DCIT CEN CIR 36, V. HIRANANDANI AKRUTI J.V.,

MA 452/MUM/2010

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 5282 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-11-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 14-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANT LAL
• Keywords: Maximum Marginal Rate

Judgement Text

.IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI SSHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER M.A. NO. 452/MUM/2010 (ARISING OUT OF I.T.A.NO. 5416/MUM/2009) ASSESSMENT YEAR : 2006-07 THE DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 36, MUMBAI VS. M/S. HIRANANDANI AKRUTI JV, AKRUTI TRADE CENTRE, ROAD NO.7, MAROL, MIDC, ANDHERI (E), MUMBAI 400 093. PAN: AAAAH 1443. H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HEMANT LAL RESPONDENT BY : SHRI VIJAY MEHTA O R E R PER N.V. VASUDEVAN, JM: THE REVENUE HAS FILED THIS MISCELLANEOUS APPLICATION PRAYING FOR RECTIFICATION OF CERTAIN APPARENT ERRORS IN THE ORDER OF THE TRIB UNAL. 2. THE FACTS AND CIRCUMSTANCES UNDER WHICH THE PRES ENT M.A. HAS BEEN FILED BY THE REVENUE ARE AS FOLLOWS: THE ASSESSEE CARRIED OUT A SLUM REHABILITATION SCHE ME (SR SCHEME) AND IN RETURN WAS GIVEN TRANSFER OF DEVELOPMENT RIGHTS( TDR) BY MMRDA. ON SALE OF SUCH TDR THE ASSESSEE DERIVED PROFIT OF RS.51,02,27 ,772 WHICH WAS CLAIMED AS DEDUCTION U/S.80-IB (10) OF THE ACT. THE SR SCHEME WAS APPROVED ON 17/11/2003 AND 9/12/2 003 I.E., DURING THE PREVIOUS YEAR RELEVANT TO AY 04-05. THE PROJEC T WAS COMPLETED ON 8.7.2005/21.12.2005 I.E., DURING THE PREVIOUS YEAR RELEVANT TO AY 06-07. ONE OF THE CONDITION FOR ALLOWING DEDUCTION U/S.80- IB(10) OF THE ACT IS THAT THE PROFITS SHOULD HAVE BEEN DERIVED FROM DEVE LOPING AND BUILDING HOUSING MA NO.452/M/2010 M/S. HIRANANDANI AKRUTI J.V. 2 PROJECT APPROVED BY THE LOCAL AUTHORITY. PRIOR TO 1-4-2005 THERE WAS NO INDICATION IN THE PROVISIONS OF SEC.80-IB(10) OF THE ACT AS TO WHAT WOULD BE THE POSITION IF COMMERCIAL SPACE IS ALSO BUILT IN A PROJECT. THE F INANCE ACT, 2004 AMENDED SEC.80-IB(10) BY INTRODUCING CLAUSE (D) TO SEC.80-I B(10) W.E.F. 1-4-2005, WHICH PROVIDED THAT THE BUILT UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENT SHOULD NOT EXCEED FIVE PERCENT OF THE AGGREGATE BUI LT UP ARE OF THE HOUSING PROJECT OR 2000 SQ.FT. WHICHEVER IS LESS. BOTH BEFORE AND AFTER THE INTRODUCTION OF CLAUSE (D ) TO SEC.80-IB(10) DISPUTES AROSE IN SEVERAL CASES AS TO WHAT WOULD BE THE POSITION WHEN IN A PROJECT COMMERCIAL SPACE IS BUILT. THE ASSESSEES WERE TAKI NG A STAND THAT PRIOR TO THE AMENDMENT REFERRED TO ABOVE, THERE WAS NO RESTRICTI ON ON THE BUILT UP AREA OF COMMERCIAL SPACE IN A PROJECT. THE REVENUE HAS BEE N TAKING A STAND THAT EVEN IF THERE IS ONE SQ.FOOT OF COMMERCIAL SPACE IN A PROJE CT THEN THE BENEFIT OF SEC.80-IB (10) WOULD NOT BE AVAILABLE TO AN ASSESSEE. THE ISSUE AS TO WHETHER THE PROVISIONS OF SEC.80-IB (10) (D) INTRODUCED W.E.F. 1-4-2005 IS PROSPECTIVE OR RETROSPECTIVE WAS CONSIDERED AND DECIDED BY A SPECIAL BENCH OF THE ITAT MUMBAI IN THE CASE OF BRA HMA ASOCIATES 122 TTJ 443 (SB) (PUNE) AND IT WAS HELD IN THE SAID DECISION TH AT THE SAID PROVISIONS WERE PROSPECTIVE AND APPLIED ONLY FROM AY 05-06. IN RES PECT OF DISPUTES REGARDING EXTENT TO WHICH COMMERCIAL SPACE CAN EXIST IN A PRO JECT ON WHICH DEDUCTION U/S.80-IB (10) IS CLAIMED WAS ALSO LAID DOWN BY THE HONBLE SPECIAL BENCH. IN THE APPEAL BEFORE THE TRIBUNAL THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80-IB (10) OF THE ACT IN AY 06-07 AND THEREFORE THE PROVISIONS OF SEC.80-IB (10)(D) WOULD BE ATTRACTED. ADMITTEDLY THE BUILT U P AREA OF COMMERCIAL SPACE IN THE SR SCHEME COMPLETED BY THE ASSESSEE WAS MORE TH AN 2000 SQ.FT. AND THEREFORE THE ASSESSEE WOULD NOT BE ENTITLED TO CLA IM DEDUCTION U/S.80-IB (10) OF THE ACT. MA NO.452/M/2010 M/S. HIRANANDANI AKRUTI J.V. 3 THE PLEA OF THE ASSESSEE BEFORE THE TRIBUNAL WAS TH AT THE LAW AS IT STOOD WHEN THE SR SCHEME WAS APPROVED BY THE COMPETENT AU THORITY SHOULD ALONE APPLY AND NOT THE LAW AS IT STOOD WHEN THE INCOME FROM TH E PROJECT IS OFFERED TO TAX. IN FACT THIS WAS THE ISSUE WHICH WAS ARGUED IN THE APP EAL BEFORE THE TRIBUNAL. THE TRIBUNAL FRAMED THE QUESTION AS TO WHAT IS THE LAW THAT HAS TO BE APPLIED IN THE CASE OF THE ASSESSEE, I.E., THE LAW AS IT EXISTED W HEN THE ASSESSEE COMMENCED DEVELOPMENT AFTER DUE APPROVAL I.E., IN THE PREVIOU S YEAR RELEVANT TO AY 04-05 OR THE LAW AS IT EXISTED WHEN THE DEDUCTION U/S.80-IB (10) IS CLAIMED I.E., A.Y. 06-07. THIS ASPECT HAS BEEN MADE VERY CLEAR IN PARA-13 OF THE ORDER OF THE TRIBUNAL. IN PARA-15 OF THE ORDER OF THE TRIBUNAL IT HAS FURTHER BE CLARIFIED THAT IF IT IS HELD THAT THE LAW AS ON THE DATE WHEN THE ASSESSEE COMMENCED DEVELOPMENT AFTER DUE APPROVAL I.E., AY 04-05 IS TO BE APPLIED, EVEN THE N THE ASSESSEE HAS TO SATISFY THE REQUIREMENTS OF PERMISSIBLE COMMERCIAL SPACE IN A H OUSING PROJECT TO CLAIM DEDUCTION U/S.80-IB (10) OF THE ACT. THE TRIBUNAL THEREAFTER PROCEEDED TO DECIDE THE QUESTION AS TO WHETHER THE LAW AS IT EXISTED WH EN THE ASSESSEE COMMENCED DEVELOPMENT AFTER DUE APPROVAL I.E., IN THE PREVIOU S YEAR RELEVANT TO AY 04-05 OR THE LAW AS IT EXISTED WHEN THE DEDUCTION U/S.80-IB (10) IS CLAIMED I.E., A.Y. 06-07, WILL APPLY. 3. IN THIS MISCELLANEOUS APPLICATION, THE REVENUE H AS SUBMITTED THAT IT HAD RELIED ON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) FOR THE PROPOSITION THAT CLAUSE-(D) OF SEC. 80-IB (10) WOULD APPLY FROM AY 05-06 AND IN THIS REGARD HAD EXTENSIVELY RELIED ON PARA-86 AND 91 OF THE SAID DECISION. IT IS THE GRIEVANCE OF THE REVENUE THAT IN PARA-21 OF THE ORDER OF THE TRIBUNAL, THE FOLLOWING SUBMISSIONS ARE STATED TO H AVE BEEN MADE BY THE LEARNED D.R. IT WAS LASTLY SUBMITTED BY HIM THAT THE DECISION I N THE CASE OF BRAHMA ASSOCIATES (SUPRA) DEALT WITH THE LAW AS IT EXISTED PRIOR TO 1/4/2005 AND THEREFORE NOT RELEVANT FOR THE PURPOSE OF RENDERING DECISION IN THE PRESENT APPEAL. MA NO.452/M/2010 M/S. HIRANANDANI AKRUTI J.V. 4 4. ACCORDING TO THE REVENUE THE REVENUE NEVER MADE SUCH SUBMISSION. IT HAS FURTHER BEEN STATED IN THE MISCELLANEOUS APPLIC ATION THAT BECAUSE OF THIS IMPRESSION IN THE MIND OF THE TRIBUNAL, THE ENTIRE DECISION OF THE TRIBUNAL IS VITIATED. THERE IS NO SPECIFIC PRAYER IN THE MISCE LLANEOUS APPLICATION MADE BY THE REVENUE BUT A REQUEST HAS BEEN MADE TO RECTIFY MIST AKE IN THE ORDER OF ITA NO.5416/MUM/09 DATED 30.3.2010. 5. WE HAVE HEARD THE SUBMISSION OF THE LEARNED D.R. WHO REITERATED THE STAND OF THE REVENUE AS CONTAINED IN THE MISCELLANE OUS APPLICATION. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE HAS PREFERRED AN APPEAL AGAINST THE ORDER OF THE ITAT BEFORE THE HONBLE HI GH COURT AND THEREFORE THE PRESENT MISCELLANEOUS APPLICATION IS NOT MAINTAINAB LE. IT WAS FURTHER SUBMITTED THAT WHEN THE APPEAL IS PENDING ADJUDICATION BEFORE THE HONBLE HIGH COURT THE TRIBUNAL SHOULD NOT CONSIDER THE MISCELLANEOUS APPL ICATION AT THIS STAGE. IT WAS FURTHER SUBMITTED THAT THE ABOVE OBSERVATIONS OF TH E TRIBUNAL, EVEN ASSUMING THAT THE SAME WERE ERRONEOUS, DOES NOT IN ANY WAY VITIAT E THE CONCLUSIONS OF THE TRIBUNAL, BECAUSE THE DECISION OF THE TRIBUNAL IS B ASED ON REASONS AS CONTAINED IN PARA-22 TO 29 OF THE ORDER OF THE TRIBUNAL AND THE SAID DECISION IS NOT BASED ON ANY CONCESSION MADE BY THE LEARNED D.R. IT WAS, TH EREFORE, SUBMITTED THAT THE MISCELLENOUS APPLICATIONS IS DEVOID OF ANY MERIT AN D THE SAME SHOULD BE DISMISSED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HA VE PERUSED OUR LOG BOOK OF THE RELEVANT DATE OF HEARING OF THE ORIGINAL APP EAL AND WE DO NOT FIND ANY SUCH SUBMISSION MADE BY THE LEARNED D.R. AS HAS BEEN MEN TIONED IN PARA-21 OF THE ORDER OF THE TRIBUNAL. TO THIS EXTENT THERE IS A M ISTAKE IN THE ORDER OF THE TRIBUNAL AND THEREFORE WE DELETE THE LAST SENTENCE OF PARA- 21 OF THE ORDER OF THE TRIBUNAL WHICH READS AS FOLLOWS: IT WAS LASTLY SUBMITTED BY HIM THAT THE DECISION I N THE CASE OF BRAHMA ASSOCIATES (SUPRA) DEALT WITH THE LAW AS IT EXISTED PRIOR TO 1/4/2005 AND THEREFORE NOT RELEVANT FOR THE PURPOSE OF RENDERING DECISION IN THE PRESENT APPEAL. MA NO.452/M/2010 M/S. HIRANANDANI AKRUTI J.V. 5 7. WE ARE HOWEVER OF THE VIEW THAT THE STAND OF THE REVENUE THAT BECAUSE OF THIS MISTAKE THE ENTIRE DECISION OF THE TRIBUNAL IS VITIATED CANNOT BE ACCEPTED. AS RIGHTLY CONTENDED ON BEHALF OF THE ASSESSEE, THE DE CISION OF THE TRIBUNAL IS NOT BASED ON ANY CONCESSION GIVEN BY THE LEARNED D.R. B UT IS BASED ON REASONS AS GIVEN IN PARA -22 TO 29 OF ITS ORDER. THE ABOVE AR GUMENT ATTRIBUTED TO THE LEARNED D.R. WAS IN THE CONTEXT OF THE QUESTION AS TO WHAT IS THE LAW THAT HAS TO BE APPLIED IN THE CASE OF THE ASSESSEE, I.E., THE LAW AS IT EX ISTED WHEN THE ASSESSEE COMMENCED DEVELOPMENT AFTER DUE APPROVAL I.E., IN T HE PREVIOUS YEAR RELEVANT TO AY 04-05 OR THE LAW AS IT EXISTED WHEN THE DEDUCTIO N U/S.80-IB (10) IS CLAIMED I.E., A.Y. 06-07. THE DECISION OF THE SPECIAL BENCH IN T HE CASE OF BRAHMA ASSOCIATES (SUPRA) DECIDED THE ISSUE AS TO WHETHER THE AMENDME NT BY THE FINANCE ACT, 2004 W.E.F. 1-4-2005 INSERTING CLAUSE (D) TO SEC.80-IB ( 10) OF THE ACT WAS PROSPECTIVE OR APPLIED RETROSPECTIVELY. THE SPECIAL BENCH ANSWERE D THE QUESTION HOLDING THAT THE SAID AMENDMENT APPLIED RETROSPECTIVELY I.E., ONLY F ROM AY 05-06. IN RESPECT OF THE AY PRIOR TO AY 0-06, THE SPECIAL BENCH LAID DOWN PA RAMETERS TO ALLOW DEDUCTION WHERE THE CONSTRUCTION ALSO CONSISTED COMMERCIAL SP ACE. THEREFORE THE DECISION IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) WAS NOT RELEV ANT TO DECIDE THE ISSUE THAT THE TRIBUNAL TOOK UP FOR CONSIDERATION IN THE APPEA L. IT WAS RELEVANT ONLY IF IT WAS HELD THAT THE LAW AS IT EXISTED WHEN THE ASSESSEE C OMMENCED DEVELOPMENT AFTER DUE APPROVAL I.E., IN THE PREVIOUS YEAR RELEVANT TO AY 04-05 IS TO BE APPLIED. IN FACT IN PARA-28 OF THE ORDER OF THE TRIBUNAL AFTER HOLDING THAT THE LAW AS IT EXISTED IN THE PREVIOUS YEAR RELEVANT TO AY 04-05 WOULD ONL Y APPLY FOR EXAMINING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IB (10) OF THE ACT, THE ISSUE AS TO WHETHER THE CONDITIONS AS LAID DOWN IN THE DECISION OF SPEC IAL BENCH IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) ARE SATISFIED ARE NOT IN THE CAS E OF THE ASSESSEE HAS BEEN REMANDED TO THE AO FOR FRESH CONSIDERATION. WE ARE OF THE VIEW THAT THE MA NO.452/M/2010 M/S. HIRANANDANI AKRUTI J.V. 6 MISCELLANEOUS APPLICATION TO THE EXTENT THAT IT STA TES THAT THE DECISION OF THE TRIBUNAL IS VITIATED BECAUSE IT PROCEEDED ON THE BA SIS OF AN ARGUMENT NOT MADE ON BEHALF OF THE REVENUE, IS MISCONCEIVED. WE THER EFORE REJECT THE MISCELLANEOUS APPLICATION TO THE ABOVE EXTENT. WE ALSO MAKE IT CL EAR THAT THE MISTAKE RECTIFIED BY THIS MISCELLANEOUS APPLICATION WILL HAVE NO BEARING WHATSOEVER ON THE CONCLUSION ARRIVED AT BY THE TRIBUNAL. WITH THE ABOVE OBSERVA TIONS, THE MISCELLANEOUS APPLICATION OF THE REVENUE IS PARTLY ALLOWED. 8. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF NOVEMBER, 2010. SD. SD./ (P.M. JAGTAP) (N.V. VASUDEAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED THE 4 TH NOVEMBER, 2010. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT, CENT. III,MUMBAI 4. THE CIT(A), CENTRAL-VI, MUMBAI 5. THE DR E BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI