2016 (12) TMI 1669 - AT - Income Tax

Appeal Dismissed on Section 80IB(10) Amendment | Deduction Allowed for Assessee | Penalty Partially Restricted

The Revenue's appeal against the non-consideration of amended provisions of Section 80IB(10) was dismissed as the Tribunal held that the amendment did not ... Eligibility to deduction u/s 80IB(10) - approval to the project - date of getting the sanction - Held that:- Considering the factual matrix and since the project was sanctioned on 03/07/2003, prior to enactment/amendment, therefore, respectfully following the decision from Hon'ble Apex Court in Sarkar Builders [2015 (5) TMI 555 - SUPREME COURT] and Hon'ble jurisdictional High Court in Brahma Associates (2009 (4) TMI 215 - ITAT PUNE ), we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal) and more so the Department in the case of sister concern of the assessee i.e. Bhumiraj Homes Ltd. (2013 (7) TMI 649 - ITAT MUMBAI), the Department allowed the claim of the assessee. It is worth mentioning that the project was approved as a composite project (residential + commercial) page-5 of the paper book and completion certificate was also issued for a composite project, thus, we affirm the stand taken by the Ld. Commissioner of Income Tax (Appeal) with respect to allowability of claimed deduction for residential units of the project. Partial denial of claim of deduction u/s 80IB(10) being part of the profit derived from housing project has been challenged - Held that:- There is a confusion in the area as in the commencement certificate dated 03/07/2003 (page-7 of the paper book), the residential area mentioned is 10491.137 mts. and the commercial area is 459.911 mts., thus, the total area comes to 10951.048 mts. At the same time, in the occupancy certificate, the residential area mentioned is 10636.203 sq.mts. and the commercial area mentioned is 536.779 sq. mts. thus, the total area comes to 11172.982 sq. mts., thus, there is a confusion in the area. Considering the totality of facts, we direct the assessee to file the necessary details before the ld. Assessing Officer and clear the factual matrix. The ld. Assessing Officer is directed to examine the claim of the assessee in accordance with law, considering the decision from Hon'ble jurisdictional High Court in Brahma Associates (2011 (2) TMI 373 - BOMBAY HIGH COURT) Penalty levied u/s 221(1) for non-payment of self assessment tax - Held that:- Major dispute was on account of allowability of deduction u/s 80IB(10). As mentioned earlier, the Ld. Commissioner of Income Tax (Appeal) as well as this Tribunal (in preceding para of this order) has allowed the claimed deduction u/s 80IB(10) on residential unit and on commercial portion restored the issue to the file of the Assessing Officer, being confusion on the area mentioned differently in different documents, thus, in our view, at least, the assessee, so far as penalty is concerned, cannot be said to be assessee in default. Section 221(2) of the Act says “where as a result of any final order the amount of tax, with respect to default in the payment of which the penalty was levied, has been wholly reduced the penalty levied shall be canceled and the amount of penalty paid shall be refunded.” In the present appeal, the substantial portion of deduction u/s 80IB(10) has been decided in favour of the assessee and the commercial portion/shops, due to confusion of the area has been sent to the file of the ld. Assessing Officer, therefore, the basis on which penalty was imposed, no more remains in existence, therefore, we find merit in the contention of the assessee, consequently, the conclusion drawn in the impugned order is partially correct. Issues Involved:1. Non-consideration of amended provisions of Section 80IB(10) of the Income Tax Act, 1961.2. Partial denial of claim of deduction under Section 80IB(10) for the commercial portion of the housing project.3. Restriction of penalty imposed under Section 221(1) of the Act.4. Condonation of delay in filing the cross objection.Detailed Analysis:1. Non-consideration of Amended Provisions of Section 80IB(10):The Revenue appealed against the non-consideration of the amended provisions of Section 80IB(10) effective from 01/04/2005 on housing projects approved before 01/04/2004. The project in question was sanctioned in 2003 and completed in 2006. The Tribunal noted that the amendment made by the Finance Act does not apply to projects approved before 01/04/2004. The Tribunal referenced the Supreme Court decision in the case of Sarkar Builders, which established that the amendment has no retrospective effect. The Tribunal concluded that the law prevailing at the time of project approval (pre-01/04/2005) would apply, and thus, the Revenue cannot deny the benefit of Section 80IB(10) based on the amended provisions.2. Partial Denial of Claim of Deduction under Section 80IB(10):The assessee contested the partial denial of deduction amounting to Rs. 1,30,87,088/- for the commercial portion of the housing project. The Tribunal found that the project was approved as a composite project (residential and commercial) and that the First Appellate Authority's finding of separate sanction plans was factually incorrect. However, there was confusion regarding the area mentioned in different documents. The Tribunal directed the assessee to submit necessary details to the Assessing Officer and instructed the Officer to re-examine the claim in accordance with the law, considering relevant judicial precedents.3. Restriction of Penalty Imposed under Section 221(1):The Revenue challenged the restriction of penalty imposed under Section 221(1) from Rs. 43,25,013/- to Rs. 4,38,383/-. The Tribunal noted that the major dispute was regarding the allowability of deduction under Section 80IB(10), which had been decided in favor of the assessee for the residential portion. Given the confusion over the commercial area, the Tribunal found that the basis for the penalty no longer existed. The Tribunal cited Section 221(2) which states that if the tax demand is reduced as a result of a final order, the penalty should be canceled. Consequently, the Tribunal upheld the partial restriction of the penalty.4. Condonation of Delay in Filing the Cross Objection:The assessee filed a cross objection with a delay of 9 days, which the Revenue opposed. The Tribunal, referencing several Supreme Court decisions, adopted a liberal approach towards condonation of delay, emphasizing that substantial justice should prevail over technicalities. The Tribunal found the reasons for the delay bona fide and condoned the delay. On the merits, since the penalty basis no longer existed, the Tribunal directed the Assessing Officer to delete the full penalty imposed under Section 221(1).Final Orders:a. ITA No.8803/Mum/2011 (Revenue's appeal) is dismissed.b. ITA No.8750/Mum/2011 (Assessee's appeal) is allowed for statistical purposes.c. ITA No.1445/Mum/2012 (Revenue's appeal) is dismissed.d. C.O. No.60/Mum/2013 (Assessee's cross objection) is allowed.This order was pronounced in the open court on 19/12/2016.