ITO 32(3)(4), MUMBAI V. SHRIKRISHNA CHAITANYA ENTERPRISES, MUMBAI

ITA 4666/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5594 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 30-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 80IB; 201; 13; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT) , G BENCH MUMBAI BEFORE SHRI JUSTICE P P BHATT, PRESIDENT & SHRI M. BALAGANESH, AM ITA NO. 4666 /MUM/ 20 17 ( ASSESSMENT YEAR : 201 3 - 1 4 ) & ITA NO. 4667 /MUM/ 2017 ( ASSESSMENT YEAR : 20 14 - 15 ) ITO 32(3)(4), MUMBAI ROOM NO.103, 1 ST FLOOR BLDG. NO.C - 10, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX BANDRA (EAST), MUMBAI 400 051 VS. M/S. SHRI KRISHNA CHAITANYA ENTERPRISES, 102, A - WING, RADHA VILAS APARTMENT, KANDARPADA, DAHISAR (W) MUMBAI 400 008 PAN/GIR NO. ABEFS7379H (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI ANAND MOHAN ASSESSEE BY NONE DATE OF HEARING 28 / 09 /2020 DATE OF PRONOUNCEMENT 06 / 10 /2020 / O R D E R PER BENCH : TH ESE APPEAL S IN ITA NO S . 4666/ MUM/2017 & 4667/MUM/2017 FOR A.Y. 2013 - 14 & 2014 - 15 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 44 IN APPEAL NO S . CIT(A) - 44/ITO 32(3)(4)/ITA - 778 /15 - 16 DATED 12/04/2017 & CIT(A) - 44/ITO 32(3)(4)/ITA - 779/15 - 16 DATED 12/04/2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT ITA NO . 4666/MUM/2017 & 4667/MUM/2017 SHRI KRISHNA CHAITANYA ENTERPRISES 2 PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 15/02/2016 & 19/02/2016 RESPECTIVELY BY THE LD. INCOME TAX OFFICER 32(3)(4), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). I DENTICAL ISSUES ARE INVOLVED IN BOTH THE APPEALS , HENCE, WITH THE CONSENT OF THE LD. DR, THE APPEAL FOR THE A.Y.2013 - 14 IS TAKEN AS THE LEAD YEAR AND THE DECISION RENDERED THEREON WOULD APPLY WITH EQUAL FORCE FOR A.Y.2014 - 15 ALSO EXCEPT WITH VARIANCE IN FIGURES. 2. WE FIND THAT THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L FOR A.Y.2013 - 14. ( I ) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE ID. CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S 80IB(10 ) OF THE I.T.ACT, 1961.' ( II ) 'ON TH E FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE L D.CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEE DID NOT FULFILL THE CONDITIONS STIPULATED FOR ELIGIBILITY OF DEDUCTION U/S.80 IB(10) OF THE ACT.' ( III ) 'ON THE FACTS AND IN THE CIRCUMST AN CES OF THE CASE AND IN LAW, THE ID.CIT(A) ERRED IN ALLOWING THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT BY HOLDING THAT THE COMPLETION CERTIFICATE HAS BEEN ISSUED BY MCGM AS CONSTRUCTED AS PER APPROVED PLAN. THE DUTY OF THE ASSESSEE FIRM ENDS ON THE SAI D DATE. AS PER THE APPROVED PLAN, THERE ARE NO RESIDENTIAL UNITS HAVING AREA OF MORE THAN 1000 SQ. FT. INSPITE OF THE FACT THAT THE D.V O IN HIS REPORT, HAS ATTESTED THAT THE FLATS HAVE BEEN AMALGAMATED IN A SINGLE UNIT.' ( IV ) 'ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, THE ID.CIT(A) ERRED IN APPRECIATING THE FACT THAT THE LANGUAGE OF SECTION 80 IB(10) AS IT STOOD BEFORE THE AMENDMENT IS VERY CLEAR AND DOES NOT CALL FOR ANY INTERPRETATION AS PROPOSED BY THE ASSESSEE. INTERPRETATION OF A SEC TION IS REQUIRED ONLY WHEN THERE IS SOME - AMBIGUITY IN THE LANGUAGE OF THE PROVISION WHICH IS NOT THE CASE IN THE CASE OF THE LANGUAGE OF SECTION 80 I B ( 10) . THE SECTION VERY CLEARLY PROVIDES THAT THE PROJECT HAS TO BE A 'HOUSING PROJECT W HICH IS A CONDITION PRECEDENT FOR AVAILING THE DEDUCTION. THE SECTION PROVIDES FOR WHAT WAS INTENDED BY THE LEGISLATURE.' ITA NO . 4666/MUM/2017 & 4667/MUM/2017 SHRI KRISHNA CHAITANYA ENTERPRISES 3 ( V ) 'THE APPELLANT PRAYS THAT T HE ORDER OF THE LD.CIT(A) ON THE ABOVE GROUNDS B E SET ASIDE AND THAT OF THE AO BE RESTORED.' ( VI ) THE APPELLANT CRAVES LEAVE TO A M END OR ALTER ANY GROUND OR ADD A NEW GROUND.' 2.1. THE ONLY EFFECTIVE ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN GRANTING PROPORTIONATE DEDUCTION U/S.80IB(10) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE INS TANT CASE. 2.2. NONE APPEARED ON BEHALF OF THE ASSESSEE. 3. WE HAVE HEARD THE LD. DR. WE FIND THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DEVELOPERS AND BUILDERS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DISCLOSED PRO FIT FROM THREE PROJECTS NAMELY 1.RADHA GOVIND 2. RADHA KRISH NA 3. RADHA MADHAV. THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD. THE ASSESSEE CLAIMED DEDUCTION @100% OF THE PROFITS TO THE EXTENT OF RS.12,51,01,985/ - U/S.80IB(10) OF THE ACT IN ITS RETU RN OF INCOME. THE LD. AO OBSERVED THAT THERE WAS A SURVEY ACTION CARRIED OUT IN THE PREMISES OF THE ASSESSEE U/S.133A OF THE ACT ON 25/11/2009 AND PURSUANT TO DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY ; STATEMENT RECORDED FROM SHRI RADHA KRISHNA SAB JI DESAI, MAIN WORKING PARTNER OF ASSESSEE FIRM ; BASED ON THE REPORT OBTAINED FROM DEPARTMENTAL VALUATION OFFICER (DVO) ON 14/01/2020 WITH REGARD TO CERTAIN FLATS DEVELOPED BY THE ASSESSEE AND ALSO BASED ON THE FINDINGS RECORDED BY HIS PREDECESSOR IN THE ASSESSMENT YEARS 2010 - 11, 2011 - 1 2 & 2012 - 13 WITH REGARD TO CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT, THE LD. AO DISALLOWED THE DEDUCTION U/S.80IB(10) OF THE ACT BY OBSERVING AS UNDER: - ITA NO . 4666/MUM/2017 & 4667/MUM/2017 SHRI KRISHNA CHAITANYA ENTERPRISES 4 IT IS SEEN FROM THE DETAILS THAT IODS OF THE 3 BUILDINGS I.E RADHA G OVIND, RADHA KRISHNA AND RADHA MADHAV WERE NOT OBTAINED IN THE NAME OF THE ASSESSEE. THEREFORE, ONE OF THE PRIMARY CONDITIONS HAS NOT FULFILLED BY THE ASSESSEE. REPORT OF THE DVO EVIDENTLY STRENGTHENS THE FINDING OF SURVEY THAT NUMBER OF FLATS ARE AMALGAM ATED IN A SINGLE UNIT WHICH MAKES THE ASSESSEE INELIGIBLE TO AVAIL THE DEDUCTION U/S 80IB(10) OF THE I.T ACT, 1961 AS THE AREA OF RESPECTIVE FLATS IS HIGHER THAN PERMITTED AS PER THE PROVISIONS OF SECTION 80IB (10) OF THE ACT. SHRI RADHA KRISHNA SABJI DES AI IN HIS STATEMENT DATED 25/26 - 11 - 2009 CONFIRMED THE AMALGAMATION WHILE ANSWERING TO Q.36 TO 39. FLAT NO. 1403 & 1404 HAS BEEN AMALGAMATED INTO SINGLE UNIT AND HAVE BEEN BOOKED ONE BY AN INDIVIDUAL AND THE OTHER BY KARTA OF HUF BEING THE SAME INDIVIDUAL. THEREBY CONTRAVENING THE PROVISIONS CONTAINED IN SECTION 80IB ( 10)(F) OF THE INCOME TAX ACT. THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED/ PROVED THE ELIGIBILITY OF DEDUCTION U/S.80IB CLAIMED BY IT, EXCEPT PROVIDING THE FORM NO.10CCB. IT NEEDS TO BE MENT IONED THAT SUBMITTING FORM NO.10 CCB IS NOT A SATISFACTORY /ADMISSIBLE PROOF TAKING INTO ACCOUNT THE FACT THAT IN ALL THE CASES WHERE DEDUCTION CLAIMED BY WAY OF PRODUCING 10CCB BUT, LATER DECIDED BY THE JUDICIARY AUTHORITIES THAT IT IS NOT ELIGIBLE FOR CL AIMING SUCH DEDUCTION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE QUESTION ARISES ABOUT ALLOWABILITY OF DEDUCTION U/S.80IB CLAIMED BY THE ASSESSEE, THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT IT HAD FULFILLED THE CONDITIONS BROUGHT IN THE INC OME TAX ACT FOR CLAIMING SUCH DEDUCTION, BY PRODUCING DOCUMENTARY EVIDENCES, POINT - WISE. THE AO HAS DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB(10) FOR A.YS. 2010 - 11 TO A.Y 2012 - 13 ON SIMILAR FINDINGS 3.1. THE LD. CIT(A) BY FOLLOWING THE ORDERS PASSED BY FOR A.Y.2010 - 11, 2 011 - 12 AND 2012 - 13 AND MORE PARTICULARLY, THE ORDER FOR A.Y.2012 - 13 DELETED THE DISALLOWANCE MADE BY THE LD. AO AND DIRECTED THE LD. AO TO GRANT DEDUCTION U/S.80IB(10) OF THE ACT BY CATEGORICALLY OBSERVING THAT THE FACTS OF THE ISSUE FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS FOR A .Y.2012 - 13. AGGRIEVED BY THIS ACTION, THE REVENUE IS IN APPEAL BEFORE US. 3.2 . WE FIND THAT THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2010 - 11 IN ITA NO.3321/MUM/2014 DATED 21/04/2017 HAD REM ANDED THE ISSUE TO THE FILE OF THE LD. AO WITH SPECIFIC DIRECTIONS BY OBSERVING AS UNDER: - ITA NO . 4666/MUM/2017 & 4667/MUM/2017 SHRI KRISHNA CHAITANYA ENTERPRISES 5 8. REGARDING THE ISSUE OF REVERSAL OF DECISION OF DENIAL OF DEDUCTION U/S 80IB(10) IN RESPECT OF THE PROFITS RELATABLE TO THE RADHA GOVIND BUILDING OF THE PROJECT, THE LIMITED DISPUTE FOR ADJUDICATION BY US RELATES TO IF THE FAA IS JUSTIFIED IN ALLOWING THE SAID DEDUCTION WHEN THERE IS AREA AND OWNERSHIP VIOLATION, IF ANY, OF A COUPLE OF FLATS IE FLATS NO. 901 AND 902 IN THE SAID BUILDING. ON THIS ISSUE, LD CIT - DR I S OF THE OPINION AO S VIEWS ARE REQUIRED TO BE UPHELD. PER CONTRA, LD AR FOR THE ASSESSEE BROUGHT OUR ATTENTION TO VARIOUS BINDING JUDGMENTS AND SUBMITTED THAT THE DENIAL OF DEDUCTION ON PROPORTIONATE BASIS WOULD MEET THE REQUIREMENTS OF THE SAID JUDGMENTS AND THE PRINCIPLES OF THE NATURAL JUSTICE. SOME OF THE SAID DECISION RELEVANT FOR THE PROPOSITION OF PROPORTIONATE ALLOWANCE OF DEDUCTION INCLUDES ELEGANT ESTATES (383 ITR 49) (BOM); G V CORPORATION (38 SOT 174) (MUM. TRIB); NAGARJUN HOMES (46 SOT 287) HYD TRIB ETC. FURTHER , NOTWITHSTANDING THE SAID ARGUMENT, LD COUNSEL ALSO SUBMITTED THAT THE PROVISIONS OF CLAUSE (F) TO SECTION 80IB(10) OF THE ACT ARE PROSPECTIVE IN APPLICATION AND THEY WILL NOT APPLY TO THE BUILDING OF RADHA GOVIND UNDER CONSIDERATION. FOR THIS PROPOSITION , LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN CASE OF EMGREEN HOLIDAY P LTD (47 SOT 98) (MUM TRIB) AND APEX COURT JUDGMENT IN THE CASE OF VEENA DEVELOPERS (277 ITR 392). AT THE END OF THE HEARING PROCEEDINGS, LD COUNSEL SUBMITTED THA T THERE IS NO AREA VIOLATION AND THE REPORT OF THE DVO SUPPORTS TO THE ASSESSEE. REGARDING OWNERSHIP RELATED VIOLATION, THERE ARE DECISIONS TO SUPPORT THE LEGAL PROPOSITION THAT THE PROVISIONS OF SAID CLAUSE (F) ARE PROSPECTIVE QUA THE DATE OF APPROVAL OF THE HOUSING PROJECT. AFTER HEARING THE PARTIES, ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AND THE PAPER BOOKS FILED ALONG WITH THE WRITTEN SUBMISSIONS, WE ARE OF THE VIEW THAT AO SHOULD BE DIRECTED TO EXAMINE THE DATE OF APPROVAL OF THE PROJECT I N QUESTION AND APPLY THE SAID DECISIONS ON THE SAID CLAUSE (EX. EMGEEN HOLDINGS (P) LTD (47 SOT 98) (MUMBAI) (PARA 8 IS RELEVANT). ACCORDINGLY WE ORDER. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATUR AL JUSTICE. ACCORDINGLY, RELEVANT GROUNDS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 3.3 . RESPECTFULLY FOLLOWING THE SAID DECISION, THE GROUNDS RAISED BY THE REVENUE ARE REMANDED BACK TO THE FILE OF THE LD. AO TO DECIDE THE ISSUE IN THE LIGHT OF DIRECT IONS GIVEN BY THIS TRIBUNAL IN A.Y.2010 - 11 REFERRED TO SUPRA. ITA NO . 4666/MUM/2017 & 4667/MUM/2017 SHRI KRISHNA CHAITANYA ENTERPRISES 6 4 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 06 / 10 /2020 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( JUS TICE P P BHATT ) SD/ - (M.BALAGANESH) PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 06 / 10 / 2020 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MU MBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//