DCIT, CIR-12(1), KOLKATA, Kolkata V. M/s Bengal Ambuja Housing Development Ltd., Kolkata

ITA 1514/KOL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7315 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-08-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SHRI P K SRIHARI CIT LD
• Assessee Lawyers: D S DAMLE; AKKAL DUDHWE
• Keywords: Business income; Business expenditure; Rule of consistency; Earning of tax free income; Proportionate interest; Additional evidence; Question of law; Deemed dividend; Competent authority; Commercial expediency; Rule 8D; Set aside
• Section: 143(3); 2(22)(e); 14A; 260A; 80IB; 80IA; 192; 2

Judgement Text

1 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA [BEFORE SHRI A. T. VARKEY, JM & SHRI A.L.SAINI, AM] I.TA NO. 1514 /KOL/201 5 ASSESSMENT YEAR: 20 10 - 11 AND I.TA NO. 1515 /KOL/201 5 ASSESSMENT YEAR: 20 11 - 12 DCIT, CIR - 12(1), KOLKATA VS. M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. PAN: AABCB0977F APPELLANT RESPONDENT DATE OF HEARING 01.08 .201 9 DATE OF PRONOUNCEMENT 18. 10 .201 9 FOR THE APPELLANT DR. ( SHRI ) P.K. SRIHARI, CIT, LD.DR FOR THE RESPONDENT SHRI D.S .DAMLE, FCA & SHRI AKKAL DUDHWEWALA, FCA, LD.ARS ORDER PER SHRI A.T. VARKEY, JM TH ESE A PPEA LS ARE PREFERRED BY THE R EVENUE AGAINST THE SEPARATE ORDER S OF LD. CIT (APPEALS) , 4, KOLKATA DATED 12 - 10 - 2015/13 - 0 - 2015 FOR THE ASSESSMENT YEAR S 2 0 10 - 11 AND 2011 - 12 . SINCE THE MAIN ISSUE INVOLVED AND THE RELEVANT FACTS ARE COMMON, WE DISPOSE BOTH THESE APPEALS BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE WE TAKE UP THE APPEAL FOR AY 2010 - 11 IN I.T.A. NO. 1514/KOL/2015 AS THE LEAD CASE. 2. GROUND NOS. 1 TO 5 TAKEN IN APPEAL ARE AGAINST THE ACTION OF THE LD. CIT(A) IN ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S 80IA TO THE EXTENT OF RS.2,79,49,838/ - IN RESPECT OF ITS HOUSING PROJECT TITLED UPOHAR - THE CONDOVILLE, HIG PHASE I. BRIEFLY STA TED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A JOINT SECTOR COMPANY IN WHICH THE GOVERNMENT OF WEST BENGAL HOLDS EQUITY STAKE OF 49.5%. VIDE DEVELOPMENT AGREEMENT DATED 16.05.2005, THE WEST BENGAL HOUSING BOARD GRANTED DEVELOPMENT RIGHTS OVER 18.62 ACRES OF LAND TO THE ASSESSEE FOR SETTING - UP A HOUSING COMPLEX. PURSUANT THERETO THE ASSESSEE PREPARED A CONCEPT 2 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. PLAN FOR DEVELOPING THE HOUSING COMPLEX ON THE 18.62 ACRES, DIVIDED IN FIVE SPECIFIED DIFFERENT ZONE AND THESE WERE DEVELOPED IN A PHASED MANNE R. COPY OF THE SANCTION GIVEN BY THE LOCAL AUTHORITY I.E. KOLKATA MUNICIPAL CORPORATION (KMC) ON 30.03.2007 ALONG WITH THE LAYOUT PLAN OF THE ENTIRE PROJECT WAS PLACED AT PAGE 23 OF THE PAPER BOOK. ZONE D OF THE SANCTIONED CONCEPT PLAN WAS HIG LUXURY HO USING ZONE COMPRISING OF 11 TOWERS HAVING 19 FLOORS EACH. THESE ELEVEN TOWERS WERE TO BE CONSTRUCTED ON DEMARCATED AREA OF 11.454 ACRES. ACCORDING TO ASSESSEE IT WAS NOT POSSIBLE TO DEVELOP AND CONSTRUCT ALL ELEVEN TOWERS SIMULTANEOUSLY AND THEREFORE THE ASSESSEE DIVIDED THE HIG ZONE INTO FIVE PHASES COMPRISING OF, PHASE 1 - TOWERS 2, 3 & 4, PHASE II - TOWERS 5, 6 & 7, PHASE III 8 & 9, PHASE IV TOWER 10 AND PHASE V, TOWER 1 & 11. FROM THE FACTS ON RECORD WE NOTE THAT DEVELOPMENT AND CONSTRUCTIO N OF EACH PHASE COMMENCED ON DIFFERENT DATES AND EVEN ITS PROMOTION, MARKETING & SALE WAS CONDUCTED SEPARATELY AT DIFFERENT POINTS IN TIME. CONSEQUENTLY THEREFORE AVERAGE PER SQUARE FEET SALES REALIZATION FOR EACH PHASE DIFFERED SIGNIFICANTLY. IT HAS BEEN THE ASSESSEES CONTENTION ALL ALONG THAT EACH OF THE FIVE PHASES OF THE HIG ZONE CONSTITUTED INDEPENDENT HOUSING PROJECTS AND INDIVIDUALLY FULFILLED CONDITIONS SPECIFIED IN LAW FOR AVAILING DEDUCTION U/S 80IB(10) OF THE ACT. IN THE RETURN FILED FOR AY 2010 - 11, THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) AMOUNTING TO RS. 7,96,42,427/ - BEING THE PROFITS DERIVED FROM DEVELOPMENT OF PHASES I, II & III. IN THE IMPUGNED ORDER THE AO HOWEVER HELD THAT HIG LUXURY ZONE WAS SANCTIONED AS A SINGLE COMPOSITE PROJECT IN WHICH THE ASSESSEE WAS TO DEVELOP AND CONSTRUCT 11 TOWERS AND FOR WHICH SINGLE COMMENCEMENT CERTIFICATE WAS GIVEN BY KMC ON 30.03.2007. ACCORDING TO AO THEREFORE THE ASSESSEE WAS REQUIRED TO COMPLETE CONSTRUCTION OF ALL 11 TOWERS ON OR BEFORE 30.03.2012 A S REQUIRED U/S 80IB(10)(I) OF THE ACT. THE AO HELD THAT THE ASSESSEE ARBITARILY BIFURCATED HIG LUXURY ZONE INTO FIVE DIFFERENT PHASES TO SUIT ITS OWN CONVENIENCE. HE NOTED THAT THERE WAS A COMMON ENTRANCE & DRIVEWAY CONNECTING ALL 11 TOWERS AND IN THAT VIE W OF THE MATTER HE CONCLUDED THAT LUXURY ZONE WAS A SINGLE PROJECT WHOSE CONSTRUCTION WAS NOT COMPLETED UNTIL 30.03.2012 AND THEREFORE DENIED THE DEDUCTION CLAIMED U/S 80IB(10). THE AO FURTHER NOTED THAT THE ASSESSEE WAS ABLE TO FURNISH COMPLETION CERTIFIC ATE DATED 29.04.2011 ONLY IN RESPECT OF PHASE I OF THE PROJECT AND PHASES II & III WHICH WERE CLAIMED TO BE COMPLETE ON OR BEFORE 30.03.2012 HAD NOT EVEN APPLIED FOR COMPLETION CERTIFICATE TILL THAT DATE. EVEN WITH REGARD TO PHASE I, THE AO NOTED THAT THE SUBJECT MATTER OF THE LETTER DATED 29.04.2011 ISSUED BY KMC CLARIFIED THAT IT WAS GRANT OF PARTIAL COMPLETION CERTIFICATE AND THE LAST PARAGRAPH OF SAID 3 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. LETTER STATED THAT THE COMPLETION CERTIFICATE FOR THE ENTIRE PROJECT WAS REQUIRED TO BE OBTAINED IN 24 MONTHS. THE AO THUS CONTENDED THAT THE CERTIFICATE ISSUED BY KMC WAS A PARTIAL COMPLETION CERTIFICATE AND NOT A FINAL ONE. FOR THE REASONS AS AFORESAID, THE AO HELD THAT ALTHOUGH THE ASSESSEE HAD COMPLETED SOME OF THE TOWERS OF THE LUXURY ZONE BUT DID N OT COMPLETE CONSTRUCTION OF ALL 11 TOWERS BY 31.03.2012 AND THEREBY DID NOT FULFILL THE CONDITIONS PRESCRIBED IN CLAUSE (II) OF EXPLANATION TO CLAUSE (A) OF SECTION 80IB(10) AND ACCORDINGLY DISALLOWED THE ENTIRE DEDUCTION OF RS.7,96,42,428/ - CLAIMED U/S 80 IB(10) OF THE ACT. AGGRIEVED BY THE AOS ORDER OF THE AO, MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHO ACCEPTED THE ASSESSEES CONTENTION THAT HIG LUXURY ZONE WAS DEVELOPED ON DEMARCATED PLOT OF LAND AND CONSTITUTED A SEPARATE AND DISTINCT FROM OTHER ZONES. HE ALSO ACCEPTED THE ASSESSEES CONTENTION THAT HIG LUXURY ZONE CONTAINED ONLY RESIDENTIAL UNITS AND THIS ZONE WAS DEVELOPED BY THE ASSESSEE IN FIVE PHASES AND THESE FIVE PHASES WERE SEPARATE &DISTINCT AND HENCE CONSTITUTED INDEPENDENT HOUSIN G PROJECTS. HE HOWEVER HELD THAT ONLY THE PHASE - I FULFILLED ALL THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) INCLUDING OBTAINING COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY PRIOR TO 31.03.2012 AND THEREFORE ALLOWED RELIEF ONLY IN RESPECT OF THE PROFI TS OF PHASE I AMOUNTING TO RS.2,79,49,838/ - AND CONFIRMED DISALLOWANCE OF THE BALANCE SUM. THE RELEVANT FINDINGS OF THE LD. CIT(A) WERE AS FOLLOWS: 4.8 FROM THE RIVAL CONTENTIONS THE FIRST ISSUE WHICH NEEDS TO BE DECIDED IS WHETHER FOR CLAIMING DEDUCT ION U/S 80IB(10) 'UPOHAR THE CONDOVILLE' SET UP ON LAND ADMEASURING 18.62 ACRES SHOULD BE CONSIDERED TO BE SINGLE IN DIVISIBLE PROJECT OR WHETHER IT COULD BE HELD TO BE AMALGAM OF DIFFERENT PROJECTS APPROVED THROUGH ONE CONCEPT PLAN SANCTIONED ON A SINGLE DATE BY THE LOCAL AUTHORITY. SINCE THE KMC GRANTED APPROVAL FOR THE ENTIRE MASTER PLAN FOR CONSTRUCTION TO BE MADE ON 18.62 ACRES LAND THE AO HAS CLAIMED THAT FOR THE PURPOSES OF SEC 80IB(10) ALL STRUCTURES SANCTIONED ON THE SINGLE DATE TOGETHER CONSTITUTE D A SINGLE PROJECT. SINCE THE STRUCTURES DEVELOPED BY THE ASSESSEE IN TERMS OF THE APPROVAL GRANTED BY KMC DATED 30.03.2007 INTER ALIA INCLUDED BUILDINGS TO HOUSE COMMERCIAL COMPLEX, VOCATIONAL TRAINING CENTRE, CLUB HOUSE ETC WHICH WERE APPARENTLY NONRESID ENTIAL IN NATURE, THE HOUSING PROJECT DID NOT QUALIFY FOR CLAIMING DEDUCTION U/S 80IB(10). 4.9 ON DUE CONSIDERATION OF THE FACTS AVAILABLE ON RECORDS AS ALSO FROM THE DETAILED SUBMISSIONS MADE BEFORE THE AO AS WELL AS BEFORE ME I DO NOT FIND MERIT IN THE AO'S PRIMARY CONTENTION THAT FOR THE PURPOSES OF SEC 80IB(10) THE HOUSING PROJECT TO BE CONSIDERED WAS ONE WHICH WAS SET UP ON THE ENTIRE LAND OF 18.62 ACRES. FROM THE MATERIALS ON RECORD IT WAS FOUND THAT THE LAND ADMEASURING 18.62 ACRES WAS DELIVERED TO THE ASSESSEE BY THE WEST BENGAL HOUSING BOARD PRIMARILY FOR HOUSING PURPOSES. PARA 2 OF THE 4 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. SECOND SCHEDULE OF THE DEVELOPMENT AGREEMENT DATED 16.05.2005 SPECIFIED THAT THE PROPOSED HOUSING PROJECT SHALL HAVE DWELLING UNITS UNDER LOWER INCOME, MIDDLE INCOM E AND HIGHER INCOME INCLUDING LUXURY GROUP. IT FURTHER CLARIFIED THAT THE HOUSING PROJECT SHALL ALSO HAVE INFRASTRUCTURAL, RECREATIONAL AND SUPPORT FACILITIES INCLUDING COMMERCIAL AREA FOR THE BENEFIT OF THE RESIDENTS. THUS, IT IS EVIDENT THAT ALTHOUGH RI GHTS OF DEVELOPMENT WERE GRANTED BY THE BOARD FOR SETTING UP A HOUSING COMPLEX YET THE DEVELOPMENT AGREEMENT ITSELF HAD ENVISAGED DEVELOPMENT OF LAND FOR MIXED USE TO CATER TO DIFFERENT AND VARIED NEEDS OF THE RESIDENTS. ON RECEIPT OF THE LAND IN QUESTION THE ASSESSEE PREPARED CONCEPTUAL DESIGNS AND THE MASTER PLAN FOR DEVELOPMENT OF TOTAL LAND OF 18.62 ACRES. AS PER THE CONCEPT PLAN THE TOTAL LAND WAS DIVIDED IN THE FOLLOWING ZONES. ZONE PROJECT LAND A RESIDENTIAL BUILDINGS 'EFFICIENCY & COMFORT' 2.846 ACRES B VOCATIONAL TRAINING CENTRE & SHOPPING ZONE 1.112 ACRES C CLUB ZONE 2.021 ACRES D LUXURY ZONE CONSISTING OF 5 PHASES OF RESIDENTIAL HOUSING TOWERS FOR HIG CATEGORY 11.454 ACRES E AREA COMPRISED IN COMMON INSTALLATIONS FOR CIVIC AMENITIES 1.187 ACRES TOTAL: 18.62 ACRES 4.1 0 FROM THE SITE PLAN OF THE PROJECT IT APPEARED THAT EACH OF THESE ZONES WERE DEVELOPED ON DEMARCATED LANDS. E.G. RESIDENTIAL BUILDINGS, HOUSING DWELLING UNITS FOR LOWER AND MIDDLE INCOME GROUP WERE CO NSTRUCTED ON DEMARCATED LAND ADMEASURING 2.846 ACRES. VOCATIONAL TRAINING CENTRE AND SHOPPING/ COMMERCIAL AREA WAS DEVELOPED ON LAND ADMEASURING 1.112 ACRES. SOCIAL CLUB FOR THE RESIDENTS WAS DEVELOPED ON LAND AREA OF 2.02 ACRES AND 11 RESIDENTIAL TOWERS O F HIG LUXURY GROUP WAS DEVELOPED ON DEMARCATED LAND AREA OF 11.454 ACRES. EACH ZONE WAS SEPARATED BY CLEAR LAND DEMARCATION AND THESE WERE NO INTERMINGLING OF DIFFERENT ZONES. EACH ZONE WAS HAVING INDEPENDENT ACCESS AND THEREFORE IT WAS QUITE VISIBLE THAT ALTHOUGH THE DEVELOPMENT WAS TO BE CARRIED OUT ON 18.62 ACRES YET THE SAME DID NOT REPRESENT A SINGLE INDIVISIBLE HOUSING PROJECT. 4.11 MY CONCLUSION IN THIS REGARDS IS SUPPORTED BY THE DECISION OF THE ITAT, BANGALORE IN THE CASE OF DCIT VS. BRIGADE ENTER PRISES PVT. LTD (28 SOT 7) WHICH INVOLVED SOMEWHAT SIMILAR FACTS. IN THAT CASE ALSO THE ASSESSEE EXECUTED A PROJECT CALLED 'B MILLENNIUM'. THE MACRO PROJECT CONSISTED OF SEVERAL HOUSING BLOCKS, COMMUNITY HALL, CLUB ETC AS MICRO COMPONENTS. THE MICRO PROJEC T CONSISTED OF 5 RESIDENTIAL BLOCKS AND THE ASSESSEE OBTAINED APPROVAL FROM THE LOCAL AUTHORITY FOR THE ENTIRE MACRO PROJECT ON A SINGLE DAY. THE DEDUCTION U/S 80IB(10) WAS HOWEVER CLAIMED ONLY IN RESPECT OF HOUSING BLOCKS BEING M & C WHICH ACCORDING TO TH E ASSESSEE INDIVIDUALLY FULFILLED CONDITIONS PRESCRIBED IN SEC 80IB(10). THE ASSESSEE'S CLAIM IN RESPECT OF ONLY 2 RESIDENTIAL BLOCKS WAS REJECTED BY THE AO ON THE GROUND THAT THE LOCAL AUTHORITY HAD GRANTED SANCTION FOR THE ENTIRE MICRO PROJECT 5 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. AS A SINGL E INDIVISIBLE ONE. SINCE THE MICRO PROJECT DID NOT COMPLY WITH ALL THE CONDITIONS SPECIFIED IN SEC 8018(10) THE DEDUCTION WAS NOT PERMISSIBLE. THE ASSESSEE'S CLAIM WAS HOWEVER ALLOWED BY THE ITAT ON THE GROUND THAT THE PLAN SANCTIONED WAS IN RELATION TO MA STER PLAN FOR THE GROUP HOUSING AND LOCAL AUTHORITY APPROVAL WAS FOR THE 'CONCEPT PLAN' WHICH COMPRISED OF NUMEROUS MICRO COMPONENTS SUCH AS SCHOOL, CIVIC AMENITIES, CLUB, COMMUNITY HALL ETC. THE TRIBUNAL THEREFORE UPHELD THE ASSESSEE'S CONTENTION THAT EVE N THOUGH THE LOCAL AUTHORITY HAD GRANTED SANCTION FOR THE ENTIRE MACRO PROJECT IN ONE GO YET THE ASSESSEE COULD CLAIM DEDUCTION U/S 80IB(10) ONLY IN RESPECT OF 2 RESIDENTIAL BLOCK WHO INDIVIDUALLY SATISFIED THE CONDITIONS OF SEC 80IB(10). THE TRIBUNAL ALSO FOUND THAT THE ASSESSEE HAD MAINTAINED SEPARATE ACCOUNTING RECORDS FOR THE SAID TWO RESIDENTIAL BLOCK AND PROFITABILITY OF EACH BLOCK WAS SEPARATELY IDENTIFIABLE AND ACCORDINGLY THE DEDUCTION WAS ALLOWED. 4.12 THE FACTS INVOLVED IN THE ASSESSEE'S CASE A RE ALMOST PARI MATERIA WITH THE FACTS INVOLVED IN THE CASE DECIDED BY THE BANGALORE BENCH OF THE ITAT. IT IS EVIDENT FROM THE DEVELOPMENT AGREEMENT THAT THE ASSESSEE WAS GRANTED DEVELOPMENT RIGHTS IN RESPECT OF 18.62 ACRES OF LAND PRIMARILY FOR HOUSING PUR POSES. HOWEVER THE DEVELOPMENT AGREEMENT ITSELF ENVISAGED THAT BESIDES DEVELOPING DWELLING UNITS IN LIG, MIG AND HLG GROUPS THERE WOULD ALSO BE DEVELOPMENT OF INFRASTRUCTURAL, RECREATIONAL AND SUPPORT FACILITIES INCLUDING COMMERCIAL AREAS FOR BENEFIT OF LO CAL RESIDENTS. IN ORDER TO GIVE EFFECT TO THE MANDATE FOR WHICH WEST BENGAL HOUSING BOARD HAD GRANTED DEVELOPMENT RIGHTS IN LAND; THE ASSESSEE HAD PREPARED CONCEPT PLAN FOR THE ENTIRE 18.62 ACRES WHICH HAD SEVERAL MICRO COMPONENTS. EACH OF THE MICRO COMPON ENT SUCH AS LIG & MLG HOUSING, CLUB, VOCATIONAL TRAINING CENTRE CUM COMMERCIAL AREA AND HIG LUXURY ZONE WAS CONSTRUCTED ON DEMARCATED LANDS WHICH WERE INDEPENDENT. EACH OF THE MICRO COMPONENT WAS SEPARATE. DEVELOPMENT OF EACH ZONE OR MICRO COMPONENT WAS AL SO CARRIED OUT AT DIFFERENT POINTS IN TIME. PROFITABILITY OF EACH SEGMENT WAS SEPARATELY IDENTIFIABLE. THE DEDUCTION WAS HOWEVER CLAIMED BY THE ASSESSEE ONLY IN RESPECT OF THE HOUSING PROJECTS WHICH WERE PART OF THE HIG LUXURY COMPONENT OF THE CONCEPT PLAN . ON THE FACTS ON RECORD THEREFORE I HOLD THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE APPELLANT'S CLAIM FOR DEDUCTION U/S ON THE GROUND THAT THE HOUSING PROJECT DEVELOPED ON 18.62 ACRES WAS NOT FULLY MEANT FOR RESIDENTIAL USE AS REQUIRED BY SEC 80IB(10) . THE AO WAS ALSO NOT JUSTIFIED IN REJECTING THE DEDUCTION U/S 80IB(10) ON THE GROUND THAT THE ASSESSEE DID NOT OBTAIN COMPLETION CERTIFICATE PRIOR TO 31.03.2012 IN RESPECT OF ALL THE BUILDINGS AND STRUCTURES WHICH WERE CONSTRUCTED ON THE LAND ADMEASURING 18.62 ACRES. THE AO'S FIRST REASON FOR DENYING DEDUCTION U/S 80IB(10) IS THEREFORE FOUND TO BE UNSUSTAINABLE. 4.13 IN THE IMPUGNED ORDER THE AO REJECTED ASSESSEE'S CLAIM IN RESPECT OF PHASES I, II & III OF HIG LUXURY ZONE SINCE THE ASSESSEE DID NOT OBTAIN COMPLETION CERTIFICATE IN RESPECT OF ALL THE 11 TOWERS PRIOR TO 31.03.2012. FROM THE MATERIALS PLACED BEFORE THE AO AS WELL AS IN THE COURSE OF APPEAL IT APPEARED THAT THE LUXURY HIG ZONE WAS DEVELOPED ON LAND ADMEASURING 11. 454 ACRES AND CONSISTED OF 11 TOWERS EACH HAVING G + 19 FLOORS. ACCORDING TO THE A/R 11 TOWERS OF LUXURY ZONE WERE CONSTRUCTED IN THE PHASED MANNER BECAUSE IT WAS NOT POSSIBLE TO UNDERTAKE DEVELOPMENT OF ALL TOWERS IN ONE GO. ACCORDINGLY 6 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. HIG LUXURY ZONE WAS DIVIDED INTO 5 PHASES AND T HE DEVELOPMENT OF EACH PHASE WAS CARRIED OUT AT DIFFERENT POINTS IN TIME. THERE WAS TIME GAP BETWEEN COMMENCEMENT OF WORK OF EACH PHASE. THE MARKETING AND SALE OF THE DWELLING UNITS COMPRISED IN EACH PHASE WAS ALSO CARRIED OUT AT DIFFERENT POINT IN TIME AN D THE PRICES AT WHICH THE INDIVIDUAL DWELLING UNITS IN DIFFERENT PHASES WERE BOOKED ALSO CONSIDERABLY DIFFERED DEPENDING ON THE TIME WHEN EACH PHASE WAS LAUNCHED. 4.1 4 ACCORDING TO THE A/R OF THE ASSESSEE PHASE I CONSISTED OF TOWERS 2, 3 & 4, PHASE II CO NSISTED OF TOWERS 5, 6 & 7, PHASE III COMPRISED OF TOWERS 8 & 9, PHASE IV COMPRISED OF TOWER 10 AND PHASE V COMPRISED OF TOWERS 1 AND 11. IN THE RETURN FILED FOR THE AY 2010 - 11 THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) ONLY IN RELATION TO PROFITS DERIVED FROM DEVELOPMENT OF PHASES I, II & III PERTAINING TO TOWERS NOS. 2 TO 9. THE AO REJECTED THE ASSESSEE'S PLEA FOR DEDUCTION FOR PHASES I, II & III ON THE GROUND THAT THE ASSESSEE HAD TREATED PHASES I, II & III AS 3 INDEPENDENT HOUSING PROJECTS EVEN THOUGH ALL 11 TOWERS OF HIG LUXURY ZONE TOGETHER CONSTITUTED A SINGLE INDIVISIBLE HOUSING PROJECT WHICH COULD NOT BE ARTIFICIALLY SEGREGATED. IN AO'S OPINION THE ASSESSEE HAD RANDOMLY SELECTED FEW BUILDINGS OF ITS OWN CHOICE AND CLAIMED THEM TO BE FORMING A 'PHA SE' OR 'HOUSING PROJECT' ONLY FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB(10). THE AO FOUND THAT ALL 11 BUILDINGS WERE CONSTRUCTED ON ONE CONTIGUOUS PLOT. ALL 11 BUILDINGS WERE CONNECTED WITH EACH OTHER BY A COMMON ROAD HAVING COMMON FACILITIES AND HAVI NG COMMON ENTRY AND EXIT POINT. HAVING REGARD TO THESE FACTS THEREFORE THE AO HELD THAT 11 TOWERS COMPRISED IN HIG LUXURY ZONE COULD NOT BE ARTIFICIALLY DIVIDED IN 5 INDEPENDENT HOUSING PROJECTS. THE AO THEREFORE CONCLUDED THAT IN ORDER TO CLAIM BENEFIT OF DEDUCTION U/S 80IB(10) IT WAS NECESSARY FOR THE ASSESSEE TO DEMONSTRATE THAT COMPLETION CERTIFICATE WAS GRANTED BY KMC IN RESPECT OF ALL 11 BUILDINGS PRIOR TO 31.03.2012 . THE AO HOWEVER NOTED THAT ONLY IN RESPECT OF TOWERS 2, 3 & 4 THE ASSESSEE HAD OBTAI NED PARTIAL COMPLETION CERTIFICATE IN APRIL 2011 AND IN RESPECT OF REMAINING 8 TOWERS THE COMPLETION CERTIFICATE WAS GRANTED BY THE KMC ONLY IN FEBRUARY 2014. THE AO THEREFORE CONCLUDED THAT SINCE THE HOUSING PROJECT HIG LUXURY SEGMENT OF 'UPOHAR THE CONDO VILLE' DID NOT OBTAIN COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY PRIOR TO 31.03.2012; CONDITION PRESCRIBED IN 80IB(10)(III) OF THE ACT AND CONSEQUENTLY BENEFIT OF DEDUCTION U/S 80IB(10)WAS NOT AVAILABLE. 4.15 IN THE RETURN FURNISHED FOR THE AY 2010 - 1 1 THE APPELLANT HAD CLAIMED DEDUCTION U/S 80IB(10) IN RESPECT OF PHASES I, II, ILL OF THE LUXURY HIG SEGMENT OF 'UPOHAR THE CONDOVILLE'' TREATING EACH OF THE PHASE TO BE INDEPENDENT HOUSING PROJECT. IN RESPECT OF PHASE I THE ASSESSEE HAD OBTAINED COMPLETIO N CERTIFICATE PRIOR TO 31.03.2012 AND THEREFORE IN THE COURSE OF ASSESSMENT THE ASSESSEE HAD ALTERNATIVELY CLAIMED BEFORE THE AO THAT AT LEAST IN RESPECT OF PROFITS DERIVED FROM PHASE I DEDUCTION U/S 80IB(10) BE ALLOWED SINCE ALL CONDITIONS OF S 80IB(10) IN RELATION TO PHASE I WERE FULFILLED. THIS ALTERNATIVE CLAIM WAS ALSO REJECTED BY THE AO ON THE GROUND THAT PHASE I COMPRISING OF TOWERS 2, 3 & 4 COULD NOT BE CONSIDERED IN ISOLATION AS A HOUSING PROJECT BECAUSE ALL 11 TOWERS OF HIG LUXURY ZONE TOGETHER CONSTITUTED ONE HOUSING PROJECT AND THEREFORE IT WAS NECESSARY FOR THE APPELLANT TO OBTAIN COMPLETION CERTIFICATE FOR ALL 11 TOWERS PRIOR TO 31.03.2012. REFERRING TO THE COMPLETION CERTIFICATE DATED 29.04.2011 THE AO FURTHER POINTED OUT THAT THE SAID 7 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. CERTI FICATE WAS ONLY AN INTERIM ONE AND WAS ISSUED ON THE CONDITION THAT THE FINAL COMPLETION WOULD BE APPLIED WITHIN TIME SPECIFIED. IN AO'S OPINION THE PARTIAL COMPLETION CERTIFICATE COULD NOT BE CONSIDERED AS THE COMPLETION CERTIFICATE ENVISAGED U/S 80IB(10) AND IN THAT VIEW OF THE MATTER EVEN THE ALTERNATIVE CLAIM OF THE ASSESSEE IN RELATION TO PHASE I WAS REJECTED BY THE AO. 4.16 ON DUE CONSIDERATION OF THE FACTS AND MATERIALS AVAILABLE ON RECORD AND AFTER CONSIDERING THE AO'S FINDINGS IN THE IMPUGNED ORDE R AS ALSO APPLICABLE LEGAL PROVISIONS I FIND THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE ASSESSEE'S CLAIM IN ITS ENTIRETY. BEFORE PROCEEDING FURTHER THE MAIN QUESTION WHICH NEEDS TO BE DECIDED IT WHETHER IT WAS NECESSARY FOR THE ASSESSEE TO OBTAIN COMPL ETION CERTIFICATE IN RELATION TO ALL 11 RESIDENTIAL TOWERS OF LUXURY HIG ZONE PRIOR TO 31.03.2012 BECAUSE ALL 11 TOWERS TAKEN TOGETHER CONSTITUTED AS ONE HOUSING PROJECT OR WHETHER IT WAS OPEN FOR THE ASSESS TO CLAIM THAT LUXURY HIG ZONE WHICH WAS DEVELOPE D BY THE ASSESSEE IN PHASES CONSTITUTED INDEPENDENT PROJECTS AND IN RELATION TO EACH OF SUCH PROJECT ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S 80IB(10). FROM THE IMPUGNED ORDER I NOTE THAT INITIAL APPROVAL OF KMC FOR 11 TOWERS COMPRISED IN LUXURY HIG S EGMENT WAS GR - ANTED ON 30.03.2007. IN MY OPINION HOWEVER MERELY BECAUSE THE SANCTION OF THE LOCAL AUTHORITY FOR LUXURY HIG SEGMENT WAS GIVEN ON A SINGLE DATE, FOR THAT REASON ALONE IT CANNOT BE SAID THAT ALL 11 RESIDENTIAL TOWERS TAKEN TOGETHER CONSTITUTED ONE SINGLE OR INDIVISIBLE HOUSING PROJECT. IF IN REALITY THE ASSESSEE SUB DIVIDED THE DEVELOPMENT AND CONSTRUCTION OF 11 TOWERS IN DIFFERENT PHASES AND DEVELOPMENT OF EACH PHASE WAS ACTUALLY CARRIED OUT AT DIFFERENT POINTS IN TIME AND IN RELATION TO EACH PHASE IF THE ASSESSEE MAINTAINED RECORDS INCLUDING FINANCIAL BOOKS SEPARATELY THEN THERE IS NO REASON TO REJECT THE ASSESSEE'S PLEA THAT EACH SUCH PHASE CONSTITUTED INDEPENDENT HOUSING PROJECT. THE ONLY CONDITION WHICH THE ASSESSEE WAS THEN REQUIRED TO FU LFILL WAS THAT EACH PHASE OF DEVELOPMENT SHOULD HAVE INDIVIDUALLY SATISFIED ALL CONDITIONS SPECIFIED IN SECTION 80IB(10). 4.17 APPLYING THIS CRITERIA I EXAMINED WHETHER EACH PHASE OF LUXURY HIG ZONE CONSTITUTED INDEPENDENT HOUSING PROJECT FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB(10). I NOTE THAT ACCORDING TO THE A/R'S SUBMISSIONS LUXURY HIG ZONE WAS DEVELOPED BY THE ASSESSEE IN 5 PHASES. THESE 5 PHASES CONSISTED THE FOLLOWING: 1. LUXURY - HIG PHASE - I COMPRISING OF TOWER - 2, TOWER - 3 AND TOWER - 4 2. LUXURY - HIG PHASE - II COMPRISING OF TOWER - 5, TOWER - 6 AND TOWER - 7 3. LUXURY - HIG PHASE - III COMPRISING OF TOWER - 8 AND TOWER - 9 4. LUXURY - HIG PHASE - IV COMPRISING OF TOWER - 10 5. LUXURY - HIG PHASE - V COMPRISING OF TOWER - 1 AND TOWER - 11 4.1 8 ALTHOUGH 5 PHASES WERE CONSTRUCTED ON CONTIGUOUS PLOT ADMEASURING 11.454 ACRES; YET FROM THE SITE PLAN I NOTE THAT EACH PHASE WAS CONSTRUCTED ON DEMARCATED PLOT AND LAND AREA OF EACH PHASE WAS MORE THAN ONE ACRE WHICH WAS THE PRIME REQUIREMENT FOR AVAILING DEDUCTION U/S 80IB(10). LAND AREA CONSUMED BY EACH PHASE WAS AS FOLLOWS: 8 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. PHASE AREA IN ACRES I 3.124 II 3.124 III 2.083 IV 1.041 V 2.083 4.19 FROM THE ABOVE CHART IT WAS EVIDENT THAT EACH OF THE 5 PHASES WERE DEVELOPED ON LAND AREAS INDIVIDUALLY EXCEEDING ONE ACRE. THE SITE PLAN A LSO INDICATED THAT THE LAND UTILIZED FOR DEVELOPMENT OF EACH PHASE WAS DEMARCATED FROM OTHER PHASE AND COULD BE ACCESSED SEPARATELY FOR CARRYING OUT THE DEVELOPMENT. 4.20 FROM THE MARKETING MATERIAL PUBLISHED FOR PROMOTING SALE OF DWELLING UNITS IT APPEAR ED THAT DEVELOPMENT OF EACH PHASE OF HIG LUXURY ZONE WAS CARRIED IN DIFFERENT POINTS IN TIME. EACH PHASE ALSO ATTAINED COMPLETION OF CONSTRUCTION AT DIFFERENT POINTS IN TIME. THE ASSESSEE MAINTAINED FINANCIAL RECORDS FOR EACH PHASE SEPARATELY. PROFITABILIT Y OF EACH PHASE WAS ALSO ASCERTAINED AND CERTIFIED BY THE AUDITORS INDEPENDENTLY. THE MARKETING OF EACH PHASE WAS CONDUCTED AT DIFFERENT POINTS IN TIME AND FOR THAT REASON THE PRICES AT WHICH THE INDIVIDUAL UNITS IN EACH PHASE GOT SOLD ALSO VARIED CONSIDER ABLY AND CONSEQUENTLY PROFITABILITY OF EACH PHASE VARIED SUBSTANTIALLY. THE MOST IMPORTANT POINT WHICH NEEDS TO BE CONSIDERED IN THIS REGARD RELATES TO THE METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE. THE ASSESSEE REGULARLY FOLLOWED 'PERCENTAGE OF COMPLE TION OF CONSTRUCTION' METHOD FOR RECOGNIZING REVENUES FROM THE BUSINESS OF DEVELOPMENT OF REAL ESTATE. THE ASSESSEE REGULARLY RECOGNIZED REVENUES GENERATED ON PRO - RATA BASIS AS THE CONSTRUCTION WORK PROGRESSED OVER A PERIOD OF TIME. IN THE CIRCUMSTANCES EV EN THOUGH THE TRANSFER OF THE RESIDENTIAL UNITS WAS EFFECTED AT THE TIME OF DELIVERY OF CONSTRUCTED UNITS CUSTOMERS, YET IN ITS BOOKS THE ASSESSEE RECOGNIZED AND ACCOUNTED FOR THE REVENUE FROM SALE OF UNITS FROM YEAR TO YEAR AS THE CONSTRUCTION PROGRESSED OVER THE TIME. THE ASSESSEE DID NOT WAIT TILL CONSTRUCTION WAS COMPLETED AND POSSESSION WAS DELIVERED. SINCE THE ASSESSEE RECOGNIZED THE REVENUE FROM YEAR TO YEAR IN PROPORTION TO THE WORK ACTUALLY PROGRESSED IN EACH PHASE; THE ASSESSEE OFFERED TO TAX INCO ME ON PROGRESSIVE BASIS IN AYS 2010 - 11 , 2011 - 12 AND 2012 - 13 EVEN THOUGH THE COMPLETION CERTIFICATE WAS NOT GRANTED BY THE LOCAL AUTHORITY TILL 2014. 4.21 IN THE COURSE OF ASSESSMENT THE ASSESSEE HAD FIRED AUDITORS' CERTIFICATES IN PRESCRIBED FORM 1OCCB IN WHICH THE AUDITOR HAD CERTIFIED THE REVENUES RECOGNIZED FOR EACH PHASE AS ALSO CERTIFIED THE PROFITS ATTRIBUTABLE TO EACH PHASE OF THE HOUSING PROJECTS SEPARATELY. FROM THE ANALYTICAL CHART FURNISHED IN THE COURSE OF HEARING IT WAS FOUND THAT WHILE FOLL OWING THE PERCENTAGE OF COMPLETION METHOD OF ACCOUNTING THE ASSESSEE MEASURED AND ASCERTAINED PERCENTAGE OF THE COMPLETED WORK FOR EACH PHASE SEPARATELY. FOR THE PURPOSE OF RECOGNIZING THE REVENUE ON PERCENTAGE COMPLETION METHOD THE ASSESSEE DID NOT CONSID ER ALL 11 BUILDINGS OF LUXURY HIG ZONE TO BE SINGLE PROJECT AND DID NOT ASCERTAIN THE PERCENTAGE OF COMPLETION WITH REFERENCE TO ENTIRE SUCH PROJECT. HAD SUCH METHOD BEEN 9 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. ADOPTED BY THE ASSESSEE THEN THE REVENUE RECOGNITION AS MADE BY THE ASSESSEE WOULD HA VE BEEN FAR LOWER THAN WHAT WAS ACTUALLY ACCOUNTED IN THE ASSESSEE'S BOOKS IN THE INITIAL YEARS. 4.22 FOR EXAMPLE IN THE FINANCIAL YEAR 2009 - 10 RELEVANT TO AY 2010 - 11 THE PERCENTAGE OF THE WORK PROGRESSED IN PHASES I, II & III WAS 39.92%, 39.83% & 39.62% RESPECTIVELY WHEREAS NO WORK HAD PROGRESSED IN PHASES IV & V DURING THE FY 2009 - 10. IF THE ASSESSEE HAD ACCOUNTED THE REVENUE BASED ON THE PERCENTAGE COMPLETION WITH REGARD TO ALL 11 RESIDENTIAL TOWERS TAKEN TOGETHER THEN IN PERCENTAGE TERMS THE COMPLETION OF WORK WOULD HAVE BEEN SUBSTANTIALLY LOWER THAN 39% AS ACCOUNTED IN THE BOOKS SINCE NO WORK ON TOWERS 1, 10 & 11 WAS ACHIEVED. SIMILARLY I FIND THAT THE PERCENTAGE OF THE WORK COMPLETED FOR PHASES I, II & III IN FY 2010 - 11 RELEVANT TO AY 2011 - 12 WAS 100% , 63.31 % AND 56.56% RESPECTIVELY. IN PERCENTAGE TERM THE REVENUE RECOGNITION AMONGST 3 PHASES SUBSTANTIALLY DIFFERED BECAUSE COMPLETION OF CONSTRUCTION ACTUALLY ACHIEVED BY EACH PHASE DURING THE RELEVANT YEAR VARIED SUBSTANTIALLY. IF THE PERCENTAGE COMPLE TION OF THE WORK WAS RECKONED UNIFORMLY FOR THE ENTIRE PROJECT OF 11 TOWERS THEN THERE COULD NOT HAVE BEEN DIFFERING PERCENTAGE OF REVENUE RECOGNITION FOR EACH PHASE. I HOWEVER FIND THAT IN THE FINANCIAL RECORDS THE ASSESSEE RECOGNIZED DISPROPORTIONATE PER CENTAGE OF REVENUE FOR EACH PHASE BECAUSE THE ASSESSEE HAD ASCERTAINED COMPLETION OF EACH PHASE IN PERCENTAGE TERMS SEPARATELY. SINCE THE ASSESSEE COMMENCED AND CONCLUDED DEVELOPMENT OF EACH PHASE OF THE HOUSING PROJECT AT DIFFERENT POINTS IN TIME, THE INC OME DERIVED FROM EACH PHASE WAS ALSO OFFERED TO TAX WITH REFERENCE TO PERCENTAGE COMPLETION OF EACH PHASE SEPARATELY. IN THE ASSESSMENTS FRAMED U/S 143(3) THE AO NEVER QUESTIONED THE ASSESSEE'S SUCH METHODOLOGY FOR RECOGNIZING THE REVENUE. ON THESE FACTS T HEREFORE IT CANNOT BE SAID THAT THE ASSESSEE DID NOT MAINTAIN SEGREGATION IN IMPLEMENTING THE HOUSING PROJECTS PHASE WISE OR THAT PHASE WISE SEGREGATION WAS ARBITRARY ONLY FOR CLAIMING DEDUCTION U/S 80IB(10). 4.23 FROM THE PLAIN READING OF THE ASSESSMENT ORDER IT APPEARED THAT THE AO NEVER QUESTIONED OR REJECTED THE ASSESSEE'S BOOKS OF ACCOUNT. THE OPERATING RESULTS AS DECLARED BY THE ASSESSEE WERE ACCEPTED BY THE AO FOR THE PURPOSE OF ASSESSING BUSINESS INCOME DERIVED FROM DEVELOPMENT OF HOUSING PROJECTS. FROM THE AUDITED ACCOUNTS AND AUDIT REPORT IN FORM 1OCCB I FIND THAT THE AUDITOR HAD CERTIFIED PROFITABILITY OF EACH PHASE OF LUXURY HIG ZONE SEPARATELY; TREATING EACH SUCH PHASE TO BE SEPARATE HOUSING PROJECT. I FURTHER FIND THAT FOR DETERMINING THE PROF ITABILITY; THE ASSESSEE FOLLOWED PERCENTAGE OF COMPLETION METHOD AND FOR ASCERTAINING THE COMPLETION IN PERCENTAGE TERMS THE ASSESSEE TOOK INTO ACCOUNT PHYSICAL PROGRESS ACHIEVED BY EACH PHASE SEPARATELY. THE DISPROPORTIONATE AND VARYING PERCENTAGE OF COMP LETION ACHIEVED FOR EACH PHASE IN DIFFERENT YEARS WAS ACCEPTED BY THE AO WITHOUT ANY QUESTION AND ASSESSEE'S BOOKS RESULTS WERE NEVER REJECTED. IN THE CIRCUMSTANCES I FIND SUBSTANTIAL MERIT IN THE ASSESSEE'S CLAIM THAT IF FOR REVENUE RECOGNITION THE AO ACC EPTED THE ASSESSEE'S WORKING AND DID NOT ADOPT UNIFORM RATE OF % COMPLETION TREATING ALL 11 BUILDINGS TO BE SINGLE PROJECT THEN IT WAS NOT APPROPRIATE FOR THE AO TO DISPUTE THE ASSESSEE'S CONTENTION REGARDING PHASE WISE DEVELOPMENT ONLY FOR THE PURPOSES OF REJECTING THE CLAIM U/S 80IB(10). 10 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 4.24 THE ASSESSEE'S PLEA IN THIS REGARD WAS THAT TO CLAIM DEDUCTION U/S 80IB(10) IT WAS NOT NECESSARY TO DEMONSTRATE THAT ALL STRUCTURES APPROVED BY A COMMON APPROVAL OF THE LOCAL AUTHORITY, CONSTITUTED AN INDIVISIBLE HO USING PROJECT. IN SUPPORT OF THIS PLEA THE A/R OF THE APPELLANT RELIED ON DECISIONS OF VARIOUS JUDICIAL AUTHORITIES WHICH HAVE BEEN REFERRED IN DETAIL IN THE A/R'S WRITTEN SUBMISSIONS. 4.25 IN PARTICULAR IN THE CASE OF SIDDHDIVINAYAK KOHINOOR VENTURE VS. ADDL. CIT (67 SOT 284) THE PUNE BENCH CONSIDERED A SIMILAR ISSUE. IN THE DECIDED CASE THE ASSESSEE ACQUIRED DEVELOPMENT RIGHTS TO A PLOT OF LAND. THE LOCAL AUTHORITY IN ITS COMMON APPROVAL SANCTIONED CONSTRUCTION OF 295 ROW HOUSES AND 144 FLATS. THE DEVELO PMENT COMMENCED PRIOR TO 01.04.2004 AND THEREFORE CLAIM DEDUCTION U/S 80IB(10) CONSTRUCTION WAS REQUIRED TO BE COMPLETED PRIOR 31.03.2008. IN THE RETURNS FOR AYS 2006 - 07 & 2007 - 08 ASSESSEE CLAIMED DEDUCTION ONLY IN RELATION TO DEVELOPMENT OF ROW HOUSES AND NOT IN RESPECT OF FLATS. THE AO REJECTED THE ASSESSEE'S CLAIM ON THE GROUND THAT THE LOCAL AUTHORITY HAD GRANTED COMMON APPROVAL FOR ROW HOUSES AND FLATS AND THEREFORE THESE 2 TOGETHER CONSTITUTED A SINGLE PROJECT. SINCE BOTH THE PROJECTS I.E. ROW HOUSES AND FLATS WERE NOT COMPLETED BY 31.03.2008 AND THE LOCAL AUTHORITY DID NOT GIVE COMPLETION CERTIFICATE TO ENTIRE PROJECT; THE CONDITIONS OF SEC. 80IB(1O)(III) WERE NOT SATISFIED. THE ITAT HOWEVER HELD THAT MERELY A COMMON APPROVAL OF THE LOCAL AUTHORITY WA S NOT SUFFICIENT TO REJECT THE ASSESSEE'S CLAIM. ACCORDING TO ITAT THE REQUIREMENT OF SEC 80IB(10)(III) WAS THAT THE HOUSING PROJECT MUST 'OBTAIN APPROVAL OF THE LOCAL AUTHORITY'. THE LANGUAGE EMPLOYED IN THE SECTION DID NOT REFLECT THE LEGISLATIVE INTENT THAT THE PROJECT SHOULD ALSO BE 'EXECUTED AS APPROVED BY THE LOCAL AUTHORITY'. TRIBUNAL THEREFORE HELD THAT THE PROJECT SWRH COMPRISING ONLY OF ROW HOUSES WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10) SINCE IT FULFILLED ALL OTHER CONDITIONS CONTAINED IN SEC 80IB (10). SIMILAR VIEW HAS BEEN EXPRESSED BY VARIOUS BENCHES OF THE ITAT IN THE COUNTRY ON WHICH THE RELIANCE WAS PLACED BY THE A/R IN HIS WRITTEN SUBMISSIONS. THE DECISIONS RELIED ON WERE AS FOLLOWS. A) SAROJ SALES ORGANIZATION VS. ITO (115TTJ 485) (MUM ITAT) B) V ANDANA PROPERTIES VS. ACIT (31 SOT 391) (MUM ITAT) C) MUDIT N. GUPTA VS. ACIT (9 TAXMANN.COM 235) (MUM ITAT) D) DCIT VS. BRIGADE ENTERPRISES PCT. LTD (28 SOT 7) (BANG ITAT) E) VISHWAS PROMOTERS PVT. LTD VS. ACIT (29 TAXMANN.COM 19) (MAD HC) F) RAMSUKH PROPERTIES VS. D CIT (138 ITD 278) (PUNE ITAT) 4.26 COPIES OF THESE DECISIONS WERE FILED IN THE COURSE OF HEARING FROM WHICH IT APPEARED THAT IN ALL THE ABOVE CASES THE ASSESSEES HAD UNDERTAKEN DEVELOPMENT OF HOUSING PROJECTS WHICH WERE APPROVED BY A COMMON SANCTION GRANT ED BY THE LOCAL AUTHORITIES. THE ASSESSEES HOWEVER COMPLETED THE CONSTRUCTION OF THE HOUSING PROJECTS IN PHASES AND OBTAINED COMPLETION CERTIFICATES AT DIFFERENT DATES. THE DEDUCTION U/S 80IB(10) WAS NOT CLAIMED TREATING THE ALL BUILDINGS APPROVED THROUGH COMMON APPROVAL TO BE ONE PROJECT BUT THE DEDUCTION WAS CLAIMED ONLY IN RESPECT OF FEW HOUSING BLOCKS COMPRISED IN THE PLAN ORIGINALLY APPROVED. IN THE DECISIONS RELIED ON BY THE A/R; THE AUTHORITIES FOUND THAT THE TERM 'HOUSING PROJECT' PER SE WAS NOT DEF INED IN SEC 80IB(10) AND THEREFORE THE SAID TERMS 11 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. WAS INTERPRETED AS USED IN COMMON PARLANCE. IN FEW DECISIONS REFERENCE WAS ALSO MADE TO SECTION 8OHHBA WHEREIN THE WORD 'HOUSING PROJECT' WAS DEFINED TO MEAN A PROJECT FOR CONSTRUCTION OF ANY BUILDING OR OT HER STRUCTURES IN ANY PART OF INDIA. APPLYING THE DEFINITION OF THE SAID WORD; IN SEC 80HHBA; AS AN INTERNAL AID; IT WAS HELD BY THE JUDICIAL AUTHORITIES THAT EVEN CONSTRUCTION OF FEW BUILDINGS OR SOME OF THE WINGS OF A BUILDING CONSTITUTED 'HOUSING PROJEC T' FOR THE PURPOSES OF SEC 80IB(10). 4.27 THE REFERENCE IN THIS REGARD IS RELEVANT TO THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF VISHWAS PROMOTERS PVT. LTD VS. ACIT (29 TAXMANN.COM 19). IN THIS CASE THE ASSESSEE UNDER TOOK 4 PROJECTS NAMELY AGRI NI; VAJARA, PODUKURU PHASE I & II. IN THE PROJECTS AGRINI AND VAJARA THE ASSESSEE CONSTRUCTED FLATS ADMEASURING LESS THAN AS WELL AS MORE THAN 1500 SQ.FT. THE DEDUCTION WAS HOWEVER CLAIMED ONLY IN RESPECT OF PROFITS ATTRIBUTABLE TO FLATS INDIVIDUALLY LESS THAN 1500 SQ.FT. ASSESSEE'S CLAIM WAS DENIED ON THE GROUND THAT DEDUCTION WAS AVAILABLE ONLY FOR THE PROJECT AS A WHOLE AND PROVIDED THAT ALL RESIDENTIAL UNITS SATISFIED THE CONDITIONS PRESCRIBED IN THAT SECTION. ACCORDING TO THE ASSESSEE HOWEVER EACH HOUS ING BLOCK IN AGRINI&VAJARA IN THEMSELVES WERE 'HOUSING PROJECTS'. THE DEDUCTION WAS RESTRICTED ONLY TO SUCH UNITS WHICH WERE INDIVIDUALLY LESS THAN 1500 SQ. FT. THE HIGH COURT HELD THAT EVEN THOUGH LARGER LAND AREA WAS COMPRISED IN THE PROJECT NAMED AGRINI AND VAJRA FOR WHICH MASTER PLAN WAS APPROVED BY THE LOCAL AUTHORITY; THE DEDUCTION WAS CLAIMED ONLY IN RESPECT OF INDIVIDUAL FLATS HAVING LESS THAN 1500 SQ.FT AREA. THE HIGH COURT HELD THAT EACH BLOCK IN THE LARGER PROJECT NAMED AGRINI AND VAJRA WAS TO BE TAKEN AS INDEPENDENT HOUSING PROJECT FOR ALLOWING DEDUCTION U/S 80IB(10). IN COMING TO ITS DECISION THE MADRAS HIGH COURT RELIED ON THE JUDGMENT OF THE CALCUTTA HIGH COURT DT.24.03.2006 IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT I.E. THE PRESENT ASS ESSEE. I FURTHER NOTE THAT IN THE DECISIONS RELIED UPON BY THE A/R A UNIFORM VIEW HAS BEEN EXPRESSED THAT THE TAXING PROVISION GRANTING INCENTIVES SHOULD BE CONSTRUED LIBERALLY AND CONSEQUENTLY RESTRICTIONS PLACED SHOULD ALSO BE CONSTRUED IN A MANNER WHICH WOULD ADVANCE THE OBJECT OF THE BENEFICIAL PROVISION AND NOT TO FRUSTRATE THE OBJECT FOR WHICH THE STATUTE HAD MADE THE PROVISION. 4.28 APPLYING THE RATIO EMANATING FROM THE DECISIONS RELIED UPON BY THE ASSESSEE I FIND THAT ASSESSEE'S CASE SQUARELY COMES WITHIN THE AMBIT OF THE RATIO LAID DOWN. THE JURISDICTIONAL FACTS ON RECORD ESTABLISH THAT EVEN THOUGH 11 BUILDINGS OF LUXURY HIG ZONE RECEIVED APPROVAL OF KMC ON 30.03.2007, THE CONSTRUCTION OF 11 TOWERS WAS ACTUALLY CARRIED OUT BY THE ASSESSEE IN PHASES . THE CONSTRUCTION WORK OF EACH PHASE COMMENCED AT DIFFERENT POINTS IN TIME. THERE WAS TIME GAP BETWEEN THE COMMENCEMENT AND COMPLETION OF CONSTRUCTION OF EACH PHASE. THE MARKETING OF EACH PHASE WAS ALSO CARRIED OUT IN A STAGGERED MANNER AT DIFFERENT POINT S IN TIME. THERE WAS TIME GAP BETWEEN THE LAUNCH OF EACH PHASE AND CONSEQUENTLY PRICE REALIZATION FOR EACH PHASE CONSIDERABLY DIFFERED WHICH HAD CONSEQUENTIAL EFFECT ON PROFITABILITY OF EACH PHASE. THE ASSESSEE FOLLOWED PERCENTAGE OF COMPLETION OF WORK MET HOD FOR RECOGNIZING THE REVENUE IN ITS BOOKS. FOR ASCERTAINING PERCENTAGE OF COMPLETION OF WORK THE ASSESSEE TOOK INTO ACCOUNT THE EXTENT OF WORK COMPLETED FOR EACH PHASE SEPARATELY. ACCORDINGLY VARYING PERCENTAGE OF REVENUE FOR EACH PHASE WAS RECOGNIZED I N THE ASSESSEE'S BOOKS IN EACH ACCOUNTING YEAR. 12 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. THE AUDITORS WHILE ISSUING THE AUDIT CERTIFICATES IN FORM 1OCCB ACCOUNTED REVENUE WITH REFERENCE TO PERCENTAGE OF WORK ACTUALLY ACHIEVED FOR EACH PHASE SEPARATELY. FOR THE PURPOSE OF ASSESSING THE INCOME OF T HE APPELLANT THE AO NEVER DOUBTED OR QUESTIONED THE ACCOUNTING METHOD FOLLOWED BY THE ASSESSEE WHERE UNDER VARYING PERCENTAGE OF REVENUE WAS RECOGNIZED FOR EACH PHASE. IN THE CIRCUMSTANCES I HAVE NO HESITATION IN HOLDING THAT THE CONDUCT OF THE ASSESSEE WH ILE ACTUALLY IMPLEMENTING THE HOUSING PROJECT, DEMONSTRATED THAT EACH PHASE OF LUXURY HIG ZONE WAS EXECUTED & MARKETED AS A SEPARATE AND DISTINCT PROJECT THOUGH SITUATED ON CONTIGUOUS PLOT. THE MERE FACT THAT ALL 11 TOWERS WERE HAVING COMMON ENTRY AND EXIT POINTS COULD NOT BE THE BASIS FOR REJECTING THE ASSESSEE'S PLEA THAT LUXURY HOUSING PROJECT CONSISTED OF 5 MICRO COMPONENTS EACH BEING INDEPENDENT HOUSING PROJECT. 4.29 I FURTHER NOTE THAT EACH OF THE 3 PHASES OF THE HOUSING PROJECT IN RESPECT OF WHICH T HE DEDUCTION WAS CLAIMED BY THE ASSESSEE WERE DEVELOPED ON PLOTS OF LAND WHOSE AREA INDIVIDUALLY EXCEEDED ONE ACRE. I ALSO NOTE THAT THE FLAT SIZES IN EACH OF THE 3 PHASES WERE BOTH LESS THAN AND MORE THAN 1500 SQ.FT. BUT THE DEDUCTION WAS RESTRICTED ONLY TO PROFITS ATTRIBUTABLE TO UNITS WHOSE INDIVIDUAL SIZE WAS LESS THAN 1500 SQ.FT. IN TERMS OF THE DECISION OF THE CALCUTTA HIGH COURT IN ASSESSEE'S OWN CASE SUCH CLAIM WAS ALLOWABLE. I THEREFORE FIND THAT MOS T OF THE CONDITIONS SPECIFIED IN SEC 80IB(10) WER E INDIVIDUALLY FULFILLED BY PHASES I, II & III OF LUXURY HIG ZONE. 4.30 ONE OF THE IMPORTANT CONDITION WHICH WAS REQUIRED TO BE FULFILLED U/S 80IB(1O)(III) PERTAINED TO OBTAINING OF COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY FOR THE HOUSING PROJECT P RIOR TO 31.03.2012. FROM THE MATERIAL ON RECORD I FIND THAT THE HOUSING PROJECT BEING PHASE I ONLY OBTAINED COMPLETION CERTIFICATE IN APRIL 2011 WHEREAS OTHER HOUSING PROJECTS BEING PHASES II, III, IV & V OF LUXURY HIG ZONE OBTAINED COMPLETION CERTIFICATE IN FEBRUARY 2014. THE A/R OF THE ASSESSEE PLEADED THAT THE ASSESSEE HAD PHYSICALLY COMPLETED THE CONSTRUCTION OF 5 BUILDING TOWERS COMPRISED IN PHASES II & III PRIOR TO 31.03.2012. THE REGISTERED ARCHITECT BY HIS CERTIFICATES DATED 27.01.2012 & 04.03.2012 CERTIFIED COMPLETION OF PHASES II & III WHICH ESTABLISHED THAT THE ASSESSEE HAD COMPLETED CONSTRUCTION OF THE HOUSING PROJECTS PRIOR TO 31.03.2012. APART FROM RELYING ON THE ARCHITECT'S CERTIFICATE THE A/R FURTHER POINTED OUT THAT IN THE ASSESSEE'S BOOKS I T HAD RECOGNIZED AND ACCOUNTED FOR 99.71% OF THE REVENUE FOR PHASE II AND 97.94% OF THE REVENUE FOR PHASE III. THE A/R THEREFORE FORCEFULLY SUBMITTED THAT SINCE THE ASSESSEE NOT ONLY OBTAINED COMPLETION CERTIFICATE FROM THE REGISTERED ARCHITECT BUT IT HA D RECOGNIZED ALMOST ENTIRE INCOME DERIVED FROM PHASES I, II & III IN ITS BOOKS TILL 31.03.2012 & OFFERED IT TO TAX ON PRO RATA BASIS BETWEEN A.YS 2010 - 11 TO 2012 - 13. ACCORDING TO THE A/R IF THE AO COULD ASSESS ENTIRE PROFIT DERIVED BY THE APPELLANT FROM IT S BUSINESS OF DEVELOPING HOUSING PROJECTS BEING PHASES I, II & III TILL AY 2012 - 13 THEN ONLY FOR THE PURPOSE OF GRANTING DEDUCTION U/S 80IB(10) THE AO COULD NOT DENY THE FACT THAT THE HOUSING PROJECTS HAD ATTAINED COMPLETION. ACCORDING TO THE A/R THE AO CO ULD NOT ADOPT CONTRADICTORY STANDS. IF FOR ASSESSING THE INCOME THE AO ACCEPTED THAT PHASES I, II & III ATTAINED COMPLETION AND ON THAT PREMISE THE AO ASSESSED ALMOST ENTIRE INCOME DERIVED FROM THE SAID 3 PHASES THEN ONLY FOR THE PURPOSE OF DEDUCTION U/S 8 0IB(10) THE AO SHOULD NOT HAVE 13 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. DENIED THE FACT OF COMPLETION OF THE HOUSING PROJECT ON THE GROUND THAT LOCAL AUTHORITY HAD NOT CERTIFIED THE COMPLETION. 4.31 ALTHOUGH THE SUBMISSION OF THE A/R CARRIES MUCH CONVICTION; YET I AM UNABLE TO AGREE WITH THE A/R 'S ARGUMENTS. IT IS TRUE THAT THE REGISTERED ARCHITECT CERTIFIED THAT PHASES I, II & III WERE COMPLETE PRIOR TO 31.03.2012. IT MAY ALSO BE TRUE THAT IN ITS BOOKS OF ACCOUNTS TILL 31.03.2012 THE ASSESSEE RECOGNIZED 100%, 99.71% & 97.94% OF THE REVENUES DERI VED FROM PHASES I, II & III OF LUXURY HIG ZONE & BASED ON SUCH REVENUE RECOGNIZED THE ASSESSEE OFFERED TO TAX ITS INCOME ON PRO - RATA BASIS. THESE FACTS CONSIDERED CUMULATIVELY CERTAINLY INDICATE THAT THE CONDUCT OF THE ASSESSEE AS ALSO THE ENTRIES IN THE B OOKS; SUPPORTED THE FACT THAT ASSESSEE HAD COMPLETED THE HOUSING PROJECTS BEING PHASES I, II & III BY 31.3.2012. IN HIS SUBMISSIONS THE A/R EXPLAINED THE REASONS FOR WHICH ASSESSEE WAS PREVENTED FROM MAKING APPLICATION TO KMC FOR GRANT OF THE COMPLETION CE RTIFICATE IN RELATION TO PHASES II, III & IV PRIOR TO 31.03.2012; EVEN THOUGH THE CONSTRUCTION OF THESE PHASES WAS COMPLETE. RELYING ON THE DECISION OF ITAT PUNE BENCH IN THE CASE OF RAMSUKH PROPERTIES VS. DCIT (138 ITD 278) THE A/R OF THE ASSESSEE CLAIMED THAT IT WAS PREVENTED BY FACTORS BEYOND ITS CONTROL AND THEREFORE THE BENEFICIAL DEDUCTION SHOULD NOT BE DENIED ON TECHNICAL GROUNDS. HAVING CONSIDERED THE RELEVANT DECISION OF THE ITAT I AM HOWEVER UNABLE TO AGREE WITH THE A/R'S CONTENTIONS. IN THE CASE DECIDED BY ITAT PUNE THE COMPLETION CERTIFICATE COULD NOT HAVE BEEN ISSUED BY THE LOCAL AUTHORITY IN VIEW OF THE PENDING ENQUIRES BY THE INVESTIGATING AUTHORITY. IN THE ASSESSEE'S CASE NO SUCH IMPEDIMENT WAS FACED BY THE ASSESSEE. IN THE CIRCUMSTANCES THE RATIO LAID DOWN BY THE ITAT PUNE CANNOT BE APPLIED TO THE ASSESSEE'S CASE. I THEREFORE HOLD THAT PHASES II & III OF LUXURY HIG ZONE DID NOT QUALIFY FOR CLAIMING THE DEDUCTION U/S 80IB(10) SINCE KMC DID NOT GRANT COMPLETION CERTIFICATE PRIOR TO 31.03.2012. 4.32 HOWEVER AS REGARDS DEDUCTION IN RELATION TO PHASE I OF LUXURY HIG ZONE I FIND THAT THE COMPLETION CERTIFICATE FOR TOWERS 2, 3 & 4 WAS GRANTED BY KMC IN APRIL 2011. AS SUCH THE CONDITION PRESCRIBED IN CLAUSE (III) OF SEC 8OIB(10) WAS FULFILLED BY HOUS ING PROJECT PHASE I. IN THE IMPUGNED ORDER THE AO DENIED ASSESSEE'S CLAIM IN RELATION TO PHASE I ONLY ON THE GROUND THAT THE CERTIFICATE ISSUED BY KMC IN APRIL2011 TERMED IT TO BE AS PARTIAL COMPLETION CERTIFICATE. IN AO'S OPINION THE PARTIAL COMPLETION CE RTIFICATE BEING PROVISIONAL IN NATURE AND LIABLE FOR REVIEW COULD NOT BE CONSTRUED AS COMPLETION CERTIFICATE ENVISAGED IN SEC 80IB(10). HOWEVER, I FIND THAT AFTER THE COMPLETION CERTIFICATE WAS ISSUED BY KMC IN APRIL 2011 THE SAID CERTIFICATE WAS NEVER WIT HDRAWN OR REVOKED BY KMC AT ANY TIME. THE 8 RESIDENTIAL TOWERS COMPRISED IN PHASES II TO V OF LUXURY HIG ZONE WERE GRANTED COMPLETION CERTIFICATE BY KMC ON 08.02.2014 COPY OF WHICH WAS FILED BEFORE ME FROM WHICH I FIND THAT IN 'BUILDING PARTICULARS' COLUMN THE LOCAL AUTHORITY CERTIFIED THE FOLLOWING INFORMATION. 'GRANT OF COMPLETION CERTIFICATE UNDER RULE 27 OF KMC BUILDING RULES 1990. THE BUILDING COMPLEX WAS SANCTIONED (B.P.NO.776/XII/06 - 07, DT. 30/03/07 FOR 11 NOS. HIG TOWERS (62M) 2 NOS. MIG TOWERS (55 M) 1 NO.LIG TOWER (55M) 2 NOS. CLUB HOUSE (HT. 4.5 & 8. 1 M.) 1 MO. COMMERCIAL & VOCATIONAL TRAINING CENTER (HT.1.8M) DEPT. HAS 14 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. ALREADY ISSUED PARTIAL C.C. FOR 3 NOS. HIG, 2 NOS. MIG, 1 NO. LIG, 2 NOS. CLUB & 1 NONCOMMERCIAL & VOCATION TRAINING CENTER. NO W COMPLETION CERTIFICATE ISSUED FOR REST OF HIG TOWERS, 1, 5, 6. 7, 8, 9, 10 & 11.' 4.33 FROM THE CERTIFICATION MADE BY KMC IT WAS THEREFORE APPARENT THAT THE LOCAL AUTHORITY GRANTED COMPLETION CERTIFICATE FOR 3 NOS. OF HIG ZONE BUILDINGS EARLIER AND IN F EBRUARY 2014 COMPLETION CERTIFICATE WAS ISSUED FOR THE REMAINING 8 TOWERS OF HIG ZONE AND WITH C.C. GRANTED TO REMAINING 8 TOWERS THE ENTIRE PROJECT ORIGINALLY SANCTIONED ON 30.03.2007 WAS DECLARED TO BE COMPLETE. 4.34 I THEREFORE FIND FORCE IN THE SUBMIS SIONS' OF THE A/R THAT THE COMPLETION CERTIFICATION GRANTED BY KMC IN APRIL 2011 TO TOWERS 2, 3 & 4 OF PHASE I THOUGH TERMED AS PARTIAL COMPLETION CERTIFICATE YET THE SAME ACTED FOR ALL INTENTS AND PURPOSES TO BE COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY AS CONTEMPLATED BY CLAUSE (III) OF SEC. 80IB(10). THIS COUPLED WITH THE FACT THAT PHASE I ALSO COMPLIED WITH OTHER CONDITIONS SPECIFIED IN SEC 80IB(10) AND THE PROFITS OF THE SAID PHASE I WERE CERTIFIED BY THE CHARTERED ACCOUNTANT IN ITS AUDIT RE PORT ISSUED IN PRESCRIBED IN FORM 10CCB I HOLD THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S 80 - IB(10) IN RESPECT OF PROFITS DERIVED FROM HOUSING PROJECT BEING PHASE I OF LUXURY HIG ZONE OF 'UPOHAR THE CONDOVILLE'. THE AO IS ACCORDINGLY DIRECTED TO GRANT DEDUCTION U/S 80IB(10) AMOUNTING TO 2.79,49,838/ - IN RESPECT OF PHASE I AND MODIFY THE ASSESSMENT ACCORDINGLY. BEING AGGRIEVED BY LD. CIT(A)S ORDER, THE REVENUE IS NOW IN APPEAL BEFORE US. 3. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES. TH E LD. CIT, DR APPEARING ON BEHALF OF THE REVENUE FURNISHED A WRITTEN SUBMISSION FORWARDED BY THE AO IN SUPPORT OF THE GROUNDS RAISED IN THE APPEAL. THE RELEVANT EXTRACTS OF THE WRITTEN SUBMISSIONS ARE AS FOLLOWS: GROUNDS NO. - 1 OF 2010 - 11 AND GROUND NO. 7 OF 2011 - 12 THE HOUSING PROJECT HAS BEEN UNDER TAKEN IN A LAND AREA OF 18.62 ACRES CONSISTING OF 11 TOWERS OF 19 FLOOR EACH, HOUSING HIG FLATS, 2 TOWERS OF MIG HOUSING AND 1 TOWER OF LIG. THE HOUSING PROJECT PROPOSED COMMERCIAL AREAS, LUXURY CLUB AS A PAR T OF THE SANCTION PROJECT BY THE KOLKATA MUNICIPAL CORPORATION VIDE BUILDING PERMIT DATED THE 30/03/2007(REF. OF APPROVED PLANS). AS PER THE APPROVED PLAN AGGREGATE BUILT UP AREA IS 70,551.81 SQ. MTRS. THE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL ES TABLISHMENTS SUCH AS COMMERCIAL LUXURY CLUB IS 12,680.17 SQ. MTRS. THE ASSESSEE CLAIMED DEDUCTIONS FOR EACH YEAR FOLLOWING PERCENTAGE COMPLETION METHOD. AS PER PROVISIONS OF SEC. 80IB(10)(A)(III) THE HOUSING PROJECT APPROVED BY KMC AFTER 01/04/2005 SHOULD HAVE BEEN COMPLETED WITHIN 5 YEARS FROM THE END OF F.Y. IN WHICH BUILDING PERMIT WAS GRANTED. IN OTHER WORDS DATE OF SANCTION BEING 30/03/2007, THE HOUSING PROJECT SHOULD HAVE BEEN COMPLETED WITHIN 31/03/2012. THE CBDT INSTRUCTION NO. 4/2009 DATED 30/06/20 09 HAS 15 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. CLARIFIED THAT DEDUCTION CAN BE CLAIMED YEAR TO YEAR BASIS AND IN CASE OF NON - COMPLETION THE PROJECT WITHIN STATUTORY TIME, THE DEDUCTION GRANTED TO THE ASSESSEE IN THE EARLIER YEARS SHOULD BE WITHDRAWN. GROUND NO,.2 OF 2010 - 11 AND GROUND NO. 8 OF 2011 - 12. AS PER THE PROVISIONS OF SEC. 80IB(10)(A)(III) THE HOUSING PROJECT SHOULD HAVE BEEN COMPLETED AS PER APPROVED PLAN DATED 30/03/2007 BY 31/03/2012. THE ASSESSEE COMPANY SHOWS VARIOUS DATES FOR VARIOUS PHASES. HOWEVER, THE COMPLETION CERTIFICATE U NDER RULE 27 OF KMC BUILDING RULES CERTIFIES A DATE OF 14/02/2014 WHICH IS WELL BEYOND THE STATUTORY DATE. THE NOTIFICATION OF KMC BUILDING RULES 2009 PROVIDES FOR PARTIAL COMPLETION CERTIFICATE. HOWEVER, UNDER RULE 29(3) THE APPLICANT BEING ASSESSING CO MPANY SHALL APPLY FOR CONVERSION OF PARTIAL COMPLETION CERTIFICATE OR ISSUE OF A COMPLETION CERTIFICATE AFTER THE EXECUTION OF THE WORK COMPLETED WITHIN THE PERIOD OR EXTENDED PERIOD. THEREFORE, THE PARTIAL COMPLETION CERTIFICATE CANNOT BE TAKEN AS CONCLUS IVE EVIDENCE OF THE COMPLETION OF THE HOUSE PROJECT. GROUND NO,.3 OF 2010 - 11 AND GROUND NO. 9 OF 2011 - 12. THE HOUSING PROJECT HAS 11 TOWERS HIG, 2 TOWERS OF MIG AND 1 TOWER OF LIG. IN SO FAR AS LUXURY HIG ARE CONCERNED THERE ARE 3 TYPES OF FLATS NAMELY 2 BED ROOM, 3 BED ROOM, 4 & MORE BED ROOM. (REFER COPY) THE TOTAL COVERED AREA OF A 2 BED ROOM FLAT WITHOUT OPEN TERRACE IS 1,200 SQ. FT. AND ONLY 17 SUCH FLATS PER TOWER HAS BEEN PLANNED. THE NEXT TYPE IS HAVING COVERED AREA OF 1,200 SQ.FT. ALONG WITH AN OPEN TERRACE ON 126 SQ.FT. AS PER DEFINITION OF BUILT UP AREA UNDER SECTION 80IB(14) BUILT UP AREA MEANS THE INNER MEASUREMENT PLUS PROJECTIONS PLUS BALCONY PLUS THE THICKNESS OF THE WALL. AS A RESULT ONLY 17 SUCH FLATS PER TOWER QUALIFY FOR DEDUCTION APAR T FROM CERTAIN FLATS IN TWO MIG TOWERS AND ALMOST ALL FLATS IN 1 LIG TOWERS. GROUND NO,.4 OF 2010 - 11 AND GROUND NO. 9 OF 2011 - 12. IN CONCLUSION THE HOUSING PROJECT HAVING BEING COMPLETED WELL BEYOND STATUTORY TIME, THE BUILT UP AREA OF SHOPS AND OTHER C OVERED ESTABLISHMENT EXCEEDING 3%, MOST OF THE FLATS UNDER HIG BEING UNITS EXCEEDING 1,500/ - SQ.FT., THE CLAIM OF ASSESSEE COMPANY FOR DEDUCTION UNDER 80IB(10) IS NOT ENFORCEABLE UNDER LAW. FURTHER AS PER INSTRUCTION 4 OF CBDT THE DEDUCTION GRANTED EARLIER REQUIRES TO BE WITHDRAWN. 4. IN THE COURSE OF HEARING THE LD. CIT, DR PARTICULARLY STRESSED ON THE FACT THAT THE ASSESSEE HAD NOT OBTAINED COMPLETION CERTIFICATE FOR THE ENTIRE PROJECT CONSISTING OF 11 TOWERS BUT HAD INSTEAD OBTAINED PARTIAL COMPLETION CERTIFICATE IN A PHASED MANNER. REFERRING TO THE KMC ACT WHICH WAS FURNISHED ALONG WITH THE WRITTEN SUBMISSIONS, IT WAS FURTHER 16 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. URGED THAT PARTIAL COMPLETION CERTIFICATE DATED 29.04.2011 OBTAINED BY THE ASSESSEE IN RESPECT OF PHASE - I CANNOT ACT AS COMPLET ION CERTIFICATE FOR ALL INTENTS & PURPOSES, AS HELD BY THE LD. CIT(A) IN HIS IMPUGNED ORDER. ACCORDING TO CIT, DR EVEN IF THE PHASE I IS ASSUMED TO BE INDEPENDENT HOUSING PROJECT, THE ASSESSEE OUGHT TO HAVE OBTAINED A SEPARATE COMPLETION CERTIFICATE FR OM THE KMC IN TERMS OF THE RULES PRESCRIBED IN THE KMC ACT WHICH ACCORDING TO HIM WAS NOT OBTAINED BY THE ASSESSEE. HE THUS SUBMITTED THAT THE ORDER OF THE LD. CIT(A) ALLOWING DEDUCTION IN RESPECT OF PHASE I WITH REFERENCE TO PARTIAL COMPLETION CERTIFICA TE AND YET HOLDING IT TO HAVE FULFILLED THE CONDITIONS PRESCRIBED IN CLAUSE (II) OF EXPLANATION TO CLAUSE (A) OF SECTION 80IB(10), WAS UNSUSTAINABLE ON THE FACTS AND IN LAW AND THEREFORE URGED THAT THE ORDER OF THE AO BE RESTORED. 5. IN RESPONSE THE ASSE SSEE ALSO FILED A WRITTEN NOTE SUPPORTING THE FINDINGS OF THE LD. CIT(A). IT WAS FURTHER CONTENDED THAT THE COMPLETION CERTIFICATE DATED 29.04.2011 ACTED AS THE COMPLETION CERTIFICATE AS CONTEMPLATED U/S 80IB(10)(I) FOR PHASE I AND THAT THE ASSESSEE WAS NO T LEGALLY REQUIRED TO OBTAIN ANOTHER COMPLETION CERTIFICATE AS CONTENDED BY THE LD. CIT, DR. TO REBUT THE LD. CIT, DRS CONTENTION, AN APPLICATION WAS MOVED UNDER RULE 29 OF THE APPELLATE TRIBUNAL RULES 1963 VIDE LETTER DATED 12.06.2019 FOR ADMISSION OF TH E REPLY DATED 01.03.2019 OBTAINED BY THE ASSESSEE FROM KMC UNDER THE RTI ACT WHEREIN IT WAS CLARIFIED THAT THE PARTIAL COMPLETION CERTIFICATES ISSUED BY KMC BUILDING DEPARTMENT WERE TO BE CONSIDERED AS GOOD AS COMPLETION CERTIFICATES WITH REGARD TO THE BUI LDINGS CONSTRUCTED BY THE ASSESSEE AT UPOHAR THE CONDOVILLE. SINCE THIS CERTIFICATE DATED 01.03.2019 ISSUED BY KMC WAS A FRESH EVIDENCE, YET IT WAS TAKEN ON RECORD BECAUSE IT WAS FOUND TO BE PERTINENT AND DECISIVE DOCUMENT FOR ADJUDICATING THE ISSUE IN VOLVED IN THESE GROUNDS. 6. WITH REGARD TO THE ADDITIONAL EVIDENCE, BOTH THE LD. CIT, DR AS WELL AS AO FURNISHED REJOINDERS. THE LD. CIT, DR OPPOSED THE ADMISSION OF ADDITIONAL EVIDENCE AND THE AO FURNISHED HIS OBJECTIONS DATED 31.07.2019 SETTING OUT HIS REASONS AS TO WHY THE REPLY GIVEN BY THE KMC IN THE RTI QUERY WAS AGAINST THE KMC RULES. THE RELEVANT EXTRACTS OF HIS WRITTEN SUBMISSIONS ARE AS FOLLOWS: THE RESPONDENT ASSESSE COMPANY HAS SUBMITTED ADDITIONAL EVIDENCE IN THE FORM OF A LETTER DATED 1/3/2 019 GIVEN BY EXECUTIVE ENGINEER KMC ON THE REQUEST MADE BY THE RESPONDENT. 17 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. THE RESPONDENT DID NOT DISCLOSE THE PURPOSE OF SEEKING SUCH LETTER FROM THE EE TO THE EE. FURTHER UNDER RTI THE APPLICANT CAN SEEK ANY INFORMATION AND INFORMATION MEANS ANY MATERIA L IN ANY FORM (SECTION 2F OF RTI ACT 2005) . EVEN AN OPINION SHOULD HAVE BEEN FOUND RECORDED IN THE RECORDS OF KMC. THIS LETTER WHERE IN SUCH OPINION IS RECORDED CAN NOT BE TAKEN AS OPINION RECORDED IN THE RECORDS OF KMC. KMC BEING A LOCAL AUTHORITY IS GOV ERNMENT BY MAYOR AND COUCIL ANY SUCH OPINION OF EE BECOMES OPINION OF KMC ONLY ON FOLLOWING THE BUSINESS RULES OF COUNCIL OF KMC. IN ADDITION, THE LETTER OF EE ATTRACTS THE ITAT RULES MORE SPECIFICALLY RULE 29 WHICH DEALS WITH THE PRODUCTION OF ADDITION AL EVIDENCE BEFORE THE HONBLE TRIBUNAL. IF THE TRIBUNAL REQUIRES ANY DOCUMENTS TO BE PRODUCED TO ENABLE IT TO PASS ORDER OR ANY OTHER SUBSTANTIAL CAUSE OR IF THE INCOME TAX AUTHORITIES HAVE DECIDED THE CASE WITHOUT GIVING SUFFICIENT OPPORTUNITY FOR REASO NS TO BE RECORDED MAY ALLOW. THE PROVISIONS OF CPC UNDER ORDER XLI, RULE 27 ENVISAGES CERTAIN CIRCUMSTANCES WHEN ADDITIONAL EVIDENCE CAN BE ADDUCED. THE LAND MARK JUDGEMENT OF HONBLE SC IN MAHAVIR SINGH &ORS AIR 2001 SC134 IS ALSO ENCLOSED. ACCORDING LY THE ADDITIONAL EVIDENCE IN THE FORM OF LETTER FROM EE KMC MAY NOT BE ALLOWED TO BE ADDUCED. 7. WE HAVE HEARD SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY PERUSED THE NOTES FURNISHED BY THE PARTIES BEFORE US IN THE COURSE OF HEARINGS. WE HAVE ALSO GON E THROUGH VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE PARTIES, CONSIDERED APPLICABLE LEGAL PROVISIONS AND THE DOCUMENTS PLACED IN THE PAPER BOOK. WE NOTE THAT IN THE RETURN FURNISHED THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB FOR RS.7,96,42,428/ - BEING THE PROFIT DERIVED FROM PHASES I, II & III OF THE HOUSING PROJECT NAMED UPOHAR THE CONDOVILLE, HIG LUXURY ZONE. IN THE ASSESSMENT ORDER THE CLAIM WAS DISALLOWED FOR THE REASONS DISCUSSED IN THE EARLIER PARAS. ON APPEAL THE LD. CIT(A) DID NOT FULL Y AGREE WITH THE AOS REASONS BUT HELD THAT IT WAS ONLY IN RESPECT OF PHASE I OF THE HOUSING PROJECT THAT THE APPELLANT HAD FULFILLED THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) OF THE ACT AND ACCORDINGLY ALLOWED THE CLAIM ONLY FOR RS.2,79,49,838/ - BEI NG THE PROFIT DERIVED FROM PHASE I. BEING AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US BUT NO APPEAL WAS PREFERRED BY THE ASSESSEE IN RELATION TO DISALLOWANCE CONFIRMED IN APPEAL. IN THE CIRCUMSTANCES TO ADJUDICATE THE PRESENT APPEAL, WE NEED TO ONLY EX AMINE WHETHER THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) OF THE ACT WERE FULFILLED BY THE ASSESSEE AND 18 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. WHETHER THE DEDUCTION U/S 80IB(10) COULD BE ALLOWED ONLY IN RESPECT OF PROFITS OF PHASE I EVEN THOUGH T HE PLAN SANCTIONED ON 30.03.2007 CONTEMPLATED CONSTRUCTION OF 11 TOWERS IN HIG LUXURY ZONE OF THE PROJECT NAMED UPOHAR THE CONDOVILLE. BEFORE DEALING WITH THE ISSUES RAISED IN APPEAL, IT IS FIRST NECESSARY TO SET OUT THE RELEVANT PROVISIONS OF SECTION 80IB(10) AS WERE IN FORCE AT THE TIME WHEN THE PROJECT WAS APPROVED IN MARCH 2007. THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, ( A ) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCT OBER, 1998 AND COMPLETES SUCH CONSTRUCTION, ( I ) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; ( II ) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, ( I ) IN A C ASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; ( II ) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; ( B ) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HA S A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE ( A ) OR CLAUSE ( B ) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; ( C ) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT - UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESID ENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY - FIVE 19 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. KILOM ETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; AND ( D ) THE BUILT - UP AREA OF THE SHOPS AND OTHER COMM ERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT OF THE AGGREGATE BUILT - UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHEVER IS LESS. 8. FROM THE LANGUAGE EMPLOYED BY THE LEGISLATURE WE NOTE THAT AN ASS ESSEE ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT IS ELIGIBLE TO CLAIM DEDUCTION ONLY IF THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) ARE FULFILLED. THE PRIMARY CONDITION WHICH AN UNDERTAKING CLAIMING DEDUCTION, MUST FULFI LL IS THAT THE UNDERTAKING SHOULD DEVELOP A HOUSING PROJECT. ALTHOUGH DEVELOPMENT OF HOUSING PROJECT IS THE PRE - REQUISITE, THE SAID TERM IS NOWHERE DEFINED IN SECTION 80IB OF THE ACT. IN ABSENCE OF THE DEFINITION OF THIS TERM, THE WORD HOUSING PROJECT HAS BEEN JUDICIALLY INTERPRETED BY DIFFERENT APPELLATE FORUMS BY TAKING AID OF THE ANALOGOUS PROVISIONS CONTAINED IN THE ACT. WE NOTE THAT THE ISSUE AS TO WHAT CONSTITUTES A HOUSING PROJECT FOR THE PURPOSES OF SECTION 80 - IB(10) CAME UP FOR CONSIDERATI ON BEFORE THE HONBLE MADRAS HIGH COURT IN THE CASE OF VISHWAS PROMOTERS PVT LTD VS ACIT (29 TAXMANN.COM 19) WHEREIN THE ASSESSEE HAD UNDERTAKEN FOUR PROJECTS WHICH INTER ALIA INCLUDED PROJECT VAJRA AND AGRINI CONSISTING SEVERAL BUILDING BLOCKS IN WHIC H FLATS ADMEASURING LESS THAN 1500 SQFT AND MORE THAN 1500 SQFT WERE CONSTRUCTED. THE DEDUCTION UNDER SECTION 80IB(10) WAS HOWEVER CLAIMED IN RESPECT OF CERTAIN BUILDING BLOCKS IN WHICH FLATS MEASURING LESS THAN 1500 SQFT WERE SITUATED. IT WAS THE ASSESSEE S CONTENTION THAT FOR THE PURPOSES OF SECTION 80IB(10), IT WAS NOT NECESSARY FOR THE ASSESSEE TO SHOW THAT ENTIRE PROJECT CONSISTING OF SEVERAL BUILDING BLOCKS TOGETHER CONSTITUTED A SINGLE HOUSING PROJECT. IT WAS SUFFICIENT THAT IF SOME OF THE BUILDING BLOCKS CONSISTED WITHIN THE SAID PROJECT FULFILLED THE CONDITIONS PRESCRIBED IN SECTION 80IB(10). IN SUCH CASE ALSO, IT COULD BE HELD TO BE A HOUSING PROJECT FOR THE PURPOSES OF GRANT OF DEDUCTION U/S 80IB(10). SUCH CONTENTION WAS NOT ACCEPTED BY THE AO AND TRIBUNAL. HOWEVER ON APPEAL UNDER SECTION 260A THE HONBLE MADRAS HIGH COURT HELD AS FOLLOWS: 9. IT IS SEEN FROM THE NARRATION OF FACTS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS BEFORE THE OTHER AUTHORITIES, THAT IN THE PROJECT UNDER THE NAME 'AGRINI', SEPARATE BLOCKS WERE THERE, THE DETAILS OF WHICH READ AS FOLLOWS: 20 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. SECTOR NAME PLINTH AREA (IN SFT) NO. OF UNITS LAND AREA ALLOCATED SECTOR - I SREENIDHI 2140 48 04.65 ACRES SECTOR - 1A SREENIDHI 1690 4 - SECTOR - II VIMAL1 1265 40 0 1.04 ACRES SECTOR - IIIA MITHRA 1050 160 03.08 ACRES SECTOR - IIIB MITHRA DELUXE & NIRMAL DELUXE 1095 36 - SECTOR - IV NIRMAL 875 240 03.53 ACRES SECTOR - V VAANYA 650 150 01.41 ACRES 10. IT IS NOT DENIED BY THE REVENUE THAT AS FAR AS THE PROJECT 'VAJ RA' IS CONCERNED, AS IN THE CASE OF AGRINI, THERE ARE SIX BLOCKS CONSISTING OF 24 FLATS. THE DISPUTE IN THESE CASES HEREIN IS ON AN ISSUE AS TO WHETHER THE ASSESSEE HAS TO LOSE THE DEDUCTION IN RESPECT THE ENTIRETY OF THE PROJECTS 'VAJRA' AND 'AGRINI', SOL ELY BY REASON OF THE FACT THAT ONE OF THE BLOCKS DEVELOPED BY THE APPELLANT IN THIS PROJECT, HAD FLATS EXCEEDING 1500 SQ.FT. 11. IT IS AN ADMITTED FACT THAT EACH ONE OF BLOCKS HAD SEPARATE SANCTION FROM THE COMPETENT AUTHORITY. EVEN THOUGH THE LARGER AREA COMPRISED IN THE NAME AND STYLE OF 'AGRINI' AND 'VAJRA' IS STATED TO BE THE MASTER PLAN OF THE PROJECT, IT IS NOT DENIED BY THE REVENUE THAT EACH BLOCK IN EACH OF THE PROJECTS HAS ITS OWN SPECIFICATION; HENCE, HAD GONE FOR PLANNING APPROVAL BY THE COMPETE NT PLANNING AUTHORITY. IN THE BACKGROUND OF THIS, THE QUESTION THAT ARISES FOR CONSIDERATION IS AS TO WHETHER THE ASSESSEE WOULD LOSE ITS CLAIM FOR DEDUCTION IN RESPECT OF THOSE BLOCKS WHICH SATISFIED THE CONDITIONS UNDER SECTION 80IB(10) OF THE ACT BY REA SON OF SOME OF THE STOCKS NOT SATISFYING THE CONDITION UNDER SECTION 80IB(10) OF THE ACT. 12. IT IS NOT DENIED BY THE REVENUE THAT THERE IS NO DEFINITION OF THE EXPRESSION 'HOUSING PROJECT' UNDER SECTION 80IB OF THE ACT. THE SAID EXPRESSION IS DEFINED UND ER EXPLANATION TO SECTION 80HHBA OF THE INCOME TAX ACT, WHICH READS AS UNDER: 'SECTION 80HHBA. - DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM HOUSING PROJECTS IN CERTAIN CASES. ** ** ** EXPLANATION : FOR THE PURPOSES OF THIS SECTION, - (A) 'HOUSING PRO JECT' MEANS A PROJECT FOR - (I) THE CONSTRUCTION OF ANY BUILDING, ROAD, BRIDGE OR OTHER STRUCTURE IN ANY PART OF INDIA ' 13. SECTION 80IA OF THE ACT IS A SPECIFIC PROVISION WHICH DEALS WITH DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTA KINGS OR ENTERPRISES ENGAGED IN THE DEVELOPMENT OF INFRASTRUCTURAL FACILITIES SUCH AS ROADS, BRIDGES AND OTHER STRUCTURE AS REGARDS THE GRANT OF DEDUCTION IN RESPECT OF DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT. SECTION 80IB 21 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IS A SPECIFIC PROVISION IN RESPECT OF PROFITS AND GAINS FROM UNDERTAKINGS ENGAGED IN DEVELOPING AND CONSTRUCTING HOUSING PROJECTS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. THUS, HOUSING PROJECTS CONSIDERED HEREIN UNDER SECTION 80IB REFERS TO ANY BUILDING OTHER THAN ROA D, BRIDGE OR OTHER STRUCTURE. THUS, GOING BY THE DEFINITION OF 'HOUSING PROJECT' TO MEAN THE CONSTRUCTION OF 'ANY BUILDING' AND THE DEDUCTION UNDER SECTION 80IB OF THE ACT IS HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASSE SSMENT YEAR FROM SUCH HOUSING PROJECT COMPLYING WITH THE CONDITION, EACH BLOCK IN THE LARGER PROJECT BY NAME 'AGRINI' AND 'VAJRA', HAS TO BE TAKEN AS AN INDEPENDENT BUILDING AND HENCE A HOUSING PROJECT, FOR THE PURPOSE OF CONSIDERING A CLAIM OF DEDUCTION. SECTION 80IB(10) BEGINS BY STATING: '(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN T HE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, * * ** **' THUS THE UNDERTAKING QUALIFYING FOR DEDUCTION UNDER SECTION 80IB OF THE ACT IS AN 'UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS' AND THE DEDUCTION IS IN RESPECT OF 'PROFITS AND GAINS DERIVED FROM' SUCH HOUSING PROJECT, SATISFYING THE COND ITIONS STIPULATED IN THE CLAUSE THEREIN. THUS, WITHIN A COMPOSITE HOUSING PROJECT, WHERE THERE ARE ELIGIBLE AND INELIGIBLE UNITS, THE ASSESSEE CAN CLAIM DEDUCTION IN RESPECT OF ELIGIBLE UNITS IN THE PROJECT AND EVEN WITHIN THE BLOCK, THE ASSESSEE IS ENTITL ED TO CLAIM PROPORTIONATE RELIEF IN THE UNITS SATISFYING THE EXTENT OF THE BUILT - UP AREA. 9. WE ALSO FIND THAT A SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL AT PUNE IN THE CASE OF SIDDHIVINAYAK KOHINOOR VENTURE VS ACIT REPORTED IN 54 TAXMANN.COM 32. IN THAT CASE ALSO IT WAS THE ASSESSEES PLEA THAT IT HAD EXECUTED TWO INDEPENDENT HOUSING PROJECTS WHICH WERE SANCTIONED BY SINGLE APPROVAL GRANTED BY LOCAL AUTHORITY. OUT OF THE TWO PROJECTS, THE ASSESSEE HAD COMPLETED THE CONSTRUCTION OF 293 UNITS IN ONE PROJECT COMPRISING OF 295 UNITS AND DEDUCTION UNDER SECTION 80IB(10) WAS CLAIMED ONLY IN RESPECT OF THE COMPLETED UNITS. THE CLAIM WAS REJECTED PRINCIPALLY ON THE GROUND THAT BOTH THE HOUSING PROJECTS SANCTIONED SIMULT ANEOUSLY TOGETHER CONSTITUTED A SINGLE COMPOSITE HOUSING PROJECT AND THEREFORE DEDUCTION WAS NOT PERMISSIBLE SINCE COMPLETION CERTIFICATE FOR THE ENTIRE HOUSING PROJECT WAS NOT OBTAINED BY 22 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. THE ASSESSEE. ON APPEAL THIS TRIBUNAL ALLOWED THE ASSESSEES CLAIM. THE RELEVANT FINDINGS OF THE TRIBUNAL IN THE SAID DECISION ARE REPRODUCED HEREUNDER: 10. THE AO HAS NOT ACCEPTED THE PLEA OF THE ASSESSEE THAT 'SWRH' AND 'S3' PROJECTS WERE TWO INDEPENDENT AND SEPARATE PROJECTS FOR THE PURPOSE OF S. 80 - IB(10) OF THE ACT . THE AO, AFTER NOTICING THE CHRONOLOGY OF EVENTS WHICH WE HAVE DEALT IN THE EARLIER PARAS, POINTED OUT THAT 'SWRH' PROJECT COMPRISING OF 295 ROW HOUSES DID NOT COME INTO EXISTENCE BY WAY OF ANY SPECIFIC APPROVAL OF PCMC. AS PER THE AO, IN THE PLAN APPROVA LS DT. 10TH SEPT., 2003 AND 29TH MARCH, 2005, PCMC HAS APPROVED CONSTRUCTION OF ROW HOUSES AS WELL AS CONSTRUCTION OF FLATS. IN PARA 12(3) AT P. 20 OF THE ASSESSMENT ORDER, THE ASSERTION OF THE AO IS THAT THE TWO PROJECTS, I.E. 'SWRH' PROJECT FOR ROW HOUSE S AND 'S3' PROJECT FOR FLATS, HAVE A 'SINGLE UMBILICAL CORD' BY WAY OF A COMMON BUILDING PERMISSION GRANTED BY THE PCMC ON 29TH MARCH, 2005. 11. THE SECOND POINT MADE BY THE AO TO SHOW THAT THE TWO PROJECTS ARE A COMPOSITE PROJECT IS CONTAINED IN PARA 12( 6) OF THE ASSESSMENT ORDER WHEREIN IT IS OBSERVED THAT THE PCMC ALLOWED THE ASSESSEE TO USE THE UNUTILIZED EXTRA FSI OF 24,645 SQ. MTRS. OF THE ROW HOUSES AREA TO BUILD THE FLATS BECAUSE THE CONSTRUCTION OF ROW HOUSES AND FLATS WAS CONSIDERED AS A COMPOSIT E PROJECT. . 13. IN NUTSHELL, THE AO HELD THAT ASSESSEE HAD UNDERTAKEN ONLY ONE PROJECT, WHICH COMPRISED OF CONSTRUCTION OF ROW HOUSES AS WELL AS FLATS, AND, THAT THE TWO WERE NOT SEPARATE PROJECTS, AS CLAIMED BY THE ASSESSEE. ACCORDINGLY, THE AO CONCLUDE D THAT ASSESSEE HAD UNDERTAKEN A SINGULAR PROJECT CONSISTING OF CONSTRUCTION OF 611 RESIDENTIAL UNITS (I.E. 295 ROW HOUSES AND 316 FLATS) AND SINCE PRIOR TO THE STIPULATED DATE OF 31ST MARCH, 2008 THE COMPLETION CERTIFICATES WERE OBTAINED FROM PCMC ONLY FO R 293 UNITS OUT OF THE TOTAL 611 RESIDENTIAL UNITS, ASSESSEE DID NOT COMPLY WITH THE CONDITION SPECIFIED IN S. 80 - IB(10)(A)(I) OF THE ACT. CONSEQUENTLY, THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER S. 80 - IB(10) OF THE ACT WAS DENIED. . 16. APART FROM THE A FORESAID, LEARNED COUNSEL CONTENDED THAT FACTUALLY ALSO THE TWO PROJECTS WERE NOT ONLY PERCEIVED BUT ALSO EXECUTED AS INDEPENDENT AND SEPARATE PROJECTS BY THE ASSESSEE. FOR THIS PURPOSE, HE HAS REFERRED TO THE RELEVANT PAGES OF THE PAPER BOOK CONTAINING TH E PLANS AND BROCHURES OF THE TWO PROJECTS TO SHOW THAT THEY HAVE BEEN CONCEIVED AND MARKETED SEPARATELY. REFERENCE HAS ALSO BEEN MADE TO CERTAIN ADVERTISEMENTS OF THE PROJECTS, COPIES OF WHICH HAVE BEEN PLACED IN THE PAPER BOOK, TO POINT OUT THAT THE TWO P ROJECTS WERE ADVERTISED ALTOGETHER SEPARATELY. 17. WITH REGARD TO THE ACTION OF THE AO IN RELYING UPON THE STATEMENT OF THE CHIEF ENGINEER, PCMC, THE LEARNED COUNSEL POINTED OUT THAT FROM THE POINT OF PCMC ALL THE BUILDINGS SANCTIONED UNDER ONE PLAN MAY C ONSTITUTE A SINGLE PROJECT, SO HOWEVER THIS WAS NOT THE POSITION FOR THE PURPOSES OF EXAMINING ASSESSEE'S CLAIM FOR DEDUCTION UNDER S. 80 - IB(10) OF THE ACT. IT WAS ALSO SUBMITTED THAT UTILIZATION OF EXTRA FSI OF THE ROW HOUSES 23 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. PROJECT FOR THE PURPOSES OF C ONSTRUCTION OF FLATS DOES NOT INDICATE THAT IT WAS A SINGLE PROJECT. THE LEARNED COUNSEL EMPHASIZED THAT THE 295 ROW HOUSES PROJECT CAN INDEPENDENTLY CONSTITUTE A 'HOUSING PROJECT' AND THE ELIGIBILITY OF ASSESSEE'S CLAIM FOR DEDUCTION UNDER S. 80 - IB(10) OF THE ACT IS TO BE CONSIDERED IN THAT LIGHT. IT WAS SUBMITTED THAT NO DEDUCTION, EITHER IN THIS YEAR OR IN THE SUBSEQUENT YEARS, HAVE BEEN CLAIMED WITH REGARD TO THE 'S 3 ' PROJECT AND THAT ON THIS ASPECT THERE IS NO DISPUTE. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS CITED AT BAR. SEC. 80 - IB(10) OF THE ACT PERMITS DEDUCTION TO AN ASSESSEE UNDERTAKING DEVELOPMENT AND BUILDING OF A 'HOUSING PROJECT' APPROVED BY A 'LOCAL AUTHORITY'; AND, SUCH DEDU CTION IS ALLOWED TO THE EXTENT OF 100 PER CENT OF PROFITS DERIVED FROM THE 'HOUSING PROJECT', SUBJECT TO THE CONDITIONS SPECIFIED THEREIN. SHORN OF OTHER DETAILS, THE ONLY CONDITION RELEVANT FOR THE PRESENT PURPOSE IS CONTAINED IN CL. (A) OF S. 80 - IB(10) O F THE ACT, WHICH IS WITH REGARD TO TIME - LIMITS FOR COMPLETION OF CONSTRUCTION OF 'HOUSING PROJECT'. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT THE PERMISSIBLE PERIOD FOR COMPLETION OF CONSTRUCTION IS TO BE GOVERNED BY SUB - CL. (I) OF CL. (A) TO S. 80 - IB( 10) OF THE ACT, BECAUSE THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY I.E. PCMC BEFORE 1ST APRIL, 2004; AND, ACCORDINGLY THE PROJECT IS REQUIRED TO BE COMPLETED ON OR BEFORE 31ST MARCH, 2008. TO THE AFORESAID EXTENT, THERE IS NO DIFFERENCE B ETWEEN ASSESSEE AND THE REVENUE. HOWEVER, THE DIFFERENCE ARISES AS TO WHICH IS THE 'HOUSING PROJECT' THAT IS REQUIRED TO BE EVALUATED TO ASCERTAIN WHETHER CONSTRUCTION HAS BEEN COMPLETED ON OR BEFORE 31ST MARCH, 2008 IN TERMS OF S. 80 - IB(10)(A)(I) OF THE A CT. AS PER THE REVENUE, THE PROJECT TO BE CONSIDERED COMPRISES OF 611 RESIDENTIAL UNITS (I.E. 295 ROW HOUSES AND 316 FLATS) AND, IF IT IS SO CONSIDERED, THE ASSESSEE HAS NOT COMPLETED CONSTRUCTION OF THE PROJECT BEFORE 31ST MARCH, 2008 AND THUS ASSESSEE BE COMES INELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER S. 80TB(10) OF THE ACT. 25. OSTENSIBLY, THE PERTINENT ISSUE WHICH IS REQUIRED TO BE ADJUDICATED IN THE PRESENT CASE IS AS TO WHETHER 'SWRH' PROJECT AND 'S 3 ' PROJECT ARE TWO INDEPENDENT PROJECTS OR A SINGLE PROJECT FOR THE PURPOSES OF DETERMINING ASSESSEE'S ELIGIBILITY FOR THE CLAIM OF DEDUCTION UNDER S. 80 - IB(10) OF THE ACT. WE MAY EMPHASIZE HERE THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER S. 80 - IB(10) OF THE ACT IS CONFINED TO THE PROFITS DERIVED IN RESPECT OF THE 'SWRH' PROJECT ALONE. SEC. 80 - IB(10) OF THE ACT ALLOWS EXEMPTION OF PROFITS DERIVED FROM DEVELOPING AND BUILDING OF A HOUSING PROJECT, SUBJECT TO THE CONDITIONS PRESCRIBED THEREIN. NOTABLY, THE EXPRESSION 'HOUSING PROJECT' HAS NOT BEEN DEFI NED IN S. 80 - IB(10) OF THE ACT, A SITUATION THAT HAS ALSO BEEN NOTED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES ( SUPRA ). IN FACT, THE HON'BLE HIGH COURT WAS CONSIDERING A PROJECT WHICH WAS FALLING IN THE PURVIEW OF THE MUMBAI MUNICI PAL CORPORATION ACT, 1988 AS ALSO UNDER THE DEVELOPMENT CONTROL REGULATIONS FOR GREATER MUMBAI, 1991 AND THE HON'BLE COURT NOTICED THAT THE EXPRESSION 'HOUSING PROJECT' IS NOT DEFINED IN THE AFORESAID TWO ENACTMENTS ALSO. THEREFORE, THE EXPRESSION 'HOUSING PROJECT' IN S. 80 - IB(10) OF THE ACT WOULD HAVE TO BE CONSTRUED AS 'COMMONLY UNDERSTOOD', AS PER THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES ( SUPRA ). AS PER THE HON'BLE BOMBAY HIGH COURT, 24 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. CONSTRUCTION OF EVEN ONE BUILDING WITH SEVERAL R ESIDENTIAL UNITS OF THE PRESCRIBED SIZE WOULD CONSTITUTE A 'HOUSING PROJECT' FOR THE PURPOSES OF S. 80 - IB(10) OF THE ACT. 30. FROM THE AFORESAID DISCUSSION, IT CAN BE INFERRED THAT IN ORDER TO UNDERSTAND THE MEANING OF THE EXPRESSION 'HOUSING PROJECT' FOR THE PURPOSE OF S. 80 - IB(10) OF THE ACT, IN THE ABSENCE OF ANY DEFINITION IN S. 80 - IB(10) OF THE ACT OR EVEN IN THE LOCAL DEVELOPMENT CONTROL RULES FOR PCMC, IT HAS TO BE CONSTRUED AS 'COMMONLY UNDERSTOOD'. THE PLEA OF THE REVENUE THAT EXPRESSION 'HOUSING PROJECT' SHOULD BE UNDERSTOOD TO MEAN THE PROJECT AS APPROVED BY THE 'LOCAL AUTHORITY' IS NOT JUSTIFIED BECAUSE EVIDENTLY THE DEVELOPMENT CONTROL RULES OF THE 'LOCAL AUTHORITY' I.E. PCMC DOES NOT DEFINE A 'HOUSING PROJECT'. IN FACT, FROM THE DISCUSSION IN THE FOREGOING PARAS IT IS EVIDENT THAT EVEN A BUILDING OR A GROUP OF BUILDINGS COMPRISED IN A LARGER PROJECT APPROVED BY A 'LOCAL AUTHORITY' CAN BE CONSTRUED AS A 'HOUSING PROJECT' FOR THE PURPOSE OF CONSIDERING A CLAIM OF DEDUCTION UNDER S. 80 - IB(10) OF T HE ACT. CONSIDERED IN THIS BACKGROUND, IN THE INSTANT CASE, THE PLEA OF THE ASSESSEE THAT 'SWRH' PROJECT IS AN INDEPENDENT PROJECT FOR THE PURPOSE OF CONSIDERING A CLAIM OF DEDUCTION UNDER S. 80 - IB(10) OF THE ACT CANNOT BE SHUT OUT MERELY BECAUSE PCMC APPR OVED IT ALONG WITH THE 'S 3 ' PROJECT. THEREFORE, WHILE EVALUATING THE COMPLIANCE WITH THE CONDITION OF COMPLETION OF CONSTRUCTION OF THE PROJECT CONTAINED IN S. 80 - IB(10)(A)(I) OF THE ACT, WE UPHELD ASSESSEE'S PLEA THAT 'SWRH' PROJECT BE CONSTRUED AS A 'HOU SING PROJECT, ESPECIALLY WHEN THE CLAIM FOR DEDUCTION UNDER S. 80 - IB(10) OF THE ACT IS CONFINED TO THE PROFITS OF 'SWRH' PROJECT. 31. APART FROM THE AFORESAID, FACTUALLY SPEAKING ALSO, IT EMERGES THAT 'SWRH' PROJECT HAS BEEN DEVELOPED AND EXECUTED BY THE ASSESSEE INDEPENDENT OF THE 'S 3 ' PROJECT. FIRSTLY, BY ITS VERY NATURE THE TWO PROJECTS ARE DIFFERENT IN AS MUCH AS 'SWRH' PROJECT CONSISTS OF ROW HOUSES ON A CONTIGUOUS PLOT SIZE OF MORE THAN, ONE ACRE; WHEREAS THE 'S 3 ' PROJECT CONSISTS OF ONLY MULTI - STORE YED FLATS. SECONDLY, IT IS ALSO NOTABLE THAT ASSESSEE MARKETED AND ADVERTISED THE TWO PROJECTS SEPARATELY. AT PP. 255 TO 260 OF THE PAPER BOOK IS PLACED THE BROCHURE OF 'SWRH' PROJECT IN WHICH THERE IS NO REFERENCE TO THE 'S 3 ' PROJECT CONSISTING OF FLATS. SIMILARLY, THE BROCHURE IN RESPECT OF 'S 3 ' PROJECT PLACED IN THE PAPER BOOK AT PP. 471 TO 475 ALSO DOES NOT CONTAIN ANY REFERENCE TO THE 'SWRH' PROJECT CONSISTING OF ROW HOUSES. ON P. 263 OF THE PAPER BOOK IS A COPY OF A NEWSPAPER ADVERTISEMENT RELEASED BY THE ASSESSEE REGARDING THE 'SWRH' PROJECT OF ROW HOUSES, WHICH DOES NOT CONTAIN ANY REFERENCE TO 'S 3 ' PROJECT COMPRISING OF FLATS. THIRDLY, EVEN IN THE AUDIT REPORT FILED IN FORM NO. 10CCB CERTIFYING THE CLAIM OF DEDUCTION UNDER S. 80 - IB(10) OF THE ACT, T HE DEDUCTION HAS BEEN COMPUTED BY CONSIDERING 'SWRH' PROJECT AS A SEPARATE PROJECT. IN THIS REPORT, SIZE OF THE PLOT OF LAND IS STATED TO BE 55,950 SQ. MTRS., WHICH IS THE PLOT AREA ON WHICH THE 'SWRH' PROJECT CONSISTING OF 295 ROW HOUSES IS CONSTRUCTED. C ONSIDERING ALL THE AFORESAID FACTORS, WE FIND AMPLE FORCE IN THE PLEA OF THE ASSESSEE THAT 'SWRH' PROJECT WAS NOT ONLY PERCEIVED BUT ALSO DEVELOPED AND EXECUTED AS A SEPARATE PROJECT INDEPENDENT OF THE 'S 3 ' PROJECT, AND THUS ASSESSEE WAS JUSTIFIED IN CONSI DERING 'SWRH' PROJECT AS 'HOUSING PROJECT' FOR THE PURPOSES OF S. 80 - IB(10) OF THE ACT. (EMPHASIS SUPPLIED) 25 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 10. SUBSEQUENT TO PHASING OUT OF SECTION 80IB(10) SIMILAR DEDUCTION IS NOW PROVIDED IN SECTION 80IBA OF THE ACT UNDER WHICH 100% PROFITS DERIVED FR OM THE HOUSING PROJECTS ARE ALLOWED TO BE DEDUCTED. SECTION 80IBA(2)(B) SPECIFICALLY PROVIDES THAT THE DEDUCTION IS PERMISSIBLE IF THE PROJECT IS COMPLETED WITHIN FIVE YEARS FROM THE DATE OF APPROVAL BY THE COMPETENT AUTHORITY. THE PROVISO TO SECTION 80IBA (2) EXPRESSLY CLARIFIES THAT THE PROJECT SHALL BE DEEMED TO HAVE BEEN COMPLETED WHEN , A CERTIFICATE OF COMPLETION OF PROJECT AS A WHOLE IS OBTAINED IN WRITING FROM THE COMPETENT AUTHORITY . WE FURTHER NOTE THAT CLAUSE (E) OF SUB - SECTION (2) OF SECTION 80IBA REQUIRES THAT THE PROJECT IS THE ONLY HOUSING PROJECT ON THE PLOT OF LAND AS SPECIFIED IN CLAUSE (D). ON CONJOINT READING OF THE PROVISIONS OF SECTION 80IB(10), 80HHBA AND 80IBA AND THE JUDICIAL DECISIONS (SUPRA), WE NOTE THAT THE PROVISIONS OF SECTION 80 IB(10) HAVE BEEN JUDICIALLY HELD TO BE WIDER IN ITS APPLICATION AND THEREFORE EVEN A SINGLE BUILDING COMPRISED IN A LARGER CONCEPT PLAN SANCTIONED BY THE LOCAL AUTHORITY AND WHICH HOUSES SEVERAL RESIDENTIAL UNITS OF THE SPECIFIED SIZE IS CONSIDERED TO BE A HOUSING PROJECT PROVIDED THAT THE SAME FULFILLS THE CONDITIONS LAID DOWN IN SECTION 80IB(10). WE FIND THAT WHEREVER THE LEGISLATURE INTENDED TO RESTRICT THE SCOPE & APPLICATION OF A PROFIT - LINKED DEDUCTION THEN THE SPECIFIC RESTRICTIVE PROVISIONS HAVE B EEN ENACTED AS IS EVIDENT FROM THE LANGUAGE EXPRESSLY USED IN SECTION 80IBA. APPLYING THE RATIO LAID DOWN IN THE DECISIONS (SUPRA) TO THE FACTS OF THE CASE, WE NOTE THAT THE CONCEPT PLAN FOR THE PROJECT TITLED AS UPOHAR THE CONDOVILLE WAS GIVEN APPR OVAL BY KMC ON 30.03.2007. FROM THE COPY OF APPROVED CONCEPT PLAN WE FIND THAT ALTHOUGH LAND PLOT SIZE IN AGGRAGATE WAS 18.62 ACRES, THIS PLOT WAS DIVIDED AND DEMARCATED INTO FIVE DIFFERENT ZONES IN THE FOLLOWING MANNER: ZONE PROJECT LAND A RESIDENTIAL BUILDINGS EFFICIENCY & COMFORT FOR LIG & MIG CATEGORIES 2.846 ACRES B VOCATIONAL TRAINING CENTRE & SHOPPING ZONE 1.112 ACRES C CLUB ZONE 2.021 ACRES D LUXURY ZONE CONSISTING OF 5 PHASES OF RESIDENTIAL HOUSING TOWERS FOR HIG CATEGORY 11.454 ACRES E AR EA COMPRISED IN COMMON INSTALLATIONS FOR CIVIC INFRASTRUCTURE 1.187 ACRES TOTAL: 18.62 ACRES 26 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 11. FROM THE ASSESSMENT ORDER WE NOTE THAT THE AO PER SE DID NOT QUESTION OR DISPUTE THE FACT THAT ZONE WISE DEVELOPMENT OF 18.62 ACRES WAS CARRIED OUT BY THE ASSESSEE INDEPENDENTLY. WE ALSO NOTE FROM THE AOS IMPUGNED ORDER THAT IT WAS HIS CASE THAT ENTIRE LAND ADMEASURING 18.62 ACRES WAS TO BE DEVELOPED AS A SINGLE COMPOSITE AND INTEGRATED HOUSING PROJECT. IN ANY CASE, FROM THE SANCTIONED CONCEPT PLAN WE NOT E THAT EACH OF THE FIVE ZONES COMPRISED IN THE CONCEPT PLAN WERE TO BE SET - UP AND DEVELOPED ON DEMARCATED LAND PARCELS AND THEREFORE IT COULD NOT BE CONSTRUED TO BE SINGLE OR COMPOSITE OR AN INTEGRATED PROJECT AS CLAIMED BEFORE US BY THE LD. CIT, DR. HAVIN G REGARD TO THE FACTS AND MATERIAL ON RECORD, WE THEREFORE FIND MERIT IN THE LD. ARS SUBMISSIONS THAT FOR THE PURPOSES OF GRANT OF DEDUCTION U/S 80IB(10) THE ENTIRE LAND PARCEL COVERING 18.62 ACRES CANNOT BE CONSIDERED TO BE A SINGLE HOUSING PROJECT. 1 2. WE FURTHER NOTE THAT THE APPELLANTS CLAIM FOR DEDUCTION U/S 80IB(10) WAS IN RESPECT OF HOUSING PROJECT NAMED AS UPOHAR THE CONDOVILLE HIG LUXURY SEGMENT WHICH THE ASSESSEE DEVELOPED IN FIVE DIFFERENT AND DISTINCT PHASES.ELEVEN RESIDENTIAL TOWERS CO MPRISED IN HIG LUXURY ZONE WERE DIVIDED INTO FIVE PHASES AND EACH PHASE WAS CONSTRUCTED ON THE DEMARCATED LAND AREA EXCEEDING ONE ACRE, DETAILS OF WHICH ARE AS FOLLOWS: PHASE AREA IN ACRES TOWER NOS. I 3.124 2, 3, 4 II 3.124 5, 6, 7 III 2.083 8 & 9 IV 1.041 10 V 2.083 1 &11 13. WE NOTE THAT THE ELEVEN TOWERS OF HIG LUXURY ZONE COMPRISED FLATS WHICH INDIVIDUALLY MEASURED LESS THAN AS WELL AS MORE THAN 1500 SQ FT. THE DEDUCTION WAS HOWEVER CLAIMED ONLY IN RESPECT OF PROFIT DERIVED FROM SALE OF FLATS I NDIVIDUALLY ADMEASURING LESS THAN 1500 SQ FT. OF THE BUILT UP AREA.FROM THE FACTS ON RECORD IT IS FOUND THAT THE ASSESSEE MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR EACH PHASE AND ALSO OBTAINED AUDIT REPORTS IN PRESCRIBED FORM 10CCB FOR EACH HOUSING PROJECT SEPARATELY. THE ASSESSEE REGULARLY FOLLOWED PERCENTAGE OF COMPLETION METHOD OF REVENUE RECOGNITION AND FOR THIS PURPOSE THE 27 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. REVENUE RECOGNIZED FOR EACH PHASE SUBSTANTIALLY DIFFERED IN EACH YEAR AS IS NOTED FROM THE FOLLOWING CHART: ASST YEAR PHASE - I PHASE - II PHASE - III PHASE - IV 2010 - 11 39.92% 39.83% 39.62% NIL 2011 - 12 100% 63.31% 56.56% 60.23% 2012 - 13 NIL 99.71% 97.94% 93.48% 14. WE FIND THAT IN THE ORDERS FOR THE YEARS UNDER CONSIDERATION, FOR THE PURPOSE OF ASSESSING THE INCOME, THE AO DID NOT DISPUT E OR CHALLENGE THE REVENUE RECOGNITION METHOD ADOPTED BY THE ASSESSEE. WE THEREFORE FIND MERIT IN THE LD. ARS SUBMISSION THAT THE ASSESSEE DID NOT ARBITRARILY BIFURCATE DEVELOPMENT OF 11 TOWERS IN FIVE PHASES ONLY FOR DERIVING UNDUE TAX BENEFIT. WE ALSO N OTE THAT MARKETING OF EACH PHASE WAS CARRIED OUT AT DIFFERENT POINTS IN TIME AND THEREFORE THE AVERAGE PRICE REALIZATION FOR EACH PHASE DIFFERED SIGNIFICANTLY. WE ALSO NOTE THAT THE COMPLETION OF EACH PHASE WAS CERTIFIED BY THE ARCHITECT ON DIFFERENT DATES AND THE RELEVANT CERTIFICATES WERE FURNISHED BEFORE THE LOWER AUTHORITIES. HAVING REGARD TO THESE FOUNDATIONAL FACTS AND THE JUDICIAL DECISIONS CITED ABOVE, WE THEREFORE DO NOT FIND MERIT IN THE REVENUES ARGUMENTS TO THE EFFECT THAT EITHER ENTIRE PROJEC T COVERING 18.62 ACRES OR EVEN THE ENTIRE HIG LUXURY ZONE OF 11.454 ACRES CONSISTING OF 11 TOWERS TOGETHER CONSTITUTED SINGLE HOUSING PROJECT FOR THE PURPOSE OF SECTION 80IB(10) OF THE ACT. WE THEREFORE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED ON FACTS IN CO NCLUDING THAT THE ASSESSEE HAD DEVELOPED FIVE INDEPENDENT HOUSING PROJECTS WHICH COMPRISED IN HIG LUXURY ZONE OF UPOHAR THE CONDOVILLE. SINCE WE HAVE HELD THAT HIG LUXURY ZONE PHASE I WAS A SEPARATE AND INDEPENDENT HOUSING PROJECT, WHICH COMPRISED OF ONLY RESIDENTIAL UNITS, THE REVENUES OBJECTION THAT THE COMMERCIAL AREA IN THE HOUSING PROJECT EXCEEDED THREE PERCENT OF THE TOTAL AREA COMPRISED IN THECONCEPT PLAN HAS NO BEARING IN DECIDING THE QUESTION OF ELIGIBILITY OF DEDUCTION U/S 80IB(10) IN RESPE CT OF PROFITS DERIVED FROM HIG LUXURY ZONE PHASE I. 15. ANOTHER GROUND ON WHICH THE REVENUE OBJECTED TO THE ORDER OF LD. CIT(A) IS THAT THE HOUSING PROJECT UPOHAR THE CONDOVILLE HIG LUXURY ZONE DID NOT QUALIFY FOR DEDUCTION U/S 80IB(10) BECAUSE ALL THE RESIDENTIAL UNITS COMPRISED IN THE SAID PROJECT DID NOT HAVE INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQFT OF BUILT UP AREA WHICH IS THE CONDITION PRECEDENT 28 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. FOR AVAILING THE DEDUCTION. WE HOWEVER NOTE THAT THE DEDUCTION WHICH THE APPELLANT CLAIMED AND AS WAS ALLOWED BY LD. CIT(A), PERTAINED TO THE PROFITS ATTRIBUTABLE TO SALE OF RESIDENTIAL UNITS OFPHASE I AND WHICH WERE HAVING INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQFT OF BUILT - UP AREA. WE FIND THAT THE ISSUE OF PRO - RATA DEDUCTION UNDER SECTION 80IB(1 0) ATTRIBUTABLE TO SALE OF FLATS HAVING INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQFT WAS CONSIDERED AND DECIDED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE APPELLANTS OWN CASE FOR THE AY 2002 - 03 & 2003 - 04 IN ITA NOS.1595 & 1735/KOL/2005. THE RELEVANT F INDING OF THE TRIBUNAL IS REPRODUCED BELOW: '22. IT IS APPARENT FROM THE PERUSAL OF SECTION 80 - IB(10) THAT THIS SECTION HAS BEEN ENACTED WITH A VIEW TO PROVIDE INCENTIVE FOR BUSINESSMEN TO UNDERTAKE CONSTRUCTION OF RESIDENTIAL ACCOMMODATION FOR SMALLER RE SIDENTIAL UNITS AND THE DEDUCTION IS INTENDED TO BE RESTRICTED TO THE PROFIT DERIVED FROM THE CONSTRUCTION OF SMALLER UNITS AND NOT FROM LARGER RESIDENTIAL UNITS. THOUGH THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSESSEE OBSERVING THAT LARGER UNITS WERE ALSO CONSTRUCTED BY THE ASSESSEE, AT THE SAME TIME, IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE HAD CLAIMED DEDUCTION ONLY ON ACCOUNT OF SMALLER RESIDENTIAL UNITS WHICH WERE FULFILLING ALL THE CONDITIONS AS CONTAINED IN SECTION 80 - IB(10) AND THE SA ME HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER ALSO. WE HAVE ALSO NOTED DOWN THE FACT THAT EVEN THE PROVISION AS LAID DOWN IN SECTION 80 - IB(10) DOES NOT SPEAK REGARDING SUCH DENIAL OF DEDUCTION IN CASE OF PROFIT FROM A HOUSING COMPLEX CONTAINING BOTH TH E SMALLER AND LARGE RESIDENTIAL UNITS AND SINCE THE ASSESSEE HAS ONLY CLAIMED DEDUCTION ON ACCOUNT OF SMALLER QUALIFYING UNITS BY FULFILLING ALL THE CONDITIONS AS LAID DOWN UNDER SECTION 80 - IB(10), THE DENIAL OF CLAIM BY THE ASSESSEE IS ON ACCOUNT OF RATHE R RESTRICTED AND NARROW INTERPRETATION OF THE PROVISIONS OF CLAUSE (C) OF SECTION 80 - IB(10) WHILE COMING TO SUCH CONCLUSION, WE ALSO FIND SUPPORT FROM THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. V. CIT [1992] 196 ITR 188 (SC), WHEREIN IT WAS HELD THAT THE PROVISIONS SHOULD BE INTERPRETED LIBERALLY AND SINCE IN THE PRESENT CASE ALSO, THE ASSESSEE BY CLAIMING PRO RATA INCOME ON QUALIFYING UNITS HAS COMPLIED WITH ALL THE PROVISIONS AS CONTAINED IN THE SAID SECTION, IN OUR CONSIDERED OPINION, SUCH CLAIM OF THE ASSESSEE WAS RIGHTLY ALLOWED BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) BY REVERSING THE ORDER OF THE ASSESSING OFFICER.' 16. IT IS F URTHER NOTED THAT THE REVENUES APPEAL U/S 260A OF THE ACT AGAINST THE DECISION OF THIS TRIBUNAL WAS DISMISSED BY THE HONBLE CALCUTTA HIGH COURT. WE ALSO NOTE THAT THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE APPELLANTS CASE WAS FOLLOWED WITH A PPROVAL BY THE HONBLE MADRAS HIGH COURT IN THE CASES OF CIT VS ELEGANT ESTATE (383 ITR 149), CIT VS ARUN EXCELLO FOUNDATIONS (P.) LTD (259 CTR 362) & VISWAS PROMOTERS (P.) LTD VS ACIT (SUPRA), AND HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS OCEANUS 29 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. DWELLINGS (P.) LTD (395 ITR 376). IN VIEW OF THE AFORESAID DECISIONS WE DO NOT FIND MERIT IN THIS OBJECTION RAISED BY THE REVENUE. 17. THE LAST OBJECTION OF THE REVENUE IS THAT THE COMPLETION CERTIFICATE DATED 29.04.2011WAS ONLY A PARTIAL COMPLETION CERT IFICATE, AND THE SAME BEING NOT THE FINAL COMPLETION CERTIFICATE, THE ASSESSEE DID NOT COMPLY WITH REQUIREMENT OF CLAUSE (II) CONTAINED IN EXPLANATION TO SECTION 80IB(10) OF THE ACT, WHICH REQUIRED THE ASSESSEE TO OBTAIN FINAL COMPLETION CERTIFICATE ON OR BEFORE 31.03.2012. IN THIS REGARD WE NOTE THAT THE ASSESSEE HAD UNDERTAKEN CONSTRUCTION OF DIFFERENT PHASES OF HIG LUXURY ZONE AT DIFFERENT POINTS IN TIME AND FOR REVENUE RECOGNITION THE ASSESSEE HAD FOLLOWED PERCENTAGE OF COMPLETION METHOD. FROM THE AUDIT REPORTS IN PRESCRIBED FORM 10CCB FILED IN SUPPORT OF THE DEDUCTION CLAIMED U/S 80IB, WE NOTE THAT 100% OF THE REVENUE DERIVED FROM PHASE I WAS RECOGNIZED BY 31.03.2011. WE NOTE THAT FOR THE PURPOSES OF ASSESSING INCOME DERIVED FROM PHASE I, THE REVENU E NEVER DISPUTED THE FACT THAT HUNDRED PERCENT OF THE REVENUE FROM PHASE I HAD ACCRUED BY 31.03.2011 BECAUSE THE DEVELOPMENT OF PHASE I WAS COMPLETED BY THAT DATE. WE THEREFORE SEE NO REASON FOR THE REVENUE TO DISPUTE AND DISBELIEVE THE ASSESSEES CONTEN TION THAT THE HOUSING PROJECT WAS COMPLETED PRIOR TO 31.03.2012. WE ALSO FIND THAT ON COMPLETION OF THE PHASE I, THE ASSESSEE NOT ONLY OBTAINED THE CERTIFICATE FROM THEREGISTERED ARCHITECT BUT IT ALSO FILED AN APPLICATION WITH KMC FOR ISSUE OF COMPLETION CERTIFICATE. WE FIND THAT AFTER THE APPLICATION WAS FILED, KMC CONDUCTED INSPECTION OF TOWERS 2, 3 & 4 COMPRISED IN PHASE I AND THEREAFTER ISSUED CERTIFICATE TITLED AS PARTIAL COMPLETION CERTIFICATE UNDER RULE 27 OF THE KMC BUILDING RULES, CERTIFYING THAT TOWERS 2, 3 & 4 WERE COMPLETED IN CONFORMITY WITH THE PARTIAL COMPLETION PLAN. THE CORPORATION ALSO CERTIFIED THAT THE BUILDING WAS FIT FOR OCCUPATION AS RESIDENTIAL PURPOSE. WE THEREFORE NOTE THAT ALTHOUGH THE CERTIFICATE DATED 29.04.2011 WAS CLAIMED TO BE PARTIAL COMPLETION YET IN THE SAID CERTIFICATE THE KMC AFTER CONDUCTING PHYSICAL INSPECTION OF TOWERS 2, 3 & 4 OF PHASE I HAD CERTIFIED THE SAME TO BE FIT FOR RESIDENTIAL OCCUPATION. WE THEREFORE DO NOT FIND ANY MATERIAL INFIRMITY IN THE LD. CIT(A )S FINDING THAT THE CERTIFICATE DATED 29.04.2011 CONSTITUTED COMPLETION CERTIFICATE CONTEMPLATED FOR THE PURPOSE OF CLAUSE (II) OF EXPLANATION TO SECTION 80IB(10). 30 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 18. WE ALSO NOTE THAT KMC ISSUED COMPLETION CERTIFICATE DATED 14.02.2014 ALSO UNDER RULE 2 7 OF KMC RULES, 1990 IN WHICH IT WAS CERTIFIED AS FOLLOWS: 'GRANT OF COMPLETION CERTIFICATE UNDER RULE 27 OF KMC BUILDING RULES 1990. THE BUILDING COMPLEX WAS SANCTIONED (B.P.NO.776/XII/06 - 07, DT. 30/03/07 FOR 11 NOS. HIG TOWERS (62M) 2 NOS. MIG TOWERS (5 5 M) 1 NO.LIG TOWER (55M) 2 NOS. CLUB HOUSE (HT. 4.5 & 8. 1 M.) 1 MO. COMMERCIAL & VOCATIONAL TRAINING CENTER (HT.1.8M) DEPT. HAS ALREADY ISSUED PARTIAL C.C. FOR 3 NOS. HIG, 2 NOS. MIG, 1 NO. LIG, 2 NOS. CLUB & 1 NONCOMMERCIAL & VOCATION TRAINING CENTER. N OW COMPLETION CERTIFICATE ISSUED FOR REST OF HIG TOWERS, 1, 5, 6. 7, 8, 9, 10 & 11.' 19. FROM THE ABOVE WE NOTE THAT WHILE ISSUING THIS CERTIFICATE, KMC HAD TAKEN NOTE OF THE PARTIAL COMPLETION CERTIFICATES EARLIER ISSUED AND THEREFORE THE COMPLETION CERT IFICATE WAS ISSUED ONLY FOR THE REST OF THE EIGHT RESIDENTIAL TOWERS COMPRISED IN PHASES II, III, IV & V OF HIG LUXURY ZONE. BEFORE US THE LD. CIT DR DID NOT DISPUTE THE FACT THAT THE ASSESSEE HAS COMPLETED THE DEVELOPMENT OF THE ENTIRE PROJECT AND THE ALL BUILDINGS DEVELOPED BY THE ASSESSE E IN THE SAID PROJECT ARE OCCUPIED BY RESIDENTS PURSUANT TO COMPLETION CERTIFICATES GRANTED BY KMC. WE ALSO NOTE THAT AFTER THE ISSUE OF THE SO CALLED PARTIAL COMPLETION CERTIFICATES, KMC DID NOT ISSUE ANY OTHER COMPLETI ON CERTIFICATES IN RESPECT OF THE BUILDINGS FOR WHICH PARTIAL COMPLETION CERTIFICATES WERE ISSUED. WE THEREFORE FIND FORCE IN THE SUBMISSIONS OF THE LD. AR THAT THE COMPLETION CERTIFICATE ISSUED BY KMC ON 29.04.2011 IN RESPECT OF TOWERS 2,3,AND 4 OF PHASE I WAS THE ONLY COMPLETION CERTIFICATE THAT WAS ISSUED BY KMC TILL DATE AND THEREFORE THE ASSESSEE FULFILLED THE CONDITIONS PRESCRIBED IN CLAUSE (II) OF EXPLANATION TO SECTION 80IB(10). WE ALSO NOTE THAT IN VIEW OF THE OBJECTIONS TAKEN BY THE LD. CIT, DR, T HE ASSESSEE HAD FILED AN APPLICATION UNDER THE RTI ACT, 2006 BEFORE THE SPIO, KOLKATA MUNICIPAL CORPORATION IN WHICH THE ASSESSEE REQUESTED THE CORPORATION TO CLARIFY AS TO WHETHER THE PARTIAL COMPLETION CERTIFICATES BEING NOS. 31/XII/2011 - 12, DT: 29.04.20 11 ISSUED FOR HIG TOWERS 2,3 & 4; NO. 279/XII/2010 - 2011, DT 20.10.2010 ISSUED FOR BLOCK MIG(A), MIG (B), LIG & MIG - LIG HALL NO. 175/XII/2011 - 12, DT: 01.12.2011 ISSUED FOR CLUB HOUSE AND NO. 184/XII/2013 - 14, DT: 21.01.2014 ISSUED FOR COMMERCIAL VOCATION AL TRAINING CENTRE SHOULD BE TREATED AS COMPLETION CERTIFICATE IN RESPECT OF THE BUILDING OR A SEPARATE AND SPECIFIC COMPLETION CERTIFICATE IS TO BE ISSUED FOR THE SAME PRIOR TO OCCUPATION . WE THUS NOTE THAT KMC WAS SPECIFICALLY REQUESTED TO SPELL OUT THE LEGAL POSITION AS TO WHETHER IN ADDITION TO OBTAINING PARTIAL COMPLETION CERTIFICATE DATED 31 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 29.04.2011 IN RELATION TO PHASE I, WHETHER IT WAS OBLIGATORY FOR THE ASSESSEE TO OBTAIN COMPLETION CERTIFICATE TO COMPLY WITH PROVISIONS OF THE KMC ACT AND RULE S THERE UNDER . IN RESPONSE, THE SPIO, KMC FURNISHED THE FOLLOWING REPLY TO THE ASSESSEE: IN REFERENCE TO YOUR QUERY RAISED IN RTI APPLICATION DATED - 22.01.2019, VIDE NO. RTI/BLDG/BR - XII, DATED - 24.01.2019, THIS IS TO INFORM YOU THAT KMC BUILDING DEPARTMEN T HAD ISSUED PARTIAL COMPLETION CERTIFICATE FOR DIFFERENT BUILDING/BLOCK IN DIFFERENT TIME. HOWEVER LAST COMPLETION CERTIFICATE WAS ISSUED VIDE NO:202/XII/13 - 14, DATED 14/02/2014. IT IS MENTIONED THAT ALL THE PARTIAL COMPLETION CERTIFICATE ISSUED BY KMC BUILDING DEPARTMENT IS CONSIDERED AS GOOD AS THE COMPLETION CERTIFICATE FOR THE BUILDING EXIST WITHIN PREMISES NO - 2052 CHAKGARIAWHICH ARE SPECIFICALLY MENTIONED IN THE CERTIFICATE. 20. FROM THE FOREGOING REPLY OF KMC WHICH WAS PROVIDED BY THE COMPETENT AUTHORITY UNDER THE RTI ACT, WE NOTE THAT THE AUTHORITY IMPLEMENTING THE PROVISIONS OF KMC ACT, 1980 HAD UNEQUIVOCALLY CLARIFIED THAT THE CERTIFICATE DATED 29.04.2011 WAS TO ACT AS THE COMPLETION CERTIFICATE FOR ALL INTENTS AND PURPOSES IN RELATION TO TOW ERS 2, 3 & 4 COMPRISED IN PHASE I. IN THE CIRCUMSTANCES, IF THE LOCAL AUTHORITY WHO WAS VESTED WITH THE POWER AND AUTHORITY OF ISSUING COMPLETION CERTIFICATE ITSELF CERTIFIED THAT THE CERTIFICATE DATED 29.04.2011 WAS TO ACT AS THE COMPLETION C ERTIFICATE AND THE ASSESSEE HAD NO LEGAL OBLIGATION TO OBTAIN YET ANOTHER COMPLETION CERTIFICATE THEN WE SEE NO REASON FOR THE REVENUE TO INSIST ON FURNISHING FINAL COMPLETION CERTIFICATE. IT IS A TRITE LAW THAT A SUBJECT IS NOT EXPECTED TO PERFORM AN IMPOSSIBILI TY. IF THE AUTHORITY VESTED WITH POWER OF ISSUING COMPLETION CERTIFICATE HAS UNEQUIVOCALLY HAS CERTIFIED THAT THE CERTIFICATE ISSUED BY IT ON 29.04.2011 WAS THE COMPLETION CERTIFICATE THEN THE ASSESSEE CAN NOT BE EXPECTED TO PRODUCE BEFORE THE TAX AUTHORIT Y SOME OTHER CERTIFICATE ONLY BECAUSE THE AO INTERPRETED THE LAW IN SOME OTHER MANNER. WE MUST BEAR IN MIND THAT IN INTERPRETING THE BENEFICIAL PROVISIONS OF THE ACT, ONE MUST ESCHEW THE INTERPRETATION WHICH LEADS TO ABSURDITY OR REQUIRES THE ASSESSEE TO C OMPLY WITH AN IMPOSSIBILITY. FOR THE FOREGOING REASONS THEREFORE WE DO NOT FIND MUCH FORCE IN THE ARGUMENT OF THE LD. CIT, DR THAT THE BENEFIT OF DEDUCTION WAS NOT PERMISSIBLE BECAUSE THE ASSESSEE HAD FAILED TO OBTAIN FINAL COMPLETION CERTIFICATE PRIOR TO 31.03.2012. 21. IN SUPPORT OF OUR FOREGOING CONCLUSIONS, WE RELY ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS TARNETAR CORPORATION (362 ITR 174). IN THE INSTANT 32 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. CASE ASSESSEE HAS UNDERTAKEN A HOUSING PROJECT WHICH IT WAS REQUIR ED TO COMPLETE ON OR BEFORE 31.03.2008 SO AS TO AVAIL DEDUCTION U/S 80IB(10) OF THE ACT. THE ASSESSEE HAD COMPLETED THE CONSTRUCTION IN 2006 AND SEVERAL RESIDENTIAL UNITS WERE ALSO OCCUPIED BY THE RESIDENTS. THE ASSESSEE APPLIED TO THE LOCAL AUTHORITY FOR ISSUING COMPLETION CERTIFICATE ON 15.02.2006. THE SAID APPLICATION WAS HOWEVER REJECTED ON 01.07.2006. THE ASSESSEE THEREAFTER PAID PENALTY AND GOT THE SAME REGULARIZED FROM THE MUNICIPALITY SUBSEQUENT TO 31.03.2008. THE AO HOWEVER DENIED THE DEDUCTION CLA IMED U/S 80IB(10) SINCE NECESSARY COMPLETION CERTIFICATE WAS NOT OBTAINED BY THE ASSESSEE PRIOR TO 31.03.2008. ON APPEAL THE HONBLE HIGH COURT ALLOWED THE DEDUCTION CLAIMED U/S 80IB(10) BY OBSERVING AS UNDER: 6 IN THE PRESENT CASE, THEREFORE, THE FACT T HAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION WELL BEFORE 31ST MARCH, 2008 IS NOT IN DOUBT. IT IS, OF COURSE, TRUE THAT FORMALLY BU PERMISSION WAS NOT GRANTED BY THE MUNICIPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRUE THAT EXPLANATION TO CLAUSE (A) TO S ECTION 80 - IB(10) LINKS THE COMPLETION OF THE CONSTRUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. HOWEVER, NOT EVERY CONDITION OF THE STATUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL COMPLIANCE THEREOF IS ESTABLISHED ON RECORD, IN A GIVE N CASE, THE COURT MAY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOSE FOR WHICH DEDUCTION WAS BEING MADE AVAILABLE. 7. IN THE PRESENT CASE, THE FACTS ARE PECULIAR. THE ASSESSEE HAD NOT ONLY COMPLETED THE CONSTRUCTION TWO YEAR S BEFORE THE FINAL DATE AND HAD APPLIED FOR BU PERMISSION. SUCH BU PERMISSION WAS NOT REJECTED ON THE GROUND THAT CONSTRUCTION WAS NOT COMPLETED, BUT THE SOME OTHER TECHNICAL GROUND. IN THAT VIEW OF THE MATTER, GRANTING BENEFIT OF DEDUCTION CANNOT BE HELD TO BE ILLEGAL. 22. THE ABOVE DECISION OF THE HONBLE GUJARAT HIGH COURT WAS FOLLOWED WITH APPROVAL BY THE SAME COURT IN THE SUBSEQUENT DECISION RENDERED IN THE CASE OF ITO VS SAKET CORPORATION (234 TAXMAN 435). IN THE DECIDED CASE THE ASSESSEE HAD COMPLET ED CONSTRUCTION OF ALL 43 UNITS COMPRISED IN THE HOUSING PROJECT WITHIN THE PRESCRIBED PERIOD OF YEARS . IT WAS HOWEVER ABLE TO OBTAIN PERMISSION FROM THE LOCAL AUTHORITY WITH RESPECT TO 20 UNITS AND ALTHOUGH APPLICATION WAS FILED IN RESPECT OF REMAINING 23 UNITS BUT PERMISSION COULD NOT BE OBTAINED IN RELATION THEREOF. THE AO DISALLOWED THE DEDUCTION CLAIMED U/S 80IB(10) OBSERVING THAT THE NECESSARY COMPLETION CERTIFICATE WAS NOT OBTAINED BY THE ASSESSEE FROM LOCAL AUTHORITY. ON APPEAL THE HIGH COURT, FOLLO WING THE DECISION IN THE CASE OF CIT VS TARNETAR CORPORATION (SUPRA), HELD AS UNDER: 33 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 8 CONSIDERING THE AFORESAID DECISION OF THE DIVISION BENCH OF THIS COURT AND THE FACTS OF THE CASE ON HAND, AS THE ASSESSEE COMPLETED PROJECT/CONSTRUCTION OF ALL 43 UNIT S WITHIN 4 YEARS FROM THE DATE OF APPROVAL BY THE COMPETENT AUTHORITY AND ALSO APPLIED FOR B.U. PERMISSION WITHIN A PERIOD OF FOUR YEARS WITH RESPECT TO ALL 43 UNITS, HOWEVER, COULD OBTAIN B.U. PERMISSION WITH RESPECT TO 20 UNITS ONLY AND FOR WHATEVER REAS ONS, WITH RESPECT TO REMAINING 23 UNITS, B.U. PERMISSION WAS NOT ISSUED BY THE AUTHORITY AND AS OBSERVED HEREINABOVE, CONSTRUCTION OF ALL 43 UNITS WAS COMPLETED, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, NO ERROR HAS BEEN COM MITTED BY THE LEARNED TRIBUNAL IN HOLDING THAT THE ASSESSEE SHALL BE ENTITLED TO DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT. 23. IN THIS REGARD, WE MAY ALSO GAINFULLY REFER TO THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE O F PR.CIT VS AMBEY DEVELOPERS PVT LTD REPORTED IN 399 ITR 216. THE RELEVANT OBSERVATIONS ARE AS FOLLOWS: ADVERTING TO THE INTERPRETATION AND MEANING TO BE ASSIGNED TO EXPLANATION ( II ) TO SECTION 80 - IB(10(A) OF THE ACT, ESSENTIALLY IT HAS TO BE SEEN WHETHE R THE TERM 'SHALL' USED THEREIN IS TO BE TREATED AS MANDATORY OR IT IS IN THE NATURE OF A DIRECTORY REQUIREMENT. IN OUR OPINION, THOUGH THE WORD USED IN EXPLANATION ( II ) TO SECTION 80 - IB(10)( A ) OF THE ACT IS 'SHALL', BUT IT WOULD NOT NECESSARILY MEAN THAT IN EVERY CASE, IT SHALL BE TAKEN TO BE MANDATORY REQUIREMENT INSTEAD WOULD DEPEND UPON THE INTENT OF THE LEGISLATURE AND NOT THE LANGUAGE IN WHICH THE PROVISION IS CLOTHED. THE MEANING AND THE INTENT OF THE LEGISLATURE WOULD BE GATHERED NOT ON THE BASIS OF THE PHRASEOLOGY OF THE PROVISION BUT TAKING INTO CONSIDERATION ITS NATURE, ITS DESIGN AND THE CONSEQUENCES WHICH WOULD FOLLOW FROM INTERPRETING IT IN A PARTICULAR WAY ALONE. THE PURPORT OF THE SAID EXPLANATION ( II ) TO SECTION 80 - IB(10)( A ) OF THE ACT IS TO SAFEGUARD THE INTERESTS OF THE REVENUE WHEREVER THE CONSTRUCTION HAS NOT BEEN COMPLETED WITHIN THE STIPULATED PERIOD. THUS, IT CANNOT MEAN THAT THE REQUIREMENT IS MANDATORY IN NATURE AND WOULD DISENTITLE AN ASSESSEE TO THE BENEFIT OF SECTION 80 - IB(10)( A ) OF THE ACT EVEN IN RESPECT OF THOSE CASES WHERE THE ASSESSEE HAD COMPLETED THE CONSTRUCTION WITHIN THE STIPULATED PERIOD AND HAD MADE AN APPLICATION TO THE LOCAL AUTHORITY WITHIN THE PRESCRIBED TIME. THE ISSUANCE OF THE REQUISITE CERTIFICATE WAS WITHIN THE DOMAIN OF THE COMPETENT AUTHORITY OVER WHICH THE ASSESSEE HAD NO CONTROL. FROM THE FINDINGS RECORDED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) AS AFFIRMED BY THE TRIBUNAL, IT WAS CLEAR THAT THE CONSTRUCTION HAD BEEN COMPLETED BEFORE THE STIPULATED DATE, I.E., MARCH 31, 2010. IT WAS ALSO NOT DISPUTED THAT THE CERTIFICATE OF COMPLETION WAS APPLIED ON MARCH 29, 2010 WHICH WAS ISSUED TO THE ASSESSEE ON DECEMBER 31, 2011. THE ASSESSEE IN SUCH CIRCUMSTANCES COULD NOT BE DENIED THE BENEFIT OF SECTION 80 - IB(10)( A) OF THE ACT. THE COMMISSIONER OF INCOME - TAX (APPEALS) AND THE TRIBUNAL HAD RIGHTLY ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE - RESPONDENT. LEARNED COUNSEL FOR THE APPELLANT - REVENUE HAS NOT BEEN ABLE TO SHOW ANY ILLEGALITY OR PERVERSITY IN THE FINDING S RECORDED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) AS WELL AS THE TRIBUNAL, WARRANTING INTERFERENCE BY THIS COURT. 34 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 24. APPLYING THE RATIO LAID DOWN IN THESE DECISIONS TO THE FACTS OF THE ASSESSEES CASE, WE FIND THAT IN THE GIVEN FACTS OF THE ASSESSE E, ITS CASE STANDS ON MUCH BETTER FOOTING. IN THIS CASE ADMITTEDLY, AFTER CONDUCTING PHYSICAL INSPECTION KMC HAD ISSUED A COMPLETION CERTIFICATE DATED 29.04.2011 CERTIFYING THE COMPLETION OF PHASE 1 AND FURTHER DECLARED IT TO BE FIT FOR OCCUPATION FOR RE SIDENTIAL PURPOSE. MOREOVER IN THE REPLY TO THE RTI APPLICATION, THE LOCAL AUTHORITY CLARIFIED THAT THE CERTIFICATE DATED 29.04.2011 BY ITSELF CONSTITUTED COMPLETION CERTIFICATE. IN LIGHT OF THESE FACTS THEREFORE WE HAVE NO HESITATION IN HOLDING THAT THE PHASE I OF THE HOUSING PROJECT WAS COMPLETED PRIOR TO 31.03.2012 WHICH WAS THE LAST DATE. SINCE ALL THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) WERE FULFILLED BY PHASE I OF HIG LUXURY ZONE OF UPOHAR THE CONDOVILLE, THE LD. CIT(A) WAS JUSTIFIED I N RESTRICTING THE APPELLANTS CLAIM FOR DEDUCTION U/S 80IB(10) ONLY IN RELATION TO PROFITS OF PHASE I. WE THEREFORE DO NOT SEE ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) AND ACCORDINGLY DISMISS THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL. 25. WE NOW TAKE UP THE APPEAL OF THE REVENUE IN ITA NO. 1515/KOL/2015 FOR AY 2011 - 12. 26. GROUND NO. 1 OF THE APPEAL IS AGAINST THE LD. CIT(A)S ACTION OF DELETING THE ADDITION OF RS.76,53,266/ - MADE BY THE AO U/S 2(22)(E) OF THE ACT. BRIEF FACTS IN SHORT ARE THAT IN THE COURSE OF ASSESSMENT THE AO NOTED THAT THE ASSESSEE HAD RECEIVED INTEREST BEARING UNSECURED LOAN OF RS.36 CRORES FROM M/S AMBUJA REALTY DEVELOPMENT LTD. THE AO NOTED THAT M/S AMBUJA HOUSING & URBAN INFRASTRUCTURE CO LTD SIMULTANEOU SLY HELD 49.50% IN THE ASSESSEE COMPANY AND 66.60% IN M/S AMBUJA REALTY DEVELOPMENT LTD. ACCORDING TO AO THEREFORE THE SECOND LIMB OF SECTION 2(22)(E) STOOD ATTRACTED BECAUSE A COMMON SHAREHOLDER I.E. M/S AMBUJA HOUSING & URBAN INFRASTRUCTURE CO LTD HELD M ORE THAN 20% IN THE ASSESSEE COMPANY AND MORE THAN 10% IN THE LENDER COMPANY I.E. M/S AMBUJA REALTY DEVELOPMENT LTD. THE AO THUS HELD THAT THE UNSECURED LOAN RECEIVED BY THE ASSESSEE FROM M/S AMBUJA REALTY DEVELOPMENT LTD WAS TAXABLE BY WAY OF DEEMED DIVID END U/S 2(22)(E) TO THE EXTENT OF ACCUMULATED PROFITS AVAILABLE WITH M/S AMBUJA REALTY DEVELOPMENT LTD. FROM THE BOOKS OF ACCOUNT OF M/S AMBUJA REALTY DEVELOPMENT LTD, THE AO NOTED THAT PRO - RATA ACCUMULATED PROFITS AVAILABLE WITH M/S AMBUJA REALTY DEVELOPM ENT LTD UPTO THE DATE 35 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. OF LOAN WAS RS.76,53,266/ - AND THEREFORE HE RESTRICTED THE ADDITION U/S 2(22)(E) TO RS.76,53,266/ - . ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 4.2 I HAVE CONSIDERED THE ARS SUBMISSIONS AND EXAMINED TH E REASONS DISCUSSED IN THE IMPUNGNED ORDER FOR WHICH THE AO JUSTIFIED ASSESSMENT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. I HAVE ALSO CAREFULLY GONE THROUGH THE APPLICABLE LEGAL PROVISION AND THE JUDICIAL DECISIONS ON WHICH RELIANCE WAS PLACED IN THE AR S SUBMISSIONS. THE FACT OF THE MATTER IS ON A NARROW COMPASS PLANE AND THERE IS NO DISPUTE BETWEEN THE PARTIES WITH REGARD TO THESE FACTS. ADMITTEDLY THE APPELLANT WAS NOT A SHAREHOLDER OF ADRL FROM WHOM LOAN OF RUPEES 36 CRORES WAS RECEIVED. THE ADDITION U/S 2(22)(E) WAS PROMPTED MAINLY BY THE FACT THAT A COMMON SHAREHOLDER WAS SUBSTANTIALLY INTERESTED IN THE LENDING COMPANY AS WELL AS THE BORROWING COMPANY. HOWEVER THE FUNDAMENTAL FACT REMAINED THAT THE BORROWER WAS NOT A SHAREHOLDER OF THE LENDING COMPA NY AT ANY TIME DURING THE RELEVANT YEAR. ON PERUSAL OF SEC. 2(22)(E) OF THE ACT, I NOTE THAT ITS SCOPE AND AMBIT WAS WIDENED FROM AY 1989 - 90, YET THE ACT DID NOT MAKE ANY AMENDMENT IN THE BASIC STRUCTURE OF THE COMPANIES ACT. EVEN UNDER THE AMENDED PROVISI ONS OF SEC. 2(22)(E), DIVIDEND REMAINED TAXABLE ONLY IN THE HANDS OF A SHAREHOLDER AND NONE ELSE. IN SUCH LEGAL BACKGROUND, IT IS, THEREFORE, NECESSARY TO SHOW THAT BEFORE ANY SUM IS ASSESSED AS DIVIDEND, IT MUST BE DEMONSTRATED THAT THE PERSON IN WHOSE HA NDS DIVIDEND IS ASSESSABLE IS A BENEFICIAL AS WELL AS A REGISTERED SHAREHOLDER OF THE PAYER. UNLESS ONE PROVES THAT THE PERSON WHO RECEIVED THE LOAN WAS REGISTERED AS WELL AS BENEFICIAL OWNER OF REQUISITE NUMBER OF SHARES OF THE LOAN GRANTING COMPANY, DEEM ING PROVISIONS OF SEC. 2(22)(E) OF THE ACT CANNOT BE INVOKED. ON THIS ASPECT, THERE HAS BEEN UNANIMITY OF JUDICIAL VIEW. AS EVIDENT FROM THE WRITTEN SUBMISSIONS MADE BY THE AR, IN LARGE NUMBER OF DECISIONS THE HIGH COURTS AT DELHI, BOMBAY, ALLAHABAD, RAJAS THAN, ETC. HAVE TAKEN CONSISTENT AND UNIFORM VIEW THAT ASSESSMENT OF DIVIDEND U/S 2(22)(E) OF THE ACT IS PERMISSIBLE IF AND ONLY IF IT IS ESTABLISHED THAT THE RECEIVER OF THE LOAN ITSELF/HIMSELF WAS A REGISTERED AS WELL AS BENEFICIAL HOLDER OF SHARES OF TH E LOAN GRANTING COMPANY. IN THE PRESENT CASE IT IS NOT THE AOS CASE THAT THE ASSESSEE AT ANY TIME DURING THE RELEVANT YEAR HELD ANY SHARES OF ARDL FROM WHOM THE LOAN WAS RECEIVED. IN ABSENCE OF THE ASSESSEES RELATIONSHIP AS A SHAREHOLDER WITH ARDL, PROVI SIONS OF SEC. 2(22) OF THE ACT WERE NOT APPLICABLE AND CONSEQUENTLY NO ADDITION U/S 2(22)(E) WAS CALLED FOR. UNDER THE FACTS AND CIRCUMSTANCES AS WELL AS LEGAL PROVISIONS OF LAW IN THE APPELLANTS CASE, I FIND THE PREMISE ON WHICH THE ADDITION OF RS.76,53, 266/ - AS DEEMED DIVIDEND, WAS MADE BY THE AO DOES NOT HAVE ANY LEGS TO STAND ON AND IS, THEREFORE, DIRECTED TO BE DELETED IN LIMINE. 27. BEFORE US T HE LD. DR REITERATED THE STAND TAKEN BY THE AO WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA . O N THE OTH ER HAND THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE DEFENDED THE ORDER OF THE LD. CIT(A). 28. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS WHICH EMANATE FROM THE RECORDS IS THAT THE LOAN WAS TAKEN BY THE ASSESSEE COMPANY 36 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. WHICH WAS NOT A SHAREHOLDER OF THE LENDING COMPANY . WE NOTE THAT SECTION 2(22)(E) OF THE ACT IS NOT APPLICABLE TO THE ASSESSEE , SINCE IT WAS NOT A SHAREHOLDER OF M/S AMBUJA REALTY DEVELOPMENT LTD ., WHICH FACT WAS NOT CONTROVERTED BY TH E LD. DR BEFORE US. IN SUPPORT OF THIS VIEW, WE RELY ON THE DECISIONS OF THE HON'BLE HIGH COURT OF BOMBAY AND DELHI IN THE CASE OF CIT V. UNIVERSAL MEDICARE (P.) LTD. [2010] 32 4 ITR 263/190 TAXMAN 144 (BOM.) & CIT V. ANKITECH (P.) LTD. [2011] 11 TAX MANN.COM /199 TAXMAN 341 (DELHI) AND THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. SARVA EQUITY (P.) LTD. [2014] 44 TAXMANN.COM 28 (KAR.) AND THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. MADHUR HOUSING & DEVELOPMENT CO. [2018] 401 ITR 152 (SC). IN THE F ACTS OF THE PRESENT CASE S INCE THE A SSESSEE COMPANY WAS NOT A SHAREHOLDER OF M/S AMBUJA REALTY DEVELOPMENT LTD , WE THEREFORE ARE OF THE CONSIDERED VIEW THAT THE A FORESAID DECISION S ARE SQUARELY APPLICABLE TO THE A SSESSEE'S CASE. WE THEREFORE DO NOT FIND AN Y REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). GROUND NO. 1 THEREFORE STANDS DISMISSED. 29. GROUND NOS. 2 & 3 ARE AGAINST THE ACTION OF LD. CIT(A) DELETING THE ADDITION OF RS. 3,08,98,602/ - MADE ON ACCOUNT OF DEEMED RENT IN RESPECT OF UNSOLD UNIT S HELD AS STOCK IN TRADE BY THE ASSESSEE COMPANY IN VARIOUS PROJECTS. THE FACTS OF THE CASE IN BRIEF ARE THAT IN THE COURSE OF ASSESSMENT THE AO NOTED THAT THE ASSESSEE HAD DISCLOSED IN ITS AUDITED FINANCIAL STATEMENTS UNSOLD INVENTORY OF 1,08,423 SQ. FT. O F COMPLETED FLATS/UNITS HAVING VALUE RS.18,77,39,745/ - . RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING FINANCE AND LEASING CO LTD (354 ITR 180), THE AO HELD THAT NOTIONAL ANNUAL LETTING VALUE OF THESE VACANT& UNSOLD UN ITS WAS ASSESSABLE UNDER SECTION 23 OF THE ACT. ACCORDING TO AO, HE HAD CONDUCTED MARKET ENQUIRIES CONCERNING THE PREVAILING RENTAL RATES OF THE RESIDENTIAL & COMMERCIAL UNITS LYING COMPLETED BUT VACANT WITH THE ASSESSEE. BASED ON THE DATA GATHERED BY HIM, HE COMPUTED AGGREGATE ALV OF THE UNSOLD COMPLETED INVENTORY OF 1,08,423 SQ. FT. AT RS.4,41,40,860/ - . AFTER ALLOWING STANDARD DEDUCTION U/S 24(B), THE AO ADDED SUM OF RS.3,08,98,092/ - BY WAY OF DEEMED RENT TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, TH E ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO DELETED THE ADDITION BY OBSERVING AS UNDER: 5.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR AND HAVE PERUSED THE DETAILED ORDER PASSED BY THE AO ON THE ISSUE. IN THE IMPUGNED ORDER THE ADDITION OF RS.3,08,98,602/ - WAS 37 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. MADE BY THE AO TREATING IT TO BE THE ANNUAL LETTING VALUE OF THE UNSOLD FLATS/COMMERCIAL UNITS U/S 23 OF THE ACT WHICH THE ASSESSEE HELD IN HIS TRADING STOCK AS ON 31.03.2011. IN SUPPORT OF THE ASSESSMENT OF NOTIONAL ALV O F UNSOLD FLATS THE AO RELIED ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS ANSAL HOUSING FINANCE & LEASING CO LTD (SUPRA). HOWEVER THE FUNDAMENTAL QUESTION WHICH NEEDS TO BE ADDRESSED IS WHETHER ASSESSMENT OF ANY INCOME UNDER THE HEAD HOUS E PROPERTY WAS AT AL PERMISSIBLE IN THE APPELLANTS CASE. ASSESSMENT OF NOTIONAL RENT OR ANNUAL LETTING VALUE IS PERMISSIBLE IF AND ONLY IF INCOME IS ASSESSABLE UNDER HEAD HOUSE PROPERTY IN ACCORDANCE WITH SECTION 22 TO 27 OF THE ACT. IF FACTS OF THE CA SE INDICATE THAT THE PROPERTY IN QUESTION IS USED FOR THE PURPOSE OF ASSESSEES BUSINESS AND LETTING OUT OF THE PROPERTY IN QUESTION IS USED FOR THE PURPOSE OF ASSESSEES BUSINESS AND LETTING OUT OF THE PROPERTY CONSTITUTES BUSINESS OF THE ASSESSEE THEN AS SESSMENT OF ANY INCOME DERIVED FROM SUCH PROPERTY IS NOT PERMISSIBLE UNDER HEAD HOUSE PROPERTY BUT THE CORRECT HEAD OF INCOME WOULD BE PROFITS & GAINS OF BUSINESS. IN THE CIRCUMSTANCES TO DECIDE THE ISSUE AT HAND IT IS FIRST NECESSARY TO DECIDE THE CORRECT HEAD OF INCOME UNDER WHICH INCOME IN RESPECT OF PROPERTIES DEVELOPED BY THE ASSESSEE WAS ASSESSABLE. 5.2.1 THE APPELLANT WAS JOINTLY PROMOTED BY THE WEST BENGAL HOUSING BOARD AND GUJARAT AMBUJA CEMENTS LTD. PRIME OBJECT FOR WHICH THE APPELLANT WAS ESTABL ISHED WAS TO UNDERTAKE CIVIC INFRASTRUCTURE DEVELOPMENT IN VARIOUS FORMATS INCLUDING PROVISION OF AFFORDABLE HOUSING IN THE STATE OF WEST BENGAL. IN PURSUANCE OF THE MAIN OBJECT INCORPORATED IN THE MEMORANDUM OF ASSOCIATION THE APPELLANT SINCE ITS INCEPTIO N UNDERTOOK DEVELOPMENT OF RESIDENTIAL AND COMMERCIAL COMPLEXES IN DIFFERENT PARTS OF WEST BENGAL FOR WHICH THE LANDS WERE PROVIDED BY THE WEST BENGAL HOUSING BOARD. THE CONSTRUCTED SPACES DEVELOPED WERE PRIMARILY SOLD BY THE APPELLANT. SINCE INCEPTION OF THE COMPANY, PROFITS, GAINS, RENTS OR OTHER ACCRETION WHICH THE ASSESSEE DERIVED FROM THE CONSTRUCTED SPACES DEVELOPED WAS ASSESSED ONLY UNDER THE HEAD PROFITS & GAINS OF BUSINESS. FROM THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION IT WAS FOUND THAT L ETTING, HIRING OR LEASING OF THE BUILDINGS, FLATS, UNITS, ETC. WAS ONE OF THE MAIN OBJECT OF THE APPELLANT BESIDES DEVELOPMENT AND CONSTRUCTION OF THE CIVIL INFRASTRUCTURE. APART FROM SELLING THE CONSTRUCTED SPACES THE ASSESSEE COMMERCIALLY EXPLOITED THE C ONSTRUCTED SPACES BY LEASING OUT OR LETTING OUT THE SAME ON TENANCY BASIS. IT ALSO APPEARED THAT IN FEW CASES THE ASSESSEE ALSO SOLD THE CONSTRUCTED SPACES ALONG WITH THE SITTING TENETS AND PROFIT DERIVED FROM SALE OF LEASED PROPERTIES WERE ALSO ASSESSEE U NDER THE HEAD PROFITS & GAINS OF BUSINESS. ON THE FACTS AS ARE AVAILABLE ON RECORD THEREFORE I HAVE NO HESITATION IN HOLDING THAT INCOME WHICH APPELLANT WOULD HAVE DERIVED OR WHICH THE APPELLANT ACTUALLY DERIVED FROM THE CONSTRUCTED SPACES DEVELOPED BY THE ASSESSEE WAS RIGHTFULLY ASSESSABLE ONLY UNDER THE HEAD PROFITS & GAINS OF BUSINESS. IN FACT I FIND THAT EVEN THE AO DID NOT ENTERTAIN ANY OTHER VIEW AND WHEREVER THE ASSESSEE ACTUALLY DERIVED RENT FORM LETTING OUT OF THE CONSTRUCTED SPACES THE RENTAL INCO ME WAS ASSESSED BY THE AO HIMSELF UNDER THE HEAD PROFITS & GAINS OF BUSINESS. FROM THE INFORMATION ON RECORD IT WAS FOUND THAT DURING THE FY 2010 - 11 THE ASSESSEE HAD ACTUALLY LET OUT COMMERCIAL SPACES AND DERIVED INCOME BY WAY OF RENT AND SERVICE CHARGES A MOUNTING TO RS.15,69,06,862/ - . SUCH RENTAL INCOME WAS CREDITED IN THE PROFIT & LOSS A/C UNDER THE HEAD OTHER INCOME. IN THE IMPUGNED ORDER INCOME FROM RENT & SERVICE CHARGES 38 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. WAS ASSESSED UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND NOT UNDER THE HEAD H OUSE PROPERTY. FROM THE ASSESSMENT ORDERS AND THE ANNUAL ACCOUNT FOR THE EARLIER AND THE SUBSEQUENT YEAR IT WAS FOUND THAT INCOME BY THE WAY OF RENT AND SERVICE CHARGES WAS EARNED BY THE APPELLANT IN THESE YEARS AS WELL AND IN THE REGULAR ASSESSMENTS U/S 1 43(3) RENTAL INCOME WAS ASSESSED UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND NOT HOUSE PROPERTY. ON THESE FACTS THEREFORE I FIND THAT IN ALL THE INCOME TAX ASSESSMENTS I.E. FOR THE EARLIER YEARS, FOR THE CURRENT YEAR AND FOR THE SUBSEQUENT YEAR THE ASSE SSING OFFICERS HAD IN PRINCIPLE ACCEPTED THAT THE IMMOVABLE PROPERTIES DEVELOPED AND CONSTRUCTED BY THE ASSESSEE WERE BEING USED FOR ITS BUSINESS PURPOSES AND THEREFORE ANY INCOME DERIVED FROM ITS COMMERCIAL EXPLOITATION WAS CHARGEABLE UNDER THE HEAD BUSIN ESS AND NOT HOUSE PROPERTY. 5.2.2 AS NOTED IN THE FOREGOING AS AND WHEN THE ASSESSEE ACTUALLY LET OUT PART OF THE UNITS/SPACES CONSTRUCTED BY THE ASSESSEE, RENTAL INCOME WAS ASSESSED UNDER THE HEAD BUSINESS AND NOT UNDER THE HEAD HOUSE PROP ERTY. IT IS ALSO NOTED THAT AS AND WHEN ANY OF THE SPACES/UNITS DEVELOPED AND CONSTRUCTED BY THE ASSESSEE WERE SOLD OR TRANSFERRED THE PROFITS WERE ASSESSED UNDER THE HEAD PROFITS & GAINS OF BUSINESS. SOME OF THE UNSOLD FLATS/UNITS HELD IN STOCK ON 31.03.2 011 WERE SOLD IN THE SUBSEQUENT YEAR. FROM THE ASSESSMENT ORDER FOR AY 2012 - 13 IT APPEARED THAT INCOME ON SALE OF SUCH UNITS/FLATS WAS ASSESSED UNDER THE HEAD BUSINESS. ON THESE FACTS, THEREFORE, I FIND THAT UNSOLD FLATS/UNITS FORMED PART OF THE INVENTORY OF THE ASSESSEES BUSINESS OF REAL ESTATE DEVELOPMENT. IN CIRCUMSTANCES THE FACT COULD NOT BE DENIED THAT THE UNSOLD FLATS WERE INTEGRAL PART OF ASSESSEES CIRCULATING CAPITAL AND IT WAS TO BE USED FOR THE PURPOSE OF ASSESSEES BUSINESS. ON THESE FACTS THE REFORE I HAVE NO HESITATION IN HOLDING THAT INCOME IF ANY WAS ASSESSABLE UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND NOT UNDER THE HEAD HOUSE PROPERTY. MY CONCLUSION IN THIS REGARD FINDS SUPPORT IN THE RECENT JUDGEMENT OF THE APEX COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD VS CIT (SUPRA). IT IS ALSO RELEVANT THAT FOLLOWING THE SAID JUDGEMENT OF THE APEX COURT THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF SHYAM BURLAP CO LTD VS CIT (61 TAXMANN.COM 121) HELD THAT IN CASE OF A COMPA NY FORMED WITH THE PURPOSE OF ACQUIRING, DEVELOPING AND DEALING IN PROPERTIES, ANY INCOME DERIVED FROM SALE, LEASE OR LETTING OUT OF THE PROPERTIES WOULD BE ASSESSABLE AS BUSINESS INCOME AND NOT UNDER THE HEAD PROPERTY. THE ARS REFERENCE TO THE DECISION O F ITAT MUMBAI IN THE CASE OF C R DEVELOPMENTS LTD VS JCIT WAS PERTINENT BECAUSE THE FACTS WERE PARI - MATERIA WITH THE ASSESSEES CASE. THE ASSESSEE BEFORE MUMBAI ITAT WAS SIMILARLY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND HELD CERTAIN UNSOLD U NITS IN STOCK. IN RESPECT OF SUCH UNSOLD UNITS ALV I.E. NOTIONAL RENT WAS ASSESSED UNDER THE HEAD HOUSE PROPERTY BY RELYING ON THE JUDGEMENT OF THE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING (SUPRA). THE ITAT HOWEVER FOUND THAT THE JUDGEMENT OF THE DELH I HIGH COURT WAS RENDERED BEFORE THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD (SUPRA) WAS DELIVERED ON 09.04.2015. IN VIEW OF THE LATER JUDGEMENT OF THE SUPREME COURT THE ITAT HAD HELD THAT THE JUDGEMENT OF THE DEL HI HIGH COURT DID NOT HOLD FIELD ANY LONGER AND IT WAS NO MORE A JUDICIAL PRECEDENT. THE TRIBUNAL HELD THAT THE UNSOLD FLATS CONSTITUTED STOCK IN TRADE OF ASSESSEES BUSINESS AND THEREFORE ANY INCOME DERIVED FROM THE STOCK WAS ONLY ASSESSABLE AS BUSINESS I NCOME AND THEREFORE NOTIONAL ANNUAL 39 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. LETTING VALUE ASSESSABLE U/S 23 COULD NOT BE ASSESSED SINCE INCOME WAS RIGHTFULLY ASSESSABLE UNDER THE HEAD BUSINESS. APPLYING THE RATIO LAID DOWN IN THESE DECISIONS TO THE FACTS OF THE ASSESSEES CASE I FIND THAT THE FL ATS AND UNITS REMAINING UNSOLD AS ON 31.03.2011 WERE STOCK IN TRADE OF ASSESSEES BUSINESS OF REAL ESTATE DEVELOPMENT. AS AND WHEN THESE UNITS WERE SOLD INCOME WAS ASSESSED UNDER THE HEAD BUSINESS. EVEN THE RENT WHICH THE ASSESSEE ACTUALLY RECEIVED FROM LE TTING OUT OF THE UNITS, THE SAME WAS ASSESSED UNDER THE HEAD PROFITS & GAINS OF BUSINESS IN THE IMPUGNED ORDER. I THEREFORE FIND THAT SAVE AND EXCEPT ASSESSING THE NOTIONAL RENTAL INCOME OR ANNUAL LETTING VALUE OF UNSOLD FLATS/UNITS THE AO NEVER INVOKED SE C. 22 & 23 OF THE ACT. IF FOR THE PURPOSE OF ASSESSING RENT ACTUALLY RECEIVED THE AO FOUND PROFITS & GAINS OF BUSINESS AS THE MOST APPROPRIATE HEAD OF INCOME THEN THERE WAS NO REASONS FOR THE AO TO DEPART FROM THE ACCEPTED POSITION AND INVOKE THE HEAD OF H OUSE PROPERTY ONLY FOR THE PURPOSE OF ASSESSING NOTIONAL ANNUAL LETTING VALUE OF UNSOLD INVENTORY OF CONSTRUCTED FLATS/UNITS. MOREOVER, THE RECENT JUDGEMENTS OF THE APEX COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD (SUPRA) AND CALCUTTA HIGH CO URTS DECISION IN THE CASE OF SHYAM BURLAP CO. LTD (SUPRA) HAVE PUT THIS ISSUE BEYOND ANY CONTROVERSY. IN TERMS OF THE RATIO LAID DOWN IN THESE DECISIONS ANY INCOME THAT THE ASSESSEE WOULD HAVE DERIVED FROM THE UNITS / SPACES CONSTRUCTED BY THE APPELLANT I N THE COURSE OF ITS REAL ESTATE BUSINESS WOULD HAVE BEEN ASSESSABLE ONLY UNDER THE HEAD PROFITS & GAINS OF BUSINESS AND NOT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN THE CIRCUMSTANCES IF NO ASSESSMENT OF INCOME WAS PERMISSIBLE UNDER THE HEAD HOUSE PRO PERTY THEN THERE IS NO QUESTION OF NOTIONAL ANNUAL VALUE BEING HELD ASSESSABLE IN THE TOTAL INCOME FOR AY 2011 - 12. FOR THE REASONS SET OUT IN THE FOREGOING THEREFORE I HOLD THAT THE AO WAS NOT JUSTIFIED IN ASSESSING RS.3,08,98,608/ - UNDER THE HEAD HOUSE P ROPERTY. THE ADDITION OF THE SAID AMOUNT IS HEREBY DELETED. 30. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. ASSAILING THE ORDER OF THE LD. CIT(A), THE LD. CIT, DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. THE LD. C IT, DR REITERATED THE OBSERVATIONS MADE BY THE AO IN THE IMPUGNED ORDER AND RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING FINANCE AND LEASING CO LTD (SUPRA) TO JUSTIFY THE IMPUGNED ADDITION MADE BY THE AO. PER CONTRA THE LD . AR RELIED ON THE ORDER OF LD. CIT(A) AND CITED A CANTENA OF DECISIONS IN SUPPORT THEREOF. HE ALSO SUBMITTED THAT THE ALV OF THE UNSOLD INVENTORY WAS DETERMINED BY THE AO IN THE MOST ARBITRARY AND HIGH PITCHED MANNER, WHICH DID NOT HAVE ANY COGENT BASIS. HE SUBMITTED THAT ALV IF ANY COULD NOT HAVE EXCEEDED THE ANNUAL VALUES OF THESE UNITS AS WAS DETERMINED BY THE LOWER AUTHORITIES FOR THE PURPOSES OF LEVY OF MUNICIPAL TAXES 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE IS SUE IN THE PRESENT CASE IS WITH RESPECT TO ADDITION ON ACCOUNT OF NOTIONAL ANNUAL LETTING VALUE OF THE UNSOLD UNITS MADE UN DER THE HEAD 'INCOME FROM HOUSE PROPERTY'. W E NOTE THAT THE A SSESSEE 40 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. WAS JOINTLY PROMOTED BY THE GOVERNMENT OF WEST BENGAL ALONG WITH M/S AMBUJA HOUSING & URBAN INFRASTRUCTURE CO LTD, BOTH HOLDING EQUAL EQUITY STAKE. FROM THE DEVELOPMENT AGREEMENT DATED 16.05.2005 ENTERED INTO BETWEEN THE ASSESSEE AND THE WEST BENGAL HOUSING BOARD , IT IS NOTED THAT THE ASSESSEE COMPANY WAS GIVEN THE DEV ELOPMENT RIGHTS IN THE LAND HAVING AREA OF 18.62 ACRES FOR UNDERTAKING LARGE SCALE CONSTRUCTION OF RESIDENTIAL & COMMERCIAL COMPLEXES WITHIN THE STATE OF WEST BENGAL . FROM THE PLAIN READING OF THE TRANSACTIONAL DOCUMENTS WE FIND THAT THE ROLE OF THE APPELL ANT AS ENVISAGED IN THE ENTIRE SCHEME FORMULATED AT THE BEHEST OF THE STATE GOVERNMENT WAS LIMITED TO BEING DEVELOPER OF THE PROJECT. IN THE CIRCUMSTANCES THEREFORE WE FIND THAT IT WAS NEVER INTENDED THAT THE APPELLANT WOULD BE PERMITTED TO HOLD AND OWN TH E COMPLETED APARTMENTS ON ITS OWN ACCORD OR THAT THE APPELLANT WOULD ACT AS THE LANDLORD / OWNER OF THE PROPERTY. SINCE THE A SSESSEE WAS AN SPV PROMOTED BY THE STATE GOVERNMENT FOR UNDERTAKING THE DEVELOPMENT OF CIVIC URBAN INFRASTRUCTURE INCLUDING CONSTRU CTION OF THE HOUSING / COMMERCIAL COMPLEX, IN THE STATE OF WEST BENGAL, IMMEDIATELY AFTER THE PROJECT WAS LAUNCHED THE A SSESSEE AND THE HOUSING BOARD HAD UNDERTAKEN DRIVE TO ALLOT THE UNITS AMONGST THE WILLING PURCHASERS OF THESE UNITS . ON THE GIVEN FACTS THEREFORE WE FIND MERIT IN THE LD. ARS CONTENTION THAT THE APPELLANT COULD NOT BE REGARDED AS OWNER OF THE HOUSE PROPERTY OF THE UNSOLD INVENTORY FOR THE PURPOSES OF SECTION 22 OF THE ACT BECAUSE ITS ROLE WAS LIMITED AS THE DEVELOPER WHO HELD THE UNIT S IN TRUST TO BE ULTIMATELY SOLD TO THE PERSONS TO WHOM THE ALLOTMENTS WOULD BE APPROVED BY THE BOARD. WE FIND THAT ON SIMILAR FACTS THIS TRIBUNAL IN THE CASE OF BENGAL DCL HOUSING DEVELOPMENT CO. LTD. VS DCIT IN ITA NO.429/KOL/2018 DATED 24.05.2019, DELET ED SIMILAR ADDITION MADE ON ACCOUNT OF DEEMED RENT ON UNSOLD INVENTORY BY OBSERVING AS UNDER: 9. FROM PLAIN READING OF THE AFORESAID PROVISIONS OF THE ACT, IT IS APPARENT THAT THE ANNUAL VALUE OF THE PROPERTY IS ASSESSED AS INCOME IN THE HANDS OF THE 'OW NER'. IN ORDER TO ATTRACT THE CHARGE OF TAX UNDER THE HEAD 'HOUSE PROPERTY' IT IS NECESSARY FOR THE AO TO PROVE THAT THE ASSESSEE IS THE OWNER OF THE HOUSE PROPERTY AS DEFINED FOR THE PURPOSES OF CHAPTER - IV - C OF THE ACT. THE TERM 'OWNER' OF THE HOUSE PRO PERTY IS DEFINED IN SECTION 27 OF THE ACT. IN THE PRESENT CASE WE NOTE THAT THE APPELLANT IS A JOINT SECTOR COMPANY PROMOTED BY WEST BENGAL HOUSING BOARD ALSO WITH M/S DC PROPERTIES LTD FOR UNDERTAKING LARGE SCALE CONSTRUCTION OF HOUSING COMPLEXES WITHIN T HE STATE OF WEST BENGAL TO SOLVE THE BASIC HOUSING PROBLEMS SUBJECT HOWEVER TO THE SUPERVISION AND OVERALL CONTROL BY THE STATE GOVERNMENT OF WEST BENGAL. WITH THIS OBJECTIVE IN MIND THE GOVERNMENT OF WEST BENGAL HAD TRANSFERRED IN FAVOUR OF THE HOUSING BO ARD CERTAIN PARCELS OF LAND AND THE SAID BOARD IN TURN HAD ENTERED INTO A DEVELOPMENT AGREEMENT DATED 23.09.2004 APPOINTING THE 41 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. APPELLANT HEREIN AS DEVELOPER AND/OR AN AGENT OF THE BOARD FOR THE PURPOSE OF CONSTRUCTION OF THE HOUSING COMPLEX TO BE DEVELOPE D ON THE LAND PARCEL ALLOTTED TO THE BOARD BY THE STATE GOVERNMENT. PURSUANT TO THE DEVELOPER'S AGREEMENT THE APPELLANT UNDERTOOK THE CONSTRUCTION OF THE HOUSING COMPLEX KNOWN AS 'UTTARA' WHICH CONSISTED OF SEVERAL APARTMENT BUILDINGS WHICH WERE CONSTRUCTE D IN PHASES AND THE REVENUE FROM THE ACTIVITY OF DEVELOPMENT AND CONSTRUCTION OF THE APARTMENTS WAS RECOGNIZED IN THE BOOKS OF THE APPELLANT AT THE TIME OF DELIVERY OF POSSESSION OF THE APARTMENTS TO THE RESPECTIVE FLAT PURCHASERS. FROM THE PLAIN READING O F THE TRANSACTIONAL DOCUMENTS WE THEREFORE FIND THAT THE ROLE OF THE APPELLANT AS ENVISAGED IN THE ENTIRE SCHEME FORMULATED AT THE BEHEST OF THE STATE GOVERNMENT WAS LIMITED TO BEING DEVELOPER OF THE HOUSING PROJECT. THE SCHEME FORMULATED PROVIDED THAT THE APPELLANT WHICH WAS THE SPV WAS OBLIGED TO CARRY OUT CONSTRUCTION OF THE RESIDENTIAL APARTMENTS TO BE SOLD TO ACTUAL USERS SO THAT THE HOUSING PROBLEMS FACED BY THE POPULOUS IN THE URBAN AREA WAS ADDRESSED. IN THE CIRCUMSTANCES THEREFORE WE FIND THAT IT W AS NEVER INTENDED THAT THE APPELLANT WOULD BE PERMITTED TO HOLD AND OWN THE COMPLETED APARTMENTS ON ITS OWN ACCORD OR THAT THE APPELLANT WOULD ACT AS THE LANDLORD / OWNER OF THE PROPERTY. SINCE THE APPELLANT WAS AN SPV PROMOTED BY THE HOUSING BOARD FOR UND ERTAKING THE CONSTRUCTION OF THE HOUSING COMPLEX, IMMEDIATELY AFTER THE PROJECT WAS LAUNCHED THE APPELLANT AND THE HOUSING BOARD HAD UNDERTAKEN DRIVE TO ALLOT THE APARTMENTS AMONGST THE WILLING PURCHASERS OF THESE APARTMENTS. CONSIDERING THESE EVENTS HARMO NIOUSLY THE ONLY CONCLUSION THAT ONE CAN DRAW IS THAT THE APPELLANT WAS NEVER OWNER OF THE APARTMENTS BUT ITS ROLE WAS LIMITED ONLY TO THE DEVELOPER WHO HELD THE APARTMENTS UNDER CONSTRUCTION IN TRUST TO BE ULTIMATELY OWNED BY THE PERSONS TO WHOM THE ALLOT MENTS WERE APPROVED BY THE BOARD. WE THEREFORE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR THAT THE APPELLANT COULD NEVER BE REGARDED AS 'OWNER' OF THE FINISHED APARTMENTS AND IN THAT VIEW OF THE MATTER THE PROVISIONS OF CHAPTER IV - C WAS NOT APPLICABLE AND THEREFORE THE NOTIONAL ANNUAL VALUE OF THE UNSOLD FLATS COULD NOT BE ASSESSED IN THE HANDS OF THE APPELLANT UNDER SECTION 23 OF THE ACT. 10. WE ALSO FIND MERIT IN THE SUBMISSION THAT EVEN THOUGH THE VALUE OF FINISHED APARTMENTS WAS INCLUDED UNDER THE HEA D 'INVENTORY' DISCLOSED IN THE BALANCE SHEET, YET SUCH APARTMENTS COULD NOT BE CONSIDERED TO BE OWNED BY THE APPELLANT FOR THE PURPOSES OF SECTION 22 OF THE ACT. FROM THE DETAILED BREAK - UP OF SUCH INVENTORY WE NOTE THAT THE APARTMENTS INCLUDED BY WAY OF IN VENTORY WERE ALLOTTED PRIOR TO BALANCE SHEET DATE AND IN RESPECT OF SUCH ALLOTMENT THE SUBSTANTIAL PART OF THE CONSIDERATION WAS ALSO RECEIVED BY THE APPELLANT AND THE SAME WAS REFLECTED BY WAY OF 'LIABILITY' IN THE APPELLANT'S BOOKS. ONCE THE APPELLANT HA D EXECUTED REQUISITE DOCUMENTATION EVIDENCING THE ALLOTMENT OF SPECIFIC UNITS / APARTMENTS IN FAVOUR OF INTENDING PURCHASERS AND THEREAFTER RECEIVED CONSIDERATION AMOUNTS IN ACCORDANCE WITH THE TERMS OF ALLOTMENT, THEN THE RIGHTS OF SPECIFIC PERFORMANCE AS WELL AS RIGHT TO OBTAIN CONVEYANCE IN RESPECT OF THE SPECIFIED APARTMENT HAD ACCRUED IN FAVOUR OF THE RESPECTIVE PURCHASER. IN THE CIRCUMSTANCES EVEN THOUGH THE HUSK OF A TITLE, IF ANY, VESTED IN THE OWNER, IN LAW SUCH PERSON COULD NOT BE CONSIDERED TO BE THE 'OWNER' OF THE HOUSE PROPERTY FOR THE PURPOSES OF SECTION 22 OF THE ACT. ONCE THE BOARD AND THE APPELLANT - DEVELOPER HAD ENTERED INTO VALID DOCUMENTATION FOR TRANSFERRING THE COMPLETED APARTMENT IN FAVOUR OF THE PURCHASER, THEN VESTED RIGHT IN THE SAI D PROPERTY STOOD ACCRUED IN FAVOUR OF THE FLAT PURCHASER WHICH THE APPELLANT OR THE BOARD COULD NOT HAVE USURPED. TILL THE COMPLETION OF THE CONSTRUCTION OF THE FLATS IN ALL RESPECTS, THE DEVELOPER RETAINED ITS POSSESSION ONLY IN TRUST AND FOR THE PURPOSE OF CARRYING OUT ITS OBLIGATIONS UNDER THE DEVELOPMENT AGREEMENT. THE DEVELOPER IN SUCH FACTUAL AND LEGAL BACKGROUND WAS DEBARRED FROM CLAIMING OWNERSHIP RIGHTS IN THE APARTMENTS ALREADY ALLOTTED TO THE FLAT PURCHASERS. VIEWED FROM ANY ANGLE THEREFORE THE A PPELLANT / DEVELOPER COULD NOT BE 42 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. REGARDED AS THE OWNER OF THE HOUSE PROPERTY SO AS TO ATTRACT CHARGE OF TAX UNDER SECTION 22 READ WITH SECTION 23 OF THE ACT. 32. WE ALSO FIND MERIT IN THE CONTENTION OF THE LD. AR OF THE APPELLANT THAT WHEN THE BUSINESS OF THE ASSESSEE IS TO DEVELOP, CONSTRUCT & SELL IMMOVABLE PROPERTIES AND THE UNSOLD UNITS HAVE ALL ALONG BEEN CONSIDERED BY THE AO TO BE 'STOCK - IN - TRADE' OF THE ASSESSEES BUSINESS THEN IT WAS UNJUSTIFIED ON THE AOS PART TO TAKE A CONTRARY STAND ON THE SA ME SET OF FACTS AND INVOKE SECTION 22 & 23 IN RESPECT OF CERTAIN STOCK - IN - TRADE WHICH WAS LYING VACANT AND ASSESS DEEMED RENT UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. IT IS NOTED FROM THE ANNUAL ACCOUNTS OF THE COMPANY AND THE COMPUTATION OF INCOME W HICH ARE AVAILABLE AT PAGES 1 TO 26 OF THE PAPER BOOK, THAT THE RENTAL INCOME ACTUALLY DERIVED FROM THE PROPERTIES LET OUT TO THE TENANTS WAS ASSESSED BY THE AO UNDER THE HEAD BUSINESS. WE THEREFORE FIND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE THAT W HEN THE ACTUAL RENTAL INCOME DERIVED FROM PROPERTIES WAS ASSESSED BY THE AO UNDER CHAPTER IV - D I.E. PROFITS & GAINS OF BUSINESS THEN ONLY WITH REFERENCE TO THE VACANT AND UNSOLD PROPERTIES, WHICH WERE NEITHER GIVEN ON RENT NOR THE ASSESSEE HAD IN TENTION TO LET THEM OUT, THE AO COULD NOT HAVE COMPUTED DEEMED RENTAL INCOME U/S 22 & 23 AND ASSESSED IT UNDER CHAPTER IV - C OF THE ACT I.E. INCOME FROM HOUSE PROPERTY. 33. WE NOTE T HAT THE REVENUES CASE SOLELY RESTS ON THE DECISION HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL HOUSING FINANCE AND LEASING CO LTD (SUPRA) WHICH HAS TAKEN A VIEW THAT ALV OF UNSOLD FLATS HELD BY A BUILDER IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. WE HOWEVER FIND THAT HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NEHA BUILDER S PVT. LTD ( 164 TAXMANN 342 ) HAS HELD THAT WHEN THE BUSINESS OF THE ASSESSEE IS TO CONSTRUCT THE PROPERTY AND SELL IT OR TO CONSTRUCT OR LET OUT THEN THE PROPERTIES ARE IN THE NATURE OF STOCK - IN - TRADE AND ANY INCOME DERIVED THERE FROM WOULD BE TAXED UNDE R THE HEAD B USINESS AND ANY INCOME DERIVED FROM SUCH STOCK - IN - TRADE CANNOT BE TERMED AS INCOME FROM HOUSE PROPERTY . WE FURTHER NOTE THAT THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF SHYAM BURLAP CO LTD VS CIT (61 TAXMANN.COM 121) HAS ALSO HE LD THAT WHERE THE ASSESSEE COMPANY IS FORMED WITH THE PURPOSE OF ACQUIRING, DEVELOPING AND DEALING IN PROPERTIES, THEN ANY INCOME DERIVED FROM SALE, LEASE OR LETTING OUT OF THE PROPERTIES WOULD BE ASSESSABLE AS BUSINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. 43 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 34. WE FIND THAT ON SIMILAR FACTS AND CIRCUMSTANCES THE C O - ORDINATE BENCH OF THIS TRIBUNAL AT MUMBAI IN THE CASE OF M/S. KANKIA SPACES PVT LTD IN ITA NO. 7288 & 7289/MUM/2017 DATED 23.04.2019 AFTER CONSIDERING THE DECISION OF HON'BLE GUJARAT H IGH COURT IN THE CASE OF CIT VS. NEHA BUILDERS (P) LTD., (SUPRA) AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL HOUSING AND CONSTRUCTION (SUPRA) HELD THAT NO NOTIONAL ANNUAL LETTING VALUE IN RESPECT OF UNSOLD FLATS HELD BY WA Y OF STOCK - IN - TRADE CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE RELEVANT FINDINGS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL ARE AS UNDER : 9. WE HAVE CONSIDERED THE SUBMISSION OF PARTIES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT THE ASSESSING OFFICER ADDED RS. 1.57 CRORE UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY ESTIMATING THE DEEMED RENTAL INCOME OF THE ASSESSEE IN RESPECT OF UNSOLD UNITS AND AFTER GRATING STATUTORY DE DUCTION OF 30% TREATED THE REMAINING AS INCOME OF HOUSE PROPERTY. THE LDCIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER BY RELYING ON THE DECISION OF DELHI HIGH COURT IN ANSAL HOSING FINANCE AND LEASING LTD (SUPRA). WE ARE CONSCIOUS OF THE FACTS THAT T HAT THE LEGISLATURE HAS INSERTED SUB - SECTION (5) IN SECTION 23 OF THE ACT BY FINANCE ACT, 2017, WITH EFFECT FROM 01.04.2018, WHICH IS NOT APPLICABLE FOR THE YEARS UNDER CONSIDERATION. 10. WE HAVE NOTED THAT IN ASSESSEES OWN CASE FOR AY 2012 - 13, SIMILAR A DDITION WAS MADE BY ASSESSING OFFICER WAS UPHELD BY LD CIT(A), HOWEVER ON APPEAL BEFORE TRIBUNAL THE SAME WAS DELETED IN ITA NO. 6686/MUM/2016 VIDE ORDER DATED 31.10.2018. THE RELEVANT PART OF THE DECISION IS EXTRACTED BELOW: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISION ARE GIVEN BELOW. ON THE ABOVE ISSUE, WE COME ACROSS ONE DECISION FOR THE ASSESSEE AND ANOTHER DECISION FOR THE REVENUE. THE DECISION IN NEHA BUILDERS PVT.LTD.(SUPRA) IS FOR THE ASSESSEE, WHEREAS THE DECISION IN ANSALHSG. FINANCE & LEASING CO. LTD.,(SUPRA) IS FOR THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. VEGETABLE PRODUCTS 88 ITR 192 (SC) HAS HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISI ONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE TAX PAYER MUST BE ADOPTED. THEREBY, WE WILL FOLLOW THE DECISION IN NEHA BUILDERS PVT.LTD. (SUPRA). 7.1 THE FOLLOWING SUB - SECTION (5) HAS BEEN INSERTED AFTER SUB - SECTION (4) OF SECTION 23 BY THE FINAN CE ACT, 2017, W.E.F. 01.04.2018: (5) WHERE THE PROPERTY CONSISTING ANY BUILDING OR LAND APPURTENANT THERETO IS HELD AS STOCK - IN - TRADE AND THE PROPERTY OR ANY PART OF THE PROPERTY IS NOT LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR, THE ANNUAL V ALUE OF SUCH PROPERTY OR PART OF THE PROPERTY, FOR THE PERIOD UP TO ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CERTIFICATE OF COMPLETION OF CONSTRUCTION OF THE PROPERTY IS OBTAINED FROM THE COMPETENT AUTHORITY, SHALL BE TAKEN TO NIL. 44 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. THUS, IN ORDER TO GIVE RELIEF TO REAL ESTATE DEVELOPERS, SECTION 23 HAS BEEN AMENDED W.E.F. AY 2018 - 19 (FY 2017 - 18). BY THIS AMENDMENT, IT IS PROVIDED THAT IF THE ASSESSEE IS HOLDING ANY HOUSE PROPERTY AS HIS STOCK - INTRADE WHICH IS NOT LET OUT FOR THE WHOLE OR PART OF THE YEAR, THE ANNUAL VALUE OF SUCH PROPERTY WILL BE CONSIDERED AS NIL FOR A PERIOD UP TO ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH A COMPLETION CERTIFICATE IS OBTAINED FROM THE COMPETENT AUTHORITY. IN VIEW OF THE ABOVE AMENDMENT TO SEC TION 23, WE ARE NOT ADVERTING TO THE CASE LAWS RELIED ON BY THE LD. COUNSEL AND LD. DR. IN THE INSTANT CASE, THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. THE ISSUE OF TAXABILITY IS WITH REGARD TO UNSOLD FLATS/UNITS OF RS.1,85,95,17,274/ - HE LD BY THE APPELLANT UNDER THE HEAD CLOSING INVENTORIES. THE AY IS 2012 - 13. IN VIEW OF THE INSERTION OF SUB - SECTION (5) IN SECTION 23 BY THE FINANCE ACT, 2017, W.E.F. 01.04.2018 NARRATED HEREINBEFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND ALLOW THE 1ST & 2ND GROUNDS OF APPEAL. 11. FURTHER, IN ASSESSEES GROUP CASE THE COORDINATE BENCH OF MUMBAI TRIBUNAL IN SARANG PROPERTY DEVELOPERS PVT LTD IN ITA NO. 5620/MUM/2016 PASSED THE FOLLOWING ORDER; 4. WE HAVE CONSIDERED THE SUBMISSION OF PARTIES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT ASSESSING OFFICER AS WELL AS LD. CIT(A) WHILE RELYING UPON THE DECISION OF DELHI HIGH COURT I.E. IN ANSAL HOUSING FINANCING & LEASING CO. LTD. (SUPRA) WHEREIN IT WAS HELD THAT ASSESSEE IS LIA BLE TO BE TAXED ON NOTIONAL ALV OF UNSOLD UNITS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE LD. AR OF THE ASSESSEE IS RELYING UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. NEHA BUILDERS P. LTD. (SUPRA) WHEREIN IT WAS HELD THAT WHEN THE AS SESSEE - COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION OF PROPERTY AND ONE OF THE BUILDING/PROPERTY WAS INCLUDED IN THE CLOSING STOCK IN THE BALANCE - SHEET DRAWN BY ASSESSEE, THE PROPERTY WOULD PARTAKE THE CHARACTER OF STOCK AND ANY INCOME DERIVED FROM ST OCK WOULD NOT BE TAKEN TO BE INCOME FROM HOUSE PROPERTY. THE HONBLE HIGH COURT FURTHER HELD THAT BUSINESS OF THE ASSESSEE IS TO CONSTRUCT THE PROPERTY AND SALE IT, THEN THAT WOULD BE THE BUSINESS AND BUSINESS STOCK, WOULD BE TAKEN AS STOCK - IN - TRADE AND ANY INCOME DERIVED FROM SUCH STOCK CANNOT BE TERMED AS INCOME FROM HOUSE PROPERTY. 5. IN THE CASE IN HAND, THERE IS NO DISPUTE THAT ASSESSEE TREATED THE UNSOLD UNIT IS TREATED AS STOCK - IN - TRADE IN ITS BOOKS OF ACCOUNT. FURTHER, THE UNIT SOLD BY THE A SSESSEE HAS BEEN OFFERED UNDER THE HEAD INCOME FROM BUSINESS. THUS, THE UNSOLD FLAT WHICH ARE STOCK - IN - TRADE, WHEN ARE SOLD, THEY ARE ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND THEREFORE, THE ASSESSING OFFICER IS NOT CORRECT IN BRINGING THOSE U NITS TO TAX ON THE BASIS OF NOTIONAL ALV UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 6. WE ARE CONSCIOUS OF THE FACT THAT THE DECISION OF HONBLE DELHI HIGH COURT IN ANSAL HOUSING FINANCING & LEASING CO. LTD. (SUPRA) IS AGAINST THE ASSESSEE. THE HONBLE SUPREME COURT IN CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (88 ITR 92) HELD THAT WHEREIN TWO REASONABLE CONSTRUCTION TO TAX PROVISION ARE POSSIBLE THAT CONSTRUCTION WHICH FAVOURS ASSESSEE MUST BE ADOPTED. THEREFORE, WITH UTMOST REGARD TO THE DECISION OF DEL HI HIGH COURT IN CASE IN ANSAL HOUSING FINANCING & LEASING CO. LTD. (SUPRA), WE ARE ACCEPTING THE VIEW TAKEN BY GUJARAT HIGH COURT IN CIT VS. NEHA BUILDERS (SUPRA). 45 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 7. THE HONBLE SUPREME COURT IN CASE OF CHENNAI PROPERTY (373 ITR 673) HELD THAT WHEN THE COMPANY IS PRIMARILY ENGAGED IN BUSINESS OF CONSTRUCTION AND DEVELOPMENT, WHICH IS THE MAIN OBJECT OF THE ASSESSEE, ITA NO. 7288, 7289 MUM 17 & 209 AND 210 MUM 18 - M/S KANAKIA SPACES PVT. LTD. 12 THE INCOME DERIVED BY ASSESSEE WOULD BE INCOME FROM BUSINES S. ON THE SAME ANALOGY IN THE CASE IN HAND, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT, WHICH IS THE MAIN BUSINESS OF THE ASSESSEE, THE UNITS WHICH COULD NOT BE SOLD AT THE END OF THE YEAR AND WERE SHOWN AS STOCK - IN - TRADE, E STIMATING RENTAL INCOME ON NOTIONAL ALV WAS NOT JUSTIFIED. PARTICULARLY WHEN, THERE IS NO EVIDENCE ON RECORD THAT THESE UNITS WERE EITHER GIVEN ON RENT OR THAT THE ASSESSEE HAS INTENTION TO LET OUT THOSE UNITS. THE UNITS WHICH ARE NOT SOLD ARE STOCK - IN - TRA DE AND THE INCOME ARISING OF ITS SALE IS LIABLE TO BE TAXED AS BUSINESS INCOME, THEREFORE, WE DO NOT FIND ANY JUSTIFICATION IN CALCULATING NOTIONAL ALV OF THE VACANT UNITS. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON ESTIMATE BASIS. IN THE RESULT, GROUND OF APPEAL RAISED BY ASSESSEE IS ALLOWED 8. IN RUNAWAL CONSTRUCTIONS &RUNAWAL BUILDERS PVT LTD (SUPRA), THE FOLLOWING ORDER WAS PASSED; ..10. IN THE CASE ON HAND BEFORE US IT IS AN UNDISPUTED FACT THAT BOTH ASSESSEES HAV E TREATED THE UNSOLD FLATS AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT AND THE FLATS SOLD BY THEM WERE ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS'. THUS, RESPECTFULLY FOLLOWING THE ABOVE SAID DECISIONS WE HOLD THAT THE UNSOLD FLATS WHICH ARE STOCK IN TRAD E WHEN THEY WERE SOLD THEY ARE ASSESSABLE UNDER THE HEAD 'INCOME FROM BUSINESS' WHEN THEY ARE SOLD AND THEREFORE THE AO IS NOT CORRECT IN BRINGING TO TAX NOTIONAL ANNUAL LETTING VALUE IN RESPECT OF THOSE UNSOLD FLATS UNDER THE HEAD 'INCOME FROM RUNWAL CONS TRUCTIONS &RUNWAL BUILDERS HOUSE PROPERTY'. THUS, WE DIRECT THE AO TO DELETE THE ADDITION MADE UNDER SECTION 23OF THE ACT AS INCOME FROM HOUSE PROPERTY. 9. FURTHER, BY FOLLOWING THE DECISION OF RUNAWAL CONSTRUCTIONS &RUNAWAL BUILDERS (SUPRA), IDENTICAL R ELIEF WAS GRANTED IN ARIHANT ESTATE PVT LTD (SUPRA). IN ACIT VS HAWARE CONSTRUCTIONS (P) LTD (SUPRA) THE COORDINATE BENCH OF MUMBAI TRIBUNAL ALSO TOOK THE VIEW THAT IF A REAL ESTATE DEVELOPER HOLDS ANY HOUSE PROPERTY AS HIS STOCK - IN - TRADE WHICH IS NOT LET OUT FOR WHOLE OR PART OF YEAR, ANNUAL VALUE OF SUCH PROPERTY WILL BE CONSIDERED AS NIL FOR A PERIOD UP TO ONE YEAR FROM END OF FINANCIAL YEAR IN WHICH A COMPLETION CERTIFICATE IS OBTAINED. 10. THE HONBLE DELHI HIGH COURT IN CIT VS ANSAL HOUSING FINANCE LTD (SUPRA) HAS TAKEN A VIEW THAT ALV OF UNSOLD FLAT BUILT BY THE BUILDER IS ASSESSABLE AS INCOME FROM THE HOUSE PROPERTY. HOWEVER, THERE IS CONTRARY VIEW OF HONBLE GUJARAT HIGH COURT IN NEHA BUILDERS (SUPRA) THAT INCOME DERIVED FROM THE PROPERTY WOULD AL WAYS BE TERMED AS INCOME FROM THE PROPERTY, BUT IF THE PROPERTY IS USED AS STOCK IN TRADE, THEN THE SAID PROPERTY WOULD BECOME OR PARTAKE THE CHARACTER OF THE STOCK, AND INCOME DERIVED FROM THE STOCK, WOULD BE INCOME FROM THE BUSINESS, AND NOT FROM T HE PROPERTY. IF THE BUSINESS OF THE ASSESSEE IS TO CONSTRUCT THE PROPERTY AND TO SELL IT OR TO CONSTRUCT AND LET OUT THE SAME, THEN WOULD BE THE BUSINESS AND THE BUSINESS STOCKS, MAY INCLUDED MOVEABLE OR IMMOVEABLE, WOULD BE TAKEN TO BE STOCK IN TRADE AND ANY INCOME FROM SUCH STOCK CANNOT BE TERMED AS INCOME FROM PROPERTY. THERE IS NO DIRECT DECISION ON THIS ISSUE BY 46 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. JURISDICTIONAL HIGH COURT; THEREFORE, THE VIEW IN FAVOUR OF THE ASSESSEE HAS TO BE ADOPTED IN VIEW OF DECISION OF HONBLE APEX COURT IN CIT VS VEGETABLE PRODUCT LTD. (88 ITR 192 SC). AS WE HAVE ALREADY REFERRED THAT SUB - SECTION (5) IN SECTION 23 WAS INSERTED BY FINANCE ACT 2017 W.E.F. 01.04.2018; THEREFORE, THE SAME IS NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 11. THERE FORE, RESPECTFULLY FOLLOWING THE DECISIONS OF COORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2011 - 3, IN ASSESSEES GROUP CASE IN SARANG PROPERTY DEVELOPERS PVT LTD (SUPRA) AND OTHER VARIOUS DECISIONS OF COORDINATE BENCH AND THE DECISIONS OF GUJARAT HIGH CO URT IN NEHA BUILDERS (SUPRA) WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN BRINGING THE UNSOLD FLAT / UNITS UNDER INCOME FROM HOUSE PROPERTY. IN THE RESULT THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 35. WE FURTHER NOTE THAT IDENTICAL VIEW HAS BEEN EXPRESSED BY THE COORDINATE BENCHES OF THIS TRIBUNAL IN THE FOLLOWING CASES HOLDING THAT THE FLATS WHICH REMAINED VACANT AND UNSOLD, NO DEEMED ALV THEREOF COULD BE ASSESSED AS INCOME U/S 23 OF THE ACT . - C.R. DEVELOPMENT PVT. LTD. V. JCIT (ITA NO. 4277/MUM/2012) DT.13.05.2015 - RUNWAL CONSTRUCTIONS V. ACIT (ITA NO. 5408/MUM/2016) DT. 22.02.2018 - COSMOPOLIS CONSTRUCTION VS DCIT ( ITA NOS.230 AND 231/PN /2018 ) DT.12.09.2018 - KOLTEPATIL DEVELOPERS LIMITED VS DCIT (ITA NO.2206/PN/2016) DATED 03.05.2019 - PROGRESSIVE HOMES V. ACIT (ITA NO. 5082/MUM/2016) DATED 16.05.2018 - ACIT V. HAWARE CONSTRUCTION PVT. LTD. (ITA NO. 3321/MUM/2016) DATED 31.08.2019 36. THE LD. CIT, DR WAS UNABLE TO POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE , FROM THE FACTS INVOLVED IN THE CASE S CITED ABOVE . IN VIEW OF THE AFORESAID FACTS AND FOLLOWING THE ABOVE DECISIONS (SUPRA) , WE UP HOLD TH E ACTION OF THE LD. CIT(A) DELETING THE ADDITION ON ACCOUNT OF DEEMED RENT OF RS. 3,08,98,602/ - MADE BY THE AO U/S 23 OF THE ACT . THESE GROUNDS ARE THEREFORE DISMISSED. 37. GROUND NOS. 4 & 5 RAISED BY THE REVENUE ARE AGAINST THE ACTION OF THE LD. CIT(A) DELETING THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF RS.10,35,175/ - . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAD INCURRED EXPENSES ON FOREIGN TRAVEL OF ITS OFFICIALS. ACCORDING TO THE AO THE ASSESSEE WAS UNABLE TO SUBSTANTIATE THE BUSINESS EXPEDIENCY FOR 47 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. INCURRING SUCH EXPENSES OF THEIR EMPLOYEES AND THEREFORE DISALLOWED THE ENTIRE EXPENDITURE. ON APPEAL THE LD. CIT(A) DELETED THE IMPUGNED DISALLOWANCE BY OBSERVING AS UNDER: 6.2 I HAVE CONSIDERED THE ARS SUBMISSIONS AND EXAMINED THE REASONS DISCUSSED IN THE IMPUGNED ORDER JUSTIFYING THE DISALLOWANCE OF RS.10,13,175/ - BEING ENTIRE FOREIGN T RAVEL EXPENDITURE INCURRED DURING THE RELEVANT YEAR. AS SUBMITTED BY THE AR, IN THE COURSE OF ASSESSMENT THE ASSESSEE HAD FURNISHED FULL PARTICULARS OF THESE EXPENSES INTER - ALIA INCLUDING NAMES OF EMPLOYEES, DATES AND PLACES VISITED, THE PURPOSE OF FOREIGN TRAVEL AND THE AMOUNTS EXPENDED. THE ENTIRE EXPENDITURE WAS HOWEVER DISALLOWED ON THE GROUND OF BEING PERSONAL IN NATURE. IN THE FIRST INSTANCE, THE APPELLANT BEING A COMPANY THE EXPENDITURE COULD NOT HAVE BEEN DISALLOWED ON THE GROUND THAT IT WAS PERSONA L EXPENDITURE OF THE ASSESSEE. SECONDLY, I FIND THAT THE EXPENDITURE INCURRED WAS IN RESPECT OF TRAVEL UNDERTAKEN BY THE EMPLOYEES OF THE ASSESSEE AND NOT BY FAMILY MEMBERS OF ANY EMPLOYEES OR DIRECTORS. I FURTHER FIND THAT THE ASSESSEE HAD EXPLAINED WITH REASONS THE NEED FOR UNDERTAKING FOREIGN TRAVEL BY THE EMPLOYEES OF THE APPELLANT IN CONNECTION WITH BUSINESS OF THE ASSESSEE. MERELY BECAUSE THE PLACES VISITED BY THE EMPLOYEES WERE SITUATED IN FOREIGN LANDS THE AO COULD NOT DOUBT THE GENUINENESS OF THE E XPENDITURE. IN THE GLOBALIZED WORLD THERE IS INCREASING NEED FOR THE EXECUTIVES OF THE COMPANY TO VISIT PLACES NOT ONLY WITHIN INDIA BUT ALSO OUTSIDE INDIA TO EXPLORE BUSINESS OPPORTUNITIES. IN THE CIRCUMSTANCES ONCE THE ASSESSEE HAD FURNISHED COMPLETE PAR TICULARS OF THE FOREIGN TRAVEL EXPENSES WHICH WERE INCURRED ONLY FOR THE TRAVEL UNDERTAKEN BY THE EMPLOYEES, THE DISALLOWANCE COULD BE HELD PROPER IF AND ONLY IF THE AO HAD ESTABLISHED ANY SPECIFIC INFIRMITY OR HE HAD PROVED WITH RELEVANT MATERIAL THAT NON E OF THE JOURNEYS WERE UNDERTAKEN FOR BUSINESS PURPOSES. I HOWEVER FIND THAT SAVE AND EXCEPT MAKING GENERALIZED ALLEGATIONS THAT EXPENDITURE WAS PERSONAL IN NATURE THE AO DID NOT BRING ON RECORD ANY FURTHER MATERIAL TO SUPPORT HIS CONCLUSIONS. ON THE CONTR ARY THE ASSESSEES CONTENTIONS ARE FOUND SUPPORTED BY NUMEROUS DECISIONS RENDERED BY THE ITAT KOLKATA BENCHES. IN ALL THESE DECISIONS THE DISALLOWANCES MADE OUT OF FOREIGN TRAVEL EXPENSES WERE DELETED AS THE ITAT FOUND THAT THE TRAVEL WAS UNDERTAKEN BY THE EXECUTIVES OR DIRECTORS OF THE COMPANY AND NOT BY ANY FAMILY MEMBERS. FOLLOWING THESE DECISIONS I DIRECT THE AO TO DELETE THE DISALLOWANCES OF RS. 10,35,175/ - . 38. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT BEFORE THE LOWER AU THORITIES AS ALSO BEFORE US THE ASSESSEE HAS FURNISHED THE COMPLETE DETAILS OF THE FOREIGN VISITS UNDERTAKEN BY THE OFFICIALS INTER ALIA INCLUDING THEIR NAMES, DATES AND PLACES VISITED. IT IS NOTED THAT NONE OF THE FAMILY MEMBERS OF THE COMPANYS OFFICIALS ACCOMPANIED THEM ON THESE VISITS. IT IS NOTED THAT THE ASSESSEE HAD ALSO FURNISHED A NOTE EXPLAINING THE REASONS FOR THE FOREIGN VISITS UNDERTAKEN BY THE OFFICIALS WHICH WAS FOUND TO BE JUSTIFIABLE BY THE LD. CIT(A). WE HOLD IN THIS REGARD THAT, AN ALLOWA BILITY OF CLAIM OF THE ASSESSEE HAS TO BE JUDGED FROM THE VIEW POINT OF THE PRUDENT BUSINESSMAN AND NOT FROM THE VIEW POINT OF THE 48 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. R EVENUE. WE FIND THAT IN THE INSTANT CASE, THE SENIOR EMPLOYEES OF THE ASSESSEE VISITED FOREIGN COUNTRIES IN CONNECTION WITH BUSINESS OF THE APPELLANT. FURTHER, THE SAID EXPENSES HAVE BEEN INCURRED OUT OF COMMERCIAL EXPEDIENCY AND HENCE IT SHOULD BE VIEWED FROM A BUSINESSMAN'S POINT OF VIEW. WE FURTHER NOTE THE ASSESSEE HAD INCURRED SIMILAR FOREIGN TRAVEL EXPENSES IN EARLIER YEA RS ALSO. THE R EVENUE IN THE ASSESSMENTS FRAMED U/S 143(3) HAD ACCEPTED THE SAME TILL ASSESSMENT YEAR 2009 - 10 BY ALLOWING THE SAME AS BUSINESS EXPENDITURE. WHEN THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE DURING THE YEAR UNDER APPEAL, THEN THERE IS NO NEED FOR THE REVENUE TO TAKE A DIFFERENT STAND IGNORING THE PRINCIPLE OF CONSISTENCY. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RADHASAOMI SATSANG VS. CIT REPORTED IN 193 ITR 321 (SC). 39. IN VI EW OF THE AFORESAID FINDINGS AND RESPECTFULLY FOLLOWING THE RATIO OF THE AFORESAID DECISIONS WE DIRECT UPHOLD THE LD. CIT(A)S ORDER DELETING THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF RS. 10,35,175/ - . GROUND NOS. 4 & 5 ARE THEREFORE DISMISSED. 40. GR OUND NO. 6 RAISED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A) DELETING THE FURTHER DISALLOWANCE OF RS.1,15,45,436/ - MADE BY THE A.O. UNDER SECTION 14A OF THE ACT READ WITH R ULE 8D OF THE INCOME TAX RULES, 1962 . BRIEFLY STATED THE FACTS OF THE CAS ES ARE THAT DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE DERIVED DIVIDEND INCOME TO THE TUNE OF RS. 5,86,286 / - WHICH WAS EXEMPT UNDER SECTION 10(34) OF THE ACT. FOR EARNING THE EXEMPT INCOME, THE ASSESSEE HAD OFFERED DISALLOWANCE OF RS. 6,05,290 / - UNDER S ECTION 14A IN THE RETURN OF INCOME. IN THE ASSESSMENT PROCEEDINGS, THE A.O. DID NOT ACCEPT THE DISALLOWANCE OFFERED BY APPELLANT. INSTEAD HE INVOKED AND APPLIED THE PROVISIONS OF RULE 8D AND MADE THE FOLLOWING DISALLOWANCE: 1. RULE 8D(2)(I) EXPENSES OFFERED BY ASSESSEE RS.6,05,290/ - 2 . RULE 8D(2)(II) INTEREST EXPENSES RS. 1,03,65,947 / - 3 . RULE 8D(2)(III) ADMINISTRATIVE EXPENSES RS.5,47,199 / - TOTAL RS. 1,15,45,436 / - 49 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. 41. AGGRIEVED BY THE ORDER OF THE ACTIO N OF THE A.O., THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO DELETED THE SAID DISALLOWANCE . AGGRIEVED THE REVENUE IS NOW IN APPEAL BEFORE US. 42. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WITH REGARD TO THE DISALLOWANCE OF PROPORTIONATE INTEREST UNDER RULE 8D(2)(II), THE LD. CIT, DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE HAD FAILED TO ESTABLISH THAT THE INTEREST BEARING BORROWINGS WERE NOT UTILIZED TO MAKE INVESTMENTS. HE THUS CONTENDED THAT THE INTEREST DISALLOWANCE BE CONFIRMED. PER CONTRA THE LD AR CONTENDED THAT THE INVESTMENTS WERE MADE BY THE ASSESSEE - COMPANY OUT OF ITS OWN FUNDS WHICH WAS SUFFICIENT TO COVER THE COST OF INVESTMENT AND THAT NO INTEREST BEARING BORROWE D FUNDS WERE UTILIZED TO MAKE INVESTMENT WHICH YIELDED THE EXEMPT INCOME. FOR BUTTRESSING THIS ARGUMENT, THE LEARNED AR DREW OUR ATTENTION TO THE AUDITED ACCOUNTS WHICH WE NOT AS UNDER: PARTICULARS 31.03.2011 31.03.2010 SHARE CAPITAL 49,500,700 49 ,500,700 RESERVES & SURPLUS 548,786,267 414,379,688 OWN FUNDS 598,286,967 463,880,388 INVESTMENTS 89,096,000 91,000,000 43. THUS WE NOTE THAT THE ASSESSEE IN FACT HAD OWN FUNDS TO THE TUNE OF RS. 5982.66 LACS AND THE INVESTMENT IS ONLY RS. 890 .96 LACS . THE LEARNED AR PLACED RELIANCE ON THE JUDGMENT OF THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF CIT VS RASOI LTD. (ITA 109 OF 2016 DATED 15.02.2017) AND HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS HDFC BANK (383 ITR 529) AND RELIANCE UTILITIES AND POWER LTD. (313 ITR 340). 44. WE NOTE THAT THE ASSESSEE HAD OWN FUNDS OF RS. 5982.66 LACS AND THE INVESTMENTS WERE ONLY TO THE TUNE OF RS. 890.96 LACS AT THE END OF THE YEAR. FROM THIS FIGURES WE FIND THAT THE ASSESSEE HAD AT ITS DISPOSALS S UFFICIENT FUNDS TO MAKE THE INVESTMENT WHICH YIELDED EXEMPT INCOME. WE FURTHER NOTE THAT IN THE PAST YEARS, THE DEPARTMENT DID NOT DISPUTE THE FACT THAT THE INVESTMENTS WERE MADE OUT OF OWN FUNDS. WE NOTE THAT IN A.Y. 2010 - 11, IN 50 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. WHICH RULE 8D WAS APPLICAB LE , THE REVENUE DID NOT INVOKE THE SAME. IT WAS NOT DISPUTED THAT INVESTMENTS WERE OUT OF OWN FUNDS AND NOT FROM BORROWED FUNDS AND ACCORDINGLY NO INTEREST DISALLOWANCE WAS MADE BY THE AOS PREDECESSOR. WE THEREFORE RELY ON THE JUDGMENT OF THE HON'BLE CALC UTTA HIGH COURT IN THE CASE OF CIT VS RASOI LTD. (SUPRA) WHEREIN THE HON'BLE HIGH COURT TAKING NOTE OF THE JUDGMENT PASSED BY THE CO - ORDINATE BENCH OF THE CALCUTTA HIGH COURT IN DHANUKA & SONS 339 ITR 319 HELD AS UNDER: 'IT APPEARS FOR BOTH THE ASSESSMENT YEARS THE APPELLATE AUTHORITY HELD THAT THERE WAS NO FINDING OF DIRECT NEXUS BETWEEN THE BORROWED FUND AND INVESTMENT IN SHARES. THE ASSESSEE'S OWN FUNDS WERE FAR IN EXCESS OF THE AVERAGE TOTAL INVESTMENTS. THERE COULD NOT BE ANY PRESUMPTION OF UTILIZATIO N OF BORROWED FUNDS. HENCE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D (2 ) (II) WAS DELETED WHILE DISALLOWANCE OF INDIRECT EXPENSES OF RS.1,82,346/ - BY APPLICATION OF RULE 8D(2) (III)UPHELD WITH THE DIRECTION TO ALLOW RELIEF OF THE SUM ALREADY DISAL LOWED BY THE APPELLANT ITSELF. ON APPEAL PREFERRED BY THE REVENUE THE TRIBUNAL HELD AS FOLLOWS: - WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT NOW THE REVENUE COULD NOT ESTABLISH THAT THE INVESTMENTS MADE IN SHARES GIVING EXEMPTED INCOME IS OUT OF BORROWED FUNDS ON WHICH INTEREST IS PAID BY ASSESSEE. THERE IS NO NEXUS WHATSOEVER. ON SPECIFIC QUERY LD. SR. DR COULD NOT CONTROVERT THAT THE ASSESSEE HAS MADE IN INVESTMENT IN SHARES GIVING EXEMPT INCOME OU T OF OWN FUNDS WHICH IS AT ABOUT 2429 LACS AND INVESTMENT IS AT RS.365 LACS ONLY. ONCE THIS FACT HAS NOT BEEN DENIED AND CIT(A) HAS CATEGORICALLY OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENT IN SHARES OUT OF ITS OWN FUNDS NO DISALLOWANCE CAN BE ATTRIBUTE D QUA THE INTEREST PAID ON BORROWED FUNDS FOR INVESTING THE SAME IN INTEREST FREE FUNDS. IN VIEW OF THE ABOVE, WE CONFIRM THE ORDER OF CIT (A) ON THE COMMON ISSUE. WE FIND THAT THIS CASE HAS YIELDED CONCURRENT FINDING OF FACTS REGARDING EXPENDITURE INCURR ED BY THE ASSESSEE FOR THE PURPOSE OF EARNING THE EXEMPT INCOME, BY THE APPELLATE AUTHORITY AND THE TRIBUNAL. AS SUCH THERE IS NO SCOPE FOR INTERFERENCE WITH SUCH CONCURRENT FINDINGS OF FACTS. WE, THEREFORE, ARE NOT SATISFIED THAT THE CASE INVOLVES ANY SUB STANTIAL QUESTION OF LAW. THE APPLICATION AND APPEAL ARE THUS DISMISSED. 45. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE S OF RELIANCE UTILITIES AND POWER LTD. (SUPRA) AND CIT VS HDFC BANK LTD (SUPRA). FOLLOWING THE AFORES AID RATIO DECIDENDI OF THE ABOVE JUDGMENTS, WE FIND THAT THE OWN FUNDS OF THE ASSESSEE ARE SUFFICIENT TO MAKE THE COST OF THE INVESTMENTS WHICH YIELDED EXEMPT INCOME. 51 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. THE A.O. HAS NOT BROUGHT ANYTHING ON RECORD WHICH PROVES THAT THE INVESTMENT WAS MADE OUT OF THE BORROWED FUNDS. WE ARE, THEREFORE, OF THE VIEW THAT THE INVESTMENT MADE OUT OF THE ASSESSEE'S OWN FUNDS AND ACCORDINGLY UPHOLD THE ORDER OF THE LD. CIT(A) DELETING THE INTEREST DISALLOWANCE OF RS. 1,03,65,947 / - MADE BY THE AO UNDER SECTION 14A READ WITH RULE 8D(2)(II). 46. NOW COMING TO THE DISALLOWANCE OF RS. 5,47,199/ - MADE UNDER RULE 8D(2)(III), THE REPRESENTATIVES OF BOTH THE PARTIES FAIRLY AGREED THAT THE DISALLOWANCE U/S 14A CANNOT UNDER ANY CIRCUMSTANCE EXCEED THE DIVIDEND EARNED BY THE ASSESS EE WHICH WAS RS. 5,86,286 / - . RELIANCE IN THIS REGARD IS PLACED ON THE DECISION THE HON'BLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS (P) LTD VS CIT ( 372 ITR 694 ). SINCE THE ASSESSEE ITSELF HAD VOLUNTARILY DISALLOWED A SUM OF RS .6,05,290 / - , WE HOLD T HAT NO FURTHER DISALLOWANCE IS WARRANTED U/S 14A OF THE ACT READ WITH RULE 8D(2)(III). THIS GROUND OF THE REVENUE THEREFORE STANDS DISMISSED . 47. GROUND NOS. 7 TO 11 TAKEN BY THE REVENUE ARE AGAINST THE ACTION OF THE LD. CIT(A) GRANTING PARTIAL RELIEF OF RS.6,43,29,138/ - BEING DEDUCTION CLAIMED U/S 80IB(10) IN RESPECT OF PHASE - I OF HIG LUXURY ZONE. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL AVAILABLE ON RECORD, WE FIND THAT ALL THE MATERIAL FACTS RELEVANT TO THIS ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS THE ARGUMENTS RAISED BY BOTH THE SIDES ARE SIMILAR TO THAT OF A.Y. 2010 - 11 . THE CONCLUSION DRAWN ON THIS ISSUE IN OUR ORDER FOR THE A.Y. 2010 - 11 SHALL APPLY MUTATIS MU TANDIS IN THIS YEAR AS WELL. WE THEREFORE UPHO LD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THESE GROUNDS OF APPEAL RAISED BY THE REVENUE. 48 . IN THE RESULT, THE BOTH APPEAL S OF THE REVENUE ARE DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH , OCTOBER 2019 . SD/ - SD/ - DR. ARJUN LAL SAINI A.T. VARKEY ACCOUNTANT ME MBER JUDICIAL MEMBER DATED 18 - 10 - 2019 52 I.T.A NO .1514/KOL/2015 & ITA NO. 1515/KOL/2015 A.YS 2010 - 11 & 2011 - 12 M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ REVENUE: THE DCIT, CIRCLE 12( 1), P - 7 CHOWRINGHEE SQ., AAYKAR BHAWAN, 7 TH FL., KOLKATA - 69. 2 RESPONDENT/ ASSESSEE: M/S. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VISHWAKARMA86C TPOSIA ROAD (S), KOLKATA - 46. 3. CIT, 4. CIT(A), KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA ** PP/SPS TRUE COPY BY BY ORDER ASSISTANT REGISTRAR ITAT KOLKATA