ACIT, Bangalore V. M/s. Krishna Enterprises, Bangalore

ITA 1372/BANG/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63756 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Agreed addition
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.1256/BANG/2010 (ASSESSMENT YEAR : 2007-08) M/S. KRISHNA ENTERPRISES (HOUSING & INFRASTRUCTURE S) PVT. LTD., (FORMERLY KNOWN AS M/S. KRISHNA ENTERPRISES), NO.357/9, 2 ND FLOOR, MSR ROAD, MATHIKERE, BANGALORE-560 054 . APP ELLANT. PAN AAGFK 4916K VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6(1), BANGALORE-560 001 .. RES PONDENT. I.T.A. NO.1372/BANG/2010 (ASSESSMENT YEAR : 2007-08) (BY REVENUE) ASSESSEE BY : SHRI V.CHANDRASHEKAR. REVENUE BY : SHRI S.K. AMBASTHA. DATE OF HEARING : 27.9.2012. DATE OF PRONOUNCEMENT : 19.10.2012. O R D E R PER SHRI JASON P. BOAZ : THESE ARE CROSS APPEALS BOTH BY THE ASSESSEE AND R EVENUE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, BANGALORE DT.19.8.2010. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE, A PARTNERSHIP FIRM, CARRYING ON T HE BUSINESS OF PROPERTY DEVELOPMENT, BUILDERS, CONTRACTORS, FILED ITS RETURN OF INCOME FOR ASSESSM ENT YEAR 2007-08 ON 29.10.2007 DECLARING INCOME OF RS.11,69,090 AFTER CLAIMING DEDUCTION OF RS. 1,46,0 5,187 UNDER SECTION 80 IB OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS 'THE ACT') IN RES PECT OF PROFITS DERIVED FROM SALE OF FLATS IN KRIS HNA DWELLINGTON PROJECT. IN ORDER TO EXAMINE AND VERIF Y THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 80 IB, A SURVEY ACTION UNDER SECTION 133A OF THE ACT W AS CARRIED OUT AT THE BUSINESS PREMISES OF THE 2 ITA NOS.1256 & 1372/BANG/10 ASSESSEE ON 29.2.2008 TO EXAMINE WHETHER IT FULFILL ED ALL THE CONDITIONS LAID DOWN IN SECTION 80 IB (1 0) OF THE ACT. THE RETURN WAS PROCESSED UNDER SECTION 14 3(1) OF THE ACT, AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETE D BY AN ORDER UNDER SECTION 143(3) OF THE ACT ON 16.12.2009 IN WHICH THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 1,79,36,760. IN DOING SO THE ASSESSING OFFICER - I) DISALLOWED THE ASSESSEE'S CLAIM FOR DEDUCTION U/S.80 IB RS.1,46,05,187. II) ESTIMATED THE ASSESSEE'S NET PROFIT @ 10% AS A GAINST RS.10,97,968 DECLARED BY THE ASSESSEE RS.21 ,62,481. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESS MENT YEAR 2007-08 DT.26.12.2009, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (APPEALS) O N BOTH THE ISSUES ADJUDICATED AGAINST BY THE ASSESSING OFFICER. 2.2.1 ON THE ISSUE OF THE DENIAL OF DEDUCTION UNDER SECTION 80 IB OF THE ACT CLAIMED BY THE ASSESSEE, THE LEARNED CIT (APPEALS), AT PARA 11 ON PAGE 14 OF HIS ORDER, FOLLOWED THE RATIO OF THE DECISION OF T HE SPECIAL BENCH OF THE ITAT IN THE CASE OF BRAHMA ASS OCIATES, WHICH LAID DOWN THE PRINCIPLE THAT MERELY BECAUSE SOME FLATS EXCEEDED THE PERMISSIBLE AREA OF 1500 SQ. FT., THE ASSESSEE WOULD NOT LOSE THE BENEFIT OF THE DEDUCTION FOR THE ENTIRE PROJECT AND IS TO BE ALLOWED THE DEDUCTION ON A PROPORTIONATE BASIS. IT IS ONLY WITH REFERENCE TO THE FLATS WHIC H HAVE MORE THAN THE PRESCRIBED AREA THAT THE ASSES SEE WOULD LOSE THE BENEFIT OF DEDUCTION UNDER SECTION 8 0 IB. THE LEARNED CIT (APPEALS) ALSO FOLLOWED THES E JUDICIAL DECISIONS OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASES OF - I) BRIGADE ENTERPRISES IN ITA NO.1198/BANG/2007 DT .29.8.2008. II) MYSTIC INVESTMENTS IN ITA NO.1170/BANG/2007 DT. 25.4.2008. III) S.J. R. BUILDERS IN ITA NO.1129/BANG/2008 DT.2 1.8.2009 AND HELD THAT THE DEDUCTION UNDER SECTION 80 IB OF THE ACT OUGHT TO BE ALLOWED PROPORTIONATELY BY ALLOWING THE DEDUCTION IN RESPECT OF THOSE FLATS WH ICH WERE WITHIN THE LIMIT OF 1500 SQ. FT. AND DISAL LOWING THE DEDUCTION CLAIMED ON FLATS WHICH EXCEEDED 1500 SQ. FT. 3 ITA NOS.1256 & 1372/BANG/10 2.2.2 ON THE OTHER ISSUE OF ESTIMATION OF NET PROFI T @ 10%, THE LEARNED CIT (APPEALS) SUSTAINED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT T HIS ADDITION WAS AGREED TO BY THE ASSESSEE BEFORE T HE ASSESSING AUTHORITY. 3.0 BOTH THE ASSESSEE AND REVENUE ARE AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPEALS) DT.19.8.2010 AND ARE BEFORE US IN APPEAL. 4.1 THE GROUNDS / REVISED GROUNDS RAISED BY THE ASS ESSEE ARE AS UNDER : 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, NATURAL JUSTICE, PROBABIL ITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESS ED ON A TOTAL INCOME OF RS. 1,79,36,760 AS AGAINST THE RETURNED INCOME OF RS.11,69,090 UNDER T HE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN ALLO WING ONLY A PORTION OF THE CLAIM OF DEDUCTION. 80 IB (10) OF THE ACT BUT OUGHT TO HAVE ALLOWED THE ENTIRE CLAIM OF DEDUCTION OF RS.1,46,05,187, MADE BY THE APPELLANT UNDER THE FAC TS AND CIRCUMSTANCES OF THE CASE. 4. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN LA W IN DISALLOWING THE AMOUNTS PAID TO SRI SUDHIR MAHAJAN, SMT. RADHA MOHAN AND M/S. VIJAYA HO LDINGS TOTALING TO RS.3,75,000 UNDER SECTION 40(A)(IA) OF THE ACT UNDER THE FACTS AND CI RCUMSTANCES OF THE CASE. 4.2 THE GROUNDS RAISED AT S.NOS.1 AND 2 ARE GENERAL IN NATURE AND NO ADJUDICATION IS THERE FORE CALLED FOR THEREON. 4.3 THE TWO ISSUES ON WHICH THE ASSESSEE'S DISPUTE LIES ARE THAT : A) GROUND NO.3 THE DEDUCTION OF RS. 1,46,05,187 CLAIMED BY THE ASSESSEE UNDER SECTION 80 IB OF THE ACT IS TO BE ALLOWED ENTIRELY AND NOT PROPORTIONALL Y AS HELD BY THE LEARNED CIT (APPEALS). B) GROUND NO.4 THE ADDITION MADE AS A RESULT OF ESTIMATION OF N ET PROFIT AT 10% IS TO BE DELETED. 5.1 THE GROUNDS RAISED BY REVENUE ARE AS UNDER : 1. THE ORDER OF THE LEARNED CIT (APPEALS) IS OPPO SED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT (APPEALS) ERRED IN LAW IN DIREC TING THE ASSESSING OFFICER TO CALCULATE PROPORTIONALLY THE DISALLOWANCE TO BE MADE UNDER SE CTION 80 IB WITH RESPECT TO INCOME OF HOUSING PROJECT KRISHNA DWELLINGTON WITH REFERENC E TO FLATS WHOSE TOTAL BUILT UP AREA EXCEEDS 1500 SQ. FT. THE CIT (APPEALS) OUGHT TO HA VE APPRECIATED THAT ONCE THERE IS VIOLATION OF ANY OF THE CONDITIONS MENTIONED IN SEC TION 80 IB (10) IN A HOUSING PROJECT, THE AS IS NOT ENTITLED TO CLAIM ANY DEDUCTION UNDER THE SA ID SECTION IN RESPECT OF PROFITS OF THE HOUSING PROJECT AS THE SECTION DOES NOT ENVISAGE PA RTIAL EXEMPTION. 80 IB (10) OF THE PROFITS FROM A HOUSING PROJECT. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (APPEALS) IN SO FAR AS IT RELA TES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4 ITA NOS.1256 & 1372/BANG/10 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND AND / OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 5.2 THE GROUNDS RAISED AT S.NOS.1, 2 AND 4 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATIO N IS CALLED FOR THEREON. 5.3 THE GROUND RAISED AT S.NO.3 IS THE ONLY ISSUE ON WHICH REVENUES APPEAL CHALL ENGES THE GRANT OF DEDUCTION UNDER SECTION 80 IB OF THE ACT TO THE ASSESSEE ON A PROPORTIONAL BASIS. REVENUE HAS SOUGHT THE SUSTAINING OF THE ORDER OF THE ASSESSING OFFICER THEREBY DENYING THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80 IB OF THE ACT. 6.0 WE HAVE HEARD BOTH PARTIES AT LENGTH AND CAREFU LLY PERUSED AND CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDICIAL DECISIONS RELIED ON AND PLACED BEFORE US. WE NOW PROCEED TO DECIDE THE ISSUES OF DISPUTE BEFORE US AS UNDER : 7.0 ISSUE OF ELIGIBILITY OF DEDUCTION UNDER SECTION 80 IB OF THE ACT . FROM A PERUSAL OF THE ORDERS OF THE ASSESSMENT, WE FIND THAT THE ASSESSING OFFICER HAS DISALLOWED THE ASSESSEE'S CLAIM FOR DEDUCTION. 80 I B OF THE ACT FOR A NUMBER OF REASONS WHICH ARE ADDUCED HEREUNDER 7.1.1 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CONSTRUCTED A TOTAL BUILT UP AREA OF 83,449.8 SQ. FT., EXCLUDING COMMON AREAS, AS AGAINST THE ARE A OF 78,039 SQ. FT. AS PER SANCTIONED PLAN AND HAS THUS NOT CONSTRUCTED THE BUILDING IN ACCORDANCE WIT H THE SANCTIONED PLAN. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 80 IB OF TH E ACT STIPULATE THAT THE PLAN MUST BE SANCTIONED BY THE LOCAL AUTHORITY AND ANY VIOLATION ON THE PART OF TH E ASSESSEE IN NOT CONSTRUCTING AS PER THE SANCTIONE D PLAN WARRANTS DENIAL OF DEDUCTION UNDER SECTION 80 IB. 7.1.2 THE HON'BLE HIGH COURT OF KARNATAKA, IN THE CASE OF CIT VS. G.R. DEVELOPERS IN ITA NO.355/2009 HAS HELD THAT THE DEFINITION OF BUILT UP AREA AS INSERTED BY FINANCE (NO.2) ACT OF 2004 W.E.F. 1.4.2005 IS PROSPECTIVE IN NATURE AND APPLIE S TO ONLY THOSE CASES WHERE PLAN APPROVALS HAVE BEE N OBTAINED AFTER 1.4.2005. IN THE INSTANT CASE, AS P ER THE RECORDS, THE ASSESSEE HAS OBTAINED PLAN 5 ITA NOS.1256 & 1372/BANG/10 SANCTION FOR CONSTRUCTION OF 74 FLATS ON 22.7.2004 AND THEREFORE THE DEFINITION OF BUILT UP AREA AS INSERTED BY FINANCE (NO.2) ACT OF 2004 W.E.F. 1.4.2 005 IS NOT APPLICABLE TO THE FACTS OF THE CASE. 7.1.3 AS REGARDS THE REASON CITED BY THE ASSESSING OFFICER FOR DENYING DEDUCTION UNDER SECTION 80 IB, THAT THE ACTUAL CONSTRUCTED AREA EXCEEDS THE AREA A S APPROVED BY THE SANCTIONED PLAN, THIS ISSUE HAS BEEN DEALT WITH BY THE CO-ORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF ITO VS. MAHAVEER MARVEL IN I TA NOS.154 & 997/BANG/2011 DT.31.8.2012. AT PARA 5.4. 5 ON PAGE 11 OF THIS ORDER, THE TRIBUNAL HELD THAT IT WAS FOR THE BBMP TO LOOK INTO VIOLATIONS OF THIS NA TURE, IF ANY, IN THE CONSTRUCTION OF THE HOUSING PR OJECT AND THAT THERE IS NO PROVISION IN THE ACT FOR THE A SSESSING OFFICER TO DENY THE DEDUCTION UNDER SECTIO N 80 IB OF THE ACT ON THIS GROUND. WE, THEREFORE, HOLD THAT THIS REASON CITED BY THE ASSESSING OFFICER CAN NOT BE A GROUND FOR DENIAL OF DEDUCTION UNDER SECTION 8 0 IB OF THE ACT. 7.2.1 THE ASSESSING OFFICER NOTED THAT (A) THE BUIL T UP AREA OF FLAT T-011 EXCEEDS THE LIMIT OF 1500 S Q. FT. AND (B) THAT THE TERRACE AREA IS TO BE ADDED TO THE BUILT UP AREA IN THE CASE OF 22 FLATS WHICH AR E LOCATED ON THE TOP FLOOR HAVING SEPARATE STAIRCASE ACCESS TO THE TERRACE FROM RESPECTIVE FLATS AND THA T IF THIS IS TAKEN INTO ACCOUNT IN THE CASE OF 20 OUT OF THE 22 FLATS, THE AREA WOULD EXCEED 1500 SQ. FT. 7.2.2 IN RESPECT OF THE BUILT UP AREA OF FLAT T-011 BEING IN EXCESS OF THE LIMIT OF 1500 SQ. FT., WE F IND THAT THE ASSESSING OFFICER HAD COME TO THIS CONCLUSION B ASED ON A STATEMENT FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT P ROCEEDINGS WHICH THE ASSESSEE SUBSEQUENTLY BY LETTER DT.3.3.2008 CLARIFIED WAS A TYPING MISTAKE W HICH GAVE THE BUILT UP AREA OF THIS FLAT AT 1,559. 78 SQ. FT. AS AGAINST THE ACTUAL AREA OF 1,459.78 SQ. FT. THE ASSESSING OFFICER HAS IGNORED THE LETTER DT.3.3.2008. IT IS ALSO STRANGE TO SEE THAT THE AS SESSING OFFICER HAS NOT GOT ANY MEASUREMENT OF THIS PROJECT BY THE DISTRICT VALUATION OFFICER BUT HAS P ROCEEDED ONLY ON THE BASIS OF DETAILS FURNISHED BY THE ASSESSEE. AFTER CONSIDERATION OF THE FACTS AND CIR CUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSING OFFICER HAS ERRED IN NOT CONSIDERING THE LETTER DT. 3.3.2008 AND THEREFORE HOLD THAT THIS REASON CITED BY THE ASSESSING OFFICER CANNOT BE A GROUND FOR DENIAL OF THE DEDUCTION UNDER SECTION 80 IB OF THE ACT. 7.2.3 ONE OF THE ASSESSING OFFICERS OBSERVATION FI NDING THAT IF THE TERRACE AREA IS ADDED ON TO THE F LATS LOCATED ON THE TOP FLOOR, WHICH ARE SEPARATELY CONN ECTED BY STAIR CASE TO THE TERRACE, THEN 20 OUT OF 22 6 ITA NOS.1256 & 1372/BANG/10 FLATS SITUATED ON THE TOP FLOOR WOULD EACH HAVE BUI LT UP AREA IN EXCESS OF 1500 SQ. FT. AND THEREFORE DEDUCTION. U/S. 80 IB OF THE ACT WAS TO BE DENIED. THIS ISSUE, WE FIND, IS COVERED BY THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. PRAMOD & OTHERS IN ITA NO.231 OF 2010 DT.29.2.2012. IN THE SAID CASE, THE ASSESSEE, A DE VELOPER, SOLD THE TERRACE PORTION TO THE OWNERS OF THE RESIDENTIAL FLATS LOCATED ON THE TOP FLOOR ALONG WI TH TERRACE WALLS CONSTRUCTED THEREUPON. THE HON'BL E HIGH COURT HELD THAT THE TERRACE PORTION CANNOT B E TAKEN INTO CONSIDERATION FOR CALCULATING THE BUIL T UP AREA AND HAS TO BE EXCLUDED. IT APPEARS THAT ALONG WITH THE TERRACE SOME WALLS CONSTRUCTED WERE SOLD TO THEM. EVEN THE CONSTRUCTION OF THE WALLS WOULD NOT ADD TO THE BUILT UP AREA. . RESPECTFULLY FOLLOWING THIS DECISION OF THE HON'BLE JURISDICTION AL HIGH COURT (SUPRA), WE HOLD THAT IN THE INSTANT CASE OF THE ASSESSEE ALSO THE TERRACE PORTION CANNOT BE ADD ED TO CALCULATE THE BUILT UP AREA IN THE CASE OF 22 FLATS LOCATED ON THE TOP FLOOR AND THAT THIS CANNOT BE A GROUND FOR DENYING DEDUCTION UNDER SECTION 80 IB OF THE ACT. 7.3.1 ANOTHER REASON CITED BY THE ASSESSING OFFICER FOR DENYING THE ASSESSEE DEDUCTION UNDER SECTION 80 IB OF THE ACT WAS THE FACT THAT THESE FLAT OWNER S WHO HAD EACH PURCHASED TWO SEPARATE FLATS BY TWO SEPARATE SALE DEEDS, HAD EACH GOT THEIR TWO FLATS C OMBINED INTO A SINGLE FLAT WITH A BUILT UP AREA OF MORE THAN 1500 SQ. FT. AND THAT THE WORK IN RESPECT OF C OMBINING OF THE TWO FLATS INTO ONE SINGLE FLAT WAS DONE BY THE ASSESSEE FOR WHICH HE HAS CHARGED SEPARATELY . 7.3.2 IN RESPECT OF THIS ISSUE, WE FIND THAT THIS I SSUE IS SQUARELY COVERED BY THE DECISION OF THE HON 'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ANRIYA PROJECT MANAGEMENT SERVICES PVT LTD IN ITA NOS.138 & 139 / 2010 DT.29.2.2010. IN THIS CASE, T HE JURISDICTIONAL HIGH COURT AT PARA 7 ON PAGE 11 THEREOF HAS HELD THAT WHERE THE PURCHASERS OF THE P ENT HOUSE AND THE TOP FLOOR HAVE PURCHASED THEM UNDER TWO INDEPENDENT SALE DEEDS, WITH THE AREA SO LD IN EACH SALE DEED BEING LESS THAN 1500 SQ. FT., IT CANNOT BE SAID TO BE IN VIOLATION OF THE PROVISION S OF SECTION 80 IB (10) OF THE ACT. 7.3.3 IN THE INSTANT CASE OF THE ASSESSEE, IT IS AN UNDISPUTED FACT THAT THE THESE FLAT OWNERS HAVE EA CH PURCHASED TWO FLATS BY SEPARATE SALE DEEDS AND THE AREA SOLD UNDER EACH SALE DEED WAS LESS THAN 1500 SQ. FT. WHICH THEY HAVE SUBSEQUENTLY ASKED THE ASSE SSEE TO COMBINE THE TWO FLATS PURCHASED AND MADE 7 ITA NOS.1256 & 1372/BANG/10 IT INTO A SINGLE FLAT. IT IS ALSO NOT DISPUTED THA T THE ASSESSEE HAS BEEN PAID SEPARATELY TO CARRY OU T THIS WORK, PURELY AS A CONTRACTOR. IN VIEW OF THE DECIS ION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE C ASE OF ANRIYA PROJECT MANAGEMENT SERVICES PVT LTD (SUPRA), WE HOLD THAT T HE ASSESSEE HAVING MADE THE SALE OF FLATS TO THESE THREE OWNERS BY SEPARATE SAL E DEEDS AND THE AREA SOLD NOT EXCEEDING 1500 SQ. FT . IN ANY OF THE SALE DEEDS HAS NOT VIOLATED THE PROVI SIONS OF SECTION 80 IB (10) OF THE ACT AND THEREFOR E CANNOT BE DENIED THE BENEFITS OF DEDUCTION UNDER SE CTION 80 IB FOR THE REASON CITED BY THE ASSESSING OFFICER. REVENUE HAS ALSO NOT BROUGHT ON RECORD AN Y EVIDENCE TO ESTABLISH THAT THE TWO FLATS WERE COMBINED INTO ONE SINGLE FLAT BEFORE THE SAME WERE SOLD BY THE ASSESSEE TO THE THREE FLAT OWNERS. IN FACT THE HON'BLE KARNATAKA HIGH COURT IN THE CASE O F PRAMOD & OTHERS (SUPRA) AT PAGE 4 OF THE ORDER HAVE HELD THAT THE DEDUCTION UNDER SECTION 80 IB OF THE ACT CANNOT BE DENIED TO THE ASSESSEE FOR THE REASON THAT THE PURCHASERS OF THE FLAT HAVE PUT UP CONSTRUCTIONS AFTER THE SALE FOR WHICH THE ASSESSEE CANNOT BE HELD RESPONSIBLE. THE FACTS IN THE INSTA NT CASE BEING SIMILAR THE ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE AND THIS REASON GIVEN BY THE ASSESSING OFFICER TO DENY THE ASSESSEE DEDUCTION UNDER SECTION 80 IB OF THE ACT IS ACCORDINGLY REJECTED. 7.4.1 THE ASSESSING OFFICER FOUND THAT ONE OF THE F LAT OWNERS TO WHOM A PORTION OF THE GARDEN AREA WAS SOLD HAD PUT UP A STRUCTURE IN HIS PORTION OF T HE GARDEN AND WAS OF THE VIEW THAT IN THIS INSTANCE IF THE GARDEN AREA CONSTRUCTION WAS ALSO TO BE TREATED AS BUILT UP AREA, THEN THE TOTAL BUILT UP AREA OF THE SAID FLAT WOULD EXCEED 1500 SQ. FT. 7.4.2 IN RESPECT TO THIS ISSUE, WE FIND THAT THIS I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASES OF I) CIT VS. PRAMOD & OTHERS IN ITA NO.231 / 2010 DT. 29.2.2012 AND II) CIT VS. M/S. ANRIYA PROJECT MANAGEMENT SERVICES PVT LTD IN ITA NOS.138 & 139 / 2010 DT.29.2.2012. IN THESE DECISIONS OF THE HON'BLE HIGH COURT, IT WA S HELD SO IN VIEW OF THE FACT THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE CONSTRUCTI ON WAS PUT UP IN THE GARDEN AREA BEFORE THE SALE OF THE FLAT TO THE PURCHASER. 8 ITA NOS.1256 & 1372/BANG/10 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED FROM PARA 7 TO 7.4.2 OF THIS ORDER, WE ARE OF THE CONSIDERED VIEW AND HOLD THAT THE ASSESSEE IS ENTITLED TO BE GIVEN DEDUCTION UNDE R SECTION 80 IB OF THE ACT FOR THE ENTIRE PROJECT AND NOT PROPORTIONATELY AS HELD BY THE LEARNED CIT (APPEALS). IT IS ORDERED ACCORDINGLY. 9.0 IN THE GROUND OF APPEAL RAISED AT S.NO.4 , THE ASSESSEE CHALLENGES THE ADDITION OF RS.21,62, 486 MADE AND CONFIRMED BY THE AUTHORITIES BELOW AS A R ESULT OF ESTIMATION OF THE ASSESSEE'S NET PROFIT @ 10% OF TURNOVER FROM NON 80 IB PROJECTS. WE FIND F ROM THE RECORDS OF ASSESSMENT THAT BOTH THE ASSESSING OFFICER AND LEARNED CIT (APPEALS) HAVE NO TED THE FACT THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAD CONSENTED TO THIS ESTIMATION OF IN COME / NET PROFIT @ 10% OF TURNOVER OF NON 80 IB PROJECTS AT KRISHNA GREENS BEFORE THE ASSESSING O FFICER. THIS FACT THAT THE ASSESSEE AGREED FOR TH IS ESTIMATION OF NET PROFIT AND RESULTANT ADDITION IS NOT DISPUTED AND THIS IS CLEARLY AN AGREED ADDITION . THE PROPOSITION PUT FORTH BY THE LEARNED COUNSEL FOR TH E ASSESSEE THAT THE CONSENT DOES NOT CONFER JURISDICTION DOES NOT HOLD MUCH WATER IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. THE VERY FACT THA T THE LEARNED COUNSEL FOR THE ASSESSEE AGREED FOR THIS ES TIMATION OF INCOME DURING ASSESSMENT PROCEEDINGS ONLY PREVENTED THE ASSESSING OFFICER FROM CARRYING OUT ANY FURTHER INVESTIGATIONS IN THE MATTER, WHICH HE VERY WELL COULD HAVE HAD THE LEARNED COUNSEL FOR TH E ASSESSEE NOT AGREED. IN OUR CONSIDERED VIEW, THE ASSESSEE CANNOT NOW CHALLENGE THIS AGREED ADDITION. WE, THEREFORE, SUSTAIN THIS ADDITION MADE BY THE ASSESSING OFFICER AND CONSEQUENTLY THE ASSESSEE'S G ROUND ON THIS ISSUE IS DISMISSED. 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER, 2012. SD/- SD/- (GEORGE GEORGE K) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP