Ita/281/2015 Of M/S. Mandavi Builders v. Dy. Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22 DAY OF SEPTEMBER 2020. PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.281/2015 BETWEEN: M/S. MANDAVI BUILDERSREPRESENTED BY ITSMANAGING PARTNER.JERRY VINCENT DIASMANDAVI PALACEEND POINT ROAD, MANIPAL|UDUPI-5 /6104. ... APPELLAN[ (BY SRI. A. SHANKAR, SR. COUNSEL A/WSRI. M. LAVA, ADV.,) | AND: DY, COMMISSIONER OF INCOME TAX.CENTRAL CIRCLE.C.R. BUILDING ANNEXE.ATTAVAR, MANGALORE-5/5001. .. RESPONDENT (BY SRI. K.V. ARAVIND, ADV.) THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,1961 ARISING OUT OF ORDER DATED 20.02.2015 PASSED IN [TA|NOs.1786 & 1/78/7/BANG/2013 FOR THE ASSESSMENT YEAR2010-11 & 2011-12, PRAYING THAT THIS HON’BLE COURT MAY BEPLEASED TO: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE AND ANSER THE SAME IN FAVOUR OF THE!APPELLANT. (1) ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO.THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY|THE|ITAT,BANGALORECc, |BENCHIN|ITANOs.1/786&|1787/BANG/2013 RELATING TO ASSESSMENT YEARS 2010-11|AND 2ZOLL-12 VIDE ITS ORDER DATED 20-O2-20L5. THIS ITA COMING ON FOR FURTHER HEARING, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax|Act, 1961 (hereinafter referred to as the Act for short)Nas been preferred by the assessee. Tne subject matterof the appeal pertains to the Assessment years 2010-11.& 2011-12. The appeal was admitted by a bench of thisCourt vide order dated 01.03.2017 on the following substantial question of law: (I)Whethertheappellate TribunalIS.justified in law in denying the deduction|under Section 80IB(10) of the Act in|respect of two flats of the housing|project by nolding that conditions laid|down in Section 80IB(10) have not beencomplied with in respect of these two|flats, contrary to evidence on record andjustified in law in denying the deduction|under Section 80IB(10) of the Act in|respect of two flats of the housing|project by nolding that conditions laid|down in Section 80IB(10) have not beencomplied with in respect of these two|flats, contrary to evidence on record and consequently passing a perverse order|on the facts and circumstances of the|Case?| 2 |Facts leading to filing of the appeal brieflystated are that the assessee, is a registered partnershipfirm is engaged in the business of constructing anddeveloping residential buildings. The assessee undertookthe construction of a housing project called MandaviPearl City in Manipal consisting of three blocks witn totalnumber of 195 flats. A search under Section 1327 of theAct was conducted in the premises of the assessee andits sister concern on 04.02.2011. Thereafter, a noticeunder Section 153(c) of the Act was issued on20.06.2011, by which the assessee was asked to filereturns of Income for Assessment Years 2010-11 ands2011-2012. The assessee filed the return in response tothe notice and decilared tne income as ‘NIL’ for pbotAssessment Years after claiming deduction underSectionS8OIB(10)oftheAct.tO|thecune|of Rs.12,26,80,417/- and Rs.6,49,29,278/- for AssessmentYears 2010-11 and 2011-12 respectively. The AssessingOfficer by an order dated 28.12.2012 determined the.total income of the assessee for the Assessment Years2010-11and2011-127at.Rs.12,68,83,697/-.and|Rs.6,49,29,278/-respectively.The.aSS@CSSCEfiledappeals before the Commissioner of Income _ Ta(Appeals). The Commissioner of Income Tax (Appeals)Dy a common order dated 20.09.2013 partly allowed theappeals.TheaSS@SSCECas|well.astherevenueapproached the Income Tax Appellate Tribunal by filingappeals. The Tribunal Dy a common order dated20.02.2015 partly allowed the appeal of the assesseeand dismissed the appeal preferred by the revenue. Inthe aforesaid factual background, this appeal has beenfiled by the assessee. Rs.12,26,80,417/- and Rs.6,49,29,278/- for AssessmentYears 2010-11 and 2011-12 respectively. The AssessingOfficer by an order dated 28.12.2012 determined the.total income of the assessee for the Assessment Years2010-11and2011-127at.Rs.12,68,83,697/-.and|Rs.6,49,29,278/-respectively.The.aSS@CSSCEfiledappeals before the Commissioner of Income _ Ta(Appeals). The Commissioner of Income Tax (Appeals)Dy a common order dated 20.09.2013 partly allowed theappeals.TheaSS@SSCECas|well.astherevenueapproached the Income Tax Appellate Tribunal by filingappeals. The Tribunal Dy a common order dated20.02.2015 partly allowed the appeal of the assesseeand dismissed the appeal preferred by the revenue. Inthe aforesaid factual background, this appeal has beenfiled by the assessee. 3.Learned Senior counsel for the assesseeSubmitted that the only issue involved in this appealpertains to denial of proportionate deduction under Section 80IB(10) of the Act in respect of two flats. It isfurther submitted that in respect of flats bearingNo.G201 and G208 situate in Block ‘B’ were allotted on25.05.7009|andtheSame|wereregisteredON|17.08.2010. It ts further submitted that aforesaid flatswere allotted to the partners of the assessee. It is alsosubmitted that clause (e) and (f) of Section 80IB(10) ofthe Act have a prospective effect and do not apply tothe fact situation of the case as the flats in questionwere allotted prior to 19.08.2009. It was furthersubmitted that the Tribunal grossly erred in holding thattwo flats were allotted after 19.08.2009, which iscontrary to the evidence on record. On the other hand,learned counsel for the revenue submitted that theorder passed by the Tribunal is just and proper,however, the issue whether the flats were allotted on25.05.7009|Orafter01.04.7010i.e.,|17.08.2010requires factual adjudication. 4We have considered the submissions madeby learned counsel for the parties and have perused therecord. The Central Board of Direct Taxes (CBDT) inCircular No.5/2010 dated 3.06.2010 has clarified thatclauses (e) and (f) Nave prospective operation. In case,the flats in question have been allotted prior to01.04.2010, the assessee will be entitled to the benefitof deduction under Section 80IB(10) of the Act inrespect of the flats in question, Dut if the flats have beenallotted subsequent to 01.04.2010, j.e., on 12.08.2010,the assessee shall not be entitled to the benefit ofdeduction under Section SOIB(10) of tne Act. Theaforesaid issue requires factual adjudication, which hasnot been specifically adjudicated by the authority.Tnerefore, in the fact situation of the case, the orderpassed by the Assessing Officer, Commissioner ofIncome Tax (Appeals) and tne order passed by theIncome Tax Appellate Tribunal in I.T.A.No.1786 &1787/BANG/2013 insofar as it pertains to aforesaid two flats in question are hereby quashed and the matter isremitted to the Assessing Officer to adjudicate the issuewhether or not the flats in question were allotted on25.05.2009 or after 01.04.2010 i.e., on 12.08.2010 andthereafter to decide the claim of the assessee fordeduction under Section 80IB(10) of the Act. In view of preceding analysis, it is not necessary to answer the substantial questions of law framed by thisCOUrT. In the result, the appeal is disposed of. SS| Sd/-JUDGE.Sd/-—JUDGE.