ITO, Ward-16(4), Hyderabad, Hyderabad V. Modi Builders & Realtors Pvt Ltd, Hyderabad, Hyderabad

ITA 1623/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2365 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 01-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H PHANI RAJU
• Assessee Lawyers: S RAMA RAO
• Keywords: Earning of tax free income
• Section: 14A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 1589 & 1590/HYD/2016 ASSESSMENT YEARS: 2011-12 & 2012-13 MODI BUILDERS & REALTORS PVT. LTD., HYDERABAD. PAN AACCM2490D VS. INCOME TAX OFFICER, WARD 16(1), HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 1623/H/2016 AY 2012-13 INCOME TAX OFFICER, WARD 16(1), HYDERABAD VS. MODI BUILDERS & REALTORS PVT. LTD., HYDERABAD. PAN AACCM2490D (APPELLANT) ( RESPONDE NT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI H. PHANI RAJU DATE OF HEARING : 19-06-2017 DATE OF PRONOUNCEMENT : 23-06-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: APPEAL IN ITA NO. 1589/HYD/2016 BY THE ASSESSEE AN D THE APPEALS IN ITA NOS. 1590/HYD/2016 AND 1623/HYD/16 A RE CROSS APPEALS, DIRECTED AGAINST THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (A) - 4 HYDERABAD, ALL, DATED 12/09/2016 FOR AY 2011-12 AND 2012-13. 2 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. ITA NO. 1589/HYD/2016 FOR AY 2011-12 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND FILED I TS RETURN OF INCOME FOR THE AY 2011-12 ADMITTING AN INCOME OF RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THE AO COMPLETED THE ASSE SSMENT BY MAKING ADDITIONS OF RS. 37,51,745/- TOWARDS DEDUCTI ON U/S 80IB(10) AND RS. 4,05,459/- TOWARDS DISALLOWANCE OF EXPENDIT URE U/S 14A AND ASSESSED THE INCOME AT RS. 41,57,204/-. 2.1 THE AO OBSERVED THAT A S PER THE COMPUTATION OF ELIGIBLE PROFITS FOR THE 80IB PROJECTS AND OTHER SUBMISSIONS MADE BY THE ASSESSEE, THE ASSESSEE COMPANY HAD EXECUTED FOUR PROJECTS VIZ ., GREENWOODS, DINDIGUL, SUNSHINE PARK, GHATKESAR, SUNSHINE PARKAM ZEXE, GHATKESAR AND HARMONEY HOMES, SHAMEERPET. THOUGH TH E ASSESSEE HAS EXECUTED 4 PROJECTS AS MENTIONED ABOVE, THE ASS ESSEE HAD MADE PROFITS ONLY FROM THE PROJECT GREENWOODS TO THE TUN E OF RS. 64,83,406/- AND AS SUCH HAS INCURRED LOSSES FROM OT HER PROJECTS. 2.2 THE AO OBSERVED THAT THE RESIDENTIAL IN THE ABO VE PROJECTS ARE INDEPENDENT RESIDENTIAL UNITS/BUNGALOWS, WHICH ARE DUPLEXES SURROUNDED BY A COMPOUND WALL. EACH RESIDENTIAL UNI T, INTER-ALIA, CONSISTS OF A PORTICO AND AN OPEN TERRACE. THE ASSE SSEE COMPANY CLAIMED THE ABOVE PROJECTS AS ELIGIBLE FOR DEDUCTIO N U/S 80IB(10) OF THE ACT AND ACCORDINGLY CLAIMED THE DEDUCTION BY OF FERING PROFITS UNDER PERCENTAGE COMPLETION METHOD. 2.3 FROM THE INFORMATION FURNISHED BY THE ASSESSEE DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE AO NOTICED THAT THE BUILT UP AREA OF THE PROJECTS GREENWOODS AND SUNSHINE PARK ARE IN EXCESS OF 1500 SFT. DURING THE COURSE OF SCRUTINY ASSESSMENT COMPL ETED IN THIS CASE 3 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. FOR THE A.YRS. 2008-09, 2009-10 AND 2010-11 A DETAI LED EXAMINATION OF THIS ASPECT HAS BEEN DONE. 2.4 AFTER GOING THROUGH THE SUBMISSIONS AND THE CAS E LAWS RELIED UPON BY THE ASSESSEE, THE AO CONCLUDED THAT THE ASS ESSEES CASE APPEARS TO BE ONE OF PROJECT INVOLVING MULTIPLE FLO OR CONSTRUCTION. IN THE PRESENT CASE, THE PROJECT INVOLVED CONSTRUCTION OF INDEPENDENT HOUSES/UNITS AND ALSO THE PROJECTIONS AND BALCONIES ARE EXCLUSIVE TO EACH UNIT AND ARE NOT COMMON AREAS SHARED WITH OTHE R RESIDENTIAL UNITS. CONSIDERING THE ACCEPTED RULES OF INTERPRETA TION FOR AN INCLUSIVE DEFINITION THE PORTICO AND OPEN TERRACE, WHOSE AREA S ARE EXCLUDED FOR COMPUTING THE BUILT-UP AREA IN THE CASE OF AMALTAS ASSOCIATES VS. ITO(SUPRA), ARE NOT THE COMMON AREAS SHARED WITH OT HER RESIDENTIAL UNITS IN THE PRESENT CASE. INSTEAD THESE ARE THE AR EAS FORMING PART OF THE INDIVIDUAL RESIDENTIAL UNITS AND AVAILABLE FOR EXCLUSIVE HABITATION OR ENJOYMENT OF THE INHABITANTS OF THE INDIVIDUAL R ESIDENTIAL UNITS. 2.5 FURTHER IN THE SUBMISSIONS MADE BY THE ASSESSEE VIDE LETTER SUBMITTED, THE AO OBSERVED THAT THE ASSESSEE HAS RE LIED ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF M/S CE EBROS HOTELS PVT. LTD., STATING THAT THE DEFINITION OF BUILT UP AREA HAS TO HAVE THE MEANING AS HAS BEEN GIVEN IN THE DEVELOPMENT CONTRO L RULES. IN THIS REGARD, IT IS TO STATE THAT IN THAT CASE JUDGMENT A S GIVEN BY THE HIGH COURT OF MADRAS PERTAIN TO THE TIME WHEN THE DEFINI TION OF BUILT UP AREA WAS NOT DEFINED IN THE I.T. ACT. NOW AS THE DE FINITION OF BUILT UP AREA IS DEFINED IN THE L.T. ACT, 1961, THE RELIANCE MADE BY THE ASSESSEE ON THE SAID CASE LAW IS NOT ACCEPTABLE. 2.6 IN VIEW OF THE ABOVE OBSERVATIONS, THE AO HELD THAT SINCE THERE IS NO CHANGE OF FACTS FOR THE A. Y. 2011-12 ALSO, T HE FOUR PROJECTS DO NOT QUALIFY FOR DEDUCTION U/E 80IB(10)OF THE ACT. A CCORDINGLY, THE AO DISALLOWED THE DEDUCTION OF RS. 37,51,745/- CLAIMED BY THE ASSESSEE U/S 80IB(10). 4 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A) AND SUBMITTED THAT SINCE T HE PORTICO AND OPEN TERRACE DOES NOT FORM PART OF BUILD-UP AREA AS PER DEFINITION IN 80IB(14), THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/ S 80IB(10) OF THE I.T. ACT, 1961 AND ALSO RELIED ON THE OF HON'BLE M ADRAS HIGH COURT IN THE CASE OF CEEBROS HOTELS PVT. LTD., WHEREIN IT WA S HELD THAT OPEN TERRACE CANNOT FORM PART OF THE BUILT UP AREA. THE ASSESSEE ALSO RELIED ON THE DECISION OF HONBLE AHMADABAD BENCH IN THE C ASE OF AMALTAS ASSOCIATES VS. ITO AND CIT VS. SHETH DEVELOPERS PVT . LTD. AND ALSO ON THE DECISION OF ITO VS. AIR DEVELOPERS. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) FOLLOWING THE DECISION OF THE ITAT IN ASSESSEES OW N CASE FOR AY 2009-10 AND 2010-11 IN ITA NOS. 1565 TO 1567/HYD/20 13, CONFIRMED THE ADDITION MADE BY THE AO. 5. AS REGARDS THE DISALLOWANCE OF EXPENDITURE U/S 1 4A OF RS. 4,05,459/-, THE CIT(A) FOLLOWING THE DECISION OF IT AT IN ASSESSEES OWN CASE FOR AY 2009-10, DELETED THE DISALLOWANCE M ADE U/S 14A. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) IN CONFIRMI NG THE ADDITION MADE U/S 80IB(10), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS ERRONEOUS TO THE EXTENT IT IS PREJUDIC IAL TO THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING DISALLOWANCE OF DEDUCTION CLAIMED U/S 80 IB OF RS.37,51,745/- IN RESPECT OF HOUSING PROJECTS. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE BUILT UP AREA OF EACH HOUSE IS MOR E THAN 1500 SQ. FT., WHEN ALL THE HOUSES ARE OF THE AREA OF LES S THAN 1500 SQ. FT. 5 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE OPEN TERRACE AND OPEN PORTICO CA NNOT FORM PART OF THE BUILT UP AREA FOR THE PURPOSE OF SEC.80 IB(10) AND IF THE OPEN TERRACE WERE TO BE EXCLUDED, THE BUILT UP AREA IS LESS THAN 1500 SQ. FT EACH AND THE APPELLANT IS ENTITLED FOR DEDUCTION U/S 80IB OF THE I.T. ACT. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. WE FIND THAT THE ISSUE IN DISPUTE IS SQU ARELY COVERED BY THE DECISION OF THE ITAT, HYDERABAD IN ASSESSEES OWN C ASE FOR AYS 2009-10 AND 2010-11 IN ITA NOS. 1566/HYD/2013 AND O THERS VIDE ORDER DATED 29/01/2016, WHEREIN THE COORDINATE BENC H HAS HELD AS UNDER: 8. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIA L ON RECORD, INCLUDING THE PAPER-BOOKS FILED BY THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY THE A SSESSEE. THE CONDITIONS TIPULATED IN THE ACT SO AS TO MAKE AN AS SESSEE ELIGIBLE FOR RELIEF UNDER S.80IB(10), IS THAT IN THE RESIDENTI AL PROJECTS CONSTRUCTED, THE RESIDENTIAL UNIT HAS A BUILT UP AR EA NOT EXCEEDING 1000 SQ. FT, WHERE SUCH UNIT IS SITUATED WITHIN THE CIT IES OF DELHI OR MUMBAI OR WITHIN 25 KMS OF THE MUNICIPAL LIMITS OF T HESE CITIES AND 1,500 SQ. FT. AT ANY OTHER PLACE. IT IS THE METHOD OF COMPUTATION OF EACH RESIDENTIAL UNITS WHICH IS UNDE R DISPUTE IN THESE CASES. HOWEVER, THIS ISSUE IS SQUARELY COVERE D IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE BY THE SUCCESS IVE DECISIONS OF THE TRIBUNAL IN SIMILAR MATTERS, INCLUDING IN AS SESSEES OWN CASES FOR ASSESSMENT YEAR 2008-09, WHEREBY THE TRIBUNAL VIDE ORDER DATED 22.3.2012 IN ITA NOS.1457 AND 1458/HYD/2011, FOLLOWING THE EARLIER DECISION OF THE TRIBUNAL IN T HE CASE OF MODI BUILDERS & REALTORS PVT. LTD. IN ITA NO.1541/HYD/2010 FO R ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 31.3.2011, CONFIRME D THE DISALLOWANCE MADE FOR THE ASSESSMENT YEAR 2008-09. RELEVANT PORTION OF THE ORDER OF THIS TRIBUNAL IN THE CASES OF THESE VERY ASSESSEES DATED 22.3.2012 IS EXTRACTED BELOW 2. THE FIRST COMMON GROUND IN THESE APPEALS IS WIT H REGARD TO ALLOWABILITY OF DEDUCTION U/S. 80IB(10) OF THE INCOME-TAX ACT,1961. 3. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPI NION THAT SIMILAR ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF MODI BUILDERS & REALTORS PVT. LTD., IN I.T.A. NO.1541/HYD/2010. THE TRIBUNAL VI DE ORDER DATED 31ST MARCH, 2011 HELD AS FOLLOWS: '11. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE MAIN CONTENTION HEREIN IS WITH REGAR D TO INCLUSION OF PORTICO AND BALCONY FOR THE PURPOSE OF DETERMINING THE BUIL T-UP AREA AS PER CLAUSE (A) 6 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. OF SUBSECTION (14) OF SECTION 80IB OF THE INCOME-TAX ACT, 1961. AS PER THIS CLAUSE THE DEFINITION OF BUILTUP AREA IS AS FOLLOWS : 80IB(14)[(A) BUILT-UP AREA MEANS THE INNER MEAS UREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WAL LS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENT IAL UNITS;] 12. THE ABOVE DEFINITION WAS INTRODUCED BY FINANCE (NO. 2) ACT, 2004. THIS AMENDMENT STARTS WITH INNER MEASUREMENT OF RESIDEN TIAL UNIT. EVEN AS PER COMMON PARLANCE BUILT-UP AREA IS THE CARPET AREA CO VERED BY THICKNESS OF WALL + BALCONY + PORTICO (PROJECTION). THUS, WHETHE R IT IS THE INNER MEASUREMENT OR OUTER MEASUREMENT ONE THING IS AMPLY CLEAR THAT, IT SHOULD BE ACTUAL MEASUREMENT NOT ANY ESTIMATE. THE DISPUTE HEREIN IS WITH REGARD INCLUSION OF PORTICO AND BALCONY FOR MEASURING THE BUILT-UP AREA OF EACH RESIDENTIAL UNIT. IF THE PORTICO AND BALCONY AREA I S ADDED, THE BUILT-UP AREA WOULD EXCEED 1500 SQ. FT. PER UNIT. AS PER THE DEFIN ITION AS STATED IN SECTION 80IB(14)(A) BUILT-UP AREA INCLUDES PROJECTION AND BA LCONY. ACCEPTED RULES OF INTERPRETATION FOR AND INCLUSIVE DEFINITION AS ELUC IDATED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. TAJMAHAL HOTEL (1 973) CTR (SC) 480; AIR 1972 (SC) 168 IS THAT IF THE WORD INCLUDE IS USED IN AN INTERPRETATIVE CLAUSE, IT MUST BE CONSTRUED AS APPREHENDING NOT ONLY SUCH AS IT SIGNIFIES TO ITS NATURE AND MERIT, BUT ALSO THINGS WHICH THE INTERPR ETATIVE CLAUSE DECLARES WHAT THEY SHALL INCLUDE. SO NORMAL MEANING OF BUILT -UP AREA, BUT FOR THE DEFINITION INCLUDE PROJECTION AND BALCONY, WOULD DE FINITELY EXCLUDE THE LATER. THEREFORE, THERE CAN BE NO DOUBT THAT PRIOR TO THE INTRODUCTION OF THE DEFINITION AFORESAID CLAUSE BUILT-UP AREA WOULD NOT INCLUDE PROJECTIONS AND BALCONY AS NORMALLY UNDERSTOOD. HOWEVER, AFTER THE ENACTMENT ITSELF CLEARLY SPECIFIES THAT BUILT-UP AREA INCLUDES BOTH PROJECTI ONS AND BALCONIES AS INCREASED BY THE THICKNESS OF WALLS AND DOES NOT IN CLUDE COMMON AREA SHARED WITH OTHERS. THIS DEFINITION GIVES THE ENLAR GED MEANING OF BUILT-UP AREA WHICH INCLUDES BALCONY AND PROJECTION. AFTER I NCLUSION OF BALCONY AND PROJECTION IF THE TOTAL AREA OF BUILT-UP AREA EXCEE DS 1500 SQ, FT. IN THIS CASE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80IB OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE JUD GEMENT OF SUPREME COURT IN THE CASE OF BAJAJ TEMPO, 196 ITR 188 WHEREIN IT WA S HELD THAT A PROVISION IN A TAXING STATUTE GRANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY; AND SINCE A PROVISIO N FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, THE RESTRIC TION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PRO VISION AND NOT TO FRUSTRATE IT. IN OUR OPINION THIS CASE LAW HAS NO APPLICATION TO THE FACTS OF THE ASSESSEES CASE. THE ARGUMENT OF THE LEARNED COUNSE L FOR THE ASSESSEE IS GOOD IN PART BUT THE INFERENCE DOES NOT LOGICALLY F OLLOW. IN OUR OPINION, THE LEGISLATIVE EXPEDIENCE ADOPTED TO ACHIEVE THAT OBJE CTIVE IN THE PROVISION REQUIRES TO BE GIVEN EFFECT ON IT IS OWN LANGUAGE. THERE IS NO AMBIGUITY IN CLAUSE (A) OF SUBSECTION (14) OF SECTION 80IB OF THE ACT. AS THERE IS NO AMBIGUITY IN THE STATUTORY LANGUAGE, RESORT TO INTE RPRETATION PROCESS TO UNFOLD THE LEGISLATIVE INTENT BECOMES IMPERMISSIBLE. THE S UPPOSED INTENTION OF THE LEGISLATURE CANNOT THEN BE APPEALED TO WHITTLE DOWN STATUTORY LANGUAGE WHICH IS OTHERWISE UNAMBIGUOUS. IF THE INTENDMENT IS NOT IN THE WORDS USED, IT IS NOWHERE ELSE. THE NEED FOR INTERPRETATION ARISES WH EN THE WORDS USED IN THE STATUTE ARE ON THEIR OWN TERMS AMBIVALENT AND DO NO T MANIFEST THE INTENTION OF THE LEGISLATURE. THE WORDS IN THE STATUTE MUST, PRI MA FACIE, BE GIVEN THEIR ORDINARY MEANINGS. WHERE THE GRAMMATICAL CONSTRUCTI ON IS CLEAR, MANIFEST AND WITHOUT DOUBT, THAT CONSTRUCTION OUGHT TO PREVA IL UNLESS THERE ARE SOME STRONG AND OBVIOUS REASONS TO THE CONTRARY. IT HAS TO BE REITERATED THAT THE OBJECT OF INTERPRETATION OF A STATUTE IS TO DISCOVE R THE INTENTION OF PARLIAMENT AS EXPRESSED IN THE ACT. THE DOMINANT PURPOSE IN CON STRUING A STATUTE IS TO ASCERTAIN THE INTENTION OF THE LEGISLATURE AS EXPRE SSED IN THE STATUTE, CONSIDERING IT AS A WHOLE AND IN ITS CONTEXT. THAT INTENTION, AND, THEREFORE, THE MEANING OF THE STATUTE, IS PRIMARILY TO BE SOUG HT IN THE WORDS USED IN THE 7 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. STATUTE ITSELF, WHICH MUST, IF THEY ARE PLAIN AND U NAMBIGUOUS, BE APPLIED AS THEY STAND. 13. BEING SO, WE CANNOT ADOPT MEANING AS CONTENDED B Y THE LEARNED COUNSEL FOR THE ASSESSEE. IN OUR OPINION, BUILT-UP AREA INC LUDES PORTICO AND BALCONY ALSO AND IN THIS CASE IT EXCEEDS 1500 SQ. FT. PER R ESIDENTIAL UNIT. ACCORDINGLY THE ASSESSEE IS DISENTITLED FOR THE BENEFIT U/S. 80 IB OF THE ACT. THE ORDER OF THE CIT(A) IS UPHELD ON THIS ISSUE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED.' IN THE ABSENCE OF ANY DECISION TO THE CONTRARY BROU GHT TO OUR NOTICE BY THE REVENUE, CONSISTENT WITH THE VIEW TAK EN BY THE COORDINATE BENCHES OF THIS TRIBUNAL IN SIMILAR MATT ERS, INCLUDING IN THE CASES OF THE ASSESSEES HEREIN AS WELL, WE FIND NO INFIRMITY IN THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES ON T HIS ISSUE. EVEN THOUGH LEARNED COUNSEL FOR THE ASSESSEE REITER ATED THE STAND OF THE ASSESSEE AND PLEADED THAT CAR PARKING AREA A ND FIRST FLOOR TERRACE, WHICH IS OPEN TO SKY SHOULD BE EXCLUDED IN COMPUTING THE AREA OF THE RESIDENTIAL UNIT, AS IS EVIDENT FROM TH E ORDERS OF THE TRIBUNAL, SUCH ARGUMENTS HAVE BEEN SPECIFICALLY CON SIDERED AND REJECTED BY THE TRIBUNAL, WHILE CONFIRMING DISALLOW ANCE OF SIMILAR CLAIMS OF THE ASSESSEES UNDER S.80IB(10) IN EARLIER YE ARS ON SIMILAR/SAME PROJECTS. WE ACCORDINGLY UPHOLD THE OR DERS OF THE CIT(A) ON THIS ISSUE AND REJECT THE GROUNDS FOR THE ASSESSEE IN THESE APPEALS. 7.1 AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDENTICAL TO THAT OF EARLIER AYS, FOLLOWING THE DECISION OF THE COORD INATE BENCH IN THOSE YEARS, WE UPHOLD THE ORDER OF THE CIT(A) IN CONFIRM ING THE ADDITION MADE BY THE AO U/S 80IB(10) AND DISMISS THE GROUND RAISED BY THE ASSESSEE IN THIS REGARD. 8. AS THE FACTS AND GROUND RAISED IN AY 2012-13 ARE MATERIALLY IDENTICAL TO THAT OF AY 2011-12, WE DISMISS THE GRO UND RAISED BY THE ASSESSEE IN THIS AY. ITA NO. 1623/HYD/2016 BY THE REVENUE FOR AY 2012-13 . 9. IN THIS APPEAL, THE REVENUE IS AGAINST THE ACTIO N OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE U/S 14A OF THE ACT. 10. THE AO OBSERVED THAT AS PER SECTION 14A OF THE ACT, WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURR ED BY HIM IN 8 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS, THE AO SHALL DETERMINE THE AMOUNT OF EXPENDIT URE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MA Y BE PRESCRIBED. RULE 8D OF THE I.T. RULES 1962 LAYS DOWN THE METHOD OF CALCULATING THE EXPENDITURE INCURRED IN RELATION TO INCOME WHIC H DOES NOT FORM PART OF TOTAL INCOME. AO OBSERVED THAT THE ASSESSEE HAS CLAIMED THAT ITS OWN FUNDS ARE ALWAYS IN EXCESS OF INVESTMENTS M ADE. HOWEVER, IT HAS NOT DENIED THE FACT THAT THERE IS INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND EXPENDITURE WHICH IS INCURR ED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME . FURTHER, AS IT CAN BE SEEN FROM RULE 8D, NO EVIDENCE IS REQUIRED T O BE EXAMINED TO THAT THE EXPENDITURE HAS BEEN ACTUALLY INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME. IN CASE WHERE NO EX PENDITURE IS SAID TO HAVE BEN INCURRED OR WHERE THE AO IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF EXPENDITURE, THE EXPEND ITURE IS REQUIRED TO BE DETERMINED FOLLOWING THE METHOD LAID DOWN UNDER RULE 8D. IN VIEW OF THE ABOVE OBSERVATIONS, THE AO DISALLOWED AN EXP ENDITURE OF RS. 42,70,961/- U/S 14A OF THE ACT. 11. ON APPEAL, THE CIT(A) DELETED THE SAID DISALLOW ANCE FOLLOWING THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR AY 2009-10. 12. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 13. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. WE FIND THAT SIMILAR DISALLOWANCE MADE B Y THE AO, WAS DELETED BY THE ITAT IN ASSESSEES OWN CASE FOR AY 2 009-10 BY OBSERVING AS UNDER: 15. WE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD, INCLUDING THE WRITTEN SUBMISSIONS FILED BY THE ASSE SSEE. IT IS THE CLAIM OF THE ASSESSEES THAT THERE IS NO INCOME EARN ED BY THE ASSESSEE WHICH DID NOT FORM PART OF THE TOTAL INCOM E RETURNED AND NO INVESTMENT HAS BEEN MADE FROM OUT OF THE BORROWE D FUNDS. 9 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. THE CIT(A) ALSO TAKEN NOTE OF THE BORROWALS MADE BY THE ASSESSEE AND FOUND THAT BORROWALS HAVE BEEN MADE BY THE ASSE SSEE FOR SPECIFIC PURPOSES, SUCH AS WORKING CAPITAL REQUIREM ENTS, SPECIFIC PROJECTS ETC., AND UTILISED FOR THOSE SPECIFIC PURP OSES. IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD, TO CONTR OVERT THE FINDINGS OF THE CIT(A) ON FACTUAL ASPECTS, AS RIGHT LY HELD BY THE CIT(A) INTEREST RELATABLE TO SUCH LOANS CANNOT BE A TTRIBUTED TO THE INVESTMENTS YIELDING INTEREST-FREE INCOME. THE OBSE RVATION OF THE CIT(A) THAT UNLESS NEXUS BETWEEN THE BORROWALS MADE BY AN ASSESSEE AND THE INVESTMENTS YIELDING EXEMPT INCOME MADE BY THE ASSESSEE IS ESTABLISHED, NO DISALLOWANCE UNDER S.14A READ WITH RULE 8D CAN BE MADE IS IN CONSONANCE WITH THE S ETTLED POSITION OF LAW LAID DOWN INTER-ALIA BY THE BOMBAY HIGH COURT IN CIT V/S. SBI DHFL LTD. (376 ITR 296) AND PUNJAB AND HAR YANA HIGH COURT IN THE CASE OF CIT V/S. HERO CYCLES LTD. (323 ITR 518) RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE S IN THE WRITTEN SUBMISSIONS FIELD BEFORE US AND OTHER CASE-LAW DISC USSED BY THE CIT(A) IN THE IMPUGNED ORDERS, BESIDES CONSISTENT W ITH THE VIEW TAKEN BY THE COORDINATE BENCHES OF THE TRIBUNAL IN SIMILAR MATTERS. IN THIS VIEW OF THE MATTER, WE FIND NO INF IRMITY IN THE IMPUGNED ORDERS OF THE CIT(A) ON THIS ISSUE. WE ACC ORDINGLY UPHOLD THE SAME AND REJECT THE GROUNDS OF THE REVEN UE IN ITS APPEALS. 13. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT FO LLOWING THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR AY 2009-10 AND ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) ON THIS ISSUE AND DISMISS THE GROUND RAISED BY THE REVENUE. 14. IN THE RESULT, APPEALS OF ASSESSEE ARE ALLOWED AN D APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 23 RD JUNE, 2017. KV 10 ITA NOS. 1589, 1590 & 1623/H/16 MODI BUILDERS & REALTORS PVT. LTD. COPY TO:- 1) MODI BUILDERS AND REALTORS PVT. LTD., C/O SHRI S . RAMA RAO, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREE T NO. 9, HIMAYAT NAGAR, HYDERABAD 500 029 2) ITO, WARD 16(1), INCOME-TAX TOWERS, AC GUARDS, HYDERABAD 3) CIT(A) - 4, HYDERABAD 4) PR. CIT - 4, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE