M/s. Namaha Estates, Hyderabad v. The ITO Ward-6(1),, Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI AKBER BASHA ACCOUNTANT MEMEBR ITA NO.29/HYD/10 : ASSTT. YEAR 2006-07 M/S. NAMAH ESTATES HYDERABAD. ( PAN AADFN 6354 R) V/S. INCOME-TAX OFFICER WARD-6(1) HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.V.BHANU NARAYANA RAO RESPONDENT BY : SHRI H.PHANI RAJU O R D E R PER G.C.GUPTA VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006- 07 IS DIRECTED AGAINST THE ORDER OF THE CIT(A). 2. GROUNDS NO.1 TO 3 OF THE ASSESSEE ARE AS UNDER- '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)-IV HYDERABAD IS ERRONEOUS ON FACTS AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-IV HYDERABAD OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80IB(10) OF THE I.T. ACT 1961 IN ITS ENTIRETY AND ACCEPTED THE INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 AS 'NIL'. ITA NO.29/HYD/10 M/S. NAMAH ESTATES HYDERABAD. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)-IV HYDERABAD OUGHT TO HAVE APPRECIATED AND UPHELD THE CONTENTION OF THE ASSESSEE THAT THERE WAS NO VIOLATION OF THE PROVISI ONS OF SECTION 80IB(10) OF THE I.T. ACT 1961 AS- (I) THE ASSESSEE HAD CONSTRUCTED EACH FLAT IN THE APPROVED HOUSING PROJECT WITH A BUILT UP AREA OF LESS THAN 1 500 SQ. FT. IS ERRONEOUS ON FACTS AND BAD IN LAW. (II) THE ASSESSEE HAD NOT VIOLATED ASSESSMENT YEAR OF THE APPLICABLE PROVISIONS OF LAW BY SELLING TWO ADJACENT FLATS TO CERTAIN BUYERS; AND (III) THE LAW AS APPLICABLE TO ASSESSMENT YEAR 2006-07 DOES NOT PROHIBIT SALE OF TWO ADJACENT FLATS TO A SINGLE BUYERS; AND SHOULD HAVE PASSED ORDERS /GIVING DIRECTIONS TO THE ASSESSING OFFICER ACCORDINGLY.' 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THESE GROUNDS OR THE APPEAL OF THE ASSESSEE I S COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF HYDERABAD BEN CH OF THE TRIBUNAL DATED 25.11.2009 IN ASSESSEE'S OWN CASE FOR ASSESSMEN T YEAR 2005-06 IN ITA NO.435/HYD/2009 WHEREIN STILL EARLIER ORDER OF THE TRIBUNAL DATED 26.5.2008 IN ASSESSEE'S OWN CASE FOR ASSESSME NT YEAR 2004-05 IN ITA NO.489/HYD/2007 WAS FOLLOWED. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND DID N OT CONTROVERT THE ABOVE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THA T THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER S.80IB(10) OF THE I.T. ACT 1961 WITH RESPECT TO THOSE FLATS CONSTRUCTED BY THE ASSESSE E WHOSE SIZE IS WITHIN THE PRESCRIBED LIMIT OF 1 500 SQ. FT. IS CO VERED IN FAVOUR OF THE ASSESSEE WITH THE DECISIONS OF THE TRIBUNAL NOTED ABOVE. ITA NO.29/HYD/10 M/S. NAMAH ESTATES HYDERABAD. 3 ACCORDINGLY WE DIRECT THAT DEDUCTION UNDER S.80IB(10) O F THE ACT MAY BE ALLOWED TO THE ASSESSEE IN RESPECT OF THOSE FLATS WHOSE SIZE IS WITHIN THE STATUTORY LIMIT OF 1 500 SQ. FT AS PER THE DIRECTIONS CONTAINED IN THE EARLIER ORDERS OF THE TRIBUNAL IN ASSE SSEE'S OWN CASE NOTED ABOVE. GROUNDS OF APPEAL NO.1 TO 3 OF THE ASSESSEE IN THIS APPEAL ARE ACCORDINGLY ALLOWED. 5. GROUND OF APPEAL NO.4 OF THE ASSESSEE READS AS FOLLOW S- '4. LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)I V HYDERABAD FURTHER ERRED BY DIRECTING THE ASSESSING OFFICER TO RESTRICT THE DEDUCTION U/S. 80IB(10)OF T HE I.T. ACT 1961 ONLY IN RESPECT OF THE FLATS/UNITS WHERE THE MAXIMUM BUILT UP AREA DOES NOT EXCEED 1 500 SQ. FT. ' 6. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER S.80IB(10) OF TH E ACT EVEN IN RESPECT OF THE FLATS/UNITS WHERE THE MAXIMUM BUILT UP AREA EXCEEDS 1 500 SQ.FT. HOWEVER THE LEARNED COUNSEL FOR THE ASSESSE E CONCEDED THAT THIS ISSUE IS NOT COVERED WITH THE DECISION OF THE TR IBUNAL IN ASSESSEE'S OWN CASE FOR EARLIER YEARS NOTED ABOVE. THE LEA RNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUBMIT TED THAT THE DEDUCTION UNDER S.80IB OF THE ACT IS NOT ALLOWABLE WH ERE THE BUILT UP AREA OF ANY FLAT EXCEEDS 1 500 SQ. FT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND TH AT DEDUCTION UNDER S.80IB(10) OF THE ACT IS ADMISSIBLE ONLY IN RESPECT OF ONLY THOSE FLATS/UNITS WHOSE MAXIMUM BUILT UP AREA DO ES NOT EXCEED 1 500 SQ. FT. IN VIEW OF THE LIMIT PRESCRIBED BY THE STATUTORY PROVISIONS ITSELF THREE IS NO MERIT IN THIS GROUND OF T HE ASSESSEE. GROUND OF APPEAL NO.4 IS ACCORDINGLY REJECTED. ITA NO.29/HYD/10 M/S. NAMAH ESTATES HYDERABAD. 4 8. GROUND OF APPEAL NO.5 IS AS UNDER- '5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED ASSESSING OFFICER OUGHT NOT HAVE MADE AN ADDITION OF RS.80 614 ON ACCOUNT OF INTEREST ON FDS HELD IN CUSTODY BY THE APPELLANT ON BEHALF OF THE 'BUYER S ASSOCIATION'.' AT THE TIME OF HEARING LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL. IT IS ACCORDINGLY REJECTED. 9. IN THE RESULT ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 9.4.2010 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 9TH APRIL 2010 COPY FORWARDED TO: 1. M/S. NAMAH ESTAES 6TH FLOOR DOYEN GALAXY 8-3-99 3 PLOT NO.07 SRINAGAR COLONY HYDERABAD 500 073. 2. INCOME-TAX OFFICER WARD 6(1) HYDERABAD 3. COMMISSIONER OF INCOME-TAX(APPEALS) IV HYDERABAD . 4. COMMISSIONER OF INCOME-TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S.