PARESH CONSTRUCTION CO., KALYAN V. ITO WD 3(2), MUMBAI

ITA 986/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1275 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 12-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: SAMEER G DALAL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI D K AGARWAL, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO 986/MUM/2009 (ASSESSMENT YEAR: 2005-06) M/S PARESH CONSTRUCTION CO , SHOP NO 2, BAJRANG APARTMENT, GROUND FLOOR, NEAR OLD RTO OFFICE, KALYAN (W)-421 301 PAN: AABFP 5209 K VS ITO, WARD -3(2) , KALYAN APPELLANT RESPONDENT APPELLANT BY: SHRI SAMEER G DALAL RESPONDENT BY: SHRI O P SHARMA ORDER PER PRAMOD KUMAR 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS D IRECTED AGAINST CIT (A)S ORDER DATED 14 TH NOVEMBER 2008 FOR THE ASSESSMENT YEAR 2005-06. 2. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS :- 1.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) I, THANE (THE LD. CIT (A)] ERRED IN CONFIRMING THE ACTION OF THE ASS ESSING OFFICER [THE A.O.] WHEREIN THE A.O. HAD REJECTED THE CLAIM OF D EDUCTION, AMOUNTING TO RS 28,26,870/-, AS PREFERRED BY THE APPELLANT U/ S 80IB(10) OF THE INCOME-TAX ACT, 1961. 1.2 WHILE DOING SO, THE LD CIT (A) FAILED TO APPRE CIATE THAT (A) THE APPELLANT HAD FULFILLED ALL THE REQUISITE C ONDITIONS FOR BEING ELIGIBLE FOR THE DEDUCTION; AND (B) THE CASE OF THE APPELLANT WAS COVERED BY THE DE CISION OF THE HONBLE TRIBUNAL IN CASE OF HARSHAD P DOSHI VS ACIT [(2007 )109 TTJ(MUM) 335]. 1.3 IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, AND IN LAW, NO SUCH REJECTION WAS CALLED FOR. ITA 986/M/2009 M/S PARESH CONSTRUCTION CO 2 1.4 WITHOUT PREJUDICE TO THE ABOVE, AND IN THE ALTE RNATIVE, IT IS SUBMITTED THAT, AT THE MOST, ONLY THE PROPORTIONATE PROFIT AS ATTRIBUTABLE TO THE COMMERCIAL SHOPS SHOULD HAVE BEEN DISALLOWED AND NO T THE ENTIRE PROFIT OF THE HOUSING PROJECT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILD ING CONSTRUCTION, AND ONE OF THE PROJECTS IT WAS INVOLVED IN THE RELEVANT PREVIO US YEAR WAS AT SURVEY NO 113/H, NO 6 A, CHIKANGHAR, KALYAN (WEST). THIS PROJECT HAD T HREE BUILDINGS A, B AND C FOR WHICH PLANS WERE APPROVED BY KALYAN DOMBIVALI MUNIC IPAL CORPORATION ON 24.4.1998, WHICH WERE REVISED AND SANCTIONED ON 3.4.1999 AND 9 .4.1999. THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) IN RESPECT OF THIS PROJECT. HOWEVER, THE ASSESSING OFFICER TOOK NOTE OF THE FACT THAT, AS PER HIS INSPECTORS REPORT, THE ASSESSEE HAS ALSO CONSTRUCTED 11 SHOPS EACH ADMEASURING 150 SQ FTS. R ELYING UPON DECISION OF THIS TRIBUNAL IN THE CASE OF LAUKIK DEVELOPERS VS DCIT ( 105 ITD 657), THE ASSESSING OFFICER REJECTED THE DEDUCTION SOLELY ON THE GROUND THAT THE ASSESSEE HAD CONSTRUCTED SHOPS AND OTHER COMMERCIAL UNITS. THE ASSESSING OF FICER CONCLUDED AS FOLLOWS:- IN VIEW OF THE ABOVE FACTS, SINCE THE ASSESSEE HAS CONSTRUCTED SHOPS AND OTHER COMMERCIAL UNITS IN THE HOUSING PROJECT FOR W HICH THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE INC OME TAX ACT, 1961, AND WHEREAS THE SECTION 80IB(10) RESTRICTS THE CONSTRUC TION TO ONLY RESIDENTIAL PREMISES THE ASSESSEE IS NOT ELIGIBLE TO CLAIM THE DEDUCTION UNDER SECTION 80IB(10). 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. THE CIT (A) UPHELD THE ORDER OF THE ASSESSING OFFICER AND OBSERVED AS FOLLOWS:- 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E WRITTEN SUBMISSION FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. THE APPELLANT WAS ENGAGED IN CONSTRUCTION OF BUILDING PROJECT CALLED GAURI AT VILLAGE CHIKANGHAR WITHIN THE MUNICIPAL LIMITS OF KALYAN DOMBIVLI MUNICIPAL CORPO RATION. SIMILAR SUBMISSIONS OF THE APPELLANT HAVE BEEN CONSIDERED IN THE FIRST APPEAL IN THE AY 03-04 AND AY 04-05. IN THOSE ASSESSMENT YEARS ALSO, THE APPE LLANT HAD CLAIMED DEDUCTION U/S 80IB(10) FOR THE SAME PROJECT TITLED GAURI. THE DETAILED REASONS WERE GIVEN IN THE APPELLATE ORDERS FOR AYS 03-04 & 04-05 FOR REJECTING THE CLAIM OF THE APPELLANT U/S 80IB(10). IT WAS HE LD IN BOTH THE APPELLATE ORDERS THAT THE PROJECT TITLED GAURI WAS NOT A H OUSING PROJECT AND HENCE THE APPELLANT WAS NOT ENTITLED FOR DEDUCTION U/S 80IB(1 0). 5.1 THE APPELLANT HAS RELIED ON THE DECISIONS IN TH E CASES OF SHRI HARSHAD P DOSHI, M/S IDEAL REALTORS, M/S POONAM GRUH NIRMAN, BAJAJ TEMPO LTD 196 ITR 188 (SC), BENGAL AMBUJA HOUSING DEVELOPMENT LTD (KO L), SAROJ SALES ITA 986/M/2009 M/S PARESH CONSTRUCTION CO 3 ORGANISATION AND ARUN EXCELO FOUNDATIONS (P) LTD. I HAVE GONE THROUGH THESE CASE LAWS. THESE CASES ARE FACTUALLY DIFFERENT FRO M THE INSTANT CASE. THE FACTS OF THE INSTANT CASE IS SIMILAR TO THE FACTS OF THE CASE OF M/S LAUKIK DEVELOPERS DECIDED BY LD ITAT, MUMBAI. THE LD ITAT, MUMBAI HA S CLEARLY HELD IN M/S LAUKIK DEVELOPERS CASE THAT THE DEDUCTION U/S 80IB WAS NOT AVAILABLE TO THE BUILDING PROJECT, WHICH WAS APPROVED AS RESIDENTIAL -CUM-COMMERCIAL PROJECT. IN THE APPELLATE ORDERS FOR AYS 03-04 & 04-05, IT H AS BEEN CLEARLY DISCUSSED AND ESTABLISHED THAT THE BUILDING PROJECT TITLED G AURI WAS APPROVED AS RESIDENTIAL-CUM-COMMERCIAL PROJECT, AS IT CONSISTED OF RESIDENTIAL UNITS AND COMMERCIAL SPACES. SINCE THE FACTS OF THE CASE REM AINED THE SAME AS THOSE OF AYS 03-04 & 04-05, I HEREBY CONFIRM THE DISALLOWANC E OF RS 28,66,870/- MADE BY THE AO U/S 80IB(10) OF THE IT ACT, 1961. THE OR DER OF THE AO IS UPHELD AND DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S 80IB(10) IS HEREBY CONFIRMED. 6. IN THE RESULT, THE APPEAL IS DISMISSED. 5. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO T HE APPLICABLE LEGAL POSITION. 7. A PLAIN READING OF THE ORDERS OF THE AUTHORITIES BELOW SHOWS A COMPLETE LACK OF APPLICATION OF MIND, AS THE CHANGES IN SECTION 80IB (10) W E F 1 ST APRIL 2005 HAVE NOT AT ALL BEEN CONSIDERED. CLAUSE (D) IN SECTION 80IB (10) WAS INSERTED W E F 1.4.2005 WHICH PROVIDED THAT BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENT SHOULD NOT EXCEED 5% OF TOTAL BUILT UP AREA OR 2,00 0 SQ FT WHICHEVER IS LESS. IN OTHER WORDS, AS LONG AS USE OF BUILT UP AREA FOR SH OPS AND OTHER COMMERCIAL AREA WAS LESS THAN 5% OF TOTAL BUILT UP AREA OR 2,000 SQ FT WHICHEVER IS LESS, DEDUCTION U/S 80IB(10) COULD NOT BE DECLINED. NONE OF THE AUTHOR ITIES BELOW HAS EXAMINED THIS ASPECT OF THE MATTER AND HAVE MERELY RELIED UPON LA UKIK DEVELOPERS CASE (SUPRA) BY A DIVISION BENCH OF THIS TRIBUNAL WHICH HAS SINCE B EEN ANYWAY REVERSED BY THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES VS J CIT (119 ITD SB 155). IN VIEW OF THESE DISCUSSIONS, AND BEARING IN MIND THE ENTIRETY OF CASE, WE REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION IN THE LIGHT OF CORRECT LEGAL POSITION AND OUR ABOVE OBSERVATIONS. THE ASSESSING OFFICER WILL GIVE DUE AND FAIR ITA 986/M/2009 M/S PARESH CONSTRUCTION CO 4 OPPORTUNITY OF HEARING TO THE ASSESSEE AND DECIDE T HE MATTER BY WAY OF A SPEAKING ORDER. 8. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON THE 25 TH DAY OF JUNE 2010. SD/- (D K AGARWAL) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATE: 25TH JUNE 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-I, THANE. 4) THE CITI, THANE. 5) THE D.R. C BENCH, ITAT, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI ITA 986/M/2009 M/S PARESH CONSTRUCTION CO 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 15.06.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 16.06.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER