Aakar Associates, Baroda v. The Income tax Officer, Ward-2(3),, Baroda

ITA 2763/AHD/2009 | 2006-2007
Pronouncement Date: 08-07-2011 | Result: Allowed

Appeal Details

RSA Number 276320514 RSA 2009
Assessee PAN AAIFA5085H
Bench Ahmedabad
Appeal Number ITA 2763/AHD/2009
Duration Of Justice 1 year(s) 9 month(s) 1 day(s)
Appellant Aakar Associates, Baroda
Respondent The Income tax Officer, Ward-2(3),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 08-07-2011
Date Of Final Hearing 30-06-2011
Next Hearing Date 30-06-2011
Assessment Year 2006-2007
Appeal Filed On 07-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER DATE OF HEARING : 30/6/11 DRAFTED ON:01/07/201 1 ITA NO. 2763/AHD/2009 ASSESSMENT YEAR : 2006-07 M/S.AAKAR ASSOCIATES 23 SAHITYA BUNGALOW BEHIND TAKSH COMPLEX VASNA ROAD BARODA VS. THE I.T.O. WARD-2(3) BARODA PAN/GIR NO. : AAIFA 5085 H (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI BHARGAV KARIA RESPONDENT BY: SHRI G.S. SOURYAVANSHI SR. D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-II BARODA DATED 16/07/2008 PASSED FOR ASSESSMENT YEAR 2006-07 AND THE SUBSTANTIVE GROUNDS ARGUED BEFORE US ARE AS UNDER: (1) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S)-II BARODA HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S. 80IB(10) OF THE ACT. (2) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S)-II BARODA HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITION A T CLAUSE (C) OF SECTION 80IB(10) OF THE ACT. ITA NO. 2763/AHD/2009 M/S. AAKAR ASSOCIATES VS. ITO ASST.YEAR - 2006-07 - 2 - (3) THE ON FACTS AND IN LAW THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)-II HAS GRIEVOUSLY ERRED IN REJ ECTING THE ALTERNATE ARGUMENT REGARDING PROPORTIONATE DEDUCTIO N ALLOWABLE IN RESPECT OF EACH RESIDENTIAL UNIT AS EN VISAGED BY THE ACT. 2. AS NOTED BY THE AO VIDE IMPUGNED ORDER PASSED U /S.143(3) OF THE I.T.ACT 1961 DATED 25/12/2008 THAT THE ASSESSEE-F IRM IS A BUILDER AND EXECUTED THE BUSINESS AS A DEVELOPER OF CONSTRUCTIO N PROJECT. THE ASSESSEE HAS CLAIMED A DEDUCTION U/S.80IB(10) OF TH E IT ACT OF RS.29 69 032/-. THE OBSERVATION OF THE AO WAS TH AT BUNGALOW NO.54 & 55 OF THE PROJECT SOUNDARYA WAS CONSTRUCTED ON THE AREA OF PLOT ADMEASURING 221.66 SQ.METERS AND THE CONSTRUCTION W AS ADMEASURING 263.76 SQ.METERS. ACCORDING TO AO THOSE RESIDENTI AL UNITS HAVE EXCEEDED THE PRESCRIBED BUILT-UP AREA OF 1500 SQ.FT . AS PER THE PROVISIONS OF SECTION 80IB(10) OF THE ACT. THE ASSESSEE HAS RAISED CERTAIN OBJECTIONS HOWEVER ALTERNATIVELY SUGGESTED THAT A T BEST A PROPORTIONATE DISALLOWANCE TO BE MADE ONLY IN RESPECT OF THE CONS TRUCTION OF THE SAID TWO UNITS. IN ADDITION TO THE ABOVE OBSERVATION OF THE AO IT HAS ALSO BEEN FOUND THAT THE PERMISSION OF DEVELOPMENT ISSUE D BY THE LOCAL AUTHORITY WAS NOT IN THE NAME OF THE ASSESSEE. FU RTHER IT WAS ALSO NOTED BY THE AO THAT THE LAND WAS NOT OWNED BY THE ASSESS EE. AS PER AO THE BASIC REQUIREMENT OF CLAIM OF DEDUCTION U/S.80IB(10 ) SHOULD BE THAT THE DEVELOPMENT APPROVAL OF THE HOUSING PROJECT SHOULD BE IN THE NAME OF AN UNDERTAKING WHO IS CLAIMING THE DEDUCTION AND ALSO THAT THE PRESCRIBED CONSTRUCTION LIMIT OF A UNIT HAD EXCEEDED THEREFOR E HE HAS DENIED THE CLAIM. THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY. ITA NO. 2763/AHD/2009 M/S. AAKAR ASSOCIATES VS. ITO ASST.YEAR - 2006-07 - 3 - 3. THE LD.CIT(A) HAS FOLLOWED A DECISION OF THE ITA T AHMEDABAD IN THE CASE OF RADHE DEVELOPERS & OTHERS IN ITA NO.248 2/AHD/2006 DATED 29/06/2007 REPORTED IN 113 TTJ 300 (AHMEDABAD) AND WITH CERTAIN DIRECTIONS ALLOWED THE APPEAL FOR STATISTICAL PURPO SES. 4. WITH THIS BRIEF BACKGROUND WE HAVE HEARD BOTH T HE SIDES. AT THE OUTSET IT HAS BEEN INFORMED THAT IN ASSESSEES OWN CASE FOR AY 2005-06 ITAT D BENCH AHMEDABAD BEARING ITA NO.2903/AHD/20 08 VIDE ORDER DATED 04/05/2011 HAS RESTORED THE MATTER WI TH CERTAIN DIRECTIONS TO AO; RELEVANT PARAGRAPH IS REPRODUCED BELOW:- 5 21 ACCORDINGLY THE BENCH CONCLUDED THAT THE APP EAL BY THE ASSESSEE IS TO BE ALLOWED TO THE EXTENT OF THE FLATS THE BU ILT UP AREA OF THE FLAT IS NOT MORE THAN 1500 SQ. FT. THE BENCH ALSO AGREED WITH T HE SUBMISSION OF THE REPRESENTATIVE FOR THE ASSESSEE THAT WHILE CONSIDER ING THE BUILT UP ARE OF 1500 SQ. FT. FOR THE PURPOSE OF EXEMPTION UNDER SEC TION 80-16(10) THE MEZZANINE FLOOR AND COMMON AREAS ARE TO BE EXCLUDED . AS REGARDS THE PENTHOUSES THE BUILT UP AREA OF WHICH WAS MORE THA N 1500 SQ. FT. THE ITAT HELD THAT THESE MAY BE EXCLUDED FOR EXEMPTION . IT WAS FURTHER OBSERVED IN THE LIGHT OF THE DECISION OF THE SPECIA L BENCH IN THE CASE OF BRAHMA ASSOCIATES V. JCIT (2009) 315 ITR (AT) 268 ( PUNE) THAT MERELY BECAUSE SOME FLATS WERE LARGER THAN 1500 SQ. FT. T HE ASSESSEE WOULD NOT LOSE THE BENEFIT IN ITS ENTIRETY. ONLY WITH REFEREN CE TO THE FLATS WHICH HAD MORE THAN THE PRESCRIBED AREA THE ASSESSEE WOULD L OSE THE BENEFIT THE BENCH HELD. 5.3 WE FURTHER FIND THAT VIEW TAKEN IN THE DECISION IN THE CASE OF LAUKIK DEVELOPERS REPORTED IN 108 TTJ 364 RELIED UPON BY THE ID. CIT(A) DID NOT FIND FAVOUR OF THE SPECIAL BENCH IN THE CASE OF BRA HMA ASSOCIATES . 5.4 THE NAGPUR BENCH OF THE ITAT IN THE CASE OF ITO VS. AIR DEVELOPERS 123 TTJ(NAG.)959 WHILE DISTINGUISHING THE AFORESAID DECISION IN THE CASE OF LAUKIK DEVELOPERS(SUPRA) RELIED UPON DECISION DA TED 5.1.2007 OF THE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HO USING DEVELOPMENT LTD. IN ITA NO. 458 OF 2006 AND CONCLUDED THAT IF A N ASSESSEE HAS DEVELOPED A HOUSING PROJECT .WHEREIN THE MAJORITY O F RESIDENTIAL UNITS HAVE A BUILT UP AREA OF LESS THAN 1500 SQ. FT. I.E THE L IMIT PRESCRIBED BY SEC. 80IB(10) OF THE ACT AND ONLY A FEW RESIDENTIAL UNIT S ARE EXCEEDING THE BUILT UP AREA OF 1500 SQ. FT. THERE WOULD BE NO JUSTIFIC ATION TO DISALLOW THE ENTIRE DEDUCTION U/S 80IB(10) OF THE ACT. THE BENCH HELD THAT IT WOULD BE ITA NO. 2763/AHD/2009 M/S. AAKAR ASSOCIATES VS. ITO ASST.YEAR - 2006-07 - 4 - FAIR AND REASONABLE TO ALLOW DEDUCTION ON PROPORTIO NATE BASIS I.E. ON THE PROFIT DERIVED FROM CONSTRUCTION OF THE RESIDENTIAL UNITS WHICH HAVE A BUILT UP AREA OF LESS THAN 1500 SQ. FT. 5.5 IN THE LIGHT OF THE VIEW TAKEN IN THE AFORESAID DECISIONS ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY CONT RARY DECISION WE HAVE NO HESITATION IN ALLOWING THE CLAIM OF THE ASS ESSEE FOR DEDUCTION U/S.80-IB(10) OF THE ACT ON PROPORTIONATE BASIS I.E . ON THE PROFIT DERIVED FROM CONSTRUCTION OF THE RESIDENTIAL UNITS WHICH HA VE A BUILT UP AREA OF LESS THAN 1500 SQ.FT.. ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE CLAIM FOR DEDUCTION U/S.80IB(10) OF THE ACT ON THE PROFIT DER IVED FROM CONSTRUCTION OF THE RESIDENTIAL UNITS WHICH HAVE A BUILT UP AREA OF LESS THAN 1500 SQ.FT.. THE UNITS WITH BUILT ARE EXCEEDING 1500 SQ.FT. WOUL D NOT BE ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT. SUBJECT TO THES E DIRECTIONS GROUND NOS.1 TO 3 IN THE APPEAL ARE ALLOWED TO THE EXTENT INDICATED HEREINBEFORE. 5. SINCE ON IDENTICAL FACTS RESPECTED CO-ORDINATE B ENCH HAS ALREADY TAKEN A VIEW WE ARE UNABLE TO DEVIATE FROM THE SA ID DECISION HENCE IN THE IDENTICAL MANNER FOR THE YEAR UNDER CONSIDERAT ION RESTORE THIS GROUND BACK TO THE STAGE OF ASSESSING OFFICER FOR DE NOVO ADJUDICATION. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TREAT ED AS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 8 TH JULY 2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 08/ 07 /2011 T.C. NAIR SR. PS ITA NO. 2763/AHD/2009 M/S. AAKAR ASSOCIATES VS. ITO ASST.YEAR - 2006-07 - 5 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II BARODA 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD 1. DATE OF DICTATION..01/07/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01/07/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S8.7.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8.7.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER