Venkaesh Tirth Construction, Sangli V. Income-tax Officer,

ITA 816/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1754 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 23-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.816/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 VENKATESH TIRTH CONSTRUCTION, SURVEY NO.375, DHAMANI ROAD, NEMINATH NAGAR, SANGLI 416416 PAN NO.ABGFS7761R . / APPELLANT V/S ITO, WARD-1(1), SANGLI . / RESPONDENT / ASSESSEE BY : NONE / REVENUE BY : SHRI SUDHENDU DAS / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 06-02-2014 OF THE CIT(A), KOLHAPUR RELATING TO ASSE SSMENT YEAR 2010-11. 2. DESPITE SERVICE OF NOTICE A NUMBER OF TIMES NONE APPE ARED ON BEHALF OF THE ASSESSEE. EVEN BEFORE CIT(A) ALSO THERE WAS NON- APPEARANCE FOR WHICH HE HAS PASSED AN EXPARTE ORDER. W E, THEREFORE, PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENT AL REPRESENTATIVE. / DATE OF HEARING :23.05.2016 / DATE OF PRONOUNCEMENT:25.05.2016 2 ITA NO.816/PN/2014 3. THE ASSESSEE IN THE ONLY GROUND OF APPEAL HAS CHALLEN GED THE ORDER OF THE CIT(A) IN CONFIRMING DISALLOWANCE OF CLAIM OF DEDUCT ION U/S.80IB(10) OF THE ACT AMOUNTING TO RS.81,94,070/-. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING OF 4 PARTNERS AND IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL UNITS AT DHAMANI ROA D, VISHRAMBAGH, SANGLI. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 15-10-2010 DECLARING N IL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAS ADOPTED COMPLETION CONTRA CT METHOD OF ACCOUNTING AND ENTIRE PROFIT FOR THE PROJECT HAS BEEN C ONSIDERED IN THIS ASSESSMENT YEAR. THE ASSESSEE HAS SHOWN RECEIPT FROM SALE OF BUNGALOW AT RS.5,82,71,000/-, SALE OF OPEN PLOT AT RS.10 LAKHS AND SALE OF SHOP AT RS.25,33,000/-. THE NET PROFIT OF RS.81,94,07 0/- HAS BEEN CLAIMED AS DEDUCTION U/S.80IB(10) OF THE ACT. 5. THE AO ASKED THE ASSESSEE TO EXPLAIN THE ALLOWABILITY OF CLAIM OF DEDUCTION U/S.80IB(10) MADE BY THE ASSESSEE. FROM THE DETAILS FURNISHED BY THE ASSESSEE THE AO NOTED THAT A TOTAL OF 14 FLATS WERE SOLD FROM THIS PROJECT, THE COMMENCEMENT CERTIFICATE OF WHIC H WAS ISSUED BY COMMISSIONER OF SANGLI-MIRAJ-KUPWAD CORPORATION ON 20-02-2007. SUBSEQUENTLY THE PLAN WAS REVISED WHICH WAS APPROVED ON 31-01-2008. AS PER THE PROVISIONS OF SECTION 80IB(10) THE PROJECT HAS TO BE COMPLETED WITHIN 5 YEARS OF ITS COMMENCEMENT. HOWEVE R , THE ASSESSEE HAS NOT SUBMITTED COMPLETION CERTIFICATE OF THE PROJECT. HE OBTAINED INFORMATION FROM THE EXECUTIVE ENGINEER, SANGLI-MIRAJ-KUPWAD CORPORATION ACCORDING TO WHICH THE ASSESSEE HAS NOT SUBMITTED ANY PROPOSAL FOR COMPLETION CERTIFICATE WITH REGARD TO THE COMPLETION OF THE PROJECT. 3 ITA NO.816/PN/2014 MOREOVER, SINCE ASSESSEE'S PROFIT INCLUDED PROF I T ON SALE OF L A ND ALSO, THE ASSESSING OFFICER ISSUED SHOW CAUSE LETTER DATED 27-12- 2013 MENTIONING THESE FACTS AND THE ASSESSEE WAS ASKED TO EXPLAIN THE POINTS MENTIONED IN THE SAID LETTER. 6. IT WAS REPLIED BY THE ASSESSEE THAT APPLICATION HAS B EEN FORWARDED TO THE MUNICIPAL AUTHORITY AND NECESSARY DOCUM ENTS WERE SUBMITTED FOR OBTAINING COMPLETION CERTIFICATE. THE POSS ESSION TO THE FLAT HOLDERS WAS GIVEN IN FINANCIAL YEAR 2009-10 AND AS SUCH, THE PROJECT WAS COMPLETED WITHIN 5 YEARS. THEREFORE, OBTA INING OF COMPLETION CERTIFICATE IS A MERE PROCEDURE AND NOT OBTAININ G OF THE SAME DOES NOT DEBAR THE ASSESSEE FROM GETTING THE DE DUCTION U/S.80IB(10) . REGARDING THE SALE OF LAND, IT WAS REPLIED THAT AS PER SECTION 80IB(10) THE AREA OF PLOT SHOULD BE MINIMUM OF ONE A CRE THEREFORE, THE EXCESS LAND WAS SOLD. THE AO ISSUED LETTER TO MUNICIPAL COMMISSIONER AND A REPLY DATED 05-02-2013 WAS OBTAINING AS PER WHICH NO APPLICATION HAS BEEN SUBMITTED FO R OBTAINING COMPLETION CERTIFICATE . DUE TO ALL THESE REASONS, THE AO REJECTED ASSESSEE'S CLAIM UNDER SECTION 80IB(10) AND ASS ESSEED THE TOTAL INCOME AT RS. 81 ,9 4 , 07 0/ - . 7. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT TOTAL AREA U NDER DEVELOPMENT WAS MORE THAN ONE ACRE AND, THEREFORE, A PA RT OF LAND WAS ALLOTTED TO ONE OF THE RESIDENTIAL UNIT HOLDER AS GARDE N AREA FOR ADDITIONAL CONSIDERATION. THE SALE OF LAND DID NOT REDUCE THE BASIC AREA REQUIRED TO CLAIM DEDUCTION UNDER SECTION 80IB(10). T HE LAND WAS TRANSFERRED AS PART AND PARCEL OF SALE OF BUNGALOW UN IT AND HENCE IT WAS WELL WITHIN LIMIT OF CONDITIONS AS PRESCRIBED IN T HE SAID SECTION. COMPLETION CERTIFICATE THOUGH APPLIED LATE WAS OBTAI NED FOR VALIDATING THE CLAIM THAT THE PROJECT WAS COMPLETED WITHIN 5 YEARS. 4 ITA NO.816/PN/2014 SINCE THE RETURN WAS FILED BY E-FILING, THEREFORE, FORM NO. 10CC B COULD NOT BE SUBMITTED. THE AO DID NOT CALL FOR SUCH REPOR T IN THE COURSE OF ASSESSMENT PROCEEDINGS. 8. HOWEVER, THE CIT(A) ALSO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER : 5. HAVING CONSIDERED ASSESSEE'S SUBMISSION I FIND THAT THER E ARE SEVERAL REASONS WHICH DO NOT ENTITLE THE APPELLANT FOR CLAIM UNDER SECTION 80IB(10). DEDUCTION UNDER SECTION 80IB(10) IS A PROVISION TO PROMOTE HOUSING ACTIVITY IN THE COUNTRY. THEREFORE, THIS DEDUCTION IS AVAILABLE IN RESPECT OF PROFIT FROM ACTIVITY CONSTRUC TION AND SALE OF HOUSES. THEREFORE, PROFIT ON SALE OF LAND AND SHOP IS NO T ELIGIBLE FOR DEDUCTION UNDER THIS SECTION. ON THE CONTRARY, THE AP PELLANT CLAIMS THAT LAND WAS TRANSFERRED AS PART AND PARCEL OF SALE OF UNI T BUNGALOW AS GARDEN AREA. IN SUCH CASE, THE TOTAL AREA OF BUNGALOW WOULD BE MUCH MORE THAN THE LIMIT OF 1500 SQ.FT. PRESCRIBED UNDER T HE SECTION. THUS, THIS CONDITION HAS BEEN VIOLATED BY THE APPELLANT. 6. THE APPELLANT HAS NOT SUBMITTED FORM 10CCB. IF HE DID NOT SUBMIT THE FORM BEFORE THE ASSESSING OFFICER, HE COULD HAVE DO NE SO DURING APPELLATE PROCEEDINGS. FURTHER, NOT ONLY THE COMPLET ION CERTIFICATE WAS NOT SUBMITTED BUT APPELLANT HAS NOT EVEN APPLIED TO T HE LOCAL AUTHORITY FOR OBTAINING THE CERTIFICATE. THIS FACT IS ESTABLISHED BY REPLY OF THE EXECUTIVE ENGINEER AS WELL AS ASSISTANT DIRECTOR OF SAN GLI-MIRAJ- KUPWAD MUNICIPAL CORPORATION. IN THE STATEMENT OF FA CTS THE APPELLANT HAS MENTIONED THAT COMPLETION CERTIFICATE THOUGH APP LIED FOR LATE WAS OBTAINED FOR VALIDATING THE CLAIM. HOWEVER, IT WAS N EVER SUBMITTED EITHER BEFORE THE ASSESSING OFFICER OR DURING APPELLAT E PROCEEDINGS. ALL THESE POINTS ESTABLISH THAT THERE ARE VARIOUS VIOLATION S OF THE PROVISIONS OF SECTION 80IB(10) DUE TO WHICH THE DEDUCT ION IS NOT AVAILABLE TO THE APPELLANT. GROUNDS TAKEN BY THE APP ELLANT ARE REJECTED AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS SUSTA INED . 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE A ND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THE CIT(A) WHILE DISMISSING THE APPEAL FILED BY THE ASSESSEE HAS GIVEN A FINDING THAT PROFIT ON SALE OF LAND AND SHOP IS NOT ELIGIBLE FOR DEDUC TION UNDER THIS SECTION AND THE AREA OF THE BUNGALOW IS MORE THAN 1500 5 ITA NO.816/PN/2014 SQ.FT. IF THE GARDEN IS INCLUDED AND THEREFORE THE ASSESSEE HAS VIOLATED THE CONDITION PRESCRIBED U/S.80IB(10) OF THE I.T. ACT. FURTHER, THE ASSESSEE HAS NEITHER SUBMITTED FORM 10CCB FROM WHICH THE BASIC DETAILS COULD HAVE BEEN FOUND NOR THE COM PLETION CERTIFICATE. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) REJECTING THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE I.T. ACT. SINCE THE ORDER OF THE CIT(A) IS A REASONED ONE GIVING DETAILS AS TO WHY THE ASSESSEE IS NO T ENTITLED TO DEDUCTION U/S.80IB(10), THEREFORE, IN ABSENCE OF ANY CONTRAR Y MATERIAL BEFORE US, WE FIND NO INFIRMITY IN HIS ORDER. ACCORDIN GLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE ASSESS EE IS DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25-05-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 25 TH MAY, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) , KOLHAPUR 4. 5. 6. THE CIT, KOLHAPUR $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // COPY // // $ ' //TRUE /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE