Pushkar Construction Co., Ahmedabad V. The Income tax Officer,Ward-9(1), Ahmedabad

ITA 1544/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94299 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Assessee Lawyers: P M MEHTA
• Keywords: Retrospective amendment; Question of law; Initiation of penalty proceedings; Non-deduction of tax
• Section: 143(3); 234B; 80IB; 194C; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI S.S. GODA RA, J.M.) I.T. A. NO. 1544/AHD/2010 (ASSESS MENT YEAR: 2006-07) PUSHKAR CONSTRUCTION CO. AMBICA NIWAS, NEAR UMA SOCIETY, PALDI, AHMEDABAD 380007 V/S THE I.T.O., WARD-9(1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAIFP1527B APPELLANT BY : SHRI P.M. MEHTA RESPONDENT BY : SHRI D.C. MISHRA, SR. D.R. ( )/ ORDER DATE OF HEARING : 07-07-2015 DATE OF PRONOUNCEMENT : 28 -08-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-XV, AHMEDABAD DATED 24.02.2010 FOR A.Y. 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF CONSTRUCTION OF HOUSING PROJECT. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 2 2006-07 ON 20.10.2006 DECLARING TOTAL INCOME OF RS. NIL AFTER CLAIMING DEDUCTION OF RS. 62,83,272/- U/S. 80IB(10). THE CAS E WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) VIDE ORDER DATED 26.12.2008 AND THE TOTAL INCOME WAS DET ERMINED AT RS. 1,07,31,760/-. AGGRIEVED BY THE ORDER OF A.O., ASS ESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 24.02.2010 D ISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF L D. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND THE GROUNDS RAISED BY T HE ASSESSEE WHICH HAVE BEEN SUBSEQUENTLY CONCISED, READS AS UNDER:- 1.IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XV [HEREINAFTE R REFERRED TO AS 'CIT(A)'], IS BAD IN LAW AND DESERVES TO BE CANCELLED, AS SHE HAS PAS SED AN ORDER WITHOUT CONSIDERING AND APPRECIATING THE FACTS OF CASE OF APPELLANT. 2.1 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE FOR DEDUCTION U/S. 80IB(10) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS 'THE ACT') AMOUNTING TO RS. 62,83,272/-, WHEN SHE OUGHT TO HAVE ALLOWED THE CLAIM OF THE APP ELLANT. 2.2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THE APPELLANT HAS NOT FULFILLED CONDITIONS U/S. 80IB (10) (B) & (C) OF THE ACT, WITHOUT CONSIDERING THE SUBMI SSION BY THE APPELLANT AND CERTAIN IMPORTANT OBSERVATIONS IN THE DVO'S REPORT, AS HIGH LIGHTED BY THE APPELLANT. 2.3 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE, THE CIT(A) SHOULD HAVE REALIZED THAT AS APPELLANT HAS SATISFIED ALL T HE CONDITIONS LAID DOWN U/S. 801B(10) OF THE ACT, DEDUCTION U/S. 80IB CANNOT BE DENIED. 3.IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 39,00,000/-, ON ACCOUNT OF ALLEGED LATE DEDUCTION TAX AT SOURCE FROM SOME PAYMENTS, BY WRON GLY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE SAME NEEDS TO BE DELETED. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE, THE CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 5,48,483/-, ON ACCOUNT OF ALLEGED NON DEDUCTION TAX AT SOURCE FROM SOME PAYMENTS, BY WRON GLY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE SAME NEEDS TO BE DELETED. 5.IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE CHARGING OF INTEREST U/S. 234B OF THE ACT, AMOUNTING TO RS. 11,92,063/-, WHEN NO SUCH INTEREST IS CHARGEABLE IN THE APPELLANT'S CASE. THE APPELLANT DENIES ITS LIABILITY TO PAY INTEREST. 6.IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE CIT (A) HAS GROSSLY ERRED IN NOT ENTERTAINING THE GROUND AGAINS T THE INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C). ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 3 1 ST GROUND IS NOT PRESSED AND THEREFORE THE SAME IS DI SMISSED AS NOT PRESSED. 4. GROUND NO. 2 AND ITS SUB GROUNDS ARE WITH RESPECT T O DENYING THE DEDUCTION U/S. 80IB(10). 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD ENTERED INTO 3 DEVELOPMENT AGREEMENTS ON VARIOUS DA TES FOR THE CONSTRUCTION OF HOUSING PROJECT THOUGH THE LAND OWN ERS WERE SAME IN THE 3 DEVELOPMENT AGREEMENTS. HE ALSO NOTICED THAT ASSESS EES ENTERING INTO 3 DEVELOPMENT AGREEMENTS CANNOT BE CONSIDERED TO BE F OR ONE HOUSING PROJECT AND THE APPROVAL AND B.U PERMISSION GRANTE D BY THE LOCAL AUTHORITIES FOR VARIOUS BLOCKS WERE DIFFERENT. HE WAS THEREFORE OF THE VIEW THAT THE HOUSING PROJECT CARRIED OUT BY THE ASSESSEE WERE ON 3 DIFFERENT PROJECTS AND NOT IN ONE PROJECT AND IN ALL THE 3 DEVELOPMENT AGR EEMENTS, THE LAND WAS BELOW 1 ACRE FOR EACH PROJECT. A.O WAS OF THE VIEW THAT TO CLAIM DEDUCTION UNDER 80IB(10), THE PROJECT SHOULD BE ON THE SIZE O F A PLOT OF LAND WHICH HAS A MINIMUM AREA OF 1 ACRE AND SINCE THE AFORESAID CO NDITION WAS NOT FULFILLED BY THE ASSESSEE, THE ASSESSEES CLAIM OF DEDUCTION UNDER 80IB(10) OF RS. 62,83,272/- WAS DISALLOWED BY THE A.O. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO U PHELD THE ORDER OF A.O BY HOLDING AS UNDER:- 12. AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEE N THAT THE APPELLANT ENTERED INTO 3 DEVELOPMENT AGREEMENTS ON THREE DIFFERENT DATES FOR THREE PLOTS OF LAND EACH BELOW 1 ACRE: SR. NO. DATE OF AGREEMENT PLOT AREA 1 08.10.2004 1463 SQ. MTR. 2 14.12.2005 1608.21 SQ. MTR. ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 4 3 20.03.2006 1544 SQ. MTR. AMC GAVE PERMISSIONS ON DIFFERENT DATES FOR CONSTRU CTION OF DIFFERENT BLOCKS. BUILDING USE PERMISSION WAS ALSO GIVEN ON DIFFERENT DATES AS OBVIOUS FROM THE TABLE BELOW GIVEN IN THE ASSESSMENT ORDER: SR. NO. DATE OF PERMISSION/REVISED DATE OF B.U PERMISSION BLOCK UNIT 1 17.12.2004/21.02.2006 30.06.2006 A 40 2 19.10.2005 20.12.2006 B 30 3 21.02.2006 18.07.2007 C 40 4 30.03.2007 29.11.2007 B-2 15 THE ABOVE TABLES SHOW THAT TO CLAIM DEDUCTION U/S 8 0IB (10) THE APPELLANT TREATED DIFFERENT BLOCKS OF APARTMENTS ON DIFFERENT PIECES OF LAND AS ONE PROJECT, THOUGH EACH PIECE OF LAND WAS BELOW I ACRE TO BEGIN WITH. THUS THE CONDITION STIPULATED IN SECTION 80 IB (10 )( B) IS NOT FOUND FULFILLED. 13. THE CONDITION WITH RESPECT TO 1500 SQ. FT. LIM IT FOR EACH RESIDENTIAL FLAT WAS NOT FOUND FULFILLED ON THE DATE OF INSPECTION OF THE DVO I.E. 24.8.2009. IT IS COMMON KNOWLEDGE THAT CHANGES IN FLATS ARE ALWAYS IN CONNIVANCE WITH THE BUILDER. ON ONE HAND THE APPELLANT IS STATING THAT NO CHANGES CAN BE UNDERTAKEN EVEN BY T HE BUYERS WITHOUT APPROVAL OF THE LOCAL AUTHORITY AND WITHOUT OBTAINING PROPER PERMIS SIONS WHILE ON THE OTHER HAND IT HAS NOT PRODUCED ANY PROOF THAT ANY SUCH PERMISSIONS / APPROVALS WERE OBTAINED BY IT OR BY THE BUYERS OF THE FLATS - FIRUZA J PATEL, JAMSHED P ATEL, FARHAD J PATEL AND FREDDY J PATEL. THE FACT IS ONE ENTIRE FLOOR WAS GIVEN KNOWI NGLY TO A FAMILY AND IT WAS IN THE APPELLANT'S FULL CONSCIOUSNESS THAT THE FLATS WOULD BE ADJUSTED OR FROM FOUR WOULD BE TURNED INTO TWO FLATS. THAT THE APPELLANT WAS NOT A PARTY OR IT WAS NOT DONE BY IT HAS NOT BEEN PROVED. 14. DURING THE COURSE OF APPELLATE PROCEEDINGS THE ID.AR IN THE PRESENCE OF THE AO PLEADED THAT EVEN IF TWO FLATS WERE MADE INTO ONE O N THE TOP FLOOR OF BLOCK C THEN TOO 1500 SQ.FT. LIMIT DID NOT EXCEED. THIS ARGUMENT IS NOT FACTUALLY CORRECT BECAUSE THE BU PERMISSION FOR BLOCK C DATED 9.7.2007 (ENCLOSED AS ANNEXURE-2 OF THIS ORDER) SHOWS ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 5 599.44 SQ.MTS BUILT-UP AREA FOR 8 RESIDENTIAL UNITS ON FOURTH FLOOR I.E. THE TOP FLOOR PLUS STAIR CABIN 62.83 SQ.MTRS. EVEN IF THE AREA OF STAI R CABIN IS EXCLUDED BUILT-UP AREA OF ONE UNIT COMES TO 74.93 SQ.MTRS. (599.44 SQ.MTR DIVIDED BY 8 UNITS) 1 SQ.MTR = 10.76 SQ.FT., THEREFORE 79.93 SQ.FT X 10 .76 = 806.24 SQ.FT. AND TWO SUCH UNITS CONSTITUTE 1612.49 SQ.FT, THUS EXCEEDING 1500 SQ.FT . LIMIT. THUS IN MY VIEW AS FOUND BY THE DVO ON THE DATE OF INSPECTION I.E. 24.8.2009 THE CONDITION 80IB(10)(C) OF 1500 SQ.FT. LIMIT FOR EACH RESIDENTIAL FLAT CONSTRUCTED IN THE PROJECT WAS NOT FOUND FULFILLED, AS IN BLOCK C TWO FLATS INSTEAD OF FOUR WERE FOUND BY THE DVO. AS CONDITIONS 80IB(10)(B) & (C) ARE FOUND VIOLATED THE DENIAL OF 80IB(10) BY THE AO IS UPHELD. 6. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT ASSESSEES PROJEC T NAMED PUSHKAR RESIDENCY WAS APPROVED BY AHMEDABAD MUNICIPAL CORP ORATION (AMC) WITH PLOT AREA OF 4717 SQ. MTRS, WHICH IS EQUIVALEN T TO 1.166 ACRES IN ITS FIRST APPROVAL DATED 19.10.2005. HE POINTED TO LAY OUT PL AN OF THE PROJECT PLACED AT PAGE 2/2 OF THE PAPER BOOK AND FROM IT, HE POINT ED THAT THE AMC NOT ONLY RECOGNIZED THE PLOT AREA TO BE 4717 SQ. MTRS. BUT A LSO RECOGNIZED THAT THE PROJECT CONSIST OF MORE THAN ONE BLOCKS NAMELY BLOC K-A, B & C. HE FURTHER SUBMITTED THAT ASSESSEE HAD ENTERED INTO 3 DEVELOPM ENT AGREEMENTS AND OBTAINED PERMISSION FROM AMC TO BEGIN CONSTRUCTION ON DIFFERENT DATES FOR DIFFERENT BLOCKS OF THE PROJECT SINCE IT WAS REQUIR ED TO MAKE THE PAYMENT OF SUBSTANTIAL AMOUNT OF CHARGES TO LOCAL AUTHORITIES FOR GETTING PERMISSION FOR CONSTRUCTION AND IN ORDER TO AVOID FINANCIAL SQUEEZ E, ASSESSEE HAD CARRIED ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 6 OUT THE CONSTRUCTION OF THE PROJECT IN A PHASED MAN NER. HE THEREFORE SUBMITTED THAT THE PROJECT REMAINED AS A ONE WHOLE PROJECT ONLY. WITH RESPECT TO LD. CITS OBSERVATION THAT IN BLOCK-C ON THE 5 TH FLOOR, ASSESSEE HAD CONSTRUCTED ONLY 2 FLATS, THE AREA OF WHICH EXC EEDED 1500 SQ. FT, HE SUBMITTED THAT LD. CIT(A) HAD RELIED UPON DVOS REP ORT WHICH IS DATED 17.11.2009. HE SUBMITTED THAT THE DATE OF INSPECTIO N BY DVO WAS 24.08.2009 WHEREAS THE DATE OF LAST B.U PERMISSION WAS DATED 29.11.2007 I.E. INSPECTION BY DVO WAS MUCH AFTER THE COMPLETIO N OF PROJECT. HE THUS SUBMITTED THAT ASSESSEE HAD CONSTRUCTED 4 FLATS EAC H HAVING SIZE OF LESS THAN 1500 SQ. FT. AND THE SAME WERE SOLD TO SEPARATE PER SONS THROUGH SALE DEEDS AND THE BUYERS OF THOSE FLATS HAVE ALSO GIVEN THEIR CONFIRMATIONS AND HAVE ALSO CONFIRMED THAT LATER ON AFTER RECEIVING THE PO SSESSION THEY HAD CLUBBED THE FLATS FROM TWO UNITS TO ONE UNIT EACH AFTER THE PURCHASE OF FLATS FROM THE ASSESSEE. HE THEREFORE SUBMITTED THAT ONCE THE ASSE SSEE HAS HANDED OVER THE POSSESSION OF THE FLATS TO THE BUYERS AND IF LATER ON THE BUYERS CLUBBED OR COMBINES THE UNIT, THE ASSESSEES CLAIM OF DEDUCTIO N U/S. 80IB(10) CANNOT BE DENIED. LD. A.R. ALSO POINTED TO THE CONFIRMATIONS OF THE SALE DEED OF THE 4 FLATS WHICH ARE PLACED AT PAGE 196 TO 259 OF THE PA PER BOOK AND ALSO POINTED TO THE CONFIRMATION OF THE PURCHASERS OF FLAT WHICH IS PLACED AT PAGE 133 TO 136 OF THE PAPER BOOK WHEREIN THE INDIVIDUAL PURCHA SERS HAVE CONFIRMED THAT THEY HAD ORIGINALLY PURCHASED THE FLAT SEPARATELY A ND INTERNAL CHANGES TO THE FLATS WERE CARRIED OUT LATER ON AND THE ADJACENT FL ATS WERE COMBINED BY THEM. HE THEREFORE SUBMITTED THAT A.O BE DIRECTED TO ALLO W THE DEDUCTION U/S. 80IB(10). THE LD. D.R ON THE OTHER HAND SUPPORTED T HE ORDER OF A.O AND LD. CIT(A). ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 7 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DEDU CTION U/S. 80IB(10) OF THE ACT WHICH WAS DENIED BY THE A.O FOR THE REASON THAT THE PLOT SIZE OF THE LAND ON WHICH THE PROJECT WAS UNDERTAKEN WAS LESS THAN 1 ACRE. FROM THE COPY OF THE LAY OUT PLAN DATED 19.10.2005 WHICH HAS BEEN CE RTIFIED BY THE AMC, IT IS SEEN THAT THE TOTAL PROJECT BY AMC HAS BEEN APPROVE D FOR 3 BLOCKS NAMELY BLOCK-A, B & C FOR THE TOTAL PLOT AREA OF 4615.21 S Q. MTRS. THE TOTAL AREA OF THE LAND ON WHICH THE ASSESSEE HAS CARRIED OUT THE CONSTRUCTION IS NOT IN DISPUTE. THE ISSUE IS WHETHER THE 3 BLOCKS CAN BE C ONSIDERED TO BE OF A SINGLE PROJECT. WE FIND THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTIES REPORTED IN (2013) 353 ITR 36 (B OM) HAD AN OCCASION TO DECIDE ON THE ISSUE OF DEDUCTION U/S. 80IB(10) WHER EIN IT HAS HELD THAT THE EXPRESSION HOUSING PROJECT IS NEITHER DEFINED UND ER SECTION 2 OF THE ACT NOR UNDER SECTION 80IB(10) OF THE ACT AND THEREFORE THE EXPRESSION HOUSING PROJECT IN SECTION 80IB(10) WOULD HAVE TO BE CONST RUED AS COMMONLY UNDERSTOOD HOUSING PROJECT IN COMMON PARLANCE AND IT WOULD MEAN CONSTRUCTING A BUILDING OR GROUP OF BUILDINGS CONSI STING OF SEVERAL RESIDENTIAL UNITS. IT FURTHER, AT PARA 26 HAS NOTED AS UNDER:- 26. HOW EVER, IN THE ABSENCE OF DEFINING THE EXPRESSION 'HO USING PROJECT' AND IN THE ABSENCE OF SPECIFYING THE SIZE OR THE NUMBER OF HOUSING PROJECTS REQUIRED TO BE CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE, EVEN ONE HOUSING PROJECT CONTAINING MULTIPLE RESIDENTIAL UNI TS OF A SIZE NOT EXCEEDING 1000 SQUARE FEET CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM A REA OF ONE ACRE WOULD BE ELIGIBLE FOR SECTION 80IB (10) DEDUCTION. IF THE CONSTRUCTION OF SECTION 80IB (10) PUT FORTH BY THE REVENUE IS ACCEPTED, IT WOULD MEAN THAT IF ON A VAC ANT PLOT OF LAND, ONE HOUSING PROJECT FULFILLING ALL CONDITIONS IS UNDERTAKEN, THEN DEDUC TION WOULD BE AVAILABLE TO THAT HOUSING PROJECT AND IF THEREAFTER SEVERAL OTHER HOUSING PRO JECTS ARE UNDERTAKEN ON THE VERY SAME PLOT OF LAND, THE DEDUCTION WOULD NOT BE AVAILABLE TO THOSE HOUSING PROJECTS AS THE PLOT ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 8 CEASES TO BE A VACANT PLOT AFTER THE CONSTRUCTION O F THE FIRST HOUSING PROJECT. SUCH A CONSTRUCTION IF ACCEPTED WOULD DEFEAT THE OBJECT WI TH WHICH SECTION 80IB (10) WAS ENACTED. 27. MOREOVER, PLAIN READING OF SECTION 80IB (10) DO ES NOT EVENREMOTELY SUGGEST THAT THE PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE MUST B E VACANT. THE SAID SECTION ALLOWS DEDUCTION TO A HOUSING PROJECT (SUBJECT TO FULFILLI NG ALL OTHER CONDITIONS) CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND IT IS IMMATERIAL AS TO WHETHER ANY OTHER HOUSING PROJECTS ARE EXISTING ON THE SAID PLO T OF LAND OR NOT. IN THESE CIRCUMSTANCES, CONSTRUING THE PROVISIONS OF SECTION 80IB (10) BY A DDING WORDS TO THE STATUTE IS WHOLLY UNWARRANTED AND SUCH A CONSTRUCTION WHICH DEFEATS T HE OBJECT WITH WHICH THE SECTION WAS ENACTED MUST BE REJECTED. 29. THEREFORE, IT IS CLEAR THAT ON A PLOT OF LAND HAVIN G MINIMUM AREA OF ONE ACRE, THERE CAN BE ANY NUMBER O F HOUSING PROJECTS AND SO LONG AS THOSE HOUSING PROJECTS ARE APPROVED BY THE LOCAL AU THORITY AND FULFILL THE CONDITIONS SET OUT UNDER SECTION 80IB (10), THE DEDUCTION THEREUND ER CANNOT BE DENIED TO ALL THOSE HOUSING PROJECTS. SECTION 80IB (10) WHILE SPECIFYIN G THE SIZE OF THE PLOT OF LAND, DOES NOT SPECIFY THE SIZE OR THE NUMBER OF HOUSING PROJECTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A PLOT HAVING MINIMUM AREA OF ONE ACRE. AS A RESULT, SIGNIFICANCE OF THE SIZE OF THE PLOT OF LAND IS LOST AND, THEREFORE, THE ASSESSEE SUBJECT T O FULFILLING OTHER CONDITIONS BECOMES ENTITLED TO SECTION 80IB (10) DEDUCTION ON CONSTRUC TION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE ACRE, IRRESPECTIVE OF THE FACT T HAT THERE EXIST OTHER HOUSING PROJECTS OR NOT. IN THESE CIRCUMSTANCES, THE DECISION OF THE TR IBUNAL IN REJECTING THE CONTENTION OF THE REVENUE REGARDING THE SIZE OF THE PLOT CANNOT BE FA ULTED. 9. SUBSEQUENTLY, WE HAVE ALSO COME ACROSS THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. VOORA PROPERTY DE VELOPERS P. LTD. REPORTED IN (2015) 373 ITR 317 (MAD), WHERE THE HON BLE HIGH COURT AFTER REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH CO URT IN THE CASE OF VANDANA PROPERTIES (SUPRA) DECIDED THE ISSUE AND TH E HEAD NOTES READS AS UNDER:- ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 9 HOUSING PROJECT SPECIAL DEDUCTION CONDITION PRECEDENT PLOT MUST HAVE MINIMUM AREA OF ONE ACRE COMPOSITE HOUSING SCHEME CONSISTING OF SIX BLOCKS I N AREA EXCEEDING ONE ACRE HOUSING PROJECT APPROVED UNDER DEVELOPMENT CONTROL RULES THAT SEPARATE PLAN PERMITS OBTAINED FOR SIX BLOCKS NOT GROUND FOR DENIAL OF DEDUCTION -A SSESSEE ENTITLED TO DEDUCTION I NCOME -TA X A CT , 1961, S . 80IB(10). 10. THUS, IN LIGHT OF THE DECISION CITED HEREINABOVE, W E ARE OF THE VIEW THAT ASSESSEE CANNOT BE DENIED DEDUCTION U/S. 80IB(10) O N THE GROUND THAT THE AREA OF PROJECT IS LESS THAN 1 ACRE AND MORE SO WHE N REVENUE HAS NOT DISPUTED ABOUT THE FULFILLMENT OF OTHER CONDITIONS STIPULATED U/S. 80IB(10) BY THE ASSESSEE. 11. AS FAR AS DENIAL OF DEDUCTION ON THE GROUND OF FLAT SIZE BEING IN EXCESS OF 1500 SQ. FT. IS CONCERNED, WE FIND THAT THE ASSESSE E HAD SOLD 4 FLATS NAMELY C-401, 402, 403 AND 404 TO 4 DIFFERENT PURCHASERS V IDE SEPARATE SALE DEEDS WHICH HAVE ALSO BEEN CONFIRMED BY THE RESPECTIVE PU RCHASERS AND AT THE TIME OF ITS SALE EACH FLAT WAS LESS THAN 1500 SQ. FT. IT IS ALSO A FACT THAT THE INSPECTION WAS CARRIED OUT BY THE DVO SUBSEQUENT AN D MUCH AFTER THE DATE WHEN ASSESSEE HAD HANDED OVER THE POSSESSION TO RES PECTIVE OWNERS OF THE FLAT. THE RESPECTIVE OWNERS HAVE ALSO CONFIRMED BY CARRYING OUT THE MODIFICATION IN THOSE FLATS AND COMBINING THOSE 4 F LATS INTO 2 FLATS. IN SUCH A SITUATION THE ACT OF THE PURCHASERS OF FLATS OF CON VERTING THE 2 FLATS IN TO 1 FLAT RESULTING INTO THE AREA OF ARE COMBINED FLAT BEING EXCESS OF 1500 SQ. FT. CANNOT BE SAID TO BE DONE BY ASSESSEE AND THEREFORE IT CANNOT BE SAID THAT ASSESSEE HAS SOLD FLAT WHOSE AREA WAS IN EXCESS OF 1500 SQ. FT. 12. BEFORE US, REVENUE HAS NOT BROUGHT ANY CONTRARY BIN DING DECISION IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 10 IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) AND THEREFO RE SET ASIDE THE ORDER OF A.O ON THIS GROUND. THUS THIS GROUND OF ASSESSEE IS ALLOWED. GROUND NO. 3 & 4 ARE CONSIDERED TOGETHER AS THEY AR E WITH RESPECT TO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. 13. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT IN CASE OF CERTAIN PARTIES, THOUGH THE ASSESSEE HAD DEDUCTED T DS ON PAYMENTS MADE TO THE SUB CONTRACTORS, BUT THE TDS THAT WAS DEDUCTED WAS NOT DEPOSITED IN THE GOVERNMENT ACCOUNT AS PER THE PROVISIONS OF SECTION 194C OF THE ACT. IN CASE OF PAYMENTS MADE/CREDITED TO THE ACCOUNT BY SH REENATH BUILDERS, A.O NOTICED THAT THE PAYMENTS WERE MADE/CREDITED ON DIF FERENT DATES UP TO 31 ST MARCH, 2006 BUT TDS WAS DEDUCTED ONLY AT THE END OF THE YEAR. A.O WAS OF THE VIEW THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS A T THE TIME OF PAYMENT OR CREDIT WHICHEVER IS EARLIER AND TDS SHOULD HAVE BEE N PAID TO THE GOVERNMENT ACCOUNT WITHIN THE PRESCRIBED TIME. SINC E THE ASSESSEE HAD DEDUCTED THE TAX ON 31 ST MARCH, 2006 ON THE VARIOUS AMOUNTS PAID ON VARIOUS DATES BEFORE 31 ST MARCH, 2006, PROVISIONS OF SECTION 40(A)(IA) WERE APPLICABLE AND ACCORDINGLY HE DISALLOWED THE PAYMEN T OF RS. 39 LACS MADE TO SHREENATH BUILDERS. WITH RESPECT TO THE LABOUR EXPE NSES/TRANSPORT EXPENSES AGGREGATING TO RS. 5,48,483/- PAID TO ANAR BUILDERS PVT. LTD, DAYALKRUPA TRANSPORT AND VIRAL TRANSPORT, A.O NOTICED THAT ASS ESSEE HAD NOT DEDUCTED THE TAX AS PER THE PROVISIONS OF SECTION 194C AND H E ACCORDINGLY HELD THE AMOUNT OF RS. 5,48,483/- AS NOT ALLOWABLE U/S. 40(A )(IA) AND ACCORDINGLY DISALLOWED THE AGGREGATE PAYMENT OF RS. 44,48,483/- (COMPRISING OF RS. 39 LACS AND 5,48,483/-). AGGRIEVED BY THE ORDER OF A.O ., ASSESSEE CARRIED THE ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 11 MATTER BEFORE LD. CIT(A) WHO CONFIRMED THE ORDER OF A.O AND DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING AS UNDER:- 15. GROUND NO.3: THE ID.AO HAS ERRED IN MAKING A DISALLOWANCE OF RS .39,00,000 ON ACCOUNTED OF ALLEGED LATE DEDUCTION TAX AT SOURCE F ROM PAYMENTS BY WRONGLY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). DURING THE COURSE OF APPELLATE PROCEEDINGS IT WAS C ONCEDED THAT THERE WAS LATE DEDUCTION OF TDS. VIDE REPLY DATED 10.8.2009 ANNEXURE 5 WAS E NCLOSED BY THE APPELLANT WHICH IN TURN IS ENCLOSED AS ANNEXURE 3 OF THIS ORDER, WHICH SHOWED THAT ALL PAYMENTS / CR EDITS TOTALING TO RS.39,00,000 WERE MADE TO ONE SHREENATH BUILDERS ON DIFFERENT DATES FROM 1.4.2005 TO 28.2.2006, AND AS PER STATUTORY REQUIRE MENTS TDS SHOULD HAVE BEEN DEPOSITED IN GOVERNMENT ACCOUNT BY 31.3.2006 WHEREA S IT WAS DEPOSITED DEPOSITED ON 31.5.2006. I HAVE THEREFORE NO ALTERNATIVE BUT TO C ONFIRM THE ADDITION MADE BY THE AO U/S.40(A)(IA) OF RS.39,00,000. 16. GROUND NO.4 THE AO ERRED IN MAKING DISALLOWANCE OF RS.5,48,483 ON ACCOUNT OF ALLEGED NON-DEDUCTION OF TAX AT SOURCE U/S.40(A)(IA ), THE FORMAT ENCLOSED BY THE APPELLANT THROUGH ITS REPLY DATED 10.8.2009 WHICH I S ENCLOSED AS ANNEXURE 3 OF THIS ORDER SHOWS NO TDS WAS MADE ON CERTAIN PAYMENTS MAD E TO THE SUB-CONTRACTORS, THEREFORE THE ADDITION MADE BY THE AO IS UPHELD. 14. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US. 15. BEFORE US, LD. A.R. WITH RESPECT TO THE DISALLOWANC E OF PAYMENT OF RS. 39 LACS U/S. 40(A)(IA) MADE TO SHREENATH BUILDERS SUBM ITTED THAT ASSESSEE HAD FILED THE RETURN OF INCOME FOR A.Y. 06-07 ON 20.10. 2006 BUT HAD DEPOSITED THE TAX ON 31 ST MAY, 2006 I.E. BEFORE FILING OF RETURN AND SINCE T HE TDS HAVE BEEN DEPOSITED BEFORE THE FILING OF RETURN, NO DISA LLOWANCE U/S. 40(A)(IA) IS CALLED FOR IN VIEW OF THE AMENDMENT MADE TO SECTION 40(A)(IA) BY FINANCE ACT, 2010 WHERE IT IS HELD THAT THE PROVISIONS OF A MENDMENT HAVE TO BE ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 12 APPLIED RETROSPECTIVELY AND FOR THE AFORESAID SUBMI SSION HE PLACED RELIANCE ON THE DECISION OF GUJARAT HIGH COURT IN THE CASE O F OMPRAKASH CHAUDHARY (T.A NO. 412 OF 2013). WITH RESPECT TO THE PAYMENT OF RS. 2 LAC TO ANAR BUILDERS PVT. LTD. WHICH WAS DISALLOWED BY A.O IS C ONCERNED, HE SUBMITTED THAT THE PAYEE NAMELY ANAR BUILDERS HAS ALREADY FIL ED ITS RETURN OF INCOME WHEREIN THE AMOUNT PAID BY THE ASSESSEE HAS BEEN IN CLUDED AND HAS ALSO PAID TAX ON THE SAME AND SINCE THERE IS NO LEAKAGE OF REVENUE ON ACCOUNT OF NON DEDUCTION OF TDS, NO DISALLOWANCE IS CALLED FOR . WITH RESPECT TO THE PAYMENTS MADE TO DAYAL KRUPA TRANSPORT AND VIRAL TR ANSPORT, THE LD. A.R. SUBMITTED THAT THE PAYMENTS WERE FOR THE SUPPLY OF SAND, WATER ETC. AND NOT FOR CONTRACT AND THEREFORE NO TDS WAS REQUIRED TO B E DEDUCTED. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD . CIT(A). 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DISA LLOWANCE U/S. 40(A)(IA). WITH RESPECT TO THE DISALLOWANCE OF RS. 39 LACS BEI NG THE PAYMENT MADE TO SHREENATH BUILDERS, AND ON PERUSING ANNEXURE-3 OF C ITS ORDER, IT IS SEEN THAT THE TDS WAS DEDUCTED ON 31 ST MARCH, 2006 AND THE SAME WAS DEPOSITED ON 31 ST MAY, 2006 AND THE RETURN OF INCOME WAS FILED BY TH E ASSESSEE ON 20.10.2006. THUS IT IS SEEN THAT THE ENTIRE TDS THA T WAS DEDUCTED BY THE ASSESSEE HAS BEEN PAID TO THE ACCOUNT OF GOVERNMENT BEFORE FILING OF RETURN OF INCOME AND IN SUCH A SITUATION AND IN VIEW OF TH E DECISION OF HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS OMPRAKA SH CHAUDHARY (T.A. NO. 412 OF 2013) ORDER DATED 22.11.2013 NO DISALLO WANCE U/S. 40(A)(IA) IS CALLED FOR. THE RELEVANT OBSERVATION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. OMPRAKASH CHAUDHARY IS AS UNDER:-. ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 13 17. THE CORE ISSUE AS TO WHETHER THE AMENDMENT MADE BY THE FINANCE ACT 2010 TO SECTION 40 [A](IA) OF THE ACT IS RETROSPECTIVE FROM THE DAT E OF INSERTION OF THE PROVISION IE., 1 ST APRIL 2005 THEREFORE NEEDS TO BE ANSWERED IN AFFIRM ATION. IT CAN BE SEEN THAT THE AMENDMENT MADE BY THE FINANCE ACT 2010 ALLOWS ADDIT IONAL TIME UPTO THE DUE DATE OF FILING OF THE RETURN IN RESPECT OF EVEN THOSE INSTA NCES WHERE TDS HAS BEEN DEDUCTED DURING THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR . THE ADDITIONAL TIME TILL THE DUE DATE OF FILING OF THE RETURN, IN CASE OF TDS MADE DURING THE LAST MONTH OF THE PREVIOUS YEAR WAS ALREADY AVAILABLE BY THE AMENDMENT MADE BY FINA NCE ACT 2008. THUS, IT IS APPARENT THAT THE RELAXATION MADE BY THE AMENDMENT MADE UNDE R THE FINANCE ACT, 2010 BRINGS THE LAW IN PARITY WITH THE AFOREMENTIONED SITUATION AND ACCORDINGLY, FOR THE TDS DEDUCTED ALL THROUGHOUT THE YEAR, TIME IS EXTENDED FROM PAYMENT TILL THE FILING OF RETURN. IT IS THUS APPARENT THAT WHEN THE AMENDMENT INTRODUCED BY THE FINANCE ACT, 2008 OF RELAXING THE TIME FOR DEPOSIT OF TDS WAS MADE RETROSPECTIVE FROM THE YEAR 2005 [1 ST APRIL 2005], THE AMENDMENT BY FINANCE ACT 2010 WITH REGARD TO OTHER LIMB OF TIME LIMIT FOR PAYMENT OF TDS HAS TO BE HELD RETROSPECTIVE NOT FROM 1 ST APRIL 2010 ONLY. IF WE RECALL AT THIS STAGE THE SPEECH OF FINANCE MINISTER WHILE INTRODUCING TH IS PROVISION BY WAY OF FINANCE ACT, 2010, THIS AMENDMENT ESSENTIALLY HAS BEEN BROUGHT F OR RELAXING THE CURRENT PROVISION ON DISALLOWANCE OF EXPENDITURE. THE TAX, IF IS DEDUCTE D AT ANY TIME DURING THE FINANCIAL YEAR AND PAID BEFORE THE DATE OF FILING OF THE RETURN, T HE LEGISLATURE INTENDED TO ALLOW DEDUCTION ON SUCH EXPENDITURE WITH AN INTENTION TO PERMIT ADDITIONAL TIME FOR MOST DEDUCTORS UPTO SEPTEMBER OF THE NEXT FINANCIAL YEAR . 17.2 IT CAN BE THUS SEEN THAT THE AMENDMENT TO SECT ION 40 [A](IA) BY THE FINANCE ACT, 2010 IS ONLY AN AMENDMENT IN CONTINUATION OF THE EA RLIER AMENDMENT MADE IN THE FINANCE BILL, 2008 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005. THE LEGISLATURE, WHILE EXTENDING THE TIME FOR PAYMENT OF TDS DEDUCTED IN T HE MONTH OF MARCH TILL DUE DATE OF FILING OF THE RETURN UNDER SECTION 139 (1) OF THE A CT, CONSIDERED THE APPARENT DIFFERENCE WHERE AN UNINTENDED BENEFIT WAS GIVEN TO THE ASSESS EE WHO DEDUCTED THE ENTIRE YEAR'S TDS IN THE MONTH OF MARCH OF THE PREVIOUS YEAR WHIC H WERE ELIGIBLE TO PAY TDS SO DEDUCTED TO THE GOVERNMENT BY DUE DATE OF FILING OF THE RETURN UNDER SECTION 139 (1) OF THE ACT. HOWEVER, THE ASSESSES WHO MAY HAVE DEDUCTE D THE TAX IN EARLIER MONTHS BEGINNING FROM APRIL TO THE END OF FEBRUARY OF THE PREVIOUS YEAR, DID NOT GET SUCH BENEFIT ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 14 OF EXTENDED TIME AND THUS THE SAME WORKED UNREASONA BLY FOR SUCH ASSESSES, AND THEREFORE, IT CAN BE SAFELY HELD UPHOLDING THE CONT ENTION OF THE RESPONDENTS THAT TO CURE SUCH DEFECT, AMENDMENT IN THE YEAR 2010 HAS BEEN BR OUGHT AND THE BENEFIT OF EXTENDED TIME TO AVOID HARDSHIP WAS GIVEN TO THE ASSESSEE AN D THEREFORE, AMENDMENT OF 2010 IS IN CONTINUATION TO THE AMENDMENT OF 2008, AND THEREFOR E, CURATIVE IN NATURE AND THE SAME HAS TO BE HELD RETROSPECTIVE IE., WITH EFFECT FROM 1 ST APRIL 2005. 18. FROM THE DISCUSSION HELD HEREINABOVE, WE ANSWER THE SUBSTANTIAL / QUESTION OF LAW RAISED IN THESE APPEALS IN FAVOUR OF THE ASSESSEE A ND AGAINST THE REVENUE BY HOLDING THE AMENDMENT MADE IN SECTION 40 (A)(IA) OF THE INCOME TAX ACT, 1961 BY THE FINANCE ACT 2010, AS RETROSPECTIVE IN OPERATION, HAVING EFFECT FROM 1 ST APRIL 2005 IE., FROM THE DATE OF INSERTION OF SECTION 40 (A) (IA) OF THE ACT. 17. WITH RESPECT TO THE PAYMENT MADE TO ANAR BUILDERS PVT. LTD., WE FIND THAT THOUGH ASSESSEE HAD SUBMITTED THAT THE PAYEE HAS AL READY INCLUDED THE PAYMENT RECEIVED FROM THE ASSESSEE AS ITS INCOME AN D PAID TAX ON IT BUT WE FIND THAT THERE IS NO FINDING TO THAT EFFECT EITHER BY THE A.O OR LD. CIT(A). IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THE ISSUE NEEDS TO BE RE-EXAMINED AND RE-DECIDED AT THE END OF A.O. IN ACCORDANCE WIT H LAW. 18. WITH RESPECT TO THE SUBMISSION OF THE ASSESSEE IN C ONNECTION WITH THE PAYMENTS MADE TO DAYAL KRUPA AND VIRAL TRANSPORT, W E ARE OF THE VIEW THAT IN THE ABSENCE OF CATEGORICAL FINDING OF A.O OR LD. CIT(A) AND IN THE LIGHT OF THE FACTUAL SUBMISSION MADE BY THE ASSESSEE THE ISS UE NEEDS RE-VERIFICATION. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF A.O F OR VERIFICATION AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT A.O SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE PROMPTLY ALL THE REQUIRED DET AILS CALLED BY THE AUTHORITIES. IN THE RESULT, THE GROUND OF ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ITA NO 1544/ AHD/2010 . A.Y. 2006-0 7 15 19. GROUND NO. 5 IS WITH RESPECT TO CHARGING OF INTERES T U/S. 234B. THIS GROUND BEING CONSEQUENTIAL IN NATURE AND THEREFORE WE DIRE CT THE A.O TO RE- COMPUTED THE INTEREST ON THE INCOME AS MAY BE FINAL LY DETERMINED IN CONSEQUENCES OF THIS ORDER. 20. GROUND NO. 6 IS WITH RESPECT TO INITIATION OF PENAL TY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WHICH IS PREMATURE AND HENCE D OES NOT NEED ANY ADJUDICATION. 21. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 28 - 08 - 2 015. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD