ITO WD WD 4(3), THANE V. PRAGATI ENTERPRISES, THANE

ITA 5989/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3831 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 25-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: SUBODH RATNAPARKHI
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ITA NO. 5989/MUM/2014 (A Y: 2010-11) I.T.O. WARD 4(3), THANE, 6 TH FLOOR, ASHAR IT PARK, ROAD 16Z, THANE(W). VS. M/S. PRAGATI ENTERPRISES, GROUND FLOOR, AAKAR BUILDING, RAJHANS RESIDENTIAL COMPLEX, BEHING D.G. NAGAR, VASAI ROAD (W) PAN: AAIFP5232B APPELLANT .. RESPONDENT REVENUE BY .. SHRI K. MOHANDAS ASSESSEE BY .. SHRI SUBODH RATN APARKHI DATE OF HEARING 27 - 07 - 2016 DATE OF PRONOUNCEMENT 10-08-2016 O R D E R PER MANOJ KUMAR AGGARWAL (AM) : THIS APPEAL HAS BEEN FILED BY REVENUE FOR A.Y. 201 0-11 ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- II [CIT(A)], MUMBAI DATED 04/07/2014 RAISING THE FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) II, THANE HAS FAILED TO APPRECIATE THE FACTS THAT THE PROJECT HAS NOT BEEN COMPLETED WITHIN THE TIME PERIOD AS LAID DOWN BY THE PROVISION OF SECTION 80IB (10) OF THE IT ACT, 1961. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE JUDICIAL PRONOUNCEMENT ON WHICH THE LD. CIT(A) HAS RELIED UPON HAS NOT BEE N ACCEPTED BY REVENUE AND SLP FILED IS PENDING FOR DISPOSAL BEFORE THE HONBL E SUPREME COURT. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNED CIT(A) II, THANE, BE CANCELLED AND THAT OF THE A.O. BE RESTORED. 2. THE FACTS IN BRIEF, ARE THAT THE ASSESSEE IS A R ESIDENT FIRM AND FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 DURING SEPTEMBER, 2010 DECLARING T OTAL INCOME OF RS. 4,20,950/-. THE NATURE OF BUSINESS OF ASSESSEE FIRM WAS BUILDING CONSTRUCT ION & DEVELOPERS. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT WHICH WAS COMPLETED BY ASSESSIN G OFFICER (AO) ORDER DATED 28/03/2013. THE ASSESSEE CLAIMED DEDUCTION U/S. 80IB(10) AMOUNT ING TO RS. 71,59,709/- WHICH WAS DISALLOWED BY AO AND MADE SOLE ADDITIONS ON THIS AC COUNT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SUBMIT THE RELEVANT DETAILS IN RESPECT OF ITS CLAIM OF DEDUCTI ON U/S. 80IB(10) OF THE ACT. REQUISITE DETAILS WERE FURNISHED. THE AO NOTICED THAT THE COMMENCEMEN T CERTIFICATE DT. 22.2.2005 IS IN RESPECT OF 17 BUILDINGS. ACCORDING TO THE AO, THE ASSESSEE ONL Y PRODUCED PART OCCUPANCY / COMPLETION CERTIFICATES AND FAILED TO PRODUCE FAILED TO PRODUC E THE FULL OCCUPANCY / COMPLETION CERTIFICATES IN RESPECT OF 17 BUILDINGS / ENTIRE PROJECT. THE AO WA S OF THE FIRM BELIEF THAT ENTIRE HOUSING PROJECT SHOULD HAVE BEEN COMPLETED WITHIN THE PRESCRIBED TI ME BUT AS THE ASSESSEE HAS FAILED TO DO SO, ITA NO. 5989/M/2014 M/S. PRAGATI ENTERPRISES 2 THE ESSENTIAL CONDITIONS OF PROJECT COMPLETION AS L AID DOWN BY SEC. 80IB(10)(A)(II) READ WITH EXPLANATION (II) HAS BEEN VIOLATED HENCE THE PROJEC T IS NOT ENTITLED FOR SEC. 80IB(10) DEDUCTION. THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN WHY THE CLA IM SHOULD NOT BE DENIED. THE ASSESSEE FILED A DETAILED REPLY VIDE LETTER DT. 15.03.2013 WHICH H AS BEEN EXTRACTED BY THE AO AT PARA-4 OF HIS ORDER. 4. AFTER CONSIDERING THE SUBMISSIONS, THE AO WAS OF THE OPINION THAT THE COMMENCEMENT CERTIFICATE HAS BEEN ISSUED IN RESPECT OF 17 BUILDI NGS. THE OCCUPANCY CERTIFICATES SUBMITTED BY THE ASSESSEE ARE PART OCCUPANCY CERTIFICATES AND NO T FULL OCCUPANCY CERTIFICATE. THE AO FINALLY CONCLUDED THAT THE ASSESSEE HAS NOT COMPLIED WITH T HE MANDATORY CONDITIONS OF SEC. 80IB(10). THE CLAIM OF DEDUCTION WAD DENIED AND HENCE SOLE AD DITION OF RS. 71,59,709/- WAS MADE TO THE RETURNED INCOME. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). IT WAS STRONGLY SUBMITTED THAT OUT OF THE TOTAL 17 BUILDINGS OF THE PROJECT AS APPROVE D BY THE LOCAL AUTHORITY, THE ASSESSEE FIRM ACQUIRED DEVELOPMENT RIGHTS IN RESPECT OF ONLY ONE RESIDENTIAL BUILDING NUMBER 5 CALLED RUBY WHICH COMPRISED OF THREE WINGS NAMELY A,B & C HAVING BUILT UP AREA OF 8264.69 SQ. MTRS. THE ASSESSEE CONTENDED THAT IT HAS COMPLETED ITS BU ILDING WITHIN STIPULATED PERIOD AND OBTAINED COMPLETION CERTIFICATE BEFORE THE DUE DATE. IT WAS FURTHER SUBMITTED THAT THE OCCUPANCY CERTIFICATED ARE GRANTED BUILDING-WISE AND IF ALL T HE BUILDING FORMING PART OF THE LAY OUT ARE NOT COMPLETED THEN PART OCCUPANCY CERTIFICATED ARE GRAN TED WHICH MEANS THAT THE PARTICULAR BUILDING CONCERN IS FULLY COMPLETED BUT OTHER BUILDINGS OF T HE LAY OUT ARE UNDER DEVELOPMENT. 6. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD.CIT(A) RELIED ON RELIEF GRANTED TO THE ASSESSEE UNDER SIMILAR CIRCUMSTANCES BY HIS PREDECESSOR FOR ASSESSMENT YEAR 2009-2010, AND ALLOWED THE CLAIM OF THE ASSESSEE. 7. AGGRIEVED BY THIS, REVENUE IS BEFORE US. 8. THE LD. DEPARTMENT REPRESENTATIVE STRONGLY SUPPO RTED THE FINDINGS OF THE AO. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE (AR) REITE RATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. AT THE OUTSET, AR DREW OUR ATTEN TION TO THE STAND TAKEN BY ITAT IN ASSESSEES OWN CASE IN ITA NO. 7020/MUM/2012 UNDER SIMILAR CIR CUMSTANCES FOR ASSESSMENT YEAR 2009- 2010 AND PRODUCED A COPY OF THE ORDER FOR OUR PERUS AL. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED MATE RIAL ON RECORD. WE NOTICE THAT A STAND HAS BEEN TAKEN BY ITAT IN ASSESSEES OWN CASE FOR A SSESSMENT YEAR 2009-2010 WHICH IS AS FOLLOWS:- WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT THAT THE ENTIRE P ROJECT IS ON A PLOT AREA OF 67225 SQ. MTR FOR WHICH THE BUILDING PLAN WAS APPROVED BY CIDCO, 17 BUILDINGS WE RE TO BE CONSTRUCTED. OUT OF THE ENTIRE PROJECT, THE ASSESSEE WAS AW ARDED THE CONSTRUCTION OF BUILDING NO. 5 CONSISTING OF 3 WINGS A, B & C. IT APPEARS THAT THE AO HAS PROCEEDED UNDER A WRONG BELIEF THAT THE ENTIRE 17 BUILDINGS HAVE BEEN CONSTRUCTED BY THE ASSESSEE. THE FACT OF THE MATTER IS THAT THE ASSESSEE HAS CONSTRUCTED ONLY BUILDING N O. 5 WITH A, B & C WINGS WHICH WAS ON A PLOT AREA OF MORE THAN ONE ACRE. THIS FACT IS NOT AT ALL IN DISPUTE. THE ASSESSEE HAS SUBMITTED THE COMPLETION CERTIFICATE IN RESPEC T OF THE BUILDING CONSTRUCTED BY IT ITA NO. 5989/M/2014 M/S. PRAGATI ENTERPRISES 3 ON WHICH IT HAS CLAIMED DEDUCTION U/S. 80IB(10) OF THE ACT. THE AO EXPECTED THE ASSESSEE TO SUBMIT COMPLETION CERTIFICATION IN RESPECT OF ALL THE BUIL DING WHICH IS TOTALLY UNCALLED FOR AND UNWARRANTED. THE AO SHOULD HAVE RESTRICTED HIS FINDINGS ONLY T O THE PROJECT AWARDED/UNDERTAKEN BY THE ASSESSEE WHICH IS BUILDING NO. 5 AN D SHOULD HAVE PROCEEDED BY FINDING WHETHER THE ASSESSEE HAS COMPLIED WITH THE MANDATO RY CONDITION IN RESPECT OF BUILDING NO. 5 ONLY. SINCE THE AO HAS PROCEEDED COMPLETELY ON MISCONCEIVED FACTS, THEREFORE, WE RESTORE THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO VERIFY THE ELIGIBILITY U/S. 80IB(10) OF THE ACT IN RESPECT OF BUILDING N O. 5 WITH A,B & C WINGS. THE AO IS DIRECTED TO VERIFY THE SALES KEEPING IN MIND THE EX PLANATION TO SEC. 80IB(10) RELATING TO THE EXECUTION OF THE HOUSING PROJECT AS A WORK CONTRACT. NEEDLESS TO MENTION, THE AO SHALL GIVE A REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. 10. AS THE MATTER IS IDENTICAL IN ALL RESPECT, WE F IND NO REASON TO DEVIATE FROM THE STAND TAKEN BY ASSESSES ORDER OF ITAT AND THEREFORE, WE R ESTORE THE MATTER BACK TO AO TO VERIFY THE CLAIM OF ASSESSEE ON THE ABOVE LINES/OBSERVATIONS. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 10/08/2016 PS:- POOJA K. COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//