ITO WD 4(1), THANE V. IDEAL REALTORS, THANE

ITA 7669/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70806 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 12-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: SUBODH RATNAPARKHI
• Section: 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 7669/MUM/2011 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER WARD 4(2) 2 ND FLOOR, QURESHI MANSION GOKHALE ROAD, NAUPADA THANE(W)-400 602. VS. M/S. IDEAL REALTORS MARBHAT TAMTALAO VASAI (W) DIST. THANE-401 303 PAN NO.AABFI 2230 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUBODH RATNAPARKHI REVENUE BY : SHRI O.P. SINGH DATE OF HEARING : 12/08/2013 DATE OF PRONOUNCEMENT : 14 / 0 8 /2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS AN APPEAL BY REVENUE ON THE ISSUE OF ELIGIB ILITY FOR DEDUCTION U/S.8O IB(10)AGAINST THE ORDER OF CIT(A) II, THANE. THE REVENUE HAS RAISED TWO GROUNDS WHICH ARE AS UNDER :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A)-II THANE, WAS JUSTIFIED IN HOLD ING THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) R ELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS . BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM.) WHEN SLP FILED BY THE DEPARTMENT AGAINST THE SAID DECISION IS PENDING BEF ORE THE SUPREME COURT. ITA NO.7669/M/11 A.Y.06-07 2 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)-II THANE, WAS JUSTIFIED IN R ELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS . BRAHMA ASSOCIATES (2011)333 ITR 289(BOM.) AND HOLDING THAT THE LIMIT WITH REGARD TO BUILT UP AREA OF SHOPS AND COMMERCIAL EST ABLISHMENTS AS PRESCRIBED BY CLAUSE (D) OF SUB SECTION 10 OF SECTI ON 80IB HAS PROSPECTIVE APPLICATION ONLY AND CAN NOT BE APPLIED RETROSPECTIVELY. 2. BRIEFLY STATED, THE FACTS OF THE ISSUE UNDER CON SIDERATION ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE A CTIVITY AS A BUILDER AND DEVELOPER AND HAS CONSTRUCTED HOUSING PROJECT C ALLED GRAND MANOR IDEAL PARK AT BHAYANDER. THE HOUSING PROJECT OF TH E ASSESSEE CONSISTS OF GROUND PLUS 4 FLOORS, WITH SIX WINGS AND TWO ROW HO USES. THE TOTAL AREA OF THE PROJECT COMPRISES OF 4740.17 SQ. MTRS, OUT O F WHICH THE RESIDENTIAL AREA CONSISTS OF 4551.37 SQ. MTRS. AND THE SHOPS CO NSISTS OF 188.80 SQ. MTRS, WHICH COMES TO 3.98% OF THE TOTAL PROJECT ARE A. ON THE NET PROFIT OF RS. 12,02,326/- ON THE SALES OF THE FLATS IN THIS H OUSING PROJECT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAIMED A DEDUCTION U/S. 801B(10) OF THE L.T. ACT, 1961 DURING THE PERIOD UN DER CONSIDERATION. IT WAS NOTICED DURING THE COURSE OF ASSESSMENT PROCEED INGS BY THE AO THAT THE ASSESSEE HAD CONSTRUCTED SHOPPING AREA CONSISTI NG OF 188.80 SQ. MTRS. IN ITS ABOVE REFERRED HOUSING PROJECT AND THE TOTAL AREA OF THESE SHOPS WAS MORE THAN THE 2000 SQ. FEET WHICH WAS IN EXCESS OF THE LIMIT PRESCRIBED U/S.8OLB(10)(D) OF THE I.T. ACT, 1961. I N VIEW OF THE ABOVE, THE AO PROCEEDED TO CONCLUDE THAT THE ASSESSEE IS NOT E LIGIBLE FOR DEDUCTION U/S. 801B(10) AS CLAIMED BY HIM ON THE ABOVE PROJEC T DUE TO THE FACT THAT THE PROJECT OF THE ASSESSEE CONSISTS OF COMMER CIAL AREA WHICH IS IN EXCESS OF THE LIMIT PRESCRIBED U/S. 801B(10)(D) OF THE I.T. ACT, 1961. AO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE AM OUNTING TO RS.12,02,326/- U/S. 80IB(10). ITA NO.7669/M/11 A.Y.06-07 3 3. BEFORE THE CIT(A), IT WAS SUBMITTED THAT ASSESSE ES PROJECT WAS APPROVED AS A RESIDENTIAL PROJECT FOR THE F.Y. 2003 -04 AND THE SHOPPING AREA IS ONLY 3.9% OF THE TOTAL AREA OF THE PROJECT WHICH WAS PERMITTED UNDER D.C. RULES OF THE LOCAL AUTHORITY. THE ASSESS EE ALSO RELIED ON THE PRINCIPLES LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM.) . THE LD. CIT(A) AFTER CONSIDERING THE FACTS HELD AS UNDER :- 4.8. THE ABOVE DECISION OF THE HONBLE HIGH COUR T OF BOMBAY IS APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLAN T. THE HOUSING PROJECT OF THE APPELLANT WAS APPROVED AS HOUSING PR OJECT BY THE LOCAL AUTHORITY I.E. MIRA BHAYANDER MUNICIPAL CORPO RATION DURING THE FINANCIAL YEAR 2003-04. THE HONBLE HIGH COURT OF BOMBAY IN ITS DECISION IN THE CASE OF BRAHMA ASSOCIATES VS CIT (S UPRA) HAS CLEARLY DECIDED THAT CLAUSE (D), INSERTED TO THE SECTION 80 1B(10) WITH EFFECT FROM 01/04/2005, IS PROSPECTIVE AND NOT RETROSPECTI VE AND HENCE CANNOT BE APPLIED TO THE PERIOD PRIOR TO 01/04/2005 . THE RESTRICTION ON THE COMMERCIAL AREA IMPOSED BY THE INTRODUCTION OF SUB-SECTION (D) TO SECTION 801B(10) W.E.F. 1.4.2005 ARE THEREFO RE NOT APPLICABLE TO THE APPELLANT AS THIS PROJECT HAVING COMMERCIAL ARE A HAD COMMENCED PRIOR TO THE SAID DATE. FROM THE DETAILS FILED, IT CAN BE OBSERVED THAT THE PROJECT OF THE APPELLANT WAS SANC TIONED AS HOUSING PROJECT BY THE MIRA BHAYANDER MUNICIPAL COR PORATION DURING THE FINANCIAL YEAR 2003-04. THEREFORE, THE HOUSING PROJECTS COMMENCING CONSTRUCTION BEFORE THE INTRODUCTION OF THE AMENDED PROVISIONS, MADE EFFECTIVE FROM 1.4.2005, WOULD BE ENTITLED FOR DEDUCTION U/S. 801B(10) EVEN THOUGH IT CONTAINED TH E COMMERCIAL AREA. THE ABOVE VIEW IS ALSO SUPPORTED BY THE DECIS ION OF THE MUMBAI TRIBUNAL IN THE CASE OF SAROJ SALES ORGANIZA TION VS ITO, 3 DTR (MUM) 494. 4.9. IN VIEW OF THE FACTS STATED ABOVE AND THE DEC ISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF BRAHMA ASSOCIATES & OTHERS VS CIT, IN THIS CASE FOR THE A.Y. 2006-07, IN MY CONSIDERED OPINION, THE CLAIM OF DEDUCTION U/S.801B(10) IS ALL OWABLE TO THE APPELLANT. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW THE SAME FOR THE YEAR UNDER CONSIDERATION. 4. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO N OT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). AS SUBM ITTED, THE PROJECT WAS ITA NO.7669/M/11 A.Y.06-07 4 APPROVED AS A HOUSING PROJECT AND THE COMMERCIAL AR EA IS EVEN LESS THAN 5%. MOREOVER, THE PRINCIPLES LAID DOWN BY THE HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES( SUPRA) WERE FOLLOWED AND APPLIED BY THE LD. CIT(A). IN VIEW OF THIS, WE SEE NO MERIT IN THE REVENUE GROUNDS RAISED. THE GROUNDS ARE ACCORDINGLY REJECTE D. 5. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2013. SD/- SD/- (AMIT SHUKLA ) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 14/08/2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.