ITO, Bangalore V. M/s Mahaveer Calyx, Bangalore

ITA 610/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8665 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIA
• Assessee Lawyers: V SRINIVASAN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS. A.Y. APPELLANT VS. RESPONDENT 610/BANG/2016 2010-11 THE INCOME TAX OFFICER, WARD 4(3)(3), BANGALORE. M/S. MAHAVEER CALYX PAN: AAOFM 2460J 611/BANG/2016 2010-11 M/S. MAHAVEER TUSCAN PAN: AANFM 8057E 612/BANG/2016 2010-11 M/S. MAHAVEER MARVEL PAN: AANFM 7688R NO.9, MAHAVEER HOMES, 24 TH MAIN, 6 TH PHASE, J.P. NAGAR, BANGALORE 560 078. APPELLANT BY : SHRI R.K. JHA, CIT(DR) RESPONDENT BY : SHRI V. SRINIVASAN, ADVOCATE DATE OF HEARING : 05.12.2016 DATE OF PRONOUNCEMENT : 06.01.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE APPEALS ARE PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF CIT(APPEALS) ON THE COMMON GROUNDS RELATING TO CLA IM OF DEDUCTION U/S. 80IB OF THE INCOME-TAX ACT, 1961 ['THE ACT']. 2. DURING THE HEARING, THE LD. COUNSEL FOR THE ASSE SSEE HAS INVITED OUR ATTENTION THAT THE CIT(APPEALS) HAD DECIDED THE ISS UE FOLLOWING THE EARLIER ORDERS OF THE CIT(A) FOR AYS 2007-08, 2008-09 AND 2 009-10 AND IN THOSE ITA NOS.610 TO 612/BANG/2016 PAGE 2 OF 6 YEARS, THE DISPUTE WITH REGARD TO BUILT-UP AREA WAS EXAMINED AND CLAIM OF DEDUCTION U/S. 80IB WAS ALLOWED. THE LD. COUNSEL FURTHER CONTENDED TH AT THE DECISION TAKEN BY THE CIT(APPEALS) WAS ALSO FU RTHER EXAMINED BY THE TRIBUNAL. THE TRIBUNAL IN THE ASSESSEE'S OWN CASE HAD EXAMINED THE ISSUE OF BUILT-UP AREA WHILE ALLOWING CLAIM OF DEDUCTION U/S. 80IB OF THE ACT. COPIES OF THE ORDERS OF THE TRIBUNAL ARE PLACED ON RECORD. 3. THE LD. DR PLACED RELIED UPON THE ORDER OF THE A O. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWE R AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE AO HAS DENIED THE DEDUCTION U/S. 80IB OF THE ACT ON THE GROUND THAT THE BUILT-UP AREA IS MORE THAN THE SANCTIONED AREA WITHOUT THE APPROVAL OF LOCAL AUTHO RITIES. THIS ASPECT WAS EXAMINED BY THE CIT(APPEALS) AS WELL AS THE TRIBUNA L IN THE EARLIER YEARS. THE TRIBUNAL WAS OF THE VIEW THAT THE ASSESSEE IS E NTITLED FOR DEDUCTION U/S. 80IB OF THE ACT. WE, HOWEVER, FOR THE SAKE OF REFERENC E, EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IN IT A NO.68/BANG/2013 IN THE CASE OF ITO V. M/S. MAHAVEER CALYX AS UNDER:- 5.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUD ING THE JUDICIAL DECISION CITED BY THE LEARNED AUTHORISED REPRESENTA TIVE. WE FIND THAT THE ISSUE OF DEDUCTION U/S. 80-IB OF THE ACT, RAISE D BY REVENUE, IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE' S OWN CASE IN ITA NOS. 153 & 998/BANG/2011 DT.31.8.2612, WHEREIN THE ASSES SEE HAD ALSO CLAIMED DEDUCTION U/S. 80-IB OF THE ACT IN RESPECT OF THE SAME PROJECT. IN THIS ORDER OF THE CO-ORDINATE BENCH F THE TRIBUN AL, IT HAS BEEN HELD AS UNDER : ITA NOS.610 TO 612/BANG/2016 PAGE 3 OF 6 5.4.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. FROM T HE FINDINGS RECORDED BY THE AUTHORITIES BELOW, IT IS SEEN THAT THE ASSESSEE OBTAINED A SANCTIONED PLAN ON 31.10.2008 FOR CONSTR UCTION OF A BASEMENT OF 92,565 SQ FT AND GROUND, FIRST, SECOND AND THIRD FLOORS AMOUNTING TO 1,83,748.40 SQ. FT. IT IS ALSO SEEN THAT THE AREA CONSTRUCTED AND SOLD AS PER THE SALE DEEDS, THE ASS ESSING OFFICER FOUND THAT THE BUILT UP AREA AFTER CONSTRUCTION WAS 1,91,436 SQ. FT. AND AFTER INCREASING BY THE COMMON AREA AT 18.5% TH E BUILT UP AREA COMES TO 2,26,851.60 SQ. FT. THE BASIC CRUX OF THE DISPUTE BETWEEN THE ASSESSEE AND REVENUE REVOLVES AROUND TH IS ASPECT OF THE MATTER. 5.4.2 IT HAS BEEN CONTENDED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW THAT THE APPROVED PLAN MENTIONS THE BUILT UP AREA BEING PLINTH AREA OF THE FLATS AND DOES NOT COVER THE BAL CONIES OF EACH FLAT, CORRIDORS, LIFT AREA ROOM, OVERHEAD TANK, SUM P TANK, SECURITY ROOMS, STAIR CASE AND STAIR CASE HEAD ROOM, WHICH A REA IS IN ADDITION TO THE AREA ARRIVED AT FROM THE SANCTIONED PLAN. WHAT THE ASSESSEE HAS CONVEYED IN THE SALE DEEDS IS THE TOTA L AREA CONSTRUCTED INCLUDING THE AFORESAID AREA, WHICH IS NOT REFLECTED IN THE SANCTIONED PLAN. THAT APART, THE CONTENTION OF THE ASSESSEE HAS BEEN THAT THE APPROVAL OF THE LOCAL AUTHORITY FOR T HE HOUSING PROJECT IS SECURED AND THAT IS SUFFICIENT FOR GRANT OF DEDUCTION UNDER SECTION 80 IB OF THE ACT. IN THIS CONTEXT, IT IS RELEVANT TO REFER TO THE CLARIFICATION OF THE CBDT IN A LETTER VIDE.NO.205/3/2001/ITA-II DT. 4.5.2001 ADDRESSED TO THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY, WHICH HAS BEEN REPRODUCED BY THE LEARNED CIT(A) AT PARA 3.8 OF HER ORDER FOR ASSESSMENT YEAR 2008-09 IN WHICH IT HAS BEEN STATED THAT APPROVAL OF ANY PROJECT AS A HOUSING PROJECT BY THE LOCAL AUTHORITY WOULD BE ADEQUATE FOR THE PURPOSES OF SECTION 80 IB OF THE ACT. ALTHOUGH, THE LEARNED DEPARTMENTAL REPRESENTATIVE H AS CONTENDED THAT AFORESAID CLARIFICATIONS WERE GIVEN IN THE CONTEXT OF THE COMMERCIAL AREAS BEING CONSTRUCTED ALONG WIT H THE HOUSING PROJECT, WE ARE OF THE VIEW THAT THE SCOPE CANNOT B E CONSIDERED TO BE RESTRICTED TO THAT CIRCUMSTANCE ALONE. THIS IS D UE TO THE FACT THAT THE DEFINITION OF A HOUSING PROJECT IS NOT GIV EN UNDER THE ACT AND THEREFORE THE VIEW OF THE CBDT THAT A HOUSING P ROJECT IS ONE WHICH IS APPROVED BY A LOCAL AUTHORITY REQUIRES TO BE GIVEN FULL EFFECT TO. THEREFORE, IT CANNOT BE CONSTRUED THAT W HAT THE ASSESSEE HAS CONSTRUCTED IS NOT A HOUSING PROJECT. ITA NOS.610 TO 612/BANG/2016 PAGE 4 OF 6 5.4.3 COMING TO THE CRUCIAL QUESTION AS TO WHETHER THE HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE IS AN APPROVED HOUSING PROJECT OR NOT, WE DO NOT FIND THE VIEW OF THE ASS ESSING OFFICER THAT THE PROJECT SHOULD BE CONSIDERED AS UNAPPROVED BECAUSE OF EXCESS CONSTRUCTION PUT UP BY THE ASSESSEE TO BE ON SOUND FOOTING. THIS IS BECAUSE THE MUNICIPAL AUTHORITIES ARE VESTE D WITH THE POWER TO LOOK INTO THE VIOLATIONS, IF ANY, OF THE APPROVED/SANCTIONED PLAN. THE ASSESSING OFFICER WHI LE EXAMINING THE ISSUE OF GRANTING OF DEDUCTION UNDER SECTION 80IB OF THE ACT HAS TO SATISFY HIMSELF WITH REGARD TO TH E FOLLOWING CONDITIONS MENTIONED IN SECTION 80 IB(10) : (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND, W HICH HAS A MINIMUM AREA OF ONE ACRE; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN 25 KMS FROM THE MUNICIPAL LIMITS OF THOSE CITIES OR ONE THOUSAND FI VE HUNDRED SQ. FT. AT ANY OTHER PLACES. (D) THE BUILT UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED 5% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PR OJECT OR 2000 SQ. FT. WHICHEVER IS LESS. 5.4.4 FROM AN APPLICATION OF THE AFORESAID CONDITIO NS TO THE FACTS OF THE ASSESSEES CASE, IT BECOMES CLEAR THAT THE A SSESSEE HAS FULFILLED THE CONDITIONS MENTIONED IN SECTION 80 IB OF THE ACT. THE JUDGMENT OF THE HON'BLE HIGH COURT OF GUJARAT I N THE CASE OF JOLLY POLYMERS (SUPRA) RELIED UPON BY THE LEARNED D EPARTMENTAL REPRESENTATIVE WAS RENDERED IN A CASE WHERE THE ASS ESSEE CLAIMED DEDUCTION UNDER SECTION 80 IB OF THE ACT IN RESPECT OF A FACTORY WITHOUT EVEN OBTAINING A FACTORY LICENCE. IN THAT C ONTEXT, THE HON'BLE COURT HELD THAT THE COMMENCEMENT OF THE IND USTRIAL ACTIVITY MUST BE LAWFUL AND ANY MANUFACTURING ACTIV ITY WHICH IS FUNDAMENTALLY UNLAWFUL AND IS PROHIBITED BY LAW AND AGAINST PUBLIC POLICY WOULD NOT BE COVERED BY THE PROVISION S. IT HAS ALSO BEEN HELD BY THE HON'BLE HIGH COURT THAT MERE BREAC H OF SOME ITA NOS.610 TO 612/BANG/2016 PAGE 5 OF 6 TECHNICAL PROVISIONS OR REQUIREMENT WOULD NOT IPSO FACT DISQUALIFY AN ASSESSEE FROM CLAIMING DEDUCTION UNDE R SECTION 80 IB OF THE ACT. WITH DUE RESPECT, WE ARE OF THE VIEW THAT THE SAID JUDGMENT WOULD THEREFORE NOT BE APPLICABLE TO THE F ACTS OF THE ASSESSEES CASE AS THE ASSESSEE HAS OBTAINED APPROV AL OF THE CONCERNED LOCAL AUTHORITIES FOR CONSTRUCTION OF A H OUSING PROJECT. THE FACT THAT THE COMPOUNDING FEE HAS NOT YET BEEN PAID WOULD NOT MEAN THAT THE HOUSING PROJECT CONSTRUCTED BY TH E ASSESSEE IS UNLAWFUL AND THUS AN VIOLATION OF THE PROVISIONS OF SECTION 80 IB OF THE ACT. 5.4.5 WE ARE OF THE VIEW THAT THE LEARNED CIT(A) HA S RIGHTLY PLACED RELIANCE ON THE DECISIONS OF THE HON'BLE APE X COURT IN THE CASES OF PETRON ENGINEERING CONSTRUCTION (P) LTD. R EPORTED IN 175 ITR 523, PANDIAN CHEMICALS LTD. REPORTED IN 262 ITR 278, N.C. BUDHARAJA & CO. REPORTED IN 204 ITR 412, IPCA LABOR ATORIES LTD. REPORTED IN 266 ITR 521 TO ARRIVE AT THE VIEW THAT THE TAX INCENTIVE BY WAY OF DEDUCTION. 80 IB OF THE ACT IS PREDOMINANTLY FOR THE PURPOSE OF AUGMENTING AFFORDABLE DWELLING A ND OUGHT TO BE INTERPRETED IN THAT LIGHT. IN THIS VIEW OF THE M ATTER, THE INCENTIVE PROVISIONS MUST BE CONSTRUED IN A MANNER WHICH ADVANCES THE OBJECT AND INTENTION OF LEGISLATURE. T HE FACT THAT THE ASSESSEE HAS OBTAINED APPROVAL FOR THE HOUSING PROJ ECT CANNOT BE LOST SIGHT OF. AS FOR THE EXCESS AREA CONSTRUCTED, AS RIGHTLY HELD BY THE LEARNED CIT(A), IT IS FOR THE BBMP TO LOOK INTO THE VIOLATIONS IF ANY IN THE CONSTRUCTION OF THE HOUSING PROJECT. THAT HOWEVER DOES NOT AUTHORIZE THE ASSESSING OFFICER TO HOLD TH AT THE ASSESSEE HAS NOT GOT APPROVAL FOR THE HOUSING PROJECT OR THA T THE CONDITIONS LAID DOWN IN SECTION 80 IB (10) STATED V IOLATED. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE OR DERS OF THE LEARNED CIT(A) FOR BOTH ASSESSMENT YEARS 2007-08 AN D 2008-09 GRANTING THE ASSESSEE DEDUCTION UNDER SECTION 80 IB OF THE ACT IS IN ACCORDANCE WITH LAW AND ON A PROPER APPRECIATION OF THE FACTS OF THE INSTANT CASE OF THE ASSESSEE AND THEREFORE F INDING NO NEED FOR INTERFERENCE THEREIN, CONFIRM THE ORDERS OF THE LEARNED CIT(A). 6. IN THE RESULT, THE REVENUES APPEAL ARE DISMISSE D. 5.4 FOLLOWING THE AFORESAID DECISION OF THE CO-OR DINATE BENCH OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSM ENT YEARS 2007-08 AND 2008-09 -(SUPRA) WHEREIN THE ASSESSEE WAS ALLOW ED DEDUCTION U/S. 80-1B OF THE ACT, WE ARE OF THE CONSIDERED OPINION THAT THE ORDERS OF THE ITA NOS.610 TO 612/BANG/2016 PAGE 6 OF 6 LEARNED C1T (APPEALS) FOR ASSESSMENT YEAR 2009-10 G RANTING THE ASSESSEE DEDUCTION U/S. 80-1B OF THE ACT IS IN ACCO RDANCE WITH LAW AND ON A PROPER APPRECIATION OF FACTS OF THE CASE ON HA ND AND THEREFORE THERE IS NO REQUIREMENT FOR INTERFERENCE THEREIN. WE, THE REFORE, UPHOLD THE ORDER OF THE LEARNED CIT (APPEALS) AND CONSEQUENTLY DISMISS THE GROUNDS RAISED BY REVENUE AT S.NOS.2 TO 5. 5. SINCE THE TRIBUNAL HAS TAKEN A CONSISTENT VIEW I N THE EARLIER YEARS, WE FIND NO JUSTIFICATION TO TAKE A CONTRARY VIEW. ACCORDINGLY WE CONFIRM THE ORDERS OF THE CIT(APPEALS). 6. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF JANUARY, 2017. SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICI AL MEMBER BANGALORE, DATED, THE 06 TH JANUARY, 2017. / DS / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.