Shreenathji Construction, Vadodara V. The Deputy Commissioner of Income Tax, Circle-1(2), Baroda

ITA 594/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5017 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K GOYAL
• Keywords: Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH , ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO. 594/AHD/2017 & / ASSTT. YEAR: 2007 - 2008 M/S.SHREENATHJI CONSTRUCTION , BAL GOPAL , NR. DARBAR CHAWDI, OPP. PUSHPAK DUPLEX , MANJALPUR, VADODARA . PA N: AAJFM6852H VS . D .C.I.T. , CIRCLE - 1 ( 2 ) , VADODARA. (APPLICANT) (RESPONENT) ASSESSEE BY : SHRI URVASHI SHODHAN , A.R REVENUE BY : SHRI N.K. GOYAL , SR. DR / DATE OF HEARING : 2 1 / 1 1 / 2019 / DATE OF PRONOUNCEMENT: 20 / 02 /2020 / O R D E R PER MS MADHUMITA ROY, JUDICIAL MEMBER : T HE I NSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 09.12.2016 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) - 5, VADODARA ARISING OUT OF THE ORDER DATED 11.01 .2016 PASSED BY THE L EARNED D . C . I .T C IRCLE - 1(2) VA DODARA UNDER SECTION 143 (3 ) R.W.S 254 OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR THE ASSESSMENT Y EAR 2007 20 08. ITA NO. 594/AHD/2017 A.Y. 2007 - 2008 2 2. THE ASSESSEE HAS MAINLY CHALLENGED THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AMOUNTING TO RS.1 2 , 35 ,762/ - THE BRIEF FACTS LEADING TO THE CASE IS THIS THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF LAND DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT IN THE NAME OF BAL GOPAL FILE D ITS RETURN OF INCOME FOR THE ASSESSMENT Y EAR 2007 - 08 D ISCLOSIN G TOTAL INCOME AT RS. NIL AFTER CLAIMING DEDUCTION UNDER SECTION 80 I B(10) OF THE A CT. THE SAID ASSESSMENT WAS FINALIZED UNDER SECTION 143(3) OF THE ACT BY THE LEARNED ASSESSING OFFICER ON 14.12.200 9 DETERMINING TOTAL INCOME AT RS.5 4 ,53, 349 / - DISALLOWING THE ENTIRE DED UCTION CLAIMED UNDER SECTION 80IB(10) OF THE A CT ON THE COUNT THAT THE APPELLANT IS NOT THE OWNER, THE COMMERCIAL CONSTRUCTION IS MORE THAN THE PERMISSIBLE LIMIT AND THE ASSESSEE HAS NOT USE D THE ENTIR E FSI AVAILABLE. IN APPEAL THE LEARNED CI T(A) ALLOW ED THE CLAIM OF THE APPELLANT WHICH WAS SUBSEQ UENTLY UPHELD BY THE HON BLE T RIBUNAL BY AND UNDER ITS ORDER DATED 30.05.20 14. HOWEVER ON THE ISSUE PROPORTIONATE DISALLOWANCE OF DEDUCTION UNDER SECTION 80I B(10) OF THE A CT FOR UNDERUTILIZATION OF FS I , THE ASSESSMENT HAS BEEN SET ASIDE FOR FRESH ADJUDICATION IN VIEW OF THE JUDGEMENT PASSED BY TH E HON BLE JURISDICTIONAL HIGH C OURT IN THE CASE OF CIT VERSUS MOONSTAR D EVELOPERS R EPORTED IN 45 TAXMANN.COM 181. IN APPEAL THE LEARNED CIT(A) HAS BE EN PLEASE D TO DIRECT THE LEARNED ASSESSING O FFICER TO CALCULATE ALLOWABLE DEDUCTION UNDER SECTION 80 I B(10) OF THE A CT AFTER ITA NO. 594/AHD/2017 A.Y. 2007 - 2008 3 CONSIDERING 30% PERMISSIBLE UNDERUTILIZATION OF FSI AS INDICATED IN THE ORDER ITSELF. DISALLOWANCE TO THE EXTENT OF RS.12,35, 762 / - HAS BEEN SUSTAINED ON ACCOUNT OF PROFIT ATTRIBUTABLE TO AN UTILIZED PORTION OF FSI. THE BALANCE ADDI TION HAS CONSEQUENTLY BEEN DELETED. HEN CE THE INSTANT APPEAL BEFORE US . 3. WE HAVE HEARD THE RESPECTIVE SUBMISSIONS MADE BY THE PARTIES, WE HAVE ALS O PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORDS. IT IS THE CASE OF THE ASSESSEE THAT NOWHERE IN THE INCOME TAX A CT IT HAS BEEN PROVIDED THAT THE UNDERTAKING ENGAGED IN THE BUSINESS ON DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT SHOULD UTILIZE TH E AVAILABLE FSI FULLY AND THEREFORE THE REVENUE HAS PROCEEDED ON MERE PRESUMPTION AND HAS WORKED OUT THE SO - CALLED FSI SALE AND ALSO WORKED OUT PROFIT ON ESTIMATED BASIS FROM SUCH SO - CALLED FSI SALE AND HAS DISALLOWED THE DEDUCTION CLAIMED PROPORTIONATELY. FURTHER THAT IN CASE OF TENEMENTS CONSTRUCTION OF THIRD - FLOOR IS NOT PERMISSIBLE AS PAR PREVAILING GDC R AND THEREFORE OUT OF T OTAL PERMISSIBLE FSI OF 1600 SQ.FT. , ONLY 1280 SQ.FT. HAD BEEN POSSIBLE TO BE UTILIZED . THE ASSESSEE ACCEPTED THAT 32% OF PERMIS SIBLE FSI CANNOT BE USED IN CASE OF TENEMENTS CONSTRUCTION. THE APPELLANT FURTHER RELIED UPON THE JUDGEMENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VERSUS SHEENA TH I NFRA R EPORTED IN 44 TAXMANN.COM 461 WHEREB Y IT HAS BEEN HELD THAT WHERE UNDER UTILIZATION OF FSI ITA NO. 594/AHD/2017 A.Y. 2007 - 2008 4 IS MARGINAL AND IF IT IS IN THE RANGE OF 25% TO 30% NO PARTIAL DISALLOWANCE OF DEDUCTION UNDER SECTION 80 I B(10) COULD BE MADE. 4. WE HAVE CAREFULLY CONS IDERED THE ORDER PASSED BY THE LEARNED CIT(A) WHEREFROM IT APPEARS THAT THE JUDGEMENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF MOONSTAR(SUPRA ) HAS ALSO BEEN TAKEN CARE OF. THE CASE OF THE ASSESSEE THAT THE PRESENT CASE IS DIFFERENT FROM THE FACTS OF THE CASE OF MOONSTA R (SUPRA ) WAS ALSO CONSIDERED. IN THAT PARTICULAR CASE PERMISSIBLE CONSTRUCTI ON HAS BEEN CARRIED OUT ON ENTIRE PERMISSIBLE ARE A AT THE GROUND LEVEL AND ONLY COMMON AREAS HAVE BEEN LEFT OPEN. WE HAVE FURTHER CONSIDERED T HE CASE OF THE ASSESSEE THAT IN THE CASE OF FLATS, FULL FSI HAS BEEN USED BU T IN THE CASE OF TENEMENTS FULL FS I COULD NOT BE USED BECAUSE OF DEVELOPMENT RULES AND R EGULATIONS AND THE ADMISSION ON BEHALF OF THE ASSESSEE THAT IN CASE OF TENEMENTS SINCE CONSTRUCTION OF THIRD - FLOOR IS NOT PERMISSIBLE , ABOUT 32 % OF THE PERMISSIBLE FSI COULD NOT BE USED EVEN IF THE DEVELOPER WANTS TO USE IT . WE FURTHER FIND THAT THE L EARNED CIT (A) HAS TAKEN INTO CONSIDERATION THE FACTS AVAIL ABLE IN THE MATTER OF SHREENATH I NFRASTRUCTURE AS RELIED UPON BY THE ASSESSEE AND BEEN ABLE TO DIFFERENTIATE THE SAME WITH THE FACT AVA ILABLE IN THE CASE OF MOONSTAR D EVELOPERS ( SUPRA ). IN THE FIRST CASE THE ASSESSEE HAVE BEEN UTILIZED 73.78% OF AVAILABLE FSI AND THERE WAS ONLY MARGINAL UNDERUTILIZATION AS C OMPARED TO THE ASSESSEE IN THE SECOND MATTER WHEN UTILIZATIO N OF FSI WAS IN ITA NO. 594/AHD/2017 A.Y. 2007 - 2008 5 THE RANGE OF 11.14% TO 65.81%. SINCE IN THE INSTANT CASE THE ASSESSES FSI UTILIZATION IS 45.18% AS NOTED BY THE ASSESSING O FFICER IN PARA 2.8 OF HIS ORDER UNDER SECTION 143 (3 ) READ WITH SECTION 254 OF THE A C T , THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT HAS BEEN FOUND TO BE NOT APPLICABLE IN THE INSTANT CASE. HOWEVER UPON TAKING INTO CONSIDERATION THE ALTERNATIVE PLEA RAISED BY THE ASSESSEE RELYING ON THE JUD GEMENT PASSED BY THE C O - ORDINATE B ENCH PASSED IN ITA NO. 2127/AHD/2011 IN THE MATTER OF M/S. RUDRAKSH D EVELOPERS THE ASSESSEE HAS BEEN MADE ELIGIBLE FOR PROPORTIONATE DISALLOWANCE U NDER SECTION 80 I B(10) OF THE A CT AFTER CONSIDERING 30% PERMISSIBLE UNDERUTILIZATION . HENCE THE LEARNED CIT( A ) TAKING INTO CONSIDERATION THE ENTI RE ASPECT OF THE MATTER HAS BEEN PLEASED TO DIRECT THE ASSESSING O FFICER TO CALCULATE ALLOWABLE DEDUCTION UNDER SECTION 80IB(10) OF THE A CT AFTER CONSIDERING 30% PERMISSIBLE UNDERUTILIZATION OF FSI AS INDICATED IN THE JUDGEMENT PASSED BY THE C O - ORDINATE BE NCH IN ITA NO. 2127/A HD/2011 IN THE MATTER OF M/S. RUDRAKSH D EVELOPERS OF THE ACT TO THE EXTENT OF RS.1 2 , 35 , 762 / - ON ACCOU NT OF PROFIT ATTRIBUTABLE TO UN UTILIZED PORTION OF FSI AND BALANCE ADDITION HAS BEEN PLEASED TO BE DELETED WHICH IN OUR CONSIDERED OPINION IS QUITE REASONABLE, RATIONAL , JUST AND PROPER SO AS TO WARRANT INTERFERENCE. WE THEREFORE , FIND NO MERIT IN THE APPEAL PREFERRED BY THE ASSESSEE. HENCE , TH E SAME IS DISMISSED . ITA NO. 594/AHD/2017 A.Y. 2007 - 2008 6 5. T HE NEXT GROUND OF APPEAL AGAINST THE DECISION OF PENALTY P ROCEEDING UNDER SECTION 271(1)(C ) OF THE ACT IS PREMATURE AND HENCE DISMISSED 6. T HE LAST GROUND OF APPEAL RELATING TO LEVY OF INTEREST UNDER SECTION 234 A/B/C IS CONSEQ UENTIAL IN NATURE AND NO ORDER NEED BE PASSED. 7. IN THE RESULT ASSESSE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 20 /02 /2020 AT AHMEDABAD. - SD - - SD - ( AMARJIT SINGH ) ACCOUTANT MEMBER ( MS MADHUMITA ROY ) JUDICIAL MEMBER ( TRUE COPY) AHMEDABAD; DATED 20 / 02 /2020 MANISH