The ACIT, Central Circle-1,, Surat v. M/s. Ambica Enterprise,, Surat

ITA 679/AHD/2014 | 2011-2012
Pronouncement Date: 27-10-2016 | Result: Dismissed

Appeal Details

RSA Number 67920514 RSA 2014
Assessee PAN AAMFA0316P
Bench Ahmedabad
Appeal Number ITA 679/AHD/2014
Duration Of Justice 2 year(s) 7 month(s) 22 day(s)
Appellant The ACIT, Central Circle-1,, Surat
Respondent M/s. Ambica Enterprise,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 27-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 27-10-2016
Date Of Final Hearing 30-09-2016
Next Hearing Date 30-09-2016
Assessment Year 2011-2012
Appeal Filed On 07-03-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV JM & SHRI MANISH BORA D AM. ITA NO.679/AHD/2014 ASST. YEAR: 2011-12 ACIT CC-1 SURAT. VS. M/S AMBICA ENTERPRISE WESTERN BUSINESS PARK NR. SOUTH GUJARAT UNIVERSITY VESU CHAR RASTA SURAT. APPELLANT RESPONDENT PAN AAMFA 0316P APPELLANT BY SHRI JAMES KURIEN SR.DR RESPONDENT BY SHRI RASESH SHAH AR DATE OF HEARING: 30/9/2016 DATE OF PRONOUNCEMENT: 27/10/2016 O R D E R PER MANISH BORAD ACCOUNTANT MEMBER . THIS APPEAL OF REVENUE FOR ASST. YEAR 2011-12 IS D IRECTED AGAINST THE ORDER OF LD. CIT(A)-II AHMEDABAD DATE D 30/12/2013 VIDE APPEAL NO.CIT(A)-II/CC-1/30/2013-14 PASSED AGAINST ORDER U/S 143(3) OF THE IT ACT 1961 (IN SHORT THE ACT) FRAME D ON 22/03/2013 BY ACIT CC-1 SURAT. FOLLOWING GROUNDS HAVE BEEN RAIS ED IN THIS APPEAL :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1 14 00 000/- BEING DEDUCTION U/S. 80IB OF THE I.T. ACT. ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 2 (2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE ON ACCOUNT OF D ISALLOWANCE OF DEDUCTION U/S. 80IB(10) IGNORING THE FACT THAT THE ASSESSEE DID NOT PRODUCE ANY SUPPORTING EVIDENCES WHICH CAN PROVE TH AT THE ON-MONEY WAS ACTUALLY RECEIVED FROM THE PROJECT OF THE ASSES SEE. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) HAS OUGHT TO HAVE UPHELD THE ORDER U/S. 143(3)C OF THE ACT. (4) IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD.CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CONSTRU CTION. A SEARCH WAS CARRIED OUT U/S 132 OF THE ACT AT THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE INFRASTRUCTURE GROUP OF CASES ON 19.01.2011 AND THE CASE OF ASSESSEE WAS ALSO COVERE D IN THE SAID ACTION. NOTICE U/S 142(1) OF THE ACT WAS ISSUED ON 13.02.2012 AND IN RESPONSE TO SAID NOTICE ASSESSEE FURNISHED ITS RETU RN OF INCOME ON 15.02.2012 DECLARING TOTAL INCOME AT RS.6 86 980/-. THE ASSESSEE HAS ALSO OFFERED ADDITIONAL UNDISCLOSED INCOME OF R S.1 14 00 000/- IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 142(1) O F THE ACT AND CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT OF RS.1 14 00 000 /-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143 (2) OF THE ACT WAS ISSUED AND DULY SERVED ON THE ASSESSEE. ON EXAMINAT ION LD. ASSESSING OFFICER OBSERVED THAT DURING THE SEARCH O PERATION U/S.132 OF THE IT ACT 1961 ONE SMALL POCKET DIARY (I.E. K. P DIARY) WAS RECOVERED FROM THE RESIDENCE OF SHRI MANISH KANTILA L SHAH (I.E. 41/42 SHANTI PALACE SOCIETY RANDER ROAD SURAT) AND SEIZ ED AS PER BF &. S (PAGE 1 TO 7). ON CONFRONTATION HE HAS ADMITTED I N HIS STATEMENT THAT PAGES OF DIARY CONTAINS THE ENTRIES OF TAXABLE INCOME RELATING TO ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 3 VARIOUS FIRMS AND NAMES OF THE PROJECTS ARE ALSO WR ITTEN IN THE PAGES OF THE SAID DIARY . SHRI MANISH KANTILAL SHAH ALSO ADMITTED THAT THESE ENTRIES ARE RECORDED IN CODES BY DELETING 2 ZEROS F ROM THE END OF ACTUAL FIGURES AND SAME ARE NOT RECORDED IN THE BOO KS OF ACCOUNT. HE HAS OFFERED THE UNACCOUNTED INCOME OF RS.23.15 CROR ES FOR TAXATION FOR THE A.Y 2011-12 IN HANDS OF VARIOUS FIRMS/CONCE RNS. DETAILS OF OFFERED INCOMES ARE AS UNDER:- SR. PAGE NAME OF THE NAME OF THE PROJECT TOTAL TOTAL AMOUNT NO NO. CONCERN AMOUNT [ACTUAL] [CODED] 1 1 ANANT ENTERPRISE WESTERN SHETRUNJAY 325000 3 25 00 000 2 2 AVANI CORPORATION WESTERN SOMCHINTAMANI 785000 7 85 00 000 3 3 AMAR DEVELOPER WESTERN SHIKHARJI 275000 2 75 00 000 4 4 AMBICA DEVELOPER WESTERN BUSINESS PARK & WESTERN RESIDENCY 165000 1 65 00 000 5 5 ADITYA DEVELOPERS VIRBHADRA AVENUE 151000 1 51 00 000 6 6 AMBICA ENTERPRISES WESTERN HEIGHT 114000 1 14 00 000 7 7 AMBICA DEVELOPER WESTERN BUSINESS PARK & WESTERN RESIDENCY 500000 5 00 00 000 TOTAL 2315000 23 15 00 000 3. LD. ASSESSING OFFICER WHILE FRAMING THE ASSESSME NT ORDER WAS OF THE VIEW THAT AS THE ASSESSEE TOTALLY FAILED IN PROVING THAT THE IMPUGNED OFFERED UNDISCLOSED INCOME AT RS.1 14 00 0 00/- FROM THE PROJECT WESTERN HEIGHT HAS BEEN EARNED AS ON MONE Y AND ALSO NO ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 4 DETAILS REGARDING NAMES AND ADDRESSES OF PURCHASERS SCHEME FLAT NO. AREA OF FLAT DATE OF SALE DEED AMOUNT OF SAL E DECLARED AMOUNT OF ON MONEY RECEIPT AND DATE-WISE DETAILS OF ON MONEY WERE FURNISHED. AS SUCH EVEN WHEN THE PROJECT WESTERN HE IGHT IS ELIGIBLE PROJECT FOR DEDUCTION U/S 80IB(10) BUT DEDUCTION U/ S 80IB(10) WAS DENIED FOR THE ON MONEY DISCLOSED AT RS.1.15 CROR ES. 4. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) AND SUCCEEDED IN FULL AS LD. CIT(A) ALLOWED THE DEDUCTI ON U/S 80IB(10) OF THE ACT FOR THE ON MONEY AT RS.1.14 CRORES RELYIN G ON THE JUDGMENT OF HON. JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. SUMAN PAPER & BOARDS LTD. 314 ITR 119 DECISION OF CO-ORDINATE BENCH IN THE CASE OF AC IT. CENTRAL CIRCLE-1 SURAT VS M/S. SHRE E PADMAVATI DEVELOPERS (ITA.NO.268/AHD/2010) AND ANOTHER DECISI ON OF THE CO- ORDINATE BENCH IN THE CASE OF ACIT VS. VIRAT GEMS ( LTA.NO.3541 & 3756/AHD/2008) & OTHERS BY OBSERVING AS UNDER :- 6 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER T HE WRITTEN SUBMISSIONS MADE BY THE LEARNED A.RS. AND THE OTHER MATERIAL AVAILAB LE ON RECORD. IT IS OBSERVED THAT THE APPELLANT FIRM WAS ENGAGED IN THE CONSTRUC TION ACTIVITY AND THE PROJECT 'WESTERN HEIGHTS' WAS ITS OWN PROJECT IN WHICH SEVE RAL UNITS WERE ALREADY SOLD. DURING THE COURSE OF SEARCH U/S.132. SHRI MANISH K. SHAH THE MAIN PARTNER OF THE APPELLANT FIRM AND OTHER CONCERNS OF THE GROUP ADM ITTED RS.1.14 CRORES AS UNACCOUNTED INCOME OF THE SAID PROJECT AND THE TOTA L DISCLOSURE (INCLUDING THE DISCLOSURE MADE IN THE APPELLANT FIRM) WAS RS.23.15 CRORES WHICH WAS BASED ON THE ENTRIES OF A SMALL POCKET DIARY NO.BF & S FOUND AND SEIZED DURING THE COURSE OF SEARCH ACTION. THE ASSESSING OFFICER AS WELL AS THE LEARNED A.RS. HAVE DISCUSSED THE FULL BIFURCATION OF THE ENTIRE DISCLO SURE AND THE NAMES OF THE PROJECTS FOR WHICH THE DISCLOSURE WAS MADE. 6.1 IT HAS BEEN STATED BY THE A.RS. THAT NET PROFIT OF RS. 2 81 91 1227-WAS SHOWN BY THE APPELLANT FIRM IN THE RETURN OF INCOME IN TH E P&L ACCOUNT WHICH INCLUDED THE ADDITIONAL UNACCOUNTED INCOME OF THE PROJECT 'W ESTERN HEIGHTS' OF RS. 1.14 CRORES. THE APPELLANT FIRM HAD CLAIMED TOTAL DEDUCT ION OF RS. 2 75 04 147/- ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 5 U/S.SOIB INASMUCH AS IT HAD EARNED THE PROFIT FROM INFRASTRUCTURE PROJECTS WHICH WAS ELIGIBLE FOR DEDUCTION U/S.80IBOFTHEL.T.ACT 6.2 IT HAS BEEN FURTHER STATED BY THE LEARNED A.RS. THAT THE ADDITIONAL INCOME DECLARED WAS PART OF THE REGULAR BUSINESS INCOME OF THE APPELLANT AND IT WAS NOT FROM ANY OTHER SOURCES. THE DISCLOSURE OF THE ADD ITIONAL INCOME HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER AND HE HAS GRANTED THE DEDUCTION U/S.80IB(10) IN RESPECT OF REGULAR INCOME OF THE PROJECT EXCEPT IN RESPECT OF ADDITIONAL INCOME DISCLOSED DURING THE COURSE OF SEARCH/SURVEY ACTION . 6.3 IT IS NOTICED THAT THE APPELLANT FIRM WAS ENGAG ED IN THE BUSINESS OF DEVELOPMENT AND BUILDING OF HOUSING PROJECTS AND NO OTHER BUSINESS ACTIVITY WAS NOTED BY THE ASSESSING OFFICER. THE ONLY SOURCE OF INCOME OF THE APPELLANT FIRM IS STATED TO BE THE INCOME FROM CONSTRUCTION OF THE PR OJECT CALLED 'WESTERN HEIGHTS' AND THE SAID PROJECT IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. IT IS SURPRISING THAT THE ASSESSING OFFICER HAS DISALLOWE D THE DEDUCTION U/S.80IB IN RESPECT OF THE SAID PROJECT ONLY TO THE EXTENT OF R S.1.14 CRORES WHICH WAS DECLARED DURING THE SEARCH WHEREAS THE SAID DEDUCTI ON IN RESPECT OF REGULAR INCOME OF THE PROJECT OF THE APPELLANT FIRM HAS BEE N ALLOWED. 6.4 THE ASSESSING OFFICER HAS NOT TREATED THE DECLA RED INCOME AS BUSINESS INCOME ON THE BASIS OF THE CONTENTS OF THE DIARY AN D STATED THAT THE NAMES OF THE PERSONS AND THE DETAILS OF 'ON MONEY' RECEIPT FLAT- WISE WAS NOT RECORDED IN THE SAID DIARY. HE HAS IGNORED THE FACT THAT ENTIRE UND ISCLOSED INCOME WAS BASED ON THE ENTRIES OF THE SAME DIARY ONLY WHICH MENTIONED MONTHWISE DETAILS OF 'ON MONEY' RECEIPT OF THE PROJECT 'WESTERN HEIGHTS' WHI CH WAS HANDLED BY THE APPELLANT FIRM. IT HAS NOT BEEN ESTABLISHED BY THE ASSESSING OFFICER THAT THE APPELLANT FIRM HAD ANY OTHER SOURCE OF INCOME EXCEP T THE INCOME FROM THE SAID PROJECT WHICH WAS THE INCOME CATEGORIZED UNDER 'BUS INESS & PROFESSION'. 6.5 IT IS ALSO OBSERVED FROM THE STATEMENT OF SHRI MANISH K.SHAH THE MAIN PARTNER OF THE APPELLANT FIRM THAT IN REPLY TO Q.N O.15 OF THE STATEMENT RECORDED U/S.132(4) DURING THE SEARCH HE HAS CLEARLY STATED THAT ON THE PAGES OF DIARY NAME OF THE FIRM AND THE PROJECT NAME WAS CLEARLY W RITTEN AND THE NET TAXABLE INCOME EARNED FROM THAT PROJECT ONLY MONTH-WISE WA S ENTERED ON THAT PAGE AND ON DIFFERENT PAGES SIMILAR DETAILS WERE WRITTEN; I .E. ON PAGE NO.1 TO 7 OF THE SAID DIARY THE RECORD OF NET TAXABLE INCOME WHICH WAS U NACCOUNTED AND NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS WAS WRITTEN. HE A LSO EXPLAINED THE DECODING FORMULA FOR CODED VERSION OF THE FIGURES ENTERED IN TO THE DIARY. HE HAS ALSO CLEARLY ADMITTED IN HIS STATEMENT THAT THE DECLARED INCOME WAS UNACCOUNTED AND UNDISCLOSED INCOME FOR F.Y.2010-11 I.E. A.Y.2001-12 . 6.6 IT IS ALSO NOTICED THAT THOUGH IN THE SAID STAT EMENT THE APPELLANT HAD STATED THAT NO DEDUCTION U/S.80IB WILL BE CLAIMED ON THIS DECLARED INCOME HOWEVER IT IS SEEN THAT THE SAID DEDUCTION HAS BEEN CLAIMED BY THE APPELLAN T FIRM IN THE RETURN ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 6 OF INCOME. IT HAS ALSO BEEN STATED BY THE LEARNED A .RS. THAT THE DEVELOPMENT AND CONSTRUCTION ACTIVITY HAPPENED TO BE THE ONLY SOURC E OF INCOME OF THE APPELLANT FIRM AND THEREFORE THE AMOUNT DISCLOSED CONSEQUENT UPON THE SEARCH/SURVEY PARTAKES THE CHARACTER OF BUSINESS INCOME AND THERE FORE THE SAME IS ELIGIBLE FOR DEDUCTION U/S.80IB OF THE ACT. MOREOVER THE AMOUNT DISCLOSED BY THE APPELLANT FIRM HAD DIRECT AND PROXIMATE CONNECTION WITH THE N ORMAL BUSINESS OF THE CONSTRUCTION ACTIVITIES AND HENCE THE CLAIM OF DEDU CTION U/S.80IB OF THE ACT WAS RIGHTLY MADE IN THE RETURN OF INCOME FOR WHICH THE APPELLANT IS ENTITLED. 6.7 ON EXAMINATION OF THE STATEMENT AND THE OTHER M ATERIAL ON RECORD SHOWS THAT EVEN THOUGH SHRI SHAH HAD STATED THAT HE WOULD NOT CLAIM DEDUCTION U/S.80IB BUT SINCE THE CLAIM HAS BEEN MADE IN THE RETURN OF INCO ME AND DURING THE ASSESSMENT PROCEEDINGS THE CLAIM WAS REQUIRED TO BE EXAMINED BY THE ASSESSING OFFICER IN PROPER PERSPECTIVE AND THE DEC ISION BE TAKEN ON THE BASIS OF THE FACTS OF THE CASE. HERE IT IS OBSERVED THAT TH E ASSESSING OFFICER HAS NOT DISCUSSED THIS ASPECT AND HAS SIMPLY HELD THAT SINC E THE EXACT DETAILS OF FLAT NUMBER NAME OF THE PERSON 'ON MONEY' RECEIPT FLAT WISE WAS NOT MENTIONED IN THE SAID DIARY THE ENTRIES MENTIONED IN THE DIARY DID NOT INDICATE TOWARDS THE 'BUSINESS INCOME' AND THE SAID INCOME WAS 'INCOME F ROM OTHER SOURCES' ON WHICH THE DEDUCTION U/S.80IB WAS NOT ALLOWABLE. 6.8 HOWEVER IN MY CONSIDERED VIEW THE ENTRIES IN THE DIARY CLEARLY INDICATED ABOUT UNACCOUNTED NET TAXABLE INCOME OF DIFFERENT F IRMS OF THE APPELLANT GROUP INCLUDING THE APPELLANT FIRM FROM THEIR RESPECTIVE PROJECTS AND IT WAS MENTIONED IN THE DIARY ITSELF THAT THE 'WESTERN HEIGHTS' WAS THE PROJECT OF THE APPELLANT FIRM AND THE SAID INCOME WAS TO BE CATEGORIZED AS 'INCOM E FROM BUSINESS'. 6.9 AS REGARDS THE ALLOWABILITY OF DEDUCTION U/S.80 IB SINCE THE SAID PROJECT WAS THE ONLY SOURCE OF INCOME FOR THE APPELLANT FIRM IN THE RELEVANT YEAR AND THE ASSESSING OFFICER HAS NOT ESTABLISHED THAT THE APPE LLANT HAD ANY OTHER SOURCE OF INCOME EXCEPT THE INCOME FROM THE SAID PROJECT WHIC H WAS OTHERWISE ENTITLED FOR DEDUCTION U/S.80IB OF THE ACT. IN MY CONSIDERED VIE W THE APPELLANT WAS ENTITLED TO THE SAID DEDUCTION U/S.SOLB ON THE DECLARED INCO ME ALSO. AS MENTIONED EARLIER THE ASSESSING OFFICER HAS ALREADY ACCEPTED THE OTHER INCOME DECLARED BY THE APPELLANT IN THE RETURN OF INCOME AND THE DEDUC TION U/S.80!B WAS ALSO ALLOWED ON RS 1 67 91 122/- [RS.2 81 91 122/- I.E. THE TOT AL CLAIM U/S.80IB MINUS RS. 1 14 00 000/-WHICH WAS DISALLOWED]. 6.10 IT IS ALSO OBSERVED THAT THE JUDGEMENT OF HON' BLE GUJARAT HIGH COURT IN THE CASE OF- CIT VS. SUMAN PAPER & BOARDS LTD. 314 ITR 119 IS R ELEVANT TO THE FACTS OF THE CASE HOLDING THAT - 'THE ASSESSEE IS ENTITLED TO CLAIM OF DEDUCTION U/S.80IB OR 801A IN BLOCK ASSESSMENT OR BLOCK PERIOD AND IT WOULD BE OPEN TO REVENUE TO SEEK ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 7 PROCEDURAL COMPLIANCE TO PROVISIONS OF SECTION 801( 7) BY MOVING TRIBUNAL IN THIS REGARD'. FOLLOWING COURT DECISIONS ARE ALSO RELEVANT TO THE FACTS OF THE CASE:- I) HON'BLE AHMEDABAD ITAT DECISION IN THE CASE OF AC IT. CENTRAL CIRCLE- 1 SURAT VS M/S. SHREE PADMAVATI DEVELOPERS (ITA.NO .268/AHD/2010 HERE THE HON'BLE BENCH HAS REFERRED TO THE JUDGEMEN T OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SUMAN PAPER & BOA RDS LTD. 314 ITR 119 (SUPRA) AND HELD THAT 'SINCE THE AMOUNT DISCLOSED WAS PART OF SALE PROCEEDS RECEIVED IN CASH AT THE TIME OF BOOKING OF FLATS AND THEREFORE THE AMOUNT DISCLOSED CONSEQUENCE UPON SEARCH PARTAKES T HE CHARACTER OF BUSINESS INCOME AND THE SAME IS ELIGIBLE FOR DEDUCT ION U/S.80IB/80LA OF THE ACT'. II) HON'BLE AHMEDABAD ITAT DECISION IN THE CASE O F ACIT VS. VIRAT GEMS (LTA.NO.3541 & 3756/AHD/2008(ORDER DATED 15.11.2010 ) 'THAT THE INCOME DISCLOSED BY THE ASSESSEE FIRM DUR ING THE COURSE OF SURVEY PROCEEDINGS IS A BUSINESS INCOME AND NOT INC OME FROM OTHER SOURCES AS THE ADDITIONAL INCOME HAS DIRECT NEXUS W ITH THE BUSINESS OF THE ASSESSEE AND THE ASSESSEE FIRM IS NOT CARRYING ON ANY OTHER BUSINESS AND HAS NO OTHER SOURCE OF INCOME.' III) DEBI BURMAN VS. CIT (1994) T L R 452 (CAL) - 'IT WAS HELD THAT THE ADDITION MADE ON THE GROUND OF RECEIPT OF EXTRA SAL E CONSIDERATION FROM THE BUYERS WHO BOOKED THE FLATS CONSTRUCTED BY THE ASSESSEE IS TO BE TREATED AS BUSINESS INCOME.' IV) CIT V/S SETH DEVELOPERS PVT. LTD. APPEAL NO. 3724/2010 DT 27-7-2012 HELD THAT INCOME DISCLOSED DURING THE SEARCH IS TO BE TREATED AS BUSINESS INCOME AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION' V) D.R. CONSTRUCTIONS V/S I.T.O. [ITA NO. 2735/A HD/2010:- THE HON'BLE I.T.A.T. BENCH HELD THAT:- 'IN OUR CONSIDERED VIEW RECEIPT OF ON-MONEY IS PART AND PARCEL OF MONIES RECEIVED ON SALE OF FLAT BY CHEQUE........' 6.11 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES A ND THE LEGAL POSITION AS CITED ABOVE I AM OF THE CONSIDERED VIEW THAT THE UNACCOU NTED INCOME DECLARED BY THE APPELLANT FIRM DURING THE COURSE OF SEARCH/SURVEY HAS TO BE HELD AS 'BUSINESS INCOME' ON WHICH THE DEDUCTION U/S.80IB IS TO BE AL LOWED AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE SAME T REATING THE SAME AS 'INCOME FROM OTHER SOURCES'. THE DISALLOWANCE IS HEREBY DEL ETED. THE APPELLANT GETS THE RELIEF. ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 8 5. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 6. LD. DR VEHEMENTLY ARGUED AND SUPPORTED THE ORDER OF ASSESSING OFFICER. 7. ON THE OTHER HAND LD. AR REITERATED THE SUBMISS IONS MADE BEFORE LD. CIT(A) AND ALSO SUBMITTED THAT OUT OF UN ACCOUNTED INCOME AT RS.23.15 CRORES OFFERED DURING THE COURSE OF SEA RCH AS EXHIBITED IN THE CHART AT PAGES 2 & 3 OF THE ASSESSMENT ORDER T HE ONLY SUM OF RS.1.14 CRORES RELATED TO THE ASSESSEE I.E. M/S AMB ICA ENTERPRISE FOR THE PROJECT WESTERN HEIGHT BEING ELIGIBLE PROJECT F OR DEDUCTION U/S 80IB(10) OF THE ACT. LD. AR FURTHER SUBMITTED THAT THE REMAINING UNACCOUNTED INCOME OTHER THAN RS.1.14 CRORES I.E. R S.22.01 CRORES HAS BEEN OFFERED TO TAX BY RESPECTIVE ASSESSEES AND NO DEDUCTION HAS BEEN CLAIMED U/S 80IB(10) OF THE ACT AND DUE TA XES HAVE BEEN PAID. LD. AR FURTHER IMPRESSED UPON THE FACT THAT THE IMPUGNED DIARY ON THE BASIS OF WHICH THE UNACCOUNTED INCOME WAS OF FERED TO TAX HAS BEEN ACCEPTED BOTH BY THE ASSESSEE AS WELL AS THE R EVENUE EXCEPT FOR THE ON MONEY RECEIVED IN WESTERN HEIGHT PROJE CT AT RS.1.15 CRORES. FURTHER ASSESSEE IS NOT IN ANY OTHER BUSINE SS ACTIVITY OTHER THAN THE DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT AS STATED IN FORM NO.3CD OF TAX AUDIT REPORT. IN THE STATEMENT RECORD ED U/S 132(4) OF THE ACT PARTNER OF THE ASSESSEE FIRM HIMSELF STATE D THAT ABOUT THE FIGURES IN THE SEIZED DAIRY PERTAINING TO THE ASSES SEE FROM WHICH HAS UNDERTAKEN THE PROJECT WESTERN HEIGHT. THIS STATEME NT U/S 132(4) OF THE ACT WAS RECORDED DURING SEARCH AND THEREFORE HA S GOT EVIDENTIAL VALUE. REVENUE HAS NOT BROUGHT ON RECORD ANY MATERI AL EVIDENCE TO ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 9 PROVE THAT THE ON MONEY WAS NOT FROM WESTERN HEIG HT AS NO SUCH EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH. LD. AR REFERRED AND RELIED ON THE DECISION OF CO-ORDINATE BENCH IN ITA NO.2610/AHD/2014 FOR ASST. YEAR 2010-11 IN THE CASE OF M/S NILKANTH DEVELOPERS VS. ITO PRONOUNCED ON 19.12.2014 IN THE CASE OF MY HO ME DEVELOPERS VS. ITO 62 TAXMANN.COM 132 (AHD.TRIB). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND THE DECISIONS RELIED ON BY THE ASSESS EE PLACED BEFORE US. SOLITARY GRIEVANCE OF THE REVENUE IS ASSAILING THE ORDER OF LD. CIT(A) FOR ALLOWING DEDUCTION U/S 80IB(10) OF THE A CT BY IGNORING THE FACT THAT ASSESSEE DID NOT PRODUCE ANY SUPPORTING E VIDENCE TO PROVE THAT THE ON MONEY WAS RECEIVED FROM THE PROJECT. WE OBSERVE THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSIN ESS OF DEVELOPMENT OF HOUSING PROJECT AND DEDUCTION U/S 80 IB(10) OF THE ACT HAS BEEN GRANTED ON THE REGULAR PROFITS FROM THE PR OJECT WESTERN HEIGHT. THE ONLY ISSUE IN THIS GROUND EMANATES FROM THE SEARCH OPERATION CARRIED OUT U/S 132 OF THE ACT AT THE RES IDENCE OF SHRI MANISH K. SHAH. DURING THE COURSE OF SEARCH A SMALL POCKET DAIRY WAS RECOVERED AND ON CONFRONTATION MR. MANISH K. SH AH ADMITTED IN HIS STATEMENT U/S 132(4) OF THE ACT WITH REGARD TO THE ENTRIES CONTAINED IN THE DAIRY RELATING TO INCOME EARNED BY VARIOUS FIRMS ALONG WITH THE PROJECTS THEY WERE DEALING IN. IN TO TAL UNACCOUNTED INCOME OF RS.23.15 CRORES WAS OFFERED FOR TAXATION IN THE HANDS OF VARIOUS FIRMS/CONCERNS WHICH INTER ALIA INCLUDED UN ACCOUNTED INCOME OF RS.1.14 CRORES TOWARDS ON MONEY IN THE HANDS OF ASSESSEE FOR THE PROJECT WESTERN HEIGHT. IT WAS SPECIFICALLY MEN TIONED THAT ON ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 10 MONEY OF RS.1.14 CRORES RELATING TO WESTERN HEIGHT HAS BEEN OFFERED TO TAX. FROM GOING THROUGH THE ASSESSMENT ORDER WE FIND THAT LD. ASSESSING OFFICER DENIED DEDUCTION U/S 80IB(10) OF THE ACT ON THE UNACCOUNTED INCOME OFFERED AT RS.1.14 CRORES FOR TH E BARE REASON THAT ASSESSEE HAS NOT FILED FLAT-WISE DETAILS OF TH E BUYERS DATE OF SALE DEED AMOUNT RECEIVED INCLUDING ON MONEY ETC. HOWEV ER WE OBSERVE THAT REVENUE HAS BEEN UNABLE TO PROVE AT ANY POINT OF TIME THAT ASSESSEE WAS HAVING ANY OTHER BUSINESS OPERATION OT HER THAN THE PROJECT WESTERN HEIGHT. FURTHER WE ALSO FIND THAT O UT OF THE UNDISCLOSED INCOME OFFERED AT RS..23.15 CRORES ASSE SSEE HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT ONLY FOR THE INCOME OFFERED FOR WESTERN HEIGHT IN THE HANDS OF ASSESSEE AT RS.1 .14 CRORES. FOR THE REMAINING AMOUNT OF RS.22.01 CRORES DUE TAXES H AVE BEEN PAID WITHOUT CLAIMING ANY DEDUCTION U/S 80IB(10) OF THE ACT. THIS FACT ITSELF REVEALS THAT UNACCOUNTED INCOME ACCEPTED BY THE REV ENUE WAS BASED ON THE IMPOUNDED DAIRY SEIZED FROM THE PREMIS ES OF ASSESSEE GROUP DURING THE COURSE OF SEARCH U/S 132 OF THE AC T. WHEN THE INCRIMINATING MATERIAL ON THE BASIS OF WHICH THE UNACCOUNTED INCOME OFFERED AT RS.22.01 CRORES HAS BEEN RECEIVED BY THE REVENUE THEN WHAT REASON REMAINS FOR QUESTIONING ABOUT RS.1.14 C RORES OF INCOME OFFERED. THIS GETS FURTHER SUBSTANTIATED BY THE FAC T THAT NO OTHER DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH WHIC H COULD PROVE THAT THE ON MONEY RECEIVED AT RS.1.14 CRORES WAS NO T RECEIVED ON ACCOUNT OF WESTERN HGIEHT PROJECT UNDERTAKEN BY THE ASSESSEE. THIS BRINGS US TO THE CONCLUSION UNDOUBTEDLY THAT THE IM PUGNED AMOUNT OF RS.1.14 CRORES IS ON MONEY RECEIVED BY THE ASSES SEE FROM THE RESIDENTIAL PROJECT WESTERN HEIGHT. ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 11 9. NOW TO EXAMINE THE ASPECT THAT WHETHER ASSESSEE WHO IS NORMALLY ALLOWED DEDUCTION U/S 80IB(10) OF THE ACT IS ELIGIBLE FOR THIS DEDUCTION TOWARDS ON MONEY RECEIVED FROM THE SAME PROJECT. WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY THE CO -ORDINATE BENCH IN THE CASE OF NILKANTH DEVELOPERS VS. ITO (SUPRA) WHE REIN THE ISSUE HAS BEEN DECIDED BY OBSERVING AS UNDER :- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN TH E INSTANT CASE WE FIND THAT THE ASSESSING OFFICER OBSERVED IN RESPECT OF ACTIVITIES OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AS FOLLOWS:- '3. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE ACTIVITY OF DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY. THE ASSESSEE-FIRM COMMENCED ITS RESIDENTIAL PROJECT IN FY 2009-10 CALLED NILKANTH HEIGHTS BLOCK A B & C AT DUMBHAL SURAT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS NOT COMPLETED THE SAID PROJECT BUT BOOKED RECEIPT FROM SALE OF FLATS DURING THE YEAR F OR WHICH SALE DOCUMENTS HAVE BEEN EXECUTED AND SHOWN NET PROFIT AT RS.78 87 0/- AFTER CLAIMING DEDUCTION 80IB OF THE ACT.' 8. A SURVEY OPERATION U/S 133 A OF THE ACT WAS CONDUCTED ON 27.08.2009. DURING THE COURSE OF SURVEY LOOSE DOCUMENTS MARKED AS 'BF -44' WAS FOUND. DURING THE COURSE OF SURVEY THE ASSESSEE EXPLAINED THAT IN TH E FILE THERE ARE EXPENSE VOUCHERS ALONGWITH RECEIPTS OF AMOUNTS RECEIVED WHI CH IS ALREADY RECORDED IN THE BOOKS OF ACCOUNTS. BESIDES THE AMOUNTS RECORDED IN PAGE NOS.59-60 WERE NOT ACCOUNTED IN THE BOOKS OF ACCOUNTS WHICH REPRESENTS INCOME BESIDES REGULAR INCOME OF THE BUSINESS. IN THESE FACTS THE ASSESSE E DISCLOSED ADDITIONAL INCOME OF THE BUSINESS AT RS.1 25 00 000/- IN ADDITION TO THE INCOME ALREADY RECORDED IN THE BOOKS OF ACCOUNTS. 9. DURING THE COURSE OF SURVEY THE ASSESSEE FURTHE R STATED THAT IT WOULD NOT CLAIM DEDUCTION U/S 80IB(10) IN RESPECT OF THE SAID ADDIT IONAL INCOME. HOWEVER IN THE RETURN OF INCOME FILED BY THE ASSESSEE THE ASSESSE E CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF THE SAID ADDITION AL INCOME OF RS.1 25 00 000/- ALSO. THE ASSESSING OFFICER DID NOT ALLOW DEDUCTION U/S 80IB(10) IN RESPECT OF THIS ADDITIONAL INCOME OF RS.1 25 00 000/- ON THE GROUND THAT THE ASSESSEE COULD NOT ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 12 GIVE DETAILS OF THE RECEIPTS OF RS.1 25 00 000/- AN D COULD NOT GIVE EVIDENCE TO SHOW THAT THE SAME WAS IN RESPECT OF BUSINESS OF TH E ASSESSEE. 10. ON APPEAL THE CIT(A) CONFIRMED THE ADDITION MA DE BY THE ASSESSING OFFICER. HE OBSERVED THAT THE ASSESSEE DURING THE SURVEY I TA NO.2610/AHD/2014 NILKANTH DEVELOPERS SURAT FOR AY 2010-11 ADMITTED UNRECORDED RECEIPTS IN THE REGULAR BOOKS OF ACCOUNTS. HAD THE DEPARTMENT NOT C ONDUCTED SURVEY U/S 133A AT THE BUSINESS PREMISES OF THE ASSESSEE-FIRM AND DETE CTED THE UNDISCLOSED INCOME THE ASSESSEE WOULD NOT HAVE DISCLOSED THESE RECEIPT S TO THE DEPARTMENT. THE ASSESSEE HAS INCLUDED THESE UNDISCLOSED RECEIPTS IN THE TOTAL TURNOVER AND CONSEQUENTLY IN ITS NET PROFIT AND CLAIMED DEDUCTIO N U/S 80IB(10) OF THE ACT. THUS NO TAX HAS BEEN PAID BY THE ASSESSEE ON THE I NCOME WHICH HE WAS FORCED TO DISCLOSE DUE TO THE ACTION/DETECTION BY THE DEPARTM ENT DURING THE SURVEY PROCEEDINGS. ACCORDING TO THE CIT(A) THE INTENTION OF THE LEGISLATURE IS TO GIVE INCENTIVE TO HONEST ASSESSEES TO COMPLY WITH THE PR OVISIONS OF THE ACT AND DISCLOSE THE TRUE AND CORRECT INCOME VOLUNTARILY AN D NOT TO DEFAULTERS/EVADERS OF INCOME-TAX. THEREFORE THE ASSESSEE HAS WRONGLY CLA IMED THE BENEFIT OF DEDUCTION U/S 80IB(10) OF THE ACT. HE THEREFORE HELD THAT T HE ASSESSING OFFICER HAS CORRECTLY ASSESSED THE ADDITIONAL INCOME OF RS.1 25 00 000/- DISCLOSED BY THE ASSESSEE DURING THE COURSE OF SURVEY AS INCOME FROM OTHER SOURCES. 11. BEFORE US THE AR OF THE ASSESSEE CLAIMED THAT DETAILS OF RS.1 25 00 000/- WAS NOTED IN THE LOOSE PAPER FOUND DURING THE COURSE OF SURVEY AND THE SAME WAS TREATED AS INCOME OF THE ASSESSEE ONLY ON THE BASIS OF THE SAID DOCUMENT. DURING THE COURSE OF SURVEY THE ASSESSEE EXPLAINED THAT T HE SAME REPRESENTS AN ADDITIONAL INCOME OF THE BUSINESS OF THE ASSESSEE W HICH WAS ACCEPTED BY THE SURVEY OFFICIALS. AS THE ASSESSEE'S BUSINESS WAS SO LELY OF 'NILKANTH HEIGHTS BLOCK A B & C AT DUMBHAL SURAT PROJECT' IT WAS NOT OPE N TO THE DEPARTMENT TO NOT ALLOW STATUTORILY ALLOWABLE DEDUCTION AFTER ACCEPTI NG THE SAME AS ADDITIONAL INCOME OF THE SAID BUSINESS. THE AR OF THE ASSESSEE HAS RELIED UPON FOLLOWING DECISIONS:- ITA NO.2610/AHD/2014 NILKANTH DEVELOPERS SURAT FOR AY 2010-11 (I) ORDER OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MHASKAR GENERAL HOSPITAL (GUJ) IN TAX APPEAL NO.1474 OF 2009 ORDE R DATED 09.08.2011; (II) CIT V. SUMAN PAPER & BOARDS LTD . (2009) 314 ITR 119; (III) ITAT AHMEDABAD BENCH ORDER DATED 19.11.2010 IN THE CASE OF ACIT V. M/S. VIRAT GEMS PASSED IN ITA NOS.3541 & 3756/AHD/2008. (IV) ITAT AHMEDABAD BENCH ORDER DATED 21.09.2012 I N THE CASE OF CIT V. M/S. SHREE PADMAVATI DEVELOPERS PASSED IN ITA NO.268/AHD/2010. (V) ITAT RAJKOT BENCH ORDER DATED 15.12.1999 IN TH E CASE OF ACIT V. PRABHUDAS S. PAREKH PASSED IN ITA NO. 1408/AHD/1993. 12. WE FIND THAT THIS BENCH OF THE TRIBUNAL IN THE CASE OF CIT V. M/S . SHREE PADMAVATI DEVELOPERS (SUPRA) HAS HELD AS UNDER:- ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 13 '7. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERU SED THE IMPUGNED STATEMENT OF MR.MAHENDRA KATARIA RECORDED ON 27/28. 12.2006. IN REPLY TO A QUESTION IT WAS CATEGORICALLY STATED QUOTE ' (I )RS.50 000/- SALES PROCEEDS OF FLAT NOT RECORDED IN BOOKS.' UNQUOTE. C ONSEQUENT THEREUPON THE SAID AMOUNT OF RS.50 LACS WAS DULY DISCLOSED IN THE PROFIT & LOSS ACCOUNT DRAWN ON 31.3.2007. IN THE CASE OF THE CIT VS. SUMAN PAPER AND BOARD LTD . [2009]314 ITR 119 (GUJ.) AN OBSERVATION HAS BEEN MADE THAT MANUFACTURING AND SALE OF BOARD PAPER AND CRAFT PAP ER HAPPENED TO BE THE ONLY SOURCE OF INCOME OF THE ASSESSEE THEREFORE TH E AMOUNT DISCLOSED CONSEQUENCE UPON THE SEARCH PARTAKES THE CHARACTER OF BUSINESS INCOME AND ELIGIBLE FOR THE DEDUCTION U/S.80IB/80IA OF THE I.T. ACT. IN THE PRESENT CASE THE ASSESSEE HAS ADMITTED THAT THE IMPUGNED A MOUNT WAS PART OF THE SALE CONSIDERATION RECEIVED IN CASH AT THE TIME OF BOOKING OF FLATS AND THEREFORE THE AMOUNT HAD DIRECT AND PROXIMATE CONN ECTION WITH THE NORMAL BUSINESS OF CONSTRUCTION ACTIVITY HENCE ELI GIBLE FOR THE DEDUCTION U/S.80IB(10) OF THE I.T. ACT . BECAUSE OF THE FACTUAL AS ALSO LEGAL ASPECT OF THE CASE WE HEREBY CONFIRM THE FINDING OF LEARNED ITA NO.2610/AHD/2014 NILKANTH DEVELOPERS SURAT FOR AY 2010- 11 CIT(APPEALS) AND DISMISS THIS GROUND OF THE REVE NUE.' 13. IN THE INSTANT CASE WE FIND THAT IT IS NOT IN DISPUTE THAT THE ONLY BUSINESS OF THE ASSESSEE WAS OF DEVELOPING AND BUILDING OF HOUS ING PROJECT STYLED 'NILKANTH HEIGHTS PROJECT'. NO MATERIAL HAS BEEN BROUGHT BEFO RE US TO SHOW THAT THE ASSESSEE WAS ENGAGED IN ANY OTHER ACTIVITY. FURTHER DURING THE COURSE OF SURVEY THE ASSESSEE HAS CATEGORICALLY STATED THAT THE AMOU NTS MENTIONED IN LOOSE DOCUMENTS MARKED AS 'BF- 44' REPRESENTS ADDITIONAL INCOME OF THE SAID BUSINESS. ONLY ON THE BASIS OF THIS DECLARATION OF THE ASSESS EE THE INCOME OF THE ASSESSEE OF RS.1 25 00 000/- WAS ACCEPTED BY THE SURVEY OFFICIA LS IN THE HANDS OF THE ASSESSEE AND WAS ASSESSED IN THE HANDS OF THE ASSESSEE. FURT HER WE FIND THAT AS PER PROVISIONS OF SECTION 80IB DEDUCTION IS ALLOWABLE IN RESPECT OF INCOME DERIV ED FROM THE ELIGIBLE HOUSING PROJECT. IN THE INSTANT C ASE IT IS NOT IN DISPUTE THAT THE BUSINESS OF THE ASSESSEE OF DEVELOPING AND BUILDING RESIDENTIAL PROJECT IN THE NAME AND STYLE OF 'NILKANTH HEIGHTS PROJECT' WAS EL IGIBLE HOUSING PROJECT U/S 80IB OF THE ACT. THEREFORE IN VIEW OF THE FACTS AN D CIRCUMSTANCES OF THE CASE STATUTORILY ALLOWABLE DEDUCTION TO THE ASSESSEE CAN NOT BE DENIED. WE THEREFORE ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. 10. FURTHER SIMILAR ISSUE CAME UP BEFORE THE CO-ORD INATE BENCH IN THE CASE OF MY HOME DEVELOPERS VS. ITO (SUPRA) WHE REIN THE ISSUE HAS BEEN DECIDED BY OBSERVING AS UNDER :- WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE FIRST LEGAL QUESTION WILL BE ON WHICH AMOUNT THE ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 14 ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB(10). THE SECTION 80IB(10) READS AS UNDER:- 80IB (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH 2008 BY A LOCAL AUTHORITY SHALL BE HUNDRED P ER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESS MENT YEAR FROM SUCH HOUSING PROJECT IF -- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER 1998 AND COMPLETES SUCH CONSTRUCTION -- (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL 2004 ON OR BEFORE THE 31ST DAY OF MARCH 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN O R IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL 2004 BU T NOT LATER THAN THE 31ST DAY OF MARCH 2005 WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL 2005 W ITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION.--FOR THE PURPOSES OF THIS CLAUSE -- (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLA N OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CL AUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SC HEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONS TRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLAR ED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 15 (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUA RE FEET AT ANY OTHER PLACE; (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED THR EE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR F IVE THOUSAND SQUARE FEET WHICHEVER IS HIGHER; (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL NO OTHER RESIDENTIAL UN IT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS NAMELY:-- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHIL DREN OF SUCH INDIVIDUAL (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIV IDUAL IS THE KARTA (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. EXPLANATION.--FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY UN DERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AW ARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). 10. FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEE IS ENTITLED FOR 100% DEDUCTION OF THE 'PROFIT DERIVED FROM SUCH HOUSING PROJECT'. THEREFORE THE ONLY REQUIREMENT TO BE ELIGIBLE FOR DEDUCTION U/S 80IB(1 0) IS THAT THE PROFIT SHOULD BE DERIVED FROM THE ELIGIBLE HOUSING PROJECTS. IN THE CASE UNDER APPEAL BEFORE US IT IS NOT IN DISPUTE THAT THE HOUSING PROJECT OF THE A SSESSEE I.E. ORNATE HOUSE WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10). ONCE THE PROJE CT WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10) THE DEDUCTION IS TO BE ALLOWED FOR 10 0% OF THE PROFIT FROM SUCH HOUSING PROJECT. IT IS IMMATERIAL WHETHER THE RECEI PT FROM THE SALE OF FLAT WAS PROPERLY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OR NOT. IN VIEW OF ABOVE WE ARE UNABLE TO AGREE WITH THE VIEW OF THE CIT(A) THA T THE DEDUCTION U/S 80IB(10) WOULD BE ALLOWED ONLY IN RESPECT OF THE PROFIT WHIC H IS WORKED OUT AS PER RECEIPT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS FOUND AT THE TIME OF SURVEY AND NOT IN RESPECT OF THE ON-MONEY WHICH WAS FOUND RECORDED IN A DIARY. IN OUR OPINION THE DEDUCTION U/S 80IB(10) IS TO BE ALLOWED ON THE 100% OF THE PROFIT DERIVED FROM THE HOUSING PROJECT. ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 16 11. NOW THE QUESTION IS WHETHER THE SUM OF RS.76 2 5 000/- IS THE PROFIT DERIVED FROM THE HOUSING PROJECT. ADMITTEDLY DURING THE AC COUNTING YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION THE ONLY BUSINE SS ACTIVITY OF THE ASSESSEE- FIRM WAS THE HOUSING PROJECT WHICH IS ELIGIBLE FOR DEDUCTION U/S 80IB(10). DURING THE COURSE OF SURVEY ONE DIARY NAMED AS 'VALENTINE L' WAS FOUND WHICH WAS MARKED AS ANNEXURE BF-5. ON PAGE NOS. 2-9 OF THE DI ARY THERE WERE RECEIPTS OF CERTAIN AMOUNTS. AS PER REVENUE AUTHORITIES WHO CON DUCTED THE SURVEY SUCH NOTING IN THE DIARY WAS FOR RECEIPT OF 'ON- MONEY' FROM HOUSING PROJECT. THIS WOULD BE CLEAR FROM QUESTION NO.11 PUT BY THE OFFIC ER WHILE RECORDING THE STATEMENT OF THE ASSESSEE. FOR READY REFERENCE QUES TION NO.11 AND REPLY THERETO ARE REPRODUCED BELOW:- 'Q.11 DURING YOUR SURVEY WE HAVE FOUND ONE DIARY ' VALENTINEL' AS ANNEXURE BF-5 IN WHICH YOU HAVE WRITTEN IN PAGE NO. 2 TO 9 THE DETAILS OF ON MONEY RECEIVED FOR BOOKING OF PLAT IN 'ORNATE HO USE' AND THE DETAILS OF DISTRIBUTIONOF THE SAME AND THE TOTAL ON WHICH IS R S.76 25 000/- (SEVENTY SIX LAKHS TWENTY FIVE THOUSAND). SO YOU ARE ASKED T O GIVE THE DETAILS OF THE SAME AND ALSO ASKED HOW IT REFLECTED IN YOUR BO OKS OF ACCOUNT. A.11 THE DIARY 'VALENTINEL' WHICH YOUR ARE SHOWING TO ME AS FOUND DURING THE COURSE OF SURVEY HAVE BEEN KEPT TO RECORD THE DETAILS OF ON MONEY RECEIVED TOTALING TO RS.76 25 000/- (SEVENTY SIX LA KHS TWENTY FIVE THOUSAND) FOR BOOKING IN THE PROJECT OF 'ORNATE HOU SE' DURING THE CURRENT YEAR IN PAGE NO.2 TO 9 WHICH WE DECLARE AS UNDISCL OSED INCOME IN OUR FIRM MY HOME DEVELOPERS AND I ASSURE YOU TO PAY THE TAX ON IT BEFORE 31.03.2010.' (ORIGINAL STATEMENT IS RECORDED IN GUJARATI HOWEVE R ITS ENGLISH TRANSLATION WAS SUPPLIED BY THE ASSESSEE) 12. FROM THE ABOVE IT IS EVIDENT THAT AS PER REVE NUE THE NOTING IN THE DIARY IS THE DETAILS OF ON-MONEY RECEIVED FOR BOOKING OF THE FLAT IN ORNATE HOUSE PROJECT AND THE TOTAL OF SUCH RECEIPT IS RS.76 25 000/-. TH E ASSESSEE WAS ASKED TO STATE HOW IT IS REFLECTED IN THE ASSESSEE'S BOOKS OF ACCO UNTS. IN RESPONSE TO WHICH THE ASSESSEE ADMITTED THE RECEIPT WAS ON-MONEY RELATING TO BOOKING IN THE PROJECT ORNATE HOUSE WHICH THE ASSESSEE DECLARED AS UN- DI SCLOSED INCOME OF THE ASSESSEE-FIRM FOR THE CURRENT YEAR. THE SUM OF RS.7 6 25 000/- IS CREDITED IN THE ASSESSEE'S PROFIT AND LOSS ACCOUNT AS BUSINESS INCO ME. THE ABOVE FACTS HAVE NOT BEEN DISPUTED BY THE REVENUE. THUS FROM THE ABOVE STATEMENT IT IS EVIDENT THAT THE SUM OF RS.76 25 000/-FOUND RECORDED IN THE DIAR Y WAS ACCEPTED TO BE THE NOTING RELATING TO RECEIPT OF ON-MONEY FOR THE BOOK ING OF FLAT IN ORNATE HOUSE BY THE REVENUE AUTHORITIES AS WELL AS THE ASSESSEE. NO W THE REVENUE IS TAXING THE SUM OF RS.76 25 000/- BUT INSTEAD OF BUSINESS INCO ME TREATING THE SAME AS INCOME FROM OTHER SOURCES. WE DO NOT FIND ANY JUSTI FICATION FOR THE DIFFERENT STAND OF THE REVENUE AUTHORITIES - ONE AT THE TIME OF SURVEY AND ANOTHER AT THE TIME OF REGULAR ASSESSMENT. DURING THE COURSE OF SU RVEY THE REVENUE AUTHORITIES THEMSELVES HAVE CONSIDERED THE RECEIPT NOTED IN THE DIARY TO BE ON-MONEY ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 17 RECEIVED FOR BOOKING OF THE FLATS IN ORNATE HOUSE. THE ASSESSEE ADMITTED THE SAME AND SURRENDERED THE SUM OF RS.76 25 000/- AS ITS IN COME FROM ORNATE HOUSE PROJECT. ADMITTEDLY THE ASSESSEE DID NOT HAVE ANY OTHER BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION. CONSIDERING THE TOTAL ITY OF THESE FACTS AND THE ARGUMENTS OF BOTH THE SIDES IN OUR OPINION THERE WAS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO HOLD THAT THE SUM OF RS.76 25 000/- WAS THE INCOME FROM OTHER SOURCES AND NOT THE INCOME FROM ORNATE HOUSE PROJECT. WE FIND THAT SIMILAR ISSUE IS CONSIDERED BY THE ITAT AHMEDABAD BENCH IN THE CASE OF M/S. NILKANTH DEVELOPERS VIDE ITA NO.2610/AHD/2014 WHER EIN THE ITAT AFTER CONSIDERING THE FACTUAL AND LEGAL POSITION IN DETAI L HELD AS UNDER:- '13. IN THE INSTANT CASE WE FIND THAT IT IS NOT IN DISPUTE THAT THE ONLY BUSINESS OF THE ASSESSEE WAS OF DEVELOPING AND BUIL DING OF HOUSING PROJECT STYLED 'NILKANTH HEIGHTS PROJECT'. NO MATERIAL HAS BEEN BROUGHT BEFORE US TO SHOW THAT THE ASSESSEE WAS ENGAGED IN ANY OTHER ACTIVITY. FURTHER DURING THE COURSE OF SURVEY THE ASSESSEE HAS CATEG ORICALLY STATED THAT THE AMOUNTS MENTIONED IN LOOSE DOCUMENTS MARKED AS 'BF- 44' REPRESENTS ADDITIONAL INCOME OF THE SAID BUSINESS. ONLY ON THE BASIS OF THIS DECLARATION OF THE ASSESSEE THE INCOME OF THE ASSE SSEE OF RS.1 25 00 000/- WAS ACCEPTED BY THE SURVEY OFFICIALS IN THE HANDS O F THE ASSESSEE AND WAS ASSESSED IN THE HANDS OF THE ASSESSEE. FURTHER WE FIND THAT AS PER PROVISIONS OF SECTION 80IB DEDUCTION IS ALLOWABLE IN RESPECT OF INCOME DERIVED FROM THE ELIGIBLE HOUSING PROJECT. IN THE I NSTANT CASE IT IS NOT IN DISPUTE THAT THE BUSINESS OF THE ASSESSEE OF DEVELO PING AND BUILDING RESIDENTIAL PROJECT IN THE NAME AND STYLE OF 'NILKA NTH HEIGHTS PROJECT' WAS ELIGIBLE HOUSING PROJECT U/S 80IB OF THE ITA NO. 29 66/AHD/2014 MY HOME DEVELOPERS VS. ITO AY 2010-11 ACT. THEREFORE IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE STATUTORILY ALLOWABL E DEDUCTION TO THE ASSESSEE CANNOT BE DENIED. WE THEREFORE ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 13. SINCE THE FACTS OF THE CASE UNDER APPEAL BEFORE US AND THE FACTS BEFORE THE ITAT 'C' BENCH AHMEDABAD IN THE CASE OF M/S. NILK ANTH DEVELOPERS ARE IDENTICAL THE ABOVE DECISION WOULD BE SQUARELY APP LICABLE TO THE CASE OF THE ASSESSEE. IN VIEW OF TOTALITY OF ABOVE FACTS AND DE CISION OF ITAT AHMEDABAD BENCH WE HOLD THAT THE SUM OF RS.76 25 000/- WAS T HE RECEIPT FROM DEVELOPING AND BUILDING OF HOUSING PROJECT IN THE NAME AND STY LE OF 'ORNATE HOUSE' WHICH WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10). WE THEREF ORE DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80IB(10) ON THE SUM OF RS. 76 25 000/- ALSO. ACCORDINGLY THE GROUND NO.2 OF THE ASSESSEES APPEA L IS ALLOWED. 11. FROM GOING THROUGH THE DECISIONS OF THE CO-ORDI NATE BENCH MENTIONED IN THE PRECEDING PARAGRAPHS WE FIND THAT THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE ABOVE DECI SIONS AND ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 18 THEREFORE FOLLOWING THE JUDICIAL CONSISTENCY WE AR E OF THE VIEW THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT FOR THE ON MONEY OF RS.1.14 CRORES. WE THEREFORE FIND NO RE ASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND WE UPHOLD THE SAME . 12. OTHER GROUNDS ARE OF GENERAL NATURE WHICH NEED NO ADJUDICATION. 13. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 27/10/16 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT AHMEDABAD ITA NO. 679/AHD/2014 ASST. YEAR 2011-12 19 1. DATE OF DICTATION: 25/10/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 26/10/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 27/10/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: