G K Developers, Pune V. Dy. CIT, Circle-8, Pune

ITA 1145/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79845 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS M S VERMA
• Keywords: Recovery proceedings
• Section: 143(3); 263; 63; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.1145/PN/2013 (ASSESSMENT YEAR : 2009-10) G.K. DEVELOPERS, 21/1 B BLOCK, PIMPRI, PUNE 411 007. PAN : AAFFG5688P . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE- 8, PUNE. . RESPONDENT ASSESSEE BY : MR. SUNIL GANOO DEPARTMENT BY : MRS. M.S. VERMA DATE OF HEARING : 20-05-2014 DATE OF PRONOUNCEMENT : 30-05-2014 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX-V, PUNE (IN SHORT THE C OMMISSIONER) DATED 26.03.2013 PASSED U/S 263(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WHEREBY AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT DATED 25.03.2011 HAS BEEN HELD TO BE ERRONE OUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1. IN THE ABSENCE OF CONDITIONS PRECEDENT FOR ASSU MPTION / EXERCISE OF REVISIONAL JURISDICTION U/S 263 OF THE I.T. ACT 1961, BY THE LEARNED C.I.T. THE IMPUGNED ORDER IS BAD IN LAW, NULL AND V OID AB INITIO AND WITHOUT JURISDICTION, AND HENCE THE SAME MAY PLEASE BE VACA TED / ANNULLED. 2. THE LEARNED ASSESSING OFFICER DURING THE SCRUTIN Y ASSESSMENT PROCEEDINGS, AFTER DUE APPLICATION OF MIND HAVING A LLOWED THE DEDUCTION CLAIMED BY THE APPELLANT ASSESSEE U/S 80-IB[10] OF THE I.T. ACT 1961, THE LEARNED C.I.T. HAS ERRED IN INVOKING HIS REVISIONAL JURISDICTION U/S 263 OF THE I.T. ACT 1961 ON THE ERRONEOUS AND FALLACIOUS GROUND OF NON APPLICATION OF MIND ON THE PART OF THE LEARNED ASSESSING OFFICER. FURTHERM ORE THE ISSUE INVOLVED BEING DEBATABLE AND COVERED IN FAVOUR OF THE APPELL ANT ASSESSEE BY CATENA OF ITA NO.1145/PN/2013 A.Y. 2009-10 DECISIONS OF ITAT PUNE AND OTHER HIGH COURTS, THE I MPUGNED ORDER IS BAD IN LAW, NULL AND VOID AB INITIO AND WITHOUT JURISDICTI ON, AND HENCE THE SAME MAY PLEASE BE VACATED / ANNULLED. 3. THE LEARNED ASSESSING OFFICER DURING THE SCRUTIN Y ASSESSMENT PROCEEDINGS, AFTER DUE APPLICATION OF MIND HAVING A CCEPTED THE NET PROFIT DECLARED BY THE APPELLANT ASSESSEE IN RESPECT OF 80 -IB PROJECT AS COMPARED WITH THE PROFITS EARNED BY THE APPELLANT ASSESSEE D URING THE RELEVANT YEAR FROM NON 80-IB PROJECTS, THE LEARNED C.I.T. HAS ERR ED IN INVOKING HIS REVISIONAL JURISDICTION U/S 263 OF THE I.T. ACT 1961 ON THE ER RONEOUS AND FALLACIOUS GROUND OF NON APPLICATION OF MIND ON THE PART OF THE LEARN ED ASSESSING OFFICER. IN THE CIRCUMSTANCES THE IMPUGNED ORDER PASSED BY THE LEAR NED C.I.T. IS BAD IN LAW, NULL AND VOID AB INITIO AND WITHOUT JURISDICTION TH E SAME MAY PLEASE BE VACATED/ ANNULLED. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE OBSERVATION OF THE LEARNED C.I.T. THAT THE LEARNED ASSESSING OFFICER HAS FAILED TO CONSIDER THAT BY NOT PAYING THE INTEREST ON LOAN S OBTAINED BY THE APPELLANT ASSESSEE FROM ITS SISTER CONCERNS NAMELY M/S GK & S .P. ASSOCIATES AND M/S G.K. ENTERPRISES, THE PROFITS OF THE SISTER CONCERN S HAVE BEEN SHIFTED TO THE APPELLANT ASSESSEE WHOSE PROFITS ARE EXEMPT U/S 80- IB[10] OF THE I.T. ACT 1961 IS ARBITRARY, PERVERSE AND BEING DEVOID OF MERITS T HE SAME MAY PLEASE BE VACATED AND CONSEQUENTLY THE IMPUGNED ORDER PASSED BY THE LEARNED C.I.T. MAY PLEASE BE VACATED / ANNULLED. 3. IN THIS CASE, ASSESSEE IS A PARTNERSHIP FIRM ENG AGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. FOR THE ASSESSMENT YEAR U NDER CONSIDERATION, IT FILED A RETURN OF INCOME ON 15.09.2009 DECLARING TO TAL INCOME OF RS.86,35,530/- WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 25.03.2011 WHEREBY THE FINALLY ASSESSED INCOM E WAS ALSO DETERMINED AT RS.86,58,930/- I.E. THE RETURNED INCOME. SUBSEQ UENTLY, THE COMMISSIONER HAS INVOKED HIS REVISIONARY JURISDICTION U/S 263 OF THE ACT AND HELD THE ASSESSMENT ORDER DATED 25.03.2011 (SUPRA) AS ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND SET -ASIDE THE SAME AND DIRECTED THE ASSESSING OFFICER TO RE-DO THE ASSESSM ENT AFTER GIVING AN APPROPRIATE OPPORTUNITY TO THE ASSESSEE OF BEING HE ARD ON THE ISSUES RAISED BY HIM. THE COMMISSIONER HAS FOUND THE ASSESSMENT ORD ER AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT ON THREE GROUNDS, ALL OF WHI CH ARE BEING CHALLENGED BY THE ASSESSEE BEFORE US IN TERMS OF THE ABOVE STATED GROUNDS OF APPEAL. 4. IN ORDER TO APPRECIATE THE GRIEVANCE OF THE ASSE SSEE, THE FOLLOWING BACKGROUND IS APPROPRIATE TO NOTICE. THE ASSESSEE DURING THE PREVIOUS YEAR ITA NO.1145/PN/2013 A.Y. 2009-10 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION , CARRIED OUT DEVELOPMENT AND CONSTRUCTION OF THREE PROJECTS, NAMELY, ROSELAN D RESIDENCY, DWARKA LORDS AND DWARKA SUNCREST. IT CLAIMED DEDUCTION U/ S 80IB(10) OF THE ACT OF RS.70,52,28,447/- IN RELATION TO THE PROFITS DERIVE D FROM ROSELAND RESIDENCY. THE DWARKA SUNCREST PROJECT WAS ALSO SAID TO BE ELI GIBLE FOR SECTION 80IB(10) BENEFITS BUT IN THE ABSENCE OF PROFITS NO CLAIM OF DEDUCTION WAS MADE. IN SO FAR AS THE PROJECT, DWARKA LORDS WAS CONCERNED THE SAME WAS STATED TO BE NOT ELIGIBLE FOR SECTION 80IB(10) BENEFITS. 5. THE FIRST REASON TAKEN BY THE COMMISSIONER WAS T HAT TWO OF THE RESIDENTIAL UNITS IN ROSELAND RESIDENCY PROJECT EXC EEDED THE PRESCRIBED LIMIT OF 1500 SQ.FT. CONTAINED IN CLAUSE (C) OF SECTION 8 0IB(10) OF THE ACT, AND THEREFORE IT WAS NOT ELIGIBLE FOR SECTION 80IB(10) BENEFITS. THE COMMISSIONER NOTICED THAT ASSESSING OFFICER FAILED TO EXAMINE TH IS ASPECT OF THE CLAIM OF SECTION 80IB(10) OF THE ACT IN RELATION TO ROSELAND RESIDENCY PROJECT, AS WAS DIRECTED BY THE COMMISSIONER FOR THE SAME PROJECT F OR ASSESSMENT YEAR 2005- 06 IN TERMS OF AN ORDER U/S 263 OF THE ACT DATED 30 .03.2012. 6. IN RELATION TO THE AFORESAID GROUND, IT WAS A CO MMON POINT BETWEEN THE PARTIES THAT WHILE CONSIDERING SIMILAR DIRECTIONS O F THE COMMISSIONER FOR ASSESSMENT YEAR 2005-06 IN AN ORDER PASSED U/S 263 DATED 30.03.2012, THE TRIBUNAL VIDE ORDER IN ITA NO.834/PN/2012 DATED 30. 01.2013 FOUND THAT ISSUE RAISED WAS DEBATABLE AND HELD THAT THE SAME WAS BEY OND THE PURVIEW OF SECTION 263 OF THE ACT, A COPY OF THE SAID ORDER HA S BEEN PLACED ON RECORD IN THE COURSE OF HEARING. 7. IN THE SAID PRECEDENT, THE FOLLOWING DISCUSSION IS RELEVANT :- 3. THE CIT HAVING CONSIDERED THE SUBMISSIONS ON BE HALF OF THE ASSESSEE, SET ASIDE THE ORDER OF THE ASSESSING OFFI CER ON ACCOUNT OF THE FACT THAT ASSESSEE HAS NOT COMPLIED WITH THE CONDITIONS OF SECTION 80IB(10) OF THE ACT. IN APPEAL BEFORE US, THE STAND OF THE ASSESSE E IS THAT IN ABSENCE OF CONDITIONS PRECEDENT FOR EXERCISE OF REVISIONAL JUR ISDICTION U/S 263 OF THE ITA NO.1145/PN/2013 A.Y. 2009-10 I.T.ACT 1961, THE IMPUGNED ORDER PASSED BY THE LEAR NED C.I.T. BEING PATENTLY ILLEGAL, BAD IN LAW AND NULL AND VOID AB INITIO AND WITHOUT JURISDICTION THE SAME MAY PLEASE BE ANNULLED. ACCORDING TO THE LD. AUTHO RISED REPRESENTATIVE, THE ASSESSING OFFICER HAS CONDUCTED PROPER ENQUIRIES IN THE MATTER OF BUILT UP AREA OF THE ROW HOUSES IN THE HOUSING PROJECT CONST RUCTED BY THE APPELLANT AND HAVING APPLIED HIS MIND TO THE ISSUE HAS ARRIVE D AT A JUDICIOUS DECISION THAT NONE OF THE ROW HOUSE IN THE SCHEME EXCEEDED T HE BUILT UP AREA OF 1,500 SQ. FT. AND THE CLAIM WAS RIGHTLY ALLOWED BY THE AS SESSING OFFICER U/S 80IB(10) OF THE ACT TO THE ASSESSEE. IN THE CIRCUMSTANCES TH E CIT OUGHT NOT TO HAVE EXERCISED THE REVISIONAL JURISDICTION U/S 263 OF TH E ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT HAS F AILED TO APPRECIATE THAT THE DEFINITION OF BUILT UP AREA AS PER SECTION 80IB(14) (A) OF THE ACT WAS APPLICABLE FOR THE PROJECTS SANCTIONED AFTER 01.04.2005 AND HE NCE THE SAME WAS INAPPLICABLE TO THE HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE. IN THE CIRCUMSTANCES THE DEFINITION OF BUILT UP AREA AS PE R DEVELOPMENT CONTROL RULES OF PCMC BEING APPLICABLE TO THE HOUSING PROJECT, TH E DEDUCTION U/S 80IB(10) WAS RIGHTLY ALLOWED BY THE ASSESSING OFFICER AND IN THE CIRCUMSTANCES THE CIT OUGHT NOT TO HAVE EXERCISED REVISIONAL POWERS U/S 2 63 OF THE ACT. THE PROVISIONS OF SECTION 80IB(14)(A) OF THE ACT ARE AP PLICABLE TO THE HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE BEING A DEBATAB LE ISSUE, THE REVISIONAL JURISDICTION OF CIT U/S.263 IS NOT JUSTIFIED, SAME SHOULD BE SET ASIDE. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE CIT. 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERI AL ON RECORD, WE FIND THE ITAT IN ASSESSEES OWN CASE IN ITA.NO.1 077/PN/2010 DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWIN G THE DECISION OF TUSHAR DEVELOPERS IN ITA.NO.165/PN/2007 AND 94/PN/2007 IN THE CASE OF HAWARE CONSTRUCTIONS (P) LTD. THIS SHOWS THAT THE ISSUE A T HAND WAS DEBATABLE AT THE RELEVANT POINT OF TIME AND REVISIONAL JURISDICTION U/S.263 SHOULD NOT BE INVOKED ON DEBATABLE ISSUES. OUR THIS VIEW GETS STRENGTH F ROM THE ORDER IN THE CASE OF J.K.BUILDERS IN ITA.NO.396/PN/2009 AND 112/PN/2011 FOR A.Y. 2005-06 AND 2006-07, WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 7. FOLLOWING THE AFORESAID OBSERVATIONS, WE THEREF ORE, HOLD THAT SINCE THE PROJECT OF THE ASSESSEE COMMENCED PRIOR T O 1-4-2005 THE DEFINITION OF BUILT UP AREA AS PROVIDED IN SEC. 8 0-IB(14)(A) CANNOT BE APPLIED IN THIS CASE SO AS TO EVALUATE THE CONDITIO N PRESCRIBED IN SUB- CLAUSE (C) OF SECTION 80IB(10) OF THE ACT. UNDER T HESE CIRCUMSTANCES, THE LIMIT OF BUILT UP AREA PRESCRIBED IN SUB-CLAU SE (C) OF SECTION 80- IB(10) OF THE ACT HAS TO BE UNDERSTOOD ON THE BASIS OF LOCAL DEVELOPMENT RULES WHICH DOES NOT INCLUDE TERRACE/CA NOPY. IF THE AREAS COVERED BY THE TERRACE/CANOPY ARE EXCLUDED, THE BUI LT UP AREA OF THE THREE ROW HOUSES IN QUESTION DOES NOT EXCEED THE LI MIT OF 1500 SQ.FT. PRESCRIBED IN SEC. 80-IB(10)(C) OF THE ACT. IN THI S VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S 80-IB(10) OF THE ACT AS CLA IMED BY THE ASSESSEE AND THE ASSESSEE SUCCEEDS IN ITS APPEAL FO R A.Y. 2005-06. . 8. AS FAR AS APPEAL FOR A.Y. 2006-07 IS CONCERNED, THE FACTS AND CIRCUMSTANCES OF THIS CASE ARE IN PARI MATERIA WITH THOSE FOR A.Y. 2005- 06 AND THEREFORE, OUR FINDINGS GIVEN IN ITA NO.396/ PN/09 FOR A.Y. 2005-06 SHALL APPLY MUTATIS MUTANDIS TO THE APPEAL VIDE ITA NO. 112/PN/11 FOR A.Y. 2006-07. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. IN VIEW OF THE ABOVE, WE HOLD THAT THE CIT WAS NOT JUSTIFIED IN INVOKING PROVISIONS OF SECTION 263 ON ABOVE MENTIONED DEBATA BLE ISSUE AT RELEVANT POINT OF TIME AS FAR AS THE ALLOWABILITY OF DEDUCTI ON U/S.80IB(10) IS CONCERNED. ACCORDINGLY, THE ORDER OF THE CIT IS SET ASIDE. ITA NO.1145/PN/2013 A.Y. 2009-10 8. FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BEE N RENDERED IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 ON AN ISSUE IDENTICAL TO THAT RAISED BY THE COMMISSIONER IN THE PRESENT YEAR , WE HOLD THAT THE COMMISSIONER WAS NOT JUSTIFIED IN INVOKING HIS REVI SIONARY POWERS CONTAINED IN SECTION 263 OF THE ACT ON THE ASPECT OF THE TWO OF THE RESIDENTIAL UNITS IN THE PROJECT ROSELAND RESIDENCY BEING IN EXCESS OF THE L IMIT OF 1500 SQ.FT. PRESCRIBED IN SECTION 80IB(10)(C) OF THE ACT. THUS , THE AFORESAID GROUND RAISED BY THE COMMISSIONER IS SET-ASIDE AS BEING UN SUSTAINABLE. 9. THE SECOND ISSUE RAISED BY THE COMMISSIONER WAS THAT ASSESSEE HAS RAISED CERTAIN LOANS FROM ITS SISTER CONCERNS, DETA ILS OF WHICH ARE IN CONTAINED IN PARA 3 OF THE IMPUGNED ORDER, ON WHICH NO INTERE ST EXPENDITURE WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT. AS PER THE COMMISS IONER, OBTAINING OF INTEREST-FREE LOANS FROM THE SISTERS CONCERNS HAS R ESULTED INTO SHIFTING OF PROFITS OF THE SISTER CONCERNS TO THE ASSESSEE CONCERN, THE REBY LEADING TO AVOIDANCE IN PAYMENT OF TAXES SINCE THE INCOME OF THE ASSESSE ES PROJECT WAS ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. 10. ON THIS ASPECT, WE FIND THAT ONE OF THE PERTINE NT REPLY FURNISHED BY THE ASSESSEE TO THE COMMISSIONER WAS TO THE EFFECT THAT THERE WAS NO COST OF FUNDS IN THE HANDS OF THE SISTER CONCERNS AND THERE FORE THERE WAS NO REQUIREMENT FOR PAYMENT OF INTEREST. THE AFORESAID ASSERTION OF THE ASSESSEE HAS GONE UN-REBUTTED BY THE COMMISSIONER. THE COMM ISSIONER, HOWEVER, HELD THAT THE IMPUGNED ASPECT WAS IMPORTANT FOR THE DETERMINATION OF PROFITS FOR THE PURPOSES OF DEDUCTION ALLOWABLE U/S 80IB(10 ) OF THE ACT WHICH WAS NOT EXAMINED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT ORDER. FOR THE SAID REASON, THE COMMISSIONER CONSIDERED TH E ASSESSMENT ORDER AS ERRONEOUS WITHIN THE MEANING OF SECTION 263 OF THE ACT. ITA NO.1145/PN/2013 A.Y. 2009-10 11. IN OUR CONSIDERED OPINION, THE COMMISSIONER HAS MISDIRECTED HIMSELF IN HOLDING THE ASSESSMENT ORDER AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTI ON 263 OF THE ACT ON THIS ASPECT. FIRSTLY, THE CHARGE MADE BY THE COMMISSION ER THAT NON-PAYMENT OF INTEREST ON LOANS RAISED BY SISTER CONCERNS HAS LED SHIFTING OF PROFITS OF THE SISTER CONCERN TO THE ASSESSEE, IS DEVOID OF ANY FA CTUAL SUPPORT. WE SAY SO, AFTER CONSIDERING THAT THE FACTUAL ASSERTION OF THE ASSESSEE THAT THERE WAS NO COST OF FUNDS IN THE HANDS OF THE SISTER CONCERN, I S UNCONTROVERTED. THE COMMISSIONER MAY BE TECHNICALLY CORRECT IN SAYING T HAT THIS ASPECT WAS NOT EXAMINED BY THE ASSESSING OFFICER, SO HOWEVER, THE OBLIGATION OF THE COMMISSIONER TO HOLD THE ORDER ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECT ION 263 OF THE ACT DOES NOT END THERE. THE COMMISSIONER HAS TO ESTABLISH THE S PECIFIC ERROR WHICH HAS LED TO DENIAL OF LAWFUL RECOVERY OF TAXES ON ACCOUNT OF ALLEGED NON-EXAMINATION OF AN ISSUE BY THE ASSESSING OFFICER. IN THE PRESENT FACT-SITUATION, IT IS ONLY AN APPREHENSION VOICED BY THE COMMISSIONER THAT NON-PA YMENT OF INTEREST ON LOANS RAISED FROM THE SISTER CONCERNS HAS LED TO A SHIFTING OF PROFITS OF THE SISTER CONCERNS TO THE ASSESSEE CONCERN. IN-FACT, THE OBS ERVATION OF THE COMMISSIONER TO THE EFFECT THAT POSSIBILITY OF COLLUSIVE TRANSACTION HAS TO BE RULED OUT, CLEARLY IMPLIES THAT THE COMMISSIONER HAS ACTED ON A MERE APPREHENSION OF AN ERROR HAVING CREPT INTO THE ORDE R OF THE ASSESSING OFFICER ON THIS ASPECT AND NOT ON THE BASIS OF ANY CLINCHIN G EVIDENCE, WHICH IN OUR VIEW, IS NOT IN CONSONANCE WITH THE REQUIREMENTS OF SECTION 263 OF THE ACT. ACCORDINGLY, THE ORDER OF THE COMMISSIONER IS SET-A SIDE ON THIS ASPECT ALSO. 12. THE LAST GROUND RAISED BY THE COMMISSIONER WAS WITH REGARD TO THE LEVEL OF PROFITABILITY DECLARED WITH RESPECT TO THE ROSELAND RESIDENCY PROJECT IN COMPARISON TO THE OTHER PROJECTS. IN THIS CONTEXT, THE COMMISSIONER NOTED THAT THE NET PROFIT RATIO OF ROSELAND RESIDENCY PROJECT, WHICH WAS A SECTION 80IB(10) ELIGIBLE PROJECT, WAS DECLARED BY THE ASSE SSEE AT 44.14% WHEREAS ITA NO.1145/PN/2013 A.Y. 2009-10 THE NET PROFIT RATIO FOR THE DWARKA LORDS PROJECT, WHICH WAS NOT ELIGIBLE FOR SECTION 80IB(10) BENEFITS, WAS DECLARED AT 30.27%. THE COMMISSIONER ALSO NOTED THAT IN THE EARLIER ASSESSMENT YEARS, ASSESSE E FIRM HAS DECLARED NET PROFIT RATIO FROM SUCH BUSINESS IN THE RANGE OF 22% TO 25% AND THEREFORE SUDDEN INCREASE IN THE PROFITABILITY OF THE SECTION 80IB(10) ELIGIBLE PROJECT IN THIS YEAR WAS REQUIRED TO BE EXAMINED IN DETAIL, WH ICH THE ASSESSING OFFICER HAD FAILED TO DO SO. 13. BEFORE THE COMMISSIONER, ASSESSEE POINTED OUT T HAT IT HAS MAINTAINED PROJECT-WISE SEPARATE BOOKS OF ACCOUNT AND THERE WA S NO ALLEGATION REGARDING THE SHIFTING OF PROFITS FROM A NON-80IB(10) PROJECT TO 80IB(10) PROJECT. IT WAS ALSO POINTED OUT BY THE ASSESSEE THAT ENTIRE FACTS WERE AVAILABLE BEFORE THE ASSESSING OFFICER WHEN THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THEREFORE IT COULD NOT BE PRESUMED THAT THIS AS PECT OF THE MATTER HAS BEEN IGNORED BY THE ASSESSING OFFICER. THE COMMISSIONER , HOWEVER, CONCLUDED THAT THE ISSUE RELATING TO EXCESS PROFITS IN THE 80 IB PROJECT HAD REMAINED TO BE EXAMINED BY THE ASSESSING OFFICER AND THEREFORE THE ASSESSMENT HAS BEEN HOLD TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE ON THIS ASPECT IN TERMS OF SECTION 263 OF THE ACT. 14. BEFORE US ALSO, THE LEARNED COUNSEL FOR THE ASS ESSEE VEHEMENTLY POINTED OUT THAT IN THE COURSE OF ASSESSMENT PROCEE DINGS THE ASSESSING OFFICER HAD RAISED VARIOUS QUERIES VIDE A DETAILED QUESTIONNAIRE DATED 01.03.2011, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 45 TO 49. ON THE SAID BASIS, IT IS SOUGHT TO BE POINT ED OUT THAT ALL THE ASPECTS, INCLUDING ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(1 0) OF THE ACT, WAS DULY EXAMINED AS ASSESSEE HAD FURNISHED NECESSARY DETAIL S IN RESPONSE TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER. ITA NO.1145/PN/2013 A.Y. 2009-10 15. ON THE OTHER HAND, THE LEARNED CIT-DR APPEARING FOR THE REVENUE HAS SUPPORTED THE ORDER OF THE COMMISSIONER ON THE BASI S OF THE DISCUSSION CONTAINED THEREIN, WHICH WE HAVE ALREADY ADVERTED T O IN THE EARLIER PART OF THIS ORDER AND IS NOT BEING REPEATED FOR THE SAKE OF CON VENIENCE. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. ON THE ASPECT OF THE PROFITS DERIVED FROM ROSELAND RESIDENCY PROJECT , WHICH IS ENTITLED FOR THE SECTION 80IB(10) BENEFITS, WE FIND THAT IN THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER RAISED VARIOUS Q UERIES, AS IS EVIDENCED BY ITEM NO.25 OF THE QUESTIONNAIRE DATED 01.03.2011, W HICH IS SPECIFICALLY PLACED ON PAGES 48 TO 49 OF THE PAPER BOOK. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH DETAILS OF THE PROJECTS IN HAND , ALONG WITH THE DETAILS OF THE UNITS CONSTRUCTED, THE COST OF CONSTRUCTION AND SAL E PRICE OF THE RESPECTIVE UNITS IN ALL THE PROJECTS. HE ALSO REQUIRED THE AS SESSEE TO FURNISH THE NAME OF THE PARTIES WHO HAVE PURCHASED THE UNITS IN ALL THE PROJECTS, DETAILS OF COMMISSION/BROKERAGE PAID, DETAILS OF LAND PURCHASE D, PURCHASE OF DEVELOPMENT RIGHTS, ETC.. THE ASSESSING OFFICER AL SO REQUIRED THE ASSESSEE TO FURNISH THE STAGES OF THE CLOSING STOCK AS WELL AS WORK-IN-PROGRESS ALONG WITH RELEVANT CERTIFICATES FROM THE ENGINEER/ARCHITECT. THE DETAILS OF THE AREA SOLD IN THE RESPECTIVE PROJECT, NAMELY, PARKING AREA SOL D , TERRACE AREA AS WELL AS THE EXTRA WORK DONE SPECIFICALLY FOR CUSTOMERS, ETC . WERE CALLED FOR. PERTINENTLY, THE ASSESSING OFFICER SOUGHT CONFIRMAT ION WHETHER SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED FOR THE SECTION 80IB(10) AND NON-80IB(10) PROJECTS AND ALSO THE REQUIRED THE ASSESSEE TO GIVE COMPARISON OF GP/NP ON BOTH TYPE OF PROJECTS . 17. ALL THE AFORESAID QUERIES RAISED BY THE ASSESSI NG OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE ADDRESSED BY THE ASSESSEE IN ITS SUBMISSIONS TO THE ASSESSING OFFICER, A COPY OF WHI CH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 51 TO 56. IN THE COURSE OF SUC H SUBMISSIONS, ASSESSEE ITA NO.1145/PN/2013 A.Y. 2009-10 ALSO FURNISHED A NOTE, JUSTIFYING THE INCREASE IN G ROSS PROFIT RATIO IN THE YEAR UNDER CONSIDERATION, A COPY OF WHICH IS PLACED AT P AGE 56 OF THE PAPER BOOK. IN THE SAID EXPLANATION, IT IS POINTED OUT THAT PRO JECT ROSELAND RESIDENCY WAS COMMENCED IN FINANCIAL YEAR 2004-05 AND DURING THAT PERIOD THE BOOKINGS WERE TAKEN AT VERY LOW SALE PRICE OF AROUND RS.1000 1200 PER SQ.FT., BUT IN SUBSEQUENT YEARS THE ASSESSEE SOLD THE UNITS AT APP ROXIMATELY RS.3000/- PER SQ.FT., WHICH RESULTED IN HIGHER SALES REALIZATIONS . THE ASSESSEE ALSO POINTED OUT THAT THERE WAS INCREASE IN COST OF CONSTRUCTION ALSO BUT THE PROPORTION OF INCREASE IN THE SALE PRICES WAS MUCH MORE THAN INCR EASE IN THE COST OF CONSTRUCTION AND THEREFORE FOR THE SALES SHOWN IN T HE LATTER YEARS, INCLUDING THE YEAR UNDER ASSESSMENT RESULTED IN A HIGHER GROSS PR OFIT/NET PROFIT RATIO IN THE ROSELAND RESIDENCY PROJECT. IT WAS ALSO POINTED OU T THAT MAJOR SALES WERE BOOKED IN POST- 2004-05 PERIOD, HENCE THE INCREASED SALE RATES HAVE CONTRIBUTED TO HIGHER GROSS PROFIT. 18. WE ARE ONLY POINTING OUT ON THE AFORESAID TO IN FER THAT IT IS NOT A CASE AS ALLEGED BY THE COMMISSIONER THAT THE LEVEL OF PROFI TABILITY DECLARED BY THE ASSESSEE WITH RESPECT TO THE ROSELAND RESIDENCY PRO JECT HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER. THE QUERIES RAI SED BY THE ASSESSING OFFICER AND THE REPLIES OF THE ASSESSEE THEREOF, WH ICH WE HAVE BRIEFLY NARRATED ABOVE, REFLECT THAT THE ASSESSING OFFICER APPLIED H IS MIND TO THE LEVEL OF PROFITS DECLARED BY THE ASSESSEE IN RELATION TO THE SECTION 80IB(10) PROJECT AS WELL AS THE NON-80IB(10) PROJECTS, THOUGH A SPECIFIC DISCUS SION IS ABSENT IN THE ASSESSMENT ORDER. OSTENSIBLY, ON AN ISSUE WHERE TH E ASSESSING OFFICER IS SATISFIED WITH THE QUERIES RAISED HE WOULD NOT PUT THE SAME IN THE ASSESSMENT ORDER. IN ANY CASE, IN THE ASSESSMENT ORDER ALSO, THE ASSESSING OFFICER HAS DETAILED THE EXERCISE CARRIED OUT BY HIM FOR VERIFI CATION OF ASSESSEES ELIGIBILITY FOR THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT, INCLUDING A REFERENCE MADE BY HIM TO THE DEPARTMENTAL VALUATION OFFICER, SOLAP UR. THEREFORE, FACTUALLY SPEAKING, THE ASSESSING OFFICER CARRIED OUT A VERIF ICATION EXERCISE WITH RESPECT ITA NO.1145/PN/2013 A.Y. 2009-10 TO ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF T HE ACT, INCLUDING ON THE ISSUE RAISED BY THE COMMISSIONER, AND ONLY THEREAFT ER HE HAS CONCLUDED IN PARA 5.6 OF THE ASSESSMENT ORDER :- THE PROJECT ROSELAND RESIDENCY FULFILLED ALL THE REQUISITE CONDITIONS LAID DOWN U/S 80IB(10) OF THE I T ACT, 1961. THE Y EAR UNDER CONSIDERATION IS 5 TH YEAR OF ASSESSEES CLAIM OF DEDUCTION ON THE SAME PROJECT. THEREFORE, FOR THE REASON DISCUSSED IN ABOVE PARAS CLAIM OF THE A SSESSEE IS FOUND IN ORDER AND THE SAME IS ACCEPTED. THE DEDUCTION CLAIMED BY THE ASSESSEE IS ALLOWED. 19. IN THE ABOVE BACKGROUND, WE ARE UNABLE TO UPHOL D THE CHARGE MADE BY THE COMMISSIONER THAT THE ASSESSING OFFICER DID NOT EXAMINE THE ISSUE RELATING TO THE LEVEL OF PROFITABILITY DECLARED BY THE ASSESSEE IN RELATION TO THE SECTION 80IB(10) AND NON-80IB(10) PROJECTS, WHILE E VALUATING ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT. ON THIS ASP ECT ALSO, WE SET-ASIDE THE ORDER OF THE COMMISSIONER. 20. THUS, ON ALL THE THREE GROUNDS RAISED BY THE CO MMISSIONER, WE FIND THAT THE COMMISSIONER MISDIRECTED HIMSELF IN INVOKI NG SECTION 263 OF THE ACT TO HOLD THE ASSESSMENT ORDER DATED 25.03.2011 (SUPR A) AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE . IN THE RESULT, WE SET-ASIDE THE ORDER OF THE COMMISSIONER AND RESTORE THE ASSES SMENT ORDER DATED 25.03.2011 (SUPRA) QUA THE ISSUES RAISED BY THE COM MISSIONER. 21. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLO WED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 30 TH MAY, 2014. SUJEET ITA NO.1145/PN/2013 A.Y. 2009-10 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-V, PUNE; 4) THE DR A BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE