CIT(A) WAS NOT J USTIFIED IN ALLOWING ITA NO. 4517/MUM/2011 5 THE CLAIM OF THE ASSESSEE AND THEREFORE THE ORDER P ASSED BY THE A.O. BE RESTORED. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE WHILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT THE ISS UE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN HAWARE CONSTRUCTIONS PVT. LTD. V. ITO IN ITA NO. 5601/MUM/2009 FOR A.Y. 2005-06, 686/MUM/2010 FOR A.Y. 2006-07 AND 1547/MUM/2011 FOR A.Y. 2007- 08 DTD. 5-8-2011 WHEREIN THE TRIBUNAL WHILE DECIDIN G THE APPEAL IN ITA NO. 686/MUM/2010 (SUPRA) HAS HELD VIDE PARA NO. 29 OF ITS ORDER AS UNDER:- 29. SINCE THE APPROVAL IN THE INSTANT CASE WAS OBT AINED ON 10.10.2003 I.E. PRIOR TO 01.04.2005, THEREFORE, IN VIEW OF THE DECISION CITED ABOVE AND IN VIEW OF THE CONSISTENT DECISIONS OF THE CO-ORDIN ATE BENCHES OF THE TRIBUNAL IN VARIOUS OTHER CASES (COPIES OF WHICH AR E PLACED IN THE PAPER BOOK) WE HOLD THAT THE AMENDMENT AS INTRODUCED BY T HE FINANCE ACT, 2004 W.E.F. 01.04.2005 I.E. A.Y. 2005-06, IS NOT AP PLICABLE TO ASSESSEES CASE. THEREFORE, THE ASSESSEE CANNOT BE DENIED THE BENEFIT OF DEDUCTION U/S.80IB(10) FOR THE COMMERCIAL AREA EXCEEDING 5% O F THE BUILT UP AREA OR 2000 SQ. FT. WHICHEVER IS LESS. IN VIEW OF THE ABOVE, HE SUBMITS THAT IN THE CASE O F THE ASSESSEE THE CONSTRUCTION WAS STARTED IN THE 1999 AND THE FIRST PHASE WAS COMPLETED ON 1-10-2005 HAVING COMMERCIAL AREA OF 12610 SQ. FT . WHICH IS 2.3% OF THE TOTAL BUILT UP AREA CONSTRUCTED I.E. 542461 SQ. FT. AS PER PARA 8.3 OF THE ASSESSMENT ORDER, THEREFORE, THE ASSESSEE SATIS FIED THE CONDITION LAID DOWN U/S 80IB (10) OF THE ACT I.E COMMERCIAL AREA I S NOT EXCEEDING 5% OF THE BUILT UP AREA. HE FURTHER SUBMITS THAT FOLLOWIN G THE ABOVE DECISION, ITA NO. 4517/MUM/2011 6 THE AMENDMENT AS INTRODUCED BY THE FINANCE ACT 2004 W.E.F. 1-4-2005 FOR A.Y. 2005-06 IS NOT APPLICABLE TO THE ASSESSEE S CASE AND THEREFORE THE BENEFIT OF DEDUCTION U/S 80IB(10) ALLOWED BY THE LD . CIT(A) BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUT E THAT THE PROJECT OF THE ASSESSEE WAS STARTED IN 1999. THE FIRST PHASE WAS COMPLETED ON 1-10- 2005 INCLUDING THE COMMERCIAL AREA. WE FURTHER FIN D THAT IT IS ALSO NOT IN DISPUTE THE ENTIRE SCHEME WAS APPROVED BY THE GOVER NMENT OF MAHARASHTRA AND SRA AND A TRIPARTITE AGREEMENT WAS SIGNED ON 10-9-1999. 8. IN HAWARE CONSTRUCTIONS PVT. LTD. (SUPRA) THE TR IBUNAL FOLLOWING THE VARIOUS DECISIONS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL AND THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BR AHMA ASSOCIATES OBSERVED THAT SINCE THE APPROVAL WAS OBTAINED ON 10 -10-2003 I.E. PRIOR TO 1-4-2005 AND HELD THAT THE AMENDMENT AS INTRODUCED BY THE FINANCE ACT, 2004 W.E.F. 1-4-2005 I.E. A.Y. 2005-06 IS NOT APPLICABLE TO THE ASSESSEES CASE. 9. BRAHMA ASSOCIATES (SUPRA) IT HAS BEEN HELD : (HE ADNOTES) : HELD, THAT CLAUSE (D) INSERTED TO SECTION 80-IB(10) WITH EFFECT FROM APRIL 1, 2005, IS PROSPECTIVE AND NOT RETROSPECTIVE AND H ENCE COULD NOT BE APPLIED FOR THE PERIOD PRIOR TO APRIL 1, 2005. SINC E DEDUCTIONS UNDER SECTION ITA NO. 4517/MUM/2011 7 80-IB(10) WERE ON THE PROFITS DERIVED FROM THE HOUS ING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS A WHOLE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTRICTING THE SECTION 80-IB(10) DEDUCTION ONLY TO A PART OF THE PROJECT. HOWEVER, IN THE PRESENT CASE, SINCE THE ASSESSEE HA D ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING SECTION 80-IB( 10) DEDUCTION TO A PART OF THE PROJECT, THE FINDINGS OF THE TRIBUNAL IN THAT B EHALF COULD NOT BE DISTURBED. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT AND THE CONSISTENT VIEW O F THE TRIBUNAL HOLD THAT SINCE THE PROJECT WAS STARTED IN 1999 I.E. PRI OR TO THE AMENDMENT BY THE FINANCE ACT, 2005 AND THE DEDUCTION U/S 80IB(10 ) IS ON THE PROFITS DERIVED FROM THE HOUSING PROJECT APPROVED BY THE LO CAL AUTHORITY AS A WHOLE, THE A.O. WAS NOT JUSTIFIED IN DISALLOWING TH E CLAIM OF THE ASSESSEE AND HENCE WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD. CIT(A) IN ALLOWING THE SAME. THE GROUNDS TAKEN BY THE REVENU E ARE, THEREFORE, REJECTED. 10. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JUNE, 2012. SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 6 TH JUNE, 2012. RK ITA NO. 4517/MUM/2011 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CENTRAL I, MUMBAI 4. COMMISSIONER OF INCOME TAX (A) 36, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH C, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI