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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI INTURI RAMA RAO & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER S.S. VISWANETHRA RAVI, JM :
These two appeals filed by the Revenue and assessee against the common order dated 12-05-2017 passed by the Commissioner of Income Tax (Appeals), Pune-5, Pune [„CIT(A)‟] for assessment year 2011-12.
Since, the issues raised in both the appeals are interlinked basing on the same identical facts. Upon hearing and with the consent of both the parties, we proceed to hear both the appeals together and to pass a consolidated order for the sake of convenience.
First, we shall take up appeal in A.Y. 2011-12 filed by the Revenue.
The only issue is to be decided is as to whether the CIT(A) is justified in holding that the assessee is eligible for claiming proportionate deduction u/s. 80IB(10) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) as a whole in the facts and circumstances of the case.
The brief facts of the case relating to the issue on hand are that the assessee is a company and engaged in the business of real estate development, mainly construction of residential and commercial units in and around Pune. The assessee filed return of income declaring a total income of Rs. Nil. Notice u/s. 142(1) of the Act was issued to the assessee. In response to the said notice, Authorized Representative on behalf of the assessee appeared and filed details as sought by the AO. According to the AO, the assessee shown sale of Rs.2,87,39,570/- from Emerald City (North Projects) and similarly, sale of Rs.34,40,21,811/- from Emerald City (South Projects). The profit declared thereon from Emerald City (North Projects) of Rs.1,48,07,416/- and Rs.14,02,86,489/- from Emerald City (South Projects). The AO appointed commission u/s. 131(d) of the Act, a Registered Valuer for verification of eligibility criteria for claiming deduction. The valuer has given report stating that 10 flats in Building „F‟ exceed the prescribed area of 1500 Sq. Ft. The AO sought explanation why claiming deduction u/s. 80IB(10) of the Act should not be disallowed. The assessee made submissions dated 28-03-2014. Having considering the same in terms of provisions u/s. 80IB(14)(a) of the Act the AO held that the assessee is not entitled to claim deduction u/s. 80IB(10) of the Act. The assessee made alternate claim seeking proportionate deduction u/s. 80IB(10) of the Act for flats which are compliance with the provisions of the Act. The AO denied the same. The CIT(A) observed that there were numerous decisions by the Tribunals and High Court and held the assessee is entitled to get the proportionate deduction on the profits of the eligible units which comply with the provisions of section 80IB(10) of the Act, accordingly, directed the AO to allow deduction u/s. 80IB(10) of the Act on eligible units vide para 6.15 of impugned order. Having considering the facts and circumstances of the case and decisions of this Tribunal in respect of allowing proportionate deduction u/s 80IB(10) of the Act which was not disputed by the ld. DR, in our opinion, the CIT(A) rightly allowed deduction for eligible units by placing reliance on the decisions of Hon‟ble High Court which were followed by the Tribunals. Thus, we find no infirmity in the order of CIT(A) in holding the assessee is entitled to have deduction u/s 80IB(10) of the Act on eligible units. Thus, grounds raised by the Revenue fails and are dismissed.
Now, we shall take up appeal in of assessee for A.Y. 2011-12.
Ground No.1 raised by the assessee challenging the action of CIT(A) in denying deduction u/s 80IB(10) of the Act in respect of 10 flats.
The ld. AR submits that the four sided covered box between the wall of the flat and the cavity wall were included in the built up area and the projected slab with the cavity wall should not be included in the built up area of the flats for the purpose of making out statutory extent of built up area as per clause (a) of section 80IB(14) of the Act. The report of Registered Valuer though it is acceptable but wrongly included window box projection for double wall and revised the built up area of flats. The elevation of the building constructed for beautification and aesthetic view could not be included in computation of built up area. In PMC approved plan calculation of built up area of each flat and consumption of FSI elevation area is not considered as part of built up area. The definition of built up area is at floor level and it should be usable area. The elevation area is neither at floor level of each unit nor usable and it cannot be part of built up area. The meaning of projections and balconies are the same and it is not only the word balcony which is more popularly used and the meaning of word balcony from the Development Control Rules for PMC. The ld. AR vehemently argued that all the 10 flats are in compliance with the provisions of section 80IB(10) of the Act and the assessee is entitled to claim deduction u/s. 80IB(10) of the Act.
The ld. DR submits that the built up area is defined in clause (a) of sub-section (14) of section 80IB and the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas. In the present case, the projection with cavity wall is a clear case of projection and has to be considered in the built up area. The contention of assessee is that the projections and balconies are one and the same is not acceptable. The legislature clearly intended the projections and balconies as separate while defining the built up area. The built up area is the carpet area increased by the thickness of the walls. There is no basis for the contention of the assessee that the projection is not usable and it cannot become part of built up area. The provision clearly defines the built up area irrespective of usable or not usable. He vehemently argued the projection inclusive of built up area and the Registered Valuer also submitted its report that the 10 flats in „F‟ Building are exceeding the prescribed area of 1500 Sq. Ft. and drew our attention to Para No. 6 of the assessment order. The CIT(A) while holding that the said 10 flats are exceeding the prescribed area of 1500 Sq. Ft. and holding the assessee is not entitled for claiming deduction u/s. 80IB(10) of the Act. He submits that the Hon‟ble Supreme Court in the case of Padmasundara Rao Vs. State of Tamilnadu reported in 255 ITR 147 clearly held that the Courts cannot read anything into a statutory provision which is plain and unambiguous. The language employed in a statute is the determinative factor of the legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself.
Heard both the parties and perused the material available on record. We find the contentions raised by the ld. AR were raised before both the authorities below. It was contended that the assessee erected an additional wall and a box like window instead of a regular window shed which was separated from the internal wall of the said residential unit with 6” cavity is not usable. In order to verify the same, the AO sought report from the DVO, who clearly stated the said 10 flats exceeding the prescribed built up area of 1500 sft. and particularly held that the said window is includable in the built up area. Therefore, it is clear the additional wall and box like window is to be included in the built up area which is above the prescribed built up area as required for claiming deduction u/s 80IB(10) of the Act. There is no dispute with regard to this position by the ld. AR. Therefore, we find no infirmity in the order of CIT(A) as it was thoroughly discussed from para No.6.10 to 6.12 of the impugned order. Thus, we hold that the assessee is not entitled to claim deduction u/s80I(10) of the Act and we completely agree with the reasons recorded by the CIT(A) and it is justified. Thus, ground No.1 raised by the assessee fails and is dismissed.
Ground No.2 raised by the assessee challenging the action of CIT(A) in confirming the disallowance made by the AO on account of warranty expenses.
We note that the said issue was adjudicated by the Tribunal in Gera Development Pvt. Ltd. for A.Y. 2007-08 which is sister concern of assessee herein. The order of Tribunal is placed at pages 72 to 80 of paper book. The Tribunal discussed the relevant issue from para No.9 to 16. On perusal of the same, we note that the Tribunal modified the order of CIT u/s 263 of the Act and upheld to the extent only on the issue of applicability of section 94(7) of the Act. We note that the CIT(A) in the impugned order at para 7.3 clearly held that the assessee has not elaborated as to how the facts and issues are identical with the case of its sister concern i.e. Gera Developments Pvt. Ltd. and by following the ratio of Hon‟ble Supreme Court in the case of Rotork Controls India Pvt. Ltd. held that the assessee is not entitled to claim warranty expenses allowable u/s 37 of the Act. We find no submissions made before us substantiating the claim of the assessee in terms of the order in the case of Gera Developments Pvt. Ltd. as relied on by the ld. AR. Therefore, in view of the same, we find no infirmity in the order of CIT(A) and it is justified. Thus, ground No.2 raised by the assessee is dismissed.
Ground No.3 raised by the assessee challenging the action of CIT(A) in confirming the disallowance made by the AO on account of hawala bills.
We note that admittedly no details were submitted before the lower authorities below as it is evidenced from the impugned order at para 8.3 at page No.42. Now, before us, the ld. AR drew our attention to the pages 43 to 71 of paper book and submits that the assessee is ready to produce all the details concerning the relevant issue. There is no dispute the said bills from page No.43 to 71 were available before the AO and CIT(A). The ld. DR did not report objection in remanding the matter to the file of AO. Therefore, considering the facts and circumstances of the case and in the interest of justice, we deem it proper to remand the matter to the file of AO for fresh consideration in terms of the material evidences as filed before us at pages 43 to 71. The assessee further is at liberty to file evidences, if any, in support of its claim. Thus, ground No.3 raised by the assessee is allowed for statistical purposes.
In the result, appeal of the Revenue is dismissed and appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 19th May, 2022.