ITO, Wd.-11(3),, Pune v. Kasturi Housing and Construction Pvt.ltd.,, Pune

ITA 969/PUN/2011 | 2003-2004
Pronouncement Date: 31-10-2010 | Result: Dismissed

Appeal Details

RSA Number 96924514 RSA 2011
Assessee PAN AABCK8626H
Bench Pune
Appeal Number ITA 969/PUN/2011
Appellant ITO, Wd.-11(3),, Pune
Respondent Kasturi Housing and Construction Pvt.ltd.,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-10-2010
Date Of Final Hearing 03-10-2012
Next Hearing Date 03-10-2012
Assessment Year 2003-2004
Appeal Filed On 21-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 901 & 902/PN/2011 (ASSESSMENT YEAR: 2002-03 & 2003-04 KASTURI HOUSING & CONSTRUCTION ADAMS COURT 2 ND FLOOR OPP. HOTEL MAHABALESHWAR BANER ROAD PUNE-411 005 PAN AAABCK 8626 H .. APPELLANT VS. INCOME-TAX OFFICER RESPONDENT WARD 11(3) PUNE ITA NO. 968 & 969/PN/2011 (ASSESSMENT YEAR: 2002-03 & 2003-04 INCOME-TAX OFFICER WARD 11(3) PUNE. APPELLANT VS. KASTURI HOUSING & CONSTRUCTION ADAMS COURT 2 ND FLOOR OPP. HOTEL MAHABALESHWAR BANER ROAD PUNE-411 005 PAN AAABCK 8626 H RESPONDENT ASSESSEE BY: SHRI V.L. JAIN RESPONDENT BY: MS VINI TA MENON DATE OF HEARING : 16-10-2012 DATE OF PRONOUNCEMENT: 31-10-2012 ORDER PER SHAILENDRA KUMAR JM : THESE CROSS APPEALS BY THE ASSESSEE AND THE DEPARTMENT ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I PUNE DATED 1 7-12- 2010 FOR A.Y. 2002-03 AND 2003-04. THE ASSESSEE IN ITS APPEALS HAS RAISED THE FOLLOWING GROUND: THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN RESTRICTING THE CLAIM U/S 80-IB(10) PRO RATA ITA NO 901 902 968 & 969/11 KASTURI HOUSING & CONSTRUCTIONS A.Y. 2002-03 & 2003-04 WITH REFERENCE TO ELIGIBLE UNITS ON THE GROUND THAT THE BUILT UP AREA OF SOME UNITS OF THE RESIDENTIAL PROJECT EXCEEDED 1500 SQ.FT. WHILE THE REVENUE IN ITS APPEALS HAS RAISED THE FOLLOWING GROUNDS. 1. THE HONBLE CIT(A) HAS ERRED IN ACTING CONTRARY TO THE PROVISIONS OF THE ACT BY ALLOWING THE PROPORTIONATE DEDUCTION U/S 80-IB(10) OF THE ACT. 2. THE CIT(A) HAS ERRED IN ALLOWING THE PROPORTIONATE DEDUCTION U/S 80-IB(10) OF THE ACT WHERE IN FACT THE ASSESSEE HAS VIOLATED ONE OF THE PROVISIONS OF SAID SECTION BY SELLING THE FLATS HAVING BUILT UP AREA MORE THAN 1500 SQ.FT. EACH 2. AT THE OUTSET OF HEARING THE LEARNED COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ISSUES INVOLVED IN THESE APPEALS ARE COVERED IN FAVOUR OF THE ASSESSEE BY DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 IN ITA NO. 1370/PN/2007 WHEREIN VIDE ITS ORDER DATED 26-=3- 2010 THE TRIBUNAL HAS SET ASIDE THE ISSUES BY OBSERVING AS UNDER: 13 A. ON THIS ISSUE OF GRANT OF PROPORTIONATE DEDUCTION WE HAVE PERUSED THE DECISION OF CALCUTTA BENCH IN THE CASE OF BENGAL AMBUJA HOUSING DEV. LTD. VS. DCIT IN ITA NO. 1595/KOL/2005 IN THE LIGHT OF THE JUDGMENT OF HONBLE HIGH COURT OF CALCUTTA IN THE SAID CASE IN ITA NO. 458 OF 2006 DATED 5-2-2007. WE HAVE ALSO PERUSED THE NAGPUR BENCH DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS. AIR DEVELOPERS (2009) 123 TTJ 959 FOR THE PROPOSITION THAT THE ASSESSEE IS ENTITLED FOR PROPORTIONATE DEDUCTION U/S 80-IB(10) IN RESPECT OF PROFITS DERIVED FROM THE RESIDENTIAL UNITS NOT EXCEEDING THE PERMITTED LIMITS. ON PERUSAL OF THE SAME WE FIND THAT PARA 6.7 OF THE SAID DECISION OF THE NAGPUR BENCH IS RELEVANT AND THE SAME READS AS UNDER: 6.7 THE RATIO OF THE ABOVE DECISION OF THE TRIBUNAL KOLKATA BENCH WOULD BE SQUARELY APPLICABLE TO THE CASE UNDER CONSIDERATION BEFORE US BECAUSE THE FACTS ARE IDENTICAL. MOREOVER EVEN IF IT IS HELD THAT IN VIEW OF THE ABOVE TWO DECISIONS OF THE TRIBUNAL TWO ITA NO 901 902 968 & 969/11 KASTURI HOUSING & CONSTRUCTIONS A.Y. 2002-03 & 2003-04 VIEWS ARE POSSIBLE WITH REGARD TO INTERPRETATION OF SEC. 80-IB(10) IT IS A SETTLED LAW THAT THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE ADOPTED. SEC. 80-IB(10) IS A BENEFICIAL PROVISION AND IT HAS BEEN HELD BY THE HONBLE APEX COURT IN THE CASE OF BAJAJ TEMPO LTD. VS. CIT (1992) 104 CTR (SC) 116 THAT A BENEFICIAL PROVISION SHOULD BE INTERPRETED LIBERALLY. IF AN ASSESSEE HAS DEVELOPED A HOUSING PROJECT WHEREIN THE MAJORITY OF THE RESIDENTIAL UNITS HAVE A BUILT UP AREA OF LESS THAN 1500 SQ.FT. I.E. THE LIMIT PRESCRIBED BY SEC. 80-IB(10) AND ONLY A FEW RESIDENTIAL UNITS ARE EXCEEDING THE BUILT UP AREA OF 1500 SQ.FT. THERE WOULD BE NO JUSTIFICATION TO DISALLOW THE ENTIRE DEDUCTION U/S 80-IB(10). IT WOULD BE FAIR AND REASONABLE TO ALLOW THE DEDUCTION ON PROPORTIONATE BASIS I.E. ON THE PROFIT DERIVED FROM THE CONSTRUCTION OF THE RESIDENTIAL UNIT WHICH HAS A BUILT UP AREA OF LESS THAN 1500 SQ.FT. I.E. THE LIMIT PRESCRIBED UNDER SEC. 80- IB(10). IN VIEW OF THE ABOVE WE DIRECT THE AO THAT IF HE FINDS THAT THE BUILT UP AREA OF SOME OF THE RESIDENTIAL UNITS IS EXCEEDING 1500 SQ.FT. HE WILL ALLOW THE PROPORTIONATE DEDUCTION U/S 80-IB(10). ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS DEEMED TO BE PARTLY ALLOWED AS ABOVE. B. FURTHER WE HAVE ALSO PERUSED THE DECISION OF THE TRIBUNAL OF THE BOMBAY BENCH IN THE CASE OF ASSTT. CIT VS. SNETH DEVELOPERS (P) LTD. (2009) 33 SOT 227 (BOM) FOR AN IDENTICAL PROPOSITION THAT THE ASSESSEE IS ENTITLED FOR PROPORTIONATE DEDUCTION WHEN THE HOUSING COMPLEX CONSISTS OF RESIDENTIAL UNITS BOTH WITH AN AREA BELOW THE PRESCRIBED LIMIT AND ABOVE THE PRESCRIBED LIMIT. IN THIS REGARD THE COUNSEL REFERRED TO LAST PARA ON PAGE 298 OF THE 33 SOT AND THE SAME READS AS FOLLOWS: HOWEVER AS AFORESAID KOLKATA BANGALORE AND NAGPUR BENCHES OF THIS TRIBUNAL HAD CLEARLY HELD EVEN WHERE SOME OF THE UNITS EXCEEDED THE AREA LIMIT RELIEF HAD TO BE GIVEN ON PRO RATA BASIS. WE ALSO FIND THAT SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES & OTHERS (2009) 122 TTJ 433 (PUNE) (SB) FOLLOWED PRO RATA RELIEF EVEN ITA NO 901 902 968 & 969/11 KASTURI HOUSING & CONSTRUCTIONS A.Y. 2002-03 & 2003-04 WHERE ASSESSEE HAD UTILIZED SPACE FOR COMMERCIAL PURPOSE UPTO THE EXTENT OF 10 PER CENT IN AN APPROVED HOUSING PROJECT. FOLLOWING THESE WE ARE OF THE OPINION THAT THE ASSESSEE IS ELIGIBLE FOR RELIEF ON PRO RATA BASIS IN RESPECT OF THE FLATS WHICH DID NOT HAVE A BUILT UP AREA EXCEEDING 1000 SQ.FT. IN RESPECT OF AISHWARIYA PROJECT. THUS THE QUANTUM OF DEDUCTION U/S 80-IB(10) IN RESPECT OF THE AISWARIYA PROJECT FOR THE FLATS WHICH HAVE BUILT UP AREA LESS THAN 1000 SQ.FT. HAS TO BE WORKED OUT ON PRO RATA BASIS IN LINE WITH OUR DISCUSSION IN THE PRECEDING PARAS. 14. FROM THE ABOVE IT IS EVIDENT THE ISSUE UNDER CONSIDERATION IS A DECIDED ONE AND THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80-IB(10) IN RESPECT OF T HE PROFITS FROM THE FLATS WHICH HAVE THE BUILT UP AREA AS PER THE PROVISIONS OF SAID CLAUSE (C) OF SEC. 80-IB (10) OF THE ACT EVEN IF THE SAID HOUSING PROJECT ALSO CONSI STS OF THE FLATS EXCEEDING THE BUILT UP AREA OF 1500 SQ.FT . THEREFORE THIS PART OF ARGUMENTS O LD. COUNSEL IS ALLOWED. THUS THE AO IS DIRECTED TO COMPUTE THE ELIGIBLE PROFITS AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ALLOW DEDUCTION ACCORDINGLY. 15. REGARDING THE ISSUE OF MERGER OF IMPUGNED EIGHT FLATS WE FIND THAT THERE IS NO DISPUTE EITHER ON T HE FACT OF MERGER OF EIGHT FLATS IN TO FOUR BIGGER FLATS OR ON THE FACT THAT AFTER MERGER THE SIZE OF THE FLAT EXCEED ED 1500 SQ.FT AND IT IS IN VIOLATION OF THE CONDITIONS MENT IONED IN CLAQUE (C) RELATING TO SPECIFIED AREA PER RESIDE NTIAL UNIT. NEVERTHELESS THERE IS DISPUTE ON ISSUE OF W HO DID THAT MERGER OF FLATS AND AT WHAT POINT OF TIME SAI D MERGER TOOK PLACE I.E. IS IT BEFORE THE SALE OF THE FLATS IN THE HANDS OF THE ASSESSEE OR AFTER THE SALE OF THE FLATS IE IN THE HANDS OF THE FLAT BUYERS. FURTHER THERE IS ANOTHER DISPUTE ON WHETHER THE MERGED FLATS HAVE TW O ENTRANCES AT THE TIME OF SALE OF FLAT AS MENTIONED BY THE ASSESSEE OR IT HAS GOT ONLY SINGLE ENTRANCE AS FOUN D DURING THE PERSONAL VISIT OF THE ASSESSING AUTHORIT Y AND SIMILARLY ON THE EXISTENCE OF ONE KITCHEN IN THE M ERGED FLATS. CONSIDERING THE FACT THAT THE AOS PERSONAL VISIT TO THE PREMISES OF THE HOUSING PROJECT REVEALED ONL Y ONE KITCHEN AND ONE ENTRANCE FOR MERGED RESIDENTIAL UNIT WE ARE OF THE OPINION THAT THE SAME MUST BE ACCEPTED AS A FACT FOR THE RELEVANT POINT OF TIME. BUT THAT POINT OF TIME IS MUCH AFTER THE SALE TRANSACTI ONS WERE COMPLETED. BUT WHAT IS REQUIRED IS THE FACTU AL POSITION AT THE TIME OF THE SALE OF THE SAID UNITS TO THE FLAT BUYERS. AO DID NOT GIVE ANY CATEGORICAL FINDI NG IN THIS REGARD. ALTHOUGH THE CIT(A) GAVE A FINDING TH AT THE ITA NO 901 902 968 & 969/11 KASTURI HOUSING & CONSTRUCTIONS A.Y. 2002-03 & 2003-04 IMPUGNED MERGER TOOK PLACE IN THE HANDS OF THE ASSESSEE BEFORE THE FLATS ARE SOLD TO THE FLAT BUYE RS THE SAME SUFFER FROM DEFICIENCY AS THE SAME IS NOT SUPPORTED BY THE EVIDENCES. THE LETTER FROM ONE OF THE PURCHASERS SHRI RABADE WHICH IS FILED AFTER HEARING IS COMPLETED THE SAME CANNOT BE ACCEPTED IN TOTO IN V IEW OF THE PRINCIPLES OF NATURAL JUSTICE AND THE ASSESS EE DID NOT HAVE THE BENEFIT OF THE SAME FOR REBUTTAL AS WE LL AS FOR CROSS EXAMINING SHRI RABADE. THEREFORE THERE IS NO CREDIBLE FACT ON THE TIMING OF THE MERGER OF T HE IMPUGNED RESIDENTIAL UNITS. AS SUCH THE AO HAS ON LY FURNISHED LETTER FROM ONLY ONE OF THE FOUR SUCH FLA T BUYERS. CONSIDERING THE ABOVE WE ARE OF THE OPINI ON THAT THIS PART OF THE INFORMATION MUST BE REFERRED TO THE FILE OF THE AO FOR A FACTUAL FINDING ON WHEN EXACTL Y THE MERGER OF FLATS OCCURRED WHETHER IT IS IN THE HANDS OF THE BUILDER OR THE FLAT BUYER OR WHETHER BEFORE THE SALE OF THE FLATS OR LATER AFTER THE SALE. SO FAR AS THE OTHER DOCUMENTS RELIED UPON BY THE ASSESSEE ARE CONCERNED WE ARE OF THE OPINION THAT THERE ARE NOT CLINCHING EVIDENCES IN SUPPORT OF THE ASSESSEE. THEREFORE A T THE END THIS ISSUE IS REMANDED TO THE FILE OF THE AO F OR A PROPER DECISION ON THE ISSUE. THE AO SHALL GRANT PR OPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY THIS PART OF THE GROUND IS SET ASIDE. 3. FACTS BEING IDENTICAL SO FOLLOWING THE AFORESAI D ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) WE HOL D THAT THE CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE CLAIM U /S 80-IB(10) OF THE ACT PRO RATA WITH REFERENCE TO THE ELIGIBLE UNITS. SIMILARLY THE CIT(A) WAS JUSTIFIED IN ALLOWING THE PROPORTIONATE DEDUCTION U/S 80-IB(10) OF THE ACT. IN VIEW OF THIS ISSUE IS DECIDED IN FAVOUR OF ASSESSEE AND THE AO IS DIRECTED TO COMPUTE ELIGIBLE PROFIT AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO ASSESSEE AND ALLOW CL AIM ACCORDINGLY. 4. IN THE RESULT THE APPEALS OF THE ASSESSEE AND T HE APPEALS OF THE REVENUE ARE DISPOSED OF AS INDICATED ABOVE. ITA NO 901 902 968 & 969/11 KASTURI HOUSING & CONSTRUCTIONS A.Y. 2002-03 & 2003-04 5. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST OCTOBER 2012 SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER ANKAM PUNE DATED: 31 ST OCTOBER 2012 COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT (A)-I PUNE 4) THE CIT I PUNE 5) THE DR B BENCH I.T.A.T. PUNE. BY ORDER //TRUE COPY// SR. P.S. I.T.A.T. PUNE