HIRANANDANI REALTORS PRIVATE LIMITED, MUMBAI V. PR.CIT, CENTRAL-1, MUMBAI

ITA 2377/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7679 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR JHA
• Assessee Lawyers: ANUJ KRISNADWALLA
• Keywords: Business income; Revision of order; Depreciation; Search and seizure; Opportunity of being heard; Assessment record; Capital expenditure
• Section: 143(3); 133A; 14A; 80IB; 68; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NOS.2377 TO 2379/M/2018 ASSESSMENT YEARS: 2012 - 13 TO 2014 - 15 PR.CIT (CENTRAL) - I MUMBAI VS. M/S . HIRANANDANI REALTORS PVT. LTD. 514, DALAMAL TOWERS 211 FPJ MARG NARIMAN POINT MUMBAI - 400 021. PAN :AABCH5909F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA, A.R. & SHRI ANUJ KRISNADWALL A, A.R. REVENUE BY : SHRI SUNIL KUMAR JHA, D.R. DATE OF HEARING : 18.10.2018 DATE OF PRONOUNCEMENT : 10 .01 .201 9 O R D E R PER B.R. BASKARAN , ACCOUNTANT MEMBER: ALL T HE SE THREE APPEALS HAVE BEEN FILED BY THE ASSE SSEE CHALLEN GING THE REVISION ORDER PASSED BY LD. PR. CIT , CENTRAL - 1 U/S 263 OF THE ACT FOR ASSESSMENT YEARS 2012 - 13 TO 2014 - 15 . 2. THE FACTS RELAT ING TO THE CASE ARE STATED IN BRIEF . T HE ASSESSEE HEREIN BELONGS TO HIRANANDANI GROUP AND IS ENGAGED IN THE BUSINESS O F CONSTRUCTION AND REAL ESTATE DEVELOPMENT ACTIVITIES. THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132 AND ALSO SURVEY OPERATIONS UNDER SECTION 133A OF THE ACT IN THE CASES OF HIRANANDANI GROUP ON 11.03.2014. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS/MATERIALS BELONGING TO THE ASSESSEE HEREIN WERE FOUND. CONSEQUENT THERETO THE PRESENT ASSESSMENTS WERE COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT. DURING THESE YEARS, THE ASSESSEE C OMPANY WAS ENGAGED IN THE BUSINESS OF ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 2 CONSTRUCTION AND DEVELOPMENT OF PROPERTIES AT OLD MAHABALIPURAM ROAD ( OM R ) , CHENNAI . THE ASSESSING OFFICER COMPLETED THE ASSESSMENTS OF ALL THE THREE YEARS ON 18 - 06 - 2015 AFTER OBTAINING PRIOR APPROVAL OF THE ADDITIONA L COMMISSIONER OF INCOME TAX, CENTRAL RANGE - 1, MUMBAI AS REQUIRED UNDER SECTION 153D OF THE ACT. 3. THE LD. PR. CIT , UPON EXAMINATION OF THE ASSESSMENT RECORD, WAS OF THE VIEW THAT THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEARS UNDER CONSIDERATION ARE PRIMA - FACIE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, HE INITIATED REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT FOR ALL THE THREE YEARS UNDER CONSIDERATION BY ISSUING SHOW CAUSE NOTIC E S TO THE ASSESSEE. THE ASSESSEE SUBMITTED THAT NO INCRIMINATING MATERIAL RELATING TO THE ASSESSEE WAS FOUND DURING THE COURSE OF SEARCH WARRANTING ANY ADDITION . IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS FURNISHED COMPLETE DETAILS THAT WERE CALLED FOR BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT ( 243 ITR 83 ) AND THE DECISION RENDERED BY HONBLE B OMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD. ( 203 ITR 108 ) , THE ASSESSEE CONTENDED THAT THE IMPUGNED ASSESSMENT ORDER S CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. THE LD. PR. CIT WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE . ACCORDINGLY, T HE LD. PR. CIT SET ASIDE THE ASSESSMENT ORDER S PASSED BY THE ASSESSING OFFICER AS WELL AS THE APPROVAL GRANTED BY ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SECTION 153D OF THE ACT FOR ALL THE THREE YEARS UN DER CONSIDERATION . ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT S OF ALL THE THREE YEARS AFRESH AFTER CONDUCTING NECESSARY ENQUIRIES ON THE POINTS MENTIONED BY HIM IN THE REVISION ORDER S AND ALSO AFTER OBTAINING FRESH APPROVAL UNDER SECTION 153D OF THE ACT. THE LD. PR. CIT ALSO DIRECTED ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 3 THE ASSESSING OFFICER TO AFFORD PROPER OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. THE ASSESSEE IS AGGRIEVED BY THE REVISION ORDERS PASSED BY LD PR. CIT. 5. WE NOTICE THAT MOST OF THE ISSU ES SOUGHT TO BE REVISED BY LD PR. CIT ARE IDENTICAL IN NATURE IN ALL THE THREE YEARS UNDER CONSIDERATION. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT PORTION OF THE SHOW CAUSE NOTICE ISSUED BY THE LD PR. CIT ON VARIOUS ISSUES IN AY 2012 - 13 : - 3. ON PERUSAL OF THE ASSESSMENT RECORDS THE FOLLOWING POINTS EMERGE. I. IT IS OBSERVED THAT YOU HAVE CLAIMED DEDUCTION U/S 80IB (10) FOR 3 PROJECTS I.E . PINEWOOD, BRENTWOOD AND SEAWOOD. YOU HAVE CLAIMED DEDUCTION OF RS 2 6 . 5 5 CR IN RESPECT OF SEAWOOD PRO JECT. IT IS SEEN FROM THE COMPLETION CERTIFICATE THAT THE PLOT SIZE IS 32,202 SQ FEET. SIMILARLY THE SIZE OF THE PLOT IN OTHER TWO PROJECTS WERE 32,202 SQ FEET. AS PER THE PROVISIONS OF 80IB(10) THE PLOT SIZE SHOULD BE ATLEAST 1 ACR E (43560 SQ FT). AS PER THE AUDIT REPORT YOU HAVE MENTIONED THE AREA TO BE 1 ACRE . HOWEVER AS PER THE COMPLETION CERTIFICATE ISSUED BY THE CHENNAI LOCAL AUTHORITIES FOR ALL THE 3 BUILDING THE PLOT SIZE IS LESS THAN 1 ACRE. HOWEVER THE SAME HAS NOT BEEN LOOKED INTO BY THE ASSESSIN G OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. II. DURING THE YEAR YOU HAVE ON INTEREST INCOME OF RS. 9 . 1 9 CRS AN D OTHER INTEREST INCOME OF RS. 5 . 50 CRS. THE SAID INTEREST HAS BEEN NETTED OFF AGAINST INTEREST PAID ON TERM LOAN/DEBENTURES. THE NET INTEREST EXPENDITURE HAS BEEN CLAIMED AS A DEDUCTION. IT IS SEEN THAT INTEREST INCOME HAS BEEN EARNED ON FDS WITH B ANKS. HOWEVER THE ASSESSING OFFICER HAS FAILED TO LOOK INTO THE ISSUE OF TAXABILITY OF THE INTEREST EARNED AS INCOME FROM OTHER SOURCES. III . SIMILARLY YOU HAVE RECEIVED NON - OPERATING INCOME OF RS 1 , 59 , 743 / - . SINCE THE INCOME WAS NOT RELATED WITH THE PROJECT, THE ASSESSING OFFICER SHOULD HAVE TAXED THE SA ME AS INCOME FROM OTHER SOURCES . HOWEVER, THE ASSESSING OFFICER FAILED TO CAR RY OUT ANY INVESTIGATION INTO THE ISSUE. IV . IT IS FURTHER SEEN THAT YOU HAVE DEBITED INTEREST COST OF RS 6 1.31 CRORES OUT OF WHICH RS. 9.19 CRORES HAS B EE N NETTING OFF AGAINST INTEREST INCOME AND BALANCE HAS BEEN TRANSFERRED TO WORK IN PROGRESS. HOWEVER, IT IS SE EN FROM THE RECORDS THAT ASSESSING OFFICER HAS NOT EXAMINED THE UTILIZATION OF THE FUNDS OF WHICH THE INTEREST HAS BEEN PAID. FURTHER THE ASSESSING OFFICER HAS NOT EXAMINED THE APPLICABILITY OF TDS PROVISIONS ON THE INTEREST PAYMENT. FURTHER THE ASSESSING OFFICER HAS NOT EXAMINED THE ALLOCATION OF INTEREST PAID TOWARDS THE OTHER PROVISIONS APPEARING IN THE BALANCE SHEET. V. AT THE END OF THE YEAR THE ADVANCES FROM SALE OF FLA T WAS RS 559 . 59 CRS. THE ASSESSING OFFICER DID NOT CONDUCT ANY INQUIRY INTO THE A MOUNTS SO RECEIVED UNDER THE HEAD SALE OF FLAT / DEPOSIT OF SALE OF FLAT. THE ASSESSING OFFICER DID NOT VERIFY ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 4 WHETHER WHAT WAS THE MARKET RATE AT WHICH THE FLAT WERE SOLD AND WHETHER THERE WAS ANY DIFFERENCE IN THE RATES. THE ASSESSING OFFICER ACCEPTED TH E CLAIM WITHOUT ANY INQUIRY AND INVESTIGATION. V I . IT IS FURTHER SEEN FROM THE RECORDS THAT THE ASSESSING OFFICER DID NOT CARRY OUT ANY INQUIRY INTO THE CORRECTNESS OF THE WORK IN PROGRESS AND ITS VALUATION. VII. DURING THE YEAR YOU HAVE ISSUED NCDS OF RS.150 CRS. HOWEVER, THE SAME HAS NOT BEEN VERIFIED BY THE ASSESSING OFFICER AS TO THE APPLICABILITY OF SEC.68. THE ASSESSING OFFICER ACCEPTED THE CLAIM WITHOUT CARRYING OUT ANY INVESTIGATION INTO THE IDENTITY AND CAPACITY OF THE DEBENTURE HOLDER AND TH E GENUINENESS OF TRANSACTION. VIII. IT IS OBSERVED THAT YOU HAVE EARNED DIVIDEND INCOME TO THE TUNE OF RS.1.41 CRORES AND YOU HAVE INVESTMENTS AMOUNTING TO RS.33.35 CRS IN SHARES AND MUTUAL FUNDS AS PER TH E BALANCE SHEET. HOWEVER NO DISALLOWANCES HAVE B EEN MADE BY THE ASSESSING OFFICER AS PER THE PROVISIONS OF SEC. 14A RWR 8D. THE ASSESSING OFFICER HAS FAILED TO LOOK INTO THE ISSUE. 6. IN ASSESSMENT YEAR 2013 - 14, THE SHOW CAUSE NOTICE WAS ISSUED ON ALL THE ABOVE SAID ISSUES. IN AY 2014 - 15, THE LD P R. CIT ISSUED SHOW CAUSE NOTICE ON ISSUES LISTED AT (I) TO (V) SUPRA. 7 . DURING THE COURSE OF HEARING, THE LD. A.R. RAISED A LEGAL ISSUE WITH REGARD TO NON - PROVIDING OF AN OPPORTUNITY TO THE ASSESSEE WHILE QUASHING APPROVAL GRANTED BY ADDITIONAL COMMISSIO NER OF INCOME TAX UNDER SECTION 153D OF THE ACT. THE LD. A.R. SUBMITTED THAT THE PRESENT ASSESSMENT ORDERS HAVE BEEN PASSED BY THE ASSESSING OFFICER AFTER OBTAINING APPROVAL UNDER SECTION 153D OF THE ACT. HE SUBMITTED THAT, I N THIS KIND OF CASE S , IT IS N ECESSARY FOR LD. PR. CIT TO REVISE NOT ONLY THE ASSESSMENT ORDER BUT ALSO THE APPROVAL GRANTED UNDER SECTION 153D OF THE ACT. HE SUBMITTED THAT THE TRIBUNAL HAS HELD , IN THE FOLLOWING CASES, THAT N ON - REVISION OF THE APPROVAL GRANTED UNDER SECTION 153D OF THE ACT WOULD BE FATAL TO THE REVISION ORDER PASSED BY LD. PR. CIT AND HENCE LIABLE TO BE QUASHED. ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 5 A. M/S. TRINITY INFRA VENTURES LTD. VS. DCIT (ITA NO S .584 TO 589/H/2015 DATED 04.12.2015) B. DHARIWAL INDUSTRIES LTD. VS. CIT (ITA NOS.1108 TO 1113/PUN/ 2014 DATED 23.12.2016) C. SHRI SURENDRA L. HIRANANDANI VS. PR. CIT (ITA NO.3226/M/2017 & ORS. DATED 14.02.2018) THE LD. A.R. SUBMITTED THAT , IN THE INSTANT CASE, THE LD. PR. CIT HAS DULY REVISED THE APPROVAL GRANTED BY THE ADDITIONAL COMMISSIONER OF INCO ME TAX U/S 153D OF THE ACT. HOWEVER, THE LD. PR. CIT DID NOT ISSUE SHOW CAUSE NOTICE TO THE ASSESSEE BEFORE REVISING THE APPROVAL GRANTED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SECTION 153D OF THE ACT. THE LD. A.R. SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. AMITABH BACHCHAN, (2016) 384 ITR 200 (SC ) HAS HELD THAT THE LD. CIT NEED NOT CONFINE HIMSELF TO THE TERMS OF NOTICE AND HENCE IT MAY NOT BE A PROBLEM IF NO NOTICE IS ISSUED ON THE ABOVE SAID ISSUE . HOWEVER, THE HONBLE SUPREME COURT HAS HELD THAT THE LD. CIT , EVEN THOUGH FREE TO EXERCISE HIS JURISDICTION ON CONSIDER ATION OF ALL RELEVANT FACTS, YET HE SHOULD GIVE FULL OPPORTUNITY TO THE ASSESSEE TO CON TRO VERT THE SAME AND TO EXPLAIN THE CIRCUMSTANCES SURROUNDING IT AS MA Y BE CONSIDERED RELEVANT BY THE ASSESSEE , I.E., PROPER OPPORTUNITY MUST BE AFFORDED TO THE ASSESSEE BY THE COMMISSIONER OF INCOME TAX PRIOR TO FINALIZATION OF HIS DECISION ON THE ISSUE ON WHICH NO SHOW CAUSE NOTICE WAS ISSUED . THE LD. A.R. S UBMITTED THAT THE LD. PR. CIT, IN THE INSTANT CASE, DID NOT PROVIDE OPPORTUNITY TO THE ASSESSEE TO CONTROVERT HIS DECISION TO REVISE THE APPROVAL GRANTED BY ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SECTION 153D OF THE ACT. THE LD. A.R. SUBMITTED THAT NON - PROVIDING OF OPPORTUNITY TO THE ASSESSEE WOULD VITIATE THE ORDER PASSED BY LD CIT ON THAT ISSUE. HE SUBMITTED THAT, AN IDENTICAL ISSUE OF NON PROVIDING OPPORTUNITY TO THE ASSESSEE BY LD. CIT WHILE PASSING REVISION ORDER WAS CONSIDERED BY THE CO - ORDINATE BENCH OF TH E TRIBUNAL IN THE CASE OF AMBUJA CEMENTS LTD. VS. CIT (ITA NO.3563/M/2016 DATED 10.11.2017) AND THE TRIBUNAL BY FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF AMITABH BACHCHAN (SUPRA) HAS HELD THAT THE REVISION ORDER PASSED BY THE COMMISSIONER WITHOUT PROVIDING OPPORTUNITY TO ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 6 THE ASSESSEE IS UNTENABLE IN THE EYES OF LAW. ACCORDINGLY, THE LD. A.R. SUBMITTED THAT THE LD. PR. CIT WAS NOT JUSTIFIED IN REVISING THE APPROVAL GRANTED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX WITHOUT AF FORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE AND HENCE THE REVISION DONE BY THE LD. PR. CIT ON THE ISSUE OF APPROVAL GRANTED U/S 153D IS UNTENABLE IN THE EYES OF LAW. SINCE THE REVISION OF APPROVAL GRANTED BY ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SE CTION 153D OF THE ACT IS UNTENABLE, THE IMPUGNED REVISION ORDER S SHOULD BE CONSIDERED AS HAVING BEEN PASSED BY THE LD. PR. CIT WITHOUT REVISING THE APPROVAL GRANTED U/S 153D OF THE ACT. IN THAT CASE, THE PRESENT CASES WILL FALL UNDER THE CATEGORY OF REVIS ING THE ASSESSMENT ORDER S WITHOUT REVISING THE APPROVAL GRANTED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX. HENCE THE DECISIONS RENDERED BY THE CO - ORDINATE BENCHES IN THE CASE OF M/S. TRINITY INFRA VENTURES LTD. (SUPRA) AND OTHER CASE LAWS, WOULD APPLY AND ACCORDINGLY THE REVISION ORDERS PASSED BY LD. PR. CIT ARE LIABLE TO BE QUASHED. 8. THE LD D.R, ON THE CONTRARY, SUBMITTED THAT THE PROCESS OF OBTAINING APPROVAL FROM THE ADDL. COMMISSIONER U/S 153D OF THE ACT IS PART AND PARCEL OF ASSESSMENT PROCE EDING . T HE ASSESSMENT ORDER IS BEING PASSED BY THE ASSESSING OFFICER ONLY AFTER OBTAINING APPROVAL, I.E., THE APPROVAL PRECEDES THE ASSESSMENT ORDER . ACCORDINGLY HE SUBMITTED THAT THE PROCESS OF OBTAINING APPROVAL CANNOT BE SEEN AS A SEPARATE PROCEEDING DISTINCT FROM ASSESSMENT PROCEEDINGS . HENCE THE REVISION OF ASSESSMENT ORDER WOULD AUTOMATICALLY RESULT REVISION OF APPROVAL GRANTED ALSO. HE SUBMITTED THAT THE LD PR. CIT , IN ANY CASE, HAS DULY REVISED THE APPROVAL GRANTED BY THE ADDL. COMMISSIONER ALSO AS OPINED BY THE TRIBUNAL IN THE ORDERS RELIED UPON BY THE ASSESSEE. HE SUBMITTED THAT NO PREJUDICE SHALL BE CAUSED TO THE ASSESSEE BY NOT PROVIDING SPECIFIC OPPORTUNITY TO THE ASSESSEE ON THE ISSUE OF CANCELLATION OF APPROVAL. 9. BEFORE ADDRESSING TH E LEGAL CONTENTION RAISED BY THE ASSESSEE, WE WOULD PREFER TO ADDRESS THE ISSUES URGED ON MERITS. ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 7 10. THE LD. A .R. SUBMITTED THAT LD PR. CIT IS EMPOWERED TO REVISE THE ASSESSMENT O RDER, IF IT IS FOUND TO BE ERRO NEOUS AND PREJUDICIAL TO THE INTERESTS OF RE VENUE. HOWEVER, IN ORDER TO ARRIVE AT SUCH A CONCLUSION, IT IS NECESSARY FOR THE THE LD. PR. CIT TO CONDUCT MINIMUM ENQUIRIES ON VARIOUS ISSUES CONSIDERED BY HIM AS RESULTED IN MAKING THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVE NUE. HE SUBMITTED THAT THE LD. PR. CIT , IN THE INSTANT CASES, HAS PASSED THE IMPUGNED ORDERS WITHOUT SATISFYING HIMSELF THAT THE ISSUE S CONSIDER ED BY HIM HAD ACTUALLY RENDERED THE ASSESSMENT ORDER S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE. HE SUBMITTED THAT THE REVISIONAL POWER U/S 263 OF THE ACT CANNOT BE INVOKED IN ORDER TO ORDER FURTHER ENQUIRY , I.E., TO CARRY OUT FISHING OR ROVING ENQUIRY ON ANY MATTER WITHOUT SATISFYING HIMSELF THAT THE ASSESSMENT ORDER HAS BEEN RENDERED ERROENEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. HE FURTHER SUBMITTED THAT THE PURPOSE OF GIVING LD. PR. CIT POWER TO REVISE THE ASSESSMENT ORDER IS TO PROTECT THE INTEREST OF THE REVENUE AND FOR THAT PURPOSE THE LD. PR. CIT HAS GOT ALL POWERS TO CALL FOR DETAIL S AND COME TO A REASONABLE CONCLUSION THAT THE ASSESSMENT ORDER WAS ERROENEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. HE SUBMITTED THAT THE ASSESSEE HAS FURNISHED PROPER AND DETAILED REPLIES ON VARIOUS ISSUES RAISED BY LD PR. CIT. HOWEVER THE LD. PR . CIT DID NOT CONDUCT EVEN MINIMUM ENQUIRY ON VARIOUS ISSUES AND ALSO THE SUBMISSIONS/DETAILS FURNISHED BY THE ASSESSEE BEFORE COMING TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE . HE SUBMITTED THAT T HE LD PR. CIT IS NOT ENTITLED TO REVISE THE ASSESSMENT ORDER SIMPLY FOR THE REASON THAT HE HAS GOT DIFFERENT VIEW ON THE SAME. ACCORDINGLY, THE LD A.R SUBMITTED THAT LD CIT SHOULD CARRY OUT MINIMAL ENQUIRIES AND FAILURE TO THE SAME WOULD BE FATAL TO THE RE VISION ORDER PASSED BY HIM. IN SUPPORT OF THESE PROPOSITIONS THE ASSESSEE RELIED UPON CERTAIN CASE LAWS. THE FIRST CASE LAW RELIED UPON BY THE LD A.R IS THE THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF CIT V. DELHI AIRPORT METRO EXPRESS IN ITA NO. 705 OF 2017 DATED 05.09 . 2017. THE ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 8 RELEVANT PORTION OF THE OBSERVATIONS MADE BY THE HONBLE DELHI HIGH COURT IS REPRODUCED HEREUNDER : - '9. IT IS SEEN, IN THE ORDER DATED 3 0 TH MARCH, 2O16, THE PCIT HAS PROCEEDED BY SETTING OUT THE CONTENTS OF SCN AND T HE CONTENTS OF REPLY GIVEN BY THE ASSESSEE. IT APPEARS THAT NO INQUIRY, AS SUCH, WAS UNDERTAKEN BY THE PCIT TO COME TO CONCLUSION THAT THE ORIGINAL ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 10. FOR THE PURPOSE OF EX ERCISING JURISDICTION UNDER SECTION 263 OF THE ACT, THE CONCLUSION THAT THE ORDER OF THE A.O IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE PRECEDED BY SOME MINIMAL INQUIRY. IN FACT, IF THE PCIT IS OF THE VIEW THAT THE A.O DID NOT U NDERTAKE ANY INQUIRY, IT BECOMES INCUMBENT ON THE PCIT TO CONDUCT SUCH INQUIRY. 11. IN THE CONSIDERED VIEW OF THE COURT, THIS CAN HARDLY CONSTITUTE THE REASONS REQUIRED TO BE GIVEN BY THE PCIT TO JUSTIFY THE EXERCISE OF JURISDICTION UNDER SECTION 263 OF T HE ACT. IN THE CONTEXT OF THE PRESENT CASE IF, AS URGED BY THE REVENUE, THE ASSESSEE HAS WRONGLY CLAIMED DEPRECIATION ON ASSETS LIKE LAND AND BUILDING, IT WAS INCUMBENT UPON THE PCIT TO UNDERTAKE AN INQUIRY AS REGARDS WHICH OF THE ASSETS WERE PURCHASED AND INSTALLED BY THE ASSESSEE OUT OF ITS OWN FUNDS DURING THE AY IN QUESTION AND, WHICH WERE THOSE ASSETS THAT WERE HANDED OVER TO IT BY THE DMRC. THAT BASIC EXERCISE OF DETERMINING TO WHAT EXTENT THE DEPRECIATION WAS CLAIMED IN EXCESS HAS NOT BEEN UNDERTAKEN BY THE PCIT. 12. MR. ASHEESH JAIN THEN VOLUNTEERED THAT THE PCIT HAD EXERCISED THE SECOND OPINION AVAILABLE TO HIM UNDER SECTION 263(1) OF THE ACT BY SENDING THE ENTIRE MATTER BACK TO THE A.O FOR AFRESH ASSESSMENT. THAT OPTION, IN THE CONSIDERED VIEW OF THE COURT, CAN BE EXERCISED ONLY AFTER THE PCIT UNDERTAKES AN INQUIRY HIMSELF IN THE MANNER INDICATED HEREINBEFORE. THAT IS MISSING IN THE PRESENT CASE.(EMPHASIS SUPPLIED)' THE LEARNED AR ALSO RELIED UPON THE DECISION OF TRIBUNAL IN CASE OF METACAPS ENGIN EERING AND MAHENDRA CONSTRUCTION CO V. CIT IN ITA NO.2895/MUM/2014 DATED 11.09.2017. THE RELEVANT PART OF OBSERVATIONS IS REPRODUCED HEREUNDER : - 13. ......HOWEVER, WE FIND THAT THE CIT WITHOUT POINTING OUT ANY INFIRMITY IN THE REPLY/EXPLANATION OF THE ASSESSEE, AND AS TO WHY THE SAME COULD NOT BE ACCEPTED HAD RATHER HUSHED THROUGH THE MATTER AND CONCLUDED THAT THE ASSESSMENT ORDER PASSED BY THE A.O WAS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 14. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDER PASSED BY THE CIT AND ARE UNABLE TO PERSUADE OURSELVES TO UPHOLD THE SAME. WE FIND THAT AS ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 9 PER THE MANDATE OF SEC. 263, A STATUTORY OBLIGATION IS CAST UPON THE CIT TO AFFORD AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, BEFORE AN ORDER PASSED BY THE A.O IS REVISED IN EXERCISE OF THE REVISIONAL JURISDICTION VESTED WITH HIM UNDER THE SAID STATUTORY PROVISION. THE UNDERLYING PURPOSE OF AFFORDING OF SUCH AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE I S TO GIVE AN OPPORTUNITY TO HIM TO EXPLAIN AS TO HOW THE ORDER PASSED BY THE A.O ON THE ISSUES ON WHICH THE SAME IS SOUGHT TO BE REVISED BY THE CIT, IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE ARE OF THE CONSIDERED VIEW THAT THE VERY PUR POSE OF AFFORDING OF AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, ON THE ISSUES ON WHICH THE ORDER PASSED BY THE A.O IS SOUGHT TO BE REVISED BY THE CIT WOULD BE LOST AND RENDERED OTIOSE, IN CASE THE REPLY OF THE ASSESSEE EXPLAINING AS TO WHY THE ORDER SO UGHT TO BE REVISED IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT JUDICIALLY DELIBERATED UPON BY THE CIT. WE ARE OF THE CONSIDERED VIEW THAT IT IS OBLIGATORY ON THE PART OF THE CIT TO CONSIDER THE REPLY OF THE ASSESSEE IN RESPECT OF THE ISSUES ON WHICH THE ORDER OF THE A.O IS SOUGHT TO BE REVISED BY HIM. ....... WE THOUGH ARE NOT OBLIVIOUS OF THE FACT THAT THE VIEW THAT AN ORDER PASSED BY THE A.O IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE REMAINS WITHIN T HE EXCLUSIVE REALM OF THE WISDOM OF THE CIT, BUT THEN THE LEGISLATURE BY CONTEMPLATING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, CAN THUS SAFELY BE HELD TO HAVE PRESUPPOSED DUE APPLICATION OF MIND BY THE REVISIONAL AUTHORITY BEFORE REVISING THE ORDER PASSED BY THE A.O. WE ARE OF THE CONSIDERED VIEW THAT THE CIT AFTER RECEIVING THE REPLY/OBJECTIONS OF THE ASSESSEE IN RESPECT OF THE ISSUES ON WHICH THE ORDER OF THE A.O IS SOUGHT TO BE REVISED, IN ALL FAIRNESS, IS REQUIRED TO DELIBERATE ON THE SAME, AND THEREAFTER ON THE BASIS OF LOGICAL REASONING CONCLUDE AS TO WHETHER IN THE BACKDROP OF THE REPLY/EXPLANATION OF THE ASSESSEE CAN THE ORDER OF THE A.O BE CHARACTERIZED AS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. . ... WE ARE AFRAID THAT IN THE CASE OF THE PRESENT ASSESSEE, THOUGH THE CIT HAD PLACED ON RECORD THE REPLY OF THE ASSESSEE IN RESPECT OF THE ISSUES ON WHICH THE ORDER PASSED BY THE A.O WAS SOUGHT TO BE REVISED AND HAD ALSO REFERRED ABOUT THE SAME IN THE BOD Y OF HIS ORDER PASSED UNDER SEC. 263, HOWEVER, NEITHER ANY REASON HAD BEEN GIVEN BY THE CIT, NOR IT CAN BE GATHERED FROM THE IMPUGNED ORDER, AS TO WHY THE EXPLANATION OF THE ASSESSEE THAT THE ORDER PASSED BY THE A.O WAS NOT ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE ISSUES ON WHICH IT WAS SOUGHT TO BE REVISED, WAS NOT FOUND TO BE ACCEPTABLE. ...WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE EXPLANATION/OBJECTIONS FILED BY THE ASSESSEE DURING THE COURSE OF REVISIONAL PROCEEDINGS IN RESPECT OF CERTAIN ISSUES ON WHICH THE CIT HAD SOUGHT TO REVISE THE ORDER PASSED BY THE A.O UNDER SEC. 143(3), THE CIT HAD FAILED TO POINT OUT AS TO HOW THE ORDER OF THE A.O WAS FOUND TO BE 'ERRONEOUS'. WE ARE OF THE CONSIDERE D VIEW THAT IN THE ABSENCE OF CLEAR OBSERVATIONS OF THE CIT AS TO HOW THE ORDER OF THE A.O AFTER CONSIDERING THE EXPLANATION/OBJECTIONS FILED BY THE ASSESSEE WAS FOUND TO BE ERRONEOUS IN RESPECT OF THE SAID RESPECTIVE ISSUES, THUS, CAN SAFELY BE HELD TO HA VE FAILED THE FUNDAMENTAL REQUIREMENT FOR VALID ASSUMPTION OF JURISDICTION AS PER T HE MANDATE OF LAW. WE FIND OUR AFORESAID VIEW TO BE SUPPORTED BY THE JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. VIKAS POLYMERS (2012) 341 ITR 537 (DE L). ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 10 THE LD A.R SUBMITTED THAT, IN THE INSTANT CASES, THE LD PR. CIT DID NOT CONSIDER THE DETAILED REPLIES GIVEN BY THE ASSESSEE; DID NOT MAKE ANY MINIMAL ENQUIRY ON VARIOUS ISSUES AND HAS PROCEEDED TO PASS THE IMPUGNED REVISION ORDERS. ACCORDINGLY HE SUB MITTED THAT THE IMPUGNED REVISION ORDERS ARE LIABLE TO BE QUASHED ON THIS GROUND ALONE. 11. THE LD. A.R. FURTHER SUBMITTED THAT CERTAIN ISSUES SOUGHT TO BE REVISED BY THE LD. PR. CIT ARE SQUARELY COVERED BY THE DECISION RENDERED BY HONBLE JURISDICTIONAL BOMBAY HIGH COURT . HE SUBMITTED THAT THE TAX AUTHORITIES ARE BOUND BY THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT AND HENCE THE LD. PR. CIT WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO EXAMINE T HEM AFRESH , AS THE SAME W OULD RESULT I N EMPTY EXERCISE . 12. WE NOW PROCEED TO DISPOSE OF THE ISSUES ON MERITS. THE ISSUES ARE TAKEN UP FOR CONSIDERATION IN THE SERIATIM GIVEN IN THE SHOW CAUSE NOTICE, SINCE WE NOTI CE THAT THE LD PR. CIT HAS DEALT WITH THE ISSUES IN DIFFERENT ORDER IN THE R EVISION ORDER PASSED BY HIM. THE LD. A.R. SUBMITTED THAT THE FIRST ISSUE SOUGHT TO BE REVISED BY THE LD. PR. CIT RELATED TO THE SIZE OF THE PLOT ON WHICH VARIOUS PROJECTS WERE UNDERTAKEN. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS CONSTRUCTED THREE TOW ERS NAMED PINEWOOD, BROWNWOOD AND SEA WOOD ON A PLOT OF LAND HAVING EXTENT OF 2.2178 ACRES. HOWEVER, THE PROPORTIONATE AREA OF PLOT ALLOCABLE TO EACH OF THE APARTMENT TOWER MENTIONED ABOVE WORKED OUT TO 32,202.50 SQ. FT. , I.E., LESS THAN ONE ACRE. AS PER THE PROVISIONS OF SEC.80IB(10) OF THE ACT, IT IS MANDATORY TO BUILDING RESIDENTIAL HOUSES ON A PLOT HAVING MINIMUM AREA OF ONE ACRE. SINCE THE PLOT AREA OF THE EACH OF THE APARTMENT TOWER WAS LESS THAN ONE ACRE, THE LD. PR. CIT CONCLUDED THAT THE ASSESSE E HAS FAILED TO COMPLY WITH THE CONDITIONS PRESCRIBED UNDER SECTION 80IB(10) WITH REGARD TO THE AREA OF LAND . ACCORDINGLY, HE HAS DIRECTED THE ASSESSING OFFICER TO EXAMINE THE ELIGIBI LITY OF THE ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80IB(10) OF THE AC T. ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 11 13. THE LD. A.R. SUBMITTED THAT THE VIEW SO ENTERTAINED BY THE LD. PR. CIT IS CONTRARY TO THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTIES (2012) 19 TAXMAN.COM 316 WHEREIN THE HONBLE BOMBAY HIGH COURT HAS HELD THAT , ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE, THERE CAN BE ANY NUMBER OF HOUSING PROJECTS. IN THIS REGARD, THE HONBLE BOMBAY HIGH COURT HAS TAKEN SUPPORT OF THE LETTER DATED 04 - 05 - 2001 ADDRESSED BY CBDT TO THE MAHARASHTRA CHAMBER OF HOUS ING INDUSTRY AND HELD AS UNDER: - 29. FROM THE AFORESAID LETTER OF CBDT, IT IS CLEAR THAT FOR THE PURPOSES OF SECTION 80IB (10) IT IS NOT THE MANDATE OF THE SECTION THAT THE HOUSING PROJECT MUST BE ON A VACANT PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND THAT WHERE A NEW HOUSING PROJECT IS CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE BUT WITH EXISTING HOUSING PROJECTS WOULD QUALIFY FOR SECTION 80IB (10) DEDUCTION. EVEN OTHERWISE, THE ARGUMENT OF THE REVENUE DOES NOT STAND TO REASON BECAUSE, IN THE CITY OF MUMBAI WHERE THERE IS ACUTE SPACE CRUNCH, IT IS DIFFICULT TO FIND A VACANT PLOT HAVING MINIMUM AREA OF ONE ACRE AND EVEN IF FEW SUCH PLOTS ARE EXISTING IT CANNOT BE SAID THAT SECTION 80IB (10) DEDUCTION WAS INTENDED TO GIVE BENEFIT ONLY TO THE UNDERTAKINGS WHO CONSTRUCT HOUSING PROJECTS ON THOSE FEW PLOTS. THEREFORE, IT IS CLEAR THAT ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE, THERE CAN BE ANY NUMBER OF HOUSING PROJECTS AND SO LONG AS THOSE HOUSING PROJECTS ARE APPROVED BY THE LOCAL AUTHORITY AND FULFILL THE CONDITIONS SET OUT UNDER SECTION 80IB (10), THE DEDUCTION THEREUNDER CANNOT BE DENIED TO ALL THOSE HOUSING PROJECTS. SECTION 80IB (10) WHILE SPECIFYING THE SIZE OF THE PLOT OF LAND, DOES NOT SPECIFY THE SIZE OR TH E NUMBER OF HOUSING PROJECTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A PLOT HAVING MINIMUM AREA OF ONE ACRE. AS A RESULT, SIGNIFICANCE OF THE SIZE OF THE PLOT OF LAND IS LOST AND, THEREFORE, THE ASSESSEE SUBJECT TO FULFILLING OTHER CONDITIONS BECOMES ENTITLE D TO SECTION 80IB (10) DEDUCTION ON CONSTRUCTION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE ACRE, IRRESPECTIVE OF THE FACT THAT THERE EXIST OTHER HOUSING PROJECTS OR NOT. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL IN REJECTING THE CONTENTION OF THE REVENUE REGARDING THE SIZE OF THE PLOT CANNOT BE FAULTED. ACCORDINGLY HE SUBMITTED THAT THE LD PR. CIT WAS NOT JUSTIFIED IN REVISING THE ASSESSMENT ORDER ON THIS ISSUE. THE LD A.R FURTHER SUB MITTED THAT AN IDENTICAL VIEW HAS BEEN EXPRESSED BY HONBLE MADRAS HIGH COURT IN THE CASE OF VOORA PROPERTY DEVELOPERS (P ) LTD (2015)(61 TAXMANN.COM 96) BY CONSIDERING THE ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 12 THE DECISION RENDERED BY THE JURISDICTIONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA). THE LD A.R SUBMITTED THAT THE APPEAL FILED BY THE REVENUE CHALLENGING THE ORDER PASSED BY HONBLE MADRAS HIGH COURT IN THE CASE OF VOORA PROPERTY DEVELOPERS PVT LTD (SUPRA) HAS SINCE BEEN DISMISSED BY HONBLE SUPREME COURT, VI DE ITS ORDER DATED 16 - 12 - 2015 PASSED IN SLP - CC NO. 16641/2015. ACCORDINGLY, THE LD. A.R. SUBMITTED THAT THIS ISSUE HAS SINCE BEEN SETTLED BY HONBLE SUPREME COURT ORDER OF LD. PR. CIT ON THE ABOVE SAID ISSUE SHOULD BE REJECTED. 14. ON THE CONTRARY, THE L D. D.R. SUBMITTED THAT THE MAIN ALLEGATION OF LD. PR. CIT WAS THAT THE ASSESSING OFFICER DID NOT CARRY OUT ANY ENQUIRY WITH REGARD TO THE ABOVE SAID ISSUE AND HENCE THERE WAS NO APPLICATION OF MIND BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE EXPLANATI ON 2 TO SECTION 263 INSERTED BY FINANCE ACT, 2015 W.E.F. 01.06.2015 SPECIFICALLY PROVIDES THAT THE ORDER PASSED WITHOUT MAKING ANY ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE SHALL BE DEEMED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, THE LD. D .R. SUBMITTED THAT THE LD. PR. CIT WAS JUSTIFIED IN PASSING THE IMPUGNED ASSESSMENT ORDER. 15. IN THE REJOINDER, THE LD A.R SUBMITTED THAT THE EXPLANATION INSERTED IN SEC.263 OF THE ACT CANNOT CHANGE THE MANDATORY RE QUIREMENTS OF SEC.263(1) OF THE ACT THAT THE ISSUES CONSIDERED BY LD PR.CIT SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE, WHICH CONCLUSION SHOULD BE ARRIVED AT BY HIM ON THE DUE EXAMINATION OF MATERIALS AVAILABLE ON RECORD AND EXPLANATIO NS FURNISHED BY THE ASSESSEE . 1 6 . WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD . THE LAW ON SEC.263 HAS BEEN EXPLAINED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. [1993] 203 ITR 108 (BOM), INTER ALIA, AS UNDER : . . . FROM A READING OF SUB - SECTION (1) OF SECTION 263, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 13 COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREIN B Y THE INCOME - TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . IT IS NOT AN ARBITRARY OR UNCHARTERED POWER, IT CAN BE EXERCISED ONLY ON FULFILMENT OF THE REQUIREMENTS LAID DOWN IN SUB - SECTION (1). THE CONSIDERATIO N OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHI CH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STAR TING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL - ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. (SEE PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977] 106 ITR 1 (SC) AT PAGE 1 0) . . . THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE MUST BE BASED ON MATERIALS ON RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE COMMISSIONER CANNOT INITIATE PROCEEDINGS W ITH A VIEW TO START FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. THE EXPLANATION INSERTED IN SEC.263 OF THE ACT, IN OUR VIEW, CANNOT UNDO THE BASIC REQUIREMENTS TO BE SATISFIED FOR INVOKING THE PROVISIONS OF SEC.263 OF THE ACT. 1 7 . W ITH REGARD TO THE CONDITION RELATING TO MINIMUM AREA OF PLOT OF LAND THAT SHOULD BE DEVELOPED IN ORDER TO AVAIL DEDUCTION UNDER SECTION 80IB(10) OF THE ACT , W E NOTICE THAT THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE IN CASE OF VANDANA PROPERTIES (SUPRA) BY ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 14 HOLDING THAT THERE CAN BE A NY NUMBER OF PROJECTS WITHIN A PLOT OF LAND . FOR THE SAKE OF CONVENIENCE WE EXTRACT BELOW THE RELEVANT PORTION OF THE ORDER. 18. THE EXPRESSION 'HOUSING PROJECT ' IS NEITHER DEFINED UNDER SECTION 2 OF THE ACT NOR UNDER SECTION 80IB (10) OF THE ACT. EVEN UNDER THE MUMBAI MUNICIPAL CORPORATION ACT, 1988 AS ALSO UNDER THE DEVELOPMENT CONTROL REGULATIONS FOR GREATER MUMBAI, 1991, THE EXPRESSION 'HOUSING PROJECT' IS NOT DEFINED. THEREFORE, THE EXPRESSION 'HOUSING PROJECT' IN SECTION 80IB (10) WOULD HAVE TO BE CONS TRUED AS COMMONLY UNDERSTOOD. 19. AS RIGHTLY CONTENDED BY MR. INAMDAR, LEARNED SENIOR ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE AND MR. MISTRI, LEARNED SENIOR ADVOCATE AND MR. JOSHI, LEARNED ADVOCATE APPEARING ON BEHALF OF THE INTERVENORS, THE EXPRESS ION 'HOUSING PROJECT' IN COMMON PARLANCE WOULD MEAN CONSTRUCTING A BUILDING OR GROUP OF BUILDINGS CONSISTING OF SEVERAL RESIDENTIAL UNITS . . 23. THE NEXT ARGUMENT OF THE REVENUE IS THAT TO AVAIL THE DEDUCTION UNDER SECTION 80IB (10), THE HOUSING PROJECT MUST BE ON THE SIZE OF A VACANT PLOT OF LAND WHICH HAS MINIMUM AREA OF ONE ACRE. IN THE PRESENT CASE, THERE ARE FIVE BUILDINGS (A, B, C, D AND E) ON A PLOT AD - MEASURING 2.36 ACRES, HENCE, THE PROPORTIONAT E AREA FOR EACH BUILDING WOULD BE LESS THAN ONE ACRE AND, THEREFORE, THE BENEFIT OF SECTION 80IB (10) COULD NOT BE GRANTED IN RESPECT OF THE HOUSING PROJECT CONSISTING 'E' BUILDING. 29. FROM THE AFORESA ID LETTER OF CBDT, IT IS CLEAR THAT FOR THE PURPOSES OF SECTION 80IB (10) IT IS NOT THE MANDATE OF THE SECTION THAT THE HOUSING PROJECT MUST BE ON A VACANT PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE A ND THAT WHERE A NEW HOUSING PROJECT IS CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE BUT WITH EXISTING HOUSING PROJECTS WOULD QUALIFY FOR SECTION 80IB (10) DEDUCTION . . .. THEREFORE, I T IS CLEAR THAT ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE, THERE CAN BE ANY NUMBER OF HOUSING PROJECTS AND SO LONG AS THOSE HOUSING PROJECTS ARE APPROVED BY THE LOCAL AUTHORITY AND FULFILL THE CONDITIONS SET OUT UNDER SECTION 80IB (10), THE DEDUCTION THEREUNDER CANNOT BE DENIED TO ALL THOSE HOUSING PROJECTS . SECTION 80IB (10) WHILE SPECIFYING THE SIZE OF THE PLOT OF LAND, DOES NOT SPECIFY THE SIZE OR THE NUMBER OF HOUSING PROJECTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A PLOT HAVING MINIMUM AREA OF ONE ACRE. AS A RESULT, SIGNIFICANCE OF THE SIZE OF THE PLOT OF LAND IS LOST AND, THEREFORE, THE ASSESSEE SUBJECT TO FULFILLING OTHER CONDITIONS BECOM ES ENTITLED TO SECTION 80IB (10) DEDUCTION ON CONSTRUCTION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE ACRE, IRRESPECTIVE OF THE FACT THAT THERE EXIST OTHER HOUSING PROJECTS OR NOT. THE HONBLE MADRAS HIGH COURT HAS ALSO EXPRESSED AN IDENTICAL VIEW IN THE CASE OF VOORA PROPERTY DEVELOPERS (P) LTD AND THE SLP FILED AGAINST THE ABOVE SAID DECISION HAS SINCE BEEN DISMISSED BY HONBLE SUPREME COURT. ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 15 1 8 . IN THE INSTANT CASE , THERE IS NO DISPUTE TH AT ALL THE THREE PROJECTS MENTIONED ABOVE HAVE BEEN EXECUTED ON A PLOT OF LAND HAVING EXTENT OF 2.2178 ACRES. ACCORDINGLY, AS PER THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA), THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS PRESCRIBED UNDER SECTION 80IB(10) OF THE ACT WITH REGARD TO THE AREA OF PLOT . SINCE THE VIEW TAKEN BY LD. PR. CIT IS CONTRARY TO THE VIEW EXPRESSED BY THE BINDING DECISION OF THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT , THE SAME CANNOT BE SUSTAINED. ACCORDINGLY, WE F IND MERIT IN THE CONTENTIONS URGED BY THE ASSESSEE ON THIS ISSUE . THE LD D.R SUBMITTED THAT THE AO HAS NOT EXAMINED THIS ASPECT AND HENCE THE LD PR.CIT WAS RIGHT IN REVISING THE ASSESSMENT ORDER ON THIS ISSUE. HOWEVER, AS RIG HTLY POINTED OUT BY LD A.R, THE RE - EXAMINATION OF AN ISSUE ALREADY SETTLED BY THE JURISDICTIONAL HIGH COURT WOULD RESULT IN AN EMPTY EXERCISE, AS THE AO IS REQUIRED TO FOLLOW THE BINDING DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT AND HENCE THE DIRE CTION GIVEN BY LD PR. CIT WOULD SERVE NO PURPOSE . IN ANY CASE, THE LD PR.CIT COULD NOT HAVE TAKEN A VIEW CONTRARY TO THE DECISION RENDERED BY HONBLE JURISDICTIONAL HIGH COURT. A CCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD. PR. CIT ON THE ABOVE SAID IS SUE. 1 9 . THE NEXT ISSUE CONSIDERED BY LD. PR. CIT RELATES TO NETTING OF INTEREST INCOME AGAINST THE INTEREST EXPENDITURE. THE LD PR. CIT NOTICED THAT THE ASSESSEE HAS NETTED OF ITS INTER E ST INCOME AGAINST THE INTEREST EXPENDITURE AND ACCORDINGLY THE NE T INTEREST EXPENDITURE HAS BEEN INCLUDED IN WORK IN PROGRESS. THE LD. PR. CIT , HOWEVER, T OOK THE VIEW THAT THE INTEREST INCOME EARNED BY THE ASSESSEE SHOULD HAVE BEEN ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES , AS PER THE DECISION RENDERED BY HON BLE SUPREME COURT IN THE CASE TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD . 227 ITR 172. THE LD. PR. CIT ALSO TOOK SUPPORT OF THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. COR OMA N DEL CEMENTS LTD 234 ITR 412 WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT INTEREST RECEIVED/EARNED FROM DEPOSITS FOR PRE - PRODUCTION PERIOD PRIOR TO COMMENCEMENT OF BUSINESS IS ASSESSABLE AS INCOME ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 16 FROM OTHER SOURCES. ACCORDINGLY, THE LD. PR. CIT TO OK THE VIEW THAT THE ASSESSING OFFICER HAS NOT EXAMINED THIS ISSUE AND HENCE THE ASSESSMENT ORDER IS RENDERED ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 20 . THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAD EARNED INTEREST INCOME FROM DIFFEREN T SOURCES. THE ASSESSEE HAS GROUPED I NTEREST INCOME INTO TWO CATEGOR IES, VIZ., INTEREST EARNED ON FIXED DEPOSITS AND INTEREST EARNED FROM VARIOUS OTHER SOURCES. THE BREAK UP DETAILS OF INTEREST INCOME EARNED DURING THE YEAR RELEVANT TO ASSESSMENT YEAR 20 12 - 13 IS GIVEN BELOW: SR. NO . PARTICULARS AMOUNT (RS.) AMOUNT (RS.) 1. INTEREST INCOME ON FDS 9, 19 ,60, 599 2. OTHER INTEREST INCOME INTEREST ON DEBENTURES 2,46,09,751 INTEREST ON INCOME TAX REFUND 63,24,841 INTEREST RECEIVE D ON INSTALMENTS 1,40,91,999 INTEREST RECEIVED ON STAFF LOAN 15,046 INTEREST RECEIVED ON INTER CORPORATE DEPOSITS 93,76,490 INTEREST ON OTHERS 6,50,156 5,50,68,283 3. OTHER NON - OPERATIN G INCOME MISCELLANEOUS INCOME 1,59, 026 PROFIT ON SALE OF FIXED ASSETS 717 1,59,743 21 . THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS NETTED OF INTEREST INCOME EARNED ON FIXED DEPOSITS AMOUNTING TO RS. 919.60 LAKHS ONLY AGAINST THE INTEREST EXPENDITURE. THE ASSESSEE HAS OFFERED FOR TAXATION THE BALANCE AMOUNT OF INTEREST INCOME OF RS.550.68 LAKHS EARNED FROM VARIOUS OTHER SOURCES, UNDER THE HEAD INCOME FROM BUSINESS . THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 17 EXECUTING A TOWNSHIP PROJECT AT OLD MAHABALIPURAM, CHENNAI AND FOR THAT PURPOSES THE ASSESSEE HAD BORROWED HUGE FUNDS. THE FUNDS SO BORROWED COULD NOT BE INVESTED AT ONE STRETCH . S INCE THERE WILL BE A TIME GAP BETWEEN THE PROCUREMENT OF LOAN FUNDS AND DEPLOYMENT OF THE SAME, THE ASSESSEE HAS INVESTED SOME PORTION OF THE LOAN FUNDS IN FIXED DEPOSITS ON TEMPORARY BASIS AS PART OF ITS BUSINESS STRATEGY , WHICH WILL ENABLE IT TO EARN INTEREST INCOME, WHICH WOULD, IN TURN, PART FINANCE THE THE INTEREST EXPENDITURE . HE SUBMITTED THAT T HE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING THE S YSTEM OF NETTING OF THE INTEREST INCOME EARNED ON TEMPORARY FIXED DEPOSITS AGAINST INTEREST EXPENDITURE . THE SAID CLAIM OF THE ASSESSEE IS SUPPORTED BY THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF LOK HOLDINGS 308 ITR 356. 22 . WITH REGARD TO THE OTHER INTEREST INCOME EARNED FROM VARIOUS OTHER SOURCES , THE LD A.R SUBMITTED THAT THE ASSESSEE HAS OFFERED THE SAME UNDER THE HEAD INCOME FROM BUSINESS. HOWEVER, THE LD. PR. CIT HAS TAKEN THE VIEW THAT THIS INTEREST INCOME HAS ALSO BEEN NETTED OF AGAINST THE INTEREST EXPENDITURE. HE SUBMITTED THAT THE LD PR. CIT HAS FAILED TO UNDERSTAND CORRECT FACTUAL POSITION IN THIS RESPECT AND HENCE, HE WAS NOT JUSTIFIED IN FINDING FAULT WITH THE ASSESSMENT ORDER WITHOUT PROPER UNDERSTANDING OF THE C ORRECT FACTUAL POSITION. HE SUBMITTED THAT OTHER INTEREST INCOME EARNED BY THE ASSESSEE ARE RELATED TO THE BUSINESS ACTIVITIES CARRIED ON BY THE ASSESSEE AND THEY ARE INEXTRICABLY LINKED TO THE PROJECT EXECUTED BY THE ASSESSEE. THE LD. A.R. FURTHER SUBM ITTED THAT THE ASSESSEE HAD MADE DETAILED SUBMISSIONS BEFORE LD. PR. CIT , BUT THE LD. PR. CIT DID NOT CONDUCT MINIMUM ENQUIRY OF THE SAME . ACCORDINGLY, HE SUBMITTED THAT THE LD. PR. CIT COULD NOT HAVE FOUND FAULT WITH THE ASSESSMENT ORDER ON THIS ISSUE AL SO. 23 . THE LD D.R, ON THE CONTRARY, PLACED HIS RELIANCE ON THE FOLLOWING CASE LAWS TO CONTEND THAT THE INTEREST INCOME EARNED BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES: - (A) CIT VS. AUTOKAST LTD (2001)(116 TAXMAN 244)(SC ) ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 18 (B) CIT VS. MEREENA CREATIONS (2010)(189 TAXMAN 71)(DELHI) (C) CIT VS. BHAWAL SYNTHETICS (INDIA), UDAIPUR (2017)(81 TAXMANN.COM 478)(RAJ) (D) CIT VS. INDO GULF FERTILISER & CHEMICAL CORPN LTD (149 TAXMAN 603)(ALL). 24 . WE HEARD THE PARTIES ON THIS I SSUE AND PERUSED THE RECORD. THE ASSESSEE HAS SUBMITTED THAT IT HAS NETTED OF INTEREST INCOME EARNED FROM FDS AMOUNTING TO RS.919.60 LAKHS ONLY AGAINST THE INTEREST EXPENDITURE. IT IS SUBMITTED THAT THE ASSESSEE IS FOLLOWING TH E SAME PRACTICE CONSISTENTL Y OVER THE PAST SEVERAL YEARS . FURTHER THE CLAIM OF THE ASSESSEE IS ALSO SUPPORTED BY THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF LOK HOLDINGS (SUPRA). ON THE CONTRARY, THE LD D.R PLACED HIS RELIANCE ON VARIOUS DECISIONS , WHICH CO NSISTED OF DECISIONS RENDERED BY DIFFERENT HIGH COURTS AND SUPREME COURT . WE SHALL BE CONCERNED WITH THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF AUTOKAST LTD (SUPRA), AS THE JURISDICTIONAL HIGH COURT HAS RENDERED A DECISION ON THIS ISSUE IN FAVOUR OF THE ASSESSEE. WE NOTICE THAT THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF AUTOKAST LTD WAS IN THE CONTEXT OF CAPITAL EXPENDITURE, WHERE AS IN THE INSTANT CASE, THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE IS OF REVENUE NATURE , I.E., IT HAS BEEN INCURRED ON FUNDS BORROWED FOR WORK IN PROGR ESS. HENCE THE RATIO OF THE DECISION RENDERED IN THE CASE OF AUTOKAST LTD (SUPRA), IN OUR CONSIDERED VIEW, IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. AS OBSERVED EARLIER, O THER DECISIONS RELIED UPON BY LD D.R HAVE BEEN RENDERED BY NON - JURISDICTIONAL HIGH COURTS, WHILE THE ASSESSEE IS RELYING UPON THE DECISON RENDERED BY THE JURISDICTIONAL BOMBAY HIGH COURT. SINCE THE CONTENTIONS OF THE ASSESSEE ARE SUPPORTED BY THE ORDER PASSED BY HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF LOK HOLDINGS (SUPRA) , WE ARE OF THE VIEW THAT THE LD. PR. CIT WAS NOT JUSTIFIED IN REVISING THE ASSESSMENT ORDER WITH REGARD TO THE NETTING OF INTEREST INCOME FROM SHORT TERM FIXED DEPOSITS AMOUNTING TO RS.919.60 LAKHS AGAINST ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 19 INTEREST EXPENDITURE . ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD PR. CIT ON THE ABOVE SAID AMOUNT OF RS.919.60 LAKHS. 25 . WITH REGARD TO THE OTHER INTEREST INCOME OF RS.550.68 LAKHS, WE NOTICE FROM THE FINANCIAL STATE MENTS AND INCOME TAX WORKINGS SUBMITTED BY THE ASSESSEE IN THE PAPER BOOK THAT THE ASSESSEE HAS OFFERED THE ABOVE SAID AMOUNT AS ITS BUSINESS INCOME. THUS THERE IS MERIT IN THE CONTENTIONS OF LD A.R THAT THE LD PR. CIT HAS NOT UNDERSTOOD THE FACTUAL ASPE CTS PROPERLY AND HE HAS BEEN GUIDED BY THE PRESUMPTIONS ENTERTAINED BY HIM ON THIS ISSUE . THERE SHOULD NOT BE ANY DOUBT THAT THE LD PR. CIT CAN COME TO A FAIR CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE, O NLY IF HE HAS UNDERSTOOD THE FACTUAL ASPECTS PROPERLY. IN THE ABSENCE OF CORRECT UNDERSTANDING OF FACTS , IT CANNOT BE SAID THAT A PROPERLY INSTRUCTED PERSON COULD HAVE COME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE IN TERESTS OF REVENUE. EVEN AFTER UNDERSTANDING THE FACTUAL ASPECTS PROPERLY, IT IS IMPERATIVE ON THE PART OF THE LD PR. CIT TO MAKE MINIMAL ENQUIRY IN ORDER TO ARRIVE AT THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE , AS HELD BY HONBLE DELHI HIGH COURT IN THE CASE OF DELHI AIRPORT METRO EXPRESS (SUPRA) . IN THE INSTANT CASE, WE NOTICE THAT THE LD PR. CIT HAS NOT UNDERSTOOD THE FACTS RELATING TO THE OTHER INTEREST INCOME OF RS.550.68 LAKHS PROPERLY AND HE DID NOT CONDUCT ANY MINIMAL ENQUIRY ALSO. INSTEAD, HE HAS PROCEEDED ON THE PRESUMPTION THAT THE ASSESSEE HAS NETTED OF THE ABOVE SAID INTEREST INCOME ALSO AGAINST INTEREST EXPENDITURE. THERE SHOULD NOT BE ANY DOUBT THAT THE REVISION OF ASSESSMENT ORDER O N MERE PRESUMPTIONS IS NOT PERMITTED UNDER THE LAW. ON THIS REASONING ALONE, THE ORDER PASSED BY LD PR. CIT ON THIS ISSUE IS LIABLE TO BE SET ASIDE. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE CONCLUSION REACHED BY LD PR. CIT ON THI S ISSUE IS NOT BASED ON MATERIAL AVAILABLE ON RECORD AND ANY ENQUIRY CONDUCTED BY HIM. INSTEAD, IT IS BASED ON PRESUMPTIONS ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 20 AND HENCE THE SAME CANNOT BE SUSTAINED . ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD PR. CIT ON THIS ISSUE. 26 . THE QUERY RAISED BY LD PR. CIT IN PARA 3(III) RELATED TO OTHER NON - OPERATING INCOME EARNED BY THE ASSESSEE. THE LD PR. CIT HAS ACCEPTED THE EXPLANATIONS OF THE ASSESSEE AND ACCORDINGLY DID NOT REVISE THE ASSESSMENT ORDER ON THIS ASPECT. HENCE THE SAME DOES NOT R EQUIRE ANY CONSIDERATION. 27 . THE NEXT ISSUE CONSIDERED BY THE LD PR. CIT IS REGARDING UTILIZATION OF FUNDS BORROWED BY THE ASSESSEE ON WHICH INTEREST OF RS.61.31 CRORES HAS BEEN PAID. THE LD PR. CIT HAS TAKEN THE VIEW THAT THE AO HAS NOT EXAMINED TH E UTILIZATION OF BORROWED FUNDS AND ALSO APPLICABILITY OF TDS PROVISIONS ON THE INTEREST PAYMENT. 28 . THE LD A.R SUBMITTED THAT THE ASSESSEE HAS TAKEN LOAN OF RS.316.55 CRORES FROM BANKS AND ALSO ISSUED DEBENTURES TO THE TUNE OF RS.150 CRORES TO M/S T ATA CAPITAL LTD AND IFCI LTD. THE ASSESSEE HAS PAID INTEREST ON THE ABOVE SAID LOANS. THE ASSESSEE HAS FURNISHED BREAK - UP DETAILS OF INTEREST EXPENDITURE TO THE LD PR. CIT AND THE SAME IS PLACED AT PAGE 50 OF THE PAPER BOOK. HE SUBMITTED THAT THE ASSESS EE HAD TAKEN ALL LOANS FROM LEADING BANKS AND FINANCE COMPANIES. THE ASSESSEE HAS ALSO DEDUCTED TAX AT SOURCE, WHEREVER IS APPLICABLE AND THE SAME HAS BEEN VERIFIED AND CERTIFIED BY THE AUDITORS IN THE TAX AUDIT REPORT. DESPITE GIVING ALL THESE DETAILS, THE LD PR. CIT HAS NOT EXAMINED THE SAME AND INSTEAD, DIRECTED THE AO TO CARRY OUT EXAMINATION WITHOUT PROPER REASONS . HE SUBMITTED THAT THE ACTION OF THE LD PR. CIT WOULD RESULT IN CONDUCTING FISHING ENQUIRIES, WHICH IS NOT PERMITTED U/S 263 OF THE ACT. 29 . WE HEARD LD D.R AND PERUSED THE RECORD. A PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE AT PAGE NO.50 OF THE PAPER BOOK, WOULD SHOW THAT THE ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 21 ASSESSEE HAS BORROWED MAJOR PORTION OF FUNDS FROM LEADING BANKS AND THE INTEREST PAID TO THEM IS NOT SU BJECT TO TDS PROVISIONS. THE DEBENTURES HAVE BEEN ISSUED TO M/S TATA CAPITAL LIMITED AND M/S IFCI LIMITED. FURTHER, IT IS THE SUBMISSION OF THE ASSESSEE THAT IT HAS DEDUCTED TDS ON THE INTEREST PAYMENTS, WHEREVER REQUIRED AND THE SAME HAS BEEN CERTIFIED BY THE AUDITORS IN THEIR TAX AUDIT REPORT. WE NOTICE THAT THE LD PR. CIT DID NOT EXAMINE THE EXPLANATIONS FURNISHED BY THE ASSESSEE IN THIS REGARD. WITHOUT EXAMINING THE REPLIES GIVEN BY THE ASSESSEE AND WITHOUT CONDUCTING MINIMUM ENQUIRIES, IT MAY NOT B E PROPER ON THE PART OF THE LD PR. CIT TO COME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS ON THE ABOVE SAID ISSUE. HENCE THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE LD PR. CIT HAS PASSED THE ORDER ON THIS ISSUE ON VAGUE REASO N S AND THE SAME IS ALSO NOT BASED ON ANY MATERIAL. ACCORDINGLY WE ARE OF THE VIEW THAT THE ORDER PASSED BY LD PR. CIT ON THIS ISSUE IS NOT SUSTAINABLE. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD PR. CIT ON THIS ISSUE. 30 . THE NEXT ISSUE CONSIDER ED BY LD PR. CIT RELATES TO THE ADVANCES AMOUNT OF RS.559.59 CRORES RECEIVED BY THE ASSESSEE TOWARDS SALE OF FLATS. THE LD PR. CIT HAS TAKEN THE VIEW THAT THE AO DID NOT CONDUCT ANY INQUIRY IN RESPECT OF THE AMOUNTS SO RECEIVED TOWARDS SALE OF FLAT AND DID NOT VERIFY THE SELLING RATE, DIFFERENCE IN SELLING RATE VIS - - VIS MARKET RATES. 31 . THE LD A.R SUBMITTED THAT THE ASSESSEE HAS BEEN DEVELOPING A HUGE RESIDENTIAL COMPLEX IN CHENNAI AND IT HAS RECEIVED ADVANCES ON SALE OF FLATS. IN SOME OF THE YEARS, THE AO HAS CALLED FOR DETAILS OF ADVANCES RECEIVED BY THE ASSESSEE AND THE SAME HAS ALSO BEEN SUBMITTED PARTY - WISE ALONG WITH THE DETAILS OF UNITS. THE ADVANCES RECEIVED BY THE ASSESSEE ARE TOWARDS SALE PRICE OF FLATS AND HENCE THE SAME CONSTITUTE REVENU E RECEIPTS . AS PER THE PROJECT COMPLETION METHOD FOLLOWED BY THE ASSESSEE, IT HAS OFFERED THE SAME AS ITS INCOME IN THE SUBSEQUENT YEARS. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 22 FURNISHED BUILDING WISE DETAILS OF ADVANCES RECEIVED BY IT BEFORE LD CIT( A) . HOWEVER, THE LD PR. CIT DID NOT EXAMINE THOSE DETAILS AND HE DID NOT ALSO FIND ANY VARIATION IN THE SELLING PRICES. THE LD A.R CONTENDED THAT THE LD PR. CIT HAS MADE GENERAL OBSERVATIONS AND ACCORDINGLY PASSED THE REVISION ORDER ON THIS ISSUE WITHOUT POINTING OUT ANY ERROR IN THE DETAILS SO SUBMITTED BY THE ASSESSEE. ACCORDINGLY HE SUBMITTED THAT THE DIRECTION GIVEN BY LD PR. CIT MAY RESULT IN MAKING OF FISHING ENQUIRIES, WHICH IS NOT PERMITTED U/S 263 OF THE ACT. 32 . WE HEARD LD D.R ON THIS ISSU E AND PERUSED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD FOR OFFERING INCOME. WE NOTICED EARLIER THAT THE ASSESSEE HAS BEEN DEVELOPING HUGE RESIDENTIAL COMPLEX IN CHENNAI WITH THREE BU ILDINGS VIZ., PINEWOOD, BRENTWOOD AND SEAWOOD. ACCORDINGLY, THE ASSESSEE HAS RECEIVED ADVANCES FROM THE BUYERS OF THE FLAT TOWARDS SALE VALUE OF FLATS AND HAS SHOWN THE SAME AS CURRENT LIABILITY DURING THE PERIOD OF CONSTRUCTION . IT WAS SUBMITTED THAT, IN THE SUCCEEDING YEARS, WHEN THE PROJECT WAS COMPLETED, THE SAME HAS BEEN OFFERED AS INCOME. HENCE IT MAY NOT BE PROPER TO APPLY THE PROVISIONS OF SEC.68 IN RESPECT OF ADVANCES RECEIVED BY THE ASSESSEE, AS THE SAME IS ULTIMATELY OFFERED AS INCOME. 33. THE ASSESSEE HAS FURNISHED DETAILS OF ADVANCES TO THE ASSESSING OFFICER IN SOME OF THE YEARS AND ALSO THE LD PR. CIT DURING THE COURSE OF REVISION PROCEEDINGS. THE ONLY VALID POINT IN THE OBSERVATIONS OF THE LD PR. CIT IS ABOUT THE DIFFERENCE IN SELLIN G PRICE VIS - VIS THE MARKET RATES, MEANING THEREBY, IT IS THE APPREHENSION OF THE LD PR. CIT THAT THE ASSESSEE MIGHT HAVE SOLD THE FLATS AT LOWER RATES THAN THE MAR KET RATES. WE NOTICE THAT IT IS ONLY THE APPREHENSION OF LD PR.CIT AND THE SAME IS NOT BASED ON ANY MATERIAL AVAILABLE ON RECORD. THE HONBLE BOMBAY HIGH COURT HAS HELD IN THE CASE OF GABRIEL INDIA LTD (SUPRA) THAT, I F THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD H AVE ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 23 COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. IN THE INSTANT CASES, THE LD PR. CIT DID NOT EXAMINE THE DETAILS FURNISHED BY THE ASSESSEE AND DID NOT CONDUCT ANY ENQUIRY TO FIND OUT THE E RROR, IF ANY, IN THE DETAILS SO GIVEN AND THE REVENUE IMPLICATIONS THEREON. THUS THERE IS NO MATERIAL AVAILABLE WITH THE LD PR. CIT WHICH WOULD WARRANT THE DIRECTION SO ISSUED BY HIM TO THE AO. HENCE THERE IS MERIT IN THE CONTENTIONS OF LD A.R THAT THE LD PR. CIT HAS REVISED THE ASSESSMENT ORDER ON THIS ISSUE BY MAKING GENERAL OBSERVATIONS AND WITHOUT FINDING ANY FAULT IN THE DETAILS FURNISHED BY THE ASSESSEE. ACCORDINGLY WE ARE OF THE VIEW THAT THE ORDER PASSED BY LD PR. CIT ON THIS ISSUE IS NOT SUSTAI NABLE. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD PR. CIT ON THIS ISSUE. 3 4 . THE NEXT ISSUE CONSIDERED BY LD PR. CIT RELATES TO THE CORRECTNESS OF WORK IN PROGRESS DECLARED BY THE ASSESSEE AND ITS VALUATION. THE LD PR. CIT HAS TAKEN THE VIEW THA T THE AO HAS FAILED TO EXAMINE THE CORRECTNESS OF WORK IN PROGRESS DECLARED BY THE ASSESSEE AND ALSO ITS VALUATION. 35 . THE LD A.R SUBMITTED THAT THE ASSESSEE HAS BEEN FOLLOWING PROJECT COMPLETION METHOD AND HENCE IT HAS ACCOUNTED ALL PROJECT RELATED E XPENSES UNDER THE HEAD WORK IN PROGRESS. THE EXPENSES, WHICH ARE ADMINISTRATIVE IN NATURE AND NOT RELATED TO THE PROJECT HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT. HE SUBMITTED THAT THE ASSESSEE HAS FOLLOWED THE SAME METHODOLOGY YEAR AFTER YEAR. THE ASSESSEE HAS GIVEN DETAILED SUBMISSIONS BEFORE LD PR. CIT ON THIS ISSUE. HOWEVER THE LD PR. CIT DID NOT EXAMINE THE SAME AND ALSO DID NOT FIND FAULT WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE. HE SUBMITTED THAT THE WORK IN PROGRESS REPRESEN TS ACTUAL EXPENSES INCURRED BY THE ASSESSEE FOR THE PROJECT. ACCORDINGLY HE SUBMITTED THAT THE LD PR. CIT HAS PASSED THE ORDER ON THIS ISSUE ON VAGUE REASONS. ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 24 36 . WE HAVE HEARD LD D.R ON THIS ISSUE AND PERUSED THE RECORD. AS PER THE METHOD OF ACCOUN TING FOLLOWED BY THE ASSESSEE, IT HAS ACCUMULATED ALL THE PROJECT RELATED EXPENSES UNDER THE HEAD WORK IN PROGRESS AND THE SAME IS IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES. THE LD A.R SUBMITTED THAT THE AMOUNT BOOKED BY THE ASSESSEE UNDER THE HEAD WORK IN PROGRESS REPRESENTS ACTUAL EXPENSES INCURRED IN RELATING TO EXECUTION OF ITS PROJECT IN CHENNAI. THE SAME SHALL BE DEDUCTED AGAINST THE SALES REVENUE ON COMPLETION OF THE PROJECT. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS GIVEN DETAILED REPLY T O THE LD PR. CIT IN THIS REGARD. WE NOTICE THAT THE LD PR. CIT DID NOT EXAMINE THE DETAILS SO FURNISHED BY THE ASSESSEE AND ALSO DID NOT FIND FAULT WITH THE SAME. HENCE THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE LD PR. CIT HAS PASSED THE ORDER ON THIS ISSUE ON GENERAL OBSERVATIONS AND THE SAME IS NOT BASED ON ANY MATERIAL. H ENCE IT CANNOT BE SUSTAINED. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD PR. CIT ON THIS ISSUE. 37 . THE NEXT ISSUE CONSIDERED BY LD PR. CIT RELATES TO THE R ECEIPT OF RS.150 CRORES BY THE ASSESSEE ON ISSUING NON CONVERTIBLE DEBENTURES. THE LD PR. CIT HAS TAKEN THE VIEW THAT THE AO HAS FAILED TO EXAMINE THE SAME IN TERMS OF SEC.68 OF THE ACT. 38 . THE LD A.R SUBMITTED THAT THE ASSESSEE HAS ALLOTTED 1500 NON - CONVERTIBLE DEBENTURES OF RS.10.00 LAKHS EACH TO M/S TATA CAPITAL LIMITED, WHICH IS A SUBSIDIARY OF M/S TATA SONS LIMITED, ONE OF THE LEADING INDUSTRIAL GROUPS OF THE COUNTRY. THE ASSESSEE HAS ISSUED THE DEBENTURES BY WAY OF DEBENTURE TRUST DEED EXECUTED BETWEEN THE ASSESSEE AND IDBI TRUSTEESHIP SERVICES LTD, BEING THE CUSTODIAN AND TRUSTEE FOR SUCH ISSUE. THE ASSESSEE HAS SUBMITTED COPIES OF BOARD RESOLUTION, DEBENTURE TRUST DEED, INFORMATION MEMORANDUM, COPIES OF APPLICATION FORMS TO LD PR. CIT. HOWEVE R, THE LD PR. CIT DID NOT EXAMINE THE SAME AND HAS PASSED THE ORDER ON THIS ISSUE BY MAKING GENERAL OBSERVATIONS. ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 25 39 . WE HEARD LD D.R ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE DEBENTURES HAVE BEEN ISSUED TO A LEADING AND REPUTED INDUST RIAL GROUP. FURTHER THE ASSESSEE HAS FURNISHED ALL THE DOCUMENTS RELATING TO THE DEBENTURE ISSUE. WE NOTICE THAT THE LD PR. CIT DID NOT EXAMINE THOSE DOCUMENTS AND HAS TAKEN THE VIEW THAT THE AO HAS NOT EXAMINED THE SAME IN TERMS OF SEC. 68 OF THE ACT. AS CONTENDED BY THE LD A.R, THE LD PR. CIT SHOULD HAVE CONDUCTED MINIMUM ENQUIRY ON THIS ISSUE AND SHOULD HAVE COME TO THE CONCLUSION THAT THE EXAMINATION OF THE DEBENTURE PROCEEDS IN TERMS OF SEC.68 OF THE ACT IS NECESSARY. THE SAME HAS NOT BEEN DONE BY LD PR. CIT. HENCE THERE IS MERIT IN THE CONTENTIONS OF LD A.R THAT THE LD PR. CIT HAS PASSED ORDER ON THIS ISSUE ON GENERAL OBSERVATIONS AND WITHOUT ANY SUPPORTING MATERIAL. H ENCE IT CANNOT BE SUSTAINED. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD PR . CIT ON THIS ISSUE. 40 . THE NEXT ISSUE CONSIDERED BY LD PR. CIT RELATES TO THE DISALLOWANCE TO BE MADE U/S 14A OF THE ACT. THE LD PR. CIT NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.1.41 CRORES AND HAS MADE INVESTMENTS TO THE TUNE OF R S.33.35 CRORES IN SHARES AND MUTUAL FUNDS. IT WAS OBSERVED THAT THE AO HAS ALSO FAILED TO EXAMINE THE SAME. HENCE THE LD PR. CIT DIRECTED THE AO TO LOOK INTO THE SAME. 41 . THE LD A.R SUBMITTED THAT THE ASSESSEE HAS ACTUALLY DISALLOWED A SUM OF RS.4.0 0 LAKHS U/S 14A OF THE ACT. HE SUBMITTED THAT THE ASSESSEE HAD HELD FOLLOWING INVESTMENTS DURING THE YEAR RELEVANT TO AY 2012 - 13. DEBENTURES OF LAKEPOINT BUILDERS P LTD 16.88 CRORES UNITS IN RELIANCE LIQUID FUND TREASURY PLAN 16.68 CRORES HE SUBMITTE D THAT THE INVESTMENT IN DEBENTURES WAS MADE IN THE EARLIER YEAR AND THE INTEREST FROM DEBENTURES IS NOT EXEMPT. THE DIVIDEND INCOME WAS RECEIVED FROM A SINGLE FUND ONLY. HE SUBMITTED THAT THE OWN FUNDS AVAILABLE WITH THE ASSESSEE IS MORE THAN THE VALUE OF INVESTMENTS. HE SUBMITTED THAT THE ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 26 DISALLOWANCE OF RS.4.00 LAKHS MADE BY THE ASSESSEE, IN THE ABOVE SAID FACTS, IS REASONABLE. HE SUBMITTED THAT THE LD PR. CIT HAS PASSED THE ORDER ON THIS ISSUE WITHOUT EXAMINING THE ABOVE SAID DETAILS AND ALSO WITHO UT EXAMINING EXPLANATIONS FURNISHED BY THE ASSESSEE. 42 . WE HEARD LD D.R AND PERUSED THE RECORD. THE CONTENTIONS OF THE LD A.R WOULD SHOW THAT THE LD PR. CIT HAS NOT EXAMINED THE DETAILS FURNISHED BY THE ASSESSEE AND DID NOT MAKE MINIMUM ENQUIRIES ON THIS ASPECT IN ORDER TO COME TO THE CONCLUSION THAT THE DISALLOWANCE MADE U/S 14A BY THE ASSESSEE AND ACCEPTED BY THE AO WOULD CALL FOR FRESH EXAMINATION. HENCE WE ARE OF THE VIEW THAT THERE IS MERIT IN THE CONTENTIONS OF LD A.R THAT THE LD PR. CIT HAS PA SSED ORDER ON THIS ISSUE ALSO ON VAGUE REASONS WITHOUT POINTING OUT THE ERROR. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD PR. CIT ON THIS ISSUE. 43 . WE SHALL NOW TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR AY 2013 - 14 . ALL THE ABOVE SAID ISSUES WERE CONSIDERED BY LD PR. CIT IN ASSESSMENT YEAR 2013 - 14 ALSO. THE FACTS RELATING TO THE SAME ARE IDENTICAL IN NATURE AND HENCE THE DECISION RENDERED BY US IN AY 2012 - 13 IN THE PRECEDING PARAGRAPHS WOULD APPLY TO AY 2013 - 14 ALSO. ACCORDINGLY, BY FOLLOWIN G THE DECISION RENDERED BY US IN ASSESSMENT YEAR 2012 - 13, WE SET ASIDE THE ORDER PASSED BY LD PR. CIT ON ALL THE ISSUES. 44 . WE SHALL NOW TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR AY 2014 - 15. IN THIS YEAR, THE LD PR. CIT PASSED THE REVISION ORDER ON THE FIRST FIVE ISSUES ADJUDICATED BY US IN AY 2012 - 13. THE FACTS RELATING TO THE SAME ARE IDENTICAL IN NATURE AND HENCE THE DECISION RENDERED BY US IN AY 2012 - 13 IN THE PRECEDING PARAGRAPHS WOULD APPLY TO AY 2014 - 15 ALSO. ACCORDINGLY, BY FOLLOWING THE DECISION RENDERED BY US IN ASSESSMENT YEAR 2012 - 13, WE SET ASIDE THE ORDER PASSED BY LD PR. CIT ON ALL THE ISSUES. ITA NOS.2377 T O 2379/M/2018 M/S. HIRANANDANI REALTORS PVT. LTD. 27 45. THE ASSESSEE HAS RAISED A LEGAL ISSUE, WHICH WERE DISCUSSED BY US INITIALLY. SINCE WE HAVE ALLOWED THE APPEALS OF THE REVENUE ON MER ITS, WE DO NOT FIND IT NECESSARY TO ADJUDICATE THE SAID LEGAL ISSUE. 4 6 . IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 . 01 . 201 9 . SD/ - SD/ - (SANDEEP GOSAIN) ( B.R. BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 10 . 01 . 201 9 . * KISHORE , SR. P.S. /PS COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.