HUBTOWN LTD., MUMBAI V. DCIT- CC-5(1), MUMBAI

CO 163/MUM/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0360 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 10-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VODAL RAJ SINGH
• Assessee Lawyers: GOVIND JHAVERI ARS
• Keywords: Reopening of assessment; Business income; Rule of consistency; Earning of tax free income; Proportionate interest; Reasonable cause; Valuation report; Tax effect; Condonation of delay; Reassessment proceedings; Rule 8D; Set aside
• Section: 143(3); 14A; 260A; 115JB; 80IB; 143(1); 139(1); 43; 48; 72; 13; 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H, BENC H MUMBAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEMB ER ITA NO.2764/MUM/2018 ( ASSESSMENT YEAR: 2013-14 ) DCIT, CC-5(1) ROOM NO.1928 19 TH FLOOR AIR INDIA BUILDING, NARIMAN POINT MUMBAI-400 021 VS. M/S. HUBTOWN LTD. AKRUTI TRADE CENTRE, 6 TH FLOOR ROAD NO.7, MAROL-MIDC ANDHERI(E) MUMBAI-400 093 PAN/GIR NO. AA ACA6101D ( APPELLANT ) .. ( RESPONDENT ) & CROSS OBJECTION NO.163/MUM/2019 ( ASSESSMENT YEAR: 2013-14 ) M/S. HUBTOWN LTD. AKRUTI TRADE CENTRE, 6 TH FLOOR ROAD NO.7, MAROL-MIDC ANDHERI(E) MUMBAI-400 093 VS. DCIT, CC-5(1) ROOM NO.1928 19 TH FLOOR AIR INDIA BUILDING, NARIMAN POINT MUMBAI-400 021 PAN/GIR NO.AAACA6101D ( APPELLANT ) .. ( RESPONDENT ) & ITA NO.2765/MUM/2018 ( ASSESSMENT YEAR: 2014-15 ) DCIT, CC-5(1) ROOM NO.1928 19 TH FLOOR AIR INDIA BUILDING, NARIMAN POINT MUMBAI-400 021 VS. M/S. HUBTOWN LTD. AKRUTI TRADE CENTRE, 6 TH FLOOR ROAD NO.7, MAROL-MIDC ANDHERI(E) MUMBAI-400 093 PAN/GIR NO. AAACA6101D ( APPELLANT ) .. ( RESPONDENT ) HUBTOWN LIMITED. 2 CROSS OBJECTION NO.164/MUM/2019 ( ASSESSMENT YEAR: 2014-15 ) M/S. HUBTOWN LTD. AKRUTI TRADE CENTRE, 6 TH FLOOR ROAD NO.7, MAROL-MIDC ANDHERI(E) MUMBAI-400 093 VS. DCIT, CC-5(1) ROOM NO.1928 19 TH FLOOR AIR INDIA BUILDING, NARIMAN POINT MUMBAI-400 021 PAN/GIR NO. AAACA6101D ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI. VIJAY MEHTA & GOVIND JHAVERI, AR,S REVENUE BY SHRI. VODAL RAJ SINGH, DR DATE OF HEARING 0 4 /10 /201 9 DATE OF PRONOUNCEMENT 1 3 /1 2 /201 9 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER : THESE TWO APPEALS FILED BY THE REVENUE FOR ASSESSME NT YEAR (AY) 2013-14 AND 2014-15 AND TWO CROSS OBJECTIONS F ILED BY THE ASSESEE FOR AY 2013-14 AND 2014-15 ARE DIRECTED AGA INST IDENTICAL, BUT SEPARATE ORDERS OF LD. COMMISSIONER OF INCOME T AX (APPEALS)-53, MUMBAI, DATED 26/02/2018 AND 27/02/2018. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CO NVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED -OFF B Y THIS CONSOLIDATED ORDER. ITA NO. 2764/MUM/2018-ASST YEAR 2013-14 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING DEDUCTION U/S 80IB, FO R RS.29,13,06,959/-. HUBTOWN LIMITED. 3 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE A SSESSES HAD TRANSFERRED FSI TO THE ASSOCIATE CONCERN FOR RS.13,672/- AS AGA INST THE READY RECKONER RATE OF RS.11,520/-. 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IGNORED THAT THE PROVISIONS OF SECTION 8 0IB(13) R.W.S. 80IA(10) WERE CLEARLY APPLICABLE AGAINST THE ASSESSEE 4. 'WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE DECIS ION RELIED UPON BY HIM IN THE CASE OF AARTI PROJECT HAS BEEN CONTESTED BEFORE THE HONBLE HIGH COURT AND THE APPEAL IS STILL PENDING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF IMMOVABLE PROPERTIES , INCLUDING PROJECTS UNDER SLUM REHABILITATION SCHEME OF THE GO VERNMENT OF MAHARASHTRA, IN ACCORDANCE WITH DCR 33(10). THE ASS ESSEE HAS FILED ITS RETURN OF INCOME FOR A.Y. 2013-14 ON 30-1 1-2013, DECLARING TOTAL INCOME OF RS. 63,72,61,220/- AND WHICH WAS RE VISED ON 31-03- 2015, DECLARING TOTAL INCOME OF RS. 54,81,07,960/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLE TED U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 12/03/2016 AND DETER MINED TOTAL INCOME OF RS. 95,64,40,510/-, BY MAKING ADDITIONS T OWARDS DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB(10) OF T HE INCOME TAX ACT, 1961. THE ASSESSEE CARRIED MATTER IN APPEAL BE FORE FIRST APPELLATE AUTHORITY AND THE LD. CIT(A), FOR DETAILE D REASONS RECORDED IN APPELLATE ORDER DATED 26/02/2019, PARTLY ALLOWED APPEAL FILED BY THE ASSESSEE, WHERE HE HAD ALLOWED RELIEF TOWARDS D ISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB(10) OF THE ACT, FOR RS.3 4,91,35,308/- TOWARDS SALE OF FSI, BUT CONFIRMED ADDITIONS MADE T OWARDS DISALLOWANCE OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME U/S 14A OF THE INCOME TAX ACT, 1961. AGGRIEVED BY T HE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS FILED CROSS OBJECTION. HUBTOWN LIMITED. 4 4. THE CORE ISSUE IN THE APPEAL OF THE REVENUE REVO LVES ON THE TENABILITY OR OTHERWISE OF THE CLAIM FOR DEDUCTION U/S. 80-IB(10) OF THE ACT FOR 34,91,35,308/-. THE DISPUTED AMOUNT REPRESE NTS THE SALE CONSIDERATION OF THE FSI GENERATED FROM ITS SLUM DE VELOPMENT PROJECT AT MAYANAGAR, WORLI (HEREINAFTER REFERRED T O AS THE 'MAYANAGAR PROJECT' IN SHORT). THIS PROJECT WAS COMPL ETED IN ACCORDANCE WITH THE PROCEDURE PRESCRIBED IN REGULAT ION NO. 33(10) OF DEVELOPMENT CONTROL REGULATIONS FOR GREATER MUMB AI, 1991 [HEREINAFTER REFERRED TO 'DCR 33(10)'IN SHORT]. THE C OSTS INVOLVED IN THE CONSTRUCTION OF SUCH PROJECTS ON BEHALF OF THE GOVERNMENT ARE REIMBURSED IN KIND, I.E. IN THE FORM OF FSI AND NOT IN MONETARY TERMS, WHICH IS A WELL-KNOWN PRACTICE FOLLOWED BY THE STAT E. BESIDES, THE FSI GRANTED BY THE GOVERNMENT FOR UNDERTAKING SUCH PROJECTS COULD BE UTILIZED BY THE DEVELOPERS EITHER FOR CONSTRUCTI ON OF SALEABLE UNITS IN THEIR OWN PROJECTS, OR ELSE COULD BE TRANSFERRED TO THIRD PARTIES FOR CONSIDERATION. IN ORDER TO ENCOURAGE SUCH REHABILIT ATION PROJECTS UNDER THE AEGIS OF THE STATE GOVERNMENT, DEDUCTION OF HUNDRED PERCENT OF THE PROFITS GENERATED THERE FROM IS GRAN TED U/S. 80-IB(10) OF THE ACT, SUBJECT TO FULFILLMENT OF OTHER TERMS A ND CONDITIONS. NEEDLESS TO STATE THAT THE AFORESAID PRACTICE FOLLO WED UNDER DCR 33(10) OF THE GOVERNMENT OF MAHARASHTRA HAS ALSO BE EN NOTIFIED AS A SCHEME- FOR THE PURPOSES OF S. 80-IB(10) OF THE A CT, VIDE NOTIFICATION NO. 67/2010 DATED 03.08.2010 AS MODIFI ED BY CORRIGENDUM DATED 05.01.2011. 5. IN ITS RETURN OF INCOME FILED FOR THE PREVIO US YEAR RELEVANT TO THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEDUCTION U/S,80IB(10) OF THE ACT, FOR AN AMOUNT OF RS.34,91, 35,308/- BEING THE SALE CONSIDERATION OF FSI OF 29,050 SQ.FEET GENERAT ED FROM ITS HUBTOWN LIMITED. 5 MAYANAGAR PROJECT, FOR WHICH APPROVAL WAS GRANTED O N 26.11.1998 AND COMPLETED AS PER DCR 33(10). IN RESPONSE TO THE QUERY RAISED AS TO THE TENABILITY OF THE CLAIM, THE ASSESSEE SUB MITTED AN EXHAUSTIVE REPLY VIDE ITS LETTER DATED 17.12.2015 W HICH HAS BEEN EXTRACTED ON PAGES 2 TO 11 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER, HOWEVER, WAS NOT INCLINED TO ACCEDE TO THE PLEADINGS MADE BY THE ASSESSEE MAINLY FOR THE FOLLOWING REASONS: (A) SINCE THE CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT ON DEEMED SALE MADE IN A.Y. 2003-04 WAS ALREADY REJECT ED AND IT WAS NOT CONTESTED IN APPEAL, THERE WAS NO JU STIFICATION FOR SEEKING RELIEF UNDER THIS VERY PROVISION IN THE YEAR UNDER CONSIDERATION; (B) THE BENEFIT OF THE NOTIFICATIONS DATED 03.0 8.2010 AND 05.01.2011 COULD BE AVAILED OF IN RESPECT OF HOUSIN G PROJECTS APPROVED BY SRA ON OR AFTER 01.04.2004 AND BEFORE 31.03.2008, AND SINCE THE REQUISITE APPROVAL WAS GR ANTED TO THE ASSESSEE ON 26.11.1998, THE AFORESAID NOTIFICAT IONS WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE ; (C) SINCE THE CONSIDERATION FOR CONSTRUCTION OF THE REHABILITATION BUILDING WAS RECEIVED IN KIND AND NOT IN CASH/CHEQU E, THE BENEFIT OF S. 80-IB(10) OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE; AND (D) THE FSI RECEIVED UNDER DCR 33(10) WAS SOLD TO FOURJONE REALTORS PVT LTD, GROUP CONCERN, @ RS. 13,672/- PER SQ. FT. AS AGAINST PREVAILING READY RECKONER RATE OF RS.11520/- PER. SQ. FT. HUBTOWN LIMITED. 6 6. IN VIEW OF THE ABOVE, THE CLAIM OF THE ASSESS EE FOR DEDUCTION U/S. 80-IB(10) OF THE ACT WAS REJECTED BY THE ASSES SING OFFICER BY OBSERVING AS UNDER: 'B. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PR OCEEDINGS WAS ASKED AS TO HOW IT WAS CLAIMING THE DEDUCTION U /S. 80IB(10) TWICE, FIRST IN A.Y. 2003-04 ON THE DEEMED SALE VALUE AS P ER STAMP DUTY READY RECKONER RATE AND THEN AGAIN IN A. Y. 2013-14 ON TH E DIFFERENCE BETWEEN ACTUAL SALE VALUE LESS THE VALUE AT WHICH THE TDR I S DISCLOSED IN THE BOOKS OF ACCOUNT IN RESPONSE TO THE ABOVE, ASSESSEE SUBMITTED THAT IN THE EARLIER YEAR, PROFIT FROM SALE OF TDR WAS CLAIM ED ON DEEMED SAFE VALUE AS PER READY RECKONER RATE BASIS AS WAS ITS P OLICY AT THAT TIME WHILE PRESENTLY, THE TDR IS ACTUALLY SOLD AND DEDUCTION I S CLAIMED ON THE PROFIT FROM ACTUAL SALE. THE ASSESSEE HAS FURTHER ARGUED T HAT THE PROJECT BEING A NOTIFIED PROJECT, ELIGIBLE TO CLAIM DEDUCTION U/S . 80IB(10) OF THE ACT, DEDUCTION TO THE SAME SHOULD BE ALLOWED. THE ASSESS EE HAS HOWEVER NOT EXPLAINED AS TO WHAT IS THE CHANGE IN CIRCUMSTANCES AND FACTS OF THE CASE WHICH WOULD MEAN THAT THE SAME PROJECT, DISALLOWED IN A. Y. 2003-04 HAS BECOME ELIGIBLE IN A. Y 2013-14. C. ON THE PERUSAL OF THE SCHEME, IT LEAVES NO DOUBT THAT THE BENEFIT OF THE SAID NOTIFICATION APPLIES ONLY TO HOUSING PROJECTS APPROVED BY SRA ON OR AFTER 1 ST APRIL 2004 AND BEFORE 31 ST MARCH, 2008. IT IS IN THIS CONTEXT TO MENTION THAT THE PROJECT IN QUESTION WAS APPROVED B Y SRA ON 26.11.1998. THEREFORE, THE PLEA OF ASSESSEE THAT PR OJECT IS COVERED BY NOTIFICATION NO, 67/2010 & 1/2011 OF CBDT IS WITHOU T FORCE. IT APPEARS THAT THE ASSESSEE IN ITS ENDEAVOR TO SUBSTANTIATE I TS CLAIM OF DEDUCTION U/S. 80-IB(10) OF THE IT. ACT, HAS TRIED TO EXTEND THE BENEFICIAL PERIOD OF EXEMPTION TO A. Y 1998-99 WHICH IS MUCH EARLIER THA N THAT MENTIONED IN THE NOTIFICATION WHICH SPECIFICALLY MENTIONED THAT THE SAME EXTENDS ONLY TO THE PROJECTS APPROVED FROM 01.04.2004 TO 31.03.2 008. D. ATTENTION IS ALSO INVITED THAT THE ASSESSEE IS F URTHER CLAIMING DEDUCTION OF RS, 34,91,35,308/- ON THE TRANSFER OF TDR OF RS. 39,71,71,600/- AND NOT ON ACTUAL RECEIPT OF CONSIDERATION IN CASH OR C HEQUE OR EQUIVALENT MEANS. DEDUCTION U/S. 80-IB(10) IS ALLOWABLE ON THE ACTUAL CONSIDERATION RECEIVED. IN THIS CASE, THE ACTUAL CONSIDERATION IS NOT CASH, CHEQUES OR ITS EQUIVALENT BUT IS IN TERMS OF RIGHT TO CONSTRUCT IN THE FORM OF FSI/TDR, IT MAY BE MENTIONED HERE THAT THOUGH THE ABOVE HAS BEE N PART OF LITIGATION BETWEEN THE DEPARTMENT AND THE ASSESSEE, THERE HAS BEEN NO FINALITY ON THE ISSUE BY THE JUDICIAL AUTHORITIES WHICH WOULD S HOW THE CORRECT PATH TO BE ADOPTED. THE ISSUE OF CLAIM OF DEDUCTION U/S. 80 -IB(10) OF THE ACT ON THE TRANSFER TDR IS NOT ACCEPTED BY THE DEPARTMENT THE DECISION OF THE HON 'BLE BOMBAY HIGH COURT IN CIT V/S. SONASHA ENTE RPRISES ITA APPEAL NO. 1391 OF 2012 HAS NOT BEEN ACCEPTED BY THE DEPAR TMENT AND SLP VIDE D. NO. 11467/2015 IS PENDING BEFORE THE HONBLE APE X COURT AS PER THE OFFICIAL WEBSITE OF THE HON'BLE SUPREME COURT HUBTOWN LIMITED. 7 F. WITHOUT PREJUDICE TO THE POINTS DISCUSSED ABOVE, IT HAS BEEN FOUND THAT THE ASSESSEE HAS TRANSFERRED THE TDR 29,050 SQ. FEE T AND RECEIVED RS. 39,79,94,100/- @ RS. 13.672/- PER SQ. FEET AFTER EF FECTING SALES TO M/S, FOUR/ONE REALTORS PVT LTD., A GROUP CONCERN OF THE ASSESSEE COMPANY AS IS ADMITTED BY THE ASSESSEE COMPANY VIDE SUBMISSION DATED 22.12.2015. THE PROMOTERS OF THE ASSESSEE COMPANY AND THAT OF M /S. FOUR/ONE REALTORS PVT LTD. ARE COMMON. HOWEVER, VALUE OF TDR AS PER STAMP DUTY READY RECKONER IS FOUND TO BE RS. 11,520/- PER SQ. FT. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE EXCESS RECEIPTS O F RS. 6,25,15,600/- AS THE DIFFERENCE BETWEEN THE ACTUAL RATE AND READY RECKONER RATE OF TDR PER SQ. FT NOT BE DISALLOWED BY INVOKING THE PR OVISION OF SECTION 80IB(10) OF THE I. T. ACT. THIS SHOULD BE SEEN 35 A N ATTEMPT OF THE ASSESSEE TO CLAIM EXCESS DEDUCTION U/S. 80IB(10) OF IT ACT. IN RESPONSE TO THE ABOVE, THE AR HAS SUBMITTED THAT THE VALUATI ON OF THE TDR HAD BEEN DONE AT THE MARKET VALUE AFTER CONSIDERING THE LOCATION AND THE DEMAND OF TDR AT THAT POINT OF TIME. THE ASSESSEE H AS ALSO FURTHER SUBMITTED A VALUATION REPORT JUSTIFYING THE RATE CH ARGED BY IT ON SALE OF TDR TO M/S. FOURJONE REALTORS PVT LTD. THE SUBMISSI ON OF THE ASSESSEE HAS BEEN CONSIDERED, HOWEVER, THE SAME IS NOT ACCEP TABLE IN ABSENCE OF THE CORROBORATIVE/ SUPPORTING DOCUMENTS/EVIDENCES T O SUPPORT ITS CONTENTION. THEREFORE THE DEDUCTION OF RS.34,91,35, 308/- ON THE TRANSFER OF TDR CLAIMED U/S. 80IB(10) OF THE I, T. ACT IS WI THDRAWN.' AGAINST THE ORDER THUS PASSED BY THE ASSESSING OFFICER, THE ASS ESSE PREFERRED APPEAL BEFORE THE CIT(A). 7. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE AO. THE ASSESSEE, FURTHER D RAWING SUPPORT FROM THE PROVISO BELOW EXPLANATION T O S. 80IB (10) OF THE ACT, AFORESAID NOTIFICATIONS DATED 03.0 8.2010 AND 05.01.2011 ISSUED BY CBDT ON THE SUBJECT AND RELYIN G UPON VARIOUS CASE LAWS SO A SO THE ORDER DATED 28.12.2017 PASSED U/S. 143(3) OF THE ACT FOR A.Y. 2015-16 GRANTING SIMILAR RELIEF, THE D ISALLOWANCE WAS ASSAILED. THE CIT(A) AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, S. 80IB(10) OF THE ACT, PRECEDENT AND THE DECISION TAKEN BY THE ASSESSING OFFICER HIMSELF ON SIMILAR FACT-SITUATION IN A.Y. 2015-16, WAS DELETED THE DISALLOWANCE IN HI S EXHAUSTIVE ORDER. IT IS AGAINST THIS ORDER THAT THE REVENUE IS IN APP EAL ON THE GROUNDS MENTIONED HEREINABOVE. HUBTOWN LIMITED. 8 8. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS ER RED IN ALLOWING DEDUCTION U/S 80IB (10) OF THE I.T. ACT, 1961 FOR R S. 34,91,35,308/-, WITHOUT APPRECIATING THE FACT THAT THE ASSESEE HAD TRANSFERRED FSI TO THE ASSOCIATED CONCERNS FOR RS. 13,672/- AS AGAINST READY RECKONER RATE OF RS. 11,520/-, IGNORING DETAILED REASONS BRO UGHT OUT BY THE LD.AO TO DENY THE BENEFIT. THE LD. DR, FURTHER SUBM ITTED THAT THE LD.CIT(A) WAS ERRED IN ALLOWING THE BENEFIT, IGNORI NG THE FACT THAT THE PROVISIONS OF SECTION 80IB(13) R.W.S. 80IA(10) WERE CLEARLY APPLICABLE AGAINST THE ASSESEE. HE, FURTHER, SUBMITTED THAT TH E LD.CIT(A) HAS ALSO FAILED TO APPRECIATE THE FACT THAT THE DECISIO NS RELIED UPON BY LD.CIT(A), IN THE CASE OF ARTHI PROJECT AND CONSTRU CTIONS VS DCIT IN ITA NO. 4190/MUM/2016, DATED 05/01/2017 WAS NOT ACC EPTED BY THE DEPARTMENT AND APPEAL THEIR AGAINST WAS FILED BEFOR E THE HONBLE BOMBAY HIGH COURT. THE LD. DR, FURTHER SUBMITTED TH AT THIS ISSUE HAS BEEN CONSIDERED BY THE AO FOR AY 2004-05, WHERE THE ASSESEE HAS ACCEPTED THE FINDINGS OF THE AO AND NOT PREFERR ED ANY APPEAL BEFORE THE APPELLATE AUTHORITIES. HOWEVER, FOR THE YEAR UNDER CONSIDERATION WITHOUT THERE BEING ANY CHANGES IN FA CTS, THE ASSESEE HAS CLAIMED THE BENEFIT. THE LD. AO AFTER CONSIDERI NG THE RELEVANT FACTS HAS REJECTED THE CLAIM OF THE ASSESEE FOR DED UCTION U/S 80IB(10) OF THE I.T. ACT, 1961 AND HIS ORDER SHOULD BE UPHELD. 9. THE LD. AR FOR THE ASSESEE, ON THE OTHER HAND, S TRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT TH E MAIN REASONS FOR THE AO TO DENY THE BENEFIT OF DEDUCTION U/S 80I B(10) OF THE ACT, IS ON THE BASIS OF REJECTION OF SAID CLAIM FOR THE AY 2003-04. HOWEVER, THE FACT REMAINS THAT THERE IS SUBSTANTIAL CHANGES IN FACTS, AFTER THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003-0 4, AS PER WHICH, THE CLAIM OF THE ASSESEE WAS SUPPORTED BY TH E NOTIFICATION HUBTOWN LIMITED. 9 ISSUED BY THE CBDT EXEMPTING NOTIFIED PROJECT FROM THE CONDITION OF COMPLETION OF THE PROJECT. HE, FURTHER SUBMITTED TH AT THE PROJECT ON WHICH DEDUCTION HAS BEEN CLAIMED WAS APPROVED ON 26 /11/1998 AND NOTIFICATION ISSUED BY THE CBDT IS SQUARELY ESTABLI SHED THE FACT THAT LIMITATION PRESCRIBED IN CLAUSE (A) AND (B) WERE IN APPLICABLE TO PROJECTS COMPLETED AS PER SCHEME OF CENTRAL AND STA TE GOVERNMENT. INDISPUTEDELY, THE MAYA NAGAR PROJECT WAS SANCTIONE D UNDER THE SCHEME OF GOVERNMENT OF MAHARASHTRA UNDER DCR 33(10 ) FOR REHABILITATION OF THE SLUM DWELLERS, AND IT WAS COV ERED BY THE NOTIFICATIONS. THEREFORE, IN VIEW OF THE UNAMBIGUOU S LANGUAGE OF THE PROVISO, THE PROJECT COMPLETED BY THE ASSESEE WAS E XCLUDED FROM THE RESTRICTIONS IMPOSED BY CLAUSES (A) AND (B) OF SUB-S. (10) OF SEC.80IB OF THE ACT. THE LD. AR, FURTHER SUBMITTED THAT THE LD.CIT(A) HAS CONSIDERED ALL THESE ASPECTS AND ALSO BY FOLLO WING JUDICIAL PRECEDENTS, INCLUDING THE DECISION OF ITAT, MUMBAI TRIBUNAL DECISIONS, IN THE CASE OF RAMESH GUNSHI DEDHIA VS. ITO [148 ITD 356 (MUM)] HELD THAT AS A CONSEQUENCE OF THE PROVI SION, THE CONDITIONS PRESCRIBED IN CLAUSES(A) AND (B) ARE REL AXED, IF THE HOUSING PROJECT WAS CARRIED OUT IN ACCORDANCE OF T HE SCHEME OF THE CENTRAL OR STATE GOVERNMENT. SINCE, THE PROJECT ON WHICH DEDUCTION WAS CLAIMED U/S 80IB(10) APPROVED BY THE STATE GOVE RNMENT OF MAHARASHTRA UNDER DCR-33(10) REGULATIONS, THE DEDU CTION HAS BEEN RIGHTLY GRANTED BY THE LD.CIT(A) AND HIS ORDER SHOULD BE UPHELD. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW ALONG WITH CASE LAWS CITED BY BOTH THE PARTIES. THE MAIN DISPUTE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER IS WITH REGA RD TO AVAILABILITY HUBTOWN LIMITED. 10 OF THE BENEFIT OF DEDUCTION U/S 80IB(10) OF THE ACT , IN LIGHT OF PROVISO TO SECTION AND ALSO MORE PARTICULARLY IN LIGHT OF C LAUSE (A) AND (B) OF SAID PROVISO. AS PER THE SAID PROVISO, CLAUSE (A) A ND (B) REGARDING DATE OF COMMENCEMENT AND DATE COMPLETION OF PROJECT HAS NO APPLICATION, IF SUCH PROJECT IS APPROVED BY CENTRAL OR STATE GOVERNMENT UNDER ANY LAWS. IT IS AN ADMITTED FACT T HAT THE PROJECT ON WHICH THE BENEFIT OF DEDUCTION WAS CLAIMED U/S 80IB (10) OF THE ACT, WAS APPROVED BY THE STATE GOVT. OF MAHARASHTRA, UND ER SRA SCHEME. IN THIS FACTUAL BACKGROUND, IF YOU EXAMINE THE CLAIM OF THE ASSESSEE, WE FIND THAT THE GOVERNMENT DOES NOT COMP ENSATE THE DEVELOPERS THE COST OF CONSTRUCTION OF THE TENEMENT S IN SLUM DEVELOPMENT PROJECTS BUT ONLY GRANTS FSI, WHICH COU LD BE UTILIZED BY THEM EITHER FOR CONSTRUCTION OF SALEABLE AREA IN OT HER PROJECTS, OR SOLD IN OPEN MARKET AS PER THEIR CHOICE. SINCE, THE ASSE SSEE DID NOT UTILIZE THE FSI OF 29,050 SQ. FEET GRANTED BY THE G OVERNMENT IN LIEU OF THE COST SUFFERED IN UNDERTAKING THE MAYANAGAR PROJ ECT AS PER DCR 33(10), IT WAS ENTITLED TO SELL IT TO ANYONE WITHOU T ANY RESTRICTION. THE ASSESSEE, THEREFORE, SOLD THE FSI GENERATED FROM IT S MAYANAGAR PROJECT TO FOURJONE REALTORS PVT LTD., A GROUP CONC ERN, AS PER THE THEN PREVAILING MARKET RATE. 11. THE AO HAS DENIED THE BENEFIT ON THREE GROUNDS . IN SO FAR AS, THE OBJECTION OF THE ASSESSING OFFICER THAT SINCE D EDUCTION U/S. 80IB(10) OF THE ACT MADE IN A.Y. 2003-04 WAS REJECT ED AND AS IT WAS NOT ASSAILED IN APPEAL, THE ASSESSEE COULD NOT REPE AT THE SAME IN THE YEAR UNDER CONSIDERATION. IT IS NOTED THAT IN A .Y. 2003-04 THE CLAIM WAS REJECTED ON THE GROUND THAT THE WHOLE OF THE PROJECT WAS NOT COMPLETED. MOST IMPORTANTLY, THE ASSESSMENT ORD ER FOR THAT YEAR WAS PASSED ON 30.12.2008 WHEREAS THE CBDT ISSUED TH E HUBTOWN LIMITED. 11 NOTIFICATION, EXEMPTING NOTIFIED PROJECTS FROM THE CONDITION OF COMPLETION OF THE PROJECT, ON 05.01.2011. THEREFORE , THE ASSESSEE HAS NOT CONTESTED THE SAID ORDER. AS AGAINST THE AB OVE, DURING THE RELEVANT PREVIOUS YEAR, THE ENTIRE PROJECT WAS COMP LETED AND THE FSI GRANTED BY THE GOVERNMENT IN LIEU OF THE COST FACTO R WAS IN FACT SOLD. IT IS, THEREFORE, THE REFERENCE MADE BY THE ASSESSI NG OFFICER TO THE PROCEEDINGS OF A.Y. 2003-04 WAS ILLOGICAL AND UNCAL LED FOR AS THE CLAIM MADE IN THE YEAR UNDER APPEAL WAS NOT DEPENDE NT UPON THAT OF THE EARLIER YEAR; AND THE CIT (A) WAS PERFECTLY JUS TIFIED IN REFUTING SUCH ARGUMENT CANVASSED BY THE ASSESSING OFFICER IN PARAGRAPH 4.12 OF HIS ORDER. 12. WITH RESPECT TO THE OBJECTION THAT SINCE THE MA YANAGAR PROJECT WAS APPROVED ON 26.11.1998, THE BENEFIT OF THE NOTI FICATION NO. 67/2010 DATED 03.08.2010 AND THE CORRIGENDUM ISSUED VIDE NOTIFICATION NO. 02/2011 INCOME TAX DATED 05.01.201 1 WAS NOT AVAILABLE. IN THIS REGARD, IT IS NOTED THAT THE INF ERENCE DRAWN BY THE ASSESSING OFFICER IS CONTRARY TO THE STATUTORY PROV ISIONS SET OUT UNDER SECTION 80IB(10) OF THE ACT. FOR READY REFERENCE, I T IS NECESSARY TO REPRODUCE SECTION 80-IB(10) OF THE ACT, AS APPLICAB LE TO THE YEAR UNDER CONSIDERATION BELOW: '(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UND ERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31 ST DAY OF MARCH, 2008 BY A LOCAL AUTHORITY SNAIL BE HU NDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT T O ANY ASSESSMENT 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 1 ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION.- (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE R ! DAY OF APRIL 2004, ON OR BEFORE THE 31 ST DAY OF MARCH, 2008; (II) IN A CASE WHERE 3 HOUSING PROJECT HAS BEEN , OR, IS APPROVED BY THE FOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2004 BUT NOT HUBTOWN LIMITED. 12 LATER THAN THE 31 ST DAY OF MARCH, 2005, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT IS APPROVED BY THE LOCAL AUTHORITY; (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN A PPROVED BY THE FOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2005, WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOU SING PROJECT 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 SH ALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH T HE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPR OVED 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 COMPLET ION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS I SSUED BY THE LOCAL AUTHORITY; (B) THE PROJECT IS ON THE SIZE OF 3 PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT EARNED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF E XISTING BUILDING IN AREAS DECLARED TO BE SLUM AREAS UNDER A NY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF. '(EMPHASIS SUPPLIED). 13. IF, YOU GO THROUGH THE PROVISIONS OF S.80-IB(10 ) OF THE ACT, EXTRACTED ABOVE AND THE AFORESAID NOTIFICATIONS ISS UED BY THE CBDT, WE FIND THAT THE ASSESSING OFFICER CLEARLY ERRED IN DISREGARDING THE PROVISO WHICH MANDATES THAT THE LIMITATIONS PRESCRI BED IN CAUSES (A) AND (B) WERE INAPPLICABLE TO HOUSING PROJECTS COMPL ETED AS PER THE SCHEME OF CENTRAL OR STATE GOVERNMENT. INDISPUTABLY , THE MAYANAGAR PROJECT WAS SANCTIONED UNDER THE SCHEME O F THE GOVERNMENT OF MAHARASHTRA UNDER DCR 33(10) FOR REHA BILITATION OF THE SLUM DWELLERS, AND IT WAS COVERED BY THE NOTIFI CATIONS. THEREFORE, IN VIEW OF THE UNAMBIGUOUS LANGUAGE OF T HE PROVISO, THE PROJECT COMPLETED BY THE ASSESSEE WAS EXCLUDED FROM THE RESTRICTIONS IMPOSED BY CLAUSES (A) AND (B) OF SUB- S. (10) OF S. 80-IB HUBTOWN LIMITED. 13 OF THE ACT HENCE, WE ARE OF THE CONSIDERED VIEW THA T REJECTION OF ASSESSEE'S CLAIM FOR DEDUCTION U/S, 80-IB(IO) OF TH E ACT WAS UNJUSTIFIED, AND IT WAS RIGHTLY SO HELD BY THE CIT( A) IN PARAGRAPH 4.10 OF HIS ORDER. 14. WE, FURTHER NOTED THAT A SIMILAR INTERPRETATI ON AS DRAWN BY THE ASSESSING OFFICER WITH RESPECT TO THE NOTIFICATION DATED 05.01.2011, THAT IT WAS TO EXTEND THE PERMISSIBLE PERIOD IN RES PECT OF PROJECTS APPROVED AFTER 01.04.2004, WAS CONSIDERED AND ADJUD ICATED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF R AMESH GUNSHI DEDHIA V. ITO [148 ITD 356 (MUM)], WHICH WAS RELIED UPON BEFORE THE CIT (A). IN THE SAID CASE, IT WAS HELD THAT AS A CONSEQUENCE OF THE PROVISO, THE CONDITIONS PRESCRIBED IN CLAUSES ( A) AND (B) ARE RELAXED IF THE HOUSING PROJECT WAS CARRIED OUT IN A CCORDANCE WITH THE SCHEME OF THE CENTRAL OR STATE GOVERNMENT. SINCE, T HE CIT(A) HAS EXTRACTED IN EXTENSO THE FINDINGS RECORDED BY THE T RIBUNAL IN PARAGRAPH 4.16 ON PAGES 23-26 OF HIS ORDER, FOR THE SAKE OF BREVITY, WE REFRAIN FROM REPETITION THEREOF. 15. THE OTHER OBJECTION OF THE ASSESSING OFFICER IS THAT SINCE THE CONSIDERATION FOR CONSTRUCTION OF THE REHABILITATIO N BUILDING WAS RECEIVED IN KIND AND NOT IN CASH/CHEQUE, THE BENEFI T OF S. 80-IB(10) OF THE ACT WOULD NOT AVAILABLE TO THE ASSESSEE. IT IS NOTED THAT THIS INFERENCE DRAWN BY THE ASSESSING OFFICER IS ALSO UN TENABLE AS HELD IN VARIOUS DECISIONS, CITED BEFORE AND CONSIDERED B Y THE CIT (A) IN PARAGRAPH 4.19 OF HIS ORDER HOLDING TO THE CONTRARY . IN THE PREMISES, WE ARE OF THE CONSIDERED VIEW THAT THE CIT (A) WAS JUSTIFIED IN REJECTING THE ARGUMENT OF THE ASSESSING OFFICER THA T SINCE THE CONSIDERATION WAS RECEIVED IN KIND AND NOT IN CASH/CHEQUE, THE HUBTOWN LIMITED. 14 ASSESSEE WAS NOT ENTITLED TO THE DEDUCTION IN PARAG RAPH 4.19 OF HIS ORDER THE ORDER OF THE CIT (A), THEREFORE, DOES NOT CALL FOR ANY INTERFERENCE ON THIS COUNT TOO. 16. MOST IMPORTANTLY, IN A.Y. 2015-16 ALSO, A SIMILAR C LAIM FOR DEDUCTION U/S. 80-IB(10) OF THE ACT WAS PREFERRED I N RESPECT OF THE FSI GRANTED AND SOLD IN IDENTICAL FACT-SITUATION. W E FIND THAT AFTER TAKING NOTE OF THE ENTIRE SCHEME, STATUTORY PROVISI ONS AND NOTIFICATIONS CITED HEREINABOVE, THE ASSESSING OFFI CER HIMSELF HAD GRANTED THE DEDUCTION SOUGHT FOR VIDE HIS ORDER DAT ED 28.12.2017 PASSED U/S. 143(3) OF THE ACT. THE FOLLOWING FINDIN GS RECORDED BY THE ASSESSING OFFICER IN THE AFORESAID ORDER DATED 28.1 2.2017 ARE NOTEWORTHY: '3.2 THE SUBMISSION OF THE ASSESSES HAS BEEN THOROU GHLY CONSIDERED WITH THE DOCUMENTS ANNEXED TO THE SUBMISSION. IT IS CLAIMING THAT CONSTRUCTION OF REHAB BUILDING WAS APPROVED BY SLUM REHABILITATION AUTHORITY UNDER DC REGULATION 33(10) OF THE DCR AND THE APPROVAL WAS GRANTED TO THE ASSESSES COMPANY FOR THE SAID PROJEC T ON 26.11.1998. CONSEQUENT TO THE CONSTRUCTION OF THE REHABILITATIO N BUILDING, THE ASSESSEE HAS RECEIVED TDR IN LIEU OF THIS CONSTRUCT ION WHICH HAS BEEN SOLD TO ITS GROUP CONCERNS DURING THE A. Y. UNDER C ONSIDERATION. THE ASSESSEE IS OF THE VIEW THAT IT IS A ELIGIBLE FOR C LAIMING DEDUCTION U/S. 80- IB(10) OF THE I.T. ACT ON THE SALE OF SAID TDR. I H AVE GONE THROUGH THE FACTS OF THE CASE AS SUBMITTED BY THE ASSESSEE AND THE SUBMISSION OF THE ASSESSES I FIND THAT DC REGULATION 33(10) OF DEVELO PMENT CONTROL REGULATION FOR GREATER MUMBAI 1991 UNDER WHICH THE ASSESSES HAS CONSTRUCTED THE REHAB BUILDINGS AND HAS BEEN NOTIFI ED BY THE CBDT. FURTHER THE FACTS BASED ON WHICH THE DEDUCTION WAS DENIED IN EARLIER YEARS DO NOT PERSIST AND HAVE CHANGED SINCE THEN AN D THE PROJECT SATISFIES THE CONDITIONS STATED IN SECTION 80IB(10) OF THE ACT. CONSIDERING THE SAME AND FURTHER CONSIDERING THE FACTS OF THE C ASE, THE CONTENTION OF THE ASSESSEE MERITS ACCEPTANCE. THEREFORE THE DEDUC TION OF RS. 29,13,06959/- ON THE TRANSFER OF TDR CLAIMED U/S. 80IB(10) OF THE I. T. ACT IS ALLOWED.' 17. WE FURTHER NOTED THAT IN ARRIVING AT HIS DECIS ION TO DELETE THE DISPUTED DISALLOWANCE DURING THE YEAR UNDER CONSIDE RATION, THE CIT HUBTOWN LIMITED. 15 (A) HAS ALSO TAKEN NOTE OF THE AFORESAID ORDER DATE D 28.12.2017 PASSED U/S. 143(3) OF THE ACT FOR A.Y. 2015-16 IN P ARAGRAPH 4.21 OF HIS ORDER. FOR ALL THE ABOVE REASONS, WE ARE OF THE VIEW THAT THE DENIAL OF DEDUCTION CLAIMED U/S. 80-IB(10) OF THE A CT WAS UNWARRANTED AND UNJUSTIFIED. THE REASONED ORDER OF THE CIT (A) DELETING THE DISALLOWANCE IS IN ORDER AND IT DOES N OT CALL FOR ANY INTERFERENCE. 18. IN REGARD TO THE OTHER OBJECTION RAISED BY THE ASSESSING OFFICER THAT THE FSI GRANTED WAS SOLD TO A GROUP ENTITY AT AN INFLATED RATE, WE FIND THAT THE STATUTE DOES NOT PROHIBIT SUCH SALE T O GROUP CONCERN. FURTHER, THE READY RECKONER RATE IS NOT SACROSANCT, AND THERE MIGHT BE INNUMERABLE REASONS FOR DEMANDING HIGHER PRICE. IN ANY CASE, THE TRANSACTION UNDER CONSIDERATION IS SUPPORTED BY A VALUATION REPORT SUBMITTED TO A.O. IN WHICH THE RATE OF FSI W AS SUPPORTED WITH THE HELP OF THREE COMPARABLE INSTANCES. FURTHER, TH E INFERENCE DRAWN BY THE ASSESSING OFFICER IS BASED UPON HIS OWN THEO RY, AND NEITHER SUPPORTED BY ANY INDEPENDENT VERIFICATION NOR AFTER DISCREDITING THE VALUATION SUBMITTED BY THE ASSESSEE FOR VALID REASO NS. WE, THEREFORE, ARE OF THE CONSIDERED VIEW THAT THE CIT( A) WAS JUSTIFIED IN REFUTING THE AFORESAID STAND TAKEN BY THE ASSESSING OFFICER. 19. THE OTHER OBJECTION RAISED BY THE ASSESSING OF FICER VIDE GROUND NO. 4, IS THAT SINCE THE ORDER OF THE TRIBUNAL IN T HE CASE OF AARTI PROJECTS AND CONSTRUCTIONS V. DCIT [ITA NO. 4190/MU M/2016 DATED 05.01.2017] WAS NOT ACCEPTED BY THE DEPARTMENT AND APPEAL THERE AGAINST WAS FILED BEFORE THE HONBLE BOMBAY HIGH CO URT AND THE CIT (A) OUGHT NOT HAVE RELIED UPON THE SAME. IN THIS RE GARD, IT IS NOTED THAT UNTIL AND UNLESS THE ORDER OF THE JURISDICTION AL TRIBUNAL IS SET HUBTOWN LIMITED. 16 ASIDE OR REVERSED BY THE HONBLE HIGH COURT, IT HOL DS THE FIELD AND THE AUTHORITIES FUNCTIONING WITHIN THEIR JURISDICTI ON ARE BOUND TO FOLLOW THE SAME. 20. LAST BUT NOT THE LEAST, WE MAY ALSO REFER TO TH E BRIEF NOTE OF THE ADDL. CIT, C.R-5, MUMBAI DATED 02.08.2019. AS PER THIS NOTE, THE DISPUTED CLAIM WAS REJECTED BY THE ASSESSING OFFICE R IN A.Y. 2003- 04 AND IT WAS ALSO ACCEPTED BY THE ASSESSES, AND TH E DISALLOWANCE MADE IN THE YEAR UNDER APPEAL WAS PURSUANT TO NOTIF ICATION NO. 02/2011/INCOME TAX DATED 25.01.2011, THE OTHER STAN D TAKEN BY THE ADDL. CIT WAS THAT IN A.Y. 2015-16 THE ASSESSEE HAD SUPPRESSED RELEVANT FACTS RELATING TO CLAIM U/S. 80-IB(10) OF THE ACT FOR SECURING THE RELIEF FROM THE ASSESSING OFFICER, AND THE CIT (A) HAD FOLLOWED SUCH AN ORDER WHILE GRANTING THE RELIEF. LASTLY, IT IS STATED IN THIS NOTE THAT THE ORDER FOR A.Y. 2015-16 HAS BEEN MADE SUBJE CT TO PROCEEDINGS U/S, 263 OF THE ACT. IN THIS REGARD, WE ARE OF THE VIEW THAT ALL THE ABOVE POINTS, EXCEPT THAT CONCERNING I NITIATION OF PROCEEDING U/S. 263 OF THE ACT FOR A.Y. 2015-16, WH ICH IS SEPARATE AND DISTINCT, HAVE BEEN DISCUSSED IN THE PRECEDING PARAGRAPHS AND, HENCE, THEY ARE NOT REPEATED FOR THE SAKE OF BREVIT Y. THE REASON FOR WHICH THE DISALLOWANCE MADE IN A.Y. 2003-04 WAS NOT CHALLENGED IN FURTHER PROCEEDINGS, AND AS TO WHY THE CLAIM WAS MA DE IN A.Y, 2013-14 HAVE BEEN CONSIDERED BY THE CIT (A) AND ALS O DISCUSSED ELABORATELY IN THE PRECEDING PARAGRAPHS. FOR THE RE ASONS ALREADY STATED, THE ASSERTIONS MADE IN THE AFORESAID NOTE O F THE ADDL, CIT DESERVE TO BE REJECTED. 21. IN THIS VIEW OF THE MATTER AND CONSIDERING FACT S AND CIRCUMSTANCE OF THIS CASE, WE ARE OF THE CONSIDERED VIEW THAT THE HUBTOWN LIMITED. 17 LIMITATIONS PRESCRIBED IN CLAUSE (A) AND (B) OF PRO VISO TO SECTION 80IB(10) OF THE ACT, IN RESPECT OF DATE OF COMMENCE MENT AND COMPLETION OF THE PROJECT HAS NO APPLICATION TO PRO JECTS UNDERTAKEN UNDER THE SCHEME OF CENTRAL OR STATE GOVT. THUS, IN VIEW OF THE FACT THAT THE PROJECT ON WHICH THE BENEFIT OF DEDUCTION WAS CLAIMED U/S 80IB(10) OF THE ACT, WAS APPROVED UNDER DC REGULATI ON 33(10) OF GOVT. OF MAHARASHTRA, AND ALSO NOTIFIED BY THE CBDT U/S 80IB(10) OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THE ASS ESSEE IS ENTITLED FOR DEDUCTION TOWARDS SALE OF FSI/TDR. THE CIT(A) A FTER CONSIDERING RELEVANT FACTS, HAS RIGHTLY ALLOWED THE BENEFIT AND DELETED ADDITION MADE BY THE AO. HENCE, WE ARE INCLINED TO UPHOLD TH E ORDER OF THE LD. CIT(A) AND DISMISSED APPEAL FILED BY THE REVENU E. 22. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. CO.NO. 163/MUM/2019-ASST YEAR 2013-14 23. THE ASSESEE HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTION: - '1. THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS. 5,91,97,243/- MADE B Y THE ASSESSING OFFICER U/S. 14A R.W.R. 8D(2)(II) OF THE ACT ON ACC OUNT OF PROPORTIONATE INTEREST EXPENDITURE. 2. THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE A SSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS. 273,97,518/- MADE BY THE ASSESSING OFFICER U/S. 14A R.W.R. 8D(2)(III) OF THE ACT IN RE SPECT OF OTHER EXPENDITURE. 3. THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE A SSESSING OFFICER TO DELETE THE DIS3FIOWANCE MADE U/S. 14A OF THE ACT WH ILE CALCULATING THE BOOK PRO FIT U/S, 115JB OF THE ACT' 24. AT THE OUTSET, THE LD. AR FOR THE ASSESEE SUBMI TTED THAT THE CROSS OBJECTION FILED BY THE ASSESEE IS DELAYED BY 77 DAYS, FOR WHICH NECESSARY PETITION ALONG WITH AFFIDAVIT FOR CONDONA TION OF DELAY HAS HUBTOWN LIMITED. 18 BEEN FILED EXPLAINING THE REASONS FOR DELAY IN FILI NG CROSS OBJECTION. THE LD. AR, FURTHER SUBMITTED THAT THE ASSESEE DID NOT FILE FURTHER APPEAL AGAINST ORDER OF THE LD.CIT(A) IN CONFIRMING ADDITIONS MADE BY THE AO TOWARDS DISALLOWANCE OF EXPENDITURE U/S 1 4A, FOR WANT OF PROPER ADVISE, HOWEVER WHILE PREPARING FOR THE H EARING OF APPEAL FILED BY THE DEPARTMENT, THE ASSESEE WAS ADVISED BY THE COUNSEL TO CHALLENGE THE ISSUE OF DISALLOWANCES OF EXPENDITURE U/S 14A OF THE ACT, BECAUSE SUCH DISALLOWANCE WAS NOT AS PER THE L AW AND ALSO, THE LAW HAS BEEN EVOLVED BY THE COURTS AND TRIBUNALS, W HICH MAY FAVOR THE ASSESEE. ACCORDINGLY, THE ASSESEE HAS IMMEDIATE LY FILED THE CAPTIONED CROSS OBJECTION WITHOUT ANY FURTHER DELAY . HE FURTHER SUBMITTED THAT SINCE, DELAY WAS NOT DELIBERATE, BUT FOR WANT OF PROPER ADVICE, A LENIENT VIEW MAY BE TAKEN AND CROSS OBJEC TION MAY BE ADMITTED FOR ADJUDICATION IN ACCORDANCE WITH LAW. I N THIS REGARD, HE RELIED UPON THE DECISION OF ITAT, MUMBAI TRIBUNAL I N THE CASE OF SUNDARAM MULTIPAP LTD. V. DCIT IN CO.NO. 272/MUM/20 17. THE ASSESEE HAS RELIED UPON THE DECISION OF HONBLE SUP REME COURT IN THE CASE OF COLLECTOR OF LAND ACQUISITION VS MST KA TIJI 167 ITR 471. 25. THE LD. DR, ON THE OTHER HAND, STRONGLY OPPOSIN G CONDONATION PETITION FILED BY THE ASSESEE SUBMITTED THAT THERE IS NO MERIT IN CONTENTION OF THE ASSESEE, BECAUSE THE ASSESEE HAS CHOSEN NOT TO FILE APPEAL AGAINST ORDER OF THE LD.CIT(A), AS IT W AS WITHDRAWN THE GROUND RAISED BEFORE THE LD.CIT(A). THE LD. DR, FU RTHER SUBMITTED THAT ONCE, THE GROUND HAS BEEN WITHDRAWN AND HAS BE EN REJECTED ON THAT BASIS, THE SAME CANNOT BE INTERFERED WITH UNLE SS, THERE IS COGENT EVIDENCES IN FAVOR OF THE PARTY, WHICH SAYS THAT GR OUND HAS BEEN PRESSED. IN THIS REGARD, HE RELIED UPON THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CENZER INDUSTRIES LTD VS ITAT HUBTOWN LIMITED. 19 (2015) 53 TAXMANN.COM 280. THE LD.DR HAS ALSO RELIE D UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF RAJENDRA PRASAD GUPTA VS CIT (2006) 202 CTR 284. 26. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. THE STATUTE PROVIDES FOR APPEAL TO AGGRIEVED PARTIES, B UT SUCH RIGHT IS NOT ABSOLUTE. AS PER THE PROVISIONS OF THE ACT, THE ASS ESEE SHALL FILE APPEAL OR CROSS OBJECTION AGAINST ORDER OF THE LD.C IT(A) BEFORE THE ITAT ON OR BEFORE 60 DAYS FROM THE DATE OF RECEIPT OF IMPUGNED ORDER. FURTHER, THE PROVISION OF SECTION 253 OF THE ACT PROVIDES INHERENT POWERS TO THE TRIBUNAL TO CONDONE DELAY IN FILING APPEAL OR CROSS OBJECTION, IF THE ASSESEE MAKES OUT A CASE TH AT SAID DELAY IS NOT DELIBERATE OR FOR THE REASONS BEYOND THE CONTRO L OF THE ASSESEE. THEREFORE, IN ORDER TO CONDONE THE DELAY IN FILING APPEAL OR CROSS OBJECTION, IT IS FOR THE ASSESEE TO EXPLAIN THE REA SONS, WHICH PREVENTED THE ASSESEE TO FILE APPEAL WITHIN PRESCRI BED TIME ALLOWED UNDER THE ACT. FURTHER, THE HONBLE SUPREME COURT, IN THE CASE OF COLLECTOR OF LAND ACQUISITION VS MST. KATIJI (SUPRA ) HAD CONSIDERED CONDONATION OF DELAY IN FILING APPEAL AND HELD THAT WHEN, TECHNICALITIES AND MERITS ARE PITTED AGAINST EACH O THER, THE SUBSTANTIAL JUSTICE SHOULD PREVAIL OVER TECHNICAL C ONSIDERATION. THE HONBLE COURT ALSO EXPLAINED THAT EVERY DAY DELAY M UST BE EXPLAINED. IN THE LIGHT OF ABOVE LEGAL PROPOSITION, IF WE EXAMINE THE CASE OF THE ASSESEE, WE FIND THAT THE REASONS GIVEN FOR NOT FILING APPEAL OR CROSS OBJECTION WITHIN TIME ALLOWED UNDER THE ACT, COMES UNDER THE PURVIEW OF REASONABLE CAUSE AS PROVIDED UNDER THE ACT. WE FURTHER NOTED THAT ALTHOUGH, THE ASSESEE HAS NOT PRESSED THE GROUND BEFORE THE LD.CIT(A), BUT THE LD.CIT(A) HAS DECIDED THE HUBTOWN LIMITED. 20 ISSUE ON MERITS. FURTHER, THE ISSUE INVOLVED IN CRO SS OBJECTION FILED BY THE ASSESEE IS WITH REGARD TO DISALLOWANCES OF EXPE NDITURE INCURRED IN RELATION TO EXEMPT INCOME U/S 14A OF THE ACT. TH E PROVISIONS OF SECTION 14A IS HIGHLY CONTROVERSIAL AND THERE ARE N UMBER OF CASES, WHICH DEAL WITH THE LAW AS ENUMERATED U/S 14A OF TH E I.T. ACT, 1961. AS SUCH, DAY BY DAY THE LAW HAS BEEN EVOLVED BY VAR IOUS COURTS AND TRIBUNALS. THEREFORE, THE ASSESEE WHILE PREPARING F OR APPEAL FILED BY THE DEPARTMENT CAME TO KNOW THAT THE DISALLOWANCES COMPUTED U/S 14A IS NOT IN ACCORDANCE WITH LAW AND ALSO, VARIOUS DECISIONS OF COURTS AND TRIBUNALS ARE IN FAVOR OF THE ASSESEE AN D ACCORDINGLY, HAS DECIDED TO FILE CROSS OBJECTION, WHICH RESULTED IN DELAY OF 77 DAYS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THA T THE REASONS GIVEN FOR NOT FILING CROSS OBJECTION WITHIN TIME AL LOWED UNDER THE ACT, SEEMS TO BE WITHIN THE AMBIT OF REASONABLE CAUSE AS PROVIDED UNDER THE ACT. 27. IN THIS REGARD, IT IS PERTINENT TO DISCUSS THE CASE LAWS RELIED UPON BY THE ASSESEE. THE ASSESEE HAS RELIED UPON TH E DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF SUNDARAM MULTIPAP VS DCIT IN CO.NO. 272/MUM/272, WHICH WAS DISPOSED-OFF ALONG WI TH THE APPEAL OF THE REVENUE IN ITA NO. 5327/MUM/2015, DATED 20/0 4/2018. IN THIS CASE, THERE IS A DELAY OF 180 DAYS IN FILING CROSS OBJECTION AND FOR SIMILAR REASONS THE DELAY WAS CONDONED BY THE TRIBU NAL BY OBSERVING AS UNDER:- '9..WHEN THE APPEAL FILED BY THE REVENUE WAS DISCUSSED WITH THE COUNSEL, IT WAS EXPLAINED TO THE ASSESSED THAT THERE WAS NO REQUIREMENT TO MAKE ANY DISALLOWANCE U/S. 14 A OF THE ACT AS THE ASSESSEE HAS NOT RECEIVED ANY DIVIDEND 'INCOME AND THE LAW IN THIS REGARD HAS BEEN EXPLAINED IN VARIOUS DECISIONS REND ERED BY THE HON'BLE HIGH COURTS. ACCORDINGLY, THE ASSESSES WAS ADVISED TO FILE CROSS OBJECTION. ACCORDINGLY, THE CROSS OBJECTION WAS FIL ED BY THE ASSESSEE WITH HUBTOWN LIMITED. 21 A DELAY OF 186 DAYS. THE LEARNED AR FURTHER SUBMITT ED THAT AN IDENTICAL ISSUE OF CONDONING DELAY IN FILING THE CROSS OBJECT ION ON THE ADVICE RECEIVED SUBSEQUENTLY WAS CONSIDERED BY THE COORDIN ATE BENCH IN THE CASE OF M/S. DBS BANK LTD. V. DY. CIT (CO NO. 189/M UM/2013 DATED 15.6.2016) AND THE COORDINATE BENCH HAS CONDONED TH E DELAY.............................................. ......... 11. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THIS PRE LIMINARY ISSUE AND PERUSED THE RECORD. WE NOTICED THAT AN IDENTICAL IS SUE RELATING TO CONDONING DELAY IN FILING THE CROSS OBJECTION, WHIC H WAS FILED BELATED AFTER THE ADVICE RECEIVED FROM OTHER COUNSEL WAS CONSIDER ED BY THE COORDINATE BENCH IN THE CASE OF DBS BANK LTD. (SUPRA) AND THE DELAY WAS CONDONED WITH THE FOLLOWING OBSERVATIONS:.....,............. ..,................ 12. ACCORDINGLY, FOLLOWING THE ABOVE SAID ORDER OF THE TRIBUNAL AND ALSO IN ORDER TO RENDER SUBSTANTIAL JUSTICE TO THE ASSESSES , WE CONDONE THE DELAY AND ADMIT THE CROSS OBJECTION. 28. THE ASSESEE IS RELIED UPON THE DECISION OF ITAT , MUMBAI, IN THE CASE OF GALAXY MEDICAL DEVICES PVT.LTD. VS ITO IN ITA NO. 3218/MUM/2010 DATED 30/09/2011. IN THIS CASE ALSO E XACTLY AN IDENTICAL SITUATION AROSE AND IT WAS RESOLVED BY OB SERVING AS UNDER:- '4. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND A LSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD THE LEARNED D .R. HAS SUBMITTED THAT THE DISALLOWANCE ON ACCOUNT OF TRAVELLING EXPENSES WAS MADE BY THE A.O. ON AGREED BASIS AS THE A.R. OF THE ASSESSES HA D AGREED FOR THE SAID DISALLOWANCE DURING THE COURSE OF ASSESSMENT PROCEE DINGS. HOWEVER, AS HELD BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF R. T. BALASUHRAMANIAM VS. ITO REPORTED IN 50 ITD 513 (MAD ) CITED BY THE LEARNED COUNSEL FOR THE ASSESSE, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT AGGRIEVED BY THE ORDER OF ASSESSMENT MADE BY TH E A. O. ON THE BASIS OF THE AGREEMENT MADE BY THE AR. AND CONSEQUENTLY H E CANNOT BE DENIED THE RIGHT OF VINDICATING HIS GRIEVANCE BEFOR E HIGHER FORUM......,...........,........................... ................ 29. COMING TO CASE LAWS RELIED UPON BY THE LD.DR. T HE LD.DR HAS RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF CENZER INDUSTRIES LTD. VS. ITAT (SUPRA). WE FIND THAT CASE BEFORE THE HONBLE BOMBAY HIGH COURT WAS, WHETHER THERE IS ANY MISTAKE IN THE ORDER OF THE TRIBUNAL IN AS MUCH AS FINDINGS RE CORDED TO THE EFFECT THAT WHETHER, THE ASSESEE HAS PRESSED GROUND AT THE TIME OF HUBTOWN LIMITED. 22 HEARING OR NOT. UNDER THOSE FACTS, THE HONBLE HIGH COURT CAME TO THE CONCLUSION THAT ONCE, ASSESEE HAD WITHDRAWN CHA LLENGE ON A PARTICULAR ISSUE, BY NOT PRESSING IT BEFORE THE TRI BUNAL, NON- CONSIDERATION OF SAID ISSUE WOULD NOT BE CONSIDERED AS MISTAKE ON PART OF TRIBUNAL. SIMILARLY, THE LD. DR HAS RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF RAJENDRA PR ASAD GUPTA VS CIT (SUPRA), WHERE IT WAS HELD THAT ONCE, AUTHORITY SAY THAT GROUND HAS NOT BEEN PRESSED AND THAT HAS BEEN REJECTED ON THAT BASIS, SAME CANNOT BE INTERFERED WITH UNLESS, THERE IS COG ENT EVIDENCE IN FAVOR OF THE PARTY, WHICH SAYS THAT GROUND HAS BEEN PRESSED. 30. IN THIS CASE, THE ISSUE IS ALTOGETHER DIFFERENT , BECAUSE ALTHOUGH, THE ASSESEE HAS NOT PRESSED THE GROUND BE FORE THE LD.CIT(A), BUT THE LD.CIT(A) HAS DECIDED THE ISSUE ON MERITS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT CASES LAWS RELIED UPON BY THE LD. DR ARE NOT APPLICABLE TO THE FACTS OF TH E PRESENT CASE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE D ELAY IN FILING CROSS OBJECTION NEEDS TO BE CONDONED AND ACCORDINGLY, THE DELAY IN FILING CROSS OBJECTION IS CONDONED AND CROSS OBJECTION IS ADMITTED FOR ADJUDICATION. 31. THE BRIEF FACTS OF THE CROSS OBJECTION FILED BY THE ASSESEE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE LD.AO AS TO WH Y, DISALLOWANCE U/S 14A OF THE ACT, BE NOT MADE, THE ASSESEE VIDE L ETTER DATED 26/02/2016, HAD WORKED OUT SUCH DISALLOWANCE AT RS. 2,73,08,768/- THE LD. AO, HOWEVER COMPUTED THE DISALLOWANCES U/S 14A OF THE ACT R.W. RULE 8D AT RS. 8,65,06,011/-. HUBTOWN LIMITED. 23 32. THE LD. AR FOR THE ASSESEE SUBMITTED THAT THE L D.AO WAS ERRED IN DISALLOWED INTEREST UNDER RULE 8D(2)(II), IN RESPECT OF INTEREST EXPENDITURE, IGNORING THE FACT THAT THE AS SESEE HAS OWN FUNDS AMOUNTING TO RS 1,658.28 CRORES, WHICH EXCEED S THE VALUE OF THE INVESTMENT OF RS. 594.29 CRORES. IN THIS REGARD , HE RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT O F BOMBAY IN THE CASE OF CIT VS. RELIANCE UTILITIES POWER LTD 313 IT R 340 (BOM) AND CIT VS HDFC BANK LTD. (366 ITR 505(BOM). THE ASSESE E HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS RELIANCE INDUSTRIES LIMITED 410 ITR 466 (SC) . THE LD. AR, FURTHER SUBMITTED THAT IN RESPECT OF DISALLOWANCES OF EXPENDITURE UNDER RULE 8D(2)(III), THE DISALLOWANCES MAY BE RES TRICTED TO THE EXTENT OF EXEMPT INCOME EARNED AND ONLY THOSE INVES TMENTS, WHICH HAVE YIELDED SUCH INCOME BE TAKEN INTO ACCOUNT F OR ARRIVING AT THE AVERAGE VALUE OF INVESTMENTS, HE, FURTHER SUBMITTED THAT IF ANY SUO- MOTO DISALLOWANCES MADE BY THE ASSESEE EXCEEDS THE EXEMPT INCOME, IT MAY BE RESTRICTED TO THE EXTENT OF THE EXEMPT INCOME. IN THIS REGARD, HE RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ACB VS ACIT (374 ITR 108) AND CIT VS INTERGLOBE ENTERPRISES LTD. IN ITA NO. 456/2016, DATED 19/08/ 2016. THE ASSESEE HAS ALSO RELIED UPON THE SPECIAL BENCH DECI SION OF ITAT, IN THE CASE OF ACIT VS VIREET INVESTMENTS PVT LTD, 165 ITD 27 (DELHI). THE LD. AR, FURTHER SUBMITTED THAT INSOFAR AS, RE-C OMPUTATION OF BOOK PROFIT U/S 115JB OF THE I.T. ACT, 1961 TOWARDS DISA LLOWANCES OF EXPENDITURE U/S 14A OF THE ACT, 1961, THIS ISSUE IS SQUARELY COVERED IN FAVOR OF THE ASSESEE BY THE DECISION OF ITAT, SP ECIAL BENCH, IN THE CASE OF ACIT VS VIREET INVESTMENT PVT.LTD. 165 ITD 27, WHERE IT WAS HELD THAT WHILE, COMPUTING BOOK PROFIT U/S 115J B, NO HUBTOWN LIMITED. 24 ADJUSTMENTS COULD BE MADE ON ACCOUNT OF DISALLOWANC E MADE U/S 14A OF THE ACT. 33. THE LD. DR, ON THE OTHER HAND, STRONGLY SUPPORT ING ORDER OF THE LD.CIT(A) SUBMITTED THAT THERE IS NO MERIT IN CONTE NTION OF THE ASSESEE THAT NO INTEREST EXPENDITURE SHOULD BE DIS ALLOWED UNDER RULE 8D(2)(II) BECAUSE, THE ASSESEE NEVER PLACED A NY RECORDS BEFORE THE LOWER AUTHORITIES TO PROVE AVAILABILITY OF OWN FUNDS IN EXCESS OF INVESTMENTS MADE IN SHARES AND SECURITIE S, WHICH YIELD EXEMPT INCOME. THE LD. DR, FURTHER SUBMITTED THAT INSOFAR AS, DISALLOWANCES OF EXPENDITURE UNDER RULE 8D(2)(III), THE ASSESEE NEVER PLEADED FOR RESTRICTIONS OF SUCH DISALLOWANCE S TO THE EXTENT OF EXEMPT INCOME AND HENCE, NO RELIEF CAN BE GIVEN TO THE ASSESEE ON THIS COUNT. HE FURTHER SUBMITTED THAT INSOFAR AS, R E-COMPUTATION OF BOOK PROFIT U/S 115JB, IN RESPECT OF DISALLOWANCES OF EXPENDITURE U/S 14A OF THE ACT, ALTHOUGH, THE ISSUE HAS BEEN COVERE D IN FAVOR OF THE ASSESEE BY THE DECISION OF ITAT SPECIAL BENCH, IN T HE CASE OF ACIT VS VIREET INVESTMENTS PVT. LTD., BUT THE DEPARTMENT HAS NOT ACCEPTED SAID DECISION AND FURTHER, APPEAL HAS BEEN PREFERRE D BEFORE THE HIGH COURT AND HENCE, THE DISALLOWANCES COMPUTED BY THE LD. AO SHOULD BE UPHELD. 34. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW ALONG WITH CASE LAWS CITED BY BOTH THE PARTIES. THE LD. AO HAS DISALLOWED EXPENDITURE INCURRED IN RELATION TO EXEM PT INCOME U/S 14A OF THE ACT, BY INVOKING RULE 8D(2)(II) AND (III ) OF I.T. RULES, 1962. ACCORDING TO THE LD. AO, DISALLOWANCES CONTEMPLATED U/S 14A SHALL BE DETERMINED, IN ACCORDANCE WITH PRESCRIBED PROCED URE PROVIDED HUBTOWN LIMITED. 25 UNDER RULE 8D, WHETHER OR NOT THE ASSESEE HAS EARNE D EXEMPT INCOME FOR THE YEAR UNDER CONSIDERATION. IT IS THE CONTENTION OF THE ASSESEE THAT WHEN, OWN FUNDS ARE IN EXCESS OF INVES TMENTS MADE IN SHARES AND SECURITIES, WHICH YIELD EXEMPT INCOME TH EN NO DISALLOWANCES CAN BE MADE TOWARDS INTEREST EXPENDIT URE UNDER RULE 8D(2)(II). THE ASSESEE FURTHER CONTENDED THAT INSOF AR AS, DISALLOWANCES OF OTHER EXPENDITURE UNDER RULE 8D(2) (III), THE SAID DISALLOWANCES CANNOT SHALLOW ENTIRE EXEMPT INCOME E ARNED BY THE ASSESEE FOR THE YEAR UNDER CONSIDERATION. IN OTHER WORDS, IT WAS ARGUED THAT DISALLOWANCES OF EXPENDITURE SHOULD BE RESTRICTED TO THE EXTENT OF EXEMPT INCOME EARNED FOR THE YEAR UNDER C ONSIDERATION. 35. HAVING HEARD BOTH THE SIDES, WE FIND MERIT IN THE ARGUMENTS OF THE LD. AR FOR THE ASSESEE FOR THE REASONS THAT THE HONBLE SUPREME COURT, IN THE CASE OF CIT VS RELIANCE INDUSTRIES LI MITED(SUPRA) HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT NO INTE REST DISALLOWANCES CAN BE MADE U/S 14A OF THE ACT, IF OWN FUNDS ARE SU FFICIENT TO COVER- UP THE VALUE OF THE INVESTMENTS. THE HONBLE JURISD ICTIONAL HIGH COURT OF BOMBAY, IN THE CASE OF CIT VS RELIANCE UTI LITY AND POWER LIMITED(SUPRA) HELD THAT WHEN, MIXED FUNDS INCLUDIN G OWN FUNDS ARE MORE THAN THE VALUE OF THE INVESTMENTS, THEN A GE NERAL PRESUMPTION GOES IN FAVOR OF THE ASSESEE THAT INVES TMENTS MADE IN SHARES IS OUT OF OWN FUNDS, CONSEQUENTLY NO DISALLO WANCE COULD BE MADE TOWARDS INTEREST EXPENDITURE. A SIMILAR RATIO HAS BEEN LAID DOWN BY THE HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS HDFC BANK LIMITED (SUPRA). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. AO WAS ERRED IN DISALLOWED INTERE ST EXPENDITURE U/S 14A, R.W. RULE 8D(2)(II) OF THE I.T. RULES, 1962 AN D HENCE, WE DIRECT HUBTOWN LIMITED. 26 THE AO TO DELETE DISALLOWANCE OF INTEREST EXPENDITU RE U/S 14A OF THE I.T. ACT, 1961. 36. COMING BACK TO THE DISALLOWANCE OF EXPENDITURE UNDER RULE 8D (2)(III) OF THE I.T. RULES, 1962. WE FIND THAT T HE HONBLE DELHI HIGH COURT, IN THE CASE OF JOINT INVESTMENTS PVT. LTD. V S CIT (2015) 372 ITR 694(DEL) HELD THAT DISALLOWANCES CONTEMPLATED U /S 14A SHALL NOT SHALLOW ENTIRE EXEMPT INCOME EARNED FOR THE YEAR UN DER CONSIDERATION. A SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE DELHI HIGH COURT, IN THE CASE OF CHEM INVESTMENT LT D. VS CIT (2015) 378 ITR 33(DEL), WHERE IT WAS HELD THAT DISALLOWANC ES SHALL NOT EXCEED EXEMPT INCOME EARNED FOR THE YEAR UNDER CONS IDERATION. FURTHER, THE HONBLE DELHI HIGH COURT, IN THE CASE OF ACB VS ACIT (SUPRA) AND CIT VS INTERGLOBE ENTERPRISES LIMITED(S UPRA) HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT FOR THE PURPOSE OF DISALLOWANCES U/S 14A OF THE ACT, ONLY THOSE INVEST MENTS ARE TO BE CONSIDERED FROM, WHICH EXEMPT INCOME HAS BEEN RECEI VED DURING THE YEAR. THE SUM AND SUBSTANCE OF RATIO LAID DOWN BY THE VARIOUS HIGH COURTS ARE THAT DISALLOWANCES CONTEMPLATED U/S 14A SHALL NOT EXCEED EXEMPT INCOME EARNED FOR THE YEAR UNDER CONS IDERATION. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE D ISALLOWANCE CONTEMPLATED U/S 14A SHALL NOT EXCEED EXEMPT INCOME EARNED FOR THE YEAR. BUT, IN THIS CASE, FACTS WITH REGARD TO E XEMPT INCOME EARNED FOR THE YEAR IS NOT COMING OUT FROM THE ORDE RS OF THE LOWER AUTHORITIES. EVEN, THE ASSESEE HAS NOT FURNISHED AN Y DETAILS WITH REGARD TO EXEMPT INCOME EARNED FOR THE YEAR UNDER C ONSIDERATION AND HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE I SSUE NEEDS TO GO BACK TO THE FILE OF THE AO. WE, THEREFORE, SET ASID E THE ISSUE TO THE FILE OF LD.AO FOR THE LIMITED PURPOSE OF ASCERTAINI NG THE FACT WITH HUBTOWN LIMITED. 27 REGARD TO THE EXEMPT INCOME EARNED FOR THE YEAR UND ER CONSIDERATION AND RESTRICT DISALLOWANCE OF EXPENDIT URE U/S 14A TO THE EXTENT OF EXEMPT INCOME; IF AT ALL ANY EXEMPT INCOM E IS EARNED FOR THE YEAR UNDER CONSIDERATION. INSOFAR AS, THE ARGUM ENTS OF THE LD. DR THAT IF DISALLOWANCES U/S.14A IS RESTRICTED TO T HE EXTENT OF EXEMPT INCOME, THEN THE ASSESSED INCOME MAY GO BELOW THE RETURN INCOME, WHICH IS NOT PERMISSIBLE UNDER THE LAW. WE FIND THA T THE CO-ORDINATE BENCH OF ITAT, MUMBAI E BENCH IN THE CASE OF M/S SUNDARAM MULTIPAP VS DCIT IN ITA NO. 5327/MUM/2015 AND CROSS OBJECTION NO. 272MUM/2017 HAD CONSIDERED AN IDENTICAL ISSUE AND B Y FOLLOWING ANOTHER DECISION OF CO-ORDINATE BENCH IN THE CASE O F TATA INDUSTRIES LIMITED (SUPRA) HELD THE ISSUE IN FAVOR OF THE ASSESEE AND ACCORDINGLY, WE REJECT THE CONTENTION OF THE LD. D R. 37. COMING TO GROUND NO.3 OF CROSS OBJECTION WHICH ASSAIL, THE DISALLOWANCE MADE U/S 14A, WHILE CALCULATING THE B OOK PROFIT U/S 115JB OF THE ACT. WE FIND THAT THIS ISSUE HAS BEEN SQUARELY COVERED IN FAVOR OF THE ASSESEE BY THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF MRINALINI TRADING COMPANY LTD. VS DCIT ITA NO. 1211/MUM/ 2014, WHERE THE TRIBUNAL BY FOLLOWING THE ORDER OF TRIBUNAL SPECIAL BENCH, IN THE CASE OF ACIT VS VIRE ET INVESTMENTS PVT. LTD(SUPRA) HELD THAT COMPUTATION OF BOOK PROFI T IN TERMS OF CLAUSE (F) OF EXPLANATION (1) TO SECTION 115JB (2) IS TO BE MADE WITHOUT RESORTING TO COMPUTATION AS CONTEMPLATED U /S 14A R.W. RULE 8D. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UN DER: - 10. COMING TO THE ADDITIONAL GROUND RAISED BY THE A SSESSEE CHALLENGING THE ADJUSTMENT MADE TOWARDS BOOK PROFIT COMPUTED U/ S 115JB OF THE INCOME-TAX ACT, 1961. THE ASSESSEE CONTENDS THAT NO ADJUSTMENT CAN BE MADE TOWARDS BOOK PROFIT COMPUTED U/S 115JB FOR ANY DISALLOWANCE MADE UNDER SECTION 14A R.W.R.8D. THE ASSESSEE FURTH ER CONTENDED THAT HUBTOWN LIMITED. 28 THE BOOK PROFIT UNDER THE PROVISIONS OF SECTION 115 JB HAS TO BE COMPUTED AS PER EXPLANATION 1 WHICH PERMITS ADD BACK OF ONLY CERTAIN ITEMS TO THE BOOK PROFIT AS LISTED OUT IN THE EXPLANATION 1. SIN CE DISALLOWANCE U/S 14A R.W.R. 8D IS NOT COVERED U/S 115JB, NO ADJUSTMENT C AN BE MADE TOWARDS DISALLOWANCE MADE U/S 14A. WE FIND MERITS IN THE AR GUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ITAT, SPECIAL BENC H IN THE CASE OF ACIT VS VIREET INVESTMENTS PVT LTD (2017) 82 TAXMANN.COM 415 (DEL TRIB)(SB) HAS CONSIDERED SIMILAR ISSUE AND AFTER CONSIDERING THE PROVISIONS OF SECTION 115JB(2) OBSERVED THAT COMPUTATION OF BOOK PROFIT IN TERMS OF CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB(2) IS TO BE MADE WITHOUT RESORTING TO COMPUTATION AS CONTEMPLATED U/S 14A R. W.R.8D. THEREFORE, CONSIDERING THE FACTS OF THE CASE AND ALSO FOLLOWIN G THE DECISION OF ITAT, DELHI SPECIAL BENCH, WE ARE OF THE VIEW THAT NO ADJ USTMENTS CAN BE MADE TOWARDS BOOK PROFIT COMPUTED U/S 115JB ON ACCO UNT OF DISALLOWANCE MADE U/S 14A FOR THE PURPOSE OF COMPUT ATION OF BOOK PROFIT U/S 115JB OF INCOME-TAX ACT, 1961. 38. IN THIS VIEW OF THE MATTER AND CONSIDERING THE CASE LAWS DISCUSSED HEREINABOVE, WE DIRECT THE LD. AO TO DELE TE ADJUSTMENTS MADE TOWARDS BOOK PROFIT COMPUTED U/S 115JB, IN RES PECT OF DISALLOWANCE OF EXPENDITURE 14A OF THE I.T. ACT, 19 61. 39. IN THE RESULT, CROSS OBJECTION FILED BY THE ASS ESEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.2765/MUM/2018- ASST YEAR 2014-15 40. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1 . WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING THE AO TO REDUCE THE AMOU NT OF RS.30 CR., BEING PROVISION FOR DEBENTURE REDEMPTION RESERVE (DRR), W HILE CALCULATING INCOME U/S. 115 JB.?. B)WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE D ECISION OF HONBLE ITAT IN ASSESSEES OWN CASE FOR EARLIER YEAR HAS NOT BEE N ACCEPTED BY THE DEPARTMENT AND APPEAL IS PENDING BEFORE THE HON'BLE HIGH COURT?.' 2. A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT(A) ERRED IN ALLOWING DEDUCTION U/S 801A(4) FO R RS.12,6273967/--,?.' B) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEES SCHEME WAS APPROVED HUBTOWN LIMITED. 29 ON 05.06.2006 AND THE PROVISIONS OF SECTION 80IA(4) (III) REQUIRED APPROVAL UNDER THE INDUSTRIAL PARK SCHEME 2008,?' 41. THE BRIEF FACTS OF THE CASE ARE THAT FOR THE PR EVIOUS YEAR RELEVANT TO THE YEAR UNDER APPEAL, THE ASSESSEE FIL ED ITS RETURN OF INCOME ON 30.11.2014 DECLARING 'NIL' INCOME AND A RE VISED RETURN WAS E-FILED THEREAFTER ON 31.03.2016 REPEATING THE SAME INCOME. THE RETURN FILED ON 31.03.2016 WAS INITIALLY PROCES SED U/S. 143(1) OF THE ACT, BUT LATER ON SELECTED FOR SCRUTINY UNDER C ASS. IN RESPONSE TO THE STATUTORY NOTICES, THE ASSESSEE MADE DUE COMPLIANCE. IN THE COMPUTATION OF BOOK PROFITS FOR THE YEAR UND ER CONSIDERATION, THE ASSESSEE HAD NOT MADE ANY ADJUSTMENT WITH RESPE CT TO A SUM OF 30 CRORE, WHICH REPRESENTED THE DEBENTURE REDEMPTIO N RESERVE (HEREINAFTER REFERRED TO AS 'DRR' IN SHORT), CREATED UNDER THE PROVISIONS OF S. 117C OF THE COMPANIES ACT, 1956 OU T OF THE PROFITS. SUCH AMOUNT, ACCORDING TO THE ASSESSEE, WAS NOT A 'R ESERVE' BUT IN THE NATURE OF AN ASCERTAINED LIABILITY. THE ASSESSI NG OFFICER, HOWEVER, ENTERTAINED THE VIEW THAT IT WAS ONLY A 'R ESERVE' AS PER CLAUSE (B), OF EXPLANATION (1) TO S. 115JB OF THE A CT. HE, THEREFORE, DIRECTED THE ASSESSEE TO JUSTIFY ITS COMPUTATION OF BOOK PROFITS. IN RESPONSE TO THE NOTICE, A DETAILED REPLY WAS FILED WHICH HAS BEEN EXTRACTED IN PARAGRAPH 5.1 ON PAGES 3-12 OF THE ASS ESSMENT ORDER. AMONGST VARIOUS OTHER ARGUMENTS, IT WAS ALSO SUBMIT TED THAT IN A.YS, 2010-11 AND 2011-12 ADDITIONS MADE BY THE ASS ESSING OFFICER IN THE COMPUTATION OF BOOK PROFITS ON SIMILAR LINE OF ARGUMENT WERE DELETED BY THE CIT (A) IN THE FIRST APPEALS. 42. THE ASSESSING OFFICER, HOWEVER, WAS NOT INC LINED TO ENDORSE THE PLEADINGS MADE BY THE ASSESSEE AS, ACCORDING TO HIM, THE DECISION ARRIVED BY THE CIT (A) IN HIS ORDERS FOR T HE PRECEDING YEARS HUBTOWN LIMITED. 30 ON THIS ISSUE WAS NOT ACCEPTED BY THE DEPARTMENT AN D SECOND APPEALS WERE FILED BEFORE THE TRIBUNAL. HE WENT ON TO STATE THAT EVEN THOUGH THE SECOND APPEAL FILED FOR A.Y. 2010-11 WAS DISMISSED VIDE ORDER IN ITA NO, 1704/MUM/2014 DATED 04.05.2016, IT WAS ON TECHNICAL GROUND, I.E. LOW TAX EFFECT AND NOT ON ME RIT, THE FINDINGS OF THE ASSESSING OFFICER TO REJECT THE CLAIM OF THE AS SESSEE, AS RECORDED IN PARAGRAPH 5.2 OF HIS ORDER, ARE AS UNDE R: '5.2 THE ASSESSEE'S SUBMISSION HAS BEEN CONSIDERED BUT NOT FOUND TO BE TENABLE. EXPLANATION (1) TO CLAUSE 2 TO SECTION 115JB CLEARLY STATES THE FOLLOWING (RELEVANT EXTRACT): (B) THE AMOUNTS CARRIED TO ANY RESERVES, BY WHATEVE R NAME CALLED [OTHER THAN A RESERVE SPECIFIED UNDER SECTION 33AC]; OR (C) THE AMOUNT OR AMOUNTS SET ASIDE TO PROVISIONS M ADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES.... ................. ALSO, WHILE COMPUTING THE BOOKS PROFIT U/S. 115JB, THE SPECIFIED ADJUSTMENTS ARE REQUIRED TO BE MADE TO THE PROFIT A ND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF PART II AND III OF SCH. VI TO THE COMPANIES ACT 1956. (II) AS PER EXPLANATION - L(B) TO SECTION 115JB, TH E AMOUNTS CARRIED TO ANY RESERVES, BY WHATEVER NAME CALLED, OTHER THAN A RES ERVE SPECIFIED U/S. 32AC, ARE REQUIRED TO BE ADDED TO THE BOOK PROFIT D ECLARED. (III) THE PROPOSED ADJUSTMENT IS COVERED UNDER EXPL ANATION -L(B) TO SECTION 115JB, AS DISCUSSED ABOVE. (IV) THE AMOUNT INVOLVED WAS MENTIONED BY THE ASSES SEE ITSELF AS RESERVE AND, THEREFORE, IS REQUIRED TO BE ADJUST ED AND ADDED BACK TO THE BOOK PROFIT IN VIEW OF EXPLANATION L(B) TO SECT ION 115JB. IN THE PRESENT CASE THE TERMINOLOGY AS WELL AS THE NATURE OF THE RESERVE SET ASIDE IS IN THE NATURE OF A RESERVE OTHER THAN THE SPECIFIED RESERVE. IT IS THEREFORE SQUARELY COVERED WITHIN THE AMBIT OF DISALLOWANCES FOR THE PURPOSE OF CALCULATION TAX U/S. 115JB OF THE ACT. T HE SAID ADDITION HAS ALSO BEEN MADE IN EARLIER ASSESSMENT YEARS. THE ASS ESSEE HAS STATED THAT THE CIT(A) HAS DECIDED THE ISSUE M ITS FAVOUR. IT IS PERTINENT TO STATE THAT THE DECISION WAS NOT ACCEPTED BY THE DEPARTMEN T AND FURTHER APPEAL WAS PREFERRED TO THE HON'BLE ITA T. THE HONBLE ITA T VIDE ORDER DATED 4.5.2016 HAS DISMISSED THE APPEAL IN LIMINE DUE TO LOW TAX EFFECT WITHOUT ADJUDICATING UPON MERITS. CONSIDERING THE SAME AND THE FACT THAT THE ADDITION OF DEBENTURE REDEMPTION RESERVE HAS BEEN A DDED BACK TO THE BOOK PROFIT U/S. 115JB IN A.Y. 2011-12 AND 2012-13, TO MAINTAIN THE PRINCIPLE OF CONSISTENCY, THE AMOUNT OF DEBENTURE R EDEMPTION RESERVE OF RS. 30,00,00,000/- IS ADDED BACK TO THE INCOME FOR THE PURPOSE OF CALCULATION OF TAX U/S. 115JB OF THE ACT 1961.' HUBTOWN LIMITED. 31 43. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE LD. AO. IN ADDITIONS, IT WAS SUBMITTED THAT THOUGH THE APPEAL OF THE REVENUE FOR A.Y. 2010- 11 WAS DISMISSED IN IIMINE , THE APPEAL FOR A.Y. 2011-12 WAS REJECTED BY PASSING A SPEAKING ORDER IN ITA NO. 769 6/MUM/2014 DATED 30.06.2017. UPON CONSIDERATION OF THE TOTALIT Y OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ANALYZING THE DRR ACCOUN T AND PRECEDENT THE CIT (A) WAS DECIDED THE DISPUTE IN FA VOUR OF THE ASSESSEE BY RELYING UPON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2011-12 [ITA NO. 7696/MUM/2014 DA TED 30.06.2017]. THE RELEVANT OBSERVATIONS MADE BY THE CIT (A) ARE AS UNDER:- '6.6 I FIND THAT THE HON'BLE ITAT IN THE APPELLANT 'S OWN CASE FOR A. Y. 2011-12 IN TTA NO. 7696/MUM/2014 DATED 30.06.2017 H AS DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT AND HAS ALLOWED TH E DEDUCTION OF DEBENTURE REDEMPTION RESERVE WHILE COMPUTING THE BO OK PROFIT U/S 115J OF THE IT. ACT. RESPECTFULLY DEFERRING TO THE JUDIC IAL HIERARCHY, THIS GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT AND THE GROUND OF APPEAL NO. 2 IS ALLOWED. ' 44. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS ERR ED IN DIRECTING THE LD.AO TO REDUCE AMOUNT OF RS. 30 CRORES BEING P ROVISION FOR DEBENTURE REDEMPTION RESERVE (DRR), WHILE CALCULATI NG THE BOOK PROFIT U/S 115JB OF THE I.T. ACT, 1961. THE LD. DR, FURTHER SUBMITTED THAT THE LD.CIT(A) FAILED TO APPRECIATE FACT THAT T HE DECISIONS OF ITAT IN ASSESEES OWN CASE FOR EARLIER YEAS HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL IS PENDING BEFORE THE HONBLE HIGH COURT. THE LD. DR, FURTHER SUBMITTED THAT AN IDENTICAL ISS UE HAS BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE C ASE OF SREI INFRASTRUCTURE FINANCE LIMITED VS ADD.CIT 281 CTR 5 32, WHEREIN IT HAS BEEN HELD THAT THE AMOUNT TRANSFERRED TO THE SP ECIAL RESERVE, HUBTOWN LIMITED. 32 PURSUANT TO THE PROVISION OF SECTION 45-IC OF THE R ESERVE BANK OF INDIA ACT, 1934 AND THE AMOUNT TRANSFERRED TO THE D RR, WERE INCLUDIBLE IN THE BOOK PROFIT UNDER CLAUSE (B) OF T HE EXPLANATION TO SECTION 115JB OF THE ACT. THE LD. DR, FURTHER REFER RING TO THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF C IT VS NATIONAL RAYON CORPORATION LIMITED (227 ITR 754), SUBMITTED THAT THE HONBLE SUPREME COURT HAS CLEARLY HELD THAT PROVISI ON FOR DEBENTURE REDEMPTION RESERVE (DRR) WOULD BE INCLUDIBLE IN BOO K PROFIT COMPUTED U/S 115JB OF THE ACT, 1961. THE LD.CIT(A) WITHOUT APPRECIATING THESE FACTS HAS DIRECTED THE AO TO EXC LUDED DRR FROM BOOK PROFIT COMPUTED U/S 115JB OF THE I.T. ACT, 196 1. 45. THE LD. AR FOR THE ASSESEE, ON THE OTHER HAND S TRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT TH IS ISSUE IS SQUARELY COVERED IN FAVOR OF THE ASSESEE BY THE DEC ISION OF ITAT, MUMBAI IN ASSESEES OWN CASE FOR AY 2012-13, IN ITA NO. 1962/MUM/2017, WHERE UNDER IDENTICAL SET OF FACTS , THE TRIBUNAL BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RAYMOND LTD (2012) 21 TAXMANN.COM 60 HELD T HAT ADJUSTMENT TO THE AMOUNT OF DRR MADE, WHILE COMPUTI NG THE BOOK PROFITS U/S 115 JB OF THE ACT IS PERMISSIBLE AND I S WITHIN THE PURVIEW OF THE LAW. THE LD. AR, FURTHER SUBMITTED THAT THIS ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN VARIOUS CASES AND AFT ER CONSIDERING THE ARGUMENTS OF THE REVENUE, IN LIGHT OF THE DECIS ION OF SREI INFRASTRUCTURE AND FINANCE LIMITED VS CIT (SUPRA) H ELD THAT PROVISION FOR DRR SHOULD BE EXCLUDED FROM BOOK PROFIT COMPUTE D U/S 115JB OF THE ACT. THE LD.CIT(A), AFTER CONSIDERING RELEVANT FACTS HAS RIGHTLY DELETED ADDITIONS MADE BY THE AO AND HIS ORDER SHOU LD BE UPHELD. HUBTOWN LIMITED. 33 46. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. THE ISSUE INVOLVED IN THE PRESENT APPEAL REGARDING EXCL USION OF DRR FROM BOOK PROFIT COMPUTED U/S 115JB OF THE ACT, 196 1 IS SQUARELY COVERED IN FAVOR OF THE ASSESEE BY THE DECISION OF ITAT IN ASSESEES OWN CASE FOR AY 2012-13 IN ITA NO. 962/MUM/2017, WH ERE UNDER IDENTICAL SET OF FACTS THE TRIBUNAL BY FOLLOWING DE CISION OF HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS RAYMOND LT D. (SUPRA) HELD THAT ADJUSTMENT OF THE AMOUNT OF DRR, MADE WHI LE COMPUTING THE BOOK PROFIT U/S 115JB IS PERMISSIBLE AND IS WIT HIN THE PURVIEW OF THE LAW. WE FURTHER NOTED THAT THE DISALLOWANCE MADE IN A.Y. 2011-12 WAS SO FOR IDENTICAL REASONINGS, BUT AS STATED HER EINABOVE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS DELE TED IN FIRST APPEAL BY FOLLOWING THE BINDING JUDGMENTS IN THE CASE OF C IT V. RAYMOND LTD. [2012] 21 TAXRNANN.COM 60 (BOM) AND TAKING NOTE OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN NATIONAL RAYON LTD. V. CIT [227 ITR 764 (SC)], COPIES OF WHICH ARE PLACED AT PAGES 5-7 AND 8-15 RESPECTIVELY OF THE PAPER BOOK. FURTHER, THE ORDER OF THE CIT (A) W AS ALSO IN CONSONANCE WITH THE RATIO LAID DOWN BY THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL IN THE CASE JSW ENERGY LTD. V. ACIT (150 I TD 406 (MUM)], A COPY OF WHICH IS ALSO PLACED AT PAGES 16-21 OF THE PAPER BOOK. THE FACTS OF THE CASE, ARGUMENTS OF THE PARTIES AND THE DECISION ARRIVED AT BY THE TRIBUNAL IN THE ORDER DATED 30.06.2017 IN IT A NO, 7696/MUM/2014 (PAGES 1-4 OF PB), ARE EXTRACTED BELO W FOR THE SAKE OF CONVENIENCE: '3. AS A PERUSAL OF THE AFORESAID GROUND OF APPEAL REVEALS, THE SOLITARY DISPUTE RELATES TO THE MANNER OF COMPUTATION OF BOO K PROFITS FOR THE PURPOSES OF DETERMINATION OF TAX LIABILITY U/S. 115 JB OF THE ACT NOTABLY, WHILE COMPUTING THE BOOK PROFITS FOR THE PURPOSES O F SEC. 115JB OF THE ACT, THE ASSESSEE-COMPANY DEDUCTED A SUM OF RS. 74, 75,00,000/- WHICH REPRESENTED DEBENTURE REDEMPTION RESERVE. THE SAID AMOUNT WAS HUBTOWN LIMITED. 34 CREATED OUT OF THE PROFITS SET-ASIDE AS DEBENTURE R EDEMPTION RESERVE, AS PER THE ASSESSING OFFICER, THE SAID DEBENTURE RE DEMPTION RESERVE WAS A RESERVE IN TERMS OF CLAUSE (B) OF EXPLANATION TO SEC 115JB OF THE ACT WHEREAS ACCORDING TO THE ASSESSEE, THE SAID AMO UNT WAS NOT A RESERVE, BUT IN THE NATURE OF AN ASCERTAINED LIABIL ITY. THE CIT(A) HAS SINCE UPHELD THE STAND OF THE ASSESSEE BY RELYING ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RAYMOND LT D,, [2012] 209 TAXMAN 65 (BOM) AS WELL AS THE JUDGMENT OF THE HON' BIE SUPREME COURT IN THE CASE OF NATIONAL RAYON LTD., 227ITR 764 (SC) . ACCORDINGLY, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE BOOK PROFITS FOR THE PURPOSES OF SEC. 115JB OF THE ACT AFTER EXCLUDI NG THE AMOUNT OF RS. 74,75,00,000/- SET ASIDE BY THE ASSESSEE AS DEBENTU RE REDEMPTION RESERVE. AGAINST SUCH A DECISION, REVENUE IS IN APP EAL BEFORE US. 4. BEFORE US, THE ID CIT-DR HAS REITERATED THE STA ND OF THE ASSESSING OFFICER, WHICH IS PRIMARILY TO THE EFFECT THAT THE IMPUGNED AMOUNT WAS MERELY A RESERVE AND, THEREFORE, WAS NOT DEDUCTIBLE WHILE DETERMINING THE BOOK PROFITS U/S. 115JB OF THE ACT. 5. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE FO R THE ASSESSEE POINTED OUT THAT THE CIT(A) MADE NO MISTAKE IN ALLOWING THE CLAIM OF THE ASSESSEE, WHICH IS ALSO IN CONSONANCE WITH THE DECI SION OF THE TRIBUNAL ON A SIMILAR ISSUE IN THE CASE OF JSW ENERGY LTD. [2014] 150 ITD 406 (MUMBAI- TRIB.). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN OUR CONSIDERED OPINION, HAVING REGARD TO THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RAYMOND LTD. (SUPRA) AS WELL AS THE DECISION OF OUR COORDINATE BENCH IN THE CASE OF JSW ENERGY (SUPRA), THE TRIBUNAL WAS CONSIDERING THE DEDUCIBILITY OF THE AMOUNT SET APAR T AS DEBENTURE REDEMPTION RESERVE FOR THE PURPOSES OF COMPUTING TH E BOOK PROFITS U/S. 115JB OF THE ACT AFTER DETAILED DISCUSSION, IT HAS BEEN HELD THAT ADJUSTMENT OF THE AMOUNT OF DEBENTURE REDEMPTION RE SERVE MADE WHILE COMPUTING THE BOOK PROFITS U/S. 115JB OF THE ACT IS PERMISSIBLE AND IS WITHIN THE PURVIEW OF THE LAW. THE DECISION OF CIT( A) IS IN CONSONANCE WITH THE AFORESAID LEGAL POSITION AND EVEN BEFORE U S, NO CONTRARY DECISION HAS BEEN BROUGHT OUT BY THE REVENUE AND AS A CONSEQ UENCE, WE HEREBY AFFIRM THE DECISION OF CIT(A) ON THIS ASPECT THUS, THE REVENUE FAILS IN ITS APPEAL.' 47. WE, FURTHER, NOTED THAT IN A.Y. 2012-13 ALSO, THE ASSESSING OFFICER HAD MADE SIMILAR ADDITION, BUT THE SAME WAS DELETED IN FIRST APPEAL. THE ORDER OF THE CIT(A) WAS UNSUCCESSFULLY CHALLENGED IN THE SECOND APPEAL IN THIS YEAR TOO IN ITA NO. 962/M UM/2017 ON THE FOLLOWING GROUND: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE- AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE AMOUNT OF RS. 30,0 0,00,000/- SET APART BY HUBTOWN LIMITED. 35 THE ASSESSEE AS DRR IS NOT A RESERVE WITHIN THE MEA NING OF EXPLANATION 1(B) TO SECTION 115JB OF THE ACT' 48. AFTER NARRATING THE FACTS OF THE CASE AND RELY ING UPON THE ORDER PASSED IN ITA NO. 7696/MUM/2014 DATED 30.06.2017, T HE ORDER IMPUGNED WAS ENDORSED BY THE TRIBUNAL VIDE ITA NO. 962/MUM/2017 DATED 31.05.2019. THE RELEVANT PARAGRAPHS FROM THE AFORESAID ORDER FOR AY. 2012-13 ARE REPRODUCED BELOW FOR THE SAKE OF CO NVENIENCE: '4. THE FACTS IN BRIEF ARE THAT THE AO ON THE PERUS AL OF RETURN OF INCOME AND OTHER DETAILS FILED BY THE ASSESSEE OBSERVED TH AT ASSESSEE HAS SET APART RS. 30 CRORES TOWARDS THE DEBENTURES AND REDE MPTION RESERVE OUT OF PROFIT OF THE CURRENT YEAR. THE ASSESSEE WAS ASKED TO JUSTIFY THE ALLOWABILITY OF THE SAID DEBENTURES REDEMPTION RESERVE FROM BOOK PROFIT CLAUSE TO EXPLANATION 1 TO SECT/ON 115JB OF THE A CT WHICH WAS REPLIED BY THE ASSESSEE VIDE WRITTEN SUBMISSION DATE 18.03. 2014 SUBMITTING THAT DURING THE YEAR UNDER CONSIDERATION THE COMPANY ISS UED DEBENTURES OF RS. 245 CRORE AND THEREFORE WHILE FINALIZING THE AC COUNTS FOR THE YEAR ENDED 31.03.2012 COMPANY HAS APPROPRIATED RS. 30 CR ORES TOWARDS DEBENTURES REDEMPTION RESERVE OUT OF THE PROFITS OF THE YEARS. THE LD. A.R. SUBMITTED THAT THE ASSESSE COMPANY HAS CREDITE D DEBENTURES REDEMPTION RESERVE TO THE EXTENT OF RS. 30 CRORES U NDER THE PROVISIONS OF SECTION 117C OF THE COMPANIES ACT, 1956. WHILE FILI NG THE RETURN OF INCOME FOR A. Y. 2012-13 THE SAID APPROPRIATION TOW ARDS REDEMPTION RESERVE HAS BEEN REDUCE FROM BOOK PROFIT AS PER EXP LANATION 1 TO SECTION 115JB OF THE ACT. THE REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND THE AO CAME TO THE CONCLUSION THAT THE RESER VE SET ASIDE IS IN THE NATURE OF RESERVE WHICH IS NOT COVERED IN THE DEFIN ITION OF SPECIFIED RESERVE AND THEREFORE SQUARELY COVERED WITHIN THE A MBIT OF DISALLOWANCE FOR THE PURPOSE OF CALCULATION OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT AND ADDED HACK TO THE INCOME OF THE ASSESSEE BY OBSERVING THAT IN A. Y 2010-11 AND 2011-12 ALSO SIMILAR SETTING APART WAS ADDED BACK TO THE PROFIT OF THE ASSESSEE. 5. THE ID. CIT(A) ALLOWED THE APPEAL OF THE ASSE SSEE BY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL BOMBAY HIGH COUR T IN THE CASE OF C1T VS. RAYMOND LTD [2012] 21 TAXMANN.COM 60 (BOM). 6. THE LD.AR, AT THE OUTSET, SUBMITTED THAT THE ISS UE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITS OWN CASE IN ITA NO. 7696/M/2014 A. Y. 2011-1 2 VIDE ORDER DATED 30.06.2017 WHICH WAS PASSED BY FOLLOWING THE DECISI ON OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RAYMOND LT D. (SUPRA). THE ID A.R. THEREFORE PRAYED BEFORE THE BENCH THAT THE GRO UND RAISED BY THE REVENUE MAY KINDLY BE DISMISSED IN VIEW OF THE DECI SION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL. HUBTOWN LIMITED. 36 7 THE ID D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF AUTHORITIES BELOW AND GROUNDS RAISED IN THE MEMORANDUM OF APPEAL. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD INCLUDING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO. 7696/M/2014 (SUPRA), WE OBSERVE THAT THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF T HE ASSESSEE. THE OPERATIVE PART IS REPRODUCED AS UNDER: . 9. SINCE THE FACTS IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL, WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE COORDINATE BENCH OF THE TRIBUNAL UPHOLD THE ORDER OF ID. CIT(A) BY DISM ISSING THE GROUND RAISED BY THE REVENUE' 49. NEEDLESS TO STATE, S. 117C OF THE COMPANIES A CT, REFERRED TO IN THE AFORESAID ORDER, MANDATES CREATION OF ADEQUATE AMOUNT OF DEBENTURE REDEMPTION RESERVE IN SIMILAR CIRCUMSTANC ES. FOR READY REFERENCE, THIS SECTION, A COPY OF WHICH IS PLACED AT PAGE 24 OF THE PAPER BOOK, IS REPRODUCED BELOW: '117C. LIABILITY OF COMPANY TO CREATE SECURITY AND DEBENTURE REDEMPTION RESER VE (1) WHERE A COMPANY ISSUES DEBENTURES AFTER THE COM MENCEMENT OF THIS ACT, IT SHALL CREATE DEBENTURE REDEMPTION RESERVE FOR THE REDEMPTION OF SUCH DEBENTURES, TO WHICH ADEQUATE AMOUNTS SHALL BE CREDITED, FROM OUT OF ITS PROFITS EVERY YEAR UNTIL SUCH DEBENTURES ARE REDEEMED. (2) THE AMOUNTS CREDITED TO THE DEBENTURE REDEMPTIO N RESERVE SHALL NOT BE UTILIZED BY THE COMPANY EXCEPT FOR THE PURPOSE A FORESAID. (3) THE COMPANY REFERRED TO IN SUB-SECTION (1) SHAL L PAY INTEREST AND REDEEM THE DEBENTURES IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THEIR ISSUE. , (4) WHERE A COMPANY FAILS TO REDEEM THE DEBENTURES ON THE DATE OF MATURITY, THE TRIBUNAL MAY, ON THE APPLICATION OF A NY OR ALL THE HOLDERS OF DEBENTURES SHALL, AFTER HEARING THE PARTIES CONC ERNED, DIRECT, BY ORDER, THE COMPANY TO REDEEM THE DEBENTURES FORTHWI TH BY THE PAYMENT OF PRINCIPAL AND INTEREST DUE THEREON. HUBTOWN LIMITED. 37 (5) IF DEFAULT IS MADE IN COMPLYING WITH THE ORDER OF THE TRIBUNAL UNDER SUB-SECTION (4), EVERY OFFICER OF THE COMPANY WHO I S IN DEFAULT, SHALL BE PUNISHABLE WITH IMPRISONMENT WHICH MAY EXTEND TO TH REE YEARS AND SHALL ALSO BE LIABLE TO A FINE OF NOT LESS THAN FIV E HUNDRED RUPEES FOR EVERY DAY DURING WHICH SUCH DEFAULT CONTINUES.,' 50. WE, FURTHER, NOTED THAT THE TRIBUNAL HAS DECI DED THIS VERY ISSUE IN FAVOUR OF THE ASSESSEE EARLIER IN THE CASE OF RA CHANA FINANCE & INVESTMENT P, LTD. AND REPUTE PROPERTIES P. LTD. FO R A.V, 2012-13 [ITA NOS. 5817 & 5816/MUM/2015 DATED 31.05.2017] TO O. THE TRIBUNAL AFTER CONSIDERING THE FACTS OF THE CASE AN D THE BINDING JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. RAYMONDS LTD. (2012) 21 TAXMANN.COM 60, THE ISSUE W AS DECIDED IN FAVOUR OF THE ASSESSES BY OBSERVING AS UNDER: '7. IN THE SIMILAR CASE ITAT AHMADABAD BENCH IN THE CASE OF ACIT VS. GENUS ELECTROTECH LTD (2016) (161 ITD 6 44 (AHD - TRIB) HAS HELD THAT THE ADJUSTMENT CLAIMED BY THE A SSESSEE FOR DEBT REDEMPTION FUND WAS DECLINED WITH A SHORT OBSE RVATION THAT DEBT REDEMPTION FUND WAS AN APPROPRIATION FOR THE PURPOSE OF CREATING A RESERVE AND WAS A BELOW LINE ADJUSTME NT AND IT DID NOT FAIL IN ANY CATEGORY OF ADJUSTMENTS PROVIDED U/ S. 115JB OF THE ACT. RESPECTFULLY FOLLOWING THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RAYMOND LTD. (SUPRA), WE ALLOW THE CLAIM OF THE ASSESSEE. THE ORDERS OF THE LOWER AUTHORITIES ARE R EVERSED AND DEDUCTION IS ALLOWED. 51 . LIKEWISE, THE ORDERS OF THE PR. CIT PASSED U/S. 263 OF THE ACT, IN THE CASE OF HOUSING DEVELOPMENT AND INFRASTRUCTU RE LTD. FOR A.YS, 2009-10 AND 2010-11 WITH RESPECT TO THOSE OF THE AS SESSING OFFICER GRANTING DEDUCTION FOR DRR, WERE REVERSED IN ITA NO S. 3530 AND 3531/MUM/2018 VIDE ORDER DATED 10.01.2019. THE RELE VANT FINDINGS RECORDED BY THE TRIBUNAL FOR SETTING ASIDE THE DIRE CTIONS ISSUED BY THE CIT ON THIS COUNT ARE AS UNDER: HUBTOWN LIMITED. 38 '24. WE HAVE HEARD RIVAL CONTENTIONS ON THIS ISSUE. THERE SHOULD NOT BE ANY DISPUTE THAT THE DECISION RENDERED BY TH E JURISDICTIONAL HIGH COURT IS BINDING ON ALL AUTHORITIES BELOW IT I N THE CASE OF RAYMOND LTD. (SUPRA), THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT THE DEBENTURE REDEMPTION RESERVE IS AN ASCERTA INED LIABILITY AND IS DEDUCTIBLE FROM NET PROFIT FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S. 115JA OF THE ACT. THE CL AIM MADE BY THE ASSESSEE AS WELL AS ALLOWED BY THE AO GETS SUPP ORT FROM THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT THE LD. PR. CIT HAS TAKEN THE VIEW THAT THE HON'BLE BOMBAY HIGH COU RT HAS NOT CONSIDERED THE DECISION RENDERED BY THE HONBLE SUP REME COURT IN THE CASE OF NATIONAL RAYON CORPORATION (227ITR 7 64) IN PROPER PERSPECTIVE AND FURTHER OBSERVED THAT THE HON'BLE B OMBAY HIGH COURT DID NOT CONSIDER THE FACT THAT THE DEBENTURE REDEMPTION RESERVE OPERATES IN CAPITA! FIELD AND HENCE APPROPR IATION OF PROFIT IS NOT DEDUCTIBLE FOR FAX PURPOSES. ACCORDIN GLY, 'THE LD. PR. CIT HAS TAKEN THE VIEW THAT THE DECISION RENDERED B Y HON'BLE BOMBAY HIGH COURT IS PER INCURIURN. WHATEVER MAY BE THE REASONING GIVEN BY ID, PR CIT, IT CANNOT BE DENIED THAT THE ID. PR. CIT HAS TAKEN DIFFERENT VIEW IN THE MATER, WITHOUT NOTICING THAT HE DECISION RENDERED BY JURISDICTIONAL 'HIGH COURT IS BINDING ON HIM ALSO. ON THE CONTRARY, THE CLAIM MADE BY THE ASSESS EE WAS WELL AS ALLOWED BY THE GETS SUPPORT FROM THE DECISION RE NDERED BY THE JURISDICTIONAL! HIGH COURT, MEANING THEREBY, THE AO HAS FOLLOWED BINDING DECISION OF THE JURISDICTIONAL HIGH COUR T, WHICH CANNOT BE FOUND FAULT WITH. ' 52. IN VIEW OF THE ABOVE, AND CONSIDERING FACTS AND CIRCUMSTANCE OF THIS CASE, WE ARE OF THE CONSIDERED VIEW THAT TH E AMOUNT OF RS.30 CRORES SET APART WAS UNDOUBTEDLY AN ASCERTAINED LIA BILITY AND NOT A HUBTOWN LIMITED. 39 'RESERVE COVERED BY CLAUSE (B) OF EXPLANATION (1) TO S. 115J B OF THE ACT, AS INFERRED BY THE ASSESSING OFFICER AND HENCE , THE AO WAS, THEREFORE, UNJUSTIFIED IN HOLDING SUCH AMOUNT AS CO VERED WITHIN THE AMBIT OF DISALLOWANCE PROVIDED IN CLAUSE (B) OF EXP LANATION (1) TO S, 115JB OF THE ACT. THE CIT (A), IN OUR CONSIDERED VI EW, WAS PERFECTLY IN ORDER IN DELETING SUCH DISALLOWANCE AND HIS ORDE R, ON THIS COUNT, DOES NOT CALL FOR ANY INTERFERENCE FOR ALL THE AFOR ESAID REASONS. 53. DURING THE COURSE OF THE HEARING, IN SUPPORT O F HIS ATTACK TO THE ORDER OF THE CIT (A), THE D.R. PLACED RELIANCE ON T HE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SREI INFRAS TRUCTURE FINANCE LTD.V. ADDL. CIT (281 CTR 532), RENDERED ON 13.02.2 015 WHEREIN IT HAS BEEN HELD THAT THE AMOUNT TRANSFERRED TO THE SP ECIAL RESERVE PURSUANT TO THE PROVISIONS OF S, 45-IC OF THE RESER VE BANK OF INDIA ACT, 1934, AND THE AMOUNT TRANSFERRED TO THE DRR, W ERE INCLUDIBLE IN THE BOOK PROFITS UNDER CL. (B) OF THE EXPLANATION ( 1) TO S. 115JB OF THE ACT. WE FIND THAT THE SAID DECISION HAS BEEN RENDER ED BASED ON PECULIAR FACTS OF ITS OWN CASE. THE SPECIFIC DISTIN GUISHING FEATURES IN THE SAID JUDGMENT ARE EVIDENT FROM PARAGRAPH 22 OF THE ORDER, WHICH IS EXTRACTED BELOW: '22. IN RESPECT OF REDEMPTION RESERVE OF RS. 18,66, 00,000, NO SPECIFIC EXPLANATION WAS GIVEN; ON WHAT ACCOUNT AND WHY THE SAID RESERVE WAS CREATED NOTHING HAS BEEN SHOWN OR POINTED OUT TO US TO SHOW WHY THE SAID RESERVE WAS CREATED THE REPLY DT. 9 TH MARCH, 2009 QUOTED IN THE ASSESSMENT ORDER REFERS T O DEFINITION OF THE TERM 'PROVISION OR RESERVE' AND VARIOUS DECI SIONS AND IN THE END IT IS STATED THAT THE AMOUNTS SET APART FOR PRO VISION OF THE DEBT REDEMPTION RESERVE TO MEET ANY KNOWN LIABILITY CANNOT BE TERMED AS 'RESERVE' AS THE SAME WAS ESSENTIALLY A ' PROVISION' TO EXPLANATION 1. WHY AND FOR WHAT REASONS THE AMOUNT OF RS. 18,66,00,000 REPRESENTED AN ASCERTAINED AND KNOWN L IABILITY, IS NOT INDICATED OR STATED. THE NATURE AND CHARACTER O F DEBT IS NOT MENTIONED AND ADVERTED TO. THE AO ALSO NOTICED THAT IN THE HUBTOWN LIMITED. 40 EARLIER YEARS, THE DEBT REDEMPTION RESERVE WAS OFFE RED OR ADDED BY THE ASSESSEE HIMSELF FOR COMPUTATION OF BOOK PRO FIT THE ASSESSMENT ORDER RECORDS THAT THE ASSESSEE HAD CREA TED A 'RESERVE' FOR MEETING ANY KIND OF DEBT WITHOUT SPEC IFYING ITS DETAILS OR PARTICULARS.' 54. UNLIKE THE POSITION EXISTED IN THE ABOVE DECI SION, THE DRR WAS CREATED BY THE ASSESSEE IN THE PRESENT CASE AS PER THE MANDATE GIVEN UNDER S. 117C OF THE COMPANIES ACT. IT IS ALS O AN ASCERTAINED LIABILITY AND NOT A MERE PROVISION AS HAS BEEN HELD IN THE BINDING JUDGMENTS OF THE HON'BLE BOMBAY HIGH COURT DISCUSSE D HEREINABOVE. IT MAY ALSO BE STATED THAT THE AFORESA ID JUDGMENT, RENDERED BY THE NON-JURISDICTIONAL HIGH COURT, WAS CONSIDERED BUT STILL THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE BY THE COORDINATE BENCHES OF THIS TRIBUNAL IN RACHANA FINA NCE & INVESTMENT P. LTD. AND REPUTE PROPERTIES P. LTD. V. ITO FOR A.Y. 2012-13 IN ITA NOS. 5817 AND 5816/MUM/2015 DATED 31 .05.2017. SIMILARLY, IN A SUBSEQUENT ORDER IN THE CASE OF HOU SING DEVELOPMENT AND INFRASTRUCTURE LTD. V. PR. CIT FOR A.YS. 2009-1 0 AND 2010-11 IN ITA NOS. 3530-3531/MUM/2013 DATED 10.01.2019 ALSO, THE COORDINATE BENCH OF THIS TRIBUNAL, EVEN AFTER CONSI DERING THE AFORESAID JUDGMENT OF THE HON'BLE DELHI HIGH COURT H AD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN THE PREMISES, T HE RATIO LAID DOWN IN THE AFORESAID JUDGMENT OF THE HON'BLE DELHI HIGH COURT WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE. 55. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH VIEW TAKEN BY THE COORDINATE BENCH, WE DIRECT THE AO TO DELETE ADDITI ONS MADE TOWARDS PROVISIONS FOR DRR TO BOOK PROFIT COMPUTED U/S 115JB OF THE I.T. ACT, 1961. HUBTOWN LIMITED. 41 56 THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM GROUND NO.2 OF REVENUE APPEAL IS REJECTION OF DEDUCTION U/ S 80IA(4) OF THE I.T. ACT, 1961 AMOUNTING TO RS. 12,62,73,967/-. THE LD. AO HAS REJECTED DEDUCTION CLAIMED TOWARDS NOTIFIED INDUSTR IAL PARK U/S 80IA(4), ON THE GROUND THAT THE BENEFIT OF THE IND USTRIAL PARK SCHEME, 2008 WAS NOT AVAILABLE TO THE ASSESEE, SIN CE IT WAS RECEIVED THE REQUISITE APPROVAL 05/06/2006. THE LD . AO, FURTHER OBSERVED THAT THE COMPLETED ASSESSMENT FOR AY 2008- 09 AND 2009- 10, GRANTING DEDUCTION U/S 80IA(4) OF THE ACT, WERE RE-OPENED AND THE OBJECTION RECEIVED BY THE ASSESEE WERE REJECTED . THEREFORE, HE OPINED THAT ASSESEE IS NOT ENTITLED FOR DEDUCTION U /S 80IA(4) IN RESPECT OF SALE OF UNITS FROM ITS INDUSTRIAL PARK A T AKRUTI CENTRE POINT U/S 80IA(4)(III) OF THE I.T. ACT, 1961. THE RELEVA NT OBSERVATION OF THE AO ARE AS UNDER:- '8. DURING THE YEAR, THE ASSESSEE HAS CLAIMED A DED UCTION OF RS. 12,62,73,967/- ON SALE OF UNITS FROM ITS INDUSTRIAL PARK AT AKRUTI CENTRE POINT U/S. 80-IA 4(III) OF THE ACT. THE COND ITION FOR ELIGIBILITY OF INDUSTRIAL PARK FOR THE BENEFIT UNDER THIS SECTI ON HAVE BEEN SPECIFIED IN RULE 18C OF THE INCOME TAX RULES. ONE OF THE CONDITIONS MENTIONED THEREIN IS THAT THE UNDERTAKIN G AND THE INDUSTRIAL PARK SHALL BE NOTIFIED BY THE CENTRAL GO VERNMENT UNDER THE INDUSTRIAL PARK SCHEME, 2008. IT IS SEEN THAT T HE NOTIFICATION IN RESPECT OF THE APPROVED INDUSTRIAL PARK WAS ISSU ED IN THE ASSESEES CASE ONLY ON 5 TH JUNE 2006 I.E. THE PARK IS NOT NOTIFIED UNDER THE INDUSTRIAL PARK SCHEME, 2008. IT IS PERTINENT TO STATE HERE THAT THE ASSESSEE'S C ASE HAS BEEN REOPENED FOR A. Y. 2008-09 AND 2009-10 ON THE SAME ISSUE. THE THEN ASSESSING OFFICERS HAD REJECTED THE OBJECTIONS RAISED BY THE ASSESSEE COMPANY TO THE REASSESSMENT PROCEEDINGS. SUBSEQUENT TO THAT THE ASSESSEE HAS FILED A WRIT PE TITION UNDER ARTICLE 226 OF THE CONSTITUTION AND THE MATTER IS S TILL SUBJUDICE. HUBTOWN LIMITED. 42 57. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESE E PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), IT WAS SUBMITTED THAT THE INDUSTRIAL PARKS OF THE ASSESSEE WERE NOT COVERED BY THE 2008 SCHEME, AS ERRONEOUSLY INFERRED BY THE ASSESSI NG OFFICER, RATHER THEY WERE COVERED BY THE INDUSTRIAL PARK SCH EME, 2002 (HEREINAFTER REFERRED TO AS 'THE 2002 SCHEME'). IT WA S SUBMITTED THAT THE APPROVAL FOR THE INDUSTRIAL PARKS OF THE ASSESS EE WAS ISSUED ON 05.06.2006 WHICH ITSELF ESTABLISHED THAT THEY WERE NOT COVERED BY THE 2008 SCHEME. THE CIT (A) IN HIS ELABORATE ORDER CONSIDERED THE DETAILED WRITTEN SUBMISSIONS FILED (PAGE 160-181 OF THE PAPER BOOK), THE 2002 SCHEME AND 2008 SCHEME, THE REQUISITE APPR OVALS GRANTED TO THE ASSESEE AND VARIOUS NOTIFICATION.; I SSUED ON THE SUBJECT. IN ADDITION, THE FIRST APPELLATE ORDERS IN A.YS, 2005-06 AND 2006-07 WERE ALSO CONSIDERED, AND HE HAS DELETED TH E DISALLOWANCE BY OBSERVING AS UNDER: '8.19 FINANCE ACT 1997 EXTENDED THE BENEFITS OF TA X HOLIDAY TO INDUSTRIAL PARKS SET UP AS PER THE SCHEME OF THE CENTRAL GOVERNMENT AND NOTIFIED IN THIS REGARD THE INDUSTRI AL PARKS HAD TO START OPERATIONS BETWEEN 1.4.1997 TO 31.3.2002. THI S WAS SUBSEQUENTLY AMENDED TO INDUSTRIAL PARKS TO BE SET UP BY 31.3.2006. NOW IT IS NOTED THAT THE INDUSTRIAL PARK S DEVELOPED BY THE APPELLANT ARE UNDER THE SCHEME OF 2002 AND ARE OPERATIVE PRIOR TO 1.4.2006. THE APPROVALS BY THE MINISTRY OF COMMERCE AND THE CBDT NOTIFICATIONS CLEARLY STATE SO. ONCE T HE CONDITIONS STIPULATED ARE SATISFIED, THE BENEFIT IS AVAILABLE FOR 10 CONSECUTIVE YEARS IN A BLOCK OF 15 YEARS. THE FIRST YEAR OF CLA IM WAS 2005-06. THE CLAIM FOR A. Y. 2005-06 AND A. Y. 2006-07 HAS B EEN UPHELD ALL THE WAY UP TO THE HON'BLE BOMBAY HIGH COURT. TH E ASSESSMENT YEAR BEFORE ME IS AY 2014-15 WHICH IS TH E LAST YEAR OF THE CLAIM. EARLIER THE OBJECTION RAISED WAS THAT THE CBDT HUBTOWN LIMITED. 43 NOTIFICATION WAS RECEIVED IN PREVIOUS YEAR RELEVANT TO AY 2007- 08 AND HENCE DEDUCTION WAS NOT ALLOWED IN A Y2005-0 6 AND 2006-07. THE CLAIM WAS ALLOWED IN AY 2007-08. IT WA S ALLOWED IN AY 2008-09 AND AY 2009-10 ALSO THOUGH SUBSEQUENTLY NOTICE U/S. 148 TO DENY THE CLAIM WAS ISSUED WHICH WAS CHA LLENGED BY WAY OF WRIT PETITIONS BY THE APPELLANT AND IS SUBJU DICE (DISCUSSED EARLIER). THE CLAIM HAS BEEN ALLOWED IN SUBSEQUENT ASSESSMENT YEARS 2010-11 2011 - 12, 2012-13 SI 2013-14. NOW FOR AY 2014- 15, THE LAST YEAR OF CLAIM, THE ASSESSING OFFICER H AS CONTENDED THAT APPROVAL SHOULD HAVE BEEN UNDER INDUSTRIAL PAR K SCHEME, 2008. THERE IS NO REASON TO NOW HOLD THAT THE APPEL LANT IS NOT ENTITLED TO DEDUCTION U/S. 8IA(4)(III) AND THAT ITS INDUSTRIAL PARK SHOULD HAVE BEEN APPROVED UNDER THE INDUSTRIAL PARK SCHEME 2008 WHICH CLEARLY IS APPLICABLE TO CASES WHERE THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK IS ON AFTER TH E 1 ST DAY OF APRIL, 2006 AND NOT LATER THAN 31 5! OF MARCH; 2009. ALSO THE INDUSTRIAL PARK SCHEME 2008 DEARLY REFERS TO APPROV AL UNDER INDUSTRIAL PARK SCHEME 2002 TO CONTINUE. THUS APPEL LANT'S APPROVAL UNDER THE 2002 SCHEME CONTINUES. FURTHER, THE MATTER BEFORE THE HON'BLE HIGH COURT IS IN RESPECT OF THE REOPENING OF ASSESSMENT AND NET ON MERITS. OTHER THAN TO MENTION THE ARGUMENT THAT APPROVAL UNDER SCHEME OF 2008 SHOULD HAVE BEEN TAKEN, NO OTHER REASONS FOR FINDINGS OF OBJECTIONS ARE RECORDED BY THE ASSESSING OFFICER FOR DENYING THE CLAIM IN AY 2 014-15.' IT IS AGAINST THE WELL-REASONED ORDER OF THE CIT(A) THAT THE AFORESAID GROUND HAS BEEN RAISED. 58. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS ERR ED IN ALLOWING THE DEDUCTION U/S 80IA(4) TOWARDS SALE OF UNITS IN INDUSTRIAL PARK AT CITY AKRUTI POINT, WITHOUT APPRECIATING THE FACT TH AT THE SCHEME WAS HUBTOWN LIMITED. 44 APPROVED ON 05/06/2006, AND THE PROVISION OF SECTIO N 80IA(4)(III) REQUIRED APPROVAL UNDER THE INDUSTRIAL PARK SCHEME, 2008. THE LD. AO HAS BROUGHT OUT CLEAR FACTS TO THE EFFECT THAT T HE ASSESEE IS NOT ENTITLED FOR DEDUCTION. HOWEVER, THE LD.CIT(A) HAS NEGATED OBSERVATIONS OF THE LD.AO WITHOUT ANY REASON, AS HO W THE PROJECT APPROVED BEFORE THE INDUSTRIAL PARK SCHEME, 2008 I S ELIGIBLE FOR DEDUCTION 80IA(4)(III) OF THE I.T. ACT, 1961. 59. THE LD. AR FOR THE ASSESEE, ON THE OTHER HAND, STRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT TH E OBJECTIONS OF THE AO WAS UNTENABLE AND IT WAS RIGHTLY DELETED BY THE CIT(A), BECAUSE THE INDUSTRIAL PARK SCHEME, 2008 RELIED UPON BY TH E AO TO REJECT THE CLAIM OF THE ASSESEE DID NOT APPLY TO ASSESEE CASE. THE ASSESEE HAD APPLIED FOR APPROVAL OF TWO INDUSTRIAL PARK, UN DER 2002 SCHEME AND THE APPROVAL WERE GIVEN BY DIPP VIDE LETTER NO. 5/09/02-IP &D DATED 31/03/2004 VIDE LETTER NO. 15/43/05 IP &D DAT ED 09/2/2005 UNDER INDUSTRIAL PARK SCHEME, 2002. FURTHER, THE CB DT HAD ALSO NOTIFIED THE SAID INDUSTRIAL PARK VIDE NOTIFICATION NO. 129/2006 AND 176/2006 DATED 05/06/2006 AND 12/06/2006 RESPECTIVE LY. SINCE, THE INDUSTRIAL PARKS OF THE ASSESEE WERE DULY APPROVED BY THE DIPP AND ALSO, NOTIFIED BY THE CBDT, THE INFERENCE DRAWN BY THE AO TO THE CONTRARY WAS UNJUSTIFIED AND UNWARRANTED. THE LD. AR FURTHER SUBMITTED THAT IF YOU GO THROUGH CLAUSE 4.1 AND CLA USE 5.6 OF THE INDUSTRIAL PARK, SCHEME, 2008, IT IS NOT UNDERSTOOD AS TO HOW THE LD.AO HAD INFERRED THAT THE INDUSTRIAL PARKS OF THE ASSESEE FOR WHICH APPROVALS WERE GRANTED UNDER 2002 SCHEME WERE COVER ED BY THE 2008 SCHEME. THE LD. AR, FURTHER SUBMITTED THAT A S IMILAR CLAIM WAS MADE IN AY 2005-06 AND AO WAS NOT ACCEPTED THE CLAI M OF THE ASSESEE. THE LD. CIT(A) HAS REVERSED THE FINDINGS OF THE LD.AO FOR HUBTOWN LIMITED. 45 BOTH THE YEARS AND THE REVENUE CARRIED THE MATER UN SUCCESSFULLY IN FURTHER APPEALS TO THE TRIBUNAL AND TRIBUNAL HAD AC CEPTED THE FACT THAT THE ASSESEES INDUSTRIAL PARKS ARE COVERED UND ER INDUSTRIAL PARK SCHEME, 2002 AND ALSO NOTIFIED BY THE CBDT AND HENC E, THE ASSESEE IS ELIGIBLE FOR DEDUCTION U/S 80IA(4) OF TH E I.T. ACT, 1961. ALTHOUGH, THE REVENUE HAS CHALLENGED THE MATTER BEF ORE THE HONBLE HIGH COURT, BUT THE HONBLE HIGH COURT VIDE THEIR J UDGMENT DATED 22/02/2013 IN ITA 71 AND 72/MUM/2012 HAD DISMISSED SUCH APPEALS. THE LD.CIT(A) AFTER CONSIDERING THE RELEVA NT FACTS HAS RIGHTLY DELETED ADDITIONS MADE BY THE AO AND HIS OR DER SHOULD BE UPHELD. 60. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAR TIALS AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. AT THE OUTSET, THE REJECTION OF THE CLAIM FOR DEDUCTION U/ S. 80-IA(4)(III) OF THE ACT BY THE ASSESSING OFFICER WAS UNTENABLE AND IT W AS RIGHTLY DELETED BY THE CIT(A). FURTHER, THE 2008 SCHEME, RE LIED UPON BY THE ASSESSING OFFICER TO REJECT THE CLAIM OF THE ASSESS ES, DID NOT APPLY TO ITS CASE. THE ASSESSEE HAD APPLIED FOR APPROVAL OF TWO INDUSTRIAL PARKS UNDER 2002 SCHEME AND THE APPROVALS WERE GIVE N BY DIPP VIDE LETTER NO. 15/09/02-1 P&D DATED 31,03.2004 AND VIDE LETTER NO. 15/43/05 IP&D DATED 09,12.2005 UNDER INDUSTRIAL PAR K SCHEME, 2002. FURTHER, THE CBDT HAD ALSO NOTIFIED THE SAID INDUSTRIAL PARK VIDE NOTIFICATIONS NOS. 129/2006 AND 176/2006, DATE D 05.06.2006 AND 12.06.2006 RESPECTIVELY. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE THAT SINCE THE INDUSTRIAL PARKS OF THE ASSESSE E WERE, THUS, DULY APPROVED BY DIPP AND ALSO NOTIFIED BY THE CBDT, THE APEX BODY OF THE DEPARTMENT THE INFERENCE DRAWN BY THE ASSESSING OFFICER TO THE CONTRARY WAS UNJUSTIFIED AND UNWARRANTED. IN ANY CA SE, THE ASSESSEE HUBTOWN LIMITED. 46 WAS NOT COVERED BY 2008 SCHEME, AS ERRONEOUSLY INFE RRED BY THE ASSESSING OFFICER SINCE IT WAS APPLICABLE TO INDUST RIAL PARKS WHICH WERE COMMENCED ON OR AFTER 01.04,2006, BUT NOT LATE R THAN 31.03.2011. ON THE OTHER HAND, THE INDUSTRIAL PARKS OF THE ASSESSEE WERE FULLY COVERED BY THE 2002 SCHEME. THIS IS EVID ENT FROM CLAUSE 4.1 AND CLAUSE 5.6 OF THE 2002 SCHEME ITSELF, A COP Y OF WHICH IS PLACED AT PAGES 110-121 OF THE PAPER BOOK. THE AFOR ESAID CLAUSES ARE REPRODUCED BELOW FOR READY REFERENCE: '4. CRITERIA FOR APPROVAL- AN UNDERTAKING SHALL BE CONSIDERED FOR NOTIFICATION UNDER CLAUSE (III) OF SUB-SECTION (4) OF SECTION 80-IA OF THE ACT, IF IT FULFILLS ALL OF THE FOLLOWING CONDIT IONS, NAMELY:- 1. THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK SHOULD BE ON OR AFTER THE 1 ST DAY OF APRIL, 2006 AND NOT LATER THAN 31 ST OF MARCH, 2009. ' '5. GENERAL CONDITIONS:- 6. AN INDUSTRIAL PARK APPROVED UNDER INDUSTRIAL PAR K SCHEME, 2002 WILL CONTINUE TO BE GOVERNED BY THE PROVISIONS OF THAT SCHEME TO THE EXTENT IT IS NOT IN CONTRAVENTION WIT H THE PROVISIONS OF ACT, AS AMENDED FROM TIME TO TIME.' 61. IN VIEW OF THE UNAMBIGUOUS LANGUAGE OF CLAUSE 4.1 AND CLAUSE 5.6 OF THE INDUSTRIAL PARK SCHEME, 2008 EXTRACTED H EREINABOVE, IT IS NOT UNDERSTOOD AS TO HOW THE ASSESSING OFFICER HAD INFERRED THAT THE INDUSTRIAL PARKS OF THE ASSESSEE, FOR WHICH APPROVA LS WERE GRANTED UNDER 2002 SCHEME WERE COVERED BY THE 2008 SCHEME. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE REJECTION OF THE CLAIM OF THE ASSESSES WHICH WAS IN ACCORDANCE WITH THE STATUTORY PROVISIONS AND SUPPORTED BY REQUISITE APPROVALS AND NOTIFICATIONS WAS RIGHTLY REVERSED BY THE CIT (A). FURTHER, A SIMILAR CLAIM W AS MADE IN A,Y, 2005-06 FOR A SUM OF RS. 10,59,66,901/-. DURING THE COURSE OF HUBTOWN LIMITED. 47 SCRUTINY, THE ASSESSING OFFICER OBSERVED THAT IN RE SPECT OF THE SAME PROPERTIES THE ASSESEE HAD OFFERED RENTAL INCOME AS 'INCOME FROM HOUSE PROPERTY' IN A.YS 2001-02 TO 2004-05 IN THE RE TURNS FILED U/S. 139(1) OF THE ACT. HENCE, THE TREATMENT OF SUCH INC OME FROM INDUSTRIAL PARKS AS 'BUSINESS INCOME WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND, THE CLAIM OF DEDUCTION U/S. 80-LA(4)(III) OF THE ACT WAS REJECTED. ON SAME LINES, THE CLAIM MADE U/S . 80-IA(4)(III) FOR A,Y. 2006-07 WAS ALSO DECLINED. SINCE THE ORDERS OF THE ASSESSING OFFICER FOR BOTH THE YEARS WERE REVERSED BY THE CIT (A), THE REVENUE CARRIED THE MATTER UNSUCCESSFULLY IN FURTHER APPEAL S TO TRIBUNAL. THE RELEVANT OBSERVATIONS MADE BY THE TRIBUNAL IN THE O RDER DATED 24.06.2011 IN ITA NOS. 4851/MUM/2009 FOR AY 2005-06 (WHICH WERE FOLLOWED IN ITA NO. 4852/MUM/2009 FOR A.Y. 2006-07) WERE AS UNDER: '12.1 WE FIND THE A.O. DISALLOWED THE CLAIM OF DEDU CTION U/S. 80- IA(4)(III) ON THE GROUND THAT THE CBDT APPROVAL WAS GIVEN ON 5.6.06 AND 12.7.06 AND, THEREFORE, THE SAME RELATES TO A. Y. 2007-08 ONLY. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSES WE FIND THE ASSESSEE MADE THE APPLICATION TO THE ME MBER, CBDT, NEW DELHI FOR NOTIFICATION ON 16.6.05, I.E. B EFORE FILING ITS RETURN OF INCOME FOR AY. 2005-06, CLAIMING DEDUCTIO N U/S. 80IA(4)(III). THE ABOVE FACT BROUGHT ON RECORD BY T HE ID CIT (A) AT PARA NO. 5.3 OF HIS ORDER HAS NOT BEEN CONTROVERTED BY THE ID D.R. WE FIND AS PER RULE 18-C(4), THE CBDT IS REQUI RED TO ISSUE THE REQUISITE NOTIFICATION ONCE THE APPROVAL IS GIV EN BY THE COMMERCE MINISTRY. IN THE INSTANT CASE, WE FIND THE MINISTRY OF COMMERCE AND INDUSTRY VIDE THEIR LETTER DATED 209 TH AUG., 2002 HAD APPROVED THE PROPOSAL OF THE ASSESSES COMPANY F OR SETTING UP OF THE INDUSTRIAL PARK HI TERMS OF THE SCHEME NO TIFIED BY THE DEPARTMENT IN EXERCISE OF THE POWERS U/S. 80IA(4)(I II) SUBJECT TO CERTAIN CONDITIONS. WE FIND THE COMMERCE MINISTRY V IDE THEIR LETTER DATED 12 TH NOV. 2003 HAS MODIFIED THE NOTIFICATION OF THE APPROVAL LETTER DTD. 23 TH AUG. 2002. WE FIND THE MINISTRY OF COMMERCE AND INDUSTRY AGAIN VIDE THEIR LETTER DTD. 31 5! DECEMBER, 2004 HAS APPROVED THE REVISED APPLICATION FOR MODIFICATION WHEREIN IT WAS MENTIONED THAT INCOME-T AX BENEFIT HUBTOWN LIMITED. 48 U/S. 80LA(4)(III) WILL BE AVAILABLE ONLY IF THE PRO POSED NUMBER OF INDUSTRIAL UNITS MENTIONED IN PARA 1(VII) OF THIS A PPROVAL LETTER ARE LOCATED IN THE INDUSTRIAL PARK. WE FIND, A COPY OF SUCH NOTIFICATION WAS FORWARDED TO THE DIRECTOR (ITA -I), OFFICE OF C ENTRAL BOARD OF DIRECT TAXES, DEPARTMENT OF REVENUE, NORTH BLOCK, N EW DELHI AND A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 1 5 TO 17. WE FIND THE ASSESSEE COMPANY HAS FULFILLED ALL THE REQ UISITE CONDITIONS FOR CLAIMING DEDUCTION U/S. 80IA(4)(III) OF THE ACT. THE REQUISITE NUMBER OF UNITS LOCATED IN INDUSTRIAL PAR K WERE COMPLETED AND THE COMPLETION CERTIFICATES WERE ALSO OBTAINED BY 24 H DECEMBER 2003, A FINDING GIVEN BY THE ID CIT(A) AND NOT CONTROVERTED BY THE ID. D.R. UNDER THESE CIRCUMSTAN CES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) A LLOWING THE CLAIM OF DEDUCTION U/S 80IA(4)(III). THE GROUND NO. 1 RAI SED BY THE REVENUE IS ACCORDINGLY DISMISSED.' 62. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE TH AT THE AFORESAID ORDER OF THE TRIBUNAL WAS CARRIED IN PROCEEDINGS U/ S. 260A OF THE ACT BY THE REVENUE BUT IN VAIN. THE HONBLE HIGH COURT VIDE THEIR JUDGMENT DATED 22.02.2013 RENDERED IN ITA NOS. 71 A ND 72 OF 2012, HAD DISMISSED SUCH APPEALS. FURTHER, IN THE SUBSEQU ENT YEAR, I,E. A.Y. 2007-08, SIMILAR CLAIM PREFERRED WAS GRANTED A FTER DUE VERIFICATION VIDE ASSESSMENT ORDER DATED 30,12.2008 . IN A.Y. 2008- 09 ALSO, CLAIM U/S. 80-IA4(III) OF THE ACT MADE BY THE ASSESSEE WAS ALLOWED IN THE ORDER PASSED U/S. 143(3) OF THE ACT DATED 24.12.2010 AND IN RESPECT OF WHICH PROCEEDINGS U/S. 147 OF THE ACT WERE INITIATED, AND THE MATTER IS SUBJUDICE BEFORE THE H ON'BLE HIGH COURT. IN ANY CASE, IT IS ON THE REOPENING PART AND NOT ON THE MERITS. 63. CONSIDERING THE TOTALITY OF THE FACTS AND CIR CUMSTANCES OF THE CASE, MORE PARTICULARLY IN ABSENCE OF ANY NON-COMPL IANCE OF STATUTORY REQUIREMENTS BY THE ASSESSEE, THE REJECTI ON OF ITS CLAIM FOR DEDUCTION U/S. 80-IA(4)(III) OF THE ACT WAS UNCALLE D FOR. THE CIT (A) WAS, THEREFORE, PERFECTLY JUSTIFIED IN CORRECTING T HE ERROR COMMITTED BY THE ASSESSING OFFICER BY PASSING AN EXHAUSTIVE; ELABORATE AND HUBTOWN LIMITED. 49 REASONED ORDER. HENCE, WE ARE INCLINED TO UPHOLD OR DER OF THE LD. CIT(A) AND REJECT GROUNDS RAISED BY THE REVENUE. 64. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. CO.NO. 164/MUM/2019- ASST YEAR 2014-15 65. THE ASSESEE HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTION:- '1. THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS. 10,44,08,023/- MADE BY THE ASSESSING OFFICER U/S. 14A R.W.R. 8D(2)(II) OF THE ACT ON ACC OUNT OF PROPORTIONATE INTEREST EXPENDITURE. 2. THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE A SSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS. 2,90,10,684/- MADE B Y THE ASSESSING OFFICER U/S. 14A R.W.R. 8D(2)(III) OF THE ACT IN RE SPECT OF OTHER EXPENDITURE. 3. THE LEARNED CIT (A) OUGHT TO HAVE DIRECTED THE A SSESSING OFFICER TO DELETE THE DIS3FIOWANCE MADE U/S. 14A OF THE ACT WH ILE CALCULATING THE BOOK PRO FIT U/S, 115JB OF THE ACT' 66. AT THE OUTSET, THE LD. AR FOR THE ASSESEE SUBMI TTED THAT THE CROSS OBJECTION FILED BY THE ASSESEE IS DELAYED BY 177 DAYS, FOR WHICH NECESSARY PETITION ALONG WITH AFFIDAVIT FOR C ONDONATION OF DELAY HAS BEEN FILED EXPLAINING THE REASONS FOR DELAY IN FILING CROSS OBJECTION. THE LD. AR AS WELL AS THE LD. DR HAS MAD E IT CLEAR THAT ARGUMENTS ADVANCED FOR ASSESSMENT YEAR 2013-14 ARE EQUALLY APPLICABLE FOR THIS YEAR AS WELL AND THEY DO NOT HA VE ANY FRESH ARGUMENTS. WE, THEREFORE, NOT INCLINED TO RECORD TH EIR ARGUMENTS IN THIS CROSS OBJECTION FOR THE SAKE OF BREVIETY. HUBTOWN LIMITED. 50 67. WE HAVE HEARD BOTH PARTIES AND HAVE GONE THROUG H CONDONATION PETITION FILED BY THE ASSESSEE. WE FIND THAT A SIMILAR CONDONATION PETITION FILED BY THE ASSESSEE FOR ASST . YEAR 2013-14 HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND COND ONE THE DELAY IN FILING CROSS OBJECTION. FURTHER, THE FACTS AND R EAONS GIVEN BY THE ASSESSEE FOR THIS ASSESSMENT YEAR ARE ALSO IDENTICA L TO THE FACTS AND REASONS CONSIDERED BY US FOR ASST. YEAR 2013-14. TH E REASONS GIVEN BY US IN PRECEEDING PARAGRAPHS NO. 28 TO 31 OF CO.N O. 163/MUM/2019 SHALL MUTATIS MUTANDIS APPLY TO THIS C ROSS OBJECTION AS WELL. THEREFORE, FOR DETAILED REASONS RECORDED I N PRECEDING PARAGRAPH, WE CONDONE DELAY IN FILING CROSS OBECTIO N AND ADMIT THE ISSUE FOR ADJUDICATION ON MERITS. 68. THE FACTS AND ISSUE INVOLVED IN THIS CROSS OBJE CTION FILED BY THE ASSESSEE IS IDENTICAL TO THE FACTS AND ISSUE WHICH WE HAD CONSIDERED IN PRECEDING PARAGRAPH IN CO. 163/MUM/2019 FOR ASST . YEAR 2013- 14. THE REASONS GIVEN BY US IN PRECEDING PARAGRAPH NO. 35 TO 39 SHALL MUTATIS MUTANDIS APPLY TO THIS CROSS OBJECTIO N AS WELL. WE, THEREFORE, FOR DETAILED REASONS RECORDED IN PRECEDI NG PARAGRAPH IN CO.163/MUM/2019, DIRECT THE AO TO FOLLOW THE FINDIN GS OF THE TRIBUNAL FOR ASST. YEAR 2013-14 AND RESTRICT DISALL OWANCES OF EXPENDITURE U/S 14A OF THE ACT, TO THE EXTENT OF EX EMPT INCOME EARNED FOR THE YEAR. WE, FURTHER DIRECT THE AO TO D ELETE ADJUSTMENT MADE TO BOOK PROFIT COMPUTED U/S 115JB OF THE ACT, TOWARDS DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961. 69. IN THE RESULT, CROSS OBJECTION FILED BY THE ASS ESEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. HUBTOWN LIMITED. 51 70. AS A RESULT, APPEALS FILED BY THE REVENUE FOR A Y 2013-14 AND 2014-15 ARE DISMISSED AND CROSS OBJECTION FILED BY THE ASSESEE FOR BOTH AYS ARE TREATED AS ALLOWED FOR STATISTICAL PU RPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13/12 /2019 SD/- (RAVISH SOOD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13/12/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//