M/s. Shroff Developers, Pune V. Deputy Commissioner of Income-tax,

MA 32/PUN/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1729 (ITAT-PUNE)
• Duration Of Justice: 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 03-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: V L JAIN
• Keywords: Reasonable cause
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER M.A. NO.32/PN/2014 ARISING OUT OF ITA NO.2009/PN/2012 (ASST. YEAR: 2009-10) M/S. SHROFF DEVELOPERS SHROFF HOUSE, S.NO.74+75/2/1, P.K. SHROFF MARG, NEAR SHROFF SUYASH, BANER, PUNE - 411045 PAN: AAXFS6555R APPLICANT VS. DY. CIT, CIRCLE 3, PUNE RESPONDENT ITA NO.2009/PN/2012 (ASST. YEAR: 2009-10) M/S. SHROFF DEVELOPERS SHROFF HOUSE, S.NO.74+75/2/1, P.K. SHROFF MARG, NEAR SHROFF SUYASH, BANER, PUNE - 411045 PAN: AAXFS6555R APPLICANT VS. DY. CIT, CIRCLE 3, PUNE RESPONDENT APPLICANT BY : SHRI V.L. JAIN RESPONDENT BY : SHRI S.P. WALIMBE DATE OF HEARING : 14-02-2014 DATE OF PRONOUNCEMENT : 19-02-2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS MISCELLANEOUS APPLICATION HAS BEEN MOVED BY T HE ASSESSEE ARISING OUT OF ORDER OF THE TRIBUNAL IN IT A NO. 2009/PN/2012 DATED 22-10-2013. BOTH THE MISCELLANE OUS APPLICATION AND MAIN APPEAL ARE BEING DECIDED BY TH IS COMMON ORDER. 2. THE ASSESSEE INTER ALIA HAS SUBMITTED THAT THE A PPEAL OF THE ASSESSEE WAS DISMISSED VIDE ORDER DATED 22.10.2 013 AND THE ASSESSEE COULD NOT RECEIVED THE NOTICE FOR HEAR ING AT THE RELEVANT POINT OF TIME. SO, HE WAS PREVENTED BY A REASONABLE CAUSE IN NOT ATTENDING THE CASE ON THE DATE FIXED F OR HEARING. ACCORDINGLY, THE ASSESSEE REQUESTED TO RECALL THE A FORESAID ORDER. FINDING FORCE IN THE CONTENTION OF THE ASSE SSEE, WE HOLD THE ASSESSEE WAS PREVENTED BY A REASONABLE CAU SE IN NOT ATTENDING THE HEARING ON THE DATE FIXED FOR HEA RING, SO IN THE INTEREST OF JUSTICE, WE RECALL OUR ORDER DATED 22.10.2013. 3. HAVING RECALLED THE ITA NO.2009/PN/2012 TO ITS O RIGINAL NUMBER, WE DECIDE THE ISSUE AT HAND ON MERIT. THE ASSESSEE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE DISALLOWANCE OF THE CLAIM U/S 80IB ( 10) OF RS.95,37,618/-. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) HAS ERRED IN NOT GRANTING PRO RATA CLAIM, WITH REFERENC E TO THE ELIGIBLE PORTION OF THE HOUSING PROJECT. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL OR ADD TO THE SAME, IF DEEMED NECESSARY. 4. THE LEARNED AUTHORIZED REPRESENTATIVE HAS POINTE D OUT THAT A SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE F OR A.Y. 2010-11, WHEREIN, THE FOLLOWING SIMILAR ISSUE OF CL AIM OF DEDUCTION U/S.80IB(10) FOR A.Y. 2007-08 WAS ALLOWED BY THE TRIBUNAL BY OBSERVING AS UNDER: 2. AT THE OUTSET OF HEARING, THE LEARNED AUTHORIZE D REPRESENTATIVE HAS POINTED OUT THAT THE ISSUE IN TH E APPEAL IS COVERED BY THE ASSESSEES OWN CASE FOR A. Y. 2007-08 IN ITA NO.754/PN/2010, WHEREIN IT WAS DECID ED AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE MAIN PLANK OF THE ARGUMENT OF THE LD. COUNSEL IS THAT THE AMENITI ES SPACE CANNOT BE EQUATED WITH COMMERCIAL SPACE AND EVEN IF ASSUMING IT IS A COMMERCIAL SPACE BUT STILL AS THE ASSESSEES PROJECT IS SANCTIONED PRIOR TO 01-04 - 2005, THE LIMITATION PUT ON THE MAXIMUM COMMERCIAL AREA IN ANY HOUSING PROJECT IS NOT APPLICABLE TO TH E ASSESSEES PROJECT AS THE ORIGINAL LAY OUT AND BUILDINGS PLAN WERE FIRST SANCTIONED ON 14-06-2004. HE SUBMITS THAT AMENITIES BUILDING WHICH IS SAID TO BE COMMERCIAL IS AN INDEPENDENT BUILDING AND IS BUI LT UP ON SPECIFIC MARKED AREA OF 1230 SQ. MTRS. WHICH IS AN INDEPENDENT PLOT CARVED OUT OF THE TOTAL AREA OF 8200 SQ. MTRS. HE SUBMITS THAT INITIALLY THE PROJE CT WAS ON THE PLOT OF LAND OF 4300 SQ. MTRS. BUT SUBSEQUENTLY ADJOINING PLOT WAS ACQUIRED AND HENCE, THE SEPARATE DEMARCATION WAS MADE. HE RELIED ON TH E DECISION OF THE HON'BLE HIGH COURT OF GUJARAT IN TH E CASE OF MANAN CORPORATION VS. CIT 78 DTR 205 (GUJ) AND CIT VS. BRAHMA ASSOCIATES 333 ITR 289 (BOM). HE SUBMITS THAT ASSUMING WITHOUT GOING INTO CONTROVERSY WHETHER IT IS A SINGLE PROJECT OR INDEPENDENT PROJECT OTHERWISE ALSO THE ASSESSEES PROJECT SANCTIONED PRIOR TO 01-04-2005, THE ASSESSE E IS NOT HIT BY THE DEFINITION OF THE BUILT UP ARE WH ICH IS APPLICABLE TO THE PROJECT WHICH HAVE BEEN APPROVED AFTER 01-04-2005. ALTERNATIVELY WE PLEADED THAT TH E PRORATA DEDUCTION MAY BE ALLOWED BY EXCLUDING THE AREA COVERED UNDER THE AMENITIES SPACE. FOR THAT PROPOSITION HE RELIED ON THE FOLLOWING DECISION: A) M/S. G K ASSOCIATES VS. ITO (ITA NO. 1137/PN/2010) (PARA 7) B) M/S. ADITYA DEVELOPERS VS. DCIT (PUNE) (ITA NO. 791/PN/2008) (PARA 6 & 7) C) MAGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION CO. VS. DCIT (PUNE) (ITA NO. 822/PN/2011) (PARA 22 & 24 ) D) M/S. RAHUL CONSTRUCTION CO. VS. ITO (PUNE) (ITA NO. 1250 /PN/2009) (PARA 8 TO 10) E) RUNWAL MULTIHOUSING (P) LTD. VS. ACIT (PUNE) (ITA NO. 1015/PN/2011) (PARA 21.3) F) DEVI CONSTRUCTION CO. VS. ACIT (PUNE) (ITA NO. 1390/PN/2010) (PARA 8) G) JAYANT M LUNAVAT VS. ACIT (PUNE) (ITA NO. 229/PN/2010) (PARA 5.2,5.4 & 5.5) 9. PER CONTRA THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEES ORIGINAL LAY OUT AND BUILDING PLAN WAS SANCTIONED FOR FIRST TIME ON 14-06-2004 I.E. BEFORE 31-03-2005 (PAGE 12 OF THE PAPER BOOK). IT APPEARS THAT SUBSEQUENTLY THE ASSESSEE ACQUIRED SOME ADDITIONAL LAND AND THE ORIGINAL PLAN WAS REVISED AND IN THE SANCTIONED LAY OUT 15% SPACE OF THE TOTAL AREA IS RESERVE FOR AMENITIES BUILDING. THE LD. COUNSEL POINTED OUT THAT TILL TODAY NOT A SINGLE UNIT IN TH E AMENITIES SPACE IS SOLD OUT. THE FURTHER ARGUMENT OF THE LD. COUNSEL IS THAT HOUSING PROJECT IS VERY BROUGHT TERM AND AMENITIES BUILDING ITSELF IS THE INDEPENDENT BUILDING. 10. LET US DEAL WITH THE ARGUMENT OF THE ASSESSEE GOING WITH THE CASE OF THE ASSESSING OFFICER THAT T HE AMENITY BUILDING IS NOTHING BUT IT IS COMMERCIAL BUILDING ONLY AND PART OF THE ASSESSEES HOUSING PROJECT. IN THIS CASE THE ASSESSEES ORIGINAL LAYO UT AND THE BUILDING PLAN WERE SANCTIONED ON 14-06- 2004 EVEN IF THE N.A. ORDER OF THE PLOT IS DATED 16 - 09-2003 (COPY OF THE PLAN PLACED AT PAGE NOS. 13 AND 14 OF THE COMPILATION). AS PER THE LAYOUT PLAN SANCTIONED ON 14-06-2004, THE TOTAL AREA OF THE PLO T IS SHOWN AT 4100 SQ. MTRS. AND AREA UNDER THE AMENITY SPACE 15% I.E. 615 SQ. MTRS. IT APPEARS THAT SUBSEQUENTLY THE ASSESSEE SOUGHT THE REVISION IN THE SANCTIONED LAYOUT AND PLAN BUT THE AREA OF THE PLOT WAS 4100 SQ. MTRS. TILL 01-04-2005 THE ASSESSEE HAS NOT DONE ANYTHING ON THE PLOT. IT APPEARS THAT THE ASSESSEE ACQUIRED THE ADJOINING LAND AND FILED THE FURTHER REVISED PLAN AND LAYOUT FOR THE APPROVAL TO THE LOCAL AUTHORITY AND THE APPROVAL WAS GIVEN TO THE SAID PLAN ON 05-08-2006. IN THE SAID LAYOUT THE TOTAL AREA OF THE PLOT IS SH OWN AT 8400 SQ. FT. (COPY OF THE PLAN AND LAYOUT IS AT PAGE NOS. 28 AND 30 OF COMPILATION). FROM THIS FACTUAL ASPECT, IT CAN SAFELY BE CONCLUDED THAT IN FACT THE PLAN SANCTIONED ON 05-08-2006 IS ALMOST A NEW PLAN AND IT WAS NOT MERELY THE REVISION OF THE EXISTING PLAN, EVEN THOUGH IN THE APPLICATION TO TH E LOCAL AUTHORITY THE ASSESSEE HAS STATED REVISION OF THE PLAN AND LAYOUT. IN CONSEQUENCE OF ACQUISITION OF THE ADDITIONAL LAND, THE AREA OF THE AMENITIES SPACE WAS ALSO INCREASED SO IT CANNOT BE SAID THAT THE PLAN SANCTIONED ON 05-08-2006 IS ONLY THE REVISED PLAN. WE ARE UNABLE TO ACCEPT THE ARGUMENT OF THE LD. COUNSEL THAT AS THE PROJECT WAS SANCTIONED ON 16-06-2004, HENCE THE DEFINITION OF THE BUILT UP AREA INTRODUCED IN SEC. 80IB(10) BY TH E FINANCE (NO. 2) ACT, 2004 W.E.F. 01-04-2005 IS NOT APPLICABLE. AFTER ANXIOUSLY PERUSING THE DOCUMENTS ON RECORD, INCLUDING THE LAYOUT PLAN AND OTHER PERMISSIONS, IN OUR OPINION THE EFFECTIVE SANCTIONE D TO THE ASSESSEES HOUSING PROJECT IS ON 05-08-2006 AND HENCE, THE ASSESSEE WAS VERY MUCH AWARE REGARDING THE CHANGE IN LAW AND HE COULD HAVE ALSO ACCORDINGLY MADE THE CHANGES IN THE PLAN AND LAYOUT. WE FIND NO MERIT ON THE FIRST ARGUMENT OF THE ASSESSEE IN RESPECT OF THE APPLICABILITY OF THE DEFINITION OF THE BUILT UP AREA INTRODUCED IN SEC. 80IB(10) W.E.F. 01-04-2005. WE HOLD THAT AMENDMENT INTRODUCED TO SEC. 80IB(10), PUTTING, CEILING ON COMMERCIAL AREA IS APPLICABLE TO THE ASSESSEES PROJECT. 