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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
1 ITA No .321/ CTK/ 2017 Asse ssment Year : 20 04- 05
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No.321/CTK/2017 Assessment Year : 2004-05
Maruti Estates (India) Pvt Vs. ACIT, Circle -2(1), Ltd., Plot No.516/1755, 4th Bhubaneswar. floor, Maruti Corner, Patia Big Bazar, Patia, Bhubaneswar. PAN/GIR No.AACCM 1339 D (Appellant) .. ( Respondent)
Assessee by : Shri P.R.Mohanty, AR Revenue by : Shri A. Tigga, DR
Date of Hearing : 12/04/ 2018 Date of Pronouncement : 17 /04/ 2018
O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order of the
CIT(A)-1, Bhubaneswar dated 13.1.2017 for the assessment year 2004-
05.
This appeal is time barred by 108 days. The assessee has filed
condonation petition supported with an affidavit requesting to condone
the delay. We find that the assessee had reasonable cause for not filing
the appeal within the stipulated time. Ld D.R. did not have any objection
for condoning the delay. We, therefore, condone the delay of 108 days in
filing the appeal before the Tribunal and admit the appeal for hearing.
2 ITA No .321/ CTK/ 2017 Asse ssment Year : 20 04- 05
The sole issue involved in the grounds of appeal is that the CIT(A)
erred in confirming the levy of penalty of Rs.5,97,480/- u/s.271(1)(c) of
the I.T.Act, 1961.
The brief facts of the case are that the Assessing Officer disallowed
deduction of Rs.16,65,43/- claimed under section 80 IB of the Act for the
following reasons:
“The assessee had claimed deduction of Rs. 16,65,433/- u/s.80IB of the I.T.Act, 1961 in respect of its project at Patia, PO- Chandrasekharpur and at Ghatikia, PS-Khandagiri. The assessee did not submit the breakup of sales from each unit and profits derived from it. It also did not submit the documents in claim of 80IB deductions, list of project for which 80IB claimed and no. of flats along with area in each project. Being a time barring matter, the case was disposed off on the basis of inspector's report and assessee's own admission. There were 2 flats/units in which the total built up area has exceeded 1500 sqft as mandated by the Act.
For enabling the benefit of section 80-IB it is necessary that profit must be derived in the previous year from housing project. The eligibility conditions include, inter alia, that the built-up area should not exceed 1500 sqft, in the context of cities other than Delhi and Mumbai. This restriction is applicable to the entire project. If some of the residential units of the project comprise an area exceeding the prescribed limit, the benefit as per the language of the section cannot be extended to the project.
If the language of the statute is plain, the obvious meaning is to be applied i.e. literal interpretation Approval is accorded by BDA to the entire project. Blocks of residential units are parts of a project and not project by itself. As such, a block of residential unit cannot be constructed to be a separate project. It was, therefore, evident that the assessee did not comply with the conditions precedent for availing of the benefit of section 80IB. Hence the claim of Rs. 16,65,433/- was disallowed by the AO and added back to the total income."
3 ITA No .321/ CTK/ 2017 Asse ssment Year : 20 04- 05 5. Thereafter, the Assessing Officer levied penalty of Rs.5,97,480/- for
concealment of income u/s.271(1)(c) of the Act, which was confirmed in
appeal by the CIT(A).
Ld A.R. of the assessee argued before us that penalty cannot be
levied where deduction claimed in the return of income by the assessee is
disallowed by the Assessing Officer. He relied on the decision of Hon’ble
Supreme Court n the case of CIT vs. Reliance Petroproducts (P) Lt., 322
ITR 158 (SC), wherein, it was held that “merely because the assessee had
claimed the expenditure, which claim was not accepted or was not
acceptable to the revenue, that by itself would not attract the penalty
u/s.271(1)(c). if the contention of the revenue is accepted then in case of
every return where the claim made is not accepted then in case of every
return where the claim made is not accepted by the AO for any reason,
the assessee will invite penalty u/s.271(1)(c). That is clearly not the
intendment of the legislature. The Tribunal, as well as, the CIT(A) and
the High Court have correctly reached this conclusion”. Further, it was
argued that where the issue is debatable one, there cannot be levy of
penalty u/s.271(1)(c) of the Act on the assessee. For this, he relied on
the following decisions:
i) Hon’ble Delhi High Court in the case of CIT vs. Liquid Investment and Trading Co in ITA No.240/2009 order dated 5.10.2010. ii) Hon’ble Bombay High Court in CIT Vs. M/s. Nayan Builders and Developers, 368 ITR 722 (Bom) iii) Smt. Ramilaben Ratilal Shah vs ACIT, 60 TTJ 171 (Ahd)
4 ITA No .321/ CTK/ 2017 Asse ssment Year : 20 04- 05 iv) Rupam Mercantile Ltd vs DCIT, 91 ITD 237 (Third Member)(Ahd) 7. On the other hand, ld D.R. relied on the orders of lower authorities. 8. We have heard the rival submissions, perused the orders of lower
authorities and materials available on record. The undisputed facts of the
case are that the Assessing Officer found that the assessee has claimed
deduction u/s. 80IB of the Act for Rs.16,65,433/- in respect of its three
projects namely, at Patia, Chandrasekharpur and Ghatikhia,
Bhubaneswar. He found that out of 30 dwelling units, in case of 2
dwelling units, the area was 1689.7 sq.ft, which being more than 1500
sq.ft, is not allowable in view of the provisions of section 80IB(10)(c) of
the Act. Therefore, he disallowed the deduction for the entire project
claimed by the assessee. We find that Hon’ble Madras High Court in the
case of VISWAS PROMOTERS PRIVATE LIMITED vs. ASSISTANT
COMMISSIONER OF INCOME TAX, 255 CTR 149 (Mad) vide order
dated 2nd November, 2012 has observed as under:
“14. On the facts admitted by the Revenue, in the projects "Agrini" and "Vajra", there are number of flats which are below 1500 sq.ft., and the relevant built-up area requirement is specified under Section 80IB(10)(c) of the Income Tax Act. Thus, the built-up area in some of the flats in both these projects are in excess of 1500 sq.ft., i.e., 32 flats in Agrini and only one flat in Vajra and that the assessee had not claimed any deduction on this. We hold that the Tribunal is not correct in its view, that by reason of these Units being in excess of 1500 sq.ft., the entire claim of the assessee in respect of these two projects would stand rejected under Section 80IB(10) of the Income Tax Act. Thus, going by the definition of "housing project" under Explanation to Section 80HHBA of the Act as referred to above as the construction of "any building" and the wordings in Section 80IB(10) of the Act, the question of rejection in entirety of the project on account of any one of the blocks not complying with the conditions, does not arise. Even in the case of each one of the blocks, wherever there are flats which satisfied the conditions particularly of the nature stated under Section 80IB(10)(c) of the Act, we have already upheld the case of the
5 ITA No .321/ CTK/ 2017 Asse ssment Year : 20 04- 05 assessee in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012 for grant of relief under Section 80IB(10) of the Act on a proportionate basis, by following the decision of the Bombay High Court reported in (2011) 333 ITR289 (CIT Vs. Brahma Associates).Thus applying the decision of this Court in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012, we hold that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression "housing project" as referring to construction of any building and the wordings in Section 80IB(10) of the Act. In the circumstances, we hold that the mere fact that one of the blocks have units exceeding built-up area of 1500 sq.ft, per se, would not result in nullifying the claim of the assessee for the entire projects. Consequently, in respect of each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement under Section 80IB(10)(c) of the Act. In so holding, we also agree with the decision of the Bombay High Court reported in (2012) 206 TAXMAN 584 (CIT v. Vandana Properties), which was decided by the Bombay High Court on similar lines as in the assessee's case before us.
In the light of the above reasoning, we have no hesitation in allowing the cases cases filed by the assessee in respect of assessment years2004- 05, 2005-06, 2006-07, 2007-08 and 2008-09, thereby answering the substantial questions of law in favour of the assessee, that the assessee is entitled to the claim of deduction in respect of all the blocks forming part of the projects called Agrini and Vajra, but to the extent of each of the blocks satisfying the conditions under Section 80IB(10) of the Act, the assessee would be entitled to the relief on a proportionate basis.” 9. Thus, in view of above decision, the assessee was entitled to
proportionate deduction u/s.80IB(10) in respect of 28 units where the
construction area did not exceed 1500 sq.ft. Therefore, it is not a case
where the deduction u/s.80IB(10)(c) by the assessee was entirely not
allowable to the assessee. Only that part of the deduction pertaining to
units where the units area exceeded 1500 sq.ft claim for deduction u/s.
80IB (10) was not allowable to the assessee. Therefore, it cannot be said
that the claim for deduction u/s.80IB(10) of the Act made by the assessee
in its return of income was entirely wrong or false.
Further, we find that in the instant case, the penalty was levied by
the Assessing Officer on the ground that the assessee has concealed its
6 ITA No .321/ CTK/ 2017 Asse ssment Year : 20 04- 05 particulars of income in respect of income of Rs.16,65,433/-. However, it
is observed that no material has been brought on record to show that the
assessee has concealed its particular of income. Rather, in the instant
case, the assessee disclosed the entire income and simultaneously
claimed deduction of that income u/s.80IB(10) of the Act. It is not a
case of concealment of income.
Further, the Hon’ble Supreme Court in the case of CIT vs Reliance
Petroproducts (P) Ltd., 322 ITR 158(SC)has held that merely making of a
claim of deduction which is found to be not allowable does not invite
penalty u/s.271(1)(c) of the Act. In the instant case, in absence of
details of any income where particulars were found to be concealed by
the assessee, in our considered view, the penalty imposed by the
Assessing Officer and confirmed by the CIT(A) is untenable. We,
therefore, delete the penalty of Rs.5,97,480/- levied u/s.271(1)(c) of the
Act and allow the grounds of appeal of the assessee.
In the result, appeal of the assessee is allowed. Order pronounced on 17 /04/2018.
Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 17/04/2018 B.K.Parida, SPS
7 ITA No .321/ CTK/ 2017 Asse ssment Year : 20 04- 05 Copy of the Order forwarded to : 1. The Appellant : Maruti Estates (India) Pvt Ltd., Plot No.516/1755, 4th floor, Maruti Corner, Patia Big Bazar, Patia, Bhubaneswar. 2. ACIT, Circle -2(1), The Respondent. Bhubaneswar 3. The CIT(A)-1, Bhubaneswar BY ORDER, 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. SR.PRIVATE SECRETARY //True Copy// ITAT, Cuttack