Deputy Commissioner of Income Tax, Circle- 1 (1), Panaji., Panaji V. M/s Deveshri Real Estate Developers., Panaji

ITA 66/PAN/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93612 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S NATARAJ
• Assessee Lawyers: SHARMILA PRABHU
• Keywords: Question of law
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 66 /PNJ/201 5 (ASST. YEAR : 2008 - 09 ) D CIT, CIRCLE - 1(1), PANAJI. VS. M/S. DEVASHRI NIRMAN LLP (FORMERLY M/S. DEVASHRI REAL ESTATE DEVELOPERS), 2 ND FLOOR, DEMPO HOUSE, D.B. BANDODKAR MARG, CAMPAL, PANAJI GOA. PAN NO. AABFD 2012 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SMT. SHARMILA PRABHU - CA DEPARTMENT BY : SHRI S. NATARAJ - D R DATE OF HEARING : 27 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 27 / 0 7 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , PANAJI, DATED 0 5 / 11 /201 4 . 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SEC. 80IB (10) ON PROPORTIONATE BASIS WHEN THE ASSESSEE COMPANY FAILED TO COMPLY WITH THE PROVISIONS OF SEC.80IB(10)(C) OF THE INCOME TAX ACT, 1961 INASMUCH AS SOME OF THE UNITS IN THE PROJECTS HAVE EXCEEDED THE PRESCRIBED LIMIT OF 1500 SQ.FT. 2 ITA NO. 66 /PNJ/2015 3 . BOTH THE PARTIES BEFORE US SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE ORDER OF THIS B E N C H OF THE TRIBUNAL IN I.T.A.NOS. 19 TO 23 & 62 TO 65/PNJ/2015 DATED 14/07/2015 FOR THE ASSESSMENT YEARS 2007 - 08 TO 2011 - 12 IN THE CASE OF THE ASSESSEE ITSELF. THEY ADMITTED THAT THE FACTS AND THE ISSUE INVOLVED ARE IDENTICAL AS WERE IN THE ASSESSMENT YEARS 2007 - 08 TO 2011 - 12. 4 . WE FIND THAT TH IS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007 - 08 TO 2011 - 12 IN I.T.A.NOS. 19 TO 23 & 62 TO 65/PNJ/2015 BY CO N SOLIDATED ORDER DATED 14/07/2015 HELD AS UNDER: - 15. AFTER CONSIDERING THE SUBMISSION S OF THE DEPARTMENTAL REPRESENTATIVE AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT IN THE ASSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSING OFFICER HAS DENIED DEDUCTION UNDER SEC. 80IB(10) TO THE ASSESSEE ON THE GROUND TH A T SOME OF THE UNITS CONSTRUCTED IN THE HOUSING PROJECTS WERE OF 2000 SQ.FT. AND THAT SEC. 80IB(10) PROVIDES FOR CONST RUCTION OF UNITS OF 1500 SQ.FT. ONLY AND, THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SEC. 80IB(10) . WE FIND THAT COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD AS UNDER: - 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. THE A.O. DISALLOWED THE CLAIM OF DEDUCTION MADE U/S.80 IB(10) BY THE ASSESSEE, MAINLY FOR THE FOLLOWING REASONS: I) SOME OF THE RESIDENTIAL UNITS, WHICH WERE ADJACENT TO EACH OTHER, WERE SOLD TO THE SAME PERSON OR FAMILY. II) THESE UNITS W ERE COMBINED TO MAKE ONE SINGLE UNIT, WHOSE COMBINED AREA WAS MORE THAN THE MAXIMUM AREA ALLOWED FOR ONE UNIT TO BE ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80 IB(10). III) THE ASSESSEE PROMOTER, HIMSELF PROVIDED FACILITIES FOR CONVERTING TWO UNITS INTO ONE UN IT AT THE CONSTRUCTION STAGE, ITSELF. IV) THUS, ALL THE CONDITIONS PRESCRIBED FOR AVAILING DEDUCTION U/S.80 IB(L0) WERE NOT FULFILLED. 3 ITA NO. 66 /PNJ/2015 V) FOR CLAIMING DEDUCTION U/S.80 IB(10), ALL THE CONDITIONS ARE REQUIRED TO BE MET SIMULTANEOUSLY. IN ITS SUBMISSION, THE APPELLANT HAS MAINLY STRESSED ON THE FOLLOWING ASPECT. I) THAT IT HAS COMPLIED WITH ALL THE PROVISIONS PROVIDED TO CLAIM DEDUCTION U/S.80 IB(10). II) IN THE APPROVED PLAN ALL THE UNITS WERE LESS THAN 1500 SQ. FEET EACH . III) IT HAS SOLD ALL THE UNIT S SEPARATELY AND THERE ARE SEPARATE AGREEMENTS FOR ALL THE UNITS. IV) THERE WAS NO RESTRICTION ON SELLING TWO ADJACENT UNITS TO THE MEMBERS OF SAME FAMILY TILL 01.04.2010. V) THE DECISION TO CONVERT TWO UNITS INTO ONE IS THAT OF THE BUYER AND THE PROMOTE R HAD NOTHING TO DO WITH THIS DECISION. AS FAR AS FACTS ARE CONCERNED, THERE ARE NO TWO DIFFERENT OPINIONS. BOTH THE A.O. AND THE APPELLANT HAVE PLACED RELIANCE ON MANY JUDICIAL PRONOUNCEMENTS. I HAVE GONE THROUGH THE FACTS OF THE CASE AND JUDICIAL PRON OUNCEMENTS RELIED UPON, BOTH BY THE A.O. AND THE APPELLANT. THE STATUTE BROUGHT ABOUT A. CHANGE IN THE CONDITIONS FOR AVAILING 80 IB(10) BENEFIT W.E.F. 01.04.2010, I.E. TWO ADJACENT UNITS CANNOT BE SOLD TO THE MEMBERS OF SAME FAMILY, SO THAT TWO SEPARATE U NITS COULD BE CONVERTED INTO ONE LARGER UNIT. BUT THIS ALSO MEANS THAT THIS CONDITION WAS NOT MANDATORY UPTO 01.04.2010 AND AS A MATTER OF FACT, THESE PROJECTS CA M E INTO EXISTENCE PRIOR TO 01.04.20 10. HOWEVER, WHILE DECIDING ON THE CLAIM OF DEDUCTION, IT IS WORTHWHILE TO ANALYSE THE CONDUCT OF THE ASSESSEE. THERE IS NO DOUBT ABOUT THE FACT THAT AT THE STAGE OF THE APPROVAL OF PLAN, EACH UNIT WAS SMALLER THAN THE MAXIMUM AREA AS ENVISAGED IN THE CONDITIONS FOR AVAILING BENEFIT OF DEDUCTION U/S.80 IB(10). HO WEVER, THIS IS ALSO A FACT THAT AT THE TIME OF SALE, MANY UNITS WERE SOLD TO THE MEMBERS OF SAME FAMILY AND TWO SMALLER ADJACENT UNITS WERE MERGED TO MAKE ONE LARGER UNIT. THIS MERGING WAS DONE AT THE REQUEST OF THE BUYERS, AT THE CONSTRUCTION STAGE ITSELF BY NONE OTHER THAN THE PROMOTER HIMSELF. FACTS OF THIS CASE ARE SIMILAR TO THAT OF M/S. MIRAJ ENTERPRISES. IN THIS CASE, THE A.O. DISALLOWED THE CLAIM OF DEDUCTION U/S.80 IB(10) ON THE GROUND THAT MANY UNITS WERE LARGER THAN THE PRESCRIBED AREA U/S.80 IB( 10). THE 4 ITA NO. 66 /PNJ/2015 CIT (A), IN HIS ORDER DIRECTED THE A.O. TO ALLOW DEDUCTION, BECAUSE THE ALTERATIONS WERE MADE AFTER THE FLATS WERE SOLD, WHICH WAS BEYOND THE CONTROL OF THE PROMOTER. THE ITAT CONFIRMED THE ORDER OF THE CIT (A) AND HONOURABLE HIGH COURT DISMISSED THE APPEAL OF THE REVENUE, SAYING THAT NO SUBSTANTIAL QUESTION OF LAW ARISE. THE ONLY DIFFERENCE IN FACTS IN THE ABOVE MENTIONED CASE AND THE INSTANT CASE IS THAT, IN THIS CASE, ALTERATIONS WERE MADE BY THE PROMOTER DURING THE CONSTRUCTION STAGE ITSELF, AL BEIT AT THE REQUEST OF THE BUYER. THEREFORE, IN THE INSTANT CASE, IT CANNOT BE SAID THAT ALTERATIONS WERE BEYOND THE CONTROL OF THE PROMOTER, WHICH IS ALSO CLEAR FROM THE STATEMENTS RECORDED BY THE A.O. IN VIEW OF THE ABOVE, THE FIRST GROUND OF APPEAL OF T HE APPELLANT, THAT ENTIRE CLAIM U/S.80 IB(10) BE ALLOWED TO THE ASSESSEE IS HEREBY REJECTED. HOWEVER, THE FACT REMAINS THAT THE PLAN FOR THE HOUSING COMPLEX DID NOT CONTAIN ANY UNIT WHICH VIOLATED THE PROVISIONS OF S.80 IB(10), ALL THE INDIVIDUAL UNITS WERE SOLD SEPARATELY, THERE WAS NO PRE - CONDITION THAT ADJACENT UNITS CANNOT BE SOLD TO THE MEMBERS OF SAME FAMILY AND THE ALTERATIONS WERE MADE ONLY AFTER THE AGREEMENT TO SALE WAS ENTERED INTO, AT THE REQUEST OF THE BUYER. THEREFORE, IT CANNOT BE CONCLUDE D THAT INTENTION OF THE BUILDER WAS TO VIOLATE ANY CONDITIONS OF S.80 IB(10). IN THIS RESPECT, I RELY ON THE DECISION OF HON. MADRAS HIGH COURT IN THE CASE OF M/S. VISHWAS PROMOTERS PVT. LTD. VS ACIT IN T.C. (APPEAL) NO. 1014 OF 2009, WHEREIN THE FACTS ARE IDENTICAL TO THAT OF INSTANT CASE. IN THIS CASE, HON. MADRAS HIGH COURT DECIDED AS UNDER: 6.1. ON THE FACTS ADMITTED BY THE REVENUE, IN THE PROJECTS AGRINI AND VAJRA, THERE ARE NUMBERS OF FLATS WHICH ARE BELOW 1500 SQ.FT., AND THE RELEVANT BUILT - UP AREA REQUIREMENT IS SPECIFIED UNDER SECTION 80 IB(10)(C) OF THE INCOME TAX ACT. THUS, THE BU ILT - UP AREA IN SOME OF THE FLATS IN BOTH THESE PROJECTS ARE IN EXCESS OF 1500 SQ.FT., I.E., 32 FLATS IN AGRINI AND ONLY ONE FLAT IN VAJRA AND THAT THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION ON THIS. WE HOLD THAT THE TRIBUNAL IS NOT CORRECT IN ITS VIEW, THA T BY REASON OF THESE UNITS BEING IN EXCESS OF 1500 SQ.FT., THE ENTIRE CLAIM OF THE ASSESSEE IN RESPECT OF THESE TWO PROJECTS WOULD STAND REJECTED UNDER SECTION 80 IB(10) OF THE INCOME TAX ACT. THUS, GOING BY THE DEFINITION OF HOUSING PROJECT UNDER EXPLAN ATION TO SECTION 8OHHBA OF THE ACT AS REFERRED TO ABOVE AS THE CONSTRUCTION OF ANY BUILDING AND THE WORDINGS IN SECTION 801B(10) OF THE ACT, THE QUESTION OF REJECTION IN ENTIRELY OF THE PROJECT ON 5 ITA NO. 66 /PNJ/2015 ACCOUNT OF ANY ONE OF THE BLOCKS NOT COMPLYING WITH THE C ONDITIONS, DOES NOT ARISE. EVEN IN THE CASE OF EACH ONE OF THE BLOCKS, WHEREVER THERE ARE FLATS WHICH SATISFIED THE CONDITIONS PARTICULARLY OF THE NATURE STATED UNDER SECTION 80 IB(10)(C) OF THE ACT, WE HAVE ALREADY UPHELD THE CASE OF THE ASSESSEE IN T.C. NOS.1348 AND 1349 OF 2007 DATED 10.10.2012 FOR GRANT OF RELIEF UNDER SECTION 80 IB(10) OF THE ACT ON A PROPORTIONATE BASIS, BY FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT REPORTED IN [2011] 333 ITR 289 (CIT VS. BRAHMA ASSOCIATES). THUS APPLYING THE DEC ISION OF THIS COURT IN T.C. NOS. 1348 AND 1349 OF 2007 DATED 10.10.2012, WE HOLD THAT THE ASSESSEE IS ENTITLED TO SUCCEED BOTH ON THE PRINCIPLE OF PROPORTIONALITY AS WELL AS BY REASON OF THE CONSTRUCTION ON THE MEANING OF THE EXPRESSION HOUSING PROJECT A S REFERRING TO CONSTRUCTION OF ANY BUILDING AND THE WOR DINGS IN SECTION 80 IB(10) OF THE ACT. IN THE CIRCUMSTANCES WE HOLD THAT THE MERE FACT THAT ONE OF THE BLOCKS HAVE UNITS EXCEEDING BUILT - UP AREA OF 1500 SQ.FT., PER SE, WOULD NOT RESULT IN NULLIFYING TH E CLAIM OF THE ASSESSEE FOR THE ENTIRE PROJECTS. CONSEQUENTLY, IN RESPECT OF EACH OF THE BLOCKS, THE ASSESSEE IS ENTITLED TO HAVE THE BENEFIT OF DEDUCTION IN RESPECT OF RESIDENTIAL UNITS SATISFYING THE REQUIREMENT UNDER SECTION 80 IB(10)(C) OF THE ACT. IN SO HOLDING, WE ALSO AGREE WITH THE DECISION OF THE BOMBAY HIGH COURT REPORTED IN [20121 206 TAXMAN 584 (CIT V. VANDANA PROPERTIES), WHICH WAS DECIDED BY THE BOMBAY HIGH COURT ON SIMILAR LINES AS IN THE ASSESSEES CASE BEFORE US. 6.2. IN THE LIGHT OF THE A BOVE REASONING, WE HAVE NO HESITATION IN ALLOWING THE CASES FILED BY THE ASSESSEE IN RESPECT OF ASSESSMENT YEARS 2004 - 05, 2005 - 06, 2006 - 07, 2007 - 08 AND 2008 - 09, THEREBY ANSWERING THE SUBSTANTIAL QUESTIONS OF LAW IN FAVOUR OF THE ASSESSEE, THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION IN RESPECT OF ALL THE BLOCKS FORMING PART OF THE PROJECTS CALLED AGRINI AND VAJRA, BUT TO THE EXTENT OF EACH OF THE BLOCKS SATISFYING THE CONDITIONS UNDER SECTION 80 IB(10) OF THE ACT, THE ASSESSEE WOULD BE ENTITLED T O THE RELIEF ON A PROPORTIONATE BASIS. THUS, IT IS CLEAR THAT THE FACTS ARE IDENTICAL IN THE INSTANT CASE TO THAT OF DISCUSSED ABOVE. RELYING ON THE ABOVE QUOTED DECISION, THE A.O. IS DIRECTED TO ALLOW DEDUCTION U/S.80 IB(10) TO THE APPELLANT ON PROPORTIO NATE BASIS. THIS SECOND GROUND OF APPEAL OF THE APPELLANT IS HEREBY ALLOWED. 7. IT IS SEEN THAT THE A.O. HAS DISALLOWED THE CLAIM OF DEDUCTION U/S.80 IB(10) ON IDENTICAL BASIS FOR A.YR. 2007 - 08, 2009 - 10, 20 10 - 11 AND 2011 - 12. SINCE THE FACTS AND LEGAL 6 ITA NO. 66 /PNJ/2015 POSITIONS ARE THE SAME, THE A.O. IS DIRECTED TO ALLOW DEDUCTION ON PROPORTIONATE BASIS IN THESE YEARS ALSO. 8. THE ASSESSEE HAS FURNISHED WORKING OF PROPORTIONATE ALLOWANCE U/S.80 IB(10) FOR ALL THE ABOVE ASSESSMENT YEARS, WHICH IS ATTACHED TO THIS APPELL ATE ORDER. THE A.O. IS DIRECTED TO VERIFY THE CORRECTNESS OF THE SAME, WHILE GIVING APPEAL EFFECT. 1 6 . WE FIND THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS FOLLOWED THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF M/S. VISHWAS PROMOTERS PVT. LTD. (SUPRA) WHILE ALLOWING PROPORTIONATE DEDUCTION UNDER SEC. 80IB(10) TO THE ASSESSEE ON THE HOUSING PROJECTS. THE DEPARTMENTAL REPRESENTATIVE HAS SIMPLY RELIED ON THE ORDER OF THE ASSESSING OFFICER AND COULD NOT CITE ANY CONTRARY DECISION WHICH WAS IN FAVOUR OF THE REVENUE . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ALSO COULD NOT CITE ANY DECISION OF THE HIGH COURT/SUPREME COURT WHICH WAS IN FAVOUR OF THE ASSESSEE FOR ALLOWING DEDUCTION ON ENTIRE INCOME UNDER SEC. 80IB(10) EVEN IN CASE WHERE THE UNITS CONSTRUCTED WERE OF MORE THAN 1500 SQ.F T . THEREFORE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS HEREBY CONFIRMED AND THE GROUND OF APPEAL OF THE ASSESSEE AS WELL AS THAT OF THE REVENUE ARE DISMISSED. 5 . SINCE BOTH THE PARTIES ADMITTED THAT THE FACTS AND THE ISSUE ARE IDENTICAL AS WERE IN THE ASSESSMENT YEARS 2007 - 08 TO 2011 - 08 , THEREFORE, FOLLOWING THE ORDER OF THIS BENCH OF THE TRIBUNAL IN I.T.A.NOS. 19 TO 23 & 62 TO 65/PNJ/2015 DATED 14/07/2015 IN ASSESSEES OWN CASE, WE DISMISS THE GROUND OF APPEAL OF THE REVENUE. 6 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 27 TH DAY OF JULY , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27 TH JU LY , 201 5 . VR/ - 7 ITA NO. 66 /PNJ/2015 COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER 8 ITA NO. 66 /PNJ/2015 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 27 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 27 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 27 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 27 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 27 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 2 8 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER