Dy.Commissioner of Income Tax, Circle-3(1)(1), Ahmedabad V. M/s. Nila Infrastructure Ltd., Ahmedabad

ITA 3050/AHD/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7983 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 02-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Earning of tax free income; Cost of acquisition
• Section: 143(3); 14A

Judgement Text

ITA NO. 3050/AHD/2015 DCIT VS. NILA INFRASTRUCTURE LTD ASSESSMENT YEAR: 2011-12 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NO.3050/AHD/2015 ASSESSMENT YEAR: 2011-12 DY. COMMISSIONER OF INCOME-TAX .............. .... APPELLANT CIRCLE-3(1)(1), AHMEDABAD VS. NILA INFRASTRUCTURE LIMITED ..............................RESPONDENT 1 ST FLOOR, SAMBHAV HOUSE, OPP.CHIEF JUSTICE BUNGALOW, BODAKDEV, AHMEDABAD 380015 [PAN : AAACN 5059 K] APPEARANCES BY: SAURABH SINGH, FOR THE APPELLANT SN SOPARKAR & PARIN SHAH - FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 28.06.2018 DATE OF PRONOUNCING THE ORDER : 25.09.2018 O R D E R PER BENCH : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 13 TH AUGUST 2015 PASSED BY THE LEARNED CIT(A)-9, AHMEDA BAD IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TA X ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR 2011-12. 2. IN GROUND NO. 1, THE ASSESSING OFFICER HAS RAISE D THE FOLLOWING GRIEVANCE:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.3,00,814/- MADE ON ACCOUNT OF DISALLOWANCE U/S 1 4A OF THE ACT R.W. RULE 8D OF THE I.T. RULES. 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE IS SUE IS SQUARELY COVERED BY THE HONBLE JURISDICTIONAL HIGH COURTS JUDGMENT IN THE CASE OF CIT VS CORRTECH ENERGY PVT LTD [(2015) 372 ITR 97 (GUJ)] INASMUCH AS THE DISAL LOWANCE UNDER SECTION 14A CANNOT EXCEED THE EXEMPT INCOME. THIS IS PRECISELY WHAT TH E LEARNED CIT(A) HAS HELD. IN VIEW OF THE MATTER AND IN VIEW OF THE DECISION OF THE LE ARNED CIT(A) WHICH IS CLEARLY IN ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBLE JU RISDICTIONAL HIGH COURT (SUPRA), WE SEE NO REASONS TO INTERFERE IN THE MATTER. ITA NO. 3050/AHD/2015 DCIT VS. NILA INFRASTRUCTURE LTD ASSESSMENT YEAR: 2011-12 PAGE 2 OF 7 4. GROUND NO.1 IS THUS DISMISSED. 5. IN GROUND NOS. 2 & 3 THE ASSESSEE HAS RAISED FOL LOWING GRIEVANCES:- 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,58,94,590/- ON ACCOUNT OF DISALLOWANCE OF DEDU CTION U/S 80-IB(10) OF THE ACT. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT VARIOUS CHARGES SUCH AS AEC, AUDA, LEGAL ETC RECEIV ED BY THE ASSESSEE IS NOT PART OF THE INCOME ELIGIBLE FOR DEDUCTION U/S 80-IB (10) OF THE ACT. 6. TO ADJUDICATE ON THESE GROUNDS, ONLY A FEW MATER IAL FACTS NEED TO BE TAKEN NOTE OF. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER NOTED THAT DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAS RECEIVED A SUM OF RS.1,58,94,590/- TOWARDS CHARGES COLLECTED FROM THE CUSTOMERS FOR AEC, AUDA, LEGAL CHARGES ETC. THE ASSESSING OFFICER WAS OF THE VIEW THAT THESE RECEIPTS ARE NOT ELIGIBLE FOR BEING INCLUDED IN THE PROFITS ELIGIBLE FOR DEDU CTION UNDER SECTION 80-IB(10). AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE LEARNED CIT(A) WHO REVERSES THE ACTION OF THE ASSESSING OFFICER BY OBS ERVING AS FOLLOWS:- I HAVE CONSIDERED THE OBSERVATIONS OF THE A.O. WIT H RESPECT TO DISALLOWANCE OF DEDUCTION U/S.80IB(10) OF THE I.T. ACT WITH RESPECT TO THE CHARGES COLLECTED FROM THE CUSTOMERS FOR AHMEDABAD ELECTRICITY COMPANY(AEC ), AHMEDABAD URBAN DEVELOPMENT AUTHORITY(AUDA) AND LEGAL CHARGES. THE TOTAL OF SUCH SUM PAID BY THE APPELLANT TO THESE THREE AUTHORITIES WAS RS. 1, 58,94,590/-. THE A.O. PRIMARILY IS OF THE VIEW THAT NO DEDUCTION IS AVAILABLE ON TH ESE SUMS AS IT IS NOT LINKED TO THE PROJECT ACTIVITY OR SUCH SUM IS NOT DERIVED FRO M THE MAIN ACTIVITY I.E THE CONSTRUCTION OF HOUSING COMPLEX NAMELY ASMAKAM UNDE RTAKEN BY THE APPELLANT. THE A.O. IS OF THE VIEW THAT THE ASSESSEE HAS CHARG ED A FIXED SUM FOR SOME SPECIFIC BLOCKS OF THE HOUSING COMPLEX NAMELY RS. 1 62,500/- FOR BLOCK-J, RS.1,12,500/- ON BLOCK-K, L, M, N, O, P ETC. THE A. O. OBSERVES THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT SUCH AMOUN T WAS INCURRED FOR EACH FLAT WHICH HAS BEEN RECEIVED BY THE APPELLANT FROM THE F LAT PURCHASERS. THE A.O. OBSERVES THAT THE NEXUS BETWEEN THE FIXED SUM RECEI VED AND THE EXPENSES, IN THE FORM OF PAYMENT TO AEC, AUDA AND LEGAL CHARGES, WAS NOT EVIDENT IN THIS CASE. A.O. RELIED ON A SAMPLE SALE DEED EXECUTED BE TWEEN THE APPELLANT AND ONE OF THE FLAT PURCHASER FOR FLAT NO.52 WHICH WAS REPRODUCED IN SUPPORT OF ITS CONTENTION VIDE PARA 5.34 OF ITS ORDER. THE A.O ALS O POINTED OUT THAT THE RELEVANT GUIDANCE MADE ON ACCOUNTING FOR REAL ESTATE TRANSAC TION ISSUED BY ICAI DOES NOT BIND THE APPELLANT TO TAKE SUCH CHARGES TAKEN FROM THE PURCHASERS AS A PART OF INCOME ELIGIBLE FOR DEDUCTION U/S. 80IB(10). 10.1 THE APPELLANT HAS PRIMARILY RELIED ON NUMBER O F JUDGMENTS INDICATING THAT OF HON'BLE SUPREME COURT NAMELY LIBERTY INDIA AND COUP LE OF OTHER TRIBUNAL DECISION TO CLAIM THAT DEDUCTION U/S.80IB(10) IS AL LOWED ON CHARGES PAID TO AUDA, AEC AND THE LEGAL CHARGES PAID. 10.2 THE APPELLANT IS DRAWN MY ATTENTION INDICATING THAT SUCH CHARGES ARE RECOVERED FROM THE CUSTOMERS AND ARE INTEGRAL PART OF THE SALE CONSIDERATION. THE ITA NO. 3050/AHD/2015 DCIT VS. NILA INFRASTRUCTURE LTD ASSESSMENT YEAR: 2011-12 