ACIT - 32(1), MUMBAI V. EKTA SANKALP DEVELOPERS, MUMBAI

ITA 5340/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0269 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 30-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 5340/MUM/2016 (ASSESSMENT YEAR: 2011-12) A C I T - 32(1) PRATYAKSHA KAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400051 VS. M/S. EKTA SANKALP DEVELOLPERS 401, HALLMARK BUSINESS PLAZA KALA NAGAR, NEAR GURUNANAK HOSPITAL, BANDRA (E) MUMBAI 400051 PAN AAAAE2019E APPELLANT RESPONDENT APPELLANT BY: MS. POOJA SWAROOP RESPONDENT BY: MS. RUTUJA N. PAWAR DATE OF HEARING: 07.02.2018 DATE OF PRONOUNCEMENT: 14.02.2018 O R D E R PER RAJESH KUMAR, AM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-44, MUMBAI DATED 06.06.2016 FOR A.Y. 2011-12 . 2. THE ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDE R OF THE CIT(A) DIRECTING THE AO TO ALLOW PROPORTIONATE DEDUCTION U NDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) IN RESPECT OF THOSE UNITS WHERE THE AREA HAS NOT EXCEEDED THE LIMIT AS PRESCR IBED UNDER SECTION 80IB(10)(C) OF THE ACT. 3. AT THE OUTSET THE LEARNED A.R. SUBMITTED BEFORE TH E BENCH THAT THE CASE OF THE ASSESSEE IS COVERED IN ITS FAVOUR BY TH E DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO. 3276/MUM/2010 FOR A.Y. 2007-08 VIDE ORDER DATED 28.09.2012 AND IN ITA NOS. 3316 & 3318/MUM/2012 FOR ASSESSMENT YEARS 2008-09 AND 2009 -10 VIDE ORDER DATED 12.09.2014 AND THEREFORE FOLLOWING THE SAME D ECISIONS THE APPEAL FILED BY THE REVENUE BE DISMISSED. ITA NO. 5340/MUM/2016 M/S. EKTA SANKALP DEVELOLPERS 2 4. THE LEARNED D.R. FAIRLY AGREED WITH THE CONTENTION OF THE LEARNED A.R. THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASS ESSEE BY THE ABOVE MENTIONED DECISIONS OF THE COORDINATE BENCH. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD INCLUDING THE DECISION OF THE COORDINATE BENCH IN A SSESSEES OWN CASE. THE FACTS OF THE CASE BEFORE US BEING SUBSTANTIAL SAME AS IN ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 WHICH HAVE BEEN DECIDE D IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE COORDINATE BENCH ( SUPRA). FOR THE SAKE OF CONVENIENCE WE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE COORDINATE BENCH IN ITA NOS. 3316 & 3318/MUM/2012 AS UNDER: - 5. WE, FACED WITH THE DECISION BY THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA), WHICH IS EVEN OTHERWISE BINDING ON US, PROCEEDED BY FIRSTLY EXAMI NING THE REVENUES RELIANCE THEREON, TO FIND IT AS VALID. TH E HONBLE HIGH COURT, UPON BEING CALLED UPON TO EXAMINE THE PROVISION OF SECTION 80-IB(10) WITH REFERENCE TO THE INGREDIENTS OF AN ELIGIBLE H OUSING PROJECT, A TERM WHICH STANDS NOT DEFINED UNDER THE ACT, CLARIFIED T HAT THE HOUSING PROJECT AS CONTEMPLATED IS ONLY A HOUSING PROJECT AS APPROVED BY THE LOCAL AUTHORITY, TO WHICH (APPROVAL) THE PROVISION REFERS TO, SO THAT THE SAME, WHERE NOT VIOLATIVE OF ANY OF THE CONDITIONS LISTED IN THE PROVISION, AS WITH REGARD TO THE EXTENT OF COMMERCI AL USER (WHICH CONDITION DID NOT EXIST IN THE PROVISION AS IT STOO D AT THE RELEVANT TIME), COULD NOT BE IMPOSED BY JUDICIAL DIKTAT. FURTHER, T HE PROJECT, AS APPROVED, IS A SINGLE PROJECT, WHICH EITHER SATISFI ES THE CONDITIONS ENLISTED IN THE PROVISION OR NOT. THERE WAS THEREFO RE NO SCOPE FOR BIFURCATING ITS PROFITS INTO THAT SUBJECT TO DEDUC TION THERE-UNDER AND NOT SO. THE FOLLOWING WORDS CAPTURE THE DECISION, W HICH FOLLOWS A COMPREHENSIVE DISCUSSION ON THE VARIOUS ASPECTS, AN D IN HARMONY AND AGREEMENT WITH ITS UNDERSTANDING, OF THE MATTE R: (REFER PARA 31 AT PGS. 302-303, ALSO CATCH NOTES AT PGS. 290-291) SECTION 80-IB(10) ALLOWS DEDUCTION TO THE ENTIRE P ROJECT APPROVED BY THE LOCAL AUTHORITY AND NOT TO A PART OF THE PRO JECT. IF THE CONDITIONS SET OUT IN SECTION 80-IB(10) ARE SATISFI ED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO T HE PART OF THE PROJECT . [EMPHASIS OURS] THAT THE SAME IS RENDERED UPON EXAMINING THE PROVIS ION IN A DIFFERENT CONTEXT WOULD BE OF NO MOMENT, WHICH THOU GH PREVAILED WITH THE TRIBUNAL IN THE CASE OF EKTA HOUSING (P.) LTD. (SUPRA) (COPY ON RECORD) IN-AS-MUCH AS IT IS TRITE LAW THAT IT IS TH E RATIO OF THE DECISION ITA NO. 5340/MUM/2016 M/S. EKTA SANKALP DEVELOLPERS 3 WHICH IS BINDING AND HAS PRECEDENT VALUE. THE SAID ORDER BY THE TRIBUNAL, IN-SO-FAR AS IT DOES NOT STATE ANY LEGAL REASONS FOR SO DEVIATING, IS, WITH RESPECT, CLEARLY INCONSISTENT W ITH THE EXPRESS AND CLEAR VERDICT BY THE HONBLE JURISDICTIONAL HIGH CO URT AS EXTRACTED HERE- IN-ABOVE. THE OTHER DECISIONS BY THE TRIBUNAL BEING RELIED UPON BY THE ASSESSEE, RENDERED WITHOUT CONSIDERING THE DECISION BY THE HONBLE COURT IN BRAHMA ASSOCIATES (SUPRA), ARE ALSO THUS A PPARENTLY IN CONFLICT THEREWITH IN-AS-MUCH AS THE SAME OPINE IN FAVOUR OF DEDUCTION, WHICH EXTENDS TO THE ENTIRE PROFIT OF TH E PROJECT, WITH REFERENCE TO THE PROFIT ATTRIBUTABLE TO THE RESIDEN TIAL UNITS SATISFYING THE CONDITION OF SECTION 80-IB(10)(C), I.E., TO A P ART OF THE PROJECT. THE PROPOSITION IS EVEN OTHERWISE INCONSISTENT WITH THE FUNDAMENTAL PRINCIPLE THAT ANY DEDUCTION IS SUBJECT TO ELIGIBIL ITY, I.E., SATISFACTION OF EACH OF THE CONDITIONS PRECEDENT. FURTHER, OUR READ ING OF THOSE DECISIONS BY THE TRIBUNAL, DID NOT EXHIBIT ANY DISC USSION ON OR AN INTERPRETATION OF SECTION 80-IB(10)(C), AS INDEED W AS ALSO THE CASE FOR THE JUDGMENT BY THE HONBLE COURT IN BRAHMA ASSOCIATES (SUPRA). THE PROVISION IS ACCORDINGLY EXAMINED CLOSELY, TO F IND CLAUSE (C) AS WORDED DIFFERENTLY FROM THE OTHER CLAUSES OF SEC TION 80-IB(10), SETTING FORTH THE CONDITIONS PRECEDENT FOR THE ELIG IBILITY TO DEDUCTION OF THE PROFITS OF THE PROJECT. THE SAID CLAUSE, ON A F AIR CONSTRUCTION, WAS FOUND TO CONTAIN A CONDITION WITH REFERENCE TO THE RESIDENTIAL UNIT COMPRISING THE HOUSING PROJECT. THE CONDITION, BY N ECESSARY IMPLICATION, APPLIES TO ALL THE RESIDENTIAL UNITS O F THE HOUSING PROJECT. THE CONVERSE, HOWEVER, CANNOT BE SAID TO HOLD, SO T HAT ONLY SUCH HOUSING PROJECT, ALL THE RESIDENTIAL UNITS COMPRISI NG WHICH SATISFY THE CONDITION OF SECTION 80-IB(10)(C), IS AN ELIGIBLE P ROJECT. THE WORD PROJECT, CLEARLY MENTIONED IN EACH OF THE OTHER C LAUSES, IS CONSPICUOUS BY ITS ABSENCE IN CLAUSE (C). THAT IS, S. 80-IB(10)(C) REPRESENTS A CONDITION PRECEDENT QUA THE RESIDENTIA L UNIT COMPRISING THE HOUSING PROJECT AND NOT QUA THE PROJECT; ITS LA NGUAGE NOT ADMITTING OF SUCH A VIEW. WE MAY THOUGH AT ONCE CLARIFY THAT THE DECISION BY THE HONBLE COURT BEING BINDING, WE WOULD NOT HAVE FOR A MOMENT HESITATED TO HOLD OTHERWISE IF WE FOUND ANYTHING TO SO SUGGEST IN THE DECISION IN BRAHMA ASSOCIATES (SUPRA), WHICH IS SANS ANY REFERENCE TO S. 80-IB(10)(C), OR IF THAT MEANING OR INTENTION WA S FOUND EXPRESSED IN ITS PLAIN LANGUAGE; IT BEING TRITE THAT THERE IS NO EQUITY ABOUT TAX AND THERE IS NO ROOM FOR INTENDMENT, SO THAT ONE HAS TO LOOK FAIRLY AT THE LANGUAGE USED, EVEN AS EXHORTED TIME AND AGAIN BY T HE APEX COURT. ALSO, FISCAL STATUTES ARE TO BE STRICTLY INTERPRETE D, AND SO ARE THE EXEMPTION PROVISIONS. IT IS ONLY ONCE AN ENTITY OR INCOME, WHICH IS THE SUBJECT MATTER OF EXEMPTION, IS FOUND, ON SUCH CONS TRUCTION, TO BE WITHIN THE AMBIT OF THE PROVISION, THAT A LIBERAL A PPROACH IS TO BE ADOPTED TOWARD EFFECTUATING THE OBJECT OF THE PROVI SION, FOR WHICH WE MAY REFER TO BAJAJ TEMPO LTD. VS. CIT [1992] 196 ITR 188 (SC) RELIED UPON BY THE TRIBUNAL IN THE VARIOUS ORDERS, AS FAR AS APPEARS ON A READING OF THEIR EXTRACTS AS LISTED IN THE TRIBUNAL S ORDER FOR A.Y. 2007- 08 (SUPRA). THE INTERPRETATION IS ALSO IN ACCORD WI TH A PURPOSIVE AND ITA NO. 5340/MUM/2016 M/S. EKTA SANKALP DEVELOLPERS 4 LIBERAL APPROACH, ADVOCATED BY THE APEX COURT IN, I NTER ALIA, BAJAJ TEMPO LTD. (SUPRA). THE PROVISION BEING AN INCENTIV E PROVISION, TOWARD PROMOTING THE GROWTH OF AFFORDABLE HOUSING IN THE C OUNTRY, THE CONSTRUCTION ENABLES THE SAME, WHILE AT THE SAME TI ME OPERATING TO EXCLUDE THE EXTENSION OF THE INCENTIVE TO HOUSING T HAT IS NOT COVERED OR TARGETED BY THE PROVISION, AS SOUGHT TO BE INCLUDED BY THE LD. AR. AGAIN, IT IS TRITE LAW THAT THE BENEFIT OF ANY AMBI GUITY, IF ANY, IN THE LANGUAGE OF THE PROVISION, SO THAT TWO REASONABLE V IEWS ARE PERMISSIBLE, IS TO GO TO THE TAX PAYER. WE MAY CLARIFY THAT OUR DECISION, EVEN AS SOUGHT TO BE EMPHASIZED EARLIER, DESPITE APPROVING THE PROPORTIO NATE DEDUCTION, I.E., W.R.T. SECTION 80-IB(10)(C), IS, FOR THE REAS ONS AFORE-STATED, THUS NOT IN CONFLICT WITH THE DECISION BY THE HONBLE JU RISDICTIONAL HIGH COURT IN BRAHMA ASSOCIATES (SUPRA). THE DEDUCTION TOWARD THE RESIDENTIAL UNITS SATISFYING THE CONDITION OF S. 80-IB(10)(C), ARRIVED AT ON A PROPORTIONATE BASIS, IS THEREFORE UPHELD. 6. IN ORDER TO MAINTAIN CONSISTENCY WITH THE DECISION OF THE COORDINATE BENCH WE HEREBY UPHOLD THE ORDER OF THE CIT(A) UPHO LDING THE PROPORTIONATE ALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF THOSE UNITS SATISFYING THE CONDITIONS OF SECTION 80 IB(10)(C) OF THE ACT AND RESULTANTLY THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2018. SD/ - SD/ - (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14 TH FEBRUARY, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -44, MUMBAI 4. THE CIT - 32, MUMBAI 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.