Appeal Details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 89109 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 8 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-03-2015
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
02-03-2015
Assessment Year
2005-2006
Appeal Filed On
08-07-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NOS.1504 TO 1508 & 1510/PN/2013 (ASSESSMENT YEARS : 2003-04 TO 2007-08 & 2009-10) DCIT, CENTRAL CIRCLE-1(1), PUNE .. APPELLANT VS. M/S. ANKIT ENTERPRISES, 2 ND FLOOR, CITY POINT, DHOLE PATIL ROAD, PUNE-411001 PAN NO. AAFFA1172N .. RESPONDENT ITA.NOS.1449 TO 1452 & 1454/PN/2013 (ASSESSMENT YEARS : 2004-05 TO 2007-08 & 2009-10) M/S. ANKIT ENTERPRISES, 2 ND FLOOR, CITY POINT, DHOLE PATIL ROAD, PUNE-411001 PAN NO. AAFFA1172N .. APPELLANT VS. DCIT, CENTRAL CIRCLE-1(1), PUNE .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI SANKET JOSHI REVENUE BY : SHRI A.K. MODI, CIT DATE OF HEARING : 09-03-2015 DATE OF PRONOUNCEMENT : 31-03-2015 ORDER PER R.K. PANDA, AM : THESE BATCH OF APPEALS FILED BY THE REVENUE AND ASS ESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-II, PUNE R ELATING TO THE RESPECTIVE ASSESSMENT YEARS AS MENTIONED ABOVE. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS, THEREFORE, THESE WERE HEARD T OGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2 2. FIRST WE TAKE UP ITA NO.1504/PN/2013 FILED BY TH E REVENUE FOR A.Y. 2003-04 AS THE LEAD CASE. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM FROM KOLTE PATIL GRO UP OF COMPANIES WHICH IS PREDOMINANTLY ENGAGED IN DEVELOPMENT OF REAL EST ATE AND SALE OF LAND ETC. IN THE COURSE OF SEARCH ACTION U/S 132(1) OF THE ACT, THE DEPARTMENT MADE ENQUIRIES WITH SOME OF THE SUPPLIERS OF STEEL TO THE ASSESSEE. IN THE COURSE OF SUCH ENQUIRIES, STATEMENTS OF SIX SUPPLIE RS OF STEEL, NAMELY, (I) M/S UNIQUE FERRO METALS PVT. LTD.; (II) M/S FRESHO METALS PVT. LTD.; (III) M/S PRAKY METALS PVT. LTD.; (IV) M/S MEGHANA ENTERP RISES; (V) M/S NARENDRAKUMAR & CO.; AND, (VI) M/S R.D. JAIN & CO. WERE RECORDED U/S 131 OF THE ACT WHEREIN THE PARTIES DEPOSED THAT THE Y HAD NOT MADE ANY ACTUAL SALES/ SUPPLIES OF STEEL TO THE ASSESSEE-COM PANY BUT ONLY ACCOMMODATION BILLS WERE ISSUED BY THEM. IT WAS ST ATED BY SUCH PARTIES THAT THE BILLS RAISED BY THEM WERE SETTLED BY CHEQU E PAYMENTS, WHICH WERE RETURNED BACK BY WAY OF CASH AFTER DEDUCTING 1% ON ACCOUNT OF COMMISSION. IT IS ALSO EMERGING FROM THE ASSESSMEN T ORDER THAT STATEMENT OF ONE OF THE TRANSPORTER, NAMELY, M/S NEW ARC TRAN SPORT WAS ALSO RECORDED BY THE DEPARTMENT WHO ALSO DEPOSED THAT HE HAD ISSUED BOGUS LORRY RECEIPTS TO ONE OF THE SUPPLIERS IN RESPECT O F THE SALES MADE TO THE ASSESSEE AND THAT HE HAD ACTUALLY NOT MADE ANY DELI VERY OF GOODS TO THE ASSESSEE-COMPANY. IN THE ASSESSMENT ORDER, THE STA TEMENTS RECORDED OF SUCH PERSONS HAVE BEEN EXHAUSTIVELY REFERRED TO. T HE ASSESSING OFFICER REFERRED TO THE STATEMENT OF ONE SHRI KRISHNAKUMAR GUPTA, DIRECTOR OF THREE OF THE AFORESAID COMPANIES, NAMELY, M/S FRESH O METAL PVT. LTD.; M/S UNIQUE FERRO METAL PVT. LTD; AND, M/S PRAKY MERCANT ILE PVT. LTD., 3 WHEREIN IT WAS ADMITTED THAT THE ACTIVITY OF TRADIN G IN STEEL WAS NOT CARRIED OUT BY THE SAID COMPANIES AND THAT THE ONLY ACTIVIT Y CARRIED OUT WAS OF CHEUQE DISCOUNTING WHEREBY CHEQUES WERE RECEIVED FR OM BENEFICIARIES AND CASH WAS RETURNED TO THEM AFTER DEDUCTING COMMI SSION. SIMILARLY, ASSESSING OFFICER REFERRED TO THE STATEMENT OF SHRI KIRTI SHAH, A PARTNER OF M/S MEGHNA ENTERPRISES WHEREIN IT IS STATED THAT TH E SAID FIRM DID NOT CARRY OUT ANY ACTUAL ACTIVITY IN TRADING OF STEEL B UT WAS CARRYING OUT CHEQUE DISCOUNTING ACTIVITIES WHEREBY CHEQUES WERE RECEIVED FROM THE BENEFICIARIES AND CASH WERE RETURNED BACK AFTER DED UCTING COMMISSION. THE ASSESSING OFFICER HAS ALSO REFERRED TO THE STAT EMENT OF ONE SHRI NARENDRAKUMAR TIMBADIA, WHO WAS PROPRIETOR OF TWO C ONCERNS, NAMELY, M/S NARENDRAKUMAR & CO. AND M/S R.D. JAIN & CO.. I N HIS STATEMENT, SHRI NARENDRAKUMAR TIMBADIA ADMITTED THAT HIS PROPR IETORY CONCERNS HAD ISSUED ACCOMMODATIONS BILLS TO THE ASSESSEE-COMPANY . THE STATEMENT OF THE TRANSPORTER, SHRI BHASKAR M. DARANDALE OF NEW A RC TRANSPORT HAS ALSO BEEN REFERRED TO WHEREIN THE SAID PERSON ADMIT TED THAT HE HAD ISSUED BOGUS LORRY RECEIPTS TO M/S M/S R.D. JAIN & CO. WIT HOUT ACTUAL DELIVERY OF ANY MATERIAL. 3. IN ADDITION TO THE STATEMENT OF THE AFORESAID SU PPLIERS OF STEEL AND THE TRANSPORTER, THE ASSESSING OFFICER HAS ALSO REF ERRED TO THE STATEMENTS OF THE EMPLOYEES OF THE ASSESSEE-COMPANY. IN THIS CONNECTION, REFERENCE HAS BEEN MADE TO THE STATEMENTS OF SHRI S.V. RANAWA RE, ASSTT. VICE PRESIDENT, ACCOUNTS AS WELL AS SHRI HEMANT Y. WADNE RKAR, SR. EXECUTIVE, PURCHASE. AS PER THE ASSESSING OFFICER, ABOVE TWO PERSONS ADMITTED THAT THE DELIVERY CHALLANS AND GOODS RECEIPT NOTE (GRN) WERE REQUIRED 4 BEFORE PASSING OF THE PURCHASE BILLS. THE ASSESSIN G OFFICER HAS CONTENDED THAT BOTH OF THEM ALSO ADMITTED THAT IN MANY CASES PURCHASE BILLS WERE PASSED WITHOUT VERIFYING THE DELIVERY CHALLANS AND GRNS. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH SUPPORTING DOCUMENTS IN THE FORM OF DELIVERY CHALLANS, GRNS, ETC. IN RESPECT OF THE PURCHASES MADE FROM THE ABOVE SIX PARTIES. IT HAS BEEN STATED BY THE ASSES SING OFFICER THAT THE ASSESSEE HAD FAILED TO PRODUCE THE REQUISITE SUPPOR TING DOCUMENTS. THE ASSESSING OFFICER HAS ALSO REFERRED TO THE STATEMEN T RECORDED OF SHRI RAJESH PATIL, CHAIRMAN & MANAGING DIRECTOR OF THE A SSESSEE-COMPANY IN THE COURSE OF SEARCH U/S 132(4) OF THE ACT DATED 30 .09.2008 AND BY REPRODUCING THE RELEVANT PORTION OF THE STATEMENT R ECORDED, ASSESSING OFFICER OBSERVED THAT ASSESSEE WAS NOT ABLE TO SUBS TANTIATE THE GENUINENESS OF THE PURCHASE OF STEEL EFFECTED FROM THE ABOVE SIX PARTIES. 4. APART FROM THE ABOVE SIX PARTIES, ASSESSING OFFI CER HAS OBSERVED THAT STEEL PURCHASES MADE FROM THE FOLLOWING FIVE P ARTIES, NAMELY, (I) VORA MERCANTILE PVT. LTD.; (II) M/S MAYOORA METAL TRADE CORPORATION; (III) YASH TRADING & CO.; (IV) M/S SHRI SURYA STEEL; AND, (V) M/S SATYAM STEEL WERE ALSO NOT SUPPORTED BY DELIVERY CHALLANS, GRNS, ETC. AND THEREFORE HE HELD THAT PURCHASES EFFECTED FROM THE ABOVE PARTIES WERE ALSO NOT GENUINE. 5. THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO SHOW-CAUSE AS TO WHY THE PURCHASES FROM THE AFORESAID 11 PARTIES BE NOT BE CONSIDERED AS BOGUS PURCHASES. THE ASSESSMENT ORDER REVEALS THAT THE CLAIM OF THE ASSESSEE WAS THAT THE PURCHASES WERE GENUINE AND ON E OF THE REASONS CANVASSED WAS THAT THE CONSUMPTION OF STEEL STOOD E STABLISHED. ACCORDING TO THE ASSESSEE, IF THE STEEL HAS BEEN CONSUMED, IT IS FAIR TO CONCLUDE THAT 5 THE PURCHASES OF STEEL WOULD HAVE BEEN EFFECTED. W ITH RESPECT TO THE SIX PARTIES WHOSE STATEMENTS WERE RECORDED U/S 131 OF T HE ACT, IT WAS CONTENDED BY THE ASSESSEE THAT NO PROPER OPPORTUNIT Y OF CROSS-EXAMINATION WAS ALLOWED BY THE DEPARTMENT. TO COUNTER THE ENQU IRIES CONDUCTED BY THE ASSESSING OFFICER, ASSESSEE ALSO OBTAINED AND F URNISHED AN AFFIDAVIT OF ONE OF THE SUPPLIERS, NAMELY, SHRI DEEPAK JAIN, PAR TNER OF SHRI SURYA STEEL WHEREIN HE CONFIRMED OF HAVING SUPPLIED STEEL TO TH E ASSESSEE. THE DETAILED REPLY OF THE ASSESSEE HAS INDEED BEEN REPR ODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 6. THE ASSESSING OFFICER AFTER CONSIDERING THE STAN D OF THE ASSESSEE AS WELL AS THE RESULT OF ENQUIRIES CONDUCTED BY HIM, D ISALLOWED PURCHASES EFFECTED FROM THE AFORESAID PARTIES IN DIFFERENT AS SESSMENT YEARS THE DETAILS OF WHICH ARE AS UNDER : ASST. YEAR AMOUNT 2003-04 75,330/- 2004-05 26,37,088/- 2005-06 5,62,271/- 2006-07 8,49,379/- 2007-08 16,083/- 2009-10 40,53,463/- 7. THE ASSESSING OFFICER HAS FURNISHED VARIOUS REAS ONS TO SUPPORT THE DISALLOWANCE. FIRSTLY, THE ASSESSING OFFICER HAS C ONTENDED THAT THE ASSESSEE WAS NOT ABLE TO FURNISH THE SUPPORTING DOC UMENTS VIZ. DELIVERY CHALLANS/GRNS, ETC. WITH REGARD TO THE PURCHASES EF FECTED FROM THE SAID 11 SUPPLIERS. SECONDLY, THE ASSESSING OFFICER HAS ALS O NOTED THAT ASSESSEE COULD NOT SUBMIT ANY INWARD REGISTER/STOCK REGISTER TO PROVE THAT THE MATERIAL WAS INDEED RECEIVED AT THE RESPECTIVE CONS TRUCTION SITES. THUS, AS PER THE ASSESSING OFFICER, ASSESSEE WAS NOT ABLE TO DEMONSTRATE THAT IT HAD 6 ACTUALLY RECEIVED DELIVERY OF STEEL IN RESPECT OF I MPUGNED PURCHASE. THIRDLY, THE ASSESSING OFFICER ALSO HELD THAT THE S IX PARTIES WERE NOT IN POSSESSION OF ANY TRANSPORT BILLS OR OCTROI RECEIPT S OR THE CHALLANS TO SUBSTANTIATE DELIVERY OF GOODS TO THE ASSESSEE. FO URTHLY, THE ASSESSING OFFICER ALSO REFERRED TO THE STATEMENTS OF SIX PART IES RECORDED U/S 131 OF THE ACT WHEREIN THEY HAD CATEGORICALLY DENIED HAVIN G SUPPLIED THE MATERIAL TO THE ASSESSEE. IN THIS CONTEXT, THE ASS ESSING OFFICER OBSERVED THAT THE SAID PARTIES CONFIRMED THAT THE BILLS ISSU ED BY THEM WERE MERE ACCOMMODATION ENTRIES WHEREBY CASH WAS RETURNED BAC K AFTER DEDUCTING THEIR DISCOUNTING/COMMISSION CHARGES. FIFTHLY, THE ASSESSING OFFICER ALSO REJECTED ASSESSEES PLEA THAT NO PROPER OPPORTUNITY OF CROSS-EXAMINATION WAS GRANTED WITH RESPECT TO THE SAID SIX PARTIES. IN THIS CONTEXT, THE ASSESSING OFFICER REFERRED TO THE STATEMENT OF SHRI RAJESH PATIL RECORDED ON 30.09.2008 WHEREIN HE WAS ALLOWED AN OPPORTUNITY TO CROSS-EXAMINE THE SIX PARTIES. IT HAS BEEN OBSERVED BY THE ASSES SING OFFICER THAT SHRI RAJESH PATIL DID NOT OPT FOR CROSS-EXAMINATION ON T HE GROUND THAT THE CFO OF ASSESSEE-COMPANY, SHRI LAKHE WAS OUT OF STATION. THE ASSESSING OFFICER NOTES IN THE ASSESSMENT ORDER THAT ANOTHER OPPORTUNITY OF CROSS- EXAMINATION WAS ALLOWED TO THE ASSESSEE IN THE COUR SE OF ASSESSMENT PROCEEDINGS ON 29.11.2010 BUT NONE OF THE PARTIES A PPEARED ON THAT DATE. CONSIDERING THE AFORESAID, THE ASSESSING OFFICER CO NTENDED THAT THE ASSESSEE WAS INDEED ALLOWED AN OPPORTUNITY TO CROSS -EXAMINE THE PARTIES BUT SINCE IT WAS REFUSED BY THE ASSESSEE AT THE TIM E OF SEARCH, IT CANNOT BE SAID THAT PROPER OPPORTUNITY HAS NOT BEEN ALLOWED T O THE ASSESSEE. SIXTHLY, THE WORKING SUBMITTED BY THE ASSESSEE SHOWING CONSU MPTION OF STEEL TO 7 JUSTIFY THAT PURCHASES IN-EFFECT WERE MADE, WAS ALS O REJECTED BY THE ASSESSING OFFICER. AS PER THE ASSESSING OFFICER, T HE SAID WORKING DOES NOT GIVE A CLEAR PICTURE BECAUSE MULTIPLE PROJECTS WERE GOING ON, WHICH WERE SPREAD OVER A NUMBER OF YEARS. THEREFORE, THE ANALYSIS GIVEN BY THE ASSESSEE WAS NOT AN OBJECTIVE ANALYSIS. FURTHER, A S PER THE ASSESSING OFFICER, THE ENQUIRIES AND INVESTIGATIONS CARRIED O UT IN THE POST-SEARCH PERIOD ESTABLISHED THAT THE CLAIMED PURCHASES OF ST EEL FROM THE SAID PARTIES WERE BOGUS AND THE PURCHASE BILLS WERE MERE ACCOMMO DATIONS ENTRIES. SEVENTHLY, RELIANCE WAS ALSO PLACED ON THE STATEMEN T OF SHRI BHASKAR MARUTI DARANDALE, PROP. OF NEW ARC TRANSPORT, WHERE BY HE ADMITTED THAT THE BOGUS BILLS WERE ISSUED AND NO MATERIAL WA S ACTUALLY TRANSPORTED. FURTHER, AS REGARDS THE AFFIDAVIT OF SHRI DEEPAK JA IN, PARTNER OF SHRI SURYA STEEL FURNISHED BY THE ASSESSEE, THE ASSESSING OFFI CER REJECTED THE SAME ON THE GROUND THAT ASSESSEE COULD NOT PRODUCE ANY S UPPORTING DOCUMENTS TO ESTABLISH THAT THE STEEL WAS ACTUALLY PURCHASED. THE ASSESSING OFFICER ALSO REFERRED TO THE PLEA RAISED BY THE ASSESSEE RE GARDING CERTAIN CONTRADICTIONS IN THE STATEMENT OF SHRI NARENDRAKUM AR TIMBODIA. THIS PLEA HAS BEEN REJECTED ON THE GROUND THAT SHRI NARE NDRAKUMAR TIMBODIA CLEARLY DEPOSED THAT HE WAS PROVIDING ACCOMMODATION /BOGUS BILLS FOR A PROFIT ON COMMISSION BASIS. 8. FOR ALL THE AFORESAID REASONS, THE ASSESSING OFF ICER HELD THAT THE SIX PARTIES WHOSE STATEMENTS WERE RECORDED U/S 131 OF T HE ACT HAD ACTUALLY NOT MADE ANY SUPPLY OF STEEL TO THE ASSESSEE AND TH EREFORE ASSESSEE HAD NOT EFFECTED THE PURCHASE OF STEEL, ETC. FROM SUCH PARTIES. NOW, WITH REGARD TO THE OTHER SET OF FIVE SUPPLIERS, ASSESSIN G OFFICER NOTED THAT SUCH 8 PURCHASES WERE NOT SUPPORTED BY THE BASIC SUPPORTIN G EVIDENCES LIKE GRN, TRANSPORT BILL, PAYMENT SLIP, OCTROI CHALLAN, DELIVERY CHALLAN, ETC.. THE PURCHASE FROM SUCH FIVE SUPPLIERS WERE ALSO HEL D TO BE BOGUS. THE AO ACCORDINGLY DISALLOWED AN AMOUNT OF RS.75,330/- FOR THE IMPUGNED ASSESSMENT YEAR ON ACCOUNT OF BOGUS PURCHASES. 9. IN APPEAL THE LD.CIT(A) DISCUSSED THE ISSUE AT P ARA 7 TO 7.14 OF HIS ORDER AND HELD THAT OUT OF THE TOTAL PURCHASES MADE BY THE ASSESSEE FROM 11 PARTIES 6 PARTIES ARE TO BE CONSIDERED AS BOGUS WHEREAS THE PURCHASES MADE FROM THE OTHER 5 PARTIES ARE TO BE CONSIDERED AS GENUINE. 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 11. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY REL IED ON THE ORDER OF THE AO. 12. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND WHILE SUPPORTING THE ORDER OF THE CIT(A) TO THE EXTENT OF GRANTING RELIEF DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING CHART GIVIN G DETAILS OF THE PURCHASES MADE BY THE ASSESSEE FROM VARIOUS PARTIES WHICH HAVE BEEN DISALLOWED BY THE AO TREATING THE SAME AS BOGUS : SR. NO. NAME OF PARTY A.Y. 2003 - 04 (RS.) A.Y. 2004 05 (RS.) A.Y. 2005-06 (RS.) A.Y. 2006- 07 (RS.) A.Y. 2007-08 (RS.) A.Y. 2008-09 (RS.) A.Y. 2009-10 (RS.) TOTAL PURCHASES FROM PARTIES DISALLOWED BY CIT 1 UNIQUE FERRO & METAL PVT. - - - - 27,01,362 . - 2 FRESHO METAL PVT. LTD. - - - - 15,67,160 7,06,314 - 3 PRAKY MERCANTILE PVT. LTD. - - - - 19,23,813 - - 4 MEGHA ENTERPRISES - - - - - - - 5 NARENDRA KUMAR & CO. - - - - - - - 6 R.D. JAIN & CO. - - - - 61,81,386 - - A SUB - TOTAL - - - - 1,23,73,721 7,06,314 - 1,30,80,035 9 PURCHASES FROM PARTIES ALLOWED BY CIT 7 VORA MERCANTILE PVT. LTD. - - - - - 5,45,400 - 8 YASH TRADING CO. - 4,26,027 - - - - - 9 SHREE SURYA STEEL - 14,34,594 5,62,271 8,49,379 16,083 6,51,016 29,72,985 10 MAYOORA METAL TRADE CORPORATION 75,330 7,76,467 - - - 7,68,408 10,80,118 11 SATYAM STEEL - - - - - - - B SUB - TOTAL 75,330 26,37,088 5,62,271 8,49,379 16,083 19,64,824 40,53,103 1,01,58,078 C TOTAL DISALLOWANCE (A + B) 75,330 26,37,088 5,62,271 8,49,379 1,23,89,804 26,71,138 40,53,103 2,32,38,113 HE SUBMITTED THAT SIMILAR DISALLOWANCE WAS ALSO MAD E IN THE CASE OF THE SISTER CONCERN M/S. KOLTE PATIL DEVELOPERS LTD., (K PDL IN SHORT). REFERRING TO THE ORDER OF THE TRIBUNAL IN THE CASE OF KPDL VS. DCIT AND VICE-VERSA VIDE ITA NOS.1411 TO 1415/PN/2013 AND 14 78 TO 1483/PN/2013 ORDER DATED 20-02-2015 FOR A.YRS. 2003 -04 TO 2009-10 THE TRIBUNAL HAS DECIDED THE ISSUE WHEREIN THE PURCHASE S MADE FROM 6 PARTIES ARE HELD TO BE BOGUS WHILE THE PURCHASES MADE FROM THE BALANCE PARTIES ARE HELD TO BE GENUINE. HE ACCORDINGLY SUBMITTED TH AT THE GROUND RAISED BY THE REVENUE SHOULD BE DISMISSED. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IDEN TICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF KPDL A SISTER CO NCERN OF THE ASSESSEE AND THE TRIBUNAL VIDE ORDER DATED 20-02-2015 HAS HE LD THAT PURCHASES FROM 6 PARTIES ARE BOGUS WHEREAS PURCHASES FROM 5 P ARTIES ARE GENUINE. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 23 TO 28 OF THE ORDER READS AS UNDER : 23. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN SUM AND SUBSTANCE, THE DISPUTE IS WITH REGARD TO THE PURCHASES CL AIMED TO HAVE BEEN EFFECTED BY THE ASSESSEE FROM THE AFORESAID 11 PART IES. THE CASE SETUP BY THE ASSESSING OFFICER IS THAT THE PURCHASE OF STEE L, ETC. MADE FROM 10 THE SAID 11 PARTIES WAS IN-GENUINE AND THEREFORE AN AM OUNT OF RS.7,75,34,092/- REPRESENTING PURCHASES EFFECTED FROM S UCH PARTIES HAS BEEN DISALLOWED WHILE COMPUTING THE TOTAL INCOME. T HE REASONS FOR THE ASSESSING OFFICER TO HOLD THE PURCHASES AS BOGUS HAVE BEEN DETAILED BY US IN THE EARLIER PART OF THIS ORDER AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. BE THAT AT IT MAY, IN OUR VIEW, THE PURCH ASES EFFECTED FROM SIX PARTIES STAND ON A DIFFERENT FOOTING THAN THE PURCHASE S EFFECTED FROM THE BALANCE FIVE PARTIES. THE POINT OF DISTINCTION IS THE MANNER AND THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER IN ORDER TO TREAT SUCH PURCHASES AS BOGUS. IN SO FAR AS THE PURCHASE FROM THE SI X PARTIES IS CONCERNED, THE SAME HAS BEEN HELD TO BE BOGUS BASED ON THE ENQUIRIES CONDUCTED BY THE DEPARTMENT IN THE POST-SEARCH PROCEE DINGS. STATEMENTS OF THE SIX PARTIES WERE RECORDED U/S 131 OF THE ACT, W HICH ELUCIDATED THAT ALL OF THEM DENIED OF HAVING MADE ACTUAL SUPPLY OF G OODS TO THE ASSESSEE. IN ONE OF THE CASES, THE ASSESSING OFFICER HAS ALSO REFERRE D TO THE STATEMENT RECORDED OF THE TRANSPORTER WHEREIN ALSO IT WAS CONFIR MED BY HIM THAT NO ACTUAL TRANSPORTATION OF GOODS WAS EFFECTED. THE AFOR ESAID ADVERSE MATERIAL OBTAINED BY THE REVENUE WAS PUT ACROSS TO THE ASSESSEE RIGHT FROM THE BEGINNING. IN THIS CONTEXT, IT WOULD ALSO B E RELEVANT TO OBSERVE THAT NEITHER THE SIX SUPPLIERS AND NOR THE ASSESSEE HAS BE EN ABLE TO PRODUCE ON RECORD EVEN THE PRIMARY EVIDENCE TO SHOW THE MOVEMENT OF GOODS FROM THEM TO THE ASSESSEE. FOR INSTANCE, NO DELIVE RY CHALLANS OR OCTROI RECEIPTS OR ANY OTHER FORM OF EVIDENCE OF DEL IVERY HAS BEEN BROUGHT OUT. THE PLEA OF THE ASSESSEE WAS THAT THE PAYMENTS HAVE BEEN MADE THROUGH CHEQUES AND THAT THE PURCHASES ARE EVIDENCED B Y THE BILLS RAISED BY THE SAID SUPPLIERS. ASSESSEE ALSO ASSERTED THAT CROSS-EX AMINATION OF THE SAID PARTIES WAS NOT ALLOWED TO THE ASSESSEE. 24. AS PER THE REVENUE, IN THE COURSE OF POST-SEARCH I NVESTIGATIONS ITSELF, SHRI RAJESH PATIL, CMD OF THE ASSESSEE-COMPANY WA S CONFRONTED ON THIS ASPECT AND WAS OFFERED CROSS-EXAMINATION OF THE SAI D PARTIES. IT APPEARS THAT THE ASSESSEE DID NOT AVAIL OF THIS OPPORTUN ITY AS THE CFO OF THE ASSESSEE-COMPANY WAS NOT PRESENT BECAUSE THE DAY-TO-D AY NITTY-GRITTY OF PURCHASES WAS NOT KNOWN TO THE CMD. EVEN IN THE CO URSE OF ASSESSMENT PROCEEDINGS, IT TRANSPIRES THAT THE ASSESSING OFFICER AL LOWED AN OPPORTUNITY OF CROSS-EXAMINATION BUT ON THE RELEVANT DATE AND TIME, THE SUPPLIERS DID NOT TURN-UP. BE THAT AS IT MAY, IN OUR CONSIDERED OPINION, CROSS-EXAMINATION OF THE SUPPLIERS WOULD BECOME MATERI AL ONLY WHEN THE ASSESSEE IS ABLE TO DEMONSTRATE WITH CERTAIN PRIMARY EVID ENCE THAT THE STATEMENTS GIVEN BY THE SUPPLIERS ARE WRONG OR THAT T HEY DO NOT REFLECT THE CORRECT STATE OF AFFAIRS. IN THIS CONTEXT, ASSESSEE HAS M ERELY REFERRED TO THE PURCHASE BILLS ISSUED BY THE SUPPLIERS AND THE CHEQUE PAY MENTS MADE. SO HOWEVER, THERE IS NO OTHER EVIDENCE, NAMELY, GRNS, OC TROI RECEIPTS, DELIVERY CHALLANS, ETC. WHICH WOULD SHOW THAT THE SUPP LIES WERE INDEED MADE. THEREFORE, IN SUCH A SITUATION, CAN THE ABSENCE OF CROSS-EXAMINATION BE FATAL TO THE ADDITION IN QUESTION ?, ESPECIALLY WH EN AT THE INITIAL STAGE, AN OPPORTUNITY OF CROSS-EXAMINATION WAS INDEED ALLOWED, WHICH COULD NOT BE AVAILED FOR THE REASONS WE HAVE ALREADY STATED ABOVE. IN OUR VIEW, THE RIGHT OF CROSS-EXAMINATION IS NOT AUTOMATIC, BUT IT W OULD BE INCUMBENT ONLY IN A SITUATION WHERE THE ASSESSEE IS ABLE TO PRIMA- FACIE DEMONSTRATE THAT THE ONUS CAST ON HIM TO ESTABLISH HIS VERSION OF AFF AIRS IS BASED ON PRIMARY EVIDENCE. IN THIS CASE, THE ASSESSEE HAD FAILED TO LEAD ANY PRIMARY EVIDENCE, VIZ. GRNS, OCTROI RECEIPTS, DELIVERY CHALLA NS, ETC. WHICH WOULD SHOW THAT THE SUPPLIES WERE INDEED MADE. 11 25. NOW, THE ASSESSEE HAS ALSO REFERRED TO AN AFFIDAVIT O F SHRI NARENDRAKUMAR TIMBODIA, PROP. OF NARENDRAKUMA & CO. AND PARTNER OF R.D. JAIN & CO., WHEREIN HE CONFIRMED THAT THE PURC HASES MADE BY THE ASSESSEE FROM HIM WERE GENUINE. THIS AFFIDAVIT WAS OBTAI NED BY THE ASSESSEE ONLY AFTER THE COMPLETION OF ASSESSMENT PROCEEDING S AND WAS SUBMITTED TO THE CIT(A). THE CIT(A) HAS ADMITTED SUC H ADDITIONAL EVIDENCE AND ON THAT THERE IS NO DISPUTE. HOWEVER, H E HAS NOT ACCEPTED THE AVERMENTS MADE THEREIN. WE HAVE ALSO PERUSED THE COPY OF SUCH AFFIDAVIT, A COPY OF WHICH HAS BEEN PLACED IN PAPER BOOK. IN THIS CONNECTION, WE HAVE ALSO PERUSED THE STATEMENT OF SHRI NARENDRAKUMAR TIMBODIA RECORDED U/S 131 OF THE ACT ON 15.09.2008, WHOSE RELEVANT PORTION HAS BEEN EXTRACTED IN THE ASSESSMENT ORDER ITSELF . IN HIS DEPOSITION, HE HAS CATEGORICALLY CONFESSED THAT THERE I S NO ACTUAL SUPPLY OF GOODS TO THE ASSESSEE AND HE EXPLAINED THAT IN ORDER TO GIVE A COLOUR OF GENUINENESS TO THE SALE BILLS, THEY HAVE PREPARED THE L ORRY RECEIPT OF M/S NEW ARC TRANSPORT SHOWING TRANSPORTATION OF GOODS TO TH E ASSESSEE. THE AFORESAID AVERMENT OF THE SAID PERSON MADE IN THE COUR SE OF POST-SEARCH ENQUIRIES STOOD CORROBORATED BY THE STATEMENT DEPOSED B Y THE TRANSPORTER, M/S NEW ARC TRANSPORT. IN CONTRAST, THE A FFIDAVIT FURNISHED IN THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) DOES NOT DEAL WITH THE ABOVE CIRCUMSTANCE AND IT DOES NOT EVEN EXP LAIN THE REASONS FOR RETRACTION OF HIS STATEMENT, AND IN ANY CASE, THE RET RACTION IS UNCORROBORATED. IN-FACT, THE STATEMENT MADE BY HIM IN THE COURSE OF POST- SEARCH ENQUIRIES STANDS CORROBORATED BY THE STATEMENT OF THE TRANSPORTER WHEREAS THERE IS NO SUCH CORROBORATION TO HIS AVERMENT S MADE IN THE AFFIDAVIT FURNISHED BEFORE THE CIT(A). UNDER THESE C IRCUMSTANCES, IN OUR VIEW, THE ORIGINAL ADMISSION OF THE SAID PERSON MADE AT THE TIME OF POST- SEARCH ENQUIRIES WOULD HOLD THE FIELD. THUS, ON THIS A SPECT ALSO, WE FIND THAT THE CIT(A) MADE NO MISTAKE. THEREFORE, ON THE ASPECT OF THE PURCHASES EFFECTED FROM THE SIX PARTIES WITH WHOM ENQU IRIES WERE CONDUCTED DURING POST-SEARCH PERIOD, THE CIT(A) JUSTIF IABLY HELD SUCH PURCHASES AS BOGUS. WE HEREBY AFFIRM HIS ACTION, AND ASSE SSEE FAILS ON THIS ASPECT. 26. BEFORE PARTING ON THIS ISSUE, WE MAY ALSO TOUCH-UP ON AN ALTERNATE PLEA RAISED BY THE ASSESSEE WITH REGARD TO THE QUANTUM OF ADDITION ON THIS COUNT. IN THIS CONTEXT, ASSESSEE POINTED OUT THAT IF TH E ENTIRE AMOUNT OF PURCHASE DEBITED IN THE PROFIT & LOSS ACCOUNT WITH RESP ECT TO THE SIX PARTIES IS DISALLOWED, IT WOULD MEAN THAT THE CORRESPON DING CONSUMPTION OF STEEL HAS NOT TAKEN PLACE IN QUANTITATIVE TERMS. B EFORE THE LOWER AUTHORITIES, ASSESSEE HAD FURNISHED A WORKING, WHICH WAS CONFIRMED BY A STRUCTURAL ENGINEER REGARDING THE MINIMUM REQUIREMEN T OF STEEL IN THE PROJECTS UNDERTAKEN BY THE ASSESSEE. AS PER THE SAID WOR KING, IF THE AFORESAID DISPUTED QUANTITY OF STEEL PURCHASE WAS EXCLUD ED, IT WOULD SHOW THAT THE CONSUMED QUANTITY OF STEEL WAS LOWER THAN THE MINIMUM REQUIRED TO UNDERTAKE CONSTRUCTION. THEREFORE, ACCORDING TO THE ASSESSEE, THE ONLY PRESUMPTION THAT CAN BE WITHDRAWN IS THAT ASSESSEE HAD IN DEED EFFECTED THE PURCHASES. IT WAS POINTED OUT THAT ON THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE THE PURCHASES, AT BEST, THE ADDITION CAN BE MADE WITH RESPECT TO THE GROSS PROFIT ELEMENT CORRESPONDING TO THE AMOUN T OF PURCHASES BUT NOT THE ENTIRE AMOUNT OF PURCHASE BILLS. THE RELIANC E HAS ALSO BEEN PLACED ON CERTAIN DECISIONS IN THIS REGARD, WHICH WE HAVE NOT ED IN EARLIER PARAS. 27. WE HAVE CAREFULLY CONSIDERED THE AFORESAID ALTERN ATE PLEA OF THE ASSESSEE BUT FIND OURSELVES UNABLE TO ACCEPT THE SAME, HA VING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE PR OPOSITION BEING RELIED UPON BY THE ASSESSEE ON THE STRENGTH OF THE DECISI ONS OF THE HONBLE 12 GUJARAT HIGH COURT NOTED EARLIER IS NOT DISPUTED. B UT THE MOOT QUESTION IS AS TO WHETHER THE POSITION CANVASSED BY THE ASSESSEE THAT T HE QUANTITY OF STEEL CORRESPONDING TO THE IMPUGNED PURCHASES HAS BEEN C ONSUMED STANDS ESTABLISHED OR NOT ? THE CONFIRMATION OF THE STR UCTURAL ENGINEER, A COPY OF WHICH HAS BEEN PLACED IN PAPER BOOK AT PAGE 79 DOES NOT ELABORATE AS TO THE TIME PERIOD IN WHICH THE CONSUMPT ION OF STEEL HAS TAKEN PLACE. MOREOVER, AT THE RELEVANT POINT OF TI ME, MULTIPLE PROJECTS OF THE ASSESSEE WERE UNDER CONSTRUCTION AND THERE IS NO MATE RIAL TO CO-RELATE AS TO WHETHER AT THE TIME WHEN THE IMPUGNED PURCHASES WERE EFFECTED ANY PROJECTS WERE BEING CARRIED OUT. THEREFORE, THE RAT IO OF THE JUDGEMENTS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF (I) BH OLANATH POLY FAB PVT. LTD. (SUPRA); AND, (II) SANJAY OILCAKE INDUSTRIES (SUPR A) CANNOT BE APPLIED IN THE PRESENT CASE. THEREFORE, THE ACTION OF THE C IT(A) IN HOLDING THE PURCHASES EFFECTED FROM SIX PARTIES AS BOGUS IS AFFIRMED. 28. NOW, WE MAY DEAL WITH THE DECISION OF THE CIT(A) WHEREBY THE PURCHASES MADE FROM FIVE PARTIES HAVE BEEN ACCEPTED. IN THIS CONTEXT, WE FIND THAT THE ASSESSING OFFICER DID NOT CARRY OUT ANY T HIRD PARTY VERIFICATION AS HE HAD UNDERTAKEN WITH RESPECT TO THE SIX PARTIES DISCUSSED EARLIER. THE FIVE PARTIES I.E. (I) VORA MERCANTILE PVT. LTD.; (II) M/S MAYOORA METAL TRADE CORPORATION; (III) YASH TRADING & CO.; ( IV) M/S SHRI SURYA STEEL; AND, (V) M/S SATYAM STEEL WERE NOT PUT THROUG H ANY ENQUIRY OR VERIFICATION BY THE ASSESSING OFFICER. IT WAS ONLY ON THE BASIS OF THE DOCUMENTS PUT-FORTH BY THE ASSESSEE THAT PURCHASES FROM TH E SAID PARTIES HAVE BEEN HELD TO BE BOGUS. NOTABLY, ASSESSEE HAD FURNI SHED THE INVOICES RAISED BY THE SAID PARTIES AND HAD ALSO EXPLAINED THAT ALL THE PAYMENTS WERE MADE BY THE CHEQUES. ASSESSEE HAD ALSO FURNISHED THE IR SALES-TAX NUMBERS. WITH RESPECT TO THE TRANSPORTATION, ASSESSEE HAD EXPLAINED THAT THE RESPONSIBILITY OF TRANSPORTATION WAS OF THE SUPPLIER AND THEREFORE ASSESSEE COULD NOT PRODUCE THE TRANSPORT RECEIPTS. THE E XPLANATIONS PUT- FORTH BY THE ASSESSEE WERE NOT SUBJECT TO ANY ENQUIRY OR VERIFICATION BY THE ASSESSING OFFICER BUT HAVE BEEN MERELY DISBELIEVED. THE ASSESSING OFFICER, IN OUR VIEW, WAS INFLUENCED BY THE OUTCOME OF ENQUIR IES MADE WITH RESPECT TO THE OTHER SIX PARTIES. HOWEVER, IN THE ABSE NCE OF ANY MATERIAL ON RECORD TO NEGATE THE POSITION CANVASSED BY THE ASSESSEE WITH RESPECT TO THE SAID FIVE PARTIES, THE EXPLANATION OF THE ASSESSEE CO ULD NOT BE DISBELIEVED. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, T HE CIT(A) MADE NO MISTAKE IN DELETING THE ADDITION WITH RESPECT TO THE AFORESAID FIVE PARTIES. AS A CONSEQUENCE, ON THIS ASPECT REVENUE FAILS. 13.1 FACTS BEING SIMILAR, THEREFORE, RESPECTFULLY F OLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF THE SISTER CONCERN KPDL AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIBUNAL WE UPHOLD THE ORDER OF LD.CIT(A) ON THIS ISSUE. TH E GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 13.2 IDENTICAL GROUND (GROUND NO.1) HAS BEEN TAKEN BY THE REVENUE IN THE APPEALS FILED IN A.YRS. 2004-05 TO 2007-08 AND A.Y. 2009-10. 13 FOLLOWING THE SAME REASONING, THE GROUND RAISED BY THE REVENUE ON ACCOUNT OF BOGUS PURCHASES IN ALL THESE YEARS ARE A LSO DISMISSED. 14. GROUNDS OF APPEAL NO.2 AND 3 BY THE REVENUE ARE AS UNDER : 2) THE LD. CIT(A) HAS ERRED IN HOLDING THAT CONSTRUC TION OF BUILDINGS G, H & I ON VACANT LAND OF MAESTRO PROJECT BY ANKIT ENTER PRISES IS NEW ONE, HENCE, MAESTRO PROJECT WHICH WAS ALREADY DEVELOPED BY KOLTE PATIL DEVELOPERS LTD. (KPDL) AND APPROVED ON 29.09.1992 DO ESN'T DEBAR THE ASSESSEE FROM CLAIMING DEDUCTION U/S 80IB(10). 3) THE LD. CIT(A.) HAS ERRED IN HOLDING THAT ALTHOUG H COMMENCEMENT CERTIFICATE WAS GRANTED BY LOCAL AUTHORITY TO KOLTE PATIL DEVELOPERS LTD. (KPDL) ON 20.08.1998 BUT AS THE SAME IS TRANSFERRED TO M/S ANKIT ENTERPRISES AND THE ASSESSEE REAPPLIED FOR COMMENCEMENT CERTIFICATE AND COMMENCEMENT CERTIFICATE WAS ISSUED BY LOCAL AUTHORITY ON 06.05.1999, HENCE ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT . 14.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSE SSEE FIRM IS A DEVELOPER AND BUILDER AND HAD UNDERTAKEN FEW RESIDENTIAL PROJ ECTS AT PUNE IN RESPECT OF WHICH IT CLAIMED DEDUCTION U/S.80IB(10). DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.2,52,93,033/- U/S.80IB(10) IN RESPECT OF THE FOLLOWING 3 PROJECTS : 1. MAESTRO - 1,62,44,904/- 2. MISTY MOOR - 8,90,022/- 3. FLORIANA ESTATE - 81,58,107/- ----------------------- 2,52,93,033/- ----------------------- 14.2 THE AO DISALLOWED THE CLAIM OF DEDUCTION U/S.8 0IB(10) IN THE 153A PROCEEDINGS FOR THE AFORESAID 3 PROJECTS FOR T HE FOLLOWING REASONS : I. MAESTROS : I. PROJECT COMMENCED ON 29-09-2005, I.E. BEFORE TH E REQUIRED DATE OF 01-10-98. II. CERTAIN RESIDENTIAL UNITS ARE HAVING AREA OF MORE THAN 1500 SQ.FT. WHICH IS MORE THAN THE THRESHOLD LIMITS PRESCRIBED U/S.8 0IB(10)(C). 14 II. MISTY MOOR : I. THE PROJECT COMMENCED ON 10-08-98 WELL BEFORE TH E REQUIRED DATE OF 01-10-98. III FLORIANA ESTATE : I. COMMERCIAL SPACE IN THE PROJECT IS MORE THAN 2000 SQ.FT. AND 5% OF THE TOTAL BUILT UP ARES. II. CERTAIN RESIDENTIAL UNITS ARE HAVING AREA OF MORE THAN 1500 SQ.FT. WHICH IS MORE THAN THE THRESHOLD LIMITS PRESCRIBED U/S.8 0IB(10)(C). 15. IN APPEAL THE LD.CIT(A) ALLOWED THE CLAIM OF DE DUCTION U/S.80IB(10) IN RESPECT OF ALL THE 3 PROJECTS. WHI LE DOING SO, HE NOTED THAT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS IN THE O RDER PASSED U/S.143(3) DATED 28-03-2006 THE THEN AO HAD ALSO DISALLOWED TH E CLAIM OF DEDUCTION U/S.80IB(10) UNDER IDENTICAL FACTS AND CIRCUMSTANCE S. IN APPEAL THE THEN LD.CIT(A) ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(1 0) IN RESPECT OF THE PROJECTS MAESTRO AND MISTY MOOR WHEREAS HE DISALLOW ED THE CLAIM OF DEDUCTION U/S.80IB(10) WITH RESPECT TO THE PROJECT FLORIANA ESTATE. IN APPEAL FILED BY THE ASSESSEE AS WELL AS THE REVENUE FOR THE IMPUGNED ASSESSMENT YEAR THE TRIBUNAL VIDE CONSOLIDATED ORDE R DATED 25-06-2012 DISMISSED THE APPEAL FILED BY THE REVENUE AND ALLOW ED THE APPEAL FILED BY THE ASSESSEE THEREBY ALLOWING THE CLAIM OF DEDUCTIO N U/S.80IB(10) IN RESPECT OF ALL THE 3 PROJECTS. 16. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 17. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. SO FAR AS TH E DISALLOWANCE OF 15 DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECT MA ESTRO IS CONCERNED, WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2 001-02 TO 2003-04 VIDE ORDER DATED 25-06-2012 HAS DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 7 TO 14 OF THE ORDER READS AS UNDER: 7. WE FIND THAT THE FACTS OF THE PRESENT CASE BEFOR E US ARE ON BETTER FOOTING THAN THE CASE OF VANDANA PROPERTIES VS. DCIT ( SUPRA) AS IN THE PRESENT CASE, ADMITTEDLY, THE LAND ON WHICH THE ASSESSEE HAS CONSTRUCTED THE BUILDINGS G, H AND I WAS SHOWN LYING VACANT IN THE ORIGINAL PLAN GOT APPROVAL BY THE KPDL AND ASSESSEE HAD OBTAINED COMMENCE MENT CERTIFICATE FOR CONSTRUCTION OF THOSE BUILDING FROM T HE LOCAL AUTHORITY ON 16.12.1998. THE ASSESSEE HAD SUBMITTED THE BUILDING PLAN TO THE MUNICIPAL AUTHORITY ON 13.11.98 ON WHICH THEY GOT THE COMMENC EMENT CERTIFICATE ISSUED ON 16.12.1998 AND THEREAFTER THE CONSTRUCTION O F THE BUILDING STARTED GOT COMPLETED ON 26.3.2003 AS PER THE COMPLET ION CERTIFICATE. THUS, IN VIEW OF THE AFORECITED DECISION OF HON'BLE B OMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES VS. DCIT (SUPRA) THE AP PROVAL OF THE PLAN SUBMITTED BY KPDL FOR THE CONSTRUCTION OF BUILDINGS B, C, F), E AND F ON 29 TH SEP, 1995 IS NOT GOING TO EFFECT THE BUILDING PLAN CONSISTING BUILDINGS G, H AND I APPROVED AND COMMENCED BY THE ASSESSEE AS PER THE COMMENCEMENT CERTIFICATE ISSUE ON 16.12.98. IN OTHER WORDS THE DATE 29.9.95 ON WHICH THE KPDL HAD TAKEN APPROVAL FOR TH E CONSTRUCTION OF THE BUILDINGS B, C, D, E AND F CANNOT BE TAKEN AS FIRST DA TE OF APPROVAL IN THE CASE OF ASSESSEE FOR CONSTRUCTION OF THE BUILDINGS G, H AN D I ON THE VACANT LAND OF THE PROJECT COMMENCED ON 16.12.98 AS PER THE COMMENCEMENT CERTIFICATE ISSUED BY THE MUNICIPAL AUTHORITY ON THE BUILDING PLAN SUBMITTED BY THE ASSESSEE ON 13.11.98, TO DENY THE CLAIM ED DEDUCTION IN VIEW OF EXPLANATION TO SECTION 80IB(10)(A) OF THE A CT. IN THESE CIRCUMSTANCES, WE DO NOT FIND SUBSTANCE IN THE CONTENTI ON OF THE LD. DR THAT THE PROJECT WAS NOT DEVELOPED BY THE ASSESSEE BUT B Y KPDL. HIS CONTENTIONS REMAINED THAT AS PER RULE 2.23 OF DEVELO PMENT CONTROLLED RULES (IN SHORT DC RULES), THE MOMENT LAY OUT IS APPROV ED, DEVELOPMENT STARTS. THUS IN THE PRESENT, CASE AS PER THE LD. DR DEVEL OPMENT OF THE PROJECT STARTED ON 29.9.95 WHEN THE LAY OUT WAS FIRSTL Y-APPROVED. HE CONTENDED THAT UNDER U/S.80IB(10) OF THE ACT BOTH DE VELOPMENT AND CONSTRUCTION ARE REQUIRED TO BE SEEN TO COMPUTE THE D ATE OF COMMENCEMENT AND COMPLETION OF THE PROJECT. HE SUBMI TTED THAT TRANSFER ONLY SHIFTS THE OWNERSHIP OF THE LAND BUT THE DATE OF COMMENCEMENT OF THE PROJECT ON THE LAND WILL REMAIN THE SAME. LD. DR REF ERRED PAGE NO. 2 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE AND SUBMITTED THAT IT IS REVISED LAYOUT OF THE BUILDING. HE SUBMITTED THAT TO VERIFY THE DATE OF COMMENCEMENT OF THE PROJECT THE SURVEY WAS CARRIED OU T AT THE PREMISES OF THE ASSESSEE. IN THAT SURVEY STATEMENT OF PARTNER OF T HE ASSESSEE FIRM WAS RECORDED AS PER WHICH THE PROJECT WAS STARTED ON 2 9.9.95. IN THIS REGARD HE REFERRED PAGE NO, 3 TO 5 OF THE ASSESSMENT OR DER WHEREIN RELEVANT STATEMENT OF THE PARTNER IN QUESTION ANSWER F ORM HAS BEEN REPRODUCED. 16 8. WE DO NOT FIND SUBSTANCE IN THE ABOVE CONTENTION OF THE LD. DR SINCE ADMITTEDLY IN THE PRESENT CASE THE LAND ON WHICH ASSESSE E HAS CONSTRUCTED BUILDINGS G, H AND I HAS BEEN SHOWN VACANT IN THE LAY OUT PLAN, A COPY WHEREOF HAS BEEN MADE AVAILABLE AT PAGE NO. 2 OF THE PAPER BOOK. THE SAID VACANT LAND WAS TRANSFERRED BY KPDL TO THE ASSESSEE AND ASSESSEE GOT THE BUILDING PLAN TO CONSTRUCT BUILDING NOS. G, H AND I A PPROVED BY THE LOCAL AUTHORITY ON 16.12.98 AS IT IS EVIDENT FROM THE COMME NCEMENT CERTIFICATE DATED 16.12.1998 ISSUED BY THE PUNE MUNICIPAL CORPORA TION (PMC) COPY MADE AVAILABLE AT PAGE NO. 1 OF THE PAPER BOOK. VID E EXPLANATION (I) TO SECTION 80IB(10)(A) IT HAS BEEN MADE CLEAR THAT FOR COMPUTATION OF THE PRESCRIBED TIME LIMIT THE STARTING DATE WILL BE THE FIRST APPROVAL OF THE BUILDING PLAN OF THE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY. FOR A READY REFERENCE THE SAID EXPLANATION (I) IS BEING REP RODUCED HERE UNDER : 'EXPLANATION.-FOR THE PURPOSE OF THIS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE H OUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLA N OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY.' 9. THUS IT IS CLEAR FROM THE ABOVE REPRODUCED EXPL ANATION THAT HOUSING PROJECT' AND 'BUILDING PLAN' OF SUCH HOUSING PROJECT ARE TWO DIFFERENT TERMINOLOGIES. FOR THE PURPOSE OF COMPUTATION OF THE PRESCRIBED TIME LIMIT FOR COMPLETION OF THE CONSTRUCTION OF THE HOUSING PRO JECT, THE FIRST DATE WOULD BE THE FIRST APPROVAL OF THE BUILDING PLAN WHI CH IN THE PRESENT CASE IS 16.12.1998. IN THE CASE OF DCIT VS. ADITYA DEVELOPE RS (SUPRA) THE PUNE BENCH HAS OCCASION TO DELIBERATE ON THE ISSUE. IT HAS BE EN HELD THEREIN THAT THE LAY OUT PLAN IS ONLY CONCEPTUAL AND CONSTRUCTION COMMENCES SUBSEQUENTLY WHEN THE ASSESSEE SUBMITS THE CONSTRUC TION PLAN WHICH ARE APPROVED BY THE AUTHORITY THUS IT IS CLEAR THAT APPROVAL OF BUILDING PLANS BY THE LOCAL AUTHORITY ALONG WITH CO MMENCEMENT CERTIFICATE IS THE RELEVANT DATE TO COMPUTE THE DAT E OF COMMENCEMENT OF THE CONSTRUCTION ON THE BUILDING PLAN. UNDISPUTE DLY, THE FIRST APPROVAL OF THE BUILDING PLAN FOR BUILDINGS G, H AN D I BY THE LOCAL AUTHORITY IN THE CASE OF THE ASSESSEE IS 16.12.98 A S PER THE ABOVE CITED DECISIONS. WE THEREFORE, HOLD AS SUCH. THE FIRST AP PELLATE ORDER IN THIS REGARD IS THUS UPHELD. 10. THE SECOND OBJECTION FOR DISALLOWANCE OF THE CL AIMED DEDUCTION IN RESPECT OF MAESTRO PROJECT BY THE A.O. WAS THAT SOM E FLATS DESIGNATED AS A & B FOR EXAMPLE 603A AND 603B WERE COMBINED BY TW O FLATS CONTIGUOUSLY LOCATED BY WAY OF HAVING SINGLE ELECTR ICITY METER, SINGLE MAIN DOOR ENTRANCE A SINGLE FAMILY RESIDING, ETC. R EPRESENTING A SINGLE UNIT IN REALITY. THE A.O. INFERRED THAT ALLEGED TWO FLATS REGISTERED SEPARATELY WITH TWO DIFFERENT INDIVIDUALS OR GROUP OF INDIVIDUALS REPRESENT A SINGLE RESIDENTIAL UNIT TO BE TAKEN TOG ETHER FOR CALCULATING BUILD UP AREA FOR THE PURPOSE OF APPLYING THE THRES HOLD LIMIT OF MAXIMUM AREA OF 1500 SQ. FT. AS CONTEMPLATED IN SEC TION 80IB(10) OF THE ACT IN G, H AND I BUILDINGS OF MAESTRO PROJECT AS A NEW UNDERTAKING. THE A.O. WHILE CALCULATING THE BUILD UP AREA OF THO SE UNIT/FLATS INCLUDED THE AREA COVERED BY THE BALCONY OR ANY OTHER BASED ON THE INTERPRETATION OF PUNE DC RULES. THE A.O. ALSO DERI VED STRENGTH TO CALCULATE THE BUILD UP AREA AS PER NEW DEFINITION O F 'BUILD UP AREA' IN SECTION 80IB(14) INSERTED W.E.F. 1.4.2005 TAKING THE AMENDMENT APPLICABLE RETROSPECTIVELY. THUS THE A.O. FOUND THA T BASED ON THE ABOVE, THE BUILD UP AREA OF SOME UNIT /FLATS OF MAE STRO HAS EXCEEDED 17 THE THRESHOLD LIMIT OF 1500 SQ. FT. WHICH DISQUALIF IED THE ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 11. THE ASSESSEE CONTENDED THE ABOVE FINDING OF THE A.O. ON THE BASIS THAT ABOVE STATED FLATS HAD BEEN SHOWN SEPARATELY IN THE APPRO VED PLAN AND THEY HAVE BEEN REGISTERED SEPARATELY, THUS, THEY CANNOT BE COMBINED TOGETHER TO CONSTITUTE A SINGLE RESIDENTIAL U NIT FOR THE PURPOSE OF CALCULATING THRESHOLD LIMIT OF BUILD UP AREA FOR THE PU RPOSE OF SECTION 80IB(10) AND FURTHER THAT DESPITE COMBINING THE TWO ADJAC ENT FLATS ALSO THE BUILD UP AREA OF THE UNIT/FLATS HAS NOT CROSSED THE LIMIT OF 1500 SQ.FT. AS PER BUILD UP AREA COMPUTED IN ACCORDANCE WITH PUNE D C RULES. IT WAS CONTENDED THAT THE A.O. HAS WRONGLY CALCULATED THE BUILD U P AREA TAKING THE BALCONY/TERRACE AREA AS A PART OF BUILD UP AREA WHICH IS NOT PERMITTED BY THE PUNE DC RULES. THE LD, CIT (A) DID NO T AGREE WITH THESE CONTENTIONS OF THE ASSESSEE AND HAS UPHELD THE ACTION OF THE A.O. TO THIS EXTENT WITH THIS OBSERVATION THAT IN A RESI DENTIAL UNIT IS TO BE NECESSARILY TAKEN THE AREA WHICH HAS BEEN MADE FOR ONE FAMILY. THE ASSESSEE IN ITS CROSS OBJECTION HAS OBJECTED THIS F INDING OF THE LD. CIT(A). THE LD.CIT(A) HAS HOWEVER, AGREED WITH THE ALTERNATIVE SUBMISSION OF THE ASSESSEE THAT EVEN AFTER INCLUSIO N OF TWO ADJACENT FLATS, NOWHERE IN ANY RESIDENTIAL UNIT, THE BUILD U P AREA HAS CROSSED 1500 SQ.FT. IF THE AREA OF BALCONY/TERRACE IS EXCLU DED AS PER PUNE DC RULES. 12. THE SUBMISSION OF THE LD. DR REMAINED THAT THE DC RULES NEED TO BE READ IN ITS TOTALITY. AS PER HIM 'BUILT UP AREA' AS DEFINED IN RULE 2.14 OF THE DC RULES IS COVERED AREA IMMEDIATELY AB OVE THE PLINTH LEVEL BY THE BUILDING OR EXTERNAL AREA OF ANY UPPER FLOOR WHICHEVER IS MORE EXCEPT THE AREA COVERED BY RULE 15.4.2. HE SUB MITTED FURTHER THAT BUILDUP AREA HAS BEEN DEFINED IN THE DC RULES FOR THE PURPOSE OF COMPUTING FSI OF THE PROJECT. THUS BALCONY WILL BE PART OF THE BUILD UP AREA BUT WILL BE EXCLUDED FOR FSI PURPOSE. HE SUBMITTED THAT 'BUILT' UP AREA' SHOULD BE CALCULATED AS PER CIVIL ENGINEERING AND ARCHITECT. LD. DR PLACED RELIANCE ON THE DECISION OF THIRD MEMBER BE NCH OF THE TRIBUNAL IN THE CASE OF SANGHVI AND DOSHI ENTERPRISE VS. ITO (2011) 60 DTR (CHENNAI) (TM) 306 AS PER WHICH TERRACE ADJOINING A FL AT WHICH IS ACCESSIBLE ONLY FROM THE FLAT AND IS MEANT FOR THE EXCLUS IVE USE OF THE OCCUPANT OF THE FLAT IS TO BE CONSIDERED AS PART OF BU ILT UP AREA OF 1500 SQ.FT. OF THE FLAT FOR THE PURPOSE OF ASCERTAINING ITS ELIGIBILITY FOR DEDUCTION UNDER SECTION 80 IB (10) OF THE ACT. 13. THE LD. AR ON THE OTHER HAND HAS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED THAT THE D EFINITION 'BUILD UP AREA' HAS BEEN INTRODUCED VIDE SUB-SECTION (14) TO SEC TION 80IB W.E.F. 1.4.2005, HENCE IT HAS NO RETROSPECTIVE EFFECT TO APP LY THE SAME IN THE CASE OF ASSESSEE FOR THE A. Y. .2003-04. HE SUBMITTED FURTHER THAT IN ABSENCE OF SUCH DEFINITION IN THE PROVISIONS OF THE IT ACT THE DC RULES AVAILABLE WITH THE PMC WILL BE APPLICABLE. THE LD. AR ALSO REFERRED PAGE NOS. 28 AND 29 OF THE PAPER BOOK I.E. VALUATION REPORT FROM THE AVO I N RESPONSE TO THE REFERENCE MADE IN THIS REGARD BY THE A.O. WHEREIN TH E AVO HAS MENTIONED THAT BALCONIES, STAIRCASE, COMMON LOBBY LIFT ROOM, AS PER DC RULES ARE NOT TO BE INCLUDED BUT HAS BEEN ACTUALLY INCLUDED WHILE COMPUTING THE BUILT UP ARE OF THE FLAT. HE SUBMITTED THAT IF AREA OF 162 SQ. FT. OF BALCONY IS EXCLUDED THE AREA OF TWO ADJOINING FLATS WOULD BE BELOW 1500 SQ.FT.. THE LD. AR SUBMITTED FURTHER THAT THE A.O. HAS WRONGLY CALCULATE D THE BUILD UP AREA AT 1516 SQ.FT. IN RESPECT OF FLAT NO. 401-A / B WHEREAS T HE AVO HAD ALREADY INCLUDED THE AREA OF TERRACE OF 142 SQ.FT. AND BALCO NY OF 56 SQ.FT. AND ARRIVED AT A TOTAL BUILT UP AREA OF THE SAID FLAT NO . 401-A / 13 ONLY AT 1354 18 SQ.FT.. HE SUBMITTED THAT THE DIFFERENCE IN INCLUSIONS BETWEEN ASSESSEE'S ARCHITECT AND THE AVO IS ONLY THAT THE DEPARTMENTAL VALUER HAS INCLUDED THE BALCONY AND TERRACE IN THE BUILT UP AREA WHILE THE ASSESSEE'S ARCHITECT EXCLUDED THEM. HE REFERRED PAGE NO. 24 AND 25 OF THE PAPER BOOK I.E. RELEVANT CERTIFICATE OF THE ASSESSEE'S ARCHITECT. THE L D. AR SUBMITTED THAT FOR THE PROJECTS STARTED PRIOR TO 1.4.2005, THE BALC ONY AND THE TERRACE ARE NOT TO BE INCLUDED IN THE BUILT UP AREA. IN SUPPORT HE REFERRED DC RULES AND CITED THE DECISION OF MUMBAI BENCH OF THE TRIBUN AL IN THE CASE OF HAWARE CONSTRUCTIONS PVT. LTD. VS. ITO (2011) 64 DTR ( MUMBAI) (TRIBUNAL) 251. WITHOUT PREJUDICE THE ABOVE SUBMISSION THE LD, AR SUBMITTED FURTHER THAT EVEN THE BUILT UP AREA OF THE COMBINED FLATS IS BELOW 1500 SQ.FT. EACH AND NOWHERE THE AREA HAS EXCEE DED 1500 SQ.FT.. IN THIS REGARD HE REFERRED PAGE NOS. 3,4 AND 29 OF THE P APER BOOK. 14. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND THE DECISIONS RELIED UPON BY THE PARTIES, WE DO NOT FIND SU BSTANCE IN THE ABOVE CONTENTION OF THE LD DR THAT BUILT UP AREA DEFINED IN THE DC RULES IS NOT APPLICABLE IN THE PRESENT CASE TO VERIFY THE ELIGIBI LITY OF THE CLAIMED DEDUCTION U/S.80IB(10) SINCE IT IS AVAILABLE WITH THE PMC TO COMPUTE FSI ONLY. THE REASON BEING IN OUR VIEW IS THAT IN ABSENCE OF AVAILABILITY OF SUCH DEFINITION IN THE IT ACT DURING THE YEAR UNDER CONSIDERAT ION THE ONLY DEFINITION AVAILABLE WITH THE PMC IS APPLICABLE AS IT IS THE PMC WHICH APPROVES AND EXEMPTION/OCCUPATION THE BUILDING PLAN A ND ISSUE COMMENCEMENT CERTIFICATES. WE DO NOT 'ALSO AGREE WITH THE VIEW OF THE AUTHORITIES BELOW THAT IF TWO UNITS / FLATS APPROVED BY THE LOCAL AUTHORITY AS SEPARATE UNITS ARE UNITED BY A PERSON AS PER HIS OWN SUITABILITY AS INSTRUCTED THE ASSESSEE TO MODIFY THE CONSTRUCTION AS PER HIS SUITABILITY, THE SAME MAYBE IN VIOLATION OF THE L OCAL LAWS AND PUNISHABLE / COMPOUNDABLE THEREUNDER BUT THE SAME IS NOT RELEVANT FOR THE PURPOSE OF COMPUTING THE ELIGIBILITY OF DEDUCTION U/S. 80IB(10) OF THE ACT ESPECIALLY WHEN THE LOCAL AUTHORITY HAS ALRE ADY ISSUED COMPLETION/ OCCUPATION CERTIFICATE THAT THOSE UNITS HA VE BEEN CONSTRUCTED AS PER THE BUILDING PLAN APPROVED. STILL WE FIND THAT T HE ASSESSEE HAS BEEN SUCCESSFULLY DEMONSTRATED THAT EVEN IF TWO FLATS ARE COMBINED, THE BUILT UP AREA AS PER DC RULES DOES NOT EXCEED 1500 SQ.FT. IN THE CASE OF HAWARE CONSTRUCTIONS (P) LTD. VS. ITO (SUPRA) THE MUMBAI BEN CH OF THE TRIBUNAL HAS HELD THAT DEFINITION OF 'BUILT UP AREA' GIVEN IN SUB SECTION (14) (A) OF SECTION 80 IB IS INSERTED BY THE FINANCE (2)ACT 2004 W .E.F. 1.4.2005 AND THEREFORE, THE SAME IS APPLICABLE ONLY IN RESPECT OF T HE PROJECTS APPROVED AFTER 1.4.2005. IN THAT CASE THE ASSESSEE'S PROJECT WAS APPROVED ON 10 TH OCT, 2003 HENCE IT WAS HELD BY THE TRIBUNAL THAT REVE NUE AUTHORITIES WERE NOT JUSTIFIED FN INCLUDING BALCONY / TERRACE IN THE BU ILT UP AREA SO AS TO DENY THE CLAIMED DEDUCTION U/S.80IB(10). THE PUNE DC RULES VIDE RULE 15.4.2 HAS PROVIDED AS TO WHICH AREA IS NOT TO BE INCL UDED WHILE CALCULATING BUILT UP AREA. THE AVO IN ITS REPORT DATED 5.5.2004 ( COPY MADE AVAILABLE AT PAGE NO. 28 OF THE PAPER BOOK) HAS ALSO MENTIONED T HAT THE BUILT UP AREAS WORKED OUT ARE EXCLUSIVE OF BALCONIES, STAIRCASE, COM MON LOBBY, LIFT ROOM AS PER DC RULES. UNDER THESE CIRCUMSTANCES WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER ALLOWING THE CLAIMED DEDUCTION ON THE BASIS THAT EVEN IF TWO FLATS EXCLUDING BALCONY ARE COMPUTED THE BUILT UP AREA WILL NOT EXCEED 1500 SQ.FT. AS PER THE DC RULES APPLICABLE IN PMC. THE FIRST APPELLATE ORDER IN THIS REGARD IS THUS UPHELD. WE ALSO HOLD THAT THE TWO ADJOINING FLATS APPROVED BY THE LOCAL AUTHORITY AS SEP ARATE UNITS AND COMPLETION CERTIFICATE ISSUED, CANNOT BE TREATED AS ON E UNIT TO COMPUTE THE BUILT UP AREA FOR THE PURPOSE OF SECTION 80IB(10) DED UCTION ONLY BECAUSE THESE TWO FLATS HAVE BEEN MODIFIED AS ONE AS PER CONVENIENCE AND INSTRUCTION OF THE BUYER. WE ORDER ACCORDINGLY. 19 17.1 FOLLOWING THE ABOVE DECISION, THE TRIBUNAL IN ASSESSEES OWN CASES FOR A.YRS. 2004-05 AND 2005-06 RESPECTIVELY VIDE SE PARATE ORDERS DATED 23-11-2012 HAS DISMISSED THE APPEALS FILED BY THE R EVENUE. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECT MAESTRO IS UPHELD. 17.2 SO FAR AS THE DEDUCTION U/S.80IB(10) IN RESPEC T OF THE PROJECT MISTY MOOR IS CONCERNED, WE FIND THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2001-02 TO 2003-04 VIDE ITA NO.1146/PN/2010 AND OTH ER CONNECTED APPEALS ORDER DATED 25-06-2012 HAS DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PARA 18 OF THE ORDER READS AS UNDER : 18. WE FIND THAT THE ISSUE INVOLVED REGARDING THE CL AIMED DEDUCTION ON THE 'MISTY MOOR' PROJECT IS AS TO WHETHER KPDL HAD U NDERTAKEN ANY CONSTRUCTION ACTIVITY THEREON IN FURTHERANCE TO COMM ENCEMENT CERTIFICATE ISSUED TO THEM ON 20.8.3998. THERE IS NO DISPUTE ON THE ABOVE FACTS THAT KPDL HAD OBTAINED THE COMMENCEMENT CERTIFICATE FROM THE LOCAL AUTHORITY FOR THE PROJECT ON 20.8.1998 NOR IS THERE ANY DISPUTE ON THIS MATERIAL FACT THAT THE KPDL HAD NOT STARTED DEVELOPMENT AND CONSTRU CTION ON THE PROJECT IN COMMENCEMENT CERTIFICATE ISSUED ON 20.8.1998. THE REQUIREMENT OF THE PROVISIONS LAID DOWN U/S. 80IB(10)( A)(II) THAT THE UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCT. 1998. THUS MERELY BECAUSE THE KPDL HAD OBTAINED INI TIAL COMMENCEMENT CERTIFICATE ON 20.08.1998 IS NOT SUFFI CIENT TO DENY THE CLAIMED DEDUCTION TO THE ASSESSEE WHO ACTUALLY DEVE LOPED AND COMMENCED THE CONSTRUCTION ON THE PROJECT IN FURTHE RANCE TO COMMENCEMENT CERTIFICATE OF THE PROJECT OBTAINED BY IT ON 6.5.1999 FROM LOCAL AUTHORITY. IT IS ALSO AN UNDISPUTED FACT THAT THE KPDL WHO INITIALLY OWNED THE DEVELOPMENT RIGHT ON THE LAND H AD TRANSFERRED THE DEVELOPMENT RIGHT TO THE ASSESSEE FIRM BY WAY O F CAPITAL CONTRIBUTION IN THE CAPITAL ACCOUNT OF KPDL ON 1.10 .98 IN THE ASSESSEE FIRM AND THEREAFTER THE ASSESSEE APPLIED FOR COMMEN CEMENT CERTIFICATE AND THE SAME WAS ISSUED TO IT BY THE LO CAL AUTHORITY ON 6.5.1999. UNDER THESE CIRCUMSTANCES WE DO NOT FIND INFIRMITY IN THE FINDING OF THE LD. CIT(A) THAT THE ASSESSEE IS VERY MUCH ELIGIBLE FOR CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT ON THE P ROJECT AND THE A.O. 20 WAS NOT JUSTIFIED IN DENYING THE CLAIMED DEDUCTION TO THE ASSESSEE ON THE SAID PROJECT. 17.3 FURTHER, THE TRIBUNAL IN ASSESSEES OWN CASE F OR A.Y. 2004-05 FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN ASS ESSEES OWN CASE FOR A.Y. 2003-04 UPHELD THE ORDER OF THE CIT(A) ALLOWIN G THE CLAIM OF DEDUCTION U/S.80IB(10) AND THE APPEAL FILED BY THE REVENUE HAS BEEN DISMISSED. SINCE THE TRIBUNAL HAD ALREADY CONSIDER ED THE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF BOTH THE PROJE CTS AND NOTHING CONTRARY HAS EMERGED DURING THE SEARCH, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04 AND 2004-05 WE UPHOLD THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF THE ABOVE 2 PR OJECTS. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 17.4 IDENTICAL GROUNDS (I.E. GROUNDS OF APPEAL NO.3 & 4) HAVE BEEN RAISED BY THE REVENUE IN THE APPEALS FOR A.YRS. 200 4-05 TO 2007-08 AND GROUNDS OF APPEAL NO.3, 4 AND 7 IN A.Y. 2009-10 IN RESPECT OF THE ABOVE 2 PROJECTS. FOLLOWING THE SAME REASONINGS THESE GROU NDS BY THE REVENUE ARE DISMISSED. 18. GROUND OF APPEAL NO.2 BY THE REVENUE IN A.Y. 20 04-05 IS A NEW ISSUE WHICH READS AS UNDER : 2) THE LD. CIT(A) HAS ERRED IN ALLOWING PROPORTIONATE D EDUCTION U/S 80IB(10) OF THE ACT TO THE PROJECT HAVING FLATS CONSI STING OF BUILT-UP AREA OF LESS THAN 1500 SQ. FT., ALTHOUGH THE SAME IS IN CONTRAV ENTION OF PROVISIONS OF SECTION 80IB(10). 18.1 AFTER HEARING BOTH THE SIDES, WE FIND DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED ON THE BASIS OF STATEMENTS RECORDED 21 FROM SOME OF THE FLAT PURCHASERS AND ON THE BASIS O F PHYSICAL VERIFICATION AND MEASUREMENT OF FLATS OF EACH PROJECT THAT SOME OF THE FLATS IN THE PROJECT LAPIS LAZULI ARE HAVING MORE THAN 1500 SQ.F T. WHICH IS MORE THAN THE THRESHOLD LIMIT AS PRESCRIBED IN SECTION 80IB(1 0) (C) OF THE I.T. ACT. FURTHER, THE PROJECT IS NOT COMPLETE AS ON 31-03-20 08 AS REQUIRED BY THE SECTION 80IB(10)(A)(IA) OF THE I.T. ACT. HE THEREF ORE DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECT LAPIS LAZULI. 19. IN APPEAL THE LD.CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NOS. 156/PN/2011 AND I TA NO. 172/PN/2011 FOR A.Y. 2004-05 DIRECTED THE AO TO ALL OW PROPORTIONATE DEDUCTION. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 20. WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 HAS ALLOWED THE CLAIM OF PROPORTIONATE DEDUCTION BY FOL LOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF D.S. KULKARNI DEVELOPER S AND THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VIDE ITA NO.458/2006 ORDER DATED 05-01- 2007. FURTHER, THE TRIBUNAL AGAIN IN ASSESSEES OW N CASE FOR A.Y. 2005- 06 HAS ALLOWED THE CLAIM OF PROPORTIONATE DEDUCTION IN RESPECT OF THE SAID PROJECT. FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2004-05 AND 2005-06 WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE CIT(A) GRANTING PROPORTIONATE DEDUCTION TO THE ASSESSEE IN RESPECT OF THE UNITS WITH BUILT UP AREA OF LESS THAN 1500 SQ.F T. IN THE PROJECT LAPIS LAZULI. THE GROUND RAISED BY THE REVENUE IS ACCORD INGLY DISMISSED. 22 20.1 IDENTICAL GROUND (GROUND OF APPEAL NO.2) HAS B EEN TAKEN BY THE REVENUE IN APPEALS FILED IN A.YRS. 2005-06 TO 2007- 08 AND A.Y. 2009-10. FOLLOWING THE SAME REASONINGS GROUND OF APPEAL NO.2 BY THE REVENUE IN THE ABOVE APPEALS ARE DISMISSED. 21. GROUND OF APPEAL NO.5 BY THE REVENUE FOR A.Y. 2 004-05 READS AS UNDER : 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEDUCTION IN RESPECT OF PROJEC T-LAPIZ LAZULI, ROSE PARADE, ALTHOUGH ASSESSEE COULD NOT FURNISHED THE COMPLE TION CERTIFICATE TILL DATE. 21.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO D URING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE DATE OF COMME NCEMENT OF THE PROJECT LAPIS LAZULI IS 24-12-1001. ACCORDING TO H IM, AS PER THE PROVISIONS OF SECTION 80IB(10) OF THE I.T. ACT THE PROJECT COMMENCED BEFORE 01-04-2004, THEREFORE, THE SAME IS REQUIRED TO BE COMPLETED ON OR BEFORE 31-03-2008. SINCE THE ASSESSEE DOES NOT HAV E FINAL COMPLETION CERTIFICATE ON 31-03-2008 THE AO HELD THAT THE ASSE SSEE IS NOT ENTITLED TO DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECT LA PIS LAZULI. HE HOWEVER HAS NOT MADE ANY ISSUE IN RESPECT OF THE PROJECT RO SE PARADE IN THE ORDER PASSED U/S.153A R.W.S.143(3). 22. BEFORE CIT(A) IT WAS SUBMITTED THAT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS THE AO HAS NOT CONSIDERED THE ISSUE OF NON-COMPLETION IN RESPECT OF THE PROJECT LAPIS LAZULI FOR DISALLOWING THE CLAIM OF DEDUCTION U/S.80IB(10). THE AO HAS CONSIDERED THIS ISSUE FOR THE FIRST TIME DURING 153A PROCEEDINGS. THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE MADE BY 23 THE AO WAS ON THE GROUND THAT THE ASSESSEE HAD NOT RECEIVED THE COMPLETION CERTIFICATE TILL 31-03-2008 FOR WHICH HE DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10). HOWEVER, THE ASSESSEE H AD MADE AN APPLICATION TO THE APPROPRIATE AUTHORITY ON 01-02-2 008. IT WAS SUBMITTED THAT THE COMPLETION CERTIFICATE COULD NOT BE OBTAIN ED FROM THE LOCAL AUTHORITY DUE TO A DISPUTE BETWEEN THE LOCAL AUTHOR ITY AND THE ASSESSEE WITH RESPECT TO THE HANDING OVER OF POSSESSION RESE RVED FOR EWS SCHEME WHICH WAS CONSTRUCTED AS A PART OF THE PROJECT. TH E ASSESSEE SUBMITTED THAT THE PROJECT LAPIS LAZULI CONSISTED OF 5 BUILDI NGS, A, B1, B2, C1 AND C2 AND AS PER THE SANCTIONED PLAN LAPIS LAZULI BUIL DINGS WERE RESERVED UNDER THE EWS SCHEME TO BE HANDED OVER TO PMC FREE OF COST. IT WAS SUBMITTED THAT THE CONSTRUCTION OF BUILDINGS RESERV ED UNDER EWS SCHEME ALONG WITH CONSTRUCTION OF BUILDING A WAS COMPLETED AND THE COMPLETION CERTIFICATE IN RESPECT OF THE SAID BUILDING OBTAINE D ON 25-05-2006 AND THIS FACT OF THE RESERVED BUILDING UNDER EWS SCHEME WAS ALSO EARLIER INTIMATED TO THE PMC VIDE LETTER DATED 11-02-2006 S O AS TO TAKE THE POSSESSION THEREOF. IT WAS SUBMITTED THAT CONSTRUCT ION OF B1 AND B2 BUILDINGS WERE COMPLETED AND THE APPLICATION FOR TH E OCCUPANCY CERTIFICATE MADE ON 01-02-2008. HOWEVER, THE OCCUPANCY/COMPLET ION CERTIFICATE OF THE TWO BUILDINGS, VIZ B1 AND B2 WERE NOT ISSUED BY THE LOCAL AUTHORITY BECAUSE OF THE DISPUTE RELATING TO THE RESERVED BUI LDINGS UNDER THE EWS SCHEME. IT WAS ACCORDINGLY ARGUED THAT THE NON-ISS UANCE OF THE COMPLETION/OCCUPANCY CERTIFICATE IN RESPECT OF THE TWO BUILDINGS WAS NOT ATTRIBUTABLE TO THE ASSESSEE AS ALL THE FORMALITIES REQUIRED FOR ISSUE OF THE COMPLETION CERTIFICATE HAD BEEN COMPLETED. THE ASS ESSEE FURTHER 24 SUBMITTED THAT THE PMC OR THE LOCAL AUTHORITY HAD N OT REJECTED THE APPLICATION FOR COMPLETION/OCCUPANCY CERTIFICATE TI LL DATE THOUGH THE ASSESSEE HAD COMPLETED THE CONSTRUCTION OF THE PROJ ECT BY THAT TIME, I.E. 31-03-2008. THE ASSESSEE SUBMITTED THAT THE POSSES SION OF THE FLATS WERE TRANSFERRED TO THE BUYERS BEFORE 31-03-2008 WHICH G ETS SUBSTANTIATED BY THE ELECTRICITY BILLS WHICH CLEARLY MENTION THE DAT E OF COMMENCEMENT OF SUPPLY OF ELECTRICITY TO THE RESIDENTS WHICH IS WEL L BEFORE 31-03-2008. THE FLATS WERE TRANSFERRED TO THE RESPECTIVE FLAT O WNERS BEFORE 31-03-2008 IS THUS SUBSTANTIATED. IT WAS SUBMITTED THAT WITHH OLDING OF THE OCCUPANCY/COMPLETION CERTIFICATE WAS BEYOND THE CON TROL OF THE ASSESSEE AND THEREFORE THE CLAIM OF DEDUCTION U/S.80IB(10) C ANNOT BE DENIED. FOR THE ABOVE PROPOSITION, THE ASSESSEE RELIED ON THE D ECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF RUNWAL MULTIHO USING PVT. LTD. VS. ACIT VIDE ITA NOS. 1015 TO 1017/PN/2011 WHERE UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL HAS ALLOWED THE CLAI M OF DEDUCTION U/S.80IB(10). THE ASSESSEE ALSO FILED THE FOLLOWIN G ADDITIONAL EVIDENCES UNDER RULE 46A : A) COPY OF APPLICATION FOR OCCUPANCY CERTIFICATE DA TED 01-02-2008 B) COPY OF COMPLETION CERTIFICATE DATED 25-06-2006 IN RESPECT OF BUILDING C RESERVED UNDER EWS SCHEME. C) COPY OF APPLICATION DATED 11-02-2006 MADE TO THE PMC D) COPY OF CERTAIN SAMPLE ELECTRICITY BILLS THE ASSESSEE SUBMITTED THAT THE AO HAS NOT RAISED T HIS ISSUE DURING THE ASSESSMENT PROCEEDINGS NOR ASKED THE ASSESSEE FIRM REGARDING THE ISSUE OF COMPLETION CERTIFICATE AND WITHOUT GIVING AN OPPORT UNITY RESORTED TO THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S.80IB(10) . 25 23. THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM T HE AO. THE AO NOTICED THAT THE ASSESSEE HAS FILED APPLICATION FOR OCCUPANCY CERTIFICATE AND NOT COMPLETION CERTIFICATE AND ACCORDING TO HIM THE TWO ARE NOT THE SAME AS THE COMPLETION CERTIFICATE IS GIVEN FOR PRO JECT WHILE OCCUPANCY CERTIFICATE IS GIVEN FOR THE BUILDINGS. HE ACCORDI NGLY SUBMITTED THAT THE DISALLOWANCE OF DEDUCTION U/S.80IB(10) FOR THE PROJ ECT LAPIS LAZULI IS JUSTIFIED. 24. THE ASSESSEE IN HIS REJOINDER TO THE REMAND REP ORT SUBMITTED THAT THE APPLICATION FOR THE SAID PROJECT WAS IN ACCORDANCE WITH THE STANDARD FORMAT ISSUED BY THE PMC FOR MAKING APPLICATION FOR COMPLE TION OF THE PROJECT. IN ORDER TO OBTAIN THE CERTIFICATE FOR COMPLETION O F PROJECT FROM THE PMC, THE DEVELOPER IS REQUIRED TO MAKE AN APPLICATION FO R COMPLETION CERTIFICATE OR OCCUPANCY CERTIFICATE IN THE STANDARD FORM ISSUE D BY THE PMC WHICH IS ALSO AVAILABLE ON ITS WEBSITE. IT WAS EXPLAINED TH AT THE APPLICATION FOR OCCUPANCY CERTIFICATE AND APPLICATION FOR COMPLETIO N CERTIFICATE ARE ONE AND THE SAME FOR THE PURPOSE OF ISSUANCE OF CERTIFI CATE FOR COMPLETION BY PMC. THEREFORE, THE AO IS NOT JUSTIFIED IN HOLDING THAT NO APPLICATION FOR COMPLETION CERTIFICATE HAS BEEN MADE. THE ASSESSEE FURTHER SUBMITTED THAT THE AO HAS NOT CHALLENGED THE FACT THAT THE PROJECT WAS NOT COMPLETED BY THE ASSESSEE WITHIN THE STIPULATED TIME LIMIT. IT WAS SUBMITTED THAT THE PMC DOES NOT ISSUE ANY SEPARATE OCCUPANCY CERTIFICA TE OTHER THAN THE CERTIFICATE FOR COMPLETION OF PROJECT/BUILDING AND THEREFORE THE AO IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD NOT MADE AN APPLICATION FOR COMPLETION CERTIFICATE AND THEREFORE DEDUCTION U/S. 80IB(10) WAS NOT ALLOWABLE TO THE ASSESSEE. IT WAS SUBMITTED THAT T HE CONSTRUCTION OF THE 26 PROJECT WAS COMPLETED WITHIN THE STIPULATED TIME AN D THE CLAIM OF DEDUCTION U/S.80IB(10) CANNOT BE DENIED MERELY BECA USE COMPLETION CERTIFICATE WAS NOT OBTAINED. RELYING ON THE FOLLO WING DECISIONS, IT WAS ARGUED THAT DEDUCTION U/S.80IB(10) WAS ALLOWABLE IN CASE WHERE THE CONSTRUCTION OF THE HOUSING PROJECT WAS ACTUALLY CO MPLETED BEFORE THE STIPULATED TIME BUT THE COMPLETION CERTIFICATE IN R ESPECT OF THE SAME COULD NOT BE OBTAINED WITHIN THE PRESCRIBED LIMIT. A. CIT VS. TARNETAR CORPORATION (GUJARAT HIGH COURT) B. RUNWAL MULTIHOUSING 1015, 1016 & 1017/PN/2011 ITAT, PUNE C. CITY DEVELOPMENT CORPORATION VS. ACIT ITAT NO.5 7 & 1287/PN/2010 ITAT, PUNE D. HINDUSTAN SAMUHA AWAS LTD. VS. ITO ITA NOS. 945 TO 950/PN/2010 ITAT, PUNE 25. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) ACCEPTED THE ADDITIONAL EVIDENCES FILED UNDER RULE 46A AND ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE I.T. ACT. T HE RELEVANT OBSERVATIONS OF THE LD.CIT(A) READ AS UNDER : 5.2.6 IT IS TRITE LAW THAT THE POWERS OF THE CIT (AP PEALS) ARE COTERMINOUS WITH THE POWERS OF A.O. IN THE CASE OF SMT. PRABHAVAT I S. SHAH VS CIT (1998) 231 ITR 1 (MUM) IT WAS HELD THAT SUB-RULE (4) OF RULE 46A SPECIFICALLY RESTORE POWER OF APPELLATE AUTHORITY TO CALL FOR PRO DUCTION OF ANY DOCUMENT TO ENABLE HIM TO DISPOSE APPEAL. SUB-SECTION (4) OF SE CTION 250 EMPOWERS THE APPELLATE AUTHORITY TO TAKE ADDITIONAL EVIDENCE . SCOPE OF POWER IS COTERMINOUS WITH ITO. CONJOINT READING OF SECTION 250 AND RULE 46A SHOWS THAT RESTRICTION ON THE APPELLANT DO NOT AFFECT THE POWERS OF THE APPELLATE AUTHORITY FOR THE PURPOSE OF RULE 46A APPEARS TO BE T O ENSURE THAT EVIDENCE IS PRIMARILY LED BEFORE THE ASSESSING OFFICER. SECTION 2 50(4) BEING A QUASI- JUDICIAL POWERS, IT IS INCUMBENT ON CIT (APPEALS) TO E XERCISE THE SAME IF THE FACTS AND CIRCUMSTANCES JUSTIFY. THE APPELLANT COULD NO T OBTAIN THE AFFIDAVITS DURING THE ASSESSMENT PROCEEDINGS AND IT APPEARS THAT DUE TO SOME GENUINE REASONS THE SAME COULD NOT BE PRODUCED DURING THE ASSES SMENT PROCEEDINGS, THEREFORE, THE EVIDENCE IN THE FORM OF AFFIDAVIT PRODUCED BY THE APPELLANT IS BEING TAKEN INTO CONSIDERATION FOR DECID ING THE ISSUE AND IS ACCORDINGLY ADMITTED FOR ADJUDICATION. 5.2.7 THE MATERIAL ON RECORD AND SUBMISSIONS OF THE APP ELLANT INDICATE THAT THE AFORESAID PROJECT LAPIS LAZULI WHICH COMPRISE D OF FIVE BUILDINGS A, B AND B2 BUILDINGS AND C1 AND C2 BUILDINGS WERE RESERV ED UNDER THE EWS SCHEME. THE APPELLANT HAD OBTAINED THE COMPLETION CE RTIFICATE WITH RESPECT TO BUILDING A AND THE TWO BUILDINGS C1 AND C2 RESERVE D UNDER THE EWS 27 SCHEME ON 25-05-2006. SUBSEQUENTLY THE APPELLANT COMP LETED THE CONSTRUCTION OF THE OTHER TWO BUILDINGS OF THE PROJEC T B1 AND B2 AND MADE AN APPLICATION FOR OBTAINING THE COMPLETION CERTIFI CATE ON 01-02-2008. HOWEVER, THE COMPLETION/ OCCUPANCY CERTIFICATE FOR THE AFORESAID BUILDING B1 AND B2 WAS NOT ISSUED BY THE PMC I.E. THE LOCAL AUT HORITY. IT HAS ALSO BEEN MENTIONED THAT THE PMC HAS NOT REJECTED THE APPLICAT ION OF THE APPELLANT FOR THE OCCUPANCY CERTIFICATE TILL DATE. MEANWHILE THE APPELLANT HAVING COMPLETED THE PROJECT TRANSFERRED THE POSSESSION OF FLA TS TO ITS BUYERS BEFORE 31-03-2008. THE SAMPLE ELECTRICITY BILLS FILED DURING THE COURSE OF APPELLATE PROCEEDINGS CLEARLY INDICATE THAT THE SUPPL Y OF ELECTRICITY HAD ALSO COMMENCED PRIOR TO 31-03-2008 WHICH LEADS TO THE INF ERENCE THAT THE FLATS WERE TRANSFERRED BY THE APPELLANT TO THE OWNERS OF FL AT BEFORE 31-03-2008. THE FACTS ON RECORD INDICATE THAT THE APPELLANT COUL D NOT HAVE OBTAINED THE OCCUPANCY CERTIFICATE BECAUSE OF THE REASONS BEYOND TH EIR CONTROL. 5.2.8 SO FAR AS THE ISSUE REGARDING THE OCCUPANCY CERT IFICATE BEING DIFFERENT FROM THE COMPLETION CERTIFICATE AND THAT AS PER THE PROVISIONS OF THE ACT, THE DEDUCTION U/S 80IB(10) IS ALLOWABLE ONLY WHEN THE COMPLETION CERTIFICATE IS OBTAINED WITHIN THE STIPULATED TIME RA ISED BY THE A.O. DURING THE REMAND PROCEEDINGS IS CONCERNED, IT WOULD BE APPR OPRIATE AND SIGNIFICANT TO DISCUSS THE MANNER IN WHICH THE CERTIFIC ATE OF OCCUPANCY OF THE COMPLETION CERTIFICATE IS ISSUED BY A LOCAL AUTHORITY. IT IS A MATTER OF GENERAL KNOWLEDGE THAT THE BUILDINGS (OR ALL TYPES OF CONSTRUC TION) IN ANY AREA ARE GOVERNED BY LOCAL DEVELOPMENT RULES. INFACT LOCAL AU THORITY IS THE SUPREME AUTHORITY FOR THE PURPOSE OF SANCTION OF DEVELOPMENT PLAN, MONITOR CONSTRUCTION AND ISSUE COMPLETION CERTIFICATES/OCCUPANC Y CERTIFICATE. ALL THE BUILDINGS WITHIN PUNE MUNICIPAL LIMITS ARE GOVERN ED BY DEVELOPMENT CONTROL RULES (DC RULES) SANCTIONED UNDER GOVERNMENT N OTIFICATION URBAN DEVELOPMENT DEPARTMENT NO. TPS-1884/1337/CR-220/84/ III UD-7 DATED 05-01-1987. THE RELEVANT RULES ARE DISCUSSED BELOW : RULE 5 OF D.C. RULES PROVIDE THAT NO PERSON SHALL CARRY O UT ANY DEVELOPMENT, ERECT, RE-ERECT OR MAKE ALTERATION OR DEMOLISH ANY BUILDING WITHOUT FIRST OBTAINING A SEPARATE BUILDING PERMISSION/COMMENCEME NT CERTIFICATE FOR EACH SUCH DEVELOPMENT WORK. RULE 6 PROVIDES FOR OBTAINING BUILDING PERMISSION/COMMENCE MENT CERTIFICATE. RULE 7 PROVIDES FOR PROCEDURE DURING CONSTRUCTION AS PER RULE 7.2, DEVELOPMENT OF BUILDING MUST COMMENCE WITHIN ONE YEAR FROM THE DATE OF ISSUE. THE OWNERS HAVE TO GIV E NOTICE IN 'APPENDIX - P TO AUTHORITY (PMC) REGARDING INTENTION TO START WO RK ON THE BUILDING SITE. RULE 7.4 PROVIDES FOR INSPECTION OF WORK UPTO PLINTH LEVEL. FOR THIS PURPOSE, DEVELOPER/OWNERS HAVE TO GIVE NOTICE IN 'A PPENDIX G' TO THE AUTHORITY. THE APPROVAL OF COMPLETION OF WORK UPTO PLINTH LEVEL IS GRANTED BY PMC IN 'APPENDIX-H'. RULE 7.6 PROVIDES FOR SUBMISSION OF COMPLETION CERT IFICATE THROUGH THE LICENSED ARCHITECT IN APPENDIX - J. RULE 7.7 PROVIDES FOR ISSUE/REFUSAL TO ISSUE OCCUPANCY CERT IFICATE. THE PROCEDURE PRESCRIBED THEREIN IS THAT THE AUTHORITY ON RECEIPT OF COMPLETION CERTIFICATE (APPENDIX J AS PER RULE 7.6) SHALL INSPECT THE WORK AND SHALL EITHER ISSUE OR REFUSE AN OCCUPANCY CERTIFICATE. THE OCCUPANCY CERTIFICATE IS ISSUED IN APPENDIX -K. RULE 7.7.1 ALSO PROVIDES FOR ISSUE OF PART OCCUPANCY CERTIFIC ATE OF A BUILDING OR PART THEREOF 28 FOR READY REFERENCE THE RULE 7.6 AND 7.7 OF DC RULE S OF PMC ARE BEING REPRODUCED BELOW : '7.6 COMPLETION CERTIFICATE - THE OWNER THROUGH THE LICENSED ARCHITECT, ENGINEER, STRUCTURAL ENGINEER, AS THE CA SE MAY BE WHO HAS SUPERVISED THE CONSTRUCTION, SHALL GIVE NOTICE TO T HE AUTHORITY REGARDING COMPLETION OF WORK DESCRIBED IN THE BUILD ING PERMISSION. THE COMPLETION CERTIFICATE SHALL BE SUBMITTED IN TH E PRESCRIBED FORM BY FOUR SETS OF COMPLETION PLAN. ONE OF THE SETS, DULY CERTIFIED AS COMPLETION PLAN SHALL BE RETURNED TO THE OWNER ALON G WITH THE ISSUE OF FULL OCCUPANCY CERTIFICATE (SEE RULE NO. 7. 7) ' '7. 7 OCCUPANCY CERTIFICATE - THE AUTHORITY, ON RECEIPT OF THE COMPLETION CERTIFICATE, SHALL INSPECT THE WORK AND SANCTION OR REFUSE AN OCCUPANCY CERTIFICATE, IN THE PROFORMA GIVEN IN APPENDIX K WI THIN 21 DAYS FROM THE DATE OF RECEIPT OF COMPLETION CERTI FICATE, AFTER WHICH PERIOD IT SHALL BE DEEMED TO HAVE BEEN APPROVE D BY THE AUTHORITY FOR OCCUPATION PROVIDED THE BUILDING HAS B EEN CONSTRUCTED AS PER THE SANCTIONED PLANS. WHERE THE OCCU PANCY CERTIFICATE IS REFUSED, THE VARIOUS REASONS SHALL BE QUOT ED FOR REJECTION, AT THE FIRST INSTANCE ITSELF. ' RULE 8 PROVIDES FOR CARRYING OUT THE INSPECTION OF WORK AT VARIOUS STAGES TO ASCERTAIN WHETHER THE WORK IS PROCEEDI NG AS PER THE PROVISIONS OF RULES AND SANCTIONED PLAN. AS IT IS EVIDENT FROM VERY READING OF THE ABOVE RULES, THE OWNER THROUGH THE LICENCED ARCHITECT, ENGINEER, AND STRUCTURAL ENG INEER AS THE CASE MAY BE, WHO HAS SUPERVISED THE CONSTRUCTION GIVES NOTICE TO THE AUTHORITY REGARDING COMPLETION OF WORK DESCRIBED IN THE BUILDI NG PERMISSION. THE COMPLETION CERTIFICATE IS SUBMITTED IN THE PRESCRIBED FORM BY CONCERNED ARCHITECT WITH 4 SETS OF COMPLETION PLAN. ONE OF THE SETS, DULY CERTIFIED AS COMPLETION PLAN IS RETURNED TO THE OWNER ALONG WITH THE ISSUE OF FULL OCCUPANCY CERTIFICATE. 5.2.9 THEREFORE, THE COMPLETION / OCCUPANCY CERTIFI CATE IN RESPECT OF A HOUSING PROJECT HAS TO BE ISSUED BY THE LOCAL AUTHORITY ONLY AS ENVISAGED BY THE PROVISION OF SEC. 80IB(10) OF THE IT. ACT, 19 61. THERE IS NO AMBIGUITY IN THE LANGUAGE OF THE EXPLANATION WHICH WOULD LEAD TO ANY OTHER INTERPRETATION. EVEN THERE WAS NO PROVISION UND ER THE PMC RULES FOR ISSUING OF THE COMPLETION CERTIFICATE DIRECTLY BY THE PMC ON THE BASIS OF AN APPLICATION ALONG WITH THE CERTIFICATE OF AN ARCHIT ECT REGARDING COMPLETION OF THE PROJECT, THE PMC OR THE LOCAL AUTHORITY ISSUES AN 'OCCUPANCY CERTIFICATE'. THEREFORE, FOR THE PURPOSES OF SECTION 8 0IB(10)(A) R.W. EXPLANATION THE OCCUPANCY CERTIFICATE WOULD BE RELE VANT TO DETERMINE THE FULFILLMENT OF THE CONDITION GIVEN IN THE SECTION. I N VIEW OF THE ABOVE FACTS, THE CONTENTION RAISED BY THE A.O. THAT APPLICATION F OR COMPLETION CERTIFICATE WAS NOT MADE AND HENCE THE CLAIM OF DEDU CTION U/S 80IB(10) WAS NOT ALLOWABLE TO THE ASSESSEE IS NOT TENABLE AND JUSTI FIED. 5.2.10 THE CONTENTION OF THE APPELLANT THAT THE WIT HHOLDING OF THE CERTIFICATE OF OCCUPANCY WAS BEYOND THEIR CONTROL IS PRIMA FACIE CORRECT AND HENCE IT CANNOT BE ATTRIBUTABLE TO THE FAULT OF THE APPELLANT. IN THE CASE OF M/S RUNWAL MULTIHOUSING PVT. LTD VS ACIT (SUPRA) ON IDENTICAL FACT THE PUNE ITAT ALLOWED THE CLAIM OF DEDUCTION. THE PUNE ITAT OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT THE APPLICATION FOR COMPLETION WAS NOT REJECTED BY THE LOCAL AUTHORITY TILL DATE COULD NOT BE CONTROVERTED BY THE 29 REVENUE AND SEEK THE CONTENTION THAT THE APPELLANT H AD TRANSFERRED THE POSSESSION OF THE FLATS TO THE RESPECTIVE OWNERS AND THE E LECTRICITY METERS WERE ALSO IN THE NAME OF FLAT OWNERS PRIOR TO 31-03-2 008 WAS NOT DISPUTED BY THE REVENUE. THE PUNE ITAT WHILE DECIDIN G THE CASE HAS RELIED UPON THE DECISIONS OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS TARNETAR CORPORATION, HINDUSTAN SAMUHA AWAS LTD. VS ITO, M/S SAT ISH BORA & ASSOCIATES, WHICH HAS HELD AS UNDER: 'CIT VS TARNETAR CORPORATION : WE HAVE PERUSED THE DETAILED DISCUSSION OF THE CIT(APPE ALS) AS WELL AS THE TRIBUNAL ON THE ISSUE. IN PARTICULAR, THE TRIBUN AL NOTED THAT THE CONSTRUCTION WAS COMPLETED IN 2006. APPLICATION FOR B U PERMISSION TO THE MUNICIPAL AUTHORITIES WAS FILED ON 15-02-2006 WHI CH WAS REJECTED ON 1-07-06. SEVERAL RESIDENTIAL UNITS WERE OCCUPIED SI NCE THE SAME WAS DONE WITHOUT NECESSARY PERMISSION. THE ASSESSEE HAD DONE W ITHOUT NECESSARY PERMISSION. THE ASSESSEE HAD ALSO PAID PENALTY AND GOT SUCH OCCUPATION REGULARISED. SEVERAL TENEMENTS WERE SOLD LO NG BEFORE THE LAST DATE. IN THE PRESENT CASE, THEREFORE, THE FACT THAT THE ASSESSE E HAD COMPLETED THE CONSTRUCTION WELL BEFORE 31ST MARCH 2008 IS NOT IN DOUBT. IT IS, OF COURSE, TRUE THAT FORMALLY BU PERMISSION WAS NOT GRANTE D BY THE MUNICIPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRUE THAT EXPLANATION TO CLAUSE (A) TO SECTION 80IB(10) LINKS THE COMPLETION OF THE CONSTRUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHO RITY. HOWEVER, NOT EVERY CONDITION OF THE STATUTE CAN BE SEEN AS MANDATOR Y. IF SUBSTANTIAL COMPLIANCE THEREOF IS ESTABLISHED ON RECORD, IN A GIVE N CASE, THE COURT MAY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOUL D NOT VITIATE THE VERY PURPOSE FOR WHICH DEDUCTION WAS BEING MADE AVAIL ABLE. IN THE PRESENT CASE, THE FACTS ARE PECULIAR. THE ASSESSEE HAD NOT ONLY COMPLETED THE CONSTRUCTION TWO YEARS BEFORE THE FINAL DATE AND HAD APPLIED FOR BU PERMISSION. SUCH BU PERMISSION WAS NOT RE JECTED ON THE GROUND WHAT CONSTRUCTION WAS NOT COMPLETED, BUT THE SO ME OTHER TECHNICAL GROUND. IN THAT VIEW OF THE MATTER, GRANT ING BENEFIT OF DEDUCTION CANNOT BE HELD TO BE ILLEGAL.' 'HINDUSTAN SAMUHA AWAS LTD, VS ITO: 7. WE HAVE CONSIDERED THE ABOVE VIEW POINTS OF THE PARTIES IN DISPUTED. WE FIND THAT IT IS A FACT THAT THE ASSESSEE THROUGH ITS A RCHITECT HAD FILED APPLICATION WITH THE AMC FOR ISSUANCE OF OCCUPANCY CE RTIFICATE ON 25.3.2008. REQUISITE FEE WAS ALSO PAID BY THE ASSESSEE IN THIS REGARD. AMC DID NOT RAISE ANY OBJECTION TO THE SAID COMPLETIO N CERTIFICATE OF THE ARCHITECT. THE OCCUPANCY CERTIFICATE DT.10.10.2008 HAS BEEN ISSUED BY THE AMC ONLY ON THE BASIS OF THE SAID APPLICATION DT. 25.3.2008. IT IS ALSO AN UNDISPUTED FACT THAT ISSUANCE OF OCCUPANCY CERTIFIC ATE IS THE PREROGATIVE OF THE LOCAL AUTHORITY I.E. AMC AND IN THIS REGARD, THE ASSESSEE HAS NO CONTROL AND IT IS BEYOND THE POWER OF THE ASSESSEE TO MAKE THE AMC ISSUE THE SAID COMPLETION/OCCUPANCY CERTI FICATE BEFORE 31.3.2008. WHAT WAS UNDER THE POWER AND CONTROL OF T HE ASSESSEE WAS ONLY TO MOVE THE AMC FOR COMPLETION CERTIFICATE FUL FILLING ALL THE REQUIREMENTS WITH THE AMC FOR ISSUANCE OF OCCUPANCY CE RTIFICATE, WHICH THE ASSESSEE HAS DONE IN THE PRESENT CASE. THUS, THE DELAY IN ISSUING THE OCCUPANCY CERTIFICATE CANNOT BE ATTRIBUTED ON THE P ART OF THE ASSESSEE TO DENY THE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT O N THE BASIS THAT THE PROJECT WAS NOT COMPLETED BY 31-3-2008, ESPECIALLY WH EN THERE IS NO OBJECTION RAISED BY THE AMC REGARDING DEVIATION IN T HE CONSTRUCTION OF THE PROJECT APPROVED BY THE AMC.' 30 'M/S SATISH BORA & ASSOCIATES: IN THE CASE OF PMC, THE COMPLETION CERTIFICATE IN PR ESCRIBED FORM ISSUED BY THE LICENSED ARCHITECT ETC. WHO HAS SUPERVISED THE CONSTRUCTION IS FURNISHED WITH FOUR SETS OF COMPLETION PLAN UNDER RULE 7.6 OF THE DC RULES OF THE PMC. THEREAFTER PMC IS REQUIRED TO RETUR N ONE OF THE SETS DULY CERTIFIED AS COMPLETION PLAN TO THE OWNER ALONG WITH THE ISSUE OF FULL OCCUPANCY CERTIFICATE AFTER INSPECTION OF THE W ORK UNDER RULE 7.7 OF THE DC RULES. SINCE EXPIATION (II) TO SECTION 80IB(1 0)(A) OF THE I. T. ACT REQUIRES COMPLETION CERTIFICATE ISSUED BY THE LOCAL AU THORITY TO BE TAKEN AS THE DATE OF COMPLETION OF THE CONSTRUCTION, A GENE RAL UNDERSTANDING IN OUR VIEW IS THAT A COMPLETION CERTIFICATE WHICH I S ISSUED BY THE LOCAL AUTHORITY AFTER CONDUCTING INSPECTIONS OF CONSTRUCTIO N BY IT. IN CASE OF PMC, IT IS ONLY OCCUPANCY CERTIFICATE WHICH IS ISSUED ALONGWITH CERTIFIED COMPLETION PLAN AFTER INSPECTION OF THE CONSTRUCTION BY IT, WE HAVE TREATED THE DATE OF ISSUANCE OF SUCH OCCUPANCY CERTIF ICATE ALONGWITH CERTIFIED COMPLETION PLAN AS THE DATE OF COMPLETION CERTIFICATE OF THE CONSTRUCTION FOR THE REQUIREMENT OF EXPLANATION (II) TO SECTION 80IB(10)(A) OF THE I. T. ACT. SINCE INFACT PMC DO NOT ISSUE OCCUPANCY CERTIFICATE G ENERALLY IN TIME AND WITH THIS UNDERSTANDING THE LEGISLATURE HAVE ALSO I NTRODUCED A DEEMING PROVISION OF 21 DAYS TO PUT CONSTRAINT UPON PM C, WE AFTER DETAILED DELIBERATION IN PRECEDING PARAGRAPHS HAVE C OME TO A CONCLUSION THAT IN CASE OF SMALL OBJECTIONS OF PMC RAISE D AFTER EXPIRY OF DEEMING PERIOD OF 21 DAYS UNDER RULE 7.7 OF DC RULES UNDER PMC, THE DATE WHEN THE APPLICANT ACQUIRED DEEMING SANCTION WI LL BE TREATED AS THE DATE OF COMPLETION (OCCUPANCY) CERTIFICATE TO M EET OUT THE REQUIREMENT OF EXPLANATION (II) TO SECTION 80IB(10) (A) OF THE ACT. WE HAVE ALREADY DISCUSSED HEREINABOVE WHAT WOULD BE THE SM ALL OBJECTIONS. IN BRIEF THOSE OBJECTIONS WHICH DO NOT AFFECT THE MAI N PROJECT AND ARE GENERALLY TEMPORARY CONSTRUCTIONS. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BE LOW DIRECT THE A. O. TO ALLOW THE CLAIMED DEDUCTION U/S. 80IB(10) OF T HE I.T. ACT 1961 IN THE ASSESSMENT YEARS UNDER CONSIDERATION TREATING THE REQ UIRED DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT AS T HE DATE WHEN ABOVE DISCUSSED DEEMING PROVISION PERIOD OF 21 DAYS EXPI RED I. E. 20.11.20.' AFTER REPRODUCING THE EXTRACT OF THE RATIO IN THE A BOVE CASES THE ITAT, PUNE IN THE CASE OF RUNWAL MULTIHOUSING PVT. LTD. HELD AS U NDER: 'IN VIEW OF THE ABOVE DECISIONS WE ARE OF THE CONSIDER ED OPINION THAT SINCE THE ASSESSEE HAS DONE WHATEVER POSSIBLE ON HIS PART, I.E. DULY APPLIED TO PMC FOR ISSUE OF COMPLETION CERTIFICATE, H ANDED OVER POSSESSION OF THE FLATS/ROW HOUSES TO THE RESPECTIVE BUYE RS, PMC HAS STARTED LEVYING MUNICIPAL TAXES AND ELECTRICITY BILLS PAID BY RESPECTIVE OWNERS, THEREFORE, DEDUCTION U/S. 80IB(10) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE CANNOT BE DENIED TO THE ASSESSEE FOR NON- RECEIPT OF COMPLETION CERTIFICATE FROM PMC BEFORE 3 1-03-2008 WHICH WAS BEYOND THE CONTROL OF THE ASSESSEE. ' THUS, IN VIEW OF THE RATIO OF THE DECISION OF PUNE IT AT AND THE FACT AS BROUGHT ON RECORD THE ISSUES AND FACTS IN THE PRESENT CASE ARE ALSO IDENTICAL TO THE CASES RELIED UPON BY THE APPELLANT. THE DISALLOWANCE OF DEDUCTION U/S 80IB(10) DO NOT APPEAR TO BE JUSTIFIED AND HENCE THE SAME CANNOT BE UPHELD. IN VIEW OF THE ABOVE, THE ADDITIO NAL GROUND RAISED BY THE APPELLANT IN RESPECT OF LAPIZ LAZULI PROJECT IS LIABL E TO BE ALLOWED. 31 26. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 27. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE GROUND RAIS ED BY THE REVENUE RELATES TO THE ALLOWABILITY OF CLAIM OF DEDUCTION U /S.80IB(10) BY THE CIT(A) IN RESPECT OF THE PROJECTS LAPIS LAZULI AND ROSE PARADE AS ACCORDING TO THE REVENUE THE ASSESSEE COULD NOT FUR NISH THE COMPLETION CERTIFICATE TILL DATE. ON PERUSAL OF THE ORDERS OF THE AO, WE FIND THAT THE AO HAS NOT RAISED THE ISSUE OF NON-COMPLETION OF TH E PROJECT ROSE PARADE IN THE ASSESSMENT ORDER PASSED U/S.153A R.W.S.143(3 ). THEREFORE, THE GROUND RAISED BY THE REVENUE ON THIS ISSUE BECOMES INFRUCTUOUS. 27.1 SO FAR AS THE PROJECT LAPIS LAZULI IS CONCERNE D, WE FIND THE AO RAISED THE ISSUE OF NON COMPLETION OF THE PROJECT F OR THE FIRST TIME IN THE ORDER PASSED U/S.153A R.W.S.143(3). ACCORDING TO T HE AO SINCE THE COMMENCEMENT CERTIFICATE FOR THE PROJECT LAPIS LAZU LI WAS OBTAINED ON 24-12-2001, THEREFORE, AS PER THE PROVISIONS OF SEC TION 80IB(10) THE PROJECT HAS TO BE COMPLETED ON OR BEFORE 31-03-2008 . SINCE THE ASSESSEE HAS ONLY MADE AN APPLICATION TO THE APPROPRIATE AUT HORITY ON 01-02-2008 AND NOT OBTAINED THE COMPLETION CERTIFICATE, THEREF ORE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IB(10) OF THE I.T. ACT. WE FIND THE LD.CIT(A) ON THE BASIS OF VARIOUS SUBMISSIONS FILED BEFORE HI M HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(10) OF THE I.T. A CT SINCE IT HAD COMPLETED 32 THE ENTIRE PROJECT WITHIN THE SPECIFIED TIME LIMIT AND HAD ALSO APPLIED FOR THE COMPLETION CERTIFICATE/OCCUPANCY CERTIFICATE TO THE PMC. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, WE FIND THE PROJECT LAPIS LAZULI CONSISTS OF 5 BUILDINGS A, B1, B2, C1 AND C2. AS P ER THE SANCTIONED PLAN, C1 AND C2 WERE RESERVED UNDER THE EWS SCHEME AND WE RE TO BE HANDED OVER TO THE PMC FREE OF COST. THE FINDING GIVEN BY THE LD.CIT(A) THAT THE CONSTRUCTION OF BUILDINGS RESERVED UNDER EWS SCHEME ALONG WITH THE CONSTRUCTION OF BUILDINGS A WAS COMPLETED AND THE C OMPLETION CERTIFICATE IN RESPECT OF THE SAID BUILDING WERE OBTAINED ON 25 -05-2006 AND THIS FACT OF THE RESERVED BUILDINGS UNDER EWS SCHEME WAS ALSO EARLIER INTIMATED TO THE PMC VIDE LETTER DATED 11-02-2006 SO AS TO TAKE THE POSSESSION THEREOF REMAINS UNCONTROVERTED. FROM THE VARIOUS DETAILS F URNISHED IN THE PAPER BOOK AS WELL AS THE DETAILS FILED BEFORE THE LD.CIT (A) WE FIND THE ASSESSEE HAD MADE AN APPLICATION TO THE APPROPRIATE AUTHORIT Y ON 01-02-2008 FOR THE BUILDING B1 AND B2 A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 122 AND 123. 27.2 THE SUBMISSION OF THE ASSESSEE THAT THE POSSES SION OF THE FLATS WERE HANDED OVER TO THE BUYERS BEFORE 31-03-2008 AND SEP ARATE ELECTRICITY BILLS FILED DURING THE COURSE OF APPELLATE PROCEEDINGS SH OW THAT COMMENCEMENT OF ELECTRICITY SUPPLY TO THE FLATS HAD STARTED WELL BEFORE 31-03-2008. THE BUILDINGS IN THE PROJECT A, C1 AND C2 WERE COMPLETE D AND THE COMPLETION CERTIFICATE IN RESPECT OF THE SAID BUILDINGS WERE O BTAINED ON 25-05-2006. SIMILARLY, THE ASSESSEE HAS MADE APPLICATION FOR OC CUPANCY CERTIFICATE FOR BUILDINGS B1 AND B2 ON 01-02-2008, A COPY OF WHICH IS FILED IN THE PAPER BOOK AT PAGE 122 AND THE SAME HAS NOT BEEN DISPUTED BY THE REVENUE. 33 SINCE THE ASSESSEE BY FURNISHING ALL THESE DETAILS HAS SUBSTANTIATED THAT IT HAS COMPLETED THE PROJECT BEFORE 31-03-2008 AND NON RECEIPT OF THE OCCUPANCY CERTIFICATE FROM THE PMC FOR THE BUILDING S B1 AND B2 WAS BEYOND ITS CONTROL, THEREFORE, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT DEDUCTION U/S.80IB(10 ) CANNOT BE DENIED MERELY BECAUSE THE PMC HAS NOT ISSUED THE COMPLETIO N CERTIFICATE BY 31- 03-2008 FOR NO FAULT ON THE PART OF THE ASSESSEE. THE VARIOUS DECISIONS RELIED ON BY THE LD.CIT(A) ALSO SUPPORTS THE CASE O F THE ASSESSEE. THE PUNE BENCHES OF THE TRIBUNAL ARE CONSISTENTLY TAKIN G THE VIEW THAT IF THE ASSESSEE HAS APPLIED TO THE PMC FOR ISSUANCE OF COM PLETION CERTIFICATE/OCCUPANCY CERTIFICATE AFTER COMPLETING THE PROJECT AND HAS DONE WHATEVER IS POSSIBLE ON ITS PART, THEN IN THAT CASE THE MERE NON-RECEIPT OF THE OCCUPANCY CERTIFICATE/COMPLETION CERTIFICATE BY THE PMC FOR NO FAULT ON THE PART OF THE ASSESSEE CANNOT BE A GROUND TO D ENY THE BENEFIT OF DEDUCTION U/S.80IB(10). 27.3 FURTHER, THE HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. CHD DEVELOPERS LTD. REPORTED IN 362 ITR 177 HAS HELD TH AT HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY PRIOR TO 01-04-2005 ARE ENTITLED TO 100% BENEFIT OF DEDUCTION U/S.80IB(10) EVEN IN ABSENCE O F COMPLETION CERTIFICATE SINCE THE AMENDMENT INSERTED BY THE FIN ANCE (NO.2) ACT, 2004 W.E.F., 01-04-2005 WAS PROSPECTIVELY APPLICABLE. I N THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) ON THIS ISSUE, WE FIND NO INFIRMITY IN THE ORDER OF TH E CIT(A) ALLOWING DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECTS L APIS LAZULI. GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 34 27.4 IDENTICAL GROUND HAS BEEN TAKEN BY THE REVENUE (GROUND OF APPEAL NO.5) IN APPEALS FILED FOR A.YRS 2005-06 TO 2007-08 AND A.Y. 2009-10. FOLLOWING THE REASONINGS GIVEN ABOVE GROUND OF APPE AL NO.5 IN THE APPEALS FILED BY THE REVENUE FOR THE ABOVE YEARS IS DISMISSED. 28. GROUND OF APPEAL NO.6 BY THE REVENUE FOR A.Y. 2 004-05 READS AS UNDER : 6) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEDUCTION IN RESPECT OF PROJEC T-LAPIZ LAZULI, ROSE PARADE AND MAESTRO, ALTHOUGH THE BUILT UP AREA OF SOME RESIDENTIAL UNITS EXCEEDS 1500 SQ.FEET AND THE SAME IS CONTRAVENTION OF S ECTION 80IB(10)(C). 28.1 AFTER HEARING BOTH THE SIDES, WE FIND THE AO H ELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IB(10) SINCE THE BUILT UP AREA OF SOME OF THE UNITS IN THE PROJECT ROSE PARADE, LAPIS LAZULI AND MAESTRO ARE MORE THAN 1500 SW.FT. IN APPEAL THE LD.CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NOS. 156/P N/2011 AND 172/PN/2011 ORDER DATED 23-11-2012 ALLOWED PROPORTI ONATE DEDUCTION IN RESPECT OF THE ELIGIBLE UNITS WHERE THE AREA OF EAC H FLAT IS 1500 SQ.FT. 29. SO FAR AS THE PROJECT ROSE PARADE IS CONCERNED, WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.156/PN/2011 FILE D BY THE ASSESSEE AND ITA NO.172/PN/2011 FILED BY THE REVENUE FOR A.Y . 2004-05 ORDER DATED 23-11-2012 AT PARA 15.1 HAS OBSERVED AS UNDER : 15.1 SO FAR AS THE ALLOWABILITY OF CLAIM OF DEDUCTI ON U/S.80IB(10) IN RESPECT OF THE PROJECT ROSE PARADE IS CONCERNED, WE FIND THE DVO IN RESPONSE TO THE REFERENCE MADE BY THE AO HAS SUBMITTED HIS REPORT GIVING THE BUILT UP AREA OF EACH FLAT IN THE PROJECT ROSE PARADE. WE FIND THE LEARNED CIT(A) AFTER CONSIDERING THE REPORT OF THE D VO HAS GIVEN A FACTUAL FINDING THAT THE BUILT UP AREA OF NONE OF THE FLATS IN THE PROJECT ROSE PARADE EXCEEDS 1500 SQ.FT. THE SUBMISSION OF THE LEA RNED COUNSEL FOR THE 35 ASSESSEE THAT EVEN AFTER COMBINING THE 2 ADJACENT FLATS THE BUILT UP AREA OF NONE OF THE FLATS AS DETERMINED BY THE DVO EXCEEDS 150 0 SQ.FT. COULD NOT BE CONTROVERTED BY THE LEARNED DR. UNDER THESE CIR CUMSTANCES, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ALLOWING THE C LAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECT ROSE PARADE. SIMILARLY, THE TRIBUNAL FOLLOWING THE ABOVE DECISIO N IN THE CROSS APPEALS VIDE ITA NOS. 1536/PN/2011 AND ITA NO.1556/PN/2011 ORDER DATED 23- 11-2012 FOR A.Y. 2005-06 DISMISSED THE APPEAL FILED BY THE REVENUE WHERE THE CIT(A) HAD ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF THE TWO PROJECTS MAESTRO AND ROSE PARADE . 30. SO FAR AS THE PROJECT LAPIS LAZULI IS CONCERNED , WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE IN THE APPEAL FILED BY THE A SSESSEE AND THE REVENUE VIDE ITA NOS. 156 AND 172/PN/2011 ORDER DATED 23-11 -2012 FOR A.Y.2004-05 HAS ALLOWED PROPORTIONATE DEDUCTION TO THE ASSESSEE IN RESPECT OF THE UNITS BELOW 1500 SQ.FT. IN THE PROJE CT LAPIS LAZULI. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 15.3 AND ONWARDS READ AS UNDER : 15.3 SO FAR AS THE APPEAL OF THE ASSESSEE IS CONCERNED R EQUESTING PRO- RATA DEDUCTION IN CASE OF THE 76 FLATS OUT OF 214 FLA TS WHICH HAVE BUILT UP AREA OF LESS THAN 1500 ST.FT. WE FIND THE TRIBUNAL IN THE CASE OF D.S. KULKARNI DEVELOPERS LTD. (SUPRA) FOLLOWING VARIOUS DECISIONS HA S HELD THAT ASSESSEE IS ENTITLED TO PROPORTIONATE DEDUCTION OF THE PROFIT S IN RESPECT OF FLATS WHICH HAVE BUILT UP AREA OF LESS THAN 1500 SQ.FT. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL READ AS UNDER : 20. IN THIS BACKGROUND, THE ALTERNATIVE PLEA OF THE ASSESSEE SPRINGS UP. THE PLEA IS THAT THE DEDUCTION U/S. 80IB(10) BE DENI ED ONLY WITH RESPECT TO THE UNITS WHICH DO NOT CONFORM TO THE CONDITION CONT AINED IN SEC. 80IB (10)(C ) AND FOR THE BALANCE ELIGIBLE RESIDENTIAL UN ITS, THE DEDUCTION SHOULD BE ALLOWED. THE REVENUE HAS OPPOSED THE SAID PLEA ON THE GROUND THAT THE ASSESSEE IS NOT ENTITLED TO A PROPORTIONATE DEDUCTI ON U/S. 80IB(10) OF THE ACT. 21. ON THIS ASPECT, WE FIND THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. EKTA HOUSING PVT. LTD. (SUPRA) HAS UP HELD THE PLEA OF THE ASSESSEE FOR A PROPORTIONATE DEDUCTION U/S. 80IB(10) OF THE ACT WHERE SOME OF THE RESIDENTIAL UNITS IN THE PROJECT VIOLATED THE CONDITION CONTAINED IN SEC. 80IB(10)(C ) OF THE ACT. THE MUM BAI BENCH AFTER NOTICING THE PRECEDENTS IN THE CASE OF 36 I) ITO V/S AIR DEVELOPERS, 25 DTR 287 (NAG.); II) DCIT V/S BRIGADE ENTERPRISES PVT. LTD., 14 DTR 37 1 (BANG.); III) ACIT V/S SHETH DEVELOPERS P. LTD., 33 SOT 277 ( MUM.); IV) BENGAL AMBUJA HOUSING DEVELOPMENT LTD. V/S DCIT; V) SJR BUILDERS V/S ACIT, 3 ITR 569 (MUM.) HELD THAT THE ASSESSEE WOULD NOT LOSE THE EXEMPTION U/S. 80IB(10) IN ENTIRETY WHERE SOME OF THE RESIDENTIAL UNITS WINGS HA D A BUILT- UP AREA IN EXCESS OF THE LIMIT PRESCRIBED IN CLAUSE (C ) OF SE C. 80IB(10) BUT, IT WOULD BE ENTITLED TO PROPORTIONATE DEDUCTION U/S. 80 IB(10) OF THE ACT WITH REGARD TO THE PROFITS EARNED ON THE ELIGIBLE UN ITS. PARTICULARLY, THE TRIBUNAL ALSO CONSIDERED THE DECISION OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) AND HELD THAT THE SAME DOES NOT ENVISAGE DENIAL OF PROPORTIONATE DEDUCTION IN SUCH CI RCUMSTANCES. THE RELEVANT DISCUSSION, AS CONTAINED IN PARAGRAPHS 8 & 9 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. RE ADS AS UNDER : VIII) WE NOW EXAMINE THE APPLICABILITY OF THE DECI SION OF THE HONBLE BOMBAY HIGH COURT IN BRAHMA ASSOCIATES (SUPRA) TO THE F ACTS OF THIS CASE. ON A CAREFUL READING OF THIS JUDGMENT, WE FIND THAT NOWHERE IT IS STATED THAT PROPORTIONATE DEDUCTION SHOULD NOT BE ALLOWED, IN CASE CERTAIN RESIDENTIAL UNITS HAD BUILT UP AREA IN EXCESS OF PRESC RIBED LIMIT OF 1,000 SQ.FT. IN FACT, THIS ISSUE WAS NOT BEFORE THE HONBLE J URISDICTIONAL HIGH COURT. THE QUESTIONS BEFORE THE HONBLE JURISDICTION AL HIGH COURT WERE DIFFERENT AND, HENCE THE JUDGMENT CANNOT BE SAID TO BE ON THIS ISSUE. THE ONLY ISSUE BEFORE THE HIGH COURT IS WHEN THERE IS A COM MERCIAL ELEMENT IN A RESIDENTIAL PROJECT, WILL BE ASSESSEE BE DENIED THE E NTIRE EXEMPTION. IN THIS CASE, THE HONBLE HIGH COURT HAS OBSERVED THAT WH EN THE LOCAL AUTHORITY APPROVED A PLAN AS A HOUSING PROJECT OR A R ESIDENTIAL CUM COMMERCIAL PROJECT, THE ASSESSEE WOULD BE ENTITLED TO C LAIM FOR DEDUCTION UNDER SECTION 80IB(10) EVEN IF THE PROJECT HAD COMME RCIAL ELEMENT IN EXCESS OF 10%. AT PARAS-27 AND 28, THE COURT OBSERVED AS FOLLOWS :- 27. THE QUESTION THEN TO BE CONSIDERED IS, WHETHER TH E SPECIAL BENCH OF THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PROJEC TS HAVING COMMERCIAL AREA UPTO 10% OF THE BUILT-UP AREA OF THE PLOT ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) ON THE ENTIRE PROJECT UPTO 1. 4.2005. ONCE THE BASIC ARGUMENT OF THE REVENUE THAT THE HOUSING PROJE CTS WITH COMMERCIAL USER ARE NOT ENTITLED TO SECTION 80IB(10) DEDUCTION IS REJECTED, THEN IN THE ABSENCE OF ANY RESTRICTION IMPOSED UNDER THE ACT, IT WAS NOT OPEN TO THE TRIBUNAL TO HOLD THAT THE PROJECTS APPROVED BY THE L OCAL AUTHORITIES HAVING RESIDENTIAL BUILDINGS WITH COMMERCIAL USER UPTO 10% O F THE PLOT AREA WOULD ALONE BE ENTITLED TO DEDUCTION UNDER SECTION 8 0IB(10). AS NOTED EARLIER, RESTRICTION REGARDING COMMERCIAL USER HAS BEE N IMPOSED FOR THE FIRST TIME BY INTRODUCING CLAUSE (D) TO SECTION 80IB( 10) WITH EFFECT FROM 1.4.2005. THEREFORE, IT WAS NOT OPEN TO THE TRIBUNA L TO HOLD THAT PRIOR TO 1.4.2005, PROJECTS HAVING COMMERCIAL USER UPTO10% OF THE PLOT AREA ALONE WOULD BE ELIGIBLE FOR SECTION 80IB(10) DEDUCTION. 28. IN THE PRESENT CASE, THOUGH THE COMMERCIAL USER IS MORE THAN 10% OF THE PLOT AREA, THE TRIBUNAL HAS ALLOWED SECTION 80 IB(10) DEDUCTION IN RESPECT OF 15 RESIDENTIAL BUILDINGS ON THE GROUND THA T THE PROFITS FROM THESE EXCLUSIVELY RESIDENTIAL BUILDINGS COULD BE DETERM INED ON STAND ALONG BASIS. IN OUR OPINION, THAT WOULD NOT BE PROPER, BEC AUSE SECTION 80IB(10) ALLOWS DEDUCTION TO THE ENTIRE PROJECT APPROVED BY T HE LOCAL AUTHORITY AND NOT TO A PART OF THE PROJECT. IF THE CONDITIONS SET OUT IN SECTION 80IB(10) 37 ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTI RE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOW ING DEDUCTION TO A PART OF THE PROJECT. IN THE PRESENT CASE, THE COMMERCIAL USER IS ALLOWED IN ACCORDANCE WITH THE DC RULES AND HENCE THE ASSESSEE WAS E NTITLED TO SECTION 80IB(10) DEDUCTION ON THE ENTIRE PROJECT APP ROVED BY THE LOCAL AUTHORITY. HOWEVER, THE ASSESSEE HAS NOT CHALLENGED THE DECISION OF THE TRIBUNAL IN RESTRICTING THE DEDUCTION TO A PART OF THE PROJECT. THEREFORE, WHILE HOLDING THAT IN LAW, THE ASSESSEE WAS ENTITLED TO SECTION 80IB(10) DEDUCTION ON THE PROFITS OF THE ENTIRE PROJECT, IN T HE FACTS OF THE PRESENT CASE, SINCE THE ASSESSEE HAS NOT CHALLENGED THE DECISION O F THE TRIBUNAL, WE ARE NOT INCLINED TO DISTURB TO DISTURB THE DECISION OF THE TRIBUNAL IN RESTRICTING THE SECTION 80IB(10) DEDUCTION ONLY IN R ESPECT OF THE PROFITS DERIVED FROM 15 RESIDENTIAL BUILDINGS. IX) THUS, IT COULD BE SEEN THAT THE HONBLE HIGH CO URT DO NOT APPROVE THE FINDINGS OF THE TRIBUNAL THAT A RESIDENTIAL BUILD ING WITH COMMERCIAL USER UP TO 10% OF THE PLOT AREA WOULD ALONE BE ENTIT LED TO DEDUCTION UNDER SECTION 80IB(10). THE ISSUE THAT, IN CASE WHERE CERTAI N RESIDENTIAL UNITS ARE OF A BUILT UP AREA IN EXCESS OF THE PRESCRIBED LIM IT OF 1,000 SQ.FT. IN RESIDENTIAL PROJECT, THIS WOULD RESULT IN THE ENTIRE E XEMPTION BEING LOST, OR WHETHER THE ASSESSEE WOULD BE ENTITLED TO A PROPORTIONA TE DEDUCTION WAS NOT BEFORE THE HIGH COURT. THUS, IN OUR OPINION, TH E DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN BRAHMA ASSOCIATES (SUPRA) DOES NOT COME TO THE RESCUE OF THE REVENUE. 22. FOLLOWING THE AFORESAID PRECEDENT, WE, THEREFORE , HOLD THAT MERELY BECAUSE THE ASSESSEE HAS VIOLATED THE CONDITION U/S. 80IB (10)(C ) IN RELATION TO THE FLATS ON THE 11 TH FLOOR, THE DEDUCTION U/S. 80IB(10) CANNOT BE DENIED IN ITS ENTIRETY, BUT, THE DENIAL SHALL BE LIMITED TO THE PROFITS IN RESPECT OF THE FLATS ON THE 11 TH FLOOR ALONE. FOR THE BALANCE OF THE RESIDENTIAL UNITS, THE PLEA OF THE ASSESSEE FOR DEDUCTIO N U/S. 80IB(10) OF THE ACT IS JUSTIFIED, AND THE ASSESSEE SUCCEEDS ON THIS ASPEC T. 16. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUN AL IN THE CASE OF D.S. KULKARNI DEVELOPERS LTD. (SUPRA) WE HOLD THAT T HE ASSESSEE IS ENTITLED TO PROPORTIONATE DEDUCTION IN RESPECT OF THE FLATS WH ICH HAVE BUILT UP AREA OF LESS THAN 1500 SQ.FT. WE ACCORDINGLY REMIT BACK TH E MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO CALCULATE THE PROPORTI ONATE DEDUCTION AND ALLOW THE DEDUCTION U/S.80IB(10) ON SUCH PROPORTIONAT E PROFIT. NEEDLESS TO SAY, THE AO SHALL GIVE DUE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE WHILE DETERMINING SUCH PROPORTIONATE DEDUCTION. 17. SO FAR AS THE DECISIONS RELIED ON BY THE LEARNED D R WE FIND THOSE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. AS REGARDS THE DECISION OF THE CHENNAI BENCH OF THE TRIB UNAL IN THE CASE OF VISWAS PROMOTERS (SUPRA) WE FIND THE CHENNAI BENCH OF THE ITAT (TM) IN THE CASE OF SANGHVI & DOSHI ENTERPRISE (SUPRA) HAS REVE RSED THE SAME AND FOLLOWING THE DECISION OF HONBLE CALCUTTA HIGH COUR T IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VIDE ITA NO.4 58 OF 2006 ORDER DATED 5-1-2007 HAS HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(10) IN RESPECT OF FLATS HAVING BUILT UP AREA NOT EXCEEDING 1500 SQ.FT. AND NOT ENTITLED TO DEDUCTION IN RESPECT OF TH OSE FLATS HAVING THEIR BUILT UP AREA EXCEEDING 1500 SQ.FT. THEREFORE, THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL RELIED ON BY THE LEARNED DR I S NOT APPLICABLE. 38 18. SO FAR AS THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA) IS CONCERNED WE FIND THE SA ID DECISION IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE THE ISSUE THERE WAS NOT OF PRO-RATA DEDUCTION. THE HONBLE HIGH COURT IN T HE SAID DECISION HAS HELD THAT CONSTRUCTION OF EVEN 1 BUILDING WITH SEVERA L RESIDENTIAL UNITS OF THE SIZE NOT EXCEEDING 1000 SQ.FT. WOULD CONSTITUTE A HOUSING PROJECT U/S.80IB(10). WE ACCORDINGLY HOLD THAT THE DECISIONS RELIED ON BY THE DR ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THUS, THE ASSESSEES GROUND RELATING TO PRO-RATA DEDUCTIO N IS ALLOWED. 30.1 FOLLOWING THE ABOVE DECISION THE TRIBUNAL IN A SSESSEES OWN CASE FOR A.Y. 2005-06 VIDE ITA NOS. 1536/PN/2011 FILED B Y THE REVENUE AND 1556/PN/2011 FILED BY THE ASSESSEE HAS DISMISSED T HE APPEAL FILED BY THE REVENUE AND ALLOWED THE CLAIM OF PROPORTIONATE DEDU CTION IN RESPECT OF THE UNITS WHICH ARE LESS THAN 1500 SQ.FT. 31. SIMILARLY, SO FAR AS THE PROJECT MAESTRO IS CON CERNED, WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 VI DE ITA NOS.156 AND 172/PN/2011 ORDER DATED 23-11-2012 AT PARA 15 OF TH E ORDER HAS DISCUSSED THE ISSUE AND DISMISSED THE APPEAL FILED BY THE REV ENUE. THE RELEVANT OBSERVATION OF THE TRIBUNAL READS AS UNDER : 15. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARI OUS DECISIONS CITED BEFORE US. THE ISSUE INVOLVED IN THE IMPUGNED APPEAL IS REGARDING ALLOWABILITY OF DEDUCTION U/S.80IB(10) IN RESPECT OF 4 PROJECTS UNDERTAKEN BY THE ASSESSEE DURING THE IMPUGNED A.Y., I.E. PROJECTS MAESTROS, MISTRY MOOR, ROSE PARADE AND LAPIZ LAZULI. SO FAR AS THE DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECTS MAESTROS AND MISTRY MOOR IS CONCERNED THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSE E BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2001-02 TO 2003- 04. SINCE THE LEARNED CIT(A) WHILE ALLOWING THE CL AIM OF THE ASSESSEE IN RESPECT OF THE ABOVE 2 PROJECTS HAS FOLLOWED THE ORDER OF HIS PREDECESSOR FOR A.Y. 2003-04 AND SINCE THE TRIBUNAL HAS DISMISSED TH E APPEAL FILED BY THE REVENUE, THEREFORE, IN ABSENCE OF ANY CONTRARY M ATERIAL BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIBUNAL, WE, RESPEC TFULLY FOLLOWING THE DECISION OF THE TRIBUNAL DISMISS THE GROUNDS RAISED BY TH E REVENUE CHALLENGING THE ORDER OF THE CIT(A) IN ALLOWING THE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECTS MAESTROS AND MISTRY MOOR. 39 THE ABOVE DECISION HAS BEEN FOLLOWED BY THE TRIBUNA L AGAIN IN A.Y. 2005-06 VIDE ITA NO. 1536/PN/2011 FILED BY THE REVE NUE AND 1556/PN/2011 FILED BY THE ASSESSEE AND THE CLAIM O F DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECTS LAPIS LAZUL I, MAESTRO AND ROSE PARADE ARE ALLOWED. SINCE THE LD.CIT(A) WHILE DECI DING THE ISSUE HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 32. IDENTICAL GROUND HAS BEEN TAKEN BY THE REVENUE (GROUND OF APPEAL NO.6) IN APPEALS FILED FOR A.YRS. 2005-06 TO 2007-0 8 AND A.Y. 2009-10. FOLLOWING THE REASONINGS GIVEN ABOVE THE GROUND OF APPEAL NO.6 IN APPEALS FILED BY THE REVENUE FOR THE ABOVE YEARS IS DISMISSED. 33. GROUND OF APPEAL NO.7 BY THE REVENUE READS AS U NDER : 7) THE LD. CIT(A) HAS ERRED IN HOLDING THAT BUILT-U P AREA DOESN'T INCLUDE BALCONY AND TERRACE FOR CLAIMING DEDUCTION U/S 80IB( 10) OF THE ACT. 33.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO H ELD THAT BUILT UP AREA OF SOME OF THE RESIDENTIAL UNITS IS MORE THAN 1500 SQ. FT. AFTER CONSIDERING THE BALCONIES AND TERRACE AND THEREFORE DEDUCTION U/S.8 0IB(10) CANNOT BE ALLOWED. IN APPEAL THE LD.CIT(A) HELD THAT THE BUI LT UP AREA DOES NOT INCLUDE BALCONY AND TERRACE FOR CLAIMING DEDUCTION U/S.80IB(10) OF THE I.T. ACT. WE FIND THE TRIBUNAL IN ASSESSEES OWN C ASE FOR A.Y. 2001-02 VIDE ITA NO.1146/PN/2010 AND OTHER CONNECTED APPEAL S ORDER DATED 25- 06-2012 AT PARA NO.14 OF THE ORDER HAS HELD THAT TH E BUILT UP AREAS WORKED OUT DOES NOT INCLUDE BALCONIES, TERRACE, COMMON LOB BY AND LIFT ROOM AS 40 PER DC RULES. THE RELEVANT OBSERVATION OF THE TRIB UNAL AT PARA 14 OF THE ORDER READS AS UNDER : 14. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND THE DECISIONS RELIED UPON BY THE PARTIES, WE DO NOT FIND SU BSTANCE IN THE ABOVE CONTENTION OF THE LD DR THAT BUILT UP AREA DEFINED IN THE DC RULES IS NOT APPLICABLE IN THE PRESENT CASE TO VERIFY THE ELIGIBI LITY OF THE CLAIMED DEDUCTION U/S. 80IB(10) SINCE IT IS AVAILABLE WITH THE PMC TO COMPUTE FSI ONLY. THE REASON BEING IN OUR VIEW IS THAT IN ABSENCE OF AVAILABILITY OF SUCH DEFINITION IN THE IT ACT DURING THE YEAR UNDER CONSI DERATION THE ONLY DEFINITION AVAILABLE WITH THE PMC IS APPLICABLE AS IT IS THE PMC WHICH APPROVES AND EXEMPTION/OCCUPATION THE BUILDING PLAN AND ISSUE COMMENCEMENT CERTIFICATES. WE DO NOT ALSO AGREE WITH THE VIEW OF THE AUTHORITIES BELOW THAT IF TWO UNITS / FLATS APPROVED B Y THE LOCAL AUTHORITY AS SEPARATE UNITS ARE UNITED BY A PERSON AS PER HIS OWN SUITABILITY AS INSTRUCTED THE ASSESSEE TO MODIFY THE CONSTRUCTION AS PER HIS SUITABILITY, THE SAME MAY BE IN VIOLATION OF THE LOCAL LAWS AND PU NISHABLE / COMPOUNDABLE THEREUNDER BUT THE SAME IS NOT RELEVANT FOR THE PURPOSE OF COMPUTING THE ELIGIBILITY OF DEDUCTION U/S. 80IB(10) OF THE ACT ESPECIALLY WHEN THE LOCAL AUTHORITY HAS ALREADY ISSUED COMPLETION / OCCUPATION CERTIFICATE THAT THOSE UNITS HAVE BEEN CONSTRUCTED AS P ER THE BUILDING PLAN APPROVED. STILL WE FIND THAT THE ASSESSEE HAS BEEN SUCCES SFULLY DEMONSTRATED THAT EVEN IF TWO FLATS ARE COMBINED, THE BUILT UP AREA AS PER DC RULES DOES NOT EXCEED 1500 SQ.FT. IN THE CASE OF HAW ARE CONSTRUCTIONS (P) LTD. VS. ITO (SUPRA) THE MUMBAI BENCH OF THE TRI BUNAL HAS HELD THAT DEFINITION OF 'BUILT UP AREA' GIVEN IN SUB SECTION ( 14) (A) OF SECTION 80 IB IS INSERTED BY THE FINANCE (2)ACT 2004 W.E.F. 1.4.2005 AND THEREFORE, THE SAME IS APPLICABLE ONLY IN RESPECT OF THE PROJECTS APPR OVED AFTER 1.4.2005. IN THAT CASE THE ASSESSEE'S PROJECT WAS APPROVED ON 10 TN OCT, 2003 HENCE IT WAS HELD BY THE TRIBUNAL THAT REVENUE AUTHORITIES WER E NOT JUSTIFIED IN INCLUDING BALCONY / TERRACE IN THE BUILT UP AREA SO AS TO DENY THE CLAIMED DEDUCTION U/S.80IB(10). THE PUNE DC RULES VIDE RULE 1 5.4.2 HAS PROVIDED AS TO WHICH AREA IS NOT TO BE INCLUDED WHILE CALCULAT ING BUILT UP AREA. THE AVO IN ITS REPORT DATED 5.5.2004 (COPY MADE AVAILABL E AT PAGE NO. 28 OF THE PAPER BOOK) HAS ALSO MENTIONED THAT THE BUILT UP AREA S WORKED OUT ARE EXCLUSIVE OF BALCONIES, STAIRCASE, COMMON LOBBY, LIFT ROOM AS PER DC RULES. UNDER THESE CIRCUMSTANCES WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER ALLOWING THE CLAIMED DEDUCTION ON THE BASIS THA T EVEN IF TWO FLATS EXCLUDING BALCONY ARE COMPUTED THE BUILT UP AREA WI LL NOT EXCEED 1500 SQ.FT. AS PER THE DC RULES APPLICABLE IN PMC. THE FIRST APPELLATE ORDER IN THIS REGARD IS THUS UPHELD. WE ALSO HOLD THAT THE TWO ADJOINING FIATS APPROVED BY THE LOCAL AUTHORITY AS SEPARATE UNITS AND COMPLETION CERTIFICATE ISSUED, CANNOT BE TREATED AS ONE UNIT TO C OMPUTE THE BUILT UP AREA FOR THE PURPOSE OF SECTION 80IB(10) DEDUCTION O NLY BECAUSE THESE TWO FIATS HAVE BEEN MODIFIED AS ONE, AS PER CONVENIENC E AND INSTRUCTION OF THE BUYER. WE ORDER ACCORDINGLY. 33.2 SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN THE CASE OF D.S. KULKARNI DEVELOPERS LTD. VIDE ITA NO.1428 AND 1429/ PN/2008 ORDER DATED 08-08-2012. IT HAS BEEN HELD IN THE SAID DEC ISION THAT THE CONTENTION OF THE BUILT UP AREA AS PER DC RULES IS TO BE CONSI DERED FOR COMPUTING THE 41 BUILT UP AREA OF PROJECTS SANCTIONED PRIOR TO 01-04 -2005. THEREFORE, FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL IN SU CH TYPE OF CASES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) H OLDING THAT BUILT UP AREA DOES NOT INCLUDE BALCONY AND TERRACE FOR CLAIMING D EDUCTION U/S.80IB(10) OF THE I.T. ACT. WE ACCORDINGLY DISMISSED THE GROU ND RAISED BY THE REVENUE ON THIS ISSUE. 33.3 IDENTICAL GROUND (GROUND OF APPEAL NO.7) HAS B EEN TAKEN BY THE REVENUE IN APPEALS FOR A.YRS. 2005-06 TO 2007-08 AN D A.Y. 2009-10. FOLLOWING THE SAME REASONING THIS GROUND BY THE REV ENUE IN ALL THESE ASSESSMENT YEARS IS DISMISSED. 34. GROUNDS OF APPEAL NO.8 AND 9 BY THE REVENUE BEI NG GENERAL IN NATURE FOR ALL THESE YEARS ARE DISMISSED. 35. NOW WE TAKE UP THE APPEALS FILED BY THE ASSESSE E. FIRST WE TAKE UP ITA NO.1449/PN/2013 FILED BY THE ASSESSEE FOR A.Y. 2004-05 AS THE LEAD CASE. 36. GROUNDS OF APPEAL NO.1 BY THE ASSESSEE READS AS UNDER : 1] THE LEARNED CIT(A) ERRED IN PARTLY CONFIRMIN G THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB(10) IN RESPECT OF THE PROJECT 'LAPIS LAZULI' WITHOUT APPRECIATING THAT THE SAID DISALLOWANCE WAS ALREADY MADE IN THE ASST. PASSED U/S 143(3) AND THEREFO RE, THERE WAS NO REASON TO MAKE THE SAID DISALLOWANCE IN THE ASST. COMPL ETED U/S 153 A OF THE ACT. 36.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO I N THE ASSESSMENT MADE U/S.153A DISALLOWED THE ENTIRE DEDUCTION CLAIMED U/ S.80IB(10) IN RESPECT OF THE PROJECT LAPIS LAZULI. BEFORE CIT(A) THE ASS ESSEE SUBMITTED THAT THE SAID ADDITION WAS ALREADY MADE IN THE ORDER PASSED U/S.143(3) AND 42 THEREFORE IN ABSENCE OF ANY INCRIMINATING MATERIAL/ EVIDENCE FOUND DURING THE COURSE OF SEARCH THERE WAS NO REASON TO MAKE TH E SAME ADDITION IN THE ORDER PASSED U/S.153A R.W.S. 143(3). HOWEVER, THE LD.CIT(A) REJECTED THE ABOVE CONTENTION OF THE ASSESSEE. RELYING ON V ARIOUS DECISIONS HE HELD THAT AS PER PROVISIONS OF SECTION 153A THE AO HAS TO ASSESS/REASSESS THE TOTAL INCOME OF PRECEDING SIX YEARS IN THE CASE OF A PERSON IN WHOSE CASE SEARCH IS INITIATED. THE REQUIREMENT OF MAKIN G ASSESSMENT/RE- ASSESSMENT U/S.153A HAS NO RELATION WITH THE NATURE OF INCRIMINATING MATERIAL FOUND OR NOT IN THE COURSE OF SEARCH. HE HELD THAT SECTION 153A REQUIRES TOTAL INCOME FOR PRECEDING SIX YEARS TO BE ASSESSED/RE-ASSESSED IN PURSUANCE TO NOTICE U/S.153A. THE TOTAL INCOME WIL L INCLUDE ANY KIND OF INCOME AND IT CANNOT BE RESTRICTED TO UNDISCLOSED O R ESCAPED INCOME. AFTER INITIATION OF SEARCH, PENDING ASSESSMENT PROC EEDINGS ARE ABATED AND THE SAME ARE MERGED WITH THE ASSESSMENT PROCEEDINGS TO BE UNDERTAKEN PURSUANT TO NOTICE U/S.153A AND NATURE OF ASSESSMEN T PROCEEDINGS CANNOT BE RESTRICTED TO MAKE ASSESSMENT ONLY ON UNDISCLOSE D INCOME. HE ACCORDINGLY SUBMITTED THAT THE CONTENTIONS RAISED B Y THE ASSESSEE THAT NO DISALLOWANCE CAN BE MADE U/S.80IB(10) IN RESPECT OF THE ASSESSMENTS ALREADY COMPLETED CANNOT BE ACCEPTED. HE, HOWEVER, HELD THAT PROPORTIONATE DEDUCTION TO THE ASSESSEE IN RESPECT OF THE SAID PROJECT IS TO BE ALLOWED. HE ACCORDINGLY RESTRICTED THE DISALLOW ANCE ONLY TO THE EXTENT OF ADDITION CONFIRMED BY THE ITAT, PUNE IN ASSESSEE S OWN CASE IN THE APPEAL ORDER PASSED IN RESPECT OF THE ORIGINAL ASSE SSMENT U/S.143(3). AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 43 37. THE LD. COUNSEL FOR THE ASSESSEE DID NOT SERIOU SLY CHALLENGE THE ISSUE ON THE GROUND THAT THE LD.CIT(A) HAS ALREADY ALLOWED PROPORTIONATE DEDUCTION U/S.80IB(10) IN RESPECT OF THE SAID PROJE CT. WHILE DOING SO, HE HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESS EES OWN CASE. IN VIEW OF THE ABOVE SUBMISSION OF THE ASSESSEE AND IN ABSE NCE OF POINTING OUT ANY MISTAKE IN THE ORDER OF THE LD.CIT(A) BY THE LD. AU THORISED REPRESENTATIVE, WE DISMISS THE ABOVE GROUND BY THE ASSESSEE. IN VIEW OF THIS, WE UPHOLD THE ORDER OF THE CIT(A) AND THE GRO UND RAISED BY THE ASSESSEE IS DISMISSED. 38. IDENTICAL GROUND (GROUND OF APPEAL NO.1) HAS BE EN TAKEN BY THE ASSESSEE IN APPEALS FOR A.YRS. 2005-06 TO 2007-08 A ND A.Y. 2009-10. FOLLOWING THE ABOVE REASONINGS THE GROUND BY THE AS SESSEE IN THE ABOVE ASSESSMENT YEARS IS DISMISSED. 39. GROUNDS OF APPEAL NO. 2 TO 5 BY THE ASSESSEE RE AD AS UNDER : WITHOUT PREJUDICE TO THE ABOVE GROUND, THE ASSESSEE SUB MITS THAT 2] THE LEARNED CIT(A) ERRED IN CONFIRMING THE D ISALLOWANCE OF DEDUCTION U/S 80IB(10) IN RESPECT OF THE PROFITS DERIVED FROM SAL E OF CERTAIN UNITS IN THE PROJECT 'LAPIS LAZULI' ON THE GROUND THAT THE BU ILT UP AREA OF THESE FLATS IN THE SAID PROJECT EXCEEDED 1500 SQ. FT. AND HENCE, NO DEDUCTION COULD BE ALLOWED IN RESPECT OF THE PROFITS DERIVED FROM SALE O F SUCH FLATS. 3] THE LEARNED CIT(A) ERRED IN HOLDING THAT CERTA IN UNITS WHICH WERE COMBINED INTO ONE FLAT WERE TO BE CONSIDERED AS A SING LE UNIT FOR THE PURPOSES OF SECTION 80IB(10) AND SINCE THE BUILT UP AR EA OF THESE FLATS EXCEEDED 1500 SQ. FT., THE DEDUCTION U/S 80IB(10) WAS NOT ALLOWABLE TO THE ASSESSED IN RESPECT OF THE SAID UNITS. 4] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE DISALLOWANCE U/S 80IB(10) WAS NOT WARRANTED AS THE BUILT UP AREA OF NO NE OF THE UNITS EXCEEDED 1500 SQ. FT. 5] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE DISALLOWANCE U/S 80IB(10) WAS NOT JUSTIFIED FOR THE FOLLOWING REASONS 44 A. THE CONCEPT OF RESIDENTIAL UNIT FOR THE PURPOSE S OF SECTION 80IB(10) IS THAT OF THE FLAT AS PER THE SANCTIONED PLAN BY THE CO MPETENT AUTHORITY AND AS PER WHICH, THE BUILT UP AREA OF EACH INDIVIDUAL F LAT WAS MUCH LESS THAN 1500 SQ. FT. AND THEREFORE, THERE WAS NO REASON TO DEN Y THE DEDUCTION U/S 80IB(10) IN RESPECT OF SUCH FLATS. B. THE STATEMENTS OF A FEW CUSTOMERS REPRODUCED BY T HE A.O. IN THE ASST. ORDER COULD NOT BE USED AS EVIDENCES AGAINST THE ASSESSEE S INCE NO OPPORTUNITY OF CROSS EXAMINATION OF THOSE PERSONS WAS PRO VIDED TO THE ASSESSEE. C. IN THE CORPORATION RECORDS, THESE ADJOINING UNI TS WERE CONSIDERED AS SEPARATE FLATS AND HENCE, FOR THE PURPOSES OF SECTION 8 0IB(10), THEY HAD TO BE CONSIDERED AS SEPARATE UNITS AND NOT ONE UNIT. 39.1 THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FAIRLY CONCEDED THAT THE ABOVE GROUNDS ARE COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2004-05 AND 2005-06. IN VIEW OF THE ABOVE SUBMISSION BY THE LD. COUNSEL FOR THE ASSESSEE THE GROUNDS OF APPEAL NOS. 2 TO 5 ARE DISMISSED. 40. IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE ASSESS EE IN APPEALS FOR A.YRS. 2005-06 TO 2007-08 AND A.Y. 2009-10. FOLLOW ING THE SAME REASONINGS, THE GROUNDS BY THE ASSESSEE FOR THE ABO VE ASSESSMENT YEARS ARE DISMISSED. 41. IN THE RESULT, THE APPEALS FILED BY THE REVENUE AND ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31-03-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 31 ST MARCH, 2015 45 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, INCOME TAX APPELLAT E TRIBUNAL, PUNE
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