ITO WD 23(2)(1), MUMBAI v. ABHILASHA COMBINES, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI R.S.SYAL AM AND SMT.ASHA VIJAYARAGHAVAN JM ITA NO.7321/MUM/2008 : ASST.YEAR 2004-2005 THE INCOME TAX OFFICER WARD 23(2)(1) MUMBAI. VS. M/S.ABHILASHA COMBINES A-1 504 SUDHIR APARTMENTS S.N.ROAD MULUND (WEST) MUMBAI 400 080. PA NO.AAFFA7153F. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DURGESH SUMROTT RESPONDENT BY : SHRI REEPAL TRALSHAWALA O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 31.10.2008 IN RELATION TO THE ASSESSMENT YEAR 2004-2005. 2. THE FIRST GROUND IS AGAINST THE GRANTING OF DEDU CTION U/S.80-IB(10) DESPITE THE FACT THAT THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITY ON 16.9.1998 WHICH WAS BEFORE THE SPECIFIED DATE I.E. 1.10.1998 AS REQ UIRED U/S.80-IB(10)(A). BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESS EE WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. IT FILED RETURN DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING DEDUCTION U/S.80-IB(10) TO THE TUNE OF RS.17 52 020 . THE ASSESSING OFFICER NOTED THAT THE APPROVAL PLAN OF THE PROJECT PASSED BY THE KALYAN DOMBIVLI MUNICIPAL CORPORATION WAS DATED 16.9.1998 17.12.2003 AND 13. 12.2005. HE HELD THAT THE DEDUCTION U/S.80-IB(10) WAS NOT AVAILABLE TO THE AS SESSEE FOR THE REASON THAT THE SPECIFIED DATE U/S.80-IB(10) IS 1.10.1998. HE FURTH ER TOOK INTO CONSIDERATION THE DATE OF AUDIT REPORT STATING THAT THE DATE OF COMME NCEMENT OF THE PROJECT AS NOVEMBER 1999. THE LEARNED CIT(A) OVERTURNED THE AS SESSMENT ORDER ON THIS POINT BY HOLDING THAT THE AUDITORS REPORT WAS INCORRECT AS STATED BY THE ASSESSEE. AFTER ITA NO.7321/MUM/2008 M/S.ABHILASHA COMBINES. 2 PERUSING THE APPROVAL LETTER AND THE LATTER GRANTIN G PERMISSION FOR CONVERSION OF LAND FROM AGRICULTURAL TO NON-AGRICULTURAL PURPOSE HE HELD THAT THE ASSESSEE COMMENCED THE CONSTRUCTION MUCH AFTER THE SPECIFIED DATE 1.10.1998. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. SECTION 80-IB(10)(A) AT THE RELEVANT TIME PROVIDES AS UNDER:- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER 1998. 4. A BARE PERUSAL OF THE STATUTORY PROVISION MANDAT ES THAT THE COMMENCEMENT OF THE DEVELOPMENT AND CONSTRUCTION WORK SHOULD COM MENCE ON OR AFTER 1.10.1998. THUS WE NEED TO EXAMINE AS TO WHETHER THE ASSESSEE COMMENCED THE WORK OF CONSTRUCTION AFTER THIS DATE. IT IS SEEN FROM THE I MPUGNED ORDER THAT THE ASSESSEE APPLIED FOR THE HOUSING PROJECT TO THE LOCAL AUTHOR ITY WHICH WAS DISAPPROVED BY IOD DATED 16.9.1998. IT WAS FOR THE REASON THAT AT THAT POINT OF TIME THE PLOT OF LAND WAS AGRICULTURAL LAND AND COULD NOT BE USED FO R NON-AGRICULTURAL ACTIVITY. THEREAFTER PERMISSION FOR CONVERSION OF AGRICULTURA L LAND INTO NON-AGRICULTURAL PURPOSE WAS RECEIVED BY THE ASSESSEE VIDE LETTER DA TED 21.11.2001. AFTER THAT THE PLAN WAS SUBMITTED TO THE LOCAL AUTHORITY FOR ITS A PPROVAL AND THE SAME WAS APPROVED ON 17.12.2003 BY GIVING COMMENCEMENT CERTI FICATE. THE BOOKS OF ACCOUNT OF THE ASSESSEE INDICATE THAT AS ON 31.3.20 03 THE ASSESSEE HAD REFLECTED ONLY ADVANCE FOR THE PLOT AND AS ON 31.3.2003 AND THE ON LY EXPENSES IN THE BOOKS WERE IN RESPECT OF PLOT EXPENSES AND LEVELING OF LAND AM OUNTING TO RS.4 LAKHS WHICH WAS SHOWN AS WORK-IN-PROGRESS. NO MATERIAL WORTH THE NA ME WAS PLACED ON RECORD BY THE LEARNED DEPARTMENTAL REPRESENTATIVE TO CONTROVE RT THE ABOVE FINDINGS RECORDED BY THE LEARNED CIT(A) ON THESE FACTUAL ASPECTS. IN THE LIGHT OF THE ABOVE DISCUSSION IT IS CLEAR THAT THE CONDITION AS STATED IN CLAUSE (A) TO SECTION 80-IB(10) BEING THE COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER ITA NO.7321/MUM/2008 M/S.ABHILASHA COMBINES. 3 1.10.1998 STANDS FULLY SATISFIED IN THE PRESENT CIR CUMSTANCES. INSOFAR AS THE MENTIONING OF THE DATE OF COMMENCEMENT OF THE CONS TRUCTION IN THE AUDIT REPORT IS CONCERNED WE NOTE THAT THE SAME WAS FOUND TO BE FA CTUALLY INCORRECT IN THE LIGHT OF MATERIAL PLACED BEFORE THE LEARNED FIRST APPELLATE AUTHORITY WHICH HAS REMAINED UNCHALLENGED BEFORE US. WE THEREFORE HOLD THAT TH ERE IS NO INFIRMITY IN THE IMPUGNED ORDER ON THIS ISSUE. 5. GROUND NO.2 IS AGAINST NOT ALLOWING DEDUCTION U/ S.80-IB(10) ON THE BASIS OF TOTAL PROJECT AREA AS WELL AS THAT USED FOR COMMERC IAL ESTABLISHMENT. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES O F THIS GROUND ARE COVERED BY THE SPECIAL BENCH ORDER OF PUNE BENCH OF THE TRIBUNAL I N BRAHMA ASSOCIATES VS. JCIT [(2009) 119 ITD 255 (PUNE) (SB)] . UNDER THESE CIRCUMSTANCES WE SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF A.O. FOR DECIDING IT AFRESH IN ACCORDANCE WITH THE DIRECTIONS MADE BY THE TRIBUNAL IN THE AFORE-NOTED SPECIAL BENCH ORDER. 6. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 19 TH DAY OF JANUARY 2010. SD/- SD/- (ASHA VIJAYARAGHAVAN) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 19 TH JANUARY 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A)-XXIII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. ITA NO.7321/MUM/2008 M/S.ABHILASHA COMBINES. 4 TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI. ITA NO.7321/MUM/2008 M/S.ABHILASHA COMBINES. 5 DATE INITIAL 1. DRAFT DICTATED ON 13 .01.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 18 .01.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER. &