Unity Construction Co., Bharuch V. The Income tax Officer, Ward-2, Bharuch

ITA 1344/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50677 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 24-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: P M MEHTA
• Keywords: Set aside
• Section: 143(3); 80IB; 147; 148

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K. TYAGI, JM AND R. C. SHARMA, A.M . ITA NO. ASST. YEAR 1344/AHD/2009 2002-03 1345/AHD/2009 2003-04 1346/AHD/2009 2005-06 UNITY CONSTRUCTION CO.,108, B.G. TRADE CENTRE, PANCHBATTI, BHARUCH VS. INCOME-TAX OFFICER, WARD-2, BHARUCH APPELLANT RESPONDENT ITA NO. ASST. YEAR 992/AHD/2009 2003-04 993/AHD/2009 2005-06 INCOME-TAX OFFICER, WARD-2, BHARUCH. VS. UNITY CONSTRUCTION CO., 108, B.G. TRADE CENTRE, PANCHBATTI, BHARUCH. APPELLANT RESPONDENT ASSESSEE BY SHRI P. M. MEHTA, AR REVENUE BY SHRI S. K. MEENA, SR.DR DATE OF HEARING-: 4/8/2011. DATE OF PRONOUNCEMENT: 9/9/2011. O R D E R PER D.K. TYAGI, JUDICIAL MEMBER . OUT OF THESE FIVE APPEALS, THE ASSESSEE HAS FILED THE THREE APPEALS AGAINST THE CONSOLIDATED ORDER DATED 15.01.2009 PAS SED BY THE LD. CIT(A) ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 2 FOR ASST. YEARS 2002-03, 2003-04 & 2005-06 AND THE REVENUE HAS FILED TWO CROSS APPEALS FOR ASST. YEARS 2003-04 & 2005-06 . SINCE IN ALL THESE APPEALS COMMON ISSUES ARE INVOLVED, THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP ASSESSEES APPEAL. GROUNDS RAIS ED BY THE ASSESSEE FOR ASST. YEAR 2002-03 ARE AS UNDER :- (1) THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) RE AD WITH SECTION 147 OF THE I.T. ACT AND PARTLY CONFIRMED BY THE FIRST APPELLATE AUTHORITY IS BAD IN LAW AND DESERVES TO B E UNCALLED FOR. (2) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN REJECTING THE UNIT COMPLETION METHOD RE GULARLY FOLLOWED BY THE APPELLANT AND SUBSTITUTING IT WITH THE PERCENTAGE OF COMPLETION METHOD. THE SAID STAND TAKEN BY THE D EPARTMENT NEEDS TO BE UNCALLED FOR. (3) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN MAKING AND GIVING DIRECTION FOR REWORKI NG RESPECTIVELY THE ADDITIONS OF RS.812238/- TOWARDS T HE ESTIMATION OF GP ON ADVANCES RECEIVED FROM THE CUSTOMERS WITHO UT ACTUAL ACCRUAL OF INCOME. THE SAME DESERVES TO BE DELETED. (4) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN BIFURCATING THE FINANCIAL, ADMINISTRATI VE AND SELLING EXPENSES ON AD HOC BASIS BETWEEN THE ELIGIBLE AND N ON-ELIGIBLE PROJECTS AND CONSEQUENTLY REDUCING THE AMOUNT OF DE DUCTION U/S 80IB(10). THE SAID ACTION DESERVES TO BE UNCALLED F OR. ASST. YEAR 2003-04 (1) THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) RE AD WITH SECTION 147 OF THE I.T. ACT AND PARTLY CONFIRMED BY THE FIRST APPELLATE AUTHORITY IS BAD IN LAW AND DESERVES TO B E UNCALLED FOR. (2) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN REJECTING THE UNIT COMPLETION METHOD REGUL ARLY FOLLOWED BY ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 3 THE APPELLANT AND SUBSTITUTING IT WITH THE PERCENTA GE OF COMPLETION METHOD. THE SAID STAND TAKEN BY THE DEPARTMENT NEED S TO BE UNCALLED FOR. (3) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN MAKING AND GIVING DIRECTION FOR REWORKING RESPECTIVELY THE ADDITIONS OF RS.650034/- TOWARDS THE ESTIMATION OF GP ON ADVANCES RECEIVED FROM THE CUSTOMERS WITHOUT ACTUAL ACCRUAL OF INCOME. THE SAME DESERVES TO BE DELETED. (4) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN BIFURCATING THE FINANCIAL, ADMINISTRATIVE AND SELLING EXPENSES ON AD HOC BASIS BETWEEN THE ELIGIBLE AND N ON-ELIGIBLE PROJECTS AND CONSEQUENTLY REDUCING THE AMOUNT OF DE DUCTION U/S 80IB(10). THE SAID ACTION DESERVES TO BE UNCALLED F OR. ASST. YEAR 2005-06 (1) THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) OF THE I.T. ACT AND PARTLY CONFIRMED BY THE FIRST APPELLATE AUTHORI TY IS BAD IN LAW AND DESERVES TO BE UNCALLED FOR. (2) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN REJECTING THE UNIT COMPLETION METHOD REGUL ARLY FOLLOWED BY THE APPELLANT AND SUBSTITUTING IT WITH THE PERCENTA GE OF COMPLETION METHOD. THE SAID STAND TAKEN BY THE DEPARTMENT NEED S TO BE UNCALLED FOR. (3) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN MAKING AND GIVING DIRECTION FOR REWORKING RESPECTIVELY THE ADDITIONS OF RS.20,39,090/- TOWARDS THE ESTIMATION OF GP ON ADVANCES RECEIVED FROM THE CUSTOMERS WITHOUT ACTUAL ACCRUAL OF INCOME. THE SAME DESERVES TO BE DELETED. (4) THE AO AS WELL AS FIRST APPELLATE AUTHORITY HAS ERR ED IN LAW AND ON FACTS IN BIFURCATING THE FINANCIAL, ADMINISTRATIVE AND SELLING EXPENSES ON AD HOC BASIS BETWEEN THE ELIGIBLE AND N ON-ELIGIBLE PROJECTS AND CONSEQUENTLY REDUCING THE AMOUNT OF DE DUCTION U/S 80IB(10). THE SAID ACTION DESERVES TO BE UNCALLED F OR. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, DEVELOPERS OF LAND, ESTATE, PROPERTY ETC. ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 4 THE RETURNS OF INCOME FOR ASST. YEAR 2002-03, ASST. YEAR 2003-04 & ASST. YEAR 2005-06 WERE FILED BY THE ASSESSEE ON 3 1.10.2002 & 28.11.2003 DECLARING INCOME AT RS. NIL, AFTER CLAIM ING DEDUCTION U/S 80IB OF THE ACT OF RS.1,99,448/- FOR ASST. YEAR 200 2-03, RS.54,01,389/- FOR ASST. YEAR 2003-04 AND RS.4,62,432/- FOR ASST. YEAR 2005-06 RESPECTIVELY. THE RETURNS WERE ACCOMPANIED BY FORM NO.10CCB, FORM NO.3CB AND 3CD ALONG WITH ITS ANNEXURE. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASST. YEAR 2004- 05, IT WAS OBSERVED BY THE AO THAT THE ASSESSEE WAS NOT BIFURCATING ITS EXPENDITURE IN PROPORTIONATE OF SALE AND WORK-IN-PR OGRESS. THUS THE ASSESSEE WAS CLAIMING MORE PROFIT ON THE SCHEMES WH ERE DEDUCTION U/S 80IB(10) WAS AVAILABLE. THEREFORE, THE CASES OF THE ASSESSEE WERE REOPENED U/S 147 OF THE ACT. ACCORDINGLY NOTICE U/S 148, DATED 28.03.2007 WAS ISSUED AND SERVED TO THE ASSESSEE. T HE ASSESSEE VIDE ITS LETTER DATED 17.04.2007 HAD SUBMITTED THAT THE RETU RNS FILED ON 31.10.2002 (FOR ASST. YEAR 2002-03) AND 28.11.2003 (FOR ASST. YEAR 2003-04) ARE TO BE TREATED AS RETURNS FILED IN RESPONSE TO NOTICE U /S 148 OF THE ACT. THE ASSESSMENTS FOR ALL THE ASSESSMENT YEARS WERE ON TH E LINE OF ASSESSMENT ORDER BY THE AO FOR ASST. YEAR 2005-06. 4. THE GROUND NO.1 OF ASSESSEES APPEALS FOR ASST. YEAR 2002-03 & 2003-04 IS COMMON AND IS NOT PRESSED HENCE THE SAME IS DISMISSED AS NOT PRESSED FOR THESE YEARS. ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 5 5. GROUND NOS. 2 & 3 OF ALL THE THREE APPEALS OF AS SESSEE ARE INTERLINKED RELATING TO PROJECT COMPLETION METHOD A ND REJECTION OF METHOD OF ACCOUNTING AND ESTIMATION OF INCOME. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT W AS GATHERED BY THE AO THAT THE ASSESSEE HAD RECEIVED ADVANCES FOR VARI OUS SCHEMES AS UNDER:- 1. ARUNODAY BUNGALOW RS.21,000 2. ANKUR FLATS RS.50,000 3. ARUNODAY RESI. HOUSING PROJECT RS.22,34,900/- FOR ASST. YEAR 2003-04 THE ADVANCE FROM ARUNODAY RE SI.DUPLEX BUNGALOW WAS RS.1,34,700/-. FURTHER, FOR ASST. YEAR 2005-06 THE ASSESSEE HAD OBTAINED FOLLOWING ADVANCES : UPVAN RESIDENCY RS.63,41,118/- ARUNODAY BUNGALOWS RS.9,96,813/- 7. BEFORE AO IT WAS STATED THAT THE ASSESSEE IS A L AND DEVELOPER AND ANY ADVANCE MONEY RECEIVED CANNOT BE CONSIDERED AS SALE UNLESS THE TITLE IS PASSED AND THAT THE PROFIT WOULD ARISE ONLY ON C OMPLETION OF SALE AS HELD IN THE CASE OF CIT VS. ASHALAND CORPORATION 13 3 ITR 66 (GUJ). IT WAS ALSO SUBMITTED THAT THE ASSESSEE IS FOLLOWING M ERCANTILE SYSTEM OF ACCOUNTING AND PROJECT COMPLETION METHOD SINCE 1993 -94 AND THE METHOD HAS BEEN ACCEPTED BY THE DEPARTMENT. IT WAS STATED THAT AS THE FIRM IS IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOU SING/COMMERCIAL ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 6 PROJECTS AND THAT THEY WERE NOT MERELY CONTRACTOR T O ANY THIRD PARTY, THE METHOD FOLLOWED IS FAIR AND LOGICAL. THE AO ON THE OTHER HAND HAS OBSERVED THAT IN VIEW OF AMENDED AS-7 W.E.F.1.4.200 3 IRRESPECTIVE OF THE YEAR OF COMPLETION OF PROJECT, INCOME HAS TO BE WOR KED OUT IN EACH YEAR DEPENDING ON THE RECEIPTS, EXPENSES, WORK-IN-PROGRE SS AND STOCK-IN-TRADE. THE AO ACCORDINGLY REJECTED THE SUBMISSIONS OF THE ASSESSEE AND COMPUTED THE GP ON THE BASIS OF ADVANCES AS UNDER:- 2002-03 8.12.238 2003-04 6,50,024 2005-06 20,39,090 8. IN APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE AO. AGGRIEVED BY THIS ORDER OF LD. CIT(A), THE ASSESSEE IS IN APP EAL BEFORE US. 9. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DEC ISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASST. YEAR 2004-05 IN ITA N O.1577 & 1551/AHD/2008 VIDE ORDER DATED 28.07.2011. (COPY OF TRIBUNALS ORDER PLACED ON RECORD.) THEREFORE, HE REQUESTED THAT THE ISSUE MAY BE DECIDED ACCORDINGLY. 10. THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHOR ITIES. 11. AFTER HEARING THE PARTIES AND GOING THROUGH THE MATERIAL ON RECORD, WE FIND THAT A SIMILAR ISSUE CAME UP BEFORE THE TRI BUNAL IN ASSESSEES OWN ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 7 CASE FOR ASST. YEAR 2004-05. AFTER DETAILED DISCUSS ION THE SAME HAS BEEN DECIDED IN FAVOUR OF ASSESSEE VIDE PARA NOS. 8 AND 19 OF THE ORDER OF THE TRIBUNAL IN ITA NOS.1577 & 1551/AHD/2008 DATED 28.0 7.2011 WITH FOLLOWING OBSERVATION :- 8, AFTER HEARING BOTH THE PARTIES AND PERUSING TH E RECORD WE FIND THAT THE SUBMISSION OF THE ASSESSEE THAT UNIT COMPL ETION METHOD FOLLOWED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE R EVENUE IN EARLIER YEARS AS WELL AS SUBSEQUENT YEAR HAS NOT BEEN DISPU TED BY THE REVENUE, AT THE TIME OF HEARING BEFORE US. THIS MET HOD OF ACCOUNTING HAS ALSO BEEN FOUND TO BE CORRECT OF ARRIVING AT TA XABLE INCOME OF THE ASSESSEE WHO IS ENGAGED IN CONSTRUCTION AND SALE OF IMMOVABLE PROPERTY BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ASHALAND CORPORATION (1982) 133 ITR 55 (G UJ) AND IN THE CASE OF CIT. V. MOTILAL C PATEL AND CO. (1988) 173 ITR 666 (GUJ). WE FURTHER FIND THAT IT IS A SETTLED POSITION OF LAW T HAT ONCE THE METHOD OF ACCOUNTING HAS BEEN ACCEPTED BY THE REVENUE IN EARL IER YEARS, IT CANNOT BE REJECTED IN THE SUBSEQUENT YEAR WITHOUT B RINGING ANYTHING ON RECORD TO SHOW THAT FACTS WERE DIFFERENT DURING THA T YEAR. IN VIEW OF THIS, WE HAVE NO HESITATION IN HOLDING THAT LOWER AUTHORI TIES WERE NOT JUSTIFIED IN REJECTING THE UNIT COMPLETION METHOD ADOPTED BY THE ASSESSEE. WE FURTHER HOLD THAT PROPORTIONATE ESTIMATE OF INCOME DONE BY THEM BY FOLLOWING THE PERCENTAGE OF COMPLETION METHOD WAS N OT CALLED FOR IN THIS CASE. THESE GROUNDS OF ASSESSEES APPEAL ARE A LLOWED. 19. AFTER HEARING BOTH THE PARTIES AND PERUSING TH E RECORD, WE FIND THAT WHILE DECIDING GROUND NO.1 & 5 WE HAVE AL READY UPHELD THE UNIT COMPLETION METHOD OF ACCOUNTING FOLLOWED B Y THE ASSESSEE AND THEREFORE THE ADDITION MADE BY THE AO BY FOLLOW ING PERCENTAGE COMPLETION METHOD IS NOT SUSTAINABLE AND THE SAME I S HEREBY DELETED. THIS GROUND OF ASSESSEES APPEAL IS ALLOWE D. FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE SET A SIDE THE ORDERS OF LOWER AUTHORITIES AND ALLOW THIS GROUND OF THE ASSE SSEE. THESE GROUNDS OF ASSESSEE ARE ALLOWED. 12. THE GROUND NO.4 OF ASSESSEES ALL APPEALS RELAT ES TO COMMON ISSUE OF DISALLOWANCE OF DEDUCTION U/S 80IB(10). ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 8 13. DURING ASSESSMENT PROCEEDINGS FOR ASST. YEAR 20 02-03 THE AO NOTICED THAT THE ASSESSEE HAD DISTRIBUTED THE ADMIN ISTRATIVE AND FINANCIAL EXPENDITURE BETWEEN ALL SCHEMES ON THE BASIS OF DED UCTION AVAILABLE U/S 80IB(10) AND NOT AVAILABLE U/S 80IB(10). FURTHER, C ERTAIN EXPENDITURES LIKE HEAD OFFICE EXPENSES WERE NOT DEBITED TO THE P ROJECT WHERE DEDUCTION U/S 80IB IS AVAILABLE. SIMILARLY, REMUNERATION AND INTEREST PAID TO PARTNERS WERE NOT DISTRIBUTED AMONGST THE SCHEMES. IN RESPON SE TO THE SHOW CAUSE LETTER, IT WAS STATED BY ASSESSEE THAT THE DEPOSITS AND BANK BORROWINGS WERE BORROWED MUCH PRIOR TO THE COMMENCEMENT OF HOU SING PROJECT ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT AND HENCE THE INTEREST PAYMENT WAS DEBITED IN HEAD OFFICE PROFIT AND OTHER INCOMES ARE CREDITED. SIMILARLY, THE INTEREST PAYMENTS ON LOANS BORROWED PRIOR TO FINANCIAL YEAR 2001-02 WERE SET OFF AGAINST PROFITS FROM OTHER BUS INESS ACTIVITIES. IT WAS ALSO SUBMITTED THAT THE REMUNERATION PAID TO PARTNE R IS NOTHING BUT DISTRIBUTION OF PARTNERSHIP PROFITS AND THE SAME WA S DEBITED IN HEAD OFFICE PROFIT AND LOSS ACCOUNT AND SET OFF AGAINST OTHER B USINESS ACTIVITIES PROFITS AND INCOMES OTHER THAN THAT ELIGIBLE U/S 80IB(10). THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT T HE FUNDS BORROWED WERE USED FOR BUSINESS PURPOSES AND FROM SURPLUS, THE AS SESSEE HAD PURCHASED THE LAND AND MATERIAL AND INCURRED EXPENDITURES FOR ALL ON GOING PROJECTS. IT WAS ALSO POINTED OUT THAT THE CAPITAL OF THE ASS ESSEE IS USED FOR BOTH THE PROJECTS ELIGIBLE FOR DEDUCTION U/S 80IB AND NOT EL IGIBLE FOR DEDUCTION U/S ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 9 80IB. FURTHER IT IS OPINED BY THE AO THAT THE REMUN ERATION PAID TO PARTNERS IS NOT THE DISTRIBUTION OF PROFIT BUT THE REMUNERATION IS PAID FOR SUPERVISING THE PROJECT AND THEREFORE, THE SAME HAS TO BE DISTRIBUTED AMONGST ALL PROJECTS. THE AO ACCORDINGLY ALLOCATED THE EXPENDITURE IN PROPORTION OF THE WORK-IN-PROGRESS AND SALE OF 80IB AND NON 80IB PROJECTS. 14. IN APPEAL THE LD. CIT(A) CONFIRMED THE VIEW TAK EN BY THE AO. AGGRIEVED BY THIS ORDER OF LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 15. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS NOW COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR ASST. YEAR 2004-05 WHEREIN THE ISSUE HAS BEEN RESTORED BA CK TO THE AO. ACCORDINGLY, HE PRAYED THAT THIS ISSUE BE RESTORED BACK TO THE AO FOR DECIDING AFRESH. 16. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDE RS OF LOWER AUTHORITIES. 17. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RECORD, WE FIND THAT A SIMILAR ISSUE CAME UP BEFORE THE TRIBUN AL, WHEREIN THE TRIBUNAL IN ITA NO.1577 & 1551/AHD/2008 VIDE ITS OR DER DATED 28.7.2011 HAS SET ASIDE THE ORDERS OF LOWER AUTHORI TIES AND RESTORED THE ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 10 ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION WIT H THE FOLLOWING OBSERVATIONS :- 29. AFTER HEARING BOTH THE PARTIES AND PERUSING TH E RECORD, WE FIND THAT LD. CIT(A) HAS DELETED THE DISALLOWANCE U /S 80IB(10) OF THE ACT ON ACCOUNT OF SALE OF UNUTILIZED FSI OF RS. 1,39,112/- BY FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF RADHE DEVELOPERS & OTHERS (SUPRA) BY HOLDING THAT THE FAC TS OF THE ASSESSEE ARE SQUARELY COVERED BY THAT DECISION OF T HE TRIBUNAL. THEREFORE, WE FEEL NO NEED TO INTERFERE WITH THE OR DER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND THE SAME IS HEREBY UPH ELD. AS REGARDS TO DISALLOWANCE OF PROPORTIONATE EXPENSES FOR WORKI NG OUT THE ELIGIBILITY OF DEDUCTION U/S 80IB(10) OF THE ACT IS CONCERNED, THE AO IS DIRECTED TO RECOMPUTE THIS EXPENDITURE IN THE LIGHT OF OUR DECISION IN ASSESSEES APPEAL, WHEREIN WE HAVE UPHE LD THE UNIT COMPLETION METHOD OF ACCOUNTING ADOPTED BY THE ASSE SSEE. THEREFORE, FOLLOWING THE ABOVE ORDER OF THE TRIBUNA L, WE RESTORE THIS ISSUE TO THE FILE OF A.O. WITH THE DIRECTION TO RECOMPUTE THE DISALLOWANCE IN THE LIGHT OF ABOVE OBSERVATION AND DECIDE THE MATTER AC CORDINGLY. REVENUES APPEALS : ASST. YEAR 2003-04 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN LO ALLOW DEDUCTION SECTION 80IB(1) SUBJECT TO VE RIFICATION OF EXPENSES. THE LD. CIT(A) RELIED ON THE ITATS DECISION IN THE CASE OF M/S. RADHE DEVELOPERS. THE SAID DECISIONS HAVE N OT BEEN ACCEPTED BY THE DEPARTMENT AND AN APPEAL TO THE HIG H COURT HAS BEEN FILED. (2) THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE APPROVAL FOR DEVELOPING AND BUILDING HOUSING PROJECTS WAS GRANTE D TO THE ORIGINAL OWNERS OF THE LAND AND NOT TO THE ASSESSEE WHO ACTED ONLY AS AN AGENT FOR EXECUTION OF THE PROJECT OF ARUNODA Y DUPLEX BUNGLOW PROJECT AND ARUNODAY RUNGLOW PROJECT WHICH RIGHTS WERE OBTAINED BY THE ASSESSEE FIRM FROM THE ORIGINA L OWNERS. ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 11 (3) THE LD. CIT(A) FAILED TO APPRECIATE THAT THE LA ND BEING AN ESSENTIAL AND INTRINSIC PART OF DEVELOPING AND BUILDING OF A HOUSING PROJECT, APPROVAL IS GRANTED BY THE LOCAL AUTHORITY TO THE O WNER OF THE LAND FOR DEVELOPING AND BUILDING HOUSING PROJECTS THEREO N, AND ANY OTHER PERSON, TO WHOM HE ENTRUSTS, THE WORKS CONNEC TED WITH THE EXECUTION OF THE PROJECT INSTEAD OF TAKING IT UP HI MSELF, CANNOT BE SAID TO BE AN ''UNDERTAKING DEVELOPING AND BUDDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY' WITHIN TH E MEANING OF SECTION 80IB{10) OF THE ACT (4) THE LD. CIT(A) FAILED TO APPRECIATE THAT IT IS THAT OWNERS OF THE LAND WHO ENTERED INTO AGREEMENTS FOR SALE OF THE DEVELOP ED UNITS TO THE BUYERS AND THE ASSESSEE ACTED ONLY AS A CONFIRMING PARTY WHICH RENDERS TO OWNERS OF THE LAND AND NOT THE ASSESSEE AS AN UNDERTAKING' IN TERMS OF SECTION 80IB(10) (5) THE LD. CIT(A) ERRED IN ADOPTING LIBERAL INTERP RETATION OF A BENEVOLENT PROVISION DESPITE THE SAME DOING VIOLENC E TO THE EXPRESS LANGUAGE USED IN THE PROVISION IN CONTRAVEN TION OF THE RATIO SETTLED IN THE CASE OF PETRON ENGINEERING CONSTRUCT ION P. LTD, VS C.B.D.T 175 ITR 523 (SC), CIT VS BUDHARAJA & CO 204 ITR 412 (SC). PANDIAN CHEMICALS LTD. VS CIT 262 ITR 278 (SC ) AND IP'CA LABORATORIES LTD VS CIT 262 ITR 278 (SC) . (6) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 9,54,936/- BEING PROJECT ATTRIBUTABLE TO THE SALE OF UNUTILIZED FSI. ASST. YEAR 2005-06 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN LO ALLOW DEDUCTION SECTION 80IB(1) SUBJECT TO VE RIFICATION OF EXPENSES. THE LD. CIT(A) RELIED ON THE ITATS DECISION IN THE CASE OF M/S. RADHE DEVELOPERS. THE SAID DECISIONS HAVE N OT BEEN ACCEPTED BY THE DEPARTMENT AND AN APPEAL TO THE HIG H COURT HAS BEEN FILED. (2) THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE APPROVAL FOR DEVELOPING AND BUILDING HOUSING PROJECTS WAS GRANTE D TO THE ORIGINAL OWNERS OF THE LAND AND NOT TO THE ASSESSEE WHO ACTED ONLY AS AN AGENT FOR EXECUTION OF THE PROJECT OF ARUNODA Y DUPLEX ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 12 BUNGLOW PROJECT AND ARUNODAY BUNGLOW PROJECT WHICH RIGHTS WERE OBTAINED BY THE ASSESSEE FIRM FROM THE ORIGINA L OWNERS. (3) THE LD. CIT(A) FAILED TO APPRECIATE THAT THE LA ND BEING AN ESSENTIAL AND INTRINSIC PART OF DEVELOPING AND BUILDING OF A HOUSING PROJECT, APPROVAL IS GRANTED BY THE LOCAL AUTHORITY TO THE O WNER OF THE LAND FOR DEVELOPING AND BUILDING HOUSING PROJECTS THEREO N, AND ANY OTHER PERSON, TO WHOM HE ENTRUSTS, THE WORKS CONNEC TED WITH THE EXECUTION OF THE PROJECT INSTEAD OF TAKING IT UP HI MSELF, CANNOT BE SAID TO BE AN ''UNDERTAKING DEVELOPING AND BUDDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY' WITHIN TH E MEANING OF SECTION 80IB{10) OF THE ACT (4) THE LD. CIT(A) FAILED TO APPRECIATE THAT IT IS THAT OWNERS OF THE LAND WHO ENTERED INTO AGREEMENTS FOR SALE OF THE DEVELOP ED UNITS TO THE BUYERS AND THE ASSESSEE ACTED ONLY AS A CONFIRMING PARTY WHICH RENDERS TO OWNERS OF THE LAND AND NOT THE ASSESSEE AS AN UNDERTAKING' IN TERMS OF SECTION 80IB(10) (5) THE LD. CIT(A) ERRED IN ADOPTING LIBERAL INTERP RETATION OF A BENEVOLENT PROVISION DESPITE THE SAME DOING VIOLENC E TO THE EXPRESS LANGUAGE USED IN THE PROVISION IN CONTRAVEN TION OF THE RATIO SETTLED IN THE CASE OF PETRON ENGINEERING CONSTRUCT ION P. LTD, VS C.B.D.T 175 ITR 523 (SC), CIT VS BUDHARAJA & CO 204 ITR 412 (SC). PANDIAN CHEMICALS LTD. VS CIT 262 ITR 278 (SC ) AND IP'CA LABORATORIES LTD VS CIT 262 ITR 278 (SC) . (6) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,95,202/- BEING PROJECT ATTRIBUTABLE TO THE SALE OF UNUTILIZED FSI. 18. GROUND NOS.1 TO 5 OF REVENUES APPEALS FOR BOTH THE YEARS ARE COMMON AND RELATE TO ONE ISSUE RELATING TO DISALLOW ANCE U/S 80IB(10). 19. AT THE TIME OF HEARING BOTH THE PARTIES AGREED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THIS TRIBUNAL IN THE CASE OF RADHE DEVELOPERS AND OTHERS IN ITANO.2482/A HD/2006. THIS ISSUE HAS ALSO BEEN DECIDED BY US VIDE PARA 17 ABOV E. THEREFORE, ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 13 FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE RESTO RE THIS ISSUE TO THE FILE OF A.O. WITH THE DIRECTION TO RECOMPUTE THE DISALLO WANCE IN THE LIGHT OF ABOVE OBSERVATION AND DECIDE THE MATTER ACCORDINGLY . 20. GROUND NO.6 RAISED IN THESE TWO APPEALS OF REVE NUE IS COMMON EXCEPT THE AMOUNT OF ADDITION. AMOUNT OF ADDITION F OR ASST. YEAR 2003- 04 IS RS.9,54,136/- AND FOR ASST. YEAR 2005-06 IS R S.2,95,202/- BEING PROJECT ATTRIBUTABLE TO THE SALE OF UNUTILIZED FSI. 21. AT THE TIME OF HEARING BOTH THE LD. REPRESENTAT IVES AGREED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF RADHE DEVELOPERS AND OTHERS (SUPRA). THEREFORE, FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF RADHE DEVELOPERS WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THE G ROUND RAISED BY THE REVENUE. 22. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 9/9/2011. SD/- SD/- (R. C. SHARMA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 9/9/2011. ITA NOS.1344-1346/AHD/2009 & OTHERS ASST. YEARS 2002-03, 2003-04 & 2005-06 14 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 1/9/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 1/9/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..