Income Tax Appellate Tribunal - Mumbai

Income Tax Appellate Tribunal - Mumbai

Vinamra Builders , Mumbai vs Department Of Income Tax on 20 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "F",MUMBAI
BEFORE SHRI D. MANMOHAN (VICE PRESIDENT) & SHRI T.R. SOOD (AM)
I.T.A. No.1907/Mum/2010
(A.Y. 2006-07)
Income-tax Officer-15(2)(2), M/s. Vinamra Builders, Matru Mandir, R.No.110, Gr. Floor, Shailesh Bldg. Out
House, Tardeo, Mumbai-400 008. Santacruz (W), Mumbai-400 054. Vs. PAN: AAAAV2211P
Appellant Respondent
Appellant by Shri Shantam Bose. Respondent by Shri Shashi Tulsiyan.
Date of hearing 12-01-2012
Date of pronouncement 20 -01-2012
O R D E R
PER T.R. SOOD, AM :
In this appeal, the Revenue has raised the following ground :
"On the facts and in the circumstances of the case and law, the learned CIT(A) has erred in holding that the
assessee is entitled to deduction u/s.80IB(10) of Rs.7,68,52,511/- ignoring the facts that the ITAT Special
Bench Pune (2009) 30 SOT 155 in the case of M/s. Brahma Associates has categorically held that the
provisions of clause (d) of Section 80IB(10), inserted by Finance Act 2004, w.e.f. 1.4.2005 has no
retrospective effect and applies only w.e.f. 1-4-2005 relevant to A.Y. 2005-06 and onwards which has binding
effect in this case."
2. After hearing both the parties, we find that the deduction u/s.80IB(10), which was
claimed by the assessee, was denied by the AO because the assessee had constructed more
commercial area than permitted under clause (d) of sec. 80IB(10). 2 ITA No.1907/M/2010 M/s.Vinamra
Builders
3. On appeal, the ld. CIT(A) allowed the deduction by following the order of his predecessor
in the case of M/s. PNK Corporation in Appeal No.CIT(A)-XV/IT-5/ACIT15(3)/2008-09 dated 25-
07-2008 as well as the decision of Special Bench of the Tribunal in the case of Brahma
Associates vs. JCIT (119 ITD 255).
Vinamra Builders , Mumbai vs Department Of Income Tax on 20 January, 2012
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4. Before us, the ld. D.R. relied on he ground of appeal and supported the order of AO.
5. On the other hand, the ld. counsel of the assessee submitted that the issue is covered by
the decision of Hon'ble Bombay High Court in the case of CIT vs. Brahma Associates (333 ITR
289) as well as the decisions of Tribunal in the cases of ITO vs. Poonam Construction & Poonam
Gruh Nirman (ITA Nos.2003 & 2052/Mum/2010 vide order dated 11-02-2011) and M/s. Harsh
Construction (ITA No.2216/Mum/2000 vide order dated 30-06-2011).
6. After considering the rival submissions, we find that the Hon'ble Bombay High Court in
the case of CIT vs. Brahma Associates (333 ITR 289), while reversing the decision of Special
Bench of the Tribunal, observed as under :
"Held that clause (d) inserted in section 80IB(10) with effect from April 1, 2005, is prospective and not
retrospective and hence could not be applied for the period prior to April 1, 2005. Since deduction under
section 80IB(10) were on the profits derived from the housing projects approved by the local authority as a
whole, the Tribunal was not justified in restricting the section 80IB(10) deduction only to a part of the project.
However, in the present case, since the assessee had accepted the decision of the Tribunal in allowing section
80IB(10) deduction to a part of the project, the findings of the Tribunal in that behalf could not be disturbed."
Further, we find that in the case of ITO vs. Poonam Constructions (supra) the Tribunal had, vide
para 7.2 (pages 7 to 10), observed as under :
"7.2 We find the Tribunal, in the abovementioned decision has followed the decision of the Tribunal in the
case of Saroj Sales Organisation (supra) and at paras 24 to 27 have held as under:
24. Now we will deal with main issue in this appeal, i.e., whether the law as it existed in the asst. yr. 2004-05
when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the
development was 3 ITA No.1907/M/2010
M/s.Vinamra Builders
accorded on 17th Nov., 2003 and when the assessee commenced development is to be applied or the law as
amended by the Finance Act, 2005 w.e.f. 1st April, 2005 whereby it was laid down that the built-up area of
the shops and commercial establishment included in the housing project should not be more than5 per cent of
the total built-up are of the project or 2,000 sq. ft. whichever is less is to be applied ? On the above issue, we
have already noticed that co- ordinate Benches of Tribunal have already expressed opinion. The decision in
the case of Saroj Sales Organisation (supra) is directly on the issue. Judicial discipline demands that we
should follow decision of a Co-ordinate Bench on identical facts.
25. The provisions of s. 80-IB(10) as it stood at different periods have already been given by us. An analysis
of the same shows the following conditions were required to be satisfied at various point of time :
Asst. yr. Conditions
2000-01 (a) Housing project to be approved by local authority (b) Project to commence on or after 1-10-1998
Vinamra Builders , Mumbai vs Department Of Income Tax on 20 January, 2012
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(c) Project was to be completed before 31-3-2001 (d) Size of the plot of land for the project should have a
minimum of 1 acre.
2001-02 (a) Housing project to be approved by local authority (b) Project to commence on or after 1-10-1998
(c) Project was to be completed before 31-3-2001 (d) Size of the plot of land for the project
should have a minimum of 1 acre.
(e) The residential unit has a maximum built-up area of one thousand square feet where such residential unit is
situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of
these cities and one thousand and five hundred square feet at any other place.
2002-03 (a) Housing project to be approved by local authority (b) Project to be approved by local authority
before 31-3-2001 (c) Project was to commence on or after 1-10-1998 (d) Size of the plot of land for the
project should have a minimum of 1 acre.
(e) The residential unit has a maximum built-up area of one thousand square feet where such residential unit is
situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of
these cities and one thousand and five hundred square feet at any other place.
2003-04
& 2004-05 (a) Housing project to be approved by local authority
(b) Project to be approved by local authority before 31-3- 2005
(c) Project was to commence on or after 1-10-1998
(d) Size of the plot of land for the project should have a minimum of 1 acre.
(e) The residential unit has a maximum built-up area of one thousand square feet where such residential unit is
situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of
these cities and one thousand and five hundred square feet at any other place.
4 ITA No.1907/M/2010
M/s.Vinamra Builders
2005-06 (a) Housing project to be approved by local authority
(b) Project to be approved before 31-3-2007
(c) Project was to commence on or after 1-10-1998
(d) The project was to be completed before 31-3-2008, if the approval was given by a local authority before
1-4-2004 and within 4 years from the end of the financial year in which the approval came where the approval
was given on or after 1-4-2004.
(e) Size of the plot of land for the project should have a minimum of 1 acre.
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(f) The residential unit has a maximum built-up area of one thousand square feet where such residential unit is
situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of
these cities and one thousand and five hundred square feet at any other place.
(g) the built-up area of the shops and commercial establishment included in the housing project should not be
more than 5% of the total built-up area of the project or 2,000 sq. ft. whichever is less.
It is noticed that the provisions as it stood at different point of time uniformly contemplates approval by local
authority. From asst. yr. 2002-03 time of approval by the local authority assumed importance.
Commencement of project is not of any importance because it dates back to 1st Oct., 1998 the starting point
when the incentive provision providing for deduction of profits from housing projects were introduced. Up to
asst. yr. 2004-05, the provision did not impose any period within which the project has to be completed,
except in asst. yrs. 2000-01 and 2001-02. In asst. yr. 2001-02, the condition was that the project should be
completed before 31st March, 2003. From asst. yr. 2005-06, the time within which the project has to be
completed has been given importance.
