The Commissioner Of Income Tax (Central v. Ashray Premises Pvt. Ltd

ASN IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.1442 OF 2012 WITHINCOME TAX APPEAL (L) NO.1443 OF 2012WITH INCOME TAX APPEAL (L) NO.1444 OF 2012 The Commissioner of Income Tax (Central)...Appellant.v. Ashray Premises Pvt. Ltd...Respondent. Mr. Vimal Gupta, Sr. Advocate i/by Padma Divakar for the Appellant.Mr. Mihir Naniwadekar for the Respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATE : 23ND JANUARY, 2013 PC: In these appeals by the revenue for assessment years 2004-05, 2005-06 and 2006-07, following common questions of law have been formulated for our consideration. i)Whether on the facts and in the circumstances of the case and in law the Tribunal is justified in allowing the claim of deduction u/s. 80IB(10) of the Income Tax Act, 1961 for a project approved prior to 1/10/1998, ignoring explanation (i) to Section 80IB of the Income Tax Act, 1961? ii)Whether on the facts and in the circumstances of the case and in law the Tribunal is justified in allowing the claim of deduction u/s.80IB (10) of the Income Tax Act for a project approved on 28/8/1997 when provisions of Section 80IB(10) were not existing in the statute? 2)The respondent-assessee initiated a project for construction of residential premises called “Gold Coast” in the year 1995-96 by purchase of land. The construction project was first approved on 20/8/1997. Subsequently, the plans for the project were revised and approval for the same was obtained on 30/5/2000 and 22/1/2002. On 5/4/2002, the respondent received permission for non agriculture use of the land. Finally the project was approved on 22/1/2002 and commencement certificate was also issued. The Bhoomi Poojan of the project was done on 26/1/2002. On 5/4/2002, the respondent received permission for ASN non agricultural use of the land. 3)There was a survey done by revenue some time in 2006 and during the course of survey it appeared from the statement of one of the Director of the respondent-assessee that the built up area of the flats was more than 1500 sq. ft. However, the Assessing Officer referred the matter to DVO who certified that the area of the flats was less than 1500 sq. ft. 4) On the aforesaid facts, the Assessing officer by assessment order for all the three years by three separate orders held that the respondent-assessee was not entitled to benefit of Section 80IB of the Income Tax Act, 1961 (“the Act”) in view of sub section 10 thereof. The Assessing Officer observed that the plan was first approved in August 1997 and subsequently revised twice. However, the first approval of the project in August, 1997 is to be taken for consideration for interpreting Section 80IB (10) of the Act. Further the Assessing officer also rejected the DVO's finding and denied the deduction under section 80IB (10) of the ASN Act on the ground that area of the flats was more than 1500 sq. ft. as found during the survey. Consequently, for all the three assessment years benefit of Section 80IB(10) of the said Act was denied. 5) On first appeal, the CIT(A) by two separate orders one for assessment year 2004-05 and 2005-06 dated 26/2/2008 and the other for assessment year 2006-07 dated 30/5/2008 allowed the respondent assessee's three appeals. The CIT (A) held that though the plan was originally approved in 1997.The revised plan was approved only in 2002 and confirmation regarding non agriculture use of land was also received in 2002. In such circumstances, it must be concluded that the housing project was commenced only from the financial year 2002-03 on commencement certificate being issued and not before 1/10/1998. Similarly, the CIT(A) held that as the examination by DVO, revealed that the size of the flats was less than 1500 sq. ft. ASN the respondent's project was not hit by sub section 80IB (10) of the Act. 6) Being aggrieved, the revenue carried the matter in and the other for assessment year 2006-07 dated 30/5/2008 allowed the respondent assessee's three appeals. The CIT (A) held that though the plan was originally approved in 1997.The revised plan was approved only in 2002 and confirmation regarding non agriculture use of land was also received in 2002. In such circumstances, it must be concluded that the housing project was commenced only from the financial year 2002-03 on commencement certificate being issued and not before 1/10/1998. Similarly, the CIT(A) held that as the examination by DVO, revealed that the size of the flats was less than 1500 sq. ft. ASN the respondent's project was not hit by sub section 80IB (10) of the Act. 6) Being aggrieved, the revenue carried the matter in appeal to the Tribunal for all the three assessment years. The Tribunal by its order dated 30/4/2012 for assessment years 2004-05, 2005-06 and 2006-07 dismissed the revenue's appeal. The Tribunal held that the amendment to Section 80IB of the Act by which an explanation was brought into Section 80IB (10) of the Act was effective only from 1/4/2005. Consequently, so far as assessment year 2004-05 is concerned the claim cannot be denied as the explanation to section 80IB (10) would come into force only from 1/4/205. Thus the claim for the benefit of Section 80IB (10) of the Act cannot be denied for assessment year 2004-05 as the Explanation to Section 80IB of the Act would come into force from assessment year 2004-05 onwards. Therefore, the requirement of area of the flats being less than 1500 sq.ft. or the ASN project approval and commencement of construction activity of having been commenced prior to 1/10/1998 cannot apply in respect of the assessment year 2004-05. 7) In any event, the Tribunal held that in the facts of this particular case the respondent-assessee would be entitled to the benefit of Section 80IB of the Act for all the three assessment years i.e. 2004-05, 2005-06 and 2006-07. The Tribunal held that the buildings were constructed on the basis of plan approved only in 2002. Further the activity of construction commenced only on 22/1/2002 when the commencement certificate was issued. Therefore, the Tribunal while upholding the order of the CIT (A) held that for all the three assessment years the approval of the authorities and commencement certificate are post 1/10/1998. Similarly, the Tribunal upheld the finding of the CIT(A) in holding that DVO has certified that combined area of the flats was less than 1500 sq. ft. Consequently, the Tribunal while upholding the ASN order of the CIT(A) held that Section 80 IB(10) of the Act are complied with and the respondent-assessee is entitled to the benefit of Section 80IB of the Act for assessment years 2004-05, 2005-06 and 2006-07. 8) We note that CIT(A) as well as the Tribunal have based their decisions on a concurrent finding of fact that the project approval and also commencement certificate was received in 2002. Further, both the authorities i.e. CIT(A) and the Tribunal have rendered a finding of fact that the area of the flat was less than 1500 sq.ft. on examination by the DVO. Consequently, the Tribunal concluded that the project was approved post October, 1998 and the area of the flat as constructed in the building was less than 1500 sq. ft. One more fact which would be have to be borne in mind is that the user of the land from agriculture to non agriculture use was received by the respondent assessee only on 8/4/2002. ASN 8/8ITXAL1442 to 1444.sxw 9) The conclusion reached by the Tribunal based on findings of fact cannot be found fault with as the revenue has not been able to show that the impugned order is perverse warranting an interference by this Court. In view of the above, the questions of law as proposed by the appellant are not being entertained. ASN 8/8ITXAL1442 to 1444.sxw 9) The conclusion reached by the Tribunal based on findings of fact cannot be found fault with as the revenue has not been able to show that the impugned order is perverse warranting an interference by this Court. In view of the above, the questions of law as proposed by the appellant are not being entertained. 10) Accordingly, all the three appeals for assessment years 2004-05, 2005-06 and 2006-07 are dismissed with no order as to costs. (M.S.SANKLECHA, J.) (J.P. DEVADHAR, J.)