ITO 23(1)(4), MUMBAI V. SHREE ABHINAV ASSOCIATES, MUMBAI

ITA 5623/MUM/2009

• Counselvise Citation: 562319914 RSA 2009
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 27-10-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 15-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'I' BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 5623/MUM/2009 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER - 23(1)(4) M/S. SHREE ABHINAV AS SOCIATES C-10, PRATYAKSHA KAR BHAVAN A-204, SAI SHRISTI, LBS MARG BANDRA KURLA COMPLEX VS. BHANDUP (W), MUMBAI 400078 BANDRA (E), MUMBAI 400051 PAN - AAMFS 3578 D APPELLANT RESPONDENT APPELLANT BY: SHRI S.K. SINGH RESPONDENT BY: SHRI PARAS SAVLA O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XXIII, MUMBAI DATED 15 TH JULY 2009 IN WHICH THE REVENUE IS CONTESTING THE ALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10) DISAL LOWED BY THE A.O. BUT GRANTED BY THE CIT(A) FOLLOWING THE DECISION OF THE ITAT IN THE CASE OF SAROJ SALES ORGANISATION VS. ITO 3 DTR (MUM) 494. 2. THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A BUILDER AND DEVELOPER DEVELOPING HOUSING PROJECT NAMED RAVINDRA ARCADE AT TITWALA, DISTRICT KALYAN. THE PROJECT HAS BEEN APPROVED BY KALYAN-DOM BIVALI MUNICIPAL CORPORATION AND THE PROJECT COMMENCED ON 22.12.2000 . THE PROJECT CONSISTING OF NINE BUILDINGS, NOS. A TO I HAD BEEN COMPLETED ON 11.08.2004. ASSESSEE EFFECTED SALES DURING THE YEAR AND CLAIMED 80IB DEDUCTION. THE A.O. DISALLOWED THE CLAIM ON THE PRETEXT THAT HOUSI NG PROJECT INCLUDED COMMERCIAL ESTABLISHMENTS TO THE EXTENT OF 3375 SQ. FT AND IN VIEW OF THE PROVISIONS OF SECTION 80IB(10) W.E.F. 01.04.2005 CO MMERCIAL BUILT UP AREA WAS ALLOWABLE TO THE EXTENT OF 5% OF THE BUILT UP A REA OR 2,000 SQ.FT. WHICH EVER IS LESS, THE DEDUCTION WAS NOT ALLOWABLE. THE CIT(A) HELD THAT THE ASSESSEE WAS ENTITLED FOR DEDUCTION UNDER SECTION 8 0IB HOLDING THAT ONCE THE PROJECT WAS APPROVED AS HOUSING PROJECT BY THE LOCAL AUTHORITIES BEFORE 31.03.2005 THE DEDUCTION UNDER SECTION 80IB(10) WAS ALLOWABLE FOR THE ITA NO. 5623/MUM/2009 M/S. SHREE ABHINAV ASSOCIATES 2 ENTIRE PROJECT AND NO DISALLOWANCE WILL BE MADE ON ACCOUNT OF COMMERCIAL SHOPS INCLUDED IN IT, WHICH IN FACT WERE LESS THAN 5% OF THE ENTIRE HOUSING PROJECT. REVENUE HAS RAISED GROUNDS THAT ASSESSEE IS NOT ELI GIBLE FOR DEDUCTION UNDER SECTION 80IB(10) RELYING ON THE AME NDMENT BROUGHT W.E.F. 01.04.2005 TO THE STATUTE. 3. AT THE OUTSET IT WAS SUBMITTED THAT THE ISSUE WAS HELD IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S SAROJ SALES ORGANISATIO N AND THE SAID ORDER WAS UPHELD BY THE JURISDICTIONAL HIGH COURT FOLLOWING T HE DECISION OF BRAHMA ASSOCITES OF THE HONBLE BOMBAY HIGH COURT. THIS IS SUE WAS CONSIDERED BY THE ITAT IN THE CASE OF SAROJ SALES ORGANIZATION VS . ITO 3 DTR 494 (MUM) DATED 24.01.2008 WHEREIN IT WAS HELD AS UNDER: - THE COMMENCEMENT CERTIFICATES IN RESPECT OF BUILDIN G NO. 1 CONSISTING OF WINGS A AND B WERE RECEIVED ON 7/3/2001 AND 30/3 /2001. COMMENCEMENT CERTIFICATES FOR VARIOUS WINGS IN BLOC K N WERE APPROVED ON VARIOUS DATES BETWEEN 10/9/2001 & 23/9/ 03. ALL THE WINGS IN BLOCK N INDEPENDENTLY SATISFIED THE NECE SSARY APPROVAL OF A HOUSING PROJECT. THERE IS NO DISPUTE THAT ALL THE D WELLING UNITS IN VARIOUS WINGS OF BLOCK N CONTAINED UNITS OF LESS TH AN 1000 SQ.FT. IT IS NOT OPEN TO THE REVENUE TO INCLUDE BUILDING NO. 1 H AVING WINGS A & B OF WHICH THE DWELLING UNITS WERE MORE THAN 1000 SQ.FT. AS PART OF THE BLOCK N PROJECT MERELY TO DENY THE STATUTORY RELIEF WHICH THE ASSESSEE IS ENTITLED TO THE ELIGIBLE HOUSING PROJEC T UNLESS THERE IS A CLEAR INTENTION OF THE LEGISLATURE THE REVENUE CANN OT BE PERMITTED TO DO SO. THE ASSESSEE HAS OBTAINED DIFFERENT COMMENCEMEN T CERTIFICATES AND STARTED ON DIFFERENT PERIODS OF TIME. THEY ARE SEPARATE BY TIME, SPACE AND STATUTORY APPROVALS AND EVEN IN DESIGNS, MAINTENANCE OF SEPARATE BOOKS OF ACCOUNT. THE ASSESSEE HAS NOT CLA IMED ANY RELIEF IN RESPECT OF PROJECT WHICH ADMITTEDLY DOES NOT ADMIT THE TEST LAID DOWN UNDER SECTION 80IB(10). COMBINING THESE TWO PROJECT S INTO ONE WILL LEAD TO A RESULT WHICH MANIFESTLY WILL BE UNJUST AN D ABSURD AND DEFEAT THE VERY PROVISIONS OF DEDUCTION SECTIONS. A S REGARDS THE OBJECTION OF THE AO THAT THE PERMISSIBLE SHOPPING A REA OF HOUSING PROJECT EXCEEDS 5%, THE ASSESSEE IS NOT ENTITLED FO R RELIEF IS ALSO NOT SUSTAINABLE. THE HOUSING PROJECTS WERE APPROVED BEF ORE 31/3/2005 AND FOR SUCH PROJECTS, WHICH WERE SO APPROVED, THER E WAS NO STIPULATION AS TO THE SHOPPING COMPLEX AREA IS PERM ISSIBLE IN THE PROJECT. THE AMENDMENTS WERE SUBSEQUENTLY MADE WHIL E EXTENDING THE DEDUCTION OF INCOME FROM HOUSING PROJECT APPROV ED UPTO 31/3/2007 AND THE DENIAL OF DEDUCTION IS CLEARLY NO T IN ACCORDANCE WITH LAW. 4. THE DECISION OF THE ITAT IN THE CASE OF SA ROJ SALES ORGANIZATION WAS UPHELD BY THE HONBLE HIGH COURT IN ITA NO. 854, 85 5 AND 1058 OF 2008 ITA NO. 5623/MUM/2009 M/S. SHREE ABHINAV ASSOCIATES 3 DATED 22.02.2011 WHEREIN THE FOLLOWING QUESTION RAI SED BY THE REVENUE WAS HELD AGAINST THE REVENUE: - WHETHER IN THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE ITAT WAS RIGHT IN ACCEPTING THE ASSESSEES CLAIM UN DER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961 IN RESPECT OF THE PROFIT DERIVED FROM SALE OF SHOP HOLDING THAT NOWHERE THERE IS ANY CONTEMPLATION FOR RESTRICTING THE BENEFIT ONLY TO RESIDENTIAL UNITS A ND NOT TO THE SHOPS ETC. EVEN THOUGH SECTION 80IB(10) REFERS ONLY TO RE SIDENTIAL UNITS AND THE AMENDMENT INCLUDING SUB-CLAUSE (D) IN RESPECT O F SHOPS AND COMMERCIAL ESTABLISHMENTS WS INTRODUCED IN THE SAID SECTION WITH EFFECT FROM 1 ST APRIL, 2005 I.E. FROM AY 2005-06 AND HAS NO RETROSPECTIVE APPLICATION. 5. AS THE ORDER OF THE ITAT WHICH WAS FOLLOWED BY THE CIT(A) WAS UPHELD BY THE JURISDICTIONAL HIGH COURT, THERE IS NO NEED TO MODIFY THE ORDER OF THE CIT(A). ACCORDINGLY, REVENUE GROUNDS ARE REJECTED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 7 TH APRIL 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 7 TH APRIL 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXIII, MUMBAI 4. THE CIT XXIII, MUMBAI CITY 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.