DCIT CIR. - 21(2), MUMBAI V. M/s. S.N. SHAH FAMILY TRUST, MUMBAI

ITA 2572/MUM/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55803 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 04-10-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 03-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Keywords: Wrong claim; Competent authority; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2572/MUM/2007 (ASSESSMENT YEAR: 2003-04) INCOME TAX OFFICER- 8(2)-2, ROOM NO.212/216A, 2ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI -400 020 ....... APPELLANT VS M/S. S.N. SHAH FAMILY TRUST, M/S. POONAM CORPORATION, 219, SHYAM KAMAL, C, AGARWAL MARKET, VILE PARLE (E), MUMBAI -400 057 ..... RESPONDENT PAN : AAAAS 0175 K APPELLANT BY : SHRI G.P. TRIVEDI RESPONDENT BY : SHRI VIJAY C. MEHTA / MRS. HARSHA PARMAR DATE OF HEARING : 04. 10.2011 DATE OF PRONOUNCEMENT: 28.10.201 1 O R D E R PER R.S. PADVEKAR, JM: IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A)-21 MUMBAI DATED 23.01.2007 FOR THE A.Y. 2003-04 DELETING THE PENALTY LEVIED BY THE A.O. U/S.271(1)( C) OF THE ACT. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS:- I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (A) ERRED IN DELETING THE PENA LTY OF ` 18,46,849/- LEVIED U/S.271(1)(C) OF THE I.T. ACT, 1 961. M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 2 II. THE LD. CIT (A) ERRED IN HOLDING THAT SINCE THE ASS ESSEE HAD VOLUNTARILY SURRENDERED ITS CLAIM U/S.80IB TO AVOID LITIGATION, THERE WAS NO CRIMINAL INTENTION OF CONC EALMENT OR DELIBERATELY FURNISHING INACCURATE PARTICULARS THAT IS MENS REA. III. THE LD. CIT (A) FAILED TO APPRECIATE THAT THE CLAIM WAS WITHDRAWN BY THE ASSESSEE ONLY AFTER THE AO DETECTE D THAT THE CONDITIONS LAID DOWN FOR ALLOWANCE OF THE DEDUC TION U/S.80IB WERE NOT JUSTIFIED, AND HENCE NOT ALLOWABL E. IV. THE LD. CIT (A) FURTHER FAILED TO APPRECIATE THAT T HE ASSESSEE CONSCIOUSLY TRIED TO GIVE COLOUR TO A CLAIM, OTHERW ISE NOT ALLOWABLE, TO LOOK AND APPEAR AS ALLOWABLE WHICH PR OVED THE MENS REA TO EVADE TAX. 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS AN AOP ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND AS A DEVELOPER AND CARRIES ON ITS BUSINESS ACTIVITY UNDER THE NAME AND STYLE OF M/S. POONAM CORPORATION. THE ASSESSEE HAD UNDERTAKEN A BUILDING PROJECT AT LOKHANDWALA COMPLEX, OSHIWARA , ANDHERI (W) MUMBAI. AS NOTED BY THE A.O. THE SAID PROJECT WAS CONSISTING OF SIX BUILDINGS VIZ A, B, C, D, E & F. THE ASSESSEE COMP LETED BUILDINGS A & B PARTLY AND COMPLETED THE CONSTRUCTION OF BUILDING S D, E & F. SO FAR AS BUILDING C IS CONCERNED, THE ASSESSEE HAS ABORTE D CONSTRUCTION OF THE SAID BUILDING DUE TO COSTAL ZONE REGULATIONS (C ZR). THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2003-04 CLA IMED THE DEDUCTION U/S.80IB(10) OF THE ACT OF ` 59,49,677/-. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED U/S.143(1) OF THE ACT AND TH ERE WAS NO REGULAR SCRUTINY ASSESSMENT U/S.143(3). BUT, SUBSE QUENTLY, THE A.O. ISSUED THE NOTICE U/S.148 AND FINALLY THE ASSESSMEN T WAS COMPLETED BY DECLINING THE CLAIM OF THE ASSESSEE U/S.80IB(10) . IT APPEARS THAT THE A.O. CARRIED OUT CERTAIN ENQUIRES BY DEPUTING H IS INSPECTOR TO PHYSICALLY INSPECT THE PROJECT TO FIND OUT THE SIZE S OF THE FLATS, AREA OF EACH FLAT AND ALSO AREA COVERED BY THE COMMERCIAL-S HOPPING. THE A.O. M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 3 ALSO CALLED FOR THE DOCUMENTS LIKE COMMENCEMENT CER TIFICATE, IOD, ARCHITECT CERTIFICATE, COPIES OF THE AGREEMENTS ETC FROM ASSESSE. THE A.O. HAD RESERVATION FOR ALLOWING THE DEDUCTION U/S .80IB(10), AS IN HIS OPINION, THE ASSESSEE WAS NOT FULFILLING THE CONDIT IONS LAID DOWN IN SEC.80IB(10) OF THE ACT FOR THE FOLLOWING REASONS: (I) THERE SHOULD HAVE BEEN ONE PROJECT ON ONE PLOT OF LAND, BUT THERE ARE ACTUALLY TWO PLOTS OF LANDS. WHILE D , E & F WINGS HAVE BEEN BUILT ON PLOT NO.116, A & B WINGS A RE UNDER CONSTRUCTION ON PLOT NO.115. THE TWO PLOTS H AVE SEPARATE SURVEY NUMBER, SEPARATE PROPERTY CARDS AND SEPARATE MUNICIPALITY DEMARCATION. (II) SIZE OF THE PLOT OF LAND SHOULD HAVE MINIMUM AREA O F ONE ACRE, BUT IN THIS CASE EACH PLOT IS ABOUT HALF AN A CRE ONLY. EVEN THE ACTUAL CONSUMABLE AREA OF BOTH THE PLOTS TOGETHER AFTER EXCLUDING RESERVED AREA IS LESS THAN ONE ACRE. (III) RESIDENTIAL UNITS OF THE PROJECT SHOULD HAVE A MAXI MUM BUILT UP AREA OF 1000 SQ.FEET BUT IN THE THREE WING S (D, E &F) THAT HAVE BEEN COMPLETED, MORE THAN 50% OF THE FLATS ARE HAVING BUILT UP OF MORE THAN 1000 SQ.FT. (IV) INVESTIGATION FURTHER REVEALED THAT THE ASSESSEE IS CONSTRUCTING COMMERCIAL ESTABLISHMENT IN THE B BUILDING, THE TOTAL AREA OF WHICH IS FAR MORE THAN 5% OF THE TOTAL PROJECT, THEREBY VIOLATING THE PRESCRIBED LIMIT U/S. 80IB(10) 3. AS PER THE PHYSICAL INSPECTION OF THE PROJECT CA RRIED OUT BY THE INSPECTOR, IT WAS NOTICED THAT THE FLATS, MORE PART ICULARLY, IN D AND F WINGS, HAD BUILT-UP AREA IN EXCESS OF 1000 SQ.FTS. IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE EXECUTED TWO DIFFERENT A GREEMENTS WITH THE MEMBERS OF THE SAME FAMILY LIKE HUSBAND-WIFE, FATHE R-MOTHER ETC., BUT, IN FACT, BOTH FLATS WERE USED AS A SINGLE RESI DENTIAL UNIT. HE ALSO ISSUED SOME SUMMONS TO THE SOME OF THE FLAT OWNERS AS NOTED BY HIM AND THEY TOLD THAT THEY HAVE NOT MADE ANY MODIFICAT IONS OR ALTERATIONS AFTER PURCHASING THEIR FLATS. THE A.O., THEREFORE, SOUGHT THE EXPLANATION OF THE ASSESSEE WHY THE DEDUCTION U/S.8 0IB(10) SHOULD NOT BE DENIED. IT APPEARS THAT AFTER LOT OF DELIBE RATIONS WITH THE A.O. M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 4 THE ASSESSEE GAVE THE LETTER WITHDRAWING THE CLAIM OF DEDUCTION U/S.80IB(10) AND THE REASONS GIVEN BY THE ASSESSEE , WHICH ARE REPRODUCED IN HIS LETTER DATED 24.02.2006 ADDRESSED TO THE A.O. ARE AS UNDER:- 13. THE WRITTEN SUBMISSION OF THE ASSESSEE WAS FOU ND TO BE ABSOLUTELY UNACCEPTABLE AND THEREFORE TO PROVE BEYO ND DOUBT THAT THE PROJECT HAS CLEARLY VIOLATED THE NOR MS OF SECTION 81IS(1) OF THE I.T. ACT, THE ASSESSEE WAS O FFERED ANOPPORTUNITY FOR A JOINT INSPECTION OF THE PROJECT IN THE PRESENCE OF THEIR ARCHITECT AND DEPARTMENTAL ENGINE ER. HOWEVER, THE ASSESSEE HAS COME FORWARD WITH A LETTE R DATED 24.02.2006 IN WHICH IT HAS GIVEN UP ITS STAND BY SURRENDERING ITS CLAIM OF DEDUCTION U/S.80IB(10) AN D HAS ADMITTED THAT THE PROJECT IS NOT LIKELY TO BE ENTIT LED FOR SUCH DEDUCTIONS. THE LETTER ADDRESSED BY SHRI S.N. SHAH , MANAGING TRUSTEE OF THE ASSESSEE IS REPRODUCED BELO W: THIS REFERS TO OUR ONGOING ASSESSMENT WHEREIN WE H AVE CLAIMED DEDUCTION OF ` 59,49,677/- U/S.80IB(10) IN RESPECT OF PROFITS FROM RESIDENTIAL HOUSING PROJECT AT VERS OVA, ANDHERI. IN THE COURSE OF ASSESSMENT, FROM TIME TO TIME, WE HAVE FURNISHED OUR DETAILED EXPLANATIONS ON HOW WE QUALI TY FOR DEDUCTION. REFERENCE MAYBE MADE TO OUR LETTERS DT. 15.01.2006 & 14.02.2006 WHEREIN WE HAVE DULY EXPLAI NED OUR COMPLIANCES, TILL DATE, WITH VARIOUS CONDITIONS OF THE SECTION. WE BELIEVE THAT WE ARE ENTITLED TO THE SA ID DEDUCTION. THE UNDERSIGNED, MR. S.N. SHAH , MANAGING TRUSTEE O F THE ASSESSEE TRUST, I AM THE PERSON WHO HAS BEEN IN KNO W OF THE PROJECT. I HAD SEVER PARALYTIC STROKE ON 23RD DAY OF OCTOBER, 2003. I AM AGED 75. MY MOBILITY HAS BEEN GREATLY REDUCED. I HAVE DEVELOPED DIABETIC AND BLOOD PRESS URE. THERE ARE ALSO COMPLICATIONS DEVELOPED RELATING TO KIDNEY. I M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 5 HAVE ALSO BEEN ADVISED STRESS FREE LIFE. DUE TO CO MBINED AFFECT OF MY AGE COUPLE WITH PARALYTIC STROKED AND OTHER HEALTH COMPLICATIONS, THERE ARE ALL POSSIBILITIES O F MY BEING IMMOBILE OR SLOW IN FORESEEABLE FUTURE. I HAVE NOW BEEN TOLD THAT THE RECENTLY INTRODUCE AMENDMENT REQUIRIN G COMPLETION OF HOUSING PROJECT BY 31.3.2008 MAY BE M ADE APPLICABLE TO US BY TAX DEPARTMENT AND LITIGATION M AY UNNECESSARILY ARISE IN FUTURE ON RETROSPECTIVE BASI S ONCE WE SUCCEED IN CURRENT YEARS. ALSO, DUE TO COASTAL ZON E REGULATION WE ARE UNABLE TO PROCEED FOR FURTHER CON STRUCTION OVER FOUNDATION WORK ALREADY ONE UP. WHILE RELAXAT ION IN THE REGULATIONS IS EXPECTED, DUE TO MY SICKNESS AND IMMOBILITY, IT IS QUITE POSSIBLE AND PROBABLE THAT IT MAY NOT BE POSSIBLE TO COMPLETE THE PROJECT BY 31.3.2006 THOUGH, IN NORMAL CIRCUMSTANCES, THIS WOULD HAVE BEEN CERTAINL Y POSSIBLE IF COASTAL REGULATION IS RELAXED. CONSIDE RING ALL THIS, WITH A VIEW TO BUY PEACE, WITH A VIEW TO KEEP ME ANY MY FAMILY FREE FROM TENSION AND WITH A VIEW TO AVOI D ANY LITIGATION OF ANY NATURE WHICH CAN ARISE, WE HAVE D EEMED IT FIT TO WITHDRAW THE CLAIM FOR DEDUCTION MADE BY US IN COMPUTATION OF TOTAL INCOME. REVISED RETURN IS BEI NG FILED HEREWITH. TAX AND INTEREST PAYABLE CONSEQUENT UPON REVISE WILL BE PAID UP BY 28TH FEBRUARY, 2006. SINCE THE OFFER IS UNDER THE CIRCUMSTANCES EXPLAINE D HEREIN, WE TAKE IT THAT THERE CAN AND THERE WOULD BE NO PEN AL ACTION INITIATED BY YOU. 14. IT IS INTERESTING TO OBSERVE FROM THE CONTENTS OF THE AFORE-SATED LETTER THAT THE ASSESSEE HAS GIVEN UP I TS CLAIM OF DEDUCTION U/S.80IB(10), NOT ON THE GROUND THAT I TS HOUSING PROJECT HAS VIOLATED THE CONDITIONS / NORMS PRESCRIBED U/S.80IB(10) OF I.T. ACT, BUT ON THE GRO UND THAT IT IS NOT POSSIBLE FOR THEM TO COMPLETE THE PROJECT BY THE M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 6 DEADLINE OF 31.03.2008 PRESCRIBED UNDER THE SECTION DUE TO CERTAIN COASTAL ZONE REGULATIONS. INSTEAD OF SURRE NDERING ITS RIGHTS ON THE BASIS OF VIOLATIONS ALREADY POINT ED OUT, HAS CHOSEN TO SURRENDER UNDER APPREHENSION THAT THE PRO JECT WILL NOT BE COMPLETED BEFORE THE TARGET UNDER THE S ECTION. THUS THE ASSESSEE HAS MADE IT CLEAR THAT IT HAS NO FURTHER ARGUMENTS TO OFFER IN ITS DEFENCE. 4. THE A.O. COMPLETED THE ASSESSMENT BY DISALLOWING THE ENTIRE CLAIM OF THE ASSESSE UNDER SEC. 80IB(10) OF THE ACT . IN THIS BACKGROUND, THE A.O. INITIATED THE PENALTY PROCEEDI NGS U/S.271(1)(C) OF THE ACT AND LEVIED THE PENALTY OF ` 18,46,849/- VIDE ORDER DATED 21.08.2006. THE ASSESSEE CHALLENGED THE PENALTY OR DER BEFORE THE LD. CIT (A) AND THE LD. CIT (A) DELETED THE PENALTY BY GIVING THE FOLLOWING REASONS:- 10. I HAVE GONE THROUGH THE WRITTEN SUBMISSIONS MA DE AND THE ARGUMENTS BEFORE ME OF THE A.R. AND HAS FOUND FORCE IN IT. THE LEARNED A.R. HAS EXPLAINED IN DETAIL EACH ISSUE RAISED BY THE ASSESSING OFFICER. I HAVE ALSO GONE THROUGH THE COPY OF THE PLAN APPROVED BY THE BMC AND F.S.I. GRANTED BY THE BMC FOR THE PROJECT AND THE AUDIT REPORT IN FORM 10 CCB FILED ALONG WITH THE RETURN OF INCOME. ON THE BASI S OF THESE FACTS / RECORDS, IT CAN BE SEEN THAT THE CLAIM OF D EDUCTION U/S.80I(B) WAS A BONAFIDE CLAIM MADE BY THE APPELLA NT. HOWEVER, DUE TO HIS INABILITY TO COMPLETE THE PROJE CT, WITHIN THE GIVEN TIME FRAME AS REQUIRED UNDER THE SECTION FOR ALLOWABILITY OF CLAIM U/S.80IB, HE HAS WITHDRAWN TH E CLAIM BY FILING REVISED RETURN IN ORDER TO BUY PEACE OF M IND AND TO AVOID LITIGATION. VARIOUS JUDICIAL PRONOUNCEMENTS SHOW THAT THE FACT OF OWNING UP INCOME WOULD NOT BY ITSE LF ATTRACT THE PROVISIONS OF SECTION 271(1)(C). M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 7 11. IT IS ALSO WELL SETTLED THAT MERELY BECAUSE AN AMOUNT IS OWNED AS INCOME, THERE CAN BE NO PRESUMPTION THAT T HE ASSESSEE EARNED INCOME OR CONCEALED THE INCOME OR H AS AN INTENTION OF CONCEALING THE INCOME. IN ANY CASE TH E APPELLANT HAS WITHDRAWN THE CLAIM BECAUSE LATER ON HE REALIZED THAT THE PROJECT CAN NOT BE COMPLETED ON A CCOUNT OF COASTAL ZONE REGULATIONS AND NOT BECAUSE OF THE OBJ ECTIONS RAISED BY THE AO. 12. IN HIS WRITTEN SUBMISSION THE APPELLANT HAS PLA CED RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENT. IN THE CASE OF K. DEEDAR AHMED V. ITO (97 ITD 240) IT WAS HELD BY HON BLE INCOME TAX APPELLATE TRIBUNAL, HYDERABAD BENCH AS UNDER: NO DOUBT MERE FILING OF REVISED RETURN WILL NOT AUTOMATICALLY PROTECT AN ASSESSEE FROM LEVY OF PENALTY BUT, IN A GIVEN CASE, WHERE AN ASSESSEE COMES FORWARD WITH CLEAN BREAST THOUGH AFTER DICTATION, AND FIL LES RETURNS OF INCOME OFFERING ADDITIONAL INCOME AND EXPRESSES REMORSE FOR HIS PAS T CONDUCT UNHESISTANTLY, THE ASSESSING OFFICER MAY HAVE TO EXERCISE THE DISCRETION IN FAVOUR OF SUCH ASSESSEE AS OTHERWISE THE EXPRESSION MAY IN SECTION 271(1)(C) REMAINS A DEAD LETTER IF IT IS UNDERSTOOD THAT IN A CASE OF ADMITTED CONCEALMENT, PENALTY IS AUTOMATIC. 13. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF J.P. SH ARMA SONS V. CIT (151 ITR 333) WHERE IN IT WAS OBSERVED THAT- IF THE ITO, AS A RESULT OF INVESTIGATION MADE BY H IM DURING THE ASSESSMENT PROCEEDINGS, DISCOVERS THAT M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 8 INACCURATE PARTICULARS HAVE BEEN SUPPLIED BY THE ASSESSEE OR THERE IS OMISSION TO SUPPLY THE CORRECT PARTICULARS ON HIS PART AND THE REVISED RETURN IS F ILED BY THE ASSESSEE AFTER SUCH A DISCOVERY IS MADE BY THE ITO, THEN, OF COURSE, IN SUCH CIRCUMSTANCES, TH E FILING OF THE REVISED RETURN CANNOT REMOVE THE EFFE CT OF CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE WHILE FILING THE ORIGINAL RETURN AND PENALTY IS LEV IABLE IN SUCH A CASE. HOWEVER, AS OBSERVED BY THEIR LORDSHIP OF THE MADRAS HIGH COURT IN RAMDAS PHARMACYS CASE (77 ITR 276), THE ENTIRETY OF CIRCUMSTANCES MUST BE TAKEN INTO CONSIDERATION AND THE CONDUCT OF THE ASSESSEE FROM THE INCEPTION TO T HE CONCLUSION OF THE ASSESSMENT PROCEEDINGS MUST BE VIEWED, IN ORDER TO FIND OUT WHETHER A CRIMINAL INTENTION OF CONSCIOUS CONCEALMENT OF TRUE PARTICUL ARS OF INCOME OF DELIBERATELY FURNISHING INACCURATE PARTICULARS BY THE ASSESSEE HAS BEEN ESTABLISHED. 14. IN VIEW OF ABOVE FINDINGS, I AM OF THE OPINION THAT THE THREE ISSUES ON THE BASIS OF WHICH DEDUCTION U/S.80 IB(10) WAS TO BE DISALLOWED ARE LEGAL ISSUES INVOLVING INTERPRETATION OF THE SECTION. THE APPELLANT HAS I NTERPRETED THE SECTION FROM HIS LEGAL POINT VIEW AS AGAINST TH E VIEW TAKEN BY THE A.O. IN SUCH CASES IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. LOOKING TO THE F ACTS AND CIRCUMSTANCES OF THE CASE THAT THE APPELLANT HAS VO LUNTARILY SURRENDERED HIS CLAIM IN ORDER TO AVOID LITIGATION, THERE IS NO CRIMINAL INTENTION OF CONSCIOUS CONCEALMENT OR DELI BERATELY FURNISHING OF INACCURATE PARTICULARS BY THE APPELLA NT THAT IS MENS REA. THEREFORE THE PENALTY OF ` 18,46,849/- UNDER SECTION 271(1)(C) OF THE ACT LEVIED BY THE A.O. IS DELETED. M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 9 5. NOW, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE LD. D.R. VEHEMENTLY SUBMITS THAT THE ASSESSEE HIMSELF HAS ADMITTED THAT THE DEDUCTION CLAIM U/S.8 0IB(10) WAS WRONGLY CLAIMED. HE SUBMITS THAT THE ASSESSEE WAS FULLY AWARE OF THE FACTUAL POSITION THAT THE PLOTS ON WHICH THE PROJEC T WAS IMPLEMENTED WAS HAVING THE SIZE OF LESS THAN 1 ACRE. HE SUBMIT S THAT THE ASSESSEE CLEVERLY SPLIT OUT THE FLATS IN SUCH A WAY THAT THE BUILT-UP AREA WOULD BE BELOW 1,000 SQ.FT. BUT, IN FACT, IT WAS THE ONLY FLAT SOLD TO THE MEMBERS OF THE SAME FAMILY AND USED THE SAID UNITS AS ONE RESIDENTIAL UNIT. THE LD. D.R. RELIED ON THE FOLLOWING DECISIO N:- CIT VS. ZOOM COMMUNICATION P. LTD. -91 TAXMAN 179 7. PER CONTRA, THE LD. COUNSEL VEHEMENTLY ARGUES TH AT THE CLAIM MADE BY THE ASSESSEE WAS A BONA FIDE CLAIM AND THE DEDUCTION WAS BASED ON THE INTERPRETATION OF SEC. 80IB(10). THE LD. COUNSEL TOOK US THROUGH THE ASSESSMENT ORDER, MORE PARTICULARLY, OB JECTION RAISED BY THE A.O. FOR DISALLOWING THE DEDUCTION TO THE ASSES SEE. HE SUBMITS THAT THOUGH THE CITY SURVEY NUMBERS ARE DIFFERENT, BUT IN FACT, SUBSEQUENTLY BOTH THE PLOTS WERE CONSOLIDATED BY TH E ORDER OF THE COLLECTOR AND ONLY ONE CITY SURVEY NO. I.E. 1/48/06 WAS RETAINED AND THE CITY SURVEY NO.1/48/07 WAS DELETED. HE SUBMITS THAT AS PER THE APPROVED PLAN OF THE COMPETENT AUTHORITY, BMC, THE UNITS WERE HAVING A BUILT-UP AREA OF LESS THAN 1,000 SQ.FT. THE LD. COUNSEL RELIED ON THE DECISION OF THE FOLLOWING PRECEDENTS:- I) TELEBUILD CONSTRUCTION (P.) LTD. VS. ACIT -13 SOT 218 (MUM) II) HAWARE ENGINEERS & BUILDERS P. LTD. VS. ACIT (MUM) -46 SOT 27 (MUM) URO 8. WE FIND THAT THE ASSESSEE CLAIMED THE DEDUCTION U/S.80IB(10), WHICH WAS BASED ON THE AUDIT REPORT IN FORM NO.10CC B. THE A.O. HAD M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 10 OBJECTION ON THE PLOT OF THE LAND AS THE SAID PLOTS WERE HAVING TWO DIFFERENT SURVEY NOS. 115 & 116. AS PER THE PLAN O N RECORD, WE FIND THAT TOTAL AREA OF THE PLOT IS 4,161 SQ.MTRS. WE, FURTHER FIND THAT BOTH THE PLOTS WERE ADJACENT TO EACH OTHER HAVING THE CI TY SURVEY NO.1/48/6 (AREA 2081.7 SQ.MTRS) AND 1/48/7 (AREA 20 75.3 SQ. MTRS.) AND BOTH THE PLOTS WERE SUBSEQUENTLY CONSOLIDATED. THE EFFECT OF THE CONSOLIDATION ORDER IS GIVEN SUBSEQUENTLY, BUT AS P ER THE APPROVED LAY-OUT, BOTH THE FLATS WERE SHOWN AS A SINGLE PLOT AND SAME HAS BEEN APPROVED BY THE BMC. MERELY BECAUSE THE CITY SURVE Y NOS. ARE DIFFERENT OTHERWISE THE PLOTS ARE ADJOINING TO EACH OTHER THEN IT CANNOT BE SAID THAT THE PLOTS WERE TOTALLY DIFFERENT HAVIN G DISTANCE BETWEEN THE TWO. 9. NOW, LET US DEAL WITH THE AN OTHER OBJECTION OF THE A.O. THAT THE ASSESSEE HAS COMPLETED THE BUILDING PROJECT IN SUCH A WAY THAT TWO UNITS/FLATS CAN BE SOLD TO MEMBERS OF THE SAME FAMI LY LIKE HUSBAND- WIFE, FATHER-MOTHER AND SAME CAN BE COMBINED AS A O NE RESIDENTIAL UNIT. NOW, THIS ISSUE HAS BEEN CONSIDERED BY THE C O-ORDINATE BENCH IN THE CASE OF EMGEEN HOLDINGS P. LTD. VS. DY. CIT MUMBAI 47 SOT 98 AND IT IS HELD THAT THE AMENDMENT INTRODUCED TO SEC . 80IB(10) W.E.F. 1.04.2010 IS PROSPECTIVE IN NATURE AND DEDUCTION U/ S.80IB(10) CANNOT BE DENIED MERELY BECAUSE END-USER BY BUYING MORE TH AN ONE UNIT ON THE NAME OF THE DIFFERENT FAMILY MEMBERS HAS MADE O NE LARGER RESIDENTIAL UNIT. THE ASSESSMENT YEAR BEFORE US IS 2003-04, HENCE, THE AMENDMENT MADE TO SEC.80IB(10) THAT IF BY VIRTU E OF PUTTING THE RESTRICTION ON THE ALLOTMENT OF THE RESIDENTIAL UNI T BY INSERTION OF CLAUSES (E) & (F) OF EXPLANATION BELOW 80IB(10) IS ONLY APPLICABLE ON THE ASSESSMENT YEAR 2010-11. SO FAR AS ARGUMENT OF THE LD. D.R. THAT THE ASSESSEE SUO MOTU WITHDREW THE CLAIM OF DEDUCTION AS IT WAS WRONG CLAIM, IN OUR HUMBLE OPINION THE SAID ARGUMEN T IS NOT CORRECT AS PER THE RECORD BEFORE US. THE A.O. HAS REPRODUC ED THE LETTER DATED 24.02.2006, IT IS STATED IN THE SAID LETTER THAT TH E ASSESSEE WHO IS MANAGING TRUSTY IS 75 YEARS OF AGE AND WAS SUFFERIN G FROM PARALYTIC M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 11 STROKE AND THUS DUE TO HIS SICKNESS AND IMMOBILITY AS WELL AS CZR, IT IS VERY DIFFICULT TO COMPLETE THE ENTIRE PROJECT AN D TO BUY PEACE HE IS WITHDRAWING THE CLAIM. AS PER THE FACTS ON RECORD, WE FIND THAT THE CLAIM OF THE ASSESSEE CANNOT BE SAID TO BE A WRONG THOUGH IT HAS WITHDREW. ON THE PERUSAL OF THE RECORD, IN OUR OPI NION, THE ASSESSEES CLAIM WAS BASED ON THE INTERPRETATION OF SEC. 80IB( 10). MOREOVER, SOME OF THE OBJECTIONS OF THE A.O. FOR ALLOWING THE CLAIM OF THE ASSESSEE ARE CONTRARY TO THE DECISIONS OF THE TRIBU NAL. NOTHING IS THERE ON RECORD TO SUGGEST THAT THE ASSESSEE CONSCI OUSLY MADE THE WRONG CLAIM. FROM THE LETTER GIVEN TO THE A.O., WE FIND THAT DUE TO THE SERIOUS HEALTH PROBLEMS THE ASSESSEE WITHDREW THE C LAIM AND NOWHERE IT IS STATED THAT THE ASSESSEE WITHDREW THE CLAIMS BECAUSE THE SAME WERE WRONG ONE. AFTER GIVING OUR ANXIOUS CONSIDERAT ION TO THE ENTIRETY OF FACTS, WE ARE OF THE OPINION THAT THIS IS NOT A CASE WHERE IT CAN BE SAID THAT THE ASSESSEE HAS CONCEALED THE PARTICULAR S OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME. WE FIND NO REASO N TO INTERFERE WITH THE ORDER OF LD. CIT (A) AND ACCORDINGLY THE SAME I S CONFIRMED. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 8TH OCTOBER 2011. SD/- SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATED : 28TH OCTOBER 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -21, MUMBAI. 4) THE CIT-CITY-21, MUMBAI. 5) THE D.R. E BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN M/S. S.N. SHAH FAMILY TRUST ITA 2572/M/2007 12 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 04.10.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 18.10.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER