M/s. Bhoomi Developers, Ahmedabad V. The Income Tax Officer, Ward-9(2), Ahmedabad

ITA 2496/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0340 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 24-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G C PIPARA
• Keywords: Salary income
• Section: 143(3); 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.2496/AHD/2013 / ASSTT. YEAR: 2007-2008 M/S.BHOOMI DEVELOPERS 1 ST FLOOR, SANIDHYA COMPLEX OPP: CHAMAK CHUNA N.H. 8, T.B. NAGAR AHMEDABAD. PAN : AAEFB 1598 A VS ITO, WARD-9(2) AMBAWADI AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI G.C. PIPARA, AR REVENUE BY : SHRI JAMES KURIAN, SR.DR / DATE OF HEARING : 29/09/2016 / DATE OF PRONOUNCEMENT: 07/10/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE A SSESSEE AGAINST THE ORDER OF THE LD.CIT(A)-XV, AHMEDABAD DATED 16.12.20 10 PASSED FOR THE ASSTT.YEAR 2007-08. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF RS.1,03 ,17,545/- CLAIMED BY THE ASSESSEE UNDER SECTION 80IB(10) OF THE INCOME TAX A CT, 1961. 3. REGISTRY HAS POINTED OUT THAT APPEAL OF THE ASSE SSEE IS TIME BARRED BY 971 DAYS. IN ORDER TO EXPLAIN THE DELAY, THE ASSES SEE HAS FILED APPLICATION ITA NO.2496/AHD/2013 2 UNDER SUB-SECTION 5 OF SECTION 253 AND ANNEXED AFFI DAVIT OF SHRI PARESHBHAI LALJIBHAI RANPARIYA, A PARTNER OF THE ASSESSEE-FIRM . IN THE AFFIDAVIT IT HAS BEEN DEPOSED THAT THE ASSESSEE FIRM WAS ENGAGED IN THE B USINESS OF ORGANIZER AND DEVELOPER FOR DEVELOPMENT AND CONSTRUCTION OF RESID ENTIAL HOUSING PROJECT. IT HAS FILED ITS RETURN OF INCOME ON 31.10.2007 DECLAR ING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE IN COME TAX ACT AT RS.1,03,17,545/-. THE LD.AO HAS PASSED AN ASSESSM ENT ORDER UNDER SECTION 143(3) ON 21.12.2009. HE DECLINED CLAIM OF DEDUCTI ON UNDER SECTION 80IB(10) OF THE ACT. DISSATISFIED WITH THE ASSESS MENT ORDER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY WAY OF IMPU GNED ORDER ON 30.9.2013. THE PARTNER HAD RECEIVED ORDER DATED 27.9.2013 SIGN ED BY THE ITO, WARD- 9(2), AHMEDABAD ALONG WITH COPY OF NOTICE UNDER SEC TION 226(3) DATED 20.9.2013 ISSUED TO THE UNION BANK OF INDIA, STATIN G THE BANK REGARDING OUTSTANDING DEMAND OF RS.72,91,820/-. COPIES OF TH ESE NOTICES ARE BEING ANNEXED IN THE PAPER BOOK FILED BY THE ASSESSEE. T HE DEPONENT FURTHER DEPOSED THAT AFTER RECEIPT OF THIS NOTICE, HE IMMED IATELY APPROACHED HIS CHARTERED ACCOUNTANT WHO WAS CONDUCTING PROCEEDING BEFORE THE LD.CIT(A). IT CAME TO THE NOTICE OF THE DEPONENT THAT THE CA H AD RECEIVED COPY OF THE CIT(A)S ORDER AND IT WAS GIVEN TO ACCOUNTANT OF TH E FIRM VIZ. SHRI ASHWINBHAI BHAVSAR, SOMEWHERE IN THE MONTH OF JANUA RY, 2011. SHRI ASHWINBHAI BHAVSAR HAS LEFT JOB IN THE MONTH OF FEB RUARY, 2011 WITHOUT INTIMATING THE ORDER OF THE LD.CIT(A) TO THE PARTNE RS. THEREAFTER, DEPONENT HAD ARRANGED COPY OF THE ORDER AND PREPARED APPEAL WITH THE ASSISTANCE OF M/S.PIPARA & CO., CHARTERED ACCOUNTANTS. ACCORDING LY, THE APPEAL HAS BEEN FILED. THE ASSESSEE HAS PRAYED THAT DELAY IN FILIN G THE APPEAL HAS OCCURRED ON ACCOUNT OF LAPSE COMMITTED BY THE ACCOUNTANT, WHO F AILED TO COMMUNICATE THE ORDER OF THE LD.CIT(A) TO THE PARTNERS. IT IS ALSO DEPOSED THAT THE LD.TAX ITA NO.2496/AHD/2013 3 CONSULTANT FAILED TO APPRAISE THE ASSESSEE DIRECTLY ABOUT THE ORDER OF THE LD.CIT(A). 4. IN ORDER TO VERIFY CORRECTNESS OF THE CLAIM MADE IN THE APPLICATION AS WELL AS IN THE AFFIDAVIT, WE HAVE DIRECTED THE LD.D R TO SUBMIT COPY OF ACKNOWLEDGEMENT EXHIBITING SERVICE OF CIT(A)S ORDE R. VIDE LETTER DATED 3.8.2016, THE JOINT COMMISSIONER OF INCOME TAX WHO IS SENIOR DR WITH B BENCH HAS PLACED ON RECORD COPY OF THE COMMUNICATIO N BY THE OFFICE OF THE CIT ALONG WITH COPY OF ACKNOWLEDGEMENT. IN THIS AC KNOWLEDGEMENT, IT IS DISCERNIBLE THAT SHRI UMESHBHAI KHESE, WHO IS PROPR IETOR OF KHESE ASSOCIATES HAD RECEIVED THE ORDER OF THE LD.CIT(A). SHRI UME SH KHESE WAS THE TAX CONSULTANT OF THE ASSESSEE BEFORE THE LD.CIT(A). H E WAS AUTHORIZED REPRESENTATIVE, AND THEREFORE, ACCORDING TO THE REV ENUE, SERVICE OF THE ORDER WAS AFFECTED UPON AN AUTHORIZED REPRESENTATIVE OF T HE ASSESSEE. WHEN THE APPEAL WAS LISTED FOR HEARING ON EARLIER OCCASION, WE WISH TO SEE OTHER EVIDENCES ABOUT THE FACTUAL CLAIM MADE IN THE AFFID AVIT. THEREFORE, WE PASSED THE FOLLOWING ORDER: 07.09.2016 PRESENT: ASSESSEE BY SHRI G.C. PIPA RA, AR REVENUE BY SHRI JAMES KURIAN, SR.DR REGISTRY HAS POINTED OUT THAT APPEAL OF THE ASSESSE E IS TIME BARRED BY 971 DAYS. IN ORDER TO EXPLAIN THE DELAY, THE ASSESSEE HAS FILED AN APPLICATION SUPPORTED WITH AFFIDAVIT OF SHRI PARESHBHAI LALJIBH AI RANPARIYA, WHO IS PARTNER IN THE ASSESSEE-FIRM. 2. IN THE AFFIDAVIT, IT HAS BEEN DEPOSED THAT LD.CI T(A) HAS DECIDED THE APPEAL OF THE ASSESSEE ON 16.12.2010. THIS ORDER O F THE LD.CIT(A) WAS SERVED UPON CHARTERED ACCOUNTANT WHO REPRESENTED TH E ASSESSEE BEFORE THE LD.CIT(A). ON THE DIRECTION OF THE TRIBUNAL, DEPAR TMENT HAS PRODUCED COPY OF THE ACKNOWLEDGEMENT SLIP WHICH EXHIBITS SERVICE OF THIS ORDER ON 28.10.2010 UPON THE CA. IT HAS BEEN FURTHER PLEADE D THAT THE TAX CONSULTANT HAD HANDED OVER THE COPY OF THE CIT(A)S ORDER IN T HE MONTH OF JANUARY, 2011 TO ONE SHRI ASHWINBHAI BHAVSAR WHO WAS AN ACCO UNTANT WITH THE ITA NO.2496/AHD/2013 4 ASSESSEE FIRM. SHRI ASHWINBHAI BHAVSAR HAS LEFT JO B IN THE MONTH OF FEBRUARY, 2011 AND DUE TO THIS REASON, APPEAL COULD NOT BE FILED WITHIN TIME. 3. WHETHER SHRI ASHWINBHAI BHAVSAR HAS EVER WORKED WITH THE ASSESSEE OR NOT, THERE IS NO EVIDENCE IN SUPPORT OF THIS PLE ADING. SIMILARLY, THERE IS NO MATERIAL PLACED ON RECORD BY THE ASSESSEE TO DEMONS TRATE THAT SHRI ASHWINBHAI BHAVSAR HAS LEFT JOB IN FEBRUARY, 2011. DURING THE COURSE OF HEARING, WHEN WE FACED WITH THIS SITUATION, WE DIRE CT THE LD.COUNSEL FOR THE ASSESSEE TO PRODUCE ATTENDANCE REGISTER, IF ANY, SA LARY REGISTER OR APPOINTMENT LETTER IN FAVOUR OF SHRI ASHWINBHAI BHA VSAR OR ANY OTHER EVIDENCE EXHIBITING THE FACT THAT SHRI ASHWINBHAI B HAVSAR HAD EVER WORKED WITH THE ASSESSEE-FIRM AND HAS LEFT THE JOB IN THE MONTH OF FEBRUARY, 2011. THE LD.COUNSEL SHALL PRODUCE THESE EVIDENCES BEFORE NEXT DATE OF HEARING WITH ADVANCE COPIES TO THE LD.DR. COPY OF THIS ORD ER SHEET BE SUPPLIED TO BOTH THE PARTIES. 4. HEARING IS ADJOURNED TO 29 TH SEPTEMBER, 2016. SD/- SD/- (AM) (JM) 5. IN PURSUANCE TO THE TRIBUNALS ORDER, THE ASSESS EE HAS FILED PAPER CONTAINING COPY OF SALARY REGISTER FOR THE MONTH OF APRIL, 2005 TO MARCH, 2016. IN THESE DETAILS, IT HAS BEEN POINTED OUT TH AT SHRI ASHWINBHAI BHAVSAR WAS WORKING AS AN ACCOUNTANT WITH THE ASSESSEE-FIRM ON A MONTHLY SALARY OF RS.6000/-. THE ASSESSEE, THEREAFTER, FILED COPIES OF INCOME-TAX RETURN OF SHRI ASHWINBHAI BHAVSAR FOR THE ASSTT.YEAR 2007-08. IN THIS RETURN, SHRI ASHWINBHAI BHAVSAR HAS SHOWN SALARY INCOME FROM THE ASSESSEE. THIS RETURN WAS FILED ON 11.9.2007 VIDE RECEIPT NO.12341104164. A TRUE CERTIFIED COPY HAS BEEN PLACED ON PAGES NO.25 TO 28 OF THE PAPER B OOK. THE FIRM HAS COMPLETED THE PROJECT, AND THERE WAS NO INCOME FROM CONSTRUCTION TO THE FIRM FOR THE ASSTT.YEAR 2008-09 ONWARDS. IT HAS BEEN PL EADED THAT SHRI ASHWINBHAI BHAVSAR USED TO WRITE ACCOUNT FOR A NUMB ER OF CONCERNS. HE HAS NET INCOME OF RS.1,12,630/- IN THE ASSTT.YEAR 2009- 10 OF WORKING AS PART- TIME ACCOUNTANT IN A LARGE NUMBER OF COMPANIES AS W ELL AS INDIVIDUALS. THE ITA NO.2496/AHD/2013 5 ASSESSEE WAS ONE OF THEM. SIMILARLY, HE HAS AN INC OME OF RS.57,000/- IN THE ASSTT.YEAR 2010-11 FROM WRITING THE ACCOUNTS. ON THE STRENGTH OF THESE DOCUMENTS, IT HAS BEEN PLEADED THAT SHRI ASHWINBHAI BHAVSAR WAS WORKING WITH THE ASSESSEE AS A REGULAR EMPLOYEE, THEREAFTER , HE WAS WORKING AS A PART- TIME EMPLOYEE ON ANNUAL REMUNERATION BASIS. HE HA S BEEN WRITING THE ACCOUNTS OF THE FIRM AS WELL AS SOME OF THE PARTNER S IN THEIR INDIVIDUAL CAPACITIES. THE LD.COUNSEL FOR THE ASSESSEE FURTH ER CONTENDED THAT THERE IS NO MALA FIDE IN THE ACT AND CONDUCT OF THE ASSESSEE. THE DELAY HAS OCCURRED ON ACCOUNT OF COMMUNICATION GAP, WHICH IS A BONA FIDE MISTAKE AND HUMANLY POSSIBLE. IN SUPPORT OF HIS CONTENTIONS, HE RELIED UPON A LARGE NUMBER OF DECISIONS: I) N. BALAKRISHNAN VS. M. KRISHNAMURTH, (1998) 7 SUPRE ME COURT CASES 123; II) COLLECTOR LAND ACQUISITION VS. MST. KATIJI & OHTERS , 167 ITR 471 (SC); III) RAFIQ & ANOTHER VS. MUNSHILAL AND ANOTHER, AIR 1981 (SC) 1400 IV) AUTO CENTRE VS. STATE OF UTTAR PRADESH AND OHTERS, 278 ITR 291 (ALL.) V) M/S.LAHOTI OVERSEAS LTD. VS. DCIT, ITA NO3786/MUM/2 012. 6. THE LD.DR, ON THE OTHER HAND, OPPOSED THE PRAYER OF THE ASSESSEE. HE CONTENDED THAT IT IS HUMANLY IMPROBABLE THAT ACCOUN TANT WOULD NOT INFORM THE ASSESSEE ABOUT THE DECISION OF THE LD.CIT(A). ACCO RDING TO THE LD.DR, IT WAS A SEVERE NEGLIGENCE AT THE END OF THE ASSESSEE IN CON DUCTING ITS INCOME-TAX PROCEEDINGS, AND THEREFORE, DOES NOT ENTITLE FOR AN Y SYMPATHETIC CONSIDERATION WITH REGARD TO THE CONDONATION OF DELAY. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. AS OBSERVED EARLIER, THE ASSESSEE HAS M ADE A CLAIM UNDER SECTION ITA NO.2496/AHD/2013 6 80IB(10) OF THE INCOME TAX ACT, 1961. SECTION 80IB (10) WAS INCORPORATED IN THE STATUTE WITH AN INTENTION TO GIVE ENCOURAGEMENT TO PROVIDE HOUSING UNITS IN URBAN AND SEMI-URBAN AREAS, WHERE THERE IS PEREN NIAL AND ACUTE SHORTAGE OF HOUSING, PARTICULARLY, FOR MIDDLE INCOME GROUP CITI ZENS. TO ENSURE THAT BENEFIT REACH TO THE PEOPLE, CERTAIN CONDITIONS WER E PROVIDED IN SUB-SECTION (10). THE ASSESSEE HAS NO TAXABLE INCOME, IF DEDUC TION UNDER SECTION 80IB(10) WAS ALLOWED TO THE ASSESSEE. THE QUESTION IS WHETHER IN THIS GIVEN SITUATION, THE ASSESSEE COULD AFFORD TO ACT NEGLIGE NTLY. SUB-SECTION 5 OF SECTION 253 CONTEMPLATES THAT THE TRIBUNAL MAY ADMI T AN APPEAL OR PERMIT FILING OF MEMORANDUM OF CROSS-OBJECTIONS AFTER EXPI RY OF RELEVANT PERIOD, IF IT IS SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR NOT PRESENTING IT WITHIN THAT PERIOD. THIS EXPRESSION SUFFICIENT CAUSE EMPLOYE D IN THE SECTION HAS ALSO BEEN USED IDENTICALLY IN SUB-SECTION 3 OF SECTION 2 49 OF INCOME TAX ACT, WHICH PROVIDES POWERS TO THE LD.COMMISSIONER TO CON DONE THE DELAY IN FILING THE APPEAL BEFORE THE COMMISSIONER. SIMILARLY, IT HAS BEEN USED IN SECTION 5 OF INDIAN LIMITATION ACT, 1963. WHENEVER INTERPRET ATION AND CONSTRUCTION OF THIS EXPRESSION HAS FALLEN FOR CONSIDERATION BEFORE HONBLE HIGH COURT AS WELL AS BEFORE THE HONBLE SUPREME COURT, THEN, HONBLE COURT WERE UNANIMOUS IN THEIR CONCLUSION THAT THIS EXPRESSION IS TO BE USED LIBERALLY. WE MAY MAKE REFERENCE TO THE FOLLOWING OBSERVATIONS OF THE HON BLE SUPREME COURT FROM THE DECISION IN THE CASE OF COLLECTOR LAND ACQUISIT ION VS. MST. KATIJI & OTHERS, 1987 AIR 1353: 1. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTI CE BEING DEFEATED. AS AGAINST THIS WHEN DELAY IS CONDONED THE HIGHEST THA T CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING TH E PARTIES. ITA NO.2496/AHD/2013 7 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY , EVERY SECOND'S DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL C OMMON SENSE PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DE SERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGH T IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MA LA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT JUDICIARY IS RESPECTED N OT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BU T BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 8. SIMILARLY, WE WOULD LIKE TO MAKE REFERENCE TO AU THORITATIVE PRONOUNCEMENT OF HONBLE SUPREME COURT IN THE CASE OF N.BALAKRISHNAN VS. M. KRISHNAMURTHY (SUPRA). IT READS AS UNDER: RULE OF LIMITATION ARE NOT MEANT TO DESTROY THE RI GHT OF PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILA TORY TACTICS, BUT SEEK THEIR REMEDY PROMPTLY. THE OBJECT OF PROVIDING A LE GAL REMEDY IS TO REPAIR THE DAMAGE CAUSED BY REASON OF LEGAL INJURY. LAW OF LIMITATION FIXES A LIFE-SPAN FOR SUCH LEGAL REMEDY FOR THE RED RESS OF THE LEGAL INJURY SO SUFFERED. TIME IS PRECIOUS AND THE WASTED TIME W OULD NEVER REVISIT. DURING EFFLUX OF TIME NEWER CAUSES WOULD SPROUT UP NECESSITATING NEWER PERSONS TO SEEK LEGAL REMEDY BY APPROACHING T HE COURTS. SO A LIFE SPAN MUST BE FIXED FOR EACH REMEDY. UNENDING PERIOD FOR LAUNCHING THE REMEDY MAY LEAD TO UNENDING UNCERTAINTY AND CONSEQU ENTIAL ANARCHY. LAW OF LIMITATION IS THUS FOUNDED ON PUBLIC POLICY. IT IS ENSHRINED IN THE MAXIM INTEREST REIPUBLICAE UP SIT FINIS LITIUM (IT IS FOR THE GENERAL WELFARE THAT A PERIOD BE PUTT TO LITIGATION). RULES OF LIMITATION ARE NOT MEANT TO DESTROY THE RIGHT OF THE PARTIES. THEY ARE MEANT TO SEE THAT PARTIES DO NOT RESORT TO DILATORY TACTICS BUT SEEK THEIR REMEDY PROMPTLY. ITA NO.2496/AHD/2013 8 THE IDEA IS THAT EVERY LEGAL REMEDY MUST BE KEPT AL IVE FOR A LEGISLATIVELY FIXED PERIOD OF TIME. A COURT KNOWS THAT REFUSAL TO CONDONE DELAY WOULD R ESULT FORECLOSING A SUITOR FROM PUTTING FORTH HIS CAUSE. THERE IS NO PR ESUMPTION THAT DELAY IN APPROACHING THE COURT IS ALWAYS DELIBERATE. THIS COURT HAS HELD THAT THE WORDS 'SUFFICIENT CAUSE' UNDER SECTION 5 OF THE LIMITATION ACT SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS TO ADVA NCE SUBSTANTIAL JUSTICE VIDE SHAKUNTALA DEVI LAIN VS. KUNTAL KUMARI [AIR 1969 SC 575] AND STATE OF WEST BENGAL VS. THE ADMINISTRATOR , HOWRAH MUNICIPALITY [AIR 1972 SC 749]. IT MUST BE REMEMBER ED THAT IN EVERY CASE OF DELAY THERE CAN BE SOME LAPSE ON THE PART O F THE LITIGANT CONCERNED. THAT ALONE IS NOT ENOUGH TO TURN DOWN HI S PLEA AND TO SHUT THE DOOR AGAINST HIM. IF THE EXPLANATION DOES NOT S MACK OF MALA FIDES OR IT IS NOT PUT FORTH AS PART OF A DILATORY STRATEGY THE COURT MUST SHOW UTMOST CONSIDERATION TO THE SUITOR. BUT WHEN THERE IS REASONABLE GROUND TO THINK THAT THE DELAY WAS OCCASIONED BY THE PARTY DELIBERATELY TO GAIN TIME THEN THE COURT SHOULD LEAN AGAINST ACCEPTANCE OF THE EXPLANATION. WHILE CONDONING DELAY THE COULD SHOULD NOT FORGET T HE OPPOSITE PARTY ALTOGETHER. IT MUST BE BORNE IN MIND THAT HE IS A L OOSER AND HE TOO WOULD HAVE INCURRED QUIET A LARGE LITIGATION EXPENS ES. IT WOULD BE A SALUTARY GUIDELINE THAT WHEN COURTS CONDONE THE DEL AY DUE TO LACHES ON THE PART OF THE APPLICANT THE COURT SHALL COMPENSAT E THE OPPOSITE PARTY FOR HIS LOSS. WE DO NOT DEEM IT NECESSARY TO RE-CITE OR RECAPITUL ATE THE PROPOSITION LAID DOWN IN OTHER DECISIONS. IT IS SUFFICE TO SAY THAT THE HONBLE COURTS ARE UNANIMOUS IN THEIR APPROACH TO PROPOUND THAT WHENEV ER THE REASONS ASSIGNED BY AN APPLICANT FOR EXPLAINING THE CONDONATION OF D ELAY, THEN SUCH REASONS ARE TO BE CONSTRUED WITH A JUSTICE ORIENTED APPROACH. IF WE LOOK THE EXPLANATION OF THE ASSESSEE, IN THE LIGHT OF PROPOSITION PROPOU NDED BY THE HONBLE COURTS, THEN, IT WOULD REVEAL THAT THE ASSESSEE COULD NOT A FFORD TO MAKE ITS APPEAL TIME-BARRED KNOWINGLY. THE DELAY IN FILING THE APP EAL HAPPENED ON ACCOUNT OF COMMUNICATION GAP BETWEEN THE PARTNERS AS WELL A S PART-TIME ACCOUNTANT, WHO HAS COLLECTED COPY OF THE ORDER FROM THE TAX CO NSULTANT OFFICE. IN THE CASE OF N.BALAKRISHNAN VS. M.KRISHNAMURTHY (SUPRA), THE HONBLE COURT HAS ITA NO.2496/AHD/2013 9 OBSERVED THAT EVERY CASE OF DELAY, THERE MUST BE SO ME NEGLIGENCE, BUT THAT NEGLIGENCE IS TO BE VIEWED WHETHER TO MAKE AN APPEA L TIME BARRED WAS ADOPTED BY WAY OF CONSCIOUS DECISION AS A DILATORY STRATEGY. IN THE PRESENT CASE, BY MAKING THE APPEAL TIME BARRED, THE ASSESSE E WOULD NOT ACHIEVE ANYTHING. IT IS ALSO TO BE SEEN THAT A POSSIBLE HU MAN NEGLIGENCE WILL PUT THE ASSESSEE WITH TAX LIABILITY OF MORE THAN RS.78 LAKH S INCLUDING INTEREST. WE HAVE ALSO BEEN INFORMED THAT THE DEPARTMENT HAS IMP OSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT. THIS CLAIM, IN OUR OPINION, WHICH WAS ADMISSIBLE TO THE ASSESSEE ON ACCOUNT OF INCENTIVE PROVISIONS, WOULD BURDEN IT WITH A HUGE TAX LIABILITY. PUNISHM ENT IN THE SHAPE OF THIS TAX LIABILITY, IF WEIGHED WITH NEGLIGENCE, IF ACCEPTED FOR ARGUMENTS SAKE, THEN, THIS PUNISHMENT IS DISPROPORTIONATE TO THE NEGLIGEN CE. THIS ALSO ONE OF THE REASONS WEIGHED IN OUR MIND FOR CONDONING THE DELAY . APART FROM THIS, WE FIND THAT THE ISSUE ON MERIT WAS INTERPRETED BY THE AO AGAINST THE ASSESSEE, BECAUSE AT THAT POINT OF TIME, POSITION OF LAW WAS NOT CLEAR ON THIS ASPECT. THIS LINE OF REASONING ADOPTED BY THE AO DID NOT GE T APPROVAL OF THE HONBLE JURISDICTIONAL HIGH COURT. WE WILL BE DEALING WITH THIS ISSUE ON MERIT IN THE SUBSEQUENT PARAGRAPH. BUT A SUBSEQUENT DEVELOPMENT IN LAW MADE A MORE STRONGER CASE IN FAVOUR OF THE ASSESSEE ON MERIT. THEREFORE, WE ARE OF THE VIEW THAT EVEN IF A NEGLIGENCE COMMITTED BY THE ACC OUNTANT IS TAKEN AS HUMAN NEGLIGENCE, THEN ALSO THIS NEGLIGENCE SHOULD NOT CA USE THE ASSESSEE PUNISHMENT OF MORE THAN RS.78 LAKHS IN THE FORM OF TAX LIABILITY. WE ALLOW THE APPLICATION OF THE ASSESSEE AND CONDONE THE DEL AY IN FILING THE APPEAL. WE PROCEED TO DECIDE THE APPEAL OF THE ASSESSEE ON MER IT. 9. BRIEF FACTS OF THE CASE THAT LAND BEARING SURVE Y NOS.27 AND 29 HAVING AN AREA OF 14602 SQ.METERS WAS PURCHASED BY NANDI V ILLA CO-OP. HOUSING SOCIETY LTD. ON 21.2.2003 FOR A CONSIDERATION OF RS .21,90,300/-. SIMILARLY, ITA NO.2496/AHD/2013 10 LAND BEARING SURVEY NOS.32/3, 32/3, 31/2 AND 29 ADM EASURING AN AREA OF 12870 SQ.METERS WAS PURCHASED BY NANDI VIHAR CO-OP. HOUSI NG SOCIETY LTD. THIS LAND WAS ALSO PURCHASED ON 21.2.2003 FOR A CONSIDER ATION OF RS.19,30,500/-. BOTH THESE SOCIETIES TOOK PERMISSION FROM LOCAL AUT HORITY FOR DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT. THE ASSESSEE ENTE RED INTO A DEVELOPMENT AGREEMENT WITH THESE SOCIETIES ON 15.11.2005 AND 26 .10.2004 RESPECTIVELY. AS PER TERMS OF AGREEMENT, THE ASSESSEE WAS GIVEN F REE ACCESS TO THE LAND FOR CONSTRUCTION OF HOUSING UNITS. THE ASSESSEE WAS AL LOWED TO JOIN PROSPECTIVE BUYERS AS MEMBER ON BEHALF OF THE SOCIETY. THE ASS ESSEE WAS ALLOWED TO COLLECT CONSIDERATION FOR LAND AS WELL AS SUPER-STR UCTURE FROM BUYERS ON BEHALF OF THE SOCIETIES. THE ASSESSEE WAS ALSO ALLOWED TO RETAIN CONSIDERATION RECEIVED FOR CONSTRUCTION AND TRANSFER THE LAND COS T TO THE SOCIETY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FURTHER SUBMITTED AS UNDER: A) YOUR GOOD SELF HAVE CONSIDERED SEGMENTAL CLAUSE S OF THE AGREEMENT AND NOT THE ENTIRE DEVELOPMENT AGREEMENT IN TOTALITY. B) THE REQUIRED LAND LOCATION IS FOUND OUT BUS. C) THE NEGOTIATIONS WITH THE LANDLORD FOR PURCHASE OF THE LAND ITS CONSIDERATION IS NEGOTIATE AND DETERMINED BY US. D) THE SOCIETY IS PROMOTED THROUGH US. E) WE ARE ASSIGNED THE ENTIRE DEVELOPMENT WORK ON L AND AREA OF MORE THAN 1 ACRE. F) THE NAME OF THE SOCIETY WAS ALSO SUGGESTED BY US INCLUDING THE MAIN PERSON TO HANDEL THE SOCIETY. G) REQUIRED ALL DOCUMENTS FOR PROMOTING T HE SOCIETY AND FOR OPENING THE BANK ACCOUNT WERE PREPARED BY THE FI RM THE CONSTRUCTION OF THE PLAN AND APPOINTMENT ARCHITECT, ENGINEER AND STRUCTURE ENGINEER WERE SUGGESTED AND DECIDED BY US . ITA NO.2496/AHD/2013 11 H) ALL LEGAL FORMALITIES WITH APPROPRIATE AUT HORITY, GOVT., ANOTHER AUTHORITIES WERE MANAGED BY US. I) THE ENTIRE LAND PURCHASE CONSIDERATION, FI NANCE IS ARRANGED BY US MAKING THE PAYMENT TO THE SOCIETY FROM THE FUND OF THE PARTNERSHIP FUND. THERE IS DIRECT NEXUS BETWEEN THE MONEY CONSI DERATION AND THE FUND. THE LAND PURCHASE CONSIDERATION IS MOVED FRO M OUR FIRM TO THE ORIGINAL LANDLORD THROUGH THE SOCIETY. J) THE LAND DOCUMENT DEED AND ITS REGISTRATIO N FORMALITIES WERE COMPLETED BY US. THE INITIAL BANAKHAT PAYMENT FOR L AND PURCHASE IS ALSO PAID BY OUR FIRM. THE SOCIETY WAS NOT HAVING A NY RESOURCE OF ANY MONEY FOR PAYING PURCHASE CONSIDERATION THE REQUIRE MENT OF CONVERSION OF AGRICULTURAL INTO NON-AGRICULTURAL LA ND PROPERTY IS ALSO SATISFIED BY OUR EFFORTS AND BY OUR DIRECT DIRECTIO N. K) THE ENTIRE CONSTRUCTION MATERIAL AND LABOU R IS IN OUR FIRM'S NAME AND ALL ADMINISTRATIVE EXPENSE FOR PUTTING THE HOUS ING CONSTRUCTION IS CONTROLLED, FINANCE BY US. THE SOCIETY HAS NOT COME INTO PICTURE AT, .ANY STAGE IN THIS RESPECT. OUR FIRM HAS SHOULDER ALL RE SPONSIBILITIES AS REGARDS MATERIAL, LABOUR MANPOWER, ELECTRICITY, ARC HITECT, ENGINEERS, DESIGN, ADVERTISEMENT AND OTHER, REQUIREMENT IN CON NECTION WITH SUCCESSFUL COMPLETION OF THE DEVELOPMENT OF HOUSING PROJECT AND CONSTRUCTION. THE OTHER CONDITIONS ALSO AMPLY PROV ES THAT WE HAVE ACTED AS ONLY DEVELOPS OF HOUSING PROJECT AND CONST RUCTION WORK. WE ARE NOT SIMPLY CONTRACTORS. THUS, THE REQUIREMENT OF PROVISIONS OF SECTION 80IB(10) STANDS FULLY SATISFIED. 10. THE LD.AO WAS NOT SATISFIED WITH THE CONTENTION S OF THE ASSESSEE. HE REJECTED THE CLAIM OF THE ASSESSEE. HE SUMMARIZED REASONS IN PARA 3.23. IT READS AS UNDER: 3.23 IT IS, THEREFORE, HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB FOR THE FOLLOWING REAS ONS. 1 THE ASSESSEE IS NOT BOTH DEVELOPER AND BUILDER AS REQUIRED BY THE PROVISIONS OF SECTION 80IB(10). ASSESSEE IS NOT A DEVELOPER BECAUSE THE ASSESSEE DID NOT CONCEPTUALISE AND OWN THE PROJECT IN AS MUCH AS THE ASSESSEE IS NOT THE OWNER OF THE LAND AND THE APPROVAL WAS NOT ISSUED TO IT BY THE LOCAL AUTHORIT Y. ITA NO.2496/AHD/2013 12 2 THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVE LOPMENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREEMENT AND HENCE THE ASSESSEE IS MERELY A CONTRACTOR FOR THE PURPOSES OF CONSTRUCTION OF THE PROJECT. 3 THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURCH ASER BUT THE SOCIETIES HAVE EXECUTED THE SALE DEEDS AS A SELLER AND THE ASSESSEE JOINED ONLY AS A CONFIRMING PARTY TO THE T RANSACTION. THIS ALSO PROVES THAT THE ASSESSEE HAS MERELY A CON TRACTOR/ AGENT OF THE SOCIETIES 4 AS PER THE AMENDMENT TO SECTION 80IB BY THE FIN ANCE ACT 2009, A CONTRACTOR WHO EXECUTES THE WORK AWARDED BY ANY PERSON IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB. ANY PERSON INCLUDES THE NANDI VILLA CO. OP. SOCIETY LTD. AND N ANDI VIHAR CO. OP. HOUSING SOCIETY LTD. WHICH ARE A LEGAL ENTI TY. 11. ON APPEAL, THE LD.CIT(A) HAS CONCURRED WITH THE AO. THE FINDING RECORDED BY THE LD.CIT(A) READS AS UNDER: 6 THE ID. AR STATED THAT THE SHOPS WERE NOT CONSTR UCTED IN THE SECTORS FOR WHICH DEDUCTION U/S. 80IB(10) WAS BEING CLAIMED , TIES CONTENTION WAS NOT FOUND TRUE BECAUSE BU PERMISSION OF 14 SHOP S WAS DATED 23.3.2007 AND WAS GIVEN ALONG WITH BU PERMISSION OF 158 RESIDENTIAL UNITS ON WHICH DEDUCTION HAD BEEN CLAIMED IN THIS Y EAR BY THE APPELLANT. FURTHER ANNEXURE 2 OF THIS ORDER WHICH IS THE ANNEX URE ENCLOSED BY THE APPELLANT WITH SUBMISSION DATED 2.12.2010 DOES NOT IN ANY WAY PROVE THAT THE RECEIPTS/ INCOME FROM CONSTRUCTION AND SAL E OF SHOPS HAD BEEN ACCOUNTED FOR IN AN EARLIER AY AND HAD NOT BEEN CLA IMED IN THE PROFIT OF RS.1,03,17,545 CLAIMED AS DEDUCTION UNDER SECTION 8 0IB(10). AS PER APPELLANT'S OWN SUBMISSION DATED 2.12.2010 IT HAD N OT CLAIMED 80IB(10) IN ANY EARLIER YEAR AND IN AY 2007-08 THAT IS THE YEAR UNDER CONSIDERATION THE CLAIM WAS MADE FOR THE FIRST TIME . IT IS INTERESTING TO NOTE THAT DEVELOPMENT PERMISSI ON DATED 22.10.2001 ENCLOSED AS ANNEXURE-3 OF THIS ORDER IS THE DEVELOP MENT PERMISSION FOR ALL TYPES OF RESIDENTIAL UNITS LISTED IN IT WHICH I NCLUDES 14 AND 7 SHOPS AS WELL. THIS DEVELOPMENT PERMISSION RUNS INTO 2 PA GES BECAUSE OF THE ITA NO.2496/AHD/2013 13 LENGTHY TABLES. THUS DEVELOPMENT PERMISSION FOR THE ENTIRE PROJECT - NANDI GRAM - WAS TAKEN IN ONE INSTANCE. THOUGH ASKED TO FURNISH BU PERMISSION OF 7 SHOPS TH E APPELLANT DID NOT AND BU PERMISSION DATED 23.3.2007 WAS FURNISHED WHI CH IS FOR 158 RESIDENTIAL UNIT AND WELL AS FOR 14 SHOPS. THE LEAR NED AR COULD NOT INFORM ANYTHING THOUGH ASKED ABOUT THE OTHER 7 SHOP S. IN THE CASE OF THE APPELLANT THE BUILT-UP AREA OF 1 4 SHOPS WHOSE BU PERMISSION DATED 23.3.2007 (ENCLOSED AS ANNEXURE 4 OF THIS ORDER) HAS BEEN GRANTED ALONG WITH THAT OF RESIDENTIAL UNITS C ONSTRUCTED IN SECTOR 4 AND 5 IS 3329.144 SQ.FT (AS 1 SQ.MTRE = 10.76 SQ.FT BUILT-UP AREA OF 14 SHOPS COMES TO 3329.144 SQ.FT.(309.40 SQ.MTRS X 10. 76 SQ.FT.) THUS MORE THAN 2000 SQ. FT. AND IN VIOLATION OF SECTION 80IB(10)(D). THE APPELLANT IS FOUND EXCEEDING THE CONDITION STIPULA TED IN SUB-CLAUSE (D) OF SECTION 80IB(10) WHICH STATES THAT THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOU SING PROJECT SHOULD NOT EXCEED 5% OF THE AGGREGATE BUILT-UP AR EA OF THE HOUSING PROJECT OR 2000 SQ.FT. WHICHEVER IS LESS. THE DISALLOWANCE OF SECTION 80IB(10) IS UPHELD ON T HE GROUND THAT THE APPELLANT IS FOUND VIOLATING THE CONDITION STIPULAT ED IN CLAUSE (D) OF SECTION 80IB(10). 12. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD. A BARE PERUSAL OF SECTION 80IB WOULD INDIC ATE THAT ENTIRE AMOUNT OF PROFIT OF AN UNDERTAKING DERIVED FROM DEVELOPING AN D BUILDING HOUSING PROJECTS, WHICH IS APPROVED BY THE LOCAL AUTHORITIE S, BEFORE THE SPECIFIED DATE, A DEDUCTION EQUAL TO SUCH PROFIT IS AVAILABLE FOR C OMPUTATION OF TOTAL INCOME OF THE ASSESSEE. THE CONDITION ENUMERATED IN THIS SECTION PROVIDES THAT RESIDENTIAL UNIT HAS MAXIMUM BUILT UP AREA OF 1500 SQ.FT. SIZE OF PLOT OF LAND SHOULD BE MORE THAN ONE ACRE, AND THE HOUSING PROJE CT SHOULD BE COMPLETED WITHIN SPECIFIED DATE. A PERUSAL OF THE IMPUGNED O RDER WOULD INDICATE THAT NEITHER THE AO NOR THE LD.CIT(A) HAS RAISED ANY OBJ ECTION WITH REGARD TO THESE CONDITIONS. LET US DEAL WITH THIS OBJECTION OF THE LD.CIT(A) FIRST. THE LD.CIT(A) HAS OBSERVED THAT FLAT SIZE WAS HIGHER AN D THE ASSESSEE HAS ITA NO.2496/AHD/2013 14 CONSTRUCTED SHOPS ALSO. WE FIND THAT THE LD.CIT(A) HAS RECORDED FACTUALLY INCORRECT FINDING. DEDUCTION HAS BEEN CLAIMED WITH REGARD TO THE PROJECTS VIZ. NANDI VIHAR CO-OP. HOUSING SOCIETY LTD. AND NANDI V ILLA CO-OP. HOUSING SOCIETY LTD. SOCIETY HAS SUBMITTED COMPLETE DETAIL S OF FIVE HOUSING SOCIETY AND POINTED OUT THAT SHOPS WERE CONSTRUCTED ONLY IN NANDI PARK CO-OP. HOUSING SOCIETY LTD. THIS PROJECT WAS COMPLETED LO NG BACK AND NO DEDUCTION WAS CLAIMED UNDER SECTION 80IB(10). THE ONLY DEDUCT ION CLAIMED BY THE ASSESSEE IN THIS YEAR RELATES TO THESE TWO PROJECTS WHERE NO SHOPS WERE CONSTRUCTED. THUS, THE LD.CIT(A) HAS ERRED IN APPR ECIATING THE FACTS. AS FAR AS OBJECTION OF THE AO IS CONCERNED, WE FIN D THAT THIS ISSUE IS NOW COVERED BY THE DECISION OF THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS. RADHE DEVELOPERS, REPORTED IN 341 I TR 403. THE HONBLE HIGH COURT HAS DISPOSED A GROUP OF APPEALS. THE QU ESTION FAMED BY THE HONBLE HIGH COURT READS AS UNDER: 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLATE TRIBUNAL WAS RIGHT IN LAW IN ALLOWING DED UCTION U/S.80IB(10) R.W.S. 80IB(1) TO THE ASSESSEE WHEN THE APPROVAL BY THE LOCAL AUTHORITY AS WELL AS COMPLETION CERTIFICATE WAS NOT GRANTED T O THE ASSESSEE BUT TO THE LANDOWNER AND THE RIGHTS AND THE OBLIGATIONS UN DER THE SAID APPROVAL WERE NOT TRANSFERABLE, AND WHEN THE TRANSF ER OF DWELLING UNITS IN FAVOUR OF THE END-USERS WAS MADE BY THE LANDOWNE R AND NOT BY THE ASSESSEE?'' 13. THE HONBLE HIGH COURT HAS ULTIMATELY HELD THAT FOR DEVELOPING HOUSING PROJECT, IT IS NOT NECESSARY THAT THE ASSES SEE TO BE OWNER OF THE LAND. SIMILARLY, IT WAS NOT NECESSARY THAT APPROVAL SHOUL D BE IN THE NAME OF ASSESSEE. IF ASSESSEE HAS BORNE RISK AND REWARD OF THE CONTRACT, THEN, IT WILL BE A PROJECT OF THE ASSESSEE. WE FIND THAT LD.AO, IN THE REASONS EXTRACTED SUPRA, HAS PRIMARILY REJECTED THE CLAIM OF THE ASSESSEE TH AT IT WAS NOT OWNER OF THE ITA NO.2496/AHD/2013 15 LAND, AND IT HAS NOT CONCEPTUALIZED THE PROJECTS. BOTH THESE CONDITIONS HAVE BEEN CONSIDERED BY THE HONBLE COURT AND DECIDED AG AINST THE REVENUE. THEREFORE, IN OUR OPINION, THE ISSUE ON MERIT IS DI RECTLY COVERED BY THE DECISION OF THE HONBLE HIGH COURT, AND THE ASSESSE E IS ENTITLED FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. WE ALLOW APPEAL OF THE ASSESSEE, AND DIRECT THE AO TO GRANT DEDUCTION UNDER SECTION 80IB (10) OF THE ACT. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 7 TH OCTOBER, 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANTN MEMBER (RAJPAL YADAV) JUDICIAL MEMBER