ACIT RG 25(3), MUMBAI V. BHOOMI CONSTRUCTION, MUMBAI

ITA 4649/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87941 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 09-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: NARESH JAIN
• Keywords: Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER ITA NO.4649/MUM/2011 (A.Y.2005-06) THE ACIT - 25(3) , C-11, R.NO.308, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051 GIR NO./PAN : AAEFB 6602 R (APPELLANT ) VS. M/S. BHOOMI CONSTRUCTION , SHOP NO.8, BHOOMI GARDEN, MAHAVIR NAGAR, KANDIVALI(W) MUMBAI0400 067. (RESPONDENT) APPELLANT BY : SHRI ASGHAR Z AIN RESPONDENT BY : SHRI NARESH JAIN DATE OF HEARING : 07/01/2015 DATE OF PRONOUNCEMENT : 07/01/2015 ORDER PER I.P.BANSAL, J.M: THIS APPEAL IS FILED BY THE REVENUE . IT IS DIRECTE D AGAINST THE ORDER PASSED BY THE LD. CIT(A) DATED 21/3/2011 FOR THE AS SESSMENT YEAR 2005- 06. THE GROUNDS OF APPEAL READ AS UNDER :- '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING DEDUCT ION U/S 80IB(10) OF THE INCOME TAX ACT-1961 TO THE EXTE NT OF RS. 76,13,322/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E ITA NO.4649/MUM/2011 (A.Y.2005-06) 2 AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT ASSESSEE'S PROJECT HAS NOT COMMENCED AFTER 1-10-1998 AS REQUIRED UNDER THE PROVISIONS OF CLAUSE(A) OF SECTION 80-IB(10) OF THE INCOME TAX ACT-1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT ASSESSEE HAS NOT FULFILLED THE CONDITION LAID DOWN IN SECTION 80-IB(10) TO CLAIM DEDUCTION UNDER THE SAID SECTION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT IN THE CASE OF THE ASSESSEE THAT THE DATE OF COMMENCEMENT CERTIFICATE IS ACTUALLY THE DATE OF COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT TH ERE WAS NO VALID GROUND FOR REOPENING THE ASSESSMENT PROCEEDINGS. 6.THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A .O. BE RESTORED. 7.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND.' 2. THE IMPUGNED ASSESSMENT ORDER IS DATED 27/12/201 0 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX A CT, 1961 (THE ACT). ORIGINAL ASSESSMENT WAS MADE VIDE ORDER DATED 31/12 /2007 PASSED UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE IS A BUILDER AND DEVELOPER AND HAS CONSTRUCTED A PROJECT NAMELY BHOOMI GREEN W HICH WAS COMPLETED IN ASSESSMENT YEAR 2004-05. ANOTHER PROJE CT IN THE NAME OF BHOOMI BREEZE WAS COMMENCED. DEDUCTION UNDER SECTIO N 80IB WAS CLAIMED AND AFTER SHOW CAUSE NOTICE ISSUED IN RESPE CT OF ALLOWABILITY OR OTHERWISE OF DEDUCTION UNDER SECTION 80IB(10), THE ASSESSEE WAS ITA NO.4649/MUM/2011 (A.Y.2005-06) 3 ALLOWED DEDUCTION UNDER SECTION 80IB(10) FOR A SUM OF RS.76,13,322/-, IN THE ORIGINAL ASSESSMENT ORDER. SUBSEQUENTLY, THE SAID ASSESSMENT WAS RE-OPENED ON THE GROUND THAT ONE OF THE CONDITION F OR ALLOWABILITY OF DEDUCTION UNDER SECTION 80IB(10) WAS NOT FULFILLED BY THE ASSESSEE. ACCORDING TO THE DEPARTMENT, SINCE COMMENCEMENT CER TIFICATE OF THE PROJECT WAS ISSUED ON 20/01/1995, THE ASSESSEE DID NOT FULFILL THE CONDITION REGARDING THE COMMENCEMENT OF PROJECT BEF ORE 01/10/1998. IT IS ON THE SAID GROUND THE DEDUCTION WAS DISALLOWED IN REASSESSMENT PROCEEDINGS VIDE IMPUGNED ASSESSMENT ORDER DATED 27 /12/2010. 2.1 THE ASSESSEE CHALLENGED THE VALIDITY OF THE REA SSESSMENT PROCEEDINGS AS WELL AS THE MERITS OF THE ADDITION. IT WAS CLAIMED THAT THE ASSESSEE DID NOT VIOLATE THE CONDITIONS LAID DOWN I N SEC.80IB(10). THOUGH THE COMMENCEMENT CERTIFICATE WAS GRANTED ON 20/01/1995 BUT DEVELOPMENT DID NOT START TILL 15/10/2001. IT WAS T HE CONTENTION OF THE ASSESSEE THAT AS PER CONDITIONS LAID DOWN IN SEC.80 IB(10) THE REQUIREMENT OR ELIGIBILITY OF THE UNDERTAKING IS TH AT SUCH UNDERTAKING SHOULD COMMENCE OR COMMENCES DEVELOPMENT AND CONSTR UCTION OF HOUSE PROPERTY ON OR AFTER 01/10/1998. IT WAS SUBMI TTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO MADE ENQUIR Y ON THIS ISSUE AND VIDE SUBMISSIONS MADE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, IN REGARD TO ENQUIRIES OF THE AO AT PO INT NO.10, IT WAS SUBMITTED THAT THOUGH THE COMMENCEMENT DATE MENTION ED IN THE CERTIFICATES FALLS IN 1995 BUT ACTUALLY THE ACTIVI TY AND COMMENCEMENT WAS ONLY STARTED IN THE YEAR 2002. ITA NO.4649/MUM/2011 (A.Y.2005-06) 4 2.2 LD. CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESS EE ON BOTH THE GROUNDS. FIRSTLY, THAT THE REASSESSMENT PROCEEDINGS WERE NOT VALID AS THE SAME WERE BASED ON MERE CHANGE OF OPINION. SECOND LY; ON MERITS, HE HAS HELD THAT AS PER REQUIREMENT OF SEC.80IB(10) IT IS NECESSARY TO ALLOW THE DEDUCTION IF UNDERTAKING HAS COMMENCED OR COMME NCES DEVELOPMENT OR CONSTRUCTION OF HOUSING PROJECT ON OR AFTER 01/10/1998 AND COMPLETES SUCH CONSTRUCTION BEFORE 31/03/2008, IN A CASE WHERE PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITIES BEFORE 01/04/2004. AS PER THE EXPLANATION, THE DATE OF FIRST APPROVAL BY THE LOCAL AUTHORITY SHALL BE TAKEN TO HAVE BEEN APPROVED ON THAT DATE W HICH MEANS THAT FOR THE PURPOSE OF DETERMINATION OF THE COMPLETION OF C ONSTRUCTION, THIS CRITERIA HAS TO BE APPLIED. THE SECTION NOWHERE MEN TIONS THAT THE DATE OF FIRST APPROVAL SHALL BE TAKEN AS COMMENCEMENT OF TH E PROJECT. A FINDING OF FACT HAS BEEN RECORDED BY THE LD. CIT(A) THAT IN THE CASE OF THE ASSESSEE EVEN THOUGH THE ORIGINAL APPROVAL WAS DATE D 20/01/1995, BUT THE ASSESSEE SUBSEQUENTLY OBTAINED RE-VALIDATION BY ORDER DATED 15/10/2001 WHICH ESTABLISHES THE FACT THAT THE RELE VANT HOUSING PROJECT WAS NOT COMMENCED TILL 15/10/2001. THUS, ON MERITS ALSO THE LD. CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESSEE . THE DEPAR TMENT IS AGGRIEVED AND HAS RAISED THE AFOREMENTIONED GROUNDS OF APPEAL . 3. THE LD. DR RELYING ON THE ASSESSMENT ORDER PLEAD ED THAT DATE OF COMMENCEMENT SHOULD BE TAKEN FROM THE DATE OF APPRO VAL AND, THEREFORE, THE ASSESSEE DID NOT FULFILL THE CONDITI ON LAID DOWN IN SEC.80IB(10). THE ASSESSMENT WAS RIGHTLY RE-OPENED AND DEDUCTION RIGHTLY DISALLOWED. LD. CIT(A) HAS COMMITTED AN ERR OR IN ACCEPTING THE ITA NO.4649/MUM/2011 (A.Y.2005-06) 5 CLAIM OF THE ASSESSEE REGARDING INVALIDITY OF REASS ESSMENT PROCEEDINGS AS WELL AS IN ACCEPTING THE CLAIM OF THE ASSESSEE O N MERITS. THUS, IT WAS PLEADED BY THE LD. DR THAT APPEAL FILED BY THE REV ENUE SHOULD BE ALLOWED. 3.1 ON THE OTHER HAND, IT WAS SUBMITTED BY THE LD. AR THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE ISSUE REGARDING ALLOWABILITY OF DEDUCTION U/S. 80IB(10) WAS CONSI DERED AT LENGTH BY THE AO. HE IN THIS REGARD INVITED OUR ATTENTION TOWARDS COPY OF ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT WHICH IS PLACED AT PAGES 1 TO 6 OF THE PAPER BOOK. LD. AR ALSO INVITED OUR ATT ENTION TO THE COPY OF SUBMISSIONS MADE BEFORE THE AO IN THE ORIGINAL ASSE SSMENT PROCEEDINGS. COPY OF SUCH SUBMISSIONS ARE FILED AT PAGE 7 TO 8 O F THE PAPER BOOK AND SPECIFIC REFERENCE WAS MADE TO THE SUBMISSIONS MADE AT POINT NO.10, WHICH READS AS FOLLOWS :- 10. NOTE ON 10CCB (80IB):- THOUGH THE DATE IS MENTIONED AS 1995, THE ACTUAL AC TIVITY AND THE COMMENCEMENT OF THE WORK WAS ONLY STARTED IN THE YE AR 2002. AS PR THE COMMENCEMENT CERTIFICATE ISSUED BY THE MUNICIPA L CORPORATION OF GREATER MUMBAI. IT MAY ALSO BE MENTIONED OVER HERE THAT THE PLOT WAS FULLY OCCUPIED BY TREES & SUBSEQUENTLY THE TREES WE RE TO BE CUT TO ENABLE THE ASSESSEE TO START THE CONSTRUCTION WORK. THE NECESSARY PERMISSION FOR CUTTING THE TREES WERE OBTAINED ONLY IN THE SAID. COPY OF THE CERTIFICATE ISSUED BY THE TREE AUTHORITY OF BRI HANMUMBAI MAHANAGAR PALIKA IS ENCLOSED HEREWITH AS ANNEXURE I FOR YOUR REFERENCE & RECORD. HOPE THE ABOVE EXPLANATION WILL SUFFICE THE CONTROV ERSY REGARDING THE STARTING OF THE PROJECT. 3.1.1 IT WAS FURTHER SUBMITTED BY THE LD. AR THAT IT IS A CLEAR CASE OF MERE CHANGE OF OPINION AND AS PER DECISION OF TH E HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. (320 ITR 561), IF THE ITA NO.4649/MUM/2011 (A.Y.2005-06) 6 REASSESSMENT IS BASED ON MERE CHANGE OF OPINION, TH E SAME WOULD NOT BE VALID INITIATION OF REASSESSMENT PROCEEDINGS. 3.2 ON MERITS, IT WAS SUBMITTED BY THE LD. AR THAT AS PER REQUIREMENTS OF SECTION 80IB(10) DATE OF APPROVAL GRANTED BY THE AUTHORITY IS NOT RELEVANT BUT WHAT IS RELEVANT IS THE DATE OF COMMEN CEMENT OF THE PROJECT OR COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF THE PROJECT. HE SUBMITTED THAT THE LD. AO DURING THE COURSE OF REAS SESSMENT PROCEEDINGS HAS MISUNDERSTOOD THE LAW AND THE SAID MISUNDERSTAN DING OF THE AO HAS BEEN CORRECTED BY THE LD. CIT(A). THEREFORE, IT WAS SUBMITTED BY THE LD. AR THAT ON MERITS ALSO THE ORDER PASSED BY THE LD. CIT(A) IS CORRECT AND SHOULD BE UPHELD. 4. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE BEEN CAREFULLY CONSIDERED. IT HAS BEEN DEMONSTRATED BY T HE ASSESSEE THAT THE ISSUE REGARDING COMMENCEMENT OF HOUSING PROJECT WAS RAISED BY THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND REPLY WA S ALSO SUBMITTED BY THE ASSESSEE WHICH HAS ALREADY BEEN REPRODUCED IN T HE EARLIER PART OF THIS ORDER. AFTER DISCUSSION, THE AO HAS ALLOWED TH E DEDUCTION UNDER SECTION 80IB(10) TO THE ASSESSEE . THEREFORE, IT I S A CASE WHERE AN OPINION WAS FORMED BY THE AO ON THIS ISSUE AND REAS SESSMENT PROCEEDINGS ARE INITIATED ONLY ON THE BASIS OF MERE CHANGE OF OPINION. THERE IS NO FRESH MATERIAL BROUGHT ON RECORD FOR IN ITIATION FOR REASSESSMENT PROCEEDINGS. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD. (320 ITR 561) (SUPRA), HAS HE LD THAT AFTER 1 ST APRIL, 1989, THE AO HAS POWER TO RE-OPEN THE ASSESSMENT UN DER SECTION 147 ITA NO.4649/MUM/2011 (A.Y.2005-06) 7 PROVIDED THE AO HAS REASON TO BELIEVE, THAT INCOME HAS ESCAPED ASSESSMENT AND, THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME; MERE CHANGE OF OPINIONCANNOT PER SE BE REASON TO RE-OPEN. THEREFORE, GROUND NO.5 OF THE REVENUE IS DISMISSED. 4.1 ON MERITS ALSO THERE IS NO CASE OF THE REVENUE AS THE REQUIREMENT OF SEC.80IB(10) IS THE COMMENCEMENT OF HOUSING PROJECT AFTER 1 ST OCTOBER, 1998 AND IT IS NOT RELEVANT THAT WHEN THE COMMENCEMENT CERTIFICATE WAS GRANTED TO THE ASSESSE E . MOREOVER, IN THE PRESENT CASE A FINDING OF FACT HAS BEEN RECORDE D BY THE LD. CIT(A) THAT SUBSEQUENTLY THE ASSESSEE HAD OBTAINED REVALID ATION ORDER DATED 15/01/2001 AND SUCH FINDING OF FACT HAS NOT BEEN CO NTROVERED BY THE REVENUE BY PLACING ANY ADVERSE MATERIAL ON RECORD. THEREFORE, MERELY ON THE BASIS OF ORIGINAL APPROVAL DATED 20/01/1995 IT CANNOT BE HELD THAT HOUSING PROJECT OF THE ASSESSEE HAD COMMENCED ON 20 /01/1995. THEREFORE, ON MERITS ALSO WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE LD. CIT(A) VIDE WHICH THE IMPUGNED RELIEF HAS BEEN GRANTED TO THE ASSESSEE. GROUND NO.1 TO 4 OF THE REVENUE ARE DISMI SSED. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 7/01/2015 ! '#$ % &' 07/01/2015 # ! ( SD/- SD/- ( . . /B.R.BASKARAN ) ( . . / I.P. BANSAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; & DATED 07/01/2015 . . ./ JV, SR. PS ITA NO.4649/MUM/2011 (A.Y.2005-06) 8 ! !! ! )*+ )*+ )*+ )*+ ,+$* ,+$* ,+$* ,+$* / COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT 2. )/-. / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. +( )* , , / DR, ITAT, MUMBAI 6. (1 2 / GUARD FILE. / BY ORDER, /+* )* //TRUE COPY// 3 33 3 / 4 4 4 4 5 5 5 5 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI.