Sri v. Chandrasekhar And M. Lava Advs

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE O8 DAY OF FEBRUARY 2071.PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’‘’BLE MR. JUSTICE NATARAJ RANGASW A BETWEEN: ILT.A. NO.198 OF 2014 1.|THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE C.R. BUILDING QUEENS ROAD BANGALORE. 2.|THE DEPUTY COMMISSIONER OF INCOME-TAX. CENTRAL CIRCLE -1 (1). C.R BUILDING QUEENS ROAD BANGALORE. (BY SRI.K.V. ARAVIND ADV.,). .., APPELLANTS~ AND* M/S VARUN DEVELOPERS # 41, VITTAL MALLYA ROADBANGALORE. .., RESPONDENT (BY SRI. A SHANKAR SENIOR FOR, SRI. V. CHANDRASEKHAR AND M. LAVA ADVS.,) THIS I.T.A. IS FILED UNDER SEC. J6O0-A OF INCOME TAXACT 1961, ARISING OUT OF ORDER DATED 05.12.2013 PASSED TN|ITANO.263/BANG/2013 FORTHE|ASSESSMENT2006-2007, PRAYING TO: YEAR (1) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW,STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE,INCOME TAX APPELLATE TRIBUNAL DATED: 05.12.2013 BEARING.IN ITA NO.263/BANG/2013 FOR THE ASSESMENT YEAR 2006-2007CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER.AND|CONFIRMTHE|ORDER|PASSEDBYTHE.DEPUTY.COMMISSIONER|OFINCOME|TAX,CENTRALCIRCLE-1(1),_BANGALORE.THIS I.T.A. COMING ON FOR’ HEARING, THIS’ DAY, |ALOK ARADHE J.,DELIVERED THE FOLLOWING: |JUDGMENT THIS I.T.A. COMING ON FOR’ HEARING, THIS’ DAY, | This appeal under Section 260A of the Income TaxAct, 1961 (hereinafter referred to as the Act for short)nas been preferred by the revenue. The subject matterof the appeal pertains to the Assessment year 2006-07.The appeal was admitted by a bench of this Court videorder dated 20.07.2015 on the following substantial|questions of law:| l.Whether on the facts and In the.circumstances of the case, the Tribunal was|correct in holding that the assessee is entitled to deduction under section 80IB(10) of the. Act on proportionate basis in respect of the.flats measuring less than 1500 square feet,|without taking into consideration that the.benefit under section 80IB(10) Is in respect ofthe entire “housing project’ and not in respect|of the flats/units specific independently?| ?.Without prejudice to first questionof law, Whether on the facts and in the|circumstances, the Tribunal was correct in|holding that the assessee would be entitled todeduction under section 80IB(10) of the Act.in respect of 12th and 13th floor flats, when)the flats were combined and were measuring|more than 1500 square feet? 3.Whether on the facts and jin the.circumstances of the case the Tribunal was|right in holding that the assessee was entitled to deduction of the flats at the 17th and 13th)floor when the assessee has not claimed|benefit in the return of income filed, without|revising the original return of income?| 4Whether on the facts and in the.circumstances of the case, the Tribunal was| right in holding that the income of theassessee from project “Mantri Sarovar” has to.be computed for the Assessment year 2006-|O7 on the basis of “Project computation|method” without appreciating that as per ASandAS9Y,theadSSCSSCEhas.to.followpercentagecompletion|methodaS|theassessee is a builder and developer? — 2.|When the matter was taken up today, learnedsenior counsel for the assessee submitted that first|substantial question of law has already been answeredin favour of the assessee by judgment of this court in|(1)|CIT VS. BRIGADE ENTERPRISES LTD’, (2020) 120.TAXMANN.COM 346 (KAR.), (11) CIT VS. SJRBUILDERS IT APPEAL NO.32 OF 2012 DATED|19.03.2012 (KAR.), and (11) CIT VS. S.N.BUILDERS|& DEVELOPERSIN ITA NO.393 OF 2014 DATED|07.01.2021 (KAR. )whereas, it is also submitted thatsecond substantial question of law has been answered in.favour of the assessee In!(1) UCO BANK VS. CIT 237ITR 889 (SC) (11) STATE OF KERALA AND OTHERS 2.|When the matter was taken up today, learnedsenior counsel for the assessee submitted that first|substantial question of law has already been answeredin favour of the assessee by judgment of this court in|(1)|CIT VS. BRIGADE ENTERPRISES LTD’, (2020) 120.TAXMANN.COM 346 (KAR.), (11) CIT VS. SJRBUILDERS IT APPEAL NO.32 OF 2012 DATED|19.03.2012 (KAR.), and (11) CIT VS. S.N.BUILDERS|& DEVELOPERSIN ITA NO.393 OF 2014 DATED|07.01.2021 (KAR. )whereas, it is also submitted thatsecond substantial question of law has been answered in.favour of the assessee In!(1) UCO BANK VS. CIT 237ITR 889 (SC) (11) STATE OF KERALA AND OTHERS VS. KURIAN ABRAHAM PRIVATE LIMITED AND|ANOTHER, 303 ITR 284 (SC), (iii) NAVNITLALZAVERI VS. K.K.SEN (1965) 56 ITR 198 (SC) and(iv) AZADI BACHAO ANDOLAN, 263 ITR 706 (SC). Similarly, it is pointed out that third substantial questionof law is covered byNATIONAL THERMAL POWER|CoO. LTD. VS. COMMISSIONER OF INCOME TAX, 229ITR 383 (SC).It is also urged that the fourthsubstantial.questionOf lawdoes.notarise for.consideration in the facts of the case. a |Learned counsel for the revenue was unableto dispute the aforesaid legal proposition that threesubstantial questions of law have been answered in.favour of the assessee. However, with regard to fourth.substantial question of law, it is submitted that finding|recorded by the tribunal on the issue covered by.substantial question of law is contrary to law laid down.by this court in|CIT VS. M/S PRESTIGE ESTATE|PROJECTS PVT. LTD. tn ITA No.84/2010 (KAR) dated 05.05.2020. 5.|On the other hand, learned Senior counsel forthe assessee submitted that the aforesaid issue does notarise for consideration in this appeal and arises only in.connected matter that is I.T.A.No.20/7/2014. 6.|We have considered the submissions made.by learned counsel for the parties and have perused therecord. The first three substantial questions of law are.answered in favour of the assessee for the reasons|assigned by learned Senior counsel for the assessee in|the judgments referred to supra. So far as fourth.substantial question of law is concerned, it is pertinent:to note that under Section 145(1) of the Act, the incomechargeable under the head Profits and Gains ofBusiness shall be computed in accordance with eithercash or mercantile system of accounting regularly|employed by the assessee. The general provision issubject to accounting standards tnat the Central Government may notify. The assessee is a builder and.developer and not a construction contractor simplicitor.Accounting Standard- 7, titled construction contracts is applicable only in case of contractors and does not applyto the case of developers and builders which is evidentfrom opinion rendered by expert advisory committee of.ICAI. It is pertinent to note that the assessee hadoffered the income for Assessment Year 2007-08 and no!income from the project was offered for the AssessmentYear 2007-08 on the basis of project completion methodand that either method of accounting finally lead to the|same results in terms of profits and therefore, revenue.neutral. In|VIEWofpreceding.analysis,thefourtn|substantial question of law is also answered against the|revenue and in favour of the assessee. | ��������������������������������������������������������� �������������������������