DCIT, CIR-12(1), KOLKATA, Kolkata v. M/s Bengal Ambuja Housing Development Ltd., Kolkata

ITA 1298/KOL/2016 | 2012-2013
Pronouncement Date: 20-11-2019 | Result: Partly Allowed

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Appeal Details

RSA Number 129823514 RSA 2016
Assessee PAN AABCB0977F
Bench Kolkata
Appeal Number ITA 1298/KOL/2016
Duration Of Justice 3 year(s) 5 month(s) 10 day(s)
Appellant DCIT, CIR-12(1), KOLKATA, Kolkata
Respondent M/s Bengal Ambuja Housing Development Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 20-11-2019
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 20-11-2019
Date Of Final Hearing 04-11-2019
Next Hearing Date 04-11-2019
Last Hearing Date 04-11-2019
First Hearing Date 05-09-2019
Assessment Year 2012-2013
Appeal Filed On 09-06-2016
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA JUDICIAL MEMBER AND DR. A.L. SAINI ACCOUNTANT MEMBER ITA NO. 1298 / KOL / 201 6 ASSESSMENT YEAR :2012-13 DCIT CIRCLE-12(1) 7 TH FLOOR AAYAKAR BHAWAN P-7 CHORWINGHEE SQUARE KOLKATA-69 V/S . M/S BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VISHWAKARMA 86C TOPSIA ROAD (SOUTH) KOLATA-700 046 [ PAN NO.AABCB 0977 F ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SUPRIYO PAL JCIT-SR-DR /BY RESPONDENT SHRI DILIP S DAMLE FCA /DATE OF HEARING 04-11-2019 /DATE OF PRONOUNCEMENT 20-11-2019 / O R D E R PER S.S.GODARA JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-4 KOLKATAS OR DER DATED 28.03.2016 PASSED IN CASE NO.19357/CIT(A)-4/RANGE-12/14-15 IN VOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT 1961; IN SHORT THE A CT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES FIRST AND FOREMOST SUBSTANTIVE GRI EVANCES FORMING SUBJECT-MATTER OF ITS GROUNDS NO.1 AND 2 SEEKS TO A DD NOTIONAL ANNUAL VALUE OF 177 91 494/- PERTAINING TO UNSOLD CONSTRUCTED FLATS / SPACES HELD AS STOCK-IN- ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 2 TRADE TO BE ASSESSABLE AS INCOME U/S22 R.W.S. 23 OF THE ACT. THE REVENUES CASE IS THAT THE CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DECIDING THE FIRST ISSUE IN ASSESSEES FAVOUR. THE TAXPAYER ON THE OTHER HAN D FILES BEFORE US A COPY OF THIS TRIBUNALS ORDER DATED 18.10.2019 IN REVENUES APPEAL(S) ITA NOS.1514 & 1515/KOL/2015 FOR ASSESSMENT YEAR(S) 2010-11 AND 2011-12 DECIDIN G THE VERY ISSUE IN ITS FAVOUR AS UNDER:- 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO AD DITION ON ACCOUNT OF NOTIONAL ANNUAL LETTING VALUE OF THE UNSOLD UNITS M ADE UNDER THE HEAD ' INCOME FROM HOUSE PROPERTY '. WE NOTE THAT THE ASSESSEE WAS JOINTLY PROMOTED B Y THE GOVERNMENT OF WEST BENGAL ALONG WITH M/S AMBUJA HOUSING & URBAN INFRASTRUCTURE CO LTD BOTH HOLDING EQUAL EQUITY ST AKE. FROM THE DEVELOPMENT AGREEMENT DATED 16.05.2005 ENTERED INTO BETWEEN THE ASSESSEE AND THE WEST BENGAL HOUSING BOARD IT IS NOTED THAT THE ASS ESSEE COMPANY WAS GIVEN THE DEVELOPMENT RIGHTS IN THE LAND HAVING AREA OF 1 8.62 ACRES FOR UNDERTAKING LARGE SCALE CONSTRUCTION OF RESIDENTIAL & COMMERCIA L COMPLEXES WITHIN THE STATE OF WEST BENGAL. FROM THE PLAIN READING OF THE TRANSACTIONAL DOCUMENTS WE FIND THAT THE ROLE OF THE APPELLANT AS ENVISAGED IN THE ENTIRE SCHEME FORMULATED AT THE BEHEST OF THE STATE GOVERNMENT WA S LIMITED TO BEING DEVELOPER OF THE PROJECT. IN THE CIRCUMSTANCES THER EFORE WE FIND THAT IT WAS NEVER INTENDED THAT THE APPELLANT WOULD BE PERMITTE D TO HOLD AND OWN THE COMPLETED APARTMENTS ON ITS OWN ACCORD OR THAT THE APPELLANT WOULD ACT AS THE LANDLORD / OWNER OF THE PROPERTY. SINCE THE ASSESSE E WAS AN SPV PROMOTED BY THE STATE GOVERNMENT FOR UNDERTAKING THE DEVELOP MENT OF CIVIC URBAN INFRASTRUCTURE INCLUDING CONSTRUCTION OF THE HOUSIN G / COMMERCIAL COMPLEX IN THE STATE OF WEST BENGAL IMMEDIATELY AFTER THE PRO JECT WAS LAUNCHED THE ASSESSEE AND THE HOUSING BOARD HAD UNDERTAKEN DRIVE TO ALLOT THE UNITS AMONGST THE WILLING PURCHASERS OF THESE UNITS. ON T HE GIVEN FACTS THEREFORE WE FIND MERIT IN THE LD. ARS CONTENTION THAT THE APPE LLANT COULD NOT BE REGARDED AS OWNER OF THE HOUSE PROPERTY OF THE UNSOLD INVENTORY FOR THE PURPOSES OF SECTION 22 OF THE ACT BECAUSE ITS ROLE WAS LIMITED AS THE DEVELOPER WHO HELD THE UNITS IN TRUST TO BE ULTIMATELY SOLD TO THE PER SONS TO WHOM THE ALLOTMENTS WOULD BE APPROVED BY THE BOARD. WE FIND THAT ON SIM ILAR FACTS THIS TRIBUNAL IN THE CASE OF BENGAL DCL HOUSING DEVELOPMENT CO. LTD. VS DCIT IN ITA NO.429/KOL/2018 DATED 24.05.2019 DELETED SIMILAR ADDITION MADE ON ACCOUNT OF DEEMED RENT ON UNSOLD INVENTORY BY OBSERVING AS UNDER: 9. FROM PLAIN READING OF THE AFORESAID PROVISIONS OF THE ACT IT IS APPARENT THAT THE ANNUAL VALUE OF THE PROPERTY IS A SSESSED AS INCOME IN THE HANDS OF THE ' OWNER '. IN ORDER TO ATTRACT THE CHARGE OF TAX UNDER THE HEAD 'HOUSE PROPERTY' IT IS NECESSARY FOR THE A O TO PROVE THAT THE ASSESSEE IS THE OWNER OF THE HOUSE PROPERTY AS DEFI NED FOR THE PURPOSES OF CHAPTER - IVC OF THE ACT. THE TERM 'OWN ER' OF THE HOUSE PROPERTY IS DEFINED IN SECTION 27 OF THE ACT. IN TH E PRESENT CASE WE NOTE THAT THE APPELLANT IS A JOINT SECTOR COMPANY P ROMOTED BY WEST BENGAL HOUSING BOARD ALSO WITH M/S DC PROPERTIES LT D FOR UNDERTAKING ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 3 LARGE SCALE CONSTRUCTION OF HOUSING COMPLEXES WITHI N THE STATE OF WEST BENGAL TO SOLVE THE BASIC HOUSING PROBLEMS SUBJECT HOWEVER TO THE SUPERVISION AND OVERALL CONTROL BY THE STATE GOVERN MENT OF WEST BENGAL. WITH THIS OBJECTIVE IN MIND THE GOVERNMENT OF WEST BENGAL HAD TRANSFERRED IN FAVOUR OF THE HOUSING BOARD CERT AIN PARCELS OF LAND AND THE SAID BOARD IN TURN HAD ENTERED INTO A DEVEL OPMENT AGREEMENT DATED 23.09.2004 APPOINTING THE APPELLANT HEREIN AS DEVELOPER AND/OR AN AGENT OF THE BOARD FOR THE PURPOSE OF CONSTRUCTI ON OF THE HOUSING COMPLEX TO BE DEVELOPED ON THE LAND PARCEL ALLOTTED TO THE BOARD BY THE STATE GOVERNMENT. PURSUANT TO THE DEVELOPER'S AGREE MENT THE APPELLANT UNDERTOOK THE CONSTRUCTION OF THE HOUSING COMPLEX KNOWN AS ' UTTARA ' WHICH CONSISTED OF SEVERAL APARTMENT BUILDINGS WH ICH WERE CONSTRUCTED IN PHASES AND THE REVENUE FROM THE ACTI VITY OF DEVELOPMENT AND CONSTRUCTION OF THE APARTMENTS WAS RECOGNIZED IN THE BOOKS OF THE APPELLANT AT THE TIME OF DELIVERY OF P OSSESSION OF THE APARTMENTS TO THE RESPECTIVE FLAT PURCHASERS. FROM THE PLAIN READING OF THE TRANSACTIONAL DOCUMENTS WE THEREFORE FIND THAT THE ROLE OF THE APPELLANT AS ENVISAGED IN THE ENTIRE SCHEME FORMULA TED AT THE BEHEST OF THE STATE GOVERNMENT WAS LIMITED TO BEING DEVELO PER OF THE HOUSING PROJECT. THE SCHEME FORMULATED PROVIDED THAT THE AP PELLANT WHICH WAS THE SPV WAS OBLIGED TO CARRY OUT CONSTRUCTION OF TH E RESIDENTIAL APARTMENTS TO BE SOLD TO ACTUAL USERS SO THAT THE H OUSING PROBLEMS FACED BY THE POPULOUS IN THE URBAN AREA WAS ADDRESS ED. IN THE CIRCUMSTANCES THEREFORE WE FIND THAT IT WAS NEVER I NTENDED THAT THE APPELLANT WOULD BE PERMITTED TO HOLD AND OWN THE CO MPLETED APARTMENTS ON ITS OWN ACCORD OR THAT THE APPELLANT WOULD ACT AS THE LANDLORD / OWNER OF THE PROPERTY. SINCE THE APPELLA NT WAS AN SPV PROMOTED BY THE HOUSING BOARD FOR UNDERTAKING THE C ONSTRUCTION OF THE HOUSING COMPLEX IMMEDIATELY AFTER THE PROJECT WAS LAUNCHED THE APPELLANT AND THE HOUSING BOARD HAD UNDERTAKEN DRIV E TO ALLOT THE APARTMENTS AMONGST THE WILLING PURCHASERS OF THESE APARTMENTS. CONSIDERING THESE EVENTS HARMONIOUSLY THE ONLY CONC LUSION THAT ONE CAN DRAW IS THAT THE APPELLANT WAS NEVER OWNER OF T HE APARTMENTS BUT ITS ROLE WAS LIMITED ONLY TO THE DEVELOPER WHO HELD THE APARTMENTS UNDER CONSTRUCTION IN TRUST TO BE ULTIMATELY OWNED BY THE PERSONS TO WHOM THE ALLOTMENTS WERE APPROVED BY THE BOARD. WE THEREFORE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR THAT THE APP ELLANT COULD NEVER BE REGARDED AS ' OWNER ' OF THE FINISHED APARTMENTS AND IN THAT VIEW OF THE MATTER THE PROVISIONS OF CHAPTER IV-C WAS NOT A PPLICABLE AND THEREFORE THE NOTIONAL ANNUAL VALUE OF THE UNSOLD F LATS COULD NOT BE ASSESSED IN THE HANDS OF THE APPELLANT UNDER SECTIO N 23 OF THE ACT. 10. WE ALSO FIND MERIT IN THE SUBMISSION THAT EVEN THOUGH THE VALUE OF FINISHED APARTMENTS WAS INCLUDED UNDER THE HEAD ' INVENTORY ' DISCLOSED IN THE BALANCE SHEET YET SUCH APARTMENTS COULD NOT BE CONSIDERED TO BE OWNED BY THE APPELLANT FOR THE PURPOSES OF SECTI ON 22 OF THE ACT. FROM THE DETAILED BREAK-UP OF SUCH INVENTORY WE NOT E THAT THE APARTMENTS INCLUDED BY WAY OF INVENTORY WERE ALLOTT ED PRIOR TO BALANCE SHEET DATE AND IN RESPECT OF SUCH ALLOTMENT THE SUB STANTIAL PART OF THE CONSIDERATION WAS ALSO RECEIVED BY THE APPELLANT AN D THE SAME WAS ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 4 REFLECTED BY WAY OF ' LIABILITY' IN THE APPELLANT'S BOOKS. ONCE THE APPELLANT HAD EXECUTED REQUISITE DOCUMENTATION EVID ENCING THE ALLOTMENT OF SPECIFIC UNITS / APARTMENTS IN FAVOUR OF INTENDING PURCHASERS AND THEREAFTER RECEIVED CONSIDERATION AM OUNTS IN ACCORDANCE WITH THE TERMS OF ALLOTMENT THEN THE RI GHTS OF SPECIFIC PERFORMANCE AS WELL AS RIGHT TO OBTAIN CONVEYANCE I N RESPECT OF THE SPECIFIED APARTMENT HAD ACCRUED IN FAVOUR OF THE RE SPECTIVE PURCHASER. IN THE CIRCUMSTANCES EVEN THOUGH THE HUSK OF A TITL E IF ANY VESTED IN THE OWNER IN LAW SUCH PERSON COULD NOT BE CONSIDER ED TO BE THE ' OWNER ' OF THE HOUSE PROPERTY FOR THE PURPOSES OF SECTION 22 OF THE ACT. ONCE THE BOARD AND THE APPELLANT- DEVELOPER HAD ENT ERED INTO VALID DOCUMENTATION FOR TRANSFERRING THE COMPLETED APARTM ENT IN FAVOUR OF THE PURCHASER THEN VESTED RIGHT IN THE SAID PROPERTY S TOOD ACCRUED IN FAVOUR OF THE FLAT PURCHASER WHICH THE APPELLANT OR THE BOARD COULD NOT HAVE USURPED. TILL THE COMPLETION OF THE CONSTRUCTI ON OF THE FLATS IN ALL RESPECTS THE DEVELOPER RETAINED ITS POSSESSION ONL Y IN TRUST AND FOR THE PURPOSE OF CARRYING OUT ITS OBLIGATIONS UNDER THE D EVELOPMENT AGREEMENT. THE DEVELOPER IN SUCH FACTUAL AND LEGAL BACKGROUND WAS DEBARRED FROM CLAIMING OWNERSHIP RIGHTS IN THE APAR TMENTS ALREADY ALLOTTED TO THE FLAT PURCHASERS. VIEWED FROM ANY AN GLE THEREFORE THE APPELLANT / DEVELOPER COULD NOT BE REGARDED AS THE OWNER OF THE HOUSE PROPERTY SO AS TO ATTRACT CHARGE OF TAX UNDER SECTI ON 22 READ WITH SECTION 23 OF THE ACT. 32. WE ALSO FIND MERIT IN THE CONTENTION OF THE LD. AR OF THE APPELLANT THAT WHEN THE BUSINESS OF THE ASSESSEE IS TO DEVELOP CO NSTRUCT & SELL IMMOVABLE PROPERTIES AND THE UNSOLD UNITS HAVE ALL ALONG BEEN CONSIDERED BY THE AO TO BE ' STOCK-IN- TRADE ' OF THE ASSESSEES BUSINESS THEN IT WAS UNJUSTIFIE D ON THE AOS PART TO TAKE A CONTRARY STAND ON THE SAME SET OF FACTS AND INVOKE SECTION 22 & 23 IN RESPECT OF CERTAIN STOCK-IN-TRADE WHICH WAS LYING VACANT AND ASSESS DEEMED RENT UNDER THE HEAD ' INCOME FROM HOUSE PROPERTY '. IT IS NOTED FROM THE ANNUAL ACCOUNTS OF THE COMPANY AND T HE COMPUTATION OF INCOME WHICH ARE AVAILABLE AT PAGES 1 TO 26 OF THE PAPER BOOK THAT THE RENTAL INCOME ACTUALLY DERIVED FROM THE PROPERTIES LET OUT TO THE TENANTS WAS ASSESSED BY THE AO UNDER THE HEAD BUSINESS. WE TH EREFORE FIND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE THAT WHEN THE ACT UAL RENTAL INCOME DERIVED FROM PROPERTIES WAS ASSESSED BY THE AO UNDER CHAPTE R IV-D I.E. PROFITS & GAINS OF BUSINESS THEN ONLY WITH REFERENCE TO THE VACANT AND UNSOLD PROPERTIES WHICH WERE NEITHER GIVEN ON RENT NOR TH E ASSESSEE HAD INTENTION TO LET THEM OUT THE AO COULD NOT HAVE COMPUTED DEEMED RENTAL INCOME U/S 22 & 23 AND ASSESSED IT UNDER CHAPTER IV-C OF THE ACT I. E. INCOME FROM HOUSE PROPERTY . 33. WE NOTE THAT THE REVENUES CASE SOLELY RESTS ON THE DECISION HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING FINAN CE AND LEASING CO LTD (SUPRA) WHICH HAS TAKEN A VIEW THAT ALV OF UNSOLD F LATS HELD BY A BUILDER IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. WE HOWEVE R FIND THAT HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NEHA BUIL DERS PVT. LTD ( 164 TAXMANN 342 ) HAS HELD THAT WHEN THE BUSINESS OF THE ASSESSEE I S TO CONSTRUCT THE PROPERTY AND SELL IT OR TO CONSTRUCT OR LET OUT THEN THE PROPERTIES ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 5 ARE IN THE NATURE OF STOCK-IN-TRADE AND ANY INCOME DERIVED THERE FROM WOULD BE TAXED UNDER THE HEAD BUSINESS AND ANY INCOME DERIVED FROM SUCH STOCK-IN-TRADE CANNOT BE TERMED AS INCOME FROM HOUSE PROPERTY . WE FURTHER NOTE THAT THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF SHYAM BURLAP CO LTD VS CIT ( 61 TAXMANN.COM 121 ) HAS ALSO HELD THAT WHERE THE ASSESSEE COMPANY IS FORMED WITH THE PURPOSE OF ACQU IRING DEVELOPING AND DEALING IN PROPERTIES THEN ANY INCOME DERIVED FROM SALE LEASE OR LETTING OUT OF THE PROPERTIES WOULD BE ASSESSABLE AS BUSINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. 34. WE FIND THAT ON SIMILAR FACTS AND CIRCUMSTANCES THE CO-ORDINATE BENCH OF THIS TRIBUNAL AT MUMBAI IN THE CASE OF M/S. KANKIA SPACES PVT LTD IN ITA NO. 7288 & 7289/MUM/2017 DATED 23.04.2019 AFTER CONSIDERING THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. N EHA BUILDERS (P) LTD. (SUPRA) AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL HOUSING AND CONSTRUCTION (SUPRA) HELD THA T NO NOTIONAL ANNUAL LETTING VALUE IN RESPECT OF UNSOLD FLATS HELD BY WA Y OF STOCK-IN-TRADE CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE UNDER THE HEA D INCOME FROM HOUSE PROPERTY . THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH O F THE TRIBUNAL ARE AS UNDER:- 9. WE HAVE CONSIDERED THE SUBMISSION OF PARTIES AN D GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSM ENT THE ASSESSING OFFICER ADDED RS. 1.57 CRORE UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY ESTIMATING THE DEEMED RENTAL INCOME OF THE ASS ESSEE IN RESPECT OF UNSOLD UNITS AND AFTER GRATING STATUTORY DEDUCTION OF 30% TREATED THE REMAINING AS INCOME OF HOUSE PROPERTY . THE LD CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER BY RELYIN G ON THE DECISION OF DELHI HIGH COURT IN ANSAL HOSING FINANCE AND LEASIN G LTD (SUPRA). WE ARE CONSCIOUS OF THE FACTS THAT THAT THE LEGISLATUR E HAS INSERTED SUB- SECTION (5) IN SECTION 23 OF THE ACT BY FINANCE ACT 2017 WITH EFFECT FROM 01.04.2018 WHICH IS NOT APPLICABLE FOR THE YE ARS UNDER CONSIDERATION. 10. WE HAVE NOTED THAT IN ASSESSEES OWN CASE FOR A Y 2012-13 SIMILAR ADDITION WAS MADE BY ASSESSING OFFICER WAS UPHELD B Y LD CIT(A) HOWEVER ON APPEAL BEFORE TRIBUNAL THE SAME WAS DELE TED IN ITA NO. 6686/MUM/2016 VIDE ORDER DATED 31.10.2018. THE RELEVANT PART OF THE DECISION IS EXTRACTED BELOW: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR D ECISION ARE GIVEN BELOW. ON THE ABOVE ISSUE WE COME ACROSS ONE DECISION FOR THE ASSESSEE AND ANOTHER DECISION FOR THE REVEN UE. THE DECISION IN NEHA BUILDERS PVT. LTD.(SUPRA) IS FOR T HE ASSESSEE WHEREAS THE DECISION IN ANSAL HSG. FINANCE & LEASIN G CO. LTD. (SUPRA) IS FOR THE REVENUE. THE HONBLE SUPREM E COURT IN THE CASE OF CIT V. VEGETABLE PRODUCTS 88 ITR 192 (S C) HAS HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISI ONS ARE POSSIBLE THAT CONSTRUCTION WHICH FAVOURS THE T AX PAYER ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 6 MUST BE ADOPTED. THEREBY WE WILL FOLLOW THE DECISION IN NEHA BUILDERS PVT.LTD. (SUPRA). 7.1 THE FOLLOWING SUB-SECTION (5) HAS BEEN INSERTED AFTER SUB- SECTION (4) OF SECTION 23 BY THE FINANCE ACT 2017 W.E.F. 01.04.2018: (5) WHERE THE PROPERTY CONSISTING ANY BUILDING OR LAND APPURTENANT THERETO IS HELD AS STOCK-IN-TRADE AND T HE PROPERTY OR ANY PART OF THE PROPERTY IS NOT LET DUR ING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR THE ANNUAL VALUE OF SUCH PROPERTY OR PART OF THE PROPERTY FOR THE P ERIOD UP TO ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN W HICH THE CERTIFICATE OF COMPLETION OF CONSTRUCTION OF THE PR OPERTY IS OBTAINED FROM THE COMPETENT AUTHORITY SHALL BE TAK EN TO NIL. THUS IN ORDER TO GIVE RELIEF TO REAL ESTATE DEVELO PERS SECTION 23 HAS BEEN AMENDED W.E.F. AY 2018-19 (FY 2017-18). BY THI S AMENDMENT IT IS PROVIDED THAT IF THE ASSESSEE IS HOLDING ANY HOU SE PROPERTY AS HIS STOCK-IN-TRADE WHICH IS NOT LET OUT FOR THE WHOLE OR PART OF THE YEAR THE ANNUAL VALUE OF SUCH PROPERTY WILL BE CONSIDERED AS NIL FOR A PERIOD UP TO ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN W HICH A COMPLETION CERTIFICATE IS OBTAINED FROM THE COMPETENT AUTHORIT Y. IN VIEW OF THE ABOVE AMENDMENT TO SECTION 23 WE AR E NOT ADVERTING TO THE CASE LAWS RELIED ON BY THE LD. COUNSEL AND LD. DR. IN THE INSTANT CASE THE ASSESSEE IS IN THE BUSINES S OF REAL ESTATE DEVELOPMENT. THE ISSUE OF TAXABILITY IS WITH REGARD TO UNSOLD FLATS/UNITS OF RS.1 85 95 17 274/- HELD BY THE APPELLANT UNDER THE HEAD CLOSING INVENTORIES . THE AY IS 2012-13. IN VIEW OF THE INSERTION OF S UB-SECTION (5) IN SECTION 23 BY THE FINANCE ACT 2017 W.E.F. 01.04.2018 NARRATED HEREINBEFORE WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND ALLOW THE 1ST & 2ND GROUNDS OF APPEAL. 11. FURTHER IN ASSESSEES GROUP CASE THE COORDINAT E BENCH OF MUMBAI TRIBUNAL IN SARANG PROPERTY DEVELOPERS PVT LTD IN ITA NO. 5620/MUM/2016 PASSED THE FOLLOWING ORDER; 4. WE HAVE CONSIDERED THE SUBMISSION OF PARTIES AN D GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT ASSESSING OFFICER AS WELL AS LD. CIT(A) WHILE RELYI NG UPON THE DECISION OF DELHI HIGH COURT I.E. IN ANSAL HOUSING FINANCING & LEASING CO. LTD. (SUPRA) WHEREIN IT WAS HELD THAT A SSESSEE IS LIABLE TO BE TAXED ON NOTIONAL ALV OF UNSOLD UNITS UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE LD. AR OF THE ASSESSEE IS RELYING UPON THE DECISION OF HONBLE GU JARAT HIGH COURT IN CIT VS. NEHA BUILDERS P. LTD. (SUPRA) WHER EIN IT WAS HELD THAT WHEN THE ASSESSEE-COMPANY ENGAGED IN THE BUSINESS ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 7 OF CONSTRUCTION OF PROPERTY AND ONE OF THE BUILDING /PROPERTY WAS INCLUDED IN THE CLOSING STOCK IN THE BALANCE-SHEET DRAWN BY ASSESSEE THE PROPERTY WOULD PARTAKE THE CHARACTER OF STOCK AND ANY INCOME DERIVED FROM STOCK WOULD NOT BE TAKE N TO BE INCOME FROM HOUSE PROPERTY. THE HONBLE HIGH COURT FURTHER HELD THAT BUSINESS OF THE ASSESSEE IS TO CONSTRUCT THE PROPERTY AND SALE IT THEN THAT WOULD BE THE BUSINESS AND BU SINESS STOCK WOULD BE TAKEN AS STOCK-IN-TRADE AND ANY INCOME DERIVED FROM SUCH STOCK CANNOT BE TERMED AS INCOME FROM HOUSE PROPERTY . 5. IN THE CASE IN HAND THERE IS NO DISPUTE THAT AS SESSEE TREATED THE UNSOLD UNIT IS TREATED AS STOCK-IN-TRADE IN ITS BOOKS OF ACCOUNT. FURTHER THE UNIT SOLD BY THE ASSESSEE HAS BEEN OFFERED UNDER THE HEAD INCOME FROM BUSINESS . THUS THE UNSOLD FLAT WHICH ARE STOCK-IN-TRADE WHEN ARE SOLD THEY ARE A SSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND THEREFORE THE ASSESSING OFFICER IS NOT CORRECT IN BRINGING THOSE UNITS TO TAX ON THE BASIS OF NOTIONAL ALV UNDER THE HEAD INCOME FROM HOUSE PROPERTY . 6. WE ARE CONSCIOUS OF THE FACT THAT THE DECISION O F HONBLE DELHI HIGH COURT IN ANSAL HOUSING FINANCING & LEASI NG CO. LTD. (SUPRA) IS AGAINST THE ASSESSEE. THE HONBLE SUPREM E COURT IN CASE OF CIT VS. VEGETABLE PRODUCTS LTD. ( 88 ITR 92 ) HELD THAT WHEREIN TWO REASONABLE CONSTRUCTION TO TAX PROVISIO N ARE POSSIBLE THAT CONSTRUCTION WHICH FAVOURS ASSESSEE M UST BE ADOPTED. THEREFORE WITH UTMOST REGARD TO THE DECIS ION OF DELHI HIGH COURT IN CASE IN ANSAL HOUSING FINANCING & LEA SING CO. LTD. (SUPRA) WE ARE ACCEPTING THE VIEW TAKEN BY GU JARAT HIGH COURT IN CIT VS. NEHA BUILDERS (SUPRA). 7. THE HONBLE SUPREME COURT IN CASE OF CHENNAI PRO PERTY ( 373 ITR 673 ) HELD THAT WHEN THE COMPANY IS PRIMARILY ENGAGED I N BUSINESS OF CONSTRUCTION AND DEVELOPMENT WHICH IS THE MAIN OBJECT OF THE ASSESSEE ITA NO. 7288 7289 MUM 17 & 209 AND 210 MUM 18 -M/S KANAKIA SPACES PVT. LTD. 12 THE INCOME DERIVED BY ASSESSEE WOULD BE INCOME FROM BUSINESS . ON THE SAME ANALOGY IN THE CASE IN HAND THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT WH ICH IS THE MAIN BUSINESS OF THE ASSESSEE THE UNITS WHICH COUL D NOT BE SOLD AT THE END OF THE YEAR AND WERE SHOWN AS STOCK-IN-TRADE ESTIMATING RENTAL INCOME ON NOTIONAL ALV WAS NOT JU STIFIED. PARTICULARLY WHEN THERE IS NO EVIDENCE ON RECORD T HAT THESE UNITS WERE EITHER GIVEN ON RENT OR THAT THE ASSESSE E HAS INTENTION TO LET OUT THOSE UNITS. THE UNITS WHICH A RE NOT SOLD ARE STOCK-IN-TRADE AND THE INCOME ARISING OF ITS SALE I S LIABLE TO BE TAXED AS BUSINESS INCOME THEREFORE WE DO NOT FIND ANY JUSTIFICATION IN CALCULATING NOTIONAL ALV OF THE VA CANT UNITS. THEREFORE WE DIRECT THE ASSESSING OFFICER TO DELET E THE ADDITION ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 8 MADE ON ESTIMATE BASIS. IN THE RESULT GROUND OF AP PEAL RAISED BY ASSESSEE IS ALLOWED 8. IN RUNAWAL CONSTRUCTIONS &RUNAWAL BUILDERS PVT L TD (SUPRA) THE FOLLOWING ORDER WAS PASSED; ..10. IN THE CASE ON HAND BEFORE US IT IS AN UNDI SPUTED FACT THAT BOTH ASSESSEES HAVE TREATED THE UNSOLD F LATS AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT AND THE FLAT S SOLD BY THEM WERE ASSESSED UNDER THE HEAD ' INCOME FROM BUSINESS '. THUS RESPECTFULLY FOLLOWING THE ABOVE SAID DECISIONS WE HOLD THAT THE UNSOLD FLATS WHICH ARE S TOCK IN TRADE WHEN THEY WERE SOLD THEY ARE ASSESSABLE UNDER THE HEAD ' INCOME FROM BUSINESS ' WHEN THEY ARE SOLD AND THEREFORE THE AO IS NOT CORRECT IN BRINGING TO TAX NOTIONAL ANNUAL LETTING VALUE IN RESPECT OF THOSE UNSOLD FLA TS UNDER THE HEAD ' INCOME FROM RUNWAL CONSTRUCTIONS &RUNWAL BUILDERS HOUSE PROPERTY '. THUS WE DIRECT THE AO TO DELETE THE ADDITION MADE UNDER SECTION 23 OF THE ACT AS INCOME FROM HOUSE PROPERTY . 9. FURTHER BY FOLLOWING THE DECISION OF RUNAWAL CO NSTRUCTIONS & RUNAWAL BUILDERS (SUPRA) IDENTICAL RELIEF WAS GRAN TED IN ARIHANT ESTATE PVT LTD (SUPRA). IN ACIT VS HAWARE CONSTRUCT IONS (P) LTD (SUPRA) THE COORDINATE BENCH OF MUMBAI TRIBUNAL ALS O TOOK THE VIEW THAT IF A REAL ESTATE DEVELOPER HOLDS ANY HOUS E PROPERTY AS HIS STOCK-IN-TRADE WHICH IS NOT LET OUT FOR WHOLE O R PART OF YEAR ANNUAL VALUE OF SUCH PROPERTY WILL BE CONSIDERED AS NIL FOR A PERIOD UP TO ONE YEAR FROM END OF FINANCIAL YEAR IN WHICH A COMPLETION CERTIFICATE IS OBTAINED. 10. THE HONBLE DELHI HIGH COURT IN CIT VS ANSAL HO USING FINANCE LTD (SUPRA) HAS TAKEN A VIEW THAT ALV OF UN SOLD FLAT BUILT BY THE BUILDER IS ASSESSABLE AS INCOME FROM THE HOU SE PROPERTY. HOWEVER THERE IS CONTRARY VIEW OF HONBLE GUJARAT HIGH COURT IN NEHA BUILDERS (SUPRA) THAT INCOME DERIVED FROM THE PROPERTY WOULD ALWAYS BE TERMED AS INCOME FROM THE PROPERTY BUT IF THE PROPERTY IS USED AS STOCK IN TRADE THEN THE SAID PROPERTY WOULD BECOME OR PARTAKE THE CHARACTER OF THE STOCK AND INCOME DERIVED FROM THE STOCK WOULD BE INCOME FROM THE BUSINESS AND NOT FROM THE PROPERTY. IF THE BUSINESS OF THE A SSESSEE IS TO CONSTRUCT THE PROPERTY AND TO SELL IT OR TO CONSTRU CT AND LET OUT THE SAME THEN WOULD BE THE BUSINESS AND THE BUSINESS STOCKS MAY INCLUDED MOVEABLE OR IMMOVEABLE WOULD BE TAKEN TO BE STOCK IN TRADE AND ANY INCOME FROM SUCH STOCK CANNOT BE TERMED AS INCOME FROM PROPERTY . THERE IS NO DIRECT DECISION ON THIS ISSUE BY JURISDICTIONAL HIGH COURT; THEREFO RE THE VIEW IN FAVOUR OF THE ASSESSEE HAS TO BE ADOPTED IN VIEW OF DECISION OF HONBLE APEX COURT IN CIT VS VEGETABLE PRODUCT LTD. ( 88 ITR 192 SC ). AS WE HAVE ALREADY REFERRED THAT SUB-SECTION (5) IN SECTION 23 WAS INSERTED BY FINANCE ACT 2017 W.E.F. 01.04.2018; ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 9 THEREFORE THE SAME IS NOT APPLICABLE FOR THE ASSES SMENT YEAR UNDER CONSIDERATION. 11. THEREFORE RESPECTFULLY FOLLOWING THE DECISIONS OF COORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2011-12 IN ASS ESSEES GROUP CASE IN SARANG PROPERTY DEVELOPERS PVT LTD (S UPRA) AND OTHER VARIOUS DECISIONS OF COORDINATE BENCH AND THE DECISIONS OF GUJARAT HIGH COURT IN NEHA BUILDERS (SUPRA) WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN BRI NGING THE UNSOLD FLAT / UNITS UNDER INCOME FROM HOUSE PROPERTY. IN T HE RESULT THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED . 35. WE FURTHER NOTE THAT IDENTICAL VIEW HAS BEEN EX PRESSED BY THE COORDINATE BENCHES OF THIS TRIBUNAL IN THE FOLLOWIN G CASES HOLDING THAT THE FLATS WHICH REMAINED VACANT AND UNSOLD NO DEEM ED ALV THEREOF COULD BE ASSESSED AS INCOME U/S 23 OF THE ACT. - C.R. DEVELOPMENT PVT. LTD. V. JCIT ( ITA NO. 4277/MUM/2012 ) DT.13.05.2015 - RUNWAL CONSTRUCTIONS V. ACIT ( ITA NO. 5408/MUM/2016 ) DT. 22.02.2018 - COSMOPOLIS CONSTRUCTION VS DCIT ( ITANOS.230 AND 231/PN/2018 ) DT.12.09.2018 - KOLTE PATIL DEVELOPERS LIMITED VS DCIT ( ITA NO.2206/PN/2016 ) DATED 03.05.2019 - PROGRESSIVE HOMES V. ACIT ( ITA NO. 5082/MUM/2016 ) DATED 16.05.2018 - ACIT V. HAWARE CONSTRUCTION PVT. LTD. ( ITA NO. 3321/MUM/2016 ) DATED 31.08.2019 36. THE LD. CIT DR WAS UNABLE TO POINT OUT ANY DIS TINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE FROM THE FACTS IN VOLVED IN THE CASES CITED ABOVE. IN VIEW OF THE AFORESAID FACTS AND FOL LOWING THE ABOVE DECISIONS (SUPRA) WE UPHOLD THE ACTION OF THE LD. CIT(A) DELETING THE ADDITION ON ACCOUNT OF DEEMED RENT OF RS.3 08 98 60 2/- MADE BY THE AO U/S 23 OF THE ACT. THESE GROUNDS ARE THEREFORE DISMISSED . 3. THE REVENUE IS FAIR IN NOT DRAWING ANY DISTINCTI ON ON FACTS OR LAW IN THE TWIN ASSESSMENT YEARS. WE THEREFORE ADOPT JUDICIAL CONSISTENCY AND GO BY THE FOREGOING DETAILED REASONING MUTATIS MUTANDIS TO AFFIRM THE CIT(A)S FINDINGS QUA THE INSTANT FIRST ISSUE. 4. NEXT COMES SECOND ISSUE OF ASSESSEES EXECUTIVE DIRECTORS FOREIGN TRAVEL EXPENSES DISALLOWANCE OF 10 54 902/- MADE IN THE COURSE OF ASSESSMENT AND REVERSED IN LOWER APPELLATE PROCEEDI NGS. THE REVENUE HAS ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 10 RAISED ITS THIRD AND FOURTH SUBSTANTIVE GROUNDS SEE KING TO REVIVE THE IMPUGNED DISALLOWANCE. IT TRANSPIRES HEREIN AS WELL THAT THE TRIBUNALS EARLIER ORDER (SUPRA) HAS DECIDED ON VERY ISSUE AS WELL IN ASSESS EES FAVOUR AS UNDER:- 38. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT BEFORE THE LOWER AUTHORITIES AS ALSO BEFORE US THE ASSESSEE HA S FURNISHED THE COMPLETE DETAILS OF THE FOREIGN VISITS UNDERTAKEN BY THE OFFICIALS I NTER ALIA INCLUDING THEIR NAMES DATES AND PLACES VISITED. IT IS NOTED THAT NONE OF THE FA MILY MEMBERS OF THE COMPANYS OFFICIALS ACCOMPANIED THEM ON THESE VISITS. IT IS N OTED THAT THE ASSESSEE HAD ALSO FURNISHED A NOTE EXPLAINING THE REASONS FOR THE FOR EIGN VISITS UNDERTAKEN BY THE OFFICIALS WHICH WAS FOUND TO BE JUSTIFIABLE BY THE LD. CIT(A). WE HOLD IN THIS REGARD THAT AN ALLOWABILITY OF CLAIM OF THE ASSESSEE HAS TO BE JUDGED FROM THE VIEW POINT OF THE PRUDENT BUSINESSMAN AND NOT FROM THE VIEW POINT OF THE REVENUE. WE FIND THAT IN THE INSTANT CASE THE SENIOR EMPLOYEES OF THE ASSES SEE VISITED FOREIGN COUNTRIES IN CONNECTION WITH BUSINESS OF THE APPELLANT. FURTHER THE SAID EXPENSES HAVE BEEN INCURRED OUT OF COMMERCIAL EXPEDIENCY AND HENCE IT SHOULD BE VIEWED FROM A BUSINESSMAN'S POINT OF VIEW. WE FURTHER NOTE THE AS SESSEE HAD INCURRED SIMILAR FOREIGN TRAVEL EXPENSES IN EARLIER YEARS ALSO. THE REVENUE IN THE ASSESSMENTS FRAMED U/S 143(3) HAD ACCEPTED THE SAME TILL ASSESS MENT YEAR 2009-10 BY ALLOWING THE SAME AS BUSINESS EXPENDITURE. WHEN THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE DURING THE YEAR UNDER APP EAL THEN THERE IS NO NEED FOR THE REVENUE TO TAKE A DIFFERENT STAND IGNORING THE PRIN CIPLE OF CONSISTENCY. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF RADHASAOMI SATSANG VS. CIT REPORTED IN 193 ITR 321 (SC). 39. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTFU LLY FOLLOWING THE RATIO OF THE AFORESAID DECISIONS WE DIRECT UPHOLD THE LD. CIT(A) S ORDER DELETING THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF RS.10 35 175/-. GROUN D NOS. 4 & 5 ARE THEREFORE DISMISSED . 5. WE ADOPT JUDICIAL CONSISTENCY QUA THE INSTANT SE COND ISSUE AS WELL TO DECLINE REVENUES CORRESPONDING THIRD AND FOURTH SU BSTANTIVE GROUNDS RAISED IN THE INSTANT APPEAL. 6. THE REVENUES FIFTH SUBSTANTIVE GRIEVANCE IS THA T CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING SEC. 14A R.W.S. RULE 8 D DISALLOWANCE OF 46 09 608/- MADE BY THE ASSESSING OFFICER IN HIS AS SESSMENT ORDER DATED 28.03.2015. WE ARE TAKEN TO CIT(A)S DETAILED DISCU SSION QUA THE INSTANT THIRD ISSUE READING AS UNDER:- 7.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR AN D PERUSED VARIOUS JUDICIAL DECISIONS CITED BEFORE ME IN SUPPORT OF THE APPELLA NT'S CLAIM. I HAVE ALSO EXAMINED THE IMPUGNED ORDER WHEREIN THE DISALLOWANCE U/S 14A HAS BEEN MADE BY INVOKING RULE 80 OF THE IT RULES 1962. ACCORDING TO AO THE ASSESSEE'S SUBMISSIONS THAT ITS CAPITAL WAS MUCH MORE THAN INVESTMENT WAS NOT SUFFI CIENT TO ESTABLISH THAT BORROWED FUNDS WAS NOT USED FOR INVESTMENT PURPOSES. THE AO AFTER EXCLUDING THE INTEREST ON BORROWINGS WHICH WERE DIRECTLY RETABLE TO BUSINESS ASSETS OF THE APPELLANT COMPUTED DISALLOWANCE UNDER RULE 80(2)(II) AND ACCORDINGLY I NTEREST OF 41 52 719/- WAS ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 11 DISALLOWED OUT OF INTEREST PAID. BESIDES THE AO ALS O DISALLOWED 4 57 729/- BEING HALF PERCENT OF THE AVERAGE INVESTMENTS AMOUNTING TO 9 14 85 775/-. THE AGGREGATE DISALLOWANCE MADE WAS THUS 46 09 608/-. 7.3. I HAVE CONSIDERED THESE FINDINGS IN THE LIGHT OF DETAILED SUBMISSIONS MADE BY THE AR. FROM THE AUDITED ACCOUNTS IT IS APPARENT THAT T HE AVERAGE COST OF INVESTMENTS DURING THE RELEVANT YEAR WAS 914 85 LACS WHEREAS THE APPELLANTS NET OWNED FUNDS IN THE FORM OF SHARE CAPITAL & RESERVES WERE 10 318 .27 LACS. AS SUCH IT IS APPARENT THAT THE ASSESSEES NET OWNED FUNDS BOTH AT THE BEG INNING AND AT THE CLOSING OF THE RELEVANT YEAR WERE SUBSTANTIALLY HIGHER THAN THE CO ST OF INVESTMENTS. ONO THESE FACTS THEREFORE I FIND MERIT IN THE SUBMISSIONS OF THE AR THAT WHEN THE ASSESSEE HAS BOTH OWN FUNDS AND BORROWED FUNDS THEN THE PRESUMPTION W OULD BE THAT THE INVESTMENTS WERE ACQUIRED OUT OF OWN FUNDS. THIS PROPOSITION FI NDS SUPPORT IN THE DECISION OF THE ITAT KOLKATA IN THE CASE OF H S I L LIMITED VS ADD L. CIT ( ITA 83/KOIL2012 ) DATED 05.08.2014. I FURTHER NOTE THAT THE ITAT KOLKATA I N THEIR RECENT DECISION IN THE CASE OF DCIT VS BINANI INDUSTRIES LTD ( ITA NO. 144/KOI/2013 ) DATED 02.03.2016 ON SIMILAR SET OF FACTS AS INVOLVED IN THE APPELLANT'S CASE H ELD THAT WHERE THE AO FAILS TO ESTABLISH THAT THE BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF ACQUIRING THE SHARES AND IN VIEW OF AVAILABILITY OF OWN FUNDS WIT H THE ASSESSEE TO MEET THE COST OF INVESTMENTS NO INTEREST COULD BE DISALLOWED UNDER SECTION 14A READ WITH RULE 8D(2)(II). 7.4. I FURTHER FIND THAT OUT OF THE TOTAL INVESTMEN TS OF ~938.75 LACS INVESTMENTS TO THE TUNE OF 765.83 LACS WAS MADE BY THE APPELLANT IN FOUR COMPA NIES NAMELY GANPATI PARKS LTD BAHDL HOSPITALITY LTD. GGL HOTEL & RESOR T CO. LTD & S.E. BUILDERS & REALTORS LTD. ALL THESE COMPANIES BELONG TO THE SAM E GROUP TO WHICH THE APPELLANT BELONG. THE APPELLANT IS ONE OF ITS PROMOTERS AND A S SUCH THE INVESTMENT WAS MADE FOR STRATEGIC BUSINESS PURPOSES AND NOT FOR THE PUR POSES OF EARNING TAX FREE INCOME IN THE FORM OF DIVIDEND. THROUGH HOLDING SHARES TH E ASSESSEE WAS EXERCISING MANAGEMENT AND CONTROL OVER THE AFFAIRS OF THESE CO MPANIES WHO HAD COMMON STRATEGIC BUSINESS OBJECTIVES. THE DELHI HIGH COURT IN THE CASE OF ORIENTAL STRUCTURE ENGINEERS PVT. LTD ( 216 TAXMANN 92 ) HAS HELD THAT WHERE THE ASSESSEE HAD MADE INVESTMENTS IN SHARES OF SUBSIDIARIES ON THE PRINCI PAL OF COMMERCIAL EXPEDIENCY AND WITH A VIEW TO ACHIEVE BUSINESS OBJECTIVE AND NOT F OR THE PURPOSES OF EARNING DIVIDEND SIMPLICITOR THEN NO DISALLOWANCE U/S 14A I S WARRANTED. A SIMILAR VIEW HAS BEEN ADOPTED BY THE ITAT. KOLKATA BENCH IN THE CASE OF DCIT VS BINANI INDUSTRIES LTD (SUPRA) & ITAT MUMBAI BENCHES IN THE CASES OF GARWARE WALL ROPES LIMITED ( 540S/MUM/2012 ) ATE ENTERPRISES LIMITED ( 102 ITD 110 ) AND SHRISTI SECURITIES PVT. LTD (148 TAXMAN 49). THE CALCUTTA HIGH COURT IN THE CASE OF RAJEEV LOCHAN KANORIA (208 ITR 616) HAS SIMILARLY HELD THAT WHERE AN ASSE SSEE ACQUIRES SHARES OF OTHER COMPANIES WITH A VIEW TO ACQUIRE CONTROLLING INTERE ST THEN USE OF BORROWED FUNDS FOR ACQUIRING SHARES AMOUNTS TO BUSINESS PURPOSE AND TH EREFORE INTEREST IS TO BE ALLOWED U/S 36(1)(III) OF THE ACT. IF THE RATIO LAID DOWN I N THESE DECISIONS IS APPLIED TO THE ASSESSEE'S CASE THEN I FIND THAT A SUBSTANTIAL AMOU NT OF INVESTMENT WAS MADE BY THE ASSESSEE IN THE COMPANIES OF WHICH THE APPELLANT IT SELF WAS PROMOTER AND THEREFORE THE PURPOSE OF ACQUIRING INVESTMENT WAS NOT TO EARN DIVIDEND SIMPLICITOR BUT TO ACHIEVE BUSINESS OBJECTIVES. IN MY CONSIDERED OPINI ON THEREFORE THE DISALLOWANCE U/S 14A R.W. RULE 80(2)(II) WAS NOT WARRANTED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. IN ANY CASE SINCE THE ASSESSEE'S NET OWN FUNDS SUBSTANTIALLY EXCEEDED THE COST OF INVESTMENTS AND THE AO NOT HAVING ESTAB LISHED ANY PROXIMATE CAUSE BETWEEN USE OF BORROWED FUNDS AND ACQUIRING INVESTM ENTS DISALLOWANCE WAS NOT JUSTIFIED SIMPLY ON PRESUMPTION FOR THE REASONS SET OUT IN THE FOREGOING THEREFORE I DO NOT FIND MERIT IN THE AO'S ACTION OF DISALLOWING INTEREST OF 41 52 179/- FOR WHICH THE SAME IS DIRECTED TO BE DELETED . ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 12 7.5. SIMILARLY THE AO DISALLOWED 0.5% OF THE AVERAG E INVESTMENTS BY INVOKING RULES 8D(2)(III). FROM THE AO'S WORKING I NOTE THAT THE DISALLOWANCE WAS MADE AT 0.5% OF AVERAGE INVESTMENTS WHICH INTER ALIA INCLUDED STRAT EGIC INVESTMENTS IN GROUP AND SUBSIDIARY COMPANIES. IN THE FIRST INSTANCE I FIND THAT THE AO DID NOT IDENTIFY ANY SPECIFIC ITEM OF EXPENDITURE WHICH HE FOUND TO BE R ELATABLE TO EARNING OF TAX FREE INCOME. AS POINTED OUT BY THE AIR THE DIVIDEND WAS RECEIVED BY ECS MODE WITHOUT INCURRING ANY COLLECTION OR BANK CHARGES. WHATEVER LITTLE ADMINISTRATIVE EXPENSES INCURRED FOR ACCOUNTING OF THE EXPENSES DID NOT AM OUNT TO 4.57 LACS. MOREOVER NO DISALLOWANCE OUT OF ADMINISTRATIVE EXPENSES WAS PER MISSIBLE WHERE THE INVESTMENTS WERE MADE FOR STRATEGIC BUSINESS PURPOSES. IN THE C IRCUMSTANCES ONLY THE EXPENSES INCURRED IN RELATION TO OTHER INVESTMENTS AMOUNTING TO 172.92 LACS COULD HAVE BEEN DISALLOWED U/S 14A. ON THE CONTRARY I FIND THAT THE ASSESSEE ITSELF HAD IDENTIFIED AND SUO MOTO DISALLOWED EXPENSES OF 8 73 212/- SUCH EXPENDITURE BEING OFFERED FOR DISALLOWANCE IS THEREFORE HELD TO BE DISALLOWABLE U/S 14A OF THE ACT. UNDER THE FACTS AND CIRCUMSTANCES THE AO IS ACCORDINGLY DIRECTED T O DELETE THE DISALLOWANCE OF 4 57 429/- MADE UNDER RULE BO(2)(III). [GROUND NOS. 6 & 7ARE ALLOWED ]. 7. IT IS CLEAR FROM A PERUSAL OF THE ABOVE EXTRACTE D LOWER APPELLATE FINDINGS THAT THE ASSESSEE HAD DERIVED EXEMPT INCOME FROM DI VIDENDS OF 26 10 000/- IN THE RELEVANT PREVIOUS YEAR. IT MADE SUO MOTU DISALLOWANCE OF 8 73 212/-. THE ASSESSING OFFICER COMPUTED IMPUGNED DISALLOWANC E UNDER THE SECOND AND THIRD HEAD(S) OF PROPORTIONATE INTEREST AND ADM INISTRATIVE EXPENSES AMOUNTING TO 41 52 179/- AND 4 57 429/- TOTALLING TO 46 09 608/-. THE ASSESSEES INTEREST FREE FUNDS AS ON 31.03.2012 REA DS 10318.27 LAKHS AS AGAINST THE CORRESPONDING EXEMPT INVESTMENTS OF 938.75 LAKHS. THE CIT(A) HAS TAKEN NOTE OF A CATENA OF CASE LAW (SUPRA) THAT THE NECESSARY PRESUMPTION IN SUCH AN INSTANCE OF THAT OF DEPLOYME NT OF NON-INTEREST BEARING FUND IN EXEMPT INVESTMENT ONLY. WE GO BY THE VERY R EASONING TO DECIDE THE REVENUES CORRESPONDING ARGUMENTS REGARDING THE PRO PORTIONATE INTEREST DISALLOWANCE. 8. NEXT COMES ADMINISTRATIVE EXPENDITURE DISALLOWAN CE OF 4.57 LAKHS. WE HAVE MADE IT CLEAR THAT THE ASSESSEES SUO MOTU DISALLOWANCE OF 8 73 212/- IS ALREADY MORE THAN THAT IN DISPUTE UNDER THIS HEA D. THE FACT ALSO REMAINS THAT THE SAID DISALLOWANCE FIGURE PERTAINS TO DIREC T EXPENDITURE ONLY WHEREAS WE ARE DEALING WITH THIS THIRD LIMB IN THE NATURE O F INDIRECT EXPENDITURE ONLY. LEARNED COUNSEL HAS TAKEN PAINS TO REFER TO THE TRI BUNALS EARLIER ORDER (SUPRA) DECLINING REVENUES ARGUMENTS ON THE GROUND THAT IT S SUO MOTU DISALLOWANCE FIGURE EXCEEDED THE THIRD HEAD OF DISALLOWANCE INVO LVING FIGURES OF 6 05 290/- ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 13 AND 5 47 199/-; RESPECTIVELY. AS AGAINST THIS THERE IS NO INDICATION BEFORE US THAT THE ASSESSEES SUO MOTU DISALLOWANCE CONTAINED THE IMPUGNED ADMINISTRATIVE HEAD AS WELL. WE THUS ACCEPT THE REV ENUES ARGUMENTS QUA THIS THIRD LIMB IN PRINCIPLE. NEXT COMES EQUALLY IMPORTANT ASPECT OF COMPUTATION OF THIS INDIRECT HEAD OF EXPENDITURE. CASE FILE SUGGESTS THAT THE AS SESSING OFFICER DID NOT INCLUDE ONLY THE DIVIDEND INCOME YIELDING INVES TMENTS IN COMPUTATION AS PER REI AGRO LTD. VS. DCIT (2014) 144 ITD 141 (KOL). FACED WITH THIS SUBMISSION WE DEEM IT APPROPRIATE T O RESTRCT THE IMPUGNED DISALLOWANCE TO 1 00 000/- ONLY OF THAT IN ISSUE OF 4.57 LAKHS. NECESSARY COMPUTATION TO FOLLOW AS PER LAW. THIS ISSUE IS PARTLY ACCEPTED IN REVENUES FAVOUR. 9. LASTLY COMES THE FOURTH ISSUE OF 80IB(10) DISALL OWANCE OF 178 36 800/- IN RESPECT OF THE ASSESSEES HOUSING PROJECTS PHASE I OF LUXURY HIG ZONE OF UPOHAR THE CONDOVILE FORMING SUBJECT-MATTER OF R EVENUES SIX TO TEN SUBSTANTIVE GROUNDS. IT EMERGES HEREIN AS WELL THAT THE TRIBUNALS EARLIER ORDER HAS ADJUDICATED THE SAME AGAINST THE DEPARTMENT AS UNDER:- 7. WE HAVE HEARD SUBMISSIONS OF BOTH THE PARTIES A ND CAREFULLY PERUSED THE NOTES FURNISHED BY THE PARTIES BEFORE US IN THE COURSE OF HEARINGS. WE HAVE ALSO GONE THROUGH VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE PARTIES CONSIDERED APPLICABLE LEGAL PROVISIONS AND THE DOCUMENTS PLACE D IN THE PAPER BOOK. WE NOTE THAT IN THE RETURN FURNISHED THE ASSESSEE HAD CLAIM ED DEDUCTION U/S 80IB FOR RS.7 96 42 428/- BEING THE PROFIT DERIVED FROM PHAS ES I II & III OF THE HOUSING PROJECT NAMED U POHAR THE CONDOVILLE HIG LUXURY ZONE. IN THE ASSESSMENT ORDER THE CLAIM WAS DISALLOWED FOR THE REASONS DISCUSSED IN T HE EARLIER PARAS. ON APPEAL THE LD. CIT(A) DID NOT FULLY AGREE WITH THE AOS REASONS BU T HELD THAT IT WAS ONLY IN RESPECT OF PHASE I OF THE HOUSING PROJECT THAT THE APPELLANT HAD FULFILLED THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) OF THE ACT AND ACCOR DINGLY ALLOWED THE CLAIM ONLY FOR RS.2 79 49 838/- BEING THE PROFIT DERIVED FROM PHAS EI. BEING AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US BUT NO APPEAL WAS PR EFERRED BY THE ASSESSEE IN RELATION TO DISALLOWANCE CONFIRMED IN APPEAL. IN TH E CIRCUMSTANCES TO ADJUDICATE THE PRESENT APPEAL WE NEED TO ONLY EXAMINE WHETHER THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE CONDITIONS PRESCRIBED IN SECTION 8 0IB(10) OF THE ACT WERE FULFILLED BY THE ASSESSEE AND WHETHER THE DEDUCTION U/S 80IB(10 ) COULD BE ALLOWED ONLY IN RESPECT OF PROFITS OF PHASE I EVEN THOUGH THE PLA N SANCTIONED ON 30.03.2007 CONTEMPLATED CONSTRUCTION OF 11 TOWERS IN HIG LUXUR Y ZONE OF THE PROJECT NAMED UPOHAR THE CONDOVILLE . BEFORE DEALING WITH THE ISSUES RAISED IN APPEAL IT IS FIRST NECESSARY TO SET OUT THE RELEVANT PROVISIONS OF SEC TION 80IB(10) AS WERE IN FORCE AT THE TIME WHEN THE PROJECT WAS APPROVED IN MARCH 200 7. ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 14 THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAK ING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PR OFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUS ING PROJECT IF (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER 1998 AND COMPLETES SUCH CONSTRUCTION (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL 2004 ON OR BEFORE THE 31ST DAY OF MARCH 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN OR IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL 2 004 WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOU SING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION .FOR THE PURPOSES OF THIS CLAUSE (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE SUCH HOUSING PROJECT SHALL BE DEEME D TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNM ENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DEC LARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPA L LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OT HER PLACE; AND (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIV E PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAN D SQUARE FEET WHICHEVER IS LESS. 8. FROM THE LANGUAGE EMPLOYED BY THE LEGISLATURE WE NOTE THAT AN ASSESSEE ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUC TION OF HOUSING PROJECT IS ELIGIBLE TO CLAIM DEDUCTION ONLY IF THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) ARE FULFILLED. THE PRIMARY CONDITION WHICH AN UNDERTAKI NG CLAIMING DEDUCTION MUST FULFILL IS THAT THE UNDERTAKING SHOULD DEVELOP A HOUSING PROJ ECT. ALTHOUGH DEVELOPMENT OF HOUSING PROJECT IS THE PREREQUISITE THE SAID TER M IS NOWHERE DEFINED IN SECTION 80IB OF THE ACT. IN ABSENCE OF THE DEFINITION OF THIS TE RM THE WORD HOUSING PROJECT HAS BEEN JUDICIALLY INTERPRETED BY DIFFERENT APPELLATE FORUMS BY TAKING AID OF THE ANALOGOUS PROVISIONS CONTAINED IN THE ACT. WE NOTE THAT THE ISSUE AS TO WHAT ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 15 CONSTITUTES A HOUSING PROJECT FOR THE PURPOSES OF SECTION 80-IB(10) CAME UP FOR CONSIDERATION BEFORE THE HONBLE MADRAS HIGH COURT IN THE CASE OF VISHWAS PROMOTERS PVT LTD VS ACIT ( 29 TAXMANN.COM 19) WHEREIN THE ASSESSEE HAD UNDERTAKEN FOUR PROJECTS WHICH INTER ALIA INCLUDED PROJECT VAJRA AND AGRINI CONSISTING SEVERAL BUILDING BLOCKS IN WHICH FLATS A DMEASURING LESS THAN 1500 SQ.FT AND MORE THAN 1500 SQ.FT WERE CONSTRUCTED. THE DEDUCTIO N UNDER SECTION 80IB(10) WAS HOWEVER CLAIMED IN RESPECT OF CERTAIN BUILDING BLOC KS IN WHICH FLATS MEASURING LESS THAN 1500 SQ.FT WERE SITUATED. IT WAS THE ASSESSEE S CONTENTION THAT FOR THE PURPOSES OF SECTION 80IB(10) IT WAS NOT NECESSARY FOR THE A SSESSEE TO SHOW THAT ENTIRE PROJECT CONSISTING OF SEVERAL BUILDING BLOCKS TOGETHER CONS TITUTED A SINGLE HOUSING PROJECT . IT WAS SUFFICIENT THAT IF SOME OF THE BUILDING BLOC KS CONSISTED WITHIN THE SAID PROJECT FULFILLED THE CONDITIONS PRESCRIBED IN SECTION 80IB (10). IN SUCH CASE ALSO IT COULD BE HELD TO BE A HOUSING PROJECT FOR THE PURPOSES OF GRANT OF DEDUCTION U/S 80IB(1 0). SUCH CONTENTION WAS NOT ACCEPTED BY THE AO AND TRIB UNAL. HOWEVER ON APPEAL UNDER SECTION 260A THE HONBLE MADRAS HIGH COURT HE LD AS FOLLOWS: 9. IT IS SEEN FROM THE NARRATION OF FACTS BEFORE T HE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS BEFORE THE OTHER AUTHORITI ES THAT IN THE PROJECT UNDER THE NAME ' AGRINI ' SEPARATE BLOCKS WERE THERE THE DETAILS OF WHICH READ AS FOLLOWS: SECTOR NAME PLINTH AREA (IN SFT.) NO. OF UNITS LAND AREA ALLOCATED SECTOR-I SREENIDHI 2140 48 04.65 ACRES SECTOR-1A SREENIDHI 1690 4 - - SECTOR-II VIMALI 1265 40 01.04 ACRES SECTOR-IIA MITHRA 1050 160 03.08 ACRES SECTOR-IIIB MITHRA DELUXE & NIRMAL DELUXE 1095 36 - - SECTOR-IV NIRMAL 875 240 03.53 ACRES SECTOR-V VAANYA 650 150 01.41 ACRES 10. IT IS NOT DENIED BY THE REVENUE THAT AS FAR AS THE PROJECT ' VAJRA ' IS CONCERNED AS IN THE CASE OF AGRINI THERE ARE SIX BLOCKS CONSIST ING OF 24 FLATS. THE DISPUTE IN THESE CASES HEREIN IS ON AN ISSUE AS TO WHETHER THE ASSES SEE HAS TO LOSE THE DEDUCTION IN RESPECT THE ENTIRETY OF THE PROJECTS ' VAJRA ' AND ' AGRINI ' SOLELY BY REASON OF THE FACT THAT ONE OF THE BLOCKS DEVELOPED BY THE APPELLANT I N THIS PROJECT HAD FLATS EXCEEDING 1500 SQ.FT. 11. IT IS AN ADMITTED FACT THAT EACH ONE OF BLOCKS HAD SEPARATE SANCTION FROM THE COMPETENT AUTHORITY. EVEN THOUGH THE LARGER AREA CO MPRISED IN THE NAME AND STYLE OF ' AGRINI ' AND ' VAJRA ' IS STATED TO BE THE MASTER PLAN OF THE PROJECT I T IS NOT DENIED BY THE REVENUE THAT EACH BLOCK IN EACH OF THE PROJECTS HAS ITS OWN SPECIFICATION; HENCE HAD GONE FOR PLANNING APPROVAL BY THE COMPETENT PLA NNING AUTHORITY. IN THE BACKGROUND OF THIS THE QUESTION THAT ARISES FOR CO NSIDERATION IS AS TO WHETHER THE ASSESSEE WOULD LOSE ITS CLAIM FOR DEDUCTION IN RESP ECT OF THOSE BLOCKS WHICH SATISFIED THE CONDITIONS UNDER SECTION 80IB(10) OF THE ACT BY REASON OF SOME OF THE STOCKS NOT SATISFYING THE CONDITION UNDER SECTION 80IB(10) OF THE ACT. 12. IT IS NOT DENIED BY THE REVENUE THAT THERE IS N O DEFINITION OF THE EXPRESSION ' HOUSING PROJECT ' UNDER SECTION 80IB OF THE ACT. THE SAID EXPRESSIO N IS DEFINED UNDER EXPLANATION TO SECTION 80HHBA OF THE INCOME T AX ACT WHICH READS AS UNDER: ' SECTION 80HHBA . - DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM HOUSING PROJECTS IN CERTAIN CASES. ** ** ** ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 16 EXPLANATION : FOR THE PURPOSES OF THIS SECTION - (A) 'HOUSING PROJECT' MEANS A PROJECT FOR - (I) THE CONSTRUCTION OF ANY BUILDIN G ROAD BRIDGE OR OTHER STRUCTURE IN ANY PART OF INDIA ' 13. SECTION 80IA OF THE ACT IS A SPECIFIC PROVISION WHICH DEALS WITH DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERT AKINGS OR ENTERPRISES ENGAGED IN THE DEVELOPMENT OF INFRASTRUCTURAL FACILITIES SUCH AS ROADS BRIDGES AND OTHER STRUCTURE AS REGARDS THE GRANT OF DEDUCTION IN RESPECT OF DEV ELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT. SECTION 80IB IS A SPECIFIC PROVISI ON IN RESPECT OF PROFITS AND GAINS FROM UNDERTAKINGS ENGAGED IN DEVELOPING AND CONSTRU CTING HOUSING PROJECTS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. THUS HOUSING PROJECTS CONSIDERED HEREIN UNDER SECTION 80IB REFERS TO ANY BUILDING OT HER THAN ROAD BRIDGE OR OTHER STRUCTURE. THUS GOING BY THE DEFINITION OF ' HOUSING PROJECT ' TO MEAN THE CONSTRUCTION OF ' ANY BUILDING ' AND THE DEDUCTION UNDER SECTION 80IB OF THE ACT I S HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT YEAR FROM SUCH HOUSING PROJECT COMPLYING WITH THE CONDITION EACH BLOCK IN THE LARGER PROJECT BY NAME ' AGRINI ' AND ' VAJRA ' HAS TO BE TAKEN AS AN INDEPENDENT BUILDING AND HENCE A HOUSING PROJECT F OR THE PURPOSE OF CONSIDERING A CLAIM OF DEDUCTION. SECTION 80IB(10) BEGINS BY STAT ING: ' (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 3 1ST DAY OF MARCH 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEA R FROM SUCH HOUSING PROJECT IF (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER 1998 AND COMPLETES SUCH CONSTRUCTION ** ** ** ' THUS THE UNDERTAKING QUALIFYING FOR DEDUCTION UNDER SECTION 80IB OF THE ACT IS AN ' UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S ' AND THE DEDUCTION IS IN RESPECT OF ' PROFITS AND GAINS DERIVED FROM ' SUCH HOUSING PROJECT SATISFYING THE CONDITIONS STIPULATED IN TH E CLAUSE THEREIN. THUS WITHIN A COMPOSITE HOUSING PROJECT WHERE THERE ARE ELIGIB LE AND INELIGIBLE UNITS THE ASSESSEE CAN CLAIM DEDUCTION IN RESPECT OF ELIGIBLE UNITS IN THE PROJECT AND EVEN WITHIN THE BLOCK THE ASSESSEE IS ENTITLED TO CLAIM PROPORTIONATE RELIEF IN THE UNITS SATISFYING THE EXTENT OF THE BUILT-UP ARE A. 9. WE ALSO FIND THAT A SIMILAR ISSUE CAME UP FOR CO NSIDERATION BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL AT PUNE IN THE CASE OF SIDDH IVINAYAK KOHINOOR VENTURE VS ACIT REPORTED IN 54 TAXMANN.COM 32. IN THAT CASE ALSO IT WAS THE ASSESSEES PLEA THAT IT HAD EXECUTED TWO INDEPENDENT HOUSING PROJEC TS WHICH WERE SANCTIONED BY SINGLE APPROVAL GRANTED BY LOCAL AUTHORITY. OUT OF THE TWO PROJECTS THE ASSESSEE HAD COMPLETED THE CONSTRUCTION OF 293 UNITS IN ONE PROJ ECT COMPRISING OF 295 UNITS AND DEDUCTION UNDER SECTION 80IB(10) WAS CLAIMED ONLY I N RESPECT OF THE COMPLETED UNITS. THE CLAIM WAS REJECTED PRINCIPALLY ON THE GROUND TH AT BOTH THE HOUSING PROJECTS SANCTIONED SIMULTANEOUSLY TOGETHER CONSTITUTED A SI NGLE COMPOSITE HOUSING PROJECT AND THEREFORE DEDUCTION WAS NOT PERMISSIBLE SINCE C OMPLETION CERTIFICATE FOR THE ENTIRE HOUSING PROJECT WAS NOT OBTAINED BY THE ASSE SSEE. ON APPEAL THIS TRIBUNAL ALLOWED THE ASSESSEES CLAIM. THE RELEVANT FINDINGS OF THE TRIBUNAL IN THE SAID DECISION ARE REPRODUCED HEREUNDER: 10. THE AO HAS NOT ACCEPTED THE PLEA OF THE ASSESS EE THAT ' SWRH ' AND ' S3 ' PROJECTS WERE TWO INDEPENDENT AND SEPARATE PROJECTS FOR THE PURPOSE OF S. 80- IB(10) OF THE ACT. THE AO AFTER NOTICING THE CHRON OLOGY OF EVENTS WHICH WE ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 17 HAVE DEALT IN THE EARLIER PARAS POINTED OUT THAT ' SWRH ' PROJECT COMPRISING OF 295 ROW HOUSES DID NOT COME INTO EXISTENCE BY WAY O F ANY SPECIFIC APPROVAL OF PCMC. AS PER THE AO IN THE PLAN APPROVALS DT. 1 0TH SEPT. 2003 AND 29TH MARCH 2005 PCMC HAS APPROVED CONSTRUCTION OF ROW HOUSES AS WELL AS CONSTRUCTION OF FLATS. IN PARA 12(3) AT P. 20 OF TH E ASSESSMENT ORDER THE ASSERTION OF THE AO IS THAT THE TWO PROJECTS I.E. ' SWRH ' PROJECT FOR ROW HOUSES AND ' S3 ' PROJECT FOR FLATS HAVE A ' SINGLE UMBILICAL CORD ' BY WAY OF A COMMON BUILDING PERMISSION GRANTED BY THE PCMC ON 2 9TH MARCH 2005. 11. THE SECOND POINT MADE BY THE AO TO SHOW THAT TH E TWO PROJECTS ARE A COMPOSITE PROJECT IS CONTAINED IN PARA 12(6) OF THE ASSESSMENT ORDER WHEREIN IT IS OBSERVED THAT THE PCMC ALLOWED THE ASSESSEE T O USE THE UNUTILIZED EXTRA FSI OF 24 645 SQ. MTRS. OF THE ROW HOUSES AREA TO B UILD THE FLATS BECAUSE THE CONSTRUCTION OF ROW HOUSES AND FLATS WAS CONSIDERED AS A COMPOSITE PROJECT. . 13. IN NUTSHELL THE AO HELD THAT ASSESSEE HAD UNDE RTAKEN ONLY ONE PROJECT WHICH COMPRISED OF CONSTRUCTION OF ROW HOUSES AS WE LL AS FLATS AND THAT THE TWO WERE NOT SEPARATE PROJECTS AS CLAIMED BY THE A SSESSEE. ACCORDINGLY THE AO CONCLUDED THAT ASSESSEE HAD UNDERTAKEN A SINGULA R PROJECT CONSISTING OF CONSTRUCTION OF 611 RESIDENTIAL UNITS ( I.E. 295 ROW HOUSES AND 316 FLATS ) AND SINCE PRIOR TO THE STIPULATED DATE OF 31ST MARCH 2 008 THE COMPLETION CERTIFICATES WERE OBTAINED FROM PCMC ONLY FOR 293 U NITS OUT OF THE TOTAL 611 RESIDENTIAL UNITS ASSESSEE DID NOT COMPLY WITH THE CONDITION SPECIFIED IN S. 80- IB(10)(A)(I) OF THE ACT. CONSEQUENTLY THE DEDU CTION CLAIMED BY THE ASSESSEE UNDER S. 80- IB(10) OF THE ACT WAS DENIED. . 16. APART FROM THE AFORESAID LEARNED COUNSEL CONTE NDED THAT FACTUALLY ALSO THE TWO PROJECTS WERE NOT ONLY PERCEIVED BUT ALSO E XECUTED AS INDEPENDENT AND SEPARATE PROJECTS BY THE ASSESSEE. FOR THIS PUR POSE HE HAS REFERRED TO THE RELEVANT PAGES OF THE PAPER BOOK CONTAINING THE PLANS AND BROCHURES OF THE TWO PROJECTS TO SHOW THAT THEY HAVE BEEN CONCEI VED AND MARKETED SEPARATELY. REFERENCE HAS ALSO BEEN MADE TO CERTAIN ADVERTISEMENTS OF THE PROJECTS COPIES OF WHICH HAVE BEEN PLACED IN THE P APER BOOK TO POINT OUT THAT THE TWO PROJECTS WERE ADVERTISED ALTOGETHER SE PARATELY. 17. WITH REGARD TO THE ACTION OF THE AO IN RELYING UPON THE STATEMENT OF THE CHIEF ENGINEER PCMC THE LEARNED COUNSEL POINTED O UT THAT FROM THE POINT OF PCMC ALL THE BUILDINGS SANCTIONED UNDER ONE PLAN MA Y CONSTITUTE A SINGLE PROJECT SO HOWEVER THIS WAS NOT THE POSITION FOR T HE PURPOSES OF EXAMINING ASSESSEE'S CLAIM FOR DEDUCTION UNDER S. 80- IB(10) OF THE ACT. IT WAS ALSO SUBMITTED THAT UTILIZATION OF EXTRA FSI OF THE ROW HOUSES PROJECT FOR THE PURPOSES OF CONSTRUCTION OF FLATS DOES NOT INDICATE THAT IT WAS A SINGLE PROJECT. THE LEARNED COUNSEL EMPHASIZED THAT THE 295 ROW HOU SES PROJECT CAN INDEPENDENTLY CONSTITUTE A ' HOUSING PROJECT ' AND THE ELIGIBILITY OF ASSESSEE'S CLAIM FOR DEDUCTION UNDER S. 80-IB(10) OF THE ACT I S TO BE CONSIDERED IN THAT LIGHT. IT WAS SUBMITTED THAT NO DEDUCTION EITHER I N THIS YEAR OR IN THE SUBSEQUENT YEARS HAVE BEEN CLAIMED WITH REGARD TO THE ' S3 ' PROJECT AND THAT ON THIS ASPECT THERE IS NO DISPUTE. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUS ED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS CITED AT BAR. S EC. 80-IB(10) OF THE ACT PERMITS DEDUCTION TO AN ASSESSEE UNDERTAKING DEVELO PMENT AND BUILDING OF A ' HOUSING PROJECT ' APPROVED BY A ' LOCAL AUTHORITY '; AND SUCH DEDUCTION IS ALLOWED TO THE EXTENT OF 100 PER CENT OF PROFITS DE RIVED FROM THE ' HOUSING PROJECT ' SUBJECT TO THE CONDITIONS SPECIFIED THEREIN. SHO RN OF OTHER DETAILS THE ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 18 ONLY CONDITION RELEVANT FOR THE PRESENT PURPOSE IS CONTAINED IN CL. (A) OF S. 80- IB(10) OF THE ACT WHICH IS WITH REGARD TO TIME-LIM ITS FOR COMPLETION OF CONSTRUCTION OF 'HOUSING PROJECT'. IN THE PRESENT C ASE THERE IS NO DISPUTE THAT THE PERMISSIBLE PERIOD FOR COMPLETION OF CONSTRUCTI ON IS TO BE GOVERNED BY SUB-CL. (I) OF CL. (A) TO S. 80-IB(10) OF THE ACT BECAUSE THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY I.E. PCMC BEFO RE 1ST APRIL 2004; AND ACCORDINGLY THE PROJECT IS REQUIRED TO BE COMPLETED ON OR BEFORE 31ST MARCH 2008. TO THE AFORESAID EXTENT THERE IS NO DIFFEREN CE BETWEEN ASSESSEE AND THE REVENUE. HOWEVER THE DIFFERENCE ARISES AS TO W HICH IS THE 'HOUSING PROJECT' THAT IS REQUIRED TO BE EVALUATED TO ASCERT AIN WHETHER CONSTRUCTION HAS BEEN COMPLETED ON OR BEFORE 31ST MARCH 2008 IN TER MS OF S. 80-IB(10)(A)(I) OF THE ACT. AS PER THE REVENUE THE PROJECT TO BE CONS IDERED COMPRISES OF 611 RESIDENTIAL UNITS ( I.E. 295 ROW HOUSES AND 316 FLATS ) AND IF IT IS SO CONSIDERED THE ASSESSEE HAS NOT COMPLETED CONSTRUC TION OF THE PROJECT BEFORE 31ST MARCH 2008 AND THUS ASSESSEE BECOMES I NELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER S. 80TB(10) OF THE ACT. 25. OSTENSIBLY THE PERTINENT ISSUE WHICH IS REQUIR ED TO BE ADJUDICATED IN THE PRESENT CASE IS AS TO WHETHER ' SWRH' PROJECT AND 'S3 ' PROJECT ARE TWO INDEPENDENT PROJECTS OR A SINGLE PROJECT FOR THE PU RPOSES OF DETERMINING ASSESSEE'S ELIGIBILITY FOR THE CLAIM OF DEDUCTION U NDER S. 80-IB(10) OF THE ACT. WE MAY EMPHASIZE HERE THAT THE CLAIM OF THE ASSESSE E FOR DEDUCTION UNDER S. 80-IB(10) OF THE ACT IS CONFINED TO THE PROFITS DERIVED IN RESPECT OF THE ' SWRH ' PROJECT ALONE. SEC. 80-IB(10) OF THE ACT ALLOWS E XEMPTION OF PROFITS DERIVED FROM DEVELOPING AND BUILDING OF A HOUSING P ROJECT SUBJECT TO THE CONDITIONS PRESCRIBED THEREIN. NOTABLY THE EXPRESS ION ' HOUSING PROJECT ' HAS NOT BEEN DEFINED IN S. 80-IB(10) OF THE ACT A SITU ATION THAT HAS ALSO BEEN NOTED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA). IN FACT THE HON'BLE HIGH COURT WAS CONSID ERING A PROJECT WHICH WAS FALLING IN THE PURVIEW OF THE MUMBAI MUNICIPAL CORP ORATION ACT 1988 AS ALSO UNDER THE DEVELOPMENT CONTROL REGULATIONS FOR GREAT ER MUMBAI 1991 AND THE HON'BLE COURT NOTICED THAT THE EXPRESSION ' HOUSING PROJECT ' IS NOT DEFINED IN THE AFORESAID TWO ENACTMENTS ALSO. THEREFORE TH E EXPRESSION ' HOUSING PROJECT ' IN S. 80-IB(10) OF THE ACT WOULD HAVE TO BE CONST RUED AS ' COMMONLY UNDERSTOOD ' AS PER THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA). AS PER THE HON'BLE BOMBAY HIGH COURT CONSTRUCTION OF EVEN ONE BUILDING WITH SEVERAL RESIDENTIAL UNITS OF THE PRESCRIBED SIZE WOULD CONSTITUTE A 'HOUSING PROJECT' FOR THE PURPOSES OF S. 80-IB(10) OF THE ACT . 30. FROM THE AFORESAID DISCUSSION IT CAN BE INFERR ED THAT IN ORDER TO UNDERSTAND THE MEANING OF THE EXPRESSION ' HOUSING PROJECT' FOR THE PURPOSE OF S. 80-IB(10) OF THE ACT IN THE ABSENCE OF ANY D EFINITION IN S. 80-IB(10) OF THE ACT OR EVEN IN THE LOCAL DEVELOPMENT CONTROL RU LES FOR PCMC IT HAS TO BE CONSTRUED AS ' COMMONLY UNDERSTOOD '. THE PLEA OF THE REVENUE THAT EXPRESSION ' HOUSING PROJECT ' SHOULD BE UNDERSTOOD TO MEAN THE PROJECT AS APPROVED BY THE ' LOCAL AUTHORITY ' IS NOT JUSTIFIED BECAUSE EVIDENTLY THE DEVELOPMENT CONTROL RULES OF THE ' LOCAL AUTHORITY ' I.E. PCMC DOES NOT DEFINE A ' HOUSING PROJECT' . IN FACT FROM THE DISCUSSION IN THE FOREGOING PAR AS IT IS EVIDENT THAT EVEN A BUILDING OR A GROUP OF BUILDING S COMPRISED IN A LARGER PROJECT APPROVED BY A ' LOCAL AUTHORITY ' CAN BE CONSTRUED AS A ' HOUSING PROJECT ' FOR THE PURPOSE OF CONSIDERING A CLAIM OF DEDUCTI ON UNDER S. 80- IB(10) OF THE ACT. CONSIDERED IN THIS BACKGROUND I N THE INSTANT CASE THE PLEA OF THE ASSESSEE THAT ' SWRH ' PROJECT IS AN INDEPENDENT PROJECT FOR THE PURPOSE OF CONSIDERING A CLAIM OF DEDUCTION UNDER S. 80-IB( 10) OF THE ACT CANNOT BE SHUT OUT MERELY BECAUSE PCMC APPROVED IT ALONG WITH THE ' S3 ' PROJECT. THEREFORE WHILE EVALUATING THE COMPLIANCE WITH THE CONDITION OF COMPLETION OF ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 19 CONSTRUCTION OF THE PROJECT CONTAINED IN S. 80-IB(1 0)(A)(I) OF THE ACT WE UPHELD ASSESSEE'S PLEA THAT ' SWRH ' PROJECT BE CONSTRUED AS A ' HOUSING PROJECT ESPECIALLY WHEN THE CLAIM FOR DEDUCTION UNDER S. 80 -IB(10) OF THE ACT IS CONFINED TO THE PROFITS OF ' SWRH ' PROJECT. 31. APART FROM THE AFORESAID FACTUALLY SPEAKING AL SO IT EMERGES THAT ' SWRH ' PROJECT HAS BEEN DEVELOPED AND EXECUTED BY THE ASSE SSEE INDEPENDENT OF THE ' S3 ' PROJECT. FIRSTLY BY ITS VERY NATURE THE TWO PRO JECTS ARE DIFFERENT IN AS MUCH AS ' SWRH ' PROJECT CONSISTS OF ROW HOUSES ON A CONTIGUOUS PL OT SIZE OF MORE THAN ONE ACRE; WHEREAS THE ' S3 ' PROJECT CONSISTS OF ONLY MULTI-STOREYED FLATS. SECONDLY IT IS ALSO NOTABLE THAT ASSESSEE M ARKETED AND ADVERTISED THE TWO PROJECTS SEPARATELY. AT PP. 255 TO 260 OF THE P APER BOOK IS PLACED THE BROCHURE OF ' SWRH ' PROJECT IN WHICH THERE IS NO REFERENCE TO THE ' S3 ' PROJECT CONSISTING OF FLATS. SIMILARLY THE BROCHURE IN RES PECT OF ' S3 ' PROJECT PLACED IN THE PAPER BOOK AT PP. 471 TO 475 ALSO DOES NOT CONT AIN ANY REFERENCE TO THE ' SWRH ' PROJECT CONSISTING OF ROW HOUSES. ON P. 263 OF TH E PAPER BOOK IS A COPY OF A NEWSPAPER ADVERTISEMENT RELEASED BY THE A SSESSEE REGARDING THE ' SWRH ' PROJECT OF ROW HOUSES WHICH DOES NOT CONTAIN ANY REFERENCE TO ' S3 ' PROJECT COMPRISING OF FLATS. THIRDLY EVEN IN THE A UDIT REPORT FILED IN FORM NO. 10CCB CERTIFYING THE CLAIM OF DEDUCTION UNDER S. 80 -IB(10) OF THE ACT THE DEDUCTION HAS BEEN COMPUTED BY CONSIDERING ' SWRH ' PROJECT AS A SEPARATE PROJECT. IN THIS REPORT SIZE OF THE PLOT OF LAND I S STATED TO BE 55 950 SQ. MTRS. WHICH IS THE PLOT AREA ON WHICH THE ' SWRH ' PROJECT CONSISTING OF 295 ROW HOUSES IS CONSTRUCTED. CONSIDERING ALL THE AFORESAI D FACTORS WE FIND AMPLE FORCE IN THE PLEA OF THE ASSESSEE THAT ' SWRH ' PROJECT WAS NOT ONLY PERCEIVED BUT ALSO DEVELOPED AND EXECUTED AS A SEPARATE PROJE CT INDEPENDENT OF THE 'S3 ' PROJECT AND THUS ASSESSEE WAS JUSTIFIED IN C ONSIDERING ' SWRH ' PROJECT AS 'HOUSING PROJECT' FOR THE PURPOSES OF S. 80-IB(1 0) OF THE ACT.(EMPHASIS SUPPLIED ) 10. SUBSEQUENT TO PHASING OUT OF SECTION 80IB(10) S IMILAR DEDUCTION IS NOW PROVIDED IN SECTION 80IBA OF THE ACT UNDER WHICH 100% PROFIT S DERIVED FROM THE HOUSING PROJECTS ARE ALLOWED TO BE DEDUCTED. SECTION 80IBA( 2)(B) SPECIFICALLY PROVIDES THAT THE DEDUCTION IS PERMISSIBLE IF THE PROJECT IS COMP LETED WITHIN FIVE YEARS FROM THE DATE OF APPROVAL BY THE COMPETENT AUTHORITY. THE PROVISO TO SECTION 80IBA(2) EXPRESSLY CLARIFIES THAT THE PROJECT SHALL BE DEEMED TO HAVE BEEN COMPLETED WHEN A CERTIFICATE OF COMPLETION OF PROJECT AS A WHOLE IS OBTAINED IN WRITING FROM THE COMPETENT AUTHORITY. WE FURTHER NOTE THAT CLAUSE (E) OF SUB-S ECTION (2) OF SECTION 80IBA REQUIRES THAT THE PROJECT IS THE ONLY HOUSING PROJECT ON THE PLOT OF LAND AS SPECIFIED IN CLAUSE (D). ON CONJOINT READING OF THE PROVISIONS OF SECTI ON 80IB(10) 80HHBA AND 80IBA AND THE JUDICIAL DECISIONS (SUPRA) WE NOTE THAT TH E PROVISIONS OF SECTION 80IB(10) HAVE BEEN JUDICIALLY HELD TO BE WIDER IN ITS APPLIC ATION AND THEREFORE EVEN A SINGLE BUILDING COMPRISED IN A LARGER CONCEPT PLAN SANCTIO NED BY THE LOCAL AUTHORITY AND WHICH HOUSES SEVERAL RESIDENTIAL UNITS OF THE SPECI FIED SIZE IS CONSIDERED TO BE A HOUSING PROJECT PROVIDED THAT THE SAME FULFILLS THE CONDITIONS LA ID DOWN IN SECTION 80IB(10). WE FIND THAT WHEREVER THE LEGISLATURE INT ENDED TO RESTRICT THE SCOPE & APPLICATION OF A PROFIT-LINKED DEDUCTION THEN THE S PECIFIC RESTRICTIVE PROVISIONS HAVE BEEN ENACTED AS IS EVIDENT FROM THE LANGUAGE EXPRES SLY USED IN SECTION 80IBA. APPLYING THE RATIO LAID DOWN IN THE DECISIONS (SUPR A) TO THE FACTS OF THE CASE WE NOTE THAT THE CONCEPT PLAN FOR THE PROJECT TITLED AS UPOHAR THE CONDOVILLE WAS GIVEN APPROVAL BY KMC ON 30.03.2007. FROM THE COPY OF APP ROVED CONCEPT PLAN WE FIND THAT ALTHOUGH LAND PLOT SIZE IN AGGREGATE WAS 18.62 ACRES THIS PLOT WAS DIVIDED AND DEMARCATED INTO FIVE DIFFERENT ZONES IN THE FOLLOWI NG MANNER: ZONE PROJECT LAND ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 20 A RESIDENTIAL BUILDINGS EFFICIENCY & COMFORT FOR LIG & MIG CATEGORIES 2.846 ACRES B VOCATIONAL TRAINING CENTRE & SHOPPING ZONE 1.112 ACRE S C CLUB ZONE 2.021 ACREA D LUXURY ZONE CONSISTING OF 5 PHASES OF RESIDENTIAL HOUSING TOWERS FOR HIG CATEGORY 11.454 ACRES E AREA COMPRISED IN COMMON INSTALLATIONS FOR CIVIC IN FRASTRUCTURE 1.187 ACARES TOTAL 18.62 ACRES 11. FROM THE ASSESSMENT ORDER WE NOTE THAT THE AO P ER SE DID NOT QUESTION OR DISPUTE THE FACT THAT ZONE WISE DEVELOPMENT OF 18.6 2 ACRES WAS CARRIED OUT BY THE ASSESSEE INDEPENDENTLY. WE ALSO NOTE FROM THE AOS IMPUGNED ORDER THAT IT WAS HIS CASE THAT ENTIRE LAND ADMEASURING 18.62 ACRES WAS T O BE DEVELOPED AS A SINGLE COMPOSITE AND INTEGRATED HOUSING PROJECT . IN ANY CASE FROM THE SANCTIONED CONCEPT PLAN WE NOTE THAT EACH OF THE FIVE ZONES CO MPRISED IN THE CONCEPT PLAN WERE TO BE SET-UP AND DEVELOPED ON DEMARCATED LAND PARCE LS AND THEREFORE IT COULD NOT BE CONSTRUED TO BE SINGLE OR COMPOSITE OR AN INTEGRATE D PROJECT AS CLAIMED BEFORE US BY THE LD. CIT DR. HAVING REGARD TO THE FACTS AND MAT ERIAL ON RECORD WE THEREFORE FIND MERIT IN THE LD. ARS SUBMISSIONS THAT FOR THE PURP OSES OF GRANT OF DEDUCTION U/S 80IB(10) THE ENTIRE LAND PARCEL COVERING 18.62 ACRE S CANNOT BE CONSIDERED TO BE A SINGLE HOUSING PROJECT . 12. WE FURTHER NOTE THAT THE APPELLANTS CLAIM FOR DEDUCTION U/S 80IB(10) WAS IN RESPECT OF HOUSING PROJECT NAMED AS UPOHAR THE CONDOVILLE HIG LUXURY SEGMENT WHICH THE ASSESSEE DEVELOPED IN FIVE DIFFER ENT AND DISTINCT PHASES. ELEVEN RESIDENTIAL TOWERS COMPRISED IN HIG LUXURY ZONE WER E DIVIDED INTO FIVE PHASES AND EACH PHASE WAS CONSTRUCTED ON THE DEMARCATED LAND A REA EXCEEDING ONE ACRE DETAILS OF WHICH ARE AS FOLLOWS: PHASE AREA IN ACRES TOWER NOS I 3.124 2 3 4 II 3 124 5 6 7 III 2 083 8 & 9 IV 1.041 10 V 2.083 I & II 13. WE NOTE THAT THE ELEVEN TOWERS OF HIG LUXURY ZO NE COMPRISED FLATS WHICH INDIVIDUALLY MEASURED LESS THAN AS WELL AS MORE THA N 1500 SQ FT. THE DEDUCTION WAS HOWEVER CLAIMED ONLY IN RESPECT OF PROFIT DERIVED F ROM SALE OF FLATS INDIVIDUALLY ADMEASURING LESS THAN 1500 SQ FT. OF THE BUILT UP A REA.FROM THE FACTS ON RECORD IT IS FOUND THAT THE ASSESSEE MAINTAINED SEPARATE BOOKS O F ACCOUNT FOR EACH PHASE AND ALSO OBTAINED AUDIT REPORTS IN PRESCRIBED FORM 10CC B FOR EACH HOUSING PROJECT SEPARATELY. THE ASSESSEE REGULARLY FOLLOWED PERCENT AGE OF COMPLETION METHOD OF REVENUE RECOGNITION AND FOR THIS PURPOSE THE REVEN UE RECOGNIZED FOR EACH PHASE SUBSTANTIALLY DIFFERED IN EACH YEAR AS IS NOTED FRO M THE FOLLOWING CHART: ASST. YEAR PHASE-I PHASE-II PHASE- III PHASE-IV 2010-11 39.92% 39.83% 39.62% NIL 2011-12 100% 63.31% 56.56% 60.23% 2012-13 NIL 99.71% 97.94% 93.48% 14. WE FIND THAT IN THE ORDERS FOR THE YEARS UNDER CONSIDERATION FOR THE PURPOSE OF ASSESSING THE INCOME THE AO DID NOT DISPUTE OR CHA LLENGE THE REVENUE RECOGNITION METHOD ADOPTED BY THE ASSESSEE. WE THEREFORE FIND M ERIT IN THE LD. ARS SUBMISSION THAT THE ASSESSEE DID NOT ARBITRARILY BIFURCATE DEV ELOPMENT OF 11 TOWERS IN FIVE PHASES ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 21 ONLY FOR DERIVING UNDUE TAX BENEFIT. WE ALSO NOTE T HAT MARKETING OF EACH PHASE WAS CARRIED OUT AT DIFFERENT POINTS IN TIME AND THEREFO RE THE AVERAGE PRICE REALIZATION FOR EACH PHASE DIFFERED SIGNIFICANTLY. WE ALSO NOTE THA T THE COMPLETION OF EACH PHASE WAS CERTIFIED BY THE ARCHITECT ON DIFFERENT DATES A ND THE RELEVANT CERTIFICATES WERE FURNISHED BEFORE THE LOWER AUTHORITIES. HAVING REGA RD TO THESE FOUNDATIONAL FACTS AND THE JUDICIAL DECISIONS CITED ABOVE WE THEREFORE DO NOT FIND MERIT IN THE REVENUES ARGUMENTS TO THE EFFECT THAT EITHER ENTIRE PROJECT COVERING 18.62 ACRES OR EVEN THE ENTIRE HIG LUXURY ZONE OF 11.454 ACRES CONSISTING O F 11 TOWERS TOGETHER CONSTITUTED SINGLE HOUSING PROJECT FOR THE PURPOSE OF SECTION 8 0IB(10) OF THE ACT. WE THEREFORE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED ON FACTS IN CONCLUDING THAT THE ASSESSEE HAD DEVELOPED FIVE INDEPENDENT HOUSING PROJECTS WHICH C OMPRISED IN HIG LUXURY ZONE OF UPOHAR THE CONDOVILLE . SINCE WE HAVE HELD THAT HIG LUXURY ZONE PHASE I WAS A SEPARATE AND INDEPENDENT HOUSING PROJECT WHI CH COMPRISED OF ONLY RESIDENTIAL UNITS THE REVENUES OBJECTION THAT THE COMMERCIAL AREA IN THE HOUSING PROJECT EXCEEDED THREE PERCENT OF THE TOTAL AREA COMPRISED IN THE CONCEPT PLAN HAS NO BEARING IN DECIDING THE QUESTION OF ELIGIBILITY OF DEDUCTION U/S 80IB(10) IN RESPECT OF PROFITS DERIVED FROM HIG LUXURY ZONE PHASE I. 15. ANOTHER GROUND ON WHICH THE REVENUE OBJECTED TO THE ORDER OF LD. CIT(A) IS THAT THE HOUSING PROJECT UPOHAR THE CONDOVILLE HIG LUXURY ZONE DID NOT QUALIFY FOR DEDUCTION U/S 80IB(10) BECAUSE ALL THE RESIDENTIAL UNITS COMPRISED IN THE SAID PROJECT DID NOT HAVE INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQFT OF BUILT UP AREA WHICH IS THE CONDITION PRECEDENT FOR AVAILING THE DEDUCTION. WE HOWEVER NOTE THAT THE DEDUCTION WHICH THE APPELLANT CLAIMED AND AS WAS ALLOWED BY L D. CIT(A) PERTAINED TO THE PROFITS ATTRIBUTABLE TO SALE OF RESIDENTIAL UNITS O F PHASE I AND WHICH WERE HAVING INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQFT OF BUIL T-UP AREA. WE FIND THAT THE ISSUE OF PRO-RATA DEDUCTION UNDER SECTION 80IB(10) ATTRIBUTA BLE TO SALE OF FLATS HAVING INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQFT WAS CON SIDERED AND DECIDED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE APPELLANT S OWN CASE FOR THE AY 2002-03 & 2003-04 IN ITA NOS.1595 & 1735/KOL/2005 . THE RELEVANT FINDING OF THE TRIBUNAL IS REPRODUCED BELOW: '22. IT IS APPARENT FROM THE PERUSAL OF SECTION 80- IB(10) THAT THIS SECTION HAS BEEN ENACTED WITH A VIEW TO PROVIDE INCENTIVE FOR B USINESSMEN TO UNDERTAKE CONSTRUCTION OF RESIDENTIAL ACCOMMODATION FOR SMALL ER RESIDENTIAL UNITS AND THE DEDUCTION IS INTENDED TO BE RESTRICTED TO THE PROFI T DERIVED FROM THE CONSTRUCTION OF SMALLER UNITS AND NOT FROM LARGER R ESIDENTIAL UNITS. THOUGH THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSES SEE OBSERVING THAT LARGER UNITS WERE ALSO CONSTRUCTED BY THE ASSESSEE AT THE SAME TIME IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE HAD CLAIMED DEDUCTION O NLY ON ACCOUNT OF SMALLER RESIDENTIAL UNITS WHICH WERE FULFILLING ALL THE CONDITIONS AS CONTAINED IN SECTION 80-IB(10) AND THE SAME HAS NOT BEEN DISPUTE D BY THE ASSESSING OFFICER ALSO. WE HAVE ALSO NOTED DOWN THE FACT THAT EVEN THE PROVISION AS LAID DOWN IN SECTION 80-IB(10) DOES NOT SPEAK REGARDING SUCH DENIAL OF DEDUCTION IN CASE OF PROFIT FROM A HOUSING COMPLEX CONTAINING BOTH THE SMALLER AND LARGE RESIDENTIAL UNITS AND SINCE THE ASSESSEE HAS ONLY C LAIMED DEDUCTION ON ACCOUNT OF SMALLER QUALIFYING UNITS BY FULFILLING A LL THE CONDITIONS AS LAID DOWN UNDER SECTION 80- IB(10) THE DENIAL OF CLAIM BY TH E ASSESSEE IS ON ACCOUNT OF RATHER RESTRICTED AND NARROW INTERPRETATION OF THE PROVISIONS OF CLAUSE (C) OF SECTION 80-IB(10) WHILE COMING TO SUCH CONCLUSION WE ALSO FIND SUPPORT FROM THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. V. CIT [1992] 196 ITR 188 (SC) WHEREIN IT WAS HELD THAT THE PROVISIONS SHOU LD BE INTERPRETED LIBERALLY AND SINCE IN THE PRESENT CASE ALSO THE ASSESSEE BY CLAIMING PRO RATA INCOME ON QUALIFYING UNITS HAS CO MPLIED WITH ALL THE PROVISIONS AS CONTAINED IN THE SAID SECTION IN OUR CONSIDERED OPINION SUCH ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 22 CLAIM OF THE ASSESSEE WAS RIGHTLY ALLOWED BY THE LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS) BY REVERSING THE ORDER OF THE ASSESSING OFFICER.' 16. IT IS FURTHER NOTED THAT THE REVENUES APPEAL U /S 260A OF THE ACT AGAINST THE DECISION OF THIS TRIBUNAL WAS DISMISSED BY THE HON BLE CALCUTTA HIGH COURT. WE ALSO NOTE THAT THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE APPELLANTS CASE WAS FOLLOWED WITH APPROVAL BY THE HONBLE MADRAS HIGH C OURT IN THE CASES OF CIT VS ELEGANT ESTATE (383 ITR 149) CIT VS ARUN EXCELLO F OUNDATIONS (P.) LTD (259 CTR 362) &VISWAS PROMOTERS (P.) LTD VS ACIT (SUPRA) AN D HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS OCEANUS 29 I.T.A NO.151 4/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010-11 & 2011-12 M/S. BENGAL AM BUJA HOUSING DEVELOPMENT LTD. DWELLINGS (P.) LTD (395 ITR 376). IN VIEW OF T HE AFORESAID DECISIONS WE DO NOT FIND MERIT IN THIS OBJECTION RAISED BY THE REVENUE. 17. THE LAST OBJECTION OF THE REVENUE IS THAT THE C OMPLETION CERTIFICATE DATED 29.04.2011WAS ONLY A PARTIAL COMPLETION CERTIFICATE AND THE SAME BEING NOT THE FINAL COMPLETION CERTIFICATE THE ASSESSEE DID NOT COMPLY WITH REQUIREMENT OF CLAUSE (II) CONTAINED IN EXPLANATION TO SECTION 80IB(10) OF THE ACT WHICH REQUIRED THE ASSESSEE TO OBTAIN FINAL COMPLETION CERTIFICATE ON OR BEFORE 31.03.2012. IN THIS REGARD WE NOTE THAT THE ASSESSEE HAD UNDERTAKEN CONSTRUCTION OF DI FFERENT PHASES OF HIG LUXURY ZONE AT DIFFERENT POINTS IN TIME AND FOR REVENUE RE COGNITION THE ASSESSEE HAD FOLLOWED PERCENTAGE OF COMPLETION METHOD. FROM THE AUDIT REPORTS IN PRESCRIBED FORM 10CCB FILED IN SUPPORT OF THE DEDUCTION CLAIME D U/S 80IB WE NOTE THAT 100% OF THE REVENUE DERIVED FROM PHASE I WAS RECOGNIZED BY 31.03.2011. WE NOTE THAT FOR THE PURPOSES OF ASSESSING INCOME DERIVED FROM PHASE I THE REVENUE NEVER DISPUTED THE FACT THAT HUNDRED PERCENT OF THE REVEN UE FROM PHASE I HAD ACCRUED BY 31.03.2011 BECAUSE THE DEVELOPMENT OF PHASE I WAS COMPLETED BY THAT DATE. WE THEREFORE SEE NO REASON FOR THE REVENUE TO DISPUTE AND DISBELIEVE THE ASSESSEES CONTENTION THAT THE HOUSING PROJECT WAS COMPLETED P RIOR TO 31.03.2012. WE ALSO FIND THAT ON COMPLETION OF THE PHASEI THE ASSESSEE NOT ONLY OBTAINED THE CERTIFICATE FROM THE REGISTERED ARCHITECT BUT IT ALSO FILED AN APPLI CATION WITH KMC FOR ISSUE OF COMPLETION CERTIFICATE. WE FIND THAT AFTER THE APPL ICATION WAS FILED KMC CONDUCTED INSPECTION OF TOWERS 2 3 & 4 COMPRISED IN PHASE I AND THEREAFTER ISSUED CERTIFICATE TITLED AS PARTIAL COMPLETION CERTIFICATE UNDER RULE 27 OF THE KMC BUILDING RULES CERTIFYING THAT TOWERS 2 3 & 4 WERE COMPLETED IN C ONFORMITY WITH THE PARTIAL COMPLETION PLAN. THE CORPORATION ALSO CERTIFIED THA T THE BUILDING WAS FIT FOR OCCUPATION AS RESIDENTIAL PURPOSE. WE THEREFORE NOTE THAT ALTH OUGH THE CERTIFICATE DATED 29.04.2011 WAS CLAIMED TO BE PARTIAL COMPLETION YET IN THE SAID CERTIFICATE THE KMC AFTER CONDUCTING PHYSICAL INSPECTION OF TOWERS 2 3 & 4 OF PHASE I HAD CERTIFIED THE SAME TO BE FIT FOR RESIDENTIAL OCCUPATION. WE THERE FORE DO NOT FIND ANY MATERIAL INFIRMITY IN THE LD. CIT(A)S FINDING THAT THE CERT IFICATE DATED 29.04.2011 CONSTITUTED COMPLETION CERTIFICATE CONTEMPLATED FOR THE PURPOSE OF CLAUSE (II) OF EXPLANATION TO SECTION 80IB(10). 18. WE ALSO NOTE THAT KMC ISSUED COMPLETION CERTIFI CATE DATED 14.02.2014 ALSO UNDER RULE 27 OF KMC RULES 1990 IN WHICH IT WAS CE RTIFIED AS FOLLOWS: 'GRANT OF COMPLETION CERTIFICATE UNDER RULE 27 OF K MC BUILDING RULES 1990. THE BUILDING COMPLEX WAS SANCTIONED (B.P.NO.776/XII /06-07 DT. 30/03/07 FOR 11 NOS. HIG TOWERS (62M) 2 NOS. MIG TOWERS (55 M) 1 NO.LIG TOWER (55M) 2 NOS. CLUB HOUSE (HT. 4.5 & 8. 1 M.) 1 MO. COMMERC IAL & VOCATIONAL TRAINING CENTER (HT.1.8M) DEPT. HAS ALREADY ISSUED PARTIAL C.C. FOR 3 NOS. HIG 2 NOS. MIG 1 NO. LIG 2 NOS. CLUB & 1 NONCOMM ERCIAL & VOCATION TRAINING CENTER. NOW COMPLETION CERTIFICATE ISSUED FOR REST OF HIG TOWERS 1 5 6. 7 8 9 10 & 11.' ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 23 19. FROM THE ABOVE WE NOTE THAT WHILE ISSUING THIS CERTIFICATE KMC HAD TAKEN NOTE OF THE PARTIAL COMPLETION CERTIFICATES EARLIER ISSUED AND THEREFORE THE COMPLETION CERTIFICATE WAS ISSUED ONLY FOR THE REST OF THE EIG HT RESIDENTIAL TOWERS COMPRISED IN PHASES II III IV & V OF HIG LUXURY ZONE. BEFORE U S THE LD. CIT DR DID NOT DISPUTE THE FACT THAT THE ASSESSEE HAS COMPLETED THE DEVELO PMENT OF THE ENTIRE PROJECT AND THE ALL BUILDINGS DEVELOPED BY THE ASSESSEE IN THE SAID PROJECT ARE OCCUPIED BY RESIDENTS PURSUANT TO COMPLETION CERTIFICATES GRANT ED BY KMC. WE ALSO NOTE THAT AFTER THE ISSUE OF THE SO CALLED PARTIAL COMPLETION CERTI FICATES KMC DID NOT ISSUE ANY OTHER COMPLETION CERTIFICATES IN RESPECT OF THE BUILDINGS FOR WHICH PARTIAL COMPLETION CERTIFICATES WERE ISSUED. WE THEREFORE FIND FORCE I N THE SUBMISSIONS OF THE LD. AR THAT THE COMPLETION CERTIFICATE ISSUED BY KMC ON 29.04.2 011 IN RESPECT OF TOWERS 2 3 AND 4 OF PHASE I WAS THE ONLY COMPLETION CERTIFICATE TH AT WAS ISSUED BY KMC TILL DATE AND THEREFORE THE ASSESSEE FULFILLED THE CONDITIONS PRE SCRIBED IN CLAUSE (II) OF EXPLANATION TO SECTION 80IB(10). WE ALSO NOTE THAT IN VIEW OF T HE OBJECTIONS TAKEN BY THE LD. CIT DR THE ASSESSEE HAD FILED AN APPLICATION UNDER THE RTI ACT 2006 BEFORE THE SPIO KOLKATA MUNICIPAL CORPORATION IN WHICH THE ASSESSEE REQUESTED THE CORPORATION TO CLARIFY AS TO WHETHER THE PARTIAL COMPLETION CERTIF ICATES BEING NOS. 31/XII/2011-12 DT: 29.04.2011 ISSUED FOR HIG TOWERS 2 3 & 4; NO. 279/X II/2010-2011 DT 20.10.2010 ISSUED FOR BLOCK MIG(A) MIG (B) LIG & MIG-LIG HALL NO. 175/XII/2011-12 DT: 01.12.2011 ISSUED FOR CLUB HOUSE AND NO. 184/XII/20 13-14 DT: 21.01.2014 ISSUED FOR COMMERCIAL VOCATIONAL TRAINING CENTRE SHOULD BE TREATED AS COMPLETION CERTIFICATE IN RESPECT OF THE BUILDING OR A SEPARAT E AND SPECIFIC COMPLETION CERTIFICATE IS TO BE ISSUED FOR THE SAME PRIOR TO O CCUPATION. WE THUS NOTE THAT KMC WAS SPECIFICALLY REQUESTED TO SPELL OUT THE LEGAL P OSITION AS TO WHETHER IN ADDITION TO OBTAINING PARTIAL COMPLETION CERTIFICATE DATED 29.0 4.2011 IN RELATION TO PHASE I WHETHER IT WAS OBLIGATORY FOR THE ASSESSEE TO OBTAI N COMPLETION CERTIFICATE TO COMPLY WITH PROVISIONS OF THE KMC ACT AND RULES THE RE UNDER. IN RESPONSE THE SPIO KMC FURNISHED THE FOLLOWING REPLY TO THE ASSESSEE: IN REFERENCE TO YOUR QUERY RAISED IN RTI APPLICATI ON DATED-22.01.2019 VIDE NO. RTI/BLDG/BR-XII DATED-24.01.2019 THIS IS TO I NFORM YOU THAT KMC BUILDING DEPARTMENT HAD ISSUED PARTIAL COMPLETION CERTIFICAT E FOR DIFFERENT BUILDING/BLOCK IN DIFFERENT TIME. HOWEVER LAST COMPLETION CERTIFICATE WAS ISSUED VIDE NO:202/XII/13-14 DATED 14/02/2014. IT IS MENTIONED THAT ALL THE PARTIAL CO MPLETION CERTIFICATE ISSUED BY KMC BUILDING DEPARTMENT IS CONSIDERED AS GOOD AS THE COMPLETION CERTIFICATE FOR THE BUILDING EXIST WITHIN PREMISES NO-2052 CHAKGARIA WHICH ARE SPECIFICALLY MENTIONED IN THE CERTIFICATE. 20. FROM THE FOREGOING REPLY OF KMC WHICH WAS PROVI DED BY THE COMPETENT AUTHORITY UNDER THE RTI ACT WE NOTE THAT THE AUTHORITY IMPLE MENTING THE PROVISIONS OF KMC ACT 1980 HAD UNEQUIVOCALLY CLARIFIED THAT THE CERT IFICATE DATED 29.04.2011 WAS TO ACT AS THE COMPLETION CERTIFICATE FOR ALL INTENTS AND P URPOSES IN RELATION TO TOWERS 2 3 & 4 COMPRISED IN PHASE I. IN THE CIRCUMSTANCES IF THE LOCAL AUTHORITY WHO WAS VESTED WITH THE POWER AND AUTHORITY OF ISSUING COMPLETION CERTIFICATE ITSELF CERTIFIED THAT THE CERTIFICATE DATED 29.04.2011 WAS TO ACT AS THE COMPLETION CERTIFICATE AND THE ASSESSEE HAD NO LEGAL OBLIGATION TO OBTAIN YET ANOT HER COMPLETION CERTIFICATE THEN WE SEE NO REASON FOR THE REVENUE TO INSIST ON FURNISHI NG FINAL COMPLETION CERTIFICATE . IT IS A TRITE LAW THAT A SUBJECT IS NOT EXPECTED TO PERFORM AN IMPOSSIBILITY. IF THE AUTHORITY VESTED WITH POWER OF ISSUING COMPLETION C ERTIFICATE HAS UNEQUIVOCALLY HAS CERTIFIED THAT THE CERTIFICATE ISSUED BY IT ON 29.0 4.2011 WAS THE COMPLETION CERTIFICATE THEN THE ASSESSEE CANNOT BE EXPECTED TO PRODUCE BEF ORE THE TAX AUTHORITY SOME OTHER CERTIFICATE ONLY BECAUSE THE AO INTERPRETED T HE LAW IN SOME OTHER MANNER. WE MUST BEAR IN MIND THAT IN INTERPRETING THE BENEFICI AL PROVISIONS OF THE ACT ONE MUST ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 24 ESCHEW THE INTERPRETATION WHICH LEADS TO ABSURDITY OR REQUIRES THE ASSESSEE TO COMPLY WITH AN IMPOSSIBILITY. FOR THE FOREGOING REA SONS THEREFORE WE DO NOT FIND MUCH FORCE IN THE ARGUMENT OF THE LD. CIT DR THAT THE BENEFIT OF DEDUCTION WAS NOT PERMISSIBLE BECAUSE THE ASSESSEE HAD FAILED TO OBTA IN FINAL COMPLETION CERTIFICATE PRIOR TO 31.03.2012. 21. IN SUPPORT OF OUR FOREGOIN G CONCLUSIONS WE RELY ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS TARNETAR CORPORATION (362 ITR 174). IN THE INSTANT CASE ASSE SSEE HAS UNDERTAKEN A HOUSING PROJECT WHICH IT WAS REQUIRED TO COMPLETE ON OR BEF ORE 31.03.2008 SO AS TO AVAIL DEDUCTION U/S 80IB(10) OF THE ACT. THE ASSESSEE HAD COMPLETED THE CONSTRUCTION IN 2006 AND SEVERAL RESIDENTIAL UNITS WERE ALSO OCCUPI ED BY THE RESIDENTS. THE ASSESSEE APPLIED TO THE LOCAL AUTHORITY FOR ISSUING COMPLETION CERTIFICATE ON 15.02.2006. THE SAID APPLICATION WAS HOWEVER REJECT ED ON 01.07.2006. THE ASSESSEE THEREAFTER PAID PENALTY AND GOT THE SAME R EGULARIZED FROM THE MUNICIPALITY SUBSEQUENT TO 31.03.2008. THE AO HOWEVER DENIED THE DEDUCTION CLAIMED U/S 80IB(10) SINCE NECESSARY COMPLETION CERTIFICATE WAS NOT OBTAINED BY THE ASSESSEE PRIOR TO 31.03.2008. ON APPEAL THE HONBLE HIGH COU RT ALLOWED THE DEDUCTION CLAIMED U/S 80IB(10) BY OBSERVING AS UNDER: 6 IN THE PRESENT CASE THEREFORE THE FACT THAT TH E ASSESSEE HAD COMPLETED THE CONSTRUCTION WELL BEFORE 31ST MARCH 2008 IS NO T IN DOUBT. IT IS OF COURSE TRUE THAT FORMALLY BU PERMISSION WAS NOT GRANTED BY THE MUNICIPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRUE THAT EXPLANATION T O CLAUSE (A) TO SECTION 80- IB(10) LINKS THE COMPLETION OF THE CONSTRUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. HOWEVER NOT EVERY CONDITION OF THE STATUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL COMPLIANCE THE REOF IS ESTABLISHED ON RECORD IN A GIVEN CASE THE COURT MAY TAKE THE VIE W THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOSE FOR WHIC H DEDUCTION WAS BEING MADE AVAILABLE. 7. IN THE PRESENT CASE THE FACTS ARE PECULIAR. THE ASSESSEE HAD NOT ONLY COMPLETED THE CONSTRUCTION TWO YEARS BEFORE THE FIN AL DATE AND HAD APPLIED FOR BU PERMISSION. SUCH BU PERMISSION WAS NOT REJECTED ON THE GROUND THAT CONSTRUCTION WAS NOT COMPLETED BUT THE SOME OTHER TECHNICAL GROUND. IN THAT VIEW OF THE MATTER GRANTING BENEFIT OF DEDUCTION C ANNOT BE HELD TO BE ILLEGAL. 22. THE ABOVE DECISION OF THE HONBLE GUJARAT HIGH COURT WAS FOLLOWED WITH APPROVAL BY THE SAME COURT IN THE SUBSEQUENT DECISION RENDER ED IN THE CASE OF ITO VS SAKET CORPORATION ( 234 TAXMAN 435 ). IN THE DECIDED CASE THE ASSESSEE HAD COMPLETED CONSTRUCTION OF ALL 43 UNITS COMPRISED IN THE HOUSI NG PROJECT WITHIN THE PRESCRIBED PERIOD OF YEARS. IT WAS HOWEVER ABLE TO OBTAIN PERM ISSION FROM THE LOCAL AUTHORITY WITH RESPECT TO 20 UNITS AND ALTHOUGH APPLICATION WAS FI LED IN RESPECT OF REMAINING 23 UNITS BUT PERMISSION COULD NOT BE OBTAINED IN RELATION TH EREOF. THE AO DISALLOWED THE DEDUCTION CLAIMED U/S 80IB(10) OBSERVING THAT THE N ECESSARY COMPLETION CERTIFICATE WAS NOT OBTAINED BY THE ASSESSEE FROM LOCAL AUTHORI TY. ON APPEAL THE HIGH COURT FOLLOWING THE DECISION IN THE CASE OF CIT VS TARNET AR CORPORATION (SUPRA) HELD AS UNDER: 8 CONSIDERING THE AFORESAID DECISION OF THE DIVISI ON BENCH OF THIS COURT AND THE FACTS OF THE CASE ON HAND AS THE ASSESSEE COMP LETED PROJECT/CONSTRUCTION OF ALL 43 UNITS WITHIN 4 YEARS FROM THE DATE OF APP ROVAL BY THE COMPETENT AUTHORITY AND ALSO APPLIED FOR B.U. PERMISSION WITH IN A PERIOD OF FOUR YEARS WITH RESPECT TO ALL 43 UNITS HOWEVER COULD OBTAIN B.U. PERMISSION WITH RESPECT TO 20 UNITS ONLY AND FOR WHATEVER REASONS WITH RESPECT TO REMAINING 23 UNITS B.U. PERMISSION WAS NOT ISSUED BY THE AUT HORITY AND AS OBSERVED HEREINABOVE CONSTRUCTION OF ALL 43 UNITS WAS COMPL ETED THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT NO ERROR HAS BEEN ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 25 COMMITTED BY THE LEARNED TRIBUNAL IN HOLDING THAT T HE ASSESSEE SHALL BE ENTITLED TO DEDUCTION CLAIMED UNDER SECTION 80IB(10 ) OF THE ACT. 23. IN THIS REGARD WE MAY ALSO GAINFULLY REFER TO THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PR.CIT VS AMBEY D EVELOPERS PVT LTD REPORTED IN 399 ITR 216. THE RELEVANT OBSERVATIONS ARE AS FOLLO WS: ADVERTING TO THE INTERPRETATION AND MEANING TO BE ASSIGNED TO EXPLANATION (II) TO SECTION 80-IB(10(A) OF THE ACT ESSENTIALLY IT H AS TO BE SEEN WHETHER THE TERM ' SHALL ' USED THEREIN IS TO BE TREATED AS MANDATORY OR IT IS IN THE NATURE OF A DIRECTORY REQUIREMENT. IN OUR OPINION THOUGH THE WORD USED IN EXPLANATION (II) TO SECTION 80-IB(10)(A) OF THE ACT IS ' SHALL ' BUT IT WOULD NOT NECESSARILY MEAN THAT IN EVERY CASE IT SHALL BE TAKEN TO BE MA NDATORY REQUIREMENT INSTEAD WOULD DEPEND UPON THE INTENT OF THE LEGISLA TURE AND NOT THE LANGUAGE IN WHICH THE PROVISION IS CLOTHED. THE MEANING AND THE INTENT OF THE LEGISLATURE WOULD BE GATHERED NOT ON THE BASIS OF T HE PHRASEOLOGY OF THE PROVISION BUT TAKING INTO CONSIDERATION ITS NATURE ITS DESIGN AND THE CONSEQUENCES WHICH WOULD FOLLOW FROM INTERPRETING I T IN A PARTICULAR WAY ALONE. THE PURPORT OF THE SAID EXPLANATION (II) TO SECTION 80-IB(10)(A) OF THE ACT IS TO SAFEGUARD THE INTERESTS OF THE REVENUE WH EREVER THE CONSTRUCTION HAS NOT BEEN COMPLETED WITHIN THE STIPULATED PERIOD . THUS IT CANNOT MEAN THAT THE REQUIREMENT IS MANDATORY IN NATURE AND WOU LD DISENTITLE AN ASSESSEE TO THE BENEFIT OF SECTION 80-IB(10)(A) OF THE ACT E VEN IN RESPECT OF THOSE CASES WHERE THE ASSESSEE HAD COMPLETED THE CONSTRUCTION W ITHIN THE STIPULATED PERIOD AND HAD MADE AN APPLICATION TO THE LOCAL AUT HORITY WITHIN THE PRESCRIBED TIME. THE ISSUANCE OF THE REQUISITE CERT IFICATE WAS WITHIN THE DOMAIN OF THE COMPETENT AUTHORITY OVER WHICH THE AS SESSEE HAD NO CONTROL. FROM THE FINDINGS RECORDED BY THE COMMISSIONER OF I NCOME-TAX (APPEALS) AS AFFIRMED BY THE TRIBUNAL IT WAS CLEAR THAT THE CON STRUCTION HAD BEEN COMPLETED BEFORE THE STIPULATED DATE I.E. MARCH 3 1 2010. IT WAS ALSO NOT DISPUTED THAT THE CERTIFICATE OF COMPLETION WAS APP LIED ON MARCH 29 2010 WHICH WAS ISSUED TO THE ASSESSEE ON DECEMBER 31 20 11. THE ASSESSEE IN SUCH CIRCUMSTANCES COULD NOT BE DENIED THE BENEFIT OF SECTION 80-IB(10)(A) OF THE ACT. THE COMMISSIONER OF INCOME-TAX (APPEALS) A ND THE TRIBUNAL HAD RIGHTLY ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSE SSEE-RESPONDENT. LEARNED COUNSEL FOR THE APPELLANT-REVENUE HAS NOT BEEN ABLE TO SHOW ANY ILLEGALITY OR PERVERSITY IN THE FINDINGS RECORDED BY THE COMMISSI ONER OF INCOME-TAX (APPEALS) AS WELL AS THE TRIBUNAL WARRANTING INTER FERENCE BY THIS COURT. 24. APPLYING THE RATIO LAID DOWN IN THESE DECISIONS TO THE FACTS OF THE ASSESSEES CASE WE FIND THAT IN THE GIVEN FACTS OF THE ASSESS EE ITS CASE STANDS ON MUCH BETTER FOOTING. IN THIS CASE ADMITTEDLY AFTER CONDUCTING PHYSICAL INSPECTION KMC HAD ISSUED A COMPLETION CERTIFICATE DATED 29.04.2011 CERTIFYIN G THE COMPLETION OF PHASE 1 AND FURTHER DECLARED IT TO BE FIT FOR OCCUPATION FOR RE SIDENTIAL PURPOSE. MOREOVER IN THE REPLY TO THE RTI APPLICATION THE LOCAL AUTHORITY C LARIFIED THAT THE CERTIFICATE DATED 29.04.2011 BY ITSELF CONSTITUTED COMPLETION CERTIF ICATE. IN LIGHT OF THESE FACTS THEREFORE WE HAVE NO HESITATION IN HOLDING THAT THE PHASE I OF THE HOUSING PROJECT WAS COMPLETED PRIOR TO 31.03.2012 WHICH WAS THE LAS T DATE. SINCE ALL THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) WERE FULFILLED BY PH ASE I OF HIG LUXURY ZONE OF UPOHAR THE CONDOVILLE THE LD. CIT(A) WAS JUSTI FIED IN RESTRICTING THE APPELLANTS CLAIM FOR DEDUCTION U/S 80IB(10) ONLY IN RELATION T O PROFITS OF PHASE I. WE THEREFORE DO NOT SEE ANY REASON TO INTERFERE WITH THE FINDING S OF THE LD. CIT(A) AND ACCORDINGLY DISMISS THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL. ITA NO.1298/KOL/2016 A.Y. 2012-13 DCIT CIR-12(1) KOL. VS. M/S BENGAL AMBU JA HOUSING DEVELOPMENT LTD. PAGE 26 LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO PIN-PO INT ANY DISTINCTION ON FACTS AND OR LAW IN THESE TWO ASSESSMENT YEARS. WE THEREF ORE ADOPT JUDICIAL CONSISTENCY TO AFFIRM THE CIT(A)S FINDINGS UNDER C HALLENGE QUA THIS LAST ISSUE AS WELL. NO OTHER ARGUMENT HAS BEEN RAISED BEFORE US. 10. THIS REVENUES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT 20 /11/2019 SD/- SD/- ( %) (' %) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA *DKP (- 20 / 11 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT CIR-12(1) 7 TH FL. AAYAKAR BHAWAN P-7 CHOWRINGHEE SQ. KOL-69 2. /RESPONDENT-M/S BENGAL AMBUJA HOUSING DEVELOPMENT L TD. VISHWAKARMA86C ROAD (SOUTH) KO LKATA-46 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3 3 / DR ITAT KOLKATA 6. < / GUARD FILE. BY ORDER/ /TRUE COPY/ 3