Income Tax Appellate Tribunal - Mumbai
Ramprasad Agarwal, Thane vs Department Of Income Tax on 21 August, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'D', MUMBAI
BEFORE SHRI G. E. VEERABHADRAPPA, PRESIDENT,
& SHRI VIVEK VARMA, JUDICIAL MEMBER
ITA NO. 2435/Mum/2010
Assessment Year: 2006-07
Shri Ramprasad Agarwal The ITO, Central Range,
Ground Floor, Vrindavan, 1st floor, Pawar Compound,
Salasar Brijbhoomi, Cherai Naka, Thane (W)
Temba Hospital Road,
Vs.
Bhayandar (W),
Dist. Thane-401 101
PAN NO: AAOPA 2405 P
(Appellant) (Respondent)
&
ITA NO. 2163/Mum/2010
Assessment Year : 2006-07
ITO, (Central), Shri Ramprasad Agarwal
Thane Pawar Industrial Estate, Ground Floor, Vrindavan,
Edulji Road, Charai, Salasar Brijbhoomi,
Thane-400 601 Temba Hospital Road,
Vs.
Bhayandar (W),
Dist. Thane-401 101
PAN NO: AAOPA 2405 P
(Appellant) (Respondent)
Appellant by : Dr. K. Shivaram &
Shri Rahul Hakani
Respondent by : Shri Satbir Singh
Date of Hearing: 21.08.2012
Date of Pronouncement: 05.09.2012
ORDER
Per Vivek Varma, J.M. :
Page 1 of 9
Shri Ramprasad Agarwal I.T.A. Nos. 2435 & 2163/Mum/2010 The cross appeals have been filed by the assessee and the department against the order of CIT(A)-I, Thane, dated 15.11.2009.
2. The assessee had filed revised grounds of appeal vide letter dated 23.11.2011, in place of the grounds filed originally. We, therefore, peruse the appeal on the revised grounds of appeal, which are as follows :- "I. Original Ground Nos. 1 & 2
1. The learned Commissioner of Income-tax (A) failed to appreciate that the appellant had obtained completion certificate in respect of Buildings on which deduction u/s.80IB(10) was claimed though the condition of obtaining building completion certificate is not applicable to the Appellant s the project commenced prior to 1/4/2005 when the condition to obtain building completion certificate did not exist and hence, deduction u/s 80IB(10) cannot be denied to the Appellant.
1.1 Without prejudice to above, the learned CIT(A) failed to appreciate that as no deduction u/s 80IB(10) was claimed on Krishnakunj A. Wing, deduction u/s 80IB(10) cannot be denied on the entire project.
2. The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal."
3. The sole issue, emanating from the grounds of appeal, as above, pertain to the denial of deduction u/s 80IB(10).
The brief facts of the case are as under :-
"The deduction is denied by the A.O. for the following reasons :
i. The plan is approved as commercial-cum-residential project.
ii. Occupation Certificate is not received.
iii. Existence of commercial space in the project.
iv. Built up area exceed 1000 sq. ft.
v. The material facts which prompted the AC to disallow the
claim , are discussed hereunder :
Approval of plan as commercial-cum-residential project The original larger plan consisting of 23 buildings were approved vide the approval dated 24/06/02 by Mira Bhayander Municipal Corporation (MBMC) as 'commercial-cum-residential' project. Out of this , the appellant constructed 3 buildings viz 'Radha Kunj' , 'Krishna Kunj' and 'Gin Raj' comprising of 1,00,930/- sq ft of constructed area including 7947 sq of commercial area. The AC came to the conclusion that, since Page 2 of 9 Shri Ramprasad Agarwal I.T.A. Nos. 2435 & 2163/Mum/2010 the project was approved as 'commercial-cum-residential' one , the appellant assessee was not entitled for the benefits of deduction and accordingly, a show cause notice dated 15/12/08 requiring the appellant to state his objection, if any was issued. The appellant relying upon the clarification issued by the CBDT to Maharashtra Chamber of Housing Industries , explained that once the project is approved as 'housing project' it amounts to approval as 'housing project.' The explanation of the appellant was rejected by the AC and relying upon the decision in the case of M/s Laukik Developers Vs DCIT , Circle-3 Thane , proceeded to hold that the assessee having failed to fulfill one of the conditions of Section 801B(10) is not entitled for the same.
The excerpts of the submission are like this :
i. The appellant has constructed 3 buildings out of 23 buildings approved as 'Salasar Brijbhoomi'. The said project has fulfilled all the requisite conditions.
ii. The plan is approved on 24/06/02 and the commencement certificate is issued on 28/5/03.
iii. The amendment which came in to effect from 1.4. 04 Will not apply this year and therefore, completion, certificate is not necessary.
iv. The land on which the project constructed is more than one acre in area.The newly inserted condition of the project to be completed within years is not applicable to this case, since the project is approved prior to 3 1/03/04.
v. The constructed area has not exceeded 1000 sq ft in each residential unit.
vi. The convenient shopping is provided as pr development Control Regulations of MBMC.
vii. The project of the appellant, however, is a 'housing project', within the meaning of clarification issued by the CBDT to Maharashtra Chamber t Housing Industries (MCHI). The restriction on shopping area is less than 2000 sq ft are 5 % will apply to the project approved after 01/04/04 not to the project of the appellant.
ix. The AO has relied upon the decisions in the case of M/s Laukik Developers Vs DCIT, Circle-3, Thane however, he has ignored the decision like Bengal Ambuja Housing.
x. The decision in the case of M/s Brahma Associates has over-
ruled the decision in the case of M/s Laukik Developers.
xi. The decision of ITAT, Mumbai in the case of ACIT Vs Sheth Developers Pvt Ltd is squarely applicable and proportionate allowance be given, if not full deduction, if the constructed area is taken to exceed 1000 sq. ft.
4.3 In respect of the above submissions, the appellant has relied upon the decisions in the following cases :
i. Shri Harshad P. Doshi Vs. DCIT, Mumbai.
ii. ITO vs. M/s. Ideal Realtors iii. M/s. Saroj Sales Corporation vs. DCIT, Mumbai.Page 3 of 9
Shri Ramprasad Agarwal I.T.A. Nos. 2435 & 2163/Mum/2010 iv. Poonam Grih Nirman Vs. ACIT, Mumbai v. Bengal Ambuja Housing Ltd. vs. DCIT."
4. The CIT(A), while accepting the contentions of the assessee, denied the deduction on the ground that OC (occupation certificate) had not been received and since one of the main condition embedded in section 80IB(10)(a)(ii) had not been fulfilled, the deduction could not be allowed.
Aggrieved the assessee is now before the ITAT.
5. Before us, the AR reiterated the submissions made before the revenue authority and submitted that the provisions for completion certificate was not there in the statute and since the project had been approved prior to 31.03.2005 newly inserted provisions were not applicable.
6. The AR relied on the decisions of ITO v/s. Sai Krupa Developers in ITA No. 3661/Mum/2011, (where one of us was party) to the order, wherein it was held, "regarding completion certificate, reliance was placed on the decision of ITAT in the case of M/s. Saroj Sales Organisation, 115 TTJ 485. It was submitted that as per section 80IB(10), which is applicable in respect of the housing projects approved before 31.03.2005, there was no requirement of obtaining completion certificate. Reliance was placed on the decision of ITAT Mumbai in the case of Hiranandani Akruti vs. DCIT, 39 SOT 498, wherein, the ratio of decision in the case of Saroj Sales Corporation was followed, which is as under :-
"We are of the view that we are not supplying any words to the statute but are only holding that the law as it existed in the Y. 2001-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17.11.2003 and when the assessee commenced development is to be applied. Therefore, the submissions of the learned D.R. in this regard cannot be accepted. We are of the view that the legislature would not have intended to take away a vested right without clear words to that effect in the provisions of Sec.80IB(10) as amended by the Finance Act, 2005, lu.e.fO1.4.2005. We, therefore, hold following decision in the case of Saroj Sales Organization (supra) that the law as existed in the A.Y. Page 4 of 9 Shri Ramprasad Agarwal I.T.A. Nos. 2435 & 2163/Mum/2010 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17.11.2003 and when the assessee commenced development is to be applied."
6.1 The AR also relied on the decision of ACIT vs Sheth Developers in ITA No. 4497/Mum/2006, reported in 33 SOT 277 (Mum), wherein the coordinate bench at Mumbai ITAT held, "Whether definition of 'built-up area' in clause (A) of section 80-IB(14) introduced by Finance Act, 2004 has only prospective effect from 1-4-2005 - Held, yes - Whether, therefore, prior to 1-4-2005 balcony would not form part of built up area, irrespective of area of such balcony - Held, yes- Whether adopting a definition formulated in a regulation promulgated based on a State law, that too relevant only for limited localized area, cannot be a basis for understanding a common term like 'built-up area' for purpose of Act and application of section 80-IB thereof - Held, yes - Whether even where some of units in a housing complex exceed area limit, relief has to be given on a pro rata basis."
6.2 The AR further relied on the Third Member decision of coordinate Bench at Chennai in the case of Sanghvi & Doshi Enterprise vs Income-tax Officer reported in 131 ITD 151 that OC would relate back to the date of application. Therefore, in the instant case, the commencement application was made on 28.05.2003, which was much prior to 31.03.2008.
6.3 The AR also relied on the decision of Saroj Sales Organisation v/s ITO in ITA No. 4008/Mum/2007, reported in 115 TTJ 485, (where one of us was a party) to the decision, held, "Assessee having completed the construction of Page 5 of 9 Shri Ramprasad Agarwal I.T.A. Nos. 2435 & 2163/Mum/2010 various wings of the building under the approved plan in two different blocks under different certificates of commencement was eligible for deduction under sec.80IB(10) in respect of one block in respect of which claim for deduction was made and which satisfied the requirement of s 80IB(10): claim could not be denied by clubbing the two blocks especially when the second block had been kept separate by the assessee and for which deduction under s.80-IB(10) was not claimed."
6.4 The AR relied on a number of decisions rendered by various coordinate Benches and concluded that the deduction u/s 80IB(10) cannot be denied by the revenue authorities.
7. The DR on the other hand, strongly supported the decision of the revenue authority and submitted that the entire business of development wrests on the OC and if OC, as per the submissions of the AR is not required, the whole provision of section 80IB(10) shall be rendered otios.
8. We have heard the rival submissions and have also perused the material on record. We find that the assessee had undertaken the development of a part of development project of 23 buildings at Mira Bhayender area. The assessee was to construct 3 buildings aggregating Rs. 1,00,930 sq. feet including 7947 sq. ft. of commercial area. The approval of the entire project was dated 24.06.2002. The controversy is with regard to the allowable of deduction u/s.80IB(10) on the project which has not got the OC but has completed the project. When we refer to the CIT(A), the reason assigned for non allowance is Page 6 of 9 Shri Ramprasad Agarwal I.T.A. Nos. 2435 & 2163/Mum/2010 that completion certificate not acquired by the assessee. The AR has cited the Third Member decision of Sanghvi & Doshi Enterprises vs ITO, reported in 131 ITD 151, where at page 181, the Hon'ble Third Member had observed that "....... and, therefore, the certificates relate back to the dates on which the applications for the certificates were made by the assessee." Therefore, rejecting the claim on this ground cannot survive. The deduction, as claimed has to be allowed. We, therefore, set aside the order of the CIT(A) and direct the AO to allow the deduction as claimed.
The appeal is thus allowed.
9. In the cross appeal, the issue raised by the department revolves around the allowance of deduction u/s 80IB(10), but from a different angle, i.e. some of the flats exceeded 1000 sq. ft. this issue has been deal with by the Co-ordinate Bench at Mumbai in the case of Saroj Sales Organisation v/s ITO reported in 115 TTJ 485 (Mumbai), Hiranandani Akruti J V v/s DCIT, reported in 39 SOT 498 (Mum) and also by the Special Bench in the case of Braham Associates, reported in 119 ITD 255 (Pune SB), wherein the coordinate Benches have held that for the projects approved prior to 01.04.2005, old law shall apply.
10. Respectfully, following the decisions, we dismiss the appeal filed by the department, as the flats whose measurements were taken to be exceeding 1000 sq. ft. included the balcony, which had to be excluded for the measurement. In these circumstances, we dismiss the appeal.
Page 7 of 9
Shri Ramprasad Agarwal I.T.A. Nos. 2435 & 2163/Mum/2010
11. In the result, the appeal filed by the assessee in ITA No. 2435/Mum/2010 is allowed the appeal filed by the department in ITA No. 2163/Mum/2010 is dismissed. Order pronounced in the open court on this day of 05/09/2012.
Sd/- Sd/-
(G.E. VEERABHADRAPPA) (VIVEK VARMA)
PRESIDENT JUDICIAL MEMBER
Mumbai, Date: 05/09/2012
Roshani
Copy to-
1) Appellant
2) Respondent
3) CITA Mumbai.
4) CIT City Mumbai
5) DR Bench Mumbai
True Copy By Order
Dy/Asst.Registrar,ITAT MUMBAI.
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