M/s. Mainadevi Saklecha Developers, Jalna V. ITO, Ward 1(3), Jalna, Jalna

ITA 346/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5252 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-11-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 23-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: V L JAIN
• Keywords: Unexplained investment; Value adopted by valuation officer; Business income; Speculation loss; Valuation report; Revenue expenditure; Capital expenditure
• Section: 80IB; 43(5); 147; 69; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER SR. NO. ITA NO. A.Y. APPELLANT RESPONDENT 1 344 /PN/1 1 200 2 - 0 3 M/S. MAINADEVI SAKLECHA DEVELOPERS, SAKLECHA BHAWAN, DURGAMATA ROAD, JALNA PAN AAJFM7176N ITO, WARD 1(3), JALNA . 2 345 /PN/1 1 200 3 - 0 4 - DO - DO - 3 346 /PN/1 1 200 4 - 0 5 - DO - - DO - 4 347 /PN/1 1 200 6 - 0 7 - DO - - DO - 5 700/PN/11 2002 - 03 ITO, WARD 1(3), JALNA M/S. MAINADEVI SAKLECHA DEVELOPERS, SAKLECHA BHAWAN, DURGAMATA ROAD, JALNA PAN AAJFM7176N 6 70 1 /PN/11 200 3 - 0 4 - DO - - DO - 7 70 2 /PN/11 2004 - 05 - DO - - DO - ASSESSEE BY : SHRI V.L. JA IN DEPARTMENT BY : SHRI S.P. WALIMBE DATE OF HEARING : 20.11.2013 DATE OF ORDER : 27.11.2013 ORDER PER SHAILENDRA KUMAR YADAV, J.M: ALL THE 4 APPEALS OF ASSESSEE AND 3 APPEALS OF REV ENUE PERTAIN TO SAME ASSESSEE ON ALMOST COMMON ISSUES. SO THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.344/PN/2011, THE ASSESSEE RAISED THE F OLLOWING GROUNDS: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CON FIRMING THE DISALLOWANCE OF THE CLAIM U/S.80IB(10) TO THE T UNE OF RS.40,45,988/-. 2 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) FURTHER ERRED IN LAW AND ON FACTS IN NOT ALLOWING A PRO-RAT A CLAIM U/S.80IB(10) WITH REFERENCE TO THE ELIGIBLE PORTION OF THE HOUSING PROJECT. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND, MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL, IF DEEMED NECESSARY. 3. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF BUILDERS AND DEVELOPERS. THE ASSESSEE HAS CLAIMED DEDUCTION IN RESPECT OF HOUSING PROJECT U/S.80IB(10) OF I.T ACT. THE ASSESSING OFFICER HAS ISSUED NOTICE U/S. 148 OF THE ACT FOR T HE YEARS UNDER APPEAL AS HE WAS OF THE OPINION THAT FOR THESE YEAR S THE ASSESSEE ESCAPED ASSESSMENTS TO THE EXTENT OF DEDUCTION CLAI MED U/S.80IB(10) WITHIN THE MEANING OF SECTION 147 EXPL ANATION-2(B) OF THE ACT. THE DETAILS OF THE INCOME RETURNED BY ASS ESSEE, ADDITION MADE TO THE RETURN INCOME AND INCOME ASSESSED IN FO LLOWING YEARS AS UNDER: ASSTT. YEAR INCOME RETURNED/ INCOME AS PER INTIMATION ADDITION OF DISALLOWANCE U/S 80IB(10) ADDITION OF UNEXPLAINED INVESTMENT U/S 69 DISALLOWANCE OF EXPENDITURE TREATING THE SAME AS SPECULATION LOSS INCOME ASSESSEE 2002 - 03 NIL 40,45,988 39,72,687 -- 80,18,675 2003 - 04 97,090 3,20,292 19,71,824 5,98,000 29,87,206 2004 - 05 NIL 9,41,176 5,46,720 -- 14,87,896 3.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY. CIT(A) FOLLOWING THE DECISION FOR A.Y.2006-07 HAS DECIDED THE APPEAL IN FAVOUR OF REVENUE, WHEREBY ADDITION MADE BY ASSESSI NG OFFICER OF RS.40,45,988/-, RS.3,20,292/- AND RS.9,41,176/- IN A.Y. 2002-03, 2003-04 AND 2004-05 RESPECTIVELY WERE CONFIRMED. I N A.Y. 2006-07, ASSESSING OFFICER WHILE ASSESSING INCOME FOR SAID Y EAR NOTICED THAT ASSESSEE IS NOT ELIGIBLE U/S. 80IB(10) AND HENCE AL LOWED RS.3,72,463/- CLAIMED BY ASSESSEE U/S. 80IB(10) OF I.T ACT. THE REASONING STATED BY ASSESSING OFFICER FOR DISALLOWA NCE U/S. 80IB(10) IS BEING SUMMARIZED AS UNDER: 3 1. AREA OF PROJECT IS LESS THAN 1 ACRE 2. ASSESSEE HAS DEVELOPED TWO DEVELOPMENT HOUSING PROJ ECTS AND AREA OF EACH PROJECT IS LESS THAN 1 ACRE 3. DEDUCTION U/S.80IA(4F) NOT ADMISSIBLE ON AREA OF RE SIDENTIAL UNIT EXCEEDED 1000 SQ. FT. 4. NO CONSTRUCTION OF RESIDENTIAL UNIT ON PLOT NO.88 A ND NO.105 5. RELEVANT INFORMATION REQUIRED FROM ASSESSEE WAS NOT FURNISHED BY ASSESSEE 6. COMPLETION CERTIFICATE IN RESPECT HOUSING PROJECT W AS NOT OBTAINED BY ASSESSEE 7. BUILT UP AREA CONSTRUCTED IN RESPECT OF 6 BUNGALOWS EXCEEDED THE PRESCRIBED LIMIT OF 1500 SQ.FT. 3.2 IN A.Y. 2006-07, THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHORITY AND CIT(A) HAVING CONSIDERED THE SAME HAS DECIDED THE ISSUE AGAINST ASSESSEE BY OBSERVING AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R AND THE REMAND REPORT OF THE A.O. AND ALSO THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO PERUSED THE VARIOUS JUDICIAL DECISIONS RELIED ON BY THE APPELLANT. THE FIRST GROUND OF APP EAL IS ABOUT ALLOWABILITY OF DEDUCTION CLAIMED U/S.80IB(10) OF T HE ACT. 6.1 THE FIRST CONTENTION RAISED BY THE A.O. FOR DIS ALLOWING THE DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT IS THAT A S PER THE SANCTIONED LAYOUT PLAN, THE AREA OF PLOTS BEARING N OS. 88 TO 138 IN S.NO.272/1 AT MANTHA ROAD, JALNA, PURCHASED BY T HE APPELLANT VIDE REGISTERED SALE DEED NO.5163 DATED 3 1/12/1998 IS ONLY 4014.60 SQ.MTRS. WHICH IS LESS THAN 1 ACRE AND NOT 4061 SQ.MTRS. AS CLAIMED BY THE APPELLANT. IN THIS REGAR D, THE APPELLANT HAS POINTED-OUT THAT AS PER THE REGISTERE D SALE DEED WITH COPY OF THE LAYOUT FORMING PART OF THE SALE DE ED, THE AREA OF PLOTS PURCHASED WAS 4061 SQ.MTRS. WHICH IS MORE THA N 1 ACRE. IT IS ALSO POINTED-OUT BY THE APPELLANT THAT THE TO TAL AREA OF PLOTS WAS REDUCED TO 4014.60 SQ.MTRS. AS PER LAYOUT SANCTIONED BY JALNA MUNICIPAL CORPORATION VIDE LETTER DATED 22 /03/1999 I.E. AFTER PURCHASING PLOTS BY THE APPELLANT ON 31/ 12/1998. THE D.V.O. IN HIS VALUATION REPORT HAS STATED THAT THE TOTAL AREA OF PLOTS BEARING NOS. 88 TO 138 IS 4061 SQ.MTRS. AS PE R THE SALE DEED DATED 31/12/1998 AND THE TOTAL AREA OF PLOTS E XCLUDING ROADS IS 4014.60 SQ.MTRS. IN VIEW OF THE ABOVE FACT S, THE 4 CONTENTION OF THE APPELLANT THAT THE TOTAL AREA OF PLOTS PURCHASED BY HIM IS 4061 SQ.MTRS. IS ACCEPTED. 6.2 THE OTHER CONTENTION RAISED BY THE A.O. FOR DIS ALLOWING THE DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT IS THAT T HE APPELLANT HAS NOT CONSTRUCTED ANY RESIDENTIAL UNIT ON PLOT NO S. 88 AND 115 AND HAS MADE FACTUALLY INCORRECT CLAIM OF CONST RUCTION OF RESIDENTIAL UNITS ON THE SAID PLOTS. THE A.O. HAS P OINTED-OUT THAT SPOT ENQUIRIES CONDUCTED ON SITE ON 04/06/2008 REVEALED THAT NO RESIDENTIAL UNITS HAVE BEEN CONSTRUCTED ON THE SAID PLOTS AND TREES HAVING SUBSTANTIAL HEIGHT AND AGE H AVE BEEN GROWN ON THESE PLOTS. THE APPELLANT HAS NOT REBUTTE D THIS CONTENTION OF THE A.O. IN HIS WRITTEN SUBMISSIONS. THE AREA OF PLOT NOS. 88 AND 105 IS 149.80 SQ.MTRS. AND 128.45 SQ.MTRS. RESPECTIVELY TOTALLING TO 278.25 SQ.MTRS. AS PER TH E SANCTIONED LAYOUT. THE APPELLANT HAS NOT CONSTRUCTED ANY RESID ENTIAL UNITS ON THESE PLOTS. HENCE, THE TOTAL AREA OF LAND PURCH ASED WHICH IS UTILIZED BY THE APPELLANT FOR CONSTRUCTION OF THE H OUSING PROJECT IS 3782.75 SQ.MTRS. [4061 - 278.25 SQ.MTRS.] WHICH IS LESS THAN 1 ACRE. IN VIEW OF THE ABOVE FACTS, THE APPELLANT H AS NOT FULFILLED THE CONDITION OF MINIMUM 1 ACRE OF LAND ON WHICH EL IGIBLE HOUSING PROJECT IS TO BE CONSTRUCTED AS PER CLAUSE (C) OF SECTION 80IB(10) OF THE ACT. 6.3 THE A.O. HAS ALSO RAISED THE CONTENTION FOR DIS ALLOWING THE DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT THAT IN R ESPECT OF 6 BUNGALOWS CONSTRUCTED BY THE APPELLANT, AREA OF EAC H RESIDENTIAL UNIT EXCEEDED THE PRESCRIBED LIMIT OF 1 500 SQ.FT. THE A.O. HAS ALSO POINTED-OUT THAT THE D.V.O. IN HIS VA LUATION REPORT HAS ALSO MENTIONED THE ABOVE FACT. THE APPEL LANT IN THIS REGARD SUBMITTED THAT EXCLUDING THE AREA OF BALCONY , THE LIMIT OF 1500 SQ.FT. HAS BEEN EXCEEDED IN RESPECT OF 3 BUNGA LOWS. THE APPELLANT HAS CLAIMED IN RESPECT OF THE REMAINING 3 BUNGALOWS THAT EXCLUDING THE AREA OF BALCONY THE BUILT-UP ARE A HAS NOT EXCEEDED THE LIMIT OF 1500 SQ.FT. THE APPELLANT SUB MITTED THAT THE AMENDMENT ABOUT INCLUSION OF BALCONY AREA IN BU ILT-UP AREA IS NOT APPLICABLE TO THE CASE UNDER APPEAL AS THE PLAN WAS SANCTIONED IN THE F.Y.1999-2000 AND THE AMENDMENT I S APPLICABLE FROM 01/04/2005. THE APPELLANT HAS ALSO RELIED ON THE FOLLOWING DECISIONS IN SUPPORT OF THE ABOVE CON TENTION: A. BRAHMA ASSOCIATES VS. JCIT 22 DTK 1 (PUNE) B. CIT VS. ANSAL PROPERTIES C. SAROJ SALES ORGANISATION VS. ITO 115 TTJ 485 (MU M.) D. CITVS. SHAH SADIQ & SONS 166 ITR 102 (SC) E. ACIT VS. SETH DEVELOPERS 33 SOT 277 (MUM.) THIS CONTENTION OF THE APPELLANT ABOUT NON-INCLUSIO N OF AREA OF BALCONY IS ACCEPTED IN VIEW OF ABOVE DECISIONS RELI ED ON BY THE APPELLANT. HOWEVER, EVEN AFTER EXCLUDING THE AREA O F BALCONY, 5 THE BUILT-UP AREA OF 3 BUNGALOWS EXCEEDS 1500 SQ.FT . AND THE SAID BUNGALOWS ARE HAVING PLOT AREA OF 129.50 SQ.MT RS. EACH AS PER THE SANCTIONED LAYOUT. THE TOTAL AREA OF THE SAID PLOTS IS 388.50 SQ.MTRS. IN THIS REGARD, THE APPELLANT CLAI MED THAT THE BUILT-UP AREA OF THE SAID 6 BUNGALOWS AS PER THE AP PROVED PLAN IS ONLY 1393.925 SQ.FT. EACH WHICH IS MUCH LESS THA N 1500 SQ.FT. THE APPELLANT HAS CLAIMED THAT THE ADDITIO NS/ALTERATIONS WERE CARRIED OUT BY THE OCCUPANTS OF THE RESIDENTIA L UNITS AFTER COMPLETION OF THE BUNGALOWS. THE APPELLANT FURTHE R SUBMITTED THAT IT IS MENTIONED IN THE VALUATION REPORT OF THE D.V.O. THAT - 'IT SEEMS THAT AFTER THE SALE TRANSACTION INDIVIDUA L OWNER AS OWN CHOICE HAS DONE SOME ADDITION/ALTERATION'. THE ABOVE REMARK OF THE D.V.O. IS ON THE BASIS OF ASSUMPTION AND WIT HOUT ANY CONCLUSIVE EVIDENCE AS THE D.V.O. HAS USED THE WORD S 'IF SEEMS THAT............'. THE CONTENTION OF THE APPELLANT IS NOT ACCEPTABLE AS THE APPELLANT HAS NOT OBTAINED THE COMPLETION CE RTIFICATE OR OCCUPANCY CERTIFICATE FROM MUNICIPAL CORPORATION PR OVING THAT THE BUNGALOWS WERE CONSTRUCTED AS PER THE APPROVED PLAN WHEREIN THE BUILT-UP AREA OF BUNGALOWS HAS BEEN STA TED TO BE LESS THAN 1500 SQ.FT. THEREFORE, I AM OF THE CONSID ERED VIEW THAT THE APPELLANT HAS CONTRAVENED THE PRESCRIBED LIMIT OF BUILT-UP AREA OF 1500 SQ.FT. IN RESPECT OF 3 BUNGALOWS HAVIN G PLOT AREA OF 388.50 SQ.MTRS. HENCE THE APPELLANT HAS CONSTRUCTED HOUSING PROJECT WITH ELIGIBLE RESIDENTIAL UNITS ON AREA OF LAND PURCHASED BY IT TO THE EXTENT OF 3394.25 SQ.MTRS. ONLY [4061 -278.25 - 388.50 SQ.MTRS.] WHICH IS MUCH BELOW THE PRESCRIBED LAND AREA OF 1 ACRE. THE APPELLANT HAS THEREFORE NOT FULFILLE D THE PROVISION OF CLAUSE (B) OF SECTION 80IB(10) OF THE ACT AND HE NCE NOT ELIGIBLE FOR THE SAID DEDUCTION. 6.4 THE A.O. HAS ALSO CONTENDED FOR DISALLOWING THE DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT THAT THE APPELLANT HAS DEVELOPED TWO DIFFERENT HOUSING PROJECTS AND AREA O F EACH PROJECT IS LESS THAN 1 ACRE. THE APPELLANT HAS OBTA INED PERMISSION FOR-TWO DIFFERENT PROJECTS ON TWO DIFFER ENT DATES UNDER NO.287/99 DATED 29/10/1999 AND NO.44/2000 DAT ED 16/02/2000. THE AREA OF LAND COVERED UNDER PERMISSI ON DATED 29/10/1999 IS 3237.60 SQ.MTRS. AS PER THE SANCTIONE D LAYOUT AND THE AREA COVERED UNDER PERMISSION DATED 16/02/2 000 IS 777 SQ.MTRS. AS PER THE SANCTIONED LAYOUT. IN THI S REGARD, THE APPELLANT SUBMITTED THAT THE INCOME-TAX ACT, 1961, NOWHERE DEFINES 'HOUSING PROJECT' FOR THE PURPOSE OF SECTIO N 80IB(10) OF THE ACT AND HENCE IT WOULD BE PRESUMPTUOUS TO SAY T HAT SINGLE SANCTION IS EQUAL TO SINGLE PROJECT. THE APPELLANT HAS ALSO CLAIMED THAT IT IS WELL-ESTABLISHED PROPOSITION OF LAW THAT WHERE TWO VIEWS ARE POSSIBLE THE VIEW FAVOURABLE TO THE A SSESSEE NEEDS TO BE ADOPTED. IN SUPPORT OF THIS CONTENTION, THE APPELLANT HAS RELIED ON VARIOUS JUDICIAL DECISIONS. FROM THE SUBMISSIONS OF THE APPELLANT, IT IS NOTICED THAT TH E APPELLANT HAS PURCHASED PLOTS BEARING NOS. 88 TO 138 WHICH AR E LOCATED 6 AROUND THREE ADJACENT ROADS. THE LAND COVERED BY TH E SAID ROADS IS NOT PURCHASED BY THE APPELLANT AND BELONGE D TO THE MUNICIPAL CORPORATION. THE APPELLANT HAS NOT AMALG AMATED THESE PLOTS BY OBTAINING APPROPRIATE SANCTION OF MU NICIPAL CORPORATION. IN VIEW OF THE ABOVE FACTS, THE CONTE NTION OF THE APPELLANT THAT THEY HAVE DEVELOPED SINGLE HOUSING P ROJECT IS ALSO REJECTED. 6.5 THE A.O. HAS FURTHER CONTENDED THAT THE APPELLA NT HAS NOT OBTAINED COMPLETION CERTIFICATE OF THE SAID HOUSING PROJECT AND HENCE NOT ELIGIBLE FOR THE DEDUCTION CLAIMED U/S.80 IB(10) OF THE ACT. IT IS UNDISPUTED FACT THAT THE APPELLANT HAS N OT OBTAINED COMPLETION CERTIFICATE OF THE HOUSING PROJECT. THE APPELLANT HAS CLAIMED THAT THE COMPLETION CERTIFICATE WAS NOT ISS UED BY THE MUNICIPAL CORPORATION WHICH WAS APPLIED FOR LONG BA CK IN THE YEAR 2001. THE APPELLANT HAS ALSO SUBMITTED THAT IN SOME CITIES OF THE COUNTRY, THE OCCUPANCY CERTIFICATE IS BEING ISSUED AND NO COMPLETION CERTIFICATE IS ISSUED. IT IS FURTHER CLA IMED BY THE APPELLANT THAT MUNICIPAL CORPORATION HAS NOT REJECT ED THE APPLICATION FOR COMPLETION CERTIFICATE. IT HAS BEEN SPECIFICALLY PROVIDED IN SUB-CLAUSE (II) OF CLAUSE (A) OF SECTIO N 80IB(10) THAT THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSI NG PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORI TY. IT HAS ALSO BEEN PROVIDED IN SECTION 80IB(10) THAT THE PRO JECTS APPROVED PRIOR TO 01/04/2004 ARE TO BE COMPLETED BE FORE 31/03/2008. IN VIEW OF THE ABOVE SPECIFIC PROVISI ONS, IT IS FOR THE APPELLANT TO OBTAIN COMPLETION CERTIFICATE OR O CCUPANCY CERTIFICATE IN SUPPORT OF THE CONTENTION THAT THE P ROJECT IS COMPLETED BEFORE 31/03/2008. IN VIEW OF THESE FACTS , I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS FAILED T O PROVE THAT THE PROJECT WHICH WAS APPROVED AS PER SPECIFICATION S MENTIONED IN THE COMMENCEMENT CERTIFICATE IN THE YEAR 2001 AN D WAS COMPLETED PRIOR TO 31/03/2008. THE CONTENTION OF THE A.O. THAT THE APPELLANT HAS NOT OBTAINED COMPLETION CERT IFICATE OF THE SAID HOUSING PROJECT AND HENCE NOT ELIGIBLE FOR THE DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT IS ACCEPTED. 6.6 IN VIEW OF THE ABOVE DISCUSSION, THE FIRST GROU ND OF APPEAL REGARDING ALLOWABILITY OF DEDUCTION U/S.80IB(10) OF THE ACT IS DISMISSED. 3.2.1 ON PRO-RATA BASIS CIT(A) DISMISSED THE ASS ESSEES CLAIM BY OBSERVING AS UNDER: 7. THE APPELLANT VIDE SECOND GROUND OF APPEAL HAVE CLAIMED THAT THE DEDUCTION U/S.80IB(10) OF THE ACT SHOULD B E ALLOWED ON PRO-RATA BASIS FOR ELIGIBLE HOUSING UNITS CONSTRUCT ED IN THE 7 HOUSING PROJECT. IN SUPPORT OF THIS CONTENTION, T HE APPELLANT HAS RELIED ON THE FOLLOWING DECISIONS: A. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VS. DCIT (39D -BCAJ 546 (KOLKATA) B. DCIT VS. BRIGADE ENTERPRISES PVT. LTD. (2008) 11 9 TTJ 269 (BANG.) C. VANDANA PROPERTIES VS. ACIT 27 DTK 282 (MU M.) 7.1 IN THIS REGARD, THE A.O. HAS POINTED-OUT THAT THE FACTS OF THE CASES RELIED UPON BY THE APPELLANT ARE DIFFEREN T AND DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. IT IS POINTED- OUT BY THE A.O. THAT THE PROJECTS REFERRED TO IN TH E DECISIONS RELIED ON BY THE APPELLANT ARE ON THE AREA OF LAND WHICH IS MUCH MORE THAN 1 ACRE AND IN THE CASE OF THE APPELL ANT THE AREA ON WHICH ELIGIBLE RESIDENTIAL UNITS HAVE BEEN CONSTRUCTED IS LESS THAN 1 ACRE. THE APPELLANT HAS POINTED-OUT THAT THE BENEFIT OF CLAIM U/S.80IB(10) IS TO BE GRANTED WITH RESPECT TO EACH RESIDENTIAL UNIT IN THE PROJECT AND AS A SEQUE L CONCLUDED THAT THE PRO-RATA CLAIMS SHOULD BE GIVEN FOR ELIGIB LE UNITS IN THE PROJECT. 7.2 THIS CONTENTION OF THE APPELLANT IS NOT ACCEPT ABLE IN VIEW OF THE RATIO LAID DOWN BY HON'BLE I.T.A.T., SP ECIAL BENCH, PUNE, IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT (20 09) 22 DTK 1. IN THE SAID DECISION, WHILE DECIDING WHETHER PRO -RATA DEDUCTION CAN BE ALLOWED IN RESPECT OF ELIGIBLE RES IDENTIAL UNITS, THE HON'BLE TRIBUNAL IN PARA 115 LAID DOWN AS UNDER : 'THERE MAY BE CASES WHERE THE TOTAL BUILT-UP COMMER CIAL AREA IS MORE THAN 10% OF THE TOTAL AREA. THESE PROJ ECTS IN OUR OPINION NORMALLY SHOULD NOT GET BENEFIT OF EXEM PTION UNLESS SUCH UNDERTAKING CAN SHOW THAT INCOME FROM CONSTRUCTION OF RESIDENTIAL DWELLING UNITS CAN BE W ORKED OUT SEPARATELY AND EVEN AFTER EXCLUDING COMMERCIAL USE OF PLOT THE PROJECT SATISFIES ALL REQUIREMENTS OF SECTION 8 0IB(10) OF THE I.T.ACT. IN OTHER WORDS, IN ORDER THAT THE PROF ITS FROM DWELLING UNIT SEGMENT OF THE PROJECT IS ELIGIBLE FO R DEDUCTION UNDER SECTION 80IB(10) IN SUCH CASE, SIZE OF THE PL OT, EXCLUDING PORTION UNDER COMMERCIAL UNIT MUST BE MOR E THAN MINIMUM AREA OF 1 ACRE AND RESIDENTIAL UNITS BUILT ON SUCH AREA MUST SATISFY CONDITION OF CLAUSE (C) OF THE PR OVISION.' IN VIEW OF THE ABOVE DECISION OF SPECIAL BENCH OF J URISDICTIONAL PUNE TRIBUNAL, THE CONTENTION OF THE APPELLANT THAT DEDUCTION IN RESPECT OF ELIGIBLE RESIDENTIAL UNITS SHOULD BE ALLOWED ON PRO- RATA BASIS CANNOT BE ACCEPTED AS THE LAND AREA ATTR IBUTABLE TO SUCH ELIGIBLE UNITS IN THE CASE OF THE APPELLANT IS LESS THAN 1 ACRE. THE CONTENTION RAISED BY THE APPELLANT IS THE REFORE REJECTED. THE SECOND GROUND OF APPEAL RAISED BY THE APPELLANT 8 THAT THE APPELLANT IS ELIGIBLE FOR PRO-RATA DEDUCTI ON U/S.80IB(10) IN RESPECT OF ELIGIBLE RESIDENTIAL UNITS IS DISMISS ED. 3.3 BEFORE US LEARNED AUTHORIZED REPRESENTATIVE S UBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOW ANCE CLAIMED U/S.80IB(10) T THE TUNE OF RS.13,72,463/- FOR A.Y. 2006-07 AND WITHOUT PREJUDICE TO ABOVE, CIT(A) FURTHER ERRED IN LOSS AND IN NOT ALLOWING U/S.80IB(10) OF I.T ACT WITH REFERENCE TO ELIGIBLE PORTION OF HOUSING PROJECT. SIMILAR ISSUE IN OTHER THREE YEAR S WERE DECIDED AGAINST ASSESSEE, WHICH HAS NOT JUSTIFIED. ON OTHE R HAND, LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF AUTHORITIES BELOW ON POINT OF DISALLOWANCE CLAIM DEDUCTION U/S. 80IB(10) OF I.T ACT. 3.4 WE FIND THAT ISSUE OF AREA OF THE PLOT HAS BEEN DECIDED BY CIT(A) IN FAVOUR OF ASSESSEE WHICH IS NOT SUBJECT MATTER B EFORE US, SO, THERE IS NO ACTION FOR US TO COMMENT ON THE ISSUE RAISED BY ASSESSING OFFICER AT THE RELEVANT POINT OF TIME. 3.5 SECOND POINT FOR DISALLOWANCE U/S. 80IB(10) IS THAT ASSESSEE HAS NOT CONSTRUCTED ANY RESIDENTIAL UNIT ON PLOT NO .88 AND NO.105 AND HAS MADE FACTUALLY INCORRECT CLAIM BY CONSTRUCT ION OF RESIDENTIAL UNIT ON SAID PLOT. ACCORDING TO ASSESSING OFFICER, A SPOT ENQUIRY REVEALED THAT NO RESIDENTIAL UNIT HAS BEEN CONSTRUC TED ON SAID PLOT. THE AREA OF THE PLOT NO.88 AND NO.105 IS 149.80 SQ. MTRS. AND 128.45 SQ. MTRS. RESPECTIVELY TOTALING TO 278.25 SQ . MTRS. AS PER SANCTIONED LAYOUT. ACCORDING TO CIT(A), ASSESSEE H AS NOT CONSTRUCTED ANY RESIDENTIAL UNIT ON THIS PLOT, HENC E TOTAL AREA OF THE LAND PURCHASED WHICH IS UTILIZED BY ASSESSEE FOR CO NSTRUCTION OF HOUSING PROJECT IS 3782.25 SQ. MTRS., (4061 278.2 5 SQ.MTRS) WHICH IS LESS THAN 1 ACRE. IN VIEW OF ABOVE, CIT(A) HELD THAT ASSESSEE HAS NOT FULFILLED THE CONDITION OF MINIMUM 1 ACRE OF LA ND ON WHICH ELIGIBLE HOUSING PROJECT WAS TO BE CONSTRUCTED AS P ER CLAUSE (C) OF SEC.80IB(10). IN THIS REGARD, WE FIND THAT IN CASE OF CIT VS. VANDANA 9 PROPERTIES (MUM), WHEREIN HONBLE BOMBAY HIGH COURT HAS HELD AS UNDER: 23. THE NEXT ARGUMENT OF THE REVENUE IS THAT TO AV AIL THE DEDUCTION UNDER SECTION 80IB(10), THE HOUSING PROJE CT MUST BE ON THE SIZE OF A VACANT PLOT OF LAND WHICH HAS MINI MUM AREA OF ONE ACRE. IN THE PRESENT CASE, THERE ARE FIVE BUILD INGS (A, B, C, D AND E) ON A PLOT AD-MEASURING 2.36 ACRES, HENCE, THE PROPORTIONATE AREA FOR EACH BUILDING WOULD BE LESS THAN ONE ACRE AND, THEREFORE, THE BENEFIT OF SECTION 80IB(10 ) COULD NOT BE GRANTED IN RESPECT OF THE HOUSING PROJECT CONSISTIN G E BUILDING. AND SUBMITTED THAT CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. 24. AS RIGHTLY CONTENDED BY THE COUNSEL FOR THE AS SESSEE AND THE INTERVENORS, SECTION 80IB(10)(B) SPECIFIES THE SIZE OF THE PLOT OF LAND BUT NOT THE SIZE OF THE HOUSING PROJECT. TH E SIZE OF THE PLOT OF LAND, AS PER SECTION 80IB(10) MUST HAVE MIN IMUM AREA OF ONE ACRE. THE SECTION DOES NOT LAY DOWN THAT THE PLOT HAVING MINIMUM AREA OF ONE ACRE MUST BE A VACANT PLOT. 25. THE QUESTION, THEREFORE; TO BE CONSIDERED IS, W HETHER THE REVENUE IS JUSTIFIED IN READING THE EXPRESSION 'PLO T OF LAND' IN SECTION 80IB(10)(B) AS VACANT PLOT OF LAND' ? 26. THE OBJECT OF SECTION 80IB (20) IN GRANTING DED UCTION EQUAL TO ONE HUNDRED PER CENT OF THE PROFITS OF AN UNDERT AKING ARISING FROM DEVELOPING AND CONSTRUCTING A HOUSING PROJECT IS WITH A VIEW TO BOOST THE STOCK OF HOUSES FOR LOWER AND MID DLE INCOME GROUPS SUBJECT TO FULFILLING THE SPECIFIED CONDITIO NS. THE FACT THAT THE MAXIMUM SIZE OF THE RESIDENTIAL UNIT IN A HOUSING PROJECT SITUATED WITHIN THE CITY OF MUMBAI AND DELH I IS RESTRICTED TO 1000 SQUARE FEET CLEARLY SHOWS THAT THE INTENTION OF THE LEGISLATURE IS TO MAKE AVAILABLE LARGE NUMBER O F MEDIUM SIZE RESIDENTIAL UNITS FOR THE BENEFIT OF THE COMMO N MAN. HOWEVER, IN THE ABSENCE OF DEFINING THE EXPRESSION 'HOUSING PROJECT AND IN THE ABSENCE OF SPECIFYING THE SIZE OR THE N UMBER OF HOUSING PROJECTS REQUIRED TO BE CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE, EVEN ONE HOUSING P ROJECT CONTAINING MULTIPLE RESIDENTIAL UNITS OF A SIZE NOT EXCEEDING 1000 SQUARE FEET CONSTRUCTED ON A PLOT OF LAND HAVI NG MINIMUM AREA OF ONE ACRE WOULD BE ELIGIBLE FOR SECTION 80IB (10) DEDUCTION. IF THE CONSTRUCTION OF SECTION 80IB(10 ) PUT FORTH BY THE REVENUE IS ACCEPTED, IT WOULD MEAN THAT IF ON A VACANT PLOT OF LAND, ONE HOUSING PROJECT FULFILLING ALL CONDITI ONS IS UNDERTAKEN, THEN DEDUCTION WOULD BE AVAILABLE TO TH AT HOUSING PROJECT AND IF THEREAFTER SEVERAL OTHER HOUSING PRO JECTS ARE UNDERTAKEN ON THE VERY SAME PLOT OF LAND, THE DEDUC TION WOULD NOT BE AVAILABLE TO THOSE HOUSING PROJECTS AS THE P LOT CEASES TO BE A VACANT PLOT AFTER THE CONSTRUCTION OF THE FIRS T HOUSING 10 PROJECT. SUCH A CONSTRUCTION IF ACCEPTED WOULD DEFE AT THE OBJECT WITH WHICH SECTION 80JB (10) WAS ENACTED. 27. MOREOVER, PLAIN READING OF SECTION 80IB(10) DOE S NOT EVEN REMOTELY SUGGEST THAT THE PLOT OF LAND HAVING MINIM UM AREA OF ONE ACRE MUST BE VACANT. THE SAID SECTION ALLOWS DE DUCTION TO A HOUSING PROJECT (SUBJECT TO FULFILLING ALL OTHER CONDITIONS) CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA O F ONE ACRE AND IT IS IMMATERIAL AS TO WHETHER ANY OTHER HOUSIN G PROJECTS ARE EXISTING ON THE SAID PLOT OF LAND OR NOT. IN T HESE CIRCUMSTANCES, CONSTRUING THE PROVISIONS OF SECTION 80IB(10) BY ADDING WORDS TO THE STATUTE IS WHOLLY UNWARRANTED A ND SUCH A CONSTRUCTION WHICH DEFEATS THE OBJECT WITH WHICH TH E SECTION WAS ENACTED MUST BE REJECTED. 28. APART FROM THE ABOVE, THE CENTRAL BOARD OF DIRE CT TAXES (CBDT) BY ITS LETTER DATED 4 TH MAY 2001 ADDRESSED TO THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY HAS STATED THUS : 'THE UNDERSIGNED IS DIRECTED TO REFER TO YOUR LETTE R NO.MCHI:RSA:M:388/L9799/3 DATED 1 ST JANUARY 2001 AND TO STATE THAT THE ADDITIONAL HOUSING PROJECT ON EXI STING HOUSING PROJECT SITE CAN QUALIFY AS INFRASTRUCTURE FACILITY UNDER SECTION 10(23G) AND 80IB(10) PROVIDED & IS TA KEN UP BY A SEPARATE UNDERTAKING, HAVING SEPARATE BOOKS OF ACCOUNTS, SO AS TO ENSURE THAT CORRECT PROFITS CAN BE ASCERTAINED FOR THE PURPOSE OF SECTION 80IB AND ALS O TO IDENTIFY RECEIPTS AND REPAYMENTS OF LONG TERM FINAN CES UNDER THE PROVISIONS OF SECTION 10(23G), SEPARATELY FINANCING ARRANGEMENTS AND ALSO, IF IT SEPARATELY F ULFILLS ALL OTHER STATUTORY CONDITIONS LISTED IN SECTIONS 10(23 G) AND 80IB(10). WITH REGARD TO YOUR QUERY REGARDING THE D EFINITION OF HOUSING PROJECT, IT IS CLARIFIED THAT ANY PROJEC T WHICH HAS BEEN APPROVED BY A LOCAL AUTHORITY AS A HOUSING PRO JECT SHOULD BE CONSIDERED ADEQUATE FOR THE PURPOSE OF SE CTION 10(23G) AND 80IB(10).' 29. FROM THE AFORESAID LETTER OF CBDT, IT IS CLEAR THAT FOR THE PURPOSES OF SECTION 80IB(10) IT IS NOT THE MANDATE OF THE SECTION THAT THE HOUSING PROJECT MUST BE ON A VACAN T PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND THAT WHERE A NEW HOUSING PROJECT IS CONSTRUCTED ON A PLOT OF LAND HA VING MINIMUM AREA OF ONE ACRE BUT WITH EXISTING HOUSING PROJECTS WOULD QUALIFY FOR SECTION 80IB(10) DEDUCTION. EVEN OTHERWISE, THE ARGUMENT OF THE REVENUE DOES NOT STAND TO REASO N BECAUSE, IN THE CITY OF MUMBAI WHERE THERE IS ACUTE SPACE CR UNCH, IT IS DIFFICULT TO FIND A VACANT PLOT HAVING MINIMUM AREA OF ONE ACRE AND EVEN IF FEW SUCH PLOTS ARE EXISTING IT CANNOT B E SAID THAT SECTION 80IB(10) DEDUCTION WAS INTENDED TO GIVE BEN EFIT ONLY TO THE UNDERTAKINGS WHO CONSTRUCT HOUSING PROJECTS ON THOSE FEW 11 PLOTS. THEREFORE, IT IS CLEAR THAT ON A PLOT OF LAN D HAVING MINIMUM AREA OF ONE ACRE, THERE CAN BE ANY NUMBER O F HOUSING PROJECTS AND SO LONG AS THOSE HOUSING PROJECTS ARE APPROVED BY THE LOCAL AUTHORITY AND FULFILL THE CONDITIONS SET OUT UNDER SECTION 80IB(10), THE DEDUCTION THEREUNDER CANNOT B E DENIED TO ALL THOSE HOUSING PROJECTS. SECTION 80IB(10) WHIL E SPECIFYING THE SIZE OF THE PLOT OF LAND, DOES NOT SPECIFY THE SIZE OR THE NUMBER OF HOUSING PROJECTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A PLOT HAVING MINIMUM AREA OF ONE ACRE. AS A RES ULT, SIGNIFICANCE OF THE SIZE OF THE PLOT OF LAND IS LOS T AND, THEREFORE, THE ASSESSEE SUBJECT TO FULFILLING OTHER CONDITIONS BECOMES ENTITLED TO SECTION 80IB(10) DEDUCTION ON CONSTRUCT ION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE ACRE, IRRESPECTIVE OF THE FACT THAT THERE EXIST OTHER HOUSING PROJECTS OR NOT IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL IN REJE CTING THE CONTENTION OF THE REVENUE REGARDING THE SIZE OF THE PLOT CANNOT BE FAULTED. 3.6 WE ARE OF THE VIEW THAT ISSUE AT HAND WITH REGA RD TO SIZE OF PLOT IS COVERED IN FAVOUR OF ASSESSEE BY DECISION OF VAN DANA PROPERTIES (SUPRA) WHEREIN, THERE WERE 5 BUILDINGS A, B, C, D AND E ON A PLOT ADMEASURING 2.36 ACRES, HENCE PROPORTIONATE AREA FO R EACH BUILDING WAS LESS THAN 1 ACRE, THEREFORE, THE BENEFIT OF SEC TION 80IB(10) WAS NOT GRANTED. THE PROVISION OF SECTION 80IB(10)(B) SPECIFIES THE SIZE OF THE PLOT, BUT NOT SIZE OF HOUSING PROJECT. THE SIZ E OF PLOT OF LAND AS PER SECTION 80IB(10) MUST HAVE BEEN MINIMUM AREA OF 1 ACRE. SECTION DOES NOT LAY DOWN THAT WITH THE HAVING MINI MUM AREA OF 1 ACRE MUST BE VACANT PLOT. OBJECT OF SECTION 80IB(1 0) IS IN GRANTING DEDUCTION EQUAL TO 100% OF THE PROFIT OF AN UNDERTA KING ARISING FROM DEVELOPING AND CONSTRUCTING HOUSE PROJECT IS WITH A VIEW TO BOOST TO STOCK OF HOUSES FOR LOWER AND MIDDLE INCOME GROUP S UBJECT TO FULFILLING THE SPECIFIED CONDITIONS. THE MINIMUM S IZE OF THE RESIDENTIAL UNIT IN HOUSING PROJECT SITUATED WITHIN CITY OF MUMBAI AND DELHI IS RESTRICTED TO 1000 SQ.FT., REVEALS THA T INTENTION OF LEGISLATION IS TO MAKE AVAILABLE LARGE NUMBER OF ME DIUM SIZE RESIDENTIAL UNITS FOR THE BENEFIT OF COMMON MAN. I N ABSENCE OF DEFINING EXPRESSION HOUSING PROJECT AND IN ABSENCE OF SPECIFYING THE SIZE OR NUMBER OF HOUSING PROJECTS REQUIRED TO BE C ONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF 1 ACRE EVEN ONE HOUSING PROJECT 12 CONTAINING MULTIPLE RESIDENTIAL UNITS OF SIZE NOT E XISTING 1000 SQ.FT., OR 1500 SQ.FT., AS THE CASE MAY BE, CONSTRUCTED ON PLOT OF LAND HAVING MINIMUM AREA OF 1 ACRE WOULD BE ELIGIBLE FOR DEDUCT ION U/S.80IB(10). PROVISIONS OF SECTION 80IB(10) DOES NOT SUGGEST THA T PLOT OF LAND HAVING MEDIUM SIZE OF 1 ACRE MUST BE VACANT. THE S AID SECTION ALLOWED DEDUCTION TO THE HOUSING PROJECT SUBJECT TO FULFILLING ALL OTHER CONDITIONS, CONSTRUCTED ON PLOT OF LAND HAVING MINI MUM AREA OF 1 ACRE AND IT IS IMMATERIAL AS TO WHETHER ANY OTHER H OUSING PROJECTS ARE EXISTING ON SAID PLOT OF LAND OR NOT. EVEN CIR CULAR CBDT VIDE LETTER DATED 04-05-2001 ADDRESSED TO MAHARASHTRA CH AMBERS OF COMMERCE STATES AS UNDER: 'THE UNDERSIGNED IS DIRECTED TO REFER TO YOUR LETTE R NO.MCHI:RSA:M:388/L9799/3 DATED 1 ST JANUARY 2001 AND TO STATE THAT THE ADDITIONAL HOUSING PROJECT ON EXISTI NG HOUSING PROJECT SITE CAN QUALIFY AS INFRASTRUCTURE FACILITY UNDER SECTION 10(23G) AND 80IB(10) PROVIDED & IS TAKEN UP BY A SE PARATE UNDERTAKING, HAVING SEPARATE BOOKS OF ACCOUNTS, SO AS TO ENSURE THAT CORRECT PROFITS CAN BE ASCERTAINED FOR THE PUR POSE OF SECTION 80IB AND ALSO TO IDENTIFY RECEIPTS AND REPAYMENTS O F LONG TERM FINANCES UNDER THE PROVISIONS OF SECTION 10(23G), S EPARATELY FINANCING ARRANGEMENTS AND ALSO, IF IT SEPARATELY F ULFILLS ALL OTHER STATUTORY CONDITIONS LISTED IN SECTIONS 10(23G) AND 80IB(10). WITH REGARD TO YOUR QUERY REGARDING THE DEFINITION OF HOUSING PROJECT, IT IS CLARIFIED THAT ANY PROJECT WHICH HAS BEEN APPROVED BY A LOCAL AUTHORITY AS A HOUSING PROJECT SHOULD BE CONSIDERED ADEQUATE FOR THE PURPOSE OF SECTION 10(23G) AND 80I B(10).' 3.7 FROM THE ABOVE, IT IS CLEAR THAT FOR THE PURPOS ES OF CLAIM UNDER SECTION 80IB(10), IT IS NOT THE MANDATE OF THE SECT ION THAT THE HOUSING PROJECT MUST BE ON A VACANT PLOT OF LAND HA VING MINIMUM AREA OF ONE ACRE AND THAT WHERE A NEW HOUSING PROJE CT IS CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE B UT WITH EXISTING HOUSING PROJECTS WOULD QUALIFY FOR SECTION 80IB(10) DEDUCTION. SO, IT IS CLEAR THAT ON PLOT OF LAND HAVING MINIMUM AREA O F ONE ACRE, THERE CAN BE ANY NUMBER OF HOUSING PROJECTS AND SO LONG A S THOSE HOUSING PROJECTS ARE APPROVED BY THE LOCAL AUTHORITY AND FU LFILL THE CONDITIONS SET OUT UNDER SECTION 80IB(10), THE DEDUCTION THERE UNDER COULD NOT BE DENIED TO ALL THOSE HOUSING PROJECTS. 13 3.8 IN VIEW OF ABOVE, ASSESSING OFFICER WAS NOT JU STIFIED IN REJECTING OF SEC.80IB(10) ON THE POINT OF SIZE OF PLOT, ASSES SING OFFICER IS DIRECTED ACCORDINGLY. EVEN IF THERE IS NO CONSTRUC TION OF A PLOTS IN PLOT NO.88 & NO.105 ASSESSEE IS ENTITLED FOR DEDUCT ION FOR ELIGIBLE UNITS ON REMAINING PLOT. ASSESSING OFFICER IS DIREC TED ACCORDINGLY. 4. NEXT ISSUE IS WITH REGARDS TO ADMISSIBILITY OF D EDUCTION U/S. 80IB(10) IN RESPECT OF 3 BUNGALOWS OUT OF 6. THE A SSESSING OFFICER POINTED OUT THAT VALUATION REPORT AS MENTIONED THAT EACH AREA OF BUNGALOW HAS EXCEEDED PRESCRIBED LIMIT OF 1500 SQ.F T. AS PER PROVISION OF SEC. 80IB(10), EACH BUNGALOW SHOULD NO T EXCEED THE PRESCRIBED LIMIT OF 1500 SQ.FT. IN THIS REGARD, AS SESSEE RELIED ON SITE PLAN SUBMITTED ON BEHALF OF ASSESSEE AND DVO REPORT AND SUBMITTED THAT COMPLETION CERTIFICATE HAS NOT BEEN GRANTED TO THE ASSESSEE TILL DATE THOUGH SAME HAS ALREADY BEEN APPLIED. IN THIS REGARD, FIRSTLY, WE ARE OF THE VIEW THAT ISSUE OF SIZE OF THE BUNGAL OW HAS TO BE DECIDED ON THE BASIS OF SITE PLAN PASSED BY CONCERN MUNICIPAL AUTHORITY. SECONDLY, CONSTRUCTION OF THE SAME AS P ER SITE PLAN CAN BE ASCERTAINED BY COMPLETION CERTIFICATE WHICH IS M ISSING IN THIS CASE. ACCORDING TO ASSESSEE, IT HAS APPLIED FOR, B UT SAME HAS NOT BEEN RECEIVED. ASSESSEE HAS NOT MADE OUT THE CASE THAT HE HAS RAISED THE CONSTRUCTION AS PER SITE PLAN APPROVED A ND PRESCRIBED LIMIT LAID DOWN IN THE PROVISIONS OF SECTION 80IB(1 0) I.E. 1500 SQ.FT. HAS NOT BEEN VIOLATED BY ASSESSEE. IN THIS REGARD, ASSESSING OFFICER IS DIRECTED TO VERIFY THIS FACT AS PER FACTS AND CI RCUMSTANCES OF THE CASE AND DECIDE THE SAME. ASSESSING OFFICER IS AT LIBERTY TO LOOK INTO THE FACT WHETHER COMPLETION HAS BEEN REJECTED OR WI THHELD BY THE CONCERNED MUNICIPAL AUTHORITY FOR REASONS ATTRIBUTA BLE TO ASSESSEE. THUS, MATTER IS RESTORED TO HIM WITH A DIRECTION TO DECIDE THE ISSUE AT HAND AFTER TAKING INTO ACCOUNT, ALL FACTS AND CI RCUMSTANCES POSSIBLE FOR DECIDING ISSUE AT HAND. ASSESSING OFF ICER IS ALSO DIRECTED TO DECIDE THE ISSUE OF PRO-RATA CLAIM OF SECTION 80 IB(10) OF I.T ACT AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE 14 ASSESSEE. SIMILAR IS THE ISSUE IN ALL YEARS. FACT S BEING SIMILAR, SO FOLLOWING THE SAME, MATTER IS RESTORED TO ASSESSING OFFICER WITH SIMILAR DIRECTION IN ALL YEARS ON ISSUE OF SIZE OF LANDS INCLUDING THREE BUNGALOWS IN QUESTION. 5. IN RESULT, ASSESSEES APPEALS ARE PARTLY ALLOWED AS INDICATED ABOVE. 6. IN ITA NO.700 TO 702/PN/2011, THE REVENUE HAS RA ISED THE FOLLOWING COMMON GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) WAS CORRECT IN UPHOLDING THAT ADDITION O F UNEXPLAINED INVESTMENT U/S 69 IS IN FACT ADDITION O F SUPPRESSED EXPENDITURE U/S.69C. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) WAS CORRECT IN DELETING THE ADDITION U/S 69 ON THE GROUND THAT ADDITION OF UNEXPLAINED INVESTMENT U/S. 69 IS IN FACT ADDITION OF SUPPRESSED EXPENDITURE U/S.69C THU S A.O WAS NOT AUTHORIZED BY SECTION 142A TO REFER THE MAT TER TO DVO; 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) WAS CORRECT IN UPHOLDING THAT WITHOUT RE JECTION OF BOOK RESULT REFERENCE TO DVO CANNOT BE MADE; 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY GROUND OF APPEAL. 7. THIS ISSUE PERTAINS TO ADDITION ON ACCOUNT OF UN EXPLAINED INVESTMENT U/S.69 ON THE BASIS OF DVO REPORT FOR A. Y. 2002-03 TO 2004-05. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED ABNORMAL PROFIT AND GAIN FROM BUSINESS OF CONSTRUCTION ON HOUSING PROJECT AN D HENCE REFERRED THE CONSTRUCTION OF HOUSING PROJECT TO DVO U/S. 142 A OF I.T ACT. THE CONCERNED DVO HAS VALUED THE COST OF CONSTRUCTION A T RS.2,56,22,299/- AS AGAINST CLAIMED BY ASSESSEE IN THE BOOKS OF ACCOUNTS AT RS.1,32,29,645/-. ASSESSING OFFICER HA S ACCORDINGLY 15 ARRIVED AT DIFFERENCE FOR EACH YEAR UNDER CONSIDERA TION AND MADE THE SAME IN YEARS UNDER APPEAL AS UNDER: PERIOD OF CONSTRUCTION RELEVANT ASSESSMENT YEAR INVOLVED EXPENDITURE CLAIMED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS RS. COST OF CONSTRUCTION ASSESSED BY THE DVO, BHOPAL RS. DIFFERENCE RS. 99 - 2000 2000 - 01 32,00,000 61,97,548 29,97,548 2000 - 01 2001 - 02 31,00,000 60,03,874 29,03,874 2001 - 02 2002 - 03 42,41,000 82,13,687 39,72,687 2002 - 03 2003 - 04 21,05,000 40,76,824 19,71,824 2003 - 04 2004 - 05 5,83,645 11,30,365 5,46,720 TOTAL 1,32,29,645 2,56,22,299 1,23,92,654 7.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY, WHERE VARIOUS CONTENTIONS WERE RAISED AND HAVING CONSIDER ED THE SAME, CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE AND THE S AME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE INTER ALIA S TATED THAT CIT(A) ERRED IN DELETING THE ADDITION OF UNEXPLAINED INVES TMENT, WHICH IN FACT ADDITION OF SUPPRESSED EXPENDITURE U/S.69C. C IT(A) WAS NOT JUSTIFIED IN HOLDING THAT WHEN REJECTION OF BOOK RE SULT MATTER CANNOT BE REFERRED TO DVO. ON OTHER HAND, LEARNED AUTHORI ZED REPRESENTATIVE RELIED ON THE DECISION OF CIT(A). 7.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL RECORD, WE FIND THAT AS PER PROVISION OF SECTION 142A(1), A SSESSING OFFICER CAN REFER MATTER TO DVO TO VERIFY ANY UNEXPLAINED E XPENDITURE U/S.69 OR 69A OF I.T ACT. THE RELEVANT PORTION OF SECTION 142A IS REPRODUCED BELOW 142A(1) FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF V ALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES REFER RED TO IN SECTIONS 69A OR 69B IS REQUIRED TO BE MADE, THE ASS ESSING OFFICER MAY REQUIRE VALUATION OFFICER TO MAKE AN ES TIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. 7.3 THE STAND OF THE ASSESSEE HAS BEEN WITHOUT REJE CTING BOOK RESULTS AND BOOKS OF ACCOUNTS U/S. 145 OF THE ACT, ASSESSING OFFICER CANNOT REFER TO FOR VALUATION BY DVO AS HELD BY HON BLE SUPREME COURT IN CASE OF SARGAM CINEMA VS CIT (2010) 328 IT R 513 (SC) 16 RELIED BY ASSESSEE. IN VIEW OF ABOVE, ASSESSING OF FICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.39,72,687/-, 19, 71,824/- AND RS.5,46,720/- FOR A.YS.2002-03, 2003-04 AND 2004-05 RESPECTIVELY. THIS REASONING FINDING OF CIT(A), NEED NO INTERFERE NCE FROM OUR SIDE, WE UPHELD THE SAME. THIS TAKE CARE OF THIS ISSUE I N A.YS.2003-04 AND 2004-05 AS WELL. 8. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD TO DISALLOWANCE OF SPECULATION LOSS IN A.Y.2003-04. ASSESSING OFFICER HAS MADE ON ACCOUNT OF DISALLOWANCE OF BUSINESS LOSS / EXPENDIT URE OF RS.5,98,000/- BY TREATING THE SAME AS SPECULATION L OSS. DURING ASSESSMENT PROCEEDINGS, ASSESSING OFFICER HAS NOTIC ED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS.5,98,000/- TO PROFIT & LOSS ACCOUNT UNDER THE HEAD RATE DIFFERENCE ON ACCOUNT OF CANCE LLATION OF STEEL BAR AND SHOWED THE SAID AMOUNT AS LIABILITY IN THE BALANCE SHEET. ASSESSING OFFICER STATED IN ASSESSMENT ORDER THAT T HIS EXPENDITURE IS NOT REVENUE EXPENDITURE BUT CAPITAL EXPENDITURE, HE NCE SAID EXPENDITURE IS NOT ALLOWABLE U/S.37 OF ACT. ASSESS ING OFFICER FURTHER HELD THAT THE SAID EXPENDITURE IS SPECULATION LOSS AND CANNOT BE SET OFF AGAINST BUSINESS INCOME. ASSESSING OFFICER FUR THER STATED THAT AS A HOUSING PROJECT WAS ON THE VERGE OF COMPLETION, P URCHASE OF STEEL WAS NOT REQUIRED FOR BUSINESS CONSTRUCTION. ASSESS ING OFFICER FURTHER HELD THAT THE SAID EXPENDITURE WAS SPECULAT ION LOSS WITHIN THE MEANING OF SECTION 43(5) OF I.T ACT AND HENCE C OULD NOT BE SET OFF AGAINST BUSINESS INCOME AS PER PROVISIONS OF SECTIO N 73(1) OF I.T ACT. 8.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY AND RAISED VARIOUS CONTENTIONS. HAVING CONSIDERED THE SAME, CIT(A) GRANTED RELIEF TO THE ASSESSEE, SAME HAS BEEN OPPOS ED BEFORE US, INTER ALIA STATED THAT CIT(A) WAS NOT JUSTIFIED IN HOLDING ASSESSEES CLAIM UNDER THE RATE DIFFERENCE ON ACCOUNT OF CANC ELLATION OF STEEL BAR IS NOT IN NATURE OF SPECULATING TRANSACTION. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE RELIED ON THE ORD ER OF CIT(A) ON THIS ISSUE. 17 8.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL RECORD, WE FIND THAT ASSESSEE HAS CARRIED OUT ONLY ONE TRAN SACTION OF CANCELLING THE PURCHASE ORDER OF STEEL BAR AND INCU RRED LOSS ON ACCOUNT OF RATE DIFFERENCE. ON PERUSAL OF EXPLANAT ION-2 TO SECTION 28, IT IS CLEAR THAT IN ORDER TO CONSTITUTE A SEPAR ATE AND DISTINCT BUSINESS, THERE HAS TO BE MORE THAN ONE SPECULATIVE TRANSACTION. THEREFORE, SECTION 73(1) OF THE ACT HAS NO APPLICAT ION TO THE FACTS OF THE CASE UNDER APPEAL. ASSESSEE HAS RIGHTLY POINTE D OUT THAT ON FACTS OF THE CASE, SECTION 43(5) OF THE ACT IS NO A PPLICATION TO THE CASE OF ASSESSEE. CIT(A) RIGHTLY HELD THAT NATURE OF TR ANSACTION IN THE CASE UNDER APPEAL DOES NOT AMOUNT TO SPECULATION LOSS DU E TO FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER IN TREATING THE BUS INESS LOSS / EXPENDITURE INSTEAD OF BUSINESS LOSS OF RS.5,98,000 /- INSTEAD OF FROM SPECULATION. WE HELD THE SAME. AS A RESULT, ALL T HE APPEALS OF REVENUE ARE DISMISSED. 9. IN THE RESULT, APPEALS OF ASSESSEE ARE PARTLY AL LOWED AS INDICATED ABOVE AND THE APPEALS OF REVENUE ARE DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THE DAY OF 27 TH NOVEMBER 2013. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH NOVEMBER, 2013 GCVSR COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A), AURANGABAD 4. THE CIT, AURANGABAD 5. THE DR, B BENCH, I.T.A.T., PUNE. 6. GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE