Income Tax Appellate Tribunal - Mumbai
Sonasha Enterprises , Mumbai vs Department Of Income Tax
1
M/s Sonasha Enterprises
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI ' E ' BENCH
MUMBAI BENCHES, MUMBAI
BEFORE SHRI B RAMAKOTAIAH, AM & SHRI VIJAY PAL RAO, JM
ITA Nos. 4911 & 4912/Mum/2010
(Asst Years 2007-08 & 08-09 )
The Income Tax Officer Vs M/s Sonasha Enterprises
Ward 23(3)(3), Mumbai 101 Marathon House
Lala Devi Dayal Road
Mulund (W), Mumbai
(Appellant) (Respondent)
PAN No. ABBFS7104H
Assessee by Dr K Shivram/Ajay R Singh
Revenue by Sh Satbia Singh
Dt.of hearing 24th Oct 2011
Dt of pronouncement 31st, Oct 2011
PER VIJAY PAL RAO, JM
These appeals by the revenue are directed against separate orders both dated 22.3.2010 of the CIT(A) for the AYs 2007-08 and 2008-09 respectively. 2 The revenue has raised the following common grounds in these appeals:
1.On the facts and circumstances of the case and in law, the Id. CIT(A) erred in allowing the claim of deduction u/s. 801B( 10) of the I.T. Act. 1961 made by the assessee even though the Assessing Officer rejected the claim of such deduction on the grounds:
i that the build up area of the 68 shops included in the housing project of tenements exceeded 5% of the aggregate built-up area of the housing project. thereby contravening the provisions of Sec. 801B(10)(d) of the Act.
ii) that the assessee was a contractor and not a builder and
iii) that the assessee has sold TDR and the same being movable asset, the provisions of Sec 801B (10) of the Act did not apply being applicable lo the housing projects only.2
M/s Sonasha Enterprises
2) On the facts and circumstances of the case and in law, the id CIT(A) erred in appreciating that the assessee has not justified and substantiated the payment to the above persons with any documentary evidence. 3 The assessee is a firm engaging in the business of builder and developer. The assessee has developed the housing project under SRA scheme as sectioned by MMRDA. The assessee claimed deduction u/s 80IB(10) for the AYs under consideration. The Assessing Officer denied the claim of the assessee mainly on two grounds viz that the assessee is having commercial establishment in the project which is more than 5% as provided under clause (d) of sec. 80IB(10) and secondly, the assessee is a contractor and not a builder who has sold Transfer of Development Right (TDR) which is a moveable asset and the provisions of the section does not apply.
3.1 On appeal, the CIT(A) issued a remand order and after considering the remand report of the Assessing Officer, allowed the claim of the assessee vide the impugned order.
4 Before us, the ld DR has submitted that the assessee has sold TDR under the SRA scheme and therefore, as per the first proviso to sec. 80IB(10) the scheme of SRA shall be notified by the Government of India. He has submitted that the assessee has not furnished any record to show that the said scheme has been notified by the Govt of India. He has further submitted that the assessee received TDR against the development of the project under consideration from MMRDA and the income of the assessee is not directly from the development of the project but by sale of TDR, which is not entitled for deduction u/s 80IB(10) of the Act. He has further submitted that the assessee has constructed 68 shops in the housing project which exceeds the prescribed limit of 5%. Even the commercial area in the project exceeds 10% of the total constructed aree of the project; therefore, the assessee is not entitled to the deduction. He has further contended that the housing project was sanctioned after 3 M/s Sonasha Enterprises 31.3.2005; therefore, the amended provisions of sec. 80IB(10) is applicable. He has relied upon the order of the Assessing Officer .
4.1 On the other hand, the ld AR of the assessee has submitted that the housing project was approved on 11.5.2004 which is prior to 31.3.2005 and therefore, the same is governed by the un-amended provisions of sec. 80IB(10) and clause (d) of sec. 80I B is not applicable, as the project was approved prior to 1.4.2005. He has further submitted that the Hon'ble High Court, in the case of Commissioner of Income-tax v. Brahma Associates reported in 333 ITR 289 has upheld the order of the Tribunal on the point of prospective amendment by which the clause (d) of sec. 80IB(10) is inserted and not retrospective. He has further submitted that the assessee has not sold out the commercial establishments in the project and all the shops were built as per the instructions and requirement of MMRDA for which the assessee did not receive any consideration. The assessee has received TDR only in respect of the residential part of the project. Therefore, the consideration received by the assessee in the form of TDR, which was sold by the assessee and accordingly, the assessee is entitled for deduction u/s 80IB(1).
5 We have considered the rival contention and perused the relevant material on record. The first objection raised by the ld DR that the SRA scheme was not notified by CBDT, it has to be seen that this objection has not been raised by the Assessing Officer either while passing the assessment order or during the remand report. Further, we note that the assessee never sought any relaxation in the conditions under clause (a) or (b) of sec. 80IB(10) by virtue of first proviso therefore, when the assessee has not claimed any benefit under the proviso, the question of the scheme of SRA, as notified or not, does not arise. Accordingly, we do not find any merit in the objection raised by the ld DR.
4
M/s Sonasha Enterprises 5.1 As regards the objection regarding the commercial establishment is concerned, as per remand report, the Assessing Officer has accepted the fact that the project was approved vide agreement dt 11.5.2004; therefore, the pre- amendment of provision of sec. 80IB(10) are applicable. Accordingly, in view of the decision of the jurisdictional High in the case of Brahma Associates (supra), there is no bar of commercial establishment in the housing project for availing deduction u/s 80IB(10) prior to the insertion of clause (d) w.r.f 1.4.2005. The Hon'ble High Court in para 33 has observed as under:
"In the absence of any provisions under the Income-tax Act, the Tribunal was not justified in holding that up to March 31, 2005 deduction under section 80- IB(10) would be allowable to projects approved by the local authority having residential building with commercial user up to 10 per cent. of the total built- up area of the plot."
Therefore, when the project was approved prior to 1.4.2005 then, there is no bar for allowing deduction u/s 80IB once the residential project has been approved by the local authorities.
5.2 As regard the last contention of the revenue is that the assessee is not a builder and the income received by sale of TDR and not by sale of housing project is concerned, we find that there is no dispute about the fact that the assessee received the TDR as a consideration against the development of the project in question. We further note that the TDR was received only for residential portion of the housing project and not for the commercial establishment. Thus, when the TDR received by the assessee was immediately sold and the sale consideration was shown as receipt from the housing project, then, there is no other element in the said receipt against the sale of TDR other than the income from housing project. 5.3 It is not the case of the revenue that the assessee sold the TDR after appreciation of the value and therefore, the entire amount cannot be treated as 5 M/s Sonasha Enterprises sale consideration of the housing project. The assessee has given the details of the receipts of TDR and sale of the TDR as in the same year and immediately after receiving from the MMDRA. Therefore, there is no element of any appreciation in the value in the sale consideration. In view of the above facts and circumstances of the case, we do not find any reason to interfere with the order of the ld CIT(A) for both the AYs.
6 In the result, the appeals filed by the revenue are dismissed. Order pronounced on the 31st, day of Oct 2011.
Sd/ Sd/
( B RAMAKOTAIAH ) ( VIJAY PAL RAO )
Accountant Member Judicial Member
Place: Mumbai : Dated: 31st, Oct2011
Raj*
Copy forwarded to:
1 Appellant
2 Respondent
3 CIT
4 CIT(A)
5 DR
/TRUE COPY/
BY ORDER
Dy /AR, ITAT, Mumbai