ITO, Mangalore v. Sri. Melwyn John Patrao, Mangalore

ITA 968/BANG/2014 | 2006-2007
Pronouncement Date: 15-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 96821114 RSA 2014
Assessee PAN ACJPP2249P
Bench Bangalore
Appeal Number ITA 968/BANG/2014
Duration Of Justice 3 year(s) 3 month(s) 23 day(s)
Appellant ITO, Mangalore
Respondent Sri. Melwyn John Patrao, Mangalore
Appeal Type Income Tax Appeal
Pronouncement Date 15-11-2017
Appeal Filed By Department
Tags No record found
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 15-11-2017
Date Of Final Hearing 18-01-2017
Next Hearing Date 18-01-2017
First Hearing Date 18-01-2017
Assessment Year 2006-2007
Appeal Filed On 23-07-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI A.K. GARODIA ACCOUNTANT MEMBER AND SHRI LALIET KUMAR JUDICIAL MEMBER ITA NO. 967 / BANG/201 4 ASSESSMENT YEAR: 20 06 07 ITO WARD - 2[1] MANGALORE. VS. SMT. MONICA PATRAO W/O SRI MELWYN JOHN PATRAO PLAMA OCEANIC NEAR BIG BAZAR BIJALI MANGALORE 575 004. PAN: ACJPP2249P ITA NO. 968/BANG/2014 ASSESSMENT YEAR: 2006 07 ITO WARD - 2[1] MANGALORE. VS. SRI MELWYN JOHN PATRAO PLAMA OCEANIC NEAR BIG BAZAR BIJALI MANGALORE 575 004. P AN: ACVPP9141J APPELLANT RESPONDENT ASSESSEE BY : SMT. SHEETAL ADVOCATE REVENUE BY : SMT. B. R. RAMESH JCIT DR DATE OF HEARING : 14.11.2017 DATE OF PRONOUNCEMENT : 15 .11.2017 O R D E R PER SHRI A.K. GARODIA ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE REVENUE AGAINST TWO DIFFERENT BUT CONNECTED ASSESSEES AND THESE ARE DIRECTED AGAINST A COMBINED ORDER OF CIT (A) MYSORE DATED 11.04.2014 FOR ASSESSMENT YEAR 2006 07. BOT H THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 967 & 968/BANG/2014 PAGE 2 OF 4 2. THE REVENUE HAS RAISED AS MANY AS 14 IDENTICAL G ROUNDS IN THESE TWO APPEALS BUT THE ONLY EFFECTIVE GRIEVANCE OF THE REVENUE IS REGARDING THE DELETION OF THE DISALLOWANCE MADE BY THE AO IN RESPECT OF THE ASSES SEES CLAIM FOR DEDUCTION U/S 54F. 3. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSME NT ORDER. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). SHE AL SO SUBMITTED THAT AS PER THE ASSESSMENT ORDER THE OBJECTION OF THE AO AS PER PA GE 7 IS THIS THAT SINCE THE CONSTRUCTION OF THE NEW ASSET WAS NOT COMPLETED WIT HIN 3 YEARS FROM THE DATE OF TRANSFER DEDUCTION U/S 54F IS NOT ALLOWABLE. SHE S UBMITTED THAT ON THIS ASPECT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS . SRI C. GOPALASWAMY IN ITA NO. 303/2015 DATED 15.02.2016 COPY AVAILABLE ON PAGES 1 TO 4 OF THE PAPER BOOK. SHE POINTED OUT THAT THE SUBSTANTIAL QU ESTION OF LAW IN THAT CASE WAS THIS THAT IN A CASE WHERE THE TIME AVAILABLE FO R CONSTRUCTION OF HOUSE IS UP TO 01.08.2010 AND AS PER THE CONSTRUCTION AGREEMENT COMPLETION TIME WAS 31.12.2011 WHETHER THE TRIBUNAL WAS JUSTIFIED IN H OLDING THAT DEDUCTION U/S 54F IS ALLOWABLE? SHE SUBMITTED THAT UNDER THESE FACTS HONBLE KARNATAKA HIGH COURT APPROVED THAT TRIBUNAL ORDER BY OBSERVING THA T THE TRIBUNAL ORDER IN THAT CASE IS COVERED BY THE JUDGMENT OF THE SAME HIGH CO URT RENDERED IN THE CASE OF CIT VS. SAMBANDHAN UDAYKUMAR AS REPORTED IN 345 ITR 389. AT THIS JUNCTURE THE BENCH RAISED A QUERY THAT IN THE PRES ENT CASE THE ASSESSEE WAS SUPPOSED TO GET BOTH COMMERCIAL AREA AS WELL AS RES IDENTIAL AREA AS PER THE JDA. HENCE IT HAS TO BE SEEN THAT WHAT IS THE VALU E OF RESIDENTIAL AREA TO BE RECEIVED BY THE ASSESSEE. THE BENCH OBSERVED THAT T HIS IS ALSO TO BE SEEN THAT IN RESPECT OF RESIDENTIAL AREA TO BE RECEIVED BY TH E ASSESSEE ALSO IT HAS TO BE SEEN THAT WHETHER IT CAN BE ACCEPTED AS INVESTMENT IN A RESIDENTIAL HOUSE BECAUSE SUCH RESIDENTIAL AREA MAY BE IN DIFFERENT T OWERS. IN REPLY SHE SUBMITTED THAT THIS IS NOT AN OBJECTION OF THE AO A S PER THE ASSESSMENT ORDER AND RELEVANT FACTS ARE NOT READILY AVAILABLE. HOWEV ER SHE PLACED RELIANCE ON A TRIBUNAL ORDER RENDERED IN THE CASE OF ITO VS. SHRI RAVI NARAYAN DESHPANDE IN ITA NO. 306/BANG/2017 DATED 13.09.2017 COPY ON PAGE S 59 TO 66 OF THE PAPER BOOK. ITA NOS. 967 & 968/BANG/2014 PAGE 3 OF 4 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT AS PER THE JDA DATED 15.03.2006 AVAILABLE ON PAGES 45 TO 58 OF THE PAPER BOOK THE BUILDER HAS TO COMPLETE THE CONSTRUCTION WITHIN 30 MONTHS STARTING FROM THE DATE OF ISSUE OF LICENSE BY THE MANGALORE CITY CORPORATION. A GRACE PERIOD OF 6 MONTHS IS ALSO PROVIDED TO THE BUILDER AS PER PAGE 5 OF JDA. AS P ER LETTER DATED 01.01.2009 FROM THE BUILDER TO THE ASSESSEE THE LICENSE WAS G RANTED BY MANGALORE CITY CORPORATION ON 10.06.2008 AND THEREFORE THE TIME A VAILABLE TO THE BUILDER FOR CONSTRUCTION IS 36 MONTHS FROM THIS DATE WHICH IS BEYOND THE PERIOD OF 3 YEARS AVAILABLE U/S 54F BUT STILL FOR THIS REASON THE C LAIM OF THE ASSESSEE FOR DEDUCTION U/S 54F CANNOT BE REJECTED AS WAS HELD BY THE TRIBUNAL IN THE CASE OF ITO VS. SHRI RAVI NARAYAN DESHPANDE (SUPRA) AND BY HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SRI C. GOPALA SWAMY (SUPRA). RESPECTFULLY FOLLOWING THESE JUDGMENTS WE HOLD THA T DEDUCTION IS ALLOWABLE TO THE ASSESSEE U/S 54F. BUT ABOUT THE QUANTUM OF DEDU CTION SO ALLOWABLE THE MATTER HAS TO GO BACK TO CIT (A) FOR A FRESH DECISI ON BECAUSE THE NECESSARY FACTS ARE NOT AVAILABLE ON RECORD AND THERE IS NO F INDING ON THE FACTUAL ASPECT IN THE ORDER OF AO OR CIT (A) BECAUSE THE AO HAS REJEC TED THE CLAIM FOR DEDUCTION ON THIS BASIS THAT THE CONSTRUCTION IS NOT COMPLETE D WITHIN TIME AND HE HAD NO OCCASION TO EXAMINE THE QUANTIFICATION. AS PER PARA 5.8 OF THE ORDER OF THE LEARNED CIT (A) IT IS SAID BY HIM THAT THE ASSESSE EC WILL GET 10 000SQ. FT. OF CONSTRUCTED RESIDENTIAL AREA AND THIS IS AN ADMITT ED FACT BUT WE FIND THAT AS PER PARA 15 OF JDA PARTY NO. 2 AMONGST THE FIRST PARTY SHALL BE ELIGIBLE FOR 10 000SQ. FT. OF COMMERCIAL AND RESIDENTIAL OF SALE ABLE AREA IN THE PROJECT. HENCE IT IS SEEN THAT THIS BASIS OF THE ORDER OF C IT (A) IS INCORRECT. AS PER THE JDA THE ASSESSEEC WILL GET TOTAL 10 000 SQ. FT INC LUDING BOTH COMMERCIAL AND RESIDENTIAL AREA. IT IS ALSO NOT KNOWN WHETHER THE RESIDENTIAL AREA TO BE RECEIVED BY THE ASSESSEE WILL BE IN ONE TOWER ONLY OR IN DIF FERENT TOWERS AND THEREFORE WHETHER IT CAN BE SAID THAT THE RESIDENTIAL AREA TO BE RECEIVED BY THE ASSESSEE IS ACCEPTABLE AS A RESIDENTIAL HOUSE. HENCE WE F EEL IT PROPER TO RESTORE THE MATTER BACK TO CIT (A) FOR DECIDING BY WAY OF A SPE AKING AND REASONED ORDER ABOUT THE QUANTUM OF DEDUCTION ALLOWABLE TO THE ASS ESSEE U/S 54F. HE SHOULD ITA NOS. 967 & 968/BANG/2014 PAGE 4 OF 4 PASS NECESSARY ORDER AS PER LAW IN THE LIGHT OF ABO VE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 5. IN THE RESULT BOTH THESE APPEALS FILED BY THE R EVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 15 TH NOVEMBER 2017. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.