OM SAWMI SMARAN DEVELOPERS P. LTD, MUMBAI V. ITO 8(2)(4), MUMBAI

ITA 6355/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0462 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 14-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Section: 115JB; 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I G. MANJUNATHA , ACCOUNTANT MEMBER ITA NO . 6 3 55 /MUM. /2014 ( ASSESSMENT YEAR : 20 1 1 1 2 ) OM SWAMI SMARAN DEVELOPERS PVT. LTD. B/11, UMA SMRUTI, 7 TH CARTER ROAD BORIVALI (EAST), MUMBAI 400 066 PAN AAACO8124A . APPELLANT V/S INCOME TAX OFFICER WARD 8(2)(4), MUMBAI . RESPONDENT ASSESSE E BY : SHRI MADHUR AGARWAL REVENUE BY : SHRI RAJAT MITTAL DATE OF HEARING 19.01 .201 8 DATE OF ORDER 31.01.2018 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 19 TH JUNE 2014 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 1 7 , MUMBAI, FOR THE ASSESSMENT YEAR 20 1 1 12 . 2 . THERE IS A DELAY OF 57 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THE CAUSE OF DELAY AND SEEKING CONDONATION THEREOF. AFTER PERUSING THE AFFIDAVIT FILED BY THE ASSESSEE 2 OM SWAMI SMARAN DEVELOPERS PVT. LTD. AND CONSIDERING THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRES ENTATIVE, W E ARE SATISFIED THAT THE DELAY IN FILING THE PRESENT APPEAL IS DUE TO BONAFIDE REASON S. HENCE , WE ARE INCLINED TO CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING ON MERITS. 3 . THE SOLITARY ISSUE ARISING FOR CONSIDERATION IN THIS APPEAL RELATES TO DISALLOW ANCE OF DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF HOUSING PROJECT. 4 . BRIEF FACTS ARE, THE ASSESSEE A COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECTS. FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2011, DECLARING NIL INCOME UNDER THE NORMAL PROVISIONS AFTER CLAIMING DED UCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF SLUM REHABILITATION PROJECT DEVELOPMENT AT VILE P ARLE KNOWN AS AJINKYA DURGA. OF COURSE, THE ASSESSEE ALSO OFFERED BOOK PROFIT OF ` 1,48,66,701 UNDER SECTION 115JB OF THE ACT. DURING THE ASSESSMENT PRO CEEDINGS, THE ASSES SING OFFICER WHILE VERIFYING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, AS MADE IN FORM NO.10CCB , FOUND THAT THE ASSESSEE HAS COMMENCED THE PROJECT ON 18 TH DECEMBER 2006, WHEREAS , IN THE IMPUGNED ASSESSMENT YEAR FO R THE FIRST TIME, THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT FOR AN AMOUNT OF ` 1,48,66,701. HE, 3 OM SWAMI SMARAN DEVELOPERS PVT. LTD. THEREFORE, CALLED UPON THE ASSESSEE TO FURNISH NECESSARY DETAILS FOR HOUSING PROJECT AND DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT. ON VERIFYING THE DETAILS SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS ALLOTTED THREE FLATS BEARING NO.201, 501 AND 502, TO A SINGLE PERSON NAMELY SHRI DWARKANATH TIWARI, THROUGH ALLOTMENT LETTER DATED 3 RD FEBRUARY 2010. SUBSEQUENTLY, FROM THE SALE AGREEMENT SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT THREE FLATS WERE SOLD TO THE CONCERNED PERSON FOR A TOTAL SALE CONSIDERATION OF ` 1,92,000 AND THE AGREEMENTS WERE REGISTERED ON 22 ND JUNE 2011. TO FUR THER VERIFY THE CLAIM OF THE ASSESSEE THAT THE FLATS WERE ALLOTTED TO SHRI DWARKANATH TIWARI, ON 3 RD FEBRUARY 2010, THE ASSESSING OFFICER SOUGHT INFORMATION UNDER SECTION 133(6) OF THE ACT AND SHRI DWARKANATH TIWARI WAS ALSO EXAMINED ON OATH UNDER SECTION 131 OF THE ACT BY THE ASSESSING OFFICER. IN THE STATEMENT RECORDED, SHRI DWARKANATH TIWARI, AGREED T HAT THE ASSESSEE HAS SOLD THREE FLATS TO HIM IN SRA PROJECT. THE ASSESSIN G OFFICER REFERRING TO CLAUSE (E) AND (F) OF SECTION 80IB(10 ) OF THE ACT OBSERVED , IF MORE THAN ONE RESIDENTIAL UNIT IN A HOUSING PROJECT IS ALLOTTED TO ONE INDIVIDUA L NO DEDUCTION U NDER SECTION 80 IB(10) OF THE ACT IS ALLOWABLE. ACCORDINGLY, HE CALLED UPON THE ASSESSEE TO EXPLAIN WHY DEDUCTION CLAIMED UNDER SECTION 80IB(10) SHOULD NOT BE DISALLOWED. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE , EVEN IF CONDITIONS OF SECTION 4 OM SWAMI SMARAN DEVELOPERS PVT. LTD. 80IB(10) OF THE ACT ARE NOT COMPLIED WITH IN RESPECT OF SOME FLATS, HOWEVER, THE PROJECT WOULD STILL QUALIFY FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AND DEDUCTION UNDER THE SAID PROVISION CAN BE ALLOWED ON PROPORTIONATE BASIS IN RESPECT OF FLATS WHICH COMPL IED TO ALL THE CONDITIONS OF SECTION 80IB(10) OF THE ACT. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. HE WAS OF THE VIEW THAT AFTER AMENDMENT TO S ECTION 80IB(10) OF THE ACT AND INTRODUCTION OF CLAUSE (E) AND (F) B Y FINANCE ACT, 2009, W.E.F. 1 ST APRIL 2010, IF MORE THAN ONE FLAT IS SOLD TO A SINGLE PERSON, NO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IS ALLOWABLE FOR THE ENTIRE PROJECT. ACCORDINGLY, HE DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB(10 ) OF THE ACT. BEING AGGRIEVED OF THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). 5 . L EARNED COMMISSIONER (APPEALS), AFTE R CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DI D NOT FIND MERIT IN THEM. AGREEING WITH THE VIEW EXPRESSED BY THE ASSESSING OFFICER, THE LEARNED COMMISSIONER (APPEALS) HELD THAT AFTER AMENDMENT TO SECTION 80IB(10) BY FINANCE ACT, 2009, NO DEDUCTION CAN BE A LLOWED IF CONDITIONS OF CLAUSE (E) AND (F) OF S ECTION 80IB(10) HAS BEEN VIOLATED. 5 OM SWAMI SMARAN DEVELOPERS PVT. LTD. 6 . LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE SRA PROJECT BY THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS OF SECTION 80IB(10) EXCEPT THE CON DITIONS OF CLAUSE (F) OF SECTION 80IB(10) OF THE ACT, THAT TOO , IN RESPECT OF ONLY THREE FLATS SOLD TO A SINGLE INDIVIDUAL. HE SUBMITTED, FOR VIO LATION OF CONDITIONS OF CLAUSE (F) I N RESPECT OF THREE FLATS DEDUCTION CLAIMED FOR THE ENTIRE HOUSING PROJECT CANNOT BE DISALLOWED. HE SUBMITTED, PRO PORTIONATE DISALLOWANCE C AN MADE IN RESPECT OF FLATS WHICH DO NOT FULFILL THE CONDITIONS OF SECTION 80IB(10) OF THE ACT. IN THIS CONTEXT, HE RELIED UPON THE FOLLOWING DECISIONS: I ) BISWAS PROMOTORS PVT. LTD. V/S ACIT, [2013] 214 TAXMAN 524; II ) CIT V/S ARUN EXELO FOUNDATION PVT. LTD., [201`3] 212 TAXMAN 342 (MAD.); III ) ITO V/S PARAS BUILDERS, 69 SOT 82; 7 . LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS). 8 . WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. AS COULD BE SEEN FROM THE FACTS AVAILABLE ON RECORD, THE ASSESSEE HAS DEVELOPED A HOUSING PROJECT UNDER THE SLUM REHABILITATION SCHEME OF THE GOVERNMENT. IT IS ALSO A FACT THAT IN THE IMPUGNED ASSESSMENT YEAR FOR THE FIRST TIME, THE ASSESSEE HAD OFFERED 6 OM SWAMI SMARAN DEVELOPERS PVT. LTD. PROFIT FROM THE SAID HOUSING PROJECT AMOUNTING TO ` 1,48,66,701 AND HAS CLAIMED DEDUCTION THEREOF UNDER SECTION 80IB(10) OF THE ACT. THERE IS NO DISPUTE THAT THE ASSESSEE HAS SOLD THREE FLATS TO A SINGLE INDIVIDUAL IN THE SAID HOUS ING PROJECT. THE ASSESSING OFFICER HAS DISALLOWED ASSESSEES CLAIM OF DEDUCTION ALLEGING VIOLATION OF CONDITION S OF CLAUSE (F) OF SECTION 80IB(10) OF THE ACT, WHICH PROVIDES THAT MORE THAN ONE RESIDENTIAL UNIT IN A HOUSING PROJECT CANNOT BE SOLD TO A PERSON / INDIVIDUAL. T HE FACTUAL MATRIX OF THE CASE REVEAL S THAT EXCEPT VIO LATION OF CONDITIONS OF CLAUSE (F) OF SECTION 80IB(10) O F THE ACT, IN THE SENSE THAT THE ASSESSEE HAS SOLD THREE FLATS TO A SINGLE INDIVIDUAL, THERE IS NO ALLEGATION BY THE DEPARTMENTAL AUTHORITIES THAT ANY OTHER CONDITIONS OF SECTION 80IB(10) OF THE ACT IN RESPECT OF ANY OTHER FLATS OF THE HOUSING PROJECT ARE VIOLATED. THUS, THE ISSUE BEFORE US IS WHETHER FOR VIOLATI ON OF THE CONDITIONS OF CLAUSE (F) OF SECTION 80IB(10) OF THE ACT IN RESPECT OF TWO FLATS , ASSESSEES CLAIM OF DEDUCTION IN RESPECT OF ENTIRE HOUSING PROJECT CAN BE DISALLOWED. IN OUR VIEW, READING THE PROVISIONS OF SECTION 80IB(10) AS A WHOLE AND THE LEGISLATIVE INTENT / OBJECT BE HIND INTRODUCING SUCH PROVISION INTO THE STATUTE WOULD REVEAL TH AT IT IS A BENEFICIAL PROVISION INTRODUCED BY THE LEGISLATURE TO DEAL WITH THE HOUSIN G PROBLEM. THUS, SUCH PROVISION HAS TO BE CONSTRUED LIBERALLY. UNDISPUTEDLY, EXCEPT VIO LATION OF CONDITIONS OF CLAUSE (F) OF SECTION 80IB(10) OF THE ACT IN RESPECT OF TWO FLATS , ALL 7 OM SWAMI SMARAN DEVELOPERS PVT. LTD. OTHER CONDITIONS OF SECTION 80IB(10) OF THE ACT ARE FULFILLED IN RESPECT OF THE HOUSING PROJECT WHICH IS EVIDENT FROM THE FACT THAT THERE IS NO OTHER ALLEGATION MADE BY THE ASSESSING OFFICER. THEREFORE, IN OUR VIEW, FOR VI OLATION OF CONDITIONS OF CLAUSE (F) OF SECTION 80IB(10) OF THE ACT IN RESPECT OF TWO FLATS, THE DEDUCTION FOR THE ENTIRE HOUSING P ROJECT OR IN RESPECT OF OTHER FLATS WHICH OTHERWISE ARE CO MPLYING TO THE CONDITIONS OF SECTION 80IB(10) CANNOT BE DISALLOWED . THE DISALLOWANCE , IF ANY , HA S TO BE RESTRI CTED TO THE FLATS WHICH VIOLATE THE CONDITIONS OF SECTION 80IB(10). THE HON'BLE JURISD ICTIONAL HIGH COURT IN CIT V/S BRAMHA ASSOCIATES, 333 ITR 289, HAS HELD THAT DEDUCTION UNDER SECTION 80IB(10) CAN BE ALLOWED ON PROPORTIONATE BASIS IN RESPECT OF FLATS WHICH FULFILLED THE CONDITIONS OF SECTION 80IB(10). THE SAME VIEW WAS EXPRESSED BY THE H ON'BLE MADRAS HIGH COURT IN THE DECISION S CITED BY THE LEARNED AUTHORISED REPRESENTATIVE. IN OUR VIEW, THE RATIO LAID DOWN IN THE AFORESAID DECISIONS , THOUGH , ARE IN THE CONTEXT OF CLAUSE (C) OF SECTION 80IB(10) OF THE ACT , HOWEVER, THEY WILL APPLY TO THE FACTS OF THE PRESENT CASE AS THERE IS NOT MUCH DIFFERENCE IN THE OBJECT FOR WHICH SECTION 80IB(10) WAS INTRODUCED , EVE N AFTER INTRODUCTION OF CLAUSE (E) AND (F) TO SECTIO N 80IB(10) BY FINANCE ACT, 2009 . TH EREFORE, APPLYING THE RATIO LAID DOWN IN THE DECISION S CITED BEFORE US, WE HOLD THAT THE ASSESSEE WILL BE ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT PROPORTIONATELY IN RESPECT OF FLATS WHICH FULFILLED ALL 8 OM SWAMI SMARAN DEVELOPERS PVT. LTD. THE CONDITIONS OF SECTION 80IB(10) OF THE ACT. ACCORDINGLY, WE DI RECT THE ASSESSING OFFICER TO COMPUTE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. GROUND RAISED IS PARTLY ALLOWED. 9 . IN THE RESULT, ASSESSEE S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.01.2018 SD/ - G. MANJUNATHA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 31.01.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI .