M/s Golden Palm Construction, Secunderabad V. Commissioner of Income Tax-V, Hyderabad

ITA 847/HYD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2351 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Difference of opinion
• Section: 143(3); 142(1); 80IB; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NO. 847/HYD/2014 ASSESSMENT YEAR: 2009-10 M/S GOLDEN PALMS CONSTRUCTIONS, SECUNDERABAD. PAN AAFFG0608M VS. THE INCOME TAX OFFICER, WARD-10(4) HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SMT. G. APARNA RAO D ATE OF HEARING : 04-07-2017 DATE OF PRONOUNCEMENT : 07-07-2017 ORDER PER D.S. SUNDER SINGH, A.M: ALL THE GROUNDS IN THIS APPEAL ARE AGAINST THE ORDER PASSED BY THE CIT-5 HYDERABAD U/S 263 OF THE IT ACT. IN THIS CASE, THE ASSESSEE FILED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE TOTAL INCOME WAS DETERMINED AT RS. 4,45,514/-. 2.0 THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE / DEVELOPMENT. DURING THE A.Y 2009-10, THE ASSESSEE CONSTRUCTED HOUSING PROJECTS COMPRISING OF RESIDENTIAL BUILDINGS ALONG WITH CERTAIN AMENITIES AND CLAIMED THE DEDUCTION OF RS. 34,81,341/- U/S 80IB (10) OF THE INCOME TAX ACT. THE A.O COMPUTED THE GROSS TOTAL INCOME AT RS. 2 ITA NO. 847/HYD/2014 M/S GOLDEN PALMS CONSTRUCTIONS, HYDERABAD. 39,25,855/- AND ALLOWED THE DEDUCTION OF RS. 34,81,341/- U/S 80-IB(10) OF THE IT ACT AND COMPUTED THE TAXABLE INCOME AT RS. 4,45,510/- U/S 143(3) OF I.T. ACT. SUBSEQUENTLY, THE CIT-5, HYDERABAD HAS TAKEN UP THE CASE FOR REVISION U/S 263 OF THE IT ACT, AND OBSERVED THAT THE ASSESSEE HAS CONSTRUCTED THE INDEPENDENT RESIDENTIAL UNITS AND THE BUILT UP AREA OF THE EACH RESIDENTIAL UNIT EXCEEDED 1,500 SQ. FEET INCLUDING THE PORTICO AND THE OPEN TERRACE. HENCE THE ASSESSMENT MADE U/S 143(3) WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, THE CIT HAS ISSUED THE SHOWCASE NOTICE CALLING FOR THE EXPLANATION OF THE ASSESSEE. THE ASSESSEE FILED THE EXPLANATION AND NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, THE LD. CIT PASSED THE ORDER U/S 263, DIRECTING THE A.O TO MODIFY THE ORDER PASSED U/S 143(3) OF THE IT ACT BY DISALLOWING THE DEDUCTION U/S 80IB OF THE IT ACT. THE CIT HAS RELIED ON THE DECISION OF CEEBROS HOTELS PVT LTD VS. DCIT OF THE HONBLE MADRAS HIGH COURT. THE CIT ALSO RELIED ON THE ORDERS OF THIS TRIBUNAL ITAT A BENCH HYDERABAD IN THE CASE OF M/S. MODI BUILDERS & REALTORS (P) LTD IN ITA NO. 1541/HYD/2010, DATED 31-03-2011, WHEREIN, THE HONBLE ITAT HELD THAT BEING SO, WE CANNOT ADOPT MEANING AS CONTENDED BY THE LD COUNSEL FOR THE ASSESSEE. IN OUR OPINION, BUILT-UP AREA INCLUDES PORTICO AND BALCONY ALSO AND IN THIS CASE, IT EXCEEDS 1500 SQ.FT PER RESIDENTIAL UNIT. ACCORDINGLY, THE ASSESSEE IS DISENTITLED FOR THE BENEFIT U/S 80IB OF THE ACT 2.1 FURTHER, CIT ALSO RELIED ON THE DECISION OF THE ITAT, HYDERABAD A BENCH IN THE CASE OF M/S. NAGARJUNA CONSTRUCTION COMPANY LIMITED (ITA NOS. 1023, 1024, 3 ITA NO. 847/HYD/2014 M/S GOLDEN PALMS CONSTRUCTIONS, HYDERABAD. 1025/HYD/2010, ITA NOS. 1237, 1238, 1239/HYD/2010, DATED 23.10.2013). 3.0 AGGRIEVED, BY THE ORDER OF THE CIT, THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE APPEAL THE LD. AR DRAWN OUR ATTENTION TO PAGE NO. 2 OF PAPER BOOK WHICH CONTAIN THE STATEMENT OF COMPUTATION OF INCOME AND THE AUDITORS REPORT U/S 10CCB OF THE IT ACT; PAGE NOS. 48 AND 49 OF PAPER BOOK RELATING TO THE PLAN APPROVAL GIVEN BY THE HUDA AND THE APPROVAL OF FINAL LAYOUT ACCORDED BY THE HUDA; PAGE NO. 51 OF THE PAPER BOOK, WHICH IS OCCUPANCY CERTIFICATE ISSUED BY THE PANCHAYAT SECRETARY, AMEENAPUR VILLAGE, PATANCHERU MANDAL; PAGE NO. 60 OF THE PAPER BOOK, THE NOTICE ISSUED BY THE A.O U/S 142(1) OF THE IT ACT CALLING FOR THE EVIDENCE FOR DEDUCTION CLAIMED UNDER CHAPTER VI OF THE INCOME TAX ACT ; PAGE NO. 62 OF THE PAPER BOOK, COPY OF THE REPLY SUBMITTED BY THE ASSESSEE WHICH INCLUDES EVIDENCES IN SUPPORT OF CHAPTER VI, DEDUCTION U/S 80-IB OF THE IT ACT; PAGE NO. 63 OF THE PAPER BOOK, A COPY OF LAYOUT FOR EACH RESIDENTIAL UNIT; PAGE NO. 70 OF THE PAPER BOOK WAS WORKINGS OF BUILT UP AREA. LD. AR REFERRING TO THE EVIDENCES DISCUSSED IN THE PAPER BOOK, SUBMITTED THAT AT THE TIME OF ASSESSMENT, THE A.O CALLED FOR ALL THE DETAILS AND THE ASSESSEE HAS SUBMITTED THE DETAILS, HOW THE BUILT- UP AREA IS COMPUTED, APPROVAL GIVEN BY THE HUDA, OCCUPANCY CERTIFICATE ISSUED BY THE PATANCHERU AND BUILT- UP AREA OF EACH INDEPENDENT RESIDENTIAL UNIT AND DEMONSTRATED THAT BUILT-UP AREA OF EACH INDEPENDENT UNIT WAS 1405 SQ FEET AND AFTER VERIFICATION OF COMPLTETE DETAILS, THE A.O HAS ACCEPTED THE CLAIM AND ALLOWED THE DEDUCTION 4 ITA NO. 847/HYD/2014 M/S GOLDEN PALMS CONSTRUCTIONS, HYDERABAD. OF SEC. 80IB(10) OF THE IT ACT. HENCE REVISITING THE SAME ISSUE WHICH WAS ALREADY CONSIDERED AND DECIDED BY THE AO IS NOTHING BUT A DIFFERENCE OF OPINION AND IS NOT PERMISSIBLE FOR REVISION U/S 263 OF THE IT ACT. THEREFORE, THE LD. AR ARGUED THAT THE ORDER PASSED U/S 263 OF THE IT ACT IS REQUIRED TO BE SET ASIDE AND THE ORDER OF THE A.O SHOULD BE RESTORED. EVEN OTHERWISE ALSO, THE LD. AR SUBMITTED THAT FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 80IB BUILT-UP AREA HAS TO BE CONSIDERED ONLY INNER PART OF MEASUREMENT OF RESIDENTIAL UNITS AND THE PROJECTION OF BALCONIES AND OPEN TERRACE PORTICO ETC., WOULD NOT BE INCLUDED IN THE BUILT-UP AREA. THE LD.AR RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. AMALTAS ASSOCIATE [2016] 75 TAXMANN.COM 183 (GUJ) WHEREIN IT WAS HELD THAT OPEN TERRACE SPACE WOULD NOT BE INCLUDED IN THE BUILT-UP AREA FOR DEDUCTION U/S 80IB. THUS, EVEN ON MERITS THE ASSESSEE HAS CORRECTLY COMPUTED THE BUILT-UP AREA AND THE A.O HAS RIGHTLY ALLOWED THE DEDUCTION U/S 80-IB AND HENCE, NO REVISION IS NECESSARY IN THIS CASE. ACCORDINGLY, THE LD. AR ARGUED THAT EVEN ON MERITS, THE CIT ORDER U/S 263 REQUIRED TO BE SET ASIDE. 4.0 ON THE OTHER HAND, THE LD. DR ARGUED THAT THE A.O ALLOWED DEDUCTION U/S 80IB OF THE IT ACT WITHOUT CONSIDERING THE BUILT-UP AREA PROPERLY. SHE ARGUED THAT FOR INDEPENDENT RESIDENTIAL UNITS BOTH THE PORTICO AND THE OPEN TERRACE TO BE INCLUDED SINCE THE ENTIRE UNIT IS THE COMPLETE POSSESSION AND THE ENJOYMENT OF THE BENEFICIARY. THE A.O HAS NOT EXAMINED THE CASE OF INDEPENDENT RESIDENTIAL UNITS WHETHER TO INCLUDE THE OPEN TERRACE AND 5 ITA NO. 847/HYD/2014 M/S GOLDEN PALMS CONSTRUCTIONS, HYDERABAD. THE PORTICO OR NOT TO COMPUTE THE BUILT UP AREA. THIS ISSUE WAS NOT DISCUSSED BY THE AO IN THE ASSESSMENT ORDER, THE DIFFERENCE OF OPINION COMES INTO THE PICTURE ONLY WHEN THE A.O HAS CONSIDERED THE ISSUE AND FORMED AN OPINION. IN THE ASSESSEES CASE, THERE WAS NO DISCUSSION ON THIS ISSUE AND THERE IS NO EVIDENCE TO HOLD THAT THE A.O CONSIDERED THE ISSUE WHETHER THE UNIT COMPRISING OF 1500 SQ FEET WAS INCLUSIVE OF PORTICO AND OPEN TERRACE OR NOT. THEREFORE THE LD. DR CONTENTED THAT THE CIT HAS RIGHTLY TAKEN UP THE CASE FOR REVISION AND THERE IS NO DIFFERENCE OF OPINION. FURTHER, THE LD. DR ARGUED THAT, HONBLE ITAT HYDERABAD HAS CONSIDERED THIS ISSUE AND GIVEN A RULING THAT THE BUILT- UP AREA INCLUDES PORTICO AND BALCONY AND IF IT EXCEEDS 1500 SQ FEET, THE ASSESSEE IS DISENTITLED FOR THE DEDUCTION U/S 80IB OF THE ACT. ACCORDINGLY, THE LD. DR CONTENTED THAT THERE IS NO ERROR IN THE ORDER OF THE CIT AND THE SAME IS TO BE UPHELD. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS CONSTRUCTED THE INDEPENDENT RESIDENTIAL BUILDINGS AND CLAIMED THE DEDUCTION UNDER SUB SEC. 10 OF SECTION 80IB OF INCOME TAX ACT. ACCORDING TO THE ASSESSEE, BUILT UP AREA OF EACH RESIDENTIAL UNIT IS 1405 SQ FEET, WHICH IS LESS THAN 1500SQ.FT EXCLUDING PORTICO AND THE OPEN TERRACE AND ENTITLED FOR DEDUCTION U/S 80IB. THE ASSESSEE PLACED THE APPROVAL OF THE HUDA BEFORE THE AO AND IN THE PLAN APPROVAL, EACH INDEPENDENT UNIT WAS STATED TO BE LESS THAN 1500 SQ FEET. THE ASSESSEE 6 ITA NO. 847/HYD/2014 M/S GOLDEN PALMS CONSTRUCTIONS, HYDERABAD. HAS SUBMITTED THAT THE OCCUPANCY CERTIFICATE, THE LAYOUT OF EACH INDEPENDENT UNIT AND FURNISHED THE WORKING OF BUILT-UP AREA AT THE TIME OF ASSESSMENT WITH WORKING OF BUILT UP AREA LESS THAN 1500 SQ FEET AND DEMONSTRATED THE SAME AT THE TIME OF ASSESSMENT. THE ASSESSEE ALSO FURNISHED THE FORM NO. 10CCB AND CLAIMED THE DEDUCTION U/S 80IB OF THE IT ACT. THE A.O CONSIDERED THE ENTIRE MATERIAL PLACED BEFORE HIM AND ALLOWED THE DEDUCTION U/S 80IB OF THE IT ACT. IN FACT THE ONLY ISSUE INVOLVED IN THIS CASE IS THE DEDUCTION U/S 80IB OF THE IT ACT AND IT IS NOT CORRECT TO SAY THAT THE AO HAS NOT EXAMINED THE ISSUE. THEREFORE, WE DID NOT FIND ANY MERIT IN THE ARGUMENT OF LD. DR THAT THE A.O HAS NOT FORMED THE OPINION WITH REGARD TO DEDUCTION U/S 80IB OF THE IT ACT. SINCE, THE A.O HAS ALLOWED THE DEDUCTION AFTER EXAMINING THE DETAILS, REVISITING THE SAME ISSUE BY THE CIT U/S 263 OF THE IT ACT AMOUNTS TO DIFFERENCE OF OPINION AND THERE IS NO ERROR IN THE ORDER PASSED BY THE A.O, WHICH REQUIRE REVISION U/S 263 OF THE IT ACT. EVEN OTHERWISE ALSO, HONBLE GUJARAT HIGH COURT CONSIDERED THIS ISSUE IN THE CASE OF AMALTAS ASSOCIATES (SUPRA) AND HELD THAT PORTICO AND OPEN TERRACE SHOULD NOT BE INCLUDED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80 IB OF THE IT ACT. SIMILARLY HONBLE MADRAS HIGH COURT IN COMMISSIONER OF INCOME-TAX, CHENNAI V. MAHALAKSHMI HOUSING REPORTED IN [2014] 41 TAXMANN.COM 146 (MADRAS) 7 ITA NO. 847/HYD/2014 M/S GOLDEN PALMS CONSTRUCTIONS, HYDERABAD. ALSO HELD THAT TO CLAIM DEDUCTION UNDER SECTION 80-IB(10), OPEN TERRACE AREA CANNOT FORM PART OF BUILT UP AREA. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIGH COURTS OF GUJARAT AND MADRAS WE SET ASIDE THE ORDER OF THE CIT AND ALLOW THE APPEAL OF THE ASSESSEE. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 07 TH JULY, 2017. SD/- SD/- (V. DURGA RAO) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 07 TH JULY, 2017. KRK 1 M/S GOLDEN PALMS CONSTRUCTIONS, C/O S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2 ITO, WARD -10(4), HYDERABAD. 3 CIT(A)-5, HYDERABAD. 4 THE COMMISSIONER OF INCOME TAX (OSD) RANGE-10, HYDERABAD. 5 THE DR, ITAT HYDERABAD 6 GUARD FILE