WADHWA CONSTRUCTION, MUMBAI V. DCIT RANGE - 19(3), MUMBAI

MA 150/MUM/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 5009 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 01-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHUA SARKAR

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AN D SHRI PAWAN SINGH, JUDICIAL MEMBER M.A. NO. 150/MUM/2016 IN ITA NO.4470/MUM/2013 A Y : 2008-09 M/S WADHWA CONSTRUCTION 301, 3 RD FLOOR, PLATINA, C-59, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400098 PAN: AAAFW6792M VS. THE DCIT, RANGE 19(3) MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHESH RAJORA, RAVIKANT S. PATHAK (AR) REVENUE BY : MISS MAHUA SARKAR (DR) DATE OF HEARING : 30.09.2016 DATE OF ORDER : 08.11.2016 ORDER PER PAWAN SINGH, JUDICIAL MEMBER 1. THE PRESENT MA IS FILED BY ASSESSEE FOR SEEKING REC TIFICATION IN THE ORDER DATED 15 TH APRIL 2016. 2. ON HEARING THE CONTENTION OF RIVAL PARTIES, WE PERU SED THE PAPER BOOK DATED 9.11.2015 ON THE DEVELOPMENT AGREEMENT DATED 10.5.2005 AND FIND THE SAID AGREEMENT IS PLACED AT PAGE 17 OF THE PAPER BOOK. WE HAVE ALSO PERUSED THE SAI D DECISION CITED BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION (MA). THE CASE OF THE AS SESSEE IN MA IS THAT THE ORDER OF THE TRIBUNAL NEEDS RECTIFICATION AS THE SAID DOCUMENTS AND JUDGMENTS WERE NOT CONSIDERED APPROPRIATELY. THE CONCLUSION OF THE TRIBUNAL RELAT ING TO THE ILLEGALITY OF THE EXCESS CONSTRUCTION OF 12,728 SQ.FT APPEARS NOT PROPER. TR IBUNAL INFERRED AS SUCH UNDER THE BELIEF THAT THE SAME IS OUTSIDE THE DEVELOPMENT AGREEMENT (SUPRA). THE SAID CLAIM OF EXPENSES RELATING TO THE EXCESS CONSTRUCTION IS ALSO OUTSIDE THE CONTRACT SCOPE. THE ALLOWABILITY OF SUCH CLAIM OF EXPENSES IS IN FAVOUR OF THE ASSESSEE IF CONTESTED BEFORE THE CIT (A) / ITAT. THE BINDING JUDGMENTS VIZ., THE JUDGMENT OF T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HUKUMCHAND MILLS LTD [202 IT R 474 (BOM)]; ANOTHER JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . PANNALAL NAROTAMDAS & CO (167 ITR 667) (BOM.) AND THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. 2 M.A.NO. 150/MUM/2016 LOKENATH & CO. (CONSTRUCTION) [147 ITR 624] (DELHI) ETC. SHALL HELP THE ASSESSEE. NON- APPRECIATION OF THE DEVELOPMENT AGREEMENT (CLAUSE-2 8) AND THE SAID JUDGMENTS FILED BEFORE THE TRIBUNAL HAS LEAD TO THE UNSUSTAINABLE C ONCLUSIONS. ACCORDING TO THE MA, THE ASSESSEES FAILURE TO FILE FURTHER APPEAL BEFORE CI T(A)/ITAT SHOULD BE CONSTRUED AS A VOLUNTARY OFFER AND NOT A WEAKNESS OR MISTAKE, IF A NY, ATTRIBUTABLE TO THE ASSESSEE. 3. AFTER CONSIDERING THE ABOVE REFERRED MA CENTRIC A RGUMENTS AND ALSO THE DECISIONS, WE ARE OF THE OPINION, THE SAID CLAUSE-28 OF THE SAID DEVELOPMENT AGREEMENT (SUPRA) IS RELEVANT AND IN FACT, IT MISSED THE ATTENTION OF TH E BENCH. THE SAID CLAUSE-28 READS AS UNDER:- THE CONSTRUCTION STATED IN CLAUSE-5 IS BASED ON THE USER OF FSI OF 41,684.81 SQ MTS. HOWEVER, AS PER LOI DATED 29 TH DECEMENT, 2004, PERMISSIBLE SALES FSI IS 42,487.42 SQ MTS. IT IS AGREED THAT IF THE SUB-DEVELOPERS USE AND CON SUME ANY FSI OVER AND ABOVE 41,684.81 SQ MTS, THE CONSIDERATION SHALL STAND INCREASED @ R S. 3100/- PER SQ FT BUILT-UP WHICH MEANS SANCTIONED FSI MULTIPLIED BY FACTOR OF 1.15. 4. FROM THE ABOVE, WE FIND THAT CLAUSE-28 PROVIDES FOR THE CONTINGENCY OF GOING FOR ANY FSI OVER AND ABOVE 41,684.81 SQ MTS. THAT EXCESS, IF A NY, WILL BE REGULARIZED WITH THE ENHANCED CONSIDERATION @ RS. 3100/- PER SQ FT. WHE N SUCH REMEDIAL PROVISIONS ARE AVAILABLE OVER AND ABOVE, DESCRIBING OF SUCH EXCESS CONSTRUCTION AS ILLEGAL IS NOT SUSTAINABLE. THEREFORE, THE FAILURE TO TAKE INTO AC COUNT THE SAID CLAUSE-28 IN CORRECT PERSPECTIVE AND THE DECISIONS CITED (SUPRA) CONSTIT UTES A MISTAKE APPARENT FROM THE RECORD AS THEY ARE AVAILABLE TO US AT THE RELEVANT POINT O F TIME. ACCORDINGLY, THE CONCLUSIONS IN THE SAID ORDER OF THE TRIBUNAL ARE REQUIRED TO BE R ECTIFIED. 5. REGARDING THE EXPENSES INCURRED FOR SUCH EXCESS FSI RELATED CONSTRUCTION, IT IS THE CASE OF THE ASSESSEE THAT SUCH EXCESS CONSTRUCTION FALLS WI THIN THE AVAILABLE FSI CONSIDERING THE AREA OF LAND. CONSIDERING THE FACTS, OUR FINDING T HAT THE SAID CONSTRUCTION IS OUTSIDE THE SCOPE OF THE CONTRACT, REQUIRES RECTIFICATION. REGA RDING THE PRIMA FACIE DISALLOWABILITY OF THE RELEVANT EXPENSES, WE FIND, OUR FINDING OF PRIMA FACIE DISALLOWABLE EXPENSES IS NOT PROPER CONSIDERING THE BINDING JUDGMENT OF THE HON BLE BOMBAY HIGH COURT AND OTHERS (SUPRA) FILED BEFORE US. 6. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE OPI NION, AS REQUESTED BY THE ASSESSEE THERE IS A NEED FOR RECALLING THE ORDER OF THE TRIB UNAL (SUPRA) AND HEARING THE APPEAL AFRESH. ACCORDINGLY, THE IMPUGNED ORDER OF THE TRI BUNAL DATED 15.4.2010 VIDE ITA NO.4470/MUM/2013 (AY 2008-09) IS RECALLED. THE REG ISTRY IS DIRECTED TO FIX THE APPEAL 3 M.A.NO. 150/MUM/2016 IN REGULAR COURSE OF HEARING AND INFORM THE PARTIES AS PER THE PROCEDURE. ACCORDINGLY, MA FILED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, MA FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH NOVEMBER, 2016. SD/- SD/- (D.KARUNAKARA RAO) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED08/11/2016 S.K.PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. //TRUE COPY/