Opel Shelters, v. ITO,

ITA 218/PUN/2009 | 2004-2005
Pronouncement Date: 20-08-2010 | Result: Allowed

Appeal Details

RSA Number 21824514 RSA 2009
Bench Pune
Appeal Number ITA 218/PUN/2009
Duration Of Justice 1 year(s) 6 month(s) 7 day(s)
Appellant Opel Shelters,
Respondent ITO,
Appeal Type Income Tax Appeal
Pronouncement Date 20-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 20-08-2010
Assessment Year 2004-2005
Appeal Filed On 12-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 218/PN/2009 (ASSTT. YEAR : 2004-05) M/S. OPEL SHELTERS PVT. LTD. 1493/A SUSHIL PARK SADASHIV PETH PUNE 411 030 PAN: AAAC02227N . APPELLANT V. INCOME TAX OFFICER WARD 3(4) PUNE . RESPONDENT APPELLANT BY : SHRI S.U. PATHAK RESPONDENT BY : SHRI. ABHAY DAMLE ORDER PER PER D. KARUNAKARA RAO AM THIS APPEAL BY THE ASSESSEE IS FILED AGAINST THE ORD ER OF THE CIT(A)- II PUNED DATED 19.11.2008 FOR THE A.Y. 2004-05. 2. AT THE VERY OUTSET THE LD. COUNSEL FOR THE ASSESS EE MENTIONED THAT GROUNDS OF APPEAL ARE ARGUMENTATIVE IN NATURE AND THE ESSENTIA L ISSUE THAT ARISES FROM THE GROUNDS RELATE TO THE DENIAL OF DEDUCTION U/S. 80 IB( 10) WHEN THE HOUSING PROJECT WHICH ALSO CONSISTS OF THE COMMERCIAL SEGMENT IN ADD ITION TO THE RESIDENTIAL ONE. REFERRING TO THE ABOVE ISSUE LD COUNSEL FOR THE ASSES SEE STATED THAT THE ISSUE IN QUESTION HAS TO BE DECIDED AS PER THE RATIO OF THE SP ECIAL BENCH DECISION IN THE CASE OF BRAHMA ASSOCIATES V/S JCIT 315 ITR 268 (AT)(S.B ). LD COUNSEL HAS FAIRLY MENTIONED THAT THE COMMERCIAL AREA OF THE PROJECT HAS EXCEEDED SAID LIMIT OF 10% AND IN SUCH CIRCUMSTANCES THE ASSESSEE IS ENTITLED TO PROPORTIONATE DEDUCTION ON STAND ALONE BASIS IN VIEW OF THE ABOVE SAID SPECIAL BENCH DECISION. FURTHER LD COUNSEL HAS MENTIONED THAT THE LOWER AUTHORITIES HAVE NOT GONE INTO THE ISSUES (I) WHETHER ASSESSEE FULFILS THE OTHER CONDITIONS MENTION ED IN SUB-SECTION (10) OF SEC. 80IB ON STAND ALONE BASIS; (II) THE ASPECTS OF EXTE NT OF PROPORTIONATE PROFITS DERIVED FROM THE HOUSING PROJECT ATTRIBUTABLE TO THE RESIDENTIA L SEGMENTS OF THE PROJECT; AND (III) THE ASPECTS OF EXTENT OF ALLOWABLE EXPENDITURE OUT OF THE COMMON EXPENDITURE ITA NO 218/PN/2009 OPEL SHELTERS P. LTD. A.Y.2004-05 2 ETC. FINALLY THE COUNSEL REQUESTED FOR SETTING ASI DE FOR EXAMINING OF THESE ISSUES FOR DECIDING THE ISSUE IN THE LIGHT OF THE RATIO ANNO UNCED IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). LD. D.R. FOR REVENUE HAS NO OBJE CTION FOR THE SAID PROPOSITION. HOWEVER HE MENTIONED THE SAID DECISION OF THE SPECI AL BENCH IS BEING CONTESTED BY THE REVENUE AND THEREFORE HE RELIED ON THE ORDERS OF THE REVENUE. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE FACT S OF THE CASE AS WELL AS THE RATIO PRONOUNCED IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). SUMMARY OF THE SAID SPECIAL BENCH DECISION AS SUMMARIZED IN PARA 130 READ S AS UNDER: 130. TO SUM UP THE CONCLUSIONS ARRIVED AT BY THIS SPE CIAL BENCH ARE AS FOLLOWS: (A) THE DEDUCTION UNDER SECTION 80IB(1)) AS APPLICABLE PRIOR TO 1 ST APRIL 2005 SUBJECT TO AND IN THE LIGHT OF THE OBSERVATIONS MADE IN THE PRECEDIN G PARAGRAPHS IS ADMISSIBLE IN CASE OF A HOUSING PROJECT COMPRISING RESIDENTIAL HOUS ING UNITS AND COMMERCIAL ESTABLISHMENTS. IN CASE THESE PROJECTS ARE APPROVED AS HOUSING PROJECTS BY THE LOCAL AUTHORITY SUCH AN APPROVAL AS HOUSING PROJECTS BY THE LOCAL AUTHORITY SUCH AN APPROVAL AS HOUSING PROJECT IS SUFFICIENT FOR THE PURPOSES O F ELIGIBILITY . IN ANY OTHER CASE WHERE 90% OR MORE OF THE TOTAL BUILT UP AREA IS USED FO R DWELLING UNITS IN ACCORDANCE WITH THE SCHEME OF SECTION 80IB(1) THE BENEFIT OF DE DUCTION UNDER SECTION 80IB(10) WILL NOT BE DECLINED. IN CASE COMMERCIAL USE OF BUILT UP AREA IS MORE THA N 10% BUT THE RESIDENTIAL SEGMENT OF THE PROJECT SATISFIES RE QUIREMENTS OF SECTION 80IB(10) ON STANDALONE BASIS IE (I) THE SIZE OF TH E PLOT EXCLUDING PORTION UNDER COMMERCIAL UNIT IS MORE THAN MINIMUM AREA OF ONE ACRE (II) RESIDENTIAL UNITS BUILT ON SUCH AREA MUST SATISFY CONDITION OF CLAUSE (C) OF THE PROVISION AND (III) OTHER NECESSARY CONDITIONS ARE FULFILLED AND WHERE INCOME FROM CONSTRUCTION OF RESIDENTIAL DWELLING UNITS CAN BE W ORKED OUT ON STANDALONE BASIS DEDUCTION UNDER SECTION 80IB(1) WILL BE AVAI LABLE IN RESPECT OF RESIDENTIAL SEGMENT OF THE PROJECT. (B) THE DEDUCTION UNDER SECTION 80IB(10) IS AVAILABLE IN R ESPECT OF PROFITS OF HOUSING PROJECT AS A WHOLE AND AS SUCH IT IS NOT RELEVANT AS TO WHAT IS THE PORTION OF PROFITS WHICH CAN BE SAID TO BE ATTRIBUTABLE TO RESIDENTIAL UNITS . THIS IS SUBJECT TO THE RIDER THAT IN CASE COMMERCIAL USE OF BUILT UP AREA IN A PROJECT IS MORE THAN 10% AND FOR THIS REASON THE PROJECT CAN NOT BE SAID TO BE A PREDOMINANTLY HOUS ING PROJECT BUT IN TERMS OF OBSERVATIONS MADE IN PARAGRAPH 115 ABOVE THE ASSESSEE IS ENTITLED TO DEDUCTION IN RESPECT OF RESIDENTIAL UNIT SEGMENT OF THE OVERALL PROJECT ON FULFILLMENT OF NECESSARY CONDITIONS THE ENTITLEMENT OF INCENTIVE DEDUCTION WILL BE CO NFINED TO ONLY TO THE PROFITS TO THE RESIDENTIAL SEGMENT OF THE OVERALL PROJECT. (C) THE LIMIT ON COMMERCIAL USE OF BUILT UP AREA AS PRESC RIBED BY CLAUSE (D) OF SECTION 80IB (10) HAS NO RETROSPECTIVE APPLICATION AND IT APPLIES ONLY W E F THE ASSESSMENT YEAR 2005-06. 4. THUS IT IS A SETTLED POSITION AT THE LEVEL OF T HE TRIBUNAL THAT IN CASE COMMERCIAL USE OF BUILT UP AREA IS MORE THAN 10% BUT T HE RESIDENTIAL SEGMENT OF THE PROJECT SATISFIES REQUIREMENTS OF SECTION 80IB(10) ON STANDALONE BASIS IE (I) THE SIZE OF THE PLOT EXCLUDING PORTION UNDER COMMERCIAL UNIT IS MORE THAN MINIMUM AREA OF ONE ACRE (II) RESIDENTIAL UNITS BUILT ON SUCH AREA MU ST SATISFY CONDITION OF CLAUSE (C) OF THE PROVISION AND (III) OTHER NECESSARY CONDITIONS ARE FULFILLED AND WHERE INCOME ITA NO 218/PN/2009 OPEL SHELTERS P. LTD. A.Y.2004-05 3 FROM CONSTRUCTION OF RESIDENTIAL DWELLING UNITS CAN BE WORKED OUT ON STANDALONE BASIS DEDUCTION UNDER SECTION 80IB(1) WILL BE AVAIL ABLE IN RESPECT OF RESIDENTIAL SEGMENT OF THE PROJECT. CONSIDERING THE FACT THAT THE COMMERCIAL SEGMENT IS ABOVE 10% IN THE INSTANT CASE IN PRINCIPLE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN RESPECT OF THE PROFITS OF THE RESIDENTIAL SEGMENT OF THE PROJE CT IN QUESTION. 5. HOWEVER ON PERUSAL OF THE ORDERS OF THE REVENUE TH ERE IS NO INDICATION THAT THESE ASPECTS OF STAND ALONE BASIS ARE EXAMINED BY T HE REVENUE AUTHORITIES. FOR THIS LIMITED PURPOSE WE ARE OF THE OPINION THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF THE AO FOR EXAMINING IF THE RESIDENTIAL SEGM ENT OF THE PROJECTS ON STAND ALONE BASIS FULFILS THE CONDITIONS SPECIFIED IN THE ACT. THE AO IS DIRECTED TO GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE APP LYING THE RATIO OF THE JUDGMENT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) TO THE FACTS OF THE CASE. ACCORDINGLY THE GROUND OF THE APPEAL HAVE TO BE ALLOWED IN PRINCIPLE. HOWEVER SINCE THE AO HAS TO EXAMINE WHETHER THE ASSESSEE HAS FULFILLED OTHER CON DITIONS OF THE SAID SUB-SECTION (10) OF SECTION 80 IB THE GROUNDS OF THE APPEAL ARE SET ASIDE FOR THE LIMITED PURPOSE. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 20TH DAY OF AUG UST 2010. SD/- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER PUNE DATED THE 20TH AUGUST 2010 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT AURANGABAD 4. THE CIT(A) AURANGABAD 4. THE D.R. A BENCH PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE