THE SHREE ASHAPURA CONSTRUCTION, MUMBAI v. M/S. ITO WD 3(3), MUMBAI

ITA 179/MUM/2009 | 2005-2006
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 17919914 RSA 2009
Bench Mumbai
Appeal Number ITA 179/MUM/2009
Duration Of Justice 2 year(s) 19 day(s)
Appellant THE SHREE ASHAPURA CONSTRUCTION, MUMBAI
Respondent M/S. ITO WD 3(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 28-01-2011
Date Of Final Hearing 01-01-2011
Next Hearing Date 01-01-2011
Assessment Year 2005-2006
Appeal Filed On 09-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.K. PANDA (AM) AND SMT ASHA VIJAYARAGH AVAN (JM) ITA NO.179/MUM/2009 (ASSESSMENT YEAR-2005-06) M/S. SHREE ASHAPURA CONSTRUCTION 4 SHUBHAM KAROTI BLDG. PATKAR BLDG. COMPOUND BAJI PRABHU CHOWK DOMBIVLI (E) MUMBAI-421 201 PAN-AAOFS 8026L VS. THE ITO WARD 3(3) KALYAN 2 ND FLOOR RANIMANSION MURBAD ROAD KALYAN (W) THANE (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI V.G. GINDE RESPONDENT BY: SHRI D. SONGATE O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-1 THANE DATED 14.10.2008 FOR THE A.Y.20 05-06. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PA RTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF BUILDING AND DEVELOPI NG. THE ASSESSEE DEVELOPED A HOUSING PROJECT ON A PLOT OF LAND BEARI NG SURVEY NO. 59H. NO. 7AGD PATHLI PANDURANGWADI DOMBIVLI(E) ADMEA SURING 5 080 SQ. MTRS. THE TOTAL BUILT UP AREA OF THE PROJECT W AS 1 06 702 SQ. FT WHICH INCLUDED ESSENTIAL SHOPPING AREA AT GROUND LE VEL OF 5 410 SQ. FT. THE PLAN FOR THIS PROJECT WAS APPROVED IN 1999 BY T HE DOMBIVLI KALYAN MUNICIPAL CORPN. THE PROJECT CONSISTING OF 6 BUIL DINGS WAS COMPLETED IN TWO PHASES. IN THE FIRST PHASE BLDG. NO. 1 2 AND 3 CONSISTING OF RESIDENTIAL FLATS AND ESSENTIAL SHOPP ING AREA AT GROUND LEVEL OF 5 410 SQ. FT WAS COMPLETED IN 2003 PROFIT FROM WHICH WAS ITA NO. 179M/09 2 DISCLOSED IN THE A.Y. 2003-04 AND 2004-05. IN THE SECOND PHASE BLDG. NO. 4 5 AND 6 CONSISTING OF ONLY RESIDENTIAL FLATS WAS COMPLETED IN 2005 AND PROFIT FROM WHICH WAS OFFERED TO TAX IN THE A.Y. 2005-06 AND 2006-07. 3. THE ASSESSING OFFICER DISALLOWED THE ASSESSEES CLAIM BY RELYING UPON THE PROVISIONS OF CLAUSE (D) INSERTED IN S. 80 -IB(10) W.E.F. 1.4.2005 BY FINANCE (NO.2) ACT 2004 WHEREBY THE L EGISLATURE PUT A LIMIT ON THE COMMERCIAL AREA OF 5% OF THE TOTAL BUI LT UP AREA OR 2 000 SQ.FT WHICHEVER IS LESS. THE A.O. HELD AS FOLLOWS: FROM THE ASSESSMENT YEAR 2005-06 BECAUSE OF THE INTRODUCTION OF CLAUSE (D) AN ASSESSEE WHOSE PROJEC T INCLUDES COMMERCIAL CONSTRUCTION OF 5% OF THE TOTAL BUILT UP AREA OF THE PROJECT LIMITED A MAXIMUM OF 2000 SQ. F T IS ALSO ENTITLED FOR DEDUCTION U/S. 80IB(10) IN THE CASE OF THE ASSESSEE FIRM THE TOTAL COMMERCIAL AREA OF THE PROJ ECT IS OF 5410 SQ. FT AND HENCE THE ASSESSEE DOES NOT FULFILL ALL THE CONDITIONS LAID DOWN IN SEC. 80IB(10). IT IS IMMAT ERIAL WHETHER THE COMMERCIAL PREMISES WERE CONSTRUCTED DU RING THE YEAR IN PHASE II OR EARLIER PHASE 1 OF THE CONS TRUCTION. DEDUCTION U/S. 80IB(10) IS ALLOWABLE TO THE PROJECT AS A WHOLE. THE ASSESSEE IS THEREFORE NOT ENTITLED FOR DEDUCTION OF RS. 23 86 005/- CLAIMED U/S. 80IB(10. THE CLAIM IS THUS DISALLOWED AND ADDED TO TOTAL INCOME. 4. AGGRIEVED BY THE ORDER OF THE AO ASSESSEE PREFE RRED AND APPEAL BEFORE THE LEARNED CIT(A). 5. THE LEARNED CIT(A) HELD AS FOLLOWS: I HAVE PERUSED THE ASSESSMENT ORDER AND THE WRITTE N SUBMISSIONS FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. IN THIS CASE THE APPELLANT WAS ENGAG ED IN THE CONSTRUCTION OF A BUILDING PROJECT CONSISTING OF BL DG. NO. 1 2 3 4 5 & 6 ON THE PLOT HAVING SURVEY NO. 59 SITU ATED IN DOMBIVLI (E). THE APPELLANT HAD CLAIMED DEDUCTION U/S. 80IB(10) IN THE A.YRS 2003-04 & 2004-05 ALSO. THE CLAIM OF DEDUCTION IN BOTH THE A.YRS WERE DISALLOWED BY THE AO BUT THE SAME WERE ALLOWED AT THE FIRST APPELLATE STAGE. ITA NO. 179M/09 3 HOWEVER W.E.F. 1.4.05 I.E. FOR THE A.Y. 2005-06 ON WARDS SEC. 80IB(10) HAS BEEN AMENDED AND THE AMENDED PROVISIONS ARE AS UNDER: A) THE HOUSING PROJECT SHOULD HAVE COMMENCED ON OR AFTER 1 ST DAY OF OCTOBER 98 AND IN CASE WHERE THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY BEFORE 1.4.04 IT SHOULD HAVE BEEN COMPLETED BY 31.3.08; B) THE PLOT SIZE ON WHICH THE HOUSING PROJECT IS DEVELOPED SHOULD HAVE MINIMUM ARE OF ONE ACRE; C) THE RESIDENTIAL UNITS IN THE PROJECT SHOULD NOT HAV E BUILT UP AREA MORE THAN 1000 SQ. FT IF THE HOUSING PROJECT IS WITHIN THE LIMITS OF CITY OF DELHI OR MU MBAI OR WITHIN A DISTANCE OF 25 KM FROM THE MUNICIPAL LIMITS OF DELHI OR MUMBAI AND 1500 SQ. FT IF THE HOUSING PROJECT IS SITUATED IN ANY OTHER CITY. D) THE BUILT UP ARE OF SHOPS/COMMERCIAL SHOPS INCLUDED IN THE HOUSING PROJECT SHOULD NOT EXCEED 5% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OF 2000 SQ.FT WHICHEVER IS LESS. FROM THE PERUSAL OF THE FACTS OF THIS CASE IT IS C LEAR THAT THE CONDITION MENTIONED AT (D) ABOVE HAS BEEN VIOLATED BY THE APPELLANT. IN THE BUILDING PROJECT UNDERTAKEN BY T HE APPELLANT THE COMMERCIAL AREA IS 5 410 SQ. FT I.E IT IS MUCH MORE THAN THE STATUTORY LIMITS OF 2 000 SQ.FT. SIN CE THE APPELLANT HAS VIOLATED THE CONDITION LAID DOWN IN S UB-CLAUSE (D) OF SEC. 80IB(10) THE AO IS LEGALLY CORRECT IN DISALLOWING THE CLAIM OF DEDUCTION UNDER THIS SECTION. IN VIEW OF THE CLEAR LEGAL PROVISIONS INCORPORATED IN THE ACT W.E .F. A.Y. 2005-06 THE CLAIM OF DEDUCTION U/S. 80IB(10) HAS B EEN CORRECTLY DISALLOWED BY THE AO. THE GROUND OF APPE AL IN RESPECT OF DEDUCTION U/S. 80IB IS THEREFORE DISMISS ED. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E TRIBUNAL . THE LEARNED COUNSEL FOR THE ASSESSEE SHRI V.G. GINDE SU BMITTED THAT IF THE PROVISIONS OF CLAUSE (D) ARE MADE APPLICABLE TO A HOUSING PROJECT WHICH IS APPROVED PRIOR TO 1.4.2005 AND WAS ALREAD Y IN PROGRESS AS ON THAT DATE THE SAME WOULD AMOUNT TO ITS RETROACT IVE APPLICATION ITA NO. 179M/09 4 WHICH IS VERY EXCEPTIONALLY PERMITTED ONLY BY EXPRE SS PROVISION OR NECESSARY IMPLICATION. 7. THE LEARNED. COUNSEL FOR THE ASSESSEE FURTHER SU BMITTED THAT THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY A DECISION OF A CO- ORDINATE BENCH OF TRIBUNAL IN THE CASE OF SAROJ SAL ES ORGANISATION VS ITO (2008) 3 DTR (MUM) (TRIB) 494 WHEREIN THE HON BLE TRIBUNAL ANALYZED IN PARA (11) THE COMPARATIVE PROVISIONS O F S. 80IB (10) BEFORE 1.4.2005 AND AFTE3R 1.4.2005. HE ALSO SUBMITTED T HAT THE COMMERCIAL AREA WAS INCLUDED IN THE FIRST PHASE OF THE PROJECT WHICH WAS COMPLETED IN 2003 AND PROFITS WHEREOF WAS ASSESSED IN A.Y. 2003-04 AND 2004-05 WHERE THE DEDUCTION U/S. 80-IB(10) HAS BEEN ALLOWED CONSEQUENT TO THE APPELLATE ORDERS. HE FURTHER SUB MITTED THAT THE SECOND PHASE WHICH IS COMPLETED IN 2005 DID NOT INC LUDE ANY COMMERCIAL AREA BUT IT CONSISTED OF ONLY RESIDENTI AL FLATS. THE AO DENIED THE DEDUCTION CLAIMED IN RESPECT OF THE PROF ITS OF THE SECOND PHASE BECAUSE OF THE COMMERCIAL AREA OF 5 410 SQ. F T WHICH WAS PART OF THE FIRST PHASE. 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IF THE FIRST PHASE IS ENTITLED TO THE BENEFIT U/S. 80-IB(10) TH EN THE SECOND PHASE WHICH IS THE PART OF THE SAME HOUSING PROJECT CANNO T BE DENIED THE SAME BENEFIT MERELY BECAUSE IT IS COMPLETED LATER A ND ITS PROFITS CAME TO BE ASSESSED IN A.Y. 2005-06. HE FURTHER SUBMITTE D THAT THE COMMERCIAL AREA WAS BUILT IN 2003 THAT IS MUCH BEF ORE THE INSERTION OF CLAUSE (D) IN S. 80-IB(10) BY THE FINANCE (NO.2) ACT 2004. THE ACTION OF CONSTRUCTING COMMERCIAL AREA IN THE FIRST PHASE OF THE PROJECT WAS ALREADY COMPLETED AND WAS NOT REVERSIBLE. HENC E THE SUBSEQUENT AMENDMENT BROUGHT IN 2004 WHICH IS TO TAKE EFFECT FROM 1.4.2005 CANNOT BE MADE APPLICABLE TO THE ASSESSEE BECAUSE I T WOULD MEAN THAT THE REVENUE EXPECTS THAT THE ASSESSEE SHOULD PERFOR M AN IMPOSSIBLE ITA NO. 179M/09 5 TASK TO CONTINUE THE BENEFIT FOR THE SECOND PHASE. IN THIS CONTEXT THE LEARNED COUNSEL SUBMITTED THAT THE FOLLOWING JUDICI AL PRECEDENTS/COMMENTARY TO CANVASS THE POINT THAT A S UBSEQUENT LEGISLATIVE AMENDMENT THAT CREATES A NEW LIABILITY OR OBLIGATIONS IN RELATION TO A TRANSACTION OR EVENT THAT HAS ALREADY TAKEN PLACE CANNOT HAVE RETROACTIVE OPERATION WHICH IS NOT PERMISSIBL E. A) H.V. THAKUR VS STATE OF MAHARASHTRA AIR 1994 SC 2623 (AT P. 2641) B) CHAIRMAN CENTRAL BOARD OF DIRECT TAXES & ORS. V S V.S. MALHOTRA (1981) 128 ITR 543 (DEL) C) IN FRANCIS BENIONS STATUTORY INTERPRETATION 2 ND EDITION AT P. 214 D) CIT VS ASIAN TECHS LTD. (1999) 240 ITR 396(KER) 9. WE HEARD BOTH THE PARTIES. WE FIND THAT THE PLAN S WERE APPROVED WAY BACK IN 1999 AND THE COMMERCIAL AREA CONSTRUCTE D IN 2003 AS A PART OF THE FIRST PHASE IN RESPECT OF WHICH DEDUCTI ON U/S. 80-IB(10) WAS ALREADY ALLOWED IN A.Y. 2003-04 AND A.Y. 2004-0 5 THE SUBSEQUENT INSERTION OF CLAUSE (D) IN S. 80-IB(10) W.E.F. 1.4.2005 CANNOT OPERATE IN A MANNER SO AS TO DISQUALIFY THE ASSESSEE TO CLAIM DEDUCTION U/S. 80-IB DUE TO THE CONSTRUCTION OF COM MERCIAL AREA IN 2003 WHEN IT WAS PERMISSIBLE IN ACCORDANCE WITH TH E LAW PREVAILING AT THAT TIME. 10. IN THE CASE OF SAROJ SALES ORGANISATION VS ITO THE CO-ORDINATE BENCH OF THE MUMBAI TRIBUNAL HELD AS FOLLOWS: AS REGARDS THE OBJECTION OF THE AO THAT THE PERMI SSIBLE SHOPPING AREA OF HOUSING PROJECT EXCEEDS 5 PERCENT THE ASSE SSEE IS NOT ENTITLED FOR RELIEF UNDER S. 80-IB(10). WE ARE OF THE VIEW THAT THE HOUSING PROJECT WERE APPROVED BEFORE 31 ST MARCH 2005 AND FOR SUCH PROJECT WHICH WERE SO APPROVED THERE WAS NO S TIPULATION AS TO THE SHOPPING COMPLEX AREA IS PERMISSIBLE IN THE PROJECT. AS ITA NO. 179M/09 6 ALREADY STATED EARLIER THAT THE AMENDMENTS WERE SUB SEQUENTLY MADE WHILE EXTENDING THE DEDUCTION OF INCOME FROM H OUSING PROJECT APPROVED UPTO 31 ST MARCH 2007 THE DENIAL OF DEDUCTION IN OUR VIEW IS CLEARLY NOT IN ACCORDANCE WITH LAW. RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH DECISI ON WE ALLOW ASSESSEES APPEAL. 11. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 28 TH DAY OF JANUARY 2011 SD/- SD/- (R.K. PANDA) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 28 TH JANUARY 2011. RJ COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CENTRAL - I CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASST. REGISTRAR I.T.A.T MUMBAI ITA NO. 179M/09 7 DATE INITIALS 1 DRAFT DICTATED ON: 18 . 01 . .2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 20 . 01 .2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ S R. PS/PS 8 . DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE ON WHICH FILE GOES TO AR 10 . DATE OF DISPATCH OF ORDER: _________ ______