Dy. Comm. of Income-tax, Cir.2 Pune, Pune V. Shri Girish K Gadiya,Aai Bunglow, Vidasagar Colony,Gultekadi Pune, Pune

ITA 85/PUN/2012

• Counselvise Citation: 8524514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 16-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH DAMOT
• Assessee Lawyers: VIPIN K GUJARATHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K.PANDA, ACCOUNTANT MEMBER. ITA.NO.85 & 86/PN/2012 (ASSTT. YEAR : 2003-04 & 2004-05) DCIT, CIRCLE-2, PUNE. .. APPELLANT VS. SHRI GIRISH K.GADIYA, AAI BUNGLOW, VIDASAGAR COLONY, GULTEKDI, PUNE 411037. .. RESPONDENT ASSESSEE BY : SHRI VIPIN K.GUJARATHI DEPARTMENT BY : SHRI RAJESH DAMOT DATE OF HEARING : 09.05.2013 DATE OF PRONOUNCEMENT : 16.05.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : BOTH THESE APPEALS PERTAIN TO SAME ASSESSEE FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER OF THE CIT(A ) ON SIMILAR ISSUE. SO THEY ARE BEING DISPOSED OF BY A COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. IN A.Y. 2003-04, THE REVENUE HAS RAISED THE FOLL OWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANC ES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN HOLDING THAT DEDUCTION U/S.80IB(10) IS ALL OWABLE TO 2 THE ASSESSEE INSTEAD OF CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN THIS MATTER. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN HOLDING THAT THE DEDUCTION UNDER SECTION 8 0IB(10), AS APPLICABLE PRIOR TO 1 ST APRIL, 2005, IS ADMISSIBLE IN THE CASE OF A HOUSING PROJECT COMPRISING COMMERCIAL ESTABLISH MENTS. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THE LETTER AND SPIRI T OF SECTION 80IB(10) PRIOR TO ITS SUBSTITUTION BY THE FINANCE ( NO.2) ACT, 2004, W.E.F. 01/04/2005 WHICH HAD AVOWEDLY BEEN BRO UGHT INTO THE STATUTE TO PROMOTE HOUSING AS A PRIORITY A REA AND WHICH (THE UN-AMENDED SECTION) DID NEITHER CONTEMPL ATE, NOR PROVIDE FOR, ANY COMMERCIAL SPACE OR AREA WHATSOEVE R AS CONSTITUTING A PART OF A HOUSING PROJECT? 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN HOLDING THE ASSESSEE AS ELIGIBLE FOR DEDUC TION U/S.80IB(10) WHEN THE ASSESSEES PROJECT HAD BEEN A PPROVED AS A RESIDENTIAL-CUM-COMMERCIAL PROJECT, AND NOT AS A HOUSING PROJECT PER SE; AND ALSO WHEN MORE THAN 2 0% OF THE ENTIRE AREA OF THE PROJECT WAS COVERED BY SHOPPING COMPLEX. 3. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF BUILDING CONSTRUCTION AND IS SOLE PROPRIETOR OF M/S .SHRI VENKATESH PROMOTERS DEVELOPERS. THE DETAILS OF THE RETURNS O F INCOME FILED AND ASSESSMENT COMPLETED FOR A.YS. 2003-04 AND 2004 -05 ARE AS UNDER: ASSESS - MENT YEAR DATE OF FILING RETURNED INCOME ASSESSED INCOME DATE OF ORDER DEDU CTION U/S. 80IB(10) 2003 - 04 27.11.2003 1,48,820 1,48,820 21.03.2006 81,97,737 2004 - 05 01.11.2004 1,49,190 1,49,190 15.11.2006 28,60,978 4. THEREAFTER NOTICE U/S.148 OF THE ACT WAS ISSUED ON 25.03.2010 AFTER RECORDING THE REASONS AND SEEKING APPROVAL OF CIT-II, PUNE. IN THE REASONS RECORDED IT WAS STATED THAT THE PROJECT UNDERTAKEN BY THE ASSESSEE COMPRISED OF SHOPS/COMMERCIAL UNITS AN D AS PER THE PROVISIONS OF SECTION 80IB(10) AS APPLICABLE FOR A. YS. 2003-04 AND 2004-05 DID NOT PERMIT OR PROVIDE FOR ANY COMMERCIA L SPACE AT ALL WITH RESPECT TO A HOUSING PROJECT. THEREFORE, THERE WAS ESCAPEMENT OF INCOME TO THE TUNE OF RS.81,97,737/- FOR A.Y. 2 003-04 AND RS.28,60,978/- FOR A.Y. 2004-05 AND IN VIEW OF THE ABOVE THE ASSESSMENT FOR THE ABOVE SAID TWO YEARS WERE REOPEN ED U/S.148. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER FOUND 3 THAT THE HOUSING PROJECT CONSTRUCTED BY THE ASSESSE E INCLUDED SHOPS/COMMERCIAL AREA ADMEASURING 1435 SQ.FT. AND T HEREFORE, HELD THAT AS PER THE PRE-AMENDED PROVISIONS OF SECTION 8 0IB(10), NO COMMERCIAL ESTABLISHMENT COULD BE INCLUDED IN A HOU SING PROJECT. HENCE, THE ASSESSING OFFICER DISALLOWED THE CLAIM M ADE BY THE ASSESSEE U/S.80IB(10) OF RS.81,97,737/- FOR A.Y. 2 003-04 AND RS.28,60,978/- FOR A.Y. 2004-05. 5. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED AND CIT(A) HAVING C ONSIDERED THE SAME, ALLOWED THE CLAIM OF THE ASSESSEE. SAME HAS BEEN OPPOSED BEFORE US, INTER ALIA, STATED THAT THE CIT(A) ERRED IN HOLDING THAT DEDUCTION U/S.80IB(10) IS ALLOWABLE TO THE ASSESSEE INSTEAD OF CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN TH IS REGARD. THE CIT(A) ERRED IN HOLDING THAT THE DEDUCTION UNDER SE CTION 80IB(10), AS APPLICABLE PRIOR TO 1 ST APRIL, 2005, IS ADMISSIBLE IN THE CASE OF A HOUSING PROJECT COMPRISING COMMERCIAL ESTABLISHME NTS. THE CIT(A) GROSSLY ERRED IN FAILING TO APPRECIATE THE L ETTER AND SPIRIT OF SECTION 80IB(10) PRIOR TO ITS SUBSTITUTION BY THE F INANCE (NO.2) ACT, 2004, W.E.F. 01/04/2005 WHICH HAD AVOWEDLY BEEN BRO UGHT INTO THE STATUTE TO PROMOTE HOUSING AS A PRIORITY AREA AND W HICH (THE UN- AMENDED SECTION) DID NEITHER CONTEMPLATE, NOR PROVI DE FOR, ANY COMMERCIAL SPACE OR AREA WHATSOEVER AS CONSTITUTING A PART OF A HOUSING PROJECT. 6. ON THE OTHER HAND LD. AUTHORISED REPRESENTATIVE SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE VIEW OF THE CIT(A) IS FORTIFIED BY THE DECISION OF HON'BLE BOMBAY HIGH CO URT IN THE CASE OF BRAHMA ASSOCIATES (2011) 333 ITR 289. 7. THE MAIN ISSUE BEFORE US IS REGARDING DEDUCTION U/S.80IB(10) OF RS.81,97,737/- FOR A.Y. 2003-04 AND RS.28,60,9 78/- FOR A.Y. 2004-05. THE STAND OF THE ASSESSEE HAS BEEN THAT T HE ASSESSING OFFICER HAS DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S.80IB(10) ON THE GROUND THAT HOUSING PROJECT BEI NG APPROVED 4 BEFORE 01.04.2005 AND AS IT CONTAINS SHOPS AND OTHE R COMMERCIAL ESTABLISHMENTS IN BUILT UP AREA OF 1435.08 SQ.FT. O R 133.39 SQ.MT., OUT OF THE TOTAL BUILT UP AREA OF 7439.41 SQ.MT., W HICH WORKED OUT TO 1.79%. THE ASSESSEE RELIED ON THE DECISION OF I TAT SPECIAL BENCH PUNE IN THE CASE OF BRAHMA ASSOCIATES, 122 TTJ 433, WHEREIN THE SPECIAL BENCH CONSIDERED THE ISSUE OF SHOPS AND COM MERCIAL AREA INCLUDED IN THE HOUSING PROJECT. THE ASSESSING OFF ICER FOUND THAT HOUSING PROJECT COMMENCED PRIOR TO A.Y. 2005-06 AND APPROVAL FOR HOUSING PROJECT WAS OBTAINED BY THE ASSESSEE AND PR OVISION OF INCLUSION OF COMMERCIAL ESTABLISHMENT IN HOUSING PR OJECT WHICH WOULD BE ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT WAS INSERTED SINCE 1 ST OF APRIL, 2005, I.E., FROM A.Y. 2005-06 WHEREAS AS SESSEES PROJECT HAD SHOP/COMMERCIAL UNITS ADMEASURING 133.3 0 SQ.MT. THE ASSESSING OFFICER HELD THAT NO COMMERCIAL ESTAB LISHMENT COULD BE INCLUDED IN HOUSING PROJECT PRIOR TO A.Y. 2005-0 6 FOR CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT. THEREFORE, DEDU CTION U/S.80IB(10) WAS DISALLOWED AND ADDED BACK TO THE I NCOME OF THE ASSESSEE BY THE ASSESSING OFFICER FOR BOTH THE YEAR S UNDER CONSIDERATION. THE STAND OF THE ASSESSEE BEFORE TH E CIT(A) HAS BEEN THAT THE ISSUE AT HAND IS COVERED BY THE DECISION I N THE CASE OF BRAHMA ASSOCIATES (SUPRA) WHEREIN IT HAS BEEN HELD THAT CLAUSE (D) IN SECTION 80IB(10) APPLIES ONLY FOR A.Y. 2005-06. NOW THIS ISSUE HAS BEEN SETTLED BY THE HON'BLE BOMBAY HIGH COURT I N THE CASE OF CIT VS. BRAHMA ASSOCIATES, 333 ITR 289 (BOM.) WHERE IN THE ISSUE OF PRORATA BASIS DEDUCTION HAS BEEN SET AT REST BY THE HON'BLE BOMBAY HIGH COURT BY OBSERVING AS UNDER: 28. IN THE PRESENT CASE, THOUGH THE COMMERCIAL USE R IS MORE THAN 10 PER AREA. THE TRIBUNAL HAS ALLOWED S.80IB(1 0) DEDUCTION IN RESPECT OF 15 RESIDENTIAL BUILDINGS ON THE GROUND THAT THE PROFITS FROM THESE EXCLUSIVELY RESIDENTIAL BUILDINGS COULD BE DETERMINED ON STANDALONE BASIS. IN OUR OP INION THAT WOULD NOT BE PROPER, BECAUSE SECTION 80IB(10) ALLOW S DEDUCTION TO THE ENTIRE PROJECT APPROVED BY THE LOC AL AUTHORITY AND NOT TO A PART OF THE PROJECT. IF THE CONDITION S SET OUT IN SECTION 80IB(10) ARE SATISFIED, THEN DEDUCTION IS A LLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO A PART OF THE PROJECT. IN THE PRESENT CASE, THE COMMERCIAL USER IS ALLOWED IN ACCORDANCE 5 WITH THE DC RULES AND HENCE THE ASSESSEE WAS ENTITL ED TO SECTION 80IB(10) DEDUCTION ON THE ENTIRE PROJECT AP PROVED BY THE LOCAL AUTHORITY. 8. IN VIEW OF ABOVE OF THE HON'BLE JURISDICTION HIG H COURT, DEDUCTION U/S.80IB(10) WAS RIGHTLY HELD TO BE ALLOW ABLE TO THE ASSESSEE IN BOTH THE YEARS BY CIT(A). THIS REASONE D FINDING OF THE CIT(A) NEEDS NO INTERFERENCE WHO HAS ALLOWED THE DE DUCTION U/S.80IB(10) BY FOLLOWING THE DECISION OF THE HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) WHEREIN IT HAS BEEN HELD THAT IN CASE COMMERCIAL USER IS ALLOWED I N ACCORDANCE WITH THE DC RULES, THEN ASSESSEE IS ENTITLED TO CLA IM DEDUCTION U/S.80IB(10) ON ENTIRE PROJECT APPROVED BY THE LOCA L AUTHORITY IN THE YEAR UNDER CONSIDERATION. 9. AS A RESULT, BOTH THE APPEALS FILED BY THE REVEN UE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 16 TH DAY OF MAY, 2013. SD/- SD/- ( R.K.PANDA ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 16 TH MAY, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DCIT, CIRCLE-2, PUNE. 3. THE CIT(A)-II, PUNE. 4. THE CIT-II, PUNE. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.