ITO, Ward 1(2), Nashik V. Shri Anant Yashwant Chavan, Nashik

ITA 916/PUN/2013

• Counselvise Citation: 91624514 RSA 2013
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: ADI TYA PRAVIN RATHI
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.916/PN/2013 (A.Y: 2003-04) ITO, WARD 1(2), NASHIK APPELLANT VS. SHRI ANANT YASHWANT CHAVAN P.NO.35, SHREEMAN BUNGLOW SAHADEO NAGAR, OPP. CHINTAMANI, MANGAL KARYALAYA, NASHIK-422113 PAN: ABBPC7176N RESPONDENT APPELLANT BY : SHRI S.P. W ALIMBE RESPONDENT BY : SHRI ADI TYA PRAVIN RATHI DATE OF HEARING: 15.04.2014 DATE OF ORDER : 28.04.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEAL)-II, [IN SHORT CIT(A)] NASHIK, DATED 26.02.2013 FOR A.Y. 2003-04 ON THE FO LLOWING GROUNDS. 01. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT (A)-II IS NOT JUSTIFIED IN ALLOWING THE DEDUCTION U/S 80IB(10) OF THE ACT. 02. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT (A) IS NOT JUSTIFIED IN NOT APPRECIATIN G THAT SINCE THE PROJECT WAS STARTED BEFORE 01.04.2004, IT HAD TO BE COMPLETED ON OR BEFORE 31.03.2008 AS PER SECT ION 80IB(10)(A)(II) OF THE ACT AND SINCE THE CONDITION WAS NOT SATISFIED, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. 2 03. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT (A) IS NOT JUSTIFIED IN NOT APPRECIATIN G THAT SINCE THE ASSESSEE'S PROJECT WAS HOUSING CUM COMMERCIAL PROJECT, IT WAS NOT ELIGIBLE FOR DEDUCTI ON U/S 80IB(10) OF THE ACT. 04. THE ORDER OF THE LD. CIT (A) BE CANCELLED AND THAT OF THE A.O. BE RESTORED. 05. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND GROUNDS OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF DEVELOPMENT OF LAND AT NASHIK. THE ASSESSEE SUBMIT TED HIS ORIGINAL RETURN OF INCOME RETURNING THEREON INCOME AT 2,08,460/- ON 01.12.2003. THE RETURN OF INCOME, IN TER ALIA, INCLUDED INCOME OF 27,44,312/- FROM A HOUSING PROJECT NAMELY MADHUSUDAN PARK. THE PROJECT MADHUSUDAN PARK W AS SITUATED ON A LAND ADMEASURING MORE THAN ONE ACRE ( 4320 SQ. MTRS.). THE PROJECT WAS APPROVED BY NASHIK MUNICIP AL CORPORATION FOR THE FIRST TIME ON 28.01.2000. THE PROJECT CONSISTS OF RESIDENTIAL AREA (85.54%) AS WELL AS CO MMERCIAL AREA (14.46%). THE ASSESSEE CLAIMED DEDUCTION OF 27,44,312/- U/S.80IB(10) OF ACT FOR A.Y. 2003-04. THE ASSESSEE FILED REVISED RETURN OF INCOME ON 23.01.2009 DECLARING TOTAL INCO ME OF 29,52,770/- WITHDRAWING DEDUCTION OF 27,44,312/- CLAIMED U/S.80IB(10). A NOTICE U/S.148 OF THE ACT WAS ISSU ED TO THE ASSESSEE ON THE BASIS OF RETURN FILED ON 23.01.2009 . IN RESPONSE TO THE NOTICE U/S.148, THE ASSESSEE FILED ANOTHER R EVISED RETURN ON 20.04.2009 DECLARING TOTAL INCOME AT 2,08,460/-. THE DEDUCTION U/S.80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE AS HE COULD NOT BE COMPLETE THE CONSTRUCTION OF PROJEC T WITHIN THE PRESCRIBED TIME LIMIT UP TO 31.03.2008. THE STAND OF THE ASSESSEE HAS BEEN THAT THIS CONDITION WAS INSERTED IN THE I.T. ACT BY FINANCE ACT (NO.2) ACT, 2004 W.E.F. 01.04.2005 R ELEVANT TO THE A.Y. 2005-06. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND HE DISALLOWED THE DEDUCT ION, INTER 3 ALIA, STATING THAT THE HOUSING PROJECT INCLUDED COM MERCIAL AREA, THE PROVISIONS OF WHICH WERE INTRODUCED W.E.F. 01.0 4.2005 AND ULTIMATELY, THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION U/S.80IB(10). 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE DEDUCTION U/S 80IB(10) OF THE ACT. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS NOT JUSTIFIED IN NOT APPRECIATING THAT SINCE THE PROJECT WAS STARTED BEFORE 01.04.2004, IT HAD TO BE COMPLETED ON OR BEFORE 31. 03.2008 AS PER SECTION 80IB(10)(A)(II) OF THE ACT AND SINCE TH E CONDITION WAS NOT SATISFIED, THE ASSESSEE WAS NOT ELIGIBLE FOR DE DUCTION U/S 80IB(10) OF THE ACT. THE CIT(A) HAS ALSO NOT JUSTI FIED IN NOT APPRECIATING THAT SINCE THE ASSESSEE'S PROJECT WAS HOUSING CUM COMMERCIAL PROJECT, IT WAS NOT ELIGIBLE FOR DEDUCTI ON U/S 80IB(10) OF THE ACT. ACCORDINGLY, THE ORDER OF CIT(A) BE SE T ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAN D, THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER O F CIT(A). 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE FOLLOWING THE DECISION OF ITAT, PUNE DATED 22.01.20 13 IN ITA NO.1478/PN/2005 FOR A.Y. 2003-04. THE RELEVANT POR TION OF THE SAME READS AS UNDER: 'THE AO DISALLOWED U/S 80IB(10) IN RESPECT OF THE P ROFIT EARNED ON THE SALE OF SHOPS (COMMERCIAL PROJECT) TO THE TU NE OF ? 11,58,704/-. THE ASSESSEE HAS PROMOTED A BUILDING S CHEME NAMELY MADHUSUDAN PARK WHICH ACCORDING TO ASSESSEE QUALIFIED FOR DEDUCTION U/S 80IB(10). THE ONLY ISSUE BEFORE U S IS WITH REGARD TO GRANTING DEDUCTION U/S 80IB(10) IN RESPEC T OF PROFIT EARNED ON ACCOUNT OF SALE OF SHOPS TO THE TUNE OF 11,58,704/-. 4 THE CIT(A) IN APPEAL OBSERVED THAT THE PROJECT AS A WHOLE WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10) WITHOUT ANY ADJ USTMENT ON ACCOUNT OF COMMERCIAL PART OF SUCH ELIGIBLE PROJECT BECAUSE THE AMENDMENT TO SECTION 80IB(10) W.E.F. 2005-06 RESTRI CTING THE COMMERCIAL AREA IN THE HOUSING PROJECT @ 5% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR 2000 SQ. FT . WHOEVER IS LESS WAS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AS THE SAID AMENDMENT IS NOT RETROSPECTIVE IN APPLICATION. IN A BSENCE OF ANY DEFINITION OF ANY DEFINITION OF THE TERM HOUSING PR OJECT U/S 80IB(10), THE DEFINITION PROVIDED IN THE OTHER SECT IONS OF THE IT ACT I.E. 80HHBA CAN BE IMPORTED. THE DEFINITION PRO VIDED U/S 80HHBA OF THE HOUSING PROJECT IS QUITE WIDE AND EAS ILY COVERS THE ENTIRE PROJECT OF THE ASSESSEE INCLUDING THE CO MMERCIAL PANS. THE TERM USED IN THE RELEVANT PART OF THE STATUTE I S NOT RESIDENTIAL HOUSING PROJECT THEREFORE, IT CANNOT BE SAID THAT THE HOUSING PROJECT FOR BEING ELIGIBLE FOR DEDUCTION U/ S 80IB(10) EXCLUDES THE COMMERCIAL PORTION. FROM THE AMENDMENT INTRODUCED FOR RESTRICTING THE BENEFIT TO THE COMME RCIAL OPERATION UPTO 5% ONLY, IT IS CLEAR FROM THE STATUTE ITSELF T HAT THE ALLOWABLE HOUSING PROJECT INCLUDES COMMERCIAL PORTION ALSO. A S THERE WAS NO RESTRICTION EARLIER, I.E. BEFORE THE INTRODUCTIO N OF THE AMENDMENT, THE QUALIFIED PROJECT WAS ELIGIBLE FOR T HE DEDUCTION U/S 80IB(10) AS A WHOLE, WITHOUT ANY RESTRICTION. I N VIEW OF THE ABOVE, THE CIT(A) HELD THAT ASSESSEE'S PROJECT AS A WHOLE WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10). THE AO WAS DIR ECTED ACCORDINGLY. WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF THE CIT(A) WHICH IS FORTIFIED BY THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES.' 4.1 THE CIT(A) HAS ALLOWED THE DEDUCTION FOLLOWING THE DECISION OF PUNE BENCH U/S.80IB(10) ON THE GROUND THAT THE P ROJECT AS A WHOLE IS ELIGIBLE AS THERE WAS NO PROVISION IN REGA RDS TO THE COMMERCIAL SPACE IN SECTION 80IB(10) DURING THE REL EVANT POINT OF TIME. MOREOVER, THERE WAS NO CONDITION WITH REGARD TO THE TIME LIMIT FOR COMPLETION WHEN THE PROJECT WAS APPROVED BY CONCERNED MUNICIPAL CORPORATION. SINCE THE PROVISION RELATIN G TO TIME LIMIT FOR COMPLETION OF THE PROJECT WAS APPLICABLE FROM A .Y. 2005-06, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE DEDUCT ION U/S.80IB(10) SHOULD NOT HAVE BEEN DENIED BY THE ASS ESSING OFFICER ON THIS ACCOUNT FOR A.Y. 2003-04. THE DEDU CTION U/S.80IB(10) WAS ALLOWED BY THE ASSESSING OFFICER V IDE ASSESSMENT ORDER DATED 21.04.2005 FOR THE PROFITS F ROM PROJECT UNDER REFERENCE TO THE EXTENT OF PROFIT RELATING TO THE RESIDENTIAL AREA ONLY. THIS VIEW IS FORTIFIED BY THE DECISION OF JURISDICTIONAL 5 HIGH COURT IN CASE OF BRAHMA ASSOCIATES (2011) 333 ITR 289. IN VIEW OF THE ABOVE, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF CIT(A), WHO HAS GRANTED RELIEF TO THE ASSESSEE W ITH REGARD TO THE DEDUCTION U/S.80IB(10). WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 28 TH OF APRIL, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 28 TH APRIL, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II, NASHIK 4) THE CIT-II, NASHIK 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE