M/s. Aditya Corporation, Baroda v. The Income tax Officer, Ward-2(3), Baroda

ITA 766/AHD/2008 | 2004-2005
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 76620514 RSA 2008
Assessee PAN AAHFA7994G
Bench Ahmedabad
Appeal Number ITA 766/AHD/2008
Duration Of Justice 3 year(s) 4 month(s) 24 day(s)
Appellant M/s. Aditya Corporation, Baroda
Respondent The Income tax Officer, Ward-2(3), Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 22-07-2011
Date Of Final Hearing 14-07-2011
Next Hearing Date 14-07-2011
Assessment Year 2004-2005
Appeal Filed On 28-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI MUKUL SHRAWAT JM & SHRI A N PAHUJA AM ITA NOS.766 & 3224/AHD/2008 (ASSESSMENT YEARS:-2004-05 & 2005-06) M/S.ADITYA CORPORATION 2ND FLOOR DEVDEEP COMPLEX NIZAMPURA BARODA. V/S ITO WARD-2(3) AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA. PAN: AAHFA 7994 G [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI RABINDRA KUMAR AND SHRI B.L. YADAV DRS ASSESSEE BY:- SHRI SUNIL TALATI AR O R D E R A N PAHUJA: THESE APPEALS BY THE ASSESSEE FILED ON 28.2.2008 & 17.9.2008 AGAINST TWO SEPARATE ORDERS DATED 17.12. 2007 AND 11.07.2008 OF THE LD. CIT(APPEALS)-II BARODA FOR THE ASSESSMENT YEARS 2004-05 &2005-06 RESPECTIVELY RAISE THE FOLL OWING COMMON GROUNDS:- 1. THE LD. CIT(A) ERRED IN FACT AND IN LAW IN CONF IRMING ACTION OF THE ITO WARD-2(3) IN OBSERVING THAT THE A PPELLANT IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S.80IB(10) OF THE INC OME TAX ACT 1961 ON THE GROUND THAT THE APPELLANT HAS CONSTRUCTED SO ME UNITS WITH BUILT UP AREA OF MORE THAN 1500 SQ.FTS. THE LD.CIT(A) ERRED IN FACT AND IN LAW IN NOT APPR ECIATING THE FACT THAT ENTIRE DEDUCTION U/S.80IB(10) OF THE ACT CANNOT BE DENIED EVEN ON THE GROUND THAT THE APPELLANT HAS CONSTRUCT ED UNITS WITH BUILT UP OF MORE THAN 1500 SQ.FTS. THE LD. CIT(A) ERRED IN FACT AND IN LAW IN NOT APPR ECIATING THE FACT THAT THE ACTUAL BUILT UP AREA OF THE UNIT WAS LESS THAN 1500 SQ.FTS. AND THEREFORE THE APPELLANT IS ELIGIBLE TO CLAIM DE DUCTION U/S.80IB(10) OF THE ACT. 2. THE LD. CIT(A) ERRED IN FACT AND IN LAW IN CONFI RMING ACTION OF THE AO IN CHARGING INTEREST U/S.234B AND 234D OF TH E ACT. 3. THE LD. CIT(A) ERRED IN FACT AND IN LAW IN CONFI RMING THE ACTION OF THE AO IN INITIATING PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT. 2 ITA NOS.766 &3224/AHD/2008 4. YOUR APPELLANT CRAVES A RIGHT TO ADD TO AMEND ALTER SUBSTITUTE DELETE OR WITHDRAW ALL OR ANY OF THE GROUNDS OF APP EAL. 2. SUBSEQUENTLY VIDE LETTER DATED 24.11.2008 & 4 .12.2008 THOUGH THE ASSESSEE SUBMITTED AN APPLICATION FOR ADMISSION OF ADDITIONAL GROUNDS OF APPEAL IN THESE TWO ASSESSMENT YEARS T HE SAID REQUEST FOR ADMISSION OF ADDITIONAL GROUNDS WAS WITHDRAWN B Y THE LD. AR DURING THE COURSE OF HEARING OF THESE APPEALS. 3. SINCE SIMILAR ISSUES WERE INVOLVED THESE TWO A PPEALS WERE HEARD SIMULTANEOUSLY FOR THE SAKE OF CONVENIENCE AN D ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. 4. THESE APPEALS WERE EARLIER DISMISSED VIDE ORDER DATED 27.11.2009 SINCE THE ASSESSEE DID NOT FULFILL THE CONDITION STIPULATED IN CLAUSE (C) OF SEC. 80IB(10) OF THE IN COME-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT]. SUB SEQUENTLY THE SAID ORDER DATED 27.11.2009 WAS RECALLED IN MA NOS.70& 7 1/AHD/2010 VIDE ORDER DATED 21-4-2011 FOR THE LIMITED PURPOSE OF EXAMINING AS TO WHETHER OR NOT THE BUILT AREA OF SIX BUNGALOWS WAS LESS THAN 1500 SQ.FT. EACH AS STIPULATED IN CLAUSE (C) OF SEC. 80IB(10) OF THE ACT. THIS IS HOW THESE APPEALS HAVE COME FOR HEARING BEF ORE US. 5. FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT THE ASSESSEE ENGAGED IN CONSTRUCTION ACTIVITIES ON CONTRACT CLA IMED DEDUCTION OF RS. 48 63 131/- U/S 80IB(10) OF THE ACT IN THEIR RE TURN OF INCOME FOR THE AY 2004-05 . THE AO DISALLOWED THE CLAIM ON TH E GROUND THAT THE ASSESSEE WAS NOT THE OWNER OF THE LAND AND THE PERMISSION OF THE LOCAL AUTHORITY VIZ. VADODARA MUNICIPAL CORPORATION FOR DEVELOPMENT OF THE PROJECT WAS NOT GRANTED IN THE NAME OF THE ASSESSEE AND SUCH PERMISSION WAS IN THE NAME OF THE ORIGINAL LAND OWNERS. THE ORIGINAL LAND OWNER HAD ASKED FOR THE S ERVICES OF ASSESSEE FIRM FOR DEVELOPMENT AND CONSTRUCTION OF T HE PROJECT. 3 ITA NOS.766 &3224/AHD/2008 MOREOVER THE ASSESSEE UTILISED FSI OF ONLY 8763. 85 SQ.MT. LEAVING UNUTILIZED FSI OF 13985.55 SQ.MT. AND THUS SALE OF UNUTILIZED FSI FELL OUTSIDE THE AMBIT OF PROVISION OF SECTION 80IB(10) OF THE ACT SINCE PROFIT ON ITS SALE WAS NOT THE PROFIT DERIVED FROM ACTIVITIES OF DEVELOPMENT AND CONSTRUCTION OF THE PROJECT. BESIDE S AS PER ORIGINAL AND MODIFIED LAY OUT PLAN BUILT UP AREA ON SIX P LOTS VIZ. 1A 1B 2 3A 61 & 62 EXCEEDED 1500 SQ. FT. ACCORDINGL Y THE AO DISALLOWED THE CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT IN THE AY 2004-05. 5.1 FOR SIMILAR REASONS CLAIM FOR DEDUCTION OF RS.38 59 709/- U/S 80IB(10) OF THE ACT WAS DISALLOWED IN THE AY 2005-0 6. 6. ON APPEAL THE CIT(A) ACCEPTED THE CLAIM FOR DED UCTION U/S 80IB(10) ON THE ISSUE OF OWNERSHIP OF LAND AND SAL E OF UNUTILIZED FSI FOLLOWING THE DECISION DATED 29.06.2007 OF THE TRIBUNAL IN THE CASE OF M/S.RADHE DEVELOPERS & OTHERS VIDE ORDER IN ITA NO.2482/AHD/2006. HOWEVER THE LD. CIT(A) UPHELD T HE ACTION OF THE AO IN DISALLOWING THE CLAIM OF THE ASSESSEE IN THES E TWO ASSESSMENT YEARS ON THE GROUND THAT THE CONDITION MENTIONED I N CLAUSE(C) OF THE SEC. 80IB(10) OF THE ACT WAS NOT FULFILLED THE BUILT UP AREA OF AFORESAID SIX BUNGLOWS EXCEEDING 1500 SQ.FT. EACH. ON FURTHER APPEAL THE ITAT VIDE THEIR ORDER DATED 27.11.2009 UPHELD THE FINDINGS OF THE LD. CIT(A) IN THESE TWO YEARS. SUBS EQUENTLY THE SAID ORDER DATED 27.11.2009 WAS RECALLED IN MA NOS.70& 7 1/AHD/2010 VIDE ORDER DATED 21-4-2011 FOR THE LIMITED PURPOSE OF EXAMINING AS TO WHETHER OR NOT THE BUILT AREA OF SIX BUNGALOWS WAS LESS THAN 1500 SQ.FT. EACH AS STIPULATED IN CLAUSE (C) OF SEC. 8 0IB(10) OF THE ACT. 7. AT THE TIME OF HEARING BEFORE US THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT IN THE AYS 2003-04 & 2006-07 HAD BEEN ALLOW ED BY THE COMMISSIONER OF INCOME TAX-I BARODA VIDE HIS ORDER DATED 4 ITA NOS.766 &3224/AHD/2008 18.12.2009 U/S 264 OF THE ACT FOR THE AY 2006-07 FOLLOWED IN ORDER DATED 21.1.2010 U/S 264 OF THE ACT FOR THE AY 2003- 04. SINCE FACTS AND CIRCUMSTANCES IN THE YEARS UNDER CONSIDERATION WERE SIMILAR TO THE FACTS AND CIRCUMSTANCES IN THE AYS. 2003-04 & 2006-07 THE LD. AR PLEADED THAT THE CLAIM MAY BE ALLOWED IN THE YEARS UNDER CONSIDERATION. ON THE OTHER HAND THE LD. DR ARGUED THAT THERE IS NOTHING IN THE IMPUGNED ORDERS TO SUGGEST THAT FACT S AND CIRCUMSTANCES IN THE YEARS UNDER CONSIDERATION WERE SIMILAR TO THOSE IN THE AYS. AYS. 2003-04 & 2006-07 AND SINCE FACTS AND CIRCUMSTANCES IN EACH YEAR COULD BE DIFFERENT TH EREFORE THE MATTER IS REQUIRED TO BE RESTORED TO THE FILE OF THE AO FO R NECESSARY VERIFICATION OF THE CLAIM. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS AND CIRCUMSTANCES OF THE CASE AS ALSO THE AFORESAID ORD ERS OF THE CIT U/S 264 OF THE ACT. APPARENTLY THE AFORESAID ORDER DATED 18.12.2009 U/S 264 OF THE ACT FOR THE AY 2006-07 AND ORDER DAT ED 21.1.2010 U/S 264 OF THE ACT FOR THE AY 2003-04 PASSED BY THE CIT LATER COULD NOT BE AVAILABLE BEFORE THE LD. CIT(A) NOR THE LATTER VERIFIED AS TO WHETHER OR NOT BUILT UP AREA OF THE AFORESAID SIX BUNGLOWS EXCEEDED THE STIPULATED LIMIT OF 1500 SQ. FT AS MEN TIONED IN CLAUSE (C) OF THE SEC. 80IB(10) OF THE ACT. IN HIS ORDER D ATED 18.12.2009 FOR THE SUBSEQUENT ASSESSMENT YEAR 2006-07 THE LD. CIT ALLOWED THE CLAIM FOR DEDUCTION U/S 80IB(10) IN THE FOLLOWING T ERMS: 2.3. THE SECOND ISSUE BEING ON FACTS I.E. WHETHER THE SIX RESIDENTIAL UNITS IN QUESTION EXCEEDED IN BUILT-UP AREA OF 1500 SQ.FT EACH IS A MATTER OF FACT AND IS BEING ADJUDICATED UPON ON MERITS. 2.4. IT IS THE ASSESSEES VERSION THAT THOUGH THEY HAD APPLIED FOR PERMITTING THE CONSTRUCTION OF 6 OF THE UNITS AT 15 00 SQ.FT. OR UNDER THE ACTUAL CONSTRUCTION DID NOT RESULT IN THESE UNI TS BEING MORE THAN 1500 SQ.FT. THE ASSESSING OFFICER IN HIS REPORT AT PARA 6 HAS ALSO EXAMINED THIS ISSUE AND ACKNOWLEDGES THAT THE CLAIM WAS ALSO TAKEN UP BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFI CER HAS STATED THAT THE ASSESSEE'S CLAIM THAT THE BUILT-UP AREA IN SOME UNITS WAS 5 ITA NOS.766 &3224/AHD/2008 APPROVED FOR 1500 SQ.FT. BUT ACTUAL CONSTRUCTED BUI LT-UP AREA DID NOT EXCEED THIS FIGURE. HOWEVER THE ASSESSING OFFICER WAS CONSTRAINED TO DENY THE CLAIM BECAUSE THE ASSESSEE DID NOT PROD UCE ANY CLEAR- CUT MATERIAL EVIDENCE. DURING THE COURSE OF PROCEED INGS THE AUTHORIZED REPRESENTATIVE AND THE PARTNER PRODUCED THE FOLLOWING DETAILS: (I) A CERTIFIED COPY OF APPLICATION TO THE VADODARA MUNICIPAL CORPORATION (VMC) DATED 07.11.2003 ENCLOSING REVISE D PLANS FOR 6 BIG UNITS IN QUESTION PREPARED BY SHRI CHIRAG V. PA TEL VMC APPROVED ARCHITECT AND ENGINEER WHERE THE AREA HAS BEEN SHOWN AT 137.50 SQ.MTRS. FOR EACH OF THESE UNITS. (II) A COPY OF THE REVISED PLAN DULY CERTIFIED BY T HE DY. TOWN DEVELOPMENT OFFICER OF VMC WHERE THE ACTUAL BUILT-U P AREA HAS BEEN CERIFIED AT 136.42 SQ.MTR. (III) MEASUREMENT OF LAY-OUT PLAN BY SHRI D.J.AKRUW ALA GOVERNMENT APPROVED VALUER AND CHARTERED ENGINEER T HAT THE MAXIMUM BUILT-UP AREA OF EACH OF THE UNITS HAS BEEN MEASURED ON SITE AT 137.5 SQ.MT EQUIVALENT TO 1480 SQ.FT. SOME OF THE SIMILAR UNITS MEASURED 136.42 SQ.MT EQUIVALENT TO 1447.88 S Q.FT. (IV) COPY OF AGREEMENT WITH THE BUYER OF THESE UNIT S WHERE THE BUYERS HAVE PAID FOR 1480 SQ.FT. OF PLINTH AREA. (V) AFFIDAVIT FROM THREE EXISTING UNIT HOLDER WHO W ERE THE ORIGINAL ALLOTTEES THAT THE ACTUAL USABLE AREA OF THESE UNIT S IS 1390 SQ.FT. ONLY. THE FACTS ARE THEREFORE CLEARLY BORNE IN THE RECO RDS OF VMC AND ALSO ON PHYSICAL VERIFICATION THAT NONE OF THESE UN IT EXCEEDED MAXIMUM PERMISSIBLE LIMIT OF 1500 SQ.FT EACH AND HE NCE THE RESTRICTION IN CLAUSE DOES NOT APPLY TO THE ASSES SEE. 2.5. ON FACTS THEREFORE THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 801B(10) IS VALID SUBJECT TO THE DECISION OF TH E HON'BLE GUJARAT HIGH COURT ARISING OUT OF THE APPEAL FILED IN THE C ASE OF M/S.RADHE DEVELOPERS AND ETHERS RELATING TO OWNERSHIP OF LAND ONLY. THE ASSESSING OFFICER IS DIRECTED TO RECTIFY THE ASSESS MENT TO THIS EXTENT. 8.1 FOLLOWING HIS AFORESAID ORDER THE LD. CIT A LLOWED THE CLAIM IN THE AY 2003-04 ALSO. 9. THE AFORESAID FINDINGS OF THE LD. CIT IN THE AYS 2003-04 & 2006-07 HAVE NOT BEEN DISPUTED BY THE REVENUE BEFOR E US WHILE THE 6 ITA NOS.766 &3224/AHD/2008 LD. CIT(A) UPHELD THE DISALLOWANCE ONLY ON THE GROU ND THAT THE ASSESSEE DID NOT FULFILL THE CONDITION STIPULATED I N CLAUSE (C) OF SEC. 80IB(10) OF THE ACT. IN THESE CIRCUMSTANCES WE CON SIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A ) AND RESTORE THE MATTER RELATING TO CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT TO HIS FILE FOR DECIDING THE ISSUE AFRESH IN ACCORDANCE WI TH LAW IN THE LIGHT OF AFORESAID FINDINGS OF THE CIT IN THE AYS 2003-04 & 2006-07 AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES . THE LD. CIT(A) IS FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRES IF FOU ND NECESSARY AND THEREAFTER MAY PASS SUCH ORDER AS HE DEEMS PROPER IN ACCORDANCE WITH LAW BRINGING OUT CLEARLY AS TO WHETHER OR NOT THE CONDITION STIPULATED IN CLAUSE (C) OF SEC. 80IB(10) OF THE ACT IS FULF ILLED IN THE YEARS UNDER CONSIDERATION. WITH THESE OBSERVATIONS GROUND NO. 1 IN THESE TWO APPEALS IS DISPOSED OF. 10 GROUND NO. 2 IN IN THESE APPEALS RELATE TO LEV Y OF INTEREST U/S 234B & 234D OF THE ACT . SINCE THE LD. AR ON BEHAL F OF THE ASSESSEE DID NOT MAKE ANY SUBMISSIONS ON THIS GROUND WHILE T HE LEVY OF INTEREST U/S 234B & 234D OF THE ACT BEING MANDATOR Y [COMMISSIONER OF INCOME TAX. VS ANJUM M. H. GHASWALA AND OTHERS 2 52 ITR 1(SC) AFFIRMED BY HON'BLE APEX COURT IN THE CASE O F CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449(SC) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564(SC)] THIS GROUND IS DISMISSED. HOWEVER THE AO MAY ALLO W CONSEQUENTIAL RELIEF IF ANY WHILE GIVING EFFECT TO THIS ORDER. 11.. GROUND NO. 3 IN THESE APPEALS PERTAIN TO IN ITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. SINCE NO APPE AL LIES AGAINST MERE INITIATION OF PENALTY PROCEEDINGS NOR ANY SUBM ISSIONS HAVING BEEN MADE BEFORE US THIS GROUND IS ALSO DISMISSED 7 ITA NOS.766 &3224/AHD/2008 12. NO ADDITIONAL GROUND HAVING BEEN RAISED IN T ERMS OF RESIDUARY GROUND NO. 4 IN THESE TWO APPEALS ACCORDINGLY THI S GROUNDS IS DISMISSED. 13. IN THE RESULT BOTH THESE APPEALS ARE PARTLY AL LOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 22-07-2011 SD/- SD/- ( MUKUL SHRAW AT ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 22-07-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S.ADITYA CORPORATION 2ND FLOOR DEVDEEP COMPLE X NIZAMPURA BARODA. 2. ITO WARD-2(3) BARODA 3. CIT CONCERNED 4. CIT(A)-IV BARODA 5. DR ITAT AHMEDABAD BENCH-D AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD