DCIT CEN CIR 10, MUMBAI v. IINDU OIL & SOAP CO. (BHANDUP), MUMBAI

ITA 5491/MUM/2012 | 2009-2010
Pronouncement Date: 30-04-2014 | Result: Dismissed

Appeal Details

RSA Number 549119914 RSA 2012
Assessee PAN AABFI0477J
Bench Mumbai
Appeal Number ITA 5491/MUM/2012
Duration Of Justice 1 year(s) 7 month(s) 30 day(s)
Appellant DCIT CEN CIR 10, MUMBAI
Respondent IINDU OIL & SOAP CO. (BHANDUP), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 30-04-2014
Date Of Final Hearing 08-04-2014
Next Hearing Date 08-04-2014
Assessment Year 2009-2010
Appeal Filed On 31-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI . . . ! BEFORE SHRI I.P. BANSAL JM AND RAJENDRA AM ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 THE ACIT CEN. CIRCLE -10 ROOM NO.802 8 TH FLOOR OLD. CGO BLDG. ANNEXE MK ROAD MUMBAI 400 020. ' ' ' ' / VS. M/S. INDU OIL & SOAP CO. (BHANDUP) PLOT NO.201 CTS 285 LBS MARG BHANDUP (WEST) MUMBAI 400 078 $ ./ % ./ PAN/GIR NO. : AABFI 0477J ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $& ) / APPELLANT BY: SHRI O.P.SINGH '($& * ) / RESPONDENT BY : SHRI A.V.SONDE ' * + / DATE OF HEARING : 08/04/2014 -.# * + / DATE OF PRONOUNCEMENT : 30/04/2014 / / O R D E R PER I.P.BANSAL J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST ORDER PASSED BY LD. CIT(A)-37 MUMBAI DATED 11/6/2012 FOR ASSESS MENT YEAR 2009-10. GROUNDS OF APPEAL READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.35 334 185/- U/S. 8OIB(1O) OF THE INCOME TAX ACT 1961 IGNORING THE BASIC FACT OF CLAUSE (B) TO 801B(1O) THE PROJECT HAS TO BE ON A PLOT OF LAND HAVING A MI NIMUM AREA OF ONE ACRE ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 2 AND LEAVES NO SCOPE FOR AN INTERPRETATION THAT THER E CAN BE A NUMBER OF PROJECTS ON THE SAME LAND. (II) THE LD. CIT(A) ERRED IN HOLDING THAT THE RESID ENTIAL HOUSING PROJECT EXECUTED BY THE ASSESSEE FIRM GOT COMPLETED WITHIN STIPULATED TIME IGNORING THE FACT THAT ONGOING COMMERCIAL PROJECT ON THE SAM E PLOT OF LAND IS NOTHING BUT THE EXTENSION! PART OF EARLIER HOUSING PROJECT AND HENCE THE CASE OF ASSESSEE FIRM CLEARLY FALLS WITHIN THE SUB- CLAUSE (II) TO CLAUSE (A) OF SECTION 801B(1O) OF THE INCOME TAX ACT 1961. (III ) THE LD.CIT (A) ERRED IN HOLDING THAT THE PRO JECT WAS A RESIDENTIAL HOUSING PROJECT WHICH DID NOT HAVE ANY COMMERCIAL AREA AT ALL ON THE FACE OF THE FACT THAT THE ASSESSEE FIRM HAS SOLD UNUTILIZED FSI WITH REGARD TO THE SAME PROJECT ONLY WHICH IS BEING UTILIZED TO DEVELOP CO MMERCIAL PROJECT ON THE SAME PLOT OF LAND AND AS SUCH THE COMMERCIAL COMPO NENT IS LIABLE TO BE TREATED AS PART AND PARCEL OF THE SAME HOUSING PROJ ECT. (IV) THE LD. CIT(A) ERRED IN HOLDING THAT CLARIFICA TION LETTER GIVEN BY AUDITOR IS SUFFICIENT PROCEDURAL COMPLIANCE EVEN THOUGH THE CE RTIFICATE GIVEN CHARTERED ACCOUNTANT CANNOT BE EQUATED WITH ORIGINAL FORM 10 CCB. 2. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. IT CONSTRUCTED A RESIDENTIAL COMPLEX UNDER THE NAM E OF SHREE SAI RADHA COMPLEX IN RESPECT OF WHICH DEDUCTION UNDER SECTIO N 80 IB(10) OF THE INCOME TAX ACT 1961 (THE ACT) WAS CLAIMED IN A.Y 2008-09 AND ALSO IN A.Y. 2009-10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE VIDE LETTER DATED 18/8/2 011 HAD SUBMITTED A NOTE WITH REGARD TO CLAIM OF DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT COPY OF THE SAID LETTER IS PLACED AT PAGES 13 TO 34 OF THE PAPE R BOOK. TO UNDERSTAND THE FACTS IT WILL BE RELEVANT TO REFER THE FOLLOWING NOTE GIV EN BY THE ASSESSEE IN RESPECT OF CLAIM MADE UNDER SECTION 80 IB(10). NOTE ON CLAIM OF DEDUCTION U/S. 801B(10) OF THE I. T. ACT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE B USINESS OF BUILDERS AND DEVELOPERS. THE ASSESSEE OWNED A LAND LOCATED AT PL OT NO.201 BEARING CTS NO.285 BHANDUP (WEST) MUMBAI 400078. THE ASSE SSEE STARTED A RESIDENTIAL HOUSING PROJECT NAMELY SAI RADHA COMP LEX IN F.Y.2004-05 ON ABOVE PLOT OF LAND AT BHANDUP. THE ASSESSEE RECEIVE D INTIMATION OF DISAPPROVAL (IOD) ON 3.07.2004 AND COMMENCEMENT CER TIFICATE ON 7.09.2004 FROM BMC FOR ABOVE PROJECT. THE ABOVE PRO JECT COMPRISES OF FIVE WINGS WING A B & C EACH OF STILT + 8 UPPER FLOORS AND WING D & E EACH OF STILT + 14 UPPER FLOORS. THE ENTIRE PROJECT I.E. WI NGS A TO E TOGETHER HAVE 208 FLATS AND ALL THE FLATS HAD AN AREA LESS THAN 1000 SQ.FT. THE ASSESSEE COMPLETED THE ABOVE PROJECT IN F.Y.2007-08 AND RECE IVED FULL OCCUPATION ON ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 3 2.12.2008 FROM BMC. THE ASSESSEE SUBMITS THAT IT FO LLOWS THE PROJECT COMPLETION METHOD OF ACCOUNTING FOR ITS CONSTRUCTIO N ACTIVITY. THE ASSESSEE HAS RECOGNIZED REVENUE OF RS.38 20 06 222/- FROM SA LE OF FLATS AND DECLARED PROFIT OF RS.15 47 18 442/- FOR A.Y.2008-09. FOR TH E YEAR UNDER CONSIDERATION THE ASSESSEE RECOGNIZED REVENUE OF R S.6 63 18 270/- AND DECLARED PROFIT OF RS.3 53 34 185/- FROM SALE OF FL ATS OF PROJECT SAI RADHA COMPLEX. THE ASSESSEE SUBMITS THAT AS HAD COMPLIED WITH THE CONDITIONS LAID DOWN U/S 801B(10) IT CLAIMED THE DEDUCTION OF RS.15 47 L8 442/- AND RS.3 53 34 185/- FOR A.Y.2008-09 AND A.Y.2009-10 RE SPECTIVELY U/S 801B(10) OF THE I.T. ACT. WITH RESPECT TO ELIGIBILITY FOR DEDUCTION U/S 801B( 10) WE SUBMIT THAT ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS STIPU LATED IN THE SAID SECTION AS FOLLOWS: 1) THE HOUSING PROJECT APPROVED BY THE BOMBAY MUNIC IPAL CORPORATION(BMC) AFTER 1ST DAY OF APRIL 2004 BUT BEFORE THE 31 ST DAY OF MARCH 2005 HAS BEEN COMPLETED WITHIN FOUR YEARS FROM THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE BMC. THE ASSESS EE OBTAINED THE APPROVAL FROM BMC ON 3.7.2004 AND THE FRILL COMPLET ION CERTIFICATE WAS GIVEN BY THE BMC VIDE ITS LETTER DT.2.12.2008 WHICH IS WI THIN 4 YEARS FROM THE DATE OF APPROVAL. 2) THE HOUSING PROJECT IS ON THE SIZE OF THE PLOT OF LAND WHICH IS MORE THAN 1 ACRE OF THE AREA. THE TOTAL PLOT AREA ON WHICH THE HOUSING PROJECT HAS BEEN DEVELOPED IS OF 13273.2 SQ. MTR. EQUAL TO ABOUT 3.2 8 ACRE. 3) EACH RESIDENTIAL UNIT HAS MAXIMUM BUILT-UP AREA OF 1000 SQ. FT. AS PER THE PLAN SUBMITTED TO AND APPROVED BY THE BMC THE AREA OF EACH FLAT IS LESS THAN 1000 SQ..FT. THE AREA OF THE FLAT.IN SIL RADHA COM PLEX BEING LESS THAN 1000 SQ. FT. IS ALSO CERTIFIED BY THE ARCHITECT AS PER HIS CERTIFICATE DT.3.12.2008. 4) CLAIM U/S 80-IB(10) HAVE DULY BEEN CONSIDERED AN D GRANTED BY THE J.T. DEPT. IN THE PREVIOUS ASSESSMENT YEAR I.E. ASSTT. Y EAR 2008-09. THE APPELLANT ENCLOSE HEREWITH FOLLOWING DOCUMENTS/ DETAILS IN CHRONOLOGICAL ORDER FOR YOUR READY REFERENCE: PARTICULARS PAGE NO. COPY OF PLAN FOR PROJECT SAI RADHA COMPLEX 47 7/12 EXTRACT OF PROPERTY 48-49 INTIMATION OF DISAPPROVAL (IOD) DT. 3.07.2004 50 -56 COMMENCEMENT CERTIFICATE DT. 7.09.2004 57-59 FULL OCCUPATION CERTIFICATE DT. 2.12.2008 RECEIVED FROM BMC 60 ARCHITECT CERTIFICATE DT. 3.12.2008 61 PROFIT & LOSS ACCOUNT FOR F.Y. 2007-08. 62 AUDITORS REPORT IN FORM 10CCB FOR A.Y.2008-09 63- 66 COMPUTATION OF TOTAL INCOME FOR A.Y. 2008-09. 6 7 ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 4 IN VIEW OF THE ABOVE IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSEE HAVE COMPLIED WITH ALL THE CONDITIONS LAID DOWN IN SEC. 80-IB(10) OF THE ACT AND HENCE ARE ELIGIBLE FOR DEDUCTION OF TOTAL PROFIT EA RNED FROM THE HOUSING PROJECT. (THE ABOVE NOTE HAS ALSO BEEN REPRODUCED BY THE AO IN THE ASSESSMENT ORDER.) FROM THE ABOVE NOTE THE FOLLOWING FACTS ARE CLEAR. (I) THE ASSESSEE IS OWNER OF A LAND LOCATED AT PL OT-201 BEARING CTS NO.285 BHANDUP(WEST) MUMBAI. (II) THE ASSESSEE STARTED A RESIDENTIAL HOUSING PRO JECT NAMELY SHREE SAI RADHA COMPLEX IN FINANCIAL YEAR 2004-05 ON THE ABOVE PLO T OF LAND AT BHANDUP. (III) THE INTIMATION OF DISAPPROVAL (IOD) WAS RE CEIVED ON 3/7/2004 FOR THE SAID PROJECT. (IV) THE COMMENCEMENT CERTIFICATE FOR THE ABOVE PR OJECT WAS ISSUED BY BMC ON 7/9/2004. (V) THE ABOVE PROJECT COMPRISES OF FIVE WINGS: (A) WING A B & C EACH OF STILT PLUS EIGHT U PPER FLOORS. (B) WING D & E EACH OF STILT PLUS 14 UPPER FLOORS. (VI) THE ENTIRE PROJECT I.E. FROM WING A TO E TOGE THER HAS 208 FLATS WHICH ARE LESS THAN 1000 SQ. FTS. (VII) THE PROJECT WAS COMPLETED IN FINANCIAL YEAR 2 007-08. (VIII) THE FULL OCCUPATION CERTIFICATE WAS ISSUED B Y BMC ON2/12/2008. (IX) IN ASSESSMENT YEAR 2008-09 THE REVENUE RECOG NIZED BY THE ASSESSEE FROM THE SAID PROJECT WAS A SUM OF RS.38 20 06 222/- OF WHICH PROFIT WAS DECLARED AT 15 47 18 442/-. (X) FOR THE YEAR UNDER CONSIDERATION THE REVENUE R ECOGNIZED BY THE ASSESSEE FROM THE SAID PROJECT IS A SUM OF RS.6 63 18 270/- OF W HICH A PROFIT OF RS.3 53 34 185/- IS DECLARED WHICH WAS CLAIMED TO B E DEDUCTIBLE UNDER THE PROVISIONS OF SECTION 80 IB(10) OF THE ACT. 2.1 ON THE ABOVE MENTIONED FACTS IT IS THE CASE OF THE ASSESSEE THAT IT IS ENTITLED TO CLAIM DEDUCTION U/S. 80 IB (10) SINCE H OUSING PROJECT WAS APPROVED BY BMC AFTER 1 ST DAY OF APRIL 2004 BUT BEFORE 31 ST MARCH 2005; THE SAME IS COMPLETED WITHIN FOUR YEARS FROM THE FINANCIAL YEAR IN WHICH HOUSING PROJECT WAS ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 5 APPROVED BY BMC; THE APPROVAL WAS OBTAINED FROM BM C ON 03/07/2004; FULL OCCUPATION CERTIFICATE WAS GIVEN BY BMC VIDE LETTER DATED 2/12/2008 WHICH IS WITHIN FOUR YEARS FROM THE DATE OF APPROVAL; THE SIZE OF THE PLOT IS MORE THAN ONE ACRE I.E. 3.28 ACRES; BUILT UP AREA OF EACH OF FL AT DOES NOT EXCEED 1000 SQ. FTS.; THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS LAID DOWN FOR GRANT OF DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT. TO MAKE SUCH CLAIM SUPPORTING DOCUMENTS WERE ALSO SUBMITTED. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT CAME TO THE NOTICE OF A.O THAT A SUBSEQUENTLY A COMMERCIAL DEVELOPMENT AGRE EMENT DATED 09/04/2011 WAS ENTERED INTO BETWEEN THE ASSESSEE FIRM AND M/S. G.K. REALTORS ( A PARTNERSHIP FIRM CONSISTED OF SHRI GANESH SHIVA THA KUR & SHRI KARTHIK SHIVA THAKUR). ACCORDING TO THE SAID AGREEMENT THE ASS ESSEE HAD SOLD DEVELOPMENT RIGHTS OF COMMERCIAL COMPLEX TO BE DEVELOPED BY M/ S. G.K.REALTORS UNDER THE NAME OF SAI INDU TOWER ON THE SAME VERY PLOT I N RESPECT OF FOLLOWING ITEMS: (I) 850 SQ.MTRS UNUTILIZED PRIMARY FSI. AND (II) AVAILMENT OF TRANSFERABLE DEVELOPMENT RIGHTS (TDR) AND PRIMARY FSI DESCRIBED IN CLAUSE -15. 3.1 THE TOTAL COMMERCIAL BUILT UP CARPET AREA AC CORDING TO THE SAID AGREEMENT WAS OF 23319.55 SQ.FT. A SEPARATE IOD DATED 1/12/2009 WAS OBTAINED AND WAS ALSO ENCLOSED WITH THE DEVELOPMENT AGREEMENT. COMMENCEMENT CERTIFICATE TO DEVELOP SEPARATE AREA W AS ALSO OBTAINED FROM BMC VIDE LETTER DATED 8/12/2010 WHICH WAS ALSO ENCLOSED WITH THE DEVELOPMENT AGREEMENT. BY READING THE CLAUSES OF THE SAID AGRE EMENT THE AO CAME TO THE CONCLUSION THAT SHREE SAI RADHA COMPLEX (RESIDE NTIAL PROJECT) OF THE ASSESSEE WAS NOT COMPLETED AND IT HAS 23300 SQ.FT. AREA OF C OMMERCIAL SPACE. THE COMMERCIAL COMPLEX TO BE BUILT UP UNDER AGREEMENT DATED 9/4/2011 WAS PART OF RESIDENTIAL COMPLEX. THUS ACCORDING TO A.O THE CO MMERCIAL AREA IN THE PROJECT OF THE ASSESSEE HAS EXCEEDED PRESCRIBED LIMIT THEREFO RE THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80 IB (10). THE D EDUCTION ALLOWED TO THE ASSESSEE UNDER SECTION 80 IB(10) OF THE ACT PRIOR T O A.Y. 2009-10 WAS BY WAY OF ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 6 MANIPULATION; THE AUDITOR DID NOT QUALIFY THE DEDUC TION AS PER FORM 10CCB THEREFORE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80 IB(10) RIGHT FROM THE BEGINNING. FOR THE SAKE OF COMPLETENESS T HE REASONS GIVEN BY AO REGARDING NON-FULFILLMENT OF CONDITIONS; AS DESCRIB ED IN PARA 12 & 13 ARE AS UNDER: 12. IN VIEW OF THE ABOVE THE ASSESSEE HAS FAILED TO FULFILL THE FOLLOWING CONDITIONS PRESCRIBED U/S 80IB FOR THE FOLLOWING RE ASONS: THE ASSESSEE HAS FAILED TO FULFILL THE CONDITIONS STATED AT NO.3 4 & 5 PLACED IN PARA NO.10. SINCE THE PROJECT IS STILL N OT COMPLETE ON THE SAME LAND THE COMMERCIAL AREA IS OVER 23000 SQ.FT. AND PERMISSIBLE LIMIT WAS 2000 SQ. FT. THE FLATS ARE NOT AS PER THE MAP IT IS ALSO GATHERED THAT FLAT BUILT UP AREA EXCEEDS 1000 SQ. FT. (I) IT IS EVIDENT FROM THE TEXT OF THE COMMERCIAL D EVELOPMENT AGREEMENT THAT THE ASSESSEE ALREADY PLANNED TO CONSTRUCT A CO MMERCIAL COMPLEX IN THE HOUSING PROJECT. THEREFORE THE ASSESSEE WAS NOT EN TITLED FOR DEDUCTION FROM VERY BEGINNING BUT DELIBERATELY DEFERRED STARTING CONSTRUCTION OF THE COMMERCIAL COMPLEX SO THAT IT COULD CLAIM DEDUCTION U/S 80IB THUS THE DEDUCTION U/S 80IB IS CLAIMED FRAUDULENTLY. (II) THE PERMISSIBLE COMMERCIAL AREA WAS 2000 SQ. FT. HOWEVER THE DEVELOPMENT AGREEMENT OF THE COMMERCIAL COMPLEX SHO WS THAT THE CLAUSE NO.2(B) PAGE NO.6 MENTIONS THAT THE SANCTION PART O F THE COMMERCIAL BUILDING IS TO BE OF A CARPET AREA OF 23319.55 SQ. FT. EQUI VALENT TO 2166044 SQ. MTRS. (III) THE PARA NO. J ON PAGE NO.3 READS AFTER DETA ILED NEGATIONS HELD OVER SEVERAL MONTHS BY AND BETWEEN THE PARTNERS OF THE OWNERS ON THE ONE HAND AND THE PARTNERS OF THE DEVELOPERS OF THE OTHER HAN D IT WAS MUTUALLY AGREED BY AND BETWEEN THE OWNERS OF ONE HAND THE DEVELOPER S OTHER HAND THAT THE OWNERS WOULD ALLOW THE DEVELOPERS SUCH DEVELOPMENT RIGHT ON CONDITION THAT ON FIRST CHANCE THAT DEVELOPERS WOULD PURCHASE AT T HEIR OWN COST AND LOAD ON THE SAID LAND DESCRIBE ON THE SCHEDULE HEREUNDER WR ITTEN TDR PREMIUM SO AS TO ABLE TO CONSTRUCT ON THE DESIGNATED AREA A CO MMERCIAL AREA OF THE NATURE INDICATED IN HERE ABOVE AND THERE WOULD BE A REA SHOULD BETWEEN THE OWNERS ON ONE HAND AND THE DEVELOPER OTHER HAND OF THE RESPECTIVE BUILDUP AREAS (AND ALSO A PERTINENT OPEN AREA) IN SUCH COMM ERCIAL BUILDING AS PART AND PARTIAL OF SUCH TRANSACTION THE M/S. INDU OIL & SOAP CO (BHANDUP)/2009-10/ACIT-CC-10 OWNER WOULD ALLOW THE DEVELOPERS THE DEVELOPMENT RIGHTS TO CONSTRUCT THE RESIDENTIAL BUI LDING BEING BUILDING F) REFER TO ABOVE. (IV) THE ABOVE SHOWS THAT THE DEVELOPER HAD ALREADY OBTAINED REQUISITE IOD VIDE DTD. 1/12/2009 THAT SHOWS THE ASSESSEE HA S ALREADY NEGOTIATED ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 7 WITH THE DEVELOPERS MUCH IN ADVANCE TO BE PRECISELY DURING THE PERIOD OF CONSTRUCTION OF THE HOUSING PROJECT ITSELF. (V) THE BLUE PRINT MAP OF THE PROJECT FURNISHED BY THE ASSESSEE IN THIS OFFICE DOES NOT APPEAR TO BE AUTHENTIC AS IT HAS N O APPROVAL STAMP OF THE CIVIL AUTHORITY. HOWEVER ASSESSEE DID NOT FURNISH ANY OTHER MAP. THIS MAP ALSO HAS PLANNING OF F BUILDING IN THE HOUSING PR OJECT HOWEVER THE SAME HAS BEEN ERASED ON THE MAP FOR THIS IT IS SLIGHTLY VISIBLE. THE ASSESSEE HAS ALREADY ENJOYED THE FULL DEDUCTION UNDER SECTION 80 IB BY MISCHIEF AS IT HAS RETAINED LAND IN THE HOUSING PROJECT FOR ITSELF. F OR THIS REASON A HOUSING PROJECT CANNOT BE TAKEN TO BE COMPLETE IN THE PRESC RIBE TIME. THE HOUSING PROJECT THEREFORE REMAINS DEFICIENT TO FULFILL THE CONDITIONS OF COMPLETION. (VI) THE COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITIES EVEN WHEN THE ASSESSEE HAS RETAINED SUBSTANTIAL LAND WITHOUT ANY DECLARED PURPOSE/PLANNING ITSELF MAKES THE APPROVAL DEFICIEN T FOR A PURPOSE OF CLAIMING DEDUCTIONS U/S 80IB. AS PER A CONDITION OF SECTION 80IB THE ASSESSEE IS LEFT ONLY TO ENJOY PROFIT FROM SALE OF THE HOUSING UNIT AND ELIGIBLE COMMERCIAL AREA. THE ASSESSEE CANNOT HOLD THE PROP ERTY FOR APPRECIATION AND FOR EARNING DEFERRED LARGER GAINS. (VII) HERE APPARENTLY THE PROFIT AS DECLARED BY THE ASSESSEE FROM SALE OF HOUSING UNIT ARE MUCH LESS THAN THE CONSIDERATION O F RIGHTS TO ANOTHER DEVELOPERS THEREFORE THE PROJECT PREDOMINANTLY BECO MES A COMMERCIAL PROJECT. THE COMMERCIAL BUILDING TO BE DEVELOP ON THE LAND IS IN THE FRONT SIDE OF THE COMPLEX FACING THE MAIN ROAD OF THE AREA OF LBS MARG. (VIII) THE COPY OF THE MAP THE HOUSING PROJECT FURN ISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS DO NOT HAVE THE L AY OUT PLAN FOR EACH CATEGORY OF RESIDENTIAL FLAT TO BE CONSTRUCTED. TH EREFORE IT CANNOT BE ASCERTAINED WHETHER THE FLAT IS IN THE PERMISSIBLE SIZE LIMIT OF LESS THAN 1000 SQ. FT. (IX) THE MAXIMUM SIZE OF THE FLAT AS PER THE COPY O F THE MAP FURNISHED IN THE E CATEGORY AND THE SIZE IS FROM 45 TO 70. HO WEVER IN THE COLUMN OF THE SIZE THERE IS NO MENTION OF SQ. MTR SIZE OF THE FLA TS HOWEVER IN THE COLUMN OF THE SIZE SIZE 45 TO 70 NOS.) IS ONLY MENTIONED. W HICH CREATE AMBIGUITY AND UNCERTAINTY AS REGARDS THE SIZE OF THE FLAT IS BUIL T UP AREA. (X) THE COPY OF THE MAP FURNISHED AS DISCUSSED ABOV E MENTION MAXIMUM SIZE OF THE FLAT OF 45 TO 70 SQ. MTRS. HOWEVER THE PERUSAL OF THE SALE DEED OBTAINED I.E. FLAT NO.102 IN E-WING SOLD TO SHRI MR . SHAILESH ARJUN LAL CHAOUDHARY AT PAGE NO.10 OF THE AGREEMENT FOR SALE AT PARA 4(A) MENTION THE SIZE OF THE FLAT NO.102 MEASURING AT 935 SQ. FT . SALABLE AREA (86.86 SQ. MTRS) I.E. 682 SQ. FT. CARPET AREA (63.36 SQ. MTR). THE SIZE OF THE FLAT AS MENTIONED IN THE AGREEMENT IS NOT AS PER THE COPY O F THE MAP FURNISHED BY THE ASSESSEE. THEREFORE THE SIZE AT 935 SQ. FT. IS BORDERLINE CASE AND DOUBTFUL. IT IS ALL LIKELY THAT THE SIZE OF THE FL AT IS NOT IN THE PRESCRIBE LIMITS BECAUSE FOR WHICH FIGURES ARE MENTIONED DIFFERENT A T DIFFERENT PLACES IN ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 8 DIFFERENT DOCUMENT. THE ASSESSEE IS MAKING SO MANY DIFFERENT MANIPULATION AND CONFUSIONS ITSELF SHOWS ALL IS NOT SO CLEAR AND CLEAN. (XI) THE PROFITS OF THE ASSESSEE ALSO INCLUDE SALE CONSIDERATION OF PARKING WHICH ALSO DO NOT QUALIFY FOR DEDUCTION U/S 80IB. 13.(I) THE MORE IMPORTANT DISQUALIFICATION OF THE ASSESSEE FOR ALLOWING DEDUCTION UNDER SECTION 80IB IS THAT THE FORM SUBMI TTED BY IT IN FORM NO.10 CCB FOR DETERMINATION OF THE DEDUCTION U/S 80IB MEN TIONS THE DEDUCTION ALLOWABLE AT NIL. THEREFORE NO DEDUCTION CAN BE AL LOWED TO THE ASSESSEE. THE ASSESSEE SUBSEQUENTLY FILED A LETTER FROM THE A UDITOR THAT THE DEDUCTION U/S 80IB IN THE CASE SHOULD BE READ AS RS.--------- -. BUT HE STILL DID NOT ISSUE A CERTIFICATE OF DEDUCTION U/S 80IB BECAUSE HE KNE W THAT THE PROJECT CANNOT BE QUALIFIED FOR 80IB DEDUCTION. THE LETTER SIGNED BY THE CA CAN NOT BE EQUATED AS REPORT UNDER SECTION 80IB IN FORM NO. 10CCB AND THEREFORE DO NOT HAVE ANY EVIDENTLY VALUE IN THE EYE OF THE LAW. THUS NO COGNIZANCE CAN BE GIVEN TO IT. (II) THE AUDITOR IN FORM NO.10CCB HAS FIRST MENTIO NED PROJECT COMPLETED ON NOT YET AND LATER HAS CANCELLED. THE AUDITOR KNEW THAT THE PROJECT IS NOT ENTITLED FOR DEDUCTION U/S 80IB(10) AS CONSTRUCTION OF COMMERCIAL COMPLEX HAS ALREADY BEGUN AND ASSESSEE WAS NOT ENTITLED FO R DEDUCTION U/S 80IB. (III) THE ASSESSEE HAS ALREADY TAKEN ALL DEDUCTIONS ON ACCOUNT OF LAND AND COST OF THE RESIDENTIAL PROJECT IN ITS RETURN OF IN COME FILED UP TO AY 2009-10. AND NOW BY SELLING THE RETAINED PORTION OF LAND AND OTHER AMENITY PORTION ALSO CONVERTED INTO BUILDABLE AREA HAS MADE MUCH M ORE PROFITS THAN IT ENJOYED FROM THE RESIDENTIAL PROJECT. THE BUILDER FIRST DECLARE AMENITIES ARE IN THE PROJECT AND AFTER CLAIMING ALL DEDUCTIONS C ANNOT THE AMENIOTY AREA INTO THE COMMERCIALLY EXPLOITABLE AREA FOR GAINS T HIS HAS NOT BEEN PART OF THE SCHEME OF DEDUCTION U/S 80IB. THEREFORE THE ASSES SEE HAS VIOLATED THE PROVISION OF THE CODE LAID U/S 80IB. (IV) I AM OF THE CLEAR VIEW THAT THE SECTION 80IBS CONDITION ARE ONCE FULFILLED HAVE TO REMAIN CONTINUOUSLY FULFILLED. (V) THE SEC-80IB DO NOT PERMIT THAT FIRST ONE BUI LDS A RESIDENTIAL COMPLEX ENJOY DEDUCTION U/S 80IB. AND ONCE 80IB DEDUCTIONS HAVE BEEN CLAIMED HE IS NOT ENTITLED TO CLAIM DEDUCTION U/S 80IB. THUS THE DEDUCTION CLAIMED INITIALLY U/S 80IB DESERVES TO BE REVERSED AND THE INCOME SUBJECTED TO INCOME TAX. (VI) THE ATTENTION IS INVITED TO THE CASE OF LAUKIK DEVELOPERS VS DCIT 105 ITD 657 (MUM) WHICH THE COURT HELD THAT IF A LOCAL AUTHORITY HAS APPROVED THE PROJECT AS RESIDENTIAL & COMMERCIAL PROJECT SU CH PROJECT IS NOT ELIGIBLE. SIMILAR IS THE CASE OF THE ASSESSEE. FIRST IT OBTA INED APPROVAL FOR RESIDENTIAL COMPLEX ONLY TO CLAIM DEDUCTIONS U/S 80IB AND LATE R GOT APPROVAL FOR COMMERCIAL PROJECT. IN SUCH CIRCUMSTANCES THE ENT IRE PROJECT BECAME ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 9 INELIGIBLE FOR 80IB DEDUCTION AND WHATEVER DEDUCTIO N CLAIMED EARLIER DESERVES TO BE DISALLOWED / REJECTED. (VII) IN THE FINALITY IT IS HELD THAT: - THE PROJECT IS NOT YET COMPLETE. - THE PROJECT HAVE 23300 SQ. FT. OF COMMERCIAL SPACE AS PER COMMERCIAL DEVELOPMENT WHICH EXCEEDS THE PERMISSIB LE LIMIT. - THE DEDUCTIONS ALREADY CLAIMED WERE BY WAY OF MANIP ULATIONS. - THE AUDITOR ALSO DO NOT QUALIFY DEDUCTION AS PER FO RM 10CCB. THEREFORE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTI ON U/S 80IB FROM VERY BEGINNING. IN VIEW OF THE ABOVE DISCUSSION TH E CLAIM OF DEDUCTION U/S 80IB FOR THE CURRENT ASSESSMENT YEAR IS HEREBY REJECTED. WITH THESE REMARK THE INCOME OF THE ASSE SSEE IS COMPUTED AS UNDER:- 3.2 THE DISALLOWANCE OF DEDUCTION WAS SUBJECT MATTE R OF APPEAL FILED BEFORE LD. CIT(A). ALL THE AFOREMENTIONED FACTS WERE REITERAT ED BY THE ASSESSEE. IT WAS SUBMITTED THAT INITIAL RESIDENTIAL PROJECT WAS COMP LETE IN ALL RESPECT IN FINANCIAL YEAR 2008-09 FOR WHICH THE ASSESSEE HAS CLAIMED DED UCTION UNDER SECTION 80 IB(10). IT WAS SUBMITTED THAT ASSESSEE DID NOT CON STRUCT ANY COMMERCIAL AREA IN THE RESIDENTIAL PROJECT AND HAS ONLY SOLD UNUTILIZE D FSI & AVAILABLE ADDITIONAL TDR RIGHTS TO ANOTHER DEVELOPER WHO WAS PRESENTLY C ONSTRUCTING COMMERCIAL BUILDING ON THE EXTRA AREA OF SAID PLOTS. IT WAS S UBMITTED THAT COMMERCIAL PROJECT UNDER DEVELOPMENT BY OTHER DEVELOPER WAS INDEPENDEN T OF THE RESIDENTIAL PROJECT COMPLETED BY ASSESSEE IN FINANCIAL YEAR 2008-09. T HESE SUBMISSIONS OF THE ASSESSEE ARE RECORDED IN PARA 6.7 OF THE ORDER OF L D. CIT(A). IT WAS ALSO SUBMITTED THAT ASSESSEE HAS RECEIVED CONSIDERATION OF RS.4 14 00 000/- FOR SALE OF TDR FOR WHICH THE AFOREMENTIONED DEVELOPMENT AG REEMENT WAS ENTERED INTO AND NO DEDUCTION UNDER SECTION 80 IB(10) HAS BEEN C LAIMED ON SUCH RECEIPTS. THE INCOME ARISING OUT OF SAID DEVELOPMENT AGREEMEN T HAS BEEN CONSIDERED AS BUSINESS INCOME OF THE ASSESSEE IN FINANCIAL YEAR 2 011-12 FOR WHICH EVEN ADVANCE TAX HAS BEEN PAID OF A SUM OF RS.35 00 000/ - AND RS.39 00 000/- ON 15/12/2011 AND 13/12/2011. THESE SUBMISSIONS OF THE ASSESSEE ARE RECORDED AT PAGE 18 OF THE ORDER OF LD. CIT(A). THE ASSESSE E ALSO SUBMITTED DETAILED SUBMISSION MEETING EACH & EVERY OBJECTION OF A.O V IDE WHICH HE DENIED THE DEDUCTION TO THE ASSESSEE. FOR THE SAKE OF COMPLET ENESS THOSE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED BELOW: ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 10 1) ON PAGE 1 PARA 5(II) OF ASSESSMENT ORDER: TH AT THE PERUSAL OF FORM 10CCB A XEROX COPY OF WHICH HAS BEEN FURNISHED SHOWS THAT THE FORM HAS MAJORITY BLANK COLUMNS THE APPELLANT SUBMIT THAT IT HAS FILED THE ORIGINAL FORM 10CCB DURING ASSESSMENT PROCEEDING VIDE ITS AUTHORIZED REPRESENT ATIVES LETTER DT.28.11.2011. THE APPELLANT FURTHER SUBMITS THAT FORM 10CCB IS A FORM PRESCRIBED BY THE LEGISLATURE FOR CLAIM OF DEDUCTION U/S 8OIA/8OIB OF THE ACT. THE FORM 10CCB IS A TAILOR-MADE FORM WHICH CONTAINS VARIOUS COLUMNS W HICH ARE APPLICABLE TO ASSESSEES CLAIMING DEDUCTIONS UNDER VARIOUS SUB SE CTIONS OF SECTION 8OIA/8OIB OF THE ACT. THE APPELLANT SUBMITS THAT ALL THE COLU MNS WHICH ARE RELEVANT/APPLICABLE TO THE APPELLANT WERE FILLED UP BY THE AUDITOR. THE COLUMNS WHICH ARE NOT RELEVANT OR RELATED TO THE UNDERTAKIN G OF THE APPELLANT WERE WRITTEN AS NA. BY THE AUDITOR. THE APPELLANT THEREFORE SU BMITS THAT THE ABOVE OBSERVATIONS OF AO ARE NOT CORRECT( REFER PAGE NO.3 7 TO 40 OF PAPER BOOK). 2) PARA 5(II) PAGE 2: WHEREAS THE DEDUCTION ALLOW ABLE U/S 10CCB WAS ALSO SHOWN TO BE NIL. THE APPELLANT SUBMITS THAT 10 CCB IS THE PRESCRIBED FORM AND THE DEDUCTION IS ALLOWABLE U/S 80IB(10) OF THE ACT. THE APPELLANT SU BMITS THAT THE DEDUCTION WAS NOT SHOWN AS NIL AS STATED BY THE AO BUT INSTEAD OF MENTIONING THE AMOUNT OF DEDUCTION OF RS.3 53 34 185/- IN FORM 10CCB THE AU DITOR HAS WRITTEN 80IB BEING THE APPLICABLE SECTION(AS AGAINST SECTION 80I /80IA MENTIONED IN SR. NO.22 OF THE FORM) (REFER PAGE NO.37 TO 40 OF PAPER BOOK) . 3) PAGE 3 PARA 8(B): AS PER THE PROVISIONS OF 80 IB(10)(B) THE TOTAL COMMERCIAL AREA SHOULD NOT EXCEED 2 000 SQ. FT. TO REMAIN QUAL IFIED FOR DEDUCTION U/S 80IB(10). THE APPELLANT SUBMITS THAT THE PROJECT OF THE APPEL LANT WAS APPROVED BY BMC PRIOR TO 31ST DAY OF MARCH 2005(REFER PAGE NO.21 TO 30 OF PAPER BOOK). THE APPELLANT SUBMITS THAT SECTION 8OIB(10) WAS SUBSTIT UTED BY A NEW SECTION BY THE FINANCE (NO.2) ACT 2004 AND THE SUBSTITUTED PROVIS IONS WERE MADE APPLICABLE W.E.F. 1.04.2005 I.E. ONLY TO THE PROJECTS APPROVED AFTER 1.04.2005. THE APPELLANT SUBMITS THAT THE SECTION PRIOR TO SUBSTITUTION BY T HE FINANCE (NO.2) ACT 2004 WAS APPLICABLE TO THE CASE OF THE APPELLANT WHEREIN THERE WAS NO CONDITION AS TO DEVELOPMENT OF COMMERCIAL AREA IN THE HOUSING PROJE CT. THE APPELLANT SUBMITS THAT THE CONDITIONS STATED BY THE AO ABOVE WAS NOT THERE AT ALL IN THE SECTION AND HENCE NOT APPLICABLE TO THE CASE OF THE APPELLANT. THE SAME WILL BE DISCUSSED DETAIL IN THE ENSURING PARAGRAPH OF OUR SUBMISSION. THE APPELLANT THEREFORE SUBMITS THAT THE ABOVE OBSERVATIONS OF AO ARE TOTAL LY IRRELEVANT TO THE CASE OF THE APPELLANT. IN ANY VIEW OF THE MATTER AND WITHOUT PR EJUDICE TO THE ABOVE THE APPELLANT HAS NOT DEVELOPED ANY COMMERCIAL AREA IN ITS PROJECT SAI RADHA COMPLEX AND THE PROJECT HAS BEEN APPROVED AS HOUSI NG PROJECT COMPRISING OF FIVE RESIDENTIAL BUILDINGS. ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 11 4) PAGE 3 PARA 8(B): IN ITS REPLY THE ASSESSEE ITS ELF ACCEPTED HAVING SOLD COMMERCIAL FSI MEASURING 8500 SQ. FT. THEREFORE TH E ASSESSEE DO NOT QUALIFY FOR DEDUCTION U/S 8OIB(10) THE APPELLANT SUBMITS THAT THE ABOVE OBSERVATIONS O F THE ADDL. CIT ARE GROSSLY INCORRECT AND MISCONSTRUED. THE APPELLANT SUBMITS T HAT AS EVIDENT FROM THE SUBMISSION MADE TO ADDL. CIT (REFER PAGE NO.48 OF P APER BOOK) IT HAS NEVER ACCEPTED THAT IT SOLD COMMERCIAL FSI. THE APPELLANT SUBMITTED THAT IT HAS SOLD TDR RIGHTS TO ANOTHER BUILDER AS PER DEVELOPMENT AG REEMENT ON WHICH THAT ANOTHER DEVELOPER IS PRESENTLY CONSTRUCTING COMMERC IAL BUILDING. 5) PAGE 3 PARA 8: .......ENTERED INTO WITH SH. G ANESH SHIVA THAKUR & SH. KARTIK SHIVA THAKUR FOR COMMERCIAL DEVELOPMENT AGREEMENT O F THE REMAINING LAND IN THE RESIDENTIAL COMPLEX CONSTRUCTED BY THE ASSESSEE AT BHANDUP MUMBAI NAMED AS SAI INDU TOWER ...... THE APPELLANT SUBMIT TH AT RESIDENTIAL PROJECT DEVELOPED BY THE APPELLANT IS NAMED AS SAI RADHA C OMPLEX AND NOT SAI INDU TOWER AS STATED BY THE AO. THE APPELLANT FURTHER S UBMITS THAT THE AGREEMENT IS NOT COMMERCIAL DEVELOPMENT AGREEMENT BUT IS A DEVEL OPMENT AGREEMENT WHEREIN APPELLANT SOLD TDR RIGHTS TO ANOTHER BUILDER. THE A PPELLANT SUBMITS THAT IT HAS NEITHER SOLD THE LAND NOR IS ENGAGED IN THE DEVELOP MENT ACTIVITY SAI INDU TOWER BUT ANOTHER BUILDER IS DEVELOPING THE SAID PROJECT. THE APPELLANT THEREFORE SUBMIT THAT THE AO MISCONSTRUED THE FACTS OF THE CASE OF T HE APPELLANT (REFER PAGE NO.49 TO 66 OF PAPER BOOK). 6) PAGE 3 PARA 9: THE DEVELOPMENT AGREEMENT ENTER ED INTO BY THE ASSESSEE FOR COMMERCIAL PURPOSE IS ENCLOSED AS ANNEXURE A TO T HIS ORDER THE APPELLANT SUBMITS THAT IT HAS NOT RECEIVED THE DEVELOPMENT AGREEMENT ALONGWITH THE ASSESSMENT ORDER. 7) PAGE 4 CLAUSE (IV): ON GOING THROUGH THE ABOVE PROVISIONS OF THE AGREEMENT IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE HAS FROM VERY BEGINNING PLANS TO CONSTRUCT A TO F BUILDINGS AND HE ALREADY HAD INTENTION TO DEVELOP THE FRONT PORTION OF THE RESIDENTIAL COMPLEX INTO A COMMERCIAL COMPLEX. THE APPELLANT SUBMITS THAT THESE OBSERVATIONS OF TH E AO ARE SELF DRAWN OBSERVATION AND CONCLUSIONS. THE APPELLANT HAS ENTE RED INTO DEVELOPMENT AGREEMENT ON 9.04.2011 WHICH ONLY REFERS TO SALE OF FSI/ TDR AND PAYMENT OF CONSIDERATION THEREOF. THE APPELLANT IS NOT A PARTY TO THE DEVELOPMENT ACTIVITY OF THE COMMERCIAL PROJECT. MOREOVER THE SAID AGREEMENT HAS BEEN ENTERED INTO MUCH AFTER THE COMPLETION OF THE RESIDENTIAL PROJEC T FOR WHICH THE DEDUCTION U/S 8OIB(10) WAS CLAIMED BY THE APPELLANT IN A.Y. 2008- 09. 8) PAGE 4 CLAUSE (V): IT IS ABUNDANTLY EVIDENT AN D PROVED BY CLAUSE 3(B)(III) THAT IMMEDIATELY ON AFTER END OF THE F.Y. 2008-09 THE AS SESSEE HAS NEGOTIATED WITH THE DEVELOPER FOR CONSTRUCTION OF F WING COMMERC IAL COMPLEX OF 19 FLOORS IN THE FRONT OF THE RESIDENTIAL COMPLEX. IT IS FOR THIS ON LY THAT THE DEVELOPER WAS ABLE TO OBTAIN IOD DATED 01.12.2009 AND COMMENCEMENT CERTIF ICATE BY 08.12.2010. THE APPELLANT SUBMITS THAT THE AO TRIED TO CORRELAT E THE ISSUE OF IOD AND COMMENCEMENT CERTIFICATE BY BMC FROM THE END OF F.Y . 2008-09 IN ORDER TO SHOW THAT THE IOD AND CC WAS OBTAINED IMMEDIATELY A FTER THE COMPLETION OF THE PROJECT BY THE APPELLANT WHICH IS HIGHLY ERRONEOUS AND UNJUSTIFIED. THE APPELLANT ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 12 SUBMITS THAT PROJECT OF THE APPELLANT WAS COMPLETED IN F.Y.2007-08 AND MOST OF THE FLATS WERE SOLD AND INCOMES THERE FROM WERE REC OGNIZED IN A.Y. 2008-09. THE APPELLANT CARRIED THE UNSOLD FLAT AS STOCK IN TRADE IN A.Y. 2009-10. DURING THE YEAR UNDER CONSIDERATION I.E. A.Y. 2009-10 THE APPE LLANT HAS ONLY SOLD FLATS WHICH WERE CARRIED FORWARD AS CLOSING STOCK IN TRAD E AND INCOME THERE FROM WERE RECOGNIZED IN BOOKS OF ACCOUNTS. THE APPELLANT THER EFORE SUBMIT THAT THE ACTIVITIES IN YEAR ENDED 31.03.2009 CANNOT BE CONSI DERED AS OF ANY RELEVANCE FOR DRAWING ANY ADVERSE CONCLUSION WITH REFERENCE TO TH E PROJECT COMPLETED IN EARLIER YEAR. THE APPELLANT FURTHER SUBMITS THAT IT MADE AP PLICATION TO BMC ON 15.01.2008 FOR ISSUE OF COMPLETION CERTIFICATE AND THE SAME WAS ISSUED BY THE BMC ON 23.03.2009 (REFER PAGE NO.36 OF PAPER BOOK). THE BMC ISSUED FULL OCCUPATION ON 2.12.2008(REFER PAGE NO.31 OF PAPER B OOK). THE IOD FOR COMMERCIAL PROJECT HAS BEEN OBTAINED ALMOST AFTER T WO YEARS AND COMMENCEMENT CERTIFICATE ALMOST THREE YEARS AFTER THE COMPLETION OF THE RESIDENTIAL PROJECT BY THE APPELLANT. THE APPELLANT THEREFORE SUBMITS THAT ALL THESE EVENTS ARE SUBSEQUENT TO THE COMPLETION OF THE RESIDENTIAL PROJECT BY THE APPELLANT AND DO NOT HAVE ANY BEARING ON THE PROJECT OF THE APPELLANT AND ITS CLA IM FOR DEDUCTION U/S 80IB(10) OF THE ACT. 9) PAGE 4 CLAUSE(VI): THE ASSESSEE HAS ALREADY IN TENDED TO CLAIM DEDUCTION U/S 8OIB ON THE PROFITS ON SALE OF SUCH BALANCE FLATS S IMULTANEOUSLY GETTING INTO AN AGREEMENT TO DEVELOP A HIGH RISE COMMERCIAL COMPLEX OF 19 FLOORS ON THE SAME RESIDENTIAL COMPLEX. THE APPELLANT SUBMITS THAT IT IS NOT DEVELOPING THE COMMERCIAL BUILDING; IT IS NOT THE BUILDER/ DEVELOPER OF THE SAID COMMERCIAL BUILD ING. THE APPELLANT ONCE AGAIN SUBMIT THAT IT HAS ONLY SOLD THE TDR RIGHTS IN RESP ECT OF LAND TO ANOTHER DEVELOPER WHO IS CONSTRUCTING THE COMMERCIAL BUILDI NG. THE APPELLANT FURTHER SUBMIT THAT IT HAS NOT CLAIMED ANY DEDUCTION U/S 8O IB(10) ON THE ABOVE COMMERCIAL BUILDING AS APPREHENDED BY THE AO. THE A PPELLANT SUBMIT THAT IT HAS ALREADY STATED TO THE AO AND ADDITIONAL CIT DURING ASSESSMENT PROCEEDING THAT THE INCOME FROM THE SALE OF TDR RIGHT ARE CONSIDERE D AS BUSINESS INCOME OF THE APPELLANT IN F.Y. 2011-12 AND IT HAS ALREADY PAID A DVANCE TAX OF RS.35 00 000/- ON 15.09.2011 AND 39 00 000/- ON 13.12.2011 IN RESP ECT OF PROFIT ON SALE OF FSI. COPY OF SUBMISSION/LETTER FILED TO ADDITIONAL CIT A ND AO IS ENCLOSED AT PAGE NO.48 AND 68 69 OF PAPER BOOK. THE APPELLANT SUBM IT THAT INSPITE OF REPEATED SUBMISSIONS MADE BY THE APPELLANT THE AO FAILED TO CONSIDER THE SAME AND RECORDED HIS ABOVE FINDING/OBSERVATION WHICH ARE CO NTRARY TO THE FACTS ON RECORD AND IS SOLELY BASED ON ASSUMPTIONS AND SURMISES. 10) PAGE 4 CLAUSE (VI): THE SSESSEE ALSO ENTERED INTO AGREEMENT FOR CONSTRUCTION OF F RESIDENTIAL WING WHICH HAS BEEN SOLD OUT TO THE NEW DEVELOPER THE COPY OF WHICH WAS REQUESTED TO FURNISH WHICH THE ASSESSEE HAS AVOIDED TO FURNISH. THE APPELLANT DENIES THE ABOVE ALLEGATION OF THE AO . THE APPELLANT SUBMITS THAT IT HAS DULY FILED THE COPY OF SAID AGREEMENT VIDE A UTHORIZED REPRESENTATIVE LETTER DT.22.12.2011(REFER PAGE NO.119 TO 149 OF PAPER BOO K) AND THE LETTER IS DULY STAMPED/ACKNOWLEDGED BY THE AO. THE APPELLANT THERE FORE SUBMIT THAT THE ALLEGATION MADE BY THE AO ARE BASELESS AND AGAINST THE MATERIAL ON RECORD. ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 13 11) PAGE 4 & 5 PARA 11: IN PARA 11 THE AO DISCUSS THE PROVISIONS OF SECTION 8OIB(10) AND IN SUBSEQUENT PARAS OF ASSESSMENT ORDE R MADE APPLICABLE THE SAME PROVISIONS TO THE CASE OF THE APPELLANT. THE AO FUR THER CATEGORIZED CERTAIN CONDITIONS I.E. CONDITION 1 TO 6 IN ABOVE PARA WHI CH ACCORDING TO THE AO NEEDS TO BE FULFILLED BY THE APPELLANT FOR CLAIMING DEDUCTIO N U/S 80IB(L0). THE APPELLANT SUBMITS THAT THE PROJECT OF THE APPELLANT WAS APPRO VED PRIOR TO 1.04.2005. THE FINANCE (NO.2) ACT 2004 SUBSTITUTED THE SUBSECTION 8OIB(10) WITH A NEW SECTION WHICH IS MADE APPLICABLE W.E.F. 1.04.2005 . THE APP ELLANT SUBMITS THAT THE PROJECT OF THE APPELLANT WAS APPROVED PRIOR TO AMEN DMENT OF SECTION 801B(10) BY THE FINANCE (NO.2) ACT 2004 AND HENCE THE PROVISION S BEFORE AMENDMENTS WERE APPLICABLE TO THE CASE OF THE APPELLANT. THE SAME W ILL BE DEALT IN DETAIL IN SUBSEQUENT PARA OF OUR WRITTEN SUBMISSION. THE APPE LLANT SUBMITS THAT THE AO HAS QUOTED AND MADE APPLICABLE TO THE CASE OF THE A PPELLANT THE NEW SECTION 80IB(L0) WHICH IS APPLICABLE ONLY TO PROJECTS APPRO VED AFTER 1 .04.2005. THE APPELLANT SUBMITS THAT THE FEW OF THE CONDITIONS L IKE CONDITION 4 STATED IN ASSESSMENT ORDER WHICH DEALS WITH COMMERCIAL AREA I N THE HOUSING PROJECT WAS NOT THERE AT ALL IN THE PROVISIONS OF STATUTE AT TH E RELEVANT TIME WHICH ARE APPLICABLE TO THE CASE OF THE APPELLANT. THE APPELL ANT SUBMIT THAT THE AO HAS GROSSLY MISINTERPRETED THE LAW AND ARBITRARILY MADE THE SAME APPLICABLE TO THE CASE OF THE APPELLANT. THE APPELLANT THEREFORE SUBM ITS THAT THE ENTIRE ASSESSMENT WAS MADE ON THE APPLICATION OF PROVISIONS OF LAW WH ICH ARE NOT APPLICABLE TO THE APPELLANT AND THUS THE ASSESSMENT ORDER SHALL BE QU ASHED FORTHWITH. 12) PAGE 5 PARA 12: THE ASSESSEE HAS FILED TO FULF ILL THE CONDITIONS STATED AT NO.3 4 & 5 PLACED IN PARA NO. 10. SINCE THE PROJECT IS S TILL NOT COMPLETE ON THE SAME LAND. THE APPELLANT ONCE AGAIN SUBMIT THAT THE AO HAS QUO TED WRONG CONDITIONS IN THE ASSESSMENT ORDER AS FEW OF THE CONDITIONS LIKE CON DITION NO. 3 AND 4 STATED BY THE AO WERE NOT THEREIN THE PROVISIONS OF SECTION 8 OIB(10) WHICH IS APPLICABLE TO THE APPELLANT. WITH REGARD TO ALLEGED NON FULFILLME NT OF CONDITION NO. 5 THE APPELLANT SUBMITS THAT THESE ARE MERE ALLEGATIONS O F AO WITHOUT THERE BEING ANY EVIDENCE ON RECORD. FURTHER THE APPELLANT AT THE CO ST OF REPETITION SUBMIT THAT THE RESIDENTIAL PROJECT WAS COMPLETED IN F.Y.2007-0 8 AND BMC HAS GIVEN COMPLETION CERTIFICATE DT.23.03.2009 TO THE APPELLA NT AND ALL THE DETAILS WERE FILED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. THE AP PELLANT THEREFORE SUBMITS THAT THE AO HAS APPLIED SUBSEQUENT PROVISIONS OF LA W AND ONLY MADE BARE ALLEGATION WITHOUT ANYTHING CONTRARY ON RECORD WHIC H DOES NOT IN ANY WAY AFFECT THE VALIDITY OF CLAIM OF THE APPELLANT U/S 8OIB(10) OF THE ACT. 13) PAGE 5 PARA 12: . THE COMMERCIAL AREA IS OVER 23000 SQ. FT. AND PERMISSIBLE LIMIT WAS 2000 SQ. FT. THE APPELLANT SUBMITS THAT THE PROJECT SAI RADHA C OMPLEX DEVELOPED BY IT WAS A RESIDENTIAL HOUSING PROJECT AS APPROVED BY THE BM C AND IT HAS NEVER BUILT ANY COMMERCIAL AREA IN THE SAID PROJECT. THE APPELLANT HAS SOLD THE RIGHT TO LOAD TDR TO ANOTHER BUILDER WHO IS BUILDING A COMMERCIAL PRO JECT WHICH IS DIFFERENT FROM THE APPELLANTS RESIDENTIAL PROJECT. THE APPELLANT SUBMITS THAT THE AO IS ARBITRARILY TREATING AREA OF PROJECT SAI INDU TOWE RS OF ANOTHER BUILDER AS THE AREA OF THE PROJECT OF THE APPELLANT FOR DENYING THE CLA IM OF THE APPELLANT U/S 8OIB(10) OF THE ACT WHICH IS FACTUALLY AND LEGALLY ERRONEOUS . ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 14 14) PAGE 5 PARA 12: ..THE FLATS ARE NOT AS PER TH E MAP IT WAS ALSO GATHERED THAT FLAT BUILT UP AREA EXCEEDS 1000 SQ. FT. THE APPELLANT SUBMIT THAT THE ABOVE OBSERVATIONS AR E WITHOUT ANY EVIDENCE OR BASIS AND SELF DRAWN OBSERVATIONS OF THE AC. THE AP PELLANT SUBMITS THAT IT HAS BUILT THE FLATS AS PER THE PLAN AND SAME WAS APPROV ED BY THE BMC. THE APPELLANT ALSO SUBMITTED THE CERTIFICATE OF ARCHITECT BHUPEND RA PATRAWAL CERTIFYING THAT THE BUILT UP AREA OF EACH FLAT IS LESS THAN 1000 SQ. FT . (REFER PAGE NO.32 OF PAPER BOOK). FURTHER THE APPELLANT VIDE AUTHORIZED REPRES ENTATIVES LETTER DT.16.12.2011 HAS ALSO SUBMITTED BEFORE THE AO COPY OF ALL THE AG REEMENT FOR SALE OF FLATS WHICH SPECIFICALLY SHOWS THE SALEABLE AREA CARPET AREA E TC. AND IN EACH AND EVERY CASE THE AREA OF THE FLAT IS MUCH BELOW THE PRESCRIBED L IMIT OF 1000 SQ. FT(REFER PAGE NO.70 TO 118 OF PAPER BOOK). IN VIEW OF MATERIALS A VAILABLE ON RECORD THE APPELLANT SUBMITS THAT THE ALLEGATIONS MADE BY THE AO ARE TOTALLY BASELESS AND WITHOUT ANY EVIDENCE. 15) PAGE 5 CLAUSE (I): IT IS EVIDENT FROM THE TEX T OF THE COMMERCIAL DEVELOPMENT AGREEMENT THAT THE ASSESSEE ALREADY PLA NNED TO CONSTRUCT A COMMERCIAL COMPLEX IN THE HOUSING PROJECT. THEREFOR E THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION FROM VERY BEGINNING BUT DEL IBERATELY DEFERRED STARTING CONSTRUCTION OF THE COMMERCIAL COMPLEX SO THAT IT C OULD CLAIM DEDUCTION U/S 8OIB. THUS THE DEDUCTION U/S 80IB IS CLAIMED FRAUDU LENTLY. THE APPELLANT SUBMITS THAT IT DID NOT CONSTRUCT ANY COMMERCIAL COMPLEX IN THE HOUSING PROJECT. THE APPELLANT BECAME ENTITLED TO T DR RIGHTS ON THE LAND WHICH IT SOLD TO ANOTHER BUILDER WHO IS CONSTRUCTING THE COMMERCIAL BUILDING. THE COMMERCIAL BUILDING DEVELOPED BY ANOTHER BUILDER IS A SEPARATE AND INDEPENDENT PROJECT FROM THE RESIDENTIAL PROJECT OF THE APPELLA NT. THE DEVELOPMENT AGREEMENT FOR SALE OF TDR RIGHTS WAS ENTERED INTO IN THE F.Y. 2011 -12 WHICH IS MUCH AFTER THE COMPLETION OF THE PROJECT OF THE APPELLANT. 16) PAGE 5 CLAUSE (II) : THE PERMISSIBLE COMMERCIA L AREA WAS 2000 SQ. FT. HOWEVER THE DEVELOPMENT AGREEMENT OF THE COMMERCIAL COMPLEX SHOWS THAT THE CLAUSE 2(B) PAGE NO.6 MENTIONS THAT THE SANCTION PART OF THE CO MMERCIAL BUILDING IS TO BE OF A CARPET AREA OF 23 319.55 SQ. FT. EQUIVALENT TO 2166 044 SQ. MTR. THE APPELLANT SUBMITS THAT THE COMMERCIAL BUILDING IS THE PROJECT OF ANOTHER BUILDER HOWEVER THE AO IS TREATING THE SAME AS APP ELLANTS PROJECT FOR REJECTING THE CLAIM OF THE APPELLANT U/S 8OIB(10) OF THE ACT. 17) PAGE 6 CLAUSE (IV) : THE ABOVE SHOWS THAT THE DEVELOPER HAD ALREADY OBTAINED REQUISITE IOD VIDE DT.1/12/2009 IN RESPECT OF SANCTION BUILDING PLANS OF THE COMMERCIAL COMPLEX. SINCE THE IOD WAS ALREADY O BTAINED BY THE DEVELOPERS MUCH IN ADVANCE TO BE PRECISELY DURING THE PERIOD OF CONSTRUCTION OF THE HOUSING PROJECT ITSELF. THE APPELLANT SUBMITS THAT ABOVE OBSERVATION OF THE AO ARE ONLY ON THE BASIS OF ASSUMPTIONS AND SURMISES. THE HOUSING PROJECT OF TH E APPELLANT WAS COMPLETED IN F.Y.2007-08 AND IOD HAS BEEN OBTAINED MUCH AFTER THE COMPLETION OF THE HOUSING PROJECT OF THE APPELLANT EVEN OTHERWISE IT DOES NOT AFFECT THE CLAIM OF THE APPELLANT IN ANY MANNER. ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 15 18) PAGE 6 CLAUSE (V): THE BLUE PRINT MAP OF THE PROJECT FURNISHED BY THE ASSESSEE IN THIS OFFICE DOES NOT APPEAR TO BE AUTHE NTIC AS IT HAS NO APPROVAL STAMP OF THE CIVIL AUTHORITY. HOWEVER ASSESSEE DID NOT FURNISH ANY OTHER MAP. THIS MAP ALSO HAS PLANNING OF F BUILDING IN THE H OUSING PROJECT HOWEVER THE SAME HAS BEEN ERASED ON THE MAP FOR THIS IT IS SLI GHTLY VISIBLE. THE ASSESSEE HAS ALREADY ENJOYED THE FULL DEDUCTION UNDER SECTION 8O IB BY MISCHIEF AS IT HAS RETAINED LAND IN THE HOUSING PROJECT FOR ITSELF. FO R THIS REASON A HOUSING PROJECT CANNOT BE TAKEN TO BE COMPLETE IN THE PRESCRIBE TIM E. THE HOUSING PROJECT THEREFORE REMAINS DEFICIENT TO FULFILL THE CONDITIO N OF COMPLETION. THE APPELLANT SUBMITS THAT THE PLAN SUBMITTED DURIN G THE ASSESSMENT PROCEEDING IS THE CERTIFIED TRUE COPY OF THE PLAN S UBMITTED TO THE BMC. THE ARCHITECT BHUPENDRA PATRAWAL HAS CERTIFIED THE SAME AND ALSO SIGNED ON THE SAME AS A CERTIFIED TRUE COPY OF THE PLAN. THE APPE LLANT SUBMITS THAT THE AO HAS NEVER ASKED FOR ORIGINAL PLAN OR RAISED ANY SUCH DO UBT IN THIS REGARD DURING ASSESSMENT PROCEEDING AND HENCE THE SAME WAS NOT SU BMITTED TO THE AO. THE APPELLANT SUBMITS THAT THE MAP SUBMITTED IN THE COU RSE OF ASSESSMENT PROCEEDING IS ONE OF THE BMC APPROVED MAP DULY CERT IFIED BY THE ARCHITECT. HOWEVER THE APPELLANT NOW ENCLOSE HEREWITH THE DUL Y STAMPED PLAN BY THE BMC FOR YOUR HONOURS PERUSAL (REFER PAGE NO.18 OF PAPE R BOOK)ALONGWITH THE PLAN SUBMITTED TO THE AO DURING ASSESSMENT PROCEEDING. T HE APPELLANT SUBMIT THAT AS CAN BE OBSERVED FROM THE PERUSAL OF PLANS BOTH THE PLANS ARE REPLICA OF EACH OTHER AND THERE IS NO CHANGE AT ALL IN THE PLANS. T HE APPELLANT THEREFORE SUBMITS THAT THE PLANS SUBMITTED TO THE AO DURING ASSESSMEN T PROCEEDING IS AN AUTHENTIC PLAN DULY CERTIFIED AS TRUE COPY BY THE ARCHITECT BHUPENDRA PATRAWALA AND SAME IS ALSO APPROVED BY THE BMC(REFER PAGE NO.17 OF PAP ER BOOK) IN VIEW OF ABOVE THE APPELLANT SUBMIT THAT THE APPREHENSIONS OF THE AO A RE BASELESS WITHOUT APPRECIATION OF FACTS IN ITS PROPER PERSPECTIVE. THE APPELLANT FURTHER SUBMIT THAT THE PROJECT MAP H AS BEEN AMENDED FROM TIME TO TIME AND THE SAME HAS BEEN DULY APPROVED BY THE BMC IN THE COURSE OF ITS IMPLEMENTATION. THE APPELLANT HAS INITIALLY PLANNED RESIDENTIAL BUI LDING COMPRISING OF WING A TO F HOWEVER SUBSEQUENTLY THE PROPOSAL TO CONSTRUCT F RESIDENTIAL WING WAS ABANDONED AND THE RELATED FSI OF F WING WERE USED FOR CONSTRUCTING FURTHER FLOOR ON A TO E WING. THE APPELLANT SUBMITS THAT TOTAL A VAILABLE FSI WHICH WAS ORIGINALLY PLANNED TO BE USED FOR CONSTRUCTING A TO F BUILDINGS WERE SUBSEQUENTLY UTILIZED FOR CONSTRUCTING A TO E BUILD ING BY INCREASING THE AREA AND FLOOR OF A TO E BUILDINGS. THE APPELLANT HAS FINALL Y CONSTRUCTED RESIDENTIAL PROJECT COMPRISING OF A TO E WING AND BMC HAS GIVEN COMPL ETION CERTIFICATE OF THE SAME RESIDENTIAL PROJECTS. THE APPELLANT NEVER CONSTRUCT ED F WING. THE APPELLANT FURTHER SUBMIT THAT THE HOUSING PROJE CT WAS COMPLETED EXACTLY AS PER THE PLAN APPROVED BY THE BMC AND IT HAS NOT RET AINED ANY LAND FOR ITSELF OUT OF HOUSING PROJECT APPROVED BY THE BMC. THE BMC OFF ICIAL HAS APPROVED THE PLAN TIME TO TIME INSPECTED THE PROJECT AND FINALLY AFTE R COMPLETION OF THE HOUSING PROJECT AS PER PLAN GRANTED THE COMPLETION CERTIFIC ATE ON 23.03.2009. THE APPELLANT SUBMIT THAT THE GRANTING OF COMPLETION CE RTIFICATE BY THE LOCAL ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 16 AUTHORITY ITSELF IS A CONCLUSIVE PROOF THAT THE APP ELLANT HAS COMPLETED THE PROJECT AS PER THE SANCTIONED PLAN. IN VIEW OF ABOVE THE AP PELLANT SUBMIT THAT THE ALLEGATIONS OF THE AO THAT THE PROJECT IS INCOMPLET E ARE WITHOUT ANY MERIT AND SAME SHALL BE QUASHED. 19) PAGE 6 CLAUSE (VI): THE COMPLETION CERTIFICAT E ISSUED BY THE LOCAL AUTHORITIES EVEN WHEN THE ASSESSEE HAS RETAINED SUBSTANTIAL LAN D WITHOUT ANY DECLARED PURPOSE/PLANNING ITSELF MAKES THE APPROVAL DEFICIEN T FOR A PURPOSE OF CLAIMING DEDUCTION U/S 80IB. AS PER A CONDITION OF SECTION 8 0IB THE ASSESSEE IS LEFT ONLY TO ENJOY PROFIT FROM SALE OF THE HOUSING UNIT AND ELIG IBLE COMMERCIAL AREA. THE ASSESSEE CANNOT HOLD THE PROPERTY FOR APPRECIATION AND FOR EARNING DEFERRED LARGER GAINS. THE APPELLANT SUBMITS THAT AS EVIDENT FROM THE APP ROVED PLAN OF BMC THE TOTAL PERMISSIBLE FSI ON THE PLOT IS 10 717.82 SQUARE MET ER AND THE APPELLANT HAS CONSTRUCTED A TO E BUILDINGS AND USED THE FSI OF 10 491.50 SQUARE METER IN ITS SAID HOUSING PROJECT I.E. 97.5% OF AVAILABLE FSI WA S CONSUMED(REFER PAGE NO.17 & 18 OF PAPER BOOK). THE HOUSING PROJECT IS APPROVE D BY THE BMC AND COMPLETION CERTIFICATE IS GRANTED TO THE APPELLANT. THE APPELL ANT THEREFORE SUBMITS THAT IT HAS USED THE FULL FSI AVAILABLE ON THE LAND AS PER THE PLAN APPROVED BY THE BMC. THE APPELLANT HAS NOT RETAINED ANY LAND FROM THE HOUSIN G PROJECT. IT BUILT THE HOUSING PROJECT AS APPROVED BY THE BMC AND THE ALLE GATION MADE BY THE AO IS BASELESS. THE APPELLANT FURTHER SUBMITS THAT TO SAN CTION A PLAN AND ISSUE COMPLETION CERTIFICATE IS THE DOMAIN OF THE BMC AND THE AO HAS NO POWER TO CHALLENGE THE COMPETENCY OF BMC THAT THE COMPLETION CERTIFICATE WAS WRONGLY ISSUED TO THE APPELLANT. 20) PAGE 6 CLAUSE (VII) : HERE APPARENTLY THE PRO FIT AS DECLARED BY THE ASSESSEE FROM SALE OF HOUSING UNIT ARE MUCH LESS THAN THE CO NSIDERATION OF RIGHTS THAT HAVE ARRIVED TO THE ASSESSEE FROM SALE OF COMMERCIA L DEVELOPMENT RIGHTS TO ANOTHER DEVELOPERS THEREFORE THE PROJECT PREDOMINAN TLY BECOMES A COMMERCIAL PROJECT. THE COMMERCIAL BUILDING TO BE DEVELOP ON T HE LAND IS IN THE FRONT SIDE OF THE COMPLEX FACING THE MAIN ROAD OF THE AREA OF LBS MARG. THE APPELLANT SUBMIT THAT IT HAS REALIZED THE REVEN UE OF RS.38 20 06 222/- IN A.Y.2008-09 AND RS.6 63 18 270/- IN A.Y. 2009-10 FR OM SALE OF FLATS IN APPROVED HOUSING PROJECT COMPRISING OF A TO B BUILDINGS. FUR THER THE APPELLANT HAS DECLARED PROFIT OF RS.15 47 18 442/- AND RS.3 53 34 185/- FROM A.Y. 2008-09 AND 2009-10 RESPECTIVELY FROM THE SAID HOUSING PROJ ECT. AS AGAINST THE SAME THE APPELLANT HAS RECEIVED CONSIDERATION OF RS.4 14 00 000/- FOR SALE OF TDR RIGHTS TO ANOTHER DEVELOPER IN F.Y. 2011-12. THE APPELLANT TH EREFORE SUBMIT THAT THE REVENUE RECOGNIZED FROM HOUSING PROJECT IS MUCH HIG HER THAN THE CONSIDERATION RECEIVED FROM SALE OF TDR RIGHTS TO ANOTHER DEVELOP ER. IN VIEW OF ABOVE THE APPELLANT SUBMIT THAT THE ABOVE OBSERVATIONS OF THE AO ARE GROSSLY IRRELEVANT AND BASED ON ILL CONCEIVED FACTS. MOREOVER THE QUANTUM OF PROFIT HAS NO RELEVANCE TO THE ELIGIBILITY OF CLAIM U/S 80IB(10) OR THE NATURE OF THE PROJECT. 21) PAGE 6 CLAUSE (VIII): THE COPY OF THE MAP THE HOUSING PROJECT FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS DO N OT HAVE THE LAY OUT PLAN FOR ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 17 EACH CATEGORY OF RESIDENTIAL FLAT TO BE CONSTRUCTED . THEREFORE IT CANNOT BE ASCERTAINED WHETHER THE FLAT IS IN THE PERMISSIBLE SIZE LIMIT OF LESS THAN L000SQ.FT. THE APPELLANT SUBMITS THAT THE PLAN SUBMITTED DURIN G THE ASSESSMENT PROCEEDING IS THE OVERALL PLAN OF THE ENTIRE PROJEC T AND IT DOES NOT CONTAIN THE FLOORWISE LAYOUT OF THE BUILDING. THE FLOORWISE LAY OUT PLAN WAS NEVER ASKED BY THE AO DURING ASSESSMENT PROCEEDING NOR DOES THE AO RAI SED ANY QUERY IN THIS REGARD AS THE SIMILAR CLAIM HAS BEEN CONSIDERED AND ALLOWED IN PRECEDING YEAR. HOWEVER THE APPELLANT HAS FILED THE CERTIFICATE OF ARCHITECT BHUPENDRA PATRAWAL CERTIFYING THAT THE BUILT UP AREA OF EACH FLAT IS L ESS THAN 1000 SQ. FT. FURTHER THE APPELLANT HAS FILED THE COPY OF ALL AGR EEMENTS FOR SALE OF FLATS DURING A.Y. 2009-10 VIDE AUTHORIZED REPRESENTATIVES LETTE R DT.16.12.2011 DURING ASSESSMENT PROCEEDING WHEREIN THE SALEABLE AREA CA RPET AREA ETC ARE CLEARLY MENTIONED. THE REST OF THE FLATS WERE SOLD IN PRECE DING YEAR I.E. A.Y.2008-09 AND THE THEN AO ASSESSING THE APPELLANT HAS ALLOWED THE APPELLANTS CLAIM AFTER DUE VERIFICATION OF THE FLATS. 22) PAGE 6 PARA 13(L): THE MORE IMPORTANT DISQUAL IFICATION OF THE ASSESSEE FOR ALLOWING DEDUCTION UNDER SECTION 80IB IS THAT THE F ORM SUBMITTED BY IT IN NO.10 CCB FOR DETERMINATION OF THE DEDUCTION U/S 8OIB MEN TIONS THE DEDUCTION ALLOWABLE AT NIL. THE APPELLANT SUBMITS THAT THE ABOVE OBSERVATION OF THE AO IS NOT CORRECT. THE APPELLANT SUBMITS THAT THE DEDUCTION WAS NOT SHOWN AS NIL AS STATED BY THE AC BUT INSTEAD OF WRITING THE AMOUNT OF DEDUCTION THE AUDITOR HAS WRITTEN 8OIB. HOWEVER AT SR. NO. 21 OF THE FORM 10 CCB THE PROF ITS FROM UNDERTAKING FROM ELIGIBLE BUSINESS HAS BEEN INADVERTENTLY STATED AS NIL THROUGH OVERSIGHT AND THE CONCERNED AUDITOR VIDE HIS LETTER TO THE AO DT.20.0 7.2011 HAS CLARIFIED THAT IT WAS AN ERROR THROUGH OVERSIGHT AND SAME SHALL BE READ A S RS.3 53 34 185/- BEING ELIGIBLE PROFIT(REFER PAGE NO.34 OF PAPER BOOK). 23) PAGE 7 CLAUSE (III): THE ASSESSEE HAS ALREADY TAKEN ALL DEDUCTIONS ON ACCOUNT OF LAND AND COST OF THE RESIDENTIAL PROJECT IN ITS RETURN OF INCOME FILLED UP TO A.Y 2009-10. AND NOW BY SELLING THE RETAINED POR TION OF LAND AND OTHER AMENITY PORTION ALSO CONVERTED INTO BUILDABLE AREA HAS MADE MUCH MORE PROFITS THAN IT ENJOYED FROM THE RESIDENTIAL PROJECT. THE B UILDER FIRST DECLARE AMENITIES ARE IN THE PROJECT AND AFTER CLAIMING ALL DEDUCTIO NS CANNOT THE AMENITY AREA INTO THE COMMERCIALLY EXPLOITABLE AREA FOR GAINS THIS H AS NOT BEEN PART OF THE SCHEME OF DEDUCTION U/S 80IB. THEREFORE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF THE CODE LAID U/S 80IB. THE APPELLANT SUBMITS THAT THE ABOVE OBSERVATIONS O F AO ARE INCORRECT AND ERRONEOUS AND NOT BASED ON ANY FACTS. THE APPELLANT HAS EARNED PROFIT ON SALE OF HOUSING PROJECT WHICH IS DULY REFLECTED IN ITS BOOK S OF ACCOUNTS AND ACCEPTED AND ASSESSED BY THE AO. THE APPELLANT FURTHER SUBMITS T HAT IT HAS NOT SOLD ANY AMENITY AREA OF HOUSING PROJECT AS STATED BY THE AO . 24) PAGE 7 CLAUSE (V): THE SEC-80 IB DO NOT PERM IT THAT FIRST ONE BUILDS A RESIDENTIAL COMPLEX ENJOY DEDUCTION U/S 80IB. AND ONCE 80IB DEDUCTIONS HAVE BEEN CLAIMED HE IS NOT ENTITLED TO CLAIM DEDUCTION U/S 80IB. THUS THE DEDUCTION ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 18 CLAIMED INITIALLY U/S.80IB DESERVES TO BE REVERSED AND THE INCOME SUBJECTED TO INCOME TAX. APPELLANT SUBMITS THAT THE ABOVE OBSERVATIONS/SENTE NCE OF AO IS ABSOLUTELY MEANINGLESS AND DOES NOT SPEAKS ANYTHING APART FROM THE ILL MOTIVE OF AO TO DENY THE DEDUCTION CLAIMED BY THE APPELLANT U/S 8OI B(10). THE APPELLANT SUBMITS THAT THE DEDUCTION U/S.80IB(10) WAS CLAIMED BY THE APPELLANT WITH REFERENCE TO A HOUSING PROJECT ON COMPLIANCE OF ALL THE CONDITIONS LAID DOWN IN THE ACT AND SUBSEQUENT GAIN ON SALE OF THE TDR RIGH T HAS BEEN OFFERED TO TAX. 25) PAGE 7 CLAUSE (VI): SIMILAR IS THE CASE OF TH E ASSESSEE. FIRST IT OBTAINED APPROVAL FOR RESIDENTIAL COMPLEX ONLY TO CLAIM DEDU CTIONS U/S.80IB AND LATER GOT APPROVAL FOR COMMERCIAL PROJECT. THE APPELLANT SUBMITS THAT THE ABOVE FINDINGS RECOR DED BY THE AO ARE FACTUALLY INCORRECT. THE COMMERCIAL BUILDING IS THE PROJECT O F ANOTHER BUILDER THE APPELLANT HAS ONLY SOLD THE TDR RIGHT TO THEM. 3.3 IN SUM AND SUBSTANCE IT WAS THE CASE OF THE AS SESSEE BEFORE LD. CIT(A) THAT SUBSEQUENT DEVELOPMENT AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S. G.K.REALTORS ON THE BASIS OF WHICH THE AO HAS OBSE RVED THAT COMMERCIAL AREA OF THE PROJECT OF THE ASSESSEE HAS EXCEEDED THE PRESC RIBED LIMIT IS INDEPENDENT TO THE RESIDENTIAL PROJECT ON WHICH THE ASSESSEE HAD C LAIMED DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT. IT WAS THE SUBMISSI ON OF THE ASSESSEE THAT IT DID NOT CLAIM DEDUCTION UNDER SECTION 80 IB (10) IN RESPECT OF ITS RECEIPTS WITH REGARD TO DEVELOPMENT OF COMMERCIAL BUILDING WHICH WAS TO BE CONSTRUCTED BY ANOTHER DEVELOPER UNDER THE DEVELOPMENT AGREEMENT. 3.4 SO FAR AS IT RELATES TO THE OBJECTION OF AO THA T AUDITOR IN FORM 10CCB DID NOT SPECIFY THE AMOUNT OF DEDUCTION IT WAS SUBMITT ED THAT SUBSEQUENTLY A LETTER FROM AUDITOR DATED 20/07/2011 WAS FURNISHED AND THE DEFICIENCY IN FILING OF FORM 10CCB WERE EXPLAINED BY THE AUDITOR AND IT WA S MENTIONED THAT THE AMOUNT OF DEDUCTION CLAIMABLE BY THE ASSESSEE WAS A SUM OF RS.3 53 34 185/-. THESE SUBMISSIONS OF THE ASSESSEE HAVE BEEN RECORDE D BY LD. CIT(A) IN PARA 6.4 OF HIS ORDER. 3.5 ON THE AFOREMENTIONED SUBMISSIONS LD. CIT(A) H AS RETURNED A FINDING IN PARA 6.7 THAT AO WAS WRONG IN OBSERVING THAT THE RE SIDENTIAL PROJECT OF THE ASSESSEE WAS NOT YET COMPLETE. THE ASSESSEE HAS REC EIVED FULL OCCUPATION ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 19 CERTIFICATE OF ITS RESIDENTIAL PROJECT AS PER CERT IFICATE ISSUED BY BMC ON 2/12/2008 AND THE RESIDENTIAL PROJECT OF THE ASSESS EE WAS COMPLETED IN ALL RESPECT IN FINANCIAL YEAR 2008-09 THEREFORE NO AD VERSE CONCLUSION CAN BE DRAWN IN THIS REGARD. SO FAR AS IT RELATES TO OBSERVATIO NS OF AO THAT COMMERCIAL AREA IN THE PROJECT EXCEEDED THE PRESCRIBED LIMIT LD. CIT( A) OBSERVED THAT AS PER SUBMISSIONS OF THE ASSESSEE ASSESSEE DID NOT CONST RUCT ANY COMMERCIAL BUILDING IN THE RESIDENTIAL PROJECT BUT HAS ONLY SOLD TDR RI GHTS TO ANOTHER DEVELOPER WHO WAS CONSTRUCTING COMMERCIAL BUILDING ON THE EXTRA AREA OF THE SAID PLOT AND THE SAID COMMERCIAL PROJECT WAS INDEPENDENT TO THE RESI DENTIAL PROJECT COMPLETED BY THE ASSESSEE IN FINANCIAL YEAR 2008-09. TO UPHOLD THESE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) HAS REFERRED TO THE FOLLOWING D ECISIONS RELIED UPON BY THE ASSESSEE: (1) CIT VS. BRAHMA ASSOCIATES 333 ITR 288 (BOM) (2) SAROJ SALES ORGANIZATION VS. ITO 115 TTJ 485 (3) VANDANA PROPERTIES VS. ACIT 31 SOT 392 (MUM) (4) CIT VS. VANDANA PROPERTIES 353 ITR 36 (BOM) (5) BHOOMIRAJ HOUSING LTD. VS. ACIT 11 ITR (TRIB) 699 (MUM) (6) HARSHAD P. DOSHI VS. ACIT 109 TTJ 335. 3.6 LD. CIT(A) HAS ALSO OBSERVED THAT THE DECISI ON IN THE CASE OF LAUKIK DEVELOPERS 105 ITD 657 RELIED UPON BY THE AO IS N O MORE A GOOD LAW IN VIEW OF SUBSEQUENT DECISION OF SPECIAL BENCH IN THE CASE OF BRAMHA ASSOCIATES & OTHERS VS. JCIT 315 ITR (AT) 268. SO FAR AS IT RE LATES TO OBSERVATION OF THE AO REGARDING NON-SPECIFICATION OF THE AMOUNT BY THE AU DITOR IN FORM 10 CCB LD. CIT(A) HAS OBSERVED THAT THE SAID AUDITOR HAS DULY FILED A LETTER DATED 20/07/2011 BEFORE AO AND THUS IT CANNOT BE SAID TH AT FORM 10CCB WAS NOT AT ALL FILED OR COULD BE CONSTRUED AS NULLITY. SOME INADVERTENT MISTAKE IN NOT FILING FEW COLUMNS IN 10CCB THOUGH CLARIFIED BY THE AUDI TOR LATER THROUGH A LETTER IS A SUFFICIENT PROCEDURAL COMPLIANCE AND RELIANCE HAS BEEN PLACED ON THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF MEENA S. BANERJE E 14 SOT 569 AND OTHER DECISIONS. ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 20 3.7 LD. CIT(A) HAS ALSO OBSERVED THAT WHEN DEDUCTIO N HAS ALREADY BEEN ALLOWED TO THE ASSESSEE IN EARLIER ASSESSMENT YEAR THAN I T CANNOT BE WITHDRAWN IN SUBSEQUENT YEAR AND FOR THIS PURPOSE REFERENCE HAS BEEN MADE TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PA UL BROTHERS 216 ITR 548 (BOM). HOWEVER LD. CIT(A) HAS OBSERVED THAT AO WI LL BE FREE TO TAKE REMEDIAL MEASURES FOR EARLIER ASSESSMENT YEARS IF HE IS IN POSSESSION OF EVIDENCE TO SUBSTANTIATE HIS OBSERVATION IN THE ASSESSMENT YEAR UNDER CONSIDERATION THAT EARLIER CLAIM OF 80 IB(10) IN A.Y 2008-09 DESERVES TO BE REVERSED. ACCORDINGLY HE HAS DELETED THE DISALLOWANCE. THE REVENUE IS AGGR IEVED BY AFOREMENTIONED ORDER OF LD. CIT(A) AND HAS RAISED AFOREMENTIONED GROUNDS OF APPEAL. 4. AFTER NARRATING THE FACTS LD. DR PLEADED THAT D EVELOPMENT AGREEMENT DATED 09/04/2011 ENTERED INTO BETWEEN ASSESSEE AND M/S. G.K.REALTORS IS IN CONTINUATION OF THE RESIDENTIAL PROJECT CONSTRUCTED BY THE ASSESSEE AS THE SAME IS SITUATED ON THE LAND ON WHICH ASSESSEE HAS CONSTRUC TED RESIDENTIAL PROJECT. HE THEREFORE SUBMITTED THAT ASSESSEES PROJECT CANNOT BE SAID TO HAVE BEEN COMPLETED. HE SUBMITTED THAT IF RESIDENTIAL PROJEC T OF THE ASSESSEE IS HELD TO BE UNCOMPLETE THEN THE COMMERCIAL AREA IN THE PROJEC T WILL BE EXCEEDING THE PRESCRIBED LIMIT AND THEREFORE AO WAS RIGHT IN HOLDING THAT ASSESSEE IS NOT ENTITLED TO GET DEDUCTION UNDER SECTION 80 IB(10) AS IT DID NOT FULFILL THE CONDITIONS LAID DOWN IN SECTION 80 IB(10). LD. DR ALSO SUBMITTED THAT SUBSEQUENT LETTER ISSUED BY THE AUDITOR CANNOT FULF ILL THE DEFICIENCY IN THE ORIGINAL FORM 10CCB AND THEREFORE LD. CIT(A) WAS WRONG IN HOLDING THAT ON THE BASIS OF SUBSEQUENT LETTER ISSUED BY AUDITOR THE CONDITION OF FILING FORM NO.10CCB WAS FULFILLED. THUS HE SUBMITTED THAT L D. CIT(A) HAS COMMITTED AN ERROR IN DELETING THE DISALLOWANCE OF DEDUCTION UND ER SECTION 80IB(10) AND HIS ORDER SHOULD BE SET ASIDE AND THAT OF AO BE RESTORE D. 5. ON THE OTHER HAND LD. AR SUBMITTED THAT THE CO MMERCIAL DEVELOPMENT AGREEMENT WAS A SEPARATE AND DISTINCT AGREEMENT AND IT WAS NOT AT ALL RELATED TO THE PROJECT OF THE ASSESSEE FOR BUILDING RESIDENTI AL COMPLEX OF FIVE BUILDINGS FROM WINGS A TO E FOR WHICH THE COMPLETION CERTIFICATE W AS GRANTED BY BMC MUCH EARLIER TO THE AGREEMENT ENTERED INTO BY THE ASSES SEE WITH M/S. G.K. REALTORS. ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 21 LD. A.R SUBMITTED THAT THE RESIDENTIAL PROJECT OF THE ASSESSEE WAS A DIFFERENT PROJECT. HE SUBMITTED THAT SUBSEQUENT DEVELOPMENT AGREEMENT DATED 09/04/2011 BETWEEN THE ASSESSEE AND M/S. G.K.REALTO RS WAS IN RESPECT OF PART OF THE LAND ON WHICH RESIDENTIAL PROJECT WAS CONSTR UCTED BY THE ASSESSEE AS 850 SQ.MTS. OUT OF THE SAID LAND WAS REMAINING UNUTILI ZED. THE PRIMARY UNUTILIZED FSI OF 850 SQ. MTRS. WAS SUBJECT MATTER OF DEVELO PMENT AGREEMENT DATED 09/04/2011 ALONG WITH ADDITIONAL TRANSFERABLE DEVE LOPMENT RIGHTS (TDR). HE SUBMITTED THAT FOR SELLING SUCH RIGHTS THE ASSESSEE HAD RECEIVED SEPARATE CONSIDERATION OF RS.4 14 00 000/- WHICH WAS OFFERED TO TAX AND WAS NEVER CLAIMED AS DEDUCTION UNDER SECTION 80 IB(10). HE S UBMITTED THAT DURING THE YEAR UNDER CONSIDERATION EVEN THAT DEVELOPMENT AGREEMENT WAS NOT IN EXISTENCE AS THE SAME WAS EXECUTED ONLY ON 09/04/2011. IT WAS S UBMITTED THAT THE SAID DEVELOPMENT AGREEMENT DATED 09/04/2011 CANNOT BE TR EATED AS EXTENSION OF THE RESIDENTIAL PROJECT OF THE ASSESSEE. IN THIS REGAR D LD. AR REFERRED TO THE FOLLOWING DOCUMENTS ENCLOSED IN THE PAPER BOOK. (A) IN RESPECT OF RESIDENTIAL COMPLEX NAMELY SHREE SAI RADHA COMPLEX: SL.NO. DESCRIPTION PAGE NOS. 1. COPY OF PLAN APPROVED AND STAMPED 18 2. 7/12 EXTRACT OF THE PROPERTY 19-20 3. INTIMATION OF DISAPPROVAL DATED 3/7/2004 21-27 4. COMMENCEMENT CERTIFICATE DATED 7/9/2004 28-30 5. FULL OCCUPATION CERTIFICATE DATED 02/12/2008 31 6. ARCHITECT CERTIFICATE DATED 03/12/2008 32 B. IN RESPECT OF COMMERCIAL COMPLEX NAMELY SAI IN DU TOWER: S.NO. DESCRIPTION PAGE NO. 1. COPY OF DEVELOPMENT AGREEMENT BETWEEN ASSESSEE AND M/S. G.K.REALTORS DATED 9/4/2011 49 TO 66 2. COPY OF INTIMATION OF DISAPPROVAL DATED 1/12/2009 ISSUED BY BMC REGARDING PROPOSED COMMERCIAL BUILDING NO.1 ON PLOT FILED IN THE CASE LAW PAPER BOOK. ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 22 5.1 REFERRING TO ABOVE DOCUMENTS IT IS THE CASE OF LD. AR THAT COMMERCIAL PROJECT WAS NOT THE PART OF RESIDENTIAL PROJECT. VIDE AGREEMENT DATED 9/4/2011 THE ASSESSEE SOLD UNUTILIZED FSI AND AVAILABLE TDR TO M/S. G.K.REALTORS. THE SAID COMMERCIAL PROJECT WAS NOT DEVELOPED BY THE AS SESSEE BUT THE SAME WAS DEVELOPED BY M/S. G.K.REALTORS. THE SAID DEVELOPME NT RIGHT WAS GIVEN TO M/S. G.K.REALTORS FOR A CONSIDERATION OF RS.4 14 00 000/ - AND THE SAME WAS OFFERED TO TAX IN ASSESSMENT YEAR 2012-13 AND NO DEDUCTION UND ER SECTION 80 IB(10) WAS CLAIMED ON THE SAID AMOUNT. 5.2. IT WAS PLEADED BY LD. AR THAT ACCORDING TO TH E DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTIE S(SUPRA) MORE THAN ONE PROJECT ON THE SAME LAND COULD BE DEVELOPED AND EAC H OF THE PROJECT WILL BE CONSIDERED SEPARATELY FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80 IB(10) AND IF THE CONDITIONS ARE FULFILLED IN RESPECT OF ONE PROJ ECT THE DEDUCTION CANNOT BE DISALLOWED FOR THE SAID PROJECT. LD. AR ALSO RELIE D UPON THE FOLLOWING DECISIONS TO RAISE FOLLOWING CONTENTIONS: I. CLAIM ALLOWED IN INITIAL YEAR CANNOT BE DISALLO WED IN SUBSEQUENT YEAR: (I) CIT VS. PAUL BROTHERS [2156 ITR 548 (BOM)] (II) SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. VS. CI T {123 ITR 669 (GUJ)} (III) JANAK DEHYDRATION (P) LT. VS. ACIT {134 TTJ 1 (AHD )(UO)} (IV) CIT VS. WESTERN OUTDOOR INTERACTIVE P. LT. 349 IT 309 (BOM) II. PROJECT APPROVED AS A RESIDENTIAL HOUSING PROJE CT: I) CIT VS. BRAHMA ASSOCIATES { 333 ITR 289} (BOM) II) BHUMIRAJ HOMES LTD. VS. DCIT { 11 ITR (TRIB) 6 99} (MUMBAI) III) HARSAHD P. DOSHI VS. ACIT {109 TTJ 335} (MUMB AI) III. MORE THAN ONE PROJECT ON SAME LAND POSSIBLE: I) CIT VS. VANDANA PROPERTIES { 353 ITR 36} (BOM) II) SAROJ SALES ORGANIZATION VS. ITO { 115 TTJ 485} (MUMBAI) ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 23 IV SALE OF DEVELOPMENT RIGHT NOT BAR FOR CLAIM OF D EDUCTION U/S. 80IB(10) I. M/S. KAMDHENU BUILDERS & DEVELOPERS (ITA NO.6622 /MUM/2012} (MUMBAI ITAT) V. INADEQUACY IN FILLING UP THE FORM ARE ONLY PROCE DURAL LAPSE AND DEDUCTION SHOULD BE GRANTED: (I) MRS. MEENA S. BANERJI VS. ITO {14 SOT 569} (MU MBAI) (II) ALPHA FOAM LTD. VS. DCIT {ITA NO.1617/PN/2008} (ITAT PUNE) 5.3 THUS IT WAS PLEADED BY LD. AR THAT THERE IS NO ERROR IN THE ORDER OF LD. CIT(A) VIDE WHICH THE IMPUGNED RELIEF HAS BEEN GRA NTED TO THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IN THE PRESENT CASE ON THE BASIS OF SUBSEQUENT AGREEMENT DATED 9/4/2011 ENTERED INTO BY THE ASSESS EE WITH M/S. G.K.REALTORS IT HAS BEEN CONCLUDED BY THE A.O THAT ASSESSEE IS NOT ENTITLED TO GET DEDUCTION UNDER SECTION 80 IB(10) MAINLY FOR THE FOLLOWING R EASONS: (I) PROJECT OF THE ASSESSEE IS NOT YET COMPLETE; (II) PROJECT HAVE 23 300 SQ.FT. OF COMMERCIAL SPACE AS P ER COMMERCIAL DEVELOPMENT WHICH EXCEED PERMISSIBLE LIMIT; (III)THE DEDUCTION IN RESPECT OF A.Y. 2008-09 HAS BEEN CLAIMED BY WAY OF MANIPULATION; (IV) THE AUDITORS ALSO DO NOT QUALIFY DEDUCTIONS AS PER FORM 10 CCB. 6.1 IF THE REASONS GIVEN BY AO FOR DENYING THE DEDUCTION UNDER SECTION 80 IB(10) ARE CONSIDERED THEN THE FIRST ISSUE WHICH H AS TO BE DECIDED IN THE PRESENT CASE WILL BE THAT WHETHER SUBSEQUENT AGREEMENT DATE D 9/4/2011 ENTERED INTO BY THE ASSESSEE WITH M/S. G.K.REALTORS CAN BE LINKED TO THE RESIDENTIAL PROJECT DEVELOPED BY THE ASSESSEE UNDER THE NAME AND STYLE SHREE SAI RADHA COMPLEX. IT IS NOT DISPUTED THAT SHREE SAI RADH A COMPLEX WAS A SEPARATE RESIDENTIAL PROJECT FOR WHICH ALL THE PERMISSIONS AS REQUIRED UNDER LOCAL LAWS WERE OBTAINED BY THE ASSESSEE AND ALL THE CONDITION S AS LAID DOWN IN SECTION 80 ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 24 IB(10) WERE FULFILLED. IT IS ONLY DUE TO THE R EASON OF FULFILLMENT OF THE CONDITIONS IN RESPECT OF SHREE SAI RADHA COMPLEX PROJECT DE DUCTION UNDER SECTION 80 IB (10) WAS GRANTED TO THE ASSESSEE IN IMMEDIATE PRECE DING YEAR. THEREFORE TO THAT EXTENT IT CANNOT BE DISPUTED THAT IF SHREE SAI RA DHA COMPLEX IS TAKEN INDEPENDENT PROJECT THEN THE ASSESSEE WILL BE HEL D TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB(10). ACCORDING TO AO DUE TO SU BSEQUENT AGREEMENT THE CONDITION REGARDING PERMISSIBLE LIMIT OF COMMERCIAL SPACE HAS BEEN VIOLATED THEREFORE ASSESSEE DOES NOT FULFILL THE CONDITIONS LAID DOWN UNDER SECTION 80 IB(10). THE MAIN REASON TO ARRIVE AT SUCH A CONCLU SION IS THAT THE COMMERCIAL PROJECT IS BEING DEVELOPED ON THE SAME LAND ON WHI CH THE ASSESSEE HAS DEVELOPED RESIDENTIAL COMPLEX UNDER THE NAME OF SH REE SAI RADHA COMPLEX. IN OUR OPINION SUCH ISSUE IS NO MORE RES-INTEGRA AS T HIS ISSUE HAS BEEN DECIDED BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. VANDANA PROPERTIES (SUPRA) WHEREIN THEIR LORDSHIPS HAVE CONSIDERED T HE PROVISIONS OF SECTION 80 IB(10) EXTENSIVELY AND HAVE COME TO THE CONCLUSION THAT HOUSING PROJECT IN SECTION 80 IB (10) WOULD HAVE TO BE CONSTRUED AS CO MMONLY UNDERSTOOD. THE EXPRESSION HOUSING PROJECT IN COMMON PARLANCE WO ULD MEAN CONSTRUCTING BUILDING OR GROUP OF BUILDINGS CONSISTED OF SEVERAL RESIDENTIAL UNITS. THEIR LORDSHIPS HAVE ALSO HELD THAT A PLAIN READING OF SE CTION 80 IB (10) DOES NOT EVEN REMOTELY SUGGEST THAT THE PLOT OF LAND HAVING MINI MUM AREA OF ONE ACRE MUST BE VACANT. THE SECTION ALLOWS DEDUCTIONS TO A HOUSIN G PROJECT ( SUBJECT TO FULFILLING ALL OTHER CONDITIONS) CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND IT IS IMMATERIAL AS TO WHETHER OR NOT ANY OTHER HOUSING PROJECT ARE EXISTING ON THE SAME PLOT OF LAND. 6.2 TO BETTER UNDERSTAND THE PROPOSITION IT WILL B E ESSENTIAL TO NARRATE THE FACTS AS THEY WERE BEFORE THEIR LORDSHIPS IN THE A FOREMENTIONED DECISION. THE SIZE OF PLOT WAS 2.36 ACRES WHICH WAS SITUATED AT K ANDIVILI (WEST). THE ASSESSEE CONSTRUCTED BUILDING A B C & D OVER A PERIOD OF YE ARS. INTIMATION OF APPROVAL IN RESPECT OF THOSE BUILDINGS WAS GRANTED DURING THE Y EARS 1993 TO 1996. BY FOLLOWING THE WORK-IN-PROGRESS METHOD OF ACCOUNTIN G THE INCOME ARISING OUT OF SALE OF THE FLATS IN THOSE BUILDINGS WAS OFFERED FR OM TIME TO TIME AND NO DEDUCTION UNDER SECTION 80 IB (10) WAS CLAIMED AS APPROVAL F OR CONSTRUCTION OF THOSE ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 25 BUILDINGS WAS GRANTED PRIOR TO 1/10/1998. PURSUAN T TO AN ORDER PASSED BY THE STATE GOVERNMENT IN THE YEAR 2001 THE CONVERSION OF STATUS OF LAND WAS PERMITTED AND ASSESSEE BECAME ENTITLED TO CONSTRUCT AN ADDITIONAL BUILDING E ON THE PLOT OF LAND HAVING SEVERAL RESIDENTIAL UNI TS. BY INTIMATION DATED 11/10/2002 THE BUILDING PLAN OF E BUILDING CONSI STING OF VARIOUS RESIDENTIAL UNITS WAS APPROVED BY BMC SUBJECT TO VARIOUS CONDIT IONS SET OUT THEREIN. THEREAFTER COMMENCEMENT SURVEY FOR CONSTRUCTION OF THE E BUILDING WAS ISSUED ON 10/3/2003. IN THE RETURN OF INCOME FILED FOR A. Y 2004-05 AND 2005-06 THE ASSESSEE ESTIMATED ITS PROFITS FROM THE E BUILDIN G BY FOLLOWING WORK-IN-PROGRESS METHOD OF ACCOUNTING AND CLAIMED DEDUCTION UNDER SE CTION 80 IB(10) AT RS.71 42 590/- AND RS.71 73 660/- RESPECTIVELY. TH E A.O DISALLOWED THE CLAIM FOR FOLLOWING REASONS: (A) THE APPROVAL FOR E BUILDING WAS GRANTED ON OCTOBER 2002 AS EXTENSION OF APPROVAL GRANTED FOR A B C &D BUILDING COMMENCING F ROM 9/6/1993 AND THEREFORE E BUILDING BEING CONTINUATION OF A B C & D BUILDING THE PROJECT MUST BE HELD TO HAVE COMMENCED PRIOR TO 1/10/1998 HENCE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB(10); (B) A B C & D BUILDINGS WERE CONSTRUCTED ON A PL OT ADMEASURING 2.36 ACRES AND THE LAND WAS PROPORTIONATELY DIVIDED BETWEEN FI VE BUILDINGS THE LAND PERTAINS TO E BUILDING WOULD BE LESS THAN ONE ACR E AND THUS DEDUCTION UNDER SECTION 80 IB(10) COULD NOT BE ALLOWED; (C) DURING THE SURVEY IT WAS NOTICED THAT TWO FLA TS ON GROUND FLOOR OF E BUILDING WERE FOUND TO BE MERGED INTO ONE FLAT AND SINCE THE AREA OF MERGED FLAT EXCEEDED 1000 SQ.FT. DEDUCTION UNDER SECTION 80 IB (10) COULD NOT BE GRANTED. THE TRIBUNAL DECIDED THE MATTER IN FAVOUR OF THE A SSESSEE. THE QUESTION RAISED BY THE REVENUE WAS THAT WHETHER THE TRIBUNAL WAS JU STIFIED IN HOLDING THAT THE FIRM WAS ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECT ION 80 IB(10). THEIR LORDSHIPS AFTER CONSIDERING THE FACTS OF THE CASE AND THE PRO VISIONS OF SECTION 80 IB(10) HAVE HELD THAT E BUILDING CONSTRUCTED BY THE ASSE SSEE WILL FALL UNDER THE ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 26 EXPRESSION HOUSING PROJECT AS THAT WAS ONE BUILDI NG WITH SEVERAL RESIDENTIAL UNITS OF SIZE NOT EXCEEDING 1000 SQ.FT. AND THESE O BSERVATION OF THEIR LORDSHIPS ARE REPRODUCED BELOW: AS RIGHTLY CONTENDED BY MR. INAMDAR LEARNED SENIO R ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE AND MR. MISTRI LEARNED SENIOR ADVO CATE AND MR.JOSHI LEARNED ADVOCATE APPEARING ON BEHALF OF THE INTERVENORS TH E EXPRESSION 'HOUSING PROJECT' IN COMMON PARLANCE WOULD MEAN CONSTRUCTING A BUILDING OR GROUP OF BUILDINGS CONSISTING OF SEVERAL RESIDENTIAL UNITS. IN FACT THE EXPLANATION IN SECTION 80-IB(10) SUPPORTS THE CONTENTION OF THE ASSESSEE THAT THE A PPROVAL GRANTED TO A BUILDING PLAN CONSTITUTES APPROVAL GRANTED TO A HOUSING PRO JECT. THEREFORE IT IS CLEAR THAT CONSTRUCTION OF EVEN ONE BUILDING WITH SEVERAL RES IDENTIAL UNITS OF THE SIZE NOT EXCEEDING 1000 SQUARE FEET ('E' BUILDING IN THE PR ESENT CASE) WOULD CONSTITUTE A 'HOUSING PROJECT' UNDER SECTION 80-IB(10) OF THE A CT. 6.3 WHILE CONSIDERING THE QUESTION THEIR LORDSHIPS HAVE ALSO CONSIDERED THAT WHETHER CONSTRUCTION OF E BUILDING WAS AN INDEPEN DENT HOUSING PROJECT IN ADDITION TO HOUSING PROJECTS ALREADY EXISTING ON TH E PLOT IN QUESTION. THE CONTENTION OF REVENUE THAT SINCE APPROVAL OF THE CO NSTRUCTION OF E BUILDING WAS GRANTED BY THE LOCAL AUTHORITY SUBJECT TO THE CONDI TIONS SET OUT IN FIRST APPROVAL GRANTED ON 12/5/1993 FOR CONSTRUCTION OF THE A B C & D BUILDINGS CONSTRUCTION OF E BUILDING MUST BE CONSIDERED TO BE EXTENSION OF THE EARLIER HOUSING PROJECT FOR WHICH APPROVAL WAS GRANTED PRIOR TO 1/10/1998 THEREFORE BENEFIT OF SECTION 80 IB (10) CANNOT BE GRANTED. THEIR LORDSHIPS HAVE REJECTED SUCH CONTENTION OF REVENUE ON THE GROUND THAT PLANS FOR A B C & D BUI LDINGS WERE APPROVED DURING THE PERIOD FROM 1993 TO 1996 WHEN CONSTRUCTION OF E BUILDING WAS NOT EVEN CONTEMPLATED ON THE PLOT IN QUESTION. IT WAS ONLY IN 2001 WHEN THE STATUS OF THE LAND WAS CONVERTED FROM SURPLUS VACANT LAND INTO WI THIN THE CEILING LIMIT LAND BY THE STATE GOVERNMENT AN ADDITIONAL BUILDING COUL D BE CONSTRUCTED ON THE PLOT IN QUESTION AND ACCORDINGLY THE BUILDING PLAN FOR CONSTRUCTION OF E BUILDING WAS SUBMITTED AND SAME WAS APPROVED BY THE LOCAL A UTHORITY ON 11/10/2002. THEIR LORDSHIPS HAVE REJECTED SUCH CONTENTION OF TH E REVENUE WITH THE FOLLOWING OBSERVATIONS: THE QUESTION THEN TO BE CONSIDERED IS WHETHER C ONSTRUCTION OF THE 'E' BUILDING IS AN INDEPENDENT HOUSING PROJECT OR EXTENSION OF THE HOUSING PROJECT ALREADY EXISTING ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 27 ON THE PLOT IN QUESTION. IT IS THE CONTENTION OF TH E REVENUE THAT SINCE THE APPROVAL FOR CONSTRUCTION OF THE 'E' BUILDING WAS GRANTED B Y THE LOCAL AUTHORITY SUBJECT TO THE CONDITIONS SET OUT IN THE FIRST APPROVAL GRANTED O N MAY 12 1993 FOR CONSTRUCTION OF THE A AND B BUILDINGS CONSTRUCTION OF THE 'E' BUIL DING MUST BE CONSIDERED TO BE THE EXTENSION OF THE EARLIER HOUSING PROJECT FOR WHICH APPROVAL WAS GRANTED PRIOR TO OCTOBER 1 1998 AND THEREFORE THE BENEFIT OF SEC TION 80-IB(10) CANNOT BE GRANTED. THERE IS NO MERIT IN THE ABOVE ARGUMENT BECAUSE W HEN THE PLANS FOR THE A B C AND D BUILDINGS WERE APPROVED DURING THE PERIOD FRO M 1993 TO 1996 CONSTRUCTION OF THE 'E' BUILDING WAS NOT EVEN CONTEMPLATED ON T HE PLOT IN QUESTION. IT IS ONLY IN THE YEAR 2001 WHEN THE STATUS OF THE LAND WAS CONVE RTED FROM SURPLUS VACANT LAND INTO WITHIN THE CEILING LIMIT LAND BY THE STATE GO VERNMENT AN ADDITIONAL BUILDING COULD BE CONSTRUCTED ON THE PLOT IN QUESTION AND A CCORDINGLY THE BUILDING PLAN FOR CONSTRUCTION OF THE 'E' BUILDING WAS SUBMITTED AND THE SAME WAS APPROVED BY THE LOCAL AUTHORITY ON OCTOBER 11 2002. THE FACT THAT THE LOCAL AUTHORITY NAMELY THE MUNI CIPAL CORPORATION APPROVED THE BUILDING PLAN FOR THE 'E' BUILDING ON THE CONDITION THAT ALL THE OBJECTIONS RAISED IN THE INTIMATION OF DISAPPROVAL DATED MAY 12 1993 RELATING TO THE EARLIER HOUSING PROJECT ON THE SAME PLOT OF LAND SHALL BE APPLICAB LE AND SHOULD BE COMPLIED WITH CANNOT BE A GROUND TO HOLD THAT THE 'E' BUILDING I S THE EXTENSION OF THE EARLIER HOUSING PROJECT BECAUSE THE EARLIER HOUSING PROJEC T WAS COMPLETED PRIOR TO OCTOBER 1 1998 AND THE HOUSING PROJECT FOR CONSTRUCTION OF THE 'E' BUILDING WAS APPROVED FOR THE FIRST TIME ON OCTOBER 11 2002. NOWHERE IN THE INTIMATION FOR DISAPPROVAL GRANTED FOR CONSTRUCTION OF THE 'E' BUILDING ON OCT OBER 11 2002 IT IS STATED THAT THE BUILDING 'E' CONSTITUTES EXTENSION OF THE EARLIER H OUSING PROJECT WHICH IS ALREADY COMPLETED. THE FACT THAT THE OBJECTIONS RAISED WHI LE APPROVING THE EARLIER HOUSING PROJECT ON THE SAME PLOT OF LAND WERE MADE APPLICA BLE TO THE HOUSING PROJECT IN QUESTION IT CANNOT BE INFERRED THAT THE HOUSING P ROJECT IN QUESTION CONSTITUTES EXTENSION OF THE EARLIER HOUSING PROJECT. THEREFOR E IN THE FACTS OF THE PRESENT CASE WHERE NEITHER THE ASSESSEE HAD SOUGHT APPROVAL OF THE BUILDING PLAN FOR CONSTRUCTION OF THE 'E' BUILDING AS EXTENSION OF T HE EARLIER HOUSING PROJECT NOR THE MUNICIPAL CORPORATION HAS GRANTED APPROVAL FOR THE HOUSING PROJECT CONSISTING OF THE 'E' BUILDING AS EXTENSION OF THE EARLIER HOUSING PR OJECT IT IS NOT OPEN TO THE INCOME- TAX AUTHORITIES TO CONTEND THAT APPROVAL TO THE HO USING PROJECT GRANTED BY THE MUNICIPAL CORPORATION ON OCTOBER 11 2002 CONSTIT UTES EXTENSION OF THE HOUSING PROJECT WHICH WAS APPROVED IN THE YEAR 1993. (EMPHASIS OURS) RELIANCE PLACED BY THE REVENUE ON THE EXPLANATION T O SECTION 80-IB(10)(A) WHICH WAS INTRODUCED WITH EFFECT FROM APRIL 1 2005 IS A LSO MISPLACED. WHAT THE SAID EXPLANATION CONTEMPLATES IS THAT WHERE THE APPROVAL IN RESPECT OF A HOUSING PROJECT IS GRANTED MORE THAN ONCE THEN THAT HOUSING PROJE CT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. FOR EXAMPLE IN R ESPECT OF A HOUSING PROJECT THE ASSESSEE MAY SEEK AMENDMENT OF THE BUILDING PLAN A T SEVERAL STAGES OF THE CONSTRUCTION AND THE SAME MAY BE APPROVED. IN SUCH A CASE THE EXPLANATION PROVIDES THAT FOR THE PURPOSES OF SECTION 80-IB(10 ) THE HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE FIRST APPROVAL WAS GRANTED BY THE LOCAL AUTHORITY. THUS THE EXPLANATI ON TO SECTION 80-IB(10)(A) REFERS TO THE APPROVAL GRANTED TO THE SAME HOUSING PROJECT M ORE THAN ONCE AND THE SAID EXPLANATION WOULD NOT APPLY WHERE THE APPROVAL IS G RANTED TO DIFFERENT HOUSING PROJECTS. IN THE PRESENT CASE AS NOTED EARLIER CO NSTRUCTION OF THE 'E' BUILDING CONSTITUTES AN INDEPENDENT HOUSING PROJECT AND THE REFORE THE DATE ON WHICH THE EARLIER HOUSING PROJECT HAD COMMENCED CONSTRUCTION COULD NOT BE APPLIED TO THE HOUSING PROJECT CONSISTING OF THE 'E' BUILDING MERE LY BECAUSE THE CONDITIONS SET OUT ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 28 WHILE GRANTING APPROVAL TO THE EARLIER HOUSING PROJ ECT HAVE ALSO BEEN MADE APPLICABLE TO THE HOUSING PROJECT IN QUESTION. THE NEXT ARGUMENT OF THE REVENUE IS THAT TO AVAIL O F THE DEDUCTION UNDER SECTION 80-IB(10) THE HOUSING PROJECT MUST BE ON THE SIZE OF A VACANT PLOT OF LAND WHICH HAS MINIMUM AREA OF ONE ACRE. IN THE PRESENT CASE THERE ARE FIVE BUILDINGS (A B C D AND E) ON A PLOT ADMEASURING 2.36 ACRES HENCE THE PROPORTIONATE AREA FOR EACH BUILDING WOULD BE LESS THAN ONE ACRE AND THEREFOR E THE BENEFIT OF SECTION 80-IB(10) COULD NOT BE GRANTED IN RESPECT OF THE HOUSING PRO JECT CONSISTING THE 'E' BUILDING. AS RIGHTLY CONTENDED BY THE COUNSEL FOR THE ASSESSE E AND THE INTERVENORS SECTION 80-IB(10)(B) SPECIFIES THE SIZE OF THE PLOT OF LAND BUT NOT THE SIZE OF THE HOUSING PROJECT. THE SIZE OF THE PLOT OF LAND AS PER SECTI ON 80-IB(10) MUST HAVE MINIMUM AREA OF ONE ACRE. THE SECTION DOES NOT LAY DOWN THA T THE PLOT HAVING MINIMUM AREA OF ONE ACRE MUST BE A VACANT PLOT. THE QUESTION THEREFORE TO BE CONSIDERED IS WHETH ER THE REVENUE IS JUSTIFIED IN READING THE EXPRESSION 'PLOT OF LAND' IN SECTION 80 -IB(10)(B) AS 'VACANT PLOT OF LAND' ? THE OBJECT OF SECTION 80-IB(10) IN GRANTING DEDUCTI ON EQUAL TO ONE HUNDRED PER CENT. OF THE PROFITS OF AN UNDERTAKING ARISING FROM DEVEL OPING AND CONSTRUCTING A HOUSING PROJECT IS WITH A VIEW TO BOOST THE STOCK OF HOUSE S FOR LOWER AND MIDDLE INCOME GROUPS SUBJECT TO FULFILLING THE SPECIFIED CONDITIO NS. THE FACT THAT THE MAXIMUM SIZE OF THE RESIDENTIAL UNIT IN A HOUSING PROJECT SITUA TED WITHIN THE CITY OF MUMBAI AND DELHI IS RESTRICTED TO 1000 SQUARE FEET CLEARLY SH OWS THAT THE INTENTION OF THE LEGISLATURE IS TO MAKE AVAILABLE A LARGE NUMBER OF MEDIUM SIZE RESIDENTIAL UNITS FOR THE BENEFIT OF THE COMMON MAN. HOWEVER IN THE ABS ENCE OF DEFINING THE EXPRESSION 'HOUSING PROJECT' AND IN THE ABSENCE OF SPECIFYING THE SIZE OR THE NUMBER OF HOUSING PROJECTS REQUIRED TO BE CONSTRUCTED ON A PLOT OF LA ND HAVING MINIMUM AREA OF ONE ACRE EVEN ONE HOUSING PROJECT CONTAINING MULTIPLE RESIDENTIAL UNITS OF A SIZE NOT EXCEEDING 1000 SQUARE FEET CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE WOULD BE ELIGIBLE FOR SECTION 80-IB(10) DE DUCTION. IF THE CONSTRUCTION OF SECTION 80-IB(10) PUT FORTH BY THE REVENUE IS ACCE PTED IT WOULD MEAN THAT IF ON A VACANT PLOT OF LAND ONE HOUSING PROJECT FULFILLIN G ALL CONDITIONS IS UNDERTAKEN THEN DEDUCTION WOULD BE AVAILABLE TO THAT HOUSING PROJEC T AND IF THEREAFTER SEVERAL OTHER HOUSING PROJECTS ARE UNDERTAKEN ON THE VERY SAME PL OT OF LAND THE DEDUCTION WOULD NOT BE AVAILABLE TO THOSE HOUSING PROJECTS AS THE PLOT CEASES TO BE A VACANT PLOT AFTER THE CONSTRUCTION OF THE FIRST HOUSING PR OJECT. SUCH A CONSTRUCTION IF ACCEPTED WOULD DEFEAT THE OBJECT WITH WHICH SECTION 80-IB(10) WAS ENACTED. MOREOVER PLAIN READING OF SECTION 80-IB(10) DOES N OT EVEN REMOTELY SUGGEST THAT THE PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE MU ST BE VACANT. THE SAID SECTION ALLOWS DEDUCTION TO A HOUSING PROJECT (SUBJECT TO FULFILLING ALL OTHER CONDITIONS) CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA O F ONE ACRE AND IT IS IMMATERIAL AS TO WHETHER ANY OTHER HOUSING PROJECTS ARE EXIST ING ON THE SAID PLOT OF LAND OR NOT. IN THESE CIRCUMSTANCES CONSTRUING THE PROVIS IONS OF SECTION 80-IB(10) BY ADDING WORDS TO THE STATUTE IS WHOLLY UNWARRANTED AND SUCH A CONSTRUCTION WHICH DEFEATS THE OBJECT WITH WHICH THE SECTION WAS ENAC TED MUST BE REJECTED. APART FROM THE ABOVE THE CENTRAL BOARD OF DIRECT T AXES (CBDT) BY ITS LETTER DATED MAY 4 2001 ADDRESSED TO THE MAHARASHTRA CHAMBER O F HOUSING INDUSTRY HAS STATED THUS : ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 29 'THE UNDERSIGNED IS DIRECTED TO REFER TO YOUR LETTE R NO. MCHI : RSA : M : 388/19799/3 DATED JANUARY 1 2001 AND TO STATE TH AT THE ADDITIONAL HOUSING PROJECT ON EXISTING HOUSING PROJECT SITE CA N QUALIFY AS INFRASTRUCTURE FACILITY UNDER SECTIONS 10(23G) AND 80-IB(10) PROVI DED IT IS TAKEN UP BY A SEPARATE UNDERTAKING HAVING SEPARATE BOOKS OF ACC OUNT SO AS TO ENSURE THAT CORRECT PROFITS CAN BE ASCERTAINED FOR THE PU RPOSE OF SECTION 80-IB AND ALSO TO IDENTIFY RECEIPTS AND REPAYMENTS OF LONG-TE RM FINANCES UNDER THE PROVISIONS OF SECTION 10(23G) SEPARATELY FINANCIN G ARRANGEMENTS AND ALSO IF IT SEPARATELY FULFILS ALL OTHER STATUTORY CONDI TIONS LISTED IN SECTIONS 10(23G) AND 80(B(10). WITH REGARD TO YOUR QUERY REGARDING THE DEFINITION OF HOUSING PROJECT IT IS CLARIFIED THAT ANY PROJECT WHICH HA S BEEN APPROVED BY A LOCAL AUTHORITY AS A HOUSING PROJECT SHOULD BE CONSIDERED ADEQUATE FOR THE PURPOSE OF SECTIONS 10(23G) AND 80-IB (10).' FROM THE AFORESAID LETTER OF THE CENTRAL BOARD OF D IRECT TAXES IT IS CLEAR THAT FOR THE PURPOSES OF SECTION 80-IB(10) IT IS NOT THE MANDATE OF THE SECTION THAT THE HOUSING PROJECT MUST BE ON A VACANT PLOT OF LAND HAVING MIN IMUM AREA OF ONE ACRE AND THAT WHERE A NEW HOUSING PROJECT IS CONSTRUCTED ON A PL OT OF LAND HAVING MINIMUM AREA OF ONE ACRE BUT WITH EXISTING HOUSING PROJECTS WOUL D QUALIFY FOR SECTION 80-IB(10) DEDUCTION. EVEN OTHERWISE THE ARGUMENT OF THE REV ENUE DOES NOT STAND TO REASON BECAUSE IN THE CITY OF MUMBAI WHERE THERE IS ACUTE SPACE CRUNCH IT IS DIFFICULT TO FIND A VACANT PLOT HAVING MINIMUM AREA OF ONE ACR E AND EVEN IF FEW SUCH PLOTS ARE EXISTING IT CANNOT BE SAID THAT SECTION 80-IB(10) D EDUCTION WAS INTENDED TO GIVE BENEFIT ONLY TO THE UNDERTAKINGS WHO CONSTRUCT HOUS ING PROJECTS ON THOSE FEW PLOTS. THEREFORE IT IS CLEAR THAT ON A PLOT OF LAND HAVIN G MINIMUM AREA OF ONE ACRE THERE CAN BE ANY NUMBER OF HOUSING PROJECTS AND SO LONG A S THOSE HOUSING PROJECTS ARE APPROVED BY THE LOCAL AUTHORITY AND FULFILL THE C ONDITIONS SET OUT UNDER SECTION 80- IB(10) THE DEDUCTION THEREUNDER CANNOT BE DENIED TO ALL THOSE HOUSING PROJECTS. SECTION 80-IB(10) WHILE SPECIFYING THE SIZE OF TH E PLOT OF LAND DOES NOT SPECIFY THE SIZE OR THE NUMBER OF HOUSING PROJECTS THAT ARE R EQUIRED TO BE UNDERTAKEN ON A PLOT HAVING MINIMUM AREA OF ONE ACRE. AS A RESULT SIGNI FICANCE OF THE SIZE OF THE PLOT OF LAND IS LOST AND THEREFORE THE ASSESSEE SUBJECT T O FULFILLING THE OTHER CONDITIONS BECOMES ENTITLED TO SECTION 80-IB(10) DEDUCTION ON CONSTRUCTION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE ACRE IRRESPECTIVE OF THE FACT THAT THERE EXIST OTHER HOUSING PROJECTS OR NOT. IN THESE CIRCUMSTANCES THE DECISION OF THE TRIBUNAL IN REJECTING THE CONTENTION OF THE REVENUE REGARDING THE SIZE OF THE PLOT CANNOT BE FAULTED. (EMPHASIS OURS). 6.4 FROM THE ABOVE OBSERVATION OF THEIR LORDSHIPS AS IT CAN BE SEEN THAT THE FOLLOWING PROPOSITIONS HAVE BEEN LAID DOWN; (I) THE SUBSEQUENT PROJECT APPROVED BY THE LOCAL AUTHORITY CANNOT BE CONSIDERED TO BE AS AN EXTENSION OF THE EARLIER PRO JECT PARTICULARLY WHERE NEITHER THE ASSESSEE HAD SOUGHT APPROVAL OF THE BUILDING PL AN FOR CONSTRUCTION OF NEW PROJECT AS EXTENSION OF EARLIER HOUSING PROJECT NO R THE MUNICIPAL CORPORATION HAS GRANTED THE APPROVAL FOR THE HOUSING PROJECT CONSIS TING OF NEW PROJECT AS AN EXTENSION OF THE EARLIER PROJECT. IF IT IS SO IT WILL NOT BE OPEN TO INCOME-TAX ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 30 AUTHORITIES TO CONTEND THAT THE APPROVAL TO THE SUBSEQUENT PROJECT GRANTED BY MUNICIPAL CORPORATION WILL CONSTITUTE EXTENSION O F THE HOUSING PROJECT WHICH WAS EARLIER APPROVED BY THE MUNICIPAL CORPORATION; (II) FOR THE PURPOSE OF ELIGIBILITY OF DEDUCTION U NDER SECTION 80 IB(10) THE HOUSING PROJECT SHOULD BE ON A PLOT WHICH HAS A MINIMUM AR EA OF ONE ACRE AND EXISTENCE OF ANY OTHER PROJECT UPON THE SAID PLOT IS OF NO RE LEVANCE FOR GRANT OF DEDUCTION UNDER SECTION 80 IB (10). 6.5 NOW IF FACTS OF THE PRESENT CASE ARE EXAMINED IN THE LIGHT OF AFOREMENTIONED LEGAL PROPOSITIONS LAID DOWN BY HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTIES (SUPRA) THEN IT WILL BE CLEAR THAT THE HOUSING PROJECT OF THE ASSESSEE DEVELOPED UNDER THE NAME OF SHREE SAI RADHA COMPLEX HAD FULFILLED ALL THE CONDITIONS LAID DOWN IN SECTION 80 IB (10). IT WAS AN INDEPENDENT RESIDENTIAL PROJECT FOR WHICH SEPARA TE APPROVALS WERE GRANTED BY THE LOCAL AUTHORITY AND FULFILLMENT OF CONDITIONS W ERE EXAMINED BY THE REVENUE IN A.Y 2008-09 AND AFTER EXAMINING THE FULFILLMENT OF THE CONDITIONS THE DEDUCTION WAS GRANTED TO THE ASSESSEE IN A.Y 2008-0 9 VIDE ORDER DATED 15/11/2010 PASSED UNDER SECTION 143(3) OF THE ACT WHEREIN AO HAS GRANTED DEDUCTION UNDER SECTION 80 IB (10) TO THE ASSESSEE OF A SUM OF RS.15 47 18 442/- . COPY OF THIS ORDER IS PLACED AT PAGES 41 TO 42 O F THE PAPER BOOK. THE AGREEMENT DATED 9/4/2011 WHICH IS REFERRED BY THE A O IS ENTERED INTO BETWEEN THE ASSESSEE AND M/S. G. K. REALTORS IS IN RESPECT OF UNUTILIZED FSI OF THE PLOT OF 850 SQ.MTRS AND ADDITIONAL TDR WHICH WAS SOLD BY TH E ASSESSEE FOR A CONSIDERATION OF RS.4 14 00 000/-. THE SAID COMMER CIAL PROJECT WAS NOT TO BE DEVELOPED BY THE ASSESSEE BUT WAS TO BE DEVELOPED B Y M/S. G.K. REALTORS AND FOR WHICH SEPARATE APPROVAL HAS BEEN OBTAINED AS PROPO SED COMMERCIAL BUILDING NO.1 ON THE SAME PLOT. THE SAID PROJECT WHICH IS NOT EVEN DEVELOPED BY THE ASSESSEE IS COMPLETELY DIFFERENT AND INDEPENDENT PR OJECT AND CANNOT BE LINKED TO THE RESIDENTIAL PROJECT OF THE ASSESSEE UNDER THE N AME SHREE SAI RADHA COMPLEX. IT HAS BEEN CLEARLY HELD BY THE HONBLE JURISDICTIONAL HIGH COURT THAT IF THE ASSESSEE DID NOT SEEK APPROVAL OF THE NEW PROJECT AS EXTENSION OF EARLIER HOUSING PROJECT AND MUNICIPAL CORPORATION ALSO DID NOT GRANT APPROVAL OF NEW ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 31 PROJECT AS AN EXTENSION OF EARLIER HOUSING PROJECT THEN IT WILL NOT BE OPEN TO THE I.T. AUTHORITIES TO CONTEND THAT APPROVAL OF THE N EW PROJECT CONSTITUTES EXTENSION OF THE OLD PROJECT. NO MATERIAL HAS BEE N BROUGHT ON RECORD TO SHOW THAT EITHER ASSESSEE HAS OBTAINED THE APPROVAL OF N EW PROJECT AS EXTENSION OF ITS EARLIER HOUSING PROJECT OR MUNICIPAL CORPORATION H AS GRANTED THE APPROVAL OF THE SUBSEQUENT PROJECT AS AN EXTENSION OF EARLIER HOUSI NG PROJECT. THEREFORE SUBSEQUENT AGREEMENT ENTERED INTO BY THE ASSESSEE W ITH M/S. G.K.REALTORS IN RESPECT OF UNUTILIZED FSI AND AVAILABLE TDR CANNOT BE CONSIDERED AS AN EXTENSION OF HOUSING PROJECT NAMELY SHREE SAI RADH A COMPLEX. THUS ON THE BASIS OF SUBSEQUENT AGREEMENT OF THE ASSESSEE WITH M/S. G.K REALTORS IT CANNOT BE HELD THAT COMMERCIAL SPACE IN THE HOUSING PROJEC T OF THE ASSESSEE FOR WHICH DEDUCTION U/S. 80 IB (10) WAS ALREADY GRANTED E XCEEDED THE PRESCRIBED LIMIT. THE A.O HAS COMMITTED AN ERROR IN LAW AND IN FACT I N TREATING THE SUBSEQUENT COMMERCIAL PROJECT DEVELOPED BY M/S. G.K.REALTORS AS PART AND PARCEL OF THE HOUSING PROJECT OF THE ASSESSEE. THEREFORE IN OUR OPINION LD. CIT(A) DID NOT COMMIT ANY ERROR IN HOLDING THAT SUBSEQUENT COMMERC IAL PROJECT WAS NOT AN EXTENSION OF HOUSING PROJECT DEVELOPED BY THE ASSES SEE. 6.6 IT HAS ALREADY BEEN MENTIONED THAT WHAT IS NEC ESSARY FOR GRANT OF DEDUCTION UNDER SECTION 80 IB (10) IS THAT THE HOUS ING PROJECT SHOULD BE ON A PLOT HAVING A MINIMUM AREA OF ONE ACRE AND EXIST ENCE OF ANY OTHER PROJECT ON THE SAID LAND IS IRRELEVANT FOR GRANT OF THE DEDUCT ION UNDER SECTION 80 IB (10) OF THE HOUSING PROJECT IF ALL THE CONDITIONS LAID DOWN IN SECTION 80 IB (10) ARE FULFILLED. IN THE PRESENT CASE THE SIZE OF PLOT IS ADMITTEDLY MORE THAN ONE ACRE. THEREFORE EXTENSION OF ANOTHER COMMERCIAL PROJECT ON THE SAME PLOT OF LAND HAS TO BE CONSIDERED TO BE IRRELEVANT FOR THE PURPOSE O F GRANTING DEDUCTION UNDER SECTION 80 IB (10) TO THE HOUSING PROJECT OF THE ASSESSEE. 6.7 THERE IS ALSO FORCE IN THE CONTENTION OF LD. AR THAT LD. CIT(A) HAS RIGHTLY HELD THAT IF DEDUCTION IS ALLOWED IN THE INITIAL Y EAR IT CANNOT BE DISALLOWED IN SUBSEQUENT YEAR AND SUCH CONTENTION OF LD. A R IS SUPPORTED BY THE FOLLOWING DECISIONS: (V) CIT VS. PAUL BROTHERS [2156 ITR 548 (BOM)] ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 32 (VI) SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. VS. CI T {123 ITR 669 (GUJ)} (VII) JANAK DEHYDRATION (P) LT. VS. ACIT {134 TTJ 1 (AHD )(UO)} (VIII) CIT VS. WESTERN OUTDOOR INTERACTIVE P. LT. 349 IT 309 (BOM) 6.8 NOW THE ONLY QUESTION REMAINS TO BE DECIDED IS THAT WHETHER THE SUBSEQUENT LETTER GIVEN BY AUDITOR DESCRIBING THE AMOUNT OF DEDUCTION UNDER SECTION 80 IB(10) CAN BE CONSIDERED TO BE SUFFICIEN T PROCEDURAL COMPLIANCE. FOR THIS PURPOSE ASSESSEE HAS PLACED RELIANCE ON TWO FO LLOWING DECISIONS :- (1) MRS. MEENA S. BANERJI VS. ITO {14 SOT 569} (MU MBAI) (2) ALPHA FOAM LTD. VS. DCIT {ITA NO.1617/PN/2008}( ITAT PUNE) COPIES OF THESE DECISIONS ARE FURNISHED IN THE PAPE R BOOK OF CASE LAWS. IN THE CASE OF MRS. MEENA S. BANERJI (SUPRA) ON THE BASIS OF FORM 10CCAC THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80 HHE. FINDING TH AT WRONG FORM 10 CCAC WAS FILED THE AO DISALLOWED THE CLAIM AS FOR CL AIMING DEDUCTION UNDER SECTION 80 HHE FORM 10 CCAF WAS REQUIRED TO BE FILED. THE TRIBUNAL OBSERVED THAT THERE WAS A BONA-FIDE MISTAKE BECAUSE IN EARLIER YEAR THE ASSESSEE WAS CLAIMING DEDUCTION UNDER SECTION 80 HHE AND THE SAME WAS ALL OWED. THE LANGUAGE OF SECTION 80 HHE AND 80 HHC ARE IDENTICAL EXCEPT FILI NG OF DIFFERENT FORMS AND IT WAS HELD THAT ASSESSEE WAS ENTITLED TO GET DEDUCTI ON. THE DECISION IN THE CASE OF MRS.MEENA S. BANERJI (SUPRA) WAS FOLLOWED IN THE CA SE OF ALPHA FOAM LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT RECTIFICATIO N OF AUDIT REPORT EVEN DURING THE FIRST APPELLATE PROCEEDINGS WAS SUFFICIENT TO MAKE ENTITLE THE ASSESSEE OF RELEVANT DEDUCTION. THE RELEVANT OBSERVATIONS OF THE TR IBUNAL FROM THE SAID DECISION ARE REPRODUCED BELOW: 6. THE NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF DEDUCTION U/S 80-TB OF THE ACT AMOUNTING TO RS.28 07 464/-. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.28 07 464/- U/S 80-TB OF TH E ACT BUT THE AUDIT REPORT IN PRESCRIBED FORM NO. 10-CCB WAS NOT FURNISHED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME. REFERRING TO SECTION 80-IB(13) R EAD WITH SECTION 80-IA(7) THE ASSESSING OFFICER HELD THAT IN ORDER TO AVAIL DEDUC TION U/S 80-IB IT IS MANDATORY TO ENCLOSE AUDIT REPORT IN THE PRESCRIBED FORM. SINCE THE ASSESSEE FAILED TO DO SO THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM OF DE DUCTION U/S 80-IB FOR WANT OF ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 33 COMPLIANCE OF THE STATUTORY REQUIREMENT. THE MATTER WAS CARRIED IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO UPHELD THE ORDER OF THE ASSESSING OFFICER. SAME HAS BEEN OPPOSED BEFORE US BY WAY OF VARIOUS CONTEN TIONS. ON THE HAND THE LEARNED DR SUPPORTED THE ORDER OF AUTHORITIES BELO W. 6.1. THE STAND OF THE ASESSEE HAS BEEN THAT THE ASS ESSING OFFICER OUGHT TO HAVE GIVEN AN OPPORTUNITY TO SUBMIT REPORT IN THE NEW FO RM BUT HAVING NOR DONE SO THE DISALLOWANCE WAS NOT JUSTIFIED. THE ASSESSEE HAS SU BSEQUENTLY SUBMITTED THE REPORT IN THE CORRECT FORM AS PER THE REQUIREMENT O F SECTION 801B THE SAID CONDITION SHOULD BE TREATED AS FULFILLED. IN THIS REGARD THE LEARNED AR PLACED RELIANCE ON THE DECISION OF MUMBAI G BENCH OF THE TRIBUNAL IN TH E CASE OF MRS. MEENA S BANERJI VS. ITO (2007) 14 SOT 569 (MUMBAI) WHEREIN THE ASSE SSEES CLAIM OF DEDUCTION U/S 80-HHC OF THE ACT ON EXPORT OF SOFTWARE OF LITERARY WORK HAS NOT BEEN REJECTED ON THE GROUND THAT THE ASSESSEE WAS ENTITLED TO DEDUCT ION U/S 80-HHE AND NOT U/S 80-HHC OF THE ACT AS THE LANGUAGE OF BOTH THE SECTI ONS IS IDENTICAL AND THE DEPARTMENT ITSELF HAS ALLOWED THE CLAIM OF DEDUCTIO N U/S 80-HHC OF THE ACT FOR EARLIER YEAR AS WELL AS IN SUBSEQUENT YEAR. IT WAS HELD THAT THE SOFTWARE OF LITERATURE BOOKS AND COLLEGE LEVEL INSTRUCTIONAL TE XTS EXPORTED BY THE ASSESSEE CONSTITUTED GOODS FOR THE PURPOSE OF SECTION 80-HHC OF THE ACT. IN THE SAID CASE THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION ON THE GROUND THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80- HHE AND NOT U/S 8 0-HHC AND THE AUDIT REPORT WAS PREPARED IN FORM NO. 1OCCAC. THE TRIBUNAL HELD THAT IF THE CLAIM OF ASESSEE WAS ALLOWABLE THEN IT WAS THE DUTY OF THE ASSESSING OFFICER TO ALLOW THE SAME. DENIAL OF CLAIM OF THE ASSESSEE ON THE REASON THAT IT CLAIMED UNDER WRONG SECTION WAS NOT JUSTIFIED. THE ASSESSING OFFICER SHOULD H AVE ASKED THE ASSESSEE TO RECTIFY THE MISTAKE BY FILING CORRECT FORM 10CCAF. FURTHER; THE DEPARTMENT HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80-HHC IN THE EARLIER YEAR A S WELL AS IN THE SUBSEQUENT YEAR. THEREFORE THE ASSESSEES CLAIM WAS HELD TO B E ALLOWABLE. WITH REGARDS TO SOFTWARE LITERATURE BOOKS AND COLLEGE LEVEL INSTRUC TIONAL TEXTS EXPORTED BY THE ASSESSEE CONSTITUTED GOODS. ACCORDING TO US IN CASE THE ASSESSEE FILES ANY WRONG FORMAT THE ASSESSING OFFICER SHOULD HAVE REC TIFIED BY ASKING FOR AUDIT REPORT IN CORRECT FORM. IN THE CASE BEFORE US AUDIT REPOR T IN THE CORRECT FORM HAS BEEN FILED BEFORE THE CIT(A). UNDER THE CIRCUMSTANCES THE CIT(A) WAS NOT JUSTIFIED IN REJECTING THE SAME BECAUSE IT WAS NOT FILED BEFORE THE ASSESSING OFFICER AT THE ASSESSMENT STAGE. SIMILAR VIEW WAS TAKEN BY CHANDIG ARH A BENCH OF THE TRIBUNAL IN THE CASE OF DURGA PRODUCTS VS. ITO (2008) 12 DTR (CHD) (TRB) 297 WHEREIN IT WAS HELD THAT PREPARATION OF EXERCISE NOTEBOOKS AND REG ISTERS FROM RAW MATERIAL IS THE MANUFACTURE ELIGIBLE FOR DEDUCTION U/S 80-IB. IN TH E CASE OF DURGA PRODUCTS (SUPRA) THE ASSESSEE FILED RETURN ACCOMPANIED WITH AUDIT RE PORT IN OLD FORM. BUT THE DEFECT WAS REMOVED IN THE COURSE OF ASSESSMENT. SO THERE WAS SUBSTANTIVE COMPLIANCE AND HENCE RELIEF U/S. 80-IB COULD NOT BE DENIED. IN THE CASE BEFORE US RECTIFICATION OF MISTAKE HAS BEEN DONE AT THE APPELLATE STAGE WHI CH HAS NOT BEEN DISPUTED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE AS THE DEFECT WITH REGARD TO AUDIT REPORT WAS RECTIFIED AT APPELLATE STAGE. WE FIND THAT THE A.O AS WELL AS CI T(A) HAVE REJECTED THE CLAIM OF ASSESSEE ON TECHNICAL GROUND AS DISCUSSED ABOVE W HICH IS NOT JUSTIFIED. IN THE INTEREST OF JUSTICE THE ASSESSING OFFICER IS DIREC TED TO GRANT RELIEF ON THIS ACCOUNT. 7. IN THE RESULT THE APPEAL IS PARTLY ALLOWED AS INDICATED ABOVE. ./ I.T.A. NO.5491/MUM/2012 ( ' ' ' ' # # # # / ASSESSMENT YEAR : 2009-10 34 6.9 NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE . THEREFORE WE HOLD THAT LD. CIT(A) WAS RIGHT IN GRANTING RELIEF TO THE ASSE SSEE ON THE BASIS OF SUBSEQUENT LETTER FURNISHED BY THE AUDITOR WHICH FULFILLED TH E DEFICIENCY IN REPORTING THE CLAIM OF THE ASSESSEE IN THE ORIGINAL AUDIT REPORT. WE DECLINE TO INTERFERE IN SUCH RELIEF GRANTED TO THE ASSESSEE. 7. IN VIEW OF ABOVE DISCUSSIONS THE DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2014 . / * -.# 0 1'2 30 /04/2014 . * 3 SD/- SD/- (RAJENDRA) . . (I.P.BANSAL) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; 1' DATED 30/04/2014 / / / / * ** * '+4 '+4 '+4 '+4 54#+ 54#+ 54#+ 54#+ / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 473 '+' / DR ITAT MUMBAI 6. 38 9 / GUARD FILE. /' /' /' /' / BY ORDER (4+ '+ //TRUE COPY// : :: : / ; ; ; ; (DY./ASSTT. REGISTRAR) / ITAT MUMBAI . ' . .VM SR. PS