ACIT-21(2), MUMBAI V. VAMAN ESTATE, MUMBAI

ITA 7570/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8616 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DWIVEDI
• Keywords: Business income; Opportunity of being heard
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI D. KARUNAKARA RAO (A.M.) ITA NO. 7570/MUM /2011 ASSESSMENT YEAR : 2008-09 ASSTT. COMMISSIONER OF INCOME TAX - 21(2), ROOM NO. 508, C-10, 5 TH FLOOR, B.K.C. BANDRA (E), MUMBAI - 51. VS. M/S VAMAN ESTATE, 501-503, TRADE AVENUE, 5 TH FLOOR, SUREN ROAD, OFF WESTERN EXPRESS HIGHWAY, ANDHERI (E), MUMBAI 400 093. PAN AAAFV5314L (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI RAJARSHI DWIVEDI ASSESSEE BY : SHRI VIJAY MEHTA DATE OF HEARING 17-10-2012 DATE OF PRONOUNCEMENT 19-10-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DTD. 16-8-2011 PASSED BY THE LD. CIT(A) 32, MUMBA I FOR THE A.Y. 2008-09. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FIRM IS ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPER. T HE RETURN WAS FILED DECLARING TOTAL INCOME OF RS. 7,04,870/-. HOWEVER, THE ASSESSMENT WAS COMPLETED AFTER PARTLY DISALLOWING DEDUCTION U/S 80 IB(10) OF THE INCOME ITA NO. 7570/MUM/2011 2 TAX ACT, 1961 (THE ACT) AT AN INCOME OF RS. 63,12,9 40/- VIDE ASSESSMENT ORDER DTD. 27-12-2010 PASSED U/S 143(3) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE ALLOWING SUBSTANTIAL RELIEF TO THE ASS ESSEE PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US. 4. GROUND NO. 1 IS AGAINST THE DELETION OF DISALLOW ANCE OF DEDUCTION U/S 80IB(10) OF THE ACT ON CAR PARKING CHARGES OF R S. 15,53,500/-. 5. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT WAS D ISALLOWED BY THE A.O. ON THE GROUND THAT THE INCOME RECEIVED ON SALE OF C AR PARKING SPACE IS NOT INCLUDIBLE IN THE ELIGIBLE PROFIT FOR THE PURPO SE OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT AND THE SALE PROCEEDS RECEI VED FROM CAR PARKING IS NOT INCLUDED IN THE REGISTERED DOCUMENT FOR TRAN SFER OF PROPERTY BY THE ASSESSEE AND, HENCE, THE SAID RECEIPT CANNOT FORM P ART OF RECEIPTS ELIGIBLE FOR DEDUCTION U/S 80IB (10) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT THE CAR PARKING IS INTEGRAL PART OF THE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY, FOLLOWED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004-05, 2 005-06 AND 2006- 07 AND HIS OWN ORDER FOR A.Y. 2007-08, DIRECTED THE A.O. TO ALLOW THE DEDUCTION. 6. AT THE TIME OF HEARING, THE LD. D.R. SUPPORTS TH E ORDER OF THE A.O. ITA NO. 7570/MUM/2011 3 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITS THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR S 2004-05 TO 2006- 07 WHEREIN THE TRIBUNAL HAS ALLOWED THE DEDUCTION U /S 80IB(10) OF THE ACT ON THE CAR PARKING SPACE, THEREFORE, THE ORDER PASSED BY THE LD. CIT(A) IN ALLOWING THE RELIEF TO THE ASSESSEE BE UP HELD. HE ALSO PLACED ON RECORD A COPY OF THE SAID ORDERS OF THE TRIBUNAL. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE. THE TRIBUNAL IN ITA NO. 3016/MUM/2008 FOR A. Y. 2004-05 DTD. 28-10-2009 HAS HELD VIDE PARA 12 OF THE ORDER AS UN DER:- AS REGARDS GROUND NO. 2 OF THE REVENUE, RELATING TO THE INCOME FROM CAR PARKING SPACES, WE AGREE WITH THE FINDING OF THE CI T(A) THAT THEY ARE THE INTEGRAL PART OF THE HOUSING PROJECT AND HENCE IT I S TO BE INCLUDED FOR DEDUCTION U/S 80IB(10) OF THE ACT. IN THE RESULT, GROUND NO. 2 IS ALLOWED. THE ABOVE ORDER HAS BEEN FOLLOWED BY THE TRIBUNAL I N THE SUBSEQUENT ASSESSMENT YEARS I.E. 2005-06 AND 2006-07. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REV ENUE, WE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL, DECL INE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ACCOUNT AND ACCORDINGLY THE GROUND TAKEN BY THE REVENUE IS REJECTED. ITA NO. 7570/MUM/2011 4 9. GROUND NO. 2 IS AGAINST THE DELETION OF DISALLOW ANCE OF DEDUCTION U/S 80IB(10) OF THE ACT ON THE MISCELLANEOUS INCOME OF RS. 29,76,380/-. 10. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT IT HAS BEEN OBSERVED BY THE A.O. IN PARA 3.2 OF THE ASSESSMENT ORDER THAT IT WA S SUBMITTED BY THE ASSESSEE THAT THE AMOUNT OF MISCELLANEOUS INCOME IS COLLECTED UNDER THE AGREEMENT FOR SALE PREPARED UNDER MOFA AND INCLUDES PROFESSIONAL FEES FOR THE PREPARATION OF MOFA AGREEMENT, DEVELOPMENT CHARGES, WATER METER CHARGES ETC. PAID TO BMC. IT WAS FURTHER SUB MITTED THAT IF THE SAID AMOUNT IS ADDED TO THE SALE VALUE OF THE FLAT, THE SALE VALUE WILL INCREASE ACCORDINGLY AND WILL FORM PART OF BUSINESS RECEIPT ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. HOWEVER, THE A.O. DID NOT ACCEPT THE SAME. ACCORDING TO THE A.O. THE DEDUCTION U/S 80IB(10) OF THE ACT IS ELIGIBLE ONLY FOR INCOME DERIVED FROM THE ELIGIBLE BUSINESS AS MENTIONED UNDER THE SECTION. THE A.O. FURTHER OBSERVED THAT THE AMO UNT RECEIVED TOWARDS LEGAL CHARGES, WATER CHARGES ETC. CANNOT BE SAID TO BE INCOME DERIVED FROM BUSINESS OF AN ELIGIBLE UNIT DESCRIBED IN SECT ION 80IB(10) OF THE ACT AND ACCORDINGLY HE DISALLOWED THE SAME. ON APPEAL, THE LD. CIT(A) FOLLOWING THE TRIBUNAL ORDER IN THE CASE OF M/S PAT HARE & ASSOCIATES AND THE APPELLATE ORDER IN ASSESSEES OWN CASE FOR A.Y. 2007-08 HELD THAT THESE MISCELLANEOUS RECEIPT OF RS. 29,76,380/- ARE PART OF ELIGIBLE BUSINESS PROFITS FOR DEDUCTION U/S 80IB(10) OF THE ACT. 11. AT THE TIME OF HEARING THE LD. D.R. SUPPORTS TH E ORDER OF THE A.O. ITA NO. 7570/MUM/2011 5 12. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE FILES DETAILS OF MISCELLANEOUS INCOME. THE LD. COUNSEL FOR THE ASSE SSEE WHILE REFERRING TO THE DETAILS OF MISCELLANEOUS INCOME I.E. DEVELOP MENT CHARGES RS. 1,185,562/-, CORPUS FUND CHARGES RS. 1,270,245/-, L EGAL CHARGES RS. 351,000/-, SOCIETY FORMATION CHARGES RS. 351,000/-, WATER, ELECTRIC & OTHER DEPOSITS RS. 825,500/- TOTALLING TO RS. 3,983 ,307/- (-) PAID TO BINDU LAND DEVELOPERS & BUILDERS RS. 1,006,927/- = 2,976,380/- SUBMITS THAT THIS ISSUE IS ALSO COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF I.T.O. VS. M/S PATHARE & ASSOCIATES IN ITA NO. 1211/MUM/2008 FOR A.Y. 2004-0 5 DTD. 13-8-2009 WHEREIN THE TRIBUNAL HAS UPHELD THE ORDER OF THE LD . CIT(A) IN ALLOWING THE DEDUCTION IN RESPECT OF DEVELOPMENT CHARGES, LE GAL CHARGES, WATER/ELECTRICITY CHARGES/METER CHARGES ETC. HE FU RTHER SUBMITS THAT ON THE ISSUE OF CORPUS FUND CHARGES, THE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE FILE OF THE A.O. HE, THEREFORE, SUBMITS THAT F OLLOWING THE SAME, THE ISSUE MAY BE DECIDED ACCORDINGLY. 13. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE CASE O F M/S PATHARE & ASSOCIATES (SUPRA) THE TRIBUNAL HAS UPHELD THE ORDE R OF THE LD. CIT(A) IN ALLOWING THE DEDUCTION U/S 80IB(10) OF THE ACT IN R ESPECT OF DEVELOPMENT CHARGES, LEGAL CHARGES, WATER/ELECTRICITY/METER CHA RGES ETC. HOWEVER, IN RESPECT OF CORPUS FUND CHARGES, THE TRIBUNAL HAS SE T ASIDE THE ISSUE TO ITA NO. 7570/MUM/2011 6 THE FILE OF A.O. IN THE ABSENCE OF ANY DISTINGUISH ING FEATURE BROUGHT ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING TH E ORDER OF THE TRIBUNAL (SUPRA) HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUC TION U/S 80IB(10) OF THE ACT IN RESPECT OF DEVELOPMENT CHARGES, LEGAL CHARGE S, SOCIETY FORMATION CHARGES, WATER, ELECTRICITY & METER CHARGES. AS RE GARDS THE DEDUCTION U/S 80IB(10) ON CORPUS FUND CHARGES, IN THE ABSENCE OF ANY RELEVANT MATERIAL AVAILABLE ON RECORD, WE RESPECTFULLY FOLLO WING THE ORDER OF THE TRIBUNAL (SUPRA) SET ASIDE THE ISSUE TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTION GIVEN BY THE TRIBUNAL IN THE SAID CASE (SUPRA) AND ACCORDING TO LAW AFTER PROVIDING R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY THE GR OUND TAKEN BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 19-10-2012 SD/- (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 19-10-2012. RK ITA NO. 7570/MUM/2011 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 32, MUMBA I 4. COMMISSIONER OF INCOME TAX CITY -21, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH F, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI