Mangla Properties Pvt.Ltd., Baroda V. The ACIT.,Cent.Circle-1, Baroda

ITA 2249/AHD/2009

• Counselvise Citation: 224920514 RSA 2009
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-07-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 22-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBHASH VAINS; O P BATHEJA SR DR I
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Capital asset; Depreciation; Search and seizure; Revised return; Reason to believe; Revenue expenditure
• Section: 143(3); 153A; 80IB; 147; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA, VP AND SHRI A. K. GARODIA , AM) ITA NO.2249, 2250 AND 2251/AHD/2009 (AY: 2004-05, 2005-06 AND 2006-07) MANGLA PROPERTIES PVT. LTD., 101 TO 107, K. P. SHOPPING COMPLEX, KARELIBAUG, BARODA P. A. NO. AABCM 3105 E VS THE A. C. I. T., CIRCLE- 1, AAYAKAR BHAVAN, RACE COURSE ROAD, BARODA (APPELLANT) (RESPONDENT) ITA NO.2286, 2287 AND 2288/AHD/2009 (AY: 2003-04, 2004-05 AND 2005-06) THE A. C. I. T., CIRCLE- 1, AAYAKAR BHAVAN, RACE COURSE ROAD, BARODA VS MANGLA PROPERTIES PVT. LTD., 101 TO 107, K. P. SHOPPING COMPLEX, KARELIBAUG, BARODA P. A. NO. AABCM 3105 E (APPELLANT) (RESPONDENT) C. O. NO.182, 183 AND 184 (IN ITA NO.2286, 2287 AND 2288/AHD/2009 - AY: 2003-04, 2004-05 AND 2005-06) MANGLA PROPERTIES PVT. LTD., 101 TO 107, K. P. SHOPPING COMPLEX, KARELIBAUG, BARODA P. A. NO. AABCM 3105 E VS THE A. C. I. T., CIRCLE- 1, AAYAKAR BHAVAN, RACE COURSE ROAD, BARODA (CROSS OBJECTOR) (RESPONDENT) ITA NO.663, 664 AND 665/AHD/2013 (AY: 2004-05, 2005-06 AND 2006-07) THE A. C. I. T., CIRCLE- 1, AAYAKAR BHAVAN, RACE COURSE ROAD, BARODA VS MANGLA PROPERTIES PVT. LTD., 101 TO 107, K. P. SHOPPING COMPLEX, KARELIBAUG, BARODA P. A. NO. AABCM 3105 E (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI VIJAY RANJAN, AR DEPARTMENT BY SHRI SUBHASH VAINS, CIT DR AND SHRI O. P. BATHEJA, SR. DR IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 2 DATE OF HEARING : 25-07-2013 DATE OF PRONOUNCEMENT : 14-08-2013 ORDER PER BENCH : IN THIS BUNCH OF TWELVE APPEALS AND CROSS OBJECTI ONS, THERE ARE CROSS APPEALS OF THE ASSESSEE AND THE REVENUE IN RE SPECT OF ASSESSMENT YEARS 2004-05 AND 2005-06 IN RESPECT OF ASSESSMENT PROCEE DINGS U/S 153A OF THE ACT AND THE CROSS OBJECTIONS ARE FILED BY THE ASSESSEE IN T HESE TWO YEARS. FOR THE ASSESSMENT YEAR 2003-04, THERE IS APPEAL FILED BY T HE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE IN RESPECT OF PROCEEDINGS U/S 153A OF THE ACT. FOR THE ASSESSMENT YEARS 2006-07, THERE IS AN ASSESSEES AP PEAL. FOR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07, THERE ARE THREE APPEALS OF THE REVENUE IN RESPECT OF PENALTY PROCEEDINGS U/S 271 (1) (C) OF T HE ACT. IN THIS MANNER, THERE ARE TOTAL TWELVE CROSS APPEALS AND CROSS OBJECTIONS WHI CH WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2003-04 BEING ITA NO.2286/AHD/2009. THE ONLY EFFECTIVE GROU ND RAISED BY THE REVENUE IN THIS APPEAL BEING GROUND NO.1 IS AS UNDER:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.1468275 MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DISALLOWANCE OF DEDUCTION U/S. 80 IB (1) OF THE I. T. ACT. 3. BRIEF FACTS REGARDING THIS ISSUE IN RESPECT OF D ISALLOWANCE OF THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 80 IB (10) OF THE ACT ARE NOTED BY THE LEARNED CIT (A) IN PARA 3.0 OF HIS ORDER WHICH INCLUDES THE FAC TS AS WELL AS STAND TAKEN BY THE AO AND ALSO INCLUDES THE ARGUMENTS MADE BY THE LEARNED AR OF THE ASSESSEE BEFORE THE LEARNED CIT (A). PARA 3.0 OF THE ORDER OF THE LEARN ED CIT (A) FOR THE ASSESSMENT YEAR 2003-04 IS REPRODUCED HEREIN BELOW:- 3.0 THE LEARNED COUNSEL CONTENDED REGARDING SECOND GROUND OF APPEAL AS UNDER:- LEARNED COUNSEL CONTENDED THAT THE APPELLANT HAD CO NSTRUCTED ONE HOUSING PROJECT NAMELY ARUN NAGAR AND THE INC OME FROM WHICH WAS CLAIMED AS DEDUCTION BY VIRTUE OF SECTION 80 IB(10) OF I. T. ACT IN THE RETURN OF INCOME FILED DURING THE YEAR UNDER CONSIDERATION. THIS RESIDENTIAL HOUSING PROJECT WAS EXECUTED BY ENTERING INTO THE DEVELOPMENT WITH THE LAND OWNERS. THE SAID IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 3 CLAIM OF DEDUCTION AMOUNTING TO RS.14,68,275/- WAS REJECTED BY THE ASSESSING OFFICER. LEARNED COUNSEL FURTHER CONT ENDED THAT THE PROVISIONS OF SECT IN 80 IB (10) ARE COMPLIED WITH IN THE PRESENT CASE AS UNDER: - I. THE APPELLANT HAD SUBMITTED TO THE ASSESSING OFF ICER THE COPY OF THE APPROVED LAW OUT PLAN AND THE COPY OF THE RAJA CHITTHI I.E. THE PERMISSION FOR DEVELOPMENT WHICH IS SUBMITTED A LONG WITH STATEMENT OF FACTS, AND ALSO THE COPY OF THE AUDITO R REPORT U/S 10CCB FOR RELEVANT ASSESSMENT YEARS IN WHICH THE DE DUCTION U/S 80 IB (10) IS CLAIMED. II. THE APPELLANT HAS COMMENCED THE DEVELOPMENT AND CONSTRUCTION ON 11/06/1992 AND THE SAME WAS APPROVED BY THE LOCA L AUTHOR0ITY ON 28.08.2000. THE DEVELOPMENT AND CONST RUCTION WAS COMPLETED ON 31.01.2003. III. THE AREA OF THE PLOT LAND WAS 26,204 SQ. MTS. AND BUILT UP AREA OF RESIDENTIAL UNITS TYPE A UNDER THE PROJECT WAS 6 3.43 SQ. MTS. AND TYPE B UNDER THE PROJECT WAS 41.78 SQ. MTS. IT CAN BE INFERRED THAT THE PROJECT IS ON THE SIZE OF THE LAN D WHICH HAS A MINIMUM AREA OF ONE ACRE AND THE BUILD UP AREA OF T H4E RESIDENTIAL UNITS DOES NOT EXCEED 1500 SQUARE FEET, WHICH ARE WELL WITHIN THE CONDITIONS MENTIONED UNDER SECTION 80 IB OF THE ACT. LEARNED COUNSEL FURTHER CONTENDED THAT COMING ON TO THE ISSUE OF LEGAL OWNERSHIP OF LAND NOT IN THE HANDS OF THE APP ELLANT AS A RESULT OF DEVELOPMENT AGREEMENT RAISED BY THE ASSES SING OFFICER THE APPELLANT WOULD LIKE TO SUBMIT THAT THERE IS NO CONDITION FOR OWNERSHIP OF LAND BY THE DEVELOPER FOR CLAIMING DED UCTION U/S. 80 IB (10). THE DEDUCTION IS ALLOWABLE TO THE DEVEL OPER OF THE HOUSING PROJECT. SECTION 80 IB(10) ONLY ENVISAGES T HAT THE UNDERTAKING SHOULD DEVELOP & CONSTRUCT HOUSING PROJ ECT SUBJECT TO CERTAIN CONDITIONS. IN FACT, THE OBJECT OF GRANTING THE RELIEF BY THE SECTION IS THE DEVELOPMENT & CONSTRUCTION OF MORE & MORE HOUSING PROJECTS. IT IS NOT A CONDITION THAT THE LAND ON WH ICH THE PROJECT IS CARRIED ON SHOULD BE REGISTERED IN THE NAME OF THE ASSESSEE. THE SUB SECTION DOES NOT REQUIRE THAT THE ASSESSEE SHOU LD BE THE OWNER OF THE LAND. A PROMOTER SHOULD QUALIFY FOR DE DUCTION BECAUSE IT RUNS UNDERTAKING FOR DEVELOPING & CONSTR UCTING A HOUSING PROJECT, SO THAT THE CONDITIONS OF RELIEF A RE SATISFIED. THE APPROVAL OF PLAN IS IN THE NAME OF THE TITLE HOLDER OF THE LAND WILL NOT MAKE ANY DIFFERENCE. THIS BY ITSELF DOES NOT FO RFEIT THE RIGHT OF THE DEVELOPER TO CLAIM DEDUCTION U/S. 80IB (10). IT IS ENOUGH THAT THE ASSESSEE DEVELOPS & CONSTRUCTS THE HOUSING PROJ ECTS. IT IS FURTHER STATED THAT ON PERUSAL OF THE SPEECHES OF H ONBLE FINANCE MINISTER AT THE TIME OF INTRODUCTION OF PROVISION E NABLING THIS DEDUCTION AND AT THE TIME OF VARIOUS AMENDMENTS MAD E INCLUDING IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 4 THE SPEECH, IT CAN BE APPRECIATED THAT THE CONDITIO N OF THE OWNERSHIP OF LAND IS NOT INTENDED. EVEN OTHERWISE, HAD THIS BEEN THE INTENTION, THE SAME WOULD HAVE BEEN SPECIFICALL Y MENTIONED IN THE SECTION. THE APPELLANT RELIES ON THE DECISION O F ITAT MUMBAI F BENCH IN THE CASE OF PATEL ENGINEERING LIMITED VS. DCIT 84 TTJ 646. IT IS STATED THAT THOUGH THE DECISION IS ON TH E PROVISIONS OF SECTION 80IA (4) OF THE ACT BUT THE PROVISIONS OF SECTION 80 IB(10) ARE ON SIMILAR FOOTING TO 80IA (4) ON THE ISSUE OF OWNERSHIP. IN THE PRESENT CASE ALSO, OWNERSHIP OF LAND IN CASE OF DEV ELOPMENT ACTIVITY IS NOT THE PRECONDITION FOR CLAIMING DEDUC TION U/S. 80- IB(10). LEARNED COUNSEL FURTHER CONTENDED THAT WITHOUT PREJ UDICE TO ABOVE, APPELLANT STATES THAT OWNERSHIP AND ABSOLUTE POSSESSION AND OCCUPATION OVER THE CONSTRUCTION AND CONSTRUCTE D LAND HAS BEEN GIVEN TO APPELLANT AND THEREFORE ONE CANNOT DE NY DEDUCTION U/S. 80 IB EVEN ON THE GROUND THAT THE SAID LAND IS NOT IN THE NAME OF APPELLANT. BY VIRTUE OF THE DEVELOPMENT AG REEMENT, THE APPELLANT HAS OBTAINED THE LAND POSSESSION TOGETHER WITH THE RIGHTS TO DEVELOP AND CONSTRUCT THE PROJECT. ACCORD INGLY, APPELLANT FIRM HAD BECOME PARTY TO THE AGREEMENT WHILE TRANSF ERRING LAND TO THE ULTIMATE CONSUMER. ONE OF THE CONNOTATIONS O F TRANSFER IS TRANSFER OF POSSESSION WHICH IS LAWFUL AND VALID. W ITHOUT TAKING POSSESSION OF THE LAND, APPELLANT FIRM WOULD NOT HA VE BEEN IN POSITION TO DEVELOP AND BUILD THE RESIDENTIAL UNITS AT ALL. LEARNED COUNSEL FURTHER CONTENDED THAT THE APPELLAN T STATES THAT IT HAS ENTERED INTO DEVELOPMENT AGREEMENT WITH ORIG INAL LAND OWNERS AND BY VIRTUE OF SAID AGREEMENTS DEVELOPMENT RIGHTS ARE TRANSFERRED IN FAVOUR OF IT. EVEN ACCORDING TO SECT ION 2 (47) OF THE INCOME TAX ACT READ WITH SECTION 53A OF TRANSFER OF PROPERTY ACT, THE SAID TRANSACTION IS TREATED AS TRANSFER IN RELA TION TO CAPITAL ASSET AND ASSESSEE BECOMES THE OWNER OF THE LAND. A PPELLANT WOULD FURTHER STATE THAT ACCORDING TO JUDGMENT OF T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKA DAS KAPADIA V. CIT (260 ITR 491), ASSIGNING DEVELOPMENT RIGHTS IN A PROPERTY AMOUNTS TO TRANSFER U/S. 2 (47) OF THE INC OME-TAX ACT, 1961 AND HENCE BY DEVELOPMENT AGREEMENT, APPELLANT HAS BECOME THE OWNER OF SAID LAND. SECTION 2 (47) (V) R EAD WITH SEC. 53A MAKES THE POSITION VERY CLEAR. LEARNED COUNSEL FURTHER CONTENDED THAT APPELLANT HA S CONSTRUCTED TENEMENTS TOGETHER WITH COMMON MENINGIT IS LIKE ROADS, WATER SUPPLY, ELECTRIC POWER, DRAINAGE CONNE CTION ETC. THUS IT HAS CREATED A NEW PRODUCT ON THE PLOT OF LA ND BY PERFORMING THE ABOVE STATED DEVELOPMENT ACTIVITIES. IT IS OBVIOUS AND VERY WELL SETTLED THAT PROVISIONS GRANTING INCE NTIVES ARE REQUIRED TO BE INTERPRETED LIBERALLY AND NOT HYPER- TECHNICALLY. IT IS HELD BY VARIOUS COURTS THAT IN CONSTRUING THE BENEV OLENT IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 5 PROVISIONS, THE CONSTRUCTION, WHICH ADVANCES, FULFI LLS AND FURTHERS THE OBJECT OF THE ACT, SHOULD BE ADOPTED RATHER THA N ONE, WHICH WOULD DEFEAT THE SAME AND RENDER THE PROTECTION ILL USORY. IN VIEW OF THE POSITION AS EXPLAINED ABOVE, SUPPORTED BY VA RIOUS JUDICIAL DECISIONS, IT IS STATED THAT DEDUCTION U/S. 80 IB C ANNOT BE DENIED TO IT. LEARNED COUNSEL FURTHER CONTENDED THAT AHMEDABAD TR IBUNAL IN CASE OF M/S. RADHE DEVELOPERS V/S. ITO (113 TTJ 300 ) ITA NO.2482/AHD/2006 WHERE IT HAS CATEGORICALLY HELD TH AT THE DEDUCTION BENEFIT IS AVAILABLE TO THE DEVELOPER OF THE HOUSING PROJECT EVEN IF HE IS NOT THE OWNER OF THE LAND ON WHICH PROJECT IS DEVELOPED NOR THE PERMISSION LETTER FOR PROJECT DEV ELOPMENT IS IN HIS NAME. THE RELEVANT CONCLUSION OF THE TRIBUNAL I S IN PARA 44 & 45 OF THE ORDER. THE RELEVANT PORTION OF THE ORDER READS AS UNDER:- 44. AS DISCUSSED AND IN VIEW OF THE CASE LAW OF TH E SUPREME COURT IN THE CASE OF MUYSORE MINERALS LTD. (SUPRA) WHEREIN IT HAS BEEN CATEGORICALLY OBSERVED AS REGAR D TO OWNERSHIP THAT ANYONE IN POSSESSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINION OVER PROPERTY AS WOULD ENABLE OTHERS BEING EXCLUDED THERE FROM AND HAVING THE RIGHT TO USE AND OCCUPY THE PROPERTY AND/OR TO ENJO Y ITS USUFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDINGS THROUGH A FORMAL DEED OF THE TITLE MIGHT NOT HAVE BEEN EXECUTED AND REGISTERED AS CONTEMPLATED BY THE TRANSFER OF PROPERTY ACT, THE REGISTRATION ACT ETC. IN THE PRESENT CASE BEFORE US, BY VIRTUE OF AGREEMENT TO SALE AND DEVELOPMENT AGREEMENT THE ASSESSEE HAS ACQUIRED DOMINION OVER THE LAND TO THE EXCLUSION OF OTHERS A ND HE HAS COMPLETED THE PROJECT IN TERMS AND CONDITIONS L AID DOWN U/S 80 IB (10) OF THE ACT, TO CLAIM DEDUCTION ON THE PROFIT DERIVED FROM CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT. THERE IS NO EXPLICIT C ONDITION ENUMERATED IN SECTION 80 IB(10) OF THE ACT AS REGAR D TO REQUIREMENT OF OWNERSHIP FOR THE CLAIM OF DEDUCTION . IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE A S WELL AS LEGAL PROPOSITION LAID DOWN BY THE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. (SUPRA) AWE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION ON THE PROFIT DERIVED FROM CONSTRUCTION AND DEVELOPMENT OF RESIDE NTIAL HOUSING PROJECT. 45. THEREFORE, LOOK AT FROM ANY ANGLE WE ARE OF THE CONSIDERED OPINION THAT TO CLAIM DEDUCTION FOR DEVE LOPING AND BUILDING HOUSING PROJECT, IT IS NOT NECESSARY T HAT ASSESSEE MUST BE AN OWNER OF THE LAND AND IT WOULD BE SUFFICIENT IF HE HAS AN UNDERTAKING DEVELOPS AND BU ILD IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 6 HOUSING PROJECT. THE ASSESSEE IS ALSO THE OWNER OF THE PROJECT, THOUGH THE TITLE DOES NOT VEST IN IT. LEARNED COUNSEL FURTHER CONTENDED THAT IT IS A SETT LED LAW THAT THE PERSON WHO DEVELOPS THE HOUSING PROJECT AND FUL FILLS THE REQUIREMENT OF PROVISIONS OF SECTION 80 IB(10) I.E . THE SIZE OF LAND, AREA OF CONSTRUCTED UNIT, TIME OF COMPLETION ETC. W ILL BE ELIGIBLE FOR DEDUCTION EVEN IF HE DOES NOT HOLD THE TITLE OF THE LAND IN HIS NAME NOR THE PERMISSION FOR DEVELOPMENT OF THE PROJECT F ROM THE CORPORATION IS OBTAINED IN HIS NAME. LEARNED COUNSEL FURTHER CONTENDED THAT THE ONLY REA SON FOR DISALLOWANCE OF CLAIM OF DEDUCTION BY THE ASSESSING OFFICER WAS THAT THE APPELLANT WAS NOT THE TITLE HOLDER OF THE LAND AND THE PERMISSION OF PROJECT DEVELOPMENT WAS NOT IN THE NA ME OF THE APPELLANT BUT IN THE NAME OF THE TITLE HOLDER OF TH E LAND NOW AFTER THE DECISION IN CASE OF M/S. RADHE DEVELOPERS V/S. ITO (113 TTJ 300) (SUPRA) THE ISSUE IS SETTLED IN APPELLANTS FA VOUR. LEARNED COUNSEL FURTHER CONTENDED THAT CONSIDERING THE ABOVE SUBMISSION THE DISALLOWANCE MADE BY THE ASSESSING O FFICER OF CLAIM U/S 80IB (10) DESERVES TO BE DELETED. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO HAS DECIDED THE ISSUE IN FAVOUR OF THE A SSESSEE BY FOLLOWING THE TRIBUNAL DECISION RENDERED IN THE CASE OF RADHE DEVELOPERS, 113 TTJ 300 (AHD) AND NOW, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DR OF THE REVENUE SUPPORTED THE ASSE SSMENT ORDER WHEREAS THE LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF T HE LEARNED CIT(A). HE ALSO SUBMITTED THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF RADHE DEVELOPERS, 341 ITR 403 (GUJ). HE ALSO SUBMITTED THAT THE ONLY OBJECTIO N OF THE AO WAS THAT THE ASSESSEE WAS NOT OWNER OF THE LAND IN QUESTION AND DEDUCTION U/S 80 IB (10) OF THE ACT IS ALLOWABLE ONLY TO THE LAND OWNER. HE SUBMITTED THA T ON THIS ASPECT, THE ISSUE IS NOW FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THIS JUD GMENT OF THE HONBLE GUJARAT HIGH COURT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND THE JUDGMENT CITED BY THE LEARNED AR. WE FIND THAT THIS ISSUE IS DECID ED BY THE LEARNED CIT(A) AS PER IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 7 PARA 3.1 OF HIS ORDER AND THE SAME IS REPRODUCED BE LOW FOR THE SAKE OF READY REFERENCE:- 3.1 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF LD. COUNSEL AS WELL AS GONE THROUGH THE RECORDS. ON PERUSAL OF RECORDS, IT HAS BEEN NOTICED THAT THE APPELLANT HAD CONSTRUCTED HOUSING PROJECT NAMELY ARIN NAGAR. THIS RESIDENTIAL HOUSING PROJECT WAS EXECUTED BY EN TERING INTO THE DEVELOPMENT AGREEMENT WITH THE LAND OWNERS. FURTHER , THE DEVELOPMENT AGREEMENT IS AN AGREEMENT UNDER WHICH THE LAND OWNE R HANDS OVER THE POSSESSION TO THE DEVELOPER, WHICH ENTITLED DEVELOP ER TO DEVELOP THE PROPERTY ENTIRELY AT HIS CHOICE, CONVENIENCE AND DI SCRETION. BU SUCH DEVELOPMENT AGREEMENT, THE PRICE ON WHICH THE LAND WOULD BE SOLD IS FIXED. THE AGREEMENT WOULD ALSO SPECIFY THAT THE LA NDOWNER WOULD BE ENTITLED TO RECEIVE HIS CONSIDERATION EITHER IMMEDI ATELY OR OVER A FIXED PERIOD, IRRESPECTIVE OF WHETHER OR NOT THE LAND IS ACTUALLY DEVELOPED BY THE DEVELOPER. THE LAND OWNER GIVES ALL HIS RIGHTS OVER THE LAND AND GIVES FULL AUTHORITY TO THE DEVELOPER TO ENJOY THE LAND IN THE MANNER OF HIS CHOICE. THE AGREEMENT WOULD ALSO SPECIFICALLY A UTHORIZE THE DEVELOPER TO DEVELOP THE LAND, CONSTRUCT TENEMENTS THEREON, BOOK MEMBERS AND HANDOVER THE POSSESSION TONE OR MORE AL LOTTEES. FOR ALL PURPOSES, THEREFORE, THE LAND OWNER EXTINGUISHES HI S INTEREST IN THIS LAND IN FAVOUR OF DEVELOPER ON EXECUTION OF THE DEV ELOPMENT AGREEMENT. THEREFORE, IT IS NOT NECESSARY THAT LAND CAN BE HAN DED OVER TO THE DEVELOPER ONLY AFTER TRANSFER OF TITLE BY WAY OF SA LE DEED AFTER MAKING FULL PAYMENT BEFORE STARTING ANY CONSTRUCTION THERE ON. SIMILAR VIEW WAS HELD BY JURISDICTIONAL AND BINDING HONBLE ITAT, AH MEDABAD BENCH IN THE CASE OF RADHE DEVELOPERS V/S. ITO (113 TTJ 300) IN ITA NO.2482/AHD/2006 WHEREIN IT WAS CATEGORICALLY HELD THAT THE DEDUCTION BENEFIT IS AVAILABLE TO THE DEVELOPER OF THE HOUSING PROJECT EVEN IF HE IS NOT THE OWNER OF THE LAND ON WHICH PR OJECT IS DEVELOPED NOR THE PERMISSION LETTER FOR PROJECT DEVELOPMENT IS IN HIS NAME. IT WAS FURTHER HELD BY JURISDICTIONAL AND BINGING HONBLE ITAT, AHMEDABAD BENCH IN CASE OF ACIT, CIRCLE 2 (1), BARODA V/S. M/ S. ADITYA ENTERPRISES, BARODA VIDE ORDER DATED 04.06.2008 IN ITA NO.1165/AHD/2008 FOR ASSESSMENT YEAR 2004-05 AFTER CONSIDERING THE DECISION IN THE CASE OF M/S. RADHE DEVELOPERS IN IT A NO.2482/AHD/2006, DATED 29.06.2007 BY THE ITAT AHME DABAD A BENCH WHICH WAS DECIDED AFTER CONSIDERING THE DECIS ION OF HONBLE APEX COURT IN CASE OF MYSORE MINERALS LTD. V/S. CIT (239 ITR 175) AND IN THE CASE OF CIT V/S. PODDAR CEMENT PVT. LTD. (22 6 ITR 625) THAT UNLESS AND UNTIL A DECISION OF THE TRIBUNAL ALLOWIN G THE RELIEF OF EXEMPTION U/S 80-IB WHICH WAS ALLOWED IN THE CASE OF ITO V/S. M/S. HARI OM DEVELOPERS IN ITA NO.365/AHD/2008, DATED 25 .04.2008 IS REVERSED BY THE HIGHER AUTHORITY, THE SAID DECISIO N OF THE TRIBUNAL HAS A BINDING AFFECT FOLLOWING THE DECISION OF JURISDIC TIONAL AND BINDING HONBLE ITAT, AHMEDABAD BENCH IN THE CASE OF RADHE DEVELOPERS V/S. ITO (113 TTJ 300). MERELY BECAUSE THE DEPARTMENT HA S FILED APPEAL AGAINST THE ORDER OF THE TRIBUNAL, THE PRECEDENTIAR Y VALUE OF THE SAID IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 8 ORDER OF THE TRIBUNAL DOES NOT CEASE. THE CASE OF J URISDICTIONAL AND BINDING HONBLE ITAT, AHMEDABAD BENCH IN RADHE DEVE LOPERS V/S. ITO (113 TTJ 300) IS DIRECTLY APPLICABLE TO THE FACTS & CIRCUMSTANCES OF THE PRESENT CASE. AS PER THE DOCTRINE OF PRECEDENTS, PR ECEDENTS NOT ONLY HAVE GREAT AUTHORITY, BUT MUST, WHERE APPLICABLE, B E FOLLOWED. THE PRACTICE OF TREATING PRECEDENTS AS ABSOLUTELY BINDI NG IS NECESSARY TO SECURE THE CERTAINTY OF THE LAW, PREDICTABILITY OF DECISIONS BEING MORE IMPORTANT THAT APPROXIMATION TO AN IDEAL. AUTHORITA TIVE DECISIONS MUST BE FOLLOWED, WHETHER THEY ARE APPROVED OF OR NOT, T HEY BEING LEGAL SOURCES OF LAW. A THING ADJUDICATED BY THE HIGHER J UDICIAL FORUM IS RECEIVED AS TRUE. THE ONLY WAY OF GETTING OUT OF TH AT IS THE GETTING THE DECISION REVERSED OR MODIFIED BY WAY OF REVISION, R EVIEW, RECTIFICATION OR APPEAL PROVIDED UNDER THE RELEVANT STATUTE AS WAS H ELD BY HONBLE SUPREME COURT IN CASE OF IPCA LABORATORY LIMITED VS . DCIT (266 ITR 521). IT WAS FURTHER HELD BY HONBLE SUPREME COURT IN CASE OF U. P. POLLUTION CONTROL BOARD VS. KANORIA INDUSTRIAL LIMI TED (259 ITR 321) THAT BINDING NATURE OF THE SUPREME COURT DECISION W OULD BE EFFECTIVE, UNDER ARTICLE 141 OF THE CONSTITUTION, EVEN IN REGA RD TO THOSE PARTIES WHO HAD NOT APPEALED TO THE SUPREME COURT. HENCE, T HE DECISION DELIVERED BY JURISDICTIONAL AND BINDING HONBLE ITA T, AHMEDABAD BENCH IN THE CASE OF RADHE DEVELOPERS V/S. ITO (113 TTJ 300) (SUPRA) WAS A RATIO DECIDENDI WITH REGARD TO WITH REGARD TO DEDUCTION CLAIMED U/S 80-IB (10) IN RESPECT OF THE PRESENT APPELLANT. IN OTHER WORDS, THE RATIO DECIDENDI OF A DECISION IS THE JUDICIAL REASO N ON WHICH THAT DECISION IS FOUNDED. IT IS WHAT THAT CASE DECIDES G ENERALLY OR RULE OF LAW FOR WHICH IT IS AN AUTHORITY. IT IS UNIVERSAL APPLI CATION. IT BINDS THE SUBJECT, THE EXECUTIVE AND THE SUBORDINATE COURTS A LIKE. THE PRINCIPLE DECIDED WILL BE APPLIED WHENEVER A NEW CASE COMES U P FOR DECISION. WHERE THE JUDGMENT AGAINST THE WHOLE WORLD, THAT IS , IN REM, THE FINDINGS IN THAT CASE MAY BE CONCLUSIVE EVEN AGAINS T THIRD PARTIES. AS AGAINST PERSONS NOT PARTY TO THE SUIT, THE ONLY PAR T OF A CASE WHICH IS CONCLUSIVE IS THE GENERAL RULE OF LAW FOR WHICH IT IS AUTHORITY, OR THE RATIO DECIDENDI OF THE JUDGMENT. IT IS THE RULE OF LAW AP PLIED BY AND ACTED ON BY THE COURT, OR THE RULE WHICH THE COURT REGARDED AS GOVERNING THE CASE. LITERALLY, IT MEANS REASON (RATIO) FOR THE DE CISION (DECIDENDI). IN VIEW OF THE ABOVE DECISION OF JURISDICTIONAL AND BI NDING HONBLE ITAT, AHMEDABAD BENCH IN THE CASE OF RADHE DEVELOPERS V/S . ITO (113 TTJ 300) DEDUCTION U/S 80- IB IS APPLICABLE AND ALLOWAB LE IN THE PRESENT CASE. IN THE CASE OF THE APPELLANT, IT HAS TAKEN PO SSESSION OF THE LAND FOR DEVELOPMENT AND BUILDING THE ONE HOUSING PROJEC T NAMELY ARUN NAGAR. THE APPELLANT HAS CONSTRUCTED TENEMENTS TOG ETHER WITH COMMON AMENITIES LIKE ROADS, WATER SUPPLY, ELECTRIC POWER, DRAINAGE CONNECTION ETC. THUS IT HAS CREATED A NEW PRODUCT ON THE PLOT OF LAND BY PERFORMING THE DEVELOPMENT ACTIVITIES. MOREOVER, IT WAS HELD B Y HONBLE BOMBAY HIGH COURT IN CASE OF FORBES FORBES CAMPBELL & CO . LIMITED VS. CIT (206 ITR 495) THAT THE SUB-SECTIONS OR SUB-CLAUSES MUST BE READ AS PART OF AN INTEGRAL WHOLE AND AS BEING INDEPENDENT AND A N ATTEMPT SHOULD BE MADE IN CONSTRUING THEM TO RECONCILE THEM IF IT IS REASONABLY POSSIBLE TO DO SO AND TO AVOID REPUGNANCY. IN THE INSTANT CA SE, THE SECTION 80-IB IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 9 (10) IS TO BE READ AS AN INTEGRAL WHOLE ONLY AND NO T IN PARTS AS APPLIED BY THE ASSESSING OFFICER IN THE PRESENT CASE. NONE OF SUB-SECTIONS OF 80 IB (10) REQUIRE THAT THE ASSESSEE SHOULD BE THE OW NER OF THE LAND. IT WAS HELD BY HONBLE SUPREME COURT IN CASE OF SYED H ASAN RASUL NUMA VS. UNION OF INDIA (AIR 1991 SC 711) THAT EVERY PRO VISION AND EVERY WORD MUST BE LOOKED AT GENERALLY AND IN THE CONTEXT IN WHICH IT IS USED IN THE SECTION. A PROMOTER SHOULD QUALIFY FOR DEDUC TION BECAUSE IT RUNS UNDERTAKING FOR DEVELOPING & CONSTRUCTING A HOUSING PROJECT, SO THAT THE CONDITIONS OF RELIEF ARE SATISFIED. THE APPROVAL OF PLAN IS IN THE NAME OF THE TITLE HOLDER OF THE LAND WILL NOT MAKE ANY DIFF ERENCE. THIS BY ITSELF DOES NOT FORFEIT THE RIGHT OF THE DEVELOPER TO CLAI M DEDUCTION U/S. 80 IB (10). IT IS ENOUGH THAT THE ASSESSEE DEVELOPS & CON STRUCTS THE HOUSING PROJECTS. THUS, THE PERSON WHO DEVELOPS THE HOUSING PROJECT AND FULFILLS THE REQUIREMENT OF PROVISIONS OF SECTION 80 IB(10) I.E. THE SIZE OF LAND, AREA OF CONSTRUCTED UNIT, TIME OF COMPLETION ETC. W ILL BE ELIGIBLE FOR DEDUCTION U/S. 80 IB (10) EVEN IF HE DOES NOT HOLD THE TITLE OF THE LAND IN HIS NAME NOR THE PERMISSION FOR DEVELOPMENT OF THE PROJECT FROM THE CORPORATION IS OBTAINED IN HIS NAME. FURTHER, IT WA S HELD BY HONBLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWARKADAS K APADIA V/S. CIT (260 ITR 491) THAT IN CASE OF DEVELOPMENT AGREE MENT, IT IS NOT AN AGREEMENT FOR SALE, BECAUSE IT IS AN EXECUTORY CONT RACT WITH THE DEVELOPER NOT BEING THE INTENDED PURCHASER. THEREFO RE, IN THE PRESENT CASE, THE INFERENCE THAT MERELY BECAUSE DEVELOPMENT AGREEMENT IS SIGNED AND BECAUSE THE DEVELOPER GAINS THE RIGHT OF ENTRY TO FULFILL ITS OBLIGATIONS UNDER THE DEVELOPMENT AGREEMENT, THERE SHOULD BE NO INFERENCE ABOUT THE APPELLANT OF A BUILDING CONTACT OR. KEEPING IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPE CTFULLY RELYING UPON THE JUDGMENTS (SUPRA), DEDUCTION U/S 80- IB (10) IS HEREBY ALLOWED, THE SECOND GROUND OF APPEAL IS ALLOWED. 7. FROM THE ABOVE PARA OF THE ORDER OF LEARNED CIT( A), WE FIND THAT A CLEAR FINDING IS GIVEN BY THE LEARNED CIT(A) THAT AS PER THE DEVELOPMENT AGREEMENT, PRICE AT WHICH THE LAND WOULD BE SOLD IS FIXED AND THIS F INDING IS ALSO GIVEN BY HIM THAT THE LANDOWNER WILL GET SUCH FIXED PRICE EITHER IMMEDIAT ELY OR OVER A FIXED PERIOD IRRESPECTIVE OF WHETHER OR NOT THE LAND IS ACTUALLY DEVELOPED BY THE DEVELOPER. THIS FINDING OF FACT COULD NOT BE CONTROVERTED BY THE LE ARNED DR. HENCE, IT IS UNDISPUTED FACT THAT THE LAND IN QUESTION HAD A FIXED PRICE AN D THE POSSESSION WAS HANDED OVER TO THE ASSESSEE FOR DEVELOPMENT OF THE PROJECT AS P ER THE DEVELOPMENT AGREEMENT. HENCE, EVEN IF, THE TITLE OF THE LAND IN QUESTION R EMAINED WITH THE LANDOWNERS AND WAS NOT TRANSFERRED IN THE NAME OF THE ASSESSEE DEV ELOPER, IT HAS TO BE ACCEPTED THAT THE ACTUAL BENEFICIAL OWNER OF THE LAND IS THE ASSESSEE DEVELOPER BECAUSE ANY APPRECIATION IN THE PRICE OF THE LAND WILL GO TO TH E COFFERS OF THE ASSESSEE DEVELOPER AND THE LANDOWNER HAS NO SHARE IN SUCH APPRECIATION OF PRICE. AS PER THE JUDGMENT IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 10 OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF M/ S. RADHE DEVELOPERS (SUPRA), THE VITAL QUESTION WHICH IS TO BE SEEN IS THIS AS TO WH ETHER THE ASSESSEE DEVELOPER IS HAVING DOMINANT CONTROL OVER THE LAND IN QUESTION A ND WHETHER THE ASSESSEE DEVELOPER IS BEARING ENTIRE RISK AND ENTITLED TO TH E ENTIRE REWARD. IN THE LIGHT OF THESE UN-CONTROVERTED FACTS AS DISCUSSED ABOVE, IN OUR CO NSIDERED OPINION, ALL THESE PRE- REQUIREMENTS ARE SATISFIED IN THE FACTS OF THE PRES ENT CASE AND, THEREFORE, THIS JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IS SQUAR ELY APPLICABLE IN THE PRESENT CASE AND AS PER THE SAME, THE ISSUE IS COVERED IN F AVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAME, WE DECLINE TO INTE RFERE WITH THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 9. NOW, WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE IN THIS ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2003-04 BEING C. O. NO.18 2/AHD/2009. THE GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECTION ARE A S UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN NOT UPHOLDING THE ASSESSEES PLEA THAT IN ABSENCE OF SEARCH AND SEIZURE OPERATION U/S. 132 IN THIS PARTI CULAR CASE THE PROVISIONS OF SECTION 153A WERE NOT AT ALL APPLICAB LE AND HE FURTHER ERRED IN UPHOLDING THE VALIDITY OF THE CONS EQUENTIAL ASSESSMENT U/S. 153A. 2. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE FURTHER REALIZED THAT SINCE THE CLAIM FOR DEDUCTION U/S. 80 IB(10) WAS MADE BY THE ASSES SEE IN HIS ORIGINAL RETURN ALSO WHICH WAS FILED ON 24.10.2003 THE PROCESSING OF THIS PARTICULAR CLAIM WAS NOT PERMISSIBLE IN AN ORDER PURPORTEDLY MADE U/S. 153A. 3. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS-OBJECTION E ITHER BEFORE OR DURING THE COURSE OF HEARING OF THE SAME. 10. GROUND NO.1 OF THE CROSS OBJECTION WAS NOT PRE SSED BY THE LEARNED AR OF THE ASSESSEE AND HENCE, THE SAME IS REJECTED AS NOT PRE SSED. 11. REGARDING GROUND NO.2, WE FIND THAT SINCE THE D EDUCTION CLAIMED BY THE ASSESSEE U/S 80 IB (10) OF THE ACT HAS BEEN ALLOWED BY THE LEARNED CIT(A) AND THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE HAS BEEN UPHELD BY US WHILE DECIDING THE IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 11 REVENUES APPEAL AS PER PARA 7 OF THIS ORDER ABOVE, THIS GROUND OF THE CROSS OBJECTION HAS BECOME REDUNDANT AND HENCE, NO ADJUDI CATION IS CALLED FOR IN THIS REGARD. THIS GROUND IS REJECTED AS REDUNDANT. 12. GROUND NO.3 OF THE CROSS OBJECTION IS GENERAL I N NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 13. IN THE RESULT, THE CROSS OBJECTION OF THE ASSES SEE IS ALSO DISMISSED. 14. NOW, WE TAKE UP APPEAL OF THE REVENUE FOR THE A SSESSMENT YEAR 2004-05 IN ITA NO.2287/AHD/2009. THE GROUNDS RAISED BY THE REV ENUE IN THIS APPEAL ARE AS UNDER:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.760276 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 80 IB (10) OF THE I. T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER ON THE ABOVE POINTS. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. C. I. T.(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED TO THE ABOVE EXTENT. 15. BOTH THE SIDES AGREED THAT THE FACTS OF THIS YE AR ARE IDENTICAL TO THE FACTS IN THE ASSESSMENT YEAR 2003-04 AND HENCE, THIS ISSUE CAN B E DECIDED IN THIS YEAR ALSO IN SIMILAR LINE. IN THE ASSESSMENT YEAR 2003-04, THIS ISSUE HAS BEEN DECIDED BY US IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AT P ARA 7 OF THIS ORDER ABOVE. ACCORDINGLY, IN THE PRESENT YEAR ALSO, THIS ISSUE I S BEING DECIDED IN FAVOUR OF THE ASSESSEE. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 17. NOW, WE TAKE UP THE CROSS OBJECTION OF THE ASSE SSEE FOR ASSESSMENT YEAR 2004-05 I. E. C. O. NO.183/AHD/2009. 18. THE GROUNDS RAISED BY THE ASSESSEE IN THIS CROS S OBJECTION ARE AS UNDER:- 1. WITHOUT PREJUDICE AND IN ADDITION TO THE ASSESS EES APPEAL (BEING NO.2249/AHD/2009) THE CIT(A) SHOULD HAVE FURTHER RE ALIZED THAT IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 12 SINCE THE CLAIM FOR DEDUCTION U/S. 80 IB(10) WAS MA DE BY THE ASSESSEE IN ITS ORIGINAL RETURN ALSO WHICH WAS FILE D ON 26.10.2004 THE PROCESSING OF THIS PARTICULAR CLAIM WAS NOT PERMISSIBLE IN AN ORDER PURPORTEDLY MADE U/S. 153A. 2. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE REALIZED ALSO THAT SIN CE THE CLAIM IN REGARD TO GENERAL EXPENSES OF RS.58,43,364 WAS MADE BY THE ASSESSEE IN THE REVISED RETURN WHICH WAS FILED ON 3 1.3.2006 (I.E. MUCH BEFORE THE ISSUANCE OF NOTICE DATED 21.8.2008 WHICH PURPORTED TO BE NOTICE U/S. 153A) THE PROCESSING OF THIS CLAIM OF GENERAL EXPENSES OF RS.58,43,364 WAS NOT PERMISSIBL E IN AN ORDER U/S. 153A. 3. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS-OBJECTION E ITHER BEFORE OR DURING THE COURSE OF HEARING OF THE SAME. 19. IT WAS SUBMITTED BY THE LEARNED AR THAT GROUND NO.1 IS NOT PRESSED AND ACCORDINGLY GROUND NO.1 OF THE CROSS OBJECTION IS R EJECTED AS NOT PRESSED. 20. REGARDING GROUND NO.2 OF THE CROSS OBJECTION, I T WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT THE CLAIM OF THE ASSESSEE R EGARDING THIS EXPENSES OF RS.58,43,364/- WAS REJECTED ON THIS BASIS THAT ANY REVISION OF RETURN AFTER SEARCH CEASED TO BE VOLUNTARY REVISION OF RETURN. A QUERY WAS ALSO RAISED BY THE BENCH AT THIS JUNCTURE AS TO WHETHER ANY FRESH CLAIM CAN BE MADE BY THE ASSESSEE IN SEARCH CASES BECAUSE ASSESSMENT AFTER SEARCH U/S 153A OF T HE ACT IS SIMILAR AS THAT OF RE- ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AND IT W AS HELD BY THE HONBLE APEX COURT IN THE CASE OF SUN ENGINEERING AS REPORTED IN 198 ITR 297 THAT RE-ASSESSMENT IS FOR THE BENEFIT OF THE REVENUE AND NO NEW CLAIM CAN BE MADE BY THE ASSESSEE IN SUCH RE-ASSESSMENT PROCEEDINGS. IN REPLY, RELIANCE WAS PLACED BY THE LEARNED AR ON THE DECISION OF THE TRIBUNAL RENDERED IN THE CAS E OF DCIT VS EVERSMILE CONSTRUCTION CO. PVT. LTD. IN ITA NO.4238/MUM/2010 DATED 30-08-2011. HE SUBMITTED A COPY OF THE TRIBUNAL DECISION AND ALSO SUBMITTED THAT THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS SUN EN GINEERING (SUPRA) WAS DULY CONSIDERED BY THE TRIBUNAL IN THIS CASE AND IT WAS HELD THAT THE AMBIT OF REASSESSMENT U/S 147 CANNOT BE IMPORTED INTO THE SC OPE OF SECTION 153A OF THE ACT. HE ALSO SUBMITTED THAT IT WAS HELD BY THE TRIBUNAL IN THIS CASE THAT THERE CANNOT BE SCOPE FOR ARGUING THAT THE ASSESSEE HAD BEEN RENDER ED POWERLESS TO EVEN LODGE A CLAIM IN RESPECT OF WHICH DEDUCTION WAS NOT ALLOWED EARLIER. HE SUBMITTED THAT AS PER IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 13 THIS TRIBUNAL DECISION, THE CLAIM OF THE ASSESSEE H AS TO BE EXAMINED AND DECIDED ON MERIT AND SINCE THERE IS NO OTHER OBJECTION OF THE AUTHORITIES BELOW REGARDING ALLOWABILITY OF THIS CLAIM OF THE ASSESSEE, THE CLA IM OF THE ASSESSEE SHOULD BE ALLOWED. HE ALSO SUBMITTED THAT ITAT AHMEDABAD BENC H ALSO IN THE CASE OF SHREE YAMUNA PULSES VS ACIT IN IT(SS)A NO.233 TO 239/AHD/ 2010 DATED 07-08-2012 CONSIDERED AND DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THIS TRIBUNAL DECISION RENDERED IN THE CASE OF DCIT VS E VERSMILE CONSTRUCTION CO. PVT. LTD., 143 TTJ 322. HE SUBMITTED A COPY OF THIS TRI BUNAL DECISION ALSO. ONE MORE TRIBUNAL DECISION WAS CITED BY THE LEARNED AR BEING DECISION OF PUNE BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF SANJAY NANDLAL VYA S VS ITO IN ITA NO.771 TO 774/PN/2010 DATED 23-12-2011. IN THIS CASE ALSO, TH E TRIBUNAL HAS FOLLOWED THE SAME TRIBUNAL DECISION RENDERED IN THE CASE OF DCIT VS EVERSMILE CONSTRUCTION CO. PVT. LTD. (SUPRA) AND SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. LEARNED DR OF THE REVENUE SUBMITTED THAT THIS CLAIM IS NOT ALLOWABLE IN VIEW OF THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF SUN ENGINEERING (SUPRA). 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND THE TRIBUNAL DECISIONS CITED BY THE LEARNED AR. THIS ISSUE WAS D ECIDED BY THE LEARNED CIT(A) AS PER PARA 4.1 OF HIS ORDER FOR THE ASSESSMENT YEAR 2 004-05 AND FOR THE SAKE OF READY REFERENCE THE SAME IS REPRODUCED HEREIN UNDER:- 4.1 I HAVE CONSIDERED THE CONTENTIONS OF LD. COUNS EL AS WELL AS GONE THROUGH THE RECORDS. ON PERUSAL OF RECORDS, IT HAS BEEN NOTICED HAT THE SEARCH WAS CONDUCTED IN MANGLA GROUP OF CASES INCLU DING THE APPELLANT ON 24.11.2005 AND INCRIMINATING DOCUMENTS WERE SEIZ ED. THE APPELLANT REVISED, AFTER FOUR MONTHS, ITS RETURN OF INCOME ON 31.03.2006 I.E. AFTER SEIZURE OF INCRIMINATING DOCUMENTS BY THE DEPARTMEN T DURING THE COURSE OF SEARCH CONDUCTED ON 24.11.2005. HOWEVER, ORIGINA LLY RETURN WAS FILED U/S 139 (1) ON 26.10.2004 WHICH WAS REVISED A FTER A GAP OF SEVENTEEN MONTHS ON 31.03.2006. THEREAFTER, A NOTIC E U/S 153A WAS ISSUED BY THE ASSESSING OFFICER ON 21.08.2006. THE APPELLANT HAD FILED ITS RETURN OF INCOME U/S 153A ON 22.10.2007 ON THE BASIS OF WHICH THE PRESENT ASSESSMENT WAS COMPLETED. HOWEVER, ASSESSIN G OFFICER HAS NOT ALLOWED GENERAL EXPENDITURE CLAIMED IN THE REVI SED RETURN AFTER CONDUCT OF SEARCH WHICH WAS NOT DISCLOSED IN THE OR IGINAL RETURN FILED U/S 139(1). THE CONTENTIONS OF LEARNED COUNSEL THAT THE GENERAL EXPENDITURE WAS DISCLOSED BY THE ASSESSEE BEFORE RE CEIPT OF NOTICE U/S IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 14 153A FOR FILING THE RETURN OR BEFORE THE SAME WAS D ISCOVERED BY THE ASSESSING OFFICER CANNOT BE ACCEDED TO BECAUSE THE GENERAL EXPENDITURE WAS DECLARED ONLY AFTER CONDUCT OF SEARCH U/S 132 I .E. WHEN THE DEPARTMENT HAD IN ITS POSSESSION INCRIMINATING DOCU MENTS & COLLECTED EVIDENCE AFTER SEARCH SINCE THE SEARCH IS CONDUCTED ON THE BASIS OF REASON TO BELIEVE OR THE EXISTENCE OF EVASION OF TA X. HENCE, THE DIRECTOR GENERAL OF INCOME TAX (INVESTIGATION) OR COMMISSION ER OF INCOME BEFORE AUTHORISATION OF SEARCH HAS TO COME TO A CONCLUSION UNDER SECTION 132 THAT THE ASSESSEE HAS BOOKS OF ACCOUNT OR DOCUMENTS WHICH ARE NOT LIKELY TO BE PRODUCED OR HAS MONEY, BULLION JEWELRY OR OTHER VALUABLES IN POSSESSION ACQUIRED OUT OF INCOME WHICH HAS NOT BEE N DISCLOSED. THE APPELLANT REVISED, AFTER FOUR MONTHS, ITS RETURN OF INCOME ON 31.03.2006 I.E. AFTER SEIZURE OF INCRIMINATING DOCU MENTS BY THE DEPARTMENT DURING THE COURSE OF SEARCH CONDUCTED ON 24.11.2005. HENCE, THE APPELLANT HAD REVISED ITS RETURN OF INCO ME UNDER FORCIBLE CIRCUMSTANCES TO CLAIM GENERAL EXPENDITURE WHICH WA S NOT CLAIMED TILL THE SEARCH WAS CONDUCTED U/S. 132. IT CANNOT BE SAI D TO BE VOLUNTARILY AS THE APPELLANT HAD NOT CLAIMED THE GENERAL EXPEND ITURE WHEN THE RETURN U/S 139 (1) WAS FILED ORIGINALLY. ALSO, THE RETURN REVISED U/S 139 CANNOT BE TREATED AS VOLUNTARILY REVISION OF IN COME SINCE ITS REVISION WAS PROMPTED BY SEARCH ONLY IN ORDER TO CLAIM GENER AL EXPENDITURE. THEREFORE, ANY REVISION OF RETURN AFTER SEARCH CEAS ED TO BE VOLUNTARILY REVISION OF RETURN. HOWEVER, THE APPELLANT IS REQUI RED TO FILE RETURN OF INCOME U/S 139 AS PER THE SPECIFIED TIME LIMIT MENT IONED THEREIN. THE TAX PAYER IS BOUND TO DECLARE CORRECT INCOME AND PA Y TAXES THEREON. BUT, THE TRUE INCOME WAS NOT DECLARED U/S 139 UNDER NORMAL CIRCUMSTANCES. THEREAFTER, INCOME TAX DEPARTMENT CO NDUCTED SEARCH U/S 132 ON THE BASIS OF WHICH THE APPELLANT FILED R EVISED RETURN OF INCOME AND SUBSEQUENTLY, ASSESSMENT WAS COMPLETED U /S 153A. HENCE, THE CLAIM OF GENERAL EXPENDITURE SUBSEQUENT TO THE SEARCH CANNOT BE CONSIDERED AS BONAFIDE AD GENUINE EXPENDI TURE. IT IS ALSO EVIDENT AS ADMITTED BY THE APPELLANT THAT TRUE AND CORRECT INCOME WAS NOT DISCLOSED IN THE ORIGINAL RETURN FILED U/S 139. THEREFORE, CONTENTIONS OF LD. COUNSEL CANNOT BE ACCEPTED. SO, THE RETURN R EVISED U/S 139 CLAIMING GENERAL EXPENDITURE AFTER SEARCH CANNOT BE TREATED ON PAR WITH A NORMAL VOLUNTARILY REVISION OF RETURN U/S 139. TH E CONTENTIONS OF LD. COUNSEL CANNOT BE ACCEPTED TO WHICH ARE HEREBY REJE CTED. KEEPING IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, NO INTERFERENCE IS CALLED FOR IN DISALLOWANCE OF GENERAL EXPENDITURE C LAIMED SUBSEQUENT TO SEARCH CONDUCTED IN THE PRESENT CASE. HENCE, THE TH IRD GROUND OF APPEAL IS DISMISSED. 22. FROM THE ABOVE PARA OF THE ORDER OF LEARNED CIT (A), WE FIND THAT THE SEARCH WAS CONDUCTED IN MANGLA GROUP OF CASES ON 24-11-20 05 AND THE ASSESSEE FILED ITS REVISED RETURN OF INCOME ON 31-03-2006. THE ORIGINA L RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 26-10-2004. IT IS ALSO NOTED BY THE LEARNED CIT(A) THAT NOTICE U/S 153A OF THE ACT WAS ISSUED BY THE AO ON 21-08-2006. HENCE, IT IS SEEN THAT ALTHOUGH IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 15 THE REVISED RETURN WAS FILED BY THE ASSESSEE BEFORE ISSUE OF NOTICE BY THE AO U/S 153A OF THE ACT, BUT THE SAME WAS FILED AFTER THE S EARCH AND AFTER A GAP OF 17 MONTHS FROM THE DATE OF FILING OF THE ORIGINAL RETU RN OF INCOME. ON THE BASIS OF THESE FACTS, THIS IS THE ONLY OBJECTION OF THE LEARNED CI T(A) THAT SINCE SEARCH WAS CONDUCTED, SUCH ADDITIONAL CLAIM MADE BY THE ASSESS EE BY WAY OF FILING REVISED RETURN OF INCOME IS NOT ALLOWABLE BECAUSE IT CANNOT BE ACCEPTED A PART OF NORMAL VOLUNTARY REVISION OF RETURN U/S 139 OF THE ACT. WE ALSO FIND THAT THIS CLAIM WAS MADE BY THE ASSESSEE BEFORE THE AO ALSO AND THE SAME WAS EXAMINED BY THE AO AS PER THE DISCUSSIONS ON PAGE 2 AND 3 OF THE ASSESSMENT O RDER AND HIS ONLY OBJECTION WAS THIS THAT THE ASSESSEE WAS FOLLOWING METHOD OF ACCO UNTING FOR SUCH GENERAL EXPENSES BY ALLOCATING THE SAME ON PRO-RATA BASIS A ND THIS POLICY OF ALLOCATING GENERAL EXPENSES ON PRO-RATA BASIS HAS BEEN FOLLOWE D BY THE ASSESSEE IN ALL THE RETURNS FILED IN THE PAST AND IN FUTURE AND NO JUS TIFICATION HAS BEEN GIVEN BY THE ASSESSEE FOR SEPARATE TREATMENT GIVEN TO THESE GENE RAL EXPENSES IN THE PRESENT YEAR. THUS IT GOES TO SHOW THAT APART FROM THIS BAS IC OBJECTION THAT THE CLAIM OF THE ASSESSEE CANNOT BE ALLOWED AFTER SEARCH BECAUSE NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME, THERE IS OTHER OBJECTION BY THE AO REGARDING ALLOWABILITY OF THIS EXPENDITURE IN THE P RESENT YEAR EXCEPT CHANGE IN ACCOUNTING METHOD. THE DETAILS OF THESE EXPENDITURE ARE ALSO AVAILABLE ON PAGE 4 OF THE STATEMENT OF FACTS FILED BEFORE THE LEARNED CIT (A) AND AS PER SUCH DETAILS, IT INCLUDES INTEREST ON BANK LOAN, DEPRECIATION, INTER EST ON DEPOSIT, DISCOUNT AND COMMISSION. FROM THE NATURE OF THESE EXPENSES ALSO, IT IS SEEN THAT THESE ARE REVENUE EXPENDITURE AND IS NOT REQUIRED TO BE ADDED IN THE VALUE OF CLOSING STOCK AND, THEREFORE, THE SAME IS ALLOWABLE IN THE YEAR I N WHICH THE EXPENSES ARE INCURRED. THE AO HAS ALSO NOT MADE OUT ANY CASE FOR DISALLOWA BILITY OF THESE EXPENSES. REGARDING THIS OBJECTION OF THE AO ALSO THAT THESE EXPENSES ARE CLAIMED IN ORDER TO CLAIM LOSS IN THE PRESENT YEAR AND TO SET OFF OF SU CH LOSS IN THE ASSESSMENT YEAR 2005-06 WHERE ADDITIONAL INCOME OF RS.80,00,000/- W AS DECLARED IS ALSO WITHOUT ANY BASIS BECAUSE EVEN IF, THESE EXPENSES ARE NOT ALLOW ED IN THE PRESENT YEAR AND THE SAME ARE ADDED TO THE CLOSING STOCK, THEN ALSO IT W ILL RESULT INTO INCREASE IN OPENING STOCK OF THE NEXT YEAR AND SINCE THE LOSSES HAVE TA KEN PLACE IN THE ASSESSMENT YEARS 2005-06 AND 2006-07 AND ADDITIONAL INCOME WAS DECLARED BY THE ASSESSEE IN THESE TWO YEARS BEING RS.80,00,000/- IN EACH YEAR O N ACCOUNT OF ON-MONEY RECEIVED ON SALE OF FLATS, DEDUCTION WILL BE ALLOWABLE IN TH ESE TWO YEARS AGAINST INCREASE IN IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 16 OPENING STOCK OF THESE TWO YEARS. THEREFORE, THIS O BJECTION OF THE AO IS ALSO WITHOUT ANY BASIS. REGARDING CHANGE IN METHOD OF ACCOUNTING , WE FIND THAT THIS IS NOT THE CASE OF THE A.O. THAT THE CHANGE IS NOT BONAFIDE OR NOT CONSISTENTLY FOLLOWED IN LATER YEARS. WE, THEREFORE, DECIDE THIS ISSUE IN FAVOUR O F THE ASSESSEE BY FOLLOWING THE THREE TRIBUNAL DECISIONS CITED BY THE ASSESSEE IN W HICH BOMBAY BENCH DECISION IS LEAD DECISION HAVING BEEN RENDERED IN THE CASE OF M /S. EVERSMILE CONSTRUCTION CO. PVT. LTD. (SUPRA) WHEREIN IT WAS HELD BY THE TRIBUN AL THAT THE AO HAS TO COMPUTE THE TOTAL INCOME OF THE ASSESSEE ON THE BASIS OF RETURN FILED AFTER CONSIDERING THE SUBMISSIONS MADE DURING THE COURSE OF HEARING BEFOR E HIM AND, THEREFORE, THERE CANNOT BE ANY SCOPE FOR ARGUING THAT THE ASSESSEE H AD BEEN RENDERED POWERLESS TO EVEN LODGE THE CLAIM FOR DEDUCTION FOR WHICH ANY CL AIM WAS NOT ALLOWED EARLIER. IN THAT CASE, IT WAS ALSO HELD THAT THE TOTAL INCOME I S NOT REDUCED SIMPLY ON THE BASIS OF MAKING A CLAIM AND THE AO IS FULLY EMPOWERED TO CON SIDER DEDUCTIBILITY AS PER THE PROVISIONS OF THE ACT. IN THE PRESENT CASE, WE HAVE SEEN THAT THE AO HAS EXAMINED THE ALLOWABILITY OF THE CLAIM MADE BY THE ASSESSEE AND HE COULD NOT POINT OUT ANY DEFECT IN THE CLAIM EXCEPT THIS THAT THE ASSESSEE I S MAKING THIS CLAIM AFTER SEARCH IN ORDER TO DECLARE LOSS IN THE PRESENT YEAR WHICH CAN BE SET OFF IN THE SUBSEQUENT TWO YEARS AGAINST EXTRA INCOME EARNED BY THE ASSESSEE I N THESE TWO YEARS ON ACCOUNT OF ON-MONEY RECEIVED IN RESPECT OF SALE OF FLATS. THE OTHER REASONING GIVEN BY THE AO FOR DISALLOWING THE CLAIM WAS THIS THAT THE ASSESSE E WAS FOLLOWING DIFFERENT ACCOUNTING PRACTICE IN THE PAST AND HE COULD NOT JU STIFY REGARDING CHANGE IN ACCOUNTING PRACTICE. ON THIS ASPECT, WE HAVE SEEN F ROM THE DETAIL OF EXPENSES AS AVAILABLE FROM THE STATEMENT OF FACTS THAT THE SAME BEING IN THE NATURE OF INTEREST, COMMISSION, DISCOUNT ETC., CANNOT BE ADDED TO THE V ALUE OF CLOSING STOCK AS PER THE ACCEPTED METHOD OF VALUATION OF CLOSING STOCK., BEC AUSE INTEREST, COMMISSION, DISCOUNT ETC. HAD NOT FORMED PART OF VALUE OF CLOSI NG STOCK. HENCE, IN THE FACTS OF THE PRESENT CASE, THIS CLAIM OF THE ASSESSEE IS BEING A LLOWED BY RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION CITED BY THE LEARNED AR BEFOR E US. THIS GROUND OF THE CROSS OBJECTION IS ALLOWED. 23. GROUND NO.3 OF THE CROSS OBJECTION IS GENERAL I N NATURE AND DOES NOT REQUIRE ADJUDICATION. IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 17 24. IN THE RESULT, THE CROSS OBJECTION OF THE ASSES SEE BEING C. O. NO.183/AHD/ 2009 (IN ITA NO.2287/AHD/2009) FOR THE ASSESSMENT Y EAR 2004-05 IS PARTLY ALLOWED. 25. NOW, WE TAKE UP THE THIRD APPEAL OF THE REVENUE IN ITA NO.2287/AHD/2009, FOR THE ASSESSMENT YEAR 2005-06. GROUNDS NO.2 AND 3 OF THE APPEAL ARE GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. THE SOL E EFFECTIVE GROUND NO.1 RAISED BY THE REVENUE IN THIS APPEAL IS AS UNDER:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.828119 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 80 IB (10) OF THE I. T. ACT. 26. IT WAS AGREED BY BOTH THE SIDES THAT IN THIS YE AR ALSO, THE FACTS ARE IDENTICAL TO THE FACTS IN THE ASSESSMENT YEAR 2003-04 AND HENCE, THE APPEAL OF THE REVENUE IN THIS YEAR CAN BE DECIDED ON SIMILAR LINE AS IN THE ASSESSMENT YEAR 2003-04. IN THE ASSESSMENT YEAR 2003-04, THIS ISSUE HAS BEEN DECIDE D BY US IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN PARA 7 ABOVE AN D ACCORDINGLY, IN THE PRESENT YEAR ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE A SSESSEE. 27. IN THE RESULT, THE APPEAL OF THE REVENUE BEING ITA NO.2288/AHD/2009, FOR THE ASSESSMENT YEAR 2005-06 IS DISMISSED. 28. NOW, WE TAKE UP ASSESSEES CROSS OBJECTION NO.1 84/AHD/2009 (IN ITA NO.2288/AHD/2009) FOR THE ASSESSMENT YEAR 2005-06. THE GROUNDS RAISED BY THE ASSESSEE IN THIS CROSS OBJECTION ARE AS UNDER:- 1. WITHOUT PREJUDICE AND IN ADDITION TO THE ASSESS EES APPEAL (BEING NO.2249/AHD/2009) THE CIT(A) SHOULD HAVE FURTHER RE ALIZED THAT SINCE THE CLAIM FOR DEDUCTION U/S. 80 IB(10) WAS MA DE BY THE ASSESSEE IN ITS ORIGINAL RETURN ALSO WHICH WAS FILE D ON 20.10.2004 THE PROCESSING OF THIS PARTICULAR CLAIM WAS NOT PERMISSIBLE IN AN ORDER PURPORTEDLY MADE U/S. 153A. 2. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE REALIZED ALSO THAT SIN CE THE CLAIM IN REGARD TO GENERAL EXPENSES OF RS.2,47,446 WAS MADE BY THE ASSESSEE IN THE REVISED RETURN WHICH WAS FILED ON 3 1.3.2006 (I.E. MUCH BEFORE THE ISSUANCE OF NOTICE DATED 21.8.2008 WHICH PURPORTED TO BE NOTICE U/S. 153A) THE PROCESSING OF THIS CLAIM OF GENERAL EXPENSES OF RS.2,47,446 WAS NOT PERMISSIBLE IN AN ORDER U/S. 153A. IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 18 3. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS-OBJECTION E ITHER BEFORE OR DURING THE COURSE OF HEARING OF THE SAME. 29. GROUND NO.1 OF THE CROSS OBJECTION WAS NOT PRES SED BY THE LEARNED AR WHEREAS REGARDING GROUND NO.2 OF THE CROSS OBJECTIO N, IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS IDENTICAL TO GROUND NO.2 O F THE CROSS OBJECTION RAISED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2004-05. GROUND NO. 3 OF THE CROSS OBJECTION IS GENERAL. 30. GROUND NO.1 OF THE CROSS OBJECTION OF THE ASSES SEE IS REJECTED AS NOT PRESSED. GROUND NO.2 OF THE CROSS OBJECTION OF THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE ON THE SAME LINE AS GROUND NO.2 OF THE CROSS OBJECTION OF THE ASSESSEE WAS DECIDED BY US IN THE ASSESSMENT YEAR 2 004-05 AT PARA 21 AND 22 ABOVE. 31. IN THE RESULT, THE CROSS OBJECTION OF THE ASSES SEE BEING C. O. NO.184/AHD/2009 (IN ITA NO.2288/AHD/2009) FOR THE A SSESSMENT YEAR 2005-06 IS PARTLY ALLOWED. 32. NOW, WE TAKE UP THE APPEAL FILED BY THE ASSESSE E FOR ASSESSMENT YEAR 2004- 05 BEING ITA NO.2249/AHD/2009. THE GROUNDS RAISED B Y THE ASSESSEE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN UPHOLDING THE VALIDITY OF THE PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U/S. 153A AND THE CONSEQUENTIAL A SSESSMENT ORDER DATED 31.12.2007 PASSED BY THE ASSESSING OFFI CER U/S. 143(3) R W. S. 153A. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF GENERAL EXPENSE S AMOUNTING TO RS.58,43,364/-. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 33. ONE ADDITIONAL GROUND WAS ALSO RAISED BY THE AS SESSEE WHICH READS AS UNDER:- WITHOUT PREJUDICE TO GROUND 2 AS PER ORIGINAL GROU NDS OF APPEAL, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A), WHILE IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 19 CONFIRMING THE DISALLOWANCE OF GENERAL EXPENDITURE AMOUNTING TO RS.58,43,364/-, ERRED IN NOT DIRECTING THE AO, TO T REAT THE SAID AMOUNT AS PART OF OPENING WORK IN PROGRESS IN A. Y. 2006-0 7, IN VIEW OF THE FACT THAT WHILE FILING RETURN OF INCOME FOR A. Y. 2006-0 7, THE SAME HAD BEEN REDUCED FROM OPENING WORK IN PROGRESS AND HAD BEEN OFFERED FOR TAX. 34. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSES SEE THAT GROUND NO.1 WAS NOT PRESSED AND THE SAME IS REJECTED AS NOT PRESSED. GR OUND NO.3 IS GENERAL IN NATURE AND DOES NOT REQUIRE ADJUDICATION. 35. REGARDING GROUND NO.2 AND THE ADDITIONAL GROUND OF APPEAL, IT WAS SUBMITTED THAT THE ISSUE INVOLVED IS SAME AS HAS BEEN RAISED BY THE ASSESSEE AS PER GROUND NO.2 IN THE ASSESSEES CROSS OBJECTION IN THIS YEAR . WHILE DECIDING GROUND NO.2 OF THE CROSS OBJECTION OF THE ASSESSEE FOR THIS YEAR A S PER PARA 21 AND 22 ABOVE, THIS ISSUE HAS BEEN DECIDED BY IS IN FAVOUR OF THE ASSES SEE AND IT HAS BEEN HELD THAT DEDUCTION HAS TO BE ALLOWED TO THE ASSESSEE REGARDI NG GENERAL EXPENSES OF RS.58,43,364/-, HENCE, GROUND NO.2 AND THE ADDITION AL GROUND RAISED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND THE SAME ARE AC CORDINGLY DISMISSED. 36. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.2249 /AHD/2009 FOR THE ASSESSMENT YEAR 2004-05 IS DISMISSED. 37. NOW, WE TAKE UP THE APPEAL FILED BY THE ASSESSE E FOR THE ASSESSMENT YEAR 2005-06 IN ITA NO.2250/AHD/2009. 38. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN UPHOLDING THE VALIDITY OF THE PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U/S. 153A AND THE CONSEQUENTIAL A SSESSMENT ORDER DATED 31.12.2007 PASSED BY THE ASSESSING OFFI CER U/S. 143(3) R. W. S. 153A 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF GENERAL EXPENSE S AMOUNTING TO RS.2,47,446/- 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND /OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 20 39. ONE ADDITIONAL GROUND WAS ALSO RAISED BY THE AS SESSEE WHICH READS AS UNDER:- WITHOUT PREJUDICE TO GROUND 2 AS PER ORIGINAL GROU NDS OF APPEAL, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A), WHILE CONFIRMING THE DISALLOWANCE OF GENERAL EXPENDITURE AMOUNTING TO RS.2,47,446/-, ERRED IN NOT DIRECTING THE AO, TO TR EAT THE SAID AMOUNT AS PART OF OPENING WORK IN PROGRESS IN A. Y. 2006-07, IN VIEW OF THE FACT THAT WHILE FILING RETURN OF INCOME FOR A. Y. 2006-0 7, THE SAME HAD BEEN REDUCED FROM OPENING WORK IN PROGRESS AND HAD BEEN OFFERED FOR TAX. 40. REGARDING GROUND NO.1 OF THE APPEAL, IT WAS SUB MITTED BY THE LEARNED AR THAT THE SAME IS NOT PRESSED AND ACCORDINGLY THE SAME IS REJECTED AS NOT PRESSED. GROUND NO.3 IS GENERAL IN NATURE AND DOES NOT REQUI RE ADJUDICATION. 41. REGARDING GROUND NO.2 OF THE APPEAL AND THE ADD ITIONAL GROUND, WE FIND THAT THE CLAIM MADE AS PER THIS GROUND IS ALTERNATIVE CL AIM TO THE CLAIM MADE BY THE ASSESSEE AS PER GROUND NO.2 OF THE CROSS OBJECTION. WHILE DECIDING GROUND NO.2 OF THE CROSS OBJECTION, THE GROUND OF THE ASSESSEE WAS ALLOWED AND HENCE, THIS ALTERNATIVE CLAIM AS PER GROUND NO.2 AND ADDITIONAL GROUND HAS BECOME INFRUCTUOUS AND IS DISMISSED ACCORDINGLY. 42. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR T HE ASSESSMENT YEAR 2005-06 IN ITA NO.2250/AHD/2009 IS DISMISSED. 43. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.2251/AHD/2009. 44. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF GENERAL EXPENSE S AMOUNTING TO RS.43,81,585. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS.15,49,524/- ON ACCOUNT OF PROVISIONAL EXPENDITURE IN RESPECT OF SOHAM BUNGALO WS. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 45. THE ASSESSEE HAS ALSO RAISED TWO ADDITIONAL GRO UNDS WHICH READ AS UNDER:- IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 21 1. WITHOUT PREJUDICE TO GROUND 1 AS PER ORIGINAL G ROUNDS OF APPEAL, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) WHILE CONFIRMING THE DISALLOWANCE OF GENERAL EXPENSES AMOUNTING TO RS.43,81,585/- IN A. Y. 2006-07, ERRED IN NOT DIRECTING THE AO TO TREAT THE SAME AS PART OF OPENI NG WORK IN PROGRESS FOR A. Y. 2007-08, IN VIEW OF THE FACT THA T WHILE DISALLOWING THE SAID EXPENSES, THE LEARNED CIT(A) A ND AO BOTH HAD HELD DISALLOWANCE OF GENERAL EXPENSES TO BE CON GRUENT WITH THE ACCOUNTING TREATMENT FOLLOWED BY THE APPELLANT . 2. WITHOUT PREJUDICE TO GROUND N.2 AS PER ORIGINAL GROUNDS OF APPEAL, ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A), WHILE CONFIRMING THE DISALLOWANCE O F RS.15,49,524/- ON ACCOUNT OF PROVISIONAL EXPENDITUR E IN RESPECT OF SOHAM BUNGALOWS, ERRED IN NOT DIRECTING THE AO, TO ALLOW THE SAME IN SUBSEQUENT YEAR WHEN THE SAME HAD ACTUALLY BEEN INCURRED. 46. REGARDING GROUND NO.1, BOTH THE SIDES AGREED TH AT THIS ISSUE IS IDENTICAL TO GROUND NO.2 RAISED BY THE ASSESSEE IN THE ASSESSMEN T YEAR 2004-05 AND THE SAME CAN BE DECIDED IN THE PRESENT CASE ALSO ON SIMILAR LINE. 47. IN THE ASSESSMENT YEAR 2004-05 AND ALSO IN THE ASSESSMENT YEAR 2005-06, THIS ISSUE HAS BEEN DECIDED BY US IN FAVOUR OF THE ASSESSEE AS PER PARA 35 ABOVE, AND ACCORDINGLY IN THE PRESENT YEAR ALSO, THIS ISSU E IS DECIDED IN FAVOUR OF THE ASSESSEE ON SIMILAR LINE. GROUND NO.1 OF THE APPEAL IS ALLOWED. 48. REGARDING GROUND NO.2, IT WAS SUBMITTED BY THE LEARNED AR THAT PROVISION WAS MADE IN RESPECT OF SOHAM BUNGALOWS WHICH IS COM PLETED IN THE PRESENT YEAR BUT THIS EXPENSES WERE ACTUALLY PAID IN THE NEXT YE AR BUT THE SAME IS ALLOWABLE IN THE PRESENT YEAR. IN SUPPORT OF HIS CONTENTIONS, THE LE ARNED AR PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT RENDERED I N THE CASE OF CIT VS TRIVENI ENGINEERING & INDUSTRIES LTD., 336 ITR 374. RELIANC E WAS ALSO PLACED ON THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF BHARAT EARTH MOVERS LTD. VS CIT, 245 ITR 428. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 49. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE GONE THROUGH THE MATERIALS AVAILABLE ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE JUDGMENTS CITED BY THE LEARNED AR. ON PAGE 8 OF THE STATEMENT OF FACTS FILED BEFORE IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 22 THE LEARNED CIT(A), IT HAS BEEN SUBMITTED BY THE AS SESSEE THAT THIS EXPENDITURE OF RS.15,49,524/- PERTAINING TO SOHAM BUNGALOWS WAS MI STAKENLY DEBITED UNDER THE NOMENCLATURE OF BUNGALOW EXPENSES IN THE PROFIT & LOSS ACCOUNT BUT THE FACT IS THAT THIS PROJECT WAS FULLY COMPLETED IN THE PRESENT YEA R AND THE ASSESSEE ALSO ACCOUNTED THE ENTIRE INCOME ACCRUING ON THE SALE OF RESIDENTI AL UNITS FORMING PART OF THIS PROJECT. NO FINDING IS GIVEN BY THE LEARNED CIT(A) THAT THIS ASSERTION OF THE ASSESSEE IS NOT CORRECT. THE LEARNED DR OF THE REVENUE ALSO COULD N OT PRODUCE ANYTHING BEFORE US TO CONTROVERT THIS ASSERTION OF THE ASSESSEE. HENCE, I T HAS TO BE ACCEPTED THAT THESE EXPENSES ARE IN RESPECT OF THE PROJECT NAMELY SOHAM BUNGALOWS WHICH WAS COMPLETED IN THE PRESENT YEAR AND THE ENTIRE INCOME ON THAT ACCOUNT WAS ACCOUNTED FOR BY THE ASSESSEE IN THE PRESENT YEAR. IN THE LIG HT OF THESE FACTS, WHEN WE EXAMINE THE APPLICABILITY OF THESE TWO JUDGMENTS CITED BY T HE LEARNED AR OF THE ASSESSEE, WE FIND THAT AS PER THESE JUDGMENTS, THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. IN THE CASE OF CIT VS TRIVENI ENGINEERING & INDUSTRIES LTD ., 336 ITR 374, IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT WHEN THE ASSESSEE HAS RECOGNIZED THE GAIN FROM THE DEPOSIT IN THIS YEAR, PROVISION FOR ANY OF KNOWN LI ABILITIES AND LOSSES HAVE TO BE MADE AND SUCH PROVISION IS JUSTIFIED AND IT IS IN CONSON ANCE THAT THE PRINCIPLE OF MATCHING COST AND REVENUE. THE EXPENDITURE WAS ALLOWED BY TH E HONBLE DELHI HIGH COURT. SIMILARLY, IN THE CASE OF BHARAT EARTH MOVERS LTD. VS CIT, 245 ITR 428, IT WAS HELD BY THE HONBLE APEX COURT THAT IF A LIABILITY HAS D EFINITELY ARISEN IN THE PRESENT YEAR, THEN, DEDUCTION IS ALLOWABLE ALTHOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. IN THE PRESENT CASE, T HIS IS THE ONLY OBJECTION OF THE REVENUE THAT LIABILITY IS NOT QUANTIFIED AND DISCHA RGED IN THE PRESENT YEAR AND THIS IS NOT THE OBJECTION OF THE REVENUE THAT THE LIABILITY IS NOT ARISING IN THE PRESENT YEAR. THIS IS ALSO NOT THE OBJECTION OF THE REVENUE THAT THE ENTIRE INCOME IN RESPECT OF SHOHAM BUNGALOW PROJECT WAS NOT ACCOUNTED FOR BY TH E ASSESSEE IN THE PRESENT YEAR. HENCE, BY RESPECTFULLY FOLLOWING THESE TWO JU DGMENTS CITED BY THE LEARNED AR, WE HOLD THAT THE CLAIM OF THE ASSESSEE HAS TO BE AL LOWED IN THE PRESENT YEAR. WE DIRECT THE AO ACCORDINGLY. GROUND NO.2 OF THE APPEA L OF THE ASSESSEE IS ALLOWED. 50. GROUND NO.3 OF THE APPEAL OF THE ASSESSEE IS GE NERAL AND REQUIRES NO ADJUDICATION. IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 23 51. REGARDING THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE, WE FIND THAT THESE ADDITIONAL GROUNDS ARE NOTHING BUT ALTERNATIVE CLAI M REGARDING THE MAIN CLAIM AS PER GROUNDS NO.1 AND 2 AND SINCE THE MAIN CLAIM AS PER GROUNDS NO.1 AND 2 IS ALLOWED BY US, ADDITIONAL GROUNDS RAISED BY THE ASSESSEE HA S BECOME INFRUCTUOUS AND THE SAME ARE DISMISSED ACCORDINGLY. 52. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.2251/AHD/2009 FOR THE ASSESSMENT YEAR 2006-07 STANDS PARTLY ALLOWED IN TH E TERMS INDICATED ABOVE. 53. NOW, WE TAKE UP THE THREE APPEALS BY THE REVENU E IN RESPECT OF PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT I.E. ITA NO. 663, 664 AND 665/AHD/2013 FOR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07 RESPE CTIVELY. 54. IN ALL THESE THREE YEARS, THE ONLY GRIEVANCE OF THE REVENUE IS REGARDING DELETION OF PENALTY IMPOSED BY THE AO U/S 271 (1) ( C) OF THE ACT AND ONLY DIFFERENCE IS REGARDING AMOUNT OF PENALTY WHICH IS RS.21,00,00 0/- FOR THE ASSESSMENT YEAR 2004-05, RS.16,00,000/- FOR THE ASSESSMENT YEAR 200 5-06 AND RS.20,00,000/- IN THE ASSESSMENT YEAR 2006-07 RESPECTIVELY. 55. THE LEARNED DR SUPPORTED THE PENALTY ORDERS WHE REAS THE LEARNED AR RELIED ON THE ORDERS OF THE LEARNED CIT(A). 56. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIE S BELOW. WE FIND THAT IN ALL THE THREE YEARS, THE LEARNED CIT(A) HAS PASSED A COMBIN ED ORDER AND THE PENALTY WAS DELETED BY HIM AT PARA NO.6 OF HIS ORDER. THE PENAL TY WAS IMPOSED REGARDING DISALLOWANCE OF THE CLAIM OF THE ASSESSEE IN RESPEC T OF GENERAL EXPENDITURE OF RS.58,43,364/-, RS.2,47,446/- AND RS.43,81,585/- BY THE AO IN THE ASSESSMENT YEAR 2004-05, 2005-06 AND 2006-07 RESPECTIVELY. WHILE DE CIDING THE QUANTUM APPEALS, WE HAVE DELETED THE DISALLOWANCE OF GENERAL EXPENDI TURE IN ALL THESE THREE ASSESSMENT YEARS AND, THEREFORE, PENALTY ON THESE D ISALLOWANCES DOES NOT SURVIVE IN ANY OF THESE THREE ASSESSMENT YEARS. PENALTY WAS AL SO IMPOSED BY THE AO IN RESPECT OF DISALLOWANCE OF CLAIM OF THE ASSESSEE RE GARDING CARRY FORWARD OF LOSS OF RS.42,45,191/- IN THE ASSESSMENT YEAR 2005-06. IT I S NOTED BY THE LEARNED CIT(A) THAT THIS DISALLOWANCE HAS ARISEN AS CONSEQUENCE OF DISALLOWANCE OF GENERAL EXPENDITURE CLAIMED BY THE ASSESSEE IN THE ASSESSME NT YEAR 2005-06 AMOUNTING TO IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 24 RS.58,43,364/-. SUCH DISALLOWANCE OF GENERAL EXPEND ITURE IN THE ASSESSMENT YEAR 2004-05 IS ALREADY DELETED BY US AND HENCE, PENALTY FOR THIS DISALLOWANCE OF CARRY FORWARD OF LOSS OF RS.42,45,191/- FOR THE ASSESSMEN T YEAR 2005-06 IS ALSO NOT SUSTAINABLE. PENALTY WAS ALSO IMPOSED BY THE AO IN RESPECT OF DISALLOWANCE OF PROVISIONAL EXPENDITURE OF RS.15,49,524/- IN RELATI ON TO SOHAM BUNGALOWS IN THE ASSESSMENT YEAR 2006-07. THIS PENALTY WAS DELETED B Y THE LEARNED CIT(A) AT PARA 9, 9.1, 9.2 AND 9.3 OF HIS ORDER AND FOR THE SAKE OF R EADY REFERENCE THESE PARA OF THE ORDER OF THE LEARNED CIT(A) ARE REPRODUCED HEREIN B ELOW:- 9. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE APPELLANT AND HAVE GONE THROUGH THE ASSESSMENT ORDE R AS WELL AS PENALTY ORDER PASSED BY THE ASSESSING OFFICER. I HA VE ALSO GONE THROUGH THE VARIOUS JUDICIAL DECISIONS RELIED UPON BY THE A PPELLANT. 9.1 IT IS UNDISPUTED FACT THAT THE APPELLANT HAS CL AIMED EXPENDITURE OF RS.15,49,524/- IN THE CURRENT ASSESSMENT YEAR SI NCE THE ENTIRE INCOME PERTAINING TO THE PROJECT OF SOHAM BUNGALOWS HAS ALREADY BEEN OFFERED TO TAX IN THE CURRENT ASSESSMENT YEAR. THE AO HAS NOT ALLOWED SUCH EXPENDITURE ON THE GROUND THAT SAME PERTAINS T O NEXT AY 2007-08. FURTHER, THE GENUINENESS OF THE EXPENDITURE HAS NOT BEEN SUSPECTED BY THE AO AS THE SAME IS SUPPORTED BY SUPPORTIVE EVIDE NCES. THE APPELLANT HAS REFERRED TO MANY JUDICIAL DECISIONS I N SUPPORT OF ITS CONTENTION FOR ALLOWABILITY OF SUCH EXPENDITURE WHI CH HAS BEEN DULY ASCERTAINED IN THE PRESENT ASSESSMENT YEAR EVEN THO UGH PAID IN THE NEXT ASSESSMENT YEAR. IT IS ALSO NOTED THAT THE AO HAS NOT ALLOWED SUCH EXPENDITURE AS REVENUE EXPENDITURE IN AY 2007-08 AL SO AS IS EVIDENT FROM THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT FOR AY 2007-08 EVEN THOUGH THE AO IS OF THE VIEW THAT THESE EXPEND ITURES ARE ALLOWABLE ONLY IN AY 2007-08. 9.2 IT IS CLEARLY ASCERTAINABLE THAT LIABILITY FOR EXPENDITURE CLAIMED HAS DEFINITELY ARISEN DURING THE ACCOUNTING PERIOD UNDER CONSIDERATION AND THE SAID LIABILITY UNDOUBTEDLY DISCHARGED IN TH E NEXT ACCOUNTING YEAR PERTAINING TO AY 2007-08. THE INCURRING OF LIA BILITY IS CLEARLY ASCERTAINABLE IN THE YEAR UNDER CONSIDERATION AND T HE SAME CANNOT BE SAID TO BE A CONTINGENT LIABILITY. THE GENUINENESS OF PAYMENT MADE IN THE SUBSEQUENT YEAR HAS ALSO NOT BEEN DOUBTED BY TH E AO EVEN THOUGH THE SAME HAS NOT BEEN ALLOWED WHILE PASSING THE ASS ESSMENT ORDER FOR AY 2007-08. 9.3 CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT JUST ON ACCOUNT OF D IFFERENCE OF OPINION BETWEEN THE APPELLANT AND THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS CANNOT LEAD TO LEVY OF PENALTY FOR CONC EALMENT OF INCOME ON AN ISSUE WHICH IS CLEARLY DEBATABLE AND ON WHICH DI FFERENT VIEWS ARE IT A NO.2249 TO 2251, 2286 TO 2288, CO 182 TO 184/A HD/2009 AND ITA NO.663 TO 665/AHD/2013 MANGLA PROPERTIES PVT. LTD. 25 POSSIBLE. IN VIEW OF THE ABOVE, THE EXPLANATION SUB MITTED BY THE APPELLANT FOR THE PURPOSE OF CLAIM OF EXPENDITURE D URING THE YEAR UNDER CONSIDERATION IS HELD TO BE BONAFIDE AS THE APPELLA NT HAS TAKEN SUPPORT FROM A NUMBER OF JUDICIAL DECISIONS IN SUPPORT OF I TS CLAIM. CONSIDERING THE ABOVE, THERE IS NO CASE OF LEVY OF PENALTY U/S 271 (1) (C) OF THE ACT AND THE SAME IS, THEREFORE, CANCELLED. 57. FROM THE ABOVE PARAGRAPHS OF THE ORDER OF THE L EARNED CIT(A), WE FIND THAT THE LEARNED CIT(A) HAS GIVEN CLEAR FINDING THAT THE CLAIM OF THE ASSESSEE IS TOTALLY A DEBATABLE ISSUE AND HENCE PENALTY FOR SUCH DISALLOW ANCE IS NOT JUSTIFIED. THE LEARNED DR COULD NOT CONTROVERT THIS FINDING OF THE LEARNED CIT(A) AND HENCE, ON THIS ASPECT ALSO, WE DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LEARNED CIT(A). MOREOVER, IT QUANTUM APPEAL, THIS DISALLOWANCE IS A LSO DELETED BY US AND HENCE, THE PENALTY CANNOT SURVIVE. 58. IN THE RESULT, THE APPEALS OF THE REVENUE FOR A LL THE ABOVE THREE YEARS ARE DISMISSED. 59. IN THE COMBINED RESULT, ALL THE THREE APPEALS O F THE REVENUE IN THE QUANTUM PROCEEDINGS ARE DISMISSED, SIMILARLY THE APPEALS OF THE ASSESSEE IN QUANTUM PROCEEDINGS FOR THE ASSESSMENT YEAR 2004-05 AND 200 5-06 ARE ALSO DISMISSED BUT, THE APPEAL OF THE ASSESSEE IN THE QUANTUM PROCEEDIN GS FOR THE ASSESSMENT YEAR 2006-07 IS PARTLY ALLOWED. C.O. OF THE ASSESSEE FOR A.Y. 2003 - 04 I.E. C.O. NO. 182/AHD/2009 IS DISMISSED AND THE REMAINING TWO CRO SS OBJECTIONS OF THE ASSESSEE ARE PARTLY ALLOWED AND ALL THE THREE APPEALS OF THE REVENUE IN THE PENALTY PROCEEDINGS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14-08-2013 . SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (A. K. GARODIA) ACCOUNTANT MEMBER LAKSHMIKANTA DEKA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER //TRUE COPY// ASST. REGISTRAR, ITAT, AHMEDABAD