PAGE 3 OF 7 APPELLANT POINTED OUT THAT A.O. HAS NOT NOTICED DES PITE POINTING OUT SO THE CLAUSE-19 OF EACH OF THE SALE DEED WHICH IS REPRODU CED AS UNDER :- 'IF ANY AMOUNT BECOMES PAYABLE TO AUDA, AMC, THE ST ATE GOVERNMENT OR OTHER PUBLIC AUTHORITY LIKE BETTERMENT CHARGES OR D EVELOPMENT TAXES OR ANY OTHER CHARGES, THE SAME SHALL BE REIMBURSED BY THE PURCHASER AS MAY BE FIXED BY THE VENDOR OR LEVIED BY THE AUTHORITY AND THE PURCHASER IS LIABLE TO PAY THE SAME DIRECTLY.' (EMPHASIS SUPPLIED) 10.3 IN THIS CASE THE APPELLANT HAS UNDISPUTEDLY PAID THESE AMOUNT TO AUDA, AEC AND LEGAL CHARGES, THE LEDGER OF WHICH HAVE BEE N PRODUCED BEFORE ME IN THE PAPER BOOK SO FILED. THE APPELLANT CONTENDS THA T SUCH CHARGES PAID TO AUDA, AMC AND LEGAL CHARGES ARE ESSENTIALLY RECOVER ED FROM EACH OF THE CUSTOMER AS PER CLAUSE-19, CRUCIAL FACT WHICH HAS B EEN OMITTED BY THE A.O. IN A NUTSHELL SUCH AMOUNT AND WHEN RECEIVED BY THE APPEL LANT HAS BEEN RECEIVED IN PURSUANT TO THE SALE DEED, A LEGAL DOCUMENT PERTAIN ING TO THE INSTANT HOUSING PROJECT AND THEREFORE IT IS CLOSELY RELATED TO THE HOUSING PROJECT AND THUS BECOMES ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE I.T. ACT . 10.4 FURTHER, MY ATTENTION WAS DRAWN TO THE DECISIO N BY HON'BLE KOLKATA TRIBUNAL IN THE CASE OF ACIT VS NORTH CITY DEVEIOPER (ITA NO .1307/KOLKATA/2010 DATED 14/7/2011] WHEREIN THE HON'BLE TRIBUNAL HAS HELD TH AT IN CONSTRUCTION OF HOUSING PROJECT THE ASSESSEE WAS UNDER OBLIGATION AS PER TH E AGREEMENT ENTERED WITH VARIOUS CUSTOMERS TO PROVIDE COMMON FACILITIES INCL UDING ELECTRICITY SUPPLY AND METERS, TRANSFORMERS, ELECTRIC SUB-STATIONS INCLUDI NG PROVISION FOR GENERATOR, IT WAS HELD BY THE HON'BLE TRIBUNAL THAT SUCH FACILITY UNDISPUTEDLY PROVIDING ELECTRICITY SUPPLIED TO THE HOUSING COMPLEX IS PART AND PARCEL OF THE ENTIRE ACTIVITY OF DEVELOPING AND BUILDING A HOUSING PROJECT. WITHO UT SUCH ELECTRICITY FACILITIES THE PROJECT DEVELOPING CANNOT BE SAID TO BE COMPLETE. I T WAS ALSO OBSERVED BY THE HON'BLE TRIBUNAL THAT EXTRA AMOUNT SO CHARGED WHILE PROVIDING ESSENTIAL COMMON FACILITIES IS PART AND PARCEL OF THE HOUSING PROJEC T AND THE AMOUNT RECEIVED IN RESPECT THERE TO IS ELIGIBLE FOR DEDUCTION U/S.80IB (10). THE RELEVANT PORTION OF THE JUDGMENT IS REPRODUCED BELOW: 24. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMISSIONS OF LEARNED REPRESENTATIVE OF THE PARTIE S. WE AGREE WITH ID. A/R THAT IN THE CONSTRUCTION OF A HOUSING PROJECT, THE ASSESSEE WAS UNDER AN OBLIGATION, AS PER AGREEMENT/MEMORANDUM ENTERED INTO, TO PROVIDE ALL COMMON FACILITIES INCLUDING ELECTRICITY SUPPLY & ME TER, TRANSFORMER & ELECTRIC SUB-STATION INCLUDING PROVISION FOR GENERA TOR. IT IS A PART AND PARCEL OF THE ENTIRE ACTIVITY OF DEVELOPING AND BUILDING A HOUSING PROJECT AND WITHOUT WHICH THE PROJECT DEVELOPED COULD NOT BE SA ID TO BE COMPLETE. WE OBSERVE THAT AS PER AGREEMENT, IT IS PROVIDED THAT EACH OF THE PURCHASERS IS REQUIRED TO PAY AN ADDITIONAL AMOUNT @ RS.55/- P ER SQ.FT. OF SUPER BUILT- UP AREA OF THE SAID FLAT BY WAY OF CONSIDERATION FO R INSTALLATION OF GENERATOR FOR THE COMMON PORTIONS AND FOR PROVIDING POWER TO THE SAID FLATS AND ALSO FOR PROVIDING ELECTRICITY SUPPLY & METER ETC. FOR C OMMON PURPOSES. WE AGREE THAT CHARGING OF EXTRA AMOUNT OR PROVIDING TH E ABOVE ESSENTIAL COMMON FACILITIES AS PER THE AGREEMENT IS IN THE CA PACITY OF DEVELOPING AND CONSTRUCTING THE HOUSING PROJECT BY THE ASSESSE E AND NOT TO ACT AS A MIDDLEMAN/AGENT, AS ALLEGED BY A.O. THESE ACTIVITIE S, WE ARE OF THE ITA NO. 3050/AHD/2015 DCIT VS. NILA INFRASTRUCTURE LTD ASSESSMENT YEAR: 2011-12 PAGE 4 OF 7 CONSIDERED VIEW, ARE PART AND PARCEL OF THE ENTIRE ACTIVITY OF DEVELOPING AND COMPLETING THE HOUSING PROJECT. HENCE WE HOLD T HAT CHARGING OF THE SAID ADDITIONAL AMOUNT, I.E. @ RS.55/- PER SQ. FT, OF SUPER BUILT-UP AREA FROM FLAT OWNERS/PURCHASERS IS HAVING DIRECT NEXUS WITH THE ACTIVITY OF DEVELOPING AND BUILDING HOUSING PROJECT. WE ALSO OB SERVE ON PERUSAL OF DETAILS AT PAGE 60 OF THE PAPER BOOK THAT THE TOTAL RECEIPTS AGAINST CESC, ELECTRICITY AND GENERATOR WAS OF RS.45,70,703/- AND WHEREAS THE EXPENSES INCURRED BY THE ASSESSEE WAS OF RS.63,94,341.94 AND THUS THERE WAS A LOSS OF RS. 18,23,638.94. BESIDES ABOVE, IN RESPECT OF RS.3,66,763/-, WHICH IS ALSO MENTIONED IN GROUND NO.3 OF THE APPEA L, RECEIVED BY THE ASSESSEE FROM FLAT OWNERS FOR EXTRA WORK, WE OBSERV E THAT THE SAID WORK WAS CARRIED OUT BEFORE HANDING OVER OF POSSESSION O F THE RESPECTIVE FLATS TO THE BUYERS AND NOT AFTER HANDING OVER OF THE POS SESSION. THE DEPARTMENT HAS DISPUTED THE POSITION BUT THERE WAS NO COGENT MATERIAL BROUGHT ON RECORD TO DISLODGE THE FACT THAT THE SAI D EXTRA WORK WAS CARRIED OUT BY THE ASSESSEE IN TERMS OF CLAUSE (C) OF SECTI ON-A OF SIXTH SCHEDULE OF THE SALE AGREEMENTS ENTERED INTO WITH THE FLAT B UYERS. THEREFORE, WE HOLD THAT ID. C.I.T.(A) HAS RIGHTLY HELD THAT THE S AID RECEIPT OF RS.3,66,763/- HAS A DIRECT NEXUS WITH THE ACTIVITY OF UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT AND IS ELIGIBLE TO BE INCLUDED WHIL E COMPUTING DEDUCTION U/S. 80-18(10) OF THE ACT IN VIEW OF ABOVE FACTS, W E HOLD THAT THERE IS NO REASON TO INTERFERE WITH THE ORDER OF ID. C.I.T.(A) . GROUND NO.3 OF THE APPEAL TAKEN BY THE DEPARTMENT IS ALSO REJECTED. 10.5 I HAVE ALSO CONSIDERED THE RELIANCE ON THE JUD GMENT NAMELY ACIT VS VAMAN ESTATE IN ITA NO.7570/MUM/2011 WHEREIN THE HON'BLE TRIBUNAL HAS FOLLOWED THE DECISION BY A CO-ORDINATE BENCH IN THE CASE OF M/S. EATHARE AND ASSOCIATES IN ITA NO.1211/M/2008 WHEREIN IT WAS POINTED OUT THAT DEVELOPMENTAL CHARGES, LEGAL CHARGES, WATER, ELECTRICITY METER CHARGES ETC . ARE ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE I.T. ACT THE RELEVANT FINDING O F THIS ORDER IS GIVEN BELOW: 13. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND M ERIT IN THE PLEA OF THE ID. COUNSEL FOR THE ASSESSEE CHAT IN THE CASE OF M/ S PATHARE & ASSOCIATES (SUPRA) THE TRIBUNAL HAS UPHELD THE ORDE R OF THE ID. CIT(A) IN ALLOWING THE DEDUCTION U/S 80IB(10) OF THE ACT IN R ESPECT OF DEVELOPMENT CHARGES, LEGAL CHARGES, WATER/ELECTRICITY/METER CHA RGES ETC. HOWEVER, IN RESPECT OF CORPUS FUND CHARGES, THE TRIBUNAL HAS SE T ASIDE THE ISSUE TO THE FILE OF AO. IN THE ABSENCE OF ANY DISTINGUISHING FE ATURE BROUGHT ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA) HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF DEVELOPMENT CHARGES, LEGAL CHARGES, SOCI ETY FORMATION CHARGES, WATER, ELECTRICITY & METER CHARGES. AS REG ARDS THE DEDUCTION U/S 80IB(10) ON CORPUS FUND CHARGES, IN THE ABSENCE OF ANY RELEVANT MATERIAL AVAILABLE ON RECORD, WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA) SET ASIDE THE ISSUE TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTION GIVEN BY THE TRIBUNAL IN THE SAID CASE (SUPRA) AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY THE GROUND TAKEN BY TH E REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 3050/AHD/2015 DCIT VS. NILA INFRASTRUCTURE LTD ASSESSMENT YEAR: 2011-12 PAGE 5 OF 7 10.6 I MAY HASTENED TO ADD THAT DECISION GIVEN BY T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS PRATHAM DEVELOPERS (33 TAXMAN .COM 272] WHEREIN THE HON'BLE HIGH COURT HAS DECIDED THAT ANY INCOME ARIS ING OUT OF THE DEVELOPING HOUSING PROJECT IS ELIGIBLE FOR DEDUCTION U/S.80IB( 10) OF THE ACT. THE OPERATIVE PART OF THIS JUDGMENT I.E. PARA-7 IS REPRODUCED BEL OW FOR READY REFERENCE :- 6. WITH RESPECT TO THE REMAINING AMOUNT COVERED UND ER THE DISCUSSION, BALANCE WRITTEN OFF OUT OF THE PAYMENTS TO CONTRACT ORS AND SUPPLIERS, WE NOTICE THAT ASSESSEE HAD CONSISTENTLY TAKEN A STAND THAT: 'THE AMOUNTS HAVE BEEN GENERATED DURING THE COURSE OF BUSINESS. IN CASE OF SUPPLIER PAYMENTS SOMETIMES THE APPELLANT D EDUCTS SOME AMOUNTS AND PAYS THE BILLS. SINCE THE AMOUNTS ARE G ENERATED DURING THE COURSE OF BUSINESS THE SAME ARE ELIGIBLE FOR DEDUCT ION U/S. 80-IB(10) OF THE ACT.' 7. IT WOULD THUS EMERGE THAT DURING THE COURSE OF B USINESS IN DEVELOPING HOUSING PROJECT, ASSESSEE HAD MADE PAYMENTS TO THE SUPPLIERS TOWARDS VARIOUS PURCHASES MADE. ON SUCH PAYMENTS, THE ASSES SEE WOULD OCCASIONALLY DEDUCT SOME AMOUNTS AND PAY THE BILL. DIFFERENCE BETWEEN THE BILL AMOUNT AND PAYMENT ACTUALLY MADE WOULD BE THE AMOUNT GENERATED DURING THE COURSE OF BUSINESS, ASSESSEE T HEREFORE, CONTENDED THAT SAME SHOULD FORM PAN OF ELIGIBLE DEDUCTION UND ER SECTION 80IB(10) OF THE ACT. WE HAVE NO HESITATION IN UPHOLDING THE VI EW OF THE CIT (APPEALS) AS WELL AS TRIBUNAL. ASSESSEE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING MAY HAVE DEBITED CLAIM IN THE BILL AMOUNT RAISED BY THE SUPPLIERS OR CONTRACTORS. HOWEVER, AS IS LIKELY TO HAPPEN IN ANY BUSINESS OF SIMILAR NATURE, THE SUPPLY OF MATERIAL MAY BE FOUND WANTING AT A LATER STAGE. THEY MAY EITHER BE DEFECTIVE OR SOMETIMES MINOR UNINTENT IONAL SHORT SUPPLY. THIS COULD BE THE REASON WHY ASSESSEE INSTEAD OF MA KING FULL PAYMENT, DEDUCTS A PORTION OF THE SUPPLIER'S BILL. THERE MAY BE OTHER REASONS SUCH AS LATE SUPPLY OF THE MATERIAL ETC. WHY SUCH EVENTU ALITY, MAY ARISE. ESSENTIALLY IN ALL SUCH CASES, WHAT WOULD HAPPEN IS THAT ASSESSEE WOULD ACTUALLY EXPEND LESS AMOUNT THAN WHAT THE BILL AMOU NT WOULD BE INDICATING. IN ESSENCE, THEREFORE, SUCH MARGIN WOUL D GO TO REDUCE THE ASSESSEE'S COST OF ACQUISITION OF THE SUPPLY. SUCH AMOUNT THEREFORE, CANNOT BE DISSOCIATED OR DIVESTED FROM ASSESSEE'S B USINESS. SUCH RECEIPT THEREFORE, CANNOT BE STATED TO BE NOT ARISING OUT O F THE ASSESSEE'S BUSINESS OF DEVELOPMENT OF HOUSING PROJECT, 10.7 CONSIDERING THE ABOVE INCLUDING THE JUDGMENTS OF JURISDICTIONAL HIGH COURT I AM OF THE VIEW THAT THE INCOME ARISING FOR ACTIVITI ES WHICH ARE ESSENTIAL PART AND PARCEL OF DEVELOPING OF BUILDING OF A HOUSING PROJE CT IS ELIGIBLE FOR DEDUCTION/S.80IB(10) OF THE ACT. IT IS NOT DISPUTED THAT SUCH SUM WAS PAID TO THE RESPECTIVE AUTHORITIES. IT IS ALSO NOT DISPUTED THA T SUCH SUM SO PAID TO THE AUTHORITIES LIKE AUDA, AEC AND LEGAL CHARGES WERE R ECOVERED FROM THE RESPECTIVE CUSTOMERS AS PER THE AGREEMENT CLAUSE-9 REPRODUCED ABOVE AND IT IS ALSO NOT DISPUTED THAT PAYMENT TO AUDA, AEC AND LEG AL CHARGES IS ESSENTIAL FOR DEVELOPMENT, COMPLETION AND EXECUTION OF A HOUSING PROJECT. I AM NOT INCLINED TO AGREE THAT FOR PROVIDING SUCH ACTIVITIES THE APPELL ANT HAS ACTED AS A MIDDLEMAN ITA NO. 3050/AHD/2015 DCIT VS. NILA INFRASTRUCTURE LTD ASSESSMENT YEAR: 2011-12 PAGE 6 OF 7 FOR THE CUSTOMERS WHO IN TURN BOUGHT FLAT. SPEAKING ALSO IN NORMAL COMMERCIAL ENVIRONMENT OF BUILDERS, ON BEHALF OF CUSTOMERS, IN TERACT AND PAY WITH RESPECTIVE AUTHORITIES FOR DEVELOPMENT FOR PROVISION OF WATER AND ELECTRICITY AND TO COMPLETE LEGAL FORMALITIES. 10.8 CONSIDERING THE DISCUSSION ABOVE, I AM OF THE VIEW THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) FOR AN AMOUNT O F RS.1,58,94,590/-, THE APPELLANT THUS GETS THE RELIEF. THE AO IS DIRECTED TO DELETE THIS DISALLOWANCE. THIS GROUND IS THEREFORE ALLOWED. 7. THE ASSESSING OFFICER IS AGGRIEVED BY THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 9. WE HAVE GONE THROUGH THE IMPUGNED ORDER AND DULY CONSIDERED THE FACTS OF THE CASE. WHATEVER DETAILS HAVE BEEN GIVEN BY THE LEAR NED COUNSEL FOR THE ASSESSEE WITH REGARD TO AUDA CHARGES, ELECTRICITY CONNECTION CHAR GES AND LEGAL CHARGES ETC., NOWHERE THESE FACTS HAVE BEEN VERIFIED BY THE LOWER AUTHORITIES AND THE COMPUTATION OF ASMAKAM PROJECT HAS NOT BEEN ELABORATELY DISCUSSED BY THE LOWER AUTHORITIES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THIS MATTER NEEDS FURTHER EXAMINATION; THEREFORE, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION AFRESH AND CALL FOR ALL DETAILS PERTAINING TO ASMAK AM PROJECT AND THEREAFTER WILL DECIDE THE MATTER ON MERITS. 10. IN THE RESULT, GROUND NOS. 2 & 3 ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT TODAY ON THE 25 TH SEPTEMBER, 2018 SD/- SD/- PRAMOD KUMAR MAHAVIR PRASAD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 25 TH DAY OF SEPTEMBER, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD ITA NO. 3050/AHD/2015 DCIT VS. NILA INFRASTRUCTURE LTD ASSESSMENT YEAR: 2011-12 PAGE 7 OF 7 1. DATE OF DICTATION: .......25.09.2018........... .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ... 25.09.2018.... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 25.09.2018... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: . 25.09.2018 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 25.09.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ...... WE FIND THAT THE LEGAL POSITION IS BY NOW WELL SETT LED BY A NUMBER OF DECISIONS OF THE CO- ORDINATE BENCHES, WHICH HAVE BEEN EXTENSIVELY REFER RED TO IN THE CIT(A)S ORDER FROM WHICH EXTRACTS ARE REPRODUCED ABOVE. WHAT IS TO BE REALLY SEEN IS PROXIMITY OF THE ACTIVITY WITH THE CORE BUSINESS OF THE ASSESSEE. TH E COLLECTIONS FOR AUDA CHARGES, ELECTRICITY CONNECTION CHARGES AND LEGAL CHARGES CA NNOT BE VIEWED ON STANDALONE BASIS AND ARE INTEGRAL AND NECESSARY PART OF THE MAIN BUS INESS ACTIVITY WHICH IS ADMITTEDLY ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). IT IS NOT, AND IT CANNOT BE AT LEAST ON THE PRESENT FACTS, CASE OF THE ASSESSING OFFICER THAT R ENDITION OF SUCH SERVICES CONSTITUTED A SEPARATE BUSINESS OR EVEN A SEPARATE ACTIVITY. RESP ECTFULLY AGREEING WITH THE STAND OF THE CO-ORDINATE BENCHES, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 10. GROUND NO. 2 IS THUS DISMISSED.