Swatantra Land & Finance Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 143/DEL/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7446 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 03-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BANWAL
• Section: 143(3); 80IB; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 143/DEL/2010 AY: 20 06-07 M/S SWATANTARA LAND & FINANCE PVT. LTD., VS ACIT, M-95, FRONT BASEMENT, CIRCLE 7(1), GREATER KAILASH-II, NEW DELHI. NEW DELHI. (PAN: AAACS1849N) ITA NO.568/DEL/2010 AY: 20 06-07 DCIT, VS M/S SWATANTARA LAND & FINANCE PVT . LTD. CIRCLE 7(1), NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY VOHRA, SR. ADV. MS BHAVITA KUMAR, ADV. RESPONDENT BY : SMT. ANIMA BANWAL, SR. DR DATE OF HEARING: 03.03.2016 DATE OF PRONOUNCEMENT: 31.05.2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA 143/DEL/2010 HAS BEEN FILED BY THE ASSESSEE AG AINST ORDER PASSED BY THE LD. CIT (APPEALS)-X, NEW DELHI. ITA 568/DEL/2010 IS THE CROSS APPEAL BY THE DEPARTMENT. THE I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 2 IMPUGNED ORDER IS DATED 12.11.2009 AND THE RELEVANT ASSESSMENT YEAR IS 2006-07. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE COMPANY WAS INCORPORATED ON 20/08/1962 AND WAS ENGAGED IN T HE BUSINESS OF DEVELOPMENT OF PLOTTED COLONIES, CONSTR UCTION OF FLATS IN THE REAL ESTATE SECTOR, BESIDES DOING MAINTENANC E OF COLONIES AND FLATS CONSTRUCTED/DEVELOPED BY IT. IN FY 2005- 06, RELEVANT TO AY 2006-07, THE ASSESSEE COMPANY SOUGHT EXEMPTION U /S 80IB(10) OF THE INCOME TAX ACT, 1961 (IN BRIEF THE ACT) IN RESPECT OF TWO PROJECTS 1. CONSTRUCTION OF FLATS IN SECTOR 30-33, FARIDABAD. 2. CONSTRUCTION OF FLATS IN SECTOR 49, FARIDABAD. 3. AS PER THE ASSESSEE, THE DEVELOPMENT OF A RESI DENTIAL PLOTTED COLONY IN SECTOR 30-33 FARIDABAD WAS STARTED IN 196 2 AND THE PLOTTING WAS COMPLETED IN 1998. THE PLOTS WERE STI LL BEING SOLD DURING THE YEAR UNDER CONSIDERATION. IN 1999, THE ASSESSEE STARTED ON THE PROJECT TO CONSTRUCT RESIDENTIAL FLA TS BY OBTAINING INDIVIDUAL SANCTIONS TO CONSTRUCT ON INDIVIDUAL PLO TS WHICH WERE UNSOLD OR PURCHASED BACK. IN 2001, IT GOT THE PERM ISSION TO I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 3 CONSTRUCT COMMERCIAL COMPLEX WHICH WAS CONSTRUCTED AND WAS BEING SOLD/LET OUT DURING THE YEAR UNDER CONSIDERAT ION. AS PER THE ASSESSEE, THE CONSTRUCTION OF FLATS IN SECTOR 49, F ARIDABAD AND THE DEVELOPMENT OF THE RESIDENTIAL COLONY STARTED IN 20 04. ONCE THE DEVELOPMENT WAS COMPLETE, THE ASSESSEE STARTED THE PROJECT OF CONSTRUCTING RESIDENTIAL FLATS BY TAKING APPROVALS FOR EACH SEPARATELY. NO COMMERCIAL AREA OR SPACE WAS BEING CONSTRUCTED UNDER THIS PROJECT AND EXEMPTION U/S 80IB (10) WAS CLAIMED IN THE YEAR UNDER CONSIDERATION ONLY IN RESPECT OF PROFITS AS DERIVED FROM THE SALE OF RESIDENTIAL FLATS. HOWEVER, THE AO WAS OF THE OPINION THAT THE ASSESSEE WAS INVOLVED IN THE DEVELOPMENT O F A SINGLE PROJECT NAMELY INDRAPRASTH RESIDENTIAL COLONY WHI CH WAS HAVING RESIDENTIAL FLATS AS WELL AS COMMERCIAL SHOPS AND T HAT THE ASSESSEE HAD CLAIMED EXEMPTION U/S 80IB(10) ON THE HOUSING C OMPLEX ONLY AND NOT ON THE WHOLE PROJECT. THE AO WAS ALSO OF T HE OPINION THAT THE TOTAL PERCENTAGE OF THE COMMERCIAL COMPLEX AS A WHOLE OF THE PROJECT WAS 17 %( APPROX) WHICH WAS MUCH HIGHER THA N THE STATUTORY REQUIREMENT OF 5% OR 2000 SQ. FT WHICHEVE R IS LESS FOR THE CLAIM OF EXEMPTION U/S 80IB (10) OF THE ACT. THE A O ALSO OBJECTED TO THE NON-FILING OF FORM 10CCB BY THE ASSESSEE WHI CH WAS MANDATORY FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB (10). IT I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 4 WAS ALSO THE CONTENTION OF THE AO THAT A PERUSAL OF THE APPROVAL FOR BUILDING PLANS OBTAINED BY THE ASSESSEE FROM TH E MUNICIPAL CORPORATION OF FARIDABAD REVEALED THAT THE APPROVAL TO THE ASSESSEE HAD BEEN GIVEN FOR THE COMPLETE PROJECT AN D NOT FOR THE PIECEMEAL PORTIONS AS CLAIMED BY THE ASSESSEE FOR T HE PURPOSE OF DEDUCTION U/S 80IB(10). THE AO WAS OF THE VIEW THA T THE WHOLE PROJECT COMPRISED OF FLATS, SHOPPING COMPLEXES, DEV ELOPMENT OF LAND ETC. AND THE PROJECT AS A WHOLE WAS ONE SINGLE ENTITY. THE AO ALSO OBJECTED TO THE METHOD OF REVENUE RECOGNITION BEING FOLLOWED BY THE ASSESSEE. AS PER THE AO, THE ASSESSEE HAD B EEN FOLLOWING THE COMPLETED CONTRACT METHOD WHEREAS THE CORRECT M ETHOD WAS PERCENTAGE OF COMPLETION METHOD. THE AO PROCEEDED TO REJECT ASSESSEES METHOD OF ACCOUNTING U/S 145 OF THE ACT AND RECOMPUTED THE PROFITS BY APPLYING THE MARKET RATE OF 10% ON THE BASIS OF PERCENTAGE OF COMPLETION METHOD. THE TOTA L NET PROFIT WAS CALCULATED AT RS. 3,68,47,606/- AND AFTER DEDUCTING THE PROFIT ALREADY DECLARED (RS. 1,47,04,342/-), THE ADDITION ON ACCOUNT OF PROFIT WAS CALCULATED AT RS. 2,21,43,264/-. FURTHE R, THE AMOUNT OF RS. 48,10,939/- CLAIMED AS DEDUCTION U/S 80IB(10) W AS ALSO DISALLOWED AND THE ASSESSMENT WAS COMPLETED AT RS. 2,88,80,000/-. I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 5 4. AGGRIEVED, THE ASSESSEE APPROACHED THE FIRST APP ELLATE AUTHORITY AND, INTER ALIA, OBJECTED TO THE ASSESSME NT ON THE FOLLOWING ISSUES I. DISALLOWANCE OF DEDUCTION U/S 80IB (10). II. AO HOLDING THAT THE AREA UNDER COMMERCIAL COMPLEX E XCEEDED THE PRESCRIBED 5% OF THE TOTAL AREA OF THE PROJECT OR 2000 SQ. FT. WHICHEVER IS LESS. III. AO HOLDING THAT THE MUNICIPAL CORPORATION OF FARIDA BAD HAD GRANTED APPROVAL TO THE ENTIRE PROJECT AS A SINGLE PROJECT AND NOT FOR ITS PIECE-MEAL PORTIONS. IV. AO NOT CALLING FOR PRODUCTION OF AUDIT REPORT IN FO RM 10CCB FROM THE ASSESSEE, EVEN THOUGH THE RETURNS OF INCOM E HAD BEEN FILED ELECTRONICALLY AND THE AUDIT REPORT HAD BEEN OBTAINED BEFORE THE DUE DATE. V. AO REJECTING THE AUDITED RESULTS OF THE COMPANY AND RE- COMPUTING PROFITS BY APPLYING 10% AS MARKET RATE OF PROFIT WITHOUT ANY BASIS. VI. AO HOLDING THAT THE REVENUE SHOULD BE RECOGNIZED ON PERCENTAGE OF COMPLETION METHOD RATHER THAN COMPLET ED CONTRACT METHOD ALLEGED AS BEING FOLLOWED BY THE AS SESSEE. I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 6 VII. AO CALCULATING THE PROFITS BASED ON EXPENDITURE AND THEREBY ERRONEOUSLY ASSESSING THE INCOME OF THE ASSESSEE NO T ONLY FOR ASSESSMENT YEAR 2006-07 BUT ALSO FOR YEARS UP TO AS SESSMENT YEAR 2005-06 TWICE. VIII. AO ERRING IN ASSESSING 10% OF THE EXPENDITUR E INCURRED ON GROUP HOUSING PROJECT AT FARIDABAD STARTED IN ASSES SMENT YEAR 2006-07 ITSELF AS INCOME EVEN WHEN ONLY 9.26% OF THE WORK WAS DONE UP TO THE END OF THE FINANCIAL YEAR. IX. AO ERRING IN ASSESSING 10% OF THE EXPENDITURE ON T HE BHIWADI PROJECT STARTED IN ASSESSMENT YEAR 2006-07 ITSELF WHERE ONLY LAND HAD BEEN ACQUIRED AS INCOME. 5. THE LD. CIT (A) WHILE PARTLY ALLOWING THE ASSE SSEES APPEAL, ADJUDICATED THE ISSUES AS UNDER:- A) THE ASSESSEES CONTENTION FOR PROJECT AT SECTOR 30- 33, FARIDABAD THAT THE SAME WAS NOT ONE COMPOSITE PROJE CT BUT NUMEROUS SEPARATE PROJECTS WAS NOT ACCEPTED. B) THE FINDING OF THE ASSESSING OFFICER THAT THE AREA UNDER COMMERCIAL CATEGORY EXCEEDED THE PERMISSIBLE LIMITS WAS CONFIRMED. I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 7 C) NON-FILING OF THE AUDIT REPORT BY THE ASSESSEE WAS HELD TO BE NOT ADVERSELY AFFECTING THE ASSESSEES CASE. D) THE CLAIM OF DEDUCTION U/S 80IB WAS DENIED FOR THE PROJECT AT SECTOR 30-33, FARIDABAD BUT ALLOWED IN RESPECT O F PROJECT AT SECTOR 49, FARIDABAD. THUS, THE TOTAL CLAIM U/S 80IB (10) ALLOWED WAS RS. 3,43,170/- OUT OF THE TOTAL CLAIM O F RS. 44,67,769/-. E) THE ACTION OF THE ASSESSING OFFICER IN REJECTING TH E FINANCIAL RESULTS OF THE ASSESSEE U/S 145 OF THE ACT WAS UPHE LD. F) THE ASSESSING OFFICERS CONCLUSION THAT THE ASSESSE E SHOULD HAVE FOLLOWED PERCENTAGE OF COMPLETION METHOD INSTE AD OF THE METHOD OF ACCOUNTING BEING FOLLOWED WAS UPHELD. G) THE ASSESSEES CONTENTION THAT THE PROFIT RATE OF 1 0% WAS ARBITRARILY HIGH WAS ACCEPTED AND THE ASSESSING OFF ICER WAS DIRECTED TO RE-COMPUTE THE PROFITS BY APPLYING THE RATE OF 6.81% (BEING THE NET PROFIT RATE FOR ASSESSMENT YEA R 2005- 06). 6. NOW, BOTH THE ASSESSEE AND THE DEPARTMENT ARE IN APPEAL AGAINST THE FINDING OF THE LD. CIT (A). THE GROUND S OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 8 1. I) WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (C IT 'A') HAS ERRED IN CONFIRMING THE DISALLOWANCE OF TH E EXEMPTION OF RS.44,67,769/- CLAIMED U/S 80IB(10) OF THE ACT BY THE ASSESSEE IN RESPECT OF ITS HOUSING PROJE CT IN SECTOR 30-33, FARIDABAD. II) WHETHER IN DOING SO, THE LEARNED CTT(A) HAS ERRED I N NOT APPLYING THE JUDGMENT OF THE SPECIAL BENCH OF T HE HON'BLE INCOME TAX APPELLATE TRIBUNAL IN M/S. BHAHM A ASSOCIATES VS. JCIT [315 ITR (AT) 368] TO THE FACTS OF THE ASSESSEE'S CASE AND IN CONCLUDING THAT THE CLASSIFICATION OF ONE COMPOSITE CONTRACT INTO VARIO US SEGMENTS IS NOT ACCEPTABLE. III) WHETHER IN DOING SO, THE LEARNED CIT 'A' HAS ERRED IN FURTHER CONCLUDING THAT MAINTENCE OF SEPARATE ACCOU NTS FOR DIFFERENT PROJECTS UNDERTAKEN BY THE ASSESSEE D OES NOT DECIDE THE ISSUE. IV) WHETHER IN DOING SO, THE LEARNED CIT 'A' HAS ERRED IN FURTHER CONCLUDING THAT THE AREA COVERED UNDER COMMERCIAL CATEGORY DECIDEDLY EXCEEDED THE PERMISSI BLE LIMITS I.E.; 5% OR 2000 SQ. FT., WHICHEVER IS HIGHE R. 2.I WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT 'A' HAS ERRED IN CONFIRMING THE ACTION OF THE AO OF REJECTING THE ASSESSEE'S METHOD OF ACCOUNTING U/ S 145 OF THE ACT AND IN RE-COMPUTING THE PROFITS OF THE ASSE SSEE FROM DIFFERENT PROJECTS BY APPLYING A NET PROFIT RATE OF 6.81% ON THE PROJECT COST INCURRED BASED ON PERCENTAGE OF CO MPLETION METHOD OF ACCOUNTING PRESCRIBED BY AS-7/AS-9 AND TH E GUIDANCE NOTE FOR REAL ESTATE DEVELOPERS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI). 7 . THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER:- 1. LD. COMMISSIONER OF INCOME TAX (APPEAL) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DIRECTING TO ALLOW DEDUCTION U/S 80IB OF THE INCOME TAX I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 9 ACT, 1961 FOR RS, 3,43,170/- AGAINST THE DISALLOWANCE OF ENTIRE DEDUCTION MADE BY THE ASSESSING OFFICER.' 2. LD. COMMISSIONER OF INCOME TAX (APPEAL) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DIRECTING THE AO TO ESTIMATE INCOME @ 6.81% ON PERCENTAGE COMPLETION METHOD AS AGAINST 10% TAKEN B Y THE AO. 3. LD. COMMISSIONER OF INCOME TAX (APPEAL) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DIRECTING THE AO TO RECOMPUTE THE ASSESSEES INCOME FOR THE AY 2006-07 AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE TO FURNISH SUCH DETAILS/EVIDENCE THAT HE M AY LIKE TO RELY ON IN WORKING OUT ITS INCOME BASED ON PERCENTAGE COMPLETION METHOD FOR THE YEAR.' 8. IN RESPECT OF GROUND NO. 1 OF THE ASSESSEES A PPEAL, THE LD. AR RELIED ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS VEENA DEVELOPERS 277 CTR 297 (S.C.) FOR THE PROP OSITION THAT UP TO 31 ST MARCH, 2005, DEDUCTION U/S 80IB(10) WAS ALLOWABLE TO HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS HOUSING PROJECTS WITH COMMERCIAL USER TO THE EXTENT PERMISS IBLE UNDER THE DEVELOPMENT CONTROL REGULATIONS FRAMED BY THE RESPE CTIVE LOCAL AUTHORITY AND THAT CLAUSE (D) INSERTED IN SECTION 8 0IB(10) W.E.F. 1 ST APRIL, 2005 WAS PROSPECTIVE AND NOT RETROSPECTIVE. THE LD. AR ALSO RELIED ON CIT VS SANKAR BUILDERS 375 ITR 392 ( S.C.) FOR THE SAME PROPOSITION. IT WAS SUBMITTED THAT IN THE LIG HT OF THESE JUDGMENTS, THE CLAIM OF DEDUCTION U/S 80IB COULD NO T BE DENIED I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 10 ON THE GROUND THAT THE COMMERCIAL CATEGORY EXCEEDED THE PRESCRIBED LIMITS. 9. ON GROUND NO. 2 OF THE ASSESSEES APPEAL, THE L D. AR SUBMITTED THAT THE ASSESSEE HAD BEEN REGULARLY FOLL OWING A SYSTEM OF ACCOUNTING WHICH HAD BEEN ACCEPTED BY THE DEPARTMENT IN ASSESSMENTS FRAMED U/S 143(3) OF THE ACT FOR ASSESSMENT YEARS 1998-99 AND 2003-04. THE LD. AR R ELIED ON THE DECISIONS OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS REALEST BUILDERS AND SERVICES LTD. 307 ITR 202 (S.C .) AND CIT VS BALAHARI INVESTMENT PVT. LTD. 299 ITR 1(S.C.) FOR T HE PROPOSITION THAT BOTH THE PROJECT COMPLETION METHOD AND THE PER CENTAGE OF COMPLETION METHOD CAN ACHIEVE THE SAME RESULT. IT WAS SUBMITTED THAT NEITHER ANY DEFECT HAS BEEN POINTED OUT IN THE METHOD OF ACCOUNTING BEING FOLLOWED BY THE ASSESSEE NOR HAS ANY CONCRETE FINDING BEEN GIVEN THAT CORRECT PROFITS CA NNOT BE COMPUTED FOLLOWING THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE. THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOW ING ONE METHOD OF ACCOUNTING WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS U/S 143(3) FO R ASSESSMENT YEAR 1998-99 AND ASSESSMENT YEAR 2003-04. I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 11 10. ON GROUND NO. 1 OF THE DEPARTMENTS APPEAL, THE LD. AR SUBMITTED THAT THE DEDUCTION U/S 80IB FOR SECTOR 49 , FARIDABAD PROJECT WAS RIGHTLY ALLOWED BY THE LD. CIT (A) AS T HERE WAS NO COMMERCIAL COMPLEX IN THE SAID PROJECT. 11. ON GROUND NO. 2 OF THE DEPARTMENTS APPEAL, IT WAS SUBMITTED BY THE LD. AR THAT THE REVENUE IS RECOGNI SED AS AND WHEN THE FLATS ARE SOLD. THE ASSESSEE RECOGNIZES R EVENUE ON HANDING OVER THE POSSESSIONS TO THE SPACE BUYER OR REGISTRATION OF SALE DEED IN ITS FAVOUR, WHICHEVER IS EARLIER. THE LD. AR SUBMITTED THAT THIS USUALLY HAPPENS EVEN BEFORE THE PROJECT I S COMPLETED IN ALL RESPECTS AND THIS IS EVIDENT FROM THE FACT THAT THE ASSESSEE CREATES A PROVISION IN ITS ACCOUNTS OF THE EXPENDIT URE YET TO BE INCURRED ON THE PROJECT (S) IN RESPECT OF THOSE ARE AS WHICH HAVE ALREADY BEEN RECOGNISED BY THE ASSESSEE COMPANY AS SOLD. THE LD. AR SUBMITTED THAT THE ASSESSEES APPEAL BE ALLO WED AND THAT OF THE DEPARTMENT BE DISMISSED. 12. IN RESPONSE, THE LD. DR SUBMITTED THAT A PERUSA L OF THE APPROVAL FOR BUILDING PLANS OBTAINED BY THE ASSESSE E FROM THE I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 12 MUNICIPAL CORPORATION OF FARIDABAD REVEALED THAT TH E APPROVAL TO THE ASSESSEE HAD BEEN GIVEN FOR THE COMPLETE PROJEC T AND NOT FOR THE PIECEMEAL PORTIONS AS CLAIMED BY THE ASSESSEE F OR THE PURPOSE OF DEDUCTION U/S 80IB(10). IT WAS SUBMITTE D THAT THE WHOLE PROJECT COMPRISED OF FLATS, SHOPPING COMPLEXE S, DEVELOPMENT OF LAND ETC. AND THE PROJECT AS A WHOLE WAS ONE SINGLE ENTITY. THE LD. DR ALSO REITERATED THE OBJE CTIONS TO THE METHOD OF REVENUE RECOGNITION FOLLOWED BY THE ASSES SEE. IT WAS SUBMITTED THAT THE ASSESSEE WAS NOT FOLLOWING ANY S YSTEM OF ACCOUNTING WHEREAS THE CORRECT METHOD WAS PERCENTAG E OF COMPLETION METHOD WHICH HAD BEEN RIGHTLY APPLIED BY THE AO. LD. DR JUSTIFIED AND SUPPORTED THE ACTION OF THE AO IN REJECTING THE ASSESSEES METHOD OF ACCOUNTING U/S 145 OF THE ACT AND RECOMPUTING THE PROFITS BY APPLYING THE MARKET RATE OF 10% ON THE BASIS OF PERCENTAGE OF COMPLETION METHOD. IT WA S PRAYED THAT THE ASSESSEES APPEAL BE DISMISSED AND THE DEPARTME NTS APPEAL BE ALLOWED. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. AS FAR AS THE ASSESSEES APPEAL IS CONCERNED, WE FIND THAT THE ISSUE IS SQUA RELY COVERED IN I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 13 FAVOUR OF THE ASSESSEE BY THE DECISION RENDERED BY THE HON'BLE APEX COURT IN CIT VS SANKAR BUILDERS (SUPRA) WHEREI N THE HON'BLE APEX COURT HAS HELD AS UNDER:- BEFORE APRIL 1, 2005, THE LEGAL POSITION UNDER SEC TION 80-IB(10) OF THE INCOME-TAX ACT, 1961, WAS THAT ONC E THE PROJECT WAS SANCTIONED BY THE LOCAL AUTHORITY A S A 'HOUSING PROJECT', THE EXTENT OF AREA SANCTIONED FO R SHOPS AND COMMERCIAL ESTABLISHMENTS IN THE HOUSING PROJECT WAS IMMATERIAL AND HAD NO BEARING. THUS, IRRESPECTIVE OF THE AREA WHERE SHOPS AND COMMERCIAL ESTABLISHMENTS WERE PERMITTED BY THE LOCAL AUTHORIT Y IN A HOUSING PROJECT, IT WAS STILL TREATED AS A HOUSIN G PROJECT AND WHILE GRANTING 100 PER CENT DEDUCTION, THE AREA COVERED BY SHOPS AND COMMERCIAL ESTABLISHMENTS WAS ALSO INCLUDIBLE. THIS POSITION CHANGED WITH THE INSERTION OF CLAUSE (D) TO SUB-SECTION (10) BY THE FINANCE (NO. 2) ACT, 2004. ACCORDING TO THE AMENDMENT CARRI ED OUT AND MADE EFFECTIVE FROM APRIL 1, 2005, EVEN IF THE LOCAL AUTHORITY HAD SANCTIONED A LARGER AREA FOR SH OPS AND COMMERCIAL ESTABLISHMENT, THE BENEFIT OF SECTIO N 80-IB (10) WOULD NOT BE ADMISSIBLE TO ASSESSEES IF THE AREA UTILISED FOR SHOPS AND COMMERCIAL ESTABLISHMEN T EXCEEDED 5 PER CENT, OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR 2,000 SQ. FEET, WHICHEVER WA S LESS. THE HOUSING PROJECT CONTEMPLATED UNDER SUB-SECTION (10) OF SECTION 80-IB INCLUDES COMMERCIAL ESTABLISHMENTS OR SHOPS ALSO. BY WAY OF THE AMENDMENT IN THE FORM OF CLAUSE (D), AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SHOPS AND COMMERCI AL ESTABLISHMENTS. THEREFORE, BY NECESSARY IMPLICATION , THE PROVISION HAS TO BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMENDMENT, TH IS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PR OVI- SION WAS SUBSTITUTED. THEREFORE, IT CANNOT BE APPLI ED TO PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR TO APRIL 1, 2005, AND COMPLETED BY THE STIPULATED D ATE, THOUGH SUCH STIPULATED DATE IS AFTER APRIL 1, 2005. I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 14 WHERE IN ACCORDANCE WITH THE PERMISSIBLE COMMERCIAL USER ON WHICH THE PROJECT WAS SANCTIONED, ASSESSEES STARTED THE PROJECTS AND THE DATE OF COMMENCING SUCH PROJECTS IS BEFORE APRIL 1, 2005, ONCE THEY HAVE ARRANGED THEIR AFFAIRS IN THIS MANNER, THE DEPARTMENT CANNOT DENY THE BENEFIT OF SECTION 80-IB (10) APPLYING THE PRINCIPL E OF RETROACTIVITY EVEN WHEN THE PROVISION HAS NO RETROSPECTIVITY. WHERE WITH THE PLANNING IN ACCORDANCE WITH THE LAW PREVAILING PRIOR TO APRIL 1, 2005, ASSESSEES HAVE ACTED AND ACQUIRED VESTED RIGHTS THEREBY THESE CANNOT BE TAKEN AWAY. CLAUSE (D) IS TO BE TREATED AS INEXTRICABLY LINKED WITH THE APPROVAL AND CONSTRUCTION OF THE HOUSING PROJECT AND AN ASSESSEE CANNOT BE CALLED UPON TO COMPLY WITH THE CONDITION WHEN IT WAS NOT IN CONTEMPLATION EITHER OF THE ASSESSEE OR EVEN OF THE LEGISLATURE, WHEN THE HOUSING PROJECT WAS ACCORDED APPROVAL BY THE LOCAL AUTHORITIES. THE POSITION OF LAW AND THE RIGHTS ACCRUED PRIOR TO ENACTMENT OF THE FINANCE (NO. 2) ACT, 2004, HAVE TO BE TAKEN INTO ACCOUNT, PARTICULARLY WHEN THE POSITION BECOMES IRREVERSIBLE. (EMPHASIS SUPPLIED) THE PROVISIONS OF SECTION 80-IB(10) MENTION NOT ONL Y A PARTICULAR DATE BEFORE WHICH SUCH A HOUSING PROJECT IS TO BE APPROVED BY THE LOCAL AUTHORITY, EVEN A DATE BY WHICH THE HOUSING PROJECT IS TO BE COMPLETED, IS FIXED. T HESE DATES HAVE A SPECIFIC PURPOSE, TO GIVE DEVELOPERS T IME TO ARRANGE THEIR AFFAIRS IN SUCH A MANNER THAT THE HOU SING PROJECT IS STARTED AND FINISHED WITHIN THOSE STIPUL ATED DATES. THIS PLANNING, IN THE CONTEXT OF FACTS, HAD TO BE MUCH BEFORE APRIL 1, 2005. THEREFORE, WHERE HOUSING PROJECTS WERE SANCTIONED MUCH BEFORE THE AMENDMENT BUT HAVE BEEN COMPLETED AFTER APRIL 1, 2005, WHEN T HE AMENDED PROVISION CAME INTO OPERATION, THE ASSESSEE S WOULD BE ENTITLED TO THE DEDUCTION UNDER SECTION 80 - IB(10) AND THE CONDITIONS MENTIONED IN CLAUSE (D) W OULD NOT APPLY. THE CARDINAL PRINCIPLE OF TAX LAW THAT THE LAW TO B E APPLIED HAS TO BE THE LAW IN FORCE IN THE ASSESSMEN T YEAR IS QUALIFIED BY EXCEPTION WHEN IT IS PROVIDED I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 15 OTHERWISE EXPRESSLY OR BY NECESSARY IMPLICATION. TH AT THE LAW WHICH IS IN FORCE IN THE ASSESSMENT YEAR WO ULD PREVAIL IS NOT AN ABSOLUTE PRINCIPLE AND EXCEPTION CAN BE EITHER EXPRESS OR IMPLIED BY NECESSARY IMPLICATION. 14. IT IS THE ASSESSEES CLAIM THAT THE APPROVAL FOR THE ASSESSEES PROJECT WAS DATED PRIOR TO 1 ST APRIL, 2005. RESPECTFULLY FOLLOWING THE RATIO OF JUDGMENT OF THE HON'BLE APEX COURT AS DISCUSSED ABOVE, WE RESTORE THE MATTER TO THE FILE OF THE ASS ESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFYING THE DATE OF APPROV AL IN THE ASSESSEES CASE AND DIRECT THAT IF THE DATE OF APPR OVAL IS PRIOR TO 1 ST APRIL, 2005, THE ASSESSEE BE ALLOWED DEDUCTION U/S 80IB (10) ON THE ENTIRE PROJECT AT SECTOR 30-33, FARIDABAD NO TWITHSTANDING THE FACT THAT THE AREA IN THE COMMERCIAL CATEGORY E XCEEDED THE PRESCRIBED LIMITS. GROUND NO. 1 OF THE ASSESSEES APPEAL IS ALLOWED. 15. AS FAR AS GROUND NO. 2 OF THE ASSESSEES APPE AL IS CONCERNED, ALTHOUGH THE METHOD OF ACCOUNTING BEING FOLLOWED BY THE ASSESSEE RESEMBLES COMPLETED CONTRACT METHOD BUT IT CANNOT BE SAID TO BE PURELY COMPLETED CONTRACT METHOD OF ACCO UNTING. HOWEVER, ON AN OVERALL PERUSAL OF THE ASSESSMENT OR DER AS WELL AS THE IMPUGNED ORDER, IT IS SEEN THAT NEITHER ANY DEF ECT HAS BEEN POINTED OUT IN THE METHOD OF ACCOUNTING BEING FOLLO WED BY THE I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 16 ASSESSEE NOR ANY CONCRETE FINDING HAS BEEN GIVEN TH AT CORRECT PROFITS CANNOT BE COMPUTED FOLLOWING THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE. THE MAIN THRUST OF THE AS SESSING OFFICER SEEMS TO BE THAT THE ASSESSEE IS DEFERRING THE PAYMENT OF TAXES. BUT THIS INFERENCE OF THE ASSESSING OFFICER CANNOT BE ACCEPTED AS THE ASSESSEE HAS BEEN CONSISTENTLY FOLL OWING ONE METHOD OF ACCOUNTING WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS U/S 143(3) FO R ASSESSMENT YEAR 1998-99 AND ASSESSMENT YEAR 2003-04. THE DEPA RTMENT HAS FAILED TO JUSTIFY ITS ACTION OF REJECTING THE B OOK RESULTS BY REJECTING THE ASSESSEES METHOD OF ACCOUNTING U/S 1 45 OF THE ACT AND APPLYING A PROFIT RATE OF 6.81% ON THE PROJECT COST INCURRED BASED ON PERCENTAGE OF COMPLETION METHOD OF ACCOUNT ING. ON THE FACTS OF THE CASE IT IS OUR CONSIDERED OPINION THAT SINCE THE ASSESSEE HAS BEEN FOLLOWING A CERTAIN SYSTEM OF ACC OUNTING CONSISTENTLY WHICH HAS EVEN BEEN ACCEPTED BY THE DE PARTMENT IN TWO SCRUTINY ASSESSMENTS AND ALSO IN SUBSEQUENT YEA RS U/S 143(1) OF THE ACT AND, MOREOVER, IN THE INSTANT APP EAL, THE DEPARTMENT HAS NOT BEEN ABLE TO DEMONSTRATE AS TO H OW THE ACCOUNTING SYSTEM BEING FOLLOWED WAS GIVING DISTORTED FIGURES OF PROFIT, IT WOULD BE PATENTLY WRONG TO D ISTURB THE METHOD OF ACCOUNTING BEING FOLLOWED. AT THIS JUNCTURE , ANY CHANGE IN THE I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 17 METHOD WILL RESULT IN THE INCOME FOR MANY ASSESSMEN T YEARS TO BE RECOMPUTED WHICH WOULD BE CONTRARY TO THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRI ES LTD. 358 ITR 295 WHEREIN IT HAS BEEN HELD THAT AN EXERCISE W HICH ONLY RESULTS IN CHANGE IN INCOME IN VARIOUS YEARS BUT IS OVERALL TAX NEUTRAL NEED NOT BE PURSUED. HERE ALSO, THE METHOD SUGGESTED BY THE ASSESSING OFFICER WILL ONLY RESULT INTO PROF IT FOR EACH YEAR BEING DIFFERENT BUT THE OVERALL PROFITABILITY WILL BE THE SAME. WE ALSO DRAW SUPPORT FROM THE JUDGMENT OF THE HON'BLE SUPREME COURT IN M/S BILAHARI INVESTMENT (2008) 299 ITR 1 F OR THE PREPOSITION THAT EVERY ASSESSEE IS ENTITLED TO ARRA NGE ITS AFFAIRS AND FOLLOW THE METHOD OF ACCOUNTING, WHICH THE DEPA RTMENT HAS EARLIER ACCEPTED. IT IS ONLY IN THOSE CASES WHERE TH E DEPARTMENT RECORDS A FINDING THAT THE METHOD ADOPTED BY THE AS SESSEE RESULTS IN DISTORTION OF PROFITS, THE DEPARTMENT CAN INSIST ON SUBSTITUTION OF THE EXISTING METHOD. WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND ALSO DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE ADDITION MADE ON THIS ACCOUNT IN THE ASSESSM ENT ORDER AND FURTHER DIRECT THAT THE INCOME AS DECLARED BY T HE ASSESSEE IN ITS RETURN OF INCOME BE TAKEN AS THE FIGURE FOR THE PURPOSE OF I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 18 CALCULATION OF THE TAX LIABILITY. GROUND NO. 2 OF THE ASSESSEES APPEAL IS ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 17. AS FAR AS GROUND NO. 1 OF THE DEPARTMENTS APP EAL IS CONCERNED, IT HAS BEEN STATED BY THE LD. AR THAT PR OJECT AT SECTOR 49 FARIDABAD DID NOT HAVE ANY COMMERCIAL SPACE AND THE LD. CIT(A) HAS GIVEN A FINDING THAT THIS PROJECT WAS EL IGIBLE FOR DEDUCTION U/S 80IB(10). IN THE APPEAL BEFORE US, T HE DEPARTMENT COULD NOT BRING ANYTHING ON RECORD TO NEGATE THE FI NDING OF THE LD. CIT (A). AS FAR AS THE PLEA OF THE DEPARTMENT THAT THERE WAS ONE COMPOSITE APPROVAL FOR THE ENTIRE PROJECT AND NOT P IECEMEAL SEPARATE APPROVALS IS CONCERNED, WE ARE OF THE CONS IDERED OPINION THAT SECTION 80IB (10) PRESCRIBES APPROVAL OF A HO USING PROJECT. A HOUSING PROJECT MAY COMPRISE OF BOTH ELIGIBLE AS WE LL AS INELIGIBLE UNITS. THE DEDUCTION WILL BE AVAILABLE AND LIMITED TO THE CLAIM ON ELIGIBLE UNITS IRRESPECTIVE OF THE FACT THAT THE EN TIRE PROJECT COMPRISING OF ELIGIBLE AND INELIGIBLE UNITS HAS BEE N APPROVED BY THE AUTHORITY BY WAY OF A SINGLE APPROVAL/COMPOSITE APPROVAL. SECTION 80IB(10) REFERS TO THE APPROVAL OF A HOUSIN G PROJECT BUT DOES NOT PRESCRIBE A PRE-CONDITION THAT THE DEDUCTI ON WILL BE AVAILABLE IN RESPECT OF ONLY THAT UNIT OR PART OF T HE PROJECT WHICH I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 19 HAS BEEN SEPARATELY APPROVED BY THE LOCAL AUTHORITY . HENCE, IT IS OUR CONSIDERED VIEW THAT A SEPARATE APPROVAL FOR EA CH ELIGIBLE UNIT OR PROJECT IS NOT THE INTENTION OF THE ACT. THE HO N'BLE MADRAS HIGH COURT IN THE CASE OF VISWAS PROMOTERS (P) LTD. VS ACIT 255 CTR 149 HAS HELD THAT THE MERE FACT THAT ONE OF THE BLOCKS HAVE UNITS EXCEEDING BUILT-UP AREA OF 1500 SQ FT PER SE, WOULD NOT RESULT IN NULLIFYING THE CLAIM OF THE ASSESSEE FOR THE ENTIRE PROJECT. CONSEQUENTLY, IT WAS HELD, THAT ASSESSEE WAS ENTITL ED TO THE BENEFIT OF DEDUCTION U/S 80IB (10(C) OF THE ACT IN RESPECT OF EACH OF THE BLOCKS. THE PUNE BENCH OF THE ITAT HAS HELD IN THE CASE OF SIDDHIVINAYAK KOHINOOR VENTURE VS ACIT (2014) 159 T TJ 390 THAT CONSTRUCTION OF EVEN ONE BUILDING WITH SEVERAL RESI DENTIAL PROJECTS OF THE PRESCRIBED SIZE WOULD CONSTITUTE A HOUSING P ROJECT FOR THE PURPOSE OF SECTION 80IB(10) OF THE ACT. THE PUNE B ENCH FURTHER HELD THAT EACH BLOCK IN A PARTICULAR PROJECT HAS TO BE TAKEN AS AN INDEPENDENT BUILDING AND HENCE IS TO BE CONSIDERED A HOUSING PROJECT FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 8 0IB(10). PARA 32 OF THE ORDER IS RELEVANT IN THE PRESENT APPEAL A LSO AND IS BEING REPRODUCED HEREIN UNDER FOR A READY REFERENCE:- 32. THE ARGUMENT OF THE REVENUE, BASED ON THE STATEMENT OF CHIEF ENGINEER, PCMC, IN OUR VIEW, DOE S NOT HELP THE CASE OF THE REVENUE AS THE FOLLOWING DISCUSSION WOULD SHOW. THE CASE SET UP BY THE REVEN UE I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 20 IS THAT TWO PROJECTS HAVE BEEN SANCTIONED BY A COMM ON APPROVAL AND THUS THE PCMC HAS VIEWED THE TWO PROJECTS AS A SINGLE COMPOSITE PROJECT. IT IS CONTE NDED BY THE REVENUE THAT THE EXPRESSION 'HOUSING PROJECT', THOUGH NOT DEFINED IN S. 80-113(10) OF THE ACT, SHOULD BE TAKEN TO BE THE PROJECT PER SE, AS APPROVED BY A 'LOCAL A UTHORITY' FOR THE PURPOSES OF S. 80-IB( 10) OF THE ACT. NO DO UBT, FOR A 'HOUSING PROJECT' TO BE ELIGIBLE FOR DEDUCTION UN DER S. 80-IB (10) OF THE ACT, IT IS REQUIRED TO BE APPROVE D BY A 'LOCAL AUTHORITY', SO HOWEVER, THE PHRASEOLOGY OF S . 80-IB (10) OF THE ACT DOES NOT REFLECT A LEGISLATIVE INTE NT THAT THE PROJECT SHOULD BE 'AS APPROVED' BY A 'LOCAL AUTHORI TY'. THE REQUIREMENT OF S. 80-IB (10) OF THE ACT TO THE EFFE CT THAT PROJECT SHOULD BE APPROVED BY A 'LOCAL AUTHORITY' I S FULFILLED NO SOONER WHEN THE 'HOUSING PROJECT' CONS IDERED BY AN ASSESSEE IS APPROVED BY A 'LOCAL AUTHORITY'. MOREOVER, THE EXPRESSION 'HOUSING PROJECT' IS NOT D EFINED IN THE DEVELOPMENT CONTROL RULES FOR PCMC I.E. THE 'LOCAL AUTHORITY' IN THE CASE BEFORE US AND THUS, THE SAID ENACTMENT CANNOT BE RESORTED TO FOR THE PURPOSE OF UNDERSTANDING THE MEANING OF EXPRESSION 'HOUSING PROJECT' CONTAINED IN S. 80-IB(10) OF THE ACT. THER EFORE, SO LONG AS THE CLAIM OF DEDUCTION IS IN RELATION TO A 'HOUSING PROJECT', WHICH HAS BEEN APPROVED BY THE 'LOCAL AUTHORITY', IT WOULD SATISFY THE REQUIREMENT OF S. 80- IB(10) OF THE ACT. PERTINENTLY, IF THE PROPOSITION OF THE REVENUE IS TO BE UPHELD, THE SAME WOULD BE QUITE CONTRARY TO THE MANNER IN WHICH THE EXPRESSION 'HOU SING PROJECT' CONTAINED IN S. 80-IB (10) OF THE ACT HAS BEEN UNDERSTOOD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA) AND ALSO BY THE HON'BLE MADRAS HIGH COURT IN VISWAS PROMOTERS (P.) LTD. (SUPRA) AND ARUN EXCELLO FOUNDATIONS (P.) LTD. (SUP RA). IT MAY ALSO BE PERTINENT TO OBSERVE THAT THE HON'BLE BOMBAY HIGH COURT IN VANDANA PROPERTIES (SUPRA) NOT ONLY NOTED THAT THE EXPRESSION 'HOUSING PROJECT' IS NOT DEFINED UNDER S. 80-IB(10) OF THE ACT BUT ALSO NOTE D THAT THE SAME WAS NOT DEFINED EVEN UNDER THE RELEVANT LO CAL REGULATIONS BEFORE IT, VIZ. THE MUMBAI MUNICIPAL CORPORATION ACT, 1988 AND THE DEVELOPMENT CONTROL REGULATIONS FOR GREATER MUMBAI, 1991. THUS, THE HON 'BLE HIGH COURT PROCEEDED TO OBSERVE THAT THE EXPRESSION 'HOUSING PROJECT' IN S. 80-IB(10) WOULD HAVE TO BE CONSTRUED AS COMMONLY UNDERSTOOD. EVEN IN THE CASE BEFORE US, THERE IS NO DISPUTE THAT THE EXPRESSION 'HOUSING PROJECT' IS NOT DEFINED IN THE DEVELOPMENT CONTROL RULES FOR PCMC AND THEREFORE, THE CONCEPT OF'HOUSING PROJECT AS SOUGHT TO BE UNDERSTOOD BY T HE AO BASED ON THE EXPLANATION OF CHIEF ENGINEER. PCMC IS NOT RELEVANT FOR THE PURPOSES OF S, 80IB (I0) OF THE AC T. THUS, I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 21 THE ARGUMENT OF THE REVENUE TO THE EFFECT THAT SINC E SWRH AND S' 1 PROJECTS HAVE BEEN APPROVED BY PCMC UNDER A COMMON APPROVAL, THE TWO PROJECTS SHOULD BE COMBINED AND CONSIDERED AS A SINGLE PROJECT FOR THE PURPOSE OF S. UNDER S. 80-IB( 10) OF THE ACT IN OUR OPINION IS MISPLACED. 18. THEREFORE, WE FIND NO REASON TO INTERFERE WIT H THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE AND WE UPHOLD THE SAM E. GROUND NO. 1 OF THE DEPARTMENTS APPEAL IS DISMISSED. 19. COMING TO GROUND NOS. 2 & 3 OF THE DEPARTMENT S APPEAL IT IS SEEN THAT THESE GROUNDS CORRESPOND THE GROUND NO. 2 OF THE ASSESSEES APPEAL WHICH HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE. HENCE, GROUND NOS. 2 & 3 OF THE DEPARTME NTS APPEAL ARE DISMISSED. 20. IN THE RESULT, THE APPEAL OF THE DEPARTMENT I S DISMISSED. 21. IN THE FINAL RESULT, THE APPEAL OF THE ASSESS EE IS ALLOWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST MAY, 201 6. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT J UDICIAL MEMBER DATED: 31ST MAY, 2016 GS I.T.A. NO. 143/D/2010 & 568/2010 ASSESSMENT YEAR 2006-07 22 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 4. DR, ITAT BY ORDER ASSTT. REGISTRAR