ITO 15(1)(2), MUMBAI V. KHYATI FINANCIAL SERVICES, MUMBAI

ITA 6603/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3105 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 27-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-10-2011
• Court: TRIBUNAL
• Department Lawyers: FD LS

Judgement Text

VK;DJ VIHYH; VF/KDJ.K ** , U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI JH TH + ,L + IUUW] YS[KK LNL; ,OA JH LAT; XXZ ] U;KF;D LNL; DS LE{KA BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER VK;DJ VIHY LA[;K@ ITA NO 6603 /MUM/201 1 ( FU/KKZJ.K OKZ / ASSESSMENT YEAR: - 2007 - 08 ) VK;DJ VIHY LA[;K@ ITA NO 6604/MUM/2011 ( FU/KKZJ.K OKZ / ASSESSMENT YEAR: - 2008 - 09) ITO 15(1)(2), MUMBAI MATRU MANDIR, TARDEO, ROOM NO. 116, GRANT ROAD, MUMBAI 7 VS.` M/S KHYATI FINANCIAL SERVICES, 3, NARAYAN BUILDING 23, L.N. ROAD, DADAR (E), MUMBAI 400 014. LFKK;H YS[KK LA[;K@TH VKB VKJ LA[;K@ PAN/GIR NO. AA GFK729A APPELLANT RESPONDENT ORDER PER G.S. PANNU, AM THE CAPTIONED ARE TWO APPEALS BY THE REVENUE PERTAINING TO SAME ASSESSEE WHICH ARISE OUT OF TWO SEPARATE BUT SIMILARLY WORDED ORDERS OF CIT(A) DATED 1.07.2011 RELATING TO ASSESSMENT YEARS 2007 - 08 AND 2008 - 09. JKTLO FD VKSJ LS @ REVENUE BY SHRI S.P. WALIMBE FU/KZKFJFR FD VKSJ LS @ ASSESSEE BY SHRI VIJAY MEHTA LQUOKBZ FD RKJH[K @ DATE OF HEARING 27.07.2015 ?KKSK.KK FD RKJH[K@ DATE OF PRONOUNCEMENT 30 .9.2015 2 2 | P A G E 2. IN BOTH THE APPEALS , AN IDENTICAL CONTROVERS Y IS INVOLVED WHICH RELATES TO DENIAL OF ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT BY THE ASSESSING OFFICER AMOUNTING TO RS. 46,57,270/ - AND RS. 8,42,44,860/ - FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 RESPECTIVELY. 3. SINCE IT WAS A COMMON PO INT BETWEEN THE PARTIES THAT FACTS AND CIRCUMSTANCES IN BOTH THE ASSESSMENT YEARS ARE SIMILAR, WE MAY REFER TO THE FACT - SITUATION IN RELATION TO ASSESSMENT YEAR 2007 - 08 IN ORDER TO APPRECIATE THE CONTROVERSY. THE RESPONDENT - ASSESSEE IS A PARTNERSHIP FIRM WHICH IS , INTE R - ALIA ENGAGED IN THE BUSINESS OF BUILDER FOR ALL TYPES OF CONSTRUCTION WORKS, LAND & PROPERTY DEVELOPMENT , ETC. FOR THE ASSESSMENT YEAR 2007 - 08, IT FILED A RETURN OF INCOME DECLARING NIL INCOME WHICH , INTER - ALIA INCLUDED A CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT OF RS, 46,57,270/ - I N RELATION TO THE PROFITS DERIVED FROM UNDERTAKING DEVELOPMENT AND BUILDING OF A HOUSING PROJECT AND AS PER THE ASSESSEE, THE REQUISITE CONDITIONS PRESCRIBED IN SECTION 80IB(10) OF THE ACT WERE FULFILLED. THE ASSESSING OFFICER, HOWEVER, DENIED THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT, PRIMARILY ON THE GROUND THAT SIMILAR CLAIM WAS DISALLOWED IN THE ASSESSMENT FOR ASSESSMENT YEAR 2006 - 07. IN ASSESSMENT YEAR 2006 - 07, THE ASSE SSING OFFICER HAD ADVANCED FOUR REASONS FOR NOT ALLOWING ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT, WHICH ARE AS FOLLOWS: - (I) THAT T HERE ARE THREE FLATS IN THE E WING CONSTRUCTED BY THE APPELLANT, WHERE THE AREA OF THE FLATS IS 1092 SQ. FT., WHICH IS VIOLATIVE OF THE MAXIMUM LIMIT OF 1000 SQ. FT . ENVISAGED IN SECTION 80IB(10)(C); (II) THAT T WO PAIRS OF FLATS WERE SOLD TO THE SAME OR RE LATED PERSONS, WHICH IN THE OPINION OF THE AO WAS A SALE AS ONE UNIT, MAKING THE TOTAL AREA MORE THAN PRESCRIBED LIMIT OF 1000 SQ. FT. ENVISAGED IN SECTION 80IB(10)(C) 3 3 | P A G E (III) THAT T HE SHOPPING OR COMMERCIAL AREA WAS TO BE CONSIDERED IN THE HANDS OF THE APPELLANT, WHEREAS THE APPELLANT CLAIMED THAT IT WAS CONSTRUCTED BY A DIFFERENT ENTITY; AND, (IV) THAT T HE AMENDED PROVISIONS OF SECTION 80IB(10)(D) WERE APPLIED IN THE CASE OF THE ASSESSEE IN TERMS OF WHICH THE COMMERCIAL AREA EXCLUDED THE PRESCRIBED LIMIT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS SINCE ALLOWED THE CLAIM OF ASSESSEE. T HE CIT(A) FOUND THAT IN THE ASSESSMENT YEARS OF 2005 - 06 AND 2006 - 07, THE IMPUGNED ISSUE HAD COME UP BEFORE HIS PREDECESSOR, WHO ALLOWED THE CLAIM OF ASSESSE E . THE CIT(A) HAS ALSO NOTICED THAT FOR ASSESSMENT YEAR 2005 - 06, THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB(10) OF THE ACT STOOD AFFIRMED BY THE TRIBUNAL ALSO . THE RELEVA NT DISCUSSION IN THE ORDER OF THE CIT(A) READS AS UNDER: - 4.3. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE LD. AR OF THE APPELLANT AS WELL AS THE ORDERS OF MY LD. PREDECESSORS FOR EARLIER YEARS I.E. A.Y. 2005 - 06 AND 2006 - 07 AND THE ORDER OF HON'BLE ITAT FOR A.Y. 2005 - 06. THE ISSUES INVOLVED IN THIS APPEAL ARE ALMOST IDENTICAL IN A. Y. 2005 - 06, A.Y. 2006 - 07 AND THE CURRENT YEAR I.E. 2007 - 08. THE ISSUES REGARDING THE CONSTRUCTION OF SHOPS/COMMERCIAL AREA, JOINING TOGETHER OF THE ADJOINING FLATS SOLD TO THE RELATED PERSONS AS WELL AS THE RETROSPECTIVE APPLICABILITY OF THE AMENDED PROVIS IONS OF 80IB(10) WERE CONSIDERED BY MY PREDECESSORS IN THE A.Y. 2005 - 06 AS WELL AS 2006 - 07. ON THESE THREE ISSUES, THE OBSERVATIONS OF THE AO WERE NOT APPROVED BY THE LD. CIT(A). ALL THESE THREE ISSUES HAVE NOW ALSO BEEN FINALIZED BY THE HON'BLE ITAT IN OR DER DATED 25.6.2010, WHEREIN THE APPEAL OF THE REVENUE HAS BEEN DISMISSED. A FRESH ISSUE WAS RAISED BY THE AO IN A.Y. 2006 - 07, WHICH WAS IN ADDITION TO THE ABOVE REFERRED THREE ISSUES INVOLVED IN A.Y. 2005 - 06. THE AO OBSERVED THAT THE THREE FLATS IN 'E' WI NG HAVE BUILT UP AREA OF 1092 SQ. FT., WHICH IS MORE THAN THE MAXIMUM AREA PRESCRIBED AT 1000 SQ.FT. FOR AVAILING THE DEDUCTION OF SECTION 80IB. ON THIS ISSUE, MY LD. PREDECESSOR HAS DELIBERATED UPON IN DETAIL, WHEREIN IT WAS CATEGORICALLY HELD BY HIM THAT THE OBSERVATION OF THE AO IS FACTUALLY INCORRECT. IT WAS FURTHER HELD BY HIM THAT THE ACTUAL BUILT UP AREA OF ALL THESE FLATS IS ONLY 913 SQ.FT. AND THE AO HAS WRONGLY PRESUMED IT 1092. SQ. FT, WHICH IS THE SUPER BUILT UP AREA. ACCORDINGLY, THIS OBJECTION /OBSERVATION OF THE AO ALSO STANDS DECIDED IN FAVOUR OF THE APPELLANT IN THE IMMEDIATELY PRECEDING YEAR. I DO NOT FIND ANY 4 4 | P A G E INFIRMITY IN THE DECISION OF MY PREDECESSOR. THEREFORE, FOLLOWING THE WELL CONSIDERED DECISIONS OF MY LD. PREDECESSOR FOR A.Y. 2005 - 0 6 AND 2006 - 07, AS WELL AS RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT IN A.Y. 2005 - 06, IT IS HELD THAT THE DENIAL OF DEDUCTION U/S. 80IB(10) TO THE APPELLANT, IS NOT JUSTIFIED, THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE APPELLANT. 5. AGAIN ST THE AFORESAID, THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING, LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SUBSEQUENT TO THE DECISION OF TRIBUNAL FOR ASSESSMENT YEAR 2005 - 06 VIDE ITA NO. 3740/MUM/2008 DATED 25.06.2010, FOR ASSE SSMENT YEAR 2006 - 07 ALSO, THE TRIBUNAL HAS UPHELD ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT VIDE ORDER DATED 13.04.2012, IN ITA NO. 5498/MUM / 2010 . I T WAS ALSO A COMMON POINT BETWEEN THE PARTIES THAT THE OBJECTIONS CONSIDERED BY THE TRIBUNAL IN ASSESSMENT YEAR 2006 - 07 ARE SIMILAR TO THE OBJECTIONS RAISED BY THE REVENUE IN ASSESSMENT YEAR 2007 - 08 AND, THEREFORE, THE ISSUE IS FULLY COVERED BY THE ORDER OF TRIBUNAL DATED 13.04.2012 (SUPRA) IN FAVOUR OF THE ASSESSEE. THE LD. REPRESENTATIVE FOR THE A SSESSEE ALSO POINTED OUT THAT THE AFORE - STATED ORDERS OF THE TRIBUNAL CONTINUE TO HOLD THE FIELD AND HAVE NOT BEEN DISTURBED BY ANY HIGHER AUTHORITY. IN VIEW OF THE AFORESAID MATRIX, WHICH IS NOT DISPUTED BY THE LD. DR, FOLLOWING THE PRECEDENTS BY WAY OF THE ORDER S OF THE TRIBUNAL DATED 25.06.2010(SUPRA) AND 13.04.2012 (SUPRA) IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 RESPECTIVELY, WE HEREBY AFFIRM THE ACTION OF CIT(A) IN ALLOWING THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT. THUS, FOR ASSESSMENT YEAR 2007 - 08, APPEAL OF THE REVENUE IS DISMISSED. 7. THE FACTS AND CIRCUMSTANCES IN ASSESSMENT YEAR 2008 - 09 STAND ON IDENTICAL FOOTING AND, THEREFORE, OUR DECISION IN ASSESSMENT YEAR 2007 - 08, 5 5 | P A G E SHALL APPLY MUTATIS MUTANDIS IN T HE APPEAL FOR ASSESSMENT YEAR 2008 - 09 ALSO. 8. RESULTANTLY , THE CAPTIONED APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 0 T H DAY OF SEPTEMBER 2015. S D / - S D / - ( SANJAY GARG ) (G.S. PANNU) (JUDICIAL MEMBER/ U;KF;D LNL; ) (ACCOUNTANT MEMBER/ YS[KK LNL; ) MUMBAI DATED 3 0 - 09 - 2015 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI