DCIT 15(3), MUMBAI V. M/s. PNK CORPORATION, MUMBAI

ITA 5792/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48611 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA
• Assessee Lawyers: SASHI TULSIYAN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI PRAMOD KUM AR (A.M.) ITA NO. 5792/MUM /2008 ASSESSMENT YEAR 2006-07 DY. COMMISSIONER OF INCOME TAX 15(3), MATRU MANDIR, IST FLOOR, TARDEO RD., MUMBAI 400 007. VS. M/S PNK CORPORATION, 102, B-1 WING, MAYUR MAA KRUPA SOCIETY, SHIMPOLI ROAD, BORIVALI (WEST), MUMBAI 400 092. PAN AAGFP 9219 A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJIT KUMAR SINHA RESPONDENT BY : SHRI SASHI TULSIYAN O R D E R PER D.K. AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 25.07.2008 PASSED BY THE LD. CIT (A) FOR THE A.Y. 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPER, FILED RETURN DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961 (THE ACT). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON EXAMINATION OF THE DETAILS, IT WAS INTER ALIA OBSERVED BY THE A.O. THAT THE HOUSING PROJECT CONSISTED OF RESIDENTIAL AS WELL AS COMMERCIAL UNIT S AND THE COMMERCIAL AREA IN THE PROJECT EXCEEDED 2000 SQ. FT. THUS THE CONDITION U/S 80IB(10)(D) OF THE ACT HAS NOT BEEN NOT BEEN FULFIL LED BY THE ASSESSEE. ITA 5792/M/2008 PNK CORPORATION 2 ACCORDINGLY, THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. IN REPLY, IT WAS INTER ALIA EXPLAINED AS UNDER (PAGE 4 OF ASSESSMENT ORDER):- THE CONDITIONS PRESCRIBED IN CLAUSE (D) WOULD ONLY BE APPLICABLE TO HOUSING PROJECTS, WHICH HAS RECEIVED APPROVAL AND I N WHICH CASE DEVELOPMENT OF THE HOUSING PROJECT HAS BEEN STARTED BY THE UNDERTAKING AFTER THE AMENDED PROVISIONS HAVE COME INTO PLAY. IN OUR CASE, WE HAD TAKEN THE PERMISSION FROM THE LOCAL AUTHORITY MUCH BEFORE THE DATE THE SECTION WAS AMENDED. CONSTRUCTION AND DEVELOPMENT OF THE HOUSING PROJECT HAS COMMENCED BY A.Y. 2003-04 AND WORK IN P ROGRESS HAS BEEN DULY REPORTED IN THE RETURNS FILED FOR A.Y. 2005-06 AND 2005-06. THE RELIANCE WAS ALSO PLACED ON THE PROVISIONS OF T HE FINANCE (NO.2) BILL 2004 AND ITAT ORDER IN THE CASE OF HARSHAD P. DOSHI VS. ACIT 25(2), MUMBAI IN ITA NO. 2305/M/2006 FOR A.Y. 2003-04 DATE D 28.2.2007 AND IN THE CASE OF M/S SAROJ SALES ORGANISATION VS. ITO FOR A.Y. 2005-06 IN ITA NO. 4008/M/07 DATED 24.1.2008. HOWEVER, THE A. O. WAS OF THE VIEW THAT SINCE THE CONDITION UNDER CLAUSE (D) OF SUB SE CTION (10) OF SECTION 80IB HAS NOT BEEN FULFILLED, THE ASSESSEES PROJECT OF OLYMPIA IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB (10) OF THE ACT AND ACCORDINGLY HE REJECTED THE CLAIM OF THE ASSESSEE. THE A.O. AFTER MAKING SO ME OTHER DISALLOWANCES COMPLETED THE ASSESSMENT AT AN INCOME OF ` 5,76,51,590/- VIDE ORDER DATED 31.03.2008 PASSED U/S 143(3)(II) O F THE ACT. ON APPEAL, THE LD. CIT(A) FOLLOWING THE DECISION OF THE TRIBUN AL IN SAROJ SALES ORGANISATION (SUPRA) AND POONAM GRUH NIRMAN, ITAT M UMBAI C BENCH IN ITA NO. 4911/M/2007 DATED 26.3.08 HAS HELD AS UN DER (PAGE 14 PARA 4.4):- ......HENCE, I HOLD THE POST AMENDED PROVISIONS OF SECTION 80IB(10)(D) IS NOT APPLICABLE IN CASES WHERE THE HOUSING PROJECT G OT APPROVED BEFORE 31.03.2005. SINCE IN THE PRESENT CASE, HOUSING PRO JECT GOT APPROVED BEFORE 31.3.2005 (I.E. 19.07.2003), THE MISCHIEF OF PROVISIONS OF SEC. 80IB(10(D) IS NOT APPLICABLE. ACCORDINGLY, THE LD. CIT(A) HAS ALLOWED THE CLAIM O F DEDUCTION U/S 80IB(10) OF THE ACT TO THE EXTENT OF ` 5,69,87,142/-. ITA 5792/M/2008 PNK CORPORATION 3 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) , THE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN AL LOWING THE CLAIM OF THE ASSESSEE U/S 80IB(10) WHICH WAS RIGHTLY DISALLO WED BY THE A.O., AS THE ASSESSEE HAS NEITHER FULFILLED THE CONDITIONS M ENTIONED IN SECTION 80IB(10) NOR IT WAS THE INTENTION OF THE LEGISLATUR E AS IS EVIDENT FROM THE OBSERVATION OF FINANCE MINISTER IN HIS BUDGET SPEEC H AND MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL 1999. 2. THE LD. CIT(A) HIMSELF HELD THAT AMENDED PROVISI ONS OF SECTION 80IB(10) INSERTED BY FINANCE ACT 2004 ARE NOT APPLI CABLE TO THE FACTS OF THE INSTANT CASE AS PROJECT WAS APPROVED PRIOR TO 3 1.03.2005 AND THEREFORE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTIO N U/S 80IB(10) AS PRIOR TO 31.03.2005 THE HOUSING PROJECT HAS TO BE 100% DW ELLING UNITS WITHOUT ANY COMMERCIAL TAINT IN HOUSING PROJECT. 4. AT THE TIME OF HEARING, THE LD. D.R. SUBMITS THA T FOR THE REASONS AS MENTIONED IN THE ASSESSMENT ORDER, THE LD. CIT(A) W AS NOT JUSTIFIED IN ALLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT ` 5,69,87,142/-. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE A.O. BE RESTORED. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE WHILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE RECENT DECISION OF TH E TRIBUNAL IN ITO VS. POONAM CONSTRUCTION AND VICE-VERSA IN ITA NO. 2003/ M/2010 & 2052/M/2010 FOR A.Y. 2006-07 ORDER DATED 11.02.2011 . HE ALSO PLACED ON RECORD A COPY OF THE SAID ORDER. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 6. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THERE IS NO DISPUTE THAT THE A.O. HAS DISALLOWED THE CLAIM OF THE ASSES SEE ON THE GROUND THAT THE SHOPPING AREA IS CONSTITUTING 6687 SQ.FT. AREA OUT OF TOTAL BUILT UP AREA ADMEASURING AT 103855.76 SQ. FT., IT IS A CLEA R CUT VIOLATION OF AMENDED SEC. 80IB(10)(D) INSERTED BY FINANCE ACT, 2 004 W.E.F. ITA 5792/M/2008 PNK CORPORATION 4 01.04.2005. HOWEVER, THE LD. CIT(A) FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL HAS HELD THAT SINCE IN THE ASSESSEES CASE , HOUSING PROJECT GOT APPROVED ON 19.7.2003 I.E. BEFORE 31.3.2005, THEREF ORE, THE AMENDED PROVISIONS OF SECTION 80IB(10)(D) IS NOT APPLICABLE AND HENCE HE ALLOWED THE CLAIM OF THE ASSESSEE. 7. IN SAROJ SALES ORGANISATION (SUPRA) SINCE REPO RTED IN (2008) 115 TTJ 485 (MUM) IT HAS BEEN HELD BY THE TRIBUNAL IN P ARA 13 OF ITS ORDER AS UNDER :- AS REGARDS THE OBJECTION OF THE AO THAT THE PERMISS IBLE SHOPPING AREA OF HOUSING PROJECT EXCEEDS 5 PER CENT, THE ASSESSEE IS NOT ENTITLED FOR RELIEF UNDER S. 80IB(10). WE ARE OF THE VIEW THAT THE HOU SING PROJECT WERE APPROVED BEFORE 31 ST MARCH, 2005 AND FOR SUCH PROJECT WHICH WERE SO APPROVED, THERE WAS NO STIPULATION AS TO THE SHOPPI NG COMPLEX AREA IS PERMISSIBLE IN THE PROJECT. AS ALREADY STATED EARL IER THAT THE AMENDMENTS WERE SUBSEQUENTLY MADE WHILE EXTENDING T HE DEDUCTION OF INCOME FROM HOUSING PROJECT APPROVED UPTO 31 ST MARCH, 2007, THE DENIAL OF DEDUCTION, IN OUR VIEW, IS CLEARLY NOT IN ACCORD ANCE WITH LAW. 8. IN HIRANANDANI AKRUTI JV VS. DCIT REPORTED IN 39 SO T 498 (MUM), IT HAS BEEN HELD BY THE TRIBUNAL VIDE PARA 27 OF TH E ORDER AS UNDER:- WE ARE OF THE VIEW THAT WE ARE NOT SUPPLYING ANY WO RDS TO THE STATUTE BUT ARE ONLY HOLDING THAT THE LAW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM R EHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACC ORDED ON 17 TH NOV. 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. THEREFORE, THE SUBMISSIONS OF THE LEARNED DEPARTMEN TAL REPRESENTATIVE IN THIS REGARD CANNOT BE ACCEPTED. WE ARE OF THE V IEW THAT THE LEGISLATURE WOULD NOT HAVE INTENDED TO TAKE AWAY A VESTED RIGHT WITHOUT CLEAR WORDS TO THAT EFFECT IN THE PROVISIONS OF S. 80-IB(10) AS AMENDED BY THE FINANCE ACT, 2005, W.E.F. IST APRIL, 2005. WE, THEREFORE, HOLD FOLLOWING THE DECISION IN THE CASE OF SAROJ SALES ORGANISATION (S UPRA) THAT THE LAW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17 TH NOV. 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. ITA 5792/M/2008 PNK CORPORATION 5 9. IN POONAM CONSTRUCTION (SUPRA), THE A.O. DISALLO WED THE CLAIM OF DEDUCTION U/S 80 IB(10) ON THE GROUND THAT THE COMM ERCIAL AREA OF THE SHOP INCLUDED IN THE ASSESSEES PROJECT IS 4382 SQ. FT. WHICH IS IN EXCESS OF 2000 SQ. FT., THEREFORE, THE ASSESSEE HAS VIOLAT ED THE CONDITION LAID DOWN IN CLAUSE (D) OF SECTION 80IB(10). THE LD. CI T(A) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE DECISION OF THE TRIBUNAL IN SAROJ SALES ORGANISATION (SUPRA). ON FURTHER APPEAL BY THE REVE NUE, THE TRIBUNAL FOLLOWING THE DECISION IN SAROJ SALES ORGANISATION (SUPRA) AND HIRANANDANI AKRUTI JV (SUPRA) UPHELD THE ORDER OF T HE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE A.O. 10. SINCE IN THE CASE BEFORE US, THERE IS NO DISPUT E THE HOUSING PROJECT GOT APPROVED ON 19.7.2003 I.E. MUCH BEFORE IST APRI L, 2005, PROVIDED U/S 80IB(10)(D) OF THE ACT AND KEEPING IN VIEW THAT THE ASSESSEE HAS COMMENCED THE PROJECT IN A.Y. 2003-04, WE RESPECTFU LLY FOLLOWING THE CONSISTENT VIEW OF THE CO-ORDINATE BENCH OF THE TRI BUNAL HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB(10) OF T HE ACT AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE A.O. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 11. IN THE RESULT, THE REVENUES APPEAL STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2011. SD/ - (PRAMOD KUMAR) ACCOUNTANT MEMBER SD/ - (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 29.04.2011. RK ITA 5792/M/2008 PNK CORPORATION 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- XV, MUMB AI 4. COMMISSIONER OF INCOME TAX, 15, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH C, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA 5792/M/2008 PNK CORPORATION 7 1 DRAFT DICTATED ON 19 . 4 .11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 1 9 . 4.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM /AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS