COSMOS ENTERPRISES, MUMBAI v. ITO WD 1(3), MUMBAI

ITA 6625/MUM/2010 | 2007-2008
Pronouncement Date: 15-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 662519914 RSA 2010
Assessee PAN AAEFC2382F
Bench Mumbai
Appeal Number ITA 6625/MUM/2010
Duration Of Justice 3 year(s) 1 month(s)
Appellant COSMOS ENTERPRISES, MUMBAI
Respondent ITO WD 1(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 15-10-2013
Date Of Final Hearing 14-08-2013
Next Hearing Date 14-08-2013
Assessment Year 2007-2008
Appeal Filed On 14-09-2010
Judgment Text
INCOME TAX APPELLATE TRIBUNAL MUMBAI - C BENCH. . .. . / !'# !'# !'# !'# ' ' ' ' BEFORE S/SH. B.R. MITTAL JUDICIAL MEMBER & RAJENDR A ACCOUNTANT MEMBER /. ITA NO.6625/MUM/2010 $ $ $ $ % % % % / ASSESSMENT YEAR-2007-08 COSMOS ENTERPRISES 201 ARIHANT PARSI AGYARI LANE TEMBHI NAKA THANE (W) 400602 VS ITO WD 1(3) VARDAN WAGLE IND.ESTATE THANE (W)MUMBAI- 400604 PAN: AAEFC2382F ( &' / APPELLANT ) ( ()&' / RESPONDENT ) /. ITA NO.6744/MUM/2010 $ $ $ $ % % % % / ASSESSMENT YEAR-2007-08 ITO WD 1(3) VARDAN BUILDING MIDC WIE THANE (W)MUMBAI- 400601 VS COSMOS ENTERPRISES 201ARIHANT BUILDING AGYARI LANETEMBHI NAKA THANE(W) PAN: AAEFC2382F ( &' / APPELLANT ) ( ()&' / RESPONDENT ) $*+ $*+ $*+ $*+ ' ' ' ' / APPELLANT BY: DR. SUNIL U.PATHAK & SHRI SUBODH RATN A PARKHI ! - ' / REVENUE BY : SMT. C. TRIPURA SUNDARI $ $ $ $ - -- - +. +. +. +. / DATE OF HEARING : 21-08-2013 /0% - +. / DATE OF PRONOUNCEMENT : 15-10-2013 $ $ $ $ 1961 - -- - 254 (1) ' '' ' + + + +1+ 1+1+ 1+ '2 '2 '2 '2 ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) PER BENCH: CROSS APPEALS HAVE BEEN FILED BY THE ASSESSING OFFI CER (AO) AND THE ASSESSEE AGAINST THE ORDER DATED 03.06.2013 OF CIT(A)-2 THANE.ASSESSEE HAS RAI SED FOLLOWING GROUNDS OF APPEAL. 1A. THE ID.CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.5 32 95 1841 MADE TO THE RETURNED INCOME OF THE APPELLANT BY DISALLOWING THE CLAIM FOR DEDUC TION U/S 801B (10) OF THE I. TAX ACT IN RESPECT OF PROFIT DERIVED FROM THE HOUSING PROJECT COSMOS PAR K DEVELOPED BY THE APPELLANT AT GHODBUNDER ROAD THANE. 1B. THE LD.CIT (A) ERRED IN NOT APPRECIATING THE FA CT THAT THE HOUSING PROJECT COSMOS PARK DEVELOPED BY APPELLANT FULFILLED ALL THE CONDITIONS IMPOSED BY SECTION 8IB(10)OF THE I. TAX ACT 1961 AND HENCE THE DEDUCTION U/S 801B (10) WAS CORRECTLY CLAIMED. 1C. THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ID. A.O. IN DENYING THE APPELLANT THE BENEFI T OF DEDUCTION U/S 80 IB(10) FOR THE REASON THAT COMPLET ION CERTIFICATE IN RESPECT OF BUILDINGS OF THE HOUS ING PROJECT WAS NOT ISSUED TO THE APPELLANT BY THE LOCA L AUTHORITY IGNORING THE FACT THAT ACTUAL CONSTRUC TION WORK OF ALL THE BUILDINGS WAS FULLY COMPLETED WITHI N THE PRESCRIBED TIME LIMIT AND THAT GRANT OF COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY IS NO T A CONDITION PRECEDENT FOR SUCCESSFUL CLAIM OF DEDUCTION U/S 801B(10). 1D. WITHOUT PREJUDICE TO THE ABOVE IT IS PRAYED TH AT THE ID CIT (A) ERRED IN NOT APPRECIATING THE ARGUMENT OF YOUR APPELLANT THAT AS PER DEVELOPMENT CONTROL RULES FOR THE CITY OF THANE IN ABSENCE OF EXPRESS REFUSAL BY THE LOCAL AUTHORITY WITHIN 21 DA YS OF SUBMISSION OF APPLICATION DOCUMENTS THE COMPLETION CERTIFICATE IS DEEMED TO BE GRANTED TO T HE DEVELOPER AND ACCORDINGLY THE HOUSING PROJECT OF YOUR APPELLANT WAS DEEMED TO BE COMPLETED WITHIN TH E PRESCRIBED TIME LIMIT. 2. THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND AND/OR VARY ANY OF THE ABOVE GROUNDS AT ANY TIME BEFORE THE DECISION OF THE APPEAL. 2 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES ASSESSEE HAS ALSO FILED FOLLOWING ADDITIONAL GROUND S OF APPEAL ALONG WITH AN APPLICATION TO ADMIT THE SAME: ON THE FACTS AND IN LAW THE LD CIT (A) ERRED IN NO T DECIDING ALL THE ISSUES RAISED AND ARGUED IN APPEAL BEFORE HIM RELATING TO THE CLAIM FOR DEDUCTI ON U/S.80IB(10)IN RESPECT OF THE HOUSING PROJECT COSMOS PARK AT THANE. THE ABOVE GROUND IS LEGAL IN NATURE AND ALL THE REL EVANT FACTS ARE ON RECORD AND THUS THE SAME MAY KINDLY BE ADMITTED. WE FIND THAT THE ADDITIONAL GROUND IS ARISING DIREC TLY OUT OF THE ORDER OF THE CIT(A) IS PURE LEGAL IN NATURE.THEREFORE ADDITIONAL GROUND FILED BY THE ASS ESSEE STAND ADMITTED. GROUNDS OF APPEAL RAISED BY THE AO READ AS UNDER:- WHETHER ON FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW HONBLE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.15 02 914/-MADE ON A CCOUNT OF BOGUS PURCHASES FROM 4 PARTIES WITHOUT VERIFYING THE FACTS. 2WHETHER ON FACTS & IN THE CIRCUMSTANCES OF THE CAS E & IN LAW HONBLE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1 50 291/- U/S 69C OF T HE I.T. ACT 1961 FOR EXPENSES ASSUMED TO BE INCURRED ON OBTAINING BOGUS BILLS. 3.THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER OR DELETE ANY GROUNDS OF APPEAL. ITA NO.6625/MUM/2010/AY -2007-08: 2. ASSESSEE AN ASSOCIATION OF PERSON(AOP) ENGAGED IN T HE BUSINESS OF BUILDER AND DEVELOPER FILED ITS RETURN OF INCOME ON 26.10.2007 DECLARING INCOME AT RS. NIL.AO FINALISED THE ASSESSMENT U/S. 143(3) OF THE ACT ON 31.12.2009 DETERMINING THE TOT AL INCOME OF THE ASSESSEE AT RS.5.49 CRORES. DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT ASS ESSEE HAD DECLARED TOTAL TURNOVER OF RS.19.4 CRORES AND NET PROFIT OF RS. 5.32 CRORES THAT IT HA D CLAIMED DEDUCTION U/S.80IB(10) OF THE ACT FOR THE ENTIRE INCOME.HE DIRECTED THE ASSESSEE TO SUBMI T EXPLANATION WITH REGARD TO THE CLAIM MADE U/S.80IB OF THE ACT.AFTER CONSIDERING THE SAME HE H ELD THAT THE HOUSING PROJECT CONSISTED OF 9 BUILDINGS THAT THE COPY OF FIRST SANCTION WAS ISSUE D BY THE MUNICIPAL AUTHORITIES ON 18.02.2003 THAT PROJECT WAS FIRST APPROVED ON OR BEFORE 31.03. 2004 THAT AS PER THE PROVISIONS OF SECTION 80IB(10)(A)(I) OF THE ACT ASSESSEE WAS REQUIRED TO COMPLETE THE CONSTRUCTION OF THE HOUSING PROJECT BEFORE 31.03.2008 THAT IT HAD TO OBTAIN OCC UPATION CERTIFICATE(OC) OF ALL THE 9 BUILDINGS FROM THE LOCAL AUTHORITIES ON OR BEFORE 31.03.2008 THAT THE ASSESSEE HAD NEITHER COMPLETED THE CONSTRUCTION OF PROJECT NOR HAD OBTAINED OC IN RESP ECT OF ALL THE 9 BUILDINGS ON/BEFORE 31.03.2008. AO ISSUED A LETTER ON 06.11.2009 TO THANE MUNICIPAL CORPORATION (TMC) IN THIS REGARD.VIDE ITS LETTER DATED 10.11.2009 TMC INFORMED THE AO THAT TH E PROJECT WAS APPROVED FOR DEVELOPMENT ON 28.02.2003 AND TILL 10.11.2009 OC WAS NOT ISSUED TO THE ASSESSEE.AO HELD THAT ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 80IB(10(A)(I) R. W.EXPLANATION (I) AND (II) BY NOT OBTAINING OC/ COMPLETION CERTIFICATE(CC)OF THE LOCAL AUTHORITIES. ACCORDINGLY VIDE HIS LETTER DATED 31.11.2009 HE ASKED THE ASSESSEE-AOP TO SHOW CAUSE AS TO WHY I TS CLAIM MADE U/S.80IB(10) SHOULD NOT BE DISALLOWED. AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE AO HELD THAT HOUSING PROJECT WAS NOT COMPLETED BEFORE 31.03.2007 THAT DEEMED APPROVA L OF TMC BEFORE 31.03.2008 DID NOT EXIST THAT IT HAD VIOLATED THE PROVISIONS OF THE SE CTION UNDER CONSIDERATION: 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).IT WAS SUBMITTED BEFORE HIM THAT PHASE-I OF THE HOUSING PROJECT WAS COMPLETED BEFORE 31.03.2007 THAT THE ASSESSEE HAD APPLIED FOR OC FROM THE LOCAL AUTHORITY ON 23.1 0.2007 THAT AS PER APPLICABLE DEVELOPMENT CONTROL RULES (DCR) FOR THE CITY OF THANE IN THE AB SENCE OF EXPRESS REFUSAL BY THE LOCAL AUTHORITY WITHIN TWENTY ONE DAYS OF THE SUBMISSION OF NECESSA RY DOCUMENTS SUCH CERTIFICATE WAS DEEMED TO BE GRANTED TO THE DEVELOPER THAT THE CONSTRUCTION CERTIFICATE IN RESPECT OF PHASE-I BUILDINGS WERE ISSUED ON 13.04.2004 AND 04.12.2004 AND NOT ON 08.0 2.2003 THAT ACCORDINGLY THE SAID HOUSING PROJECT WAS REQUIRED TO BE COMPLETED PRIOR TO 31.03 .2009 AND NOT BEFORE 31.03.2008 AS HELD BY 3 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES THE AO THAT THE CONDITION FOR CLAIM TO BE MADE U/S. 80IB(10)WAS THAT HOUSING PROJECT SHOULD BE APPROVED BY THE LOCAL AUTHORITY THAT GRANT OF CC BY THE LOCAL AUTHORITY WAS NOT A CONDITION MANDA -TORY FOR SUCCESSFUL CLAIM TO BE MADE U/S. 80IB OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER FAA HELD THAT SECTION 80IB(10)(A)(EXPL.)(II) MANDATED THAT THE DATE OF CO MPLETION OF CONSTRUCTION OF HOUSING PROJECT HAD TO BE TAKEN AS THE DATE ON WHICH CC WAS ISSUED BY T HE LOCAL AUTHORITY THAT CC IN RESPECT OF 9 BUILDINGS OF THE HOUSING PROJECT OF THE ASSESSEE HA D NOT BEEN GRANTED BY THE LOCAL AUTHORITIES TILL DECEMBER 2009 THAT THE ARGUMENT OF THE ASSESSEE ABO UT DEEMING A GRANT OF CC HAD TO BE IGNORED THAT PROVISIONS OF SECTION 80IB(10)MADE IT CLEAR TH AT ISSUE OF CC WAS MANDATORY THAT ENTIRE EMPHASIS FOR CLAIMING DEDUCTION UNDER THE SECTION W AS BASED ON THE PERIOD OF COMMENCEMENT AS WELL AS THE COMPLETION OF THE HOUSING PROJECT FOR W HICH THE PARTICULAR TIME FRAME HAD BEEN PRESCRI -BED THAT THE HOUSING PROJECT WERE ELIGIBLE FOR DED UCTION U/S.80IB(10) OF THE ACT IF THE DEVELOPER ADHERED TO THE SPECIFIED TIME PERIOD PRESCRIBED IN THE SECTION THAT BECAUSE OF THE FAILURE OF THE ASSESSEE TO OBTAIN THE MANDATORY CC FROM THE LOCAL AUTHORITY IT WAS NOT ELIGIBLE FOR THE DEDUCTION THAT THE ASSESSEE HAD NOT COMPLIED WITH THE BASIC C ONDITION THAT CC ISSUED BY LOCAL AUTHORITY HAD NOT BEEN FILED BY THE ASSESSEE THAT THE LOCAL AUTHO RITY HAD INFORMED THAT CC WAS NOT ISSUED BY IT. FINALLY UPHOLDING THE ORDER OF THE AO FAA DISMISSED THE APPEAL FILED BY THE ASSESSEE. HE FURTHER MENTIONED THAT AO HAD ALSO DISALLOWED DE DUCTION U/S. 80IB(10) ON OTHER GROUNDS ALSO LIKE EXISTENCE OF RESIDENTIAL UNITS ABOUT 1000 SQ. FT. AND THE EXISTENCE OF COMMERCIAL ESTABLISHMENT IN THE PROJECT THAT ASSESSEE HAD VIOLATED THE BASIC CONDITION FOR CLAIMING THE DEDUCTION THAT OTHER GROUNDS WERE INFRUCTUOUS.IN SHORT HE DID NOT ADJUDI CATE THE OTHER ISSUE RAISED BY THE ASSESSEE.HE HELD THAT AS THE MAIN GROUND OF APPEAL HAD BEEN DE CIDED AGAINST THE ASSESSEE SO THERE WAS NO NEED TO DECIDE THE OTHER GROUNDS. 2.3. BEFORE US AUHTORISED REPRESENTATIVE(AR)SUBMITTED TH AT THERE WAS DIFFERENCE BETWEEN THE A LETTER INTIMATING PERMISSION TO CONSTRUCT AND A CO MMENCEMENT CERTIFICATE IN THE CASE UNDER CONSI -DERATION COMMENCEMENT CERTIFICATES WERE ISSUED ON 13.04.2004 AND 04.12.2004 BY TMC THAT PHASE I OF THE PROJECT CONSISTING OF 5 BUILDINGS W AS COMPLETED ON 28.03.2007 THAT AN APPLICATION WAS SUBMITTED TO TMC ON 27.10.2007FOR ISSUING OC TH AT ASSESSEE DID NOT GET ANY REFUSAL LETTER FROM TMC THAT ONLY CONDITION FOR CLAIMING DEDUCTION U/S.80IB WAS COMPLETION OF HOUSING PROJECT IN STIPULATED TIME THAT OC BY LOCAL AUTHORITY WAS N OT MANDATORY THAT AS PER RULE 37 OF DEVELOPME -NT CONTROL RULES 1994(DCR) IF LOCAL AUTHORITY DID NOT REJECT THE APPLICATION MADE BY THE ASSESSEE WITHIN A PERIOD 21 DAYS IT HAD TO BE DEEMED THAT OC WAS ISSUED TO THE ASSESSEE THAT TMC HAD NOT REJECTED THE APPLICATION MADE BY THE ASSESSEE THAT CLUSTER OF BUILDINGS FROM OUT OF A LARGE LAYOUT WOULD BE ELIGIBLE FOR DEDUCTION U/S.80IB(10)OF THE ACT THAT COMPLETION OF CONSTRUCTION OF HOUSING PROJECT WAS SUFFICIENT COMPLIANCE OF SUB SECTION (A )AND THE EXPLANATION THAT HOUSING PROJECTS COMMENCED PRIOR TO 1 ST APRIL 2005 WERE ENTITLED FOR DEDUCTION U/S.80IB INS PITE OF COMMERCIAL AREA BEING IN EXCESS OF LIMITS PRESCRIBED BY SUB-SECTION (D)TO SECTION 80IB (10) THAT HOUSING PROJECT DEVELOPED BY THE ASSESSEE WAS MORE THAN 25 KMS.FROM THE CITY OF MUMBAI THAT UPPER LIMIT OF AREA OF 1000 SQ.FT.OF RESIDENTIAL UNITS WAS NOT APPLICA BLE.THAT PROPERTY TAX LEVIED BY TMC WAS PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION TH AT LEVY OF PROPERTY TAX PROVED COMPLETION OF PROJECT.HE RELIED UPON THE CASES OF VANDANA PROPER TIES (254CTR258) SAROJ SALES ORGANIZATION (SUPRA) MUDHIT M. GUPTA(51DTR217) BRIGADE ENTERPRIS ES PVT. LTD.(119 TTJ 269) MAGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION CO.(150TTJ590) M/S.RAHUL CONSTRUC -TION CO. (ITANO. 1250/PN/ 2009 & 707/PN/2010 DT.30.03.2012)VISWAS PR OMOTERS (P) LTD.(255 CTR 149) RUNWAL MULTI-HOUSING PVT. LTD-(ITA NO.1015 1016 & 1017/PN/ 2011 DT. 21.11.2012). FOR THE PROPOSITION THAT COMPLETION OF CONSTRUCTION OF HOUSING PROJECT IS SUFFICIENT COMPLIANCE WITH SUB-SECTION (A) TO SECTION. 80IB(10) AR RELIED UPON THE CASES OF TARNETAR CORPORATION( 210 TAXMAN 206) RAMSUKH PROPERTIES(138 ITD 278) HIRANA NDANI AKRUTI JV (39 SOT 498) REGENCY MAHAVIR CONSTRUCTION (ITA 1309/PN/2009 & 567/PN/201 0 DT.14.12.2012) CITY DEVELOPMENT 4 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES CORPORATION (ITA 57 & 1287/PN/2010-DT. 22.09.2012) HINDUSTAN SAMUHA AWAS LTD. (ITA 945 TO 950/PN/ 2010 -DT. 20.08.2011) VARUN DEVELOPERS( ITA1624/PN/2011-DT. 22.03.2013)AND SAI KRUPA DEVELOPERS(ITA 3661/M/2011-DT. 14.03.2012) HE ALSO RELIED UPON THE AFFIDAVIT DATED 12.08.2013 FILED BY SH.SURAJ RAMESH PARMAR ONE OF THE PARTNERS OF A FIRM THAT IS ONE OF THE CONSTITUENT O F AOP.HE REFERRED TO AVERMENTS OF THE AFFIDAVIT WHEREIN IT HAD BEEN MENTIONED THAT THAT THE PROJECT COSMOS PARK CONSISTED OF TWO PHASES NAMELY PHASE I AND PHASE II THAT IN PHASE I FIVE BU ILDINGS NAMELY VINCA (1 &2) COPPERLEAF (3 & 4) AND WHITEFIELD (9) WERE CONSTRUCTED THAT SAID PROJECT HAD COMMENCED IN FINANCIAL YEAR 2004- 05 AND WAS COMPLETED IN FINANCIAL YEAR2007-08 THAT DEDUCTION U/S 801B(10)WAS CLAIMED IN RESPE -CT OF PHASE I OF PROJECT -I AND SAME WAS FOR A.Y. 2007-08 THAT CONSTRUCTION OF 5 BUILDINGS COMPRISING OF PHASE I OF COSMOS PARK WAS FULLY COMP LETED AS PER SANCTIONED PLANS THAT AOP HAD APPLIED TO TMC THROUGH ITS ARCHITECT M/S. ARCHETYPE CONSULTANTS (I) PVT. LTD. FOR GRANT OF OC FOR THE SAID 5 BUILDINGS ON 23.10.2007 THAT TMC HAD NOT GRANTED IT THE OC THAT TMC DID NOT ISSUE ANY REJECTION LETTER TO THE AOP THAT IT WAS ORALLY INFORMED THAT THE OC HAD NOT BEEN GRANTED AS IT HAD NOT SATISFIED THE REVISED ULC NORMS OF 2007 THA T GOVERNMENT OF MAHARASHTRA SOUGHT TO CHANGE THE ULC NORMS THROUGH THE RESOLUTION DATED 1 2.04.2007 THAT AS PER CHANGE INTRODUCED AOP WAS EXPECTED TO CONSTRUCT A LARGER NUMBER OF SM ALLER FLATS IN THE PROJECT TO BE HANDED OVER TO GOVERNMENT AUTHORITIES THAT IT WAS NOT POSSIBLE FO R THE AOP AS PROJECT WAS SUBSTANTIALLY COMPLETE BY THAT DATE THAT THE STATE OF MAHARASHTRA HAD ADOP TED THE URBAN LAND (CEILING & REGULATION) REPEAL ACT 1999 ON 29TH NOVEMBER 2007 AND IN VIEW OF THE SAID ULC REPEAL ACT ALL THE PROCEE -DINGS UNDER THE SAID ULC ACT 1976 STOOD ABATED TH AT AFTER THAT GOVERNMENT WAS NOT ENTITLED TO INITIATE ANY ACTION IN FURTHERANCE OF ANY OF THE PR OVISIONS OF THE SAID UILC ACT THAT A WRIT PETITION NO. 5684 OF 2007 WAS FILED IN BOMBAY HIGH COURT NA GPUR BENCH AGAINST THE SAID RESOLUTION DATED 12.04.2007 ON THE GROUND THAT THERE WAS NO PO WER VESTED IN THE STATE GOVERNMENT EITHER U/S 20 21 OR ANY OTHER PROVISIONS OF THE ULC ACT TO NU LLIFY OR CANCEL THE ORDER PASSED OR BUILDING PERMIT ISSUED BY THE PLANNING AUTHORITY UNDER THE M AHARASHTRA REGIONAL AND TOWN PLANNING ACT THAT THE HON.BOMBAY HIGH COURT NAGPUR BENCH VIDE ITS JUDGMENT DT.14.06.2008 QUASHED AND SET ASIDE THE RESOLUTIONS DT.12.4.2007 AND 08.11.20 07 THAT THE AOP HAD CONSTRUCTED ALL THE 5 BUILDINGS IN PHASE I WHICH WAS CONSIDERED AS A PROJ ECT AS PER SANCTIONED PLAN THAT NON ISSUE OF OC BY TMC IN RESPECT OF THE SAID 5 BUILDINGS FOR WA NT OF NOC FROM ULC DEPARTMENT WAS NOT ON ACCOUNT OF ANY FAILURE ILLEGALITY ATTRIBUTABLE TO IT BUT IS ON ACCOUNT OF CHANGE IN POLICY BY THE STA TE GOVERNMENT THAT FLAT OWNERS WERE HANDED OVER POSSES SION OF THE CONSTRUCTED PREMISES OF PHASE I OF COSMOS PARK COMPLEX IN F.Y.2006-07 THAT TMC HAD LEVIED PROPERTY TAX IN RESPECT OF THE UNITS CONSTRUCTED IN THE SAID 5 BUILDINGS.REFERRING TO PA GES 11TO13A 19 AND 20 OF THE PAPER BOOK (PB) HE SUBMITTED THAT DATE OF FIRST SANCTION AND D ATE OF COMPLETION OF CONSTRUCTION OF THE PROJECT IN QUESTION WAS 28.02.2003 AND 23.10.2007 RESPECTIV ELY THAT ALL THE 5 BUILDINGS COMPRISING OF THE PROJECT COSMOS PARK PHASE WERE COMPLETED BEFORE THE TIME STIPULATED BY THE ACT. REFERRING TO THE AVERMENTS OF THE AFFIDAVIT HE STATED THAT RULE RESO LUTION DATED 12.4.2007 AND 08.11.2007 PASSED UNDER ULC ACT WERE QUASHED BY THE NAGPUR BENCH OF HONBLE BOMBAY HIGH COURT THAT RESOLUTION REQUIRED THAT ASSESSEE SHOULD CONSTRUCT CERTAIN NUMBER OF HOUSES FOR WEAKER SECTIONS THAT BY THE TIME RESOLUTION WAS PASSED ASSESSEE HAD COMPLETED THE MAJOR PORTION OF PHASE I THAT AFTER QUASHING OF RESOLUTION ASSESSEE WAS NOT SUPPO SED TO DO ANYTHING. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT PRO JECT WAS NOT COMPLETED IN TIME THAT FIRST DATE OF APPROVAL HAD TO BE TAKEN AS THE DATE OF COMMENCE MENT OF THE PROJECT THAT LOCAL AUTHORITY HAD NOT MENTIONED ABOUT TWO PHASES OF THE PROJECT THAT DEVELOPMENT PLAN WAS ABOUT NINE BUILDINGS THAT EVEN PHASE ONE WAS NOT OVER IN STIPULATED PERI OD THAT SANCTION DATE WAS IMPORTANT THAT OC WAS A MUST FOR CLAIMING EXEMPTION UNDER THE ACT THA T THERE WAS NO APPROVAL FROM TMC THAT AO HAD MADE QUERIES WITH THE LOCAL AUTHORITIES THAT AS SESSEE HAD NOT FULFILLED THE CONDITIONS AS ENVISAGED THE BY THE ACT FOR CLAIMING DEDUCTION U/S .80IB OF THE ACT THAT PROJECT WAS NOT COMPLETED BY 31.03.2008 THAT PROJECT HAS TO BE TAKE N AS A WHOLE THAT DELAY IN OBTAINING OC WAS 5 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES BECAUSE THE ASSESSEE HAD VIOLATED THE PROVISIONS OF ULC ACT THAT ASSESSEE WAS CARRYING OUT JOB OF SUB-CONTRACTOR THAT FOR CLAIMING BENEFIT OF THE SEC TION ASSESSEE SHOULD COMPLY THE PROVISIONS FULLY THAT DEEMING SANCTION CANNOT BE EQUATED WITH CC THAT COMMERCIAL AREA WAS CONSTRUCTED BY THE ASSESSEE WHILE COMPLETING THE HOUSING-PROJECT. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.UNDISPUTED FACTS OF THE CASE UNDER CONSIDERATION CAN BE SUMMARISED AS U NDER: I)ASSESSEE HAD DEVELOPED HOUSING PROJECT IN THE NAM E AND STYLE OF COSMOS PARK COMPRISING OF 9 BUILDINGSVINCA-1-2 COPPERLEAF-I-II IBERIS-I-II MAYF LOWER-I-II &WHITEFIELD AT GHODBUNDER ROAD THANE (W) II)ASSESSEE CLAIMED THAT IT HAD COMPLETED A CLUSTER OF 5 BUILDINGS THAT WAS ELIGIBLE FOR CLAIMING DEDUCTION U/S.80IB OF THE ACT III).AO HELD THAT THE ASSESSEE HAD NOT COMPLETED TH E HOUSING PROJECT IN PRESCRIBED PERIOD THAT IN ABSENCE OF CC FROM THE LOCAL MUNICIPAL AUTHORITIES AND BECAUSE OF CERTAIN OTHER VIOLATIONS LIKE TOTAL AREA OF SOME OF THE FLATS OF THE PROJECT AND EXISTENCE OF COMMERCIAL PREMISES IT WAS NOT ENTITLED TO THE DEDUCTION IV).FAA UPHELD THE ORDER OF THE AO BUT DID NOT ADJU DICATE GROUNDS PERTAINING TO SIZE OF FLATS AND COMMERCIAL AREA. WE FIND THAT DEDUCTION CLAIMED U/S.80IB (10) WAS RE JECTED BY THE FAA ON THE GROUND THAT THE ASSESSEE HAD NOT PRODUCED THE OC OF TMC CERTIFYING COMPLETION OF THE HOUSING PROJECT.WE FIND THAT THE ASSESSEE HAD MADE AN APPLICATION OF LOCAL AUTHORITY I.E.TMC FOR DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT AND TMC HAD ISSUE D SANCTION OF DEVELOPMENT PERMISSION ON 18.2.2003.IT APPEARS THAT THE AO HAD TAKEN THE SAID PERMISSION AS COMMENCEMENT CERTIFICATE.IN OUR OPINION SANCTION OF DEVELOPMENT PERMISSION CANN OT BE EQUATED WITH COMMENCEMENT CERTIFI- CATE. TMC HAD ISSUED COMMENCEMENT CERTIFICATES ON 1 3.04.2004 AND 04.12.2004 FOR CONSTRUCTION OF FIRST PHASE OF THE PROJECT.FROM PERUSAL OF PAGES NO.11TO13/13A OF THE PB IT IS CLEAR THAT SANCTION TO COMMENCE THE WORK-COMMENCEMENT CERTIFIC ATE- WAS ISSUED BY TMC IN THE MONTHS OF APRIL AND DECEMBER 2004.THEREFORE DATES OF COMMENCE MENT OF PROJECT HAS TO BE TAKEN AS 13. 04.2004 AND 04.12.2004.IN OUR OPINION AO WAS NOT JU STIFIED IN HOLDING THAT COMMENCEMENT CERTIFICATE WAS RECEIVED BY THE ASSESSEE 18.2.2003. NOW WE WOULD LIKE TO DISCUSS THE ISSUE OF OC.PAGE NO. 19 AND 20 OF THE PB ARE THE LETTERS DATED 27.03.2007 SENT BY THE ARCHITECT OF THE ASSESSE TO TMC INTIMATING IT THAT FIRST PHASE OF THE PROJECT CONSISTING OF 5 BUILDINGS HAD BEEN COMPLETED.TMC WA S REQUESTED BY THE ASSESSEE TO ISSUE OF OC. AS STATED EARLIER FAA HELD THAT IN ABSENCE OF OC FO RM TMC ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S.80IB OF THE ACT.WE FIND THAT ISSUE OF OBTAINING OC FROM LOCAL AUTHORITY HAS ARISEN BEFORE VARIOUS JUDICIAL FORUMS FROM TIME TO TIME. I N THE CASE OF SAI KRUPA DEVELOPERS (SUPRA)THE ISSUE OF OC WAS DEALT AS UNDER: 8.REGARDING COMPLETION CERTIFICATE RELIANCE WAS P LACED ON THE DECISION OF 1TAT IN THE CASE OF M/S. S AROJ SALES ORGANISATION 115 TTJ 485.IT WAS SUBMITTED THA T AS PER SECTION 80IB(10) WHICH IS APPLICABLE IN RESPECT OF THE HOUSING PROJECTS APPROVED BEFORE 31. 3.2005 THERE WAS NO REQUIREMENT OF OBTAINING COMPLETION CERTIFICATE. RELIANCE WAS PLACED ON THE DECISION OF 1TAT MUMBAI IN THE CASE OF HIRANANDANI AKRUTI VS DC1T 3SOT 498 WHEREIN THE RATIO OF DEC ISION IN THE CASE OF SAROJ SALES CORPORATION WAS FOLLOWED WHICH IS AS UNDER: WE ARE OF THE VIEW THAT WE ARE NOT SUPPLYING ANY W ORDS TO THE STATUTE BUT ARE ONLY HOLDING THAT THE LAW AS IT EXISTED IN THE Y. 2001-05 WHEN T HE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17.11.2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPM ENT IS TO BE APPLIED. THEREFORE THE SUBMISSIONS OF THE LEARNED D.R. IN THIS REGARD CANN OT BE ACCEPTED. WE ARE OF THE VIEW THAT 6 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES THE LEGISLATURE WOULD NOT HAVE INTENDED TO TAKE AWA Y A VESTED RIGHT WITHOUT CLEAR WORDS TO THAT EFFECT IN THE PROVISIONS OF SEC.80IB( 10) AS A MENDED BY THE FINANCE ACT 2005 W.E.F. 01.4.2005.WE THEREFORE HOLD FOLLOWING THE DECISIO N IN THE CASE OF SAROJ SATES ORGANIZATION (SUPRA) THAT THE LAW AS EXISTED IN THE A.Y.2004-0S WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARR YING OUT THE DEVELOPMENT WAS ACCORDED ON 17.11.2003 AND WHEN THE ASSESSEE COMMENCED DEVEL OPMENT IS TO BE APPLIED. 9.AFTER CONSIDERING THE ASSESSEES SUBMISSIONS THE C1T(A) DIRECTED THE AO TO ALLOW DEDUCTION U/S. 80IB (10) OF THE ACT INTER ALIA OBS ERVING AS UNDER: REGARDING FIRST OBJECTION OF THE AO IT IS SEEN FR OM THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE APPELLANT WITH M/S. SAI SAMARTH ENTERPRISES THAT THE APPELLANT HAD THE RIGHTS TO APPROPRIATE THE SALE PROCEEDS. FURTHER IT IS SEEN F ROM THE P&L ACCOUNT THAT THE ASSESSEE HAS ADMITTED THE SALE PROCEEDS OF FLATS/SHOPS CONSTRUCT ED BY THEM AND IT IS NOT A CASE WHERE THE ASSESSEE HAS ADMITTED CONTRACT RECEIPTS RECEIVED FR OM M/S. SAI SAMARTH ENTERPRISES. IF THE ASSESSEE HAD ADMITTED CONTRACT RECEIPTS FROM M/S SA I SAMARTH ENTERPRISES THE TDS PROVISIONS SHOULD BE APPLICABLE AND THEY SHOULD HAV E DEDUCTED TDS WHEREAS AS SEEN FROM THE STATEMENT OF TOTAL INCOME THE ASSESSEE HAS NOT CLAIMED ANY CREDIT FOR TDS. THIS SHOWS THAT THE ASSESSEE WAS NOT A CONTRACTOR AS HELD BY T HE AO. THE ASSESSEE BEING A DEVELOPER IS ENTITLED TO DEDUCTION U/S. 80IB(10). THERE IS NO RE QUIREMENT IN SECTION 801B(10) THAT THE ASSESSEE SHOULD BE OWNER OF THE LAND AND THE SAME I S SUPPORTED BY THE DECISION OF THE ITAT AHEMEDABAD IN THE CASE OF RADHE DEVELOPERS (SUPRA). REGARDING THE NEXT OBJECTION OF THE AO THAT THE PROJECT WAS NOT COMPLETED BEFORE 31.3. 2008 THE CONTENTION OF THE REPRESENTATIVE IS THAT AS THE PROJECT OF THE APPELL ANT WAS APPROVED BEFORE 31.3.2005 THERE WAS NO REQUIREMENT OF OBTAINING THE COMPLETION CERT IFICATE.THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS. IN THE CIRCUMSTANCES I ACCEPT THE PLEA OF THE REPRESENTATIVE THAT DEDUCTION U/S. 80IB(10) CANNOT BE DENIED MERELY BECAUSE THE APPELL ANT DID NOT OBTAIN THE COMPLETION CERTIFICATE ON OR BEFORE 31.3.2008. IN VIEW OF ABOV E I FIND THAT THERE IS NO JUSTIFICATION FOR DENYING DEDUCTION U/S. 801B(10). 10.AGGRIEVED BY THE STAND SO TAKEN BY THE CIT(A) T HE REVENUE IS IN APPEAL BEFORE US. 11.HAVING HEARD THE LEARNED DEPARTMENTAL REPRESENTA TIVE AND GOING TO THE FACTS OF THE CASE AND DETAILED REASONING GIVEN BY THE C1T(A) WE ARE NOT INCLINED TO DISTURB THE WELL REASONED ORDER OF THE CIT(A) WHEREIN HE HAS ALLOWED THE CL AIM FOR DEDUCTION U/S. 80IB(10) TO THE ASSESSEE FIRM. 12.IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. IN THE CASE OF CITY DEVELOPMENT CORPORATION (ITA148 9/PN/2009 AND 1100/PN/2010-AY.2006- 07AND 07-08DATED22.09.2012)ISSUE BEFORE THE B BENCH OF PUNE TRIBUNAL WAS SIMILAR TO THE ISSUE BEFORE US.IN THAT MATTER CC WAS ISSUED BY THE LOCAL AUTHORITY AFTER THE STIPULATED DATE THOUGH THE ARCHITECT OF THE ASSESSEE HAD MADE AN APPLICATION F OR ISSUE OF OC AND HE HAD MENTIONED THAT BUILDING IN QUESTION WAS COMPLET.AO AND FAA HELD TH AT IN ABSENCE OF THE OC ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S.80IB OF THE ACT THO UGH IT HAD MADE APPLICATION WITHIN TIME. DECIDING THE APPEAL TRIBUNAL HELD AS UNDER: 12.WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS.QUITE CLEARLY THE DISPUTE IS WITH REGARD TO THE COMPLETION CERTIFICATE OF BUILDING E HAVING BEEN ISSUED BY THE LOCAL AUTHORITY I.E.PUNE MUNICIPAL CORPORATION ON 5-5-2008. SUB-CLAUSE (I) OF CLAUSE (A) TO SECTION 80-LB(10) REQUIRES THAT THE CONSTRUC TION OF THE PROJECT IN QUESTION IS TO BE COMPLETED ON OR BE FORE 31-3-2008. CLAUSE (II) OF EXPLANATION BELOW SE CTION 80-IB(1O)(A) PRESCRIBES THAT THE DATE OF COMPLETION OF CONSTRUCTION OF HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RES PECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. IN THE PRESENT CASE IT HAS BEEN ISSUED ON 5-5-2008 AND HENCE THE CASE SET UP BY THE REVENU E THAT THE COMPLETION IS BEYOND THE MANDATED DATE OF 31-3- 2008.IN THIS BACKGROUND WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE APPLIED FOR OBTAINING THE COMPLETION CERTIFICATE IN RESPECT OF BUILDING E O N 12-3- 2008. FROM THE DISCUSSION MADE BY THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER WHEREIN THE FACTUAL ASSERTIONS OF THE ASSESSEE HAVE BEEN REPRODUCED IT IS QUITE EVIDENT THAT THE ASSESSEE ASSERTED THAT B EFORE 31-3-2008 THE CONSTRUCTION OF BUILDING WAS COMPLET E IN ALL RESPECTS; THAT ELECTRICAL CONNECTION WAS PROVIDED TO EACH FLAT OWNER; ROAD WAS COMPLETE; WAT ER AND DRAINAGE CONNECTION WAS AVAILABLE; SEWERAGE SYSTEM WAS OPERATING; CLUB HOUSE WAS FUNCTIONAL; ET C. THE ASSESSEE ALSO POINTED OUT THAT THE LOCAL 7 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES AUTHORITY HAD ALSO INITIATED PROPERTY TAX ASSESSMEN TS FOR EACH OF THE FLATS AND THE SAME DEMONSTRATED THAT ALL THE FLATS IN THE BUILDING WERE COMPLETE. IN FAC T IN PARA 6.9 OF THE ASSESSMENT ORDER THE ASSESSI NG OFFICER NOTICED THAT THE FACTS THAT THE FLATS WERE COMPLETED AND POSSESSION GIVEN WILL NOT COME TO TH E RESCUE OF THE ASSESSEE. THE AFORESAID FINDING OF T HE ASSESSING OFFICER SUPPORTS THE ASSERTION MADE BY THE ASSESSEE THAT FACTUALLY SPEAKING CONSTRUCTION OF FL ATS IN BUILDING E WAS ALSO COMPLETE AND POSSESSIO N HANDED OVER TO THE ACTUAL USER/CUSTOMERS PRIOR TO 3 1-3-2008. PERTINENTLY ON THE BASIS OF THE ARCHITEC TS CERTIFICATE CONFIRMING COMPLETION OF CONSTRUCTION O F BUILDING THE ASSESSEE APPLIED FOR THE COMPLETION CERTIFICATE TO THE PUNE MUNICIPAL CORPORATION ON 12 -3-2008. IT HAS BEEN POINTED OUT BEFORE US THAT THE LOCAL AUTHORITY I.E. PUNE MUNICIPAL CORPORATION DID NOT RAISE ANY OBJECTION WITH REGARD TO ASSESSEES APPLICATION AND THE CERTIFICATE FOR BUILDING E WA S THEREAFTER ISSUED ON 5-5-2008. THE MOOT QUESTION IS AS TO WHETHER IN SUCH A SITUATION CAN IT BE SAID THAT THE ASSESSEES PROJECT DID NOT COMPLY WITH THE COND ITION PRESCRIBED IN SUB-CLAUSE (I) OF CLAUSE (A) TO SECTI ON 80-IB(10)OF THE ACT WHEREBY THE CONSTRUCTION WAS TO BE COMPLETED ON OR BEFORE 31-3-2008. SOMEWHAT SIMILAR SITUATION WAS CONSIDERED BY OUR CO-ORDINATE BENCH IN THE CASE OF HINDUSTAN SAMUTHA AWAS LTD. (SUPRA) WHEREIN ALSO ON THE STRENGTH OF ARCHITECTS CERTIFI CATE AN APPLICATION FOR OBTAINING COMPLETION CERTIFICATE WAS MOVED TO THE LOCAL AUTHORITY ON 25-2-2008 BUT IN ACTUALITY THE COMPLETION CERTIFICATE WAS ISSUED BY THE LOCAL AUTHORITY ON 10-10-2008 THE TRIBUNAL NOT ICED THAT THE DELAY IN ISSUING COMPLETION CERTIFICATE WA S NOT ATTRIBUTABLE TO THE ASSESSEE AS NO OBJECTIONS WERE RAISED BY THE LOCAL AUTHORITY. THE TRIBUNAL AFTER C ONSIDERING ITS EARLIER DECISIONS IN THE CASE OF M/S . SATISH BOHRA & ASSOCIATES VS. ACIT IN ITA NO. 713 AND 714/ PN/2010 FOR A.Y. 204-05 AND 2005-06 DATED7-1- 2011M/S. D.K. CONSTRUCTIONS VS. ITO ITA NO.243/PN/2 0LO FOR A.Y. 2006-07; DATED 6-12-2010AND SANGHVI AND DOSHI ENTERPRISES VS. ITO AND OTHERS TA NO. 259 TO 263/MDS/2010 DATED 19-5-2011 FOR A.Y. 2005-06 AND 2006-07(TM) HAS CONCLUDED AS FOLLOWS: FROM THE ABOVE ONCE THIS IS CLEAR THAT THE DATE T HAT APPEARS ON THE ARCHITECTS COMPLETION CERTIFICATE FILED BEFORE THE LOCAL AUTHORITY IS REL EVANT ONE. IN THE INSTANT CASE THE SAID DATE IS 25 -3- 2008 AND THE ASSESSEE FILED REQUISITE FORM BEFORE T HE LOCAL AUTHORITIES INTIMATING THE COMPLETION OF THE PROJECT. THE SAID CERTIFICATE/INTIMATION WAS AC CEPTED BY THE LOCAL AUTHORITY WITHOUT ANY AMENDMENTS OR OBJECTIONS. LOCAL AUTHORITY HAS NOT R AISED ANY QUERIES ON THE QUALITY CONSTRUCTION OF THE BUILDING OR THE COMPLETION OF THE SAME AS PER T HE PLANS APPROVED BY SUCH AUTHORITY. IN SUCH CIRCUMSTANCES IN OUR OPINION THE DELAY IN OBTAINI NG THE COMPLETION CERTIFICATE ON 10-10-2008 IS CERTAINLY NOT ATTRIBUTABLE TO THE ASSESSEE AND OBTA INING THE SAID CERTIFICATE BEFORE 31-3-2008 IS BEYOND THE CONTROL OF THE ASSESSE. ASSESSEES JOB INCLUDES THE COMPLETION OF THE BUILDING IN ACCORDANCE WITH THE APPROVED PLANS AND INTIMATION O F THE SAME TO THE LOCAL AUTHORITY BY WAY OF FILING THE REQUISITE FORMS TOGETHER WITH THE COMPLE TION CERTIFICATE GIVEN BY THE ARCHITECT THE SPECIALIST IN THE MATTER AND THE ASSESSEE HAS DONE HIS JOB SCRUPULOUSLY IN THIS CASE. 1-FOWEVER THE LOCAL AUTHORITY HAS NEITHER OBJECTED TO THE SAID AP PLICATION OF THE ASSESSEE AND THE ARCHITECT BY RAISING ANY OBJECTIONS FOR ACCEPTED BY ISSUE OF SAI D COMPLETION CERTIFICATE TILL 10-10-2008. THEREFORE THE DELAY IN GRANT OF THE SAID CERTIFICATE IS CERTA INLY NOT ATTRIBUTABLE TO THE ASSESSEE. THEREFORE I N OUR OPINION THE ASSESSEE IS NOT DEFAULTER OR THIS ACCO UNT AND THUS THE AC HAS ERRED IN DENYING THE DEDUCTION U/S 80-IB(10) OF THE ACT. ACCORDINGLY TH E ORDER OF THE CIT(A) HAS TO BE REVERSED. THUS THE GROUNDS RAISED IN THE APPEAL ARE ALLOWED 13.THE AFORESAID DECISION OF THE TRIBUNAL IS CLEARL Y APPLICABLE TO THE FACTS OF THE PRESENT CASE ALSO. IN THE PRESENT CASE THE COMPLETION CERTIFICATE WAS APPLIE D FOR BEFORE 31-3-2008 I.E. ON 12-3-2008. IT IS UNDISPUTABLE THAT THE APPLICATION OF THE ASSESSEE H AS BEEN APPROVED BY THE LOCAL AUTHORITY WITHOUT RAI SING ANY AMENDMENT OR OBJECTION AS HAS BEEN ASSERTED BY THE ASSESSEE ALL ALONG AND THE DELAYED ISSUANCE OF THE COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY O N 5-5-2008 ALBEIT AFTER THE MANDATED DATE OF 31-3- 2008 CANNOT BE ATTRIBUTED TO THE ASSESSEE. IN THIS BACKG ROUND OF THE MATTER WE THEREFORE FIND AMPLE FORCE IN THE PLEA OF THE ASSESSEE THAT DENIAL OF DEDUCTION U/S 8 0-IB(10) ON SUCH SCORE IS UNCALLED FOR. IN CONCLUSI ON THEREFORE IN THE INSTANT FACTUAL BACKGROUND WE HO LD THAT THE ASSESSEE HAS COMPLIED WITH THE CONDITIO N OF COMPLETING THE CONSTRUCTION OF THE PROJECT WITHIN T HE MANDATED DATE OF 31-3-2008 EVEN WITH REGARD TO BUILDING E FOLLOWING THE PARITY OF THE REASONING LID DOWN IN THE CASE OF HINDUSTAN SAMUTHA AWAS LTD . (SUPRA). 14.SUB-CLAUSE(I) OF CLAUSE (A) TO SECTION 80-IB(10) OF THE ACT REQUIRES THAT THE UNDERTAKING DEVELOPI NG AND BUILDING A HOUSING PROJECT COMPLETES SUCH CONSTRUC TION OR BEFORE 31-3-2008. IN THE PRESENT CASE ASSESSEE HAS FACTUALLY ASSERTED RIGHT FROM THE STAG E OF ASSESSMENT PROCEEDINGS THAT THE CONSTRUCTION OF BUILDING E WAS COMPLETE IN ALL RESPECTS AS PER SA NCTIONED PLAN AND ALL THE FLATS WERE HANDED OVER TO THE 8 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES ACTUAL USERS/CUSTOMERS PRIOR TO 31-3-2008. IN THE B ACKGROUND OF THE AFORESAID FACTUAL POSITION WHICH H AS REMAINED UNCONTROVERTED IN OUR VIEW ON A PLAIN RE ADING OF SUB-CLAUSE (I) OF CLAUSE (A) TO SECTION 80 - IB(10) THE CONDITION PRESCRIBED THEREIN IS FULFILLE D. INASMUCH AS THE CONSTRUCTION OF BUILDING E WA S COMPLETE BEFORE 31-3-2008. HOWEVER ON THE READING OF CLAUSE (II) OF THE EXPLANATION BELOW SEC. 80- IB(10)(A) OF THE ACT IT EMERGES THAT THE COMPLETIO N OF CONSTRUCTION OF A HOUSING PROJECT IS TO BE TAK EN TO BE THE DATE ON WHICH COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHORITY WHICH IN THE PRESENT CASE I S ISSUED ON 5-5-2008 I.E. BEYOND THE STIPULATED DATE OF 31-3 -2008. THE MOOT QUESTION IS IN CASE THE CONDITION O F COMPLETION CONSTRUCTION CONTAINED IN THE SUBSTANTIV E SECTION 80-IB(10)(A)(I) IS FACTUALLY FOUND TO BE COMPLIED WITH CAN THE CONTENTS OF THE EXPLANATION CLAUSE (II) THEREOF ALTER THE SITUATION? CAN AN EXPLANATION APPENDED TO A SECTION ENLARGE THE SCOP E OF THE MAIN SECTION SO AS TO MAKE IT MORE ONEROUS FOR A TAXPAYER? BE THAT AS IT MAY WE DO NOT DWELL ON T HIS ASPECT ANY FURTHER AS THE ASSESSEE HAS BEEN FO UND TO BE ELIGIBLE FOR NECESSARY RELIEF BECAUSE THE CONDIT ION PRESCRIBED IN SECTION 80-IB(10)(A)(I) OF THE AC T HAS BEEN COMPLIED WITH IN VIEW OF THE STATED PRECEDENTS . WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) O N THIS ASPECT AND HOLD THAT THE ASSESSEE CANNOT BE DENIED THE CLAIM OF DEDUCTION U/S 80-IB(10) ON THE STRENGT H OF NON-ISSUANCE OF THE COMPLETION CERTIFICATE FOR BUIL DING E BY THE PUNE MUNICIPAL CORPORATION BEFORE 3 1- 3-2008 HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE. SIMILARLY IN THE CASE OF HINDUSTAN SAMUHA AWAS LTD .(ITA945-50/PN/2010-AYS.2002-03TO 2007 -08 DTD.30.08.2011 B BENCH OF PUNE TRIBUNAL HAS HEL D THAT THE DATE THAT APPEARED ON THE ARCHITECTS COMPLETION CERTIFICATE FILED BEFORE THE LOCAL AUTHORITY WAS A RELEVANT ONE THAT IN THE CASE OF THE ASSESSEE SAID DATE WAS 25-3-2008 AND T HE ASSESSEE HAD FILED REQUISITE FORM BEFORE THE LOCAL AUTHORITIES INTIMATING THE COMPLETION OF THE PROJECT THAT CERTIFICATE-INTIMATION WAS ACCEPTED BY THE LOCAL AUTHORITY WITHOUT ANY AMENDMENTS OR OB JECTIONS THAT LOCAL AUTHORITY HAD NOT RAISED ANY QUERIES ON THE QUALITY CONSTRUCTION OF THE BUIL DING OR THE COMPLETION OF THE SAME AS PER THE PLANS APPROVED BY SUCH AUTHORITY THAT IN SUCH CIRCU MSTANCES THE DELAY IN OBTAINING THE COMPLETION CERTIFICATE ON 10-10-2008 IS WAS CERTAINLY NOT ATTR IBUTABLE TO THE ASSESSEE AND OBTAINING THE SAID CERTIFICATE BEFORE 31.3.2008 WAS BEYOND THE CONTROL OF THE ASSESSEE THAT ASSESSEES JOB INCLUDED THE COMPLETION OF THE BUILDING IN ACCORDANCE WITH T HE APPROVED PLANS AND INTIMATION OF THE SAME TO THE LOCAL AUTHORITY BY WAY OF FILING THE REQUISI TE FORMS TOGETHER WITH THE COMPLETION CERTIFICATE GIVEN BY THE ARCHITECT THAT THE ASSESSEE HAD DONE H IS JOB SCRUPULOUSLY THAT THE LOCAL AUTHORITY HAD NEITHER OBJECTED TO THE APPLICATION OF THE ASSESSEE THAT THE DELAY IN GRANT OF THE CERTIFICATE WAS CERTAINLY NOT ATTRIBUTABLE TO THE ASSESSEE THAT THE ASSESSEE WAS NOT DEFAULTER ON THIS ACCOUNT AND THE AO HAD ERRED IN DENYING THE DEDUCTION U/S 801A(10) OF THE ACT. WE FIND THAT HONBLE HIGH COURT OF GUJARAT HAD AN O CCASION IN THE CASE OF TARNETAR CORPORATION (SUPRA)TO DEAL WITH THE SAME ISSUE.IN THAT MATTER A SSESSEE GOT APPROVAL FOR DEVELOPMENT OF HOUSING PROJECT FROM THE LOCAL AUTHORITIES BEFORE 01.04.200 4 AND IT COMPLETED THE CONSTRUCTION IN THE YEAR 2006.ON 15.02.2006 IT APPLIED TO THE LOCAL AUTHORIT IES FOR USE OF THE BUILDINGS.FOR TECHNICAL REASONS LOCAL AUTHORITY DID NOT GRANT THE PERMISSIO N UP TO MARCH 2009.AO DISALLOWED THE CLAIM MADE U/S.80IB OF THE ACT.FAA ALLOWED THE APPEAL FIL ED BY THE ASSESSEE AND THE TRIBUNAL UPHELD THE ORDER OF THE FAA.WHEN THE MATTER REACHED TO THE HONBLE HIGH COURT QUESTION TO BE DECIDED BY IT WAS WHETHER AN ASSESSEE;WHO COMPLETES HOUSING PROJECT WELL BEFORE FINAL DATE BUT LOCAL AUTHORITY FOR TECHNICAL REASONS GRANTS BUSINESS USE PERMISSION AFTER SUCH DATE;WILL BE ENTITLED TO DEDUCTION U/S.80IB OF THE ACT ?CONSIDERING THESE FA CTS HONBLE HIGH COURT HELD THAT 6.IN THE PRESENT CASE THEREFORE THE FACT THAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION WELL BEFORE 31ST MARCH 2008 IS NOT IN DOUBT. IT WAS OF COURSE TRUE THAT FORMALLY BU PERMISSION WAS NOT GRANTED BY THE MUNICIPAL AUTHORITY BY SUCH DATE . IT IS EQUALLY TRUE THAT EXPLANATION TO CLAUSE (A) TO SECTION 80-IB(L0) LINKS THE COMPLETION OF TH E CONSTRUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. HOWEVER NOT EVERY C ONDITION OF THE STATUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL COMPLIANCE THEREOF IS EST ABLISHED ON RECORD IN A GIVEN CASE THE COURT MAY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOUL D NOT VITIATE THE VERY PURPOSE FOR WHICH DEDUCTION WAS BEING MADE AVAILABLE. 7.IN THE PRESENT CASE THE FACTS ARE PECULIAR. THE ASSESSEE HAD NOT ONLY COMPLETED THE CONSTRUCTION TWO YEARS BEFORE THE FINAL DATE AND HAD APPLIED FOR BU PERMISSION. SUCH BU PERMISSION WAS NOT 9 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES REJECTED ON THE GROUND THAT CONSTRUCTION WAS NOT CO MPLETED BUT THE SOME OTHER TECHNICAL GROUND. IN THAT VIEW OF THE MATTER GRANTING BENEFIT OF DED UCTION CANNOT BE HELD TO BE ILLEGAL. WE ARE OF THE OPINION THAT FROM THE ABOVE DISCUSSIO N ONE THING IS CLEAR THAT FOR CLAIMING DEDUCTION U/S.80IB THE BASIC CONDITION TO BE FULFILLED IS TO COMPLETE THE HOUSING PROJECT BEFORE A PARTICULAR DATE.GRANT OF CC IS THE PREROGATIVE OF LOCAL AUTHO RITY-ASSESSEE HAS NO CONTROL OVER IT.IF THE LOCAL AUTHORITY DO NOT REJECT THE APPLICATION FILED THE A SSESEE THEN.IN OUR OPINION FOR THE INACTION OF THE LOCAL AUTHORITY A LEGITIMATE CLAIM OF A BENEVOLENT LEGISLATION SHOULD NOT BE REJECTED BY THE AO. HERE WE WOULD LIKE TO REPRODUCE RULE 37 OF DCR(PG. OF PB)THAT READS AS UNDER : THE COMMISSIONER ON ACCEPTANCE OF THE COMPLETION C ERTIFICATE SHALL SANCTION AN OCCUPATION CERTIFICATE IN THE FORM IN APPENDIX K WITHIN 21 DA YS FROM THE DATE OF RECEIPT OF THE COMPLETION CERTIFICATE AFTER WHICH PERIOD IT SHALL BE DEEMED TO HAVE BEEN APPROVED BY THE COMMISSIONER FOR OCCUPATION PROVIDED THE BUILDING HAS BEEN CONSTRUC TED AS PER THE SANCTIONED PLANS. WHERE THE OCCUPATION CERTIFICATE IS REFUSED THE REASONS FOR SUCH REFUSAL SHALL BE COMMUNICATED TO THE OWNER. IN OUR OPINION THE PROVISION OF DEEMING SANCTION WA S INTRODUCED IN THE DCR WITH AN AIM TO SAVE THE COMMON CITIZENS FROM THE INHERENT BUREAUCRATIC DELAY.WE FIND THAT TMC HAD NOT SENT ANY LETTER TO THE ASSESSEE INTIMATING THE REASONS FOR N OT ISSUING CC.IF THE VIOLATION OF RESOLUTION OF DCR ACT WAS THE REASON AFTER THE DECISION OF THE HO NBLE JURISDICTIONAL HIGH COURT THAT REASON ALSO DOES NOT EXITS.IN SHORT IN ABSENCE OF DENIAL B Y THE TMC RULE 37 OF DCR COMES IN PICTURE. AFTER CONSIDERING THE PECULIAR FACTS OF THE CASE; A SSESSEE HAD COMPLETED THE HOUSING PROJECT BEFORE STIPULATED TIME AND IT HAD MADE AN APPLICATION ON 2 3.10.2007 TO TMC TO ISSUE CC THERE IS NOTHING ON RECORD THAT APPLICATION MADE BY THE ASSESSEE FOR ISSUE OF CC WAS REJECTED BY TMC FOR NON COMPLETION OF THE PROJECT OR FOR ANY OTHER VOILATIO N POSSESSION OF THE FLATS WAS HANDED OVER TO THE OWNERS OF THE RESIDENTIAL UNITS TMC HAD RAISED PROP ERTY BILLS FOR THE HOUSING PROJECT ASSESSEE HAS ALSO PAID PROPERTY TAX AMOUNTING TO RS.14.51 LACS ON 14.12.2007 RULE 37 OF DCR PROVIDES FOR DEEMING APPROVAL OF CC; WE ARE OF THE OPINION THAT FAA WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESEE-AOP WAS NOT ENTITLED FOR 80IB(10)DEDUCTION ONLY BECAUSE IT HAD NOT OBTAINED CC FROM THE LOCAL AUTHORITY FOR THE PHASE I OF THE HOUSING PROJECT.OUR VIEWS ARE SUPPORTED BY THE CASES INCLUDING THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT REFERRED ABOVE. THEREFORE REVERSING THE DECISION OF THE FAA WE ALLO W EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. BEFORE PROCEEDING FURTHER WE WOULD LIKE TO CLEARIFY THAT THOUGH WE HAVE HELD THAT CONSIDERING THE PECULIAR FACTS OF THE CASE UNDER CONSIDERATION ASSE SSEE-AOP IS ELIGIBLE FOR DEDUCTION UNDER 80IB OF THE ACT BUT WE HAVE DEALT WITH THE QUANTUM OF DE DUCTION.IN OUR OPINION IT IS THE JOB OF THE OFFICERS OF THE DEPARTMENT.FAA HAS NOT DEALT WITH T HE ISSUES OF SIZE OF SOME OF RESIDENTIAL UNITS AND SIZE OF ALLOWABLE COMMERCIAL USE OF THE HOUSING PROJECT WHILE DECIDING THE APPEAL FILED BY THE ASSESSEE.IN OUR OPINION THESE FACTORS DECIDE THE QU ANTUM OF DEDUCTION AVAILABLE.IN OTHER WORDS WE HAVE ONLY HELD THAT DEDUCTION U/S.80IB COULD NOT BE DENIED TO THE ASSESEE JUST BECAUSE IT HAD NOT OBTAINED CC FROM TMC BUT WHAT SHOULD BE EXACT DEDUC TION HAS TO DECIDED BY THE AO AFTER THE FAA PASSES A SPEAKING ORDER ABOUT THE TWO ISSUES. 3 .REFERRING TO THE ADDITIONAL GROUNDS AR SUBMITTED T HAT THE ASSESSEE HAD RAISED SPECIFIC ISSUES BEFORE THE FAA THAT FAA DID NOT ADJUDICATE THE GROU NDS PERTAINING TO AREA OF COMMERCIAL COMPLEX AREAS OF FLATS AND DEFINITION OF CITY OF MU MBAI THAT ISSUE RAISED BY THE ASSESSEE WERE VITAL AND HAD DIRECT BEARING ON THE RESULT OF THE APPEAL. IN THIS REGARD HE REFERRED TO MUMBAI MUNICIPAL CORPORATION ACT-1988 BOMBAY GENERAL CLAUSE ACT1904 THE GREATER BOMBAY LAWS AND BOMBAY HIGH COURT (DECLARATION OF LIMITS) ACT1945 AND MAHA RASHTRA LAND REVENUE CODE-1966.HE ARGUED THAT CITY OF MUMBAI EXISTED UPTO CHUNABHATTI ON THE EASTERN SIDE.HE REFERRED TO THE MAPS ISSUED BY MUNICIPAL CORPORATION.HE RELIED UPON THE CASES OF SILVER LAND DEVELOPERS PVT. LTD. 10 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES DECIDED BY THE I BENCH OF MUMBAI (2506/MUM/ 2009) D ATED 11.07.2012 AND DECISION OF HONBLE JURISDICTIONAL HIGH COURT DELIVERED IN THE CASE OF MAVAJI MULJI MERCHANT V/S.STATE OF MAHARASHTRA & OTHERS 1993(3) BOM.C.R.220.(BOM.) 3.1. WE FIND THAT ASSESSEE HAD WHILE FILING APPEAL BEFOR E THE FAA HAD AGITATED VARIOUS ISSUE BECAUSE AO HAD DENIED IT THE BENEFIT OF SECTION 80I B(10) NOT ONLY ON ONE GROUND BUT ON VARIOUS GROUNDS.IN OUR OPINION WHILE DECIDING THE APPEAL FA A SHOULD ADJUDICATE ALL THE GROUND THAT ARE RAISED BY AN ASSESSEE.PROVISIONS OF SECTION 250 OF THE ACT PROVIDES THAT WHILE DISPOSING OF THE APPEAL HE WOULD NOT ONLY DETERMINE THE ISSUES RAISE D BEFORE HIM BUT HE WOULD ALSO MENTION THE REASONS FOR ARRIVING AT THE DECISION.THEREFORE BY N OT ADJUDICATING THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE FAA HAS NOT ADHERED TO THE MANDATE OF THE ACT.WE ADMIT THE ADDITIONAL GROUND AS SAME IS OF LEGAL IN NATURE AND WILL HAVE BEARING ON THE OUTCOME OF THE APPEAL. DECIDING THE ADDITIONAL GROUND IN FAVOUR OF THE ASS ESSEE WE DIRECT THE FAA TO DECIDE THE UN- ADJUDICATED GROUNDS OF APPEAL AFRESH AFTER AFFORDIN G A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE-AOP. AS A RESULT APPEAL FILED BY THE ASSESSEE STANDS PAR TLY ALLOWED. ITA NO.6774/MUM/2010 AY2007-08 4. NOW WE WOULD TAKE THE APPEAL FILED BY THE AO.BOTH T HE GROUND OF APPEAL ARE INTER-LINKED.THEY ARE ABOUT DELETION OF AN ADDITION MADE ON ACCOUNT O F BOGUS PURCHASES AND COMMISSION PAID FOR THE SAID PURCHASES.FIRST GROUND OF APPEAL IS ABOUT ADDITION OF RS. 15.02 LACS ON ACCOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE.AO RECEIVED INFORMAT ION FROM THE INVESTIGATION WING MUMBAI THAT ASSESSEE HAD DEBITED CERTAIN EXPENSES ON ACCOU NT OF PURCHASES WHICH WERE ALLEGED TO BE IN NATURE OF ACCOMMODATION ENTRIES.ON THE BASIS OF SAI D INFORMATION AO RECORDED STATEMENT OF ONE SHRI DHARMESH HAKANI ON 19.11.2009. AS PER THE AO S HRI HAKANI STATED THAT HE HAD PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE BY ISSUING BO GUS SALE-BILLS WITHOUT SUPPLYING ANY MATERIAL THAT THE TOTAL AMOUNT INVOLVED IN SUCH TRANSACTION AMOUNTED TO RS. 15.02 LACS. AO ASKED THE ASSESSEE WHY AN ADDITION SHOULD NOT BE MADE TO ITS INCOME FOR THE PURCHASES MADE FROM MR. HAKANI.ASSESSEE REQUESTED THE AO TO ALLOW IT TO CRO SS-EXAMINE THE WITNESS TO ESTABLISH GENUINEN -ESS OF THEIR CLAIM.AO ISSUED SUMMONS TO SHRI HAKAN I BUT NOBODY APPEARED ON THE STIPULATED DATE.AO HELD THAT ASSESSEE HAD MADE BOGUS PURCHASES AND INFLATED ITS EXPENSES TO THE TUNE OF RS. 15.02 LACS. 4.1. AGAINST THE ABVE ADDITION ASSESSEE PREFERRED AN APP EAL BEFORE THE FAA.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R HE HELD THAT ISSUE OF BOGUS PURCHASES REQUIRED DETAILED ANALYSIS AND INVESTIGATION ON THE PART OF THE AO.WITH REGARD TO COPIES OF MAIN STATEMENTS OF FOUR PARTIES THE CONTENTION OF THE AS SESSEE ABOUT MAKING GENUINE PURCHASES AND MAKING PAYMENT BY CHEQUE HAD NOT BEEN CONTROVERTED BY THE AO THAT THE ASSESSEE HAD DISCHARGED ITS ONUS THAT THE AO DID NOT DISCHARGE THE ONUS BY NOT MAKING FURTHER ENQUIRIES WITH THE BANK THAT IN ABSENCE OF ENQUIRY ABOUT WITHDRAWA LS MADE AGAINST THE CHEQUE ISSUED BY THE ASSESSEE AND GIVING BACK OF THE SAID MONEY TO IT AS SESSEE COULD NOT BE HELD GUILTY OF MAKING BOGUS PURCHASE/TAKING BACK THE MONEY IN CASH AFTER ISSUING THE CHEQUE AGAINST THOSE PARTY THAT AO HAD BASED HIS ORDER ONLY ON THE STATEMENT OF SHR I HAKANI THAT IN THE ABSENCE OF CROSS- EXAMINATION OF SHRI HAKANI BY THE ASSESSEE STATEMEN T MADE BY HIM COULD NOT BE AGAINST IT THAT THE AO HAD NOT PRODUCED ANY CORROBORATIVE EVIDENCE ON RECORD TO PROVE HIS ALLEGATIONS THAT WITHOUT AFFORDING ANY OPPORTUNITY OF CROSS-EXAMINAT ION OF THE PERSON IN QUESTION THE AO COULD NOT TAKE ANY UNILATERAL DECISION THAT THE OPPORTUN ITY OF CROSS-EXAMINATION WAS A SINE-QUA-NON OF THE DUE PROCESS OF LAW THAT NO ADVERSE INFERENCE C OULD BE DRAWN AGAINST THE ASSESSEE UNLESS IT WAS AFFORDED DUE OPPORTUNITY OF CROSS-EXAMINATION OF A PERSON WHOSE STATEMENTS WERE USED AGAINST IT. FINALLY HE ALLOWED THE APPEAL OF THE ASSESSEE AND D ELETED THE ADDITION MADE BY THE AO. 11 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES 4.2. BEFORE US DR SUBMITTED THAT SHRI HAKANI WAS OWNER O F FOUR CONCERNS WHO HAD CLAIMED TO HAVE SUPPLIED MATERIAL TO THE ASSESSEE THAT HE ADMI TTED BEFORE THE AO THAT HE HAD ISSUED BOGUS BILLS THAT ASSESSEE HAD NOT PURCHASED ANY MATERIAL FROM HAKANI OWNED ENTITIES.AR SUBMITTED THAT THERE WAS NO EVIDENCE WITH AO TO MAKE ADDITION THAT MATERIAL WAS PURCHASED BY THE ASSESSEE THAT PAYMENT WAS MADE BY THE ASSESSEE TO HAKANI BY CHEQU E THAT THERE WAS NO ALLEGATION THAT ASSESSEE HAD RECEIVED BACK THE MONEY FROM HAKANI THAT ASSESS EE WAS NOT GIVEN A CHANCE TO CROSS EXAMINE THE WITNESS. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.ADDITON WAS MADE BY THE AO ONLY ON THE BASIS OF THE INFORMATION RECEIVE D FROM THE INVESTIGATION WING AND THE STATEMENT OF SH.HAKANI.IT IS ONE OF THE WELL SETTLE D PRINCIPLES OF TAXATION JURISPRUDENCE THAT IF TAX LIABILITY IS TO BE FASTENED TO AN ASSESSEE ON THE B ASIS OF STATEMENT OF A PERSON THEN ASSESEE HAS TO BE GIVEN A CHANCE OF CROSS-EXAMINATION THAT PERSON. THERE IS NO NEED TO AFFORD AN OPPORTUNITY OF CROSS-EXAMINATION IF STATEMENT IS NOT USED AGAINST THE ASSESSE.IN THE CASE UNDER CONSIDERATION AO HAD MADE AN ADDITION HOLDING THAT ASSESSEE HAD MADE BOGUS PURCHASES RELYING UPON THE STATEMENT OF A THIRD PARTY.PRINCIPLES OF NATURAL JUSTICE DEMA ND THAT EVIDENCES COLLECTED BEHIND THE BACK OF THE ASSESSEE HAD TO CONFRONTED TO HIM FOR REBUTTAL. AS THE AO DID NOT ADHERED TO THE SETTLED LEGAL PROCEDURE SO FAA WAS JUSTIFIED IN ALLOWING THE APPE AL FILED BY THE ASSESSEE. THEREFORE UPHOLDING HIS ORDER WE DE CIDE GROUND NO.1 AGAINST THE AO. 5. SECOND GROUND OF APPEAL FILED BY THE AO IS ABOUT AD DITION OF RS. 1.5 LACS MADE BY THE AO U/S. 69C OF THE ACT ON ACCOUNT OF EXPENSES INCURRED BY T HE ASSESSEE FOR OBTAINING THE BOGUS BILLS OF PURCHASES.DURING THE ASSESSMENT PROCEEDINGS AO HELD THAT FOR OBTAINING BOGUS PURCHASE BILLS ASSESSEE-AOP MUST HAVE INCURRED EXPENDITURE @10%OF THE BILL AMOUNT.HE MADE AN ADDITION OF RS.1.5LAKHS TO THE TOTAL INCOME OF THE ASSESSEE.IN THE APPELLATE PROCEEDINGS.FAA DELETED THE SAID ADDITION HOLDING THAT AS FACT OF PURCHASE OF BOGUS BILLS WAS NOT ESTABLISHED SO NO ADDITION COULD BE MADE. 5.1. BEFORE US DR AND AR MADE SUBMISSIONS THAT WERE MADE WITH REGARD TO GROUND NO.2.WE HAVE ALREADY UPHELD THE ORDER OF THE FAA WHILE DECIDING EARLIER GROUND SO FOLLOWING THE SAME GROUND NO.2 IS ALSO DECIDED AGAINST THE AO.APPEAL FILED BY THE AO IS REJECTED. AS A RESULT APPEALS FILED BY THE ASSESSEE AND THE A O STAND PARTLY ALLOWED AND DISMISSED RESPECTIVELY. * +3 $*+ 4 $ - . 5 6 - 1 7 8232 9 ' !: 4 $!: - !+ ;< . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER 2013 . '2 - /0% ' 7 =$ 15 >? : 2013 0 - 1 @ SD/- SD/- ( . A A A A . . B.R.MITTAL ) ( !'# !'# !'# !'# / RAJENDRA ) / JUDICIAL MEMBER ' ' ' ' /ACCOUNTANT MEMBER / MUMBAI =$ /DATE: 15 TH OCTOBER 2013 SK '2 '2 '2 '2 - -- - (+B (+B (+B (+B C'B%+ C'B%+ C'B%+ C'B%+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 12 ITA NO. 6625/MUM/2010 COSMOS ENTERPRISES 3. THE CONCERNED CIT (A) / D E 4. THE CONCERNED CIT / D E 5. DR C BENCH ITAT MUMBAI / BF1 (+$ . . . 6. GUARD FILE/ 1 G )B+ )B+ )B+ )B+ (+ (+(+ (+ //TRUE COPY// '2$ / BY ORDER H / ; ! DY./ASST. REGISTRAR /ITAT MUMBAI