ASST CIT CIR 4 THANE, THANE V. PRAGATI ENTERPRISES, THANE

ITA 7020/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83791 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 23-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAMBIT MISHRA
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Opportunity of being heard
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C B ENCH, MUMBAI , , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO.7020/MUM/2012 ( ' ' ' ' / ASSESSMENT YEAR :2009-10 THE ACIT,CIRCLE-4, THANE / VS. M/S. PRAGATI ENTERPRISES, GROUND FLOOR, AAKAR BLDG., RAJHANS RESIDENTIAL BLDG., DG NAGAR, VASAI ROAD (W), THANE ( % ./ ) ./ PAN/GIR NO. : AAIFP 5232B ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY: SHRI SAMBIT MISHRA +,(* . - / RESPONDENT BY: SHRI SUBODH RATNAPARKHI . /0% / DATE OF HEARING :01.09.2014 12' . /0% / DATE OF PRONOUNCEMENT :12.09.2014 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-II, THANE DT.14.8.2012 PERTAINING TO A.Y.200 9-10. 2. THE GRIEVANCES OF THE REVENUE READ AS UNDER: ITA NO. 4119/M/2013 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A)-11, THANE HAS ERRED IN ALLOWING DEDUCTIO N U/S. 80IB(10) TO THE ASSESSEE THEREBY DELETING ADDI TION OF RS. 4,88,82,573/- MADE BY THE AO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A)-11, THANE FAILED TO APPRECIATE THE FACT THAT THE PROJECT OF THE ASSESSEE IS INCOMPLETE AS OUT OF 17 BUILDING SANCTIONED VIDE COMMENCEMENT CERTIFICATE D T. 22.2.2005 FOR CONSTRUCTION, OCCUPATION CERTIFICATE FOR ONLY ONE BUILDING (BUILDING NO. 5 RUBY) WAS OBTAINE D BEFORE DUE DATE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A)-11, THANE ERRED IN INTERPRETING THE WORK PROTECT RELYING UPON DECISION OF VANDANA PROPERTI ES 128 TTJ 89 (MUM) AND SAROJ SALES ORGANISATION REPORTED IN 115 TTJ 485 (MUM), DECISION OF WHICH HA VE NOT BEEN ACCEPTED BY THE DEPARTMENT AND DEPARTMENT S APPEALS ARE PENDING BEFORE HONBLE SUPREME COURT. 4. THE ASSESSEE IS A BUILDER AND A DEVELOPER. RETU RN FOR THE YEAR WAS FILED ON 25.9.2009 DECLARING TOTAL INCOME AT RS. 8 ,219/- AFTER CLAIMING DEDUCTION U/S. 80IB(10) AMOUNTING TO RS. 4,88,82,57 3/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTI CES WERE ISSUED AND SERVED UPON THE ASSESSEE. 4.1. DURING THE COURSE OF THE ASSESSMENT PROCEEDING S, THE ASSESSEE WAS ASKED TO SUBMIT THE RELEVANT DETAILS IN RESPECT OF ITS CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT. REQUISITE DETAILS WERE F URNISHED. THE AO NOTICED THAT THE COMMENCEMENT CERTIFICATE DT. 22.2. 2005 IS IN RESPECT OF 17 BUILDINGS. ACCORDING TO THE AO, THE ASSESSEE HA S FAILED TO PRODUCE THE PART OCCUPANCY/COMPLETION CERTIFICATE IN RESPECT OF EACH BUILDING AND FULL OCCUPANCY/COMPLETION CERTIFICATE IN RESPECT OF THE ENTIRE PROJECT. THE AO WAS OF THE FIRM BELIEF THAT ESSENTIAL CONDITIONS OF PROJECT COMPLETION AS LAID DOWN BY SEC. 80IB(10(A)(II) READ WITH EXPLANAT ION (II) HAS BEEN ITA NO. 4119/M/2013 3 VIOLATED HENCE THE PROJECT IS NOT ENTITLED FOR SEC. 80IB DEDUCTION. THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN WHY THE CLAIM S HOULD NOT BE DENIED. THE ASSESSEE FILED A DETAILED REPLY VIDE LETTER DT. 15.12.2011 WHICH HAS BEEN EXTRACTED BY THE AO AT PARA-5 OF HIS ORDER. 4.2. AFTER CONSIDERING THE SUBMISSIONS, THE AO WAS OF THE OPINION THAT THE COMMENCEMENT CERTIFICATE HAS BEEN ISSUED IN RES PECT OF 17 BUILDINGS. THE OCCUPANCY CERTIFICATES SUBMITTED BY THE ASSESSE E ARE PART OCCUPANCY CERTIFICATE AND NOT FULL OCCUPANCY CERTIFICATE. TH E AO FINALLY CONCLUDED THAT THE ASSESSEE HAS NOT COMPLIED WITH THE MANDATO RY CONDITIONS OF SEC. 80IB(10). THE CLAIM OF DEDUCTION WAS DENIED, ADDIT ION OF RS. 4,88,82,573/- WAS MADE TO THE RETURNED INCOME. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). IT WAS STRONGLY SUBMITTED THAT OUT OF THE TOTAL 17 BUILDIN GS OF THE PROJECT APPROVED BY THE LOCAL AUTHORITY. THE ASSESSEE FIRM COMPRISES OF ONLY ONE BUILDING NO. 5 AND ASSESSEE HAS COMPLETED ITS BUILD ING AND COMPLETION CERTIFICATES HAVE BEEN OBTAINED BEFORE THE DUE DATE . IT WAS FURTHER SUBMITTED THAT THE OCCUPANCY CERTIFICATES ARE GRANT ED BUILDING-WISE AND IF ALL THE BUILDING FORMING PART OF THE LAY OUT ARE NO T COMPLETED THEN PART OCCUPANCY CERTIFICATES ARE GRANTED WHICH MEANS THAT THE PARTICULAR BUILDING CONCERN IS FULLY COMPLETED BUT OTHER BUILD INGS OF THE LAY OUT ARE UNDER DEVELOPMENT. 5.1. AFTER CONSIDERING THE FACTS AND THE SUBMISSION S, THE LD. CIT(A) AT PARA-4.13 OBSERVED THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS SPECIFIED IN SEC. 80IB(10) OF THE ACT AND THE PROJ ECT UNDERTAKEN BY THE ASSESSEE COMPRISING OF BUILDING NO. 5 IS COMPLETE I N ALL RESPECT BEFORE ITA NO. 4119/M/2013 4 THE DUE DATE THEREFORE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT AND DIRECTED THE AO ACCORDINGLY. 6. AGGRIEVED BY THIS, REVENUE IS BEFORE US. 7. THE LD. DEPARTMENT REPRESENTATIVE STRONGLY SUPPO RTED THE FINDINGS OF THE AO. IT IS THE SAY OF THE LD. DR THAT SINCE THE ASSESSEE HAS NOT COMPLIED WITH THE MANDATORY CONDITION OF SEC. 80IB( 10), THE CLAIM WAS RIGHTLY DENIED BY THE AO. 8. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REI TERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT COMPLETION CERTIFICATE WAS SUBMITTED B EFORE THE REVENUE AUTHORITIES IN RESPECT OF THE BUILDING NO. 5. THER EFORE, THERE IS NO REASON FOR DENYING THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN UNDI SPUTED FACT THAT THE ENTIRE PROJECT IS ON A PLOT AREA OF 67225 SQ. MTR FOR WHIC H THE BUILDING PLAN WAS APPROVED BY CIDCO, 17 BUILDINGS WERE TO BE CONSTRUC TED. OUT OF THE ENTIRE PROJECT, THE ASSESSEE WAS AWARDED THE CONSTR UCTION OF BUILDING NO. 5 CONSISTING OF 3 WINGS A, B & C. IT APPEARS THAT THE AO HAS PROCEEDED UNDER A WRONG BELIEF THAT THE ENTIRE 17 BUILDINGS H AVE BEEN CONSTRUCTED BY THE ASSESSEE. THE FACT OF THE MATTER IS THAT THE A SSESSEE HAS CONSTRUCTED ONLY BUILDING NO. 5 WITH A.B & C WINGS WHICH WAS ON A PLOT AREA OF MORE THAN ONE ACRE. THIS FACT IS NOT AT ALL IN DIS PUTE. THE ASSESSEE HAS SUBMITTED THE COMPLETION CERTIFICATE IN RESPECT OF THE BUILDING CONSTRUCTED BY IT ON WHICH IT HAS CLAIMED DEDUCTION U/S. 80IB(1 0) OF THE ACT. THE AO EXPECTED THE ASSESSEE TO SUBMIT COMPLETION CERTIFIC ATION IN RESPECT OF ALL ITA NO. 4119/M/2013 5 THE 17 BUILDINGS WHICH IS TOTALLY UNCALLED FOR AND UNWARRANTED. THE AO SHOULD HAVE RESTRICTED HIS FINDINGS ONLY TO THE PRO JECT AWARDED/UNDERTAKEN BY THE ASSESSEE WHICH IS BUILDING NO. 5 AND SHOULD HAVE PROCEEDED BY FINDING WHETHER THE ASSESSEE HAS COMPLIED WITH THE MANDATORY CONDITION IN RESPECT OF BUILDING NO. 5 ONLY. SINCE THE AO HA S PROCEEDED COMPLETELY ON MISCONCEIVED FACTS, THEREFORE WE REST ORE THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO VERIFY THE E LIGIBILITY U/S. 80IB(10) OF THE ACT IN RESPECT OF BUILDING NO. 5 WITH A,B & C WINGS. THE AO IS DIRECTED TO VERIFY THE SALES KEEPING IN MIND THE EX PLANATION TO SEC. 80IB(10) RELATING TO THE EXECUTION OF THE HOUSING P ROJECT AS A WORK CONTRACT. NEEDLESS TO MENTION, THE AO SHALL GIVE A REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2014 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) / JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 4 DATED : 12 TH SEPTEMBER, 2014 . . ./ RJ , SR. PS ITA NO. 4119/M/2013 6 3 3 3 3 . .. . +/ +/ +/ +/ 5 '/ 5 '/ 5 '/ 5 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 78 +/ , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// ; ;; ; / < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI