GIRILAL & CO., MUMBAI v. DCIT RG 14(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G MUMBAI BEFORE SHRI J SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) GIRILAL AND CO. SHOP NO.1 CUSROW BAUG SHAHID BHAGAT SINGH ROAD COLABA MUMBAI-400039 .APPELLANT VS DCIT RG 14(2) EARNEST HOUSE MUMBAI-400021. . RESPONDENT ASSESSEE BY : SHRI S E DASTO OR REVENUE BY : SHRI PAVAN VED O R D E R PER VIJAY PAL RAO THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 3.10.2008 OF THE CIT(A) FOR THE ASSESSM ENT YEAR 2001-02. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1 THE CIT(A) ERRED IN UPHOLDING NOTICE DATED 15.3.2007 U/S 148 OF THE INCOME TAX ACT (HEREINAF TER REFERRED TO AS THE ACT) AS VALID ALTHOUGH THE CONDI TIONS PRECEDENT SET OUT INTER ALIA IN S 147 AND 148 OF T HE ACT HAD NOT BEEN COMPLIED WITH AND THE SAME OUGHT TO HE LD TO BE BAD IN LAW. 2. THE CIT(A) ERRED IN NOT CANCELING THE REASSESSMENT PROCEEDINGS WERE NOT INITIATED ON ACCOUNT OF THE AOS APPLICATION OF HIS OWN MIND; ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 2 3. THE CIT(A) ERRED IN DISMISSING GROUND NO.1 AND 2 RAISED IN THE GROUND OF APPEALS BEFORE THE LD. CIT(A) EX-PARTE AND WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT ALTHOUGH TIME WAS SOUGHT BY THE APPELLAN T AS COPIES OF CERTAIN DOCUMENTS (INSPECTION OF WHICH WA S GIVEN TO THE APPELLANT ONLY ON 10.9.2008) WERE NOT MADE AVAILABLE TO THE APPELLANT ALTHOUGH THE SAME WERE CRUCIAL FOR ADJUDICATING GROUND NO.1 AND 2 RAI SED IN THE GROUNDS OF APPEAL RAISED BEFORE THE CIT(A) 4. THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION AMOUNTING TO NRS.2 75 04 350/- U/S 80IB(10) OF THE ACT ALTHOUGH THE APPELLANT FIRM SAT ISFIED ALL THE CONDITIONS LAID DOWN IN S.80 IB(10) OF THE ACT RELEVANT TO ASSESSMENT YEAR 2001-02. 5. THE CIT(A) ERRED IN UPHOLDING INTEREST LEVIED BY THE AO U/S 234B ALTHOUGH THE APPELLANT DENIED LIABI LITY TOWARDS INTEREST U/S 2334B OF THE ACT; 6. WITHOUT L PREJUDICE TO GROUND 5 HEREINABOVE THE CIT(A) ERRED IN UPHOLDING THE INTEREST CHARGED BY T HE AO U/S 234B OF THE ACT FROM 1.5.2003 UP TO 20 TH DECEMBER 2007. 7. THE CIT(A) ERRED IN UPHOLDING THE AOS ACTION OF LEVYING INTEREST U/S 234D OF THE ACT ALTHOUGH THE SAID SECTION 234D WAS INTRODUCED MUCH AFTER THE END OF T HE ASSESSMENT YEARS 2001-02 BY FINANCE ACT 2003 W.E. F 1.6.2003; 8. THE CIT(A) ERRED IN NOT ADJUDICATING GROUND NO.8 A RAISED IN THE GROUNDS OF APPEAL BEFORE THE LEARNED CIT(A) WHICH IS REPRODUCED HEREUNDER: 8 THE AO ERRED IN INITIATING PENALTY PROCEEDINGS U NDER SECTION 271(1)(C ) OF THE ACT 3. GROUNDS OF APPEAL NO.1 AND 2 REGARDING THE VALI DITY OF THE REOPENING OF THE ASSESSMENT. THE BRIEF FACTS RELE VANT TO THE ISSUE OF VALIDITY OF THE REOPENING OF THE ASSESSEE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDING CO NSTRUCTION. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29. 10.2001 ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 3 DECLARING A TOTAL INCOME O F RS.12 36 393/-. THE RE TURN WAS PROCESSED U/S 143(1) AND THEREAFTER WAS SELECTED F OR SCRUTINY BY ISSUING A NOTICE U/S 143(2). THE ASSESSMENT WAS COMPLETED ON 1.5.2003 BY DETERMINING THE TOTAL INCOME AT RS. 12 36 393/- HOWEVER SUBSEQUENTLY IT WAS NOTICED THAT DUE TO F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS RELATING TO THE ASSESSMENT OF ITS INCOME IT WAS A LLOWED WRONG AND EXCESSIVE DEDUCTION U/S 80IB AMOUNTING TO RS.2 75 04 350/- AND THERE WAS OTHER ESCAPEMENT OF INCOME ALSO. HENCE AFTER TAKING APPROVAL OF THE CIT A NOT ICE U/S 148 WAS ISSUED AND SERVED ON THE ASSESSEE ON 17.3.2007 AND THE REASONS FOR REOPENING THE ASSESSMENT WERE GIVEN TO THE ASSESSEE VIDE LETTER DATED 12.4.2007. ACCORDINGLY THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W. SECTION 1 47 ON 20.12.2007 BY DETERMINING THE TOTAL INCOME AT RS.2 87 40 740/- . THE MAIN ADDITION WAS MADE ON ACCOUNT OF WRONG AN D EXCESSIVE CLAIM OF DEDUCTION U/S 80-IB(10) AMOUNTIN G TO RS.2 75 04 350/-. 3.1 THE ASSESSEE HAD TAKEN UP THE CONSTRUCTION OF T HE BUILDING GIRISHIKHAR AND GIRI CENTRE ON A PLOT OF LAND AND CLAIMED THAT THE CONDITIONS LAID DOWN U/S 80IB(10) STOOD SATISFIED. ACCORDINGLY THE CLAIM OF DEDUCTION U/S 80IB(10) WAS ALLOWED IN THE ORIGINAL ASSESSMENT. LATER ON THE A O NOTED THAT ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 4 THE FULL FACTS WITH REGARDS TO THE EXACT SIZE OF PL OT WAS NOT DISCLOSED AND PART OF THE PLOT STOOD ALREADY UTILI ZE FOR BUILDING PROJECTS WHICH WERE COMPLETED AND AN AREA OF 12512 SQ.FT. STOOD UTILIZED PRIOR TO 1.4.1981 AGAIN AN AREA OF 17729 SQ.FT STOOD UTILIZED ON 17.9.1997. THE BALANCE AREA OF 5 919 SQ. FT WAS CONVERTED INTO STOCK IN TRADE ON 11.10.1998 AN D COST OF THIS AREA OF PLOT WAS DETERMINED AT RS.84 34 575/- IN THE VALUATION REPORT DATED 11.10.1998. THE AO WAS OF TH E VIEW THAT ONLY THIS AREA OF LAND (5919SQ.FT) WAS UTILIZED FO R THE PROJECTS NAMELY GIRI SHIKHAR AND GIRI CENTRE AND THIS AR EA WAS FAR BELOW THE REQUIRED SIZE OF THE PLOT I.E. 1 ACRE. THE A.O. WAS OF THE VIEW THAT EVIDENTLY ONE OF THE REQUIREMENTS U/ S 80IB WAS NOT SATISFIED AND THEREFORE DEDUCTION U/S 80IB WAS NOT ALLOWABLE AND THE AO DENIED THE DEDUCTION. 3.2 IN THE MEAN TIME THE ASSESSEE CHALLENGED THE RE- OPENING BEFORE THE HON. JURISDICTIONAL HIGH COURT BY FILING THE WRIT PETITION NO. 2369 OF 2007. THE HON. JURISDICT IONAL HIGH COURT DISMISSED THE WRIT PETITION OF THE ASSESSEE VIDE DECISION DATED 12.12.2007 AND HELD THAT THERE WAS NO TRUE DI SCLOSURE OF EXACT SIZE OF PLOT WHEN THE NEW CONSTRUCTION COMME NCED. THE INFORMATION WAS IN THE ANNEXURE AND CONSEQUENTLY EX PLANATION 2(C) (IV) OF SECTION 147 OF THE INCOME TAX ACT WILL APPLY. THEREAFTER THE ASSESSEE CHALLENGED THE RE-OPENING OF THE ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 5 ASSESSMENT BEFORE THE CIT(A) ON THE GROUND THAT TH E REOPENING OF THE ASSESSMENT IS SOLELY ON THE BASIS OF OBJECT ION/QUERIES RAISED BY THE AUDIT PARTY. THE CIT(A) HELD THAT T HE AO FORMED HIS OWN OPINION AND THE ASSESSMENT WAS REOPENED WITH THE APPROVAL OF THE CIT. THEREFORE THE ASSESSMENT MADE U/S SECTION 143(3) R.W. SECTION 147 IS VALID. ACCORDI NGLY THE CIT(A) DISMISSED THE OBJECTION OF THE ASSESSEE. 3.3. BEFORE US MR. S E DASTOOR THE LEARNED SR. CO UNSEL FOR ASSESSEE SUBMITTED THAT THOUGH THE HON. JURISDICT IONAL HIGH COURT HAS DISMISSED THE WRIT PETITION FILED BY THE ASSESSEE CHALLENGING THE VALIDITY OF RE-OPENING AND NOTICE U/S 148 OF THE IT ACT BUT THE ISSUE BEFORE THE HON. JURISDICTIONA L HIGH COURT WAS WITH RESPECT TO WHETHER THE ASSESSEE FAILED TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT OF INCOME AND WHETHER IT CAN BE SAID THAT THERE WAS NO REASON TO BELIEVE FOR ISSUING THE NOTICE THAT INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT. THE LEARNED SR. COUNSEL HAS POINTED OUT THAT THE A SSESSEE INSPECTED THE ASSESSMENT RECORD AND CAME TO KNOW T HAT REOPENING WAS BASED ON AUDIT OBJECTION. THE LEAR NED SR. COUNSEL HAS REFERRED THE AUDIT REPORT AT PAGE 1 OF THE PAPER BOOK AND SUBMITTED THAT THE AUDIT PARTY HAS RAISE D THE OBJECTION THAT THE SIZE OF THE PLOT WAS LESS THAN O NE ACRE AND THEREFORE THE CONDITIONS LAID DOWN U/S 80IB WERE NO T FULFILLED. ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 6 THE AO HAD OBJECTED THE AUDIT OBJECTION VIDE LET TER DATED 17.1.2005 AND IN THE SAID LETTER THE AO HAS POINT ED OUT THAT THE SIZE OF PLOT WAS MORE THAN ONE ACRE AS PER THE APPROVED PLAN WAS ATTACHED BY THE ASSESSEE. ANOTHER POINT R AISED BY THE AO AGAINST THE AUDIT OBJECTION WAS THAT WHEN THE CA SE WAS AUDITED BY THE SENIOR AUDITOR NO SUCH OBJECTION WA S RAISED. THUS THE LEARNED SR. COUNSEL HAS SUBMITTED THAT TH ESE FACTS WERE NOT BEFORE THE HON. JURISDICTIONAL HIGH COURT AT THE TIME OF THE DECISION IN THE WRIT PETITION FILED BY THE ASSE SSEE AND THE ISSUE BEFORE THE HON. JURISDICTIONAL HIGH COURT WAS NOT THE VALIDITY OF THE REOPENING OF THE ASSESSMENT ON TH E BASIS OF AUDIT REPORT. WHEN THE AO DID NOT ACCEPT THE AUDI T QUARRY AND MAINTAINED THE SIZE OF THE PLOT IS MORE THAN ONE AC RE THEN THE SUBSEQUENT REOPENING OF THE ASSESSMENT ON THE SA ME GROUND IS NOT SUSTAINABLE AS IT IS BASED ON CHANGE OF OPI NION. THE ASSESSMENT ORDER FOR THE A.Y. 2002-03 WAS PASSED O N 20.10.2004 ACCEPTING THE CLAIM OF THE ASSESSEE A ND THE SAME WAS NOT REOPENED. THE LEARNED SR. COUNSEL HAS REFE RRED THE LETTER DATED 8.12.2005 WRITTEN BY THE AO FOR SEEKI NG APPROVAL FOR THE REOPENING OF THE ASSESSMENT. IN THE SAID LETTER THE AO REFERRED THE AUDIT OBJECTION AS WELL AS THE REPLY BY THE AO TO THE AUDIT OBJECTION AND SINCE NO REPLY WAS RECEIVED BY THE AO FROM THE AUDITOR THEREFORE TO TAKE SAFE SIDE TH E AO DECIDED TO RE-OPEN THE ASSESSMENT AFTER APPROVAL OF THE C IT APPEAL. ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 7 THUS THE LEARNED SR. COUNSEL HAS FORCIBLY CONTEN DED THAT THE RE-OPENING IS BASED ON THE AUDIT OBJECTION AND NOT ON THE BASIS OF INDEPENDENT OPINION OR ANY INDEPENDENT REASON TH AT THE AO TO COMPLY WITH THE PROVISIONS OF ACT AND INCOME AS SESSABLE TO TAX IS ESCAPE ASSESSMENT. THE LEARNED SR. COUNSEL T HEN REFERRED THE REPORT DATED 23.9.2008 SOUGHT BY THE L EARNED CIT(A) DURING THE APPELLATE PROCEEDINGS AND SUBMITT ED THAT IN THE REMAND REPORT IT IS STATED THAT THE AO HAS GIV EN THE REASONS FOR THE REOPENING OF THE ASSESSMENT AND THE RE IS NO REFERENCE OF ANY QUARRY RAISED BY THE AUDIT DEPART MENT THEREFORE THE CONTENTION OF THE ASSESSEE WAS SOUGH T TO BE REJECTED. HOWEVER THE EXISTENCE OF THE AUDIT OBJ ECTION/QUERY AND REPLY BY THE AO HAS NOT BEEN DISPUTED IN THE RE MAND REPORT. THUS HE HAS CONTENDED THAT THE REMAND REP ORT IS CONTRARY TO THE REPLY OF THE AO TO THE AUDIT QUER Y AND CANNOT BE RELIED UPON. THE LEARNED SR. COUNSEL FURTHER CO NTENDED THAT THERE IS NO OTHER REASON FOR RE-OPENING THAN THE A UDIT QUERY WHEN THERE IS A POSITIVE COGENT CONNECTION BETWEEN THE AUDIT PARTY AND REASONS FOR REOPENING. THE AUDIT QUERY ITSELF CANNOT BE A GOOD REASON FOR REOPENING OF THE ASSESS MENT. FURTHER THE AUDIT QUERY WHICH WAS REJECTED CANNO T BE A REASON FOR REOPENING OF THE ASSESSMENT. HE HAS RE LIED UPON THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF PURITY TECHTEXTILE PRIVATE LIMITED V/S ACIT REPORT ED IN 325 ITR ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 8 459 IL AND FS INVESTMENT MANAGERS LTD V/S ITO REP ORTED IN 298 ITR 32 AND THE DECISION OF HON. DELHI HIGH COU RT IN THE CASE OF CIT V/S INDIAN SUPER AND GENERAL INDUSTRY EXPORT AND IMPORT CORPORATION LTD REPORTED IN (2008) 170 TAXM AN 229 (DELHI). THE LEARNED SR. COUNSEL HAS AGAIN STRESSED THAT WHEN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 HAS NOT BEEN REOPENED AND EVEN HAS NOT BEEN REVISED AND THE T IME FOR TAKING SUCH ACTION HAS ALREADY BEEN EXPIRED THEN IT AMOUNTS TO ACCEPTANCE OF THE CLAIM OF THE ASSESSEE BY THE REVE NUE. THUS THE LEARNED SR. COUNSEL HAS SUBMITTED THAT THE DECI SION OF THE HON. JURISDICTIONAL HIGH COURT IN THE ASSESSEES OW N CASE CHALLENGING THE VALIDITY OF THE REOPENING HAS TO BE READ IN THE CONTEXT OF THE ISSUE INVOLVED IN THE SAID WRIT PE TITION AND THEREFORE HAS NO BEARING ON THE ISSUE RAISED BY TH E ASSESSEE. 3.4 ON THE OTHER HAND SH. PAWAN VED THE LEARNED CIT-DR HAS SUBMITTED THAT THE CORRESPONDENCE BETWEEN THE A .O. AND AUDIT DEPT. AN ADMINISTRATIVE ACTION AND REPLY BY THE AO IS IN THE ADMINISTRATIVE CAPACITY AND WAS NOT AN ACTION O F STATUTORY IN THE NATURE. HE HAS FURTHER SUBMITTED THAT WHEN THE AO SUBSEQUENTLY CAME TO THE CONCLUSION WHILE TAKING T HE STATUTORY ACTION THAT THE INCOME HAS ESCAPED ASSESSMENT THAN THE CORRESPONDENCE BETWEEN THE AUDIT DEPARTMENT AND THE AO IS NOT RELEVANT. THE LD. DR HAS VEHEMENTLY OBJECTED T HE OBJECTION ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 9 OF THE ASSESSEE AGAINST THE REOPENING OF THE ASSE SSMENT AND SUBMITTED THAT THE ISSUE HAS ALREADY BEEN ADJUDICA TED BY THE HON. JURISDICTIONAL HIGH COURT WHILE DECIDING THE WRIT PETITION OF THE ASSESSEE AND THEREFORE THE SAME CANNOT BE AGITATED AGAIN. HE HAS RELIED UPON THE DECISION OF THE JU RISDICTIONAL HIGH COURT AS WELL AS THE ORDERS OF THE LOWER AUTH ORITIES. 3.5 WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES AT LENGTH AND ALSO PERUSED THE RELEVANT REC ORD. AT THE OUTSET IT IS PERTINENT TO MENTION HERE THAT THE ISSUE OF VALIDITY OF REOPENING OF THE ASSESSMENT HAS BEEN CONSIDERED AND DECIDED BY THE HON. JURISDICTIONAL HIGH COURT IN WR IT PETITION FILED BY THE ASSESSEE WHEREBY IT IS FOUND THAT THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL PARTICULAR OF TH E FACTS AND INFORMATION NECESSARY TO THE ASSESSMENT OF THE INCO ME. THE HON. JURISDICTIONAL HIGH COURT IN PARAGRAPHS 4 TO 7 OF THE JUDGMENT DATED 12.12.2007(SUPRA) HAS HELD AS UNDE R: 4. FROM THE MATERIAL ON RECORD IT WOULD BE CLEAR THAT PRIMA FACIE TO CLAIM BENEFIT UNDER SECTION 81- 1B ON THE RELEVANT DATE ONE OF THE REQUIREMENTS IS THAT T HE SIZE OF THE PLOT OF LAND IS A MINIMUM OF ONE ACRE. THE PETITIONERS IN THE DECLARATION FILED UNDER SECTION 80IB(10) WHILST CLAIMING DEDUCTION HAD SET OUT AS UNDER :- THE SIZE OF THE PLOT OF LAND IS 4074.90 SQ. METER I.E. IT IS HIGHER THAN ONE ACRE. THE ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 10 APPROVED PLAN IS ATTACHED HEREWITH SHOWING THE SIZE OF THE PLOT OF LAND IT IS NO DOUBT TRUE THAT IN SO FAR AS THE PLAN ANN EXED AND THE VALUATION REPORT AN EXISTING BUILDING WAS S HOWN AND ANOTHER A PROPOSED BUILDING. IN THE VALUATION OF PROPERTY DONE BY DOSHI AND CO. ALL THAT WAS SET OUT IS TOTAL FSI AREA AFTER DEDUCTION AND THE VALUATIO N. PURSUANT TO THE NOTICE BY THE AO BY COMMUNICATION O F FEBRUARY 10 2003 THE INFORMATION AS SET OUT THEREIN WAS SET OUT. 5. THE QUESTION IS WHETHER BECAUSE SOME OF THE INFORMATION WAS CONTAINED IN TO THE ANNEXURE AND AL SO IN RESPECT OF THE STATEMENT RECORDED WHETHER IT CAN BE SAID THAT THERE WERE NO REASONS TO BELIEVE FOR THE NOTICE BEING ISSUES. ONE OF THE QUESTIONS ASKED WAS AS UNDER :- QUESTION NO.5: WHAT ACTIVITIES WERE GOING ON OF CONSTRUCTION IN ANDHERI AND SINCE WHAT PERIOD. ANSWER: ONE PLOT OF LAND WAS PURCHASED IN THE YEAR 1961-62 IN J B NAGAR ANDHERI (W) ADMEASURING 3645 SQ. YARDS AND ANOTHER PLOT OF LAND WAS PURCHASED LA TER ON AFTER FEW YEARS ADMEASURING ABOUT 900 SQ. YARDS . SOME PARTS OF THE PLOT WAS EXCHANGED WITH THE NEIGHBOR TO MAKE IT ONE PIECE OF LAND. ONE BUILDIN G WAS CONSTRUCTED ON A PORTION OF LAND IN THE YEAR 1965- 66. THE FLATS OF THE BUILDINGS WERE GIVEN TO THE VA RIOUS PARTIES. IN THE YEAR 1996-97 WE STARTED DEVELOPIN G THE BALANCE PLOT AND STARTED CONSTRUCTING RESIDENTIAL BUILDING OF SALE OF FLATS ON OWNERSHIP BASIS 6. CONSIDERING THE TESTS LAID DOWN BY THE SUPREME COURT IN RAYMOND WOOLLEN MILLS LTD. (SUPRA) THE QUESTION IS WHETHER THE ASSESSING OFFICER HAD P RIMA FACIE REASON TO BELIEVE THA THE INCOME HAD ESCAPED ASSESSMENT. WE HAVE EARLIER NOTED EXPLANATION 2 ( C ) (IV) OF SECTION 147. IN OUR OPINION AS THERE WAS N O TRUE DISCLOSURE OF THE EXACT SIZE OF THE PLOT WHEN THE N EW CONSTRUCTION COMMENCED IT PRIMA FACIE CANNOT BE SA ID THAT THERE WERE NO REASONS TO BELIEVE. THE INFORM ATION WAS IN THE ANNEXURE AND CONSEQUENTLY THE EXPLANATI ON 2( C ) (IV) OF SECTION 147 OF THE ACT WILL APPLY. THE VARIOUS JUDGMENTS RELIED UPON ON BEHALF OF THE PETITIONER ASSESSEE ARE DISTINGUISHABLE IN AS MUCH AS E ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 11 EITHER THERE WAS NO FAILURE TO DISCLOSE THE FULL AN D TRUE RELEVANT INFORMATION AND/OR IT WAS MERELY A CHANGE OF OPINION. THE QUESTION IS WHETHER THE PETITIONERS CONSIDERING THE SIZE OF THE PLOT AND PART OF IT HAV ING ALREADY BEEN DEVELOPED COULD CLAIM THE BENEFITS UND ER SECTION 10IB (10) OF THE IT ACT. THE ISSUE AS TO WHETHER THE SIZE OF THE PLOT OF LAND HAS TO BE CONSIDERED AT THE TIME THE NEW CONSTRUCTION IS BEIN G PUT UP OR WHETHER THE BUILDING ALREADY CONSTRUCTED INCLUDING VARIOUS DEDUCTIONS LIKE R G AREA SET BA CK HAD TO BE CONSIDERED IN COMPUTING THE SIZE OF THE PLOT IS AN ISSUE WHICH WE DO NOT PROPOSE TO ANSWER AT TH IS STAGE IN THE EXERCISE OF OUR EXTRA ORDINARY JURIS DICTION. THE PETITIONER TO INVOKE THE EXTRA ORDINARY JURISDI CTION OF THIS COURT MUST ALSO MAKE OUT A CASE THAT NO PAR T OF THE RELEVANT MATERIAL HAD BEEN KEPT OUT FROM THE A O AND/OR THAT IT WOULD NOT BE UNREASONABLE FOR THE ASSESSING OFFICER TO DRAW INFERENCE FROM THE ANNEXU RE PRODUCED . 7. IN THE INSTANT CASE WE FIND THAT THERE WAS NO TRUE AND FULL DISCLOSURE BY THE PETITIONER AND CONSEQUENTLY WE FIND NO MERIT IN THIS PETITION WHI CH IS ACCORDINGLY DISMISSED. RULE DISCHARGES 3.6 IT IS CLEAR FROM THE DECISION OF THE HON. HIGH COU RT THAT THE INFORMATION FURNISHED BY THE ASSESSEE WAS IN ANNEX URE AND CONSEQUENTLY THE EXPLANATION 2( C )(IV) OF SECTION 147 OF THE ACT WILL APPLY. ONCE IT IS HELD THAT THE ASSESSEE HAS FAILED TO FURNISH/DISCL OSE FULLY AND TRULY ALL THE FACT AND RELEVANT INFORMATION THEN THE QUESTION O F CHANGE OF OPINION OR HAVING NO REASON TO BELIEVE THAT THE INCOME ESCAPE D ASSESSMENT DOES NOT ARISE. THE QUESTION OF NO REASON TO BELIEVE OR CHA NGE OF THE OPINION ARE INTERLINKED WITH THE QUESTION OF DISCLOSING THE FUL L TRUE AND RELEVANT INFORMATION MATERIAL OR FACTS NECESSARY FOR THE AS SESSMENT. THEREFORE WHEN THE ISSUE OF FAILURE TO DISCLOSE FULLY AND TR ULY RELEVANT INFORMATION AND FACTS HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE JURISDICTIONAL HIGH ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 12 COURT THEN WE CANNOT GO BEHIND THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT TO JUDGE THE VALIDITY OF THE REOPENING OF TH E ASSESSMENT EVEN ON THE ISSUE OF AUDIT OBJECTION. MOREOVER IT IS MANIFES T FROM THE RECORD THAT THE AUDIT OBJECTION IS REGARDING FACTUAL INFORMATION B EING SIZE OF THE PLOT ON WHICH HOUSING PROJECT WAS DEVELOPED BY THE ASSESSE E AND THEREFORE IT WAS NOT A MERE OPINION OF THE AUDIT PARTY WHICH IS THE BASIS OF THE REOPENING BUT IT WAS A FACTUAL INFORMATION POINTED OUT BY TH E AUDIT PARTY ON THE BASIS OF WHICH THE AO REACHED THE CONCLUSION THAT THE DE DUCTION U/S 80IB WAS ALLOWED EXCESSIVE AS IT WAS NOT ADMISSIBLE TO THE A SSESSEE. THE AO HAS RECORDED THE REASONS FOR REOPENING OF THE ASSESSEE AS UNDER : IN THIS CASE ASSESSMENT UNDER SECTION 143(3) OF THE IT ACT 1961 WAS COMPLETED ON 1.5.2003 BY THE ACI T CENTRAL CIRCLE 15 AND 16 MUMBAI AND THE RETURNED INCOME WAS ACCEPTED AT RS.12 36 393/- AFTER ALLOWI NG DEDUCTION U/S 80IB(10) AT RS.2 75 04 350/- TO ENJOY THE BENEFIT OF DEDUCTION U/S 80IB (10) OF THE ACT APART FROM OTHER CONDITIONS A CONDITION THAT H AS TO BE FULFILLED IS THAT THE PLOT OF LAND ON WHICH THE PROJECT IS DEVELOPED SHOULD BE OF MINIMUM AREA OF ONE ACRE. ONE ACRE IS EQUAL TO 4046.78 SQ. METER OR 43559.5 5 SQ. FT. THE TOTAL AREA OF ORIGINAL PLOT OF ASSESSEE WAS 43346. SQ.FT (AS PER VALUATION REPORT) WHICH IS A L ITTLE MORE THAN 43559.55 SQ.FT. AGAINST THE PLOT OF 43 84 6. SQ. FT IT HAD USED 12 512 SQ. FT OF FSI I BEFORE 1.4.1981. THUS THE CORRESPONDING AREAD OF PLOT O F LAND USED BECOMES 12 512/36 160 X 43846 = 15171.49 SQ. FT BEFORE 1.4.1981. THUS THE PLOT OF LAND AVAIL ABLE WITH THE ASESEE FOR CONSTRUCTION OF ELIGIBLE PROJET BECOMES 43846 15171.49 = 28674.51 SQ. FT. THIS I S MUJCH BELOE THE PRESCRIBED LIMIT OF 43 559.55 SQ.FT (I.E ONE ACRE). HENCE IT CAN BE SEEN THAT AREA OF THE PR OJECT ON WHICH THE CONSTRUCTION WAS STARTED BY THE ASSESS EE FOR PROJECT GIRISHIKHAR AND GIRI CENTRE WAS WE LL BELOW PRESCRIBED AREA OF THE PLOT I.E. 1 ACRE. THEREFORE THE PRE-REQUISITE CONDITION THAT THE ARE A OF ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 13 THE PROJECT SHOULD OF MINIMUM 1 ACRE HAS NOT BEEN FULFILLED BY THE ASSESSEE. THE ASSESSEE HA SUBMITTED ALONG WITH THE RETURN OF INCOME THE CERTIFICATE OF ARCHITECT SHRI DINES SHAH WHICH IS DATED 17.05.2001. IT IS MENTIONED AT SR. N O.(1) AS UNDER : THAT THE HOUSING PROJECT KNOWN AS GIRI SHIKHAR AN D GIRI CENTRE IS CONSTRUCTED ON THE SIZE OF PLOT OF LAND ADMEASURING 4079.9 SQ. MTR. (OVER ONE ACRE) IN AN DHERI (EAST) FURTHER IN A REPLY DATED 10.2.2003 SR. NO.20 THE ASSESSEE HAS WRONGLY CLAIMED THAT THE SIZE OF THE PLOT OF LAND W AS MORE THAN ONE ACRE. THE REPLY OF THE ASSESSEE AS PER ANNEXUR E G SR. NO.(B) OF PARA 2 IS REPRODUCED BELOW: THE SIZE OF THE PLOT OF LAND IS 4074.90 SQ.MTR I. E. IT IS HIGHER THAN ONE ACRE. THE APPROVED PLAN IS ATTACHED HEREWITH SHOWING THE SIZE OF THE PLOT OF LAND BOTH THE CERTIFICATE AND THE REPLY OF THE ASSESSEE WERE FACTUALLY INCORRECT BECAUSE IT WAS NOWHERE STATED T HAT AROUND ONE THIRD OF THE FSI PERTAINING TO THE LAND WAS AL READY USED BEFORE 1.4.1981. THUS IT IS CLEAR CASE OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MA TERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE FACT THAT ONE THIRD OF THE FSI HAS BEEN USED B Y THE ASSESSEE BEFORE 1.4.81 WAS MENTIONED IN THE VALUATION REPORT OF DOSHI AND CO. DATED 20.10.98 WHICH WAS FILED BY THE ASSESSEE DURING THE COURSE O F ASSESSMENT VIDE LETTER DATED 10.2.2003 (SR.NO.11) THE SAME WAS FILED BY THE ASSESSEE FOR THE PURPOSES OF CALCULATING THE FAIR MARKET VALUE OF 5919 SQ. FT. THE REPLY OF THE ASSESSEE AT SR NO.11 (SUPRA) IS REPRODUCED BELOW: THE VALUE OF LAND ADMEASURING 5919 SQ. FT FOR GI RI SHIKAR AND GIRI CENTRE IS TAKEN AT RS.1 425/- PER SQ. F T BEING THE FAIR MARKET VALUE DURING AY 1999-2000 AS PER THE V ALUER ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 14 REPORT. THE LAND VALUE COMES TO RS.84 34 575. THE TDR COST COMES TO RS.73 33 140/- SO THE INFORMATION REGARDING THE ACTUAL SIZE OF T HE PLOT USED FOR THE CONSTRUCTION OF GIRI SHIKAR AND GIRI CENTRE WAS ONLY AVAILABLE IN THE VALUATION REPORT. THE FACT THAT THE ACTUAL SIZE OF THE PLOT AVAILABLE FOR CONSTRUCTION OF GIRI SHIKHAR AND GIRICENTRE WAS L ESS THAN ONE ACRE I.E. 43 559.55 SQ. FT COULD NOT BE ASCERTAINED BY THE AO WHILE COMPLETING THE ORIGINA L ASSESSMENT U/S 143(3) BECAUSE THEY COULD NOT BE DISCOVERED BYTHE AO WITH DUE DILIGENCE. HENCE THE CASE OF THE ASESEEE FALLS UNDER EXPLANATION 1 TO SECTION 147 THIS FAILURE ON THE PART OF THE ASSESSEE LED TO WRO NG AND EXCESSIVE ALLOWANCE OF DEDUCTION U/S 80IB AMOUNTING TO RS.2 75 04 350/- BY THE AO. HENCE TH E CASE OF THE ASSESSEE IS COVERED UNDER EXPLANATION 2 ( C )(IV) OF SECTION 147. WITHOUT PREJUDICE TO THE ABOVE IN THIS CASE A SUR VEY U/S 133A HAD BEEN CONDUCTED AT THE ASSESSEES BUSINESS PREMISES. THE ASSESSEE HAS OFFERED AN AMOUNT OF RS.1 03 CRORES (RS.47.26 LAKSH PERTAINE D TO GIRI RESIDENCY AND WAS OFFERED IN AY 2000-01 AND THE SAME HAD BEEN TAXED IN THAT ASSESSMENT YEAR. THE BALANCE AMOUNT WAS OFFERED FOR TAXATION IN AY 2001-02 AS THEY PERTAINED TO GIRI SHIKHAR AND GIRI CENTRE BUILDINGS) BEING CASH COMPONENTS FROM SALE O F FLATS. THE ASSESSEE IN ITS RETURN OF INCOME FILED INCLUDED THE SAID DECLARATION AND CLAIMED DEDUCTION U/S 80IB(10). HOWEVER THE PERUSAL OF THE CAE RECOR DS SHOWS THAT THE DECLARATION WAS NEVER SHOWN IN THE BOOKS. HENCE THE DEDUCTION U/S 80IB(10) WAS INADMISSIBLE TO THE ASSESSEE TO THE EXTENT OF DECLARATION MADE IN THE SURVEY PROCEEDINGS IN VIEW OF THE ABOVE I HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT TO THAT EXTENT ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 15 3.7 FROM THE REASONS RECORDED BY THE AO IT IS CLEAR THAT THE REASONS OF REOPENING WAS THE SIZE OF THAT THE PLOT IN THE OPINION OF THE AO IS LESS THAN ONE ACRE AS REQUI RED BY THE CONDITION PRESCRIBED U/S 80IB(10). THEREFORE THE OBJECTION WHICH WAS POINTED OUT BY THE AUDIT PARTY WAS FACT UAL ONE. IN THE CASE OF CIT V. P.V.S. BEEDIES PVT. LTD. REPOR TED IN 237 ITR 13 (SC) THE HON. APEX COURT HAS HELD AS UNDER: WE HAVE CONSIDERED THE MATTER. IT APPEARS THAT THE REOPENING WAS DONE BECAUSE IN THE ORIGINAL ASSESSMENT DONATIO NS MADE TO A BODY KNOWN AS P.V.S. MEMORIAL CHARITABLE TRUST WAS HELD BY THE INCOME TAX OFFICER TO BE ELIGIBLE FOR DEDUCT ION UNDER SECTION 80G. BUT SUBSEQUENTLY IT WAS POINTED OUT BY THE INTERNAL AUDIT PARTY THAT THE RECOGNITION WHICH HAD BEEN GRA NTED TO THE P.V.S. MEMORIAL CHARITABLE TRUST HAD EXPIRED ON 22- 9-1972. THAT MEANS IT HAD EXPIRED BEFORE 1-4-1973. THEREFOR E IN THE RELEVANT YEARS OF ACCOUNT THIS TRUST WAS NOT A RECO GNIZED CHARITABLE TRUST. IN THAT VIEW OF THE MATTER THE DO NATION TO P.V.S. MEMORIAL CHARITABLE TRUST DID NOT QUALIFY FOR DEDUC TION UNDER SECTION 80G AS A DONATION MADE TO A RECOGNIZED CHAR ITY. WE ARE OF THE VIEW THAT BOTH THE TRIBUNAL AND THE H IGH COURT WERE IN ERROR IN HOLDING THAT THE INFORMATION GIVEN BY INTERNAL AUDIT PARTY COULD NOT BE TREATED AS INFORMATION WIT HIN THE MEANING OF SECTION 147(B) OF THE INCOME TAX ACT. TH E AUDIT PARTY HAS MERELY POINTED OUT A FACT WHICH HAS BEEN OVERLOOKED BY THE INCOME TAX OFFICER IN THE ASSESSMENT THE F ACT THAT THE RECOGNITION GRANTED TO THIS CHARITABLE TRUST HAD EX PIREED ON SEPTEMBER 22 1972 WAS NOT NOTICED BY THE ITO. TH IS IS NOT A CASE OF INFORMATION ON A QUESTION OF LAW. THE DIS;U TE AS TO WHETHER REOPENING IS PERMISSIBLE AFTER THE AUDIT P ARTY EXPRESSES AN OPINION ON A QUESTION OF LAW IS NOW B EING CONSIDERED BY A LARGER BENCH OF THIS COURT. THERE CAN BE NO DISPUTE THAT THE AUDIT PARTY IS ENTITLED TO POINT O UT A FACTUAL ERROR OR OMISSION IN THE ASSESSMENT. REOPENING OF THE CAS E ON THE BASIS OF A FACTUAL ERROR POINTED OUT BY THE AUDIT PARTY IS PERMISSIBLE UNDER LAW. IN VIEW OF THAT WE HOLD THA T REOPENING OF ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 16 THE CASE UNDER SECTION 147(B) IN THE FACTS OF THIS CASE WAS ON THE BASIS OF FACTUAL INFORMATION GIVEN BY THE INTE RNAL AUDIT PARTY AND WAS VALID IN LAW. THE JUDGMENT UNDER APPEAL IS SET ASIDE TO THIS EXTENT. THE APPEALS ARE ALLOWED. THERE WILL NO ORDER AS T O COSTS 3.8 THUS IT IS SETTLED LAW AS HELD BY THE HON. APE X COURT IN THE ABOVE CITED CASE THAT IF ANY FACTUAL ERROR HAS BEEN POINTED OUT BY THE INTERNAL AUDIT PARTY THE SAME IS A GOOD INFORMATION WITHIN THE MEANING OF SECTION 147(B) OF THE INCOM E TAX ACT AND THEREFORE REOPENING ON THE BASIS OF SUCH FACT UAL ERROR POINTED OUT IS PERMISSIBLE UNDER LAW. IN THE CASE OF PURITY TECHTEXTILE PRIVATE LIMITED V/S ACIT (SUPRA) THE HON. HIGH COURT HAS NOTED THAT THE BASIS ON WHICH THE ASSESSM ENT FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 HAS BEEN SOU GHT TO BE REOPENED WAS THAT IT WAS DURING THE COURSE OF ASSE SSMENT PROCEEDINGS FOR THE SUBSEQUENT ASSESSMENT THE R EVENUE HAD OBTAINED A COPY OF LICENSE WHICH SHOWS THAT THE ORDER HAS BEEN APPROVED AS FAR BACK ON SEPTEMBER 12 1988. T HE RECORD SHOWS THAT THE REVENUE WAS IN POSSESSION OF ALL THE MATERIAL PRODUCED BY THE ASSESSEE DURING THE COURSE OF ORIGI NAL ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2003 -04. THEREFORE BASIS ON WHICH THE ASSESSMENT HAS BEEN S OUGHT TO BE OPENED WAS FACTUALLY INCORRECT. IN VIEW OF T HE FACTS THE HON.HIGH COURT HAS HELD THAT THE ASSESSMENT WAS BE ING ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 17 REOPENED AS PRECAUTIONARY MEASURE WHEN THE AO HAD REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. SIMILARLY IN THE CASE OF IL AND FS INVESTMENT MANAGERS LTD V/ S ITO (SUPRA) THE HON. HIGH COURT HAS RECORDED THE FACTS THAT IT IS NOT AT ALL THE CASE OF THE REVENUE THAT THE ASSESSE E HAD NOT DISCLOSED ANY THING. THE ASSESSEE HAS GIVEN FU LL PARTICULARS OF INTANGIBLE ASSETS IT HAD MENTIONED THAT IT IS E LIGIBLE FOR DEPRECIATION. IN THOSE FACTS AND CIRCUMSTANCES OF THE CASE IT WAS FOUND THAT THE REOPENING OF THE ASSESSMENT WAS BASED ON THE AUDIT OBJECTION AND NOT ANY INFORMATION FOUND BY THE ASSESSING OFFICER ON HIS OWN THAT THE INCOME AS ESC APED ASSESSMENT. AGAIN IN THE CASE OF CIT V/S INDIAN SUPER AND GENERAL INDUSTRY EXPORT AND IMPORT CORPORATION LTD (SUPRA) THE HON. DELHI HIGH COURT HAS HELD THAT ON PERUSAL OF THE REASONS GIVEN BY THE AO FOR REOPENING OF THE ASSESSMENT SH OWED THAT THERE WAS ABSOLUTELY NO MENTION ABOUT ANY APPLICATI ON OF MIND BY THE AO TO THE OBJECTIONS RAISED BY THE AUDIT PA RTY. THE REASONS DISCLOSED NOTHING BUT A CHANGE OF OPINION ON THE ADMITTED FACTS. THESE DECISIONS AS RELIED UPON BY THE ASSESSEE DO NOT APPLY TO THE FACT OF THE PRESENT CASE WHERE THE OBJECTION AND ERROR POINTED OUT BY THE AUDIT PARTY IS FACTU AL IN NATURE AND THE HON. HIGH COURT HAS ALREADY HELD THAT THE ASSES SEE FAILED TO DISCLOSE FULLY AND TRULY ALL THE RELEVANT INFOR MATION AND MATERIAL NECESSARY FOR ASSESSMENT. ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 18 3.9. IN VIEW OF THE ABOVE DISCUSSION WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LEARNED SR.COUNSEL THEREFOR E GROUND RAISED AGAINST THE REOPENING OF THE ASSESSMENT IS D EVOID OF ANY MERIT AND THE SAME IS DISMISSED. 4. GROUNDS OF APPEAL NO.1 AND 2 ARE DISMISSED. 5. GROUNDS OF APPEAL NO.3 AND 6 ARE REGARDING NOT O FFERING THE SUFFICIENT OPPORTUNITY. AT TIME OF HEARING TH E LEARNED SR. COUNSEL FOR THE ASSESSEE HAS STATED THAT THE ASSESS EE DOES NOT PRESS THESE GROUNDS AND THE SAME MAY BE DISMISSED A S NOT PRESSED TO WHICH THE LEARNED DR HAS NO OBJECTION. ACCORDINGLY WE DISMISS THE GROUNDS OF APPEAL NO.3 AND 6 BEING NOT PRESSED. 6. GROUNDS OF APPEAL NO.4 IS REGARDING DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10). THE A.O FOUND TH AT OUT OF TOTAL SIZE OF PLOT OF LAND ABOUT 1/3 OF THE LAND I.E. 12512 WAS ALREADY USED FOR CONSTRUCTION IN THE YEAR 1965 AN D THEREFORE THE SIZE OF PLOT OF LAND AVAILABLE WITH THE ASSESSE E FOR THE CONSTRUCTION OF PROJECT IN QUESTION WAS MUCH LESS THAN ONE ACRE AS REQUIRED UNDER THE PROVISIONS OF SECTION 80IB(1 0). THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB IN RESPECT OF BUILDING GIRI SHIKHAR AND GIRI CENTRE. THE AO HAS HELD THAT OUT OF ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 19 THE TOTAL AREA OF 43559.55 SQ.FT THE AREA OF 12512 SQ. FT WAS UTILIZED PRIOR TO 1.4.1981 FOR CONSTRUCTION OF BUI LDING. HOWEVER THE AREA OF 17729 SQ. FT WAS UTILIZED ON 17.9.1997 AND THE BALANCE WAS 5919 WAS CONVERTED INTO STOCK-IN-TRAD E ON 11.10.1998. THUS THE AO WAS OF THE VIEW THAT THE AREA OF LAND FOR THE PROJECT WAS FAR BELOW OF THE REQUIRED SIZE OF THE PLOT OF ONE ACRE. ACCORDINGLY THE DEDUCTION U/S 80IB(10) WAS DENIED. 6.1 ON APPEAL THE CIT(A) CONFIRMED THE DISALLOWANC E MADE BY THE AO ON THE GROUND THAT THE SIZE OF PLOT ON W HICH THE PROJECT HAS BEEN CONSTRUCTED IS MUCH LESS THAT THE REQUIRED SIZE OF ONE ACRE. IT WAS FURTHER HELD THAT EVEN THE TWO BUILDINGS CONSTRUCTED BY THE ASSESSEE ONE HAS ALREADY COMMENC ED PRIOR TO 1.10.1998 AND THE BUILDING WHICH WAS COMMENCED AFTER 1.10.1998 SHOULD HAVE BEEN ON A PLOT OF LAND NOT L ESS THAN ONE ACRE. THEREFORE THE CONDITION PRESCRIBED UNDER SE CTION 80IB (10) HAS NOT BEEN SATISFIED. ACCORDINGLY HE HAS DI SMISSED THE CLAIM OF THE ASSESSEE. 6.2 BEFORE US THE LEARNED SR. COUNSEL HAS SUBMITTE D THAT AS PER THE REQUIREMENT OF THE SECTION 80IB(10) THE HO USING PROJECT SHALL BE ON THE SIZE OF PLOT OF LAND NOT LESS THAN ONE ACRE WHICH MEANS THE AREA OF PLOT SHALL BE ONE ACRE AND NOT THE AREA UTILIZED FOR THE PROJECT. HE HAS REFERRED T HE CBDT CIRCULAR DATED 4 TH MAY 2001 AND SUBMITTED THAT THE ADDITIONAL ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 20 HOUSING PROJECT ON THE EXISTING PROJECT SITE CAN Q UALIFY THE DEDUCTION U/S 80IB IF THE SAME IS APPROVED BY THE L OCAL AUTHORITY AS HOUSING PROJECT. HE HAS RELIED UPON THE DECISION OF HE HON SUPREME COURT IN THE CASE OF BAJAJ TEMP O LIMITED. VS CIT(SC) REPORTED IN 196 ITR 188 AND SUBMITTED THAT THE INCENTIVE PROVISIONS SHOULD BE INTERPRETED IN SUC H A WAY SO THAT IT WOULD FURTHER THE OBJECT OF THE PROVISIONS. HE HAS SUBMITTED THAT THE PROVISIONS OF THE SECTION 80IB ARE INCENTIVE AND BENEFICIARY PROVISIONS THEREFORE THE SAME SH OULD BE INTERPRETED IN FAVOUR OF THE ASSESSEE FOR FURTHERA NCE OF THE OBJECT OF THE PROVISIONS. THE LD. SR. COUNSEL S UBMITTED THAT THERE IS NO DISPUTE THAT THE TOTAL SIZE OF THE PLOT IS MORE THAN ONE ACRE AND EVEN MORE THAN ONE PROJECT CAN BE DEVE LOPED ON ONE PLOT OF LAND. HE HAS RELIED UPON THE ORDER OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VA NDANA PROPERTIES V/S ACIT REPORTED IN (2009) 31 SOT 392 AND SUBMITTED THAT IN THE SAID CASE THE TRIBUNAL HAS HE LD THAT THE ENTIRE AREA OF THE PLOT HAS TO BE TAKEN IN TO CONS IDERATION ON WHICH THE PROJECT HAVE BEEN PLANNED THOUGH SOME OF THE BUILDINGS HAD NOT BEEN QUALIFIED FOR DEDUCTION U/S 80IB. ON QUERY FROM THE BENCH THE ASSESSEE FILED THE TITL E DEED OF THE PLOT IN QUESTION. THE LD. SR. COUNSEL HAS CLARIFIE D THAT THE SIZE OF PLOT AS PER THE SANCTIONED PLAN AS WELL AS THE TITLE DEED IS MORE THAN ONE ACRE AS MENTIONED IN THE REVISED PRO PERTY CARD ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 21 AND ORDER DATED 18.1.1997 OF ADDITIONAL COLLECTOR. URBAN LAND CEILING MUMBAI. AS PER THE SAID ORDER DATED 18.1.1 997 THE AREA OF THE PLOTS UNDER CST NO.344A 344B 346A 3481 3498 HAS BEEN INCREASED FROM 3854.3 SQ.MT TO 4704.9 SQ.MET ERS. THE PLOT UNDER CST NO.345 TO 349B AND 329B AMALGAMATED IN TO NEW CST NO.329B AND AREA OF WHICH IS 4074.9 QU. M TRS. THUS THE SIZE OF PLOT IS UNDISPUTEDLY IS MORE THAN ONE A CRE AND IT WAS NOT DISPUTED BY THE LOWER AUTHORITIES. THE DISPUTE IS REGARDING THE EXCLUSION OF AREA ON WHICH A BUILDING WAS CON STRUCTED IN THE YEAR 1965 TO 1966. 6.3 ON THE OTHER HAND THE LEARNED DR HAS SUBMITTED THAT WHEN THE ASSESSEE HAS ALREADY HAS ALREADY CONSTRU CTED THE BUILDING ON THE ONE PART OF THE PLOT OF LAND WHIC H IS NOT AS PER THE HOUSING PROJECT AS PROVIDED UNDER SECTION 80IB( 10) THEN THE LAND AVAILABLE WITH THE HOUSING PROJECT ELIGIB LE FOR DEDUCTION U/S 80IB(10) IS ONLY AFTER EXCLUSION OF L AND WHICH WAS ALREADY UTILIZED BY THE ASSESSEE FOR THE CONST RUCTION OF THE BUILDING IN THE YEAR 1965-66. THE SAID BUILDING WAS EVEN NOT CONSTRUCTED FOR ANY HOUSING PROJECT OR SALE PURPOS E BUT IT WAS ASSESSEES BUSINESS ASSETS TILL IT WAS ACCOUNTED B Y THE ASSESSEE IN THE BOOKS OF ACCOUNTS AS STOCK-IN-TRADE IN THE YEAR 1997. HE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT WHEN THE PLOT OF LAND AVAILABLE FOR THE ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 22 HOUSING PROJECT IN QUESTION WAS LESS THAN ONE ACRE THEN THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IB(10 ). 6.4 AFTER CONSIDERING THE RIVAL CONTENTIONS AND REL EVANT RECORD WE NOTE THAT THE ASSESSEE PURCHASED A PLOT OF LAND IN SURVEY NO.41 42 AND 43 ADMEASURING ABOUT 3645 SQ.Y ARD OR 3047.68 SQ. METRS. VIDE CONVEYANCE DEED DATED 4.11. 961. THEREAFTER THE ASSESSEE PURCHASED ANOTHER PLOT OF LAND ADMEASURING ABOUT N 900 SQ. YARDS OR 752.51 SQ. MET RS. IN SURVEY NO.41 VIDE CONVEYANCE DEED DATED 16.09.1965. IN THE MEAN TIME THE ASSESSEE CONSTRUCTED THE BUILDING V IZ GIRI SHIKHAR IN THE YEAR 1965-66 WHICH WAS GIVEN ON T ENANCY BASIS. THEREAFTER FOR THE CONVENIENCE OF MERGING OF THESE TWO PLOTS THE ASSESSEE EXCHANGED A PART OF THESE PLOTS WITH ANOTHER PLOT OF LAND VIDE EXCHANGE AGREEMENT DATED 14.1.1975 AND UNDER THIS PROCESS THE ASSESSEE HAS GIVEN A PLO T OF LAND ADMEASURING ABOUT 1011.1 SQ. YARDS IN EXCHANGE THER EOF THE ASSESSEE HAS RECEIVED A PLOT OF LAND OF THE SIZE OF 1074.SQ.YARDS. THE ASSESSEE GOT 62.9 SQ.YARDS A DDITIONAL AREA. AFTER THIS EXCHANGE OF PLOT THE TOTAL AREA OF THE ASSESSEES PLOTS OF LAND COME TO 3854.3 SQ.MTR WHIC H IS LESS THAN ONE AREA OF LAND. SUBSEQUENTLY IN THE YEAR 1997 AS PER THE ORDER OF THE ASSTT. COLLECTOR ULC A REVISED T HE PROPERTY CARD WAS ISSUED AND THE AREA OF THE PLOT AMALGAMA TED INTO ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 23 NEW CST NO.329B WAS INCREASED TO 474.9 SQ. MTRS. IT IS HOWEVER NOT CLEARED FROM THE SAID ORDER AS TO HOW T HIS AREA OF THE PLOT WAS INCREASED; WHETHER IT WAS DUE TO SOME ERROR IN THE MEASUREMENTS IN THE RECORD OR DUE TO MERGER OF TH E PASSAGE IN THE PROCESS OF AMALGAMATION OF THE VARIOUS PLOT S INTO ONE. NONETHELESS AS PER THE RECORD THE TOTAL AREA OF T HE PLOT IS 4074.9. SQ.YARDS WHICH IS MORE THAN ONE ACRE. TH E QUESTION IS NOW ARISES BEFORE US WHETHER THE LAND ALREADY UTIL IZED BY THE ASSESSEE FOR CONSTRUCTION OF THE BUILDING IN THE YE ARS 1965-66 WOULD BE A PART OF THE PLOT OF LAND FOR THE PURPOSE OF SIZE AS PRESCRIBED UNDER SECTION 80IB(10). UNDISPUTEDLY THE CONSTRUCTION OF THE BUILDING IN THE YEAR 1965-66 WA S NOT USED FOR THE HOUSING PROJECT AS PRESCRIBED U/S 80IB OR 8 0IA. THE SAID BUILDING WAS TREATED BY THE ASSESSEE AS ITS BUSI NESS ASSETS THEREFORE THE ASSESSEE UTILIZED THE PART OF THE PLOT OF LAND BY CONSTRUCTING THE SAID BUILDING WHICH CONSUMED 125 12 SQ.FT. OF FSI. 6.5 THE OBJECT OF FISCAL INCENTIVES PROVIDED UNDER SECTION 80IB(10) WAS TO MAKE AVAILABLE DWELLING UNITS TO T HE MIDDLE CLASS INVESTOR WISHING TO PURCHASE A HOUSE. THUS THE PARAMETER OF MIDDLE CLASS HOUSING PROJECT AND THE HOUSING FINANCE COMPANIES ARE PROVIDED BY RESTRICTING SIZE OF UNITS AND THE AREA OF PLOT. AS IT IS CLEAR FROM THE OBJECT SPEECH OF THE ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 24 FINANCE MINISTER FOR THE YEAR 1999-00 THE RESTRICTI ON AND CONDITIONS UNDER SECTION 80IB(10) ARE PRESCRIBED SO THAT THE OBJECT TO PROMOTE MORE AND MORE RESIDENTIAL UNIT F OR THE MIDDLE CLASS. THEREFORE THE INCENTIVE IN THE SHAPE OF A TAX HOLIDAYS IS PROVIDED UNDER SECTION. THE RESTRICTION OF THE PLOT SIZE APPEARS TO BE FOR THE PURPOSES OF MINIMUM REQUIRE D OPEN SPACE IS AVAILABLE FOR THE OCCUPANTS OF THE RESI DENTIAL UNITS OF THE PROJECT AND FOR OTHER NECESSARY AMENITIES AND FACILITIES FOR THE RESIDENTS. THEREFORE THE OBJECT OF THESE INCE NTIVES WAS TO DEVELOP THE HOUSING PROJECT FOR MIDDLE CLASS. AS P ER THE PROVISIONS OF SECTION 80IB THE CONDITIONS OF SIZE O F PLOT IS ONE OF THE MAIN IMPORTANT CONDITIONS AND SAID PROVISION IS TO BE STRICTLY CONSTRUED OTHERWISE THE VERY OBJECT OF THE INSENSIT IVE WILL BE FRUSTRATED. THE OBJECT AND SCHEME OF THE FISCAL IN CENTIVES U/S 80IB IS TO PROMOTE HOUSING PROJECT FOR MIDDLE CLASS AND THEREFORE TWO CONDITIONS REGARDING THE SIZE OF RESI DENTIAL UNIT AND AREA OF PLOT ARE INTRODUCED SO THAT THE RESIDEN TIAL UNIT SHOULD BE IN THE REACH OF THE MIDDLE CLASS AND THE MINIMUM SIZE OF THE PLOT SHOULD NOT BE LESS THAN ONE ACRE SO TH AT THE SUFFICIENT OPEN SPACE IS AVAILABLE TO THE RESIDEN TS FOR THE BASIS AMENITIES AND FACILITY. THERE IS NO DOUBT THERE CAN BE MORE THAN ONE BUILDINGS IN THE HOUSING PROJECT AND THE A DDITIONAL HOUSING PROJECT ON THE EXISTING HOUSING PROJECT AL SO QUALIFY AS INFRASTRUCTURAL FACILITIES IF IT SEPARATELY FULFIL LING ALL OTHER ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 25 STATUTORY CONDITIONS PROVIDED UNDER SECTION 80IB(1 0). THIS POSITION HAS ALSO BEEN CLARIFIED BY THE CIRCULAR NO.FNO.205/3/2001 ITA-II DATED 4.5.2001. 6.6 IN A SITUATION WHERE IF CERTAIN PORTION OF TH E HOUSING PROJECT DOES NOT QUALITY FOR DEDUCTION U/S 80IB(10) DUE TO NON- COMPLIANCE OF THE CONDITIONS AS PROVIDED UNDER SECT ION THEN REMAINING HOUSING PROJECT MAY QUALIFY FOR DEDUCTION IF ALL THE CONDITIONS PROVIDED U/S 80IB(10) ARE SATISFIED. IN OTHER WORDS IN ORDER TO QUALIFY THE DEDUCTION WITH RESPECT TO O NLY A PORTION OR A PART OF THE ENTIRE BUILDING ON THE PLOT THE COND ITIONS OF SIZE OF PLOT IS CONCERNED THE SAME HAS TO BE CONSIDERED B Y EXCLUDING THE PROPORTIONATE AREA OF THE PLOT IN RATIO TO NON QUALIFYING PORTION OF HE BUILDING TO QUALIFY THE PART OF THE PROJECT. THUS AS FAR AS THE AREAS OF THE PLOT IS CONCERNED THE S IZE OF PLOT HAS TO BE TAKEN INTO CONSIDERATION IRRESPECTIVE OF THE FACT WHETHER ONE BUILDING PROJECT OR MORE ARE DEVELOPED ON THE S AID PLOT SO LONG AS THE BUILDING PROJECTS ARE IN COMPLIANCE WITH THE PROVISION OF SECTION 80IB. IN THE CASE OF VANDAN A PROPERTIES V/S ACIT (SUPRA) THIS TRIBUNAL HAS TAKEN A VIEW T HAT IF THERE ARE DIFFERENT BUILDINGS PROJECT ON ONE PLOT OF LAND THEN FOR THE PURPOSES OF DEDUCTION U/S 80IB(10) AND PARTICULARLY FOR THE CONDITION OF SIZE OF THE PLOT OF LAND THEN THE ALLO CATION OF THE PLOT IS NOT REQUIRED PROPORTIONATELY AMONG THE DI FFERENT ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 26 BUILDING BUT THE ENTIRE PLOT HAS TO BE SEEN. THIS VIEW WAS TAKEN BY THIS TRIBUNAL ON THE FACT WHEN THE AO OB SERVED THAT THE PLOT WAS TO BE DIVIDED AMONG THE DIFFERENT BUI LDINGS WHILE DECIDING THE ISSUE ON 80IB(10). THE RELEVANT PART O F THE ORDER IN THE CASE OF VEDANTA PROPERTIES (SUPRA) IS REP RODUCED BELOW : 13. NOW THE OBJECTION IS IN RESPECT OF THE SIZE O F THE PLOT OF THE LAND. THERE IS NO DISPUTE ABOUT THE FACT THAT T HE ASSESSEE ACQUIRED THE DEVELOPMENT RIGHTS IN RESPECT OF THE PLOT WHICH WAS ADMITTEDLY 2.36 ACRES ON WHICH ASSESSEE EXECUTE D THE DIFFERENT BUILDING PROJECTS. THE CASE OF THE AO FOR REJECTING THE CLAIM OF THE ASSESSEE IS THAT IF THE SAID LAND IS P ROPORTIONATELY ALLOCATED AMONG DIFFERENT BUILDINGS THEN AREA ALLO CATED TO BUILDING E IS LESS THAN ONE ACRE. AS PER CL (B) T O S.80 IB(10) IT IS PROVIDED THAT THE PROJECT SHOULD BE ON A SIZE O F PLOT OF LAND WHICH HAS THE MINIMUM AREA OF ONE ACRE. AS PER THE AREA STATEMENT GIVEN IN THE PLANTS WE FIND THAT NO SPEC IFIC DEMARCATION IN RESPECT OF THE PLOT OF 2.36 ACRES H AS BEEN MADE. IT IS SEEN THAT THE SURPLUS LAND AVAILABLE W ITH THE ASSESSEE OR EARLIER OWNER WAS GIVEN THE STATUS AS WITHIN CEILING LIMIT (WCL) AND DUE TO CHANGE OR CONVERSION OF THE LAND STATUS THAT THE ASSESSEE WAS ABLE TO PLANT THE PR OJECT FOR BUILDING WING-E. THE LD. COUNSEL BROUGHT TO OUR NO TICE THE CORRESPONDENCE MADE BY THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY MUMBAI WITH THE HON. FINANCE MINISTER G OVERNMENT OF INDIA NEW DELHI SEEKING CLARIFICATION OF CERTA IN ASPECTS ON S 10(23G) AND S. 80IB(10). THE MAIN ISSUE WAS IN RES PECT OF THE TREATMENT TO BE GIVEN TO THE TRANSFER OF DEVELOPMEN T RIGHTS (TDR) IS PURCHASED BY THE DEVELOPER AND USED ON THE EXISTING PLOT OF LAND OR THE PROJECT. AS PER THE LETTER DATE D 4.5.2001 IT APPEARS THAT THE CBDT NEW DELHI HAS REPLIED GIVI NG THE CLARIFICATION THAT ADDITIONAL HOUSING PROJECT ON TH E EXISTING HOUSING PROJECT CAN QUALITY FOR EXEMPTION/DEDUCTIO N UNDER SECTION 10(23G) AND 10-IB (10) PROVIDED THE CORRECT PROFIT CAN BE ASCERTAINED. SO FAR AS THE PRESENT CASE IS CONCE RNED WE HAVE TO TAKE INTO CONSIDERATION THE ENTIRE AREA OF THE PLOT ON WHICH ALL THE BUILDINGS PROJECTS HAVE BEEN PLANNED I.E. A B C D AND E THOUGH SOME OF THE BUILDINGS DO NOT QUALITY F OR DEDUCTION UNDER S. 80IB(10) OF THE ACT AND ADMITTEDLY . THE SAME IS ALSO NOT CLAIMED. WE THEREFORE DO NOT AGREE WITH THE V IEW TAKEN BY THE AO AS WELL AS THE LEARNED CIT(A) THAT THE ASSES SEE HAS VIOLATED THE ANOTHER CONDITION IN RESPECT OF THE SI ZE OF PLOT ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 27 6.7 WE ARE IN AGREEMENT WITH THE CONTENTIONS OF TH E LEARNED SR. COUNSEL TO THE EXTENT THAT THE ENTIRE AREA OF P LOT HAS TO BE SEEN AND NOT THE AREA OF PLOT WHICH IS CONSUMED IN THE PROJECT. HOWEVER AS PER THE REQUIREMENT OF THE PROVISIONS OF SECTION 80IB(10) THE MINIMUM AREA OF ONE ACRE OF PLOT SHAL L BE AVAILABLE FOR THE HOUSING PROJECT UNDER TAKEN FOR THE DEVELOPMENT AS PER THE SECTION 80IB(10). IF THE PR OPOSITION ADVANCED BY THE LEARNED SR. COUNSEL IS ACCEPTED TH AT THE REQUIREMENT IS ONLY TOTAL SIZE OF PLOT AND NOT THE AVAILABLE AREA IN THE HOUSING PROJECT THEN IT WOULD DEFEAT THE V ERY PURPOSE OF THE SCHEME AND OBJECT OF THE PROVISIONS. IN THE C ASE IN HAND THE ASSESSEE ALREADY CONSTRUCTED THE PART OF THE PL OT IN THE YEAR 1965-66 AND THERE IS NO DISPUTE THAT THE SAME CONS TRUCTION IS NOT IN COMPLIANCE WITH THE SECTION 80IB THEREFORE IN OUR VIEW PROPORTIONATE AREA WHICH WAS ALREADY AVAILED IN THE SAID CONSTRUCTION NOT AS PER THE SCHEME OF SECTION 80IB( 10) SHALL NOT BE A PART OF THE SIZE OF PLOT FOR THE PROJECT CL AIMED TO BE ENTITLED FOR DEDUCTION U/S 80IB(10). THE PUNE SPECI AL BENCH OF THIS TRIBUNAL IN CASE OF BRAHMA ASSOCIATES VS. JT. CIT 30 SOT 155 HAS ALSO TAKEN A SIMILAR VIEW AS HELD IN PARA 1 20 AS UNDER: 120. TO SUM UP THE CONCLUSIONS ARRIVED AT BY THIS SPECIAL BENCH ARE AS FOLLOWS :- '(A)THE DEDUCTION UNDER SECTION 80-IB(10) AS APPLI CABLE PRIOR TO 1-4-2005 SUBJECT TO AND IN THE LIGHT OF THE OBSERV ATIONS MADE IN ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 28 THE PRECEDING PARAGRAPHS IS ADMISSIBLE IN CASE OF A 'HOUSING PROJECT' COMPRISING RESIDENTIAL HOUSING UNITS AND C OMMERCIAL ESTABLISHMENTS. IN CASE THESE PROJECTS ARE APPROVED AS HOUSING PROJECTS BY THE LOCAL AUTHORITY SUCH AN APPROVAL A S HOUSING PROJECT IS SUFFICIENT FOR THE PURPOSES OF ELIGIBILI TY. IN ANY OTHER CASE WHERE 90 PER CENT OR MORE OF THE TOTAL BUILT UP AREA IS USED FOR DWELLING UNITS IN ACCORDANCE WITH THE SCH EME OF SECTION 80-IB(10) THE BENEFIT OF DEDUCTION UNDER S ECTION 80- IB(10) WILL NOT BE DECLINED. IN CASE COMMERCIAL USE OF BUILT-UP AREA IS MORE THAN 10 PER CENT BUT THE RESIDENTIAL S EGMENT OF THE PROJECT SATISFIES REQUIREMENTS OF SECTION 80-IB(10) ON STANDALONE BASIS I.E. (I) THE SIZE OF THE PLOT E XCLUDING PORTION UNDER COMMERCIAL UNIT IS MORE THAN MINIMUM AREA OF ONE ACRE (II) RESIDENTIAL UNITS BUILT ON SUCH AREA MUST SATI SFY CONDITION OF CLAUSE (C) OF THE PROVISION AND (III) OTHER NECESS ARY CONDITIONS ARE FULFILLED AND WHERE INCOME FROM CONSTRUCTION O F RESIDENTIAL DWELLING UNITS CAN BE WORKED OUT ON STANDALONE BASI S DEDUCTION UNDER SECTION 80-IB(10) WILL BE AVAILABLE IN RESPECT OF RESIDENTIAL SEGMENT OF THE PROJECT. (B)THE DEDUCTION UNDER SECTION 80-IB(10) IS AVAILAB LE IN RESPECT OF PROFITS OF HOUSING PROJECT AS A WHOLE AND AS S UCH IT IS NOT RELEVANT AS TO WHAT IS THE PORTION OF PROFITS WHICH CAN BE SAID TO BE ATTRIBUTABLE TO RESIDENTIAL UNITS. THIS IS SUBJE CT TO THE RIDER THAT IN CASE COMMERCIAL USE OF BUILT-UP AREA IN A P ROJECT IS MORE THAN 10 PER CENT AND FOR THIS REASON THE PROJECT C ANNOT BE SAID TO BE A PREDOMINANTLY HOUSING PROJECT BUT IN TERM S OF OBSERVATIONS MADE IN PARAGRAPH 115 ABOVE THE ASSES SEE IS ENTITLED TO DEDUCTION IN RESPECT OF RESIDENTIAL UNI T SEGMENT OF THE OVERALL PROJECT ON FULFILMENT OF NECESSARY CONDITIO NS THE ENTITLEMENT OF INCENTIVE DEDUCTION WILL BE CONFINED TO ONLY TO THE PROFITS TO THE RESIDENTIAL SEGMENT OF THE OVERALL P ROJECT. (C)THE LIMIT ON COMMERCIAL USE OF BUILT UP AREA AS PRESCRIBED BY CLAUSE (D) OF SECTION 80-IB(10) HAS NO RETROSPECTIV E APPLICATION AND IT APPLIES ONLY WITH EFFECT FROM THE ASSESSMENT YEAR 2005- 06.' 6.8 IN VIEW OF THE ABOVE DISCUSSION WE HOLD THAT T HE PART OF THE PLOT OF LAND WHICH WAS ALREADY USED FOR THE CON STRUCTION OF BUILDING NOT A PART OF THE PROJECT AS PER THE PROV ISIONS OF SECTION 80IB(10) SHALL NOT BE CONSIDERED AS PART O F THE AREA FOR ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 29 THE PURPOSE OF HOUSING PROJECT UNDER SECTION 80IB. HENCE WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LEANED CIT(A) QUA THIS ISSUE. WE CONFIRM THE ACTIONS OF TH E LOWER AUTHORITIES. 7. GROUNDS OF APPEAL NO.6 IS REGARDING LEVY OF INTE REST U/S 234B. THE LEVY OF INTEREST U/S 234B IS MANDATORY AN D CONSEQUENTIAL ONE THEREFORE NO SPECIFIC FINDING IS REQUIRED. 9. GROUNDS OF APPEAL NO.7 REGARDING LEVYING OF INT EREST U/S 234D. 9.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORD. . THE LEARNED SR. COUNSEL HAS RELIED UPON THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT V/S BAJAJ HINSTUTHAN LTD. IN THE INCOME TAX A PPEAL NO. 198 OF 2009 ORDER DATED 15.4.2009 AND SUBMITTED THA T THE PROVISIONS OF SECTION 234D CANNOT BE APPLIED PRIOR TO 1.6.2003.. THE HON. JURISDICTIONAL HIGH COURT HAS OBSERVED IN PARAGRAPH 5 AS UNDER: 5. SO FAR AS THE LAST QUESTION IS CONCERNED IT IS SEEN THAT THE SUBJECT PROVISION CAME ON STATUTE BOOK W.E.F 1. 6.2003. IF THAT BE SO THE SAID PROVISION DOES NOT HAVE RETROS PECTIVE EFFECT . IN THIS VIEW OF THE MATTER WE DO NOT SEE APPEAL GIVING RISE TO ANY SUBSTANTIAL QUESTION OF LAW. APPEAL IS THEREFO RE DISMISSED IN LIMINE WITH NO ORDER AS TO COSTS . ITA NO. 7000/MUM/2008 (ASSESSMENT YEARS 2001-02) 30 10. IN VIEW OF THE ABOVE DECISION OF THE HON. JURIS DICTIONAL HIGH COURT WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE 11 IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH FEB 201 1 SD SD (J.SUDHAKAR REDDY) (V IJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ON THIS 28 TH DAY OF FEB 2011 SRL:10211 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI