M/S. ATUL PROJECTS INDIA P LTD, MUMBAI V. DCIT- 9(1)(2) (NOW JURIDICTION WITH DC CC 2(4)), MUMBAI

ITA 1940/MUM/2023

AI Insights

The case involves multiple appeals by M/s Atul Projects India Pvt Ltd against the orders of the CIT(A)-48 Mumbai for various assessment years. The primary issues revolved around the denial of deductions under section 80IB(10), additions towards rental income, and disallowances under sections 14A and 37(1) read with section 36(1)(iii). The Tribunal examined the legal grounds and factual matrix, including the impact of the Finance Act, 2022, and the applicability of section 43CA. The Tribunal's decision involved a detailed analysis of the provisions of the Income Tax Act, relevant judicial precedents, and the specific circumstances of each assessment year in question.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108277 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-08-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 24-05-2023
• Other Referred Cases: National Thermal Power Company Ltd. Vs. CIT, ACIT vs Hotel Blue Moon, CIT vs Laxman das Khandelwal, Ashok Commercial Enterprises vs ACIT, CIT (International Taxation) vs Brandix Mauritius Holdings Ltd, Kamadenu Builders & Developers vs DCIT, JSW Infrastructure Ltd vs DCIT, Reliance Utilities & Power Ltd vs CIT, CIT vs Radhe Developers, CIT vs Cajetano Mario Pereira, Melba Malaika Colaco Preira, PCIT vs Vishnu Enterprises, Nirved Traders Pvt Ltd vs CIT, Era Infrastructure India Pvt Ltd vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Earning of tax free income; Deemed to accrue or arise in india; Retrospective amendment; Question of law; Revised return; Rule 8D; Set aside
• Section: 131; 145; 37; 132; 144; 2; 43CA; 143(3); 50C; 142(1); 14A; 260A; 115JB; 80IB; 37(1); 139(5); 143(1); 143(2); 139(1); 158BC; 153; 119; 153C

Judgement Text

1 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”,MUMBAI BEFORE MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) AND MS. PADMAVATHY S. (ACCOUNTANT MEMBER) I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 (Assessment year : 2014-15 to 2017-18 & 2019-20) M/s Atul Projects India Private Limited, 5 th Floor, Trade Avenue Andheri East, Suren Road Chakala, Mumbai-400 093 PAN : AAGCA5921P vs DCIT-9(1)(2) (Now Jurisdiction with DC CC (2)(4), Mumbai ASSESSEE RESPONDENT Present for the Assessee Shri Naresh Jain & Akshay Jain Present for the Department Shri Nimesh Yadav ( CIT DR) Date of hearing 16/08/2023 Date of pronouncement 27/09/2023 O R D E R Per Padmavathy S (AM): These appeals by the assessee are against the separate orders of the CIT(A)-48 Mumbai dated 12/5/2023 for the assessment year 2014-15, dated 03.05.2023 for AY 2015-16, 2016-17 & 2017-18 and dated 08.05.2023 for AY 2019-20. 2 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 2. The assessee raised various grounds with regard to the issues as tabulated below for the years under consideration. Issue AY 2014-15 AY 2015-16 AY 2016-17 AY 2017-18 AY 2019-20 General Ground No.1,2 & 6 Ground No.1 & 5 Ground No.1 & 5 Ground No.1,2 & 9 Ground No.1,3 & 8 Return filed u/s.153C not considered and passing order u/s.153C r.w.s.144 - Ground No.2 Ground No.2 - Ground No.2 & 4 Denying deduction u/s.80IB(10) Ground No.3 Ground No.3 Ground No.3 Ground No.3 - Disallowance u/s. 36(1)(va) r.w.s. 2(24)(x) - - - Ground No.4 - Addition towards rental income Ground No.4 Ground No.4 Ground No.4 Ground No.5 - Disallowance u/s.14A - - - Ground No.6 - Addition made u/s.43CA Ground No.5 - - Ground No.7 - Disallowance u/s.37(1) r.w.s.36(1)(iii) - - - Ground No.8 - Addition made u/s.69C - - - - Ground No.5 to 7 Assessment order passed without issue of notice u/s.143(2) Addition Ground No.1 Addition Ground No.1 - Addition Ground No.1 Assessment u/s.153C of completed proceedings can be made only on the basis of incriminating material Addition Ground No.2 Assessment order passed without DIN Addition Ground No.2 Addition Ground No.2 - Addition Ground No.3 3. The assessee is a real estate developer. The assessee derives income from the sale of residential and commercial flats / unit. The assessee also derives income from commercial units given on lease. The details of the return of income filed by the assessee and the deduction claimed under section 80IB(10) are tabulated below – 3 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd Particulars AY 2014-15 AY 2015-16 AY 2016-17 AY 2017-18 AY 2019-20 Income Returned – Original return Rs.11,16,92,198 Rs.15,40,92,250 Rs.22,15,22,300 Rs.26,49,57,870 Rs,72,18,19,320 Date of filing 25.11.2014 28.09.2015 17.10.2016 31.10.2017 24.10.2019 Income Returned – Revised return Rs.8,88,25,368 Rs.10,28,73,620 Date of filing 31.03.2016 29.03.2017 Deduction u/s.80IB(10) Rs.86,30,612 Rs.28,64,010 Rs.3,77,69,095 Rs,1,80,29,146 ITA No.1876,1877 & 1880 / Mum/2023 – AY 2015-16, 2016-17 & 2019-20 4. For AY 205-16, 2016-17 and 2019-20, the assessee has raised additional grounds contending the appeal on legal grounds. In support of the admission of this additional ground, the learned A.R. submitted that it involved only adjudication of substantial question of law and no fresh facts were required to be examined. The learned Departmental Representative opposed the admission of additional ground. Keeping into consideration the entire conspectus of the facts and circumstances of the case and the additional ground raised before us we are convinced that its adjudication does not require any fresh investigation of facts and involves substantial question of law. Respectfully following the judgement of the Hon‟ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT [(1998) 229 ITR 383 (SC)] we admit these additional ground for adjudication. 5. The ld AR during the course of hearing submitted that for AY 2015-16, 2016-17 and 2019-20 if the legal grounds are adjudicated in favour of the assessee, then the grounds on merits would become academic. Accordingly we will first consider the legal grounds raised in these years first. 4 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 6. There was a search operation under section 132 of the Income Tax Act (the Act) in the case of M/s.Hubtown Limited and others on 30.07.2019 and pursuant to that the assessee's case was centralised by issue of notice under section 153C for the assessment years 2014-15 to 2019-20. In response to the notice under section 153C, the assessee filed the return on income on 13.08.2021. The Assessing Officer has recorded in the assessment order that the assessee failed to file the return of income and according notice under section 143(2) was not issued. Therefore, the Assessing Officer proceeded to complete the assessment under section 153C r.w.s.144, by denying deduction u/s.80IB(10), and by making addition towards rental income. For AY 2019-20, the assessing officer also made an addition under section 69C. Aggrieved the assessee filed further appeal before the CIT(A). The CIT(A) upheld the additions by relying on his own finding in assessee's case for AY 2017-18. The assessee also raised a legal contention for before the CIT(A) stating that the addition cannot be made without incriminating material since the assessment for the years under consideration is completed i.e. abated. The CIT(A) in this regard held that that on the date of issue of notice under section 153C, the proceedings under section 148/147 are pending before the Hon'ble High Court and therefore cannot be treated as abated assessment. Aggrieved the assessee is in appeal before the Tribunal raising various grounds contenting the issues as tabulated herein above. Assessment order passed without issue of notice u/s.143(2) 7. The ld AR submitted that the assessing officer has stated that no notice under section 143(2) is served for the reason that the return of income is not available in the ITBA portal. However it was submitted that the assessee has filed the return of income which is evidenced by the screen shot from the ITBA portal 5 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd (page 6 of paper book). In this regard, the bench directed the ld DR for a report from the assessing officer and based on the report submitted before us the assessing officer has submitted that the return of the assessee is now available in the ITBA portal. Therefore the reason quoted for not issuing notice under section 143(2) is factually incorrect since the assessee has filed the return of income. On the issue of validity of proceedings under section 153C without issue of notice under section 143(2), the ld AR submitted that the issue of notice is a jurisdictional requirement and any assessment order passed under section 153C without complying with the same is a nullity. The ld AR placed reliance on the decision of the Hon'ble Supreme Court in the case of ACIT vs Hotel Blue Moon (2010) 321 ITR 362 (SC) and CIT vs Laxman das Khandelwal (2019) 417 ITR 325 (SC). The ld AR also submitted through written submissions dated 07.09.2023, that the Hon'ble Bombay High Court in the case of Ashok Commercial Enterprises vs ACIT (WP No.2593, 2594,2596,2597,2598, 2847, 2588,2625 of 2021 dated 04.09.2023) has considered the same issue and has quashed the order passed under section 153C r.w.s.144 for the reason that the same is passed without issue of notice under section 143(2). 8. The ld DR relied on the order of the lower authorities. 9. We heard the parties and perused the material on record. The main contention of the assessee is that the order is passed under section 153C r.w.s.144 without issue of notice under section 143(2) and therefore not valid. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Hotel Blue Moon (supra). We notice that in the recent decision of the Hon'ble Bombay High Court in the case of Ashok Commercial Enterprises (supra) has considered the same issue and held that – 6 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd ―17 Whether the provisions of Section 144 of the Act: could be invoked to pass a best judgment assessment? (a) Under the scheme of the Act, an assessment is usually required to be made under Section 143(3) of the Act, after hearing such evidence as the assessee may produce, after taking into account all relevant material gathered and after hearing the assessee. The provisions of Section 144 of the Act are special and exceptional which can only be invoked if any of the conditions specified in Section 144 (1) (a), (b) or (c) are satisfied. Section 144 of the Act reads as under : Section 144 (1) If any person - (a) fails to make the return required /under sub-section (1) of section 139] and has not made a return or a revised return under sub-section (4) or sub-section (5) [or an updated return under sub-section (8A)] of that section, or (b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 [or fails to comply with a direction issued under sub- section (2A) of that section] , or (c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143, the [Assessing] Officer, after taking into account all relevant material which the [Assessing] Officer has gathered, [shall, after giving the assessee an opportunity of being heard, make the assessment] of the total income or loss to the best of his .. judgment and determine the sum payable by the assessee on the basis of such assessment : Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further that it shall not he necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section.] [(2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall he construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.] In the instant case, as paragraph 4 of the impugned assessment order for Assessment Year 2017-2018 clearly shows, respondent has erroneously proceeded on the basis that no return had been filed by petitioner pursuant to the notice under Section 153C of the Act, since he records that no return is available on the ITBA portal. This factual oasis is demonstrably erroneous, A return of income pursuant to notice issued under Section 153C(1) of the Act has been filed on L5 rh August 2021 7 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd and an acknowledgment showing an e-filing acknowledgment: number is on record. Non availability of return on the ITBA portal is the only basis on which respondent no.l seeks to exercise power under Section 144 of the Act relying upon the provisions of Section 144(1)(a) of the Act. In view of the irrefutable fact that Section 144(1)(a) of the Act cannot apply since petitioner has filed a return, no best judgment assessment under Section 144 of the Act could have been passed; (b) Respondent no.l has also, in the impugned order of assessment dated 28 th September 2021, recorded that no notice under Section 143(2) of the Act was issued by him. Therefore, there is no question of the provisions of Section 144(l)(c) of the Act being applicable; (c) Insofar as, the provisions of Section 144(l)(b) of the Act are concerned, as explained hereinabove,, there has been no failure to comply with the terms of any notice issued under Section 142(1) of the Act. Therefore, the purported exercise of powers under Section 144 of the Act cannot be sustained; (d) Even if one assumes that one of the jurisdictional preconditions set out in Section 144(1)(a), (b) or (c) of the Act is satisfied then, Section 144(1) of the Act read with the 1 st proviso requires that an Assessing Officer shall give an assessee an opportunity of being heard as to why the proposed assessment of income to the best of his judgment should not be made. A perusal of the show cause notice dated 22 nd September 2021 shows that this has not been done in the instant case. Further, the provisions of the 2 nd proviso to Section 144(1) of the Act cannot apply since petitioner has not failed to comply with any notice under Section 142(1) of the Act; (e) Therefore, the impugned assessment order dated 28 lh September 2021 could, if at all, have been passed under Section 153C read with Section 143(3) of the Act. If the validity of the impugned order of assessment dated 28 :n September 2021 is tested on this basis it cannot be sustained. It is a jurisdictional condition precedent to passing. under Section 153C read with Section 143(3) of the Act that a notice Section 143(2) of the Act must be issued as held in Hotel Blue Moon (Supra). The Apex Court held that issuance of notice under Section 143(2) of the Act was a jurisdictional condition precedent for passing an assessment under Section 153A/153C. Paragraphs 15 and 16 of Hotel Blue Moon (Supra) read as under: 15. We may now revert back to Section 258 BC(b) which is the material provision which requires our consideration. Section 158 BC(b) provides for enquiry and assessment. The said provision reads "that the assessing officer shall proceed to determine the undisclosed income of the 8 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd Block period in the manner laid down in Section 158 BB and the provisions of Section 142, sub-section (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." An analysis of this sub section indicates that, after the return is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 143(2)/142 and complete the assessment under Section 143(3). This Section does not provide for accepting the return as provided under Section 143(i)(a). The assessing officer has to complete the assessment under Section 143(3) only. In case of default in not filing the return or not complying with the notice under Sections 143(2)/142, the assessing officer is authorized to complete the assessment ex-parte under Section 144. Clause (b) of Section 158 BC by referring to Section 143(2) and (3) would appear to imply that the. provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter X1V-B of the Act. This legislation is by incorporation. This Section even speaks of sub- sections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158 BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of Section 158 BC(b) it has done so specifically. Thus, when Section 158 BC(b) specifically refers to applicability of the proviso thereto cannot be exclude. We may also notice here itself that the clarification given by CBDT in its circular No. 717 dated 14th August, 1995, has a binding effect on the department, but not on the Court. This circular clarifies the 9 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd requirement of law in respect of service of notice under sub-section (2) of Section 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of Section 158 BC, the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) of the Act. However, it is contended by Sri Shekhar, learned counsel for the department that in view of the expression "So far as may be" in Section 153 BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Pratap Singh's case [1985] 155 ITR 166(SC). In this case, the Court has observed that Section 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in Section 165 has to be generally followed. The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal Vs. Jaiswal Industries, Neemach and Ors., [(1989) 4 SCC 344], wherein this Court while dealing with the scope and import of the expression "as far as practicable" has stated "without anything more the expression 'as far as possible' will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be applicable in its-entirety except such provision therein which may not be practicable to be applied. 16. The case of the revenue is that the expression 'so far as may be apply' indicates that it is not expected to follow the provisions of Section 142, sub-sections 2 and 3 of Section 143 strictly for the purpose of Block assessments. We do not agree with the submissions of the learned counsel for the revenue, since we do not see any reason to restrict the scope and meaning of the expression 'so far as may be apply'. In our view, where the assessing officer in repudiation of the return filed under Section 158 BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143. In the instant case, paragraph 4 of the impugned assessment order records that no notice under Section 143(2) of the Act has been issued. The Revenue has erroneously proceeded on the basis that the said notices are not required 10 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd since no return of income had been filed by petitioner which was factually incorrect; (f) For all the reasons set out above, the impugned order dated 28 th September 2021, whether treated as having been passed under Section 153C read with Section 144 or Section 143(3) of the Act cannot be sustained and is bad in law, of no legal effect and ought to be quashed and set aside;‖ 10. It is relevant to note that the Hon'ble Delhi High Court in the case of Ashok Chaddha vs ITO (2012) 20 taxmann.com 387 (Delhi) has held a different view to hold that issue of notice under 143(2) is not mandatory for assessment done under section 153A/153C by distinguishing the decision of the Apex Court in the case of Hotel Bluemoon (supra) for the reason that the same was rendered in the context of erstwhile section 158BC and not under section 153C.. However considering the binding effect of Jurisdictional High Court, we hold that the order of assessment passed under section 153C r.w.s. 144 in assessee's case is bad in law and quashed accordingly. Assessment order passed without DIN 11. The Ld.AR in this regard submitted that for the A.Ys 2015-16, 2016-17 and 2019-20, separate assessment order were passed all dated 30/09/2021 and that the orders do not contain Document Identification Number (DIN). The Ld.AR submitted that according to the CBDT Circular No.19/2019, all communications issued by the income tax department (including assessment order) issued after 1.10.2019 should bear a DIN and that any communication not bearing a DIN shall be treated as invalid and deemed to have never been issued. The ld AR further submitted that the circular provides that in exceptional circumstances the DIN could be issued within 15 working days from the date of its issuance however, it is 11 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd a condition that reasons should be mentioned as to why the DIN could not have been issued along with the said communication. The ld AR also submitted that as per the said circular, when the communication is issued manually, prior approval is required to be taken and the same should be mentioned in the said communication. It was submitted that the assessment order does not contain an averment that the approval of Chief Commissioner / DGIT was obtained for passing the said order manually. The ld AR drew our attention to the communication dated 18.07.2023 shared by Ld. DR, where in para 4 of the letter, it is mentioned that DIN was subsequently generated on 18.11.2021 (i.e. beyond 15 working days from the date of assessment order). Therefore the ld AR argued that the DIN generated after 15 days from the date of order is bad in law, being not in compliance with the said Circular and liable to be quashed. 12. The ld DR submitted that though the order does not have the DIN, the same was subsequently communicated through a separate letter. The ld DR further submitted that due to technical issues in the ITBA portal, the order was manually prepared which got rectified subsequently. Accordingly the ld DR submitted that 19. We have heard the rival submissions and perused the material on record. Before proceeding further, we will look at the contents of the CBDT circular No.19/2019 dated 14.08.2019 which is reproduced below – ―CIRCULAR NO. 19/ 2019 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, dated the 14th August, 2019. 12 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd Subject:Generation/Allotment/Quoting of Document Identification Number in Notice/Order/Summons/letter/ correspondence issued by the Income Tax Department – reg. With the launch of various e-governance initiatives, Income-tax Department is moving toward total computerization of its work. This has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax-administration. Presently, almost all notices and orders are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as "communication") were found to have been issued manually, without maintaining a proper audit trail of such communication. 2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income- tax Act, 1961 (hereinafter referred to as "the Act"), has decided that no communication shall be issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 2019 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. 3. In exceptional circumstances such as, — (i) when there are technical difficulties in generating / allotting / quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties: or (iii) when due to delay in PAN migration. PAN is lying with non-jurisdictional Assessing Officer; or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) When the functionality to issue communication is not available in the system, 13 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner/Director General of income-tax. In cases where manual communication is required to be issued due to delay in PAN migration, the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner/ Director General of Income-tax for issue of manual communication in the following format- " .. This communication issues manually without a DIN on account of reason/reasons given in para3(i)/3(ii)/3(iii)/3(iv)/3(v) of the CBDT Circular No ...dated (strike off those which are not applicable) and with the approval of the Chief Commissioner/Director General of Income Tax vide number .... dated .... 4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued. 5. The communication issued manually in the three situations specified in para 3- (i), (ii) or (iii) above shall have to be regularised within 15 working days of its issuance, by — i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; iii. communicating the DIN so generated to the assessee/any other person as per electronically generated pro-forma available on the System. 6. An intimation of issuance of manual communication for the reasons mentioned in para 3(v) shall be sent to the Principal Director General of Income-tax (Systems) within seven days from the date of its issuance. 7. Further, in all pending assessment proceedings, where notices were issued manually, prior to issuance of this Circular, the Income-tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31th October, 2019.‖ Sd/- (Sarita Kumari) Director (ITA.II)CBDT.‖ 14 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 13. From the plain reading of the Circular, it is clear that the effective 1st October 2019, no communication shall be issued unless a DIN is allotted and is quoted in the body of the letter except under exceptional circumstances as mentioned in Para 3 which also lays down certain procedures to be followed for issue of manual order under certain circumstances. Accordingly, the manual communication should mention the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner/ Director General of Income-tax for issue of manual communication in a specific format. Para 4 of the circular states that the communication issued manually not in conformity with Para-2 and Para-3 of the circular, shall be treated as invalid and shall be deemed to have never been issued. 14. We notice that the Hon'ble Delhi High Court in the case of CIT (International Taxation) vs Brandix Mauritius Holdings Ltd [2023] 149 taxmann.com 238 (Delhi) has considered the issue of passing of assessment order without DIN and held that – ―12. We have heard learned counsel for the parties. The present appeal is preferred under section 260A of the Act. The Court's mandate, thus, is to consider whether or not a substantial question of law arises for consideration. 12.1 As noted above, the impugned order has not been passed on merits. 13. The Tribunal has applied the plain provisions of the 2019 Circular, based on which, it has allowed the appeal preferred by the respondent/assessee. 14. The broad contours of the 2019 Circular have been adverted to by us hereinabove. 14.1 Insofar as the instant case is concerned, admittedly, the draft assessment order was passed on 30-12-2018. 15. The respondent/assessee had filed its objections qua the same, which were disposed of by the Dispute Resolution Panel [DRP] via order dated 20-9-2019. 15 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 16. The final assessment order was passed by the Assessing Officer (AO) on 15-10- 2019, under section 147/144(C)(13)/143(3) of the Act. Concededly, the final assessment order does not bear a DIN. There is nothing on record to show that the Assessee/revenue took steps to demonstrate before the Tribunal that there were exceptional circumstances, as referred to in paragraph 3 of the 2019 Circular, which would sustain the communication of the final assessment order manually, albeit, without DIN. 16.1 Given this situation, clearly paragraph 4 of the 2019 Circular would apply. 17. Paragraph 4 of the 2019 Circular, as extracted hereinabove, decidedly provides that any communication which is not in conformity with paragraphs 2 and 3 shall be treated as invalid and shall be deemed to have never been issued. The phraseology of paragraph 4 of the 2019 Circular fairly puts such communication, which includes communication of assessment order, in the category of communication which are non-est in law. 17.1 It is also well established that circulars issued by the CBDT in exercise of its powers under section 119 of the Act are binding on the revenue 17.2.*** 17.3.*** 18. The argument advanced on behalf the Assessee/revenue, that recourse can be taken to section 292B of the Act, is untenable, having regard to the phraseology used in paragraph 4 of the 2019 Circular. 19. The object and purpose of the issuance of the 2019 Circular, as indicated hereinabove, inter alia, was to create an audit trail. Therefore, the communication relating to assessments, appeals, orders, etcetera which find mention in paragraph 2 of the 2019 Circular, albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular. 20. The logical sequitur of the aforesaid reasoning can only be that the Tribunal's decision to not sustain the final assessment order dated 15-10-2019, is a view that cannot call for our interference. 21. As noted above, in the instant appeal all that we are required to consider is whether any substantial question of law arises for consideration, which, inter alia, would require the Court to SANIYA examine whether the issue is debatable or if there is an alternate view possible. Given the language employed in the 2019 Circular, there is neither any scope for debate not is there any leeway for an alternate view. 16 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 21.1 We find no error in the view adopted by the Tribunal. The Tribunal has simply applied the provisions of the 2019 Circular and thus, reached a conclusion in favour of the respondent/assessee. 22. Accordingly, the appeal filed by the Assessee / revenue is closed.: 15. In assessee‟s case it is noticed as per the appeal set filed, that the order of assessment for AY 2015-16, 2016-17 and 2019-20 are all dated 30.09.2021 and do not contain the DIN. For AY 2019-20 the Assessing Officer on 18.11.2021 had issued an intimation whereby the DIN of the orders under section 153C r.w.s.144 were communicated to the assessee. Therefore we agree with the contention of the ld AR that that the order under section 153C r.w.s.144 neither contains the DIN in the body of the order, nor contains the fact in the specific format as stated in Para 3 that the communication is issued manually without a DIN after obtaining the necessary approvals. Therefore we are of considered view that the impugned order is not in conformity with Para 2 and Para 3 of the CBDT circular. 16. We notice that this issue has also been considered by the Jurisdictional High Court in the case of Ashok Commercial Enterprises (supra) and held the order of assessment to be invalid for the reason that the same is issued without DIN. In view of these discussions and respectfully following the decision of the Jurisdictional High Court and Hon'ble Delhi High Court we hold that the order passed under section 153C r.w.s.144 is invalid and shall be deemed to have never been issued as per Para 4 of the CBDT circular as the order is not conformity with Para 2 and Para 3. It is ordered accordingly 17. The assessee for AY 2019-20 raised an additional ground contending that the relevant assessment being unabated assessment, no addition can be made while 17 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd completing the assessment under section 153C r.w.s.144 without any incriminating material. Since we have already quashed the assessment order for AY 2015-16, 2016-17 and 2019-20 for the reason of non-issue of notice under section 143(2) and is issued without DIN, this ground for AY 2019-20 has become academic and hence left open. ITA No.1940/Mum/2023 – AY 2014-15 18. For the assessment year 2014-15, the assessee filed its original return of income on 25/11/2014 declaring total income of R.11,16,92,198/-. Subsequently, the assessee revised its return of income on 31/03/2016 revising the total income at Rs.8,88,25,358/- after claiming Chapter VIA deduction of Rs.1,09,80,612/-. The case was selected for scrutiny and statutory notices were duly served on the assessee. The Assessing Officer in the assessment order framed under section 143(3) of the Act dated 29.12.2016 did not allow the deduction claimed by the assessee under section 80IB(10) for Rs.86,30,612/- for the reason that –  The deduction was not claimed in the original return of income filed under section 139(1) and, therefore, not allowable as per provision of section 80AC;  Certain units are having the built-up area of more than 1,000 sq.ft.  The approval for the project is not obtained in the name of the assessee. 19. The Assessing Officer also made addition towards the difference in rental income from ICICI Bank which the assessee offered at 80% of rent received. The Assessing Officer further made an addition towards deemed income under section 43CA. Aggrieved, the assessee preferred appeal before the CIT(A), who upheld the disallowance / additions. Aggrieved, the assessee is in appeal before the Tribunal. 18 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd Disallowance of deduction under section 80IB(10): 20. The assessee has developed a building in SRA project named “Blue Mountain”. The profits of the project have been offered to tax from Assessment Year 2013-14 onwards based on sale of flats in the respective assessment years. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed the deduction under section 80IB(10) in the revised return filed on 31/03/2016 under section 139(5) of the Act. The Assessing Officer held that as per the provisions of section 80AC, the deduction under section 80IB is admissible only where the assessee furnishes a return of income on or before the due date specified under section 139(1) of the Act. The Assessing Officer further held that the letter of intent of the project for which deduction under section 80IB(10) was claimed, was received in the name of Lucky Developers and accordingly, the claim of deduction under section 80IB shall not be allowed to the assessee since the assessee has not fulfilled the conditions laid down in sub section (a) of section 80IB(10). The Assessing Officer also noticed that as per the submissions of the assessee, two of the flats are having built up area of more than 1000 sq.ft. and thereby the conditions specified in sub section (c) of section 80IB(10) is violated. Accordingly, the Assessing Officer denied the benefit of entire deduction claimed under section 80IB(10) to the assessee. The CIT(A) held that the assessee has not claimed the deduction in the return filed under section 139(1) and section 80AC mandates that to avail benefit under section 80IB, the assessee is required to file the return within the date prescribed under section 139(1). Accordingly the CIT(A) upheld the denial of deduction under section 80IB(10) by holding that – ―6.9 Thus, in view of the aforesaid legal discussion and facts of the case, it is held that Assessee has failed to fulfill the condition of filing of return u/s. 139(1) and 19 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd therefore, the Assessee was not eligible for the benefit of deduction u/s. 80IB(10) in view of clear provisions of section 80AC of the Act. 1 have carefully gone through the judgments relied upon by the Assessee on the issue of claim of deduction in the revised return of income and find these factually distinguishable. Moreover, when Hon'ble Calcutta High Court and Hon'ble Uttarakhand High Court have already decided that deduction u/s. 80IB has to be claimed through return of income u/s. 139(1) in view of expressed provisions of section 80AC of the Act, any contrary decision of lower authorities will not have any binding precedence. Hence, considering the decisions of Hon'ble High Courts and Hon'ble ITAT's as discussed above, the claim of deduction u/s. 80IB(10) of the Act of Rs. 86,30,612/- of the Assessee is rejected. Once the claim of deduction u/s. 80IB(10) has been rejected on this primary ground, the other sub-grounds raised by the Assessee i.e., project not approved in the name of the Assessee (1.2) and size of flats exceeding, the limit (1.4) become academic in nature and need no adjudication. Accordingly, the Ground No.1 along with all sub-grounds of the present appeal are dismissed.‖ 22. The Ld.AR in this regard submitted that as per the provisions of section 80AC, the requirement for allowability of deduction under section 80IB is that the return should have been filed on or before the due date under section 139(1). In assessee‟s case, the return for A.Y. 2014-15 was filed on 25/11/2014 i.e. before the due date under section 139(1). The Ld.AR further submitted that the said section does not mandate that the claim of deduction under section 80IB should have been made in the original return of income filed under section 139(1). Therefore, the Ld.AR argued that the deduction cannot be denied on the ground that claim is made for the revised return of income filed under section 139(5). The Ld.AR also submitted that the case laws relied on by the revenue pertains to where the original return of income was not filed and, therefore, is distinguishable from assessee‟s case. The Ld.AR in this regard relied on the decision of co-ordinate bench of the Tribunal in the case of DCIT vs Kamadenu Builders & Developers (2016) (3) TMI 240 – ITAT MUMBAI. 20 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 23. The ld DR relied on the order of the lower authorities. 24. We heard the parties and perused the material on record. We notice that the coordinate bench in the case of Kamadenu Builders & Developers (supra) has considered a similar issue and held that – ―7. We have considered rival contentions, carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements cited at bar. From the record we found that assessee is engaged in development of housing project. However, the original return was filed well within the time u/s.139(1), wherein the assessee has not made any claim of deduction u/s.80IB(10). The assessee filed revised return wherein deduction u/s.80IB(10) was claimed, however, while framing assessment the AO decline claim of deduction in view of the provisions of Section 80A(5) of the Act. As per our considered view, Section 80A(5) only requires filing of return, nowhere it suggests that claim should be made in the original return and not by way of revised return. When the original return of income has been filed well within the due date, the revised return filed thereafter before the completion of assessment proceedings, is a valid return of income to be considered by the AO. The assessee has been given opportunity to file revised return u/s.139(4) for removal of the any defect in the original return. The CIT(A) considering the remand report and the written submission of the assessee and after applying various judicial pronouncements recorded a finding to the effect that assessee has filed revised return claiming deduction u/s.80IB(10) before completion of assessment. Following the judicial pronouncement laid down by the Hon'ble Allahabad High Court in the case of Thakur Dharmapur Sugar Mills Ltd. 90 ITR 236, held that revised return must be considered as it was originally filed. It is the duty of the AO to allow legal claim if made before him and provided it all the conditions of the claim. Nowhere the AO has alleged that assessee has failed to comply with any of the conditions of Section 80IB(10), only grievance of AO was that claim was made in the return filed u/s.139(1). After applying the judicial pronouncements laid down by various High Courts and Tribunal, the CIT(A) recorded a finding to the effect that both the original return was filed well within the time limit prescribed under the law and the revised return filed before the AO completing the assessment that the assessee has fulfilled all the conditions u/s.8016(10), therefore, entitled for deduction in respect of housing project. The findings recorded by the CIT(A) have not been controverted by department by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of CIT(A) in allowing assessee's claim for deduction u/s.80IB(10) of the Act.‖ 21 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 25. We further, a similar view has also been held in the case of DCIT vs JSW Infrastructure Ltd [2019 (11) TMI 1717 - ITAT MUMBAI] also. We will look at the provisions of section 80AC before proceeding further - 80AC. Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80- IA or section 80-IAB or section 80-IB or section 80-IC 66 [or section 80-ID or section 80-IE], no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub- section (1) of section 139.] 26. Though section 80AC mandates that the assessee is not entitled to claim deduction under section 80IB(10), unless the return of income is filed under section 139(1), the section does not contain anything that prohibits the claim of deduction in the revised return when the original return of income is filed within the time limit provided under section 139(1). We, therefore, see merit in the argument of the Ld.AR that in assessee‟s case, the deduction under section 80IB should be allowed since the condition under section 80AC i.e. in filing the return or before the due date under section 139(1) has been fulfilled by the assessee. In the light of the above discussion and relying on the decision of the co-ordinate bench, we hold that the assessee cannot be denied the benefit of deduction under section 80IB (10) on this ground. 27. The next reason for the Assessing Officer to deny the benefit of section 80IB(10) is that the approval for the said project is not in the name of the assessee. Though the Assessing Officer has denied the benefit for this reason also, the CIT(A) did not give any specific finding with regard to this ground raised by the assessee stating that this has become academic in the light of the findings given with regard to claim not made in the return filed under section 139(1) 22 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 28. The plan for the project “Blue Mountain" was originally approved in the name of M/s. Lucky Developers. Subsequently, vide development agreement dated 10.09.2007, the assessee had taken over part of the development rights from M/s. Lucky Developers. As per the agreement, the Assessee would pay a consideration for the purchase of rights and would be responsible for the execution of the project. The Ld.AR submitted that as per the provisions of section 80IB(10), it is the developer, who is entitled for deduction under section 80IB(10). In assessee‟s case, though the approval is not in the name of the assessee, the entire development has been carried out by the assessee and, therefore, the assessee is entitled for deduction under section 80IB(10). The Ld.AR further submitted that as per the terms of development agreement, the entire risks and rewards concerning the project would be undertaken by the assessee itself and, therefore, the assessee is entitled for deduction under section 80IB(10). The Ld.AR in this regard relied on the decision of the Bombay High Court in the case of CIT vs Cajetano Mario Pereira, Melba Malaika Colaco Preira 2014(5) TMI 228 – BOMBAY HIGH COURT and also in the case of PCIT vs Vishnu Enterprises 022(3) TMI 389 – BOMBAY HIGH COURT. 29. The Ld.DR, on the other hand, submitted that the approval is in the name of Lucky Builders and the assessee is merely a contractor of developing the project. Therefore, the assessee is not entitled for deduction under section 80IB of the Act. 30. We heard the parties and perused the material on record. In assessee‟s case, the approval of the project is in the name of M/s.Lucky Developers and that the assessee has entered into a development agreement for the development of the project. Accordingly the assessee contends that being the developer of the project bears the entire risk and rewards of the project is entitled for deduction under 23 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd section 80IB. In this regard our attention was drawn to certain clauses of the agreement, which is reproduced below:- ―8. The party of the SECOND PART is exclusively responsible for construction of the said plot up to 355000 sq.ft. F.S.I. including 32000 sq.ft. area of the party of the FIRST PART in respect of which party of the FIRST PART have release the C.C. for the party of the SECOND PART. The party of the SECOND PART cannot sale or construct said Plots more area then the C.C. granted by party of the FIRST PART. If the party of SECOND PART fails to complete the construction for any reason on his part, in that event, the party of the SECOND PART will not stop any payment to the party of the FIRST PART.‖ 28. The party of the SECOND PART doth hereby agrees that the party of the SECOND PART shall comply with the aforesaid obligations entirely at his own risk as to the costs and BRANDIST consequences thereof and the platy of the FIRST PART will not be held liable and/or responsible in any manner whatsoever nature in respect thereof. a. The development work to be carried out by the party of the SECOND PART as aforesaid shall include the construction of said Plot and necessary infrastructure the garden area for the same, the party of the SECOND PART its own costs, expenses and responsibility and in accordance with the plans as getting passed by party of the first part under approval by the concerned authorities with such amendment as may require from time to time be proposed by the party of the SECOND PART and approved by the said Authorities. ..... b. In particular, the party of the SECOND PART alone be liable for payment of fees and all costs, wages etc., of the consulting Architects, R.C.C. Consultants and other professionals and consultants, engineers, contractors, surveyors, workman, laborers and other as may be engaged by them for construction of said Plot. The party of the SECOND PART alone shall be liable for payment of the Bills and suppliers of building materials and all other charges, fees and deposits to be paid to the concerned authorities for the development work to be carried out as aforesaid. The party of the SECOND PART shall get the personal employed in constructions work insured under the provisions of ACT and other relevant laws.‖ 31. From the perusal of above it is clear that the construction and development of the project is undertaken by the assessee and M/s. Lucky Developers has only sold the development rights and obtained CC without bearing any risks and 24 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd rewards. In this regard we notice that the Hon'ble High Court of Gujarat in the case of CIT vs Radhe Developers [2012] 17 taxmann.com 156 (Gujarat) has considered a similar issue and the relevant findings of the Hon'ble High Court is extracted below – ―38. In the present case, as already held the assessee had undertaken the development of housing project at its own risk and cost. The land owner had accepted only the full price of the land and nothing further. The entire risk of investment and expenditure was that of the assessee. Resultantly, profit and loss also would accrue to the assessee alone. In that view of the matter, the addition of the Explanation to Section 80IB with retrospective effect of 1.4.2001 would have no material bearing in the cases on hand. 45. Under the circumstances, we are of the opinion that the Tribunal committed no error in holding that the assessees were entitled to the benefit under Section 80IB(10) of the Act even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners.‖ 32. We further notice that the Hon‟ble jurisdictional High Court in the case CIT vs Cajetano Mario Pereira, Melba Malaika Colaco Preira (supra) has held a similar view that – ―11. The CIT (Appeals) as also the ITAT have given concurrent findings of fact that in the facts of the present case also risks and rewards relating to the project were on the assessee-developer and not on the owner of the land. The deduction is available in case of developing and building housing project, and it is the respondent-assessees who are engaged in the business of developing and building housing project in question and therefore we do not find any merit in the submission made by the learned counsel for the Assessee-revenue that the respondents-assessee were not eligible to the benefit under Section 80IB(10) of the Act, merely because the project was not approved in the name of respondents-assessee, but was in the name of the original land owner.‖ 25 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 33. The provisions of section 80IB(10) also provides that the deduction is available to an undertaking developing and building housing projects which is the assessee in the given case. There is nothing provided in section 80IB to demonstrate that deduction is available when the project approval is in the name of the assessee. In view of the above judicial pronouncements and the facts of the case, we are of the considered view that the assessee being the developer of the project bearing the entire risk and rewards is entitled for deduction under section 80IB(10). 34. The third ground on which the Revenue has denied the benefit of section 80IB to the assessee is that two of the flats viz., Flar no. 2201 (pent house) with 1909 sq. ft and Flat no. 2202 (pent house) having 2417 sq. ft are having built up area of more than 1000 sq.ft. The ld AR in this regard submitted that that these two flats were not sold and the profit arising from the project does not include any profit attributable to these two flats. The ld AR drew our attention to the decision of the Hon‟ble Bombay High Court in the case of Pr. CIT vs. Kumar Builders Consortium (ITA No. 82 of 2018) where it is held that the assessee is entitled for proportionate claim of deduction under section 80IB. Accordingly the ld AR submitted that benefit of section 80-IB(10) has not been taken by the assesses in respect of these two flats during the year under consideration and therefore the profit claimed as deduction in year under consideration should be fully allowed. 35. We heard the parties and perused the material on record. We notice that the Hon‟ble Bombay High Court in the case of Kumar Builders Consortium (supra) has held that – ―7. Section 80IB(10) of the Act, 1961, allows to an undertaking developing and building housing projects, hundred percent deduction of the profits derived from such housing projects subject to the fulfillment of inter alia the 26 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd timeline as regards approval of the project, its commencement and completion as prescribed in Sub-clause 'a' of Section 80IB(10) of the Act, 1961. The fulfillment of the condition as regards the size of the plot of land in terms of Sub-clause 'b' of Section 80IB(10) of the Act, 1961, or the compliance as regards the built-up area of the residential unit being not more than 1500 sq.ft. at any place other than the city of Delhi or Mumbai in terms of Sub-clause 'c' of Section 80IB(10) of the Act, 1961. 8. The argument advanced by the learned Counsel for the Assessee was that Section 80IB(10), does not at all envisage a pro rata deduction, in respect of eligible flats. In other words, it is suggested that even if a single flat in a housing project is found to exceed the permissible maximum built- up area of 1500 sq.ft., the assessee would lose its right to claim the benefit of deduction in respect of the entire housing project under Section 80IB(10). In our opinion, a plain reading of the said section does not support that interpretation at all. Learned Counsel for the Assessee would have been perfectly justified, had the legislature in its wisdom, in clause 'c' used the words "each residential unit has a maximum built-up area ....". This would then clearly indicate that the intention was to ensure that each and every residential unit in such a housing project confirms inter alia to the size prescribed with a view to make an assessee eligible for claiming the deduction. However, the words used in clause 'c' are as under: "(c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place" It is a well settled principle of interpretation of statutes that when the language of a statute is unambiguous and admits of only one meaning, no question of construction of a statute then arises. Reliance in this regard can be placed on the Apex Court judgment in Nelson Motis V/s. Union Of India And Another 2 . It, therefore, becomes clear that clause 'c' only qualifies an eligible residential unit and no more and further that if there is such a residential unit, which confirms to the requirement as to size in a housing project, all other conditions being fulfilled, the benefit of deduction cannot be denied in regard to a such residential unit. Section 80IB(10), nowhere even remotely aims to deny the benefit of deduction in regard to a residential unit, which otherwise confirms the requirement of size at the cost of an ineligible residential unit with a built-up area of more than 1500 sq.ft. 27 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 9. For the reasons above, we are of the opinion that the order of the ITAT directing the A.O. to workout the pro rata deduction under Section 80IB(10) of the Act, 1961, in regard to the eligible residential units, merits no interference. The appeal is held to be without merit and is accordingly dismissed.‖ 36. The ratio laid down by the Hon'ble High Court is that the deduction under section 80IB(10) cannot be denied in entirety and the proportionate deduction should be allowed. Applying the said ratio in assessee's case under consideration, we direct the assessing officer to allow proportionate deduction under section 80IB(10) with respect to those flats sold during the year under consideration whose built up area is less than 1000 sq.ft. It is ordered accordingly. Addition towards rental income 37. The Assessee is the joint owner of the property developed at Trans Trade Centre, Mumbai which is leased out to M/s ICICI Bank Limited. The other co- owners are Mr. Mahendra Mehta & Mr. Girdharlal V Mehta (hereinafter referred to as the “Mehta‟s”). The Assessee is the owner of 80% of the property whereas the Mehta‟s own 20% of the property. Being the developers of the property, the lease agreement with the tenant, i.e., ICICI Bank, was entered in the name of the Assessee and the tenant had paid the entire deposit and rent to the Assessee. Accordingly, the Assessee offered the entire rent of Rs. 7,56,43,080/- to tax despite the fact that only 80% of the property is owned by the Assessee company. Subsequently, the Mehta‟s filed a suit against the Assessee which is pending before the Hon‟ble Bombay High Court in civil proceedings no. 3005/2008. The interim order for the same was passed on 19.11.2018 (Sr. No. 6, Page 9 of the Paper Book) wherein it has been concluded that 20% of the rent will be payable to the Mehta‟s. Pursuant to filing of above suit, the Assessee filed a revised return 28 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd wherein he reduced the above disputed 20% rentals from his income and also made a subsequent reduction in the standard deduction claimed u/s. 24(a) 38. The assessee submitted before the assessing officer that though the assessee has received 100% of the rental income, 80% only is offered for the reason that the assessee is not he owner for 20% of the property and that as per directions of the Court the assessee is required to pay the Mehta's 20% of the rent. The Assessing Officer did not accept the submissions of the assessee for the reason that the assessee has received 100% of the rent from M/s.ICICI Bank and that the assessee has not submitted any documentary evidence that 20% of the rent has been transferred to the co-owners i.e. Mehta‟s. The Assessing Officer accordingly made addition towards differential rent. On further appeal the CIT(A) upheld the addition by relying on his own order for A.Y. 2017-18. 39. The Ld.AR submitted that the rental income was in dispute and therefore no rental income was being paid to Mr. Mehta as per the said agreements initially. The ld AR further submitted that interim orders have been passed by the Hon'ble High Court as per which the Hon‟ble Court has observed that the assessee neither has a case of ownership nor have they averred as such. The Ld.AR also drew our attention to the relevant finding of the Bombay High Court (page 122 of legal paper book) as reproduced below – 7. Notably, even in the present proceedings, the 1st defendant has at no point said that it is the 100% or only owner of the property. Had it said so, these orders of 19th November 2018 and 15th April 2019 would not only have been resisted, but would actually have been unnecessary simply because there would then have been no question of the plaintifs sharing in any revenue generated from any license fees of the structure on that property. The only basis of that sharing was an 80/20 sharing of the title. Clearly, therefore, there was no question of the 1st defendant representing to Kotak Mahindra Investments Ltd. that it was the 100% owner of this property when precisely the opposite representation was being made to me. 29 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 40. The ld AR also drew our attention to the findings of the Hon'ble High Court wherein the assessee has been directed to pay the amount towards the rental income received for earlier years and also the direction of the court to M/s.ICICI Bank that going forward 20% of the rent shall be directly paid to Mehta's. The ld AR reiterated that the Assessee has already paid an amount of Rs. 2,22,00,000/- to the Mehta‟s on account of the rental receipts of earlier years. Thus, the disputed rental income has been paid to the said party retrospectively. Further, it to be noted that even if initially the entire rent amount was received by the Assessee, the same was ordered to be deposited into the separate bank account with court registrar vide interim order. Therefore it was submitted that as such, the Assessee cannot be held to be the rightful receiver of the rental amount which has even been held by court and therefore must not be taxed for the same.. Accordingly, the Ld.AR submitted that rental income in hands of the Assessee should be taxed to the extent of 80% only and prayed that the addition be deleted. 41. The ld DR relied on the order of the lower authorities. The ld DR submitted that the assessee did not make any provision in the books of accounts towards the 20% of the rent which is payable to Mehta's. The ld DR further submitted that the assessee itself has offered 100% of the rent to tax and only through the revised return the income was reduced to 80%. The ld DR also submitted that since the assessee has been receiving 100% of the rent, the same should be taxed in the hands of the assessee. 42. We have heard the parties and perused materials on record. We notice that there was a dispute with respect to the ownership of the property and that the Bombay High Court through interim orders held that the assessee is not the owner of 20% of the property and therefore directed the assessee to pay the Mehta's the 30 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd rent received in earlier years and also directed M/s.ICICI Bank to directly pay 20% of the rent to Mehta's going forward. From the perusal of these findings of the Hon'ble High Court it is clear that the assessee has never been the owner of 100% of the property and has owned only 80%. The reason as quoted by the revenue for making the addition is that the assessee has not submitted the documentary evidence of payment of 20% to the Mehta's and that the assessee has received 100% of the rent from M/s.ICICI Bank. Further the CIT(A) has merely relied on the order for A.Y. 2017-18 without giving any independent finding in this regard for the year under consideration. 43. Under the Income Tax Act it is the real income that needs to be taxed. There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee i.e. whether it is an application of income or diversion of income by overriding title. In determining whether there has been diversion of income by overriding title, it is the nature of the obligation which is the decisive fact. Where by an obligation, income is diverted before it reached the assessee who even if he were to collect it, does so, not as part of his income, but for and on behalf of the person to whom it is payable. 44. In the light of this legal position, when we look at the assessee's case, as per the order of the Hon'ble High Court the assessee is held to the owner of only 80% of the property and that legally the assessee is entitled to receive only 80% of the rental income. As already stated, the reason for making the addition by the revenue is that the assessee has not submitted the documentary evidences regarding the payment of 20% rent to ICICI Bank. Further in our view it is important to examine the terms of the lease agreement entered by the assessee with ICICI Bank Ltd in 31 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd order to understand that as per the terms of the agreement though the assessee receives 100% of the income, 20% is received on behalf of Mehta's. This is relevant in order to decide that the payment of 20% of rent towards arrears to Mehta's by the assessee as per the order of the court is application income in the hands of the assessee or is an income overriding the title. Therefore we remit the issue back to the assessing officer with a direction to verify the terms of the lease agreement between the assessee and ICICI Bank Ltd and decide the issue in accordance with law. This ground is allowed for statistical purposes. Addition under section 43CA 45. The Assessee had sold flats in the project Blue Tulip and the sale agreements were registered during the financial relevant to AY 2014-15. The booking amount towards the flats in this project was received and allotment letters were issued to purchaser in FY 2009-10, one in FY 2010-11 and one FY 2012-13. The Assessing Officer during the course of assessment raised a query as to why the difference between consideration / agreement amount claimed by the assessee and deemed consideration as per section 43CA should not be added as income. The assessee, in this regard submitted that – "At the last hearing your honour have asked to submit the documentary evidence for receipt of initial payment from the fiat purchasers who made the booking in earlier years prior to 1.04.2013. A statement has already been filed vide letter did. 2/12/2016 (copy enclosed) stating the date of booking, date of 1 st payment received etc. In support of that statement the following documents as desired are enclosed herewith; I. The copies of allotment letters issued to flat purchasers prior to 1/4/2013 [in the F.Y. 2009-10] II. The copy of ledger account of the respective flat purchasers showing the last 1 st payment received by cheque. 32 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd III. Copy of blank statement of assessee company for the relevant period wherein the 1 st payment received from flat purchasers in F.Y. 2009-10 is reflected duly highlighted. IV. Copies of registered agreements of the said flat purchasers appearing in the chart submitted on record/ enclosed. Perusal of the above documents would clearly show that the payment was received way back in F.Y. 2009-10 and the agreement were registered in the F.Y. 2013-14 and therefore the stamp duty authorities have adopted the value of the year of the registration “Since the flats were booked and the consideration was fixed way back in F. Y. 2009-10 when section 43CA was not on statue book the provisions of the said section does apply to the booking made in F.Y,. 2009-10. The section 43CA is prospective in nature and therefore applies for the transactions entered into after 1.4.2013 and not for the transactions entered before that date. Therefore it is submitted that no adjustment is required for taking the value as adopted by the stamp duty authority in respect of these flats as per the statement enclosed. 46. The Assessing Officer held that the submissions are not acceptable and that the assessee has received consideration for some of the flats at less than the stamp duty value. The Assessing Officer accordingly made an addition of Rs.1,80,84,618/- being the difference between the stamp duty value as on the date of registration and the agreement value. The CIT(A) relied on his order for A.Y. 2017-18 and upheld the addition. 47. The primary contention of the Ld.AR is that the provisions of section 43CA is not applicable in assessee's case since the section was introduced by Finance Act, 2013 with prospective effect from 01-04-2014 and that the impugned transactions are already agreed prior to assessment year 2014-15. The ld AR further submitted that the flats were sold as per the allotment letters in which the sale price is agreed and therefore the allotment letters were to be considered as sale agreements. Since the allotment letters i.e. sale agreement was entered into prior to A.Y. 2014-15 the provisions of section 43CA is not applicable in assessee‟s case. The ld AR brought to our attention that the certain portion of the payment was 33 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd received at the time of allotment which fact has not been disputed by the Assessing Officer. The ld AR relied upon the judgment of DISHA CONSTRUCTION VERSUS JT. CIT-25 (2), MUMBAI [2021 (6) TMI 614 - ITAT MUMBAI], which states that if the date of allotment is before 01.04.2014, then the provisions of 43CA shall not apply. The ld AR drew reference to various decisions rendered in the context of section 50C which is similar to section 43CA, to submit that the section is applicable only prospectively and the letter of allotment should only be considered for the applicability of section 43CA. The ld AR submitted that date of allotment would be the date on which purchaser of a residential unit can be stated to have acquired the property. Further, with regard to the contention of the Assessing Officer with regard to three specific cases wherein he held that allotment letter which were issued to the erstwhile parties were cancelled and subsequently the flats were transferred to the present owners after 01.04.2013, the ld AR clarified that even the subsequent owners viz. with the present owners, the allotment letters were issued prior to 01.04.2013 itself. The ld AR also submitted that the allotment letters for the same have been submitted in front of the lower authorities. 48. The ld DR on the other hand argued that section 43CA is applicable in the year of transfer and that in assessee's case the transfer took place at the time of registration of the sale agreement which is AY 2014-15. The ld DR submitted that the assessee has offered the income arising on the sale of flats in the year under consideration and therefore the applicability of section 43CA cannot be questioned. The ld DR in response to the contention that the letter of allotment is to be considered as agreement to sell submitted that the transfer as per the Transfer of Property Act happened i.e. whether there was a part performance of the contract 34 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd needs to be tested before accepting the submissions. The ld DR accordingly prayed that the issue can be remitted back for fresh examination. 49. We heard the parties and perused the material on record. Before proceeding further we look at the provisions of section 43CA of the Act which reads as under – [Special provision for full value of consideration for transfer of assets other than capital assets in certain cases. 43CA. (1) Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1). (3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement. (4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by any mode other than cash on or before the date of agreement for transfer of the asset.] 50. From the plain reading of the above section, it is clear that section 43CA gets triggered if the consideration received by an assessee on transfer of immovable property is less than the stamp duty value on the date of the agreement, and in that case, the value so adopted or assessed or assessable shall be deemed to 35 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd be the full value of consideration for the purposes of computing income under the head “Profits & Gains of Business or Profession". Therefore it is important to understand when the transfer of asset took place in assessee's case for the purpose of determining the applicability of section 43CA. Section 2(47) of the Act defines the term `transfer‟. However, the said definition is in relation to a capital asset and section 43CA applies to an asset which is not a capital asset and therefore, the definition of the term `transfer‟ as defined u/s 2(47) may not be applicable. Therefore it is relevant to examine whether the letter of allotment can be construed as an agreement to sell and that as per the terms of letter there is a transfer. It is also relevant to look at whether on the date of issue of letter of allotment the property / asset was in existence or under construction in order to understand if transfer by issue of letter of allotment was only rights in under construction flats or the property per se. The decisions relied on by the assessee are rendered in the context of section 50C in which the asset transferred is a capital asset. Therefore the same cannot be applied in assessee's case where the transfer is of non-capital asset under section 43CA without examining the terms of the letter of allotment. We notice that the Assessing Officer has not verified the terms agreed in the letter of allotment and has not given any specific finding in respect of the contention of the assessee that the provisions of section 43CA is not applicable. The CIT(A) has relied on the order for AY 2017-18 in assessee's own case without recording any findings specific to the year under consideration. On perusal of the order relied on by the CIT(A) for AY 2017-18, we notice that there is no finding with to whether the transfer of the immovable property took place in the year of allotment or in the year of registration. The lower authorities have mainly proceeded with the addition on the ground that the assessee itself has offered the adjustment of sale value in the original return of income and has removed the same in the revised return. In view 36 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd of this discussion we are of the considered view that the issue of applicability of provisions of section 43CA for the impugned transactions should be remitted back to the assessing officer for fresh examination with a direction to give reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes. ITA No.1879/Mum/2023 – AY 2017-18 51. For the assessment year 2017-18, the assessee filed the return of income on 31/10/2017 declaring total income f Rs.26,49,57,870/- under the normal provisions of the Act and a book profit of Rs.29,44,66,446/- under section 115JB of the Act. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer completed the assessment under section 143(3) by making the following adjustments (i) Denying deduction u/s.80IB(10) (ii) Disallowance u/s. 36(1)(va) r.w.s. 2(24)(x) (iii) Addition towards rental income (iv) Disallowance u/s.14A (v) Addition made u/s.43CA (vi) Disallowance u/s.37(1) r.w.s.36(1)(iii) 52. On further appeal the CIT(A) confirmed the disallowances and the assessee is in appeal before us against the order of CIT(A). Disallowance of deduction under section 80IB(10) 53. The Assessing Officer noticed that the assessee, for the year under consideration, has claimed a deduction of Rs.1,80,29,146/-under section 80IB(10) towards the project „SRA Project – Blue Mountain‟ and that the project was commenced on 27/04/2006 and deduction was claimed from the assessment year 37 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 2013-14. The Assessing Officer called on the assessee to furnish the relevant details pertaining to the deduction claimed under section 80IB(10). The assessee furnished the details called for by the Assessing Officer and submitted that all the conditions for claiming the deduction have been duly complied with. The Assessing Officer denied the benefit of section 80IB(10) for the reason that – (a) Assessee has not furnished the details of units sold showing the compliance with the provisions of the Act; (b) Based on the details filed during the remand proceedings for A.Y. 2013-14, the assessee has furnished details with regard to the built-up area, according to which, units are higher than the specified limit of 1000 sq.ft.; (c) The assessee has allocated lesser expenses towards the project „Blue Mountain‟ in order to claim higher deduction under section 80IB(10). 54. Aggrieved, assessee preferred appeal before the CIT(A), who confirmed the disallowance. 55. The Ld.AR submitted that the additional area considered by the Assessing Officer to come to the conclusion that the size of the units is higher than 1000 sq.ft. are elevational projection beyond the building line that is not accessible and, therefore, cannot be considered for the purpose of computing the built up area while allowing deduction under section 80IB(10) of the Act. The Ld.AR relied on the decision of the co-ordinate bench in the case of Nahar Enterprises vs DCIT (2017) 4 TMI 913 (ITAT Mumbai) wherein it was held that though areas in the unit which are on non-floor level should not form part of built up area for the purpose of deduction under section 80IB(10). The Ld.AR further submitted that in the above case, the co-ordinate bench has clearly held that floor bed or which is open to sky, window or window projection, cupboard projections are not to be included in calculation of built up area. The Ld.AR also relied on the various judicial pronouncements in order to submit that the external projections which are 38 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd built for the aesthetic beauty of the building and not habitable, should not be considered as part of built up area for the purpose of section 80IB(10). The Ld.AR also submitted a detailed written submission distinguishing the judgment relied on by the CIT(A). 56. With regard to the allocation of expenses held by the assessing officer as not correct, the ld AR submitted that the apportionment has been examined by a Chartered Accountant and an Audit Report in Form 10CCB has been issued by the auditor. The ld AR also submitted that the revenue has not brought anything on record, to substantiate his reasoning for addition. 57. The Ld.DR, on the other hand, submitted that the details relied on by the Assessing Officer have been submitted by the assessee, itself, in which the total area is more than 1000 sq.ft. Accordingly, the Ld.DR submitted that the assessee has not complied with the conditions prescribed under section 80IB(10) and, therefore, not eligible for deduction. 58. We heard the parties and perused the material on record. The main ground on which the revenue has denied the benefit of deduction under section 80IB(10) of the Act is that built up area in certain flats as per the details submitted by the assessee during the remand proceedings of AY 2013-14 shows that the area is bigger than the specified limit of 1000 sq.ft. On perusal of the details submitted by the assessee during the remand proceedings as extracted below 152.71 sq.ft. has been given as elevational projections beyond building line which is not accessible and not calculated in the municipal approved plan:- 39 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd SAMARTH BLUE MOUNTAINS (A) B.U.A. of Flat No.1 & 4 o WINGT A calculated as per Municipal Approved plans dated 03/08/2009 Sr No Length Width Totqal Area (sq mt) 1 2.74 1.52 4.16 2 5.92 3.81 22.56 3 3.35 4.1 13.74 4 2.59 2.65 6.86 5 6.09 3.48 21.19 6 3.74 3.5 9.59 B2 3.5 1.92 6.72 B1 2.59 0.42 1.09 TOTAL (SQ.MTR) (Sq.Ft) 85.91 924.73 (B) Approximate area of Elevational Projection beyond the Building line which is not accessible & not calculated in the MunicipalApproved plan. Sr No Length Width Totqal Area (sq mt) 1 1.8 1 1.80 2 0.6 1.5 0.90 3 0.73 2.7 1.97 4 2.59 0.9 2.33 5 2.75 0.83 2.28 6 2.57 0.61 1.57 7 1.65 0.45 0.74 8 (FLOWER BED) 1.2 2.16 2.59 TOTAL (Sq. Mtr) 14.19 152.71 GRAND TOTAL (A+B) (Sq.Ft.) 1077.44 59. The said sq.ft. has been considered by the Assessing Officer to be part of the built up area for the purpose of section 80IB(10) deductionIn the above extracted details furnished the assessee has given an overall submission saying that 152.71 sq.ft belongs to elevational projections beyond building line which is not accessible and not calculated in the municipal approved plan. However the details each of the line items such whether it belongs to common area etc., has not been submitted by the assessee justifying the claim that the same should not be included as "Built-up area". We further notice that the Assessing Officer, has merely gone 40 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd by the above extracted data submitted before the Assessing Officer during remand proceedings for AY 2013-14, but has not gone into further detail elevated area to examine whether the same falls within the definition of "Built-up area" under section 80IB. It is relevant here to look at the definition "Built-up area" which is extracted below – (14) For the purposes of this section,— (a) "built-up area" means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units; 60. As stated above the lower authorities have not verified the facts of the matter but simply gone by the details submitted by the assessee and assuming the extra area should be part of "Built-up area". This is not correct approach for the reason that definition of "Built-up area" in our considered view needs to be examined based on facts relevant to assessee's case. Therefore we deem it fit to remit the issue back to the assessing officer for a fresh examination of the facts based on the details that may be called for from the assessee. The assessee is directed to submit the relevant details to substantiate the claim that the "Built-up area" does not exceed 1000 sq ft with respect to the flats sold during the year. 61. During the course of hearing the ld AR presented a without prejudice plea that deduction under section 80IB should be allowed on proportionate basis with respect to the flats sold whose "Built-up area" is less than 1000 sq.ft. We have while considering the issue of deduction under section80IB for AY 2014-15 already issued direction to the assessing officer to allow proportionate deduction under section 80IB(10) with respect to those flats sold during the year under consideration whose built up area is less than 1000 sq.ft as per the ratio laid down 41 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd by the Jurisdictional High Court in the case of Kumar Builders Consortium (supra). Accordingly similar direction is issued for the year under consideration also. 62. The Assessing Officer has denied the benefit of section 80IB for one more reason that the common expenses are allocated disproportionately towards the project eligible for section 80IB in order to claim enhanced deduction. The CIT(A) upheld the view taken by the Assessing Office for the reason that the assessee has not justified the allocation of expenses with any documentary evidence. Since we have already remitted the issue back to the assessing officer, we in this regard further direct the Assessing Officer to verify the allocation based on evidences that may be called for from the assessee and decide in accordance with law. 63. The Ground raised with regard to employees‟ contribution towards PF & ESI is not pressed during the course of hearing and hence, the same is dismissed as not pressed. Addition towards rental income 64. The Assessing Officer made an addition of Rs.1,09,10,971/- towards 100% of the rental income received from ICICI Bank as against 80% offered by the assessee. 65. We have given a detailed finding with regard to the same issue while adjudicating the appeal for A.Y. 2014-15 in the earlier part of its order. Facts being identical, our decision with regard to the issue is mutatis mutandis applicable for .Y. 2017-18 also. Accordingly, the issue is remitted to the Assessing Officer with similar directions. 42 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd Disallowance under section 14A read with rule 8D 66. During the year under consideration, the assessee has received a dividend income of Rs.375/-. The Assessing Officer further noticed that the assessee has made investment in equity instruments amounting to Rs.5,30,38,500/- and Rs.85,50,02,986/- in the partnership firm, the income of which is exempt as per law. During the year under consideration, the assessee has incurred a loss of Rs.23,48,906/- from the investment in the partnership firm. The assessee submitted before the Assessing Officer that the assessee has not maintained any separate books of account for the source of exempt income and that the assessee has sufficient interest free funds which are used for the purpose of making investments. Accordingly, the assessee submitted that no disallowance under section 14A is warranted. The Assessing Officer did not accept the submissions of the assessee and proceeded to make a disallowance of Rs.78,32,624/- against which, the assessee filed appeal before CIT(A), who upheld the disallowance. 67. The Ld.AR submitted that the disallowance under section 14A cannot exceed the exempt income earned by the assessee, which is Rs.375/-. The Ld.AR relied on the decision of the Bombay High Court in the case of Nirved Traders Pvt Ltd vs CIT (2019) 4 TMI 1738 in this regard. Further, the Ld.AR submitted that the amendment to section 14A made by Finance Act, 2022 is prospective in nature and cannot be applied in assessee‟s case for the year under consideration. The Ld.AR in this regard relied on the decision of the Hon‟ble Delhi High Court in the case of Era Infrastructure India Pvt Ltd in ITA No.2104/2022. 43 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 68. We heard the parties and perused the material on record. The assessee has made investments in equity instruments amounting to Rs.5,30,38,500/- and the assessee earned dividend income of Rs.375/- . The assessee has also invested Rs.85,50,02,986/- in the partnership firm and the loss from the partnership firm for the year under consideration was Rs. 23,48,906/-. The assessing officer has made a disallowance of Rs. Rs.78,32,624/-. The contention of the assessee is that the assessee is having sufficient own funds and hence no disallowance is warranted. The assessee without prejudice submitted that the disallowance if any should be restricted to the amount of exempt income earned. In this regard we notice that the Hon'ble Bombay High Court in Nirved Traders (P.) Ltd. (supra) has considered a similar issue and held that disallowance under section 14A of the Act cannot be more than exempt income. Accordingly we hold that the disallowance under section 14A should be restricted to the exempt income earned by the assessee. The assessing officer is directed accordingly to recompute the disallowance under section 14A r.w.r.8D. Addition under section 43CA 69. During the year, the assessee had sold 3 flats and the Assessing Officer called for an explanation from the assessee for the difference in the agreement value and the stamp duty value for the purpose of proposed addition under section 43CA. The details of the 3 flats sold are as given below:- Name of the Customer Allotment Date Agreement Value Registration Date Agreement Value Market Value as per Registration Santosh Kumar Shetty 12.07.2016 1,31,48,000 12.07.2016 1,31,48,000/- 1,34,46,000/- 44 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd Ragavendra Sheregar 01.09.2012 1,12,13,824 28.10.2016 1,12,13,824/- 1,46,30,800/- Shobhnath Rajbhar 11.02.2012 1,08,54,400 10.03.2017 1,08,54,400/- 1,40,97,600/- 70. With regard to the flat sold to Shri Santosh Kumar Shetty, the assessee submitted that the difference between stamp value and the agreement value is less than 5% and thus section 43CA does not apply. In regard to flat sold to Shri Raghavendra and Shri Shobhnath, the assessee submitted that the buyers had paid part consideration during the allotment and, therefore, the stamp duty value as on the date of allotment which is less than the agreement value should only be considered as per the provisions of sub sections (3) and (4) of section 43CA. The assessee, in this regard furnished the letter of allotment. The Assessing Officer did not consider the submissions of the assessee and made an addition of Rs.69,58,170/- under section 43CA of the Act. 71. The Ld.AR reiterated the submissions made before the lower authorities. The ld AR further submitted that the Assessing Officer while considering the issue, has erroneously held that the assessee does not have any objection to addition under section 43CA with regard flats sold to Shri Raghavendra and Shri Shobhnath, whereas the assessee had made submissions objecting the addition. The Ld.AR also submitted that the first proviso inserted vide Finance Act, 2018, which deals with minor variations, which has the range of 5% was inserted with an intention to remove the undue hardship and, therefore, should be treated as retrospective for the purpose of section 43CA with regard to the flat sold to Shri Santosh Kumar. The Ld.AR in this regard placed reliance on the decision of the co-ordinate bench in the case of Harish H Gandhi vs ACIT (2022) (6) TMI 1277 (ITAT, Mumbai). With regard to flat sold to Shri Raghavendra and Shri 45 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd Shobhnath, the ld AR submitted that no addition under section 43CA is warranted if the stamp duty value as on the date of agreement i.e. date of allotment is considered since the market value on the said date is lower than the value for which the property is registered. 72. The Ld.DR relied on the order of the lower authorities. 73. We heard the parties and perused the material on record. The issue is similar to the addition made under section 43CA for AY 2014-15, where we have remitted the issue back to the assessing officer to examine the applicability of section 43CA for the impugned transactions afresh. Since the issue for AY 2017-18 is similar towards sale of flat to Shri Raghavendra and Shri Shobhnath, we remit the issue for the year under consideration also back to the assessing officer. For the flat sold to Shri Santosh Kumar, we notice that the coordinate bench SHRI HARISH H GANDHI has considered a similar issue and held the appeal in favour of the assessee. Accordingly we hold that if the difference between the stamp duty value and the transaction value covered by the provisions of section 43CA is less than 10% even prior to 1/4/2021, does not warrant any addition in the hands of the assessee. Accordingly, we direct the assessing officer to delete the addition made towards sale of flat to Shri Raghavendra and Shri Shobhnath under section 43CA of the act. Disallowance under section 37(1) read with section 36(1)(iii) 74. The Assessing Officer disallowed the interest expenditure charged to the P&L Account. The Assessing Officer, on analysis of the financial statements was of the view that there are two instances where the interest bearing borrowed funds 46 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd are being used for other than business purposes. The first one being mismatch of inventory between the closing stock as on 31/03/2016 vs the opening stock as of 01/04/2015. The assessee submitted the following reconciliation:- ―In response, the Assessee furnished the explanation on 13/11/2019 to the same as under:- Inventory as on 31.303.2016 1,022,605,816 Less Transferred to investment 350,970,816 Inventory as on 01.04.2016 671,635,000 Reason:- Opening stock of units of the commercial project called ―first avenue‖ transferred to investment account as management has decided to lease out this units and not to sell in future Hence credit effect given in profit & loss account of Project first avenue.‖ 75. The Assessing Officer on perusal of the details held that since the portion of the stock is converted into investment, the finance cost incurred towards this inventory cannot be claimed as a deduction. Accordingly, the Assessing Officer disallowed a sum of Rs.4,31,69,410/-. Secondly, the Assessing Officer noticed that the assessee has given interest free loans to the subsidiary, Atul Resource and Hospitality India Pvt Ltd and, therefore, disallowed interest paid by the assessee @12.3% as disallowable. The Assessing Officer, however, restricted overall disallowance to the finance cost charged to the P&L Account. On appeal, the CIT(A) upheld the disallowance made by the Assessing Officer. 76. The Ld.AR submitted that the assessee is having enough own funds in the form of share capital and reserves and, therefore, no disallowance is warranted under section 36(1)(iii). The assessee in this regard place reliance on the decision 47 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd of the Hon‟ble Bombay High Court in the case of CIT vs Relance Utilities & Power Ltd (2009) 178 Taxmann 135 (Bom). Accordingly, the Ld.AR prayed for deletion of disallowance under section 37 (1) read with section 36(1)(iii) of the Act. 77. The Ld.DR relied on the order of the lower authorities. 78. We heard the parties and perused the materials on record. We notice that the Hon‟ble Bombay High Court in the case of Reliance Utilities & Power Ltd (supra) has considered a similar issue and held that - 10. If there be interest free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest free funds available. In our opinion the Supreme Court in East India Pharmaceutical Works Ltd. (Supra) had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (supra) where a similar issue had arisen.. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcomber’s case (Supra) the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle therefore would be that if there are funds available both interest free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest free fund generated or available with the company, if the interest free funds were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the C.I.T. (Appeals) and I.T.A.T. 48 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd 79. On perusal of records we notice that the assessee is having interest free funds to the tune of Rs.210 crores and therefore applying the ratio laid down by the jurisdictional High Court to assessee's case we hold that no disallowance under section 36(1)(iii) is warranted. This ground raised by the assessee is allowed. 80. In the result, appeals for A.Ys 2015-16, 2016-17 & 1920 are allowed. Appeal for A.Y. 2014-15 allowed for statistical purpose and appeal for A.Y. 2017- 18 is partly allowed. Order pronounced in the open court on 27/09/2023 Sd/- sd/- (KAVITHA RAJAGOPAL) (PADMAVATHY S) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dt :27 th September, 2023 Pavanan प्रतितिति अग्रेतििCopy of the Order forwarded to : 1. अिीिार्थी/The Assessee , 2. प्रतिवादी/ The Respondent. 3. आयकर आयुक्त CIT 4. तवभागीय प्रतितिति, आय.अिी.अति., मुबंई/DR, ITAT, Mumbai 6. गार्ड फाइि/Guard file. BY ORDER, //True Copy// Asstt. Registrar / Senior Private Secretary ITAT, Mumbai 49 I.T.A. No.1940,1876,1877, 1879 & 1880 / Mum/2023 M/s Atul Projects India Pvt Ltd