The ACIT, Circle-2, RAJKOT-GUJARAT V. M/s. Friends Land Development Co., RAJKOT-GUJARAT

MA 16/RJT/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9562 (ITAT-RAJKOT)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: J C RANPURA
• Keywords: Question of law
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . .. . , , , , . .. . . .. . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVASTAV A, AM MA NO.16/RJT/2012 I.T.A. NO.1219/RJT/2010 (ASSESSMENT YEAR 2007-08) / (ASSESSMENT YEAR 2007-08) COMMISSIONER OF INCOME-TAX CIRCLE-II, RAJKOT ( * / APPLICANT) VS. M/S FRIENDS LAND RAJKOT DEVELOPMENT CO PRASHAM, 3 RD FLOOR NR. DHARAM CINEMA OPP MOHANBHAI HALL KASTURBA GANDHI ROAD RAJKOT PAN : AAAFF4174E +,* / RESPONDENT -. / APPLICANT BY SHRI. AVINASHKUMAR . / RESPONDENT BY SHRI J.C.RANPURA . / DATE OF HEARING 24.9.2012 . / DATE OF PRONOUNCEMENT 19.10.2012 / / / / ORDER . .. . . . . . , , , , / T. K. SHARMA, J. M. THIS MA FILED BY THE REVENUE READS AS UNDER : IN THIS CASE. THE DEPARTMENT HAD FILED APPEAL BEFOR E THE INCOME HONBLE INCOME-TAX APPELLATE TRIBUNAL. RAJKOT AGAINST THE O RDER OF THE LD.CIT(A)-III, RAJKOT FOR A.Y. 2007-08. THE HONORABLE INCOME-TAX APPELLATE TRIBUNAL. RAJKOT B ENCH. RAJKOT VIDE ORDER DATED 11-11-2011 IN ITA NO.1219/R JT/2010 HAS DISMISSED THE APPEAL FILED BY THE DEPARTMENT AND UPHELD THE DECISION OF LD. CIT(A). IN ITS DECISION IT IS HELD THAT DEDUCTI ON U/S.80IB(10) OF THE ACT IN RESPECT OF PROFIT ON SALE OF 4 RESIDENTIAL UNITS WHERE THE BUILT UP AREA IS LESS THAN 1500 SQ.FT. IS ALLOWABLE. MA NO.16/RJT/2012 I.T.A. NO1219/RJT/2010 2 2 IT IS RESPECTFULLY SUBMITTED THAT IN THIS CASE ASSESSEE HAS DEVELOPED A PROJECT IN WHICH BUILD-UP AREA OF INDIVIDUAL BUNGALOW S IN MANY CASES HAS EXCEEDED 1500 SQ.FT. AND ALSO BY DEVELOPING A COMME RCIAL SPACE WHICH EXCEEDED 17% OF TOTAL AREA OF APPROVED PROJECT. IT WOULD BE WORT HWHILE TO REFER TO THE OBSERVATIONS MADE BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OR BRAHMA ASSOCIATES REPORTED IN 119 ITD 255(SB) WHEREIN THE HONBLE SPECIAL BENCH IN PARA. NO. 114 OF ITS ORDER OBSERVED THAT 'WE HAVE NOTED THAT SECTION 80IB(10) CATEGORICALLY REFERS TO THE 'PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT'. WHAT IS DEDUCTIBLE IS 'PROFIT OF THE HOUSING PROJECT' AND NOT THE PROFIT ATTRIBUTABLE TO THE RESIDENTIAL UNITS'. ONCE THEREF ORE, WE HOLD THAT THE PROJECT IN QUESTION IS A HOUSING PROJECT, ENTIRE PROFITS OF THE HOUSING PROJECT ARE DEDUCTIBLE UNDER SECTION 80-IB(10) . THE QUESTION OF PROPORTIONATE DEDUCTION IS, THEREFORE, NOT AT ALL RELEVANT IN THIS CONTEXT'. 3. THE BENCH ALSO FURTHER NOTICED IN ITS ORDER THAT 'THAT ENTIRE THRUST OF THE TAX CONCESSION UNDER SECTION 80-IB (10) IS AIMED AT PROVIDING MORE DWELLING UNITS. IN EVERY BUDGET SPEECH , THE SUCCESSIVE FINANCE MINISTERS HAVE MADE EVERY ENDEAVOUR TO ADDRESS PROBLEM OF ACUTE SHORTAGE OF DWELLING UNITS - P RIMARILY FOR LESS PRIVILEGED SECTIONS OF THE SOCIETY. AS LEARNED SPECIAL COUNSEL RIGHTLY POINTS OUT THAT THIS PROBLEM IS TACKLED ON ONE HAND BY EXPENDITURE ON VARIOUS HOUSING SCHEMES, AND, ON THE OTHE R HAND, BY PROVIDING TAX INCENTIVES ON THE REVENUE SIDE. AS A MA TTER OF FACT, THE FACT THAT SIZE OF RESIDENTIAL UNIT IS RESTRICTED TO 1,000 SQ.FT.IN AREAS WITHIN 25 KMS. FROM MUNICIPAL LIMITS IN DELHI AND MUMBAI, AND TO 1,500 SQ. FT. IN OTHER AREAS. ALSO SHOWS THIS UNMI STAKABLE THRUST IN THE TAX INCENTIVE. THE TAX INCENTIVE BY WAY OF DEDUCTION UNDER SECTION 80-IB (10) IS CLEARLY LINKED TO PROVISION FOR AFFORDABLE DWELLING UNITS'. 'A PLAIN READING OF SECTION 80-IB(10 ). IN ENTIRETY, MAKES IT CLEAR THAT THIS SECTION IS AIMED AT PROMOTING CON STRUCTION OF HOUSING PROJECTS SO AS TO ADDRESS THE PROBLEM OF SHO RTAGE OF DWELLING UNITS'. 'THE PREDOMINANT OBJECTIVE OF THIS I NCENTIVE PROVISION, THEREFORE, IS TO ENCOURAGE BETTER AVAILABIL ITY OF THE DWELLING UNITS FOR LOW AND MIDDLE CLASS SEGMENTS OF THE SO CIETY'. 4. HERE IN THE INSTANT CASE THE PROFITS IN RESPECT OF SOME UNITS WERE PICKED UP AS QUALIFYING FOR DEDUCTION U/S 80-IB (1 0) AND THE SAME WAS ACCORDINGLY COMPUTED. THE CONDITIONS LAID DOWN IN THE SECTIONS HAVE TO BE SATISFIED AS A WHOLE AND NOT PARTIA LLY SO AS TO BE ELIGIBLE FOR THE DEDUCTION. THERE IS A SPECIFIC PURPO SE FOR WHICH THE CONDITIONS ARE STIPULATED IN THE SECTION AND THEY H AVE TO BE FULFILLED INTOTO BY AN ASSESSEE FOR AVAILING THE INCENT IVE PROVIDED IN THE SECTION. 5. REFERENCE IS ALSO INVITED TO THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA V/S CIT 317 ITR 218(SC), WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT SECTION 80IB & 80IA ARE A CODE BY THEMSELVES AS THEY CONTAIN BOTH SUSTAINING AS WELL AS PROCEDURAL PROVISIONS. HENCE WHEN SPECI FIC MA NO.16/RJT/2012 I.T.A. NO1219/RJT/2010 3 CONDITIONS ARE PRESCRIBED IN THE SECTION THEY HAVE TO BE FULFILLED BEFORE THE ASSESSEE IS ELIGIBLE TO CLAIM THE DEDUCTION. 6. IN VIEW OF THE PROVISION OF SECTION 801B( I 0), THE ASSESSEE'S PROJECT WAS NOT FOUND TO BE ELIGIBLE FOR DEDUCTION U/S 80LB OF THE ACT AND HENCE PROFIT ON SALE OF 4 RESIDENTIAL UNITS WHERE BUILD-U P AREA IS LESS THAN 1500 SQ.FT. IS NOT ALLOWABLE FOR DEDUCTION U/S.80IB(10). 7. IN THE FACTS AND CIRCUMSTANCES NARRATED ABOVE, O RDER ITA NO.1219/RJT/2010 DATED 11-11-2011 OF THE HON'BLE ITAT FOR THE ASSESS MENT YEAR 2007-08 MAY BE RECALLED FOR FRESH ADJUDICATION . 2. AT THE TIME OF HEARING OF THIS MISCELLANEOUS APPLICAT ION ON BEHALF OF THE REVENUE SHRI AVINASH KUMAR THE LD. DR APPEAR ED AND RELYING ON THE AFORESAID MISCELLANEOUS APPLICATION POINTED OUT THA T THE TRIBUNAL MAY RECALL ITS ORDER FOR FRESH ADJUDICATION. ON THE O THER HAND, SHRI J.C.RANPURA, LD.COUNSEL, APPEARED ON BEHALF OF THE ASSESSEE POINTED OUT THAT THERE IS NO MISTAKE APPARENT FROM RECORD WITHIN T HE MEANING OF SECTION 254(2) OF THE INCOME-TAX ACT 1961, AS THE TRIBU NAL IN ITS ORDER HAS FOLLOWED THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASES IN ITA NO.86/R/2009 & ITA NO.91/R/2009 AND ITA NO.1085/RJT/ 2009 & 1086/JT/2009(AY-2005-06) & ITA NO.1086/RJT/2009 FO R THE ASSESSMENT YEAR 2006-07 DATED 19.3.2010 AND 30.6.2010 RESPECTIV ELY. IN THE ASSESSMENT YEAR 2006-07, THE APPEAL OF THE REVENUE ON T HE CONTROVERSY INVOLVED IS ADMITTED BY THE HONBLE GUJARAT HIGH COU RT VIDE ORDER DATED 1.05.2012. THE RELEVANT SUBSTANTIAL QUESTION OF LAW W HICH IS ADMITTED BY THE HONBLE HIGH COURT IN THE ASSESSMENT YEAR 2006-07 IS AS UNDER : WHETHER THE TRIBUNAL BELOW COMMITTED SUBSTANTIAL ER ROR OF LAW OF LAW IN ALLOWING DEDUCTION UNDER SECTION 8IB(10); OF THE INCOME TAX ACT IN RESPECT OF PROFIT ON SALE OF 17 RESIDENTIAL UNITS OF 17 RESIDENTIAL UNITS OF A PROJECT NOTWITHSTANDING THE FA CT THAT THE ENTIRE PROJECT WAS NOT COMPLETED AND IT IS A CASE OF PARTIAL COMP LETION OF A PROJECT VIOLATING EXPLANATION ADDED TO SECTION 80IB(10 ) OF THE ACT ON THE BASIS OF ABOVE, THE LD. COUNSEL FOR THE ASSESSEE P OINTED OUT THAT THERE IS NO MISTAKE COMMITTED BY THE TRIBUNAL IN FOLLO WING THE DECISIONS OF MA NO.16/RJT/2012 I.T.A. NO1219/RJT/2010 4 THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07. HE FURTHER SUBMITTED THAT BY THIS MISCELLANEOUS APPLICA TION, THE DEPARMENT IS SEEKING REVIEW OF THE TRIBUNAL ORDER AND THE TRIBUNAL HAS NO POWER TO REVIEW ITS DECISION. 3. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE CONTENT OF THE MISCELLANEOUS APPLICATION. ADMITTEDLY, N O MISTAKE APPARENT FROM THE RECORD WITHIN THE MEANING OF SECTION 254(2) OF THE ACT HAS BEEN POINTED OUT BY THE LD. DR IN ITS MISCELLANEOUS APPLICATI ON. FURTHER, THE TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER. IN THIS V IEW OF THE MATTER, THE MISCELLANEOUS APPLICATION FILED BY THE DEPARTMENT IS D ISMISSED. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF TH E REVENUE IS DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD SD ( .. / D. K. SRIVASTAVA) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 3/ ORDER DATE 19-10-2012. /RAJKOT SRL . .. . +4 +4 +4 [phone] / COPY OF ORDER FORWARDED TO:- 1. * / APPLICANT - 2. +,* / RESPONDENT- 3. : / CONCERNED CIT. 4. :- / CIT (A),. 5. 4 +, , / DR, ITAT, RAJKOT 6. / GUARD FILE. MA NO.16/RJT/2012 I.T.A. NO1219/RJT/2010 5 / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.