Income Tax Appellate Tribunal - Mumbai
Rehab Housing P.Ltd, Mumbai vs Asst Cit Cen Cir 9, Mumbai on 22 June, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL "D", BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM ITA No.7498/Mum/2014 (Assessment Year :2011-12) Rehab Housing Pvt. Ltd., Vs. DCIT - CC-9, Mumbai th Gitaneel Arcade, 5 Floor, 85, Hill Road, Bandra (W), Mumbai - 400 050 PAN/GIR No. AABCR6883Q Appellant) .. Respondent) ITA No.360/Mum/2015 (Assessment Year :2011-12) DCIT - CC-2(3), Vs. Rehab Housing Pvt. Ltd., Mumbai Gitaneel Arcade, 5th Floor, 85, Hill Road, Bandra (W), Mumbai - 400 050 PAN/GIR No. AABCR6883Q Appellant) .. Respondent) Assessee by Shri Dilip Lakhani Revenue by Ms. Vinita J Menon Date of Hearing 06/04/2017 Date of Pronouncement 22/06/2017 आदे श / O R D E R PER R.C.SHARMA (A.M):
These are the cross appeals filed by the assessee and revenue against the order of CIT(A)-37 Mumbai dated 3/11/2014 for the A.Y. 2011-12 in the matter of order passed u/s.143(3) of the IT Act.
2. Rival contentions have been heard and record perused.
3. Facts in brief are that assessee is engaged in the business of real estate development and development of housing project. In the course of 2 ITA No.7498/Mum/2014 & 360/Mum/2015 Rehab Housing Pvt. Ltd., scrutiny assessment, AO made disallowance of Rs.11,51,315/- u/s.14A r.w.r 8D.
4. At the outset, learned AR placed on record the order of the Tribunal in assessee's own case in the immediately preceding year 2010-11 wherein similar disallowance so made by AO was restricted by establishing the proportion to the dividend income qua dividend yielding investment. Precise observation of Tribunal was as under:-
"Regarding the disallowance made under clause (iii) of the Rule 8D(2), Ld Counsel for the assessee relied on various legal propositions. In this regard, he brought our attention to each and every account of the Profit & Loss Account and submitted that none of these expenses are directly relatable to the earning of the dividend income. Notwithstanding the said arguments, Ld Counsel for the assessee brought our attention to the order of the AO for the earlier AY 2009-2010 and demonstrated that the officers accepted the assessee's submission of restricting the disallowance to the amount of Rs. 4,89,834/- u/s 14A of the Act. In this regard, he mentioned that the same amount was arrived at after establishing the proportion to the dividend income qua dividend yielding investment. In this regard, he brought our attention to page 44 of the paper book to demonstrate that no expenditure was incurred towards advisors and agents. Further, he brought our attention to page 30 of the PB, which the computation of disallowance u/s 14A of the Act applying the similar formula of proportion between the exempt income versus dividend yielding investment.
5. After hearing both the parties and on perusal of the said page 30 of the PB, we find the disallowance of Rs. 4,54,399/- is in tune with the decision of the AO for the AY 2009-2010. No specific reason is brought our before us as to why the similar formula should not be followed for this year also instead of mechanically adopting the formula laid down in Rule 8D(2) of the Rules. Considering the same, we direct the AO to follow the method adopted by him for the earlier A.Y. 2009-10 and restrict the disallowance to Rs.4,54,400/- (rounded of). Accordingly, grounds raised by the assessee are partly allowed."
5. As the facts and circumstances during the year under consideration are same, respectfully following the order of the Tribunal, we direct the AO to 3 ITA No.7498/Mum/2014 & 360/Mum/2015 Rehab Housing Pvt. Ltd., re-compute the disallowance by establishing the proportion to the dividend income qua dividend yielding investment. We direct accordingly.
6. In the appeal filed by the Revenue, Revenue is aggrieved by the action of CIT(A) for allowing deduction u/s.80IB(10) of the IT Act in respect of release of 5% of eligible TDR in the current year.
7. We have considered rival contentions and found that assessee has claimed deduction u/s.80IB (10) in respect of receipts of sale of TDR, the project in respect of which deduction was claimed have been completed in the Assessment Year 2004-05 and 2005-06. In the assessment so framed for these assessment years u/s.143(3), the AO observed that assessee is eligible for 80IA (1) deduction. However, 5% of TDR relating to these products were not released by MMRDA on account of ULCA in the SRA project executed by the assessee. 5% was received by the assessee during the year under consideration. The CIT(A) allowed the same as eligible for deduction us/.80IB(10) after observing as under:-
"4.3.1. Ground of appeal no 5 is in respect of claim u/s 80IB(10). The assessing officer has followed the earlier decision in the appellant's case to deny claim u/s 80IB(10) in the current year in respect of release of 5% of eligible TDR this year that had been withheld on account of ULCA by MMRDA in the SRA project executed by the appellant. A project under SRA was given to appellant by MMRDA in October 2002 which was executed in FY 2003-04 and 2004-05. The project developed by the appellant was pursuant to Mumbai Urban Transport Project for rehabilitation of slum dwellers dishoused from public sites. It was' required to provide ready built tenements of prescribed specifications and hand it to MMRDA for this purpose within time bound schedule. The compensation to appellant was partly by way of issue of TDR apart from some lumpsum amount in cash for each tenement. The TDR received was sold from time to time and appellant had claimed 80IB(10) deduction on such income. 5% of the TDR had been withheld by MMRDA as per ULCA.4 ITA No.7498/Mum/2014 & 360/Mum/2015
Rehab Housing Pvt. Ltd., Since ULCA was repealed, the same was released to the appellant. The housing project approved before 1/4/2004 has to be completed before 31/3/2008, a condition which has been fulfilled. There is no restriction on claiming 80IB(10) deduction in any year in which income has arisen. The claim in the present year is in respect of income on this 5% of TDR. The appellant argued before me that the TDR received and sold in the current year is intrinsically connected to the SRA housing project completed earlier and hence must be allowed to claim deduction u/s 80IB(10). The appellant had claimed deduction u/s 80IB(10) in respect of 95% of eligible TDR received earlier in earlier assessment years which had been allowed in assessments u/s 143(3) by AO in the original assessments. Though the deduction was denied in the assessments 'after the search action, the appellant had succeeded in its appeal before the Ld CIT(A). Hence It was pleaded that the deduction should be allowed. regards the appeal before me, there is no dispute that 4.3.2. It is seen that assessments under 143(3) were 2004-05 and 2005-06 on 17/3/2006 by ACIT Cir 9(3) wherein claim u/s 80IB (10) was allowed. A search action u/s 132 was conducted on 4-10-2006 and search action concluded on 29-12-2006. Assessment order u/s 153A rws 143(3) was passed 2001-02 to AY 2006-07 and uls 143(3) for AY 2007-08 on 30/12/2008 by ACIT Central-09, Mumbai. In this assessment order, book results were rejected us/ 145(3) income for different years were recomputed. For various reasons discussed in detail in the assessment order, the claim for deduction u/s 80lB(10) were denied. Issues raised were whether appellant could get benefit when construction was executed by L& T Ltd., whether construction of shops was part of the same project and therefore the project was not a housing project, and whether income from sale of TDR issued will be eligible for 80lB deductions. The appeal against the consolidated assessment order was disposed by Ld CIT(A) , Central VII, Mumbai vide his order dated CIT(A)C- VII/ACIT-CC-9/IT-187 to 190/08-09 dated 27-04-2009. In this order all the additions made by assessing officer was deleted. In the present case, the assessing officer has relied upon the findings and views in the assessment order uls 153A rws 143(3) in this case. He has also noted the decision and the reasoning of the Ld CIT(A) in accepting the grounds raised in appeal before him. However, the AO has mentioned that department has filed appeal against the order of Ld CIT(A) which is pending before the Hon'ble lTAT Mumbai Bench. On verification, the Ld AR has informed that the departmental appeal before ITAT is still pending and has not been decided. I note that the appeal has 5 ITA No.7498/Mum/2014 & 360/Mum/2015 Rehab Housing Pvt. Ltd., been pending for over 5 years and it would not be fair to keep this appeal pending awaiting the fate of departmental appeal.
4.3.3. As regards the appeal before me, there is no dispute that the income from TDR in respect of 5% of eligibility is intrinsically linked with the project executed in respect of which the income from TDR at 95% of eligibility was considered in the claim for deduction u/s.80IB(10) in the earlier years. It is also not in dispute that this 5% TDR was received only now and was not available earlier. Thus, the only questions that remain is whether the project executed by the appellant is entitled to deduction u/s 80IB(10) and whether sale of TDR and consequent income arising from it is eligible for 80IB deduction. Both these issues were core issues adjudicated by the Ld CIT(A)-Central VII, Mumbai at length in the appellate order (supra). Having perused the appellate order as well as the assessment order, I am in agreement with the findings and decision of Ld CIT(A)-Central VII, Mumbai. Facts remaining same the ground of appeal no 5 is allowed. Thus the claim of deduction u/s 80IB(10) is allowed."
8. We have considered rival contentions and found from the record that the assessee is eligible for deduction u/s. 80IB(10) in respect of the projects under consideration and due deduction have already been allowed by the department in the earlier years. In the year under consideration 5% of eligible TDR which had been on account of ULCA by MMRDA in the SRA project was released. We found that the project under SRA was given to the assessee in the year October, 2002 and which was executed in the financial years 2003-04 and 2004-05. With regard to release of 5% amount of the TDR, there is not dispute that income from TDR is intrinsically linked with the project executed in respect of which the income from TDR at 95% of eligibility was already considered and claimed for deduction u/s. 80IB(10) and was allowed in the earlier years. There is also no dispute that the balance amount of 5% TDR was received during the year under consideration which is also 6 ITA No.7498/Mum/2014 & 360/Mum/2015 Rehab Housing Pvt. Ltd., eligible for deduction u/s. 80IB(10). The detail having recorded by the ld. CIT(A) has not been controverted by ld. DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of the ld. CIT(A) and allow deduction in respect of 5% of TDR received during the year u/s. 80-IB(10).
9. In the result, the appeal of the assessee is allowed in part for statistical purposes, whereas the appeal of the Revenue is dismissed.
Order pronounced in the open court on this 22/06/2017 Sd/- Sd/-
(RAVISH SOOD ) (R.C.SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated 22/06/2017
Karuna Sr.PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
DR, ITAT, Mumbai
5. BY ORDER,
6. Guard file.
सत्यापित प्रतत //True Copy//
(Asstt. Registrar)
ITAT, Mumbai