Shri. A. Ramachandran, Bangalore V. M/s SRK Gold Earth Constructions (P) Ltd., Bangalore

ITA 489/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60797 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 28-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNDER RAJAN
• Assessee Lawyers: ABRAHAM BA CHERIAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BANGALORE BANGALORE BANGALORE BENCH BENCH BENCH BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI N. N. N. N. BARAT BARAT BARAT BARATH HH HVAJA SANKAR, VICE VAJA SANKAR, VICE VAJA SANKAR, VICE VAJA SANKAR, VICE- -- -PRESIDENT PRESIDENT PRESIDENT PRESIDENT A AA AND NDND ND SHRI SHRI SHRI SHRI N.V.VASUDEVAN N.V.VASUDEVAN N.V.VASUDEVAN N.V.VASUDEVAN, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO.489/BANG/2011 (ASSESSMENT YEAR: 2007-08) INCOME-TAX OFFICER, WARD 12(2), BANGALORE. APPELLANT VS. M/S.SRK GOLD EARTH CONSTRUCTION PVT. LTD. 94/1 & 95/1, DODDATHAGUR VILLAGE, BEGUR HOBLI, ELECTRONIC CITY, BANGALORE-560 100. RESPONDENT PAN: AAHCS 4626C APPELLANT BY: SHRI SUNDER RAJAN, JCIT. RESPONDENT BY : SHRI ABRAHAM BABY CHERIAN, C.A. DATE OF HEARING: 17-07-2012. DATE OF PRONOUNCEMENT: 17-07-2012. O R D E R O R D E R O R D E R O R D E R PER PER PER PER N. BARATHVAJA SANKAR, VP N. BARATHVAJA SANKAR, VP N. BARATHVAJA SANKAR, VP N. BARATHVAJA SANKAR, VP: :: : THIS IS AN APPEAL PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEAR 2007-08 IN THE CASE OF THE ASSESSEE M/S.SRK GOLD EARTH CONSTRUCTION (P) LTD., BANGALORE, AGAINS T THE APPELLATE ORDER DATED 30-12-2010 OF THE CIT(A)-III, BANGALORE. 2. THE ONLY ISSUE BROUGHT BEFORE US FOR ADJUDICATI ON BY THE REVENUE IS WHETHER THE CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S 80-IB(10) IN RESPECT OF PROJ ECT WHICH IS NOT A HOUSING PROJECT. THE RELEVANT GROUNDS READ A S UNDER: ITA NO. 489/BANG/2011 PAGE 2 OF 5 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S 80IB(10) IN RESPECT OF A PROJECT WHICH IS NOT A HOUSING PROJECT AS IS EVIDENT FROM THE BROCHURE BROUGHT OUT BY THE ASSESSEE, THE ARRANGEMENT OF SALE AND LEASE BACK OF THE APARTMENTS AND OTHER SURROUNDING CIRCUMSTANCES WHICH PROVE THAT THE APARTMENTS ARE MEANT TO BE RUN AS SERVICE APARTMENTS, AND THEREFORE, THE PROJECT IS TO BE CONSIDERED AS A COMMERCIAL VENTURE BETWEEN THE BUILDER AND THE BUYERS WHICH DOES NOT QUALIFY TO BE A HOUSING PROJECT AS ENVISAGED IN SECTION 80-IB OF THE IT A CT, 1961. 2. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 3. THOUGH THIS IS REVENUES APPEAL, LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE VERY SAME ISSUE IN THE CASE OF THE SAME ASSESSEE HAS BEEN CONSIDERED BY THIS TRIBUNAL IN ITA NO.1166/BANG/2010 FOR THE ASSESSMENT YEAR 2005-06 ( ORDER DATED 22-7-2011) AND FOR THE ASSESSMENT YEAR 2006-0 7 IN ITA NO.79/BANG/2011 (ORDER DATED 17-1-2012) AND WERE DE CIDED IN FAVOUR OF THE ASSESSEE BY DISMISSING THE REVENUES APPEAL. 4. WE HAVE ALSO HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE FACTS AND MATERIA LS INCLUDING THE DECISIONS OF THE TRIBUNAL CITED SUPRA. IN ITA NO.79/BANG/2011 (ASSESSMENT YEAR 2006-07), WHILE DI SPOSING OF THE APPEAL BY THE REVENUE, THE TRIBUNAL HAS OBSERVE D AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE IN QUE STION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL CITED SUPRA. THE RELEVANT FINDING OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT Y EAR 2005-06 READS AS FOLLOWS:- ITA NO. 489/BANG/2011 PAGE 3 OF 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE RELEVANT FINDING OF THE FIRST APPELLATE AUTHORITY IN HOLDING THAT THE ASSESSE E HAD CONSTRUCTED THE RESIDENTIAL APARTMENTS AND NOT SERVICED APARTMENTS, READS AS FOLLOWS:- 11. TO CONCLUDE, I FIND THAT (A) THE APARTMENTS WERE APPROVED BY THE CONCERNED AUTHORITIES AS RESIDENTIAL APARTMENTS, (B) ALL THE APARTMENTS WERE SOLD AND HANDED OVER AS RESIDENTIAL APARTMENTS, (C) A LARGE MAJORITY OF THE APARTMENTS, I.E. 68 OUT OF 96 APARTMENTS WERE USED AS RESIDENTIAL APARTMENTS AND (D) THE APPELLANT HAD NOT APPLIED FOR OR OBTAINED ANY REGULATORY PERMISSION TO BUILD OR OPERATE SERVICED APARTMENTS. ON THE OTHER HAND, APART FROM DEPENDING ON THE CONTENTS OF THE BROCHURE AND THE IDENTICAL SIZE, DESIGN AND FURNITURE OF THE APARTMENTS, THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SUPPORT HIS CLAIM THAT THE APARTMENTS WERE CONCEPTUALIZED AS SERVICED APARTMENTS. IN THIS REGARD I HAVE ALREADY HELD THAT THOUGH THE APARTMENTS OF THE APPELLANT ARE IDENTICAL IN SIZE AND DESIGN AND ALSO IDENTICALL Y FURNISHED IT CANNOT BE CONCLUDED ON THAT BASIS ALONE THAT THE APARTMENTS HAVE BEEN CONCEPTUALIZED AS SERVICED APARTMENTS. I HAVE FURTHER HELD THAT WHEN THE APPELLANT HAD NOT OBTAINED ANY REGULATORY PERMISSION TO BUILD SERVICED APARTMENTS MERE TALL CLAIMS MADE IN A BROCHURE IS NOT SUFFICIENT AND CONCLUSIVE EVIDENCE TO HOLD THAT THE APARTMENTS WERE CONCEPTUALIZED AS SERVICED APARTMENTS. 11.1 IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE 96 APARTMENTS BUILT BY THE APPELLANT UNDER THE PROJECT NAMES AS SRK SAMRUDHI WERE ALL RESIDENTIAL APARTMENTS (OPTIONALLY CONVERTIBLE TO SERVICED APARTMENTS) AND THEREFORE, THE SAID PROJECT OF THE APPELLANT WAS A HOUSING PROJECT AND HENCE ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. THUS, THE FIRST REASON FURNISHED BY THE AO (I.E. THAT THE PROJECT OF THE APPELLANT CONSISTED OF CONSTRUCTED OF SERVICED APARTMENTS) TO HOLD THAT THE APPELLANT WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IB(1)) OF THE INCOME TAX ACT, 1961, IS NOT VALID. 7.1 THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB(1) IN RESPECT OF THE PROJECT, NAMED, SRK SAMRUDDHI AND IN TOTAL, CONSTRUCTED 96 FLATS. THE FIRST APPEL LATE ITA NO. 489/BANG/2011 PAGE 4 OF 5 AUTHORITY HAS CATEGORICALLY FOUND THAT THE PLAN FOR TH E CONSTRUCTION OF THE APARTMENTS BY THE NAME SRK SAMRUDDHI HAS BEEN APPROVED BY THE CONCERNED LOCAL AUTHORITIES AS RESIDENTIAL APARTMENTS. SINCE APARTMENTS HAVE BEEN APPROVED AND CERTIFIED BY THE CONCERNED LOCAL AUTHORITIES AS RESIDENTIAL APARTMENTS , UNLESS AND UNTIL THE FACTS AND CIRCUMSTANCES OF THE CASE SHOW OTHERWISE, IT IS TO BE ASSUMED THAT THE APARTMENTS CONSTRUCTED BY THE ASSESSEE COMPANY WERE RESIDENTIAL APARTMENTS. FURTHER, THE FIRST APPELLATE AUTHORITY HAS CATEGORICALLY STATED THAT OUT OF THE 96 APARTMENTS CONSTRUCTED, 4 APARTMENTS HAD BEEN RETAINED BY THE DEVELOPER AND THE BALANCE 92 WERE SOLD TO OUTSIDERS AND OUT OF THE 92 APARTMENTS, 68 FLATS WERE USED AS RESIDENTIAL APARTMENTS. IT WAS FURTHER FOUND BY THE FIRST APPELLATE AUTHORITY THAT AT THE TIME OF SALE OF THESE APARTMENTS, IT WERE SOLD A S RESIDENTIAL APARTMENTS BY THE ASSESSEE COMPANY TO THE INDIVIDUAL OWNERS AND THERE IS NOTHING ON RECOR D TO SUGGEST OR TO SHOW THAT THE ASSESSEE HAD APPLIED FOR OR OBTAINED ANY REGULATORY PERMISSION TO BUILD OR OPERATE SERVICED APARTMENTS. THESE FINDINGS OF THE FIRST APPELLATE AUTHORITY HAVE NOT BEEN DISPELLED BY THE DEPARTMENT WITH ANY EVIDENCE. THEREFORE, WE HOLD THAT THE CIT(A) IS CORRECT IN HOLDING THAT THE ASSESSEE HAD CONSTRUCTED RESIDENTIAL APARTMENTS AND THE SAME WERE SOLD AS SUCH BY THE ASSESSEE COMPANY. IN THE LIGHT OF THE ABOVE REASONING, WE HOLD THAT THE CIT(A)S ORDER IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR . 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7.1 FACTS IN THIS CASE ARE IDENTICAL TO THE FACTS CONSIDERED BY THE TRIBUNAL IN ITA NO.1166/BANG/2010 DATED 22/7/2011. THEREFORE, FOLLOWING THE COORDINATE BENCH DECISION CITED SUPRA, WE UPHOLD THE ORDER OF TH E CIT(A). WE DO NOT FIND ANY CHANGE IN THE FACTS AND CIRCUMST ANCES OF THE CASE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, FOLLOWING THE ABOVE DECISION, WE DISMISS THE GROUND S OF APPEAL RAISED BY THE REVENUE. ITA NO. 489/BANG/2011 PAGE 5 OF 5 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON AT THE END O F THE HEARING ON 17 TH JULY, 2012 . SD/- SD/- (N. (N. (N. (N.V. V.V. V.VASUDEVAN VASUDEVAN VASUDEVAN VASUDEVAN) )) ) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) VICE VICE VICE VICE- -- -PRESIDENT PRESIDENT PRESIDENT PRESIDENT EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE