ITO WD 3(3), MUMBAI V. UMIYA ENTERPRISES, MUMBAI

ITA 9040/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9003 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 24-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DWIVEDI
• Keywords: Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F BENCH BEFORE SHRI I.P.BANSAL(JUDICIAL MEMBER) AND SHRI B.RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO.9040/MUM/2010 ASSESSMENT YEAR: 2007-08 ITO WARD 3(3), 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN, MUMBAI. UMIYA ENTERPRISES, 112, VASUDEV LAXMI BUILDING, BEHIND TILAK TALKIER, ABOVE SATKAR HOTEL, DOMBIVALI, MUMBAI PA NO.AABFU 0185 B (APPELLANT) VS. (RESPONDENT) APPELLANT BY : MR RAJARSHI DWIVEDI RESPONDENT BY : NONE DATE OF HEARING : 10 .9.2012 DATE OF PRONOUNCEMENT: 14.9.2012 ORDER PER I.P.BANSAL, JM: THIS IS AN APPEAL FILED BY DEPARTMENT. IT IS DIRECTED AGA INST ORDER DATED 15.9.2010 OF LD CIT(A)-1, THANE FOR ASSESSMENT YEA R 2007-08. GROUND RAISED BY REVENUE READS AS UNDER: ON THE FACTS OF THE CASE AND IN LAW, WHETHER LD CIT(A ) WAS RIGHT IN ALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S . 80IB(10) OF THE I.T.ACT, 1961 WITHOUT APPRECIATING THE F ACT THAT THE PROJECT CONTAINING 1825 SQ.FT OF COMMERCIAL AREA W AS APPROVED BY THE COMPETENT AUTHORITY PRIOR TO 1.4.2005, THEREBY VIOLATING ONE OF THE CONDITIONS PRESCRIBED B Y THE CLAUSE (D) OF SECTION 80IB(10) OF THE I.T.ACT. 2. NOTICE OF HEARING SENT TO RESPONDENT ASSESSEE WAS DULY SERVED, AS PER ACKNOWLEDGEMENT ON RECORD. HOWEVER, NONE WAS PRE SENT WHEN THE MATTER WAS CALLED ON FOR HEARING. THEREFORE, WE PROCEED T O DECIDE THE ITA NO.9040/MUM/2010 ASSESSMENT YEAR: 2007-08 2 APPEAL OF REVENUE EXPARTE QUA-RESPONDENT ASSESSEE AFTE R CONSIDERING THE SUBMISSIONS OF LD D.R AND ON THE BASIS OF MATERIAL ON RECORD. 3. THE ASSESSEE IS A BUILDER AND DEVELOPER. ON THE PROJ ECT UMIYA COMPLEX PHASE I & II DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME ACT, 1961 (THE ACT) WAS CLAIMED BY THE ASSESSEE TO THE E XTENT OF RS.30,55,250/- WHICH HAS BEEN DISALLOWED BY THE AO ON THE FOLLOWING REASONS: PHASE:I: (1) THIS PROJECT CLAIMED TO BE A RESIDENTIAL COMPLEX. THE AO FOUND THAT A COMMERCIAL AREA OF 1825 SQ.FT. WAS APPROVED. THER EFORE, THE AO HELD THAT DEDUCTION UNDER SECTION 80IB(10) CANNO T BE ALLOWED AS THE SAID DEDUCTION IS MEANT FOR RESIDENTIAL COMPLEXES. (2) THE SECOND REASON TO DISALLOW THE DEDUCTION WAS THAT T HE EXCLUSION OF THE PORTION OF LAND BEARING 656.75 SQ. FT. FROM T HE PROJECT RENDERED THE AREA DEVELOPED BY THE ASSESSEE LESS THAN O NE ACRE, THEREFORE, DEDUCTION UNDER SECTION 80IB(10) CANNOT B E ALLOWED FOR WHICH AO HAS RELIED UPON THE DECISION OF LD. CIT(A ) IN THE CASE OF ASSESSEE FOR A.Y 2004-05. (3) THE THIRD REASON GIVEN BY THE AO FOR DISALLOWING THE DEDUC TION IS THAT PHASE II OF THE ASSESSEES PROJECT WAS REQUIRED TO BE COMPLETED UPTO 31 ST MARCH, 2008 AND ACCORDING TO THE EVIDENCE AVAILABLE ON RECORD THE PROJECT HAVING NOT BEEN COMPLET ED UPTO 31/03/2008 DEDUCTION WAS NOT ADMISSIBLE. 3.1 APART FROM THE ABOVE THE AO HAS CONSIDERED THE ALT ERNATIVE POSSIBILITY ACCORDING TO WHICH ALSO HE HAS HELD THAT DEDUCT ION TO THE ASSESSEE CANNOT BE ALLOWED. THE AO CONSIDERED THE POSS IBILITY OF CONSIDERING PHASE I & II AS SINGLE PROJECT, THEN ALSO HE HAS HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB (10) OF THE ACT ON ALL THE AFOREMENTIONED THREE COUNTS. IT IS IN THIS MANN ER LD. A.O HAD ITA NO.9040/MUM/2010 ASSESSMENT YEAR: 2007-08 3 REJECTED THE CLAIM OF ASSESSEE REGARDING DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT. 3.2 THE ACTION OF THE AO WAS CHALLENGED IN APPEAL BEFORE LD . CIT(A). SO FAR AS IT RELATES TO REASON MENTIONED AT S.NO.1 I.E. RE GARDING COMMERCIAL AREA OF 1825 SQ.FT., LD. CIT(A) FOUND THAT THE DECISION OF LD. CIT(A) FOR A.Y 2004-05 WAS CONSIDERED BY ITAT IN ITA NO.2750/MUM/2009, WHEREIN ITAT RELYING UPON THE DECISION OF SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT (2009) 11 9 ITD 255 (SB) HAD HELD THAT MARGIN OF 10% CAN BE GIVEN FOR COMMERC IAL AREA AND SO LONG AS THE COMMERCIAL SPACE IN THE BUILT UP AREA IS LESS THAN 10% OF THE TOTAL BUILT UP AREA, THE CLAIM FOR DEDUCTION UNDER SEC TION 80 IB(10) CANNOT BE DENIED. FINDING THAT COMMERCIAL AREA OF 1825 SQ.FT . BEING 1.36% OF TOTAL BUILT UP AREA, DEDUCTION COULD NOT BE REFUS ED. HENCE, THE ASSESSEE WAS CONSIDERED TO BE ENTITLED FOR DEDUCTION UN DER SECTION 80 IB (10). THIS ORDER OF THE TRIBUNAL IS DATED 8/2/2010 AND THE OBSERVATIONS OF THE TRIBUNAL ARE CONTAINED IN PARA - 3, WHICH IS BEING RE PRODUCED BELOW: THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. A S REGARDS THE POINT RAISED BY THE AO NAMELY THAT THE HOUSING PROJECT WAS NO T ENTIRELY RESIDENTIAL BUT WAS PARTIALLY COMMERCIAL, THE SAME IS GOVERNED BY THE ORDER OF THE SPECIAL BENCH (PUNE) OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT (2009) 119 ITD 255 (SB). IN THIS CASE, IT HAS BEEN HELD THAT THE MARGIN OF 10% CA N BE GIVEN FOR COMMERCIAL AREA AND SO LONG AS THE COMMERCIAL SPACE IN THE BUILT UP AREA IS LESS THAN 10% OF THE TOTAL BUILT UP AREA , THE CLAIM FOR DEDUCTION U/S. 80 IB(10) CANNOT BE DENIED. THIS ORDER SUPPORTS THE ASSESSEES CLAIM THAT THE COMMERCIAL AREA OF UMIYA BEING ONLY 1.36% OF THE TOTAL BUILT UP AREA, THE DEDUCTION CANNOT BE REFUSED. ACCORDINGLY, WE HOLD THAT, THE ASSESSEES CLAIM CANNOT BE REFUSED ON THIS GROUND NAMELY THAT THE GROUND TH AT THE ASSESSEE DID NOT SATISFY THE CONDITION PRESCRIBED BY CLAU SE (C) OF SECTION 80IB(10). 3.3 IT IS AGAINST THIS RELIEF GIVEN BY LD. CIT(A) THE DEPART MENT HAS FILED AFOREMENTIONED GROUNDS. THUS THE ISSUE RAISED BY THE RE VENUE IN THE PRESENT APPEAL IS SQUARELY COVERED AGAINST THE DEPARTM ENT BY THE ORDER ITA NO.9040/MUM/2010 ASSESSMENT YEAR: 2007-08 4 OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2004-05, TH EREFORE, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY LD. CIT(A) ON THE ISSUE WHICH HAS BEEN RAISED IN THE PRESENT APPEAL. THEREFORE, DEPART MENTAL APPEAL IS LIABLE TO BE DISMISSED AND IS ACCORDINGLY DISMISSED. 4. BEFORE PARTING WITH THIS ORDER WE MAY MENTION HERE TH AT LD. CIT(A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE ON THE GRO UND THAT THE IIND PHASE WAS NOT COMPLETED UPTO 31/03/2008, THERE FORE, DEDUCTION UNDER SECTION 80 IB(10) WAS NOT ALLOWABLE. THE PRESENT APPEAL WAS FILED IN 2010 AND IT IS NOT BROUGHT TO OUR NOTICE THAT WHETH ER ASSESSEE HAS ALSO FILED ANY APPEAL AGAINST THE IMPUGNED ORDER PASSED BY LD. CIT(A) AND WHAT IS THE FATE OF THAT APPEAL. IN ABSENCE OF THIS A SPECT OUR FINDING IN THE PRESENT ORDER WILL BE LIMITED ONLY TO THE ISSUE RAIS ED BY THE REVENUE IN THE PRESENT APPEAL AND CANNOT BE EXTENDED TO ANY OTHER GROUND ON WHICH THE ALLOWABILITY OF DEDUCTION TO THE ASSESS EE HAS BEEN REFUSED. WITH THESE OBSERVATIONS WE DISMISS THE DEPARTMENTAL APPE AL. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON SEPTEMBER, 2012 SD/- (B.RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (I.P.BANSAL) JUDICIAL MEMBER MUMBAI, DATED 14 TH SEPTEMBER, 2012 V.M. COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),1, THANE 4. COMMISSIONER OF INCOME TAX-1, THANE 5. DEPARTMENTAL REPRESENTATIVE, BENCH F MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI