ITO WD 23(2)(1), MUMBAI V. ABHILASHA COMBINES, MUMBAI

ITA 4965/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2758 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 02-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU JIT BANGAR
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Section: 80IB

Judgement Text

, THE INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMB AI , , BEFORE SHRI RAJENDRA,ACCOUNTANT MEMBER AND MS. BEENA PILLAI,JUDICIAL MEMBER /ITA NO.4965//MUM/2012, /ASSESSMENT YEAR 2004-05) /ITA NO.1860-61//MUM/2011, /ASSESSMENT YEAR 2006-07 & 07-08) ITO -23(2)(1), C-10/201-2 ND FLOOR, PRATYAKSHAKAR BHAVAN, BKC,BANDRA(E),MUMBAI-400050 VS M/S.ABHILASHA COMBINES, A/36,PATIL BHAVAN,NSB ROAD, MULUND(WEST),MUMBAI-4000803 PAN:AAFFA7153F ( / APPELLANT ) ( / RESPONDENT ) /ITA NO.5001 AND 02//MUM/2012, /ASSESSMENT YEAR2005-06 AND 08-09 M/S.ABHILASHA COMBINES, PAN:AAFFA7153F VS. ITO -23(2)(1), BKC,BANDRA(E),MUMBAI-50 ( / APPELLANT ) ( / RESPONDENT ) / ASSESSEE BY : SHRI REEPAL G. TRALSHAWALA / REVENUE BY :SHRI SUJIT BANGAR / DATE OF HEARING :29.10. 2015 / DATE OF PRONOUNCEMENT : 29 .10 . 2015 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,A.M. CHALLENGING THE ORDERS DATED 29.5.2012 AND 6.12.201 0 OF THE CIT(A)-11 AND 33-MUMBAI,RESPE -CTIVELY ASSESSEE AND THE ASSESSING OFFICER(AO)HAVE FILED APPEALS FOR THE ABOVE MENTIONED ASSESSMENT YEARS(AY.S.).ALL THE APPEALS DEAL WITH S IMILAR ISSUE-AS TO WHETHER THE ASSESSEE HAD CORRECTLY CLAIMED THE DEDUCTION U/S.80IB OF THE ACT .THEREFORE,WE ARE ADJUDICATING THEM BY A COMMON SINGLE ORDER. ITA NO./4965/MUM/2012-AY.2004-05: ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF CONSTRUCTI ON OF BUILDINGS,FILED ITS RETURN OF INCOME ON 1.11.2004,DECLARING NIL INCOME.THE ASSESSMENT WA S COMPLETED ON 28.12.2006,U/S. 143 (3) OF THE ACT,DETERMINING THE INCOME OF THE ASSESS EE AT RS.17.52 LACS. 2. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA,WHO ALLOWED THE APPEAL FILED BY THE ASSESSEE.THE ORDER OF THE FAA WAS CHALLENGED BY THE AO BEFORE THE TRIBUNAL.VIDE ORDER,DATED 19.01.2010(ITA /7321/MUM/2008),THE TRIBUNAL RESTOR -ED BACK THE MATTER TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH IN LIGHT OF THE DECISION OF BRAHMA ASSOCIATES(119ITD255). THE AO AFTER CONSIDERING THE SUBMISSION OF THE ASSE SSEE,DT.22.12.2012,HELD THAT THE DEPARTMENT HAD FILED AN APPEAL BEFORE THE HONBLE B OMBAY HIGH COURT WITH REGARD TO COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF HOU SING PROJECT AS WELL AS THE COMMERCIAL AREA,THAT THE ASSESSEE HAD CHANGED HIS P LAN DELIBERATELY TO AVAIL THE BENEFIT OF 80IB,THAT THE LAW HAD EXISTED UPTO 2004-05 DID NOT PERMIT ANY CONSTRUCTION OF ANY COMMERCIAL FOR CLAIMING DEDUCTION U/S.80IB(10) OF T HE ACT, THAT THE TOTAL BUILT UP AREA OF THE PROJECT IN THE ASSESSEES PROJECT WAS MORE THAN 200 0 SQ. FT. FINALLY,HE DENIED THE CLAIM,MADE BY THE IT U/S.80IB(10),AMOUNTING TO RS.17.53 LACS. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA.BEF ORE HIM,IT WAS ARGUED THAT THE TRIBUNAL HAD GIVEN A FINDING OF FACT THAT PROJECT UNDER CONSIDERATION HAD COMMENCED AFTER 01.10. ITA NO.496 5&OTHRERS/ABHILASA-AY.04-05TO08-09 2 2 1998, THAT THE PROJECT WAS COMPLETED WITHIN THE STI PULATED TIME THAT FILING OF AN APPEAL BY THE DEPARTMENT AGAINST THE DECISION OF TRIBUNAL WAS NO GROUND TO DENY A CLAIM/DEDUCTION MADE BY AN ASSESSEE.AFTER CONSIDERING THE AVAILABLE MATERIAL, THE FAA HELD THAT THE ORIGINAL BUILT UP COMMERCIAL AREA WAS 3920 SQ.FT.,THAT THE P LAN WAS APPROVED ON 7.12.2003, THAT THE COMPLETION CERTIFICATE OF THE PLAN WAS ISSUED ON 24 .8.05.HE REFERRED TO THE ORDER OF THE AHMEDABAD TRIBUNAL DELIVERED IN THE CASE OF NAMAN C ONSTRUCTION(ITA 2424/AHD/2009 DT. 13.5.2011),THAT THE ARGUMENT ADVANCED BY THE ASSESS EE THAT RESTRICTION OF COMMERCIAL AREA HAD TO BE APPLIED TO THE PROJECT APPROVED ON OR BEF ORE 1.4.2005 WAS IN CONTRAVENTION WITH LEGISLATIVE INTENT AND WITH THE JUDGMENT OF HONBLE BOMBAY HIGH COURT THAT CLAUSE (D) SECTION 80IB(10)IS APPLICABLE IRRESPECTIVE WHETHER THE PROJECT HAS BEEN APPROVED ON OR AFTER 01.4.05 OR BEFORE 01.4.05,THAT THE RESTRICTION TO C OMMERCIAL AREA ARE AS PER CLAUSE(D)OF SECTION 80IB(10)OF THE ACT WAS APPLICABLE FROM AY.0 5-06.HE ALLOWED THE APPEAL FILED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION,WHERE AS THE APPEALS FOR THE REMAINING TWO AY.S.I.E.2005-06 AND 2008-09 WERE DISMISSED. 2.2. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE(DR) STATED THAT THE MATTER COULD BE DECIDED ON MERITS.THE AUTHORIS ED REPRESENTATIVE(AR) STATED THAT AO HAD NOT FOLLOWED THE DIRECTIONS OF THE TRIBUNAL,THA T THE PROJECT WAS APPROVED BEFORE 1.4.05 AND HENCE THE RESTRICTIONS IMPOSED BY THE LEGISLATU RE FOR SUBSEQUENT YEARS WERE NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION.HE SUPPO RTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ISSUE OF AVAILABILITY OF DEDUCTION U/S.80IB OF THE ACT,TO THE ASSESSEE,WAS DISCUSSED BY THE HONBLE HIGH COURT OF BOMBAY(INCOME TAX APPEAL NO.1 482 OF 2011-DATED 15. 02.2013- AY. 2004-05),WHILE DECIDING THE APPEAL FILED BY CIT-23, MUMBAI.WE ARE REPRODUCING THE RELEVANT QUESTIONS FRAMED FOR THE CONSIDERATION OF THE HONB LE COURT AND SAME READ AS UNDER: B) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW,THE TRIBUNAL WAS RIGHT IN CONSIDERING THE COMMENCEMENT CERTIFICATE DATED 16-9 -1998 AS APPROVED BY LOCAL AUTHORITY,AS LAND WAS AGRICULTURAL LAND.WHEREAS NOWHERE IN THE S AID CERTIFICATE IT IS MENTIONED THAT THE PROJECT WAS DISAPPROVED ? D) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW,THE TRIBUNAL WAS RIGHT IN SETTING ASIDE THE ORDER WITH REGARD TO COMMERCIAL A REA BACK TO THE FILE OF THE AO FOR DECIDING IT AFRESH IN ACCORDANCE WITH SPECIAL BENCH ORDER OF PU NE BENCH OF THE TRIBUNAL IN BRAHAMA ASSOCIATES V/S. JCIT(2009)119ITD255(PUNE)(SB),WHEN THE ACT CLEARLY STATES THAT BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENT INC LUDED IN THE HOUSING PROJECT SHOULD NOT EXCEED FIVE PERCENT OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET,WHICHEVER IS LESS, WHEREAS,COMMERCIAL A REA IS 3920 SQUARE FEET ? WHILE DECIDING THE QUESTION B)AGAINST THE REVENUE,T HE HONBLE COURT HELD THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S.80IB(10)OF THE ACT,AS IT HAD NOT VIOLATED THE PROVISIONS OF SECTION 80IB (10)(A)OF THE ACT. THE HONBLE COURT,FURTHER HELD AS UNDER: IN SO FAR AS QUESTION (D)IS CONCERNED,COUNSEL FOR THE PARTIES STATE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS COUR T IN THE MATTER OF COMMISSIONER OF INCOME TAX V/S. BRAHMA ASSOCIATES REPORTED IN (2011)333 IT R 289 (BOM.).IN VIEW OF THE ABOVE WE SEE NO REASON TO ENTERTAIN QUESTION (D) AS FRAMED. THE DEPARTMENT HAS ALSO FILED APPEAL FOR THE AY.200 5-06,BEFORE THE HONBLE COURT RAISING THE SIMILAR GROUNDS.THE COURT DISMISSED THE APPEAL. IN OUR OPINION,THE ISSUE HAS ATTAINED FINALITY IN V IEW OF THE JUDGMENTS OF THE HONBLE BOMBAY HIGH COURT DELIVERED IN THE ABOVE REFERRED TWO AY.S .RESPECFULLY,FOLLOWING THE ABOVE,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO FO R THE AY.2004-05. ITA/1860-61/MUM/2011-AY.S.2006-07 & 2007-08: 3. WHILE COMPLETING THE ASSESSMENTS FOR THE ABOVE MENT IONED TWO AY.S.,THE AO DISALLOWED DEDUCTION U/S.80IB(10)OF THE ACT AMOUNTING TO RS.28 .65 LAKHS AND RS.30.95 LAKHS RESPECTIVELY ITA NO.496 5&OTHRERS/ABHILASA-AY.04-05TO08-09 3 3 ON THE GROUND THAT THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITIES BEFORE 01.10.1998.THE AO ALSO HELD THAT THE COMMERCIAL AREA OF THE PROJECT W AS MORE THAN THE LIMIT PRESCRIBED BY THE PROVISIONS OF THE SECTION 80IB(10)(D)OF THE ACT.THE FAA ALLOWED THE APPEALS FILED BY THE ASSESSEE. WHILE DECIDING THE APPEALS FILED BY THE AO FOR OTHE R AY.2004-05,WE HAVE DECIDED THE ISSUE IN AGAINST HIM.FOLLWING THE SAME,WE UPHOLD THE ORDERS OF THE FAA FOR BOTH THE ABOVE MENTIONED AY.S. AND DECIDE THE EFFECTIVE GROUND OF APPEAL AGA INST THE AO. ITA/5001-02/MUM/2012-AY.2005-06 & 2008-09: 4. THE EFFECTIVE GROUND OF APPEAL,FILED BY THE ASSESSE E,FOR BOTH THE YEARS IS ABOUT DISALLOWANCE OF DEDUCTION U/S.80 IB(10)OF THE ACT.THE AO AND THE FAA,IN THEIR ORDERS,HELD THAT THE PROVISIONS OF SUB SECTION (D) TO THE SECTION 80IB O F THE ACT WERE APPLICABLE IN THE CASES UNDER CONSIDERARION,THAT THE SECTION WAS APPLICABLE RETRO SPECTIVELY.THEY REJECTED THE CLAIM MADE BY THE ASSESSEE AMOUNTING TO RS.30.47 LAKHS AND RS.1.4 7 CRORES RESPECTIVELY. BEFORE US,THE AR RELIED UPON THE JUDGMENTS OF THE H ONBLE BOMBAY HIGH COURT DELIVERED IN ASSESSEES OWN CASE(SUPRA)AND FURTHER STATED THE HO NBLE APEX COURT HAS ALSO HELD THAT PROVISIONS OF SECTION 80IB(10)(D)WERE NOT RETROSPEC TIVE. DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 4.1. WE FIND THAT WHILE DECIDING THE APPEALS IN THE CASE S OF SARKAR BUILDERS AND OTHERS,ON 15. 05.2015,THE HONBLE SUPREME COURT (CIVIL APPEAL NO .4476 OF 2015& OTHERS)HAS DEALT THE ISSUE AT LENGTH AND HAS APPROVED THE VIEW TAKEN BY THE HONBLE HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA).WE WOULD LIKE TO REPRODUC E THE RELEVANT PORTION OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT AND SAME READS AS UND ER: CLAUSE (D) WAS SPECIFICALLY INSERTED WITH EFFECT FR OM APRIL 1, 2005 AND, THEREFORE, THAT CLAUSE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO APRIL 1, 2005. CLAUSE (D) SEEKS TO DENY SECTION 80- IB(10) DEDUCTION TO PROJECTS HAVING COMMERCIAL USER BEYOND THE LIMIT PRESCRIBED UNDER CLAUSE (D), EVEN THOUGH SUCH COMMERCIAL USER IS APPROVED B Y THE LOCAL AUTHORITY. THEREFORE, THE RESTRICTION IMPOSED UNDER THE ACT FOR THE FIRST TIM E WITH EFFECT FROM APRIL 1, 2005, CANNOT BE APPLIED RETROSPECTIVELY. RESPECTFULLY,FOLLOWING THE ABOVE JUDGMENT AND THE J UDGMENTS DELIVERED IN ASSESSEES OWN CASE BY THE HONBLE COURT,WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE FOR BOTH THE AY.S. AS A RESULT,APPEALS FILED BY THE AO STAND DISMISSED AND THE APPEALS OF THE ASSESSEE ARE ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 29TH,OCTOBER ,2015. !' 29 #$%& ,2015 '() SD/- SD/- ( / BEENA PILLAI ) ( / RAJENDRA ) * / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, !' DATE: 29.10.2015 . . . JV.SR.PS. ! ! ! ! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ ITA NO.496 5&OTHRERS/ABHILASA-AY.04-05TO08-09 4 4 //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.