The ACIT, 1 (1), v. M/s Deep Mohini,

ITA 437/IND/2008 | 2005-2006
Pronouncement Date: 15-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 43722714 RSA 2008
Assessee PAN IZEOF1500S
Bench Indore
Appeal Number ITA 437/IND/2008
Duration Of Justice 1 year(s) 6 month(s) 20 day(s)
Appellant The ACIT, 1 (1),
Respondent M/s Deep Mohini,
Appeal Type Income Tax Appeal
Pronouncement Date 15-04-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 15-04-2010
Date Of Final Hearing 13-09-2010
Next Hearing Date 13-09-2010
Assessment Year 2005-2006
Appeal Filed On 25-09-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NO. 437/IND/08 A.YS. 2005-06 ASSTT. COMMISSIONER OF INCOME TAX 1(1) BHOPAL APPELLANT VS M/S DEEP MOHINI BHOPAL PAN AAEFD-2569-B RESPONDENT APPELLANT BY : SMT. APARNA KARAN SR. DR RESPONDENT BY : SHRI H.P. VERMA AND SHRI ASHISH GOYAL O R D E R PER JOGINDER SINGH JM THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 2 ND JULY 2008. THE FIRST GROUND RAISED IS THAT ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C OMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE ADDITION OF RS.7 68 180/- MADE ON ACCOUNT OF DISALLOWANCE OF CLAIM OF DEDUCTI ON U/S 80IB(10) OF THE ACT. 2 2. DURING HEARING WE HAVE HEARD SMT. APARNA KARAN SR. DR AND SHRI H.P. VERMA ALONG WITH SHRI ASHISH GOYAL LD. C OUNSEL FOR THE ASSESSEE . AT THE OUTSET THE LEARNED SR. DR CONTE NDED THAT THIS ISSUE MAY BE REMANDED BACK TO THE FILE OF THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) AS IDENTICALLY WAS DONE BY THE TRIBUNAL IN THE CASE OF FORTUNE BUILDERS (ITA NO. 248/IND/2008) ORD ER DATED 26 TH MARCH 2010. THE LD. COUNSEL FOR THE ASSESSEE THOUGH DEFEN DED THE IMPUGNED ORDER BUT HAD NO OBJECTION IF THE ISSUE IS REMANDED BACK TO THE FILE OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 3. IN VIEW OF THE ABOVE ASSERTION WE ARE REPRODUCI NG HEREUNDER THE RELEVANT PORTION OF THE AFORESAID ORDER FROM FORTUN E BUILDERS :- THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DATED 7.3.2008 FOR THE ASSESSMENT YEAR 2005-06. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. 3. FIRSTLY WE SHALL TAKE UP THE REVENUES APPEAL IN ITA NO. 248/IND/2008. 4. GROUND NOS. 1 TO 5 READ AS UNDER :- IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(APPEALS) HAS ERRED IN :- 1. DELETING THE ADDITION OF RS. 53 60 449/- ON ACCOUNT OF REJECTION OF CLAIM U/S 80IB OF IT ACT HOLDING THAT EVEN IF THE ASSESSEE DOES NOT OWN THE LAND THE BENEFIT OF DEDUCTION CLAIMED IN RESPECT OF THE PROFITS DERIVED FROM SUCH HOUSING PROJECT 3 CANNOT BE DENIED TO THE ASSESSEE PARTICULARLY WHEN ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION AND IS MERELY ACTING AS A CONTRACTOR. 2. DELETING THE DISALLOWANCE IN VIRTUALLY SUMMARY A ND NON SPEAKING MANNER THOUGH THE PROVISION U/S 80IB(1) HAS BEEN COMPREHENSIVELY APPLIED BY THE ASSESSING OFFICER. 3. ALLOWING THE EXEMPTION U/S 80IB HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION INSPITE OF ITS STATUS AND THERE IS NO REQUIREMENT IN THE SECTION THAT THE APPROVAL FOR COMPLETING HOUSING PROJECT SHOULD BE IN THE NAME OF ASSESSEE WHO IS CARRYING OUT THE DEVELOPMENT AND CONSTRUCTION WORK. 4. ALLOWING THE EXEMPTION U/S 80IB HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION THOUGH SOME OF THE UNITS CONSTRUCTED BY ASSESSEE ARE ADMITTEDLY MORE THAN THE PRESCRIBED MAXIMUM SIZE OF 1500 SQ.FT. AND THERE IS GROSS VIOLATION OF THE CONDITIO NS MENTIONED IN SECTION 80IB. 5. ALLOWING THE EXEMPTION U/S 80IB THOUGH THE ASSESSEE HAS NOT SOLD ANY CONSTRUCTED PROPERTY TO ITS CUSTOMERS AND ALL THE SUMS RECEIVED FROM CUSTOMERS ARE CREDITED AS CONSTRUCTION RECEIPTS AND THE REGISTRY FOR THE LAND ONLY IS MADE AND THAT TOO BY THE SOCIETY. 5. THE LEARNED SR. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THIS ISSUE WAS DECIDED BY THE LEARNE D COMMISSIONER OF INCOMETAX (APPEALS) VIDE HIS ORDER DATED 7.3.2008 IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE OWNERSHIP OF LAND WAS NOT A SPECIFIED CONDITION IN SECTION 80IB(10) OF THE ACT . IT WAS ALSO HELD BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THAT DEVELOPMENT CONSTRUCTION OF THE PROJECT WAS TO BE COMPLETED IN ALL RESPECTS BY THE BUILDER FIRM (ASSE SSEE). THE LD. DR FURTHER SUBMITTED THAT SUBSEQUENTLY THE RE WAS AN AMENDMENT IN SECTION 80IB(10) THROUGH THE FINANCE ACT 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2001 BY INSERTION OF EXPLANATION WHEREBY IT WAS PROVIDED THAT THE BENEFIT OF DEDUCTION UNDER SECTIO N 80IB(1) OF THE ACT COULD NOT BE GIVEN TO AN UNDERT AKING WHICH EXECUTED THE HOUSING PROJECT AS A WORKS CONTR ACT AWARDED BY ANY PERSON AND THEREFORE THIS ASPECT O F THE 4 MATTER WAS TO BE CONSIDERED NOW. THE LEARNED SR. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE OBSERVATIONS OF THE LARGER THIRD MEMBER BENCH OF TH E TRIBUNAL IN THE CASE OF B.T. PATIL & SONS; BELGAUM CONSTRUCTION PRIVATE LIMITED V. ACIT IN ITA NO. 140 8 AND 1409/PN/2003 ORDER DATED 26 TH OCTOBER 2009 AS REPORTED IN 32 DTR (MUM) (TM) (TRIB) 1 ON THE ASPEC T THAT A CONTRACTOR WAS NOT ENTITLED FOR DEDUCTION UN DER SECTION 80IA WERE ALSO RELEVANT IN THE CONTEXT OF PROVISIONS OF SECTION 80IB(10) OF THE ACT. 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT IN SECTION 80IA(4) THERE WA S A REQUIREMENT OF OWNERSHIP OF THE PROJECT WHEREAS NO SUCH REQUIREMENT EXISTED IN SECTION 80IB(10 ) OF TH E ACT. AS REGARDS THE STATUS OF THE ASSESSEE I.E. WHETHER THE ASSESSEE WAS A DEVELOPER OR A CONTRACTOR THE LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE D IN FACT WORKED AS A DEVELOPER. HOWEVER A QUERY WA S RAISED AS TO HOW THIS FACT WAS ESTABLISHED NOW BECA USE IN THE EARLIER PROCEEDINGS NOT MUCH EXAMINATION WAS DONE ON THIS ASPECT. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO THE OBSERVATIONS OF THE TRIBUNAL IN THE AFORESAID CASE IN PARAS 37 TO 40 AT PAGES 27 TO 29 OF THE SAID ORDER WHEREIN THE TRIBUNAL HAD CONSIDERED BOTH THE TERMS I.E. DEVELOPER VS. WORKS CONTRACT AND SUBMITTED THAT SUCH OBSERVATIONS SUPPORTED THE CLAIM OF THE ASSESSEE. 7. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) TO DECIDE THE SAME AFRESH AFTER CONSIDERING THE AFORESAID DECISION OF THE TRIBUNAL AND EXPLANATION INSERTED BY FINANCE ACT 2009 AND AFTER CONSIDERING THE FACTS IN DETAIL AS REGARD TO NATURE OF AGREEMENT AS WELL AS ACTUAL WORK DONE BY THE ASSESS EE. 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS O F THE AUTHORITIES BELOW. 9. THE SHORT QUESTION INVOLVED IN THIS APPEAL IS 5 REGARDING THE STATUS OF THE ASSESSEE I.E. WHETHER I T HAS ACTED AS A DEVELOPER OR HAS CARRIED OUT WORKS CONTRACT. THERE ARE DEVELOPMENTS SUBSEQUENT TO THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN THIS REGARD IN THE FORM OF LEGISLATIVE AMENDMENT AS WELL AS THE AFORESAID DECISION OF THE TRIBUNAL WHICH MAY REQUIRE CONSIDERATION TO DECIDE THE ISSUE CONCLUSIVELY. FURTHER INVESTIGATION INTO THE FACTS AS TO THE NATURE OF WORK DONE BY THE ASSESSEE AND THE CAPACITY OF THE ASSESSED IS ALSO REQUIRED. THEREFORE WE RESTORE ALL THE ISSUES RAISED IN THES E GROUNDS TO THE FILE OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) TO DECIDE THE SAME AFRESH AS PER LAW AFTER TAKING INTO CONSIDERATION SUCH LEGISLATIVE CHANGES AFORESAID DECISION OF THE TRIBUNAL AND OUR OBSERVATIONS MADE HEREINABOVE. IT IS NEEDLESS TO MENTION THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE WHICH SHALL BE AT LIBERTY TO FILE NECESSARY DETAILS/EVIDENCES TO SUBSTANTIATE ITS CLAIM. THUS ALL THESE GROUNDS STAND ALLOWED FOR STATISTICAL PURPOSES. XXX XXX 17. IN THE RESULT THE REVENUES APPEAL STANDS PART LY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJE CTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26 TH MARCH 2010 KEEPING IN VIEW THE AFORESAID CONCLUSION (HIGHLIGHT ED PORTION) IDENTICALLY ON THE SAME OBSERVATION WE REMAND THIS ISSUE BACK TO THE FILE OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR FR ESH ADJUDICATION IN ACCORDANCE WITH LAW ON THE SAME TERMS AND CONDITION S MENTIONED ABOVE THEREFORE THIS GROUND OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES ONLY. 6 4. THROUGH NEXT GROUND THE REVENUE HAS CHALLENGED T HE IMPUGNED ORDER ALLOWING RELIEF OF RS.9 92 370/- (ALTHOUGH AN AMOUNT OF RS.7 75 508/- WAS DEBITED IN P&L ACCOUNT) ON ACCOUN T OF DISALLOWANCE OF LAND REGISTRY CHARGES MADE BY THE ASSESSING OFFI CER. THE LEARNED SR. DR SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. C OUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. 5. ON CONSIDERATION OF RIVAL SUBMISSIONS IT IS SEE N THAT THE ASSESSEE MADE SALES OF HOUSES TO DIFFERENT PARTIES AND THE S ALE CONSIDERATION INCLUDES REGISTRY CHARGES. AS PER THE AGREEMENT TH E REGISTRY CHARGES WERE TO BE BORNE BY THE DEVELOPER MEANING THEREBY SUCH CHARGES ARE INCLUDED IN THE SALE CONSIDERATION. THE ASSESSEE BO OKED ENTIRE RECEIPTS IN THE SALES ACCOUNT AND IN FACT THE REGISTRY CHARG ES RECEIVED FROM THE CUSTOMERS WERE ALSO INCLUDED IN THE TOTAL SALE CONS IDERATION. AT THE TIME OF REGISTRY SUCH EXPENSES WERE INCLUDED IN THE SAL E CONSIDERATION AS THE SAME WERE PART OF THE CONSIDERATION. INSTEAD OF SHO WING THE SAME AS NET SALES THE ASSESSEE SHOWED THE SAME ON BOTH THE SID ES OF P&L ACCOUNT I.E. ONCE AT THE TIME OF RECEIPT IN THE SALES ACCOU NT AND OTHER AT THE TIME OF REGISTRY AS REGISTRY EXPENSES. BUT THE FACT REM AINS THAT REGISTRY EXPENSES WERE DULY TAKEN FROM THE CUSTOMERS BEING A LREADY INCLUDED IN THE SALE CONSIDERATION. EVEN OTHERWISE AS PER CLAU SE 8 OF THE SALE AGREEMENT THE APPELLANT HAS TO BEAR THE REGISTRY E XPENSES BEING PART OF TOTAL SALES CONSIDERATION. SINCE THE ASSESSEE HAS D EBITED RS.7 75 508/- 7 ON ACCOUNT OF REGISTRY EXPENSES IN THE P&L ACCOUNT THEREFORE THERE IS NO INFIRMITY IN THE IMPUGNED ORDER. THIS GROUND OF THE REVENUE IS THEREFORE DISMISSED. FINALLY THE APPEAL OF THE REVENUE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 15 TH APRIL 2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER APRIL 15 TH 2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE *DBN/