11. NOW WE ADDRESS THE NEXT LIMB OF THE ARGUMENT OF THE LD. COUNSEL I.E. AMENITIES SPACE ITSELF IS A SEPARATE PROJECT. WE FIND FORCE IN THE SAID CONTENTION OF THE ASSESSEE. AS PER THE INFORMATION ON RECORD, WE FIND THAT THE ASSESSEE WAS REQUIRED T O RESERVE 15% AREA OF HIS PLOT FOR AMENITIES SPACE EVEN THOUGH THE LD. COUNSEL HAS TAKEN LOT OF EFFORT S TO CONVINCE THAT AMENITY BUILDING IS DIFFERENT THAN COMMERCIAL BUILDING BUT WE PREFER NOT TO GO INTO TH E SAID CONTROVERSY. WE ARE EXAMINED THIS ISSUE ON THE DIFFERENT CONTENTION OF THE ASSESSEE THAT AMENITIES SPACE FOR AMENITY BUILDING IS A PROJECT ITSELF. ON THE PERUSAL OF THE LAYOUT AND PLAN, IT IS UNDISPUTED FACT ON RECORD THAT FROM THE FIRST APPROVED LAYOUT, THE ASSESSEE HAS SHOWN 15% AREA RESERVE IN PLOT OF LAND AS AMENITIES SPACE. THE ARGUMENT OF THE LD. COUNSEL IS THAT THE LOCAL AUTHORITY IN TERMS OF DC RULES AND MAHARASHTRA REGIONAL TOWN PLANNING ACT, 1966 (IN SHORT MRTP ACT) MANDATES THAT IF THE PLOT AREA IS MORE THAN 1 ACRE IN THE RESIDENTIAL ZONE THEN AMENITIES SPACE T O THE EXTENT OF 15% OF THE PLOT AREA SHALL HAVE TO BE PROVIDED IN THE LAYOUT. THE LD. COUNSEL ALSO REFERRED TO SEC. 22 OF THE MRTP ACT, 1966 TO IMPRESS HIS ARGUMENT ON THE POINT THAT THE RESERVATION OF THE AMENITY SPACE IS GOVERNED BY THE RELEVANT STATUTE AND IS NOT THE MATTER OF CHOICE OF THE DEVELOPER. THE ASSESSEE HAS ALSO FILED THE COP Y OF THE SANCTIONED PLAN OF THE AMENITY BUILDING ON THE RESERVE SPACE OF 1230 SQ. MTRS. WHICH IS PLACE AT PAGE NO. 40 OF THE COMPILATION. WE FURTHER FIND THAT FOR THE CONSTRUCTION OF THE BUILDING OF THE AMENITY SPACE SEPARATE PERMISSION HAS BEEN GRANTED BY THE DISTRICT COLLECTOR BEING COMPETENT LOCAL AUTHORITY VIDE ORDER DATED 07-06-2008. IF TH E BUILDING ON THE AMENITY SPACE HAS BEEN GRANTED SPECIFIC PERMISSION SEPARATELY, IN OUR OPINION IT PARTAKE THE CHARACTER OF INDEPENDENT PROJECT AND CANNOT BE TAGGED WITH THE ASSESSEES OTHER PROJECTS . THE LD. COUNSEL ALSO SUBMITTED THAT NOT A SINGLE UNIT IN THE SAID BUILDING HAS BEEN SOLD TILL TODAY EVEN THOUGH GIVEN ON LEASE AND NO PROFIT FROM THE AMENITY BUILDING SPACE IS INCLUDED IN THE ELIGIBLE PROFIT ON WHICH THE DEDUCTION U/S. 80IB(10) HAS BEEN CLAIMED. THE LD. COUNSEL HAS RELIED ON THE PLETHORA OF THE DECISIONS ON THIS LIMB OF ARGUMENT BUT IN OUR OPINION THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTY 353 ITR 36 (BOM) IS APPLICABLE TO THE FACTS OF THIS CASE. WE, ACCORDINGLY, HOLD THAT THE AMENITY BUILDING IS AN INDEPENDENT PROJECT ITSELF AND IT CANNOT BE TAGGED WITH OTHER PROJECTS OF THE ASSESSEE. WE, FURTHER HOLD THAT THE ASSESSEE HAS NOT VIOLATED ANY OF THE CONDITIONS OF SEC. 80IB(10) TO GAIN ELIGIBILITY FOR CLAIMING THE DEDUCTION AND HENCE BOTH THE AUTHORITIES BELOW ERRED BY DENYING THE DEDUCTION TO THE ASSESSEE. WE, ACCORDINGLY, ALLOW THE ASSESSEES CLAIM OF DEDUCTION ON THE ABOVE REASON AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S. 80IB(10). WE ALSO MAKE IT CLEAR THAT AS THE AMENIT Y BUILDING IS TREATED AS AN INDEPENDENT PROJECT, THE ASSESSEE IS NOT ENTITLED TO INCLUDE THE PROFIT EARN ED FROM THE SALE OF ANY OF THE UNIT IN THE SAID BUILDI NG FOR CLAIMING THE DEDUCTION U/S. 80IB(10). 12. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . 2.1 NOTHING CONTRARY WAS BROUGHT ON BEHALF OF REVEN UE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONIN G, WE HOLD THAT THE AMENITY BUILDING IS AN INDEPENDENT PR OJECT ITSELF AND IT CANNOT BE TAGGED WITH OTHER PROJECTS OF THE ASSESSEE. THE ASSESSEE HAS NOT VIOLATED THE CONDIT IONS OF SECTION 80IB(10) FOR CLAIMING THE DEDUCTION AND HENCE BOTH THE AUTHORITIES BELOW ERRED BY DENYING THE DEDUCTION TO THE ASSESSEE. ACCORDINGLY, WE ALLOW T HE ASSESSEES CLAIM OF DEDUCTION FOR THE REASONS INCORPORATED IN A.Y. 2007-08. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE DEDUCTIO N U/S.80IB(10) AND IT IS ALSO MAKE IT CLEAR THAT AS T HE AMENITY BUILDING IS TREATED AS AN INDEPENDENT PROJE CT, THE ASSESSEE IS NOT ENTITLED TO INCLUDE THE PROFIT EARNED FROM SALE OF ANY OF THE UNIT IN THE SAID BUILDING F OR CLAIMING THE DEDUCTION U/S.80IB(10). 3. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FA CTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF ASSESSEE ON THE REASONING GIVEN BY BENCH IN A.Y. 2007-08. IT IS AL SO MADE CLEAR THAT AS THE AMENITY BUILDING IS TREATED AS AN INDEPENDENT PROJECT, THE ASSESSEE IS NOT ENTITLED T O INCLUDE THE PROFIT EARNED FROM SALE OF ANY OF THE UNIT IN T HE SAID BUILDING FOR CLAIMING DEDUCTION U/S.80IB(10) OF ACT . 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION AS WELL AS APPEAL FILED BY THE ASSESSEE ARE ALLOWED AS INDICAT ED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 19 TH DAY OF FEBRUARY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YA DAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED 19 TH FEBRUARY, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-III, PUNE 4) THE CIT-III, PUNE 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, ITAT, PUNE.