I.T.O. 14(3)(3), MUMBAI V. RISHABH DEVELOPERS, MUMBAI

ITA 5963/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9172 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 2879/MUM/2011(A.Y. 2007-08) ITA NO.5963/MUM/2012(A.Y. 2005-06) ITA NO.5964/MUM/2012(A.Y.2006-07) THE INCOME TAX OFFICER 14(3)(3), 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021. (APPELLANT) VS. M/S. SHRI RISHABH DEVELOPERS, 39, RAMWADI, 1 ST FLOOR, KALBADEVI ROAD, MUMBAI - 02. PAN:AACAS 1141D (RESPONDENT) APPELLANT BY : SHRI SANJEEV JAIN RESPONDENT BY : SHRI VIMAL PUNMIYA DATE OF HEARING : 04/12/2012 DATE OF PRONOUNCEMENT : 07/12/2012 ORDER PER I.P.BANSAL, J.M ALL THESE APPEALS ARE FILED BY THE REVENUE. TH EY ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A)-25, DATED 15/2/2011 F OR A.Y 2007-08 AND DATED 31/7/2012 FOR ASSESSMENT YEARS 2005-06 AND 2006-07 . THE ORDER FOR ASSESSMENT YEAR 2005-06 & 2006-07 IS A CONSOLIDATED ORDER. TH E ISSUE RAISED IN ALL THESE APPEALS ARE COMMON AND IDENTICAL AND ALL THESE APPE ALS WERE ALSO ARGUED TOGETHER. HENCE, FOR THE SAKE OF CONVENIENCE WE DISPOSE OF A LL THESE APPEALS BY THIS CONSOLIDATED ORDER. GROUNDS OF APPEAL ARE ALSO ID ENTICAL. THE GROUNDS OF APPEALS RAISED BY THE REVENUE FOR A.Y 2007-08 ARE REPRODUCE D AS UNDER:- ITA NO. 2879/MUM/2011(A.Y. 2007-08) ITA NO.5963/MUM/2012(A.Y. 2005-06) ITA NO.5964/MUM/2012(A.Y.2006-07) 2 1 THE ORDER OF CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2 THE LD.CIT(A) ERRED IN LAW IN HOLDING THAT THE DA TE OF COMMENCEMENT OF PROJECT AS 06.01.2001 ON THE BASIS OF N.A. PERMISSI ON GRANTED BY THE DISTRICT COLLECTOR AND COMPLETION OF CERTAIN OTHER FORMALITI ES WITHOUT APPRECIATING THE FACT THAT THE CIDCO HAD GIVEN COMMENCEMENT CERTIFIC ATE ON 26.11.1996 AND ACCORDINGLY DATE OF COMMENCEMENT WAS 26.11.1996. 3 THE LD.CIT(A) ERRED IN LAW THAT IN ALLOWING DEDUC TION U/S 801B(10) OF RS. 15.56,340/- CLAIMED BY THE ASSESSEE IGNORING THE FA CT THAT ASSESSEE WAS NOT FULFILLING THE CONDITIONS LAID DOWN U/S 801B(10) OF INCOME TAX ACT AS THE ASSESSEE HAD COMMENCED PROJECT ON 26.11.1996 I.E. P RIOR TO 01.10.1998. 4. FOR THESE AND ANY OTHER REASONS THAT MAY BE URGE D AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT(A) BE QUASHE D AND THAT OF THE A.O. BE RESTORED. . 2. THE ASSESSEE IS A DEVELOPER AND ENGAGED IN CONST RUCTION OF BUILDINGS. IT CLAIMED DEDUCTION UNDER SECTION 80 IB (10) OF THE INCOME TAX ACT,1961 (THE ACT) FOR DEVELOPMENT AND CONSTRUCTION OF RESIDENTIAL BUI LDINGS AT VIRAR. RELYING UPON THE LETTER ISSUED BY CIDCO DATED 26/11/1996 THE AO OBSERVED THAT THE PROJECT UNDERTAKEN BY THE ASSESSEE WAS STARTED ON 26/11/199 6. AS PER CONDITIONS LAID DOWN IN SECTION 80 IB(10) OF THE ACT DEDUCTION COUL D BE GRANTED TO THE PROJECTS WHICH ARE STARTED W.E.F. 1/10/1998. THEREFORE, AO DENIED THE DEDUCTION TO THE ASSESSEE AND HAS MADE FOLLOWING ADDITIONS TO THE IN COME FOR THE ASSESSMENT YEARS UNDER CONSIDERATION. S.NO. ASSESSMENT YEAR AMOUNT (IN RS.) 1. 2005-06 1,17,02,749/- 2. 2006-07 10,99,286/- 3. 2007-08 15,56,343/- 3. THE ACTION OF THE AO WAS AGITATED IN THE APPEALS FILED BEFORE LD. CIT(A). THE FIRST ORDER OF LD. CIT(A) IS DATED 15/2/2011 FOR A. Y 2007-08. IT WAS PLEADED THAT THE COMMENCEMENT OF THE PROJECT SHOULD NOT BE TAKEN FROM THE PERMISSION GIVEN BY CIDCO AS THE SAME WAS WITH A CONDITION TO OBTAIN PERMISSION FROM COLLECTOR. UNLESS THE PERMISSION IS GIVEN BY THE COLLECTOR, AS SESSEE COULD NOT COMMENCE THE PROJECT. IT WAS SUBMITTED THAT COLLECTOR, THANE HA D GIVEN THE PERMISSION FOR COMMENCEMENT OF PROJECT ON 1/12/1999. THEREFORE, PROJECT COULD NOT BE ITA NO. 2879/MUM/2011(A.Y. 2007-08) ITA NO.5963/MUM/2012(A.Y. 2005-06) ITA NO.5964/MUM/2012(A.Y.2006-07) 3 COMMENCED PRIOR TO THAT DATE. IT WAS PLEADED THAT THE ASSESSEE HAS FULFILLED THE CONDITIONS AS THE PROJECT UNDERTAKEN BY IT WAS STA RTED MUCH AFTER 1/10/1998. REFERENCE WAS MADE TO VARIOUS DECISIONS OF ITAT TO CONTEND THAT THE RELEVANT DATE FOR COMMENCEMENT OF PROJECT WILL BE THE DATE WHEN C OLLECTOR HAS GRANTED PERMISSION TO COMMENCE THE PROJECT. LD. CIT(A) HAS ACCEPTED SUCH SUBMISSION OF THE ASSESSEE RELYING UPON THE FOLLOWING DECISION CI TED BY THE ASSESSEE BEFORE HIM. 1. ORDER OF ITAT PUNE BENCH IN THE CASE OF NIRMIT I CONSTRUCTION VS. DCIT (95 TTJ 117) 2. ITAT MUMBAIS ORDER IN THE CASE OF SHRI VIMALC HAND N. DHOKA (ASSESSEES PARTNER) ITA NO.5520/MUM/2005 A.Y.2002-03. 3. CIT(A)-34 MUMBAIS ORDER FOR A.Y 2006-07 IN THE CASE OF M/S. NITA ENTERPRISE. 4. ITO 15(1) 1 MUMBAIS ORDER U/S. 143(3) FOR A.Y 2005-06 IN ASSESSEES OWN CASE. (ALLOWED DEDUCTION. HE ALSO OBSERVED THAT IN THE CASE OF ASSESSEE ITSE LF AO HAD ALLOWED SUCH DEDUCTION IN EARLIER YEARS. FOR A.Y 2005-06 AND 2006-07 LD. CIT(A) HAS FOLLOWED EARLIER ORDER AND GRANTED RELIEF TO THE ASSESSEE. BEING AGGRIEVE D, THE REVENUE HAS FILED THESE APPEALS BEFORE THE TRIBUNAL. 4. LD. D.R AFTER NARRATING THE FACTS SUBMITTED THAT ASSESSEES PROJECT HAD COMMENCED ON 26/11/1996 WHEN CIDCO GRANTED THE PERM ISSION TO THE ASSESSEE. LD. CIT(A) HAS WRONGLY GRANTED RELIEF TO THE ASSES SEE ON THE GROUND THAT PROJECT OF THE ASSESSEE HAS COMMENCED ONLY ON 1/12/1999 WHEN COLLECTOR HAS GIVEN N.A PERMISSION. THUS IT WAS PLEADED BY LD. D.R THAT O RDER OF LD. CIT(A) FOR ALL THESE YEARS SHOULD BE SET ASIDE AND THAT OF AO BE RESTORE D. 5. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. AR TH AT PERMISSION GIVEN BY CIDCO WAS SUBJECT TO OBTAINING N.A PERMISSION FROM COLLECTOR, WHICH WAS GIVEN ONLY ON 1/12/1999, THEREFORE, HE PLEADED THAT DATE OF COMMENCEMENT OF PROJECT SHALL BE CONSIDERED TO BE ONLY AFTER 1/12/1999. HE SUBMITTED THAT ALL OTHER ITA NO. 2879/MUM/2011(A.Y. 2007-08) ITA NO.5963/MUM/2012(A.Y. 2005-06) ITA NO.5964/MUM/2012(A.Y.2006-07) 4 CONDITIONS HAVE BEEN FULFILLED BY THE ASSESSEE AND SINCE PROJECT HAS COMMENCED AFTER 1/10/1998, LD. CIT(A) HAS RIGHTLY ACCEPTED TH E CLAIM OF THE ASSESSEE. HE SUBMITTED THAT THE CASE LAW RELIED UPON BY THE ASSE SSEE BEFORE LD. CIT(A) SUPPORTS THE DECISION OF LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. COPY OF PERMISSION GIVEN BY CIDC O WAS PLACED BEFORE US AND A COPY WAS ALSO GIVEN TO LD. DR. THE LETTER IS DATE D 26/11/1996. IN THE SAID LETTER, INTER ALIA, IT IS MENTIONED AS UNDER: THIS PERMISSION IS VALID ONLY AFTER N.A. PERMISSI ON IS OBTAINED FROM THE COLLECTOR THEREFORE, THE PERMISSION GIVEN BY CIDCO WAS SUBJEC T TO PERMISSION GIVEN BY COLLECTOR. COPY OF PERMISSION GIVEN BY COLLECTOR IS PLACED AT PAGES 1 TO 4 OF THE PAPER BOOK AND AS THE SAME IS IN MARATHI, TRANSLATE D COPY IS PLACED AT PAGES 5 TO 14 OF THE PAPER BOOK. THE SAID PERMISSION IS DATED 1/12/1999. THESE PERMISSIONS ARE IN THE NAME OF ORIGINAL OWNER NAMEL Y MR. L.N. AGARWAL & OTHERS. WE HAVE CAREFULLY GONE THROUGH THE PERMISSION GIVEN BY COLLECTOR WHICH IS DATED 1/12/1999. IN THE SAID PERMISSION REFERENCE HAS BE EN MADE TO THE LETTER ISSUED BY CIDCO DATED 26/11/1996 AND ALSO REVISED PLAN AP PROVAL VIDE LETTER OF CIDCO DATED 10/08/1998. THE SAID ORDER IS AUTHORIZING THE ASSESSEE FOR USE OF THE IMPUGNED LAND FOR THE PURPOSE OF RESIDENTIAL AND NO N-AGRICULTURAL USE AND THE SAID PERMISSION IS SUBJECT TO VARIOUS TERMS. THEREFORE , IT CAN BE OBSERVED THAT LETTER ISSUED BY CIDCO DATED 26/11/1996 CANNOT BE TAKEN AS PERMISSION TO THE ASSESSEE TO COMMENCE PROJECT BECAUSE IT WAS SUBJEC T TO N.A PERMISSION FROM COLLECTOR, WHICH IS GIVEN ONLY ON 1/12/1999. IT IS NOT THE CASE OF AO THAT ASSESSEE OR PREVIOUS OWNER HAS INCURRED ANY EXPENDI TURE ON DEVELOPMENT OF PROJECT BEFORE 1/12/1999. THE OBJECTION OF AO REGA RDING COMMENCEMENT OF THE PROJECT IS BASED ONLY ON THE LETTER OF CIDCO DATED 26/11/1996, WHICH IS SUBJECT TO PERMISSION OF THE COLLECTOR. TILL THE PERMISSION I S GIVEN BY COLLECTOR ASSESSEE ITA NO. 2879/MUM/2011(A.Y. 2007-08) ITA NO.5963/MUM/2012(A.Y. 2005-06) ITA NO.5964/MUM/2012(A.Y.2006-07) 5 COULD NOT USE THE LAND FOR RESIDENTIAL OR NON-AGRIC ULTURAL PURPOSES. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY LD. CIT(A) THAT PROJECT OF THE ASSESSEE WAS NOT COMMENCED ON 26/11/1996 WHEN THE LETTER WAS ISS UED BY THE CIDCO TO THE ASSESSEE. THE ONLY GROUND RAISED BY THE REVENUE IN THE PRESENT APPEAL IS THE GRIEVANCE AGAINST THE FINDINGS OF LD. CIT(A) THAT PROJECT DID NOT COMMENCE ON 26/11/1996. AS WE FIND NO INFIRMITY IN SUCH FINDIN G WE DECLINE TO INTERFERE AND THE APPEALS FILED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 7 TH DAY OF DEC. 2012 SD/- SD/- (SANJAY ARORA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 7 TH DEC. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R E BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO. 2879/MUM/2011(A.Y. 2007-08) ITA NO.5963/MUM/2012(A.Y. 2005-06) ITA NO.5964/MUM/2012(A.Y.2006-07) 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 4/12/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 5/12/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER