Deputy Commissioner of Income-tax, V. Kumar Builder Consortium, Pune

ITA 923/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1002 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-10-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 92 3 /PN/201 4 / ASSESSMENT YEAR : 20 1 0 - 1 1 THE ADDL . COMMISSIONER OF INCOME TAX, RANGE 4 , PUNE . / APPELLANT VS. KUMAR BUILDER CONSORTIUM, 10 TH FLOOR, KUMAR BUSINESS CENTRE, BUND GARDEN, OPP. PUNE CENT RAL, PUNE 411001 . / RESPONDENT PAN: AA HFK7992A / APPELLANT BY : S MT. DIVYA BAJPAI / RESPONDENT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 08 . 1 0.2015 / DATE OF PRONOUNCEMENT: 16 .1 0.2015 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - II , PUNE, DATED 27 . 0 1 .20 1 4 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INC OME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING DEDUCTION U/S . 80IB(10) OF THE ACT IN RESPECT OF PROJECT KUMAR KRUTI AND KUMAR SHANTIN IKETAN ? ITA NO. 92 3 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 2 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE IMPORT OF SECTION 80IB(10) WHICH SPEAKS ABOUT SANCTION TO THE ' HOUSING PROJECT' AND NOT TO THE INDIVIDUAL BUILDINGS IN THE PROJECT? 3) THE LEARNED COMMISSIONER O F INCOME - TAX (APPEALS) ERRED IN NOT 3) THE LEARNED COMMISSIONER O F INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT KUMAR KRUTI PROJECT IS A PART OF LARGER PROJECT I . E . KUMAR CITY WHICH WAS APPROVED ON 08 . 08 . 2003 AND THE HOUSING PROJECT HAD NOT BEEN COMPLETED BY 31.03 . 2008, THUS VIOLATING THE CONDITIONS PROV IDED IN CLAUSE (A) TO SECTION 801B(10) OF THE ACT? 4) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING PRORATE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF ELIGIBLE FLATS IN THE PROJECT KUMAR KRUTI IN SPITE OF VIOLATION OF CLAUSE (C) W ITHOUT APPRECIATING THE FACT THAT JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES, 333 ITR 289 HELD DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO A PART OF THE PROJECT? 5) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT 5) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE LARGER PROJECT, K UMAR CITY PROJECT CONTAINED COMMERCIAL AREA MORE THAN STIPULATED AS PER PROVISIONS OF SECTION 80IB(10), THUS VIOLATING THE PROVI SIONS OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT? 6) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING PRORATE DEDUCTION U/S . 80IB(10) ON QUALIFYING UNITS IN RESPECT OF KUMAR SHANTINIKETAN PROJECT WITHOUT APPRECIATING THE FACT THAT THE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS . BRAHMA ASSOCIATES, 333 ITR 289 HELD DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO A PART OF THE PROJECT ? 3. THE LEARNED AUTH ORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 . THE ISSUE RAISED IN THE PRES ENT APPEAL IS IN RELATION TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF PROJECT KUMAR KRUTI AND KUMAR SHANTINIKETAN . 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPING RESIDENTI AL PROJECTS IN PUNE. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT FOR THE PROJECT KUMAR SHANTINIKETAN, WHICH WAS SITUATED AT S.NO.138/5, PASHAN AND COMPRISED OF 8 BUILDINGS. THE ASSESSEE WAS RE COGNIZING THE INCOME BY FOLLOWING THE PERCENTAGE COMPLETION METHOD OF ACCOUNTING. THE INCOME BY FOLLOWING THE PERCENTAGE COMPLETION METHOD OF ACCOUNTING. THE ITA NO. 92 3 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 3 ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT IN RESPECT OF THE SAID PROJECT, TWO OF THE FLATS BEARING NOS.3 AND 4 IN D BUILDING HAD A GARDE N AREA OF 236.03 SQ. FT. , WHICH WAS NOT ON THE GROUND FLOOR BUT WAS ON PODIUM. THE SAID GARDEN AREA WAS FOR THE EXCLUSIVE USE OF THE SAID TWO FLAT OWNERS. THE GARDEN AREA WAS COVERED AND WAS NOT OPEN TO SKY. FURTHER, IT WAS SOLD TO THE FLAT OWNER AT A P RICE. THE ASSESSING OFFICER IN VIEW THEREOF, RELATING TO ASSESSMENT YEAR 2009 - 10 , COMPUTED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AFTER INCLUDING THE GARDEN AREA IN THE FLAT AREA OF THE SAID TWO FLATS AND DISALLOWED THE CLAIM OF DEDUCTION UNDER S ECTION 80IB(10) OF THE ACT. SINCE NO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS ALLOWED FOR ASSESSMENT YEARS 2008 - 09 AND 2009 - 10, THE ASSESSING OFFICER FURTHER DISALLOWED THE CLAIM OF THE ASSESSEE FOR CAPTIONED ASSESSMENT YEAR. FURTHER, THE ASSESSIN G OFFICER ALSO NOTED THAT IN RESPECT OF SECOND PROJECT KUMAR KRUTI, SITUATED AT KALYANI NAGAR, THE PROJECT WAS FOUND TO BE PART OF ONE BIGGER PROJECT KUMAR CITY, WHICH WAS SANCTIONED ON 08.08.2003 . THE ORIGINAL PLAN WAS KUMAR CITY, WHICH WAS SANCTIONED ON 08.08.2003 . THE ORIGINAL PLAN WAS SUBSEQUENTLY REVISED SEVERAL TIMES INCLUDING ON 02.03.2005 AND FURTHER ON 30.03.2007. IN THE REVISED SANCTIONED PLAN ON 02.03.2005 , THE SAID 12 BUILDINGS A - 1 TO A - 12 OF THE PROJECT KUMAR KRUTI WERE SHOWN. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROJECT KUMAR KRUTI WAS PART OF THE L ARGER PROJECT KUMAR CITY, WHICH IN TURN, WAS SANCTIONED ON 08.08.2003 . ACCORDINGLY, THE PROJECT WAS REQUIRED TO BE COMPLETED BY 31.03.2008 . HOWEVER, THE ASSESSEE HAD FAILED TO COMP L ETE THE SAID PROJECT BY 31.03.2008 . FURTHER, IN THE SAID PROJECT , 8 OF T HE FLATS WERE FOUND TO HAVE AREA MORE THAN MAXIMUM PERMISSIBLE AREA OF 1500 SQ. FT. SINCE THE FLATS HAD GARDEN AREA FOR EXCLUSIVE USE OF THE FLAT OWNERS OF 635 SQ. FT., THE SAID GARDEN AREA WAS NOT ON THE GROUND FLOOR, BUT WAS AREA OF SAID 8 FLATS, THE TO TAL AREA OF THE FLAT WAS 2029 SQ. FT., WHICH WAS MORE THAN THE MAXIMUM PERMISSIBLE BUILT UP AREA AND FOLLOWING THE ITA NO. 92 3 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 4 ASSESSMENT ORDERS RELATING TO ASSESSMENT YEAR S 2008 - 09 AND 2009 - 10 , THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF PRO JECT KUMAR KRUTI WAS DENIED TO THE ASSESSEE. 5. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN TURN, FOLLOWING THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1164/PN/2012 RELATING TO ASSESSMENT YEAR 2008 - 09 AND ITA NO.2210 /PN/2012 RELATING TO ASSESSMENT YEAR 2009 - 10 , ORDER DATED 15.04.2013 . THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED UNDER PARA 3.4 AT PAGES 6 TO 8 OF THE APPELLATE ORDER. THE TRIBUNAL HAD DIRECTED THE ASSESSING OFFICER TO ALLOW PRORATA DEDUCTION I N RESPECT OF ELIGIBLE FLATS NOT EXCEEDING PRESCRIBED LIMIT OF COVERED AREA OF 1500 SQ. FT. AFTER EXCLUDING FLATS EXCEEDING 1500 SQ. FT. THE SAID FINDINGS WERE IN RESPECT OF PROJECT KUMAR KRUTI. FURTHER, THE CIT(A) ALSO ALLOWED THE PRORATA CLAIM UNDER SEC TION 80IB(10) OF THE ACT IN RESPECT OF PROJECT KUMAR SHANTINIKETAN, WHEREIN ALSO THE TRIBUNAL CONSIDERED THE ISSUE IN THE EARLIER YEARS AND THE ASSESSING OFFICER WAS DIRECTED TO RE - WORK THE DEDUCTION IN RESPECT OF UNITS HAVING COVERED AREA OF 1500 SQ. FT. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED UNDER PARA 4.2 AT PAGES 9 TO 11 OF THE APPELLATE ORDER. THE CIT(A) IN VIEW THEREOF, DIRECTED THE ASSESSING OFFICER TO RE - WORK DEDUCTION IN RESPECT OF ASSESSEES PROJECT KUMAR SHANTINIKETAN AS PER THE D IRECTIONS OF TRIBUNAL DATED 15.04.2013 AND ALLOWED THE PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE CLAIM OF DEDUCTION UN DER SECTION 80IB(10) OF THE ACT IN RESPECT OF TWO PROJECTS UNDERTAKEN BY THE ASSESSEE I.E. KUMAR KRUTI AND KUMAR SHANTINIKETAN. THE FIRST ISSUE IS IN RELATION TO PRORATA CLAIM OF DEDUCTION IN RESPECT OF PROJECT KUMAR SHANTINIKETAN . ITA NO. 92 3 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 5 TWO OF THE FLAT BEARIN G NOS.3 AND 4 IN BUILDING D HAD COVERED AREA EXCEEDING 1500 SQ.FT. AND ON THAT BASIS, THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE. THE TRIBUNAL HAD IN THE EARLIER YEARS RELATING TO ASSESSMENT YEAR S 2008 - 09 AND 2009 - 10 , ALLOWED THE CLAIM OF ASSESSEE WITH DIRECTIONS TO THE ASSESSING OFFICER TO ALLOW PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AND DENIED THE SAID DEDUCTION IN RESPECT OF TWO FLATS I.E. FLAT NOS.3 AND 4 IN BUILDING D , WHICH HAD COVERED AREA OF MORE THAN PRESCRIBED LIMIT. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED UNDER PARA 4.2 AT PAGES 9 TO 11 OF THE APPELLATE ORDER , WHICH ARE BEING REFERRED TO, BUT NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. IN THE ENTIRETY OF THE ABOVE SAID FACT S AND CIRCUMSTANCES, WHERE THE ISSUE IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN THE EARLIER YEARS, FOLLOWING THE SAME PARITY OF REASONING, WE DIRECT THE ASSESSING OFFICER TO RE - WORK PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 7. THE SECOND ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF PROJECT KUMAR KRUTI. THE SAID DEDUCTION WAS DENIED TO THE ASSESSEE ON ACCOUNT OF TWO ACCOUNTS I.E. WHERE THE PROJECT KUMAR KRUTI WAS PART OF LARGER PROJECT NAMED KUMAR CITY , AND WHERE THE ASSESSEE HAD NOT COMPLETED THE PROJECT BY 31.03.2008 , PRORATA DEDUCTION WAS ALLOWED TO THE ASSESSEE. THE TRIBUNAL AFTER CONSIDERING THE ISSUE, HELD THAT THE PROJECT KUMAR KRUTI WAS AN INDEP ENDENT PROJECT SINCE THE BUILDING PLAN OF THE SAID PROJECT WAS SANCTIONED INDEPENDENTLY ON 16.07.2006 AND IN VIEW THEREOF, THERE WAS NO JUSTIFICATION IN HOLDING THAT THE PROJECT KUMAR KRUTI WAS PART OF KUMAR CITY. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRO D U C ED UNDER PARA 3.4 AT PAGES 6 TO 8 OF THE APPELLATE ORDER, WHICH ARE BEING REFERRED TO, BUT NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. ITA NO. 92 3 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 6 THE TRIBUNAL FURTHER HELD THAT THE ASSESSEE WAS ENTITLED TO PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE A CT IN RESPECT OF ELIGIBLE UNITS, WHICH WERE WITHIN COVERED AREA LIM IT OF 1500 SQ.FT. HOWEVER, FEW FLATS , WHICH EXCEEDED THE PRESCRIBED COVERED AREA WERE DENIED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. FOLLOWING THE SAME PARITY OF REASONING, WE UP HOLD THE ORDER OF CIT(A) IN DIRECTING THE ASSESSING OFFICER TO WORK OUT THE PRORATA DEDUCTION IN RESPECT OF UNITS SOLD IN KUMAR KRUTI PROJECT. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 8 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED ON THIS 16 TH DAY OF OCTOBER , 2015. SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 16 TH OCTOBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II , PUNE ; 4. / THE CIT - II, PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE