Florida Towers Pvt. Ltd., Kolkata V. ITO, WD-1(3), KOLKATA, Kolkata

ITA 925/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1586 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 23-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE ACIT
• Assessee Lawyers: N IRAV SETH ACA; R P AGARWAL SR
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH, KOLKATA BEFORE SHRI S.S. VISWANETHRA RAVI, JM &DR. A.L.SAINI, AM ./ ITA NO.925/KOL/2015 ( / ASSESSMENT YEAR: 2009-10 FLORIDE TOWERS PVT. LTD. 8,CAMAC STREET, SHANTINIKETAN BUILDING, 5 TH FLOOR, ROOM NO.2, KOLKATA-700017 VS. I.T.O, WARD - 1(3), KOLKATA ./ ./PAN/GIR NO. : AAACF7811P (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI R. P. AGARWAL, SR. COUNSEL & SHRI NIRAV SETH, ACA RESPONDENT BY :SHRI ARINDAMBHATTACHARJEE, ACIT / DATE OF HEARING : 21/08/2017 /DATE OF PRONOUNCEMENT : 30/08/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2009-10, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I, KOLKATA, IN APPEAL NO.872/CIT(A)-1/W-1(3)/2014-15 DATED 25.02.2015, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE AO U/S.143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT) DATED 14.11.2011. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER EARED IN DISALLOWING THE CLAIM FOR DEDUCTION U/S 80-IB OF INCOME TAX ACT FOR RS.26,11,744/-. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 2.THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE ASSESSING OFFICER IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND BAD IN LAW. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER. FLORIDE TOWERS PVT. LTD. ASSESSMENT YEAR: 2009-10 ITA NO.925/KOL/2015 PAGE | 2 3.THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AND DELETE ALL OR ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME OF RS.NIL. THE ASSESSEES CASE WAS PROCESSED U/S.143(1) OF THE ACT. THE CASE THEN WAS SELECTED FOR SCRUTINY U/S.143(2) OF THE ACT. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPING AND SELLING OF A HOUSING PROJECT. THE ASSESSING OFFICER OBSERVED THAT ON EXAMINATION OF THE AUDITED ACCOUNTS, IT WAS SEEN THAT ASSESSEE EARNED A PROFIT OF RS. 26,10,118/-. LN THE RETURN OF INCOME THE ASSESSEE CLAIMED THAT THE ENTIRE PROFIT IS EXEMPTED U/S. 80-LB OF THE L.T ACT, 1961. LN SUPPORT OF SUCH CLAIM, THE ASSESSEE FURNISHED FORM NO.10CCB DULY SIGNED BY THE A CHARTERED ACCOUNTANT UNDER RULE 18BBB OF THE I.T RULES, 1962. IN COURSE OF EXAMINATION OF FORM NO.10CCB, IT WAS SEEN THAT THE BUILDING PROJECT WAS SANCTIONED BY THE LOCAL AUTHORITY ON 03.10.2002 BUT ASSESSEE DID NOT PRODUCE THE SANCTIONED LETTER BEFORE AO. IN SPITE OF THE FACT THAT IT IS SPECIFICALLY MENTIONED IN THE FORM 10CCB, NO COPY OF FIRST APPROVAL OF THE BUILDING PLAN HAD BEEN ATTACHED TO THAT FORM 10CCB BY THE AUDITOR. THE ASSESSING OFFICER OBSERVED THAT BASED ON FORM NO.10CCB AND AUDITED ACCOUNTS, IT WAS CONCLUDED THAT THE PROJECT WAS STILL UNDER CONSTRUCTION ACTIVITY DURING THE F.Y 2008-09. SECTION 80-IB(10) OF THE I.T ACT, 1961 CLEARLY STATES THAT ANY HOUSING PROJECT TAKEN UP AFTER SEPTEMBER 30, 1998 BUT BEFORE 1 ST APRIL 2004 SHOULD BE COMPLETED ON OR BEFORE 31 ST MARCH 2008. IN THE INSTANT CASE, THE PROJECT WAS NOT COMPLETED PRIOR TO 1 ST APRIL 2008 RATHER THE CONSTRUCTION ACTIVITY WAS GOING DURING F.Y 2008-09. THE AO ALSO HIGHLIGHTED OTHER IRREGULARITIES IN RESPECT OF THE SAID CLAIM OF THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM U/S. 80-IB OF THE ACT. FLORIDE TOWERS PVT. LTD. ASSESSMENT YEAR: 2009-10 ITA NO.925/KOL/2015 PAGE | 3 4. AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER. THE LD. CIT(A) OBSERVED THAT THERE WAS NO EVIDENCE OF ANY SUCH COMPLETION CERTIFICATE BEING ISSUED BY THE HOWRAH MUNICIPAL CORPORATION OR EVEN RECEIPT OF LETTER / REQUISITION MADE BY THE APPELLANT FOR ISSUE OF COMPLETION CERTIFICATE BY THE HOWRAH MUNICIPAL CORPORATION. FURTHER THE A.O. CONFIRMED THAT AS PER ENQUIRY, IT WAS INFORMED THAT AS PER PROVISION OF HOWRAH MUNICIPAL CORPORATION RELEVANT RULE 1991, COMPLETION CERTIFICATE IS ISSUED ONLY IF THE DEVELOPER REQUESTED FOR IT IN WRITING AND IT WAS CONFIRMED FROM ENQUIRY THAT THEY HAD NOT RECEIVED ANY SUCH REQUEST FROM THE ASSESSEE. THEREFORE, ASSESSING OFFICER HAD ALSO MENTIONED IN HIS REMAND REPORT DATED 16.12.2013 THAT AS PER PRESCRIBED CONDITION U/S 80- IB(10)(C) THE RESIDENTIAL UNIT SHOULD HAVE MAKE BUILT UP AREA OF 1500 SQ.FT, AND THE ASSESSEE HAS NOT FULFILLED THESE CONDITIONS. THIS WAY, THE LD. CIT(A) CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER. 5. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT IN THE LIGHT OF THE RECENT JUDGMENT OF THE HON`BLE SUPREME COURT IN THE CASE OF CIT VS. SARKAR BUILDERS IN [2015] 57 TAXMANN.COM 313 (SC), THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. THE REQUIREMENT OF THE SAID SUB SECTION IS THAT IN ORDER TO CLAIM DEDUCTION A HOUSING PROJECT SHOULD BE APPROVED BEFORE THE 31 ST DAY OF MARCH 2008. THE LD COUNSEL FURTHER STATED THAT THE ASSESSEE`S BUILDING PROJECT WAS SANCTIONED BY THE LOCAL AUTHORITY ON 03.10.2002 THEREFORE THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80-IB OF THE ACT AND THE RECENT JUDGMENT OF THE HON`BLE SUPREME COURT IN THE CASE OF CIT VS. SARKAR FLORIDE TOWERS PVT. LTD. ASSESSMENT YEAR: 2009-10 ITA NO.925/KOL/2015 PAGE | 4 BUILDERS IN [2015] 57 TAXMANN.COM 313 (SC) (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE`S CASE UNDER CONSIDERATION, WHEREIN IT WAS HELD AS UNDER: 20. HAVING REGARD TO THE ABOVE, LET US TAKE NOTE OF THE SPECIAL FEATURES WHICH APPEAR IN THESE CASES: A) IN THE PRESENT CASE, THE APPROVAL OF THE HOUSING PROJECT, ITS SCOPE, DEFINITION AND CONDITIONS, ALL ARE DECIDED AND DEPENDENT BY THE PROVISIONS OF THE RELEVANT DC RULES. IN CONTRAST, THE JUDGMENT IN RELIANCE JUTE INDUSTRIES LTD. (SUPRA) WAS CONCERNED WITH INCOME TAX ONLY. B) THE POSITION OF LAW AND THE RIGHTS ACCRUED PRIOR TO ENACTMENT OF FINANCE ACT, 2004 HAVE TO BE TAKEN INTO ACCOUNT, PARTICULARLY WHEN THE POSITION BECOMES IRREVERSIBLE. C) THE PROVISIONS OF SECTION 80IB(10) MENTION NOT ONLY A PARTICULAR DATE BEFORE WHICH SUCH A HOUSING PROJECT IS TO BE APPROVED BY THE LOCAL AUTHORITY, EVEN A DATE BY WHICH THE HOUSING PROJECT IS TO BE COMPLETED, IS FIXED. THESE DATES HAVE A SPECIFIC PURPOSE WHICH GIVES TIME TO THE DEVELOPERS TO ARRANGE THEIR AFFAIRS IN SUCH A MANNER THAT THE HOUSING PROJECT IS STARRED AND FINISHED WITHIN THOSE STIPULATED DATES. THIS PLANNING, IN THE CONTEXT OF FACTS IN THESE APPEALS, HAD TO BE MUCH BEFORE 01.04.2005. D) THE BASIC OBJECTIVE BEHIND SECTION 80IB(10) IS TO ENCOURAGE DEVELOPERS TO UNDERTAKE HOUSING PROJECTS FOR WEAKER SECTION OF THE SOCIETY, INASMUCH AS TO QUALIFY FOR DEDUCTION UNDER THIS PROVISION, IT IS AN ESSENTIAL CONDITION THAT THE RESIDENTIAL UNIT BE CONSTRUCTED ON A MAXIMUM BUILT UP AREA OF 1000 SQ.FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI AND MUMBAI OR WITHIN 25 KMS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND 1500 SQ.FT. AT ANY OTHER PLACE. E) IT IS THE CARDINAL PRINCIPLE OF INTERPRETATION THAT A CONSTRUCTION RESULTING IN UNREASONABLY HARSH AND ABSURD RESULTS MUST BE AVOIDED. F) A CLAUSE (D) MAKES IT CLEAR THAT A HOUSING PROJECT INCLUDES SHOPS AND COMMERCIAL ESTABLISHMENTS ALSO. BUT FROM THE DAY THE SAID PROVISION WAS INSERTED, THEY WANTED TO LIMIT THE BUILT UP AREA OF SHOPS AND ESTABLISHMENTS TO 5% OF THE AGGREGATE BUILT UP AREA OR 2000 SQ.FT., WHICHEVER IS LESS. HOWEVER, THE LEGISLATURE ITSELF FELT THAT THIS MUCH COMMERCIAL SPACE WOULD NOT MEET THE REQUIREMENTS OF THE RESIDENTS. THEREFORE, IN THE YEAR 2010, THE PARLIAMENT HAS FURTHER AMENDED THIS PROVISION BY PROVIDING THAT IT SHOULD NOT EXCEED 3% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR 5000 SQ.FT., WHICHEVER IS HIGHER. THIS IS A SIGNIFICANT MODIFICATION MAKING COMPLETE DEPARTURE FROM THE EARLIER YARDSTICK. ON THE ONE HAND, THE PERMISSIBLE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL SHOPS IS INCREASED FROM 2000 SQ.FT. TO 5000 SQ.FT. ON THE OTHER HAND, THOUGH THE AGGREGATE BUILT UP AREA FOR SUCH SHOPS AND ESTABLISHMENT IS REDUCED FROM 5% TO 3%, WHAT IS SIGNIFICANT IS THAT IT PERMITS THE BUILDERS TO HAVE 5000 SQ.FT. OR 3% OF THE AGGREGATE BUILT UP AREA, WHICHEVER IS HIGHER. IN CONTRAST, THE PROVISION EARLIER WAS 5% OR 2000 SQ.FT., 'WHICHEVER IS LESS'. G) FROM THIS PROVISION, THEREFOR, IT IS CLEAR THAT THE HOUSING PROJECT CONTEMPLATED UNDER SUB-SECTION (10) OF SECTION 80IB INCLUDES COMMERCIAL FLORIDE TOWERS PVT. LTD. ASSESSMENT YEAR: 2009-10 ITA NO.925/KOL/2015 PAGE | 5 ESTABLISHMENTS OR SHOPS ALSO. NOW, BY WAY OF AN AMENDMENT IN THE FORM OF CLAUSE (D), AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SAID SHOPS AND/OR COMMERCIAL ESTABLISHMENTS. THEREFORE, BY NECESSARY IMPLICATION, THE SAID PROVISION HAS TO BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMENDMENT, THIS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PROVISION WAS SUBSTITUTED. THEREFORE; IT CANNOT BE APPLIED TO THOSE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR TO 01.04.2005 AND COMPLETED BY THE STIPULATED DATE, THOUGH SUCH STIPULATED DATE IS AFTER 01.04.2005. THEREFORE, LD COUNSEL STATED THAT SAID JUDGMENT OF HON`BLE SUPREME COURT IS APPLICABLE TO THE ASSESSEE`S CASE UNDER CONSIDERATION, AND THEREFORE THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80-IB OF THE ACT. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE AO WHICH WE HAVE ALREADY NOTED IN THE EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT PROJECT WAS SANCTIONED ON 03.10.2002 (AS CLAIMED BY ASSESSEE, THE CERTIFICATE HAS NOT BEEN PRODUCED BEFORE US).THE LD. COUNSEL FOR THE ASSESSEE AS POINTED OUT BEFORE US THAT THE SAID PROJECT WAS SANCTIONED ON 3.10.2002, BUT ON BEING ASKED, HE COULD NOT FURNISH BEFORE US THE COPY OF SANCTION LETTER. BESIDES, LD ASSESSING OFFICER ALSO POINTED OUT CERTAIN DRAWBACKS (VIDE HIS ASSESSMENT ORDER), LIKE BUILDING PLAN HAD NOT ATTACHED WITH FORM NO. 10CCB, COMPLETION CERTIFICATE OF PROJECT IS NOT AVAILABLE, INFORMATION ABOUT THE COVERAGE AREA, BUILT UP AREA, EXACT DATE OF COMPLETION ETC. LD. COUNSEL SUBMITS THAT A JUDGMENT DATED 15.05.2015 OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SARKAR BUILDERS REPORTED IN [2015] 57 TAXMANN.COM 313 (SC) HELD THAT FROM THIS PROVISION, THEREFOR, IT IS CLEAR THAT THE HOUSING PROJECT CONTEMPLATED UNDER SUB-SECTION (10) OF SECTION 80IB INCLUDES COMMERCIAL ESTABLISHMENTS OR SHOPS ALSO. NOW, BY WAY OF AN AMENDMENT IN THE FORM OF CLAUSE (D), AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SAID SHOPS AND/OR COMMERCIAL ESTABLISHMENTS. THEREFORE, BY NECESSARY IMPLICATION, THE SAID PROVISION HAS TO FLORIDE TOWERS PVT. LTD. ASSESSMENT YEAR: 2009-10 ITA NO.925/KOL/2015 PAGE | 6 BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMENDMENT, THIS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PROVISION WAS SUBSTITUTED. THEREFORE; IT CANNOT BE APPLIED TO THOSE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR TO 01.04.2005 AND COMPLETED BY THE STIPULATED DATE, THOUGH SUCH STIPULATED DATE IS AFTER 01.04.2005. AS ARGUED THAT THE RATIO LAID DOWN THEREIN IS SQUARELY APPLICABLE TO THE FACTS IN THE PRESENT CASE. ADMITTEDLY, IT IS A LEGAL ISSUE AND WAS NOT BEFORE THE CIT OR AO. THEREFORE, WE DEEM IT PROPER TO REMAND THE ISSUE TO THE FILE OF CIT(A) TO DECIDE THE ISSUE IN PURSUANCE OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SARKAR BUILDERS(SUPRA). THEREFORE, WE ARE OF THE VIEW THAT PRINCIPLES OF THE SAID JUDGMENT ARE TO BE EXAMINED IN THE CONTEXT OF THE FACTS OF THE ASSESSEE`S CASE UNDER CONSIDERATION. THEREFORE, WE DIRECT THE LD. CIT(A) TO EXAMINE THE FACTS, AS EXPLAINED ABOVE, OF THE ASSESSEES CASE AND TO SEE WHETHER THE JUDGMENT OF THE HONBLE SUPREME COURT FITS IN THE ASSESSEES CASE OR NOT AND ADJUDICATE THE ISSUE AS PER PROVISIONS OF THE ACT. THEREFORE, WE ALLOW THIS APPEAL FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE, IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30/08/2017. SD/ - (S. S. VISWANETHRA RAVI) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 30/08/2017 RS SPS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT FLORIDE TOWERS PVT. LTD. 2. / THE RESPONDENT-I.T.O, WARD-1(3), KOLKATA 3. ( ) / THE CIT(A), :KOLKATA. 4. / CIT 5. , , / DR, ITAT, FLORIDE TOWERS PVT. LTD. ASSESSMENT YEAR: 2009-10 ITA NO.925/KOL/2015 PAGE | 7 TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . KOLKATA 6. / GUARD FILE.