26. There is truth in the plea of hardship put forth on behalf of the assessee. Let us assume an assessee applies
and obtains approval of a local authority for building a housing project in the previous year relevant to asst.
yr. 2002-03. As per the law as it stood in the previous year relevant to asst. yr. 2002-03 up to 2004-05, there
was no time-limit within which the construction has to be completed or any restriction regarding commercial
area that can be built in a housing project. Let us assume that the assessee complies with all the conditions for
allowing relief under s. 80-IB(10), i.e., it is approved as a housing project by the local authority but the area of
commercial space as approved by the local authority is more than 2,000 sq. ft. The assessee commences the
project but is able to complete only in the previous year relevant to asst. yr. 2005-06. As per the change in law
from asst. yr. 2005-06 with regard to the area of commercial space in a housing project the assessee would
loose his eligibility to claim deduction. In such cases, there is definitely grave hardship to the assessee. The
interpretation sought to be canvassed by the learned Departmental Representative will also lead to absurd
situation. Let us assume an assessee obtains approval of a housing project prior to 1st April, 2005 say in
previous year relevant to asst. yr. 2002-03. He builds commercial space in excess of 2,000 sq. ft. in the
housing project. He follows percentage completion method of accounting and offers profits in asst. yrs.
2002-03 to 2004-05, claims exemption under s. 80-IB(10) and is allowed exemption. On the same project in
asst. yr. 2005-06, the assessee would not get the benefit of s. 80- IB(10). We, therefore, find no grounds to
take a view different from the one 5 ITA No.1907/M/2010
M/s.Vinamra Builders
taken by the Co-ordinate Bench of the Tribunal in the case of Saroj Sales Organisation (supra).
27. 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 asst. yr. 2004-05 when the assessee submitted its proposal for slum rehabilitation and the
permission for carrying out the development was accorded on 17th Nov., 2003 and when the assessee
commenced development is to be applied. Therefore, the submissions of the learned Departmental
Representative 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 s. 80-IB(10) as
amended by the Finance Act, 2005, w.e.f. 1st April, 2005. We, therefore, hold following the decision in the
case of Saroj Sales Organisation (supra) that the law as it existed in the asst. yr. 2004-05 when the assessee
submitted its proposal for slum rehabilitation and the permission for carrying out the development was
accorded on 17th Nov., 2003 and when the assessee commenced development is to be applied."
7 Respectfully following the decision of the coordinate Benches of the Tribunal in the case of Hiranandani
Akruti, JV (supra) and the decision in the case of Saroj Sales Organisation (supra) and in absence of any
contrary decision or distinguishable feature brought on record by the ld DR, we find no infirmity in the order
Vinamra Builders , Mumbai vs Department Of Income Tax on 20 January, 2012
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of the ld CIT(A) deleting the disallowance. The grounds raised by the revenue are accordingly dismissed."
Following the above orders, we decide the issue against the Revenue.
7. In the result, the Revenue's appeal is dismissed.
Order pronounced on the 20th day of January, 2012.
Sd/- Sd/- (D. MANMOHAN) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER
Mumbai: 20th January , 2012.
NG:
Copy to :
1. Department.
2.Assessee.
3 CIT(A)-26, Mumbai.
4 CIT,City-15, Mumbai.
5.DR,"e" Bench,Mumbai.
6.Master file.
(TRUE COPY)
6 ITA No.1907/M/2010
M/s.Vinamra Builders
BY ORDER,
Asst.Registrar, ITAT, Mumbai.
7 ITA No.1907/M/2010
M/s.Vinamra Builders
Details Date Initials Designati on
1. Draft dictated on 16-01-2012 Sr.PS/
2. Draft Placed before author 17-01-2012 Sr.PS/
3. Draft proposed & placed before the Second Member JM/AM
4. Draft discussed/approved by Second Member JM/AM
Vinamra Builders , Mumbai vs Department Of Income Tax on 20 January, 2012
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5. Approved Draft comes to the Sr.PS/PS Sr.PS/
6. Kept for pronouncement on Sr.PS/
7. File sent to the Bench Clerk Sr.PS/
8. Date on which the file goes to the Head clerk
9. Date on which file goes to the AR
10. Date of dispatch of order
Vinamra Builders , Mumbai vs Department Of Income Tax on 20 January, 2012
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