DCIT, Central Circle 1(1), Pune V. M/s. Sukhwani Associates, Pune

ITA 954/PUN/2013

• Counselvise Citation: 95424514 RSA 2013
• Duration Of Justice: 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: R G NAHAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.954/PN/2013 (A.Y: 2003-04) DCIT, CENTRAL CIRCLE1(1), PUNE APPELLANT VS. M/S. SUKHWANI ASSOCIATES 208/2A, STATION ROAD PIMPRI, PUNE 411018 PAN: AAEFS7987E RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI R.G . NAHAR DATE OF HEARING: 24.04.2014 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)-I, [IN SHORT CIT(A)] PUNE, DATED 15.02.2013 FOR A.Y. 2003-04 ON THE FOLLOWING GROUNDS. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN ADMITTING AND DECIDING THE APPEAL AGAINST THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 263 OF T HE ACT IN CONTRAVENTION OF SECTION 246A OF THE ACT. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN DECIDING THAT PROVISION OF SECTION 263 IS BENEFI CIAL FOR ASSESSEE. 3. THE LD. COMMISSIONER OF INCOME-TAX(A) ERRED IN DECI DING THAT ASSESSEE HAS COMPLIED WITH THE PROVISION OF SE CTION 80IA(7) OF THE ACT BY SUBMITTING FORM NO. 10CCB DUR ING ASSESSMENT PROCEEDINGS U/S, 263, ALTHOUGH IT WAS NO T PRODUCED DURING ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT AND WAS NOT PART OF AUDIT REPORT. 2 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 2. THE ASSESSEE IS A BUILDER AND DEVELOPER. THE A SSESSEE HAS DEVELOPED TWO PROJECTS NAMELY SUKHWANI ENCLAVE AT P IMPRI AND SUKHWANI ELITE AT KUBERA PARK, PUNE. THE ASSESSEE CLAIMED DEDUCTION U/S. 80IB(10) ON ACCOUNT OF ITS SUKHWANI ENCLAVE PROJECT. THE ONLY ISSUE IS INVOLVED IN THE APPEAL IS THAT REGARDING DISALLOWANCE U/S.80IB(10) OF 1,08,98,910/-. IN THE FIRST ROUND OF THE ASSESSMENT COMPLETED U/S.143(3), THE CLAIM O F THE ASSESSEE HAS BEEN ALLOWED. HOWEVER, THE ASSESSMENT WAS SET ASIDE BY THE CIT(A), CENTRAL, PUNE ON TWO MAJOR GRO UNDS, FIRSTLY, BEING THAT THERE WAS NO PROPER AUDIT REPORT IN THE PRESCRIBED FORM NO.10CCB. THE SECOND GROUND WAS THAT THE ASSE SSEE HAD SHOWN ABNORMALLY HIGH NET PROFIT RATE OF 52.72% ON 80IB(10) PROJECT VIZ. SUKHWANI ENCLAVE WHEREAS NET PROFIT ON NON 80IB(10) WAS A MERE 5.10%. THE ASSESSMENT WAS THEREFORE, SE T ASIDE TO BE FRAMED DE NOVO AFTER CONDUCTING DETAILED ENQUIRIES ABOUT THE ABNORMALLY HIGH PROFIT RATE SHOWN IN THE PROJECT KN OWN AS SUKHWANI ENCLAVE. 3. DURING THE ASSESSMENT PROCEEDINGS, IN SET-ASIDE PROCEEDINGS, THE ASSESSING OFFICER MADE ENQUIRIES A ND ASKED TO JUSTIFY THEIR PROFIT MARGINS SHOWN IN THE EXEMPT VI S--VIS TAXABLE PROJECTS. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE AND ACKNOWLEDGING THAT THE GAP IN THE VARIATION OF PROF ITS COULD HAVE BEEN CAUSED DUE TO THE LOWER RANK COST OF SUKHWANI ENCLAVE AND THERE WAS DIFFERENCE IN AMENITIES BETWEEN TWO PROJE CTS. THE ASSESSING OFFICER ARRIVED AT THE CONCLUSION THAT TH E ASSESSEE WAS NOT ENTITLED TO THE DEDUCTION ON THREE ACCOUNTS- (A) IT IS OBVIOUS THAT THE EXPENSES OF TAX FREE PRO JECT MUST HAVE BEEN SHIFTED TO TAXABLE PROJECTS THEREBY REDUC ING THE PROFIT MARGIN OF THE TAXABLE PROJECT; 3 (B) THE PROPER AUDIT REPORT IN FORM NO.10CCB WAS NO T FURNISHED ALONG WITH THE ORIGINAL RETURN OF INCOME; AND (C) THE ASSESSEES PROJECT CONSTITUTED SOME COMMERC IAL AREA. 4. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND THE CIT(A) HAVING ANALYSED ON THE ABOVE THREE A CCOUNTS, GRANTED RELIEF TO THE ASSESSEE. THE SAME HAS BEEN O PPOSED BEFORE US ON BEHALF OF REVENUE MAINLY ON THE GROUND THAT T HE CIT(A) ERRED IN DECIDING THAT THE ASSESSEE HAS NOT COMPLIE D WITH THE PROVISIONS OF SECTION 80IB(10) OF THE ACT BY SUBMIT TING FORM NO.10CCB DURING THE ASSESSMENT PROCEEDINGS U/S.263, ALTHOUGH IT WAS NOT PRODUCED DURING ASSESSMENT PROCEEDINGS U /S. 143(3) OF THE ACT AND WAS NOT PART OF AUDIT REPORT. BEFOR E US, THE REVENUE HAS RAISED, INTER ALIA, THE ABOVE GROUND AN D REQUESTED TO SET ASIDE THE ORDER OF CIT(A). ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER O F CIT(A). 5. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT REGARDING PROPER AUDIT REPORT IN FORM NO.10CCB, THE STAND OF THE ASSESSEE HAS BEEN THAT A LTHOUGH THE RETURN WAS ACCOMPANIED BY AN INVALID AUDIT REPORT A ND NOT IN FORM NO.10CCB AS REQUIRED UNDER THE PROVISIONS OF S ECTION 80IB(10), A REVISED AUDIT REPORT IN FORM NO.10CCB D ATED 25.12.2008 WAS FILED DURING THE COURSE OF RE-ASSESS MENT PROCEEDINGS. THE ASSESSEE PLACED HIS RELIANCE ON T HE DECISIONS OF ITAT, PUNE IN MACHHAR POLYMER PVT. LTD. VS. ACIT IN ITA NO.226/PN/2006 AND MALKHARE BUILDERS AND DEVELOPERS PVT. LTD. IN ITA NO.1520/PN/2007, WHEREIN, THE ASSESSEE HAS NOT FILED AUDIT REPORT IN THE REQUISITE FORMAT WITH THE RETURN OF INCOME BUT THE SAME WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ALTHOUGH, THE ASSESSING OFFICER DENIE D THE CLAIM U/S.80IB(10), BUT IN THESE CASE, THE CIT(A) RELYING ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN CIT VS. NATIO NAL EXPORTS 4 PVT. LTD. 263 ITR 10 AND BERGER PAINTS (I) LTD. (20 02) 254 ITR 503 ALLOWED THE CLAIM OF ASSESSEE, INTER ALIA, HOLDING THAT ALTHOUGH THE AUDIT REPORT WAS MANDATORY, IF THE SAME WAS FUR NISHED PRIOR TO COMPLETION OF THE ASSESSMENT PROCEEDINGS, IT WOU LD BE CONSIDERED AS SUFFICIENT COMPLIANCE TO THE PROVISIO NS OF THE ACT. 6. IN VIEW OF THE ABOVE, THE CIT(A) HAD GRANTED REL IEF TO THE ASSESSEE BY HOLDING THAT THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SECTION 80IB(10) OF THE ACT BY SUBMIT TING THE FORM NO.10BBC DURING THE ASSESSMENT PROCEEDINGS IN RESPO NSE TO THE DIRECTIONS U/S.263 OF THE ACT. THIS REASONED FACTU AL LEGAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. 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)-I, PUNE 4) THE CIT-I, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE