ADDL CIT 24(3), MUMBAI V. NEETA ENTERPRISES, MUMBAI

ITA 2898/MUM/2010

• Counselvise Citation: 289819914 RSA 2010
• Duration Of Justice: 4 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 22-05-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 12-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH RANJAN PRASAD
• Assessee Lawyers: VIMAL PUNMIYA
• Section: 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . . , / . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER . / ITA NO.2898/MUM/2010 ! ! ! ! / ASSESSMENT YEAR 2006-07 . / ITA NO.5126/MUM/2010 ! ! ! ! / ASSESSMENT YEAR 2007-08 . / ITA NO.4580/MUM/2011 ! ! ! ! / ASSESSMENT YEAR 2008-09 THE ITO- 24(3)-2, C-11,7 TH FLOOR, B.K.C. BANDRA (E), MUMBAI - 51 / VS. M/S. NEETA ENTERPRISES, 141, GUNDECHA HOUSE, JAWAHAR NAGAR, GOREGAON(W), MUMBAI 400 062 ' ./ #$ ./ PAN/GIR NO. : AACFN 4947M ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( / APPELLANT BY: SHRI RAJESH RANJAN PRASAD &''% ) ( / RESPONDENT BY : SHRI VIMAL PUNMIYA ) * / DATE OF HEARING : 22/05/2014 +,! ) * / DATE OF PRONOUNCEMENT : 04/06/2014 - / O R D E R PER I.P.BANSAL, J.M: ALL THESE APPEALS ARE FILED BY THE REVENUE AND THE Y ARE DIRECTED AGAINST THREE SEPARATE ORDERS DATED 4/1/2010, 25/3/2010 AND 28/3/2011 PASSED BY LD. CIT(A) FOR ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09 RESPECTIVELY. GROUNDS OF APPEAL IN ALL THESE APPEALS ARE IDENTICA L AND READ AS UNDER: M/S. NEETA ENTERPRISES 2 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80 IB(10) OF THE I.T. ACT IGNORING THE FACT THAT THE A PPROVAL OF THE LOCAL AUTHORITY WAS OBTAINED ON 28.11.1992 I.E. MUCH BEFO RE 01.10.1998. 2. SINCE ISSUE RAISED BY THE REVENUE IS IDENTICAL I N ALL THE THREE APPEALS AND THESE APPEALS WERE ARGUED TOGETHER BY BOTH THE PARTIES, THEREFORE, FOR THE SAKE OF CONVENIENCE ALL THESE APPEALS ARE DISPOSED OF BY THIS SINGLE ORDER. 3. FOR ASSESSMENT YEAR 2006-07 LD. CIT(A) HAS PASSE D A SPEAKING ORDER AND FOR OTHER YEARS, ORDER OF 2006-07 HAS BEEN FOLL OWED SINCE THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES OF THE CASE AND T HE ISSUE IS IDENTICAL. 4. THE ASSESSEE IS ENGAGED IN THE ACTIVITY OF DEVEL OPMENT AND CONSTRUCTION OF HOUSING PROJECTS. IN THE PROCESS, IT HAS DEVELO PED HOUSING PROJECT KNOWN AS GUNDECHA GARDEN SITUATED AT CS NO.44, 1/44, 1/28 OF PAREL SEWRI DIVISION OF DR. BABASAHEB AMBEDKAR ROAD, LALBAGH, MUMBAI. ACCO RDING TO ASSESSEE LAYOUT OF THIS PROJECT WAS APPROVED BY MCGM VIDE NO .EB/9706/FS/A DATED 31/5/2003. THE ASSESSEE STARTED CONSTRUCTION OF TH E BUILDING AS PER APPROVAL OF BMC DATED 13/1/2004 AND COMMENCEMENT CERTIFICATE DATED 16/9/2003 FOR WING A, B & C. ON THE SAID PROJECT ASSESSEE HAS CL AIMED DEDUCTION UNDER SECTION 80 IB(10) IN RESPECT OF EACH OF THE ASSESSM ENT YEAR AS UNDER: ASSESSMENT YEAR AMOUNT. 2006-07 RS. 7,18,02,721/- 2007-08 RS. 13,50,93,090/- 2008-09 RS. 21,28,55,116/- 4.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y 2006-07, WHILE EXAMINING THE DETAILS, THE AO FOUND THAT COMMENCEME NT CERTIFICATE ORIGINALLY WAS ISSUED UNDER NO.EEBPC/9706/FS/A OF 28/11/ 1992 FOR THE DEVELOPMENT OF THE PROPOSED RESIDENTIAL BUILDINGS AND CLUB HOUS E ON THE AFOREMENTIONED PLOT OF M/S. BOMBAY GAS COMPANY LTD., EMPIRE HOUSE, DR. D.N.ROAD, MUMBAI M/S. NEETA ENTERPRISES 3 400001. ACCORDING TO AO THE SAME WAS REVALIDATED U PTO 27/11/2003 AND THE SAME WAS ALSO BEING EXTENDED FOR FURTHER PERIODS AS PER NOTINGS IN THE COMMENCEMENT CERTIFICATE DATED 28/11/1992. THE PA RT OCCUPATION CERTIFICATE ON THE BASIS OF WHICH DEDUCTION UNDER SECTION 80 IB (10) WAS CLAIMED IN RESPECT OF COMPLETION OF WING A,B & C WAS ALSO ISSUED IN FAVOUR OF M/S. BOMBAY GAS COMPANY LIMITED BY BMC UNDER NO.EEBPC/9706/FS/A DAT ED 18/2/2006. THEREFORE, LD. AO ISSUED SHOW CAUSE NOTICE TO THE A SSESSEE TO FURNISH COPY OF THE AGREEMENT REGARDING PURCHASE OF PLOT ON WHICH T HE PROJECT WAS CONSTRUCTED AND ALSO TO EXPLAIN THAT AS TO WHY IN VIEW OF EXPL ANATION (I) UNDER SUB-SECTION (10) AMOUNT OF RS.7,18,02,721/- SHOULD NOT BE DISAL LOWED. THE AO ALSO CALLED FOR SOME INFORMATION UNDER SECTION 133(6) FROM M/S. GAS PROPERTY DEVELOPERS VIDE LETTER DATED 30/11/2007 SEEKING COPY OF REDEVE LOPMENT ACCOUNT OF THE ABOVE PROPERTY FROM 1/8/1992 TO 10/7/2003 GIVING DE TAILS OF YEAR WISE EXPENSES INCURRED UNDER VARIOUS HEAD FROM 1/8/1992 TO 10/7/2003 AND ALSO THE FOLLOWING INFORMATION: 1. RESUME OF THE INCOME EARNING ACTIVITIES CARRIED ON BY YOU. 2. COPY OF YOUR LEDGER ACCOUNT OF THE ABOVE ASSES SEE FOR THE YEAR WHEN THE DEVELOPMENT AGREEMENT IS MADE. 3. DETAILS OF PAYMENTS RECEIVED BY YOU ALONG WITH COPY OF BANK STATEMENTS IN RESPECT OF THE DEVELOPMENT AGREEMENT. 4. COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN F ILED BY YOU GIVING PAN, ADDRESS OF ASSESSING OFFICER. 5. COPY OF P/L ACCOUNT AND BALANCE SHEET FOR THE Y.E. 31.03.1993 TO Y.E. 31.03.2004. 4.2 THE AFOREMENTIONED INFORMATION WAS PROVIDED TO AO BY M/S. GAS PROPERTY DEVELOPERS VIDE LETTER DATED 18/12/2007. FROM THE DETAILS SO FURNISHED THE AO OBSERVED THAT IN THE P&L ACCOUNTS FOR THE YEAR ENDING 31/3/2004 M/S. GAS PROPERTY DEVELOPERS HAD WRITTEN OFF PROJECT EXPENDITURE AGGREGATING TO RS.4,68,14,023/- AGAINST THE CONSIDE RATION RECEIVED BY IT UNDER DEVELOPMENT AGREEMENT DATED 10/7/2003. FROM THE SA ID DETAILS THE AO FOUND M/S. NEETA ENTERPRISES 4 THAT PROJECT EXPENSES INCURRED BY THE ASSESSEE UPTO 31/3/998 WAS A SUM OF RS.1,80,46,496/-. 4.3 ON THESE FACTS AO ARRIVED AT A CONCLUSION THAT DEVELOPMENT OF THE PROJECT COMPLETED BY THE ASSESSEE WAS STARTED PRIOR TO 1/10/1998, AS THE PROJECT CONSTRUCTED BY THE ASSESSEE WAS CONTINUATIO N OF THE PROJECT STARTED BY M/S. BOMBAY GAS COMPANY LIMITED VIDE IOD NO.EB/9076 /A & IOD NO.EB/9077/A ISSUED IN AUG.1992 BY BMC. THE AO CA LLED FOR THE EXPLANATION OF THE ASSESSEE AND ASSESSEE FILED DETA ILED REPLY WHICH HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER. IT WAS SUBMITT ED THAT AFOREMENTIONED LAND WAS TAKEN INTO POSSESSION BY THE ASSESSEE FROM M/S. GAS PROPERTY DEVELOPERS VIDE DEVELOPMENT AGREEMENT DATED 10/7/20 03, THEREFORE, ASSESSEE FIRM COULD NOT INCUR ANY EXPENDITURE ON THE IMPUGNE D HOUSING PROJECT BEFORE 10/07/2003. IT WAS ALSO SUBMITTED THAT ACCORDING T O FACTUAL AND LEGAL POSITION NO EXPENDITURE HAD BEEN INCURRED ON DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT BEFORE 1/10/1998. IT WAS SUBMITTED THAT APPROVAL OF THE HOUSING PROJECT BY LOCAL AUTHORITY AND COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ARE TOTALLY DIFFERE NT AND THEY HAVE NO CONNECTION WITH EACH OTHER. REGARDING QUERY OF THE A.O REGARDING THE EXPENDITURE INCURRED ON HOUSING PROJECT BY M/S. GAS PROPERTY DEVELOPERS, IT WAS SUBMITTED THAT THEY ALSO DID NOT INCUR EXPENDIT URE ON DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT AND OUT OF THOSE EX PENDITURE A SUM OF RS.4,16,300/- IS PAID IN CONNECTION WITH APPROVAL O F THE BUILDING PLAN TO THE ARCHITECT AND ENGINEERS. THE OTHER EXPENSES OF RS. 13,500/-, RS.13,950/- AND RS.12,963/- ARE ON BRICKS, CEMENT AND SAND RESPECTI VELY, WHICH ARE INCURRED FOR REPAIR OF BOUNDARY WALL OF THE PROJECT. IT WAS SUBMITTED THAT NONE OF OTHER EXPENSES COULD BE RELATED TO THE DEVELOPMENT AND CO NSTRUCTION OF THE HOUSING PROJECT. IT WAS SUBMITTED THAT ORIGINAL BUILDING P LAN WHICH WAS APPROVED BY THE LOCAL AUTHORITY ON 28/11/1992 WAS TOTALLY DIFFE RENT FROM THE REVISED BUILDING PLAN APPROVED BY LOCAL AUTHORITY IN 2003. IT WAS SUBMITTED THAT AS PER ORIGINAL BUILDING PLAN APPROVED ON 28/11/1992 T WO BUILDINGS WERE TO BE M/S. NEETA ENTERPRISES 5 CONSTRUCTED ON THE AFORESAID PLOT OF LAND. WHEREAS ACCORDING TO REVISED BUILDING PLAN APPROVED BY LOCAL AUTHORITY IN 2003, SEVEN BUILDINGS WERE TO BE CONSTRUCTED. THE POSSESSION OF THE LAND WAS TAKEN BY THE ASSESSEE IN THE YEAR 2003 AND THEREAFTER ASSESSEE GOT REVISED BUILDING P LAN APPROVED. COPIES OF BUILDING PLANS WERE ALSO SUBMITTED AND IT WAS CONTE NDED THAT FROM ALL THESE FACTS IT IS CLEAR THAT NO EXPENDITURE COULD HAVE BE EN INCURRED ON THE DEVELOPMENT AND CONSTRUCTION OF REVISED HOUSING PR OJECT BY THE ASSESSEE FIRM BEFORE TAKING POSSESSION OF THE PLOT IN THE YEAR 20 03. REFERENCE WAS MADE TO CERTAIN JUDICIAL PRONOUNCEMENTS WHICH INTER ALIA IN CLUDE DECISION OF TRIBUNAL IN THE CASE OF NIRMITI CONSTRUCTION VS. DCIT, 95 TT J 1117 (PUNE) IN WHICH SIMILAR ISSUE WAS INVOLVED. IN THE SAID CASE CERTAI N EXPENSES WERE INCURRED IN RESPECT OF PROJECT BEFORE 1/10/1998 I.E. A SUM OF R S.6,000/- TOWARDS ACQUIRING OF THE LAND AND RS.1140/- TOWARDS POOJA ETC. AND I T WAS HELD BY THE TRIBUNAL THAT THE PROJECT DID NOT COMMENCE BEFORE 1/10/1998 . 5. VARIOUS OTHER CONTENTIONS WERE ALSO RAISED TO CONTE ND THAT THE ASSESSEE WAS ELIGIBLE TO GET DEDUCTION UNDER SECTION 80IB(1) AS IT HAS FULFILLED ALL THE CONDITIONS LAID DOWN IN SECTION 80IB. IT WAS SUBMIT TED THAT THE IOD OBTAINED ON 28 TH NOVEMBER, 1992 HAD LAPSED AND IT WAS REVALIDATED U PTO 27 TH NOVEMBER, 1993. PART OCCUPATION CERTIFICATE SUBMITTED BY THE ASSESSEE WAS ALSO ISSUED VIDE LETTER DATED 18 TH FEBRUARY, 2006. ON THE BASIS OF THE SAID OCCUPATIO N CERTIFICATE THE ASSESSEE HAS CLAIMED DEDUCTION UNDE R SECTION 80IB(10) AS THE WINGS A, B AND C OF THE HOUSING PROJECT WORK WAS CO MPLETED. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND DISALLOWED THE DEDUCTION ON THE GROUND THAT THE PROJECT WAS STARTED BY COMME NCEMENT CERTIFICATED DATED 28 TH NOVEMBER, 1992 ISSUED TO M/S. GAS PROPERTY DEVELOP ERS, THEREFORE, THE ASSESSEE DOES NOT FULFILLED THE CONDITIONS LAID DOW N IN SECTION 80IB(10) ACCORDING TO WHICH FOR BEING ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) THE PROJECT MUST HAVE TO BE STARTED ON OR AFTER 1 ST OCTOBER, 1998. M/S. NEETA ENTERPRISES 6 6. NON-GRANTING OF DEDUCTION UNDER SECTION 80IB(10) WA S CHALLENGED IN AN APPEAL FILED BEFORE THE CIT(A). THE ASSESSEES SUBM ISSION BEFORE THE CIT(A) HAVE BEEN SUMMARISED BY THE LEARNED CIT(A) AND READ AS U NDER: - 1. THE APPELLANT IS A PARTNERSHIP FIRM, ENGAGED IN THE DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT. 2. THE APPELLANT FILED ITS RETURN OF INCOME FOR THE AY 2006-07 ON 31.10.2006 DECLARING TOTAL INCOME AT NIL, AFTER CLA IMING DEDUCTION UNDER SECTION 80-IB(10) OF THE INCOME-TAX ACT, 1961 (THE ACT), TO THE EXTENT OF RS.7,18,02,721 3. THE CASE OF THE APPELLANT FOR THE AY 2006-07 WAS SELECTED FOR SCRUTINY. 4. THE ASSESSING OFFICER (AO) CALLED FOR A NUMBER O F DETAILS FROM THE APPELLANT, IN REGARD TO THE AFORESAID CLAIM OF THE APPELLANT, UNDER SECTION 80-IB(10) OF THE ACT. 5. THE APPELLANT HAD PURCHASED A PLOT OF LAND, BEAR ING CS NO. 1/44, 1/28, 44 OF PAREL SEWREE DIVISION, OFF. DR. BABASAH EB AMBEDKAR ROAD, LALBAUG, MUMBAI AND STARTED DEVELOPING AND CO NSTRUCTING A HOUSING PROJECT THERE, IN THE FINANCIAL YEAR (FY) 2 003-04. THE RELEVANT DETAILS IN THIS REGARD ARE AS FOLLOWS: (I) THE AFORESAID PLOT OF LAND WAS PURCHASED FROM M /S. GAS PROPERTY DEVELOPERS, VIDE A DEVELOPMENT AGREEMENT, DATED 10.7.2003. (II) THE ORIGINAL LAY-OUT PLAN FOR THE CONSTRUCTION OF TWO BUILDINGS ON THE AFORESAID PLOT OF LAND WAS APPROVED BY THE LOCA L AUTHORITY ON 28.11.1992. ACCORDINGLY, ONLY TWO BUILDINGS WERE TO BE CONSTRUCTED ON THE AFORESAID PLOT OF LAND. HOWEVER, THE ORIGINAL OWNERS, VIZ. M/S. GAS PROPERTY DEVELOPERS COULD NOT START CONSTRUCTION ACTIVITY, AS PER THE AFORESAID LAY-OUT PLAN, ON ACCOUNT OF CERTAIN DIFFICULTIES/PROBLEMS. (III) AFTER TAKING POSSESSION OF THE AFORESAID PLOT OF LA ND, VIDE THE AFORESAID DEVELOPMENT AGREEMENT, THE APPELLANT FURN ISHED A REVISED LAY-OUT PLAN BEFORE THE LOCAL AUTHORITY, WH ICH WAS APPROVED BY THE LOCAL AUTHORITY IN 2003. AS PER THE REVISED LAY- OUT PLAN, SEVEN BUILDINGS ARE TO BE CONSTRUCTED ON THE AFORESAID PLOT OF LAND. (IV) IN THIS REGARD, IT IS SIGNIFICANT TO NOTE THAT THE APPELLANT FIRM HAD TAKEN POSSESSION OF THE AFORESAID PLOT OF LAND IN THE FY 2003-04 AND THEREAFTER, GOT THE REVISED BUILDING PL AN APPROVED. M/S. NEETA ENTERPRISES 7 (V) AS ALREADY POINTED OUT, NO CONSTRUCTION ACTIVITY WA S CARRIED OUT BY M/S. GAS PROPERTY DEVELOPERS, AS PER THE FIRST L AY-OUT PLAN, DATED 28.11.1992, ACCORDING TO WHICH TWO BUILDINGS WERE TO BE CONSTRUCTED ON THE AFORESAID PLOT OF LAND. IT IS, T HUS CLEAR THAT AS PER THE ORIGINAL LAY OUT PLAN, NO DEVELOPMENT/CO NSTRUCTION, WHATSOEVER, WAS CARRIED OUT. (VI) IT WAS ONLY AFTER THE APPELLANT TOOK POSSESSION OF THE AFORESAID PLOT OF LAND, THAT THE LAY-OUT PLAN WAS REVISED, AC CORDINGLY WHICH SEVEN BUILDINGS ARE TO BE CONSTRUCTED ON THE AFORESAID PLOT OF LAND. (VII) IT IS, THUS, ABSOLUTELY CLEAR THAT NO CONSTRUCTION ACTIVITY WAS CARRIED OUT ON THE AFORESAID PLOT OF LAND BY M/. GA S PROPERTY DEVELOPERS AND IT WAS ONLY AFTER THE POSSESSION OF THE AFORESAID LAND WAS TAKEN OVER BY THE APPELLANT, VID E DEVELOPMENT AGREEMENT, DATED 10.7.2003, THAT THE DEVELOPMENT/CONSTRUCTION ACTIVITY WAS STARTED ON TH E AFORESAID PLOT OF LAND. (VIII) THEREFORE, IT IS CLEAR THAT NO DEVELOPMENT/CONSTRUC TION ACTIVITY HAD COMMENCED ON THE AFORESAID PLOT OF LAND BEFORE 10.07.203, WHICH CLEARLY IMPLIES THAT THE DEVELOPMENT AND CONS TRUCTION ACTIVITY BY THE APPELLANT, IN RESPECT OF THE AFORES AID HOUSING PROJECT WAS STARTED AFTER 1.10.1998. IT WAS ALSO SUBMITTED BEFORE THE CIT(A) THAT THE DE TAILS FURNISHED BEFORE THE AO BY M/S. GAS PROPERTY DEVELOPERS DID NOT CONTAIN ANY ITEM FROM WHICH IT CAN BE INFERRED THAT THEY HAD INCURRED ANY PROJECT DEVELOP EXPENDITURE. THE CHART OF EXPENDITURE SUBMITTED BY THE SAID CONCERN WILL CLEA RLY SHOW THAT THE EXPENSES WERE IN THE NATURE OF; (I) MUNICIPAL TAXES, (II) AR CHITECTS FEES FOR THE APPROVAL OF THE LAYOUT PLAN, (III) INTEREST PAYABLE ON THE LOAN OBTAINED FOR THE PURCHASE OF THE PLOT OF LAND, AND (IV) SALARY, BONUS AND SECURI TY CHARGES. THE ONLY EXPENDITURE ON CONSTRUCTION INCURRED BY M/S. GAS PR OPERTY DEVELOPERS WERE IN THE FORM OF BRICKS, CEMENT AND SAND TO THE EXTENT O F ` 13,300/-, ` 123,950/- AND ` 12,963/- RESPECTIVELY, WHICH WERE INCURRED ON THE R EPAIR OF BOUNDARY WALL OF THE AFORESAID PLOT OF LAND AND THESE EXPENDITURE WE RE INCURRED BEFORE 31 ST MARCH, 1994. THUS IT WAS PLEADED THAT FROM THE EXPE NSES INCURRED BY M/S. GAS PROPERTY DEVELOPERS IT CAN BE SEEN THAT THESE W ERE FOR THE BUSINESS ACTIVITY CARRIED ON BY THEM AND NO PART OF THE EXPENSES DEBI TED BY THEM RELATE TO ANY M/S. NEETA ENTERPRISES 8 DEVELOPMENT/CONSTRUCTION ACTIVITY EXCEPT THE MINOR EXPENDITURE INCURRED ON BRICK, CEMENT AND SAND FOR THE REPAIR OF THE BOUNDA RY WALL. IT WAS ALSO SUBMITTED THAT NO CONSTRUCTION WAS DONE AS PER THE ORIGINAL LAYOUT PLAN AND ALL THE CONSTRUCTION DONE IN THE PROJECT IS AS PER THE REVISED LAYOUT PLAN APPROVED IN THE FINANCIAL YEAR 2003-04 WHICH RELATE TO SEVEN BUILDINGS AND IN WHICH YEAR THE REVISED HOUSING PROJECT WORK WAS COMMENCED. IT WAS FURTHER SUBMITTED THAT NUMBER OF NO OBJECTION CERTIFICATES HAD TO BE TAKEN BEFORE COMMENCEMENT OF THE PROJECT AND THE ASSESSEE HAD OBTAINED THE FO LLOWING CERTIFICATES FROM THE LOCAL AUTHORITY FOR COMMENCEMENT OF THE PROJECT:- I. ULC PERMISSION REVALIDATED ON 23.05.2003 II. NOC FROM CHIEF FIRE OFFICER LETTER DATED 11.07.2003 III. NOC FROM TREE AUTHORITY LETTER DATED 20.08.2003 IV. NOC FROM RAILWAY AUTHORITY RECEIVED AS PER LETTER D ATED 10.09.2003 V. NOC TO CARRY THE WORK FOR STORM WATER DRAIN LETTER DATED 21.10.2003 VI. NOC FROM HYDRAULIC ENGINEER (HE) DATED 27.02.2005 IT WAS SUBMITTED THAT WITHOUT OBTAINING THE AFOREME NTIONED NO OBJECTION CERTIFICATES, NO DEVELOPMENT/CONSTRUCTION ACTIVITY COULD BE COMMENCED BY THE ASSESSEE. ALL THESE NO OBJECTION CERTIFICATES WERE TAKEN IN THE YEAR 2003 AND THUS IT IS CLEAR THAT DEVELOPMENT/CONSTRUCTION ACTI VITY WAS STARTED IN 2003. IT WAS ALSO SUBMITTED THAT CERTAIN MUNICIPAL CHARGES W ERE TO BE INCURRED BEFORE STARTING THE HOUSING PROJECT IN THE NATURE OF; (I) DEVELOPMENT CHARGES, (II) EXTRA WATER SEWERAGE CHARGES, (III) BALCONY ENCLOSURE CHA RGES AND ALL THESE CHARGES WERE PAID BY THE ASSESSEE ONLY AFTER 10 TH JULY, 2003, I.E. AFTER EXECUTION OF THE DEVELOPMENT AGREEMENT. IT WAS SUBMITTED THAT BESIDE S ALL ABOVE, BEFORE STARTING THE HOUSING PROJECT, A PROJECT STRUCTURAL ENGINEER IS TO BE APPOINTED, WHICH IN THE PRESENT CASE WAS APPOINTED VIDE APPOIN TMENT LETTER DATED 28 TH JUNE, 2003 AND THE NAME OF THE ENGINEER WAS MR. MR. PATIL. M/S. NEETA ENTERPRISES 9 7. IT WAS FURTHER SUBMITTED THAT VIDE CLAUSE (E) OF T HE DEVELOPMENT AGREEMENT DATED 10 TH JULY, 2003 IT WAS CLEARLY MENTIONED THAT THE EARLI ER IOD, CC, WHICH WERE TAKEN BY M/S. GAS PROPERTY DEVELOPER S HAD ALREADY LAPSED AND THE ASSESSEE HAD TO SUBMIT FRESH PROPOSAL FOR DEVEL OPMENT OF THE AFORESAID PROPERTY TO THE CONCERNED AUTHORITIES. 8. FROM THE AFOREMENTIONED FACTS IT WAS SUBMITTED THAT IT IS ABSOLUTELY CLEAR THAT THE DEVELOPMENT/CONSTRUCTION ACTIVITY IN RESPE CT OF THE PRESENT HOUSING PROJECT WAS STARTED ONLY AFTER SIGNING OF THE DEVEL OPMENT AGREEMENT DATED 10 TH JULY, 2003, I.E. MUCH AFTER THE STATUTORY DATE OF C OMMENCEMENT, I.E. 1 ST OCTOBER, 1998 AND THUS IT WAS PLEADED THAT THE CLAI M OF THE ASSESSEE HAS WRONGLY BEEN REJECTED BY THE AO. 9. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D AFTER PERUSING THE DOCUMENTS AND EVIDENCES SUBMITTED BY THE ASSESSEE T HE LEARNED CIT(A) HAS RETURNED A FINDING THAT AS PER THE DOCUMENTS PLACED ON RECORD THE SANCTION OBTAINED BY THE EARLIER DEVELOPER HAD LAPSED AND FR ESH APPROVAL ALONGWITH CHANGED PROJECT REPORT WAS OBTAINED, WHICH WAS TOTA LLY DIFFERENT THAN THE EARLIER PROJECT. THE EXPENDITURE INCURRED BY M/S. G AS PROPERTY DEVELOPERS OF ` 13,300/-, ` 13,950/- AND ` 12,963/- ON BRICKS, CEMENT AND SAND FOR REPAIR OF THE BOUNDARY WALL DO NOT AMOUNT TO CONSTRUCTION DON E AT ALL BY THE EARLIER OWNER. THE POSSESSION OF THE LAND IN QUESTION WAS T AKEN OVER BY THE ASSESSEE VIDE DEVELOPMENT AGREEMENT DATED 10 TH JULY, 2003 AND DEVELOPMENT WAS STARTED AFTER THAT DATE ONLY. AS PER THE ORIGINAL P LAN SUBMITTED BY THE EARLIER DEVELOPER ONLY TWO BUILDINGS WERE TO BE CONSTRUCTED ON THE LAND IN QUESTION BUT AS PER THE NEW PLAN OF THE PRESENT OWNER SEVEN BUILDINGS WERE TO BE CONSTRUCTED. THEREFORE, AFTER CONSIDERING VARIOUS F ACTS AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE THE LEARNED CIT(A) HAD CO NCLUDED THAT THE AO WAS WRONG IN HIS CONCLUSION THAT THE DEVELOPMENT OF PRO JECT WORK WAS STARTED BEFORE 1 ST OCTOBER, 1998 AND THE ASSESSEE DID NOT FULFIL THE CONDITION LAID DOWN IN SECTION 80IB(1). IT IS FURTHER OBSERVED BY THE L EARNED CIT(A) THAT THOUGH THE M/S. NEETA ENTERPRISES 10 ASSESSEE HAS RELIED UPON VARIOUS CASE LAW IN SUPPOR T OF HIS GROUNDS OF APPEAL BUT THE CASE OF THE ASSESSEE IS VERY CLEAR ON THE B ASIS OF THE FACTS AND EVIDENCES PLACED ON RECORD AND AFTER GOING THROUGH THOSE RECO RDS THERE REMAINS NO DOUBT THAT THE DEVELOPMENT OF THE PROJECT WAS STARTED AFT ER 1 ST OCTOBER, 1998. THE LEARNED CIT(A) HAS DIRECTED THE AO TO ALLOW THE CLA IM OF DEDUCTION UNDER SECTION 80IB(10) TO THE ASSESSEE AND HAS ALLOWED TH E APPEAL FILED BY THE ASSESSEE. 10. THE DEPARTMENT IS AGGRIEVED WITH THE AFOREMENTIONED FINDINGS RECORDED BY THE LEARNED CIT(A) AND HAS RAISED THE GROUNDS OF APPEAL, WHICH HAVE ALREADY BEEN REPRODUCED. 11. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY THE L EARNED D.R. THAT THE IOD OBTAINED BY M/S. GAS PROPERTY DEVELOPERS ON 28 TH NOVEMBER, 1992 WAS REVALIDATED AND ON THE BASIS OF THAT ONLY THE CONST RUCTION HAS DONE. M/S. GAS PROPERTY DEVELOPERS HAD INCURRED HUGE EXPENSES ON T HE PROJECT WHICH WAS SHOWN BY THEM IN THEIR BALANCE SHEET AS WORK-IN-PRO GRESS. THE AO HAD CALLED FOR INFORMATION FROM M/S. GAS PROPERTY DEVELOPERS A ND AFTER EXAMINING THE DETAILS THE AO HAS FOUND THAT HUGE EXPENDITURE OF ` 1,89,46,496/- WHERE INCURRED BY M/S. GAS PROPERTY DEVELOPERS AND THUS T HE PROJECT CONSTRUCTED BY THE ASSESSEE HAS COMMENCED MUCH PRIOR TO 01.01.1998 . THE LEARNED D.R. SUBMITTED THAT ONE OF THE CONDITIONS LAID DOWN IN S ECTION 80IB(10) IS THAT TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) THE P ROJECT MUST BE STARTED ON OR AFTER 1 ST OCTOBER, 1998. THEREFORE, THE LEARNED D.R. PLEADED THAT THE AO WAS RIGHT IN COMING TO THE CONCLUSION THAT THE HOUSING PROJECT DEVELOPED BY THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80IB(10). THE LEARNED D.R. SUBMITTED THAT THE LEARNED CIT(A) HAS WRONGLY DIRECTED THE AO TO ALLOW THE DEDUCTION UNDER SECTION 80IB(10) AND HIS ORDER SHOULD BE SET ASIDE AND THAT OF THE AO BE RESTORED. 12. ON THE OTHER HAND, THE LEARNED A.R. SUBMITTED THAT THE PROJECT APPROVED ON 28 TH FEBRUARY, 1992 WAS REGARDING CONSTRUCTION OF TWO B UILDING. THE M/S. NEETA ENTERPRISES 11 APPROVAL DATED 28 TH FEBRUARY, 1992 HAD LAPSED AND THE FRESH APPROVAL OBTAINED BY THE ASSESSEE WAS IN RESPECT OF AN ENTIR ELY DIFFERENT PROJECT, WHICH CONSISTED OF SEVEN WINGS. HE SUBMITTED THAT THE FAC T REGARDING EARLIER PROJECT HAVING BEEN LAPSED IS RECORDED IN THE DEVELOPMENT A GREEMENT AND IT HAS ALSO BEEN RECORDED IN THE AGREEMENT THAT THE ASSESSEE WI LL OBTAIN FRESH APPROVAL AT ITS OWN COST. THUS, IT WAS SUBMITTED BY THE LEARNED A.R. THAT THE APPROVAL OBTAINED BY THE ASSESSEE WAS IN RESPECT OF AN ENTIR ELY DIFFERENT PROJECT, WHICH WILL BE CONSIDERED TO BE A FRESH PROJECT. HE SUBMIT TED THAT THE ASSESSEE HAS ENTERED INTO DEVELOPMENT AGREEMENT ONLY ON 10 TH JULY, 2003 AND PRIOR TO THAT NO EXPENDITURE, WHATSOEVER, IN RESPECT OF THE HOUSI NG PROJECT WAS INCURRED BY THE ASSESSEE OR BY M/S. GAS PROPERTY DEVELOPERS. HE SUBMITTED THAT THE LEARNED CIT(A) HAS RECORDED A FINDING THAT THE ONLY EXPENSES DEBITED BY M/S. GAS PROPERTY DEVELOPERS WHICH COULD BE RELATED TO C ONSTRUCTION ARE MINOR EXPENSES OF ` 13,300/-, ` 13,950/- AND ` 12,973/- RELATING TO BRICKS, CEMENT AND SAND RESPECTIVELY AND THESE WERE IN RESPECT OF REPA IR OF THE BOUNDARY WALL AND THUS THE AO WAS WRONG IN COMING TO THE CONCLUSION T HAT THE PROJECT WAS COMMENCED BY M/S. GAS PROPERTY DEVELOPERS. HE SUBMI TTED THAT PRIOR TO THE COMMENCEMENT OF THE PROJECT NOT ONLY APPROVAL HAS T O BE OBTAINED BUT VARIOUS NO OBJECTION CERTIFICATES HAVE ALSO TO BE OBTAINED WITHOUT WHICH IT IS NOT POSSIBLE TO COMMENCE THE DEVELOPMENT. HE SUBMITTED THAT BEFORE THE CIT(A) THE DETAILS OF ALL THESE NO OBJECTION CERTIFICATES WERE MENTIONED AND THESE ARE RECORDED IN PARA 8 OF THE ORDER OF THE CIT(A). APAR T FROM THOSE NO OBJECTION CERTIFICATES CERTAIN MUNICIPAL CHARGES WERE ALSO TO BE PAID, WHICH HAVE BEEN PAID BY THE ASSESSEE ONLY AFTER ENTERING INTO DEVEL OPMENT AGREEMENT AND APPOINTMENT OF STRUCTURAL ENGINEERS WAS ALSO DONE O N 28 TH JUNE, 2003. THUS IT WAS SUBMITTED BY THE LEARNED A.R. THAT THE LEARNED CIT(A) HAS RIGHTLY HELD THAT THE PROJECT OF THE ASSESSEE HAD COMMENCED AFTER 1 ST OCTOBER, 1998 AND HIS ORDER IS BASED UPON THE EVIDENCE SUBMITTED BY THE A SSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO BEFORE THE LEARN ED CIT(A). M/S. NEETA ENTERPRISES 12 13. THE LEARNED A.R. FURTHER RELIED UPON THE FOLLOWING DECISIONS TO CONTEND THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER S ECTION 80IB(10) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE: - (I) NIRMITI CONSTRUCTION VS. DCIT (2005) 4 SOT 383 (PUN E) (SUPRA) (II) ACIT VS. SHREE OSTWAL BUILDERS LTD. DECISION OF T HE F BENCH, MUMBAI ITAT DATED 28 TH FEBRUARY, 2011 IN ITA NO. 2144 & 2153/MUM/2010. CO PY OF THE ORDER PLACED AT PAGES 13 TO 25 OF THE PAPER BOO K. IN THE SAID CASE THE PROJECT WAS ORIGINALLY SANCTIONED BY CIDCO VIDE LET TER DATED 3 RD AUGUST, 1998 AND COMMENCEMENT CERTIFICATE WAS ALSO ISSUED SIMULT ANEOUSLY AND THE AO DISALLOWED DEDUCTION UNDER SECTION 80IB(10) ON THE GROUND THAT THE PROJECT DID NOT COMMENCE ON AFTER 1 ST OCTOBER, 1998 IN RESPECT OF OSTWAL NAGIRI PROJECT. THE AO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE SAID PROJECT, WHICH WAS ORIGINALLY APPROVED BY CIDCO WAS PURCHASED BY THE A SSESSEE VIDE AGREEMENT DATED 20 TH AUGUST, 2001 AND AT THE TIME OF PURCHASE THE LAND WAS VACANT WITHOUT ANY STRUCTURE CONSTRUCTED THEREON. THE GROU ND TAKEN BY THE AO FOR NOT ACCEPTING THE STAND OF THE ASSESSEE WAS THAT THE PH RASE COMMENCED DEVELOPMENT USED IN SECTION 80IB(10) MEAN START OF PROJECT AND THE INITIAL WORKS WHICH ARE REQUIRED TO BE DONE SUCH AS PLANNIN G, OBTAINING APPROVAL OF THE COMPETENT AUTHORITIES, ETC. ARE INTEGRAL PART O F THE SAID COMMENCEMENT OF THE PROJECT AND ITS DEVELOPMENT AND THUS THE DEDUCT ION WAS DISALLOWED BY THE AO. ON THESE FACTS IT WAS HELD BY THE TRIBUNAL THAT THE LAND ON WHICH THE SAID PROJECT WAS TO BE CONSTRUCTED WAS PURCHASED BY THE ASSESSEE IN THE MONTH OF AUGUST, 2001 AND TILL THE DATE OF SAID PURCHASE THE RE WAS NO CONSTRUCTION ACTIVITY WHICH HAD COMMENCED IN RESPECT OF OSTWAL N AGRI PROJECT. AS A MATTER OF FACT, THE ASSESSEE COMPANY HAD REVISED THE BUILD ING PLAN, WHICH WERE ORIGINALLY PREPARED BY M/S. SONAL VENTURE AND APPRO VED BY CIDO AND GOT SANCTIONED BY CIDO ONLY ON 4 TH JANUARY, 2002. ONLY AFTER THAT DATE THE ASSESSEE STARTED CONSTRUCTION WORK ON OSTWAL NAGRI PROJECT. AS PER THE RELEVANT PROVISION, DEDUCTION UNDER SECTION 80IB(10) IS ALLO WABLE IN THE CASE OF AN M/S. NEETA ENTERPRISES 13 UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT IF SUCH UNDERTAKING HAS COMMENCED DEVELOPMENT AND CONSTRUCTION OF THE SAID HOUSING PROJECT ON OR AFTER 1 ST OCTOBER 1998. IT WAS OBSERVED THAT IN THE PRESENT CASE, THE ASSESSEE COMPANY IS SUCH AN UNDERTAKING WHICH HAS DEVELOPED AND COMPLETED THE HOUSING PROJECT AND THE RELEVANT LAND HAS BEEN PURC HASED BY IT ONLY IN THE MONTH OF AUGUST, 2001, THEREFORE, IT CANNOT BE SAID THAT IT HAS COMMENCED DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT PRI OR TO 1 ST OCTOBER, 1998. IT WAS HELD THAT THE LEARNED CIT(A) WAS RIGHT IN HOLDI NG THAT THE OSTWAL NAGRI PROJECT COULD HAVE COMMENCED BY THE ASSESSEE COMPAN Y ONLY AFTER PURCHASE OF LAND IN THE MONTH OF AUGUST, 2001 AND THE ASSESSEE WAS HELD TO BE ENTITLED FOR DEDUCTION UNDER SECTION 80IB(10). (III) SMT. MANJU GUPTA VS. ACIT (2011) 15 TAXMANN.COM 2 87 (MUM), COPY PLACED ON PAGES 202 TO 217 OF THE PAPER BOOK. IN TH E SAID CASE THE ASSESSEE WAS TO START A HOUSING PROJECT FOR WHICH AN APPLICA TION WAS MOVED FOR ISSUANCE OF COMMENCEMENT CERTIFICATE WHICH WAS ISSUED ON 15 TH MAY, 1991. THE ASSESSEE COULD NOT START CONSTRUCTION AND THE COMME NCEMENT CERTIFICATE STOOD LAPSED. ANOTHER COMMENCEMENT CERTIFICATE WAS ISSUED , WHICH WAS ALSO LAPSED. FINALLY, CONSTRUCTION WORK WAS STARTED IN THE YEAR 2002 IN PURSUANCE OF COMMENCEMENT CERTIFICATE DATED 2 ND MARCH, 2001. THE AO DENIED DEDUCTION ON THE GROUND THAT THE PROJECT HAD COMMENCED PRIOR TO 01.10.1998 AS THE FIRST COMMENCEMENT CERTIFICATE WAS ISSUED ON 15 TH MAY, 1991. ON THESE FACTS IT WAS HELD BY THE TRIBUNAL THAT DATE OF COMMENCEMENT OF D EVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT WAS DATE WHEN THE A SSESSEE ACTUALLY STARTED AND CARRIED OUT WORK OF DEVELOPMENT AND CONSTRUCTIO N AND NOT DATE WHEN PROJECT WAS FIRST APPROVED BY LOCAL AUTHORITY. (IV) VANDANA PROPERTIES VS. ACIT (2009) 31 SOT 392 (MU M) (V) CIT VS. VANDANA PROPERTIES 353 ITR 36 WHEREIN THE IR LORDSHIPS HAVE HELD THAT CONSTRUCTION OF ANOTHER BUILDING ON THE S AME PLOT OF LAND FOR WHICH SEPARATE APPROVAL WAS GRANTED BY THE MUNICIPAL AUTH ORITY WILL BE CONSIDERED AS M/S. NEETA ENTERPRISES 14 A SEPARATE PROJECT AND NOT EXTENSION OF THE EARLIER HOUSING PROJECT AND THUS WILL BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(1) SEP ARATELY. (VI) ITO VS. ASHRAY PREMISES (P.) LTD. (2012) 27 TAXMANN .COM 149 (MUM), COPY PLACED AT PAGES 238 TO 246 OF THE PAPER BOOK. IN THE SAID CASE HE FIRST LAYOUT PLAN WAS APPROVED ON 28.08.1997 AND THAT SOM E EXPENDITURES WERE ALSO INCURRED TOWARDS THE SAID PROJECT. THEREFORE, THE AO HELD THAT THE PROJECT HAD COMMENCED BEFORE 1 ST OCTOBER, 1998 AND HE HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE AND THE ORDER OF THE CIT(A) WAS UPHELD BY THE TRIBUNAL ON THE GROUND THAT CONSTRUCTION OF THE HOUSING PROJECT WAS IN ACCORDANCE WITH THE PLAN APPROVED ON 22 ND JANUARY, 2002. EARLIER EXPENDITURE INCURRED WERE N OT ON DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT AND, THEREFORE, THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION. 14. THUS, IT WAS PLEADED BY THE LEARNED A.R. THAT RELI EF HAS RIGHTLY BEEN GRANTED BY THE LEARNED CIT(A) AND HIS ORDER SHOULD BE UPHELD. 15. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTION S HAVE CAREFULLY BEEN CONSIDERED. THE ASSESSEE BECAME ENTITLED TO DEVELOP THE IMPUGNED PLOT VIDE DEVELOPMENT AGREEMENT DATED 10 TH JULY, 2003. IN THE DEVELOPMENT AGREEMENT, COPY OF WHICH IS FILED IN THE PAPER BOOK AT PAGES 1 TO 32, AS PER CLAUSE (E) OF THE RECITAL, I.E. PAGE 5 OF THE AGREEMENT, THE VALIDITY OF THE SANCTIONED PLANS ALONGWITH IOD AND CC WHICH WERE ISSUED IN THE YEAR 1992 AND 1993 HAD LAPSED AND AS PER THAT CLAUSE THE OWNER OF THE PLOT HAVE INFORMED THE DEVELOPER THAT THE DEVELOPER WILL HAVE TO SUBMIT FRESH PROPOS AL FOR DEVELOPMENT OF THE SAID PROPERTY TO THE AUTHORITIES OF BRIHAN MUMBAI M AHANAGAR PALIKA AND ALL SUCH OTHER AUTHORITIES AS MAY BE NECESSARY AND TO G ET THE SAME SANCTIONED AS MENTIONED HEREIN. THE DEVELOPERS SHALL BE ENTITLED EITHER TO GET THE SAID PLANS ALONGWITH IOD AND CC REVALIDATED OR TO SUBMIT A FRE SH PLAN TO THE AUTHORITIES OF BRIHAN MUMBAI MAHANAGAR PALIKA AND ALL SUCH AUTH ORITIES AS MAY BE NECESSARY AND TO GET THE SAME SANCTIONED AND TO OBT AIN IOD AND CC AT THE COST M/S. NEETA ENTERPRISES 15 OF THE DEVELOPER. THUS, IT IS CLEAR FROM THE AFOREM ENTIONED CLAUSE THAT WHEN THE ASSESSEE ENTERED INTO DEVELOPMENT AGREEMENT WITH TH E OWNER OF THE PLOT AT THAT POINT OF TIME THE IOD AND CC AND OTHER SANCTIO NS ISSUED IN THE NAME OF THE OWNER OF THE PROPERTY HAD LAPSED AND THE ASSESS EE COMPANY HAD TO SUBMIT FRESH APPLICATIONS FOR REVALIDATION OF EARLIER IOD AND CC AND PLANS, ETC. OR TO SUBMIT FRESH PLAN. IT HAS BEEN MENTIONED THAT THE E ARLIER SANCTION WAS FOR TWO BUILDING WHEREAS THE FRESH LAYOUT PLAN GOT SANCTION ED BY THE ASSESSEE WAS IN RESPECT OF SEVEN WINGS OF THE PROJECT. ACCORDING TO THE FINDINGS RETURNED BY THE LEARNED CIT(A), THE EARLIER LAYOUT PLAN WAS TOTALLY DIFFERENT FROM THE LAYOUT PLAN DEVELOPED BY THE ASSESSEE. THESE FINDINGS OF THE CI T(A) HAVE NOT BEEN CONTROVERTED. ACCORDING TO THE FINDINGS RECORDED BY THE LEARNED CIT(A), NUMBER OF NO OBJECTION CERTIFICATES WERE OBTAINED BY THE A SSESSEE AFTER ENTERING INTO THE DEVELOPMENT AGREEMENT. COPIES OF ALL THESE NO OBJEC TION CERTIFICATES, IOD AND CC WERE SUBMITTED. NO CONTRARY EVIDENCE HAS BEEN BR OUGHT ON RECORD TO CONTROVERT THESE FINDINGS RECORDED BY THE LEARNED C IT(A). SIMPLY ON THE BASIS OF THE IOD OBTAINED BY M/S. GAS PROPERTY DEVELOPERS, T HE AO HAS DRAWN AN INFERENCE THAT IT WAS CONTINUATION OF THE EARLIER P ROJECT. HOWEVER, THE PROJECT HAS TO BE SEEN VIS--VIS THE APPROVAL OBTAINED FOR IT AND COMMENCEMENT OF THE PROJECT. THE PROJECT COMMENCED AND DEVELOPED BY THE ASSESSEE IS NOT AS PER THE OLD PROJECT FOR WHICH APPROVAL WAS OBTAINED BY M/S. GAS PROPERTY DEVELOPERS ON 28 TH NOVEMBER, 1992. THE AO HAS ALSO RELIED UPON THE EXPENDITURE INCURRED BY M/S. GAS PROPERTY DEVELOPER S. THIS ISSUE HAS ALSO BEEN EXAMINED BY THE LEARNED CIT(A) AND A FINDING H AS BEEN RECORDED THAT OUT OF THE EXPENSES INCURRED BY M/S. GAS PROPERTY DEVEL OPERS CERTAIN MINOR EXPENSES WERE INCURRED, WHICH ARE ` 13,300/-, ` 13,950/- AND ` 12,963/- ON BRICKS, CEMENT AND SAND, WHICH WERE INCURRED PRIOR TO 31 ST MARCH, 1994 AND WERE IN RESPECT OF REPAIR OF THE BOUNDARY WALL. THE SE FINDINGS ARE ALSO NOT CONTROVERTED BY BRINGING ANY CONTRARY MATERIAL ON R ECORD. THUS, THESE EXPENSES ALSO CANNOT BE CONNECTED WITH THE PROJECT GOT APPRO VED BY THE ASSESSEE IN THE FINANCIAL YEAR 2003 AND ON THE BASIS OF THOSE EXPEN DITURE IT CANNOT BE SAID THAT M/S. NEETA ENTERPRISES 16 THE PROJECT DEVELOPED BY THE ASSESSEE IS CONTINUATI ON OF THE EARLIER PROJECT FOR WHICH APPROVAL WAS OBTAINED BY M/S. GAS PROPERTY DE VELOPERS ON 28 TH NOVEMBER, 1992. 16. IN THE CASE OF CIT VS. VANDANA PROPERTIES (SUPRA) T HE HON'BLE BOMBAY HIGH COURT HAS EXAMINED THIS ISSUE AND THEIR LORDSH IPS HAVE OBSERVED THAT CONSTRUCTION OF SEPARATE BUILDING CANNOT BE CONSIDE RED AS AN EXTENSION OF EARLIER HOUSING PROJECT WHERE NEITHER THE ASSESSEE HAS SOUGHT APPROVAL OF THE BUILDING PLAN AS EXTENSION OF EARLIER HOUSING PROJE CT NOR THE MUNICIPAL CORPORATION GRANTED APPROVAL FOR THE FRESH HOUSING PROJECT AS EXTENSION OF EARLIER HOUSING PROJECT. IT WAS ALSO HELD THAT IT W ILL NOT BE OPEN TO THE INCOME TAX AUTHORITIES TO CONTEND THAT THE APPROVAL TO THE HOUSING PROJECT GRANTED BY THE MUNICIPAL CORPORATION SUBSEQUENTLY CONSTITUTE E XTENSION OF HOUSING PROJECT WHICH WAS EARLIER APPROVED. IN THE SAID CASE THE AS SESSEE HAD CONSTRUCTED BUILDING A, B, C AND D ON A PLOT OF 2.36 ACRES OF L AND. SUBSEQUENTLY, PURSUANT TO THE ORDER PASSED BY THE STATE GOVERNMENT PERMITT ING CONVERSION OF STATUS OF LAND, ASSESSEE FIRM SUBMITTED BUILDING PLAN FOR CON STRUCTION OF BUILDING E WITH SEVERAL RESIDENTIAL UNITS. VIDE INTIMATION DATED 11 TH OCTOBER, 2002 THE LAYOUT PLAN FOR BUILDING E WAS APPROVED BY THE MUNICIPAL C ORPORATION AND ON THE SALE PROCEEDS OF E BUILDING THE ASSESSEE CLAIMED DEDUCT ION UNDER SECTION 80IB. HOWEVER, THE AO OBSERVED THAT APPROVAL FOR BUILDING E WAS GRANTED AS AN EXTENSION OF APPROVALS GRANTED FOR BUILDING A, B, C AND D, CONSTRUCTION OF WHICH WAS COMMENCED FROM 09.06.1993. THE AO DISALLO WED DEDUCTION ON THE GROUND THAT THE PROJECT COMMENCED PRIOR TO 01.10.19 98; IF THE PLOT WAS PROPORTIONATELY DIVIDED BY 5 BUILDINGS, THE PLOT PE RTAINING TO BUILDING E WOULD BE LESS THAN ONE ACRE. ON SUCH DENIAL THEIR LORDSHI PS HAD OBSERVED THAT EACH APPROVAL GRANTED SHOULD BE TAKEN AS SEPARATE APPROV AL UNLESS EITHER THE ASSESSEE CONSIDERED THE SUBSEQUENT APPROVAL AS EXTE NSION OR THE BMC HAS GRANTED SUCH APPROVAL AS EXTENSION. REFERENCE CAN B E MADE TO THE FOLLOWING OBSERVATIONS OF THEIR LORDSHIPS: - M/S. NEETA ENTERPRISES 17 21. THE FACT THAT THE LOCAL AUTHORITY, NAMELY THE MUNICIPAL CORPORATION APPROVED THE BUILDING PLAN FOR E BUILDING ON THE CONDITION THAT ALL THE OBJECTIONS RAISED IN THE INTIMATION OF DISAPPROVAL DATED 12 TH MAY 1993 RELATING TO THE EARLIER HOUSING PROJECT ON THE SAME PLOT OF LAND SHALL BE APPLICABLE AND SHOULD BE COMPLIED WITH, CANNOT BE A GROUND TO HOLD THAT E BUILDING IS EXTENSION OF THE EARLIER HOUSING PR OJECT BECAUSE THE EARLIER HOUSING PROJECT WAS COMPLETED PRIOR TO 1 ST OCTOBER 1998 AND THE HOUSING PROJECT FOR CONSTRUCTION OF E BUILDING WAS APPROV ED FOR THE FIRST TIME ON 11 TH OCTOBER 2002. NOWHERE IN THE INTIMATION FOR DISAPP ROVAL GRANTED FOR CONSTRUCTION OF E BUILDING ON 11 TH OCTOBER 2002, IT IS STATED THAT BUILDING E CONSTITUTE EXTENSION OF THE EARLIER HOUSING PRO JECT WHICH IS ALREADY COMPLETED. THE FACT THAT THE OBJECTIONS RAISED WHIL E APPROVING THE EARLIER HOUSING PROJECT ON THE SAME PLOT OF LAND WERE MADE APPLICABLE TO THE HOUSING PROJECT IN QUESTION, IT CANNOT BE INFERRED THAT THE HOUSING PROJECT IN QUESTION CONSTITUTES EXTENSION OF THE EARLIER HOUSI NG PROJECT. THEREFORE, IN THE FACTS OF THE PRESENT CASE, WHERE, NEITHER THE A SSESSEE HAD SOUGHT APPROVAL OF THE BUILDING PLAN FOR CONSTRUCTION OF E BUILDING AS EXTENSION OF THE EARLIER HOUSING PROJECT, NOR THE MUNICIPAL CORP ORATION HAS GRANTED APPROVAL FOR THE HOUSING PROJECT CONSISTING OF E BUILDING AS EXTENSION OF THE EARLIER HOUSING PROJECT, IT IS NOT OPEN TO THE INCOME-TAX AUTHORITIES TO CONTEND THAT APPROVAL TO THE HOUSING PROJECT GRANTE D BY THE MUNICIPAL CORPORATION ON 11H OCTOBER 2002 CONSTITUTES EXTENSI ON OF THE HOUSING PROJECT WHICH WAS APPROVED IN THE YEAR 1993. (EMPHASIS GIVEN BY US) 17. THE OTHER DECISIONS WHICH SUPPORT THE CASE OF THE ASSESSEE ARE AS UNDER: - (I) SMT MANJU GUPTA VS. ACIT (SUPRA). IN THE SAID C ASE THE FIRST COMMENCEMENT CERTIFICATE WAS ISSUED ON 15 TH MAY1991, WHICH HAD LAPSED AND ULTIMATELY FINAL CONSTRUCTION WAS STARTED IN THE YE AR 2002 IN PURSUANCE OF COMMENCEMENT CERTIFICATE DATED 2 ND MARCH, 2001 AND IT WAS HELD BY THE TRIBUNAL THAT THE DATE OF COMMENCEMENT OF DEVELOPME NT AND CONSTRUCTION OF THE HOUSING PROJECT IS THE DATE WHEN THE ASSESSEE A CTUALLY STARTED AND CARRIED OUT THE WORK OF DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT AND NOT THE DATE WHEN THE PROJECT WAS FIRST APPROVED BY THE LOCAL AUTHORITY. RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER:- 17. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE DATE OF COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT IS THE DATE WHEN THE ASSESSEE ACTUALLY STARTED AND CAR RIED OUT THE WORK OF DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT AND NOT THE DATE M/S. NEETA ENTERPRISES 18 WHEN THE PROJECT WAS FIRST APPROVED BY THE LOCAL AU THORITY. THE ORDER OF THE CIT(A) IS UPHELD, QUA, THIS ISSUE. (II) ITO VS. ASHRAY PREMISES (P.) LTD. (SUPRA). IN THE SAID CASE THE ASSESSEE STARTED THE HOUSING PROJECT AND TOOK APPROVAL FOR L AYOUT PLAN ON 22 ND JANUARY, 2002. IT WAS NOTICED BY THE AO THAT THE HOUSING PRO JECT WAS STARTED BEFORE 01.10.1998 AS THE DATE OF APPROVAL FOR LAYOUT PLAN WAS 28 TH AUGUST, 1997 AND THAT SOME EXPENDITURE WAS INCURRED TOWARDS THE SAID PROJECT AND IT WAS HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION. THE CI T(A) HELD THAT CONSTRUCTION OF THE HOUSING PROJECT WAS IN ACCORDANCE WITH THE PLAN APPROVED ON 22 ND JANUARY 2002 AND THAT THE EXPENDITURE INCURRED BEFORE 31 ST MARCH, 2002 WAS CLEARLY NOT ON THE DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJ ECT. THEREFORE, THE PROJECT COULD NOT BE SAID TO HAVE BEEN STARTED BEFORE 01.10 .1998. THE TRIBUNAL HAS UPHELD THE FINDINGS OF THE CIT(A) ON THE GROUND THA T THE EXPENDITURE RELATES TO COST OF LAND, CONSTRUCTION OF COMPOUND WALL AND MUN ICIPAL TAXES AND VARIOUS EXPENDITURE FOR PLAN APPROVAL WERE INCURRED. THESE EXPENSES CANNOT BE CONSIDERED TO HAVE BEEN INCURRED ON CONSTRUCTION AC TIVITY ON THE PROJECT AND THUS THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80IB(10). 18. IN THE PRESENT CASE ALSO NO EXPENDITURE, WHATSOEVER , HAS BEEN SHOWN TO BE INCURRED ON THE HOUSING PROJECT FOR WHICH APPROV AL WAS OBTAINED BY THE ASSESSEE AFTER ENTERING INTO DEVELOPMENT AGREEMENT, I.E. ON 10 TH JULY, 2003. THE EXPENDITURE INCURRED BY M/S. GAS PROPERTY DEVEL OPERS WERE NOT ON THE HOUSING PROJECT APPROVED BY THE MUNICIPAL CORPORATI ON ON THE REVISED LAYOUT 19. PLAN SUBMITTED BY THE ASSESSEE AFTER ENTERING INTO DEVELOPMENT AGREEMENT. THE EXPENDITURE INCURRED BY M/S. GAS PRO PERTY DEVELOPERS WAS ON REPAIR OF THE BOUNDARY WALL. THEREFORE, ON THE BASI S OF THE EARLIER APPROVAL OBTAINED BY M/S. GAS PROPERTY DEVELOPERS, WHICH HAS ALREADY LAPSED, AND THE EXPENSES WERE ON ACCOUNT OF REPAIR OF BOUNDARY WALL THE PROJECT CANNOT BE STATED TO HAVE BEEN COMMENCED BEFORE 01.10.1998. TH EREFORE, WE FIND NO INFIRMITY IN THE FINDINGS RECORDED BY THE LEARNED C IT(A) THAT THE AO WAS WRONG IN HOLDING THAT THE HOUSING PROJECT OF THE ASSESSEE HAD COMMENCED BEFORE M/S. NEETA ENTERPRISES 19 01.10.1998. WE UPHOLD HIS ORDER. SINCE THE FACTS AN D CIRCUMSTANCES IN ALL THE THREE CASES ARE IDENTICAL, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/06/2014 - ) +,! . / 0 04/06/2014 , ) 1 2 SD/- SD/- ( . / D.KARUNAKARA RAO ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; / DATED 04/06/2014 - - - - ) )) ) &*3 &*3 &*3 &*3 43!* 43!* 43!* 43!* / COPY OF THE ORDER FORWARDED TO : : : : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 5 ( ) / THE CIT(A)- 4. 5 / CIT 5. 361 &* , , / DR, ITAT, MUMBAI 6. 1 7 / GUARD FILE. - - - - / // / BY ORDER, '3* &* //TRUE COPY// 8 88 8 / 9 9 9 9 # # # # (DY./ASSTT. REGISTRAR) , / / / / ITAT, MUMBAI . . ./ VM/NP , SR. PS