M/s Sobha Developers Ltd.,, v. CIT,

ITA 551/BANG/2013 | 2009-2010
Pronouncement Date: 31-07-2014 | Result: Partly Allowed

Appeal Details

RSA Number 55121114 RSA 2013
Assessee PAN AABCS7723E
Bench Bangalore
Appeal Number ITA 551/BANG/2013
Duration Of Justice 1 year(s) 3 month(s) 7 day(s)
Appellant M/s Sobha Developers Ltd.,,
Respondent CIT,
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 31-07-2014
Assessment Year 2009-2010
Appeal Filed On 23-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER I.T.A. NO. 55 1 /BANG/201 3 (ASSESSMENT YEAR : 200 8 - 0 9 ) M/S. SOBHA DEVELOPERS LTD. SARJAPUR MARATHAHALLI ORR DEVARABISANAHALLI BELLANDUR POST BANGALORE. PAN AABCS7723E VS. COMMISSIONER OF INCOME TAX (LTU) BANGALORE. APPELLANT RESPONDENT. APPELLANT BY : SHRI V.SRINIVASAN. RESPONDENT BY : SHRI PRISCILLA SINGSIT. DATE OF H EARING : 10.6.2014 . DATE OF P RONOUNCEMENT : 31.7. 2014 . O R D E R PER SHRI JASON P. BOAZ A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (LTU) BANGALORE PASSED UNDER SECTION 263 OF THE INCOME TA X ACT 1961 (IN SHORT 'THE ACT') ON 27.3.2013 FOR ASSESSMENT YEAR 2008 - 09. 2. THE FACTS OF THE CASE IN BRIEF ARE AS UNDER: 2.1 THE ASSESSEE A COMPANY IN THE BUSINESS OF REAL ESTATE AND PROPERTY DEVELOPMENT FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 ON 3.10.2008 DECLARING TOTAL INCOME OF RS.124 57 49 834. THE ASSESSEE FILED A REVISED RETURN OF INCOME ON 8.5.2009 DECLARING INCOME OFRS.82 62 46 568 AFTER CLAIMING DEDUCTION OF RS.144 37 51 701 UNDER SECTION 80 IB (10) OF THE ACT. THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY ORDER DT.29.12.2010 WHEREIN THE INCOME OF THE ASSESSEE WAS 2 ITA NO.551/BANG/13 DETERMINED AT RS.87 99 41 89 0 . IN DOING SO THE ASSESSING OFFICER INTER ALIA RECOMPUTED THE DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT AT RS. 139 31 40 676 AS AGAINST RS.144 37 51 70 1 CLAIMED BY THE ASSESSEE AND EXCLUDED THE PROFIT FROM SALE OF UNDIVIDED INTEREST IN LAND WHILE COMP UTING THE DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2008 - 09 DT.29.12.2010 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CONCERNED CIT(APPEALS). DURING THE PENDENCY OF THIS APPEAL THE C IT LTU BANGALORE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE INITIATING REVISION PROCEEDINGS U/S.263 OF THE ACT AFTER REVISING AND HOLDING THE AFORESAID ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2008 - 09 PASSED BY THE ASSESSING OFFICER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE ON THE FOLLOWING POINTS : (I) WRONG CLAIM AND ALLOWANCE OF DEDUCTION U/S.80 IB(10). (II) THE SHORT FALL IN THE REMITTANCE OF TDS BYRS.10 13 572 WHICH RELATED TO A GROSS RECEIPT OF RS.4 47 29 567 WHICH REQUIRES DISALLOWANCES U/S.40(A)(IA). (III) TO CONSIDER THE SHORT COMPUTATION OF FRINGE BENEFIT VALUE ON GIFT AWARDS TO COMPLIMENTS TO STAFFS INCLUDED UNDER MISCELLANEOUS EXPENSES. THE SAME NEEDED TO BE CLASSIFY UNDER GIFT WHICH ATTRACTS 50% FBT. THEREFORE THERE IS A SHORT COMPUTATION OF FBT VALUE AMOUNTING TORS.20 65 161. IN RESPONSE TO THIS SHOW CAUSE NOTICE (SUPRA) OF THE LEARNED CIT LTU THE ASSESSEE FILED A DETAILED WRITTEN SUBMISSION VIDE LETTER DT.24.10.2011 CONTENDING THAT THE AFORESAID ISSUES PO INTED OUT IN THE NOTICE DO NOT RENDER THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008 - 09 DT.28.12.2010 TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2.3 SUBSEQUENTLY IT IS SEEN THAT THE CIT LTU ISSUED ANOTHER SHOW CAUSE NOTICE DT.20.12 .2012 TO THE ASSESSEE FOR CONSIDERATION OF THE FOLLOWING ADDITIONAL ISSUES IN THE COURSE OF THE PROCEEDINGS INITIATED U/S.263 OF THE ACT : - I) TDS CREDIT CLAIMED DURING THE A.Y. WITHOUT OFFERING CORRESPONDING INCOME. II) PROVISION FOR OTHER AMOUNTING TO RS .28.50 CRORES. III) CLAIM FOR DEDUCTION U/S.36(1)(III) AMOUNTING TO RS.41.95 CRORES. THE ASSESSEE FILED ITS REPLY TO THE ISSUES RAISED IN THIS NOTICE VIDE LETTER DT.25.2.2013. 3 ITA NO.551/BANG/13 2.4 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE TO THE ISSUES R AISED IN THE NOTICES ISSUED (SUPRA) THE LEARNED CIT LTU PASSED THE IMPUGNED ORDER U/S.263 OF THE ACT HOLDING THAT THE ORDER OF ASSESSMENT PASSED U/S. 143(3) OF THE ACT DT.29.12.2010 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE FINDINGS OF THE CIT LTU ON THE VARIOUS ISSUES RAISED IN THE PROCEEDINGS U/S.263 OF THE ACT ARE AS UNDER : - I) WITH REGARD TO THE DEDUCTION CLAIMED UNDER SECTION 80 IB(10) OF THE ACT THE LEARNED CIT LTU HELD THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITION UND ER SECTION 80 IB(10) OF DEVELOPING AND BUILDING HOUSING PROJECTS. IT WAS HELD THAT THE ASSESSEE IS ONLY A BUILDER SINCE THE L AND ON WHICH THE PROJECTS WERE DEVELOPED BELONGED TO THE SISTER CONCERNS OF THE ASSESSEE THEREFORE THE ASSESSING OFFICER WAS DIR ECTED TO DENY THE ASSESSEE THE DEDUCTION CLAIMED UNDER SECTION 80 IB(10)OF THE ACT. II) WITH REGARD TO THE SHORTFALL IN REMITTANCE OF TDS AND CONSEQUENT DISALLOWANCES OF RS.4 47 29 567 ON ACCOUNT OF SHORTFALL IN REMITTANCE OF TDS AND CONSEQUENT DISALLOWA NCE U/S.40(A)(IA) OF THE ACT THE LEARNED CIT LTU DIRECTED THE ASSESSING OFFICER TO MAKE A DISALLOWANCE OF RS.4 47 29 567 ON ACCOUNT OF SHARES FALL IN REMITTANCE OF RS.10 13 572; OBSERVING THAT THERE WAS A SHORTFALL IN REMITTANCE OF TDS DURING THE YEAR. HE THEREFORE DIRECTED THE ASSESSING OFFICER THAT THE RELATABLE AMOUNT OF PAYMENT MADE TO CONTRACTORS HAD TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT. III) THE ISSUE OF SHORT COMPUTATION OF VALUE OF FRINGE BENEFIT WAS NOT DEALT WITH IN THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT SINCE IT AROSE IN THE ORDER U/S. 115WE OF THE ACT DT.9.12.2010. IV) WITH REGARD TO THE ISSUE OF CREDIT FOR TDS THE LEARNED CIT LTU DIRECTED THE ASSESSING OFFICER TO VERIFY THE INCOME OFFERED AND ALLOW THE CORRESPONDING TDS IN THE PROPER ASSESSMENT YEAR AS PER LAW. V) WITH REGARD TO THE CLAIM FOR DEDUCTION OUT OF PROVISION OTHERS OF RS.28.50 CRORES THE LEARNED CIT LTU DIRECTED THE ASSESSING OFFICER TO VERIFY THE PROVISION CREATED WITH EVIDENCE TO BE PRODUCED AND SET ASI DE THE MATTER FOR FRESH CONSIDERATION. 4 ITA NO.551/BANG/13 VI) WITH REGARD TO THE ISSUE RELATING TO THE DEDUCTION CLAIMED UNDER SECTION 36(1)(III) OF RS.41.95 CRORES THE LEARNED CIT LTU NOTED THAT THE ALLOWANCE OF THE SAID DEDUCTION WAS APPROPRIATE AND NO REVISION WAS RE QUIRED TO BE MADE IN RESPECT OF THE SAID ISSUE. 3. AGGRIEVED BY THE ORDER THE LEARNED CIT LTU BANGALORE UNDER SECTION 263 OF THE ACT DT.27.3.2013 THE ASSESSEE HAS FILED THIS APPEAL RAISING THE FOLLOWING GROUNDS : - 1. THE ORDER PASSED BY THE LEARN ED CIT U/S. 263 OF THE ACT IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW EQUITY WEIGHT OF EVIDENCE PROBABILITIES FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT FAILED TO APPRECIATE THAT THERE WAS NO ERROR MUCH LESS AN ERROR PREJUDICIAL TO THE INTEREST OF THE REVENUE IN THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER ALLOWING THE DEDUCTION U/S. 80IB(10) OF THE ACT WARRANTING REVISION U/S.263 OF THE ACT AND CONSEQUENTLY THE FINDING OF THE LEARNED CIT HOLDING THAT THE ALLOWA NCE OF DEDUCTION U/S.80IB(10) OF THE ACT BY THE ASSESSING OFFICER IS ERRONEOUS REQUIRES TO BE VACATED. 2.1 THE LEARNED CIT FAILED TO APPRECIATE THAT THE AFORESAID ISSUE RELATING TO THE DEDUCTION U/S.80 IB(10) OF THE ACT WAS EXAMINED IN GREAT DETAIL B Y THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS AND THEREFORE THERE WAS NO JUSTIFICATION FOR INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. 2.2 WITHOUT PREJUDICE TO THE ABOVE THE LEARNED CIT IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT WAS ONLY A BUILDER AND NOT A DEVELOPER AND THEREBY NOT ENTITLED TO THE DEDUCTION U/S.80IB OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE. 2.3 THE LEARNED CIT FAILED TO APPRECIATE THAT THE FINDING THAT THE APPELLANT WAS ONLY A BUI LDER AND NOT A DEVELOPER IS TOTALLY MISCONCEIVED AS THERE CAN BE NO DOUBT THAT THE APPELLANT HAS DEVELOPED THE VARIOUS HOUSING PROJECTS AND THE MERE FACT THAT THE LAND ON WHICH THE PROJECTS WERE DEVELOPED BY THE APPELLANT WERE INITIALLY ACQUIRED BY CERTAIN GROUP COMPANIES CANNOT BE A GROUND TO HOLD THAT THE APPELLANT HAS ACTED AS A BUILDER AND NOT A DEVELOPER IN RESPECT OF THESE PROJECTS. 3. THE LEARNED CIT FAILED TO APPRECIATE THAT THERE WAS NO ERROR MUCH LESS AN ERROR PREJUDICIAL TO THE INTEREST OF THE REVENUE IN THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IN RESPECT OF THE ALLEGED FAILURE TO MAKE A DISALLOWANCE U/S. 40(A)(IA) OF THE ACT FOR THE SHORTFALL IN THE REMITTANCE OF TDS WARRANTING REVISION U/S.263 OF THE ACT AND CONSEQUENTLY THE FINDIN G OF THE LEARNED CIT HOLDING THAT THERE WAS A FAILURE TO REMIT TDS WARRANTING THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT REQUIRES TO BE VACATED. 4. THE LEARNED CIT FAILED TO APPRECIATE THAT THERE WAS NO ERROR MUCH LESS AN ERROR PREJUDICIAL TO THE INTERE ST OF THE REVENUE IN THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER ALLOWING THE DEDUCTION FOR THE PROVISION FOR EXPENSES TO BE INCURRED IN RESPECT OF COMPLETED PROJECTS WARRANTING REVISION U/S. 263 OF THE ACT AND 5 ITA NO.551/BANG/13 CONSEQUENTLY THE ORDER PASSED BY THE CIT HOLDING THAT THE FAILURE OF THE LEARNED ASSESSING OFFICER TO EXAMINE THE SAME CONSTITUTES AN ERROR REQUIRES TO BE VACATED. 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. 4. FROM A PERUSAL OF THE GROUNDS OF APPEAL RAISED (SUPRA) IT I S SEEN THAT THE ASSESSEE IS ONLY CHALLENGING THREE ISSUES CONSIDERED BY THE LEARNED CIT LTU IN THE PROCEEDINGS UNDER SECTION 263 OF THE ACT FOR ASSESSMENT YEAR 2008 - 09. ORIGINALLY THE LEARNED CIT LTU HAD RAISED SIX ISSUES WHICH WERE SET OUT EARLIER I N THIS ORDER (SUPRA) AND LATER DROPPED PROCEEDINGS IN RESPECT OF TWO ISSUES VIZ. FRINGE BENEFIT TAX AND INTEREST CLAIMED UNDER SECTION 36(1)(III) OF THE ACT. THE LEARNED CIT LTU HAS RENDERED HIS FINDINGS IN RESPECT OF FOUR ISSUES AND ASSESSEE HAS CHAL LENGED ONLY THREE OF THOSE ISSUES IN THIS APPEAL. WE WILL NOW ADDRESS THESE ISSUES RAISED GROUND WISE. 5. THE GROUNDS RAISED AT S.NOS.1 AND 5 ARE GENERAL IN NATURE AND THEREFORE NO SEPARATE ADJUDICATION IS REQUIRED THEREON AS THEY WILL GET DISPOSED OFF AUTOMATICALLY WITH THE DISPOSAL OF OTHER GROUNDS. 6. IN RESPECT TO THE GROUND RAISED AT S.NO.4 THE SAME WAS NOT PRESSED BEFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SINCE THE LEARNED CIT LTU HAD DIRECTED THE ASSESSING OFFI CER TO EXAMINE THE SAID ISSUE AND DECIDE THE ALLOWABILITY OF THE PROVISIONS FOR EXPENSES BASED ON THE EVIDENCES TO BE ADDUCED BY THE ASSESSEE. IN THIS VIEW OF THE MATTER GROUND NO.4 IS DISMISSED AS NOT PRESSED. 7.1 IN RESPECT OF THE GROUNDS RAISED A T S.NOS.2.1 2.2 AND 2.3 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT CO - ORDINATE BENCHES OF THE BANGALORE TRIBUNAL HAS CONSIDERED THE SIMILAR ISSUE IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2006 - 07 AND 2007 - 08. THE LEARNED AUTHORISED REPRESENTATIVE PLACED ON RECORD COPIES OF THE SAID ORDERS. IT WAS SUBMITTED THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL DISPOSED OFF THE ASSESSEE'S APPEAL FOR ASSESSMENT YEAR 2006 - 07 BY ORDER IN ITA NO.339/BANG/2011 DT.28.9.2012 CANCELLING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT 6 ITA NO.551/BANG/13 ON THE GROUND THAT THERE WAS A MERGER OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WITH THAT OF THE ORDER PASSED BY THE LEARNED CIT (APPEALS) AND THE TRIBUNAL ALLOWING DEDUCTION UNDER SECTION 80 IB (10 ) OF THE ACT. HOWEVER IN RESPECT OF THE PROCEEDINGS UNDER SECTION 263 OF THE ACT FOR ASSESSMENT YEAR 2007 - 08 IN THE ASSESSEE'S OWN CASE THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ORDER IN ITA NO.1395/BANG/2012 DT.30.4.2014 HELD THAT THE CONCLUSION O F THE LEARNED CIT LTU THAT THE ASSESSEE IS ONLY A BUILDER AND NOT A BUILDER AND DEVELOPER OF THE HOUSING PROJECT WAS NOT PROPER. THE SAID CONCLUSIONS WERE REVERSED AND IT WAS HELD BY THE TRIBUNAL THAT THE ASSESSING OFFICER MUST EXAMINE THE ISSUE IN THE LIGHT OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN RADH E DEVELOPERS REPORTED IN 341 ITR 403 (GUJ). IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE GROUNDS NOS.2 TO 2.3 WERE COVERED BY THE AFORESAID DECISIONS OF THE CO - ORDINA TE BENCHES OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR EARLIER YEARS. 7.2 PER CONTRA THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LEARNED CIT LTU AND SUBMITTED THAT THE CIT HAD CORRECTLY INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT IN DIRECTING THE ASSESSING OFFICER TO DENY THE ASSESSEE THE DEDUCTION CLAIMED UNDER SECTION 80 IB(10) OF THE ACT. 7.3 . 1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. THE ORDER OF THE CO - ORDIN ATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2006 - 07 IN ITA NO.339/BANG/2011 (SUPRA) IS AN ORDER PASSED ON THE JURISDICTION UNDER SECTION 263 OF THE ACT. IN THE SAID ORDER THE TRIBUNAL FOUND THAT THE ISSUE CONSIDERED BY THE A SSESSING OFFICER IN ASSESSMENT PROCEEDINGS AND DECIDED BY THE APPELLATE AUTHORITIES RELATING TO DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT WAS THE SAME AS THE ISSUE BEING CONSIDERED BY THE LEARNED CIT UNDER SECTION 263 OF THE ACT AND THEREFORE THE LEARNE D CIT LTU COULD NOT EXERCISE JURISDICTION UNDER SECTION 263 OF THE ACT. IN THIS VIEW OF THE MATTER THE ORDER PASSED UNDER SECTION 263 OF THE ACT WAS CANCELLED. HOWEVER IN THE PRESENT CASE BEFORE US THE LEARNED CIT LTU INITIATED PROCEEDINGS UNDER S ECTION 263 OF THE ACT DURING THE PENDENCY OF THE FIRST APPEAL 7 ITA NO.551/BANG/13 BEFORE THE LEARNED CIT (APPEALS). THEREFORE THERE WAS NO QUESTION OF ANY MERGER OF THE ORDER AND THE CONCLUSIONS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.339/BANG/2011 (SUPRA) CANNOT HAVE ANY APPLICATION TO THE PRESENT CASE. 7.3.2 IN THE ORDER OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.1395/BANG/2012 DT.30.4.2014 IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007 - 08 THE TRIBUNAL HAS CONSIDERED IN DETAIL THE ISSUE RELATI NG TO THE FINDING OF THE LEARNED CIT LTU THAT THE ASSESSEE IS ONLY A BUILDER AND NOT A BUILDER AND DEVELOPER OF HOUSING PROJECTS. IT WAS HELD BY THE TRIBUNAL AT PARAS 30 TO 35 OF THIS ORDER AS UNDER : - 30. HAVING HELD THAT THERE WAS NO MERGER OF T HE ORDER OF THE AO WITH THAT OF ANY APPELLATE AUTHORITY WHEN THE CIT INVOKED AND EXERCISED JURISDICTION U/S.263 OF THE ACT IN PASSING THE IMPUGNED ORDER AND THAT TWO VIEWS DID NOT EXIST ON THE QUESTION WHETHER THE ASSESSEE WAS ONLY A BUILDER AND NOT A B UILDER AND DEVELOPER OF HOUSING PROJECT WE PROCEED TO EXAMINE THE MERITS OF THE QUESTION WHETHER THE ASSESSEE COULD BE DENIED THE BENEFIT OF DEDUCTION U/S.80 - IB(10) OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS NOT OWNER OF THE LAND OR THAT HE WAS ONLY A BUILDER AND NOT A DEVELOPER OF HOUSING PROJECT. THE HON BLE GUJARAT HIGH COURT RENDERED ITS DECISION IN THE CASE OF RADHE DEVELOPERS(SUPRA) ON 13.12.2011. THE ITAT AHMEDABAD RENDERED ITS DECISION IN THE AFORESAID CASE ON 29.6.2007 REPORTED AS RADHE DEV ELOPERS AND OTHERS VS. DCIT (2008) 23 SOT 420 (AHD.). 31. THE ASSESSEE IN ITS SUBMISSIONS BEFORE THE CIT IN REPLY TO THE SHOW CAUSE NOTICE SUBMITTED AS TO HOW IT WAS A DEVELOPER AND BUILDER OF HOUSING PROJECTS IN QUESTION. THESE SUBMISSIONS HAVE BEEN GIVEN IN THE EARLIER PART OF THIS ORDER AND ARE NOT BEING REPEATED. IN THE IMPUGNED ORDER THE CIT HAS NOT DISPUTED ANY OF THE FACTS AS MENTIONED BY THE ASSESSEE IN REPLY TO THE SHOW CAUSE NOTICE. HE HAS HOWEVER CONCLUDED AT PAGE 16 PARA - IV OF THE IMPUGNE D ORDER THAT THE DISCUSSION ABOVE MAKES IT CLEAR THAT THE ASSESSEE IS NOT AT ALL ELIGIBLE FOR DEDUCTION U/S.80IB OF THE ACT. THEREAFTER HE HAS CONCLUDED THAT THE ASSESSMENT ORDER ALLOWING DEDUCTION U/S.80IB IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSING OFFICER WAS DIRECTED TO MAKE ENQUIRIES AND VERIFY THE SUBMISSIONS OF THE ASSESSEE. IN OUR VIEW HAVING CONCLUDED THAT THE ASSESSEE IS NOT A DEVELOPER AND BUILDER IT BECOMES A CASE WHERE THE CIT HAS EXERCISED THE POWERS U/S.263 OF T HE ACT AND REVISED THE ORDER OF THE ASSESSING OFFICER BY MODIFYING THE ASSESSMENT. IN THE LIGHT OF THE ABOVE DIRECTIONS THERE IS NOTHING FURTHER TO BE DONE BY THE ASSESSING OFFICER. 32. IN THE LIGHT OF THE ABOVE DIRECTIONS OF THE CIT IN THE ORDER U/S. 263 OF THE ACT WE HAVE TO EXAMINE THE QUESTION AS TO WHETHER THE ASSESSEE CAN BE SAID TO BE ONLY A BUILDER AND NOT A DEVELOPER AND BUILDER . IN THIS REGARD WE HAVE ALREADY SEEN THE 8 ITA NO.551/BANG/13 REPLY OF THE ASSESSEE TO THE SHOW CAUSE NOTICE U/S.263 OF THE ACT. WI THOUT REBUTTING THOSE SUBMISSIONS AND CALLING FOR INFORMATION THE CIT IN THE IMPUGNED ORDER HAS CONCLUDED THAT THE ASSESSEE IS ONLY A BUILDER AND NOT A DEVELOPER AND BUILDER OF HOUSING PROJECT. IN OUR VIEW SUCH A FINDING IS WITHOUT ANY BASIS AND WITHO UT BRINGING ON RECORD MATERIAL AND CONTRARY TO THE CLAIM MADE BY THE ASSESSEE. THE SAME CANNOT BE SUSTAINED AND IS HEREBY VACATED. 33. SINCE THE ASPECT RAISED BY THE CIT IN THE IMPUGNED ORDER U/S.263 OF THE ACT HAS NOT BEEN EXAMINED BY THE AO EITHER I N THE ORIGINAL PROCEEDINGS OR IN THE IMPUGNED ORDER THE CIT S DIRECTION REMANDING THE ISSUE TO THE AO FOR FRESH EXAMINATION HAS TO BE UPHELD. HOWEVER THE ISSUE AS TO WHETHER THE ASSESSEE IS ONLY A BUILDER OR DEVELOPER AND BUILDER HAS ALSO TO BE EXAMI NED BY THE AO AS THE FINDINGS BY THE CIT IN THIS REGARD HAS ALREADY BEEN VACATED BY US IN THE EARLIER PARA OF THIS ORDER. IN THE SET ASIDE PROCEEDINGS PURSUANT TO THE ORDER OF THE CIT U/S.263 OF THE ACT THE AO HAS TO CALL FOR ALL DETAILS OF COPIES OF THE AGREEMENT FOR PURCHASE OF THE LAND BY THE ASSESSEE FROM THE SISTER CONCERN AND AS TO HOW THE SEVERAL ASPECTS OF DEVELOPMENT OF A HOUSING PROJECT SET OUT IN THE EARLIER PART OF THIS ORDER WERE IN FACT DONE ONLY BY THE ASSESSEE. WHAT IS THE ROLE OF THE SI STER CONCERN OF THE ASSESSEE IN SO FAR AS IT RELATES TO SALE OF LAND IS CONCERNED AND AS TO HOW DESPITE BEING NOT OWNER OF THE LAND PURSUANT TO A REGISTERED SALE DEED WAS IN FACT ENTITLED TO ALL OWNERSHIP RIGHTS AS ENVISAGED U/S.2(47)(V) OF THE ACT. AFTER SCRUTINY OF THE RELEVANT DOCUMENTS IT IS FOR THE AO TO COME A CONCLUSION AS TO WHETHER THE ASSESSEE WAS ONLY A BUILDER OR A DEVELOPER AND BUILDER OF HOUSING PROJECTS FOR WHICH DEDUCTION U/S.80 - IB(10) OF THE ACT IS CLAIMED IN THE LIGHT OF THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS (SUPRA). HE HAS ALSO TO GO INTO THE QUESTION AS TO WHO CONCEPTUALIZES THE SCHEME AND ULTIMATELY EXECUTES THE SCHEME AND CONVEYS THE FLATS TO THE PROSPECTIVE BUYERS. 34. TO THE ABOVE EX TENT THE DIRECTIONS OF THE CIT IN THE IMPUGNED ORDER ARE MODIFIED AND THE ISSUE REMANDED TO THE AO TO BE CONSIDERED IN THE LIGHT OF THE DIRECTIONS GIVEN ABOVE. 35. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE QUESTION AS TO WHETHER THE ASSESSEE WAS A DEVELOPER AND BUILDER OF HOUSING PROJECT OR MERELY A BUILDER AND WAS NOT ENTITLED TO DEDUCTION U/S.80IB OF THE ACT WAS NOT EXAMINED BY THE AO IN THE ORDER OF ASSESSMENT. THE ORDER OF THE ASSESSING OFFICER WAS THEREFORE ERRONEOUS TO THIS EXTENT. THEREFORE THE EXERCISE OF JURISDICTION BY THE CIT U/S.263 OF THE ACT WAS PROPER. WITHOUT REBUTTING THOSE SUBMISSIONS AND CALLING FOR INFORM ATION THE CIT IN THE IMPUGNED ORDER HAS CONCLUDED THAT THE ASSESSEE IS ONLY A BUILDER AND NOT A DEVELOPER AND BUILDER OF HOUSING PROJECT. IN OUR VIEW SUCH A FINDING IS WITHOUT ANY BASIS AND WITHOUT BRINGING ON RECORD MATERIAL AND CONTRARY TO THE CLAIM MADE BY THE ASSESSEE. THE SAME CANNOT BE SUSTAINED AND IS 9 ITA NO.551/BANG/13 HEREBY VACATED. THE DIRECTIONS OF THE CIT IN THE IMPUGNED ORDER ARE MODIFIED AS STATED ABOVE. THE ISSUE AS TO WHETHER THE ASSESSEE IS ONLY A BUILDER AND NOT A DEVELOPER AND BUILDER OF HOUSIN G PROJECT IS REMANDED TO THE AO TO BE CONSIDERED AFRESH IN THE LIGHT OF THE DIRECTIONS GIVEN ABOVE. FOR THE REASONS GIVEN ABOVE WE PARTLY ALLOW THE APPEAL OF THE ASSESSEE. 7.3.3 ON AN APPRECIATION OF THE MATTER WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE IMPUGNED ASSESSMENT YEAR 2008 - 09 IS SIMILAR TO THE ISSUE CONSIDERED AND DECIDED BY THE TRIBUNAL FOR ASSESSMENT YEAR 2007 - 08. THE OBSERVATIONS EXTRACTED FROM THE ORDER OF THE CO - ORDINATE BENCHES (SUPRA) ARE IN OUR VIEW S QUARELY APPLICABLE TO THE CASE ON HAND SINCE THE LEARNED CIT LTU HAS CONCLUDED THAT THE ASSESSEE IS A BUILDER WITHOUT REBUTTING ANY OF THE SUBMISSIONS AND CONTENTIO NS PUT FORTH BY THE ASSESSEE W ITH REGARD TO THE VARIOUS ACTIVITIES CARRIED OUT BY THE AS SESSEE IN THE REPLY TO THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 OF THE ACT. WE THEREFORE VACATE THE FINDINGS OF THE LEARNED CIT LTU IN THIS REGARD AND MODIFY THE DIRECTIONS ISSUED UNDER SECTION 263 OF THE ACT WHILE REMANDING THE ISSUE TO THE AS SESSING OFFICER TO CONSIDER THE PLEA OF THE ASSESSEE IN THE LIGHT OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS (SUPRA). ACCORDINGLY GROUNDS AT S.NOS.2 2.1 2.2 AND 2.3 ARE PARTLY ALLOWED. 8.1 IN RESPECT OF GROU ND AT S.NO.3 THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE LEARNED CIT LTU AT PAGE 6 OF HIS ORDER HAS OBSERVED AS UNDER : - HOWEVER ON A PERUSAL OF THE ASSESSMENT RECORD FOR THE ASSESSMENT YEAR 2008 - 09 AND 3CD REPORT PRODUCED BY THE CA IT IS STATED IN THE 3CD REPORT FURNISHED BY THE AUDITORS AS PER ANNEXURE 7 THAT THE AMOUNT OF RS.5 24 52 209 WAS DEDUCTED FROM CONTRACT OF PAYMENTS (AT THE RATE OF 2.266% U/S.194C). ON CROSS VERIFICATION WITH DETAILS OF TDS AMOUNT REMITTED TO THE GOVT. ACCO UNT AVAILABLE IN THE TDS RETURNS PROCESS BY THE ITO (TDS) LTU IT WAS NOTICED THAT THE ASSESSEE AS REMITTED THE TDS AMOUNT ONLY TO THE EXTENT TO THE RS.5 14 38 637 THEREBY RESULTING IN A SHORTFALL OF RS.10 13 572. CONSEQUENTLY THE GROSS AMOUNT OFRS.4 47 29 567 RELATING TO THE ABOVE SHORTFALL NEEDS TO BE DISALLOWED U/S.40(A)(IA). THE A.O. HAS COMMITTED AN ERROR NOT DISALLOWING THE CORRESPONDING AMOUNT RELATING TO THE SHORT DEDUCTION U/S.40(A)(IA) WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF IT ACT. 10 ITA NO.551/BANG/13 8.1.2 IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THERE WAS NO REAL SHORTFALL IN THE PAYMENT OF TDS OF RS.10 13 572. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD FILED LET TER DT.13.7.2013 BEFORE THE ASSESSING OFFICER SUBMITTING THAT THERE WAS A SHORT RECOVERY OF TDS OF RS.10 11 875 DURING THE EARLIER ASSESSMENT YEAR 2007 - 08 IN THE MONTH OF MARCH 2007. WHEREAS THE ACTUAL TDS DEDUCTIBLE F OR MARCH 2007 WAS RS.58 54 853 O N LY A SUM OF RS.48 42 978 WAS DEDUCTED. IT IS SUBMITTED THAT THE ASSESSEE REMITTED THE ENTIRE TDS DEDUCTIBLE OF RS.58 54 853 FOR MARCH 2007 AND RECOVERED THE SHORT DEDUCTION IN THE NEXT YEAR IN JUNE 2007. IT IS FURTHER SUBMITTED THAT THE ENTRY FOR RECOV ERY OF TDS PERTAINING TO THE EARLIER YEAR WAS INADVERTENTLY SHOWN AS TDS DEDUCTED FOR ASSESSMENT YEAR 2008 - 09 IN THE INFORMATION SUBMITTED FOR PURPOSES OF TAX AUDIT. THE LEARNED AUTHORISED REPRESENTATIVE PRAYED THAT THE ASSESSING OFFICER MAY BE DIRECTED T O VERIFY THE S AID CLAIM IN THE PROCEEDINGS WHILE GIVING EFFECT TO THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT. 8.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LEARNED CIT LTU AND SUBMITTED THAT THE SAID RECONCILIATION SOUGHT TO BE PUT FORTH BY THE LEARNED AUTHORISED REPRESENTATIVE (SUPRA) WAS NOT BEFORE THE LEARNED CIT LTU WHEN HE PERUSED THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT AND THEREFORE THE FINDING THEREIN CANNOT BE DISTURBED. 8.3 WE HAVE HEARD BOTH PARTIE S AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. ON AN APPRECIATION OF THE SUBMISSIONS MADE AND THE MATERIAL BEFORE US WE ARE OF THE VIEW THAT THE LEARNED CIT LTU OUGHT NOT TO HAVE STRAIGHTAWAY HELD THAT THERE WAS A SHORTFALL IN REMITTANCE OF TDS OFRS.10 13 572 AND CONSEQUENTLY DISALLOWANCE OFRS.4 47 29 567 RELATING TO THE ABOVE SHORTFALL NEEDS TO BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. IT IS SEEN FROM THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT THAT THE ASSESSEE HAS REQUESTE D THE LEARNED CIT LTU TO INFORM AS TO HOW THE SHORTFALL OF RS.10 13 572 WAS ARRIVED AT. IT WAS ALWAYS THE PLEA OF THE ASSESSEE BEFORE THE LEARNED CIT LTU THAT THERE WAS NO SHORTFALL. AS EXPLAINED BY THE LEARNED AUTHORISED REPRESENTATIVE IF THE AMOUNT OF TDS DURING THE RELEVANT YEAR WAS ERRONEOUSLY REPORTED 11 ITA NO.551/BANG/13 IN THE 3CD REPORT BY THE CHARTERED ACCOUNTANT ON ACCOUNT OF THE TDS DEDUCTIBLE IN THE EARLIER PREVIOUS YEAR SUCH A MISTAKE SHOULD NOT BE HELD AGAINST THE ASSESSEE. IT IS SUBMITTED THAT THE ASSESS EE HAS FILED A RECONCILIATION OF TDS PAYABLE BEFORE THE ASSESSING OFFICER VIDE LETTER DT.13.7.2013 (A COPY OF WHICH HAS BEEN PLACED ON RECORD) WHICH SHOULD BE EXAMINED AND VERIFIED BEFORE ANY DISALLOWANCE CAN BE CONTEMPLATED OR MADE UNDER SECTION 40(A)(IA) OF THE ACT. IN THIS VIEW OF THE MATTER WE MODIFY THE DIRECTION OF THE LEARNED CIT LTU TO THE ASSESSING OFFICER FOR MAKING A DISALLOWANCE OFRS.4 47 29 567 UNDER SECTION 40(A)(IA) OF THE ACT TO THE EXTENT THAT THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE ASSESSEE'S CLAIM OF RECONCILIATION OF TDS AND THE PLEA THAT THE GROSS TAX DEDUCTED IN FORM 3CD REPORT IS ERRONEOUS. IF IT IS FOUND AFTER VERIFICATION THAT THE SAME IS ERRONEOUSLY REPORTED AND THE ASSESSEE HAS NOT SHORT REMITTED ANY TDS DEDUCTED DURIN G THE YEAR THEN NO DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT CAN BE MADE. IF HOWEVER THE ASSESSING OFFICER S FINDING AFTER VERIFICATION IS TO THE CONTRARY THEN REQUISITE DISALLOWANCE UNDER SECTION 40(A)(IA) WILL HAVE TO BE MADE. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED. 9. IN THE RESULT THE ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T J U L Y 201 4 . S D / - S D / - ( N.V. VASUDEVAN ) ( JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP