Income Tax Appellate Tribunal - Rajkot
Asstt. Commr. Income Tax, Cen. ... vs Shree Jivraj Township,, ... on 2 May, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAJKOT BENCH, RAJKOT
[CONDUCTED THROUGH E-COURT AT AHMEDABAD]
BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 151/Rjt/2015
नधारण वष/Assessment Year: 2010-2011
Assistant Commissioner of Vs. M/s. Shree Jivraj Township,
Income-tax, Central Circle-2, Soor Prabhav, 14, Panchnath
Rajkot Plot, Rajkot
PAN : ABHFS 3670 C
[
अपीलाथ / (Appellant) यथ / (Respondent)
Revenue by : Shri Avinash Kumar, Sr. DR
Assessee by : Shri M.J. Ranpura, AR
सु न वाई क ता र ख / Date
of Hearing : 17/04/2017
घोषणा क तार ख / Date of Pronouncement: 02/05/2017
आदे श/O R D E R
PER MANISH BORAD, ACCOUNTANT MEMBER:
This appeal of Revenue for Assessment Year 2010-2011 is directed against the order of the Commissioner of Income-tax (Appeals)-11, Ahmedabad dated 29.01.2015 vide appeal No.CIT(A)-11/485-R/CC.2/2014- 15, arising out of order u/s 143(3) of the Income-tax Act, 1961 (herein after referred to as "the Act") dated 25.03.2013 framed by the DCIT, Central Circle-2, Rajkot.
2. The solitary grievance of the Revenue is against the order of the ld. CIT(A) in allowing assessee's claim of deduction under Section 80IB(10) of the Act at Rs.53,43,074/-.
3. Briefly stated facts, as culled out form the record, are that the assessee is a partnership firm, engaged in the business of real estate and building ITA No. 151/Rjt/2015 ACIT vs. Shree Jivraj Township AY : 2010-2011 -2- construction. Return of income for AY 2010-11 was filed on 08.07.2010 showing Nil income after claiming deduction under Section 80IB(10) of the Act at Rs.53,43,074/-. Case picked up for scrutiny under CASS and notice under Section 143(2) followed by 142(1) along with detailed questionnaire was issued. Necessary replies with details as called for were furnished. The assessee has undertaken a residential project called 'Jivraj Township' which was commenced during FY 2006-07. The ld. Assessing Officer denied the deduction under Section 80IB(10) of the Act by observing that the assessee was unable to get approval of the housing project by the Municipal Corporation as separate building plans for each of the units.
4. Aggrieved, the assessee went in appeal before the ld. CIT(A) and succeeded as ld. CIT(A) followed the judgment of Hon'ble jurisdictional High Court in the case of B.M. and Brothers, reported in (2014) 2 Taxmann.com 24, and observed that as the assessee has taken the approval in respect of the housing project more than once and it shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority and accordingly held that assessee was eligible to avail the claim of deduction under Section 80IB(10) of the Act.
5. Aggrieved, the Revenue is now in appeal before us.
6. At the outset, ld. Counsel for the assessee submitted that the issue raised in this appeal is squarely covered by the decision of the Co-ordinate Bench in assessee's own case for AY 2011-12 in ITA No.209/Rjt/2015, pronounced on 05.12.2016, wherein the Co-ordinate Bench has dismissed the Revenue's appeal raising similar issue.
7. On the other hand, ld. Departmental Representative submitted that ld. CIT(A) has merely relied on the judgment of Hon'ble jurisdictional High ITA No. 151/Rjt/2015 ACIT vs. Shree Jivraj Township AY : 2010-2011 -3- Court in the case of B.M. and Brothers (supra), against which Department has filed Special Leave Petition before the Hon'ble Supreme Court of India.
8. We have heard the rival contentions and perused the material on record. The only issue raised by the Revenue is against the ld. CIT(A)'s order allowing deduction under Section 80IB(10) of the Act on the profits earned by the assessee-firm in the construction projects. We observe that ld. Counsel as referred and relied upon the decision of the Co-ordinate Bench in assessee's own case in ITA No.209/Rjt/2015 (supra) for AY 2011-12, where the Co-ordinate Bench has dismissed the Revenue's appeal by observing as follows:-
"8. Aggrieved by this, the assessee carried the matter before the ld. CIT(A) and reiterated its claim of deduction u/s 80IB(10) of the Act. The assessee drew the attention of the First Appellate Authority to the decision of the Hon'ble Bombay High Court in the case of Vandana Properties 27 DTR 282 wherein "it has been held that the approval for separate buildings can be granted and that mil not affect the claim of the assessee u/s 80IB(10) of the Act".' It was also brought to the notice of the ld. CIT(A) that the approval of building plan in piecemeal is needed to be submitted separately as per conditions laid down by the statutes in this regard. After considering the facts and the submissions, the ld. CIT(A) drew support from the decision of the Hon'ble Jurisdictional High Court in the case of B.M. and Brothers 42 Taxmann.com 24, The relevant extract of the decision in the case of B.M. and Brothers (supra) is as under:-
'5. We have heard Shri Pranav Desai, learned Counsel appearing on behalf of the appellant-revenue and considered the orders passed by the ITAT as well as CIT(A). It is required to be noted that the layout plan of the 'housing project' named 'Maninagar' at Rajkot came to be approved by the Assistant Town Planner on 30/03/2002 as also by the Collector, Rajkot on 17/04/2002 i.e much before the date 01/04/2004, which is the cut-off date. The said 'housing project' was with respect to 119 units. It was found that, out of 119 units, on most of the plots, after getting necessary approvals, constructions were already completed. Considering the above, ITAT granted deductions under Section 80- IB(10) of the Act with respect to those units constructed and completed prior to 31/03/2008. The C1T(A) while granting deduction under Section 80-IB(10) of the Act with respect to those ITA No. 151/Rjt/2015 ACIT vs. Shree Jivraj Township AY : 2010-2011 -4- units approved prior to 01/04/2004 and granted prior to 31/03/2003 has observed in paragraph 3,4 as under:
'3.4 I have carefully considered the finding given by the Assessing Officer and the contentions of the AR of the appellant. The main basis of not allowing deduction u/s. 80-IB(10) by the A.O. appears to be the averment of the A.O. that the assessee has taken 69 approvals for construction and therefore it could not be construed approval for the entire project. The A.O. is of the view that S. 80-IB(10) Explanation (i) envisages approval to be obtained for such housing project, but does not envisage multiple approval or approvals in piecemeal manner. The A.O. is also of the view that Section 80-IB(10) uses the word 'approval' and not 'approvals' for housing project. Accordingly, the A.O. came to conclusion that the assessee has failed to fulfill the basic conditions laid down in Section 80-IB(10) and that is why the claim of deduction was disallowed. However, the above contentions of the A.O. is not correct. Firstly, he has not clearly pointed out which of the conditions laid down u/s 80-IB(10) are not fulfilled by the appellant. As regarding his averment that Section 80-IB(10) uses the word 'approval' and not 'approvals' for housing project it appears that the A.O. has not properly gone through the other provisions of Section 80- IB(10). The word 'approval' can be taken and considered as singular and also multiples when more than one projects are there. In this connection, specific reference is made to the Section 80-IB(10) and the Explanation there below. The Explanation reads as under:--
(i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority.
(ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority.
Thus, from (I) above, it is clear that more than one approvals has also been envisaged by the Legislature in the Act and that is why it is mentioned 'in a case where the approval in respect of the housing project is obtained more than once..,'. Thus, there is no bar in the Act for obtaining more than one approval. The basic fact is that the A.O. is to see whether the conditions laid down u/s. 80-IB(10) are cumulatively fulfilled or not? Here, in the case of appellant, the housing project 'lay out plan' has been approved by the Assistant Town Planner to RMC on 30/03/2002 as also by the Collector, Rajkot on 17/04/2002, which is much before the date 01/04/2004 which is the ITA No. 151/Rjt/2015 ACIT vs. Shree Jivraj Township AY : 2010-2011 -5- cut-off date. As far as the date of commencement is concerned, it has no relevance under the provisions of Section 80-IB(10) of the Act because the provisions only speak about the approval or date of completion. As far as the condition of the area of project is concerned it should be more than one acre, here in the case of appellant the project 'Maninagar' having 119 units -was constructed on an area of 3.33 Acres. Similarly, the condition regarding built-up area per unit should be less than 1500 sq. ft. and there is no dispute regarding that in the appellant's case also because all the 119 units are having less than area of 1500 sq.ft. As regarding the date of completion it has been laid down in Section 80- IB(10) that the construction should be completed on or before 31/03/2008. Here, in the case of appellant, it is found that most of the units have been completed before 31/03/2008. However it is found that out of 119 units, construction of some of the units was completed after 31/03/2008 as shown in the Table on pages 7 & 8 of the assessment order. The argument of the AR of the appellant is that during the year under consideration only 21 units have been sold and in case of all these units- construction was completed before 31/03/2008. However, in my considered opinion, the units construction of which has been completed after 31/03/2008 will not be eligible for benefit u/s. 80- IB(10) in any year. From the copies of the commencement and completion certificate issued by the RMC it is found that the same has been issued in the name of appellant-firm M/s. B.M. & Brothers for the housing project known as 'Maninagar' on Rajya "Road and the same is given for construction of residential units. Further also brochure issued by the appellant-firm says that 'Maninagar' is a residential housing project wherein layout plan also shows that various houses are constructed on adjoining plots from Sr. Nos. 1 to 119 as per the approved layout plan giving place for roads and public plots. These factors also indicate that it is a residential housing project known as 'Maninagar' having composite residential units. The appellant also relied on the decision in the case of Vandana Properties [27 DTR (Mum) 282 (2009)], wherein it has been held by the Hon'ble Tribunal that the approval for separate buildings can be granted and that mil not affect the claim of the assesses u/s. 80-IB (10) of the Act. Moreover, the Hon'ble ITAT, Bangalore in the case of Brigade Enterprises (P) Ltd, (119 ITJ 269) has held that although separate approvals are obtained for different units, if particular unit satisfied the conditions of Section 80-IB(10) deduction is to be granted. Therefore, keeping in view all the facts of the case and the legal issue involved, it is held that the appellant fulfils all the conditions laid down u/s 80-IB(10) of the Act and that the A.O's averment that on the basis of multiple approvals 80-IB deduction can be disallowed - is held to be incorrect. Accordingly, the claim of deduction made by the appellant u/s. 80-IB is ITA No. 151/Rjt/2015 ACIT vs. Shree Jivraj Township AY : 2010-2011 -6- allowed and the addition made of Rs.1,45,67,940/- is hereby ordered to be deleted. However, the A.O. is directed to see if the construction of any unit is completed after 31/03/2008 during the year the eligible profit on the sale should be excluded from the 80-IB(10) deduction. Similarly for the assessment year subsequent to the A. Y. 2008-09 also he should keep in mind that whatever units -which are sold after A.Y. 2008-09 and where date of completion is after 31/03/2008 no deduction u/s. 80-IB(10) should be allowed out of eligible profit. Accordingly, this ground of appeal is partly allowed.' The Tribunal confirmed the aforesaid findings and has dismissed the appeal preferred by the revenue.
6. Considering the provisions of Section 80-IB(10) of the Act when the 'housing project' named 'Maninagar' at Rajkot was approved prior to 01/04/2004 and different units were constructed before 31/03/2008, it cannot be said that ITAT has committed any error granting deduction under Section 80-IB(10) of the Act with respect to only those units of 'housing project' named 'Maninagar' approved prior to 01/04/2004 and of which constructions have been completed prior to 31/03/2008. It cannot be disputed that the 'housing project' named 'Maninagar' was already approved prior to 01/04/2004 with respect to different units. The 'housing project' was approved prior to 01/04/2004 and constructions that have been put up have been completed prior to 31/03/2008.'
9. Following the decision of the Hon'ble Jurisdictional High Court, the ld. CIT(A) directed the A.O. to allow the claim of deduction u/s 80IB(10) of the Act.
10. Aggrieved by this, the revenue is before us. At the very outset, the ld. counsel for the assessee stated that the issues are squarely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court (supra). The ld. D.R. fairly conceded to this.
11. We have given a thoughtful consideration to the underlying facts in the issues before us. We find force in the contentions of the ld. Counsel. The facts of the case in hand are similar to the facts considered by the Hon'ble Jurisdictional High Court (supra). As no distinguishing facts have been brought on record by the ld. D.R. nor any distinguishing decision has been cited by the Id. D.R, we have already extracted the relevant part of the Hon'ble High Court's decision which has been followed by the First Appellate Authority. Therefore, we do not find any error or infirmity in the findings of the ld. CIT(A), we decline to interfere."
ITA No. 151/Rjt/2015ACIT vs. Shree Jivraj Township AY : 2010-2011 -7-
9. We further observe that ld. Departmental Representative was unable to distinguish the facts for the year under appeal, i.e., AY 2010-11 with the facts dealt by the Co-ordinate Bench in AY 2011-12. Also, ld. Departmental Representative conceded to the fact that the Special Leave Petition filed before the Hon'ble Apex Court in the case of B.M. and Brothers (supra) has still not reached finality and therefore, presently the judgment of Hon'ble jurisdictional High Court will prevail. We, therefore, respectfully following the decision of the Co-ordinate Bench (supra), wherein the Revenue's appeal is dismissed by following the judgment of Hon'ble jurisdictional High Court in the case of B.M. and Brothers (supra), find no reason to interfere with the order of the ld. CIT(A).
10. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the Court on 2nd May 2017 at Ahmedabad.
Sd/- Sd/-
(MAHAVIR PRASAD) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated, 02/ 05/2017
BT**
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं#धत आयकर आय%
ु त / Concerned CIT
4. आयकर आय%
ु त (अपील)/ The CIT(A)-
5. वभागीय त न#ध,आयकर अपील य अ#धकरण ,राजोकट/DR,ITAT, Rajkot,
6. गाड0 फाईल /Guard file.
आदे शानस
ु ार/ BY ORDER,
TRUE COPY
सहायक पंजीकार (Asstt.Registrar)
आयकर अपील य अ#धकरण
ITAT, Rajkot