ITO 19(1)(4), MUMBAI V. SAGAR SHOPPING DEVELOPERS, MUMBAI

ITA 5286/MUM/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3281 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 21-01-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 12-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay
• Section: 143(3); 80IB; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BE NCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .TA NO.5286/MUM/2011 ( / ASSESSMENT YEAR: 2003-04 THE ITO - 19(1)(4), PIRAMAL CHAMBERS, PAREL, LALBAUG, MUMBAI-400 012 / VS. M/S. SAGAR SHOPPING DEVELOPERS, SAGAR REGENCY, OFF JAWAHARLAL NEHRU ROAD, VAKOLA BRIDGE, NEAR DHOBI GHAT, VAKOLA, SANTACRUZ (E), MUMBAI-400 05 C.O. NO. 211/MUM/2012 (ARISING OUT OF I .TA NO.5286/MUM/2011 ( / ASSESSMENT YEAR: 2003-04 M/S. SAGAR SHOPPING DEVELOPERS, SAGAR REGENCY, OFF JAWAHARLAL NEHRU ROAD, VAKOLA BRIDGE, NEAR DHOBI GHAT, VAKOLA, SANTACRUZ (E), MUMBAI-400 05 / VS. THE ITO - 19(1)(4), PIRAMAL CHAMBERS, PAREL, LALBAUG, MUMBAI-400 012 ./ ./ PAN/GIR NO. AADFS 1422M ( / APPELLANT ) .. ( / RESPONDENT ) / REVENUE BY: SHRI LOVE KUMAR / ASSESEE BY: SHRI AJAY R SINGH / DATE OF HEARING :21.01.2016 !' / DATE OF PRONOUNCEMENT :29.01.2016 / O R D E R ITA NO. 5286/M/2011 C.O. NO. 211/M/12 2 PER C.N. PRASAD, JM: THESE ARE APPEAL BY THE REVENUE AND THE CROSS OBJEC TION BY THE ASSESSEE PREFERRED AGAINST THE ORDER OF THE LD. CI T(A)-30 MUMBAI DATED 09.05.2011 PERTAINING TO ASSESSMENT YEAR 200 3-04. SINCE THIS APPEAL AND THE CROSS OBJECTION WERE HEARD TOGETHER, THEY ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE AND BREVITY. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THAT T HE PROJECT HAD COMMENCED AFTER 1.10.1998 WITHOUT APPRECIATING THE FACT THAT THE AO HAD BROUGHT OUT SUFFICIENT MATERIA L ON RECORD TO CONCLUDE THAT THE PROJECT HAD COMMENCED M UCH PRIOR TO 01.10.1998 I.E. ON 13.11.1996 AND HENCE NO T ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE I.T. AC T. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN RELYING ON THE DECISION OF THE HONBLE ITAT IN THE CASE OF M/S. SARKAR BUILDER S, ITA NO. 4835/M/07 DATED 23.10.209 WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF BUILDING AND CONSTRUCTION. THE ORIGINA L RETURN WAS FILED BY THE ASSESSEE ON 1.11.2004 DECLARING NIL INCOME A FTER CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT . ASSESSMENT U /S. 143(3) WAS COMPLETED ON 28.3.2006 ACCEPTING THE NIL INCOME SH OWN BY THE ASSESSEE AFTER ALLOWING DEDUCTION CLAIMED U/S. 80IB (10) OF THE ACT. LATER ON NOTICE U/S. 148 WAS ISSUED AND THE REASSES SMENT WAS COMPLETED U/S. 143(3) R.W. SEC. 147 OF THE ACT COMP LETED ON 24.12.2007 DETERMINING THE INCOME OF THE ASSESSEE A T RS. ITA NO. 5286/M/2011 C.O. NO. 211/M/12 3 29,36,955/- BY WITHDRAWING THE DEDUCTION ALLOWED U/ S. 80IB(10) OF THE ACT. THE REASON FOR THE AO FOR WITHDRAWING THE DEDUCTION ALLOWED U/S. 80IB(10) WAS THAT INITIALLY MUNICIPAL CORPORATION OF GREATER MUMBAI ISSUED COMMENCEMENT CERTIFICATES IN THE NAME OF SUNIL BUILDERS FOR THE RESIDENTIAL BUILDING ON THE SITE AND FOR THE VERY SAME SITE, THE ASSESSEE OBTAINED COMMENCEMENT CERTI FICATE ON 5.8.1999. ACCORDING TO THE AO, DEDUCTION U/S. 80IB (10)(A) IS ALLOWABLE IF SUCH UNDERTAKING IS COMMENCED OR COMM ENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1.10.1998 AND SINCE THE COMMENCEMENT CERTIFICATE HA S BEEN ISSUED ON 13.11.1996 I.E. PRIOR TO 1.10.1998, THE AO WAS OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10 ) OF THE ACT. 3.1. ON APPEAL, THE LD. CIT(A) WHILE UPHOLDING THE VALIDITY OF REOPENING ALLOWED THE CLAIM OF DEDUCTION U/S. 80IB( 10) TO THE ASSESSEE HOLDING THAT THE COMMENCEMENT CERTIFICATE WHICH WAS ISSUED ON 13.11.1996 IN THE NAME OF SUNIL BUILDERS GOT EXPIRED ON 12.11.1997 AND THE ASSESSEE APPLIED FOR COMMENCEME NT CERTIFICATE OF THE RESIDENTIAL PROJECT ON 13.5.1999 AND THE COM MENCEMENT CERTIFICATE WAS ISSUED IN THE NAME OF THE ASSESSEE BY THE MUNICIPAL CORPN. OF GREATER MUMBAI ON 5.8.1999. THE LD. CIT( A) HELD THAT THE DEVELOPMENT WORK WAS STARTED ONLY AFTER THE COMMENC EMENT CERTIFICATE ISSUED IN THE NAME OF THE ASSESSEE ON 5 .8.1999 THEREFORE HE HELD THAT SINCE THE ASSESSEE HAS DEVELOPED THE P ROJECT RATHER COMMENCED THE PROJECT AFTER 1.10.1998, ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. 4. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFO RE US. ITA NO. 5286/M/2011 C.O. NO. 211/M/12 4 5. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY S UPPORTED THE ORDER OF THE AO IN DENYING THE ASSESSEE DEDUCTI ON U/S. 80IB(10) OF THE ACT. 6. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPOR TED THE ORDER OF THE LD. CIT(A). HE INVITED OUR ATTENTION TO PAG E 53 TO 55 OF THE PAPER BOOK AND SUBMITS THAT THE ORIGINAL COMMENCEME NT CERTIFICATE WAS ISSUED IN THE NAME OF SUNIL BUILDERS ON 13.11.1 996 AND THIS WAS VALID UPTO 12.11.1997. HE SUBMITS THAT THE ASSESSE E FIRM ENTERED INTO DEVELOPMENT AGREEMENT WITH SUNIL BUILDERS VID E AGREEMENT DATED 9.4.1993 FOR CONSTRUCTION OF RESIDENTIAL COMP LEX. HE SUBMITS THAT SUNIL BUILDERS DID NOT CARRY OUT ANY DEVELOPME NT WORK THOUGH IT HAD APPLIED ON 15.10.1982 AND OBTAINED CERTIFICATE ON 13.11.1996. HE SUBMITS THAT AFTER ENTERING INTO DEVELOPMENT AGR EEMENT ON 9.4.1993, ASSESSEE MADE APPLICATION TO BMC ON 13.5. 1999 AND OBTAINED COMMENCEMENT CERTIFICATE DATED 8.8.1999 AN D THE ENTIRE CONSTRUCTION OF THE PROJECT WAS COMMENCED IN PURSUA NCE OF THE SAID CERTIFICATE. THEREFORE, IT IS SUBMITTED THAT THE PROJECT WAS COMMENCED AFTER 1.10.1998 AND THE ASSESSEE IS ENTIT LED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. 7. HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIA LS PLACED BEFORE US. THE AO DENIED DEDUCTION U/S. 80IB(10) B Y REOPENING THE ASSESSMENT U/S. 147 OF THE ACT FOR THE REASON THA T DEDUCTION U/S. 80IB(10) IS ALLOWABLE WHEN THE PROJECT IS COMMENCED ON OR AFTER 1.10.1998. SINCE THE COMMENCEMENT CERTIFICATE ACCO RDING TO THE AO WAS ISSUED PRIOR TO 1.10.1998, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. THE LD. CIT(A) HELD THAT THE ITA NO. 5286/M/2011 C.O. NO. 211/M/12 5 COMMENCEMENT CERTIFICATE ISSUED ON 13.11.1996 IN TH E NAME OF SUNIL BUILDERS GOT EXPIRED ON 12.11.1997 AND THE ASSESSEE ON ENTERING INTO DEVELOPMENT AGREEMENT WITH SUNIL BUILDERS APPLIED F OR COMMENCEMENT CERTIFICATE ON 13.5.1999 AND GOT CERTI FICATE DATED 5.8.1999 AND THE PROJECT WAS COMMENCED BY THE ASSES SEE PURSUANT TO THE CERTIFICATE DATED 5.8.1999 AND SINCE THE PROJEC T WAS COMMENCED AFTER 1.10.1998, ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. WHILE HOLDING SO, THE LD. CIT(A) OBSERVED AS UNDER: THE APPELLANT ON THE OTHER HAND HAS CONTENDED THAT THE COMMENCEMENT CERTIFICATE (CC) DATED 13.11.1996 ISSU ED IN THE NAME OF SUNIL BUILDERS GOT EXPIRED ON 12.11.1997 SI NCE SUNIL BUILDERS DID NOT CARRY ANY DEVELOPMENT WORK. THE AP PELLANT MADE AN APPLICATION TO BMC ON 13.5.1999 AND ACCORDI NGLY THE APPELLANT WAS ISSUED COMMENCEMENT CERTIFICATE DATED 5.8.1999 IN ITS OWN NAME I.E. SAGAR SHOPPING DEVELOPERS. THE APPELLANT HAS SUBMITTED THAT THE FIRM CARRIED OUT DEVELOPMENT WORK ON SALEABLE PART OF THE PROJECT IN PURSUANCE OF THE CC DATED 5.8.1999. AS SUCH, THE AO'S RELIANCE ON THE ISSUE O F CC DATED 13.11.1996 ISSUED IN THE NAME OF SUNIL BUILDERS IS TOTALLY DEVOID OF THE FACTS AND CIRCUMSTANCES OF THE CASE. THE A.R . OF THE APPELLANT ALSO SUBMITTED THAT THE ISSUE OF CC DOES NOT LEAD TO THE CONCLUSION THAT DEVELOPMENT ACTIVITY HAS COMMENCED. THE AR. OF THE APPELLANT ALSO SUBMITTED THAT IN SUBSEQUENT YEA RS, THE ASSESSMENT HAS BEEN FRAMED U/S.143(3) AND THAT FIND INGS HAVE BEEN GIVEN THAT THE APPELLANT HAS SATISFIED ALL THE CONDITIONS U/S.80IB(1) OF THE I.T.ACT. THE CC DATED 13.11.1996 WAS ISSUED IN THE NAME OF S UNIL BUILDERS WHICH GOT EXPIRED ON 12.11.1997. HOWEVER, THE CC DATED 13.11.1996 WAS ISSUED IN THE NAME OF SUNIL BUILDERS WHO DID NOT CARRY OUT ANY DEVELOPMENT WORK. THIS BEING SO, THE APPELLANT MADE APPLICATION ON 13.5.1999 AND ACCORDINGLY IT WA S ISSUED CC DATED 5.8.1999 IN ITS OWN NAME. THUS THE CC WAS ISS UED TO 2 DIFFERENT ENTITIES I.E. SUNIL BUILDERS AND THE APPE LLANT AND HENCE IT IS NOT CORRECT TO APPLY EXPLANATION (1) TO SECTION 80IB(10). THE DEVELOPMENT WORK STARTED ONLY AFTER THE CC DATED 5. 8.1999 WAS ISSUED IN THE NAME OF THE APPELLANT. THE FACTS OF T HE CASE CITED BY ITA NO. 5286/M/2011 C.O. NO. 211/M/12 6 THE APPELLANT OF SARKAR DEVELOPERS ARE TO MY MIND O N WEAKER FOOTINGS COMPARED TO THE CASE OF THE APPELLANT. IN THE CASE OF SARKAR DEVELOPERS, BOTH THE CERTIFICATES WERE IN TH E NAME OF THE SAME ASSESSEE WHEREAS IN THE CASE OF THE APPELLANT, THE CC ELATED 13.11.1996 IS IN THE NAME OF SUNIL BUILDERS AND THE CC DATED 5.8.1999 IS IN THE NAME OF THE APPELLANT. HOWEVER, THE OTHER FACTS OF SARKAR BUILDERS ARE QUITE SIMILAR TO THE FACTS O F THE APPELLANT IN AS MUCH AS THE CC WAS EXPIRED IN BOTH THE CASES AND A FRESH CC WAS OBTAINED WHICH IS AFTER 1.10.1998. THE HON. TRI BUNAL IN THE CASE OF SARKAR BUILDERS HAD HELD THAT FROM THE CC O RIGINALLY OBTAINED, IT CANNOT BE SAID THAT THE APPELLANT HAS DEVELOPED THE PROJECT PRIOR TO 1.10.1998. THIS FINDING OF THE HON . TRIBUNAL IS VERY MUCH APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. HENCE FOLLOWING THE RATIO DECIDED IN THE AFOREMENTIONED CASE, I ALSO HOLD THAT THE APPELLANT IS ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE I.T. ACT AND THE OBJ ECTION OF THE AO THAT THE APPELLANT HAS OBTAINED THE CC PRIOR TO 1.1 0.1998 DOES NOT HOLD GOD. THE AO IS DIRECTED TO GRANT DEDUCTIO N U/S. 80IB(10) TO THE APPELLANT ACCORDINGLY. THE GROUNDS OF APPEAL ARE ALLOWED. 8. NONE OF THE ABOVE FINDINGS OF THE LD. CIT(A) HAS BEEN REBUTTED BY THE REVENUE WITH EVIDENCES. IN THE CIRCUMSTANCE S, WE DO NOT SEE ANY VALID REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) IN HOLDING THAT ASSESSEE IS ENTITLED FOR DEDUCTION U/ S. 80IB(10) OF THE ACT. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. C.O. NO. 211/M/2012 10. THE ASSESSEE IN ITS CROSS OBJECTION CHALLENGING THE ORDER OF THE LD. CIT(A) IN UPHOLDING THE REOPENING OF THE ASSES SMENT U/S. 148 OF THE ACT. ITA NO. 5286/M/2011 C.O. NO. 211/M/12 7 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT T HE C.O. BECOME INFRUCTUOUS ONCE THE ORDER OF THE LD. CIT(A) IS UPH ELD. WE FIND FROM THE RECORD, THE C.O FILED BY THE ASSESSEE IS TIME B ARRED BY 103 DAYS. N O PETITION FOR CONDONATION OF DELAY HAS BEEN FILED BY THE ASSESSEE. THUS, THE C.O. FILED BY THE ASSESSEE IS DISMISSED I N LIMINE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2016. SD/- SD/- (RAJESH KUMAR) (C.N. PRASAD ) # / ACCOUNTANT MEMBER %&# /JUDICIAL MEMBER MUMBAI; )# DATED : 29 TH JANUARY, 2016 . & . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. +,-&&./ , ./' , / DR, ITAT, MUMBAI 6. -012 / GUARD FILE. / BY ORDER, +& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI