ITO WD 2(4), THANE V. SONAM BUILDERS, MUMBAI

ITA 7388/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71238 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 24-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R M MADHAVI
• Assessee Lawyers: VIMAL PUNMIA
• Section: 143(3); 80IB

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO. 7388/M/2011 ( / ASSESSMENT YEAR : 2008 - 20 09 ) ITO - WARD 2(4), QURESH I MANSIN, GOKHLE ROAD, NAUPADA, THANE (W), THANE. / VS. SONAM BUILDERS, A/301 - 304 AKASH GANGA BLDG, DEVCHAND NAGAR, JAIN MANDIR ROAD, BHAYANDAR (W), MUMBAI. ./ PAN : AACFS 3498 J ( / APPELLANT) .. ( / RESPON DENT ) / APPELLANT BY : SMT. R.M. MADHAVI / RESPONDENT BY : SHRI VIMAL PUNMIA / DATE OF HEARING : 24.9 .2013 / DATE OF PRONOUNCEMENT : 24 .9 .2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 3.11.2011 IS AGAINST THE ORDER OF THE CIT (A) - II, THANE DATED 27.6.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING AN ADDITION OF RS. 1,45,76,796 / - MADE ON ACCOUNT OF DENIAL OF ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) WITHOUT APPRECIATING THE FINDINGS OF THE AO REGARDI NG VIOLATION OF ELIGIBILITY CONDITIONS PRESCRIBED FOR CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. 2. THE LD CIT (A) ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION U/S 80IB(10) EVEN THOUGH THE COMMERCIAL AREA EXCEEDS 5% OF THE TOTAL BUILT UP ARE RELYING ON TH E DECISION OF BRAHMA ASSOCIATES VS. JCIT [2009] 122 TTJ (PUNE)(SB) 433 WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. ASSESSEE FILED THE RETURN DECLARING THE TOTAL 2 INCOME OF RS. 10,77,650/ - . DURING THE ASSESSMENT YEAR UNDER CONS IDERATION (2008 - 2009), ASSESSEE RETURNED THE TOTAL INCOME OF RS. 17,50,65,327/ - AND CLAIMED DEDUCTION U/S 80IB (10) AMOUNTING TO RS. 17,39,87,678/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT . DURING THE ASSESSMENT PROCEEDINGS, AO DISALLOWE D THE DEDUCTION U/S 80IB(10) TO THE EXTENT OF RS. 1,45,76,796/ - CLAIMED BY THE ASSESSEE IN RESPECT OF THE HOUSING PROJECT CONSTRUCTED IN VARIOUS PHASES AT BHAYENDER, MUMB AI AND DETERMINED THE ASSESSED INCOME AT RS. 1,56,54,446/ - . AGGRIEVED WITH THE ABOVE DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, RELYING ON THE DECISION IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT [2009] 122 TTJ (PUNE)(SB) 433, LD CIT (A) ALLOWED THE ASSESSEES APPEAL WITH A DIRECTION TO AO TO ALLOW THE CLAIM OF DEDUCTION U/S 80IB(10) IN RESPECT OF THE SAI D HOUSING PROJECT OF THE ASSESSEE. AGGRIEVED WITH THE DECISION OF THE CIT (A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, SHRI VIMAL PUNMIA, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ISSUE RAISED IN THIS APPEAL STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2006 - 2007 VIDE ITA NO.4607/M/2011, DATED 18.7.2012. IN THIS REGARD LD COUNSEL BROUGHT OUR ATTENTION TO THE CONTENTS O F PARA 6 - 9 OF THE SAID TRIBUNALS ORDER AND MENTIONED THAT THE TRIBUNAL RELIED ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES REPORTED IN [2011] 333 ITR 289 (BOM.) AND ALLOWED THE DEDUCTION U/S 80IB(10) OF THE ACT ON PROPORTIONATE BASIS. ACCORDINGLY, THE REVENUES APPEAL IN THAT CASE WAS DISMISSED. REFERRING TO THE IMPUGNED ORDER O F THE CIT (A), LD COUNSEL MENTIONED THAT WHILE ADJUDICATING THE ISSUE, CIT (A) FOLLOWED THE SAID DECISION OF THE JURISDICTIONAL HIGH COURT IN BRAHMA ASSOCIATES (SUPRA). HE ALSO MENTIONED THAT THE REVENUES GROUNDS REVEALS THAT MERELY BECAUSE THEY HAVE NOT ACCEPTED THE CITED DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT [2009] 3 122 TTJ (PUNE)(SB) 433 , THE REVEN UE DID NOT HAVE BENEFIT OF THE CITED JUDGMENT OF THE JURISDICTIONAL HIGH COURT, WHICH ACTUALLY UPHELD THE ORDER OF THE SPECIAL BENCH REPORTED IN 122 TTJ 433. 6. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CASE LAWS CITED BY THE LD CO UNSEL. WE HAVE ALSO PERUSED THE RELEVANT FACTS OF THE PRESENT CASE AND ALSO GONE THROUGH THE PARA S 6 TO 9 OF THE SAID TRIBUNAL S ORDER DATED 18.7.2012 WHICH READ AS U NDER . 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE A.O. HAS ALLOWED THE DEDUCTION U/S 801B(1 O) IN RESPECT OF OTHER PHASES OF THE PROPERTY KNOWN AS GOLDEN NEST. IT IS ALSO NOT IN DISPUTE THAT THE HOUSING PROJECT OF GOLDEN NEST PHASE VII AND X ARE APPROVED BY THE LOCAL AUTHORITY ON 25 - 1 - 2001 AND PHASE XL AND XIA ON 14 - 1 - 2004 I.E. PRIOR TO 1 - 4 - 2 005 INSERTED UNDER CLAUSE (D) TO SECTION 801B(10) OF THE ACT W.E.F. 1 - 4 - 2005 WHICH IS PROSPECTIVE IN NATURE AND NOT RETROSPECTIVE. WE FURTHER FIND THAT THE ASSESSEES CONTENTION THAT THE PERCENTAGE OF COMMERCIAL AREA IN PHASE VII, X AND COMBINED PHASE XL A ND XIA OF THE PROPERTY KNOWN AS GOLDEN NEST ARE AT 6.59%, 4.99%, AND 5.48% RESPECTIVELY WAS NOT CONTROVERTED BY THE REVENUE EVEN AT THIS STAGE. 7. IN BRAHMA ASSOCIATES (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER (PAGE 303 & 304) : - IN THE RESULT, THE QUESTIONS RAISED IN THE APPEAL ARE ANSWERED THUS: UP TO MARCH 31, 2005 (SUBJECT TO FULFILLING OTHER CONDITIONS), Z UNDER SECTION 80 - IB(10) IS ALLOWABLE TO. HOUSING PROJECTS BY THE LOCAL AUTHORITY HAVING RESIDENTIAL UNITS WITH COMMERCIAL USE R TO THE EXTENT PERMITTED UNDER THE DEVELOPMENT CONTROL RULES/ REGULATIONS FRAMED BY THE RESPECTIVE LOCAL AUTHORITY. (B) IN SUCH A CASE, WHERE THE COMMERCIAL USER PERMITTED BY THE LOCAL AUTHORITY IS WITHIN THE LIMITS PRESCRIBED UNDER THE DEVELOPMENT CONTR OL RULES/REGULATION, THE DEDUCTION UNDER SECTION 80 - IB(10) UP TO MARCH 31, 2005 WOULD BE ALLOWABLE IRRESPECTIVE OF THE FACT THAT THE PROJECT IS APPROVED AS HOUSING PROJECT OR RESIDENTIAL PLUS COMMERCIAL. (C) IN THE ABSENCE OF ANY PROVISIONS UNDER THE INCOME - TAX ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UP TO MARCH 31, 2005 DEDUCTION UNDER SECTION 80 - IB(10) WOULD BE ALLOWABLE TO PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UP TO 10 PER CENT. OF THE TOTAL BUILT - UP AREA OF THE PLOT. (D) SINCE THE DEDUCTION UNDER SECTION 80 - IB(L0) IS ON THE PROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS A WHOLE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTRICTING THE SECTION 80 - IB(10) DEDUCTION ONLY TO A PART OF THE PROJECT. HOWEVER, IN THE PRESENT CASE, SINCE THE ASSESSEE HAS ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING SECTION 80 - IB(10) DEDUCTION TO A PART OF THE PROJECT, WE DO NOT DISTURB THE FINDINGS OF THE TRIBUNAL IN THAT BEHALF. 4 (E) CLAUSE (D) INSERTED TO SECTION 80 - IB(10) WITH EFFECT FROM APRIL 1, 2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO APRIL 1, 2005. 8. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVEN UE, WE RESPECTFULLY FOLLOWING THE DECISION CITED SUPRA HOLD THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION U/S 801B(10) OF THE ACT IN RESPECT OF THE ABOVE PROPERTY AS ALLOWED BY THE ID. CIT(A). 9. ON THE ISSUE OF AREA OF ROW HOUSES EXCEEDING 1000 SQ. FT. , THE ID. CIT(A) HELD THAT THE DEDUCTION U/S 801B( 10) OF THE ACT HAS TO BE ALLOWED ON PROPORTIONATE BASIS AS DECIDED BY THE ID. CIT(A) II, THANE IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2003 - 04, 2004 - 05 AND 2005 - 06. CONSIDERING THE ASSESSES SUB MISSION THAT THE A.O. WHILE GIVING TO THE ORDER OF THE TRIBUNAL HAS CONSIDERED THE SAME AND ALLOWED RS. 6,70,464/ - IN THE ASSESSMENT YEAR 2004 - 05 (SUPRA), WE DE CLINE TO INTERFERE WITH THE ORDER PASSED BY THE ID. CIT(A) ON THIS ACCOUNT. THE GROUNDS TAKEN B Y THE REVENUE ARE, THEREFORE, REJECTED. 8. FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEE HAS NOT VIOLATED ANY SPECIFIED CONDITION AND THE DEDUCTION IS ALLOWABLE ON PROPORTIONATE BASIS TOO. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE AT THE LEVEL O F THE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA), WE ARE OF THE OPINION THAT THE FINDINGS OF THE CIT (A) GIVEN IN PARA 4 WITH ITS SUB - PARAS FOUND REASONABLE AND THEY DO NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOU NCED IN THE OPEN COURT ON 24 TH SEPTEMBER , 2013. SD/ - SD/ - ( AMIT SHUKLA ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUN TANT MEMBER MUMBAI ; 24 .9 .2013 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 5 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGIS TRAR) , / ITAT, MUMBAI