ITO 15(1)(3), MUMBAI V. PODDAR ASHISH DEVELOPERS, MUMBAI

ITA 3704/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8158 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: J D MISTRY; RAO
• Keywords: Difference of opinion
• Section: 133A; 80IB; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNALC BENCH, MUMB AI BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI AMIT SHUK LA, JM ITA NO. 2443/MUM/2012 ASSESSMENT YEAR-2009-10 PODDAR & ASHISH DEVELOPERS, 5C, COURT CHAMBERS, NO.35, NEW MARINE LINES, MUMBAI-400020 / VS. INCOME - TAX OFFICER 15(1)(3), 1 ST FLOOR, INCOME-TAX OFFICES, MATRU MANDIR, GRANT ROAD, MUMBAI ./PAN :AAAAP4750D ( /ASSESSEE ) .. ( / RESPONDENT ) ITA NO. 3704/MUM/2012 ASSESSMENT YEAR-2009-10 INCOME - TAX OFFICER 15(1 )(3), 1 ST FLOOR, INCOME-TAX OFFICES, MATRU MANDIR, GRANT ROAD, MUMBAI / VS. PODDAR & ASHISH DEVELOPERS, 5C, COURT CHAMBERS, NO.35, NEW MARINE LINES, MUMBAI-400020 ./PAN :AAAAP4750D ( /ASSESSEE ) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI J.D.MISTRY & M.R.RAO / REVENUE BY : SHRI A.C. TEJPAL /DATE OF HEARING : 07 /08/2014 / DATE OF PRONOUNCEMENT : 30/09/2014 / ORDER PER D. KARUNAKARA RAO, AM: THESE ARE THE CROSS APPEALS BY BOTH THE REVENUE AND ASSESSEE AGAINST THE ORDER OF THE CIT(A)-26, MUMBAI DATED 07/03/2012. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE T HAT THE ASSESSEE IS AN AOP OF THREE MEMBERS NAMELY M/S BEDROCK LIMITED M/S ASHISH ESTATE AND PROPERTIES PVT. LTD AND M/S ESVEE PODDAR FAMILY TRUST UNDER AN AGREE MENT DATED 19/06/2004. 2 ITA NO.2443/MUM/2012 & 3704/MUM/2012 THE AOP IS FORMED FOR DEVELOPING A PROPERTY AT GORE GAON WEST UNDER THE NAME GARDEN ESTATE. THE ASSESSEE CONSTRUCTED A-WING AND B-WING IN THE SAID GARDEN ESTATE AND EACH WING IS TO HAVE 96 FLATS. DUE TO SOM E REASONS, B-WING CONTAINS FINALLY 95 FLATS ONLY. BOTH THE WINGS HAVE FLATS V ARYING FROM 1-BHK TO 3-BHK FLATS. ALL THE FLATS ARE APPROVED TO BE WITH THE BUILT UP AREA OF LESS THAN 1000 SQ. FT. AS PRESCRIBED IN CLAUSE (C) TO EXPLANATION TO SECTION 80IB(10) OF THE ACT. THE PROJECT WAS APPROVED IN THE A.Y.2005-06 AND COMPLETED BEFOR E MARCH 2009 RELEVANT TO THE A.Y.2009-10. THERE WAS A SURVEY ACTION U/S 133A OF THE ACT ON 11/03/2008 AND THE PROJECT IS INCOMPLETE BY THAT DATE. DURING T HE SURVEY, THE OFFICERS NOTED THAT THERE ARE 24 1BHK FLATS UNDER CONSTRUCTION AND 10 O F THE THEM WERE ALREADY SOLD. THEY ARE CONSTRUCTED IN SUCH A WAY THAT THE SAID FL ATS COULD BE CONVENIENTLY COMBINED WITH THE LOWER 1-BHK FLATS VERTICALLY IN O RDER TO GENERATE SPACIOUS DUPLEX FLATS. THIS IS POSSIBLE AS THERE IS A SQUARE SHAPED HOLE LEFT IN BETWEEN THE TWO FLATS FOR PROVIDING A STAIR CASE IF FLAT OWNERS SO DESIRE TO REACH THE LOWER FLAT. THERE IS A PROVISION FOR ONE KITCHEN IN THE LOWER FLAT IF A DU PLEX FLAT IS GENERATED. HOWEVER, THERE IS NO STAIR CASE SEEN ALREADY BUILT AT THE TI ME OF SURVEY ACTION. REVENUE OFFICERS INTERPRETED THESE FINDINGS BY STATING THAT THE ASSESSEE INTENDS TO SELL 1BHK FLATS AS DUPLEX FLATS. FURTHER, THE AO RELIED ON A COLOUR BROCHURE OF DUPLEX FLOOR PLAN SHOWING THE DRAWING HOW TWO 1-BHK FLATS (LOCA TED ONE ABOVE OTHER) COULD BE JOINED. IT WAS FOUND AT THE SITE AND THE SAME WAS I MPOUNDED TOO. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE OBTAINED REQU ISITE APPROVAL OF THE LOCAL AUTHORITIES FOR CONSTRUCTION OF 1-BHK FLATS WITH TH E BUILT UP AREAS OF BELOW 1000 SQ. FT. BUT WHEN COMBINED, OBVIOUSLY, THE BUILT UP AREA OF EACH OF THE SAID DUPLEX FLAT EXCEEDS THE STIPULATED AREA LIMIT OF 1000 SQ. FT. BUILT UP AREA. HOWEVER, THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE NOT ONL Y OBTAINED THE SAID APPROVAL FROM THE LOCAL AUTHORITIES FOR CONSTRUCTING 1BHK FL AT BUT ALSO CONSTRUCTED AS SUCH AND ALSO THE EACH OF SUCH 1-BHK WAS SOLD BY WAY OF SEPARATE AGREEMENTS. OF COURSE THE TWO 1BHK FLATS WERE SOLD TO TWO MEMBERS OF THE SAME FAMILY. IN THE SURVEY TIME, A STATEMENT WAS RECORDED FROM THE SITE ENGINEER AS WELL AS SHRI ASHISH VAID, THE DIRECTOR OF THE AOP. PARA 9 OF THE ASSESSMENT ORDER CONTAINS 3 ITA NO.2443/MUM/2012 & 3704/MUM/2012 RELEVANT QUESTIONS AND ANSWERS FROM THE STATEMENT A ND THE ABOVE DISCREPANCIES WERE PUT TO THEM BY THE SURVEY TEAM. 3. A SUMMARY OF THE SAID QUESTIONS AND ANSWERS INCL UDES THE FACT OF IMPOUNDING THE SAID BROCHURE CONTAINING THE PLAN AN D DESIGN FOR JOINING TWO 1BHK FLATS TO GENERATE A DUPLEX FLAT AND IT IS AIMED A T BOOSTING SALES AND IT IS PART OF THE MARKETING MECHANISM FOR SALE OF THE SAID 1-BHK FLATS (24 IN NUMBER). REGARDING PROVIDING OF A SQUARISH HOLE BETWEEN TWO FLATS AN D WITH A SINGLE KITCHEN, IT IS SUBMITTED THAT THE SAME IS DONE FOR AND AT THE REQ UEST OF THE FLAT BUYERS, IF HEY WISH TO MERGE TOW 1-BHK FLATS. THUS, IT IS THE ASS ESSEES ASSERTION THAT ALL THE 24 1-BHK FLATS WAS CONSTRUCTED WITH THE BUILT UP AREA OF LESS THAN 1000 SQ.FT. AND HOWEVER, FOR MARKETING PURPOSES THE SO CALLED HOLE WAS PROVIDED WITH PLAN TO CONNECT THEM BY STAIRCASE WITH A SINGLE KITCHEN IN THE LOWER FLOOR. IT IS AN ADMITTED FACT THE SO CALLED DUPLEX FLATS WERE GENERATED BY J OINING AT THE REQUEST OF THE BUYERS AFTER THEY OCCUPIED THE FLATS DURING THE POS T-SALE PERIOD. FURTHER, THE FACT IS THAT THE ASSESSEE OBTAINED APPROVAL FOR CONSTRUCTIO N OF 24 1-BHK FLATS EACH WITH THE AREA BELOW 1000 SQ FT AND SOLD ACCORDINGLY. PRO VIDING A SQUARE SHAPED HOLE AND SINGLE KITCHEN IS PART OF THE MARKETING TECHNIQ UE. THE HOLE PROVIDED IN THE CEILING/ROOF IS OF AN AREA OF 1.5 MT.SQ. AND EACH 1 -BHK FLAT HAS THE APPROVED BUILT UP AREA OF 631 SQ.FT. ONLY. CONSIDERING THE ABOVE DISCREPANCIES AND THE INTENTION FOR GENERATING DUPLEX FLAT , THE ASSESSING OFFICER INTERPRETED THE SAME AGAINST THE ASSESSEE AND OPINED THAT THE ASSESSEE VIOLATED THE CONDITION RELATING TO THE AREA OF THE FLAT PROVIDED CLAUSE (C) OF THE EXPLANATION TO S ECTION 80IB(10) OF THE ACT. 4. IN THE ASSESSMENT, THE AO REJECTED THE AFFIDAVI T OF SRI VAID, THE DEPONENT OF THE STATEMENT WHO REQUESTED THE AO TO CONSIDER T HE POST SURVEY EVENTS IN THE MATTER TOO BEFORE CONCLUDING THE ASSESSMENT (PA RA 14(B) OF THE AOS ORDER). IT IS THE CASE OF THE ASSESSEE THAT THE STATEMENT TAKE N DURING THE SURVEY ACTION IS NOT BINDING AND RELIED ON THE JUDGMENTS OF VARIOUS COUR TS ON THIS ISSUE. AO ALSO REJECTED THE FINDING OF THE CIT(A) IN CONNECTION WI TH THE ASSESSMENT OF THE EARLIER YEARS. IN THOSE ORDERS RELEVANT FOR EARLIER YEARS, THE CIT(A) DECIDED THE ISSUE OF 4 ITA NO.2443/MUM/2012 & 3704/MUM/2012 CLAIM OF DEDUCTION IN FAVOUR OF THE ASSESSE AND THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT IS FOUND ALLOWABLE (PARA 10 ON PAGE 11 OF THE AOS ORDER). FURTHER, THE AO ALSO REJECTED LETTERS GIVING BY FOUR FLAT BUYER S OF 1-BHK, FILED BEFORE HIM. THESE LETTERS CONFIRMS THE ASSESS EES CLAIM THAT THE HOLE AND SINGLE KITCHEN ARE PROVIDED AT THE INSTANCE OF THE FLAT BUYERS. (PARA 15 OF THE ASSESSMENT ORDER). IN PARA 16, IT IS DESCRIBED THA T THE AO UNDER TOOK THE EXERCISE OF VERIFICATIONS OF THE FLAT BUYERS AND INVOKED THE PROVISIONS OF SECTION 133(6) OF THE ACT. THE AO ISSUED NOTICES ON 16/12/2011 TO AL L THE 1BHK FLAT OWNERS IN THE PROJECT AND RECEIVED REPLIES FROM ALL OF THEM. HE MADE AN ENQUIRY INTO THE ESSENTIAL FACTS OF WHO JOINED THE TWO FLATS TO FORM DUPLEX AND THE TI ME OF SUCH JOINING EVEN . IT IS THE FINDING OF THE AO THAT FOUR FLATS OWNE D TWO EACH BY SRI VIMAL KUMAR PODDAR AND MRS CHAULA VIMAL PODDAR ARE NOT JOINED. DURING THE ASSESSMENT PROCEEDINGS, THE AO VISITED ALONG WITH T HE DVO TO FOUR OTHER FLATS AND FOUND THAT FOUR DIFFERENT FAMILIES HAVE OCCUPIED 1- BHK FLATS AND THERE IS NO STAIR CASE IN THESE FLATS (PARA 16). THEY ARE INDEPENDEN T FLATS IN ALL RESPECTS AND THERE IS NO DISCREPANCIES WITH REFERENCE TO THE ALLEGED HOLE AND THE KITCHEN ORIGINALLY POINTED OUT BY SURVEY TEAM. THUS, THE POST SURVEY D EVELOPMENTS WERE NOT TAKEN IN TO ACCOUNT WHILE MAKING THE ASSESSMENT. IT IS THE F INDING OF THE AO AT THE END OF THE SAID PARA 16 THAT THE FLAT BUYERS HAVE JOINED T HE TWO 1-BHK FLATS IN TO DUPLEX FLATS AFTER TAKING POSSESSIONS OF THE FLATS BY MAKING USE OF THE PROVISIONS PROVIDED BY THE DEVELOPER. RELEVANT EXTRACT READ AS FOLLOWS,- IN ALL OTHER CASES, THEY ARE SAID TO BE JOINED BUT THEY HAVE REPLIED T HAT EITHER THE PROVISIONS TO JOIN WERE MADE BY THE DEVELOPER AT THEIR REQUEST OR THAT THEY JOINED THE SAME AFTER TAKING POSSESSIONS OF THE FLATS. 5. THEREFORE, ASSESSEE IS NOT FOUND ELIGIBLE FOR CL AIM OF DEDUCTION UNDER SUCH SECTION. WHILE DENYING THE CLAIM OF DEDUCTION ON THE ENTIRE PROFITS OF THE PROJECT WITHOUT PREJUDICE, THE AO HELD THAT THE PROFIT ATTR IBUTABLE TO THE BALANCE OF 18 1BHK FLATS CANNOT BE ALLOWED AS DEDUCTION U/S 80IB( 10) OF THE ACT ON PROPORTIONATE BASIS. THE PARA 17 CONTAINS THE CONCL USIONS AND THE SAME REPRODUCED AS UNDER:- 5 ITA NO.2443/MUM/2012 & 3704/MUM/2012 17. I HAVE CONSIDERED THE SUBMISSIONS MADE AS ABOVE. B UT IT IS DIFFICULT TO ACCEPT THE SUBMISSIONS. THE ARGUMENTS OF THE ASSESSEE CANNOT TAKE AWAY THE FACTS FOUND AT THE TIME OF SURVEY. DURING THE COURSE OF SURVEY IT WAS CLEA RLY VISIBLE THAT THE INTENTION OF THE ASSESSEE WAS TO CONSTRUCT AND SELL DUPLEX. THE COL OUR PRINTED BROCHURE IS EVIDENCE OF THIS FACT THAT IT HAD NO OTHER INTENTION OTHER THAN SELL ING THEM AS ONE UNIT AND CERTAINLY IN WHATEVER MANNER THE PLANS WERE APPROVED, SOLD INDIV IDUALLY TO THE PARTIES BUT THE INTENTION OF THE ASSESSEE TO SELL THEM AS DUPLEX FLATS CANNOT BE RULED OUT. IT APPEARS THAT THE ASSESSEE EVEN AT THE TIME OF DESIGNING THE PLANS HA D THE SAME INTENTION TO SELL WITH THE IDEA TO JOIN THEM AS DUPLEX FLATS. IN THIS SITUATION, I T DOES NOT MATTER WHETHER THE ASSESSEE HIMSELF MADE THE PROVISION OR JOINED THE FLATS OR T HE SAME WAS MADE AT THE REQUEST OF THE PURCHASER. THE ASSESSEE IN ITS STATEMENT ADMITTED TO THE FACT THAT CHANGES WERE DONE AT THE INSTANCE OF THE BUYERS WHO HAD PURCHASED TWO ON E BHK FLATS. ACCORDINGLY, I HOLD THAT THE ASSESSEE HAD VIOLATED THE CONDITION U/S 80IB(10 ) AND THEREFORE NOT ELIGIBLE FOR THE DEDUCTION CLAIMED. THE PROFITS ATTRIBUTABLE TO THE 18 ONE BHK FLATS CANNOT BE ALLOWED, EVEN IF U/S 80IB(10), PROPORTIONATE DEDUCTION OF PROFITS FROM THE PROJECT IS ALLOWABLE UNDER LAW. VARIOUS TRIBUNALS HAVE HELD THAT THE PROVISIONS BEI NG INCENTIVE PROVISIONS, 80IB(10) SHOULD BE APPLIED IN FAVOUR OF THE TAX PAYER AND WHERE A S MALL PART OF THE PROJECT DOES NOT FULFILL THE CONDITION, THE ASSESSEE WILL NOT LOSE BENEFIT IN RE SPECT OF THE PART WHICH FULFILLS THE CONDITIONS U/S 80IB(10). BUT THE BOMBAY HIGH COURTS DECISION IN THE CASE OF BRAHMA ASSOCIATES (333 ITR 289) IS AGAINST THE ASSESSEE. FOR THE SAKE OF RECORDS THE BUILT UP AREA OF THESE 18 ONE BHK FLATS IS 11358 SQ.FT. AGAINST TOTAL BUILT OF AR EA OF FLATS IN THE PROJECT AT 156651 SQ.FT. THE AREA WHICH DO NOT SATISFY THE CONDITION U/S 80I B (10) IS 7.25%. 6. THE CLAIM OF DEDUCTION IN ASSESSMENTS FOR A.Y.2005-06 TO 2008-09 : IN THE ASSESSMENT ORDER IN PARA 11, AO DISCUSSED THE D EVELOPMENT IN THE ASSESSMENT FOR THE A.Y.2005-06 TO 2008-09 AND MENTIONED THAT ASSESSMENT WERE COMPLETED IN THOSE YEARS ON WIP METHOD REJECTING THE PROJECT COMPLETION METHOD (PCM) OPTED BY THE ASSESSEE. THE SAME IS NOT APPROVED BY CIT(A) AND EVENTUALLY UPHELD THE PROJECT COMPLETION METHOD FOLLOWED BY TH E ASSESSEE. THE MATTER TRAVELLED TO THE ITAT ON THIS ISSUE. IN THIS REGAR D, THE COUNSEL FILED COPY OF RELEVANT ORDER OF THE TRIBUNAL FOR THE A.Y.2007-08 AND 2008-09 VIDE ITA NO.3408/MUM/2010 AND 3559/MUM/2011 DATED 12/03/2014 . THIS ISSUE HAS NOW COME TO THE FINALITY AND THE THE PROFITS OF THE PRO JECT IS REQUIRED TO BE ASSESSED ON PCM OF ACCOUNTING AND UNDISPUTEDLY IN THE CURRENT A SSESSMENT YEAR 2009-10. 7. IN ADDITION TO THE AO CONCLUSION RELATING TO 18 OF THE ONE BHK FLATS, THE ASSESSING OFFICER ALSO DISCUSSED OTHER DEVIATION WI TH REGARD TO ADJACENT FLATS NO. B/1303 AND 1304, THE ISSUE RELATING TO BUILT UP ARE A OF 3BHK FLATS OF THE PROJECT, REQUIREMENTS OF INCLUDING DRY BALCONY MEANING OF BU ILT UP AREA ETC. SOME 3BHK FLATS WERE REFERRED TO THE DVO FOR MEASUREMENT PURP OSE AND THE COPY OF THE SAID 6 ITA NO.2443/MUM/2012 & 3704/MUM/2012 REPORT OF DVO WAS MADE TO THE ASSESSEE FOR COMMENTS . FINALLY, THE AO FOUND THAT THE SAID FLATS ARE IN THE SPECIFIED AREA OF 1000 SQ . FT. CONSIDERING THE DEVIATION FROM THE ADDITIONS SPECIFIED IN THE PROVISIONS OF SECTIO N 80IB(10), THE ENTIRE PROFITS OF THE PROJECT IS CONSIDERED FOR THE A.Y.2009-10 AND D ENIED THE DEDUCTION CLAIMED U/S 80IB(10) OF THE ACT. THE ASSESSMENT IS COMPLETED A T THE TOTAL INCOME OF RS.46,71,12,960/- AGAINST THE NIL INCOME RETURNED B Y THE ASSESSEE. AGGRIEVED BY ABOVE CONCLUSION OF THE AO, THE ASSESSEE IS IN APPE AL BEFORE THE CIT(A). 8. BEFORE THE CIT(A): DURING THE FIRST APPELLATE PROCEEDINGS BEFORE THE FAA, THE ASSESSEE MADE WRITTEN SUBMISSION WHICH ARE EXTR ACTED IN PARA 4 OF THE IMPUGNED ORDER. IN THAT, THE ASSESSEE PROVIDED A REBUTTAL TO EACH OF THREE MAIN ISSUES RAISED BY THE AO I.E A. JOINING OF TWO FLATS NO.1303 AND 1304 IN THE B-WING , B. THE VIOLATION IN RESPECT OF AREAS OF 3BHK FLATS AND C. VIOLATION IN RESPECT OF 1BHK FLATS QUA THE DUPLEX FLATS. IN CONNECTION WITH FIRST ONE REGARDING JOINED OF TWO FLATS, ASSESSEE PRODUCED A LETTER FROM THE PURCHASE R (MR. PANNALAL PODDAR) DATED JULY 2007 WHICH CONTAINS WRITTEN REQUEST TO THE DEV ELOPERS AND IT CONTAINS THE FOLLOWING REQUEST IE PLEASE REMOVE THE WALL BETWEEN THE TWO FLATS . THE ASSESSEE RELIED ON THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL MUMBAI BENCH IN THE CASE OF G. V. CORPORATION (38 SOT 174) IN HIS SUPPORT WHICH IS RELEVANT FOR THE PROPOSITION THAT THE ASSESSEE CANNOT BE DENIED OF T HE BENEFITS OF THE DEDUCTION U/S 80IB OF THE ACT, WHEN SUCH CONVERSION OF FLATS IN T O BIGGER ONES IS MADE BY THE DEVELOPER AT THE REQUEST OF THE FLAT PURCHASERS/BUYERS. REGARDING THE SECOND OBJECTION RELATING TO MEASUREMENT OF BUILT UP AREA OF 3BHK F LATS IN THE PRESENCE OF THE DVOS, ASSESSEE EXPLAINED THAT THE DRY BALC ONY, DRY AREA, WINDOW PROJECTIONS ETC COULD NOT BE INCLUDED WITHIN THE D EFINITION OF THE BUILT UP AREA FOR THE PURPOSE OF U/S 80IB(10) OF THE ACT. THE ASSESS EE SUBMITTED THAT THE AO ACCEPTED ABOVE CONTENTION OF THE ASSESSEE IN VIEW O F THE DVO FINDINGS IN THE MATTER AND THUS, THE BUILT UP AREA FOR 3BHK FLATS A RE CONCLUDED AS BELOW THE PRESCRIBED LIMIT OF 1000 SQ.FT. FINALLY, REGARDING THE THIRD AND THE LAST OBJECTION OF THE AO FOR GRANTING DEDUCTION U/S 80IB OF THE AC T RELATING TO CONVERSION OF THE 7 ITA NO.2443/MUM/2012 & 3704/MUM/2012 1BHK FLATS INTO THE DUPLEX FLATS QUA THE PROVIDING OF THE HOLE AND A SINGLE KITCHEN, THE ASSESSEE SUBMITTED THE RELEVANT PARA AS UNDER:- IN RESPECT OF ISSUE IN NO. (III) OF PARA 6, IT IS SUBMITTED AT THE TIME OF SURVEY AND THEREAFTER THROUGH THE ASSESSMENT PROCESSES FOR THE EARLIER YE ARS AS WELL IN THE SUBJECT ASSESSMENT IN APPEAL, THAT ONE BHK FLATS WERE INDEPENDENT FLATS AS PLANNED , AS PER PLAN APPROVALS IN TERMS OF CONSTRUCTION MADE. EACH FLAT HAS SEPARATE ENTRA NCE. EACH FLAT IS BELOW 1000 SQ. FT. BUILT UP AREA. EACH FLAT HAS BEEN SOLD UNDER INDEPENDENT AG REEMENT AS SUCH. 6 FLATS PURCHASED BY FOUR PURCHASERS ARE BOUGHT AND RETAINED BY THEM AS ONE BHK UNITS AND ARE BEING USED AS SUCH, WHICH WAS A FACT AS LATE AS ON 23/12/2011 WHEN THE AO INSPECTED FOUR FLATS AND HAD RECEIVED A LETTER OF CONFIRMATION IN RESPECT OF 2 OTHER FLATS CONFIRMING THAT THE PURCHASERS HAD NOT JOINED TWO FLATS TO MAKE A LARGE R FLAT KNOWN AS DUPLEX FLAT. THIS ALSO SHOWS THAT THE APPELLANT HAD NOT DESIGNED TO CONSTRUCT OR SELL ONE BHK FLATS AS DUPLEX FLATS COMBINING TWO ONE BHK FLATS INTO ONE. THE APPELLANT SUBMITTE D THAT CERTAIN PROVISIONS WERE LEFT SUCH AS A HOLE BETWEEN THE TWO FLATS SO TO ENABLE JOINING THE M THROUGH STAIRCASE AND PROVISION OF ONE KITCHEN BETWEEN THE TWO FLATS BUT AT THE REQUEST OF THE PURCHASERS AND THAT EVEN THE BROCHURE FOUND AT THE TIME OF SURVEY WAS TO SHOW HOW THEY CO ULD BE CONNECTED, WHEN THE PURCHASERS WERE INTERESTED TO PURCHASE AND JOIN THEM. AS AT T HAT DATE, THERE WAS NO PROHIBITION FOR ONE INDIVIDUAL OR FAMILY TO BUY AND FOR THE DEVELOPER TO SELL MORE THAN ONE UNIT TO THEM. THE AMENDMENT PROHIBITING SUCH SALE AS A CONDITION CAME EFFECTIVE FROM AUGUST, 2010. IN APPEAL FOR THE PREVIOUS ASSESSMENT YEARS, THE LEARNED CIT(A) ACCEPT4ED THE SUBMISSIONS OF THE APPELLANT AND HELD THAT IF THE P URCHASER OR AT THEIR REQUEST THE APPELLANT SHALL HAVE JOINED TWO FLATS INTO ONE, THE APPELLANT COULD NOT BE FAULTED U/S 80IB(10) OF THE ACT TO DENY DEDUCTION UNDER THE SAID PROVISION. DURING THE COURSE OF ASSESSMENT FOR THE SUBJECT ASSESSMENT YEAR, THE AO ISSUED NOTICES U/S 133(6) TO ALL THE OWNERS OF ONE B HK FLATS CALLING FOR THE DETAILS AS TO WHETHER TWO ONE BHK F LATS OWNED BY THEM OR THEIR FAMILY WERE JOINED INTO ONE AND IF SO, AT WHOSE INSTANCE THEY W ERE JOINED. THE DISCUSSIONS BY THE AO CAN BE FOUND IN PARA 16 OF THE ORDER. HE CONFIRMS THAT HE WAS TAKEN TO 4 ONE BHK FLATS IN B WING OF THE PROJECT AND HE FOUND THAT THEY WERE NOT JOIN ED AND THERE WAS NO PROVISION FOR SUCH JOINING THROUGH STAIRCASE AND EACH OF THE FOUR FLAT S HAD INDEPENDENT KITCHENS. HE FURTHER RECORD THAT ALL OTHER FLAT OWNERS HAVE FILED THEI R REPLIES. IN CASE OF TWO MORE FLATS, THE OWNER HAS SAID THAT THEY HAVE NOT COMBINED THE TWO FLATS. IN ALL OTHER CASES, THEY ARE SAID TO BE JOINED BUT THEY HAVE REPLIED THAT EITHER THE PROVIS IONS TO JOIN WERE MADE BY THE DEVELOPER AT THEIR REQUEST OR THAT THEY JOINED THE SAME AFTER TA KING POSSESSION OF THE FLATS. 9. IN SUPPORT OF CLAIM, THE ASSESSEE RELIED ON VARI OUS DECISIONS WHICH ARE REPRODUCED AS UNDER:- 6 (A) FIRSTLY, WE PRAY THAT FOR JOINING OF TWO FLAT S WHETHER HORIZONTALLY OR VERTICALLY, SO JOINED BY OR AT THE REQUEST OF THE PURCHASER, THE APPELLAN T CANNOT BE FAULTED UNDER THE PROVISIONS OF SECTION 80 IB(10) OF THE ACT. THE FOLLOWING DECISIO NS OF THE MUMBAI TRIBUNAL SUPPORT THE VIEW POINT OF THE APPELLANT: I. SMT. MANJU GUPTA VS. ACIT (134 ITR 503) MUMBAI, II. EMGEEN HOLDING PVT. LTD ., MUMBAI VS. DCIT (47 SOT 98) MUMBAI, III. G V CORPORATION VS. ITA (38 SOT 174) MUMBAI. FULL TEXT OF THE ABOVE DECISIONS ARE SUBMITTED SEPARATELY. IF THIS VIEW ., THE APPELLANT WILL BE ENTITLED TO 100% DEDUCTION CL AIMED U/S 80 IB(10) OF THE ACT . (B) WITHOUT PREJUDICE THE ABOVE, WE SUBMIT THAT THE FOLLOWING CASES SUPPORT THE 'WITHOUT PREJUDICE' PRAYER OF THE APPELLANT THAT IN CASE THE AO IS HELD TO BE RIGHT, THEN THE APPELLANT MIGHT LOSE DEDUCTION ONLY PROPORTIONATELY ON 11358 SQ. FT. AREA ACCOUNTING TO 7.25% OF THE PROJECT AND THE APPELLANT SHOULD BE ENTITLED TO 92. 75% OF THE DEDUCTION CLAIMED BY IT U/S 80 IB(10) OF THE ACT. THE PROFITS QUA FLATS COMPLYING WITH THE MEASUREMENT CONDITIONS AND 8 ITA NO.2443/MUM/2012 & 3704/MUM/2012 OTHERWISE CAN BE WORKED OUT ON STAND-ALONE BASIS. V ARIOUS DECISIONS WERE RELIED ON THIS ISSUE 10. ON CONSIDERING THE ABOVE DETAILED EXPLANATION O F THE ASSESSEE, WHICH HAS THE SUPPORT OF THE BINDING JUDICIAL PRONOUNCEME NTS ON THE OBJECTIONS RAISED BY THE AO, CIT(A) ACCEPTED THE SUBMISSION OF THE ASSESSEE ON THE INITIAL TWO ISSUES AS WELL AS ASSESSEES CLAIM OF DEDUCTION U/S 80IB O F THE ACT ON PRO-RATA BASIS IN VIEW OF THE BINDING OF THE JUDGMENT OF THE JURISDIC TIONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). HOWEVER, CIT(A) HELD THAT THE CLAIM OF DEDUCTION CANNOT BE EXTENDED TO THE PROFITS OF T HE PROJECT ATTRIBUTABLE TO THE DUPLEX FLATS CONVERTED FROM THE 1-BHK FLATS BECAUSE OF VIOLATION OF THE CONDITIONS SPECIFIED IN THE SAID PROVISIONS. CIT(A) IS OPINION THAT PRIMA-FACIE, IT APPEARS THAT TOTAL AREA OF SUCH FLATS HAS EXCEEDED THE LIMITS WI TH THE CONNIVANCE OF THE ASSESSEE. RELEVANT PARAGRAPH IN THIS REGARD READS A S UNDER:- AS FAR AS THE FIRST ISSUE IS CONCERNED, I AM NOT C ONVINCED WITH THE CONTENTION OF THE APPELLANT THAT THE JOINING OF 1BHK FLATS HAS BEEN DONE BY THE PURCHASERS OF THESE FLATS INDEPENDENTLY. RATHER FROM THE RECOVERY OF DUPLEX BROCHURES, FOUND AT THE TIME OF SURVEY AT THE PREMISES OF APPELLANT, IT BECOMES CLEAR THAT AS PER THE MARKETI NG STRATEGY THE APPELLANT HAS PLANNED IN ADVANCE TO CONSTRUCT ONE BHK FLATS IN SUCH A MANNER THAT AFTER PURCHASING THE TWO INDEPENDENT LOOKING FLATS, THE PURCHASERS CAN JOIN TWO FLATS TO MAKE A DUPLEX HOUSE. IT IS, BECAUSE OF THIS REASON, MAJORITY OF THE FLATS, IN ONE BHK PROJECT H AVE BEEN CONVERTED INTO DUPLEX FLATS HAVING BUILT UP AREA OF MORE THAN 1,000 SQ. FT. T HEREFORE, THE APPELLANT CANNOT BE ALLOWED DEDUCTION IN RESPECT OF SUCH DUPLEX FLATS BECAUSE P RIMA FACIE IT APPEARS THAT TOTAL AREA OF SUCH FLATS HAS EXCEEDED THE LIMITS WITH THE KNOWLEDGE AND CONNIVANCE OF THE APPELLANT. 11. THUS, THE CIT(A) GRANTED PART RELIEF TO THE ASS ESSEE AND CONFIRMED THE WITHOUT PREJUDICE DISALLOWANCE MADE BY THE AO, IN R ESPECT OF THE CLAIM OF THE DEDUCTION ON THE PROFITS RELATABLE TO THE 18 FLATS CONVERTED INTO THE DUPLEX FLATS. IN THE PROCESS, HE REJECTED THE EVIDENCES GATHERED AFT ER SURVEY ACTION VIDE THE PROCEEDINGS U/S 133(6) OF THE ACT AND THE CONFIRMAT ION LETTERS GARNERED BY THE ASSESSEE. CONCLUSION OF THE ITAT ON THE GROUND RAIS ED IN APPEALS ARE GIVEN IN THE FOLLOWING PARAGRAPHS. WE SHALL FIRST TAKE UP THE A SSESSEES GROUND ITA NO 2443/M/2012 12. AGGRIEVED WITH THE SAID CONCLUSIONS OF THE CIT(A ), IN THE ASSESSEE 9 ITA NO.2443/MUM/2012 & 3704/MUM/2012 FILED THE PRESENT APPEAL RAISING THE FOLLOWING GROUN D,- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN HOLDING THAT 1BHK FLATS WHERE-EVER CONVERTED INTO DUPLEX HAD BUILD UP AREAS OF MORE THAN 1000 SQ FT AND SUCH FLATS EXCEEDED THE LIMITS UNDER SECTION 80IB(10) WITH THE KNOWLEDGE AND CONNIVANCE OF THE APPELLANT AND THERE FORE, THE PROFITS ATTRIBUTABLE TO SUCH FLATS DID NOT QUALIFY FOR DEDUCTION U/S 80IB(1 0) OF THE ACT. 13. BEFORE US, IN CONNECTION WITH THE APPEAL OF THE ASSESSEE, SHRI J.D. MISTRY, LD COUNSEL FOR THE ASSESSEE MADE VARIOUS SU BMISSIONS/ ARGUMENTS. ON FACTS, HE MENTIONED THAT THE PROJECT UNDER CONSIDER ATION MADE A BEGINNING IN THE A.Y. 2005-06 AFTER OBTAINING DUE APPROVALS AND THE SAME IS COMPLETED IN THE CURRENT ASSESSMENT YEAR 2009-10. IN THE INITIAL A.Y S. OF THE PROJECT, THERE WAS DIFFERENCE OF OPINION BETWEEN HE ASSESSEE AND THE A O ON THE PROPER TIMING /AO FOR RECOGNITION OF PROFITS OF THE PROJECT. AO DISTU RBED THE ACCOUNTS OF THE ASSESSEE AND THRUST ON HIM THE PERCENTAGE COMPLETION METHOD /WIP METHOD IN PLACE OF THE PROJECT COMPLETION METHOD (PCM)FOLLOWED BY THE A SSESSEE. THE MATTER TRAVELED TO THE SAA IE ITAT AND EVENTUALLY, IT IS A DECIDED ISSUE NOW AND THE PROFITS OF THE PROJECT NEEDS TO BE COMPLETED BASED ON THE PROJECT COMPLETION METHOD AS ORIGINALLY FOLLOWED BY THE ASSESSEE. FURTHER, HE N ARRATED THE FINDING OF THE SURVEY TEAM DURING THE ACTION U/S 133(A) ON 11/03/2008, WH EN THE PROJECT IS STILL IN PROGRESS. IT IS AN UNDISPUTED FACT THAT THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITIES AND THE ASSESSEE HAS APPROVAL TO CONSTR UCT 1-BHK FLATS, 24 IN NUMBER. REGISTRATION OF EACH OF SUCH FLATS WAS DONE AS 1-BH K FLAT AND NOT AS DUPLEX FLATS AS ALLEGED BY THE REVENUE. THE OWNERSHIP EACH OF THE FLATS IS INDIVIDUALIZED. ON THE FINDING OF THE SURVEY TEAM ABOUT THE PROVIDING PROV ISION FOR SQUARE SHAPED HOLE IN THE CEILING/FLOOR AND PROVIDING A SINGLE KITCHEN PL ATFORM IS A MATTER OF MAKING A PROVISION FOR FACILITATING CREATION OF DUPLEX FLAT, IF THE FLAT OWNERS/BUYERS SO DESIRE AFTER THE SALE. MAKING SUCH A PROVISIONS IS AIMED A T THE MARKETING OF THE 1-BHK FLATS TO ATTRACT MORE BUYERS FROM THE SAME FAMILY. ASSESSEE PROVIDED REQUISITE DESIGN TO HELP THE BUYERS IN MERGING THE TWO 1-BHK FLATS INTO A DUPLEX FLAT WITH SINGLE KITCHEN. AS PER LD COUNSEL, THE ASSESSEE HAS NOT CONSTRUCTED ANY STAIRCASE BEFORE THE FLATS WERE REGISTERED/SOLD TO THE FLAT B UYERS OF THE ONE BHK FLATS. IT IS 10 ITA NO.2443/MUM/2012 & 3704/MUM/2012 ON RECORD THAT ALL OTHER FLAT BUYERS HAVE FILED THE IR REPLIES NOTICES SENT U/S 133(6) OF THE ACT. WHILE SOME BUYERS GAVE A CATEGORICAL ST ATEMENTS MENTIONING THAT THEY HAVE NOT COMBINED TWO FLATS AND OTHERS HAVE MENTION ED THAT THEY GOT THE FLATS MERGED AFTER THE FLATS ARE PURCHASED BY THEM USING THE SAID THE PROVISION FOR CONSTRUCTING THE STAIR CASE USING THE DESIGN AND SE RVICES OF THE DEVELOPER. THUS, THE DEVELOPER JOINED THE FLATS AT THEIR REQUEST AF TER TAKING THE POSSESSION OF THE FLATS. PARA 16 EXTRACTED ABOVE IS RELEVANT HERE AN D AO WHEN VISITED THE FLATS, FOUND THAT FOUR OF THE FLATS ARE WITHOUT ANY PROVIS ION FOR STAIRCASE AND THEY HAVE INDEPENDENT KITCHEN. INDIVIDUAL FAMILIES ARE FOUND RESIDING IN THEM. IT IS CATEGORICAL ASSERTION OF THE ASSESSEE THAT A FLAT B UYERS COMBINED FLATS IN SOME CASES AFTER TAKING POSSESSION OF THE FLATS AND IN SIX OTHER FLATS, THERE IS NO SUCH CONVERSION OR MERGER OF FLATS. ASSESSEE HAS MERELY MADE A PROVISION FOR SUCH MERGER OR COMBINING AND IN SUCH CASE, IT CAN NOT BE SAID THAT ASSESSEE VIOLATED THE NAMES UNDER THE PROVISION U/S 80IB(10) OF THE ACT. THE COUNSEL ARGUED THAT IN A CASE WHERE THE JOINING OF THE FLATS IS DONE BY THE PURCHASER, IT CANNOT BE STATED THAT THE ASSESSEE WHO MERELY PROVIDED FOR SUCH MERG ER, HAS CONSTRUCTED FLATS IN VIOLATION OF THE AREA PRESCRIBED FOR EACH FLATS. RE FERRING TO THE PROVISION OF CLAUSE (C) OF EXPLANATION TO SECTION 80IB(10) OF THE ACT, L D. COUNSEL MENTIONED THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF 100% OF TH E PROFITS OF HOUSING PROJECTS, IF APART FROM THE OTHER CONDITION, THE RESIDENCE UNIT HAS MAXIMUM BUILT UP AREA OF LESS THAN 1,000 SQ. FT. IN MUMBAI. CONSTRUCTION OF A RESIDENTIAL UNIT (1-BHK FLATS) WITH A PROVISION OF A SQUARISH HOLE IN THE ROOF/CEI LING, DOES NOT MAKE THE ASSESSEE INELIGIBLE FOR CLAIM OF DEDUCTION MERELY WHEN THE S AID PROVISION WAS MADE BY THE ASSESSEE. IT IS FOR THE FLAT BUYER TO USE OF REJEC T THE SAID PROVISION. THE ASSESSEE SHOULD BE DECLARED ELIGIBLE FOR CLAIM OF THE SAID D EDUCTION. IN THIS REGARD, COUNSEL BROUGHT OUR ATTENTION TO THE DECISION IN THE CASE O F BABA PROMOTERS AND DEVELOPERS IN ITA NO. 629/PN/2009 A.Y.2004-05, ITA NO.625/PN/2 011 A.Y.2006-07 & ITA NO.159/PN/2010 A.Y. 2005-06 DATED 29/02/2012 AND RE LIED ON THE CONTENTS OF THE PARA 13 OF THE SAID ORDER. 14. FURTHER, LD. COUNSEL BROUGHT OUR ATTENTION TO T HE DECISION OF COORDINATE 11 ITA NO.2443/MUM/2012 & 3704/MUM/2012 BENCH ITAT, MUMBAI IN THE CASE OF G.V. CORPORATION 38 SOT 174 FOR IDENTICAL PROPOSITION THAT WHERE THE PURCHASER HAVE REQUESTED FOR JOINING OF TWO FLATS THEREBY EXCEEDING THE PRESCRIBED LIMIT, THE ASSESSE E IS FOUND ELIGIBLE FOR DEDUCTION. PARA 12 OF THE ORDER OF THE TRIBUNAL IS RELEVANT 15. DRAWING PARALLEL IN THE INSTANT CASE, LD COUNSE L MENTIONED THAT THE IMPOUNDED BROCHURE MERELY PROVIDES FOR MANNER/DESIG N OF CONVERTING THE FLATS IN DUPLEX AND IT NEVER ADVERTISED FOR THE SAKE OF FLAT S EXCEEDING THE AREA OF 1000 SQ. FT. FOR EACH 1BHK FLATS. FURTHER, HE BROUGHT OUR A TTENTION TO THE FACTS GATHERED DURING THE POST SURVEY ACTION AND MENTIONED THAT M OST OF THE FLATS ARE NEVER JOINED BY NOT EVEN THE FLAT BUYERS. T 16. ON THE OTHER HAND LD. DR FOR THE REVENUE RELIED ON THE ORDER OF THE CIT(A) ON THIS ISSUE AND MENTIONED THAT ASSESSEE HA S CLEAR INTENTION OF MAKING SALES OF THE 1BHK FLATS AS DUPLEX FLATS RIGHT FROM THE BEGINNING OF THE CONSTRUCTION OF THE PROJECT. IN SUCH CIRCUMSTANCES THE CONDITION SPECIFIED IN CLAUSE (C) OF THE EXPLANATION TO SECTION 80IB(10) OF THE ACT ARE DEEME D VIOLATED RIGHTLY BY THE AO. ON THE CONTENTS OF THE PROCEEDINGS U/S 133(6) OF TH E ACT, LD. DR RELY ON THE ORDER OF THE AO. 17. WE HAVE HEARD BOTH THE PARTIES. THE FACTS NECESSAR Y OF ADJUDICATION OF THE ISSUES UNDER CONSIDERATION INCLUDE THAT THE ASS ESSEE STARTED A PROJECT NAMED GARDEN ESTATE WITH A AND B WINGS WITH 96 AND 95 FL ATS RESPECTIVELY. THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITIES TO CONSTRUCT 1-BHK, 2-BHK AND 3-BHK FLATS AND ACCORDINGLY,THE BUILT UP AREA OF EACH OF THESE FLATS SO APPROVED DOES NOT EXCEED 1000SQ FT. NO DUPLEX FLATS ARE TO BE ENVISAG ED IN THIS PROJECT. THERE IS NO DISPUTE WITH REGARD TO THE 2-BHK AND 3-BHK FLATS BE FORE US AND THE DISPUTE NOW IS RESTRICTED TO 1- BHK FLATS ALLEGEDLY MERGED INTO TH E DUPLEX FLATS ONLY. 18. ON THIS DISPUTE, THE FACTS ARE THAT THERE ARE 24 SU CH 1-BHK FLATS IN THE PROJECT. OUT OF THEM, THERE IS NO DISPUTE WITH REGA RD TO 6 OF SUCH 1-BHK FLATS. DISPUTE IS RESTRICTED TO 18 OF SUCH 24 ONE-BHK FLAT S. THE DISPUTE REVOLVES AROUND 12 ITA NO.2443/MUM/2012 & 3704/MUM/2012 (A) DEVELOPER MAKING A PROVISION (A SQUARE SHAPED HOLE IN THE CEILING /FLOOR) FOR CONSTRUCTION OF THE STAIRCASE CONNECTING THE LOWER 1-BHK FLAT TO GENERATE A DUPLEX FLAT WITH SINGLE KITCHEN AND (B) THE IMPOUNDING FR OM THE ASSESSEES PREMISES OF A BROCHURE WITH THE DESIGN ON HOW TO MERGE TWO 1-BH K FLATS INTO A DUPLEX FLAT. AO MADE USE OF THE SAME TO INTERPRET THAT THE ASSESSEE ALWAYS INTENDED TO CONSTRUCTED DUPLEX FLATS, EACH OF WHICH HAS THE BUI LT UP AREA EXCEEDING THE SPECIFIED AREAS IN SAID CLAUSE (C) OF THE EXPLANATIO N TO SECTION 80IB(10) OF THE ACT. IN THE SURVEY AS WELL AS THE ASSESSMENT PROCEEDINGS , ASSESSEE PLEADED THAT THE ASSESSEE MERELY MADE PROVISION AS A PART OF THE MAR KETING STRATEGY FOR SELLING THE 1-BHK FLATS AND SUCH A PROVISION WAS MADE USE OF BY THE FLAT BUYERS AFTER TAKING POSSESSION OF THE FLATS. AS PER THE ASSESSEE, CONS TRUCTION OF DUPLEX FLATS WAS NEVER A PART OF HIS PROJECT. HE NEVER CONSTRUCTED SUCH D UPLEX FLATS. ASSESSEE FILED CONFIRMATION LETTERS FROM THE FLAT BUYERS BEFORE TH E AO AND THE SAME WERE NOT CONSIDERED. DURING THE ASSESSMENT PROCEEDINGS, AO A LSO VARIED THE SAID CLAIM OF THE ASSESSEE BY ISSUING THE LETTERS U/S 133(6) OF T HE ACT AND IN FACT MADE A PERSONAL INSPECTION ALONG WITH THE DVO AND EVENTUAL LY IGNORED THE SAID EVIDENCES GARNERED IN THE PROCEEDINGS. CIT(A) CONFIRMED THE O PINION OF THE AO BY REFERRING TO THE INTENTION OF THE ASSESSEE AND INTERPRETING THE SAID PROVIDING A HOLE IN THE ROOF AGAINST THE ASSESSEE. IN THE PROCESS, THE FA CTS RELATING TO THE DESIGN AND PLAN OF EACH OF THE RESIDENTIAL FLAT, APPROVAL GRANTED B Y THE LOCAL AUTHORITIES, COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITIES ETC ARE IGNORED. THUS, IN THE ASSESSEES APPEAL, ONLY DISPUTE FOR ADJUDICATION RELATES TO I F THERE IS ANY VIOLATION BY THE ASSESSEE OF THE CONDITIONS SPECIFIED IN CLAUSE (C) TO EXPLANATION TO SECTION 80IB(10) OF THE ACT RELATING TO THE MAXIMUM BUILT UP AREA O F EACH RESIDENTIAL UNIT IE 1-BHK FLAT. TO DECIDE THE ISSUE UNDER CONSIDERATION, WE N EED TO DELVE ON THE FOLLOWING ASPECTS AND THEY ARE: A. RELEVANCE OF THE DISCREPANCIES NOTICED DURING THE S URVEY ACTION ON 11/03/2008 , WHEN THE PROFITS OF PROJECT ARE ASSESSABLE TO TAX IN AY 2009-10 BASED ON PROJECT C METHOD: 19. TAKING INTO CONSIDERATION THE TIMING OF THE DIS CREPANCIES NOTED DURING THE SURVEY ACTION IN MARCH 2008, AOS WHO MADE THE ASSES SMENTS FOR THE AY 2005-06 13 ITA NO.2443/MUM/2012 & 3704/MUM/2012 T0 2008-09, WERE UNDER THE BONA FIDE BELIEF THAT THE PROFITS OF THE PROJECT NEEDS TO BE RECOGNIZED BASED ON THE PERCENTAGE COMPLETION (W IP) METHOD IN PLACE OF PROJECT COMPLETION METHOD ADOPTED BY THE ASSESSEE. THE DISCREPANCIES NOTED BY THE SURVEY TEAM WERE USED AGAINST THE ASSESSEE IGNO RING THE FACT THAT WHAT NEEDS TO BE SEEN ARE IF THE PROJECT IS COMPLETED AS PER T HE PLAN APPROVED BY THE LOCAL AUTHORITIES OR NOT. IF THE SAME IS CONSIDERED, WHAT IS RELEVANT TO BE SEEN BY THE AO IS IF THE ASSESSEE AS A DEVELOPER HAS COMPLETED THE CONSTRUCTION OF 24 1-BHK FLATS OR NOT. IF THE DEVELOPER HAS DUTIFULLY CONSTRUCTED THE SAID FLATS IN ACCORDANCE WITH DIAGRAM SHOWING THE RELEVANT DATES THE PLAN APPROVED BY THE LOCAL AUTHORITIES IN THE AY 2009-10, WHERE THE PROFITS NEEDS TO BE RECOGNIZED FOR TAX PURPOSE BASED ON THE PROJECT COMPLETION METHOD, THE SAID DISCREPANCIES IE MAKING A PROVISION OF SQU ARE SHAPPED HOLE AS DISCOVERED DURING SURVEY ACTION IN AY 2008-09, BECOMES IRRELEV ANT. IMPOUNDING OF THE BROCHURE WITH DETAILS OF METHOD OF MERGER OF 1-BHK FLATS INTO A DUPLEX, CANNOT BE USED AGAINST THE ASSESSEE AS IT ONLY PROVIDES THE D ESIGN OF MERGER. IT IS NOT CASE OF THE REVENUE THAT THE DEVELOPER CONSTRUCTED THE DUPL EX FLATS BY MERGER OF TWO 1- BHK FLATS WITH IT OWN MONEY AND THEN SOLD AS SUCH T O THE BUYERS. IT IS ON THE RECORDS THAT THE OWNERS OF DUPLEX HAVE MERGED THE F LATS AFTER TAKING POSSESSION OF THEIR FLATS USING THE DESIGN PROVISIONS SUPPLIED BY THE ASSESSEE IN THE BROCHURE. THERE IS EVIDENCE CONTRARY TO THE SAME. B. RELEVANCE OF THE INTENTION OF THE ASSESSEE: 20. BOTH AO AND HE CIT(A) INTERPRETED THE DISCREPANCIES NOTED DURING THE SURVEY ACTION TO READ INTO THE INTENTION OF THE DEV ELOPER AND DENIED THE DEDUCTION IN RESPECT OF THE PROFITS OF THE PROJECT. OF COURSE, CIT(A) RESTRICTED THE PROJECT IS COMPLETED IN AY 2009-10 PROJECT STARTED IN AY 2005-06 SURVEY U/S 133A ON 11/03/2008 (AY 08 - 09) A B 14 ITA NO.2443/MUM/2012 & 3704/MUM/2012 DISALLOWANCE AND DETAILS ARE ALREADY DISCUSSED ABOV E. INTERPRETING THE PROVISION OF HOLE AND THE IMPOUNDING OF THE BROCHURE, IRS OFFICE RS ARE OF THE OPINION THAT THE ASSESSEE HAS THE INTENTION FROM THE VERY BEGINNING OF THE PROJECT THAT THE ASSESSEE INTENDS TO CONSTRUCT THE DUPLEX FLATS AND NOT THE 1-BHK FLATS. THEREFORE, SUCH VERY INTENTION IS MADE USE BY THE AO TO DENY T HE BENEFITS OF DEDUCTION U/S 80IB (10) OF THE ACT. BUT THE FACT IS THAT THE ASSE SSEE GOT THE APPROVAL FOR CONSTRUCTING IMPUGNED 10BHK FLATS FROM THE AUTHORIT IES AND COMPLETED THE CONSTRUCTED AS PER THE APPROVED PLANS. ASSESSEE OBT AINED COMPLETION CERTIFICATE TOO FROM THE CONCERNED AUTHORITIES ABOUT WHICH THER E IS NO DISPUTE. IN OUR OPINION, WHAT IS REQUIRED TO BE SEEN SHOULD INCLUDE, WHAT AR E THE PLANS, DESIGNS OF THE PROJECT AND BUILT UP AREAS PARTICULARS OF THE RESID ENTIAL UNITS AT THE APPROVAL STAGE, CONSTRUCTION STAGE AND FINALLY AT SALES POINT. IN T HE INSTANT CASE, FROM THE APPROVAL STAGE TILL THE STAGE OF ISSUANCE OF THE COMPLETION CERTIFICATE, THERE IS NO VIOLATION BY THE DEVELOPER. THE DISCREPANCIES NOTED DURING THE S URVEY ACTION COULD HAVE BEEN MADE GOOD DURING THE PERIOD FROM DATE OF SURVEY IE 11/03/2008, TO THE DATE OF COMPLETION OF THE HOUSING PROJECT IE MARCH 2009. TH ERE IS NO EVIDENCE TO SUGGEST THAT IT IS THE DEVELOPER WHO PLANNED AND GENERATED DUPLEX FLATS OUT OF THE 1-BHK FLATS AND THEN SOLD AS SUCH TO THE BUYERS. IN FACT THERE IS EVIDENCE TO INDICATE THAT IT IS THE FLAT BUYERS WHO MERGED THE FLATS INTO DUP LEX FLATS DURING THE POST SALES PERIOD. MEANING THEREBY, THE MERGER OF FLATS IF ANY TAKEN PLACE AFTER THE SALE OF THE SAID SAID 1-BHK FLATS BY THE FLAT BUYERS AND, MAY B E USING THE DESIGN MADE AVAILABLE BY THE DEVELOPER, THE ASSESSEE CANNOT BE PENALIZED AND DENIED THE CLAIM OF DEDUCTION. AS SUCH, THE RELEVANT LEGAL PROVISION S DO NOT AUTHORIZE THE AO TO DENY DEDUCTION BASED ON THE INTENTION. WHAT IS REQU IRED TO BE SEEN IS IF THE 1-BHK FLATS ARE PLANNED, DESIGNED, APPROVED FOR CONSTRUCT ION, CONSTRUCTED AND FINALLY OBTAINED THE COMPLETION CERTIFICATE OR NOT. IF TH E ANSWER IS AFFIRMATIVE, THE CLAIMS CANNOT BE DENIED BASED ON THE INTENTION OF THE ASSE SSEE. C. IGNORING THE CONFIRMATION FILED BY THE FLAT BUYERS: 21. AO UNDERTOOK THE EXERCISE OF VERIFICATION U/S 1 33(6) OF THE ACT AND ALL THE 15 ITA NO.2443/MUM/2012 & 3704/MUM/2012 FLAT BUYERS RESPONDED TO THE SAID QUIRIES. NOT EVEN A SINGLE FLAT OWN STATED THAT DUPLEX FLAT BEING A RESIDENTIAL UNIT EXCEEDING THE SPECIFIED LIMIT OF BUILT UP AREAS WAS CONSTRUCTED BY THE DEVELOPER AND SOLD TO THE AS SESSEE. IN OUR OPINION, THE REVENUE AUTHORITIES HAVE DECIDED THE ISSUE AGAINST THE ASSESSEE PREJUDICIALLY AND IGNORED THE EVIDENCES THAT ARE GIVEN AGAINST THE RE VENUE. IN SUCH CASE, THE ORDERS OF THE REVENUE CANNOT BE HELD JUDICIOUS ONES. D. ABSENCE OF ANY DIRECT EVIDENCE TO SUGGEST THAT THE ASSESSEE CONSTRUCTED THE DUPLEX FLATS: 22. WE HAVE EXAMINED THE ORDERS OF THE REVENUE AND THE PAPERS FILED BEFORE US IN SEARCH OF THE MATERIAL THAT ESTABLISHES CONCL USIVELY TO THE EFFECT THAT THE ASSESSEE CONSTRUCTED DUPLEX FLATS WHOSE BUILT UP AR EA EXCEEDED THE SPECIFIED LIMITS IN CLAUSE (C) OF THE SAID EXPLANATION. THERE IS SUCH MATERIAL OR DIRECT EVIDENCE TO DEMONSTRATE THE AOS ALLEGATION. IN OUR OPINION, WH EN 1-BHK FLATS ARE OTHERWISE BUILT AND SOLD AS SUCH, MERE MAKING A PROVISION TO HELP THE FLAT BUYERS TO MERGE THEM TO SUIT THEIR CONVENIENCE DURING THE POST-SALE , SHOULD NOT DISENTITLE TO THE ASSESSEE TO MAKE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. IT IS UNDISPUTED FACT THAT FEW 1-BHK FLATS REMAIN SO WITHOUT ANY MERGER D ESPITE THE PROVISION OF HOLE LEFT AND OTHERS ARE MERGED INTO DUPLEX DURING THE P OST SALE USING SUCH PROVISION. IN OUR OPINION, THE DEVELOPER CANNOT BE PENALIZED BY D ENYING THE DEDUCTION. AS SUCH CLAIM OF DEDUCTION WAS FOUND ALLOWABLE BY THE THEN CIT(A) WHO DECIDED THE ISSUES IN EARLIER ASST YEARS. OF COURSE, THESE ORDERS ARE NOT RELEVANT NOW CONSIDERING THE ORDER OF THE TRIBUNAL. E. FLAT BUYERS OWNS UP THE FACT OF MERGER OF FLATS INT O DUPLEX FLATS BY THEM USING THE DESIGN OF THE DEVELOPER: 23. WE HAVE DISCUSSED THIS ISSUE IN THE EARLIER PAR AGRAPHS OF THE ORDER. IT IS BORNE ON THE RECORDS THAT THE AO INVOKED THE PROVIS ION OF SECTION 133(6) OF THE ACT AND THE FLAT BUYERS STATED CATEGORICALLY, THEY MERG ED THE FLATS VERTICALLY INTO DUPLEX FLATS AVAILING THE PROVISIONS PROVIDED BY THE DEVEL OPER. IN OUR OPINION, MERE 16 ITA NO.2443/MUM/2012 & 3704/MUM/2012 MAKING A PROVISION OF A HOLE FOR FUTURE USE BY THE FLAT BUYERS FOR ERECTING THE STAIR CASE OR SO, SHOULD NOT COME ON THE WAY OF THE ASSES SEE TO CLAIM DEDUCTION. F SCOPE OF THE LEGAL PRONOUNCEMENTS ON THE MERGER O F FLATS BY THE BUYERS AND BY ASSESSEE AT THE INSTANCE OF FLAT BUYE RS: 24. THE PROVISIONS OF CLAUSE (C) OF THE EXPLANATION TO SECTION 80IB(10) OF THE ACT SPECIFIES A CONDITION FOR THE ASSESSEE TO CLAIM ING DEDUCTION IN RESPECT OF THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S. THE CONDITION SO SPECIFIED AS PART OF THE EXPLANATION IS FOR THE PURPOSE OF CLA USE (A) TO SECTION 80IB(10) OF THE ACT AND THE SAID CLAUSE PROVIDES THAT THE UNDERTAKING HAS COMMENCED OR COMMENCES THE DEVELOPMENT AND CONSTRUCTION OF THE H OUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER 1998 AND COMPLETES SUCH CONSTRUCTIO N ON SPECIFIED DATES DEPENDING ON THE DATE OF APPROVAL BY LOCAL AUTHORIT IES. CONDITION SPECIFIED IN CLAUSE (C) TO EXPLANATION PROVIDES FOR THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDEN TIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR... THESE PROVISIONS DO NO PROVIDE ANY DISCRETION TO THE AO TO DECIDE ANYTHING BASED ON THE INTENTION OF THE ASSESSEE. THE CONDITIONS HAVE TO BE MET ADEQUATELY BEFORE CLAIMING THE DEDUC TION. THESE PROVISIONS ARE SUBJECT MATTER OF ADJUDICATION IN VARIOUS CASES AND SOME OF THEM BROUGHT TO OUR NOTICE ARE DETAILED AS FOLLOWS. THESE PROVISIONS ARE INTERPRETED BY VARIOUS TRIBUN ALS. IT IS A SETTLED PROPOSITION OF THE LAW THAT THAT FOR JOINING OF TWO FLATS WHETHER HORIZONTALLY OR VERTICALLY, SO JOINED BY OR AT THE REQUEST OF THE PURCHASER, THE APPELLANT C ANNOT BE FAULTED UNDER THE PROVISIONS OF SECTION 80 IB(10) OF THE ACT. THE FOLLOWING DECISIO NS OF THE MUMBAI TRIBUNAL SUPPORT THE VIEW POINT OF THE APPELLANT: I. SMT. MANJU GUPTA VS. ACIT (134 ITR 503) MUMBAI, II. EMGEEN HOLDING PVT. LTD ., MUMBAI VS. DCIT (47 SOT 98) MUMBAI, III. G V CORPORATION VS. ITA (38 SOT 174) MUMBAI. THE APPELLANT WIL L BE ENTITLED TO 100% DEDUCTION CLAIMED U/S 80 IB(10) OF ACT. WE HAVE ALSO PERUSED THE ORDER OF THE TRIBUNAL IN THE CASE OF BABA 17 ITA NO.2443/MUM/2012 & 3704/MUM/2012 PROMOTERS AND DEVELOPERS (SUPRA) AND PERUSED THE CO NTENTS OF PARA 13 AND RELEVANT PORTIONS READ AS FOLLOWS,- SO FAR AS MERGER OF FLATS AND THEREBY EXCEEDING THE PRESCRIBED LIMIT . DENIAL OF THE DEDUCTION , IS CONCERNED THERE