ACIT CEN CIR-2, THANE v. SHREE OSTWAL BUILDERS LTD, MUMBAI

ITA 7293/MUM/2008 | 2004-2005
Pronouncement Date: 17-02-2010 | Result: Dismissed

Appeal Details

RSA Number 729319914 RSA 2008
Assessee PAN AAFCS2523N
Bench Mumbai
Appeal Number ITA 7293/MUM/2008
Duration Of Justice 1 year(s) 1 month(s) 21 day(s)
Appellant ACIT CEN CIR-2, THANE
Respondent SHREE OSTWAL BUILDERS LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 17-02-2010
Date Of Final Hearing 12-02-2010
Next Hearing Date 12-02-2010
Assessment Year 2004-2005
Appeal Filed On 26-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'I' BENCH MUMBAI BEFORE SHRI D.K. AGARWAL JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NOS. 7292 & 7293/MUM/2008 (ASSESSMENT YEARS: 2003-04 & 2004-05) ACIT CENTRAL CIRCLE - 2 M/S. SHREE OSTWAL BUILDERS LTD. PAWAR INDUSTRIAL ESTATE A-1 SHANTIGANGA APARTMENT EDULJI ROAD CHARAI THANE 400061 VS. OPP. RAILWAY STATION BHAYANDER (E) PAN - AAFCS 2523 N APPELLANT RESPONDENT CO NOS. 209 & 210/MUM/2009 (ASSESSMENT YEAR: 2003-04 & 2004-05) M/S. SHREE OSTWAL BUILDERS LTD. ACIT CENTRAL CIRCL E - 2 A-1 SHANTIGANGA APARTMENT PAWAR INDUSTRIAL ESTATE OPP. RAILWAY STATION BHAYANDER (E) VS. EDULJI ROAD CHARAI THANE 400061 PAN - AAFCS 2523 N CROSS OBJECTOR APPELLANT IN APPEAL REVENUE BY: MS. VANDANA SAGAR ASSESSEE BY: MR. VIMAL PUNMIYA O R D E R PER BENCH THE APPEALS ARE BY THE REVENUE AND THE CROSS OBJECT IONS ARE BY THE ASSESSEE AGAINST THE ORDERS OF THE CIT(A)-II THANE DATED 17/09/2008 2. GROUNDS OF THE REVENUE IN BOTH THE YEARS ARE COMMON WHICH ARE AS UNDER: - 1. THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 80IB(10) ON THE PROPORTIONATE PROFIT EARNED ON CONSTRUCTION AND SALE OF RESIDENT IAL UNITS. 2. THE LEARNED CIT(A) HAS EARED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB (10) OF THE ACT ONLY ON THE PROPORTIONATE PRO9FIT FROM COMMERCIAL AREA WITHOUT APPRECIATING T HAT THE PROJECT CONSISTS OF COMMERCIAL AND RESIDENTIAL AREA. 3. THE LEARNED CIT(A) HAS FAILED TO APPRECIATING TH E FACT THAT ACT DOES NOT PERMIT FOR THE PROPORTIONATE DEDUCTION TO BE AL LOWED IN RESPECT OF VIOLATION MADE WHILE AVAILING THE DEDUCTION U/S 80I B(10). ITA NO. 7292& 7293/MUM/2008 &CO M/S. SHREE OSTWAL BUILDERS LTD. 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS FAILED IN APPRECIATING THE FACT THAT THE A.O. H AS CLEARLY ESTABLISHED THAT THE ASSESSEE HAS VIOLATED THE COND ITIONS PRESCRIBED UNDER SECTION 80IB(10) OF THE ACT AND HAS OF NONE T HE ON EVIDENCE ON RECORD. 5. THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT PRIOR TO AMENDMENT IN FINANCE ACT IN 2004 ONLY RESIDENTIAL P ROJECT WAS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IB(10). 6. THE LD. CIT(A) WAS NOT RIGHT IN LAW IN NOT TAKIN G INTO ACCOUNT THE DECISION GIVEN BY THE HON'BLE ITAT MUMBAI IN THE C ASE OF M/S LAUKIK DEVELOPERS 108 TTJ 364 OF THANE WHEREIN IT HAS BEEN HELD THAT IT THE VERY OBJECT OF INTRODUCING THE PROVISIO NS OF SECTION 80IB(10) IN THE STATUTE BOOK FOR PROMOTION OF HOUSI NG ACTIVITY SHALL BE NULLIFIED IF THE ASSESSEES ARE ALLOWED PROPORTI ONATE DEDUCTION. 3. BRIEFLY STATED THE ASSESSEE IS A BUILDER AND DEVEL OPER AND HAS CLAIMED DEDUCTION UNDER SECTION 80IB ON ITS PROJECTS OSTWAL NAGRI. THE ASSESSING OFFICERS OBJECTION WAS THAT THERE WERE COMMERCIAL PREMISES EXCEEDING 2 000 SQ.FT. IN THE PROJECT AND HENCE THE ASSESSEE IS NO T ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. THE CIT(A) CONSIDERED THAT THE ENTIRE PROJECT WAS APPROVED BY THE MUNICIPAL CORPORATION AS A RESIDENT IAL PROJECT AND THE COMMERCIAL PREMISES WAS WITHIN THE NORMS PROVIDED A ND ACCORDINGLY HE AFTER ELABORATE DISCUSSION ALLOWED PROPORTIONATE D EDUCTION ON RESIDENTIAL AREA OF THE PROJECT EXCLUDING THE PROFITS EARNED ON THE COMMERCIAL AREA. THE REVENUE IS AGGRIEVED ON THE ABOVE DECISION OF THE C IT(A) IN GRANTING PROPORTIONATE PROFITS FOR DEDUCTION UNDER SECTION 8 0IB. 4. THE LEARNED D.R. REITERATED THE FACTS AS CONSIDERED BY THE A.O. AND OBJECTED TO THE GRANTING OF 80IB WHEN THERE ARE VIO LATIONS OF PROVISIONS IN VIEW OF COMMERCIAL AREA WHICH IS MORE THAN 10% IN SOME OF THE UNITS. HE REFERRED TO THE FACTS CULLED OUT FROM THE CIT(A)S ORDER IN SUPPORT OF THE GROUNDS. 5. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THE ASS ESSEE HAS 4 SECTORS AND THE COMMERCIAL AREA OF THE ENTIRE PROJE CT IS ONLY AT 6.15% AND GAVE THE FOLLOWING TABLE WITH REFERENCE TO VARIOUS ASSESSMENT YEARS AND CLAIMS THEREON: - ITA NO. 7292& 7293/MUM/2008 &CO M/S. SHREE OSTWAL BUILDERS LTD. 3 SECTOR NO. RESI. AREA SQ.FT. SHOP AREA SQ.FT. PROFIT TOTAL PROFIT DEDUCTION U/S. 80IB ASSESSMENT YEAR 1 49788 10135 90 62 623 2003-04 2 52650 0 73 40 541 1 64 03 164 1 64 03 164 2003-04 3 51160 8598 50 40 147 2004-05 4 54410 0 45 89 082 96 29 229 95 32 588 2004-05 4 22360 0 79 84 575 78 10 222 78 10 222 2005-06 4 55645 0 4 45 168 4 45 168 4 72 146 2006-07 6. IT WAS SUBMITTED FURTHER THAT THE CIT(A) HAS GRANTE D PROPORTIONATE DEDUCTION WHEREAS THERE WAS A SEARCH ON THE PREMISE S OF THE ASSESSEE SUBSEQUENTLY AND IN THE REASSESSMENT PROCEEDINGS UN DER SECTION 153A THE A.O. DISALLOWED THE ENTIRE 80IB DEDUCTION WHICH WAS GRANTED BY THE CIT(A)-I THANE VIDE HIS ORDER DATED 30.11.2009 IN RESPECTIVE ASSESSMENT YEARS AND PLACED THE ORDER ON RECORD IN SUPPORT OF THE CIT(A) S ORDER IN THIS CASE RECENTLY PASSED. 7. WE HAVE CONSIDERED THE ISSUE. AS VERIFIED FROM THE RECORD THE CIT(A) HAS ANALYSED THE COMMERCIAL AREA INVOLVED IN THE WH OLE PROJECT BEING LESS THAN 10% AND HE ALSO ANALYSED VARIOUS ITAT DECISION S. ACCORDINGLY HE GRANTED PROPORTIONATE DEDUCTION BY STATING AS UNDER : - 04. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF T HE ASSESSING OFFICER AND AS WELL AS THE ARGUMENTS OF THE LD. A.R. THE LE ARNED A.R. POINTED OUT THAT THE PROJECT DEVELOPED BY THE APPELLANT EFFECTI VELY IS A HOUSING PROJECT AS PER THE COMMENCEMENT CERTIFICATE NO. BBS R/CC/BP- 1735/B/418 DATED 17.06.1998 IS FOR RESIDENTIAL BUILDING AND RESIDENTIAL WITH SHOPLINE BUILDING AND THEREBY THE APPELLANT HAS COMPLIED WITH THE NOTIFICATION ISSUED BY THE CBDT V IDE NO.205/3/2001/ITA II DATED 4/5/2001. THE JURISDICTI ONAL TRIBUNAL IN THE CASE OF MR. HARSHAD P. DOSHI VS ACIT [2007] 109 TTJ 335 HAS ALSO PRONOUNCED THE SAME VERDICT. IT HAS BEEN RIGHTLY PO INTED OUT BY THE LD. A.R. THAT SUB-SECTION (C) OF SECTION 80IB(10) OF T HE ACT CLEARLY MEANS DEDUCTION FOR A RESIDENTIAL UNIT WHICH IS NOT MORE THAN 1000 SQ.FT/1500 SQ.FT. AS THE CASE MAY BE ELIGIBLE FOR DEDUCTION. T HE STATED VIEW IN THIS PROCEEDINGS HAS BEEN SUPPORTED BY THE DECISION OF H ON'BLE ITAT KOLKATTA IN THE CASE OF BENGAL AMBUJA HOUSING DEVE LOPMENT LTD. VS DCIT ITA NO. 1735/KOL/2005 FOR THE A.Y. 2002-03. TH E HON'BLE KOLKATTA TRIBUNAL AGREED TO THE VIE OF THE CIT(A) AND HELD T HAT THE DENIAL OF THE CLAIM OF THE ASSESSEE WAS ON ACCOUNT OF RATHER REST RICTED AND NARROW INTERPRETATION OF THE PROVISION OF CLAUSE (C) OF SE CTION 80IB(10). THE TRIBUNAL WHILE COMING TO THIS CONCLUSION RELIED UPO N THE JUDGEMENT OF THE APEX COURT IN THE CASE OF M/S. BAJAJ TEMPO LTD. VS. CIT (1992) 196 ITA NO. 7292& 7293/MUM/2008 &CO M/S. SHREE OSTWAL BUILDERS LTD. 4 ITR 188 (SC). THE KOLKATTA ITATS DECISION HAS BEEN UP HELD BY THE KOLKATTA HIGH COURT VIDE ORDER NO. ITA NO. 458 OF 2 006 DATED 27/03/2007. THE DECISION IN THE CASE OF M/S. ARUN E XCELLO FOUNDATION LTD. VS. ACIT (2007) 108 TTJ 71 RENDERED BY ITAT C HENNAI ALSO SUPPORTS THE ABOVE VIEW. ACCORDINGLY THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT ON THE PROPORTIO NATE PROFIT FROM COMMERCIAL AREA AND THE ASSESSING OFFICER IS DIRECT ED TO ALLOW DEDUCTION U/S. 80IB(10) ON THE PROPORTIONATE PROFIT EARNED ON CONSTRUCTION AND SALE OF RESIDENTIAL UNITS WHICH COMPLY WITH THE SUB SECT ION (C) OF THE SECTION 80IB(10) OF THE ACT. 8. THERE IS NO DISPUTE WITH REFERENCE TO THE APPROVAL OF THE PROJECT AS A HOUSING PROJECT AND ALSO THERE IS NO DISPUTE THAT A LL THE SECTORS ARE CONSIDERED BY THE REVENUE AS ONE SINGLE PROJECT FOR THE PURPOS E OF DEDUCTION UNDER SECTION 80IB. SINCE THE COMMERCIAL AREA IS LESS THA N 6.15% THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB AS THE FA CTS ARE CLEARLY COVERED BY THE DECISION IN THE CASE BRAHMA ASSOCIATES 315 ITR(AT) 266 (SB). IN TERMS OF PERCENTAGE THE COMMERCIAL AREA CONSTITUTES 6.15% OF THE TOTAL CONSTRUCTED AREA. THE DECISION IN THE CASE OF M/S. LAUKIK DEVEL OPERS RELIED UPON BY THE REVENUE IN THE GROUNDS OF APPEAL HAS BEEN CONSIDERE D AND OVERRULED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). IN VIEW OF THE ORDER OF THE SPECIAL BENCH THERE IS NO NEED TO DIFFER FROM THE FINDINGS OF THE CIT(A) IN GRANTING PROPORTIONATE DEDUCTION. ACC ORDINGLY THE ORDER OF THE CIT(A) IS CONFIRMED AND REVENUES APPEALS ARE DISMI SSED. 9. THE CROSS OBJECTIONS ARE IN SUPPORT OF THE CIT(A)S ORDER AND SINCE THE ORDER IS CONFIRMED THE CROSS OBJECTIONS BECOME ACAD EMIC IN NATURE. ACCORDINGLY THEY ARE TREATED AS DISMISSED. 10. IN THE RESULT THE APPEALS OF THE REVENUE AND THE C ROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY 2010. SD/- SD/- (D.K. AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 17 TH FEBRUARY 2010 ITA NO. 7292& 7293/MUM/2008 &CO M/S. SHREE OSTWAL BUILDERS LTD. 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) II THANE 4. THE CIT I THANE 5. THE DR I BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.