DCIT CIR 1, MUMBAI V. KRUNAL PRAVINCHANDRA GALA, MUMBAI

ITA 7724/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8224 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 10-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU KRISHNA
• Assessee Lawyers: SUBODH RATNAPARAKHI
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , . . , . . BEFORE SHRI P.M.JAGTAP, AM & SHRI AMIT SHUKLA, JM ./ ITA NO.7724/MUM/2010 ( / ASSESSMENT YEAR :2005-2006) DCIT, CIR 1, THANE. VS. KRUNAL PRAVINCHANDRA GALA, PROP. M/S HE M/S.HEMAL BUILDERS, PRIDE PARK, PHASE-1, OPP. LAWKIM GHODBUNDER, RD. THANE (W.) ./ ./PAN NO.AGLPG 2 012 M ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. ANU KRISHNA / RESPONDENT BY : MR. SUBODH RATNAPARAKHI / DATE OF HEARING : 30 TH JULY, 2012 / DATE OF PRONOUNCEMENT : 3 RD AUGUST, 2012 / O R D E R PER AMIT SHUKLA (J.M.) : THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER DATED 13-8-2010, PASSED BY THE CIT(A )-II, THANE FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143( 3) FOR THE ASSESSMENT YEAR 2005-2006 ON THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN LAW, THE LD CIT(A) HAS ERRED IN HOLDING THAT THE EXISTENCE OF COMMERCI AL AREA IN THE HOUSING PROJECT APPROVED PRIOR TO 01/04/2005 CANNOT COME IN THE WAY OF ASSESSEES CLAIM FOR DEDUCTION U/S.80IB(10) OF THE INCOME TAX ACT, 1961. ITA NO : 7724/M/10 2 2. ON THE FACTS AND IN LAW, THE LD CIT(A) HAS ERRED IN HOLDING THAT THE PROJECT PRIDE PARK OF THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE INCOME TAX ACT, 1961, ON STAND ALONE BASIS. 3. ON THE FACTS AND IN LAW, THE LD CIT(A) HAS ERRED IN HOLDING THAT AS THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION ON COMMERCIAL COMPONENT OF THE PROJECT, THE DEDUCTION U/S. 80IB(10) OF THE INCOME TAX ACT, 1961, IS ALLOWABLE TO THE ASSESSEE. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECT THROUGH ITS PROPRIETORY CONCERN M/S HEMAL BUILDERS. THE SAID FIRM HAS DEVELOPED A CLUSTER OF BUILDINGS AT VILLAGE CHITALSAR-MANPADA, DISTRICT THANE. THE SAID CLUSTER OF BUILDING INCLUDES ONE BUILDING PRIDE PLAZA WHICH HOUSES COMMERCIAL ESTABLISHMENTS AND OTHER BUILDINGS WERE FOR RESIDENTIAL UNITS/\ UNDER THE PROJE CT NAME PRIDE PARK. THE ASSESSEE HAD SHOWN A NET PROFIT OF ` .12,89,205/- ON TOTAL SALES OF ` .49,96,960/- WHICH INCLUDES GAINS ON TRANSFER OF DEVELOPMENT RIGHTS OF ` .10,00,000/- WHICH WAS SEPARATELY SHOWN AS NET PROFIT. ON THE BALANCE SALES OF UNSOLD FLATS OF PHASE I OF THE HOUS ING PROJECT PRIDE PARK, AMOUNTING TO ` .39,96,960/-, DURING THE YEAR UNDER CONSIDERATION, A NET PROFIT OF ` .12,89,205/- WAS WORKED OUT AND HA S BEEN CLAIMED AS EXEMPT UNDER SECTION 80IB(10). THE ASSESSING OFFICER HAS REJECTED THE CLAIM ON THE GROUND THAT AS PER THE APPROVED PLAN OF HOUSING PROJECT PHASE 1 OF THE PRIDE PARK, THE COMMERCIAL UNI TS HAVE ALSO BEEN CONSTRUCTED AND ITA NO : 7724/M/10 3 SOLD ALONG WITH THE RESIDENTIAL UNITS HAVING AREA OF 1598 SQ.MTRS.. THE ASSESSEES CONTENTIONS HAVE BEEN T HAT BOTH THE PROJECTS WERE INDEPENDENT AND DISTINCT EVEN THOUGH THEY WERE COVERED UNDER THE SAME SANCTIONED PLAN OF THE LOCAL AUTHO RITY. BOTH PROJECTS WERE LOCATED AT A DISTANCE AND THE ACCOUNT OF BOTH THE PROJECTS HAVE BEEN SEPARATELY MAINTAINED. 3. BEFORE THE CIT(A), THE ASSESSEE MADE DETAIL SUBMISSION HIGHLIGHTING THE PROJECT WORK DETA ILS, ACCOUNTS FOR BOTH THE PROJECTS WHICH WERE SEPARATELY MAINTAINED, PURCHASE BILLS OF MATERIAL, WHICH WERE SEPARATELY IDENTIFIED AND THE AGREEMENTS FOR SALE OF PREMISES IN RESPECT OF BOTH THE PROJECTS. THE SAID SUBMISSIONS HAVE BEEN INCORPORATED BY THE CIT(A) FROM PAGE 4 TO 10 OF THE APPELLATE ORDER. THE CIT(A) AFTER CONSIDERING T HE FACTS AND SUBMISSIONS OF THE ASSESSEE ALLOWED THE CLAIM OF THE ASSESSEE ON VARIOUS COUNTS, FIRSTLY, THAT SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CIT(A) FOR THE ASSESSMENT YEAR 2004-2005; SECONDLY, ON THE FACT, IT WAS CLEAR THAT THE ASSESSEE HAS NOT INCLUDED THE COMMERCIAL AREA OF THE PROJECT PRIDE PARK FOR THE PURPOSE OF ANY CLAIM UNDER SECTION 80IB(10), HENCE, THERE WAS NO POINT OF MAKING DISALLOWANCE OF SUCH CLAIM BY THE ASSESSING OFFICER AND THAT CLAIM UNDER SECTION 80IB(10) PERTAINS PURELY FOR RESIDENTIAL UNITS, WHICH SATISFIED ALL THE CONDITIONS AND THIRDLY, THE ASSESSEES CASE, OTHE RWISE ALSO, IS COVERED BY THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF BRAHMA ITA NO : 7724/M/10 4 ASSOCIATES, AND VARIOUS OTHER DECISION OF THE TRIBUNAL, LIKE M/S. SAROJ SALES CORPORATION VS. ITO, RE PORTED IN 3 DTR (TRIB.)(MUM) 494 . 4 . AT THE OUTSET, LEARNED COUNSEL SUBMITTED THAT THIS ISSUE NOW STANDS COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES, REPORTED IN (2011) 333 ITR 289 , WHEREIN THE DECISION OF THE S PECIAL BENCH HAS BEEN UPHELD. ON THE OTHER HAND, LEARNED SENIOR DR FAIRLY AGREED THAT THE ISSUE INVOLVED IN THIS CASE STANDS COVER ED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. 5. AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIONS AND FINDING OF THE CIT(A) AS WELL AS THE DECISION IN THE CASE OF CIT VS. BRAHMA ASSOCIATES (SUPRA), WE FIND THAT ON THE FACTS OF THE CASE ITSELF, AS HELD BY THE CIT(A), THERE IS NO QUE STION OF DISALLOWING THE CLAIM UNDER SECTION 80IB(10) MERELY ON THE GROUND THAT APPROVAL WAS GRANTED FOR COMMERCIAL AND RESIDENTIAL PURPOSES TOGETHER. IN FACT, THE ASSESSEE HAS MAINTAINED TWO SEPARATE ACCOUNTS FOR COMMERCIAL AND RESIDENTIAL PROJECT AND HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10) ONLY IN RESPECT OF RESIDENTIAL PROJECT. FURTHER, THERE IS NO OTHER ALLEGATION THAT VARIOUS TERMS AND CONDITIONS LAID DOWN UNDER SECTION 80IB(10) DOES NOT FULFIL IN THE ASSESSEES CASE. IN ANY CASE, THIS ISSUE NOW STANDS COVERED BY THE DECISION OF THE HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPR A), WHEREIN IT HAS BEEN HELD THAT EXISTENCE OF COMMERCIAL UNITS IN A PROJECT COMMENCED AND COMPLETED ITA NO : 7724/M/10 5 PRIOR TO 01-04-2005, WILL NOT HAVE ANY ADVERSE IMPACT ON THE CLAIM FOR DEDUCTION U/S. 80IB(10). IN THIS CASE , IT IS AN UNDISPUTED FACT THAT HOUSING PROJECT HAS BEEN COMMENCED ON 23.1.2003 AND WAS COMPLETED ON 12-2-2004 I.E. MUCH BEFORE 1-4-2005. THUS, FOLLOWING THE DECISION OF THE HONBLE HIGH C OURT, WE DO NOT FIND ANY SUBSTANCE IN THE GROUNDS RAISED BY THE DEPARTMENT AND IS ACCORDINGLY DISMISSED. 6 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST, 2012 . 3 RD AUGUST, 2012 SD/- SD/- ( . . ) ( ) ( P.M.JAGTAP) ( AMIT SHUKLA) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED 3 RD / AUGUST/2012 . . / PKM. . ./PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. ITA NO : 7724/M/10 6 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI