Shri Naresh T. Wadhwani, Pune V. Addl.CIT, Range 8,Pune, Pune

ITA 603/PUN/2009

• Counselvise Citation: 60324514 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V L JIAN
• Keywords: Opportunity of being heard
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 603/PN/2009 (ASSTT. YEAR : 2005-06 ) SHRI. NARESH T. WADHWANI ... APPELLANT OFFICE NO. 26-30, 2 ND FLOOR, SAI KRUPA BHAVAN, OPP. KSB PUMP, KHARALWADI, PIMPRI, PUNE 411018 PAN : NOT AVAILABLE V. ADDL. CIT, RANGE 8, PUNE RESPO NDENT APPELLANT BY : SHRI. V.L. JIAN RESPONDENT BY : MS. NEERA MALHOTRA DATE OF HEARING : 16/01/12 DATE OF PRONOUNCEMENT : 12-3-12 ORDER PER I.C. SUDHIR, JM THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS : 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ORDER OF THE ASSESSING OFFICER REJECTING THE CLAIM U/S 80 IB (10) TO THE TUNE OF RS. 69,30,621/- IN RESPECT OF THE PROJECTS SAI GANESH PARK AND SAI SNEH PARK. 2. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE PROVISION OF SECTION 80IB (10) AS AMENDED W.E.F. 01 .04.2005 SHALL APPLY TO PROJECTS ALREADY APPROVED AND COMMENCED MU CH BEFORE ON 01.04.2004. 3. THE CIT(A) ERRED IN LAW IN CONFIRMING THAT THE P LOT AREA TO BE RECKONED FOR THE ELIGIBLE HOUSING PROJECT U/S 80IB( 10) HAS TO BE THE NET PLOT AREA. ITA . NO.603//PN/2009 SHRI NARESH T. WADHWANI A.Y. 2005-06 PAGE OF 7 2 2. AT THE OUTSET OF HEARING, THE LD. A.R. SUBMITTED THAT THE ISSUE RAISED IN THE GROUNDS IS FULLY COVERED BY THE DECIS ION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF OPEL SHELTERS PVT. LTD . VS. ACIT & OTHER, ITA NO. 219/PN/2009 (A.Y. 2005-06), ORDER DATED 31 MAY 2011 AND BY THE DECISION IN THE CASE OF M/S. M.D. ASSOCIATES VS. I TO, ITA NO. 1638/PN/2007, A.Y. 2004-05, ORDER DATED 23 RD MARCH 2010 AND SHRI NARESH T. WADHWANI VS. ITO, ITA NO. 339/PN/2007 (A. Y. 2004-05), ORDER DATED 17 TH JULY 2009. 3. THE LD. D.R. BASICALLY PLACED RELIANCE ON THE OR DERS OF THE AUTHORITIES BELOW AND ALSO CITED THE DECISION OF P UNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. AGARWAL CONSTRUCTIONS VS. ACIT, ITA NO. 872/PN/06 AND OTHERS (A.Y. 2003-04), ORDER DATED 23 RD MARCH 2011. 4. THE RELEVANT FACTS ARE THAT DURING THE YEAR, THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IB(10) AT RS. 69,30,621/- IN RESPECT OF PROFITS EARNED ON THE PROJECTS SAI SNEH PARK AND SAI GAN ESH PARK. THE A.O. NOTED THAT THE PROJECT SAI SNEH PARK COMPRISED 120 RESIDENTIAL UNITS AND 12 COMMERCIAL UNITS, THE AREA OF THE RESIDENTIAL P LOT WAS 84272 SQ.FT. WHILE THE COMMERCIAL AREA OF 2558 SQ.FT. THE A.O D ISALLOWED THE CLAIMED DEDUCTION ON THIS PROJECT MAINLY ON THE BASIS THAT THE PROJECT SAI SNEH PARK WAS HAVING COMMERCIAL AREA EXCEEDING PRESCRIBE D LIMIT OF 2000 SQ.FT. AS PER THE CONDITION PRESCRIBED IN CLAUSE ( D) TO SECTION 80 IB (10) OF THE ACT. 4.1. REGARDING THE PROJECT SAI GANESH PARK, THE A .O NOTED THAT THE GOVERNMENT APPROVED VALUER AND ARCHITECT HAS REPOR TED THAT OUT OF TOTAL LAND OF 5400 SQ. MTR., AN AREA OF 1498.5 SQ.MTR. W AS COMPULSORILY ACQUIRED BY PCMC (PIMPRI CHINCHWAD MUNICIPAL CORPO RATION) FOR ITA . NO.603//PN/2009 SHRI NARESH T. WADHWANI A.Y. 2005-06 PAGE OF 7 3 DEVELOPMENT PLAN ROAD AND THEREFORE, THE A.O NOTED THAT THE NET AREA OF THE PLOT AVAILABLE FOR THE PROJECT WAS 3901.5 SQ.MT R. OR 0.964 ACRES. THE A.O. DENIED THE CLAIMED DEDUCTION U/S. 80 IB (10) O F THE ACT ON THE BASIS THAT THE REQUIREMENT UNDER CLAUSE (B) TO SEC. 80IB( 10) IS THAT THE PROJECT SHOULD BE ON THE SIZE OF PLOT OF LAND HAVIN G MINIMUM AREA OF 1 ACRE, BUT THE SAME IS NOT SATISFIED IN THE CASE OF ASSESSEE HAVING LAND AREA OF 0.964 ACRES ONLY. THE LD CIT(A) HAS UPHELD THE ACTION OF THE A.O. 5. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW, AND DECISIO NS RELIED UPON. IN THE CASE OF OPEL SHELTERS PVT. LTD., VS. ACIT AND OTHE RS (SUPRA), THE PUNE BENCH OF THE TRIBUNAL AFTER DISCUSSING THE ISSUE I N DETAILS HAS COME TO THE CONCLUSION THAT AMENDED PROVISIONS U/S. 80IB (1 0) W.E.F. 1.4.2005 ARE NOT APPLICABLE ON THE PLAN APPROVED AND COMMENC ED CONSTRUCTION WELL BEFORE 1.4.2005. IN THOSE PROJECTS, THE ASSESSEES ARE REQUIRED TO COMPLETE THE PLAN AS IT HAS BEEN APPROVED AND AS PE R THE PROVISIONS OF THE INCOME TAX LAW AS PREVAILED AT THE TIME OF APPR OVAL AND COMMENCEMENT OF THE CONSTRUCTION OF THE PROJECT. F OR THE READY REFERENCE PARA NO. 20 OF THE SAID DECISION OF THE T RIBUNAL IN THE CASE OF OPEL SHELTERS PVT. LTD. (SUPRA) IS BEING REPRODUCE D HEREUNDER : 20. BY APPLYING THE PRINCIPLE OF HARMONIOUS CONSTR UCTION TO INTERPRET THE PROVISIONS UNDER SUB-SECTION (10) TO SECTION 80IB AS AMENDED W.E.F. 1.4.2005 WE COME TO THE CONCLUSION T HAT THE LEGISLATURE ALWAYS INTENDED THAT THE PROJECT MUST B E APPROVED BY THE LOCAL AUTHORITY, THUS IN THOSE APPROVED PROJECT S WHERE CONSTRUCTION HAS BEEN STARTED MUCH EARLIER THAN 1.4 .2005, THE ASSESSEES ARE REQUIRED TO COMPLETE THE PLAN AS IT H AS BEEN APPROVED. AS PUTTING SUCH ASSESSEES TO COMPLETE TH E PLAN MEETING OUT CONDITION UNDER CLAUSE (D) OF THE SUB-SECTION W OULD LEAD INTO ABSURDITY AND IMPOSSIBILITY FOR THE ASSESSEE AND I N CONTRADICTION TO THE PROVISIONS U/S. 80 IB(10) AS PREVAILED AT THE T IME OF APPROVAL ITA . NO.603//PN/2009 SHRI NARESH T. WADHWANI A.Y. 2005-06 PAGE OF 7 4 AND COMMENCEMENT OF THE CONSTRUCTION OF THE PROJEC T WELL BEFORE 1.4.2005. BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V (SUPRA) HAS DISCUSSED ALL THESE RELEVANT ASPECTS RAISED BY THE DEPARTMENT. IN THE CASE OF HIRANANDANI AKRUTI J.V V/S. DCIT, IT HAS BEEN HELD THAT THE LAW AS EXISTED WHEN THE A SSESSEE SUBMITTED ITS PROPOSAL AND PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED AND WHEN THE ASSESSEE COMM ENCED DEVELOPMENT IS TO BE APPLIED. IN THE PRESENT CAS ES, AS PER PAGE NOS. 17 AND 20 OF THE PAPER BOOK IN THE CASE OF OPE L SHELTER THE PROJECT WAS COMMENCED ON 23.2.2001 AND EVEN COMPLET ED ON 14.5.2004, SIMILARLY AS PER THE CONTENTS OF PAGE NO .2 OF THE ASSESSMENT ORDER AND PAGE NO. 41 OF THE PAPER BOOK IN THE CASE OF D.S. KULKARNI AND ASSOCIATES, THE PROJECT WAS COMM ENCED ON 12.4.2001 AND COMPLETED IN THE MONTH OF NOVEMBER 20 03. THUS, THE ASSESSEES WERE SUPPOSED TO COMPLETE THE PROJECT S AS PER THE LAW AS EXISTED IN THE A.Y. 2001-02 IN THE CASE OF OPEL SHELTERS AND IN THE A.Y. 2002-03 IN THE CASE OF D.S. KULKARNI A ND ASSOCIATES. WE THUS FOLLOWING THE DECISION IN THE CASE OF HIRA NANDANI AKRUTI JV V/S. DCIT (SUPRA) HOLD THAT AMENDED PROVISIONS UNDE R SECTION 80 IB(10) W.E.F. 1.4.2005 ARE NOT APPLICABLE IN THE PR ESENT CASE, HENCE ASSESSEES ARE ELIGIBLE FOR THE CLAIMED DEDUCTION U/ S. 80 IB (10) OF THE ACT. WE ACCORDINGLY DIRECT THE A.O TO ALLOW TH E CLAIMED DEDUCTION TO THE ASSESSEES. IN VIEW OF THE ABOVE DECISION, WHEN WE EXAMINED THE FACTS OF THE PRESENT CASE REGARDING THE PROJECT SAI SNEH PARK, WE FIND THAT THE AUTHORITIES BELOW HAVE DENIED THE CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT ON THE BASIS THAT THE PROJECT WAS HAVING COMMERCIAL AR EA OF 2558 SQ.FT. WHICH WAS EXCEEDING THE PRESCRIBED LIMIT OF 2000 SQ.FT. AS PER CLAUSE (D) OF SEC. 80 IB (10) OF THE ACT. THE CONTENTION OF THE ASSESSEE REMAINED THAT THE LAW CANNOT BE PRESUMED TO PRESCR IBE A COMPLETION LIMIT FOR BUILDINGS ALREADY COMPLETED BEFORE THE D ATE OF INTRODUCTION OF LAW. THUS, IT IS CLEAR THAT REFERENCE TO HOUSING P ROJECTS APPROVED BEFORE 1.4.2005 IS IN CONNECTION WITH THE TIME LIMIT OF CO MPLETION PRESCRIBED IN RESPECT OF INCOMPLETE PROJECTS AS OF THE DATE OF IN TRODUCTION OF THE ITA . NO.603//PN/2009 SHRI NARESH T. WADHWANI A.Y. 2005-06 PAGE OF 7 5 AMENDMENT AND DOES NOT CONFER ANY RETROSPECTIVE ME ANING OR INTENT TO THE AMENDMENT. WE FIND SUBSTANCE IN THIS CONTENTI ON OF THE ASSESSEE IN VIEW OF THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF OPEL SHELTERS PVT.LTD. VS. ACIT (SUPRA). WE THUS SET AS IDE THE MATTER TO THE FILE OF A.O TO EXAMINE THE RELEVANT FACT REGARDING DATE OF APPROVAL OF THE PROJECT AND COMMENCEMENT OF THE SAME AND IF IT IS E ARLIER THAN 1.4.2005, THEN DECIDE THE CLAIMED DEDUCTION U/S. 80 IB (10) O N THE PROFIT EARNED DURING THE YEAR ON THE PROJECT SAI SNEH PARK AS P ER THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF OPEL SHEL TERS PVT. LTD. VS. ACIT (SUPRA) AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. SO FAR AS THE CLAIMED DEDUCTION IN RESPECT OF PR OFIT EARNED DURING THE YEAR ON THE PROJECT SAI GANESH PARK IS CONCER NED, WE FIND THAT AN IDENTICAL ISSUE HAS BEEN DECIDED BY PUNE BENCH OF T HE TRIBUNAL IN THE CASE OF M/S. M.D. ASSOCIATES VS. ITO (SUPRA) HOLD ING THAT THE SIZE OF THE PLOT SHOWN IN THE LAY OUT PLAN SUBMITTED FOR THE H OUSING PROJECT WILL BE THE START POINT FOR THE PURPOSE OF CALCULATION OF THE SIZE OF THE PLOT AVAILABLE FOR THE HOUSING PROJECT. IF THE AUTHORIT Y DIRECTS TO SACRIFICE SOME PORTION TO D.P. ROAD ETC., AS PER THE MANDATE OF THE LOCAL LAWS, THEN NATURALLY THE SAID PROJECT IS ON THE SIZE OF THE PLOT WHICH WAS AVAILABLE FOR THE HOUSING PROJECT THOUGH DUE TO IM POSED MANDATORY RESTRICTION, SOME AREA HAD TO BE SACRIFICED FOR PRO VIDING ROAD ETC., AS PER THE NORMS OF THE SANCTIONING AUTHORITY (PARA 9 OF T HE ORDER IN THE CASE OF M/S. M.D. ASSOCIATES (SUPRA)). WE, THUS, SET ASIDE THE MATTER TO THE FILE OF THE A.O. TO EXAMINE THE ISSUE IN VIEW OF THE DEC ISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. M.D. ASSOCIATES VS . ITO (SUPRA) AND DECIDE THE SAME ACCORDINGLY AFTER AFFORDING OPPORTU NITY OF BEING HEARD TO ITA . NO.603//PN/2009 SHRI NARESH T. WADHWANI A.Y. 2005-06 PAGE OF 7 6 THE ASSESSEE. 7. SO FAR AS THE DECISION OF THE TRIBUNAL IN THE CA SE OF ASSESSEE ITSELF FOR THE A.Y. 2004-05 RELIED UPON BY THE LD. A.R. IS CONCERNED, IT IS OF NO HELP SINCE IT IS RELATED TO A.Y. 2004-05 AND THE M ATTER HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF THE A.O FOR ADJUDICA TION OF THE CLAIMED DEDUCTION IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES & OTHERS, IN ITA NO. 1417/PN/2006. THE A.Y. 2004-05 INVOLVED THEREIN IS ADMITTEDLY RELATED TO THE YEAR BEFORE THE AMENDMENT IN THE PROVISIONS OF SEC. 80 IB (10) W.E. F. 1.4.2005. LIKEWISE, THE DECISION OF PUNE BENCH OF THE TRIBUNA L IN THE CASE OF M/S. AGARWAL CONSTRUCTION VS. ACIT (SUPRA) RELIED UPON BY THE LD. D.R., THE ISSUE REGARDING INCLUSION OF AREAS ON ACCOUNT OF GA RDEN, AS A PORTION OF HOUSING PROJECT FOR THE COMPUTATION OF MINIMUM LAND AREA REQUIRED FOR THE PROJECT AS PER SEC. 80 IB (10) HAS BEEN SET ASI DE BY THE TRIBUNAL TO THE FILE OF A.O TO DECIDE THE SAME DE NOVO AFTER V ERIFICATION OF RELEVANT FACTS IN VIEW OF THE DECISION OF THE TRIBUNAL IN TH E CASE OF BUNTY BUILDERS, ITA NO. 1808/PN/2005 DATED 16.2.2010 AND NAVNIRMAN DEVELOPERS, ITA NO. 729/PN/2007, ORDER DATED 4.5.2010 AFTER AFFORDI NG OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS DECISION, THUS, IS NOT HELPFUL TO THE REVENUE AS IT DOES NOT APPROVE THE ACTION OF THE AU THORITIES BELOW IN THE PRESENT CASE. 8. THE GROUND NOS. 1 TO 3 ARE THUS ALLOWED FOR STAT ISTICAL PURPOSES. 9. CONSEQUENTLY, THE APPEAL IS ALLOWED FOR STATISTI CAL PURPOSES. ITA . NO.603//PN/2009 SHRI NARESH T. WADHWANI A.Y. 2005-06 PAGE OF 7 7 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12TH M ARCH 2012. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 12 TH MARCH, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT V, PUNE 4. THE CIT(A)- III,PUNE 5. THE D.R. B BENCH, PUNE 6. GUARD FILE /-TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE