ITO, Ward 3(1), Pune V. Shri Jawant M Lunawat, Pune

ITA 722/PUN/2013

• Counselvise Citation: 72224514 RSA 2013
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: SUNIL PATHAK
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.722/PN/2013 A.Y. 2008-09 ITO, WARD 3(1), PUNE APPELLANT VS. SHRI JAWANT M LUNAWAT 1206, B-22, LUNAWAT COURT, OPP. SHAMBHAJI GARDEN, SHIVAJINAGAR, PUNE 411005 PAN: AAYPL3026H RESPONDENT APPELLANT BY : SHRI S.P. W ALIMBE RESPONDENT BY : SHRI SUN IL PATHAK DATE OF HEARING: 13.02.2014 DATE OF ORDER : 19.02.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, [SHORT C IT(A)-II] PUNE, DATED 16.11.2012 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS. 1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN ALLOWING ASSESSEE'S CLAIM OF DEDUCTION U/S.80IB( 10) BY MERELY RELYING ON THE DECISION OF HON. LTAT, PUNE F OR A.YS.2006-07 AND 2007-08. 2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN ALLOWING ASSESSEE'S CLAIM OF DEDUCTION U/S. 80IB (10) WHEN THE ASSESSEE HAD NOT COMPLETED THE PROJECT BY 31.03.2008 THUS VIOLATING THE PROVISIONS OF SUB SEC TION (I) OF CLAUSE (A) TO SECTION 80IB(10) OF THE ACT ? 3) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN HOLDING THAT BUILDING G WAS A SEPARATE PROJECT A S THE 2 ORIGINAL PLAN WAS REDESIGNED WITH MAJOR MODIFICATIO NS AS BUILDING G WAS RELOCATED WITHOUT APPRECIATING THAT THE REVISION /REDESIGNING OF THE PLAN IS ONE OF THE FRE QUENT OCCURRENCE OF ANY PROJECT CLAIMING DEDUCTION U/S. 8 0IB(10) AND WITHOUT CONSIDERING EXPLANATION (I) TO SECTION 80IB(10)? 4) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN HOLDING THAT BUILDING G WAS A SEPARATE PROJECT W ITHOUT APPRECIATING THAT JUST BY RELOCATING THE BUILDING G FROM LEFT TO RIGHT WILL NOT TAKE THIS BUILDING OUT OF THE PRO JECT ORIGINALLY CONCEIVED AND THE DERESERVATION OF PLOT WILL ALSO NOT ALTER THE FACT THAT IT WAS THE SAME PLOT ? 5) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN HOLDING THAT G WAS A SEPARATE PROJECT WITHOUT APPRECIATING THAT THE PHOTOGRAPHS TAKEN IN THE COUR SE OF SURVEY SUBSTANTIATES THE FACT THAT BUILDING G HAS N O SEPARATE EXISTENCE AS IT SHARES A COMMON WALL WITH BUILDING F AND BUILDING G ALSO HAS COMMON ACCESS, COMMON CLU B HOUSE & OTHER AMENITIES WITH OTHER BUILDINGS OF THE PROJECT PRAKRITI ? 6) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN HOLDING THAT BUILDING G WAS A SEPARATE PROJECT W ITHOUT APPRECIATING THAT THE FLATS IN BUILDING G WERE SOLD BY THE ASSESSEE NOT AS AN INDEPENDENT BUILDING BUT UNDER T HE NAME OF PROJECT 'PRAKRIT!' ? 2. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF BUILDING CONSTRUCTION AND REAL ESTATE DEVELOPMENT A ND TRADING OF TDR & SHARES AND ALSO DERIVES INCOME FROM OTHER SOU RCES. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLA IMED DEDUCTION U/S.80IB(10) AMOUNTING TO 3,19,79,779/- IN RESPECT OF THE HOUSING PROJECT 'PRAKRUTI' BALEWADI, PUNE. T HE ASSESSING OFFICER FOUND THAT THE DEDUCTION CLAIMED U/S 80IB(1 0) IN RESPECT OF THE SAME HOUSING PROJECT FOR A.Y. 2007-08 WAS DI SALLOWED ON THE GROUND THAT THE HOUSING PROJECT WAS NOT COMPLET ED WITHIN THE TIME LIMIT STIPULATED AS PER SEC. 80IB (10) I.E BEF ORE 31.03.2008. THE ASSESSING OFFICER THUS RELYING ON THE EARLIER Y EARS ASSESSMENT ORDER FOR A.Y. 2006-07 AND 2007-08 DISAL LOWED THE CLAIM OF 80IB(10) DEDUCTION AMOUNTING TO 3,19,08,779/-. IN APPEAL, THE SAME WAS ALLOWED BY FOLLOWING THE DECIS ION OF ITAT FOR A.Y. 2006-07 AND 2007-08. 3 3. THIS FACT HAS NOT BEEN DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THE TRIBUNAL HAS DECI DED THE ISSUE IN FAVOUR OF ASSESSEE FOR A.Y. 2006-07 BY OBS ERVING AS UNDER AND THE SAME WAS FOLLOWED IN A.Y. 2007-08. 5. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF THE BOMBAY PROVINCIAL MUNICIPAL CORPO RATIONS ACT (HEREINAFTER CALLED AS BPMC) APPLICABLE TO PUNE MUNICIPAL CORPORATION HEREINAFTER CALLED PMC, CONCE IVED THE IDEA FOR ERECTING SEVEN BUILDINGS ON AMALGAMATE D PLOT BEARING SURVEY NO.15/4, 15/3/1, 15/3/2, 15/2, 15/5 AND 15/6 (HEREINAFTER REFERRED TO AS LAND). HE FILED THIS PROPOSAL ON 13.02.2004. PURSUANT TO THIS PROPOSAL, A COMMENCEMENT CERTIFICATE BEARING NO.CC/2341/03 WAS ISSUED TO THE ASSESSEE BY PMC ON 26.03.2004 FOR CONSTRUCTION OF SEVEN BUILDINGS IN ACCORDANCE WITH THE SANCTIONED LAY OUT PLAN AND THE SAID SEVEN BUILDING S FOR THE PURPOSE OF IDENTIFICATION WERE MARKED ON SAID PLAN FROM LEFT TO RIGHT AS TYPE G, TYPE A, TYPE B, TYPE C, TYPE D, TYPE E, AND TYPE F, AS INDICATED IN SAID PLAN. THE SAID PLA N SANCTIONED FOR ABOVE 7 BUILDINGS UNDERWENT REVISION AND REVISED PLAN WAS SANCTIONED ON 22.02.2005 VIDE COMMENCEMENT CERTIFICATE/BUILDING PLAN SANCTION CC/4347/04. IN THE SAID REVISED PLAN DATED 22.02.2 005, ASSESSEE CONCEIVED BUILDINGS A TO H. SUBSEQUEN T TO THIS, ASSESSEE EXECUTED THIS PLAN AND BUILDINGS TYPE A, T YPE B, TYPE C, TYPE D, WERE COMPLETED FOR WHICH COMPLETION CERTIFICATE NO.BCO/14/4264 WAS ISSUED ON 14.03.2006 WHICH IS NOT IN DISPUTE. MEANWHILE ON 31.12.2005 C ONCERN, PLANNING AUTHORITY WAS PLEASED TO APPROVE RP ROADS OF VILLAGE BALEWADI AND AS AN EFFECT OF WHICH 24 MT. W IDE RP ROAD WAS DELETED AND LAND WHICH WAS ORIGINALLY RESE RVED FOR 24 MT. WIDE RP ROAD STOOD DERESERVED. THE SAID DEVELOPMENT PLAN WAS EVENTUALLY SANCTIONED BY GOVERNMENT OF MAHARASHTRA VIDE NOTIFICATION WHICH I S ATTACHED HEREWITH AS ANNEXURE 4, WHICH READS AS FOL LOWS: GOVERNMENT OF MAHARASHTRA URBAN DEVELOPMENT DEPARTMENT, MANTRALAYA, MUMBAI 400032. DATE: 18.09.2008 NOTICE NO.TPS-1807/39/CR-1017(A)/07/UD-13 4 THE GOVERNMENT IN URBAN DEVELOPMENT DEPARTMENTS NOTICE NO.TPS-1807/39/CR-1017(A)/07/UD-13 DATED 13.08.2008 REGARDING THE MODIFICATIONS OF SUBSTANTI AL NATURE AS EXCLUDED PARTS IN THE DRAFT DEVELOPMENT PLAN, PUNE (ADDITIONAL AREA) (BANER-BALEWADI, SECTO R-I) FOR INVITING SUGGESTIONS/OBJECTIONS IS HEREBY WITHDRAWN. THE REVISED NOTICE IS ISSUED SEPARATELY . BY ORDER AND IN THE NAME OF THE GOVERNOR OF MAHARASHTRA. ( SUDHAKAR NANGNURE ) DEPUTY SECRETARY, GOVERNMENT OF MAHARASHTRA 5.1. APPELLANT THEREAFTER APPLIED FOR SANCTION OF P LAN FOR ADDITIONAL 8 TH BUILDINGS, IN THE FORM OF SEPARATE HOUSING PROJECT ON ADDITIONAL PIECE OF LAND DUE TO DERESEVATION/CANCELLATION OF 24 MT. WIDE RP ROAD WH ICH WAS SHOWN IN PLAN AS TYPE G BUILDING ON RIGHT HAND SIDE OF PLAN. THE PLAN FOR 8 TH BUILDING TYPE G WAS ALSO INCORPORATED IN SANCTION DATED 10.08.2006 FOR WHICH COMMENCEMENT CERTIFICATE NO.CC/1660/6 WAS SANCTIONE D ALONGWITH TYPE I, TYPE E, TYPE F, WHICH WAS COMPLET ED ON 07.12.2007 WHICH IS EVIDENT FROM THE COMPLETION CER TIFICATE NO.BCO/6/OC/57 WHEREIN BUILDING TYPE I, TYPE E AND TYPE F WERE COMPLETED. TYPE G BUILDING CONCEIVED O N RIGHT HAND SIDE WAS NOT COMPLETED WHILE SECOND COMPLETION CERTIFICATE WAS GIVEN WITH REGARD TO BUILDING TYPE I, TYPE E AND TYPE F. 5.2. ABOVE DISCUSSION MAKES IT CLEAR THAT ASSESSEE COMMENCED CONSTRUCTION ON 26.03.2004 AT THE STRENGT H OF COMMENCEMENT CERTIFICATE NO.CC/2341/03 FOR 7 BUILDI NGS AND COMPLETED THE SAME IN TOTALITY ON 07.12.2007. THE COMPLETION OF 7 BUILDINGS WAS IN TWO STAGES. COMPL ETION CERTIFICATE DATED 24.03.2006 WAS ISSUED FOR 4 BUILD INGS MARKED AS TYPE A, B, C AND D AT THE STRENGTH OF SAN CTION PLAN DATED 20.03.2004 AS SHOWN AS BUILDING NO.2345 IN ANNEXURE A TO THIS ORDER. COMPLETION CERTIFICATE D ATED 07.12.2007 PLACED AT PAGE 29 OF THE PAPER BOOK WAS ISSUED IN RESPECT OF THE BALANCE 3 BUILDINGS SHOWN IN THE SANCTIONED PLAN DATED 07.12.2007 AT TYPE I, TYPE E AND TYPE F BUILDING (SHOWN AS BUILDING NOS.1, 6 AND 7 I N ANNEXURE A), AND ASSESSEE HAS CLAIMED TO RECOGNISE ITS RECEIPTS IN THE SAME MANNER. IT IS PERTINENT TO ME NTION HERE THAT BUILDING 8 SUBSEQUENTLY MARKED AS G WAS SANCTIONED FOR THE FIRST TIME ON 10.08.2006 AND WAS NOT COMPLETED TILL THE RELEVANT POINT OF TIME AND ASSES SEE HAS 5 NOT CLAIMED DEDUCTION U/S.80IB(10) IN RESPECT OF TH E 8 TH BUILDING TYPE G WHICH IS CLAIMED TO BE SEPARATE PRO JECT ITSELF. THE ASSESSEE CLAIMS TO HAVE MAINTAINED SEP ARATE BOOKS OF ACCOUNT FOR 8 TH BUILDING NAMED AS TYPE G. AS PER THE PROVISIONS OF SECTION 80IB(10) AS IT EXISTED FO R A.Y. 2004- 05 READS AS UNDER: 80IB(10) THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S APPROVED BEFORE THE 31ST DAY OF MARCH, 2005 BY A LO CAL AUTHORITY, SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, ( A ) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998; ( B ) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHIC H HAS A MINIMUM AREA OF ONE ACRE; AND ( C ) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMB AI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LI MITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. 5.3. IN THE ABOVE PROVISION, THERE WAS NO STIPULATI ON TO THE PERIOD OF COMPLETION. UNDISPUTEDLY THE ASSESSEE HA S COMMENCED THE CONSTRUCTION ON OR AFTER 1 ST OCTOBER, 1998 BUT BEFORE 31 ST MARCH, 2005. IN FACT, THE ASSESSEE HAS COMMENCED HIS PROJECT ON 26.03.2005 VIDE COMMENCEME NT CERTIFICATE CC 2341/03. AREA OF LAND IS NOT IN DIS PUTE BECAUSE IT IS MORE THAN 1 ACRE. THE MAXIMUM AREA O F A RESIDENTIAL UNIT IS 1500 SQ.FT. IN PUNE. THESE ISS UES ARE NOT IN DISPUTE BEFORE US. THE HOUSING PROJECT OF THE A SSESSEE AS ENVISAGED ON 26.03.2006 COMPRISES OF 7 BUILDINGS. THE ASSESSEE COMMENCED THE PROJECT ON 26.03.2004 AND COMPLETED CONSTRUCTED AS PER REVISED PLAN IN TWO ST AGES I.E., ON 22.02.2005 AND ON 07.11.2007 RESPECTIVELY. THER EFORE, ASSESSEE WAS ENTITLED FOR RELIEF U/S.80IB(10) VIS-A -VIS SEVEN BUILDINGS COMPLETED IN TWO STAGES MENTIONED ABOVE. 5.4. HOUSING PROJECT HAS NOT BEEN DEFINED IN SECTIO N 80IB(10). THEREFORE, TO UNDERSTAND THE DEFINITION O F THE HOUSING PROJECT, ONE HAS TO GO ON DICTIONARY MEANIN G OR ON VARIOUS JUDICIARY PRONOUNCEMENTS ON THE ISSUE. TRI BUNAL IN THE CASE OF SAROJ SALES ORGANISATION VS. ITO (2008) 115 TTJ (MUMBAI) 485, HELD AS UNDER: 6 WHEREIN THE ASSESSEE HAVING COMPLETED THE CONSTRUCTION OF VARIOUS WINGS OF BUILDING UNDER APPROVED PLAN IN TWO DIFFERENT BLOCKS UNDER DIFFERE NT CERTIFICATES OF COMMENCEMENT WAS ELIGIBLE FOR DEDUCTION U/S.80IB(10) IN RESPECT OF ONE BLOCK IN RESPECT OF WHICH CLAIM FOR DEDUCTION WAS MADE AND WHICH SATISFIED THE REQUIREMENT OF SECTION 80IB(10) , IT WAS HELD THAT CLAIM COULD NOT BE DENIED BY TWO BLOC KS ESPECIALLY WHEN 2 ND BLOCK HAS BEEN KEPT SEPARATE BY THE ASSESSEE AND FOR WHICH DEDUCTION U/S.80IB(19) WAS NOT CLAIMED. IN CASE BEFORE US, CLAIM FOR RESCHEDULED AND RELOCATED BLOCK G IS NOT SUBJECT MATTER BEFORE US AND EXCLUDING THE SAME, 7 BUILDING S AS CONCEIVED AND DISCUSSED AS ABOVE HAVE BEEN COMPLETED IN TWO STAGES AS MENTIONED ABOVE. SO, TH E ASSESSEE IS ENTITLED FOR CLAIMING DEDUCTION U/S.80IB(10) IN RESPECT OF 7 TYPES/BLOCKS COMPLETED IN TWO STAGES AS DISCUSSED ABOVE. 5.5. IN ACIT VS. VANDANA PROPERTIES ITA.NO.3633/PN/ 2009 AND 4361/PN/2010 REPORTED AS (2010) 128 TTJ (MUMBAI ) UO 89, WHEREIN THE ASSESSEE HAVING CONSTRUCTED WING E AFTER OBTAINED COMMENCEMENT CERTIFICATE IN 2002 AND 2003 THOUGH SIMILAR CERTIFICATE HAD BEEN OBTAINED FOR PR IOR TO 1998 IN RESPECT OF A, B, C & D WING, WHEREIN E WAS SEPARATE HOUSING PROJECT AND SAME HAVING BEEN COMPL ETED BEFORE 31.03.2005, ASSESSEE WAS HELD ENTITLED FOR D EDUCTION U/S. 80IB(10) IN RESPECT OF WING A. FROM THE ABOVE DISCUSSIONS IT IS CLEAR THAT 8 TH BUILDING RENAMED AS TYPE G SHOULD NOT BE CONFUSED WITH ORIGINALLY CONCEIVED TY PE G IN COMMENCEMENT CERTIFICATE DATED 26.03.2004 AS CLARIF IED ABOVE. IT IS PERTINENT TO MENTION HERE THAT ORIGIN ALLY ASSESSEE CONCEIVED TYPE G ON LEFT HAND SIDE SUBSEQU ENTLY IT WAS RELOCATED ON RIGHT HAND SIDE AS TYPE G BUT SAME SHOULD NOT BE CONFUSED BECAUSE THE LOCATIONS ARE DI FFERENT. INITIALLY IT WAS ON THE LEFT HAND SIDE SUBSEQUENTLY IT WAS SHIFTED TO RIGHT HAND SIDE. ASSESSEE HAS COMPLETED CONSTRUCTION OF A, B, C AND D BUILDINGS VID E COMPLETION CERTIFICATE NO.BCO/14/6/264 DATED 14.03.2006 WHILE REMAINING E, F AND I WERE COMPLETED VIDE COMP LETION CERTIFICATE NO.BCO/6/OC/57 DATED 07.12.2007. ISSUE OF RELOCATED TYPE G IS NOT BEFORE US. IN THESE CIRC UMSTANCES, ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) IN RESPECT OF BUILDING TYPES A, B, C, D, E, F AND I, COMPLETED IN TWO STAGES AS DISCUSSED ABOVE. THE ASSESSING OFFICER I S DIRECTED ACCORDINGLY. 4. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE ARE NOT 7 INCLINED TO INTERFERE WITH THE FINDINGS OF CIT(A) W HO HAS GRANTED THE CLAIM OF 80IB(10) TO THE ASSESSEE AS HE HAS COM MENCED THE CONSTRUCTION ON OR AFTER 01.10.1998 BUT BEFORE 31.0 3.2005 AND THE AREA OF LAND IS ALSO NOT MORE THAN 1500 SQ. FT. AS APPLICABLE IN PUNE MUNICIPALITY AND THE PROJECT COMPRISES OF S EVEN BUILDINGS. FURTHER, THE ASSESSEE HAS COMMENCED THE PROJECT ON 26.03.2004 AND COMPLETED CONSTRUCTION AS PER REVISE D PLAN IN TWO STAGES I.E. ON 22.02.2005 AND ON 07.11.2007 RES PECTIVELY, THEREFORE, THE ASSESSEE WAS ENTITLED FOR RELIEF VIS --VIS SEVEN BUILDINGS COMPLETED IN TWO STAGES AS MENTIONED ABOV E. WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 19 TH OF FEBRUARY, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 19 TH FEBRUARY, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE