ITO WD 1(3), THANE V. KASHISH PARK REALTORS, THANE

ITA 5697/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7420 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: SUBODH RATNAPARKHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER ITA NO. 5697 /MUM./2016 ( ASSESSMENT YEAR : 20 1 2 1 3 ) INCOME TAX OFFICER WARD 1(3), MUMBAI . APPELLANT V/S M/S. KASHISH PARK REALTORS F.G.P. COMPLEX, KASHISH PARK L.B.S. MARG, NEAR MULUND CHECK NAKA THANE (W) 400 604 AAGFK2620J . RESPONDENT REVENUE BY : SHRI V. VIDHYADHAR ASSESSEE BY : S HRI SUBODH RATNAPARKHI DATE OF HEARING 19.04.2018 DATE OF ORDER 25.04.2018 O R D E R PER SAKTIJIT DEY, J.M. THIS APPEAL BY THE REVENUE IS AGAINST ORDER DATED 30 TH JUNE 2016 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 1 , MUMBAI, FOR THE ASSESSMENT YEAR 20 1 2 1 3 . 2 . THE ISSUE IN DISPUTE IN THE PRESENT APPEAL RELATES TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) IN RESPECT OF A HOUSING PROJECT. 2 M/S. KASHISH PARK REALTORS 3 . B RIEF FACTS ARE, THE ASSESSEE A PARTNERSHIP FIRM IS ENGAGED IN TH E BUSINESS OF REAL ESTATE DEVELOPMENT / CONSTRUCTION. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 TH SEPTEMBER 2011 DECLARING TOTAL INCOME OF ` 5,95,659 AFTER CLAIMING DEDUCTION OF ` 4,94,34,549 , UNDER SECTION 80IB(1 0) OF THE ACT. DURING THE ASSES SMENT PROCEEDINGS, TO VERIFY ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT THE ASSESSING OFFICER CALLED FOR VARIOUS INFORMATION. F ROM THE DETAILS SUBMITTED BY THE ASSESSEE HE FOUND THAT THE ASSESSEE CLAIMED TO HAVE DEVELOPED A HOUSING PROJECT NAMED KASHISH PARK COMPRISING OF BUILDING NO.MN 6, MN 7 A ND MN 8 ALONG WITH TOWER A AT FGP COMPLEX, MULUND CHECK NAKA, THANE (WEST). IT WAS N OTICED, THE ASSESSEE RECEIVED COMPLETION CERTIFICATE IN RESPECT OF TOWER A IN THE ASSESSMENT YEAR 2011 12 AND THE PROFIT DERIVED THERE FROM WAS OFFERED TO TAX IN THE SAID ASSESSMENT YEAR. HOWEVER, THE WHOLE OF THE PROFIT WAS CLAIMED AS DEDUCTION UNDER SECT I ON 80IB(10) OF THE ACT. SIMILARLY , BUILDINGS NO.MN 6, MN 7 AND MN 8, WERE COMPLETED IN ASSESSMENT YEAR 2010 11. THOUGH, THE PROFIT DERIVED THERE FROM WAS OFFERED TO TAX IN ASSESSMENT YEAR 2010 11, HOWEVER, ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. HE FOUND THAT IN THE IMPUGNED ASSESSMENT YEAR, REMAINING FLATS IN BUILDINGS NO.MN 6, MN 7 & MN 8 AND TOWER A HAVE BEEN SOLD AND ASSESSEE DERIVED PROFIT OF ` 4,94,34,549 WHICH HAS BEEN CLAIMED AS DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. ON FURTHER VERIFICATION 3 M/S. KASHISH PARK REALTORS OF THE PARTNERSHIP DEED AND DEVELOPMENT AGREEMENTS PRODUCED BEFORE HIM, THE ASSESSING OFFICER FOUND THAT M/S. FGP LTD. WAS THE OWNER OF A PLOT OF LAND ADMEASURING 58,258 SQ.MTRS. OU T OF THE AFORESAID LAND, M/S. FGP LTD. GRANTED DEVELOP MENT RIGHTS OF 5,805 SQ.MTRS. TO LADAM HOMES LTD. VIDE AGREEMENT DATED 5 TH JULY 2000. FURTHER, DEVELOPMENT RIGHTS IN RESPECT OF ANOTHER 19,690 SQ.MTRS. OF LAND WERE GRANTED TO KASHISH PARK REALTORS PVT. LTD. VIDE AGREEMENT DATED 10 TH OCTOBER 2001. HE NOTIC ED, KASHISH PARK REALTORS PVT. LTD. AND LADAM HOMES LTD. HAD CARRIED OUT SOME CONSTRUCTION ACTIVITIES OVER THE PLOT OF LAND SOLD TO THEM AND THE FULL FSI WAS UTILISED BY THEM IN THE CONSTRUCTION ACTIVITY, HENCE, THERE WAS NO CHANCE FOR FURTHER CONSTRUCTION EXCEPT THE TDR TO BE SAN CTIONED BY THANE MUNICIPAL CORPORATION IN LIEU OF RESERVATION LAND SURRENDERED TO THEM. THE ASSESSING OFFICER OBSERVED, SUBSEQUENTLY M/S. FGP LTD. ENTERED INTO AN AGREEMENT WITH THE ASSESSEE ON 3 RD DECEMBER 2003, FOR CONSTRUCTION OF TDR FSI 9,591 SQ.MT RS. H OWEVER, THE AGREEMENT WAS UNREGISTERED. THE ASSESSING OFFICER ALSO FOUND THAT PAYMENTS FOR PURCHASE OF FSI FROM M/S. FGP LTD. HAD STARTED BY ONE OF ASSESSEES PARTNER VIZ; KASHISH PARK REALTORS LTD EVEN BEFORE THE ASSESSEE CAME INTO EXISTENCE . THE ASSESSING OFFICER OBSERVED , EARLIER , THOUGH , KASHISH PARK REALTORS PVT. LTD HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH FGP LTD., HOWEVER, IT HAS DECLINED THE OFFER OF DEVELOPMENT OF TDR FSI DUE TO PAUCITY OF FUNDS . THUS, THE ASSESSING OFFICER WAS OF THE OPINION THAT 4 M/S. KASHISH PARK REALTORS THE ASSESSEE FIRM WAS CREATED UNDER A SCHEME OF ARRANGEMENT FOR CLAIMING BENEFIT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WHICH OTHERWISE WOULD NOT HAVE BEEN AVAILABLE TO KASHISH PARK REALTORS PVT . LTD. THUS, THE ASSESSING OFFICER CONCLUDED THAT THE PARTNERS OF THE ASSESSEE FIRM HAVE ARRANGED THE BUSINESS OF THE FIRM IN A MANNER TO PRODUC E MORE THAN THE ORDINARY PROFIT. THEREFORE , HE TREATED THE TRANSACTION BETWEEN THE PARTIES AS A COLLUSIVE TRANSA CTION AND ACCORDINGLY REJECTED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. BEING AGGRIEVED OF THE AFORESAID DECISION OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 . T HE LEARNED COMMISSION ER (APPEALS) TAKING NOTE OF THE FACT THAT DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT BY THE ASSESSEE IN RESPECT OF THE SAME HOUSING PROJECTS IN ASSESSMENT YEAR 2010 11 AND 2011 12, HAVE BEEN ALLOWED BY HIM , FOLLOWED THE SAME AND ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IB(10) OF THE ACT. 5 . WE HAVE HEARD THE PARTIES. AT THE VERY OUTSET, THE LEARNED COUNSEL S APPEARING FOR THE RIVAL PARTIES HAVE CONCEDED BEFORE US THAT THE ISSUE IN DISPUTE S TANDS SQUARELY COVERED BY THE DECISION OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010 11. ON A PERUSAL OF THE AFORESAID ORDER OF THE CO ORDINATE BENCH DATED 9 TH 5 M/S. KASHISH PARK REALTORS MARCH 2018, PASSED IN ITA NO. 5777/MUM./2014 AND ITA NO.6172/MUM./201 4 , IT IS NOTICED THAT WHILE DECIDING IDENTICAL ISSU E ARISING OUT OF IDENTICAL FACTS AND CIRCUMSTANCES , THE TRIBUNAL HAS ALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, HOLDING AS UNDER: 19. THE OTHER OBJECTION BY THE LEARNED DR IS THAT THE PROJECT OF THE ASSESSEE WAS NOT AN INDEPENDENT PROJECT, THE SAME HAS BEEN DEALT WITH BY CIT(A) IN PARA - 4(B) ON THIS ASPECT THE CIT(A) NOTES THAT THE MAIN REASON GIVEN BY THE ASSESSING OFFICER WAS THAT M/S. KASHISH PARK REALTY PVT. LTD. WHICH IS ONE OF THE PARTNERS OF THE ASSESSEE FIRM HAD INITIALLY THE RIGHT TO ACQUIRE TDR - FSI FROM M/S. FGP LTD., HOWEVER, M/S. KASHISH PARK REALTY PVT. LTD., SUBSEQUENTLY DECIDED NOT TO ACQUIRE THE FSI - TDR AND REQUESTED M/S. FGP LTD., TO SELL THE SAME TO THE ASS ESSEE FIRM. AS PER THE ASSESSING OFFICER, IF M/S. KASHISH PARK REALTY PVT. LTD., WOULD HAVE DEVELOPED THE PROJECT BY ACQUIRING TDR - FSI, IT WOULD NOT BE ENTITLED TO THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT. IN THIS CONTEXT, THE CIT(A) HAS NOTED THAT T HE CBDT COMMUNICATION DATED 04/05/2001(SUPRA) PERMITTED THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT EVEN WHERE THE ADDITIONAL HOUSING PROJECT WAS CONSTRUCTED BY CONSUMING TDRS ON AN EXISTING HOUSING PROJECT, PROVIDED THE PROJECT IS TAKEN UP BY A SEPARA TE UNDERTAKING HAVING BOOKS OF ACCOUNTS MAINTAINED IN SUCH MANNER TO ENSURE ASCERTAINING OF CORRECT PROFITS. ON THIS BASIS, THE CIT(A) FOUND ASSESSING OFFICERS OBJECTION AS UNTENABLE BECAUSE AS PER THE CBDT, THE DEDUCTION WAS AVAILABLE EVEN ON CONSTRUCTIO N OF A HOUSING PROJECT ON TDR - FSI ACQUIRED IN RESPECT OF EXISTING HOUSING PROJECT SITE. IN OUR CONSIDERED OPINION NO FAULT CAN BE FOUND WITH THE CONCLUSION BY THE CIT(A) ON THIS ASPECT. THE CHARGE MADE BY THE ASSESSING OFFICER IS THAT THERE IS A COLLUSIVE ARRANGEMENT IN ORDER TO CLAIM THE BENEFIT U/S.80IB(10) OF THE ACT; THIS CHARGE, IN OUR VIEW, IS NOT MAINTAINABLE BECAUSE EVEN IF M/S. KASHISH PARK REALTY PVT. LTD., WOULD HAVE CARRIED OUT THE DEVELOPMENT, IN TERMS OF CBDT COMMUNICATION DATED 04/05/2001(SUP RA), SUCH PROJECT WOULD ALSO BE ELIGIBLE FOR THE BENEFITS OF SECTION 80IB(10) OF THE ACT. THUS, THE ORDER OF CIT(A) ON THIS ASPECT IS ALSO AFFIRMED. CONSIDERING ALL THESE ASPECTS, WE CONFIRM THE ORDER OF CIT(A) AND THEREFORE, SO FAR AS THE GROUNDS RAISED B Y THE REVENUE ARE CONCERNED THE SAME ARE DISMISSED. 6 M/S. KASHISH PARK REALTORS 6 . THERE BEING NO MATERIAL DIFFERENCE IN THE FACTUAL POSITION, ADHERING TO THE NORMS OF JUDICIAL DISCIPLINE, WE RESPECTFULLY FOLLOW THE DECISION OF THE CO ORDIN ATE BENCH ON THE DISPUTED ISSUE. ACCORDINGLY , WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUND RAISED BY THE REVENUE. 7 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.04.2018 SD/ - RAMIT KOCHAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 25.04.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR /SR.P.S ) ITAT, MUMBAI