ACIT 15(2), MUMBAI v. S.R. DEVELOPERS, MUMBAI

ITA 3800/MUM/2011 | 2007-2008
Pronouncement Date: 23-10-2013 | Result: Allowed

Appeal Details

RSA Number 380019914 RSA 2011
Assessee PAN ABBFS0073R
Bench Mumbai
Appeal Number ITA 3800/MUM/2011
Duration Of Justice 2 year(s) 5 month(s) 13 day(s)
Appellant ACIT 15(2), MUMBAI
Respondent S.R. DEVELOPERS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-10-2013
Appeal Filed By Department
Order Result Allowed
Bench Allotted E
Tribunal Order Date 23-10-2013
Date Of Final Hearing 09-10-2013
Next Hearing Date 09-10-2013
Assessment Year 2007-2008
Appeal Filed On 10-05-2011
Judgment Text
` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI . . ! ' #'' '$ % ! & BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI VIVEK VARMA JUDICIAL MEMBER . : 3800 / / 2011 A.Y. 2007-2008 ITA NO. : 3800/MUM/2011 (ASSESSMENT YEAR: 2007-2008) ASST. COMMISSIONER OF INCOME TAX -15(2) MATRU MANDIR ROOM NO. 113 TARDEO MUMBAI -400 072 VS M/S S R DEVELOPERS A-3 ANJUM NURAL TRUST MOHALI VILLAGE SAKI NAKA MUMBAI -400 072 .: PAN: ABBFS 0073 R (APPELLANT) (RESPONDENT) APPELLANT- REVENUE BY : SHRI PITAMBAR DAS RESPONDENT- ASSESSEE BY : SHRI JIGNESH P. SHAH /DATE OF HEARING : 09-10-2013 !' / DATE OF PRONOUNCEMENT : 23-10-2013 * O R D E R #'' '$ : PER VIVEK VARMA JM: THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE O RDER OF CIT(A) 26 MUMBAI DATED 23.02.2011 THE FOLLOWING GROUNDS HAV E BEEN TAKEN: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S 80IB (10) OF THE INCOME TAX ACT 1961 IGNORING THE CRUCIAL POINT THAT THE ASSESSEE H AS FAILED TO ESTABLISH THE FACT OF COMPLETION OF THE PROJECT BEFORE PRESCRIBED DUE DATE I.E. 31.03.2008 WHICH COMMENCED AS PER THE COMMENCEMENT CERTIFICATE DATED 08.12.2004. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN IGNORING THE POINT THAT THE COM PLIANCE OF CONDITIONS U/S 80IB(10) OF THE INCOME TAX ACT 1961 HAS TO BE SEEN WITH REFERENCE TO THE PROJECT (ELIGIBLE BUSINESS) FOR WHICH COMMENCEMENT CERTIFICATE WAS OBTAINED ON 06.12.2004. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS EL IGIBLE FOR DEDUCTION EVEN THOUGH THE COMMERCIAL AREA IN THE PROJECT IS MORE T HAN 2000 SQ. FT. WHILE THE SAME RESULTS IN VIOLATION OF SECTION 80IB(10) OF TH E INCOME TAX ACT 1961 AS PER THE AMENDMENT INSERTED BY THE FINANCE (NO. 2) A CT 2004 WHICH IS CLARIFICATORY AND DECLARATORY IN NATURE. M/S S R D EVELOPERS ITA 3800/MUM/2011 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE CLAIM FOR EXPENSES OF RS. 88 36 025/- EVEN THOUGH THE ASSESSING OFFICER HAS SPECIFICALLY CALLE D UPON THE ASSESSEE TO FURNISH DETAILS/EVIDENCES IN SUPPORT OF THE RELATE D TAXES DEDUCTED AT SOURCE AND THE ASSESSEE HAS FILED TO FURNISH ANY REPLY/ EV IDENCES AT THE STAGE OF ASSESSMENT AND ALSO THE APPELLATE PROCEEDINGS. 2. FIRST THREE GROUNDS ARE INTERLINKED AND PERTAIN TO TH E CLAIM OF DEDUCTION U/S 80IB(10) ALLOWED BY THE CIT(A). 3. THE FACTS ARE THAT THE ASSESSEE IS AN AOP VIDE AGRE EMENT DATED 31.05.2005 TO DEVELOP AND CONSTRUCT 5 BUILDINGS A B C D & E SURVEY NO. 139/141/143 AT OLD CTS NO. 463 465 AND 468 AT VILLAGE NAVAHAR BHAYENDER (E). THE ASSESSEE RECEIVED COMMENCEME NT CERTIFICATES ISSUED BY MIRA BHAYENDER MAHANAGAR PALIKA DAT ED 06.12.2004. AS PER THE AO IN THE ASSESSMENT ORDER IN ASS ESSMENT YEAR 2005-06 THE ASSESSEE SHOWING THE SAME AS ONE PR OJECT AS APPROVED BY THE CONCERNED AUTHORITY. HOWEVER IN ASSESS MENT YEAR 2006-07 THE ASSESSEE DIVIDED THE BUILDING PROJECT INTO T WO PROJECTS AS PROJECT 1 AND PROJECT 2 AND MAINTAINED SEPARATE BOOK S AND COMPUTED SEPARATE PROFIT & LOSS A/C FOR THE TWO PROJECTS. THE AO DEALING IN THE ISSUE OBSERVED THAT THE ENQUIRIES MADE THROUGH WARD OFFIC ERS REVEALED THAT BUILDINGS A AND D HAD BEEN ASSIGNED TO A SEPARATE DEVELOPERS AND ALSO THAT BUILDING A CONSIST OF COMMERCIAL UN ITS EXCEEDING 2000 SQ. FT. WHICH WAS AGAINST THE TERMS OF CON DITIONS AS LAID DOWN IN SECTION 80IB(10)(D). ACCORDING TO THE AO THE DED UCTION CAN ONLY BE MADE AVAILABLE AFTER THE COMPLETION CERTIFICATE HAS BEEN RECEIVED BY THE ASSESSEE. SINCE THE COMPLETION CERTIFICATE WAS NOT RECEIVED THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION AND THUS HE DENIED THE CLAIM OF DEDUCTION U/S 80IB(10) MADE BY THE ASSESSEE. 4. THE ASSESSEE APPROACHED THE CIT(A) WHO AFTER TAKING THE FACTS OF THE CASE INTO CONSIDERATION HELD 5. I HAVE CIRCUMSPECTED THE ENTIRE SPECTRUM OF FAC TS AND CIRCUMSTANCES OF THE CASE VIS--VIS APPLICABILITY OF LAW U/S 80IB(10 ) AND VARIOUS DECISION OVER THE ISSUE. I FIND THAT LD. AO HAS MECHANICALLY DISALLOWED THE GENUINE CLAIM OF THE APPELLANT WHEREAS APPELLANT F ULFILLS ALL THE CONDITIONS. BEFORE NARRATING THE VARIOUS FACTS AND COMING TO THE INDIVIDUAL REASONING OF THE AO IT IS NECESSARY TO POINT OUT THE M/S S R D EVELOPERS ITA 3800/MUM/2011 3 BACKGROUND OF THE CASE. THE APPELLANT IS AN AOP OF A JOINT VENTURE CONSISTING OF 7 MEMBERS. IT HAS STARTED BUSINESS OF CONSTRUCTION AT MIRA- BHAYANDER THANE FROM 3 1.05.2004 FOR DEVELOPING A PROJECT KNOWN AS RITU PARADISE ON A PIECE OF PLOT OF LAND NO. 466 463 465 AND 468 AT VILLAGE NAVGHAR TALUKA BHAYENDER DIST. THANE FOR WHICH NECESSARY PERMISSION HAS BEEN OBTAINED FROM MIRA BHAYENDAR MU NICIPAL CORPORATION (MBMC) VIDE APPROVAL LETTER NO. MB/MNP/ NRJ1742/04-05 DATED 06.02.2006. THE SIZE OF PLOT ON WHICH SUCH HO USING PROJECT IS CONSTRUCTED IS OF 10 316 SQ. MTS. THE BUILT-UP AREA OF EACH RESIDENTIAL UNIT IS LESS THAN 1000 SQ.FT FURTHER IN THE PROJEC T ON WHICH PROFIT DEDUCTION U/S 80IB(10) HAS BEEN CLAIMED DOES NOT HA VE ANY COMMERCIAL ESTABLISHMENTS. WHEN THE COMMENCEMENT CERTIFICATE W AS DATED 06.12.2004 AS PER THE PROVISION OF SECTION 80IB TH IS PROJECT WAS TO BE COMPLETED WITHIN 4 YEARS FROM THE END OF FINANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY AND ACCORDINGLY IT WAS TO BE COMPLETED BEFORE 31.03.2009 WHEREAS AS A DMITTED BY THE AO COMPLETION CERTIFICATE WAS OBTAINED ON 20.11.20 08 WHICH MEANS PROJECT WAS COMPLETED WITHIN 4 YEARS FROM THE END O F FINANCIAL YEAR I.E. 2004-05 IN WHICH THE HOUSING PROJECT WAS APPROVED B Y THE LOCAL AUTHORITY. THE LD. AO HAS IGNORED THIS VITAL ASPECT OF THE ISSUE AND DUE TO THAT HE HAS REACHED TO THE WRONG CONCLUSION. FU RTHER I FIND MERIT IN THE ARGUMENTS OF THE LD AR AS THERE IS NO SHOPPING AREA IN PROJECT I AND FURTHER THE REASON FOR BIFURCATING THE HOUSING PROJ ECT IN 2 PARTS WITH A VIEW TO TAKE PRECAUTION OF ACCOUNTING OF THE PROFIT S FROM THE VARIOUS SUB- PROJECTS OF THE SAME PROJECT. IT IS ALSO PERTINENT TO MENTION THAT PROJECT I IS COMPRISING OF 5 WINGS I.E. A B C D & E AND EA CH WING INDEPENDENTLY FULFILLS ALL THE CONDITIONS SPECIFIED UNDER THE PROVISION OF SECTION 80IB(10). THEREFORE UNLESS SUBSTANTIAL AND CONTRARY EVIDENCE IS BROUGHT ON RECORD CLAIM OF THE APPELLANT CANNOT BE DISCARDED. FURTHER IT IS A FACT AND EVIDENCE ON RECORD THAT PROJECTS W ERE DULY COMPLETED WITH THE STIPULATED TIME VIDE COPY OF LETTER FROM A RCHITECT FOR COMPLETION OF PROJECT ON DATED 20.02.2008 09.07.2005 21.06.2 006 25.01.2007 09.01.2009 & 11.09.2006. FURTHER CONTENTION OF THE APPELLANT GETS SUPPORTED WITH ORDER THAT PROPERTY TAX DATED 13.04. 2007 17.07.2006. SIMILAR IS THE FACT IF A LETTER FROM BMC DATED 18.1 0.2006 22.12.2006 27.09.2006 AND 16.09.2005 FOR WATER HARVESTING IS T AKEN INTO ACCOUNT. 5.2 THE CONTENTION OF THE AO THAT APPELLANT HAS CON STRUCTED COMMERCIAL UNITS EXCEEDING 2000 SQ.FT. AREA OF HOUSING PROJECT IS VIOLATION OF CLAUSE (D) OF SECTION 80IB(10) IS NOT CORRECT BECAUSE IN PROJECT I THERE IS NO SHOPPING AREA BUT IT IS A PURELY RESIDENTIAL APARTM ENT. IT APPEARS THAT LD. AO HAS NOT PROPERLY SCRUTINIZED THE FACTS OF TH E CASE NOR HAS PROPERLY APPRECIATED THE EVIDENCES ON RECORD. DUE T O THAT HE HAS REACHED TO THE WRONG CONCLUSION THAT APPELLANT HAS CONSTRUCTED COMMERCIAL AREA WHICH IS MORE THAN 2000 SQ.FT. FURT HER IT IS WORTHWHILE TO MENTION THAT PROJECT UNDER CONSIDERATION WAS APP ROVED PRIOR TO AMENDMENT U/S 801B(10) VIDE CLAUSE (D) HENCE THIS PROVISION IS NOT APPLICABLE TO THE APPELLANT. THIS ISSUE HAS BEEN CO NSIDERED AND DECIDED BY THE APPELLATE AUTHORITIES AND THE ABOVE FINDING HAS ALSO BEEN GIVEN BY THE LD. CIT(A) 25 IN THE CASE OF MS K INJAL ASSOCIATES IN ORDER APPEAL NO. CIT(A) XXV/ITO 25(1)(1)/ITA 290/08 -09 DATED 12.08.2009. IN THE CASE OF ARUN EXCELLO FOUNDATION (P) LTD. VS. ACIT CHENNAI ITA NO. 2090 AND 2091 DATED 16.02.2007 I T HAS BEEN HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80I B DESPITE SETTING APART 9.31% OF THE BUILT UP AREA FOR SHOPS ON THE G ROUND THAT THE RESTRICTION ON COMMERCIAL AREA IS OPERATIVE ONLY FR OM 01.04.2005. THE HONBLE ITAT MUMBAI IN CASE OF M/S. SAROJ SALES COR PORATION VS. ITO WARD 25(2)(3) MUMBAI DT. 24.01.2008 HELD THAT FOR P ROJECTS STARTED BEFORE 31.03.2005 THE CONDITION OF THE SHOPPING AR EA NOT EXCEEDING 5% M/S S R D EVELOPERS ITA 3800/MUM/2011 4 OF THE BUILT UP AREA IS NOT APPLICABLE AND THEREFOR E DEDUCTION U/S. 80IB WAS AVAILABLE. PARA 13 OF THE JUDGMENT READS AS RE GARDS THE OBJECTION OF THE ASSESSING OFFICER THAT THE PERMISSIBLE SHOPP ING AREA OF HOUSING PROJECT EXCEED 5% THE ASSESSEE IS NOT ENTITLED FOR RELIEF U/S. 80IB (10). WE ARE OF THE VIEW THAT THE HOUSING PROJECT WHICH W ERE APPROVED BEFORE 31.03.2005 THERE WAS NO STIPULATION AS TO THE SHOP PING COMPLEX AREA IS PERMISSIBLE IN THE PROJECT. AS ALREADY STATED EARLI ER THAT THE AMENDMENTS WERE SUBSEQUENTLY MADE WHILE EXTENDING T HE DEDUCTION OF INCOME FROM HOUSING PROJECT APPROVED UP TO 31.03.20 07 THE DENIAL OF DEDUCTION IN OUR VIEW IS CLEARLY NOT IN ACCORDANCE OF LAW. THE DECISION IN INCOME TAX OFFICER 19(2) (3) MUMBAI VS. M/S. VIN AMRA DEVELOPERS IS ALSO ON THE SAME REASONING AND CONCLUSION. IT IS ST ATED THEREIN THAT CONSIDERING THE RIVAL SUBMISSION I AM OF THE VIEW THAT THE CLAIM OF THE ASSESSEE IS TO BE ALLOWED PARTICULARLY CONSIDERING THAT THE AMENDED PROVISIONS WAS BROUGHT INTO OPERATION WITH EFFECT F ORM 01.04.2005 AND COULD BE APPLIED ONLY FROM A. V. 2005-06 ONWARDS. FURTHER IN THE CASE OF HARSHAD P. DOSHI VS. ACIT -25(2) REPORTED IN 109 TTJ (MUM) 335 A BENCH ITAT HAS HELD THAT ONCE THE PROJECT HAS BEEN APPROVED BY THE MUNICIPAL CORPORATION AS A HOUSING PROJECT THE ASS ESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 801B(10) AND NO DISALLOWANC E COULD BE MADE ON ACCOUNT OF SHOPS INCLUDED THEREIN. FURTHER IT I S ALSO HELD BY THE HONBLE ITAT IN THE CASE OF ACIT 22 (3) VS. SHREE B ALAJI DEVELOPERS ITA NO. 2592/MUMBAI C BENCH 2006 A. Y. 04-05 DATED 21.1 0.2008 THAT IT IS WELL SETTLED JUDICIAL PRINCIPLE THAT PROVISIONS OF LAW SHOULD BE INTERPRETED IN A MANNER WHICH RESULT INTO ATTAINMEN T OF THE OBJECTIVE OF THE PROVISION. IT IS ALSO RELEVANT TO MENTION THAT IN THE CASE OF M/S. POONAM GRIH NIRMAN VS. ACIT CIRCLE 15 (2) ITAT C BE NCH IN ITA NO. 4911/MUMBAI/2007 DATED 26.03.2008 THE ABOVE FINDIN G HAS BEEN REITERATED WHILE DECIDING THE APPEAL AGAINST THE OR DER U/S. 263 OF THE I. T. ACT 1961. THE CASE OF ITO WARD 4 (1) VS. M/S. I DEAL REALTORS ITA NO. 4292/SMC BENCH MUMBAI/2007 DATED 08.11.2007 ALS O IT HAS BEEN HELD THAT ON THE SET OF FACT CLAIM OF DEDUCTIO N U/S. 80IB(10) IS ALLOWABLE. THE SAME ISSUE HAD COME FOR THE CONSIDER ATION OF MY PREDECESSOR LD. CIT(A)26 (EARLIER XV) OF THIS CHAR GE IN THE CASE OF M/S PNK CORPORATION APPEAL NO. CIT(A)-X V/IT-5/ACIT 15 (3)/2008-09 DATED 25.07.2008 IN WHICH THE WORTHY LD. CIT(A) HAS HELD AS UNDER: FROM THE PLAIN READING OF PROVISIONS SEC.80IB (10) APPLICABLE BEFORE 1-4-2005 AND AFTER 1-4-2005 I FIND THAT THE AMENDED PROVISIONS INSERTED BY FINANCE ACT 2004 W.E.F 1-4- 2005 HAVE SOME ADDITIONAL CONDITIONS WHICH WERE NOT AVAILABLE IN THE PRE- AMENDED PROVISION APPLICABLE BEFORE 1-4-2005. THE F IRST POINT WHICH IS TO BE NOTED THAT THE POST AMENDED PROVISIO N OF SEC. 80IB(1 0) APPLIES IN RESPECT OF HOUSING PROJECT APP ROVED BEFORE 31-3-2007 WHEREAS PRE-AMENDED PROVISIONS OF SEC.80I B(10) IS APPLICABLE FOR HOUSING PROJECT APPROVED BEFORE 31-3 -2005. IN THIS WAY THE PRE-AMENDED PROVISIONS OF SEC. 80IB(10) AN D POST AMENDED PROVISIONS OF SEC.801B(10) HAVE HOT OVERLAP PING DOMAIN. THE POST AMENDED PROVISIONS OF SEC. 80IB(10 ) HAS BEEN LOADED WITH SOME ADDITIONAL CONDITIONS IN SEC.80IB( 10)(A) IN RESPECT OF COMPLETION OF HOUSING PROJECT AND SECTIO N 80IB(10)(D) CAPPING THE EXTENT OF SHOPPING AND COMMERCIAL ESTAB LISHMENT TO BE INCLUDED IN HOUSING PROJECTS. THE ADDITIONAL CON DITIONS GIVEN IN RESPECT OF COMPLETION OF HOUSING PROJECT HAVE ST IPULATED SOME REASONABLE TIME INTERVAL GRANTED TO COMPLETE THE PR OJECT. THIS CONDITION AS SUCH DOES NOT ADVERSELY AFFECT THE CLA IM OF DEDUCTION AVAILABLE IN RESPECT OF THE HOUSING PROJE CTS WHICH HAVE BEEN APPROVED BEFORE 01-04-2005. AS SUCH IT D OES NOT BRING ANY HINDRANCE IN OPERATION OF PREAMENDED PROV ISIONS OF M/S S R D EVELOPERS ITA 3800/MUM/2011 5 SEC. 80IB(10). THE POST AMENDED PROVISIONS OF SEC.8 0IB(10) HAS ENSHRINED ANOTHER ADDITIONAL CONDITION IN CLAUSE (D ) OF SEC.80IB (10) WHICH BRINGS SOME THRESHOLD LIMITS FOR SHOPPIN G AND COMMERCIAL ESTABLISHMENT TO BE INCLUDED IN A HOUSIN G PROJECT. THIS PARTICULAR ADDITIONAL CONDITION BRINGS SOME AN OMALY IF IT IS APPLIED STRICTLY FOR A.Y. 2005-06 AND ONWARDS IN CA SES WHERE THE HOUSING PROJECT GOT APPROVED BEFORE 01-04-2005. FOR EXAMPLE IF THE HOUSING PROJECT GETS APPROVAL BEFOR E 31-3-2003 AND IT DERIVES SOME PROFIT FOR THE A.Y. 2004-05 IT IS ENTITLED FOR DEDUCTION U/S.80IB(10) FOR THE AY 2004-05 EVEN THO UGH THE HOUSING PROJECT HAS INCLUDED SOME SHOPPING AND COMM ERCIAL ESTABLISHMENTS. BUT THE SAME HOUSING PROJECT MAY N OT GET DEDUCTION U/S.80IB (10) ON DERIVING CERTAIN PROFIT FOR A.Y.2005- 06 AFTER PRIMA-FACIE APPLICABILITY OF THE POST AMEN DED PROVISIONS OF SEC.80IB(10)(D) IN CASE THE BUILT-UP-AREA OF SHO PPING COMPLEX AND COMMERCIAL ESTABLISHMENT EXCEEDS 5% OF AGGREGAT E AREA OF BUILT-UP-AREA OF PROJECT OR 2000 SQ.FT. WHICH EVER IS LESS. IN THIS WAY IT MAY BE SEEN THAT A HO USING PROJECT WHICH H AS BEEN APPROVED BEFORE 1-4-2005 MAY GET DISQUALIFICATION O F SEC.80IB(10)(D) IF THIS PARTICULAR PROVISION IS AP PLIED W.E.F A.Y. 2005-06. HERE IT IS IMPORTANT TO NOTE THAT PRIMARY CONDITION OF APPLICATION OF SEC. 80IB(10) IS WITH REFERENCE TO T HE DATE OF APPROVAL OF HOUSING PROJECT. THEREFORE THE QUESTIO N MAY ARISE AS TO WHETHER THE POST-AMENDED PROVISIONS OF SEC.80IB( 10)(D) ARE TO BE APPLICABLE WITH REFERENCE TO ASSESSMENT YEAR OR THE DATE OF THE APPROVAL OF HOUSING PROJECT. IT IS WELL ACCEPTE D PRINCIPLES OF JURISPRUDENCE THAT EVERY LEGISLATION IS TO BE REGAR DED AS PROSPECTIVE IF II AMENDS SUBSTANTIVE LAW. THE LEGIS LATURE SHOULD CLEARLY SPEC5 ITS INTENTION TO APPLY THE LAW RETRO SPECTIVELY IF IT IS LIKELY TO AFFECT THE VESTED RIGHTS TO THE CITIZE NS CREATED BY EARLIER. THE CONDITIONS U/S. 80IB(10)(D) REQUIRE TO BE TESTED AT THE TIME THE PROJECT WAS CONCEPTUALIZED. A VESTED R IGHT CREATED BY EARLIER LEGISLATION CANNOT BE SNATCHED AWAY OR D IVESTED UNLESS THERE IS CLEAR-CUT RETROSPECTIVE AMENDMENT T O DO SO. A HARMONIOUS DOCTRINE OF INTERPRETATION IS TO BE ADOP TED TO HARMONIZE THE OPERATION OF THE PROVISIONS OF SEC. 8 0IB(10). THE EXPRESSION USED IN A STATUTE ORDINARILY BE UNDERSTO OD IN THE SENSE IN WHICH IT IS BEST HARMONIOUS TO THE OBJECT OF A STATUTE AND WHICH EFFECTUATES THE OBJECT OF LEGISLATURE [SA RKAR (BB) V. CIT (1981) 132 ITR 150 (CAL.) CIT V. SUPERINTENDIN G ENGINEER UPPER SILERU (1985) 152 ITR 753 (AP) CIT V. ASSOCI ATED FINANCE CO. LTD. (1992) 195 ITR 742 (CAL.) ]. THIS IS THE H ARMONIOUS CONSTRUCTION OF INTERPRETATION OF A FISCAL STATUTE. AN ASSESSEE WHO GOT HIS HOUSING PROJECT APPROVED BEFORE 1-4-200 5 HAD NO INKLING REGARDING THE ADDITIONAL CONDITION WHICH HA S BEEN IMPOSED BY POST AMENDED PROVISIONS OF SEC.80IB(10)( D). LOOKING TO THE FACT THAT ONCE THE PLAN GETS APPROVED CANNOT BE ALTERED IN ORDER TO SATISFY SUCH ADDITIONAL CONDITION AND IF THE POST AMENDED PROVISION OF SEC.8OIB(10)(D) IS MADE APPLIC ABLE FOR THE AY 2005-06 IN SUCH CASES THE ASSESSEE WILL LOOSE T HE DEDUCTION U/S.8OIB(10) FOR NO FAULT ON THEIR PART. A TAX PAYE R IS NOT BE SUPPOSED TO FORESIGHT OR ANTICIPATE ABOUT ANY CONDI TION TO BE IMPOSED IN FUTURE AND ACCORDINGLY READJUST HIS AFFA IR TO SUIT THE CLAIM OF DEDUCTION. FURTHER IT IS ALSO NOT POSSIBL E TO ALTER OR MODIFY THE APPROVED PLAN SUBSTANTIALLY AFTER CONSTR UCTION HAS STARTED. IN FACT IF THE PROVISIONS OF SEC.8OIB(10) (D) IS INTERPRETED IN SUCH A MANNER TO BE APPLICABLE STRICTLY W.E.F A. Y.2005-06 IT MAY BE A CASE OF PROMISSORY ESTOPPEL WHICH MAY NOT BE THE M/S S R D EVELOPERS ITA 3800/MUM/2011 6 INTENTION OF LEGISLATURE. THE CONCEPT OF PROMISSORY ESTOPPEL HAS BEEN ACCEPTED BY HON. SUPREME COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD. V. STATE OF UP. 118 I TR 326 (SC) TO MITIGATE THE RIGORS OF STRICT LAW IN THE INTERES T OF JUSTICE TO AN INDIVIDUAL. HERE A LIMITED POINT IS TO EMPHASIZE T HAT THE PROVISION IS TO BE INTERPRETED TO AVOID THE CASE OF PROMISSORY ESTOPPEL. THEREFORE I AM OF THE OPINION THAT THE P OST-AMENDED PROVISIONS OF SEC.80IB(10)(D) SHOULD BE MADE APPLIC ABLE WITH REFERENCE TO THE DATE OF THE APPROVAL OF HOUSING PR OJECT I.E. IF THE APPROVAL OF HOUSING PROJECT HAS BEEN MADE ON OR AFT ER 1-4-2005 THIS PARTICULAR CONDITION SHOULD BE APPLIED IN RESP ECT OF ANY PROFIT DERIVED FROM SUCH PROJECTS WITHOUT HAVING AN Y REFERENCE TO THE ASSESSMENT YEAR. SUCH VIEW ALSO GETS SUPPORT FR OM THE DECISION OF SAROJ SALES ORGANIZATION. THE FINDING G IVEN BY ITAT IN PARA 13 OF THE ORDER WHICH READS AS UNDER: AS REGARDS THE OBJECTION OF THE AO THAT THE PERMIS SIBLE SHOPPING AREA HOUSING PROJECT EXCEED 5% THE ASSESS EE IS SNOT ENTITLED TO RELIEF UNDER SECTION 80IB(10). WE ARE OF THE VIEW THAT THE HOUSING PROJECT WERE APPROVED BEF ORE 31.03.2005 AND FOR SUCH PROJECT WHICH WERE SO APPROVED THERE WAS NO STIPULATION AS TO THE SHOPPI NG COMPLEX AREA IS PERMISSIBLE IN THE PROJECT. AS ALRE ADY STATED EARLIER THAT THE AMENDMENTS WERE SUBSEQUENTL Y MADE WHILE EXTENDING THE DEDUCTION IN OUR VIEW IS CLEARLY NOT IN ACCORDANCE WITH LAW. IT MAY BE SEEN THAT HON. ITAT HAS GIVEN A FINDING T HAT IF THE HOUSING PROJECT WERE APPROVED BEFORE 31-03-2005 THERE WAS NO STIPULATION AS TO THE SHOPPING COMPLEX AREA IS PERMISSIBLE IN THE PROJECT. IN OTHER WORDS IN R ESPECT OF HOUSING PROJECTS APPROVED BEFORE 31-03-2005 THE CONVENIENT SHOPPING HAS BEEN ACCEPTED U/S. 80IB(1 0) F THE HOUSING PROJECT IS SO APPROVED. IN THE PRESENT CASE THE MBMC APPROVED THE PLAN OF THE APPELLANT AS HOUSING PROJECT WITH SHOPS AT THE GROUND FLOOR. HEN CE I HOLD THE POST-AMENDED PROVISIONS OF SECTION 801B(10 )(D) IS NOT APPLICABLE IN CASES WHERE THE HOUSING PROJEC T GOT APPROVED BEFORE 31.03.2005. SINCE IN THE PRESENT CA SE HOUSING PROJECT GOT APPROVED BEFORE 31.03.2005 (I.E . 19.07.2003) THE MISCHIEF OF PROVISIONS OF SEC. 80I (10)(D) IS NOT APPLICABLE. 5.3 IT IS PERTINENT TO MENTION THAT IN THE CASE OF BRAH MA ASSOCIATES VS. JCIT ITA NO. 1417 SPL. BENCH (PUNE) HAS ALSO APPROVED T HE DECISION OF M/S SAROJ SALES ORGANIZATION VS. ITO WARD 25(2)(3) ITA NO. 4008/M/2007 THE SAME FINDING HAS ALSO BEEN GIVEN BY THE LD. CIT (A) 25 IN THE CASE OF MS KINJAL ASSOCIATES IN ORDER APPEAL NO. CIT(A) XXV /ITO 25(1)(1)/ITA 290/08-09 DATED 12.08.2009. FURTHER IN THE CASE OF M/S HAPPY HOME ENTERPRISES THE LD. CIT(A) 27 HAS GIVEN THE SAME F INDING AND DECISION OVER THE SAME ISSUE RELATED WITH APPLICABILITY OF C LAUSE (D) OF SECTION 801B(10). IT IS RELEVANT TO MENTION THAT THE HONBL E PUNE SPL BENCH HAS GIVEN CATEGORICAL FINDING IN THE CASE OF BRAHMA ASS OCIATES VS. JCIT IN ITA NO. 1417/PN12006 (A.Y.2003-04) DATED 06.04.2009 WHEREIN THE HONBLE MEMBERS HAVE HELD AS UNDER: SO FAR AS ASSESSMENT YEARS PRIOR TO A.Y. 2005-06 A RE CONCERNED APPROVAL BY THE LOCAL AUTHORITIES FOR THE HOUSING PROJECT CONSTITUTES ADMISSIBLE MATERIAL TO COME TO THE CONCLUSION THE HOUSING PROJECT IS ELIGIBLE FOR DEDUCTION U/S 8 0IB(10)- WHAT WAS BROUGHT INTO EFFECT BY INSERTION OF CL. (D) IN SECTION 80IB (10) VIDE FINANCE ACT 2004 WAS A RESTRICTION ON USE OF BUILT-UP M/S S R D EVELOPERS ITA 3800/MUM/2011 7 AREA/FOR COMMERCIAL PURPOSES - THIS INDICATES THAT THERE WAS NO SUCH LIMIT IN FORCE FOR THE EARLIER YEARS - RESTRIC TION OF 5% IS APPLICABLE ONLY WITH PROSPECTIVE EFFECT AND THERE I S NO JUSTIFICATION TO PRESUME THAT SUCH A LIMIT OR PROHI BITION WAS IN PLACE IN THE EARLIER YEARS AS WELL ON THE COMMERCIA L USE OF AREA- IT WOULD BE REASONABLE TO GRANT BENEFIT OF INCENTIV E PROVISION TO PROJECTS IN WHICH BUILT-UP AREA FOR COMMERCIAL PURP OSES DOES NOT EXCEED 10% OF TOTAL AREA - WHERE APPROXIMATELY 90% OR MORE OF THE TOTAL AREA IS UTILIZED FOR BUILDING DWELLING WH ERE THE PROJECT HAS BEEN PASSED AS RESIDENTIAL-COMMERCIAL PROJECTS - WHERE THE TOTAL BUILT-UP COMMERCIAL AREA IS MORE THAN 10% OF TOTAL AREA SUCH PROJECTS NORMALLY SHOULD NOT GET BENEFIT OF DE DUCTION UNLESS THE UNDERTAKING CAN SHOW THAT THE INCOME FRO M CONSTRUCTION OF RESIDENTIAL DWELLING UNITS CAN BE W ORKED OUT SEPARATELY AND EVEN AFTER EXCLUDING THE COMMERCIAL USE OF PLOT THE PROJECT SATISFIES ALL THE REQUIREMENTS OF SECTI ON 80IB(]0) ON STANDALONE BASIS. 5.4 THEREFORE THE ISSUE REGARDING APPLICABILITY O F PROVISION OF LAW UNDER CLAUSE (D) OF SUB-SECTION 10 OF SECTION 80IB OF I.T . ACT IS RELEVANT FOR THE HOUSING PROJECT APPROVED AFTER 01.04.2005 AND IT CA NNOT BE PRESUMED TO BE DECISIVE AS APPLICABLE FOR THE OLD HOUSING PR OJECT APPROVED MUCH EARLIER THAN AMENDED PROVISION OF LAW PROSPECTIVELY . FURTHER THE ARGUMENTS OF THE LD. AR IS WORTH ACCEPTABLE THAT JU DICIAL CONSISTENCY HAS TO BE MAINTAINED HENCE IT WOULD BE UNJUSTIFIAB LE ON THE PART OF SUCCESSOR APPELLATE AUTHORITY TO INTERPRET THE APPL ICABILITY OF LAW WITH DIFFERENT APPROACH OR ON THE BASIS OF STRANGE-LOGIC SPECIALLY WHEN FACTS ARE IDENTICAL AND THERE IS NO PERVERSITY OF INTERPR ETATIVE-UNDERSTANDING OF THE SAME SET OF FACTS. 5.5 THUS IN VIEW OF THE ABOVE I REACH TO THE CON CLUSION THAT LD. AO HAS WRONGLY DISALLOWED THE GENUINE CLAIM OF THE APPELLA NT THEREFORE HE IS DIRECTED TO ALLOW THE DEDUCTION OF RS.28 39 472/-. 5. THE CIT(A) THUS ALLOWED THE CLAIM OF DEDUCTION U/S 80IB(1 0) REVERSING THE ORDER OF THE AO ON THIS ISSUE. 6. THE DEPARTMENT BEING AGGRIEVED IS NOW BEFORE THE ITAT. 7. BEFORE US THE DR SUBMITTED THAT THOUGHT THE ISSUE H AS BEEN DECIDED BY THE CIT(A) AGAINST THE REASONING GIVEN BY THE AO KEEPING IN VIEW THE VARIOUS DECISIONS BUT THE ORDER IS SILENT ON OT HER CRITERIA SUCH AS THE PLOT SIZE HOW THE ASSESSEE SEPARATED THE PROJECT INTO TWO WHEN THE APPLICATION AND COMMENCEMENT WAS ALLOWED SINGULAR LY AND HOW MUCH IS THE ACTUAL COMMERCIAL AREAS WHICH HAVE BEEN CLAIMED. THE DR THEREFORE SUBMITTED THAT THESE DETAILS HAD YET T O BE SUBMITTED BY THE ASSESSEE TO THE AO EVEN IF THEY WERE SUBMITTED BEFORE THE CIT(A). M/S S R D EVELOPERS ITA 3800/MUM/2011 8 8. THE AO THEREFORE SUBMITTED THAT FOR VERIFICATION AND SATISFACTION THE ISSUE NEEDS TO GO BACK TO THE AO. 9. THE AR ON THE OTHER HAND SUBMITTED THAT COMPLETE D ETAILS WERE FILED WHICH WAS UNDER: BUILDING NO. AREA NO. OF UNITS FLATS/SHOPS/WINGS DATE OF COMPLETION AS PER ARCHITECT CERTIFICATE AREA TOTAL 10 870.00 SQ.MTRS PROJECT I 4 790.40 SQ.MTRS 98/0/4 09.07.05 & 21.06.06 39 636 SQ. FT. PROJECT II 6 079.60 SQ.MTRS 124/39/4 11.09.06 & 25.01.07 7 4641 SQ. FT. THE AR SUBMITTED THAT SINCE THE REQUIREMENTS OF THE AO WERE MET WITH REGARD TO THE DETAILS NOTHING WAS LEFT TO BE DONE BY THE ASSESSE E. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND HAVING PERUSED THE ORDERS OF THE REVENUE AUTHORITIES IT IS APPA RENT THAT THE DETAILS FILED BEFORE THE CIT(A) WERE NOT BEFORE THE AO WHICH IN OUR OPINION WERE IMPORTANT CRITERIA FOR THE CLAIM OF THE DEDUCTIO N U/S 80IB(10) ON HOUSING PROJECTS. 11. IN THE INTEREST OF JUSTICE WE ARE OF THE OPINION THAT SATISFACTION OF THE AO IS PARAMOUNT. IN SUCH A SITUATION SINCE THE DET AILS HAVE BEEN PRODUCED BEFORE THE CIT(A) WHO USED THE SAME TO A LLOW THE DEDUCTION SHOULD BE EXAMINED BY THE AO AS WELL. SINCE THER E WAS NO OCCASION FOR THE AO TO EXAMINE ALL THE DETAILS WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO T O EXAMINE THE CLAIM OF DEDUCTION U/S 80IB(10) IN ACCORDANCE WITH LAW AND IN ACCORDANCE WITH THE RATIOS LAID DOWN BY THE VARIOUS DECIS IONS OF THE COORDINATE BENCHES OF THE ITAT AND THE HONBLE HIGH COU RTS WHICH HAVE BEEN CITED BEFORE US. 12. SINCE WE HAVE RESTORED THE ISSUE TO THE FILE OF THE AO WE DO NOT FIND IT NECESSARY TO DELVE ON THE DECISIONS RENDERED BY T HE VARIOUS M/S S R D EVELOPERS ITA 3800/MUM/2011 9 COURTS CITED BEFORE US. THESE MAY BE CITED BY THE AR BE FORE THE AO TO SUPPORT THE CASE. 13. IN THESE CIRCUMSTANCES GROUNDS NO. 1 2 & 3 ARE TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. 14. GROUND NO. 4 PERTAINS TO DISALLOWANCE MADE U/S 40(A)(IA). 15. THE AO ON EXAMINATION OF THE ACCOUNTS AS MAINTAINED CAME TO THE CONCLUSION THAT THE ASSESSEE HAD NOT DEDUCTED TAS ON THE PAYMENTS MADE ON BROKERAGE LABOUR CHARGES AND TRANSP ORTATIONS AND THEREBY COMPUTED THE DISALLOWANCE AT RS. 88 36 025/-. 16. BEFORE THE CIT(A) IT WAS CONTENDED THAT PROPER TDS WAS MADE AND DETAILS OF SUCH DEDUCTION OF TAS WAS SHOWN IN ITS TAR IN COLUMN NO. 27A. THE ASSESSEE THEREFORE SUBMITTED THAT NOT ONLY ALL PAYMENTS WERE GENUINE BUT THE CORRECT TAX AT SOURCE WAS DEDUC TED AND HE THEREFORE ALLOWED THE APPEAL AND DELETED THE ADDITION BY OBSERVING I HAVE CONSIDERED THE FINDING OF THE ASSESSING OFF ICER AND THE RIVAL SUBMISSION OF THE APPELLANT. I FIND THAT LD. AO HAS ERRED IN D ISALLOWING THESE GENUINE EXPENSES WITHOUT IF NO DETAILS WERE GIVEN AO COULD HAVE VERIFIED FROM THE AUDIT REPORT AND WOULD HAVE SATISFIED HIMSELF. IN P ARA 2 OF THE ASSESSMENT ORDER HE HIMSELF HAS WRITTEN THAT ALL THE RELEVANT DETAILS AND INFORMATION CALLED FOR FROM TIME TO TIME HAS BEEN SUBMITTED BY THE APP ELLANT AND CASE HAS BEEN DISCUSSED WITH THE AR ON VARIOUS OCCASIONS. THEREFO RE IT BECOMES OBVIOUS THAT WITHOUT PROPERLY VERIFYING THE FULL FACTS OF THE CA SE LD. AO HAS PROCEEDED TO PRESUME OF NON TDS. THE COLUMN NO. 27(A) OF AUDIT R EPORT DATED 24.10.2007 REVEALS THE TDS U/S 194C OF RS.1 14 102/- U/S 194A OF RS.10 200/- U/S 194H OF RS.1 07 825/- AND 194J OF RS.2 550/-. FURTH ER DURING THE COURSE OF APPELLATE PROCEEDING LD. AR HAS REFERRED TO THE BO OKS OF ACCOUNTS HAVING DETAILS OF TDS THEREFORE IT IS VERY APPARENT THAT LD. AO HAS WRONGLY PRESUMED THAT NO TDS WAS MADE. FURTHER IT IS WORTHWHILE TO MENTION THAT WHEN APPELLANT IS FOUND TO BE ENTITLED FOR DEDUCTION U/S 801B( 10) FOR THE PROFIT EARNED FROM HOUSING PROJECT IT MAKES NO DIFFERENCE TO THE APPELLANT TO DISALLOW SUCH EXPENDITURES DIRECTLY RELATED TO THE HOUSING P ROJECT. IF THIS DISALLOWANCE OF EXPENDITURE IS APPROVED THE DEDUCTIBLE PROFIT W OULD BE INCREASED WHICH WILL NOT SOLVE ANY PURPOSE OF THE AO. AS DISCUSSED HEREI N ABOVE THERE IS NO FAULT OF TDS HENCE THERE IS NO PROPRIETY TO DISALLOW SUCH E XPENDITURE. THUS CONSIDERING THE FACTS OF THE CASE AND PROPER TDS BY THE APPELLANT DISALLOWANCE OF BROKERAGE LABOUR CHARGES AND TRANSPORTATION CHA RGES AMOUNTING TO RS.88 36 025/- IS DIRECTED TO BE DELETED FROM THE A SSESSMENT. 16. THE CIT(A) THUS DELETED THE ADDITION. 17. AGAINST THIS THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. M/S S R D EVELOPERS ITA 3800/MUM/2011 10 18. BEFORE US THE DR SUBMITTED THAT WHATEVER DETAILS HAD BEEN FILED BY THE ASSESSEE WERE FILED AFTER THE ASSESSMENT WAS FRAM ED AND BEFORE THE CIT(A) AND THE AO HAD NO OCCASION NOT EXAMINE THE S AME. THE DR THEREFORE PRAYED THAT THE ISSUE BE RESTORED TO THE AO FOR EXAMINATION OF THE DETAILS FILED BEFORE THE CIT(A). 19. THE AR SUBMITTED THAT THE DETAILS WERE SUBMITTED BEFO RE THE CIT(A) BUT IT WAS ON THOSE DETAILS THAT THE AUDITOR HAD FR AMED AN OPINION FOR TAR AND REPRODUCED THE SAME IN THE TAR WHICH APPARENTLY WERE BEFORE THE AO. HENCE THE AO WAS WRON G TO MAKE AN ADDITION. 20. WE HAVE HEARD THE ARGUMENTS OF EITHER SIDE AND HAVE PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE TAR CONTAINS THE DETAILS WITH REGARD TO TDS. WE ALSO FIND FROM THE APB THAT THE ASSESS EE HAD FILED AN APPLICATION U/S 154 WHEREIN IT WAS MENTIONED THAT COMP LETE DETAILS HAD BEEN FILED VIDE LETTER DATED 17.11.2009 WHICH IS PRIOR TO THE DATE OF ASSESSMENT I.E. 14.12.2009. THIS APPLICATION IS LYING UNDISPO SED OFF TILL DATE. 21. THERE IS A COMPLETE VARIANCE IN THE SUBMISSIONS OF TH E CONTESTING PARTIES ALONG WITH AN UNDISPOSED OFF RECTIFICATION APPLICATION U/S 154. 22. IN OUR CONSIDERED OPINION THE ISSUE MUST BE RESTORED TO THE AO WHO SHALL EXAMINE THE DETAILS AS PLACED BEFORE HIM IN RECTIFICA TION PETITION AND IN THE TAR AND ADJUDICATE THE ISSUE IN ACCOR DANCE WITH LAW. NEEDLESS TO MENTION THAT ADEQUATE AND REASONABLE OP PORTUNITY SHALL BE PROVIDED TO THE ASSESSEE TO PRESENT ITS CASE. 23. GROUND NO. 4 IS THEREFORE ALLOWED FOR STATISTICAL PURPOSES. M/S S R D EVELOPERS ITA 3800/MUM/2011 11 24. IN THE RESULT THE APPEAL AS FILED BY THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER 2013. SD/- SD/- ( . . ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATE: 23 RD OCTOBER 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) & & ' ( ) - 26 MUMBAI / THE CIT (A)-26 MUMBAI. 4) & & ' ) -15 -. / THE CIT CITY -15 MUMBAI 5) /01 2 & 2 . / THE D.R. E BENCH MUMBAI. 6) 13 4 COPY TO GUARD FILE. &56 / BY ORDER / / TRUE COPY / / [ 7 / 8 9 & 2 . DY. / ASSTT. REGISTRAR I.T.A.T. MUMBAI *;<8 . . * CHAVAN SR. PS