DCIT CEN CIR 36, MUMBAI V. HABITAT, MUMBAI

ITA 6451/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83974 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 20-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: VASANTI B PATEL
• Keywords: Business income
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI SANJAY GARG, J M ITA NO. 6451 / MUM/20 12 ( ASSESSMENT YEAR :200 9 - 10 ) DCIT, CENTRAL CIRCLE - 36, MUMBAI - 400 020 VS. M/S HABITAT, 101, KALPATRU SYNERGY, OPP. GRAND HYATT., SANTACRUZ (E), MUMBAI - 600 055 PAN/GIR NO. : A AAFH 1314 E ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI PITAMBAR DAS /ASSESSEE BY : MS. VASANTI B. PATEL DATE OF HEARING : 18 TH SEPT , 201 4 DATE OF PRONOUN CEMENT : 29 TH OCT., 201 4 O R D E R PER R.C.SHARMA ( A .M.) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A ) , DATED 1 - 8 - 2012 FOR THE ASSESSMENT YEAR 200 9 - 10 , IN THE MATTER OF ORDER PASSED U/S. 143 ( 3 ) OF TH E I.T. ACT , WHEREIN THE FOLLOWING GROUNDS HAVE BEEN TAKEN : - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT AMOUNT OF INTEREST OF RS. 13,01,802/ - BE TREATED AS BUSINESS INCOME ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80IB OF THE I.T. ACT, 1961. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT AMOUNT OF INTEREST OF RS. 2,60,000/ - RECEIVED AS 20% OF GROSS RECEIPTS FROM JOINT VENTURE BE TR EATED AS ELIGIBLE FOR CLAIMING DEDUCTION U/S.80 IB OF THE I.T. ACT, 1961. 2 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE RECORD. FACTS IN BRIEF ARE THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF HOUSING ITA NO. 6451 / 12 2 DEVELOPMENT. DURING THE COURSE OF SCRUTINY AS SESSMENT, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED INTEREST ON LATE PAYMENTS FROM CUSTOMERS AMOUNTING TO RS. 13,01,802/ - . AFTER CONSIDERING REPLY OF THE ASSESSEE , THE AO HAS HELD THAT THE INTEREST INCOME IS NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING AND IS NOT ELIGIBLE FOR DEDUCTION U/S. 80LB. THUS HE HAS REDUCED THE INTEREST AMOUNT FROM THE BUSINESS INCOME AND RECOMPUTED THE DEDUCTION U/S. 80I B. 3 . BY THE IMPUGNED ORDER, CIT(A) DELETED THE DISALLOWANCE AFTER OBSERVING AS UNDER : - 2.3 I HAVE CONSIDER ED THE SUBMISSIONS OF THE APPELLANT, ORDER OF THE AO AND FACTS OF THE CASE CAREFULLY, IT IS NOTICED THAT THE ASSESSEE HAS EARN ED INTEREST INCOME OF RS. 13,01,802/ - ON LATE PAYMENTS RECEIVED FROM CUSTOMERS. THE ASSESSEE HAS ALSO RECEIVED INTEREST INCOME OF R S.1,99,074/ - ON FIXED DEPOSITS KEPT WITH KOTAK MAHINDRA BANK AND RS. 4005/ - WAS FROM RELIANCE ENERGY LTD. AGAINST ELECTRICITY DEPOSIT. THE AO HAS TREATED THIS AS INCOME FROM OTHER SOURCES AND NOT ALLOWED THE DEDUCTION U/S . 80LB. ON THE OTHER HAND, THE A. R. OF THE APPELLANT HAS SUBMITTED THAT THE INTEREST RECEIVED FROM CUSTOMERS ON ACCOUNT OF LATE PAYMENTS IS A BUSINESS INCOME AND ELIGIBLE FOR DEDUCTION U/S. 80LB. THE A. R. OF THE APPELLANT HAS ALSO RELIED ON THE DECISIONS OF THE HON'BLE COURTS AS ABOVE AND SPECIFICALLY IN THE CASE OF M/S TOLARAM & CO. VS. DCIT, CENTRAL CIRCLE - 31, MUMBAI. THE HON'BLE TRIBUNAL HAS GIVEN A SPECIFIC FINDING ON THIS ISSUE THAT THE LATE PAYMENT OF INTEREST RECEIVED FROM CUSTOMERS IS A BUSINESS INCOME. THE A.R. HAS ALSO RELIED ON T HE DECISION OF THE HON'BLE TRIBUNAL MUMBAI IN THE CASE OF ITS GROUP CO. DCIT VS. M/S. KALPATARU PROPERTY P. LTD. VIDE ORDER DATED 26.2.2009. THE HON'BLE TRIBUNAL HAS ALSO TREATED THE LATE PAYMENT OF INTEREST FROM CUSTOMERS AS BUSINESS INCOME AND ALLOWED DE DUCTION U/S. SOIB. KEEPING IN VIEW THE FACTS AND THE JUDICIAL PRONOUNCEMENT OF THE HON'BLE COURTS, IT IS HELD THAT THIS ISSUE IS SQUARELY COVERED BY THESE DECISIONS AND THE AMOUNT OF INTEREST OF RS. 13,01,S02/ - RECEIVED ON ACCOUNT OF LATE PAYMENTS FROM CUS TOMERS IS TREATED AS BUSINESS INCOME ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80IB. 4 . THE AO HAS ALSO DISALLOWED THE INTEREST INCOME OF RS. 2,60,000/ - EARNED FROM JOINT DEVELOPMENT ACTIVITY ENTERED BETWEEN ASSESSEE AND M/S. K.V. PROPERTY VENTURES PVT. LTD.. BY THE IMPUGNED ORDER THE CIT(A) ITA NO. 6451 / 12 3 DELETED THE DISALLOWANCE AND DIRECTED THE AO TO ALLOW THE CLAIM OF DEDUCTION U/S. 80IB ON THE INCOME OF RS. 2,60,000/ - AFTER HAVING THE FOLLOWING OBSERVATION : - 3.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ORDER O F THE AO AND FACTS OF THE CASE CAREFULLY, IT IS NOTICED THAT THE APPELLANT HAS ENTERED INTO A DEVELOPMENT AGREEMENT DATED 17.12.2003 WITH M/S. K.V. PROPERTY VENTURES P. LTD. AS PER THIS AGREEMENT THE ASSESSEE SHALL RECEIVED CONSIDERATION @ 20% OF THE GROSS RECEIPTS FROM THE DEVELOPER. AS PER THIS AGREEMENT THE ASSESSEE HAS RECEIVED 20% OF SHARE AMOUNTING TO RS. 2,60,000/ - . THIS INCOME WAS TREATED AS INTEREST INCOME BY THE AO AND NOT ALLOWABLE DEDUCTION U/S. 80IB. ON THE OTHER HAND, THE A.R. OF THE APPELLANT HAS SUBMITTED THAT AS PER THE DEVELOPMENT AGREEMENT BETWEEN THE ASSESSEE AND M/S. K.V. PROPERTY VENTURES P. LTD. THE ASSESSEE HAS RECEIVED 20% OF THE GROSS RECEIPTS AND IT IS A BUSINESS INCOME AND NOT IF] THE NATURE OF INTEREST INCOME. FROM THE PERUSAL O F THE FACTS AND ARGUMENTS, IT IS OBSERVED THAT AS PER THE DEVELOPMENT AGREEMENT BETWEEN THE ASSESSEE AND COMPANY M/S. K.V. PROPERTY VENTURES P. LTD., THE ASSESSEE HAS RECEIVED 20% OF SHARE OF GROSS RECEIPTS AMOUNTING TO RS.2,60,000/ - . SINCE THE ASSESSEE HA S RECEIVED THIS INCOME AS PER THE DEVELOPMENT AGREEMENT, IT IS A BUSINESS INCOME AND NOT IN THE NATURE OF INTEREST INCOME AS CONTENDED BY THE AO. IT SEEMS TO BE A MISTAKE APPARENT FROM THE RECORD. THEREFORE, THE AO IS DIRECTED TO TREAT THE AMOUNT OF RS.2,6 0,000/ - RECEIVED AS 20% OF THE GROSS RECEIPTS FROM JOINT VENTURE AS BUSINESS INCOME AND ALLOW DEDUCTION U/S. 80IB ACCORDINGLY. GROUND OF APP EAL IS ALLOWED. 5 . THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ABOVE ORDER OF CIT(A). 6 . WE HAVE CONSIDERED RIV AL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT ASSESSEE WAS IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF REAL ESTATES. INTEREST RECEIVED ON LATE PAYMENT FROM THE CUSTOMERS WAS TREATED BY THE AO AS INCOME FROM OTHER SOURCES. AFTER GIVING DETAILED FINDING AT PARA 2.3 THE CIT(A) HAD DELETED THE SAME. THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIDYUT CORPORATION, 324 ITR 221 (BOM) , WHEREIN IT WAS HELD THAT INTEREST RECEIVED ON DELAYED PAYMENT OF PRICE OF GOODS SOLD WAS IN THE NATURE OF ITA NO. 6451 / 12 4 SALE PRICE DERIVED FROM INDUSTRIAL UNDERTAKING, THEREFORE, ELIGIBLE FOR CLAIM OF DEDUCTION U/S.80IB . IN THE INSTANT CASE ALSO CATEGORICAL FINDING HAS BEEN RECOR DED BY THE CIT(A) AT PARA 2. 3 WHICH HAS NOT BEEN CONTROVERTED. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) OF TREATING SUCH INTEREST INCOME AS BUSINESS INCOME ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80IB . 7 . WITH REGARD TO THE INCOME OF RS . 2,60,000/ - , WE FOUND THAT THE SAME WAS EARNED WITH RESPECT TO THE BUSINESS AGREEMENT ENTERED FOR DEVELOPMENT OF PROPERTY WITH M/S K.V.PROPERTY VENTURES PVT. LTD.. AS PER THE AGREEMENT ASSESSEE WAS TO RECEIVE CONSIDERATION AT THE RATE OF 20% OF THE GROSS R ECEIPTS FROM THE DEVELOPERS. SUCH CONSIDERATION WAS IN THE NATURE OF BUSINESS INCOME. THE DETAIL ED FINDING RECORDED BY THE CIT(A) AT PARA 3.3 HAS NOT BEEN CONTROVERTED BY THE LEARNED DR. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR HOLDING THAT CONSIDERATION @20% RECEIVED FOR DEVELOPMENT OF PROPERTY WAS IN THE NATURE OF BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S.80IB AND NOT INTEREST INCOME. 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29/10 / 201 4 . 29/10 / 2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACC OUNTANT MEMBER MUMBAI ; DATED 29/10 /2014 /PKM , PS ITA NO. 6451 / 12 5 COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMB AI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//