ACIT Cir- 5 Pune, Pune V. M/s Viraj Properties, Pune

ITA 784/PUN/2012

• Counselvise Citation: 78424514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: R G AGIWAL
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.784/PN/2012 (ASSESSMENT YEAR : 2007-08) ASST. COMMISSIONER OF INCOME TAX CIRCLE 5, PUNE . APPELLANT VS. M/S VIRAJ PROPERTIES 783, BHAWANI PETH, PUNE 411 042 PAN : AACFV8012B . RESPONDENT C.O. NO.16/PN/2013 (ARISING OUT OF ITA NO.784/PN/2012) (ASSESSMENT YEAR : 2007-08) M/S VIRAJ PROPERTIES 2413, EAST STREET, KUMAR CAPITAL, 1 ST FLOOR, CAMP, PUNE 411 001 PAN : AACFV8012B . APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE 5, PUNE . RESPONDENT APPELLANT BY : MR. MUKESH VERMA RESPONDENT BY : MR. R. G. AGIWAL DATE OF HEARING : 30-05-2013 DATE OF PRONOUNCEMENT : 06-06-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, PUNE DATE D 28.10.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 10.03.2010 PAS SED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESS MENT YEAR 2007-08. ITA NO.784/PN/2012 C.O. NO.16/PN/2013 M/S VIRAJ PROPERTIES A.Y. 2007-08 2. IN THIS APPEAL, ALTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT THE SOLITARY GRIEVANCE OF THE REVENUE IS WITH REGARD TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT OF RS.4,06,21,680/- IN RESPECT OF THE PR OFITS EARNED FROM ITS PROJECT NAMELY, KUMAR PARISAR. 3. IN BRIEF, FACTS ARE THAT ASSESSEE IS A PARTNERSH IP FIRM ENGAGED IN THE BUSINESS OF DEVELOPING OF LANDS AND CONSTRUC TION OF BUILDINGS, INCLUDING RESIDENTIAL PROJECTS. FOR THE ASSESSMENT YEAR 2007-08, IT FILED ITS RETURN OF INCOME DISCLOSING TOTAL INCOME AT RS.1,62,72,709/- AFTER CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AMOUNTING TO RS.4,06,21,680/-. IN THE IMPUGNED ASSE SSMENT FINALIZED BY THE ASSESSING OFFICER UNDER SECTION 14 3(3) READ WITH SECTION 147 OF THE ACT DATED 10.03.2010, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RELATION TO KUMAR PARISAR PROJECT HAS BEEN DENIED. THE PRIMARY REASO N SATED BY THE ASSESSING OFFICER TO DENY THE CLAIM OF THE ASSESSEE IS TO THE EFFECT THAT THE SAID PROJECT CONSISTED OF COMMERCIAL ESTAB LISHMENTS HAVING BUILT-UP AREA OF 11,964 SQ.FT. WHICH EXCEEDED THE P RESCRIBED LIMIT OF 2000 SQ.FT. IN TERMS OF CLAUSE (D) OF SECTION 80IB( 10) OF THE ACT. THE PROJECT KUMAR PARISAR WAS A CONTINUING PROJECT FR OM THE EARLIER YEARS AND EVEN FOR THE ASSESSMENT YEARS 2004-05 & 2 006-07 THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE AC T WAS DENIED FOR SIMILAR REASONS. THE CIT(A) HAS SINCE ALLOWED THE C LAIM OF THE ASSESSEE, FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 WHEREBY ASSESS EES CLAIM OF DEDUCTION WAS ALLOWED BY THE TRIBUNAL VIDE ITA NO.1 580/PN/2007 DATED 30.04.2009. THE CIT(A) FOLLOWED THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 -05, IN WHICH THE RELIANCE WAS PLACED ON THE JUDGEMENT OF THE SPE CIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES & OTH ERS VS. JCIT 119 ITA NO.784/PN/2012 C.O. NO.16/PN/2013 M/S VIRAJ PROPERTIES A.Y. 2007-08 ITD 255 (SB) AND IT WAS HELD THAT SO LONG AS 90% OF THE BUILT-UP AREA OF THE PROJECT KUMAR PARISAR WAS USED FOR RESIDEN TIAL PURPOSES, THE DEDUCTION SHALL BE ALLOWED IN RESPECT OF THE PROFIT S DERIVED FROM SUCH PROJECT. AGAINST THE AFORESAID DECISION OF THE CIT( A), REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, AT THE OUTSET, LEARNED REPRESENTATIVE FOR THE RESPONDENT-ASSESSEE SUBMITTED THAT SUBSEQUENT TO TH E DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2004-05 DATED 30.0 4.2009 (SUPRA), THE TRIBUNAL ALSO UPHELD ASSESSEES CLAIM FOR DEDUC TION UNDER SECTION 80IB(10) OF THE ACT IN RELATION TO ASSESSME NT YEAR 2006-07 VIDE ITA NO.49/PN/2010 DATED 30.03.2012. IN ITS ORD ER FOR ASSESSMENT YEAR 2006-07 (SUPRA) THE TRIBUNAL NOTICE D THE SUBSEQUENT JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S BRAHMA ASSOCIATES & OTHERS 333 ITR 289 (BOM.) WHEREIN, WHILE AFFIRMING THE DECISION OF THE SPECIA L BENCH OF THE TRIBUNAL, IT WAS HELD THAT CLAUSE (D) OF SECTION 80 IB(10) OF THE ACT INSERTED WITH EFFECT FROM 01.04.2005 IS PROSPECTIVE AND NOT RETROSPECTIVE IN NATURE. IN THIS MANNER, IT IS SOUG HT TO BE CANVASSED THAT THE PRECEDENTS IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 & 2006-07 (SUPRA) COVER THE PRESENT C ONTROVERSY IN FAVOUR OF THE ASSESSEE. 5. THE AFORESAID FACTUAL MATRIX BROUGHT-OUT BY THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS NOT BEEN CONTRO VERTED BY THE LEARNED CIT(DR). HOWEVER, AS PER THE CIT(DR), CASE OF THE REVENUE IS THAT SUBSEQUENT TO INSERTION OF CLAUSE (D) IN SE CTION 80IB(10) OF THE ACT WITH EFFECT FROM 01.04.2005, THE PERMISSIBL E LIMITS OF COMMERCIAL ARE PRESCRIBED THEREIN, WHICH SHALL BE A PPLICABLE INASMUCH AS THE DECISION OF THE TRIBUNAL IN THE CAS E OF OPEL SHELTERS PVT. LTD. & OTHERS VS. ITO (ITA NO.219/PN/2009 AND ORS. DATED ITA NO.784/PN/2012 C.O. NO.16/PN/2013 M/S VIRAJ PROPERTIES A.Y. 2007-08 31.05.2011 FOR THE ASSESSMENT YEAR 2005-06) FOLLOWE D BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2006-07 (SUPRA) IS TO BE UNDERSTOOD AS MEANING THAT IT WOULD BE APPLICABLE FROM THE ASSESSMENT YEAR 2005-06. IN THE PRESENT CASE, IT IS POINTED OUT THAT THOUGH THE PROJECT WAS APPROVED BEFORE THE INSERTION OF CLAUSE (D) IN SECTION 80IB(10) OF THE ACT WITH EFFECT FROM 01.04.2005 BUT THE COMPLETION OF THE PROJECT IS SUB SEQUENT TO 01.04.2005 AND THEREFORE, IN SO FAR AS THE ASSESSME NT YEAR 2005-06 ONWARDS, THE DEDUCTION CANNOT BE MADE AVAILABLE IN RELATION TO THE IMPUGNED PROJECT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. FACTUALLY SPEAKING IT IS NOT IN DISPUTE THAT THE PROJECT KUM AR PARISAR UNDERTAKEN BY THE ASSESSEE WAS APPROVED BY THE LOCA L AUTHORITY PRIOR TO 01.04.2005 AND AT THAT POINT OF TIME THE R ESTRICTION ON CONSTRUCTION OF COMMERCIAL AREA IN A HOUSING PROJEC T PRESCRIBED IN CLAUSE (D) OF SECTION 80IB(10) OF THE ACT WAS NOT O N THE STATUTE INASMUCH AS THE SAID INSERTION OF CLAUSE (D) TO SEC TION 80IB(10) OF THE ACT WAS MADE BY THE FINANCE (NO.2) ACT, 2004 WI TH EFFECT FROM 01.04.2005. THOUGH THE PROJECT WAS APPROVED PRIOR T O 01.04.2005 BUT ITS CONSTRUCTION CONTINUED EVEN IN THE SUBSEQUE NT YEARS AS IS THE CASE DURING THE YEAR UNDER CONSIDERATION. THE PLEA OF THE LEARNED CIT(DR) IS THAT SO LONG AS THE PROJECT OF THE ASSES SEE HAS NOT BEEN COMPLETED PRIOR TO 01.04.2005, IT WOULD NOT BE ALLO WED DEDUCTION FROM THE ASSESSMENT YEAR 2005-06 ONWARDS WITHOUT CO MPLYING WITH THE LIMIT PRESCRIBED UNDER SECTION 80IB(10)(D) OF T HE ACT. IN OUR CONSIDERED OPINION, THE SAID ASPECT OF THE CONTROVE RSY HAS BEEN ADDRESSED BY THE TRIBUNAL IN ITS ORDER DATED 30.03. 2012 (SUPRA) FOR ASSESSMENT YEAR 2006-07 IN THE FOLLOWING WORDS :- ADMITTEDLY, THE PROJECT WAS APPROVED BEFORE INSERT ION OF CLAUSE (D) IN SECTION 80IB(10) OF THE ACT W.E.F. 1. 4.2005, HENCE, IN ITA NO.784/PN/2012 C.O. NO.16/PN/2013 M/S VIRAJ PROPERTIES A.Y. 2007-08 VIEW OF THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF OPEL SHELTERS PVT. LTD. AND OTHERS (SUPRA), AMENDED PROVISIONS WILL NOT BE APPLICABLE ON THE PROJECT APPROVED BY THE LO CAL AUTHORITY BEFORE COMING INTO THE OPERATION OF CLAUSE (D) OF S ECTION 80IB(10) OF THE ACT, WE ARE OF THE VIEW THAT THE LD. CIT(A) WHILE ALLOWING THE CLAIMED DEDUCTION WAS NOT JUSTIFY IN RESTRICTING TH E DEDUCTION OF COMMERCIAL AREA, UPTO THE 10% OF THE TOTAL BUILT-UP AREA FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF M/S. BRAHMA ASSOCIATES. WE, THUS, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F BRAHMA ASSOCIATES & OTHERS (SUPRA) DIRECT THE A.O. TO ALLO W THE CLAIMED DEDUCTION ON THE PROJECT KUMAR PARISAR WITHOUT AN Y RESTRICTION ON ACCOUNT OF COMMERCIAL AREA. EVEN OTHERWISE, THIS MA TERIAL FACT HAS NOT BEEN DISPUTED BY THE REVENUE BEFORE THE TRIBUNA L THAT THE COMMERCIAL AREA IN THE PROJECT IS LESS THAN 10% OF TOTAL BUILT-UP ARE AS CLAIMED BY THE ASSESSEE. IN VIEW OF THIS FINDING , THE GROUNDS OF THE APPEAL PREFERRED BY THE REVENUE ARE REJECTED AN D GROUND NO.2 OF THE APPEAL PREFERRED BY THE ASSESSEE IS ALLOWED. 7. IN SO FAR AS THE ARGUMENT SETUP BY THE LEARNED CIT(DR) IS CONCERNED THE SAME, IN OUR VIEW IS BASED ON MISPLAC ED UNDERSTANDING OF THE JUDGEMENT OF THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES & OTHERS (SU PRA). QUITE CLEARLY THE HONBLE BOMBAY HIGH COURT HAS OPINED TH AT THE CLAUSE (D) INSERTED IN SECTION 80IB(10) OF THE ACT WITH EFFECT FROM 01.04.2005 IS PROSPECTIVE AND NOT RETROSPECTIVE IN NATURE. THE AFORESAID IS BEING INTERPRETED BY THE LEARNED CIT(D R) TO MEAN THAT IT WOULD APPLY TILL THE ASSESSMENT YEAR 2004-05. IN OT HER WORDS, AS PER THE LEARNED CIT(DR) THE PROJECT SHOULD NOT ONLY BE APPROVED PRIOR TO 01.04.2005 BUT ALSO COMPLETED PRIOR TO 01.04.2005; THUS, AS PER THE ARGUMENT OF THE LEARNED CIT(DR) FOR ASSESSMENT YEAR 2005-06 ONWARDS THE NEWLY INSERTED CLAUSE (D) IN SECTION 80 IB(10) OF THE ACT WOULD ALSO APPLY TO PROJECTS APPROVED PRIOR TO 01.0 4.2005 BUT NOT COMPLETED PRIOR TO 31.03.2005. IN OUR CONSIDERED OP INION, THE AFORESAID ARGUMENT SETUP BY THE LEARNED CIT(DR) HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CA SE FOR THE ITA NO.784/PN/2012 C.O. NO.16/PN/2013 M/S VIRAJ PROPERTIES A.Y. 2007-08 ASSESSMENT YEAR 2006-07 DATED 30.03.2012 (SUPRA). I N ASSESSMENT YEAR 2006-07, THE TRIBUNAL WHILE ADJUDICATING THE C ONTROVERSY REFERRED TO EARLIER DECISION OF THE PUNE BENCH OF T HE TRIBUNAL IN THE CASE OF OPEL SHELTERS & D. S. KULKARNI ASSOCIATES I N ITA NOS. 219 & 17/PN/2009 DATED 31.05.2011 IN WHICH IT WAS HELD TH AT THE NEWLY INSERTED CLAUSE (D) TO SECTION 80IB(10) OF THE ACT WILL NOT APPLY ON THE PROJECTS APPROVED UPTO 31.03.2005 SINCE IN THOS E PROJECTS ASSESSEES ARE REQUIRED TO CONSTRUCT WHAT HAS BEEN A PPROVED. EVIDENTLY, THE PRESENT ARGUMENT PUTFORTH BY THE LEA RNED CIT(DR) HAS BEEN ANSWERED BY THE TRIBUNAL IN THE CASE OF OPEL S HELTERS (SUPRA) AND ACCORDINGLY THE SAME DOES NOT HELP THE REVENUE. APART THEREFROM WE NOTICE THAT IF THE INTERPRETATION OF T HE LEARNED CIT(DR) IS TO BE ACCEPTED, IT WOULD NOT BE IN CONSONANCE WI TH THE UNDERSTANDING OF PROSPECTIVE NATURE OF INSERTION OF CLAUSE (D) IN SECTION 80IB(10) OF THE ACT WITH EFFECT FROM 01.04. 2005, AS LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF BRAHMA ASSOCIATES & OTHERS (SUPRA). THEREFORE, IN OUR VIEW THE PRECEDENT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 (SU PRA) FULLY COVERS THE CONTROVERSY IN FAVOUR OF THE ASSESSEE AN D CIT(A) MADE NO MISTAKE IN ALLOWING THE CLAIM OF THE ASSESSEE FO R DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RELATION TO KUMAR P ARISAR PROJECT ESPECIALLY WHEN NO CHANGE IN FACTS AND CIRCUMSTANCE S IN THIS YEAR HAVE BEEN BROUGHT OUT BY THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 9. IN THE CROSS OBJECTION FILED BY THE ASSESSEE THE ONLY GRIEVANCE IS THAT THE CIT(A) ERRED IN NOT UPHOLDING THE PLEA OF THE ASSESSEE THAT THE PROCEEDINGS INITIATED BY THE ASSE SSING OFFICER BY ISSUANCE OF NOTICE UNDER SECTION 147/148 OF THE ACT ARE INVALID AND ITA NO.784/PN/2012 C.O. NO.16/PN/2013 M/S VIRAJ PROPERTIES A.Y. 2007-08 ACCORDINGLY, THE ENTIRE ASSESSMENT ORDER DATED 10.0 3.2010 IS LIABLE TO BE CANCELLED. 10. WE FIND THAT THE CIT(A) IN PARA 7 OF HIS ORDER OBSERVED THAT THE SINCE HE WAS UPHOLDING THAT ASSESSEES CLAIM FOR DE DUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF THE ENTIR E PROFITS DERIVED FROM THE PROJECT KUMAR PARISAR, THE PLEA OF THE A SSESSEE CHALLENGING THE VALIDITY OF PROCEEDINGS INITIATED B Y ISSUANCE OF NOTICE UNDER SECTION 147/148 OF THE ACT WAS ONLY AN ACADEM IC EXERCISE AND HE DID NOT ADJUDICATE THE SAME. THE GROUND OF APPEA L WAS ACCORDINGLY DISMISSED. 11. IN THE APPEAL OF THE REVENUE, THE ACTION OF THE CIT(A) IN UPHOLDING THE ALLOWABILITY OF DEDUCTION UNDER SECTI ON 80IB(10) OF THE ACT IN RESPECT OF ENTIRE PROFITS FROM THE PROJECT KUMAR PARISAR HAS BEEN AFFIRMED BY US. OSTENSIBLY, NO FAULT CAN BE FO UND WITH THE CIT(A) IN OBSERVING THAT SINCE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS UPHELD, THE PRELIMI NARY GROUND RAISED ON THE ISSUE OF INITIATION OF PROCEEDINGS UN DER SECTION 147 WAS RENDERED ACADEMIC. SO, HOWEVER, WE DEEM IT FIT AND PROPER TO MODIFY THE ORDER OF THE CIT(A) TO THE EXTENT THAT I N CASE SUBSEQUENTLY ON AN APPEAL BY THE REVENUE BEFORE THE HIGHER FORUMS, THE DECISION WITH REGARD TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IS ALTE RED, THEN THE ASSESSEE WOULD BE AT LIBERTY TO SEEK ADJUDICATION O F ITS GROUND REGARDING THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT ON MERITS. SINCE, THE ASSESSEE HAS SUCCE EDED ON MERITS EVEN BEFORE US, THE GROUND OF VALIDITY OF REOPENING UNDER SECTION 147/148 OF THE ACT CONTINUES TO REMAIN ACADEMIC AND IS NOT ADJUDICATED FOR THE PRESENT. THUS, CROSS OBJECTION PREFERRED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS FOR THE AFORES AID REASON. ITA NO.784/PN/2012 C.O. NO.16/PN/2013 M/S VIRAJ PROPERTIES A.Y. 2007-08 12. RESULTANTLY, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH JUNE, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 06 TH JUNE, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III, PUNE; 4) THE CIT-III, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE