Ferrous Infrastructure Pvt. Ltd., New ... vs Department Of Income Tax

1 ITA 4535/Del/2013 DCIT Vs. Ferrous Infrastructure P Ltd.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH "B" NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG: JUDICIAL MEMBER

ITA no. 4535/Del/2013 A.Y. 2009-10 DCIT, Circle 11(1), Vs. Ferrous Infrastructure Pvt. Ltd., New Delhi. Vatika Towers, Ist Floor, Block-B, Golf Course Road, Sector-54, Gurgaon. PAN: AAACF 9776 H

( Appellant ) ( Respondent )

Appellant by : Smt. Parvinder Kaur Sr. DR Respondent by : Shri S.K. Gupta CA

Date of hearing : 25/03-2015 Date of order : 24-04-2015.

ORDER

PER S.V. MEHROTRA, A.M:-

This appeal, preferred by the revenue, is directed against CIT(A)'s order dated 28-5-2013 relating to AY 2009-10.

2. Brief facts of the case are that the assessee, in the relevant year was engaged in real estate development. It filed its return of income showing total income at Rs. 98,35,997/- and book profit u/s 115JB declared at Rs. 2,14,59,962/-. The AO noticed that assessee had claimed deduction u/s 80IB for the project at Sector 89, Faridabad in the income-tax return. In the assessment order he has observed that as per section 80IB(14)(a), "built up 2 ITA 4535/Del/2013 DCIT Vs. Ferrous Infrastructure P Ltd.

area" means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness walls but does not include the common areas shared with other residential units. He, accordingly, recalculated the built up area and concluded that assessee had wrongly claimed deduction u/s 80IB(10). The assessee surrendered the claim made u/s 80IB(10) vide its submissions dated 5-12-2011 which are reproduced hereunder:

"The assessee has claimed a deduction u/s 8018(10) on project at Sector 89 Faridabad amounting to Rs. 73,48,416/- which comprises of the following:

(a) On flats with a covered area of

994..75 sq. ft. in terms of provision of section 80IB(10) Rs. 2682314/-

(b) On flats with a covered area of 1126.45 sq. ft. in terms of provisoin of section 80IB(10) Rs. 4666102/-

Total: Rs. 73,48,416/-.

The deduction on flats of 1126.45 sq. ft. has been claimed based on the opinion that the area of balconies in a flat which is not counted towards covered area in terms of the local building bye laws should not be taken into the account while determining the covered area of the flat under any other law. The issue is debatable and therefore in order of avoid any confusion the assessee is surrendering the deduction claimed under 8018(10) amounting to Rs. 46,66,102/- claimed on flats of covered area of 1126.45 sq. ft. when counted including the area of the balconies. Secondly the assessee is also surrendering the deduction claimed as in the opinion of the assesee it will not be possible for it to get the completion certificate for this part of the project before 31st March 2012."

3 ITA 4535/Del/2013 DCIT Vs. Ferrous Infrastructure P Ltd.

2.1. Accordingly, the AO had made addition of Rs. 46,66,102/- and also initiated penalty proceedings u/s 271(1)(c).

2.2. In penalty order the AO has observed that during the course of penalty proceedings the assessee could not produce any cogent reply or the evidence to justify non-imposition of penalty. He referred to various case laws and concluded that the assessee company had furnished inaccurate particulars of income and accordingly assessee's case was covered by the Explanation 1 to Section 271(1)(c).He imposed a penalty of Rs. 15,86,008/-. 2.3. Ld. CIT(A) taking into consideration that assessee's claim was bona fide and was based on opinion and interpretation of the law and also squarely covered by the decision of Hon'ble Delhi High Court in the case of CIT Vs. Jakson Ltd. 214 Taxman 94 (Del.) as also other decisions, as mentioned in his order, allowed the assessee's appeal. 2.4. Being aggrieved the revenue is in appeal before us.

3. Having heard both the parties we find that in regard to project at Sector 89, Faridabad the assessee had claimed deduction u/s 80IB(10) on the ground that built up area of the residential unit was 971.97 sq. ft. without balcony, the super area of flat being 1412 sq. ft. The area of balcony was 154.48 sq. ft and, therefore, if the area of balcony was to be included in the built up area, then the same exceeded 1000 sq. ft., disentitling the assessee to deduction u/s 80IB(10). The built up area has been defined u/s 80IB(14)(a) to mean the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness walls but does not include the common areas shared with other residential units. The assessee had advanced its claim on the basis of opinion obtained as per 4 ITA 4535/Del/2013 DCIT Vs. Ferrous Infrastructure P Ltd.

local building bye laws as per which balcony was to be excluded while calculating the built up area. Thus, ii was a case of the claim being advanced under a bona fide belief that the covered area as defined in the local building bye laws should be substituted for any other definition under any other law. After considering the specific definition under the Income-tax Act, the assessee surrendered its claim.

3.1. Ld. CIT(A) has, inter alia, relied on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Jakson Ltd. (supra). In this case penalty was imposed because of the reason that deduction claimed u/s 80IB by the assessee was ultimately allowed at a lower level. The enhanced claim for deduction u/s 80IB made in the revised return was not accepted and only the original amounts, claimed by the assessee at the time of filing of original return, was allowed. Under these circumstances, Hon'ble Delhi High Court observed as under:

5. It is apparent from the above extract, that the mere making of a claim which is ultimately held not to be sustainable in law, would not amount to furnishing inaccurate particulars regarding the income of an assessee. In the present appeals it is only that the claims of deduction under Section 80IB have been downscaled. This, by itself, would not mean that it is a case of furnishing inaccurate particulars of income. Furthermore, there is no finding in the penalty order as to which part of the income the assessee had concealed and with regard to which particular facet of his income had the assessee provided inaccurate particulars thereof. In these circumstances, we feel that the Tribunal has correctly applied the decision of the Supreme Court in the case of Reliance Petroproducts (P) Ltd.

(supra). No substantial question of law arises for our consideration in these appeals. The appeals are dismissed.

5 ITA 4535/Del/2013 DCIT Vs. Ferrous Infrastructure P Ltd.

3.2. In the present case, there is no dispute as regards the particulars furnished by assessee and the only dispute was with regard to inclusion of balcony in the built up area as per the definition u/s 80IB(14)(a). It appears that when confronted with specific provision of law, the assessee surrendered its claim, which initially appears to have been made on the basis of local bye laws. Thus, claim advanced by assessee was not sustainable in law and, therefore, he had surrendered the claim. We find that Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts (P) Ltd. 322 ITR 158 has, inter alia, held as under:

"9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as: "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript."

We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars." (emphasis supplied by us) 6 ITA 4535/Del/2013 DCIT Vs. Ferrous Infrastructure P Ltd.

3.3. Respectfully following the decision of Hon'ble Supreme Court in the case of Reliance Petroproducts (P) Ltd. (supra), we do not find any reason to interfere with the order of ld. CIT(A) in deleting the penalty in question.

4. In the result, revenue's appeal is dismissed.

Order pronounced in open court on 24-04-2015.

Sd/- Sd/- (C.M. GARG ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 24-04-2015. MP: Copy to : 1. Assessee 2. AO 3. CIT 4. CIT(A) 5. DR