Itxa/1038/2016 Of The Pr. Commissioner Of Income Tax-Iii, Thane v. Mukesh Kimtani

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1038 OF 2016 The Pr. Commissioner of Income Tax-III, Thane. … Appellant V/s. Shri Mukesh Kimtani … Respondent --- Mr.Tejveer Singh for the Appellant.Mr.Mihir Naniwadekar with Mr.Ruturaj Gurjar for the Respondent.--- CORAM : AKIL KURESHI AND B.P.COLABAWALLA, JJ. DATE : JANUARY 08, 2019. P.C.:- 1.Revenue has filed this appeal against the judgment ofIncome Tax Appellate Tribunal (“Tribunal” for short) dated 18[th]March, 2015, raising following questions for our consideration: “i)Whether on the facts and circumstances ofthe case and in law, the ITAT has erred inquashing the order u/s 263 of the Income TaxAct, 1961 when clear facts were brought onrecord and the same could not rebutted by theassessee at any state of the proceedings?ii)Whether on the facts and circumstances ofthe case and in law, the ITAT has erred inoverlooking a crucial fact that the area of plot sanctioned for the project was less than one (1)Acre i.e. 4048 sq.meter, which is a strictrequirement of Section 80IB (10(b))?” 2.Brief facts are as under:- Respondent-assessee is an individual and was engaged inhousing development project. For the assessment year 2005-06,the assessee had claimed deduction under Section 80IB(10) ofthe Income Tax Act, 1961 in relation to income arising out ofsuch housing project. During the course of assessment one of theissues examined by the Assessing Officer was whether theassessee fulfilled all necessary conditions for claiming suchdeduction, in particular whether the plot of land on which thehousing project was being developed had minimum area of 1acre. The Assessing Officer issued a show cause notice to theassessee and asked for an explanation why the claim should notbe rejected since the land revenue records suggested that thearea of a land was less than 4050 sq. meters (i.e. approximately1 acre). The assessee pointed out that there were errors in therevenue records which were later on rectified by virtue ofwhich the land area was shown to be 4050 sq. meters. The 353 itxa 1038-16-o Assessing Officer however noticed that though the area of landwas stated to be 4050 sq. meters, part of it would be occupiedfor road widening and similar such other purposes leavingonly a net of 3192 sq. meters of land available for development.The assessee in this context had argued that even after theshrinkage in the plot size, the Floor Space Index (“FSI” forshort) available for development remained the same. In otherwords, the total construction that the assessee could put up onthe land in question, did not get reduced. The assessee therefore,argued that not the actual area of the land in question, but thearea on the basis of which permission for construction anddevelopment permission could be applied and granted shouldbe considered for the purpose of ascertaining whether therelevant condition of minimum plot area is satisfied or not. 3.The Assessing Officer framed assessment under Section143(3) of the Act and granted the deduction under Section80IB(10) of the Act as claimed by the assessee on the groundthat the order of the assessment was erroneous and prejudicialto the interest of the revenue, the Commissioner took the order 453 itxa 1038-16-o 3.The Assessing Officer framed assessment under Section143(3) of the Act and granted the deduction under Section80IB(10) of the Act as claimed by the assessee on the groundthat the order of the assessment was erroneous and prejudicialto the interest of the revenue, the Commissioner took the order 453 itxa 1038-16-o in revision in exercise of powers under Section 263 of the Act. Hewas of the opinion that the Assessing Officer had not carried outproper inquiries and granted benefit of deduction withoutfulfillment of conditions. The assessee approached the Tribunal.Tribunal by the impugned judgment allowed the appeal and setaside the revisional order of the Commissioner. The Tribunalnoted that the Assessing Officer had carried out the detailedinquiries about the satisfaction of the relevant condition. Thiswas not a case where a claim was granted by the AssessingOfficer without inquiry. The Tribunal noted that the stand of theassessee in this regard was supported by the decisions of theTribunal on the same point. Inter alia on such grounds theappeal was allowed upon which the revenue has filed the presentappeal. 4.The materials on record would clearly suggest that theAssessing Officer was conscious of the requirement of the areaof the plot of land being not less than 1 acre. In this context, hehad issued show cause notice to the assessee and called for hisexplanation. As noted, the assessee's explanation was two-fold. 553 itxa 1038-16-o Firstly, there was errors in the land documents which wascorrected later on and second that the reduction in the area ofland for road widening and such other public purposes should beignored, in view of the fact that the assessee was allowed toutilize the full FSI. The assessing Officer accepted suchexplanations and granted the reduction. The view that theAssessing Officer adopted was at that time supported by thedecisions of the Tribunal. The Assessing Officer having taken aplausible view, as is well settled to series of judgments ofvarious High Courts and Supreme Court, the Commissioner couldnot have exercised Revisional power. While dismissing theappeal we however make it clear that we express no final opinionon the legal issue which the Commissioner desired to raise in thepresent case. Tax Appeal is dismissed accordingly. (B.P.COLABAWALLA,J.) (AKIL KURESHI,J.)….