ITO, Bangalore v. M/s SRK Gold Earth Construction Pvt. Ltd.,, Bangalore

ITA 1166/BANG/2010 | 2005-2006
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 116621114 RSA 2010
Assessee PAN AAHCS4626C
Bench Bangalore
Appeal Number ITA 1166/BANG/2010
Duration Of Justice 9 month(s) 1 day(s)
Appellant ITO, Bangalore
Respondent M/s SRK Gold Earth Construction Pvt. Ltd.,, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 22-07-2011
Date Of Final Hearing 20-07-2011
Next Hearing Date 20-07-2011
Assessment Year 2005-2006
Appeal Filed On 21-10-2010
Judgment Text
PAGE 1 OF 6 ITA NO.1166/BANG/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N BARATHVAJA SANKAR VICE PRESIDENT AND SHRI GEORGE GEORGE K J.M ITA NO.1166/BANG/2010 (ASSESSMENT YEAR 2005-06) THE INCOME TAX OFFICER WARD-12(2) BANGALORE. - APPELLANT VS M/S SRK GOLD EARTH CONSTRUCTION PVT. LTD. 37/38 RAHEJA ARCADE KORAMANGALA BANGALORE-34. - RESPONDENT PAN AAHCS4626C APPELLANT BY : SMT. JACINTA ZIMIK VASHAI ADDL. CIT RESPONDENT BY : SHRI CHERIAN K BABY C.A. ORD ER PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-V BANGALORE DATED 29.01.2010. THE RELEVANT ASSESSMENT YEAR IS 2005-06. 2. THE SOLITARY EFFECTIVE GROUND RAISED BY THE REVEN UE READS AS FOLLOWS:- THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S 80IB(10) IN RESPECT OF A PROJECT WHICH IS NOT A HOUSING PROJECT AS IS EVIDEN T FROM THE BROCHURE BROUGHT OUT BY THE ASSESSEE PAGE 2 OF 6 ITA NO.1166/BANG/2010 2 THE ARRANGEMENT OF SALE AND LEASE BACK OF THE APARTMENTS AND OTHER SURROUNDING CIRCUMSTANCES WHICH PROVE THAT THE APARTMENTS ARE MEANT TO BE RUN AS SERVICE APARTMENTS AND THEREFORE THE PROJECT IS TO BE CONSIDERED AS A COMMERCIAL VENTURE BETWEEN THE BUILDER AND THE BUYERS WHICH DOES NOT QUALIFY TO BE A HOUSING PROJECT AS ENVISAGED IN SECTION 80IB OF THE I T ACT 1961. 3. BRIEFLY STATED THAT FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE B USINESS OF DEVELOPMENT AND CONSTRUCTION OF SITES AND FLATS. FOR THE CONCERNED ASST. YEAR RETURN OF INCOME WAS FILED ON 21.10.2005 DECLARING AN INCOME OF RS.1 61 490/- AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE I T ACT AMOUNTING TO RS.78 37 390/- . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT. THE SCRUTINY ASSESSMENT U/S 143( 3) WAS COMPLETED VIDE ORDER DATED 28.12.2007 WHEREIN THE CLAIM OF TH E ASSESSEE U/S 80IB WAS DENIED BY THE A.O. FOR THREE REASONS NAMEL Y I) THE PROJECT OF THE ASSESSEE ACCORDING TO THE AO CONSISTED OF CONSTRUCTION OF SERVICED APARTMENTS AND THEREFORE IT WAS A COMMERCIAL VENTURE AND NOT A HOUSING PROJECT; HENCE THE PROJECT WAS NOT ENTITLED DEDUCTION U/S 80IB OF THE ACT. II) ACCORDING TO THE AO THE ASSESSEE DID NOT ITSELF UNDERTAKE THE CONSTRUCTION OF THE PROJECT BUT OUTSOURCED THE SAME TO CONTRACTORS. III) THE ASSESSEE COMPANY HAD NOT FURNISHED FORM NO.10CCB ALONG WITH THE RETURN OF INCOME. PAGE 3 OF 6 ITA NO.1166/BANG/2010 3 4. AGGRIEVED BY THE REJECTION OF THE CLAIM OF THE A SSESSEE U/S 80-IB OF THE ACT THE MATTER WAS CARRIED IN APP EAL BEFORE THE FIRST APPELLATE AUTHORITY THE FIRST APPELLATE AUTHO RITY DIRECTED THE AO TO GRANT DEDUCTION U/S 80IB(10) OF THE ACT. THE FIRST APPELLATE AUTHORITY HELD THAT THE THREE REASONS ON THE BASIS O F WHICH THE AO DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB(10) OF T HE ACT IS NOT SUSTAINABLE. 5. THE REVENUE BEING AGGRIEVED BY THE GRANT OF DED UCTION U/S 80IB IS IN APPEAL BEFORE US. IT IS TO BE MENTI ONED HERE THAT THE REVENUE IS ONLY AGGRIEVED BY THE CIT(A)S ORDER IN RE JECTING THE FIRST REASON STATED BY THE AO IN DENYING THE CLAIM OF DEDUC TION U/S 80IB NAMELY THE ASSESSEE HAS CONSTRUCTED SERVICED APART MENTS AND NOT RESIDENTIAL APARTMENTS. 6. THE LEARNED DR SUPPORTED THE ORDER OF THE AO WH EREAS THE LEARNED AR REITERATED THE SUBMISSIONS MADE BEFO RE THE INCOME TAX AUTHORITIES AND ALSO RELIED ON THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE RELEVANT FINDING OF THE FI RST APPELLATE AUTHORITY IN HOLDING THAT THE ASSESSEE HAD CONSTRUCT ED THE RESIDENTIAL APARTMENTS AND NOT SERVICED APARTMENTS READS AS FO LLOWS:- 11. TO CONCLUDE I FIND THAT (A) THE APARTMENTS WERE APPROVED BY THE CONCERNED AUTHORITIES AS RESIDENTIAL APARTMENTS (B) ALL THE APARTMENTS WERE PAGE 4 OF 6 ITA NO.1166/BANG/2010 4 SOLD AND HANDED OVER AS RESIDENTIAL APARTMENTS (C) A LARGE MAJORITY OF THE APARTMENTS I.E. 68 OUT OF 96 APARTMENTS WERE USED AS RESIDENTIAL APARTMENTS AND (D) THE APPELLANT HAD NOT APPLIED FOR OR OBTAINED ANY REGULATORY PERMISSION TO BUILD OR OPERATE SERVICED APARTMENTS. ON THE OTHER HAND APART FROM DEPENDING ON THE CONTENTS OF THE BROCHURE AND THE IDENTICAL SIZE DESIGN AND FURNITURE OF THE APARTMENTS THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SUPPORT HIS CLAIM THAT THE APARTMENTS WERE CONCEPTUALIZED AS SERVICED APARTMENTS. IN THIS REGARD I HAVE ALREADY HELD THAT THOUGH THE APARTMENTS OF THE APPELLANT ARE IDENTICAL IN SIZE AND DESIGN AND ALSO IDENTICALLY FURNISHED IT CANNOT BE CONCLUDED ON THAT BASIS ALONE THAT THE APARTMENTS HAVE BEEN CONCEPTUALIZED AS SERVICED APARTMENTS. I HAVE FURTHER HELD THAT WHEN THE APPELLANT HAD NOT OBTAINED ANY REGULATORY PERMISSION TO BUILD SERVICED APARTMENTS MERE TALL CLAIMS MADE IN A BROCHURE IS NOT SUFFICIENT AND CONCLUSIVE EVIDENCE TO HOLD THAT THE APARTMENTS WERE CONCEPTUALIZED AS SERVICED APARTMENTS. 11.1 IN VIEW OF THE ABOVE DISCUSSION I HOLD HAT THE 96 APARTMENTS BUILT BY THE APPELLANT UNDER THE PROJECT NAMES AS SRK SAMRUDHI WERE ALL RESIDENTIAL APARTMENTS (OPTIONALLY CONVERTIBLE TO SERVICED APARTMENTS) AND THEREFORE THE SAID PROJECT OF THE APPELLANT WAS A HOUSING PROJECT AND HENCE ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT 1961. THUS THE FIRST REASON FURNISHED BY THE AO (I.E. THAT THE PROJECT OF THE APPELLANT CONSISTED O F CONSTRUCTED OF SERVICED APARTMENTS) TO HOLD THAT THE APPELLANT WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IB(1)) OF THE INCOME TAX ACT 1961 IS NOT VALID. PAGE 5 OF 6 ITA NO.1166/BANG/2010 5 7.1 THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB(1) IN RESPECT OF THE PROJECT NAMED SRK SAMRUDDHI AND IN TOTAL CONSTRUCTED 96 FLATS. THE FIRST APPELLATE AUTHORIT Y HAS CATEGORICALLY FOUND THAT THE PLAN FOR THE CONSTRUCTION OF THE APA RTMENTS BY THE NAME SRK SAMRUDDHI HAS BEEN APPROVED BY THE CONCER NED LOCAL AUTHORITIES AS RESIDENTIAL APARTMENTS. SINCE APART MENTS HAVE BEEN APPROVED AND CERTIFIED BY THE CONCERNED LOCAL AUTHOR ITIES AS RESIDENTIAL APARTMENTS UNLESS AND UNTIL THE FACTS AND CIRCUMSTANCES OF THE CASE SHOW OTHERWISE IT IS TO BE ASSUMED THA T THE APARTMENTS CONSTRUCTED BY THE ASSESSEE COMPANY WERE RESIDENTIAL APARTMENTS. FURTHER THE FIRST APPELLATE AUTHORITY HAS CATEGORIC ALLY STATED THAT OUT OF THE 96 APARTMENTS CONSTRUCTED 4 APARTMENTS HAD BEEN RETAINED BY THE DEVELOPER AND THE BALANCE 92 WERE SO LD TO OUTSIDERS AND OUT OF THE 92 APARTMENTS 68 FLATS WERE USED AS RESIDENTIAL APARTMENTS. IT WAS FURTHER FOUND BY THE FIRST APPEL LATE AUTHORITY THAT AT THE TIME OF SALE OF THESE APARTMENTS IT WE RE SOLD AS RESIDENTIAL APARTMENTS BY THE ASSESSEE COMPANY TO THE INDIVIDUAL OWNERS AND THERE IS NOTHING ON RECORD TO SUGGEST OR TO SHOW THAT THE ASSESSEE HAD APPLIED FOR OR OBTAINED ANY REGULATORY P ERMISSION TO BUILD OR OPERATE SERVICED APARTMENTS. THESE FINDIN GS OF THE FIRST APPELLATE AUTHORITY HAVE NOT BEEN DISPELLED BY THE DE PARTMENT WITH ANY EVIDENCE. THEREFORE WE HOLD THAT THE CIT(A) IS CORRECT IN HOLDING THAT THE ASSESSEE HAD CONSTRUCTED RESIDENTI AL APARTMENTS AND THE SAME WERE SOLD AS SUCH BY THE ASSESSEE COMPANY. IN THE LIGHT OF THE ABOVE REASONING WE HOLD THAT THE CIT(A)S ORDE R IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED F OR. PAGE 6 OF 6 ITA NO.1166/BANG/2010 6 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER PRONOUNCED ON FRIDAY THE 22 ND DAY OF JULY 2011 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE C IT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/21/7. BY ORDER ASST. REGISTRAR ITAT BANGALORE.