Income-tax Officer, Pune V. M/s. Sai Drishti Constructions, Pune

ITA 932/PUN/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7594 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NITIN RANDER
• Keywords: Opportunity of being heard
• Section: 80IB

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.932/PUN/2017 / ASSESSMENT YEAR : 2012-13 ITO, WARD-8(4), PUNE . /APPELLANT VS. M/S. SAI DRISHTI CONSTRUCTIONS, OFFICE NO.9, UMED BHAVAN, CANARA BANK BUILDING, PIMPRI, PUNE 411 018 PAN : AACAS7705B . / RESPONDENT C.O.NO.26/PUN/2018 (ARISING OUT OF ITA NO.932/PUN/2017) / ASSESSMENT YEAR : 2012-13 M/S. SAI DRISHTI CONSTRUCTIONS, OFFICE NO.9, UMED BHAVAN, CANARA BANK BUILDING, PIMPRI, PUNE 411 018 PAN : AACAS7705B . CROSS OBJECTOR VS. ITO, WARD-8(4), PUNE ... APPELLANT IN THE APPEAL / APPELLANT BY : SHRI PANKAJ GARG / RESPONDENT BY : SHRI NITIN RANDER / DATE OF HEARING : 16.05.2018 / DATE OF PRONOUNCEMENT: 17.05.2018 / ORDER PER D. KARUNAKARA RAO, AM : THE REVENUE FILED THE MAIN APPEAL ITA NO.932/PUN/20 17 AGAINST THE ORDER OF CIT(A)-6, PUNE, DATED 26-12-2016 INVOLVING ASSESSMENT YEAR 2012-13. ASSESSEE ALSO FILED THE CROSS OBJECTION AGAINST THE APPEAL FILED BY THE REVENUE VIDE C.O.26/PUN/2018. ITA NO.932/PUN/2017 & CO NO.26/PUN/2018 M/S. SAI DRISHTI CONSTRUCTIONS 2 2. GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE HON'BLE CIT(A) WAS CORRECT IN HOLDING THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S. 80IB(10) ON THE ENTIRE PROJ ECT IRRESPECTIVE OF THE FACT THAT THE PROJECT WAS COMPLETED ON 30.03.2012 I .E. AFTER CLAUSES (E) & (F) WERE INSERTED VIDE FINANCE ACT, 2009. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE HON'BLE CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S.80IB(10) EVEN WHEN THE ASSESSEE HAS VIOLATED THE CONDITIONS OF SECTION 80IB(10) OF THE I.T. ACT, 1961. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE HON'BLE CIT(A) WAS JUSTIFIED IN CONCLUDING THAT THE DATE OF EXECUTION OF SALE OF FLATS WAS PRIOR TO EFFECTIVE DATE OF AMENDM ENT TO FINANCE ACT, 2009 DESPITE THE FACT THAT THE ASSESSEE ENTERED INTO SAL E TRANSACTION IN F.Y. 2009-10 RELEVANT TO A.Y. 2010-11 FROM WHICH SAID AM ENDMENTS ARE APPLICABLE. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE HON'BLE CIT(A) WAS JUSTIFIED BY TREATING THE DATE O F DEVELOPMENT AGREEMENT AS POINT OF TIME OF ALLOTMENT RESIDENTIAL UNITS. 3. THE ONLY CROSS OBJECTION RAISED BY THE ASSESSEE READS AS UNDER : 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN COMP UTING THE PRO-RATA DISALLOWANCE OF CLAIM U/S.80IB(10) AT AN AMOUNT OF RS.14,80,667/- INSTEAD OF AN AMOUNT OF RS.1,16,288/-. 4. BRIEFLY STATED, RELEVANT FACTS OF THE CASE ARE T HAT THE ASSESSEE IS AN AOP AND IS ENGAGED IN THE BUSINESS OF PROMOTERS AND DEV ELOPERS OF HOUSING PROJECTS. ASSESSEE FILED THE RETURN OF INCOME ON 2 6-09-2012 DECLARING TOTAL INCOME AT NIL. DURING THE COURSE OF ASSESSMENT, AO NOTICED THAT ASSESSEE HAS SHOWN SALE OF FLATS FOR A SUM OF RS.99,18,300/- AND CLAIMED DEDUCTION U/S.CHAPTER VI A AMOUNTING TO RS.49,23,657/-. IT I S NOTICED THAT FLAT NOS. 15 AND 16 ALLOTTED TO MR. AJAY KATE IN BUILDING-B WERE HORIZONTALLY MERGED. FLAT NOS. 5 AND 6 ON IST FLOOR OF BUILDING-A ALLOTTED TO MR. KISHOR PAHUJA IN BUILDING A AND FLAT NOS. 3 AND 4 ON 2 ND FLOOR WERE HORIZONTALLY MERGED. FLAT NOS. 7 AND 8 ALLOTTED TO MS. MINA AHUJA ON 4 TH FLOOR OF BUILDING-A WERE ALSO HORIZONTALLY MERGED. REJECTING THE EXPLANATIONS GIVEN BY THE AS SESSEE, THE AO CAME TO THE ITA NO.932/PUN/2017 & CO NO.26/PUN/2018 M/S. SAI DRISHTI CONSTRUCTIONS 3 CONCLUSION THAT MORE THAN ONE RESIDENTIAL UNITS HAV E BEEN ALLOTTED TO ONE PERSON AND THE AREA OF THE MERGED FLATS IS MORE THA N 1500 SQ.FT. AND THEREFORE, THE ASSESSEE HAS VIOLATED THE CONDITIONS LAID DOWN IN CLAUSE (C) AND (E) OF SECTION 80IB OF THE ACT. THUS, AT THE END OF ASSES SMENT U/S.143(3) OF THE ACT, THE AO DISALLOWED THE ENTIRE CLAIM OF DEDUCTION OF RS.49,23,657/- MADE BY THE ASSESSEE. 5. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) R ELYING ON THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.991/PN/20 14, DATED 15-02-2016 FOR THE A.Y. 2010-11 GRANTED PART RELIEF TO THE ASSESSE E BY HOLDING AS UNDER : 5. THE ITAT ORDER HAS BEEN PERUSED AND IT IS FOUND THAT THE ISSUE HAS BEEN COVERED IN FAVOUR OF THE APPELLANT. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE A.Y. 10-11. IN THIS A.Y. 12-12, THE F LAT ALLOTTED TO MRS. MEENA PAHUJA (FLAT NO. A-8) HAS BEEN TAKEN AS A SALE DURI NG THE YEAR, THOUGH THIS FLAT WAS ALLOTTED TO HER VIDE AGREEMENT EXECUTED ON 06-0 4-2009. THE ALLOTMENT OF THIS FLAT IS CONTRARY TO THE PROVISIONS OF CLAUSE ( E) OF SEC.80IB(10) AND THEREFORE THE PROFIT ARISING ON SUCH ALLOTMENT SUBSEQUENT TO THE FINANCE ACT, 2009 IS NOT ELIGIBLE FOR DEDUCTION U/S.80IB(10). THE APPELLANT WORKED OUT THE PROFIT AT RS.1,16,288/- AS A RELATABLE TO THE FLAT SOLD TO MR S. MEENA PAHUJA. HOWEVER, THE WORKING APPEARS TO BE ERRONEOUS. THE TOTAL ARE A SOLD DURING THE YEAR IS 3864 SQ.FT. AND THE TOTAL PROFIT EARNED IS RS.49,23 ,658/-. THE PROFIT FOR PER SQ.FT. WORKS OUT TO RS.1,274.24. THE FLAT NO.A HAS AN AREA OF 1162 SQ.FT. AND THEREFORE RELATABLE PROFITS WORKS OUT TO RS.14, 80,667/-. THE AO IS DIRECTED TO DISALLOW THIS AMOUNT AS NOT ELIGIBLE FOR DEDUCTI ON U/S.80IB(10). THE AO IS DIRECTED TO ALLOW THE DEDUCTION U/S.80IB(10) FOR TH E BALANCE AMOUNT IN VIEW OF THE TRIBUNAL DECISION IN APPELLANTS OWN CASE FOR T HE EARLIER YEAR. 6. AGGRIEVED WITH THE PART RELIEF GIVEN BY THE CIT( A), THE REVENUE FILED THE PRESENT APPEAL. FURTHER, AGGRIEVED WITH THE PRO-RA TA DISALLOWANCE OF CLAIM U/S.80IB(10) AT AN AMOUNT OF RS.14,80,667/- THE ASS ESSEE FILED THE CROSS OBJECTION WITH THE SOLITARY GROUND . 7. LD. DR FOR THE REVENUE RELIED ON THE ORDER OF TH E AO. LD. DR SUBMITTED THAT THE ASSESSEE HAS VIOLATED THE BASIC CONDITIONS STIPULATION IS SECTION 80IB(10) OF THE ACT. HE RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF B.M. BHATTACHARYA VS. RUSSEL ESTATE CORP. A IR 1993 SC 1632, 1634. ITA NO.932/PUN/2017 & CO NO.26/PUN/2018 M/S. SAI DRISHTI CONSTRUCTIONS 4 LD. DR FURTHER STATED THAT THE CBDT CIRCULAR NO.5/1 0, DATED 03-06-2010 WOULD APPLY TO THE TRANSACTIONS AFTER A SPECIFIED DATE DU RING THE YEAR. THE AMENDMENTS MADE ARE APPLICABLE W.E.F. 01-04-2010. THEREFORE, LD. DR PRAYED FOR CONFIRMING THE ORDER OF THE AO. 8. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE CIT(A) CONFIRMED THE PORTION OF THE PROFITS WHI CH IS NOT CORRECT AS PER LAW. THEREFORE, THE ISSUE NEEDS TO BE REMANDED TO THE FI LE OF CIT(A) FOR RECONSIDERATION OF THE FACTS. 9. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE OR DERS OF THE REVENUE. I FIND THE REVENUES GRIEVANCE RAISED IN GROUND NOS.1 TO 4 STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA ) FOR THE A.Y. 2010-11. THEREFORE, THE GROUNDS RAISED BY THE REVENUE STANDS DISMISSED. RELIANCE IS PLACED ON THE DISCUSSION GIVEN IN PARA NO.4.3 OF TH E CIT(A)S ORDER. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. C.O.NO.26/PUN/2018 (ARISING OUT OF ITA NO.932/PUN/2017) 11. IN THE CROSS OBJECTION, THE ASSESSEE RAISED A G ROUND IDENTIFYING THE MISTAKE IN QUANTIFYING THE DISALLOWABLE AMOUNT ON P RO-RATA BASIS ON THE FLAT RELATABLE TO MRS. MEENA PAHUJA. THE FACTS INCLUDE THAT THE ASSESSEE QUANTIFIED THE SAME AT RS.1,16,288/- ON A BASIS UNKNOWN TO ME. HOWEVER, THE REVENUE QUANTIFIED THE SAME AT RS.14,80,667/- ON THE BASIS OF AVERAGING. THE DISCUSSION GIVEN AT PARA NO.5 OF THE ORDER OF CIT(A ) WHICH IS ALREADY EXTRACTED ABOVE IS RELEVANT. 12. ON HEARING THE PARTIES, I FIND THE AO TRAVELLED ON THE BASIS OF ESTIMATIONS AND ADOPTED AVERAGE METHODS WHICH IS OF COURSE NOT THE ACTUALS. ITA NO.932/PUN/2017 & CO NO.26/PUN/2018 M/S. SAI DRISHTI CONSTRUCTIONS 5 THERE IS NO REASON OR THE LOGIC FOR THE REVENUE TO REJECT THE ACTUAL AND ADOPT THE AVERAGE FIGURES. THEREFORE, IN MY VIEW, THE SA ME METHOD ADOPTED BY THE AO IS UNSUSTAINABLE. I FIND IT RELEVANT TO REMAND THIS ISSUE TO THE FILE OF THE AO FOR IDENTIFYING THE PROFITS, SPECIFIED TO THE FLAT. IN THE REMAND PROCEEDINGS, THE AO SHALL QUANTIFY THE SAME ON ACTUAL AND NOT THE AV ERAGES. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ACCORDINGLY, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. 13. IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 14. TO SUM UP, APPEAL OF THE REVENUE IS DISMISSED A ND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THIS 17 TH DAY OF MAY, 2018. SD/- (D.KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 17 TH MAY, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2, AURANGABAD 4. / TH E CIT - 2, AURANGABAD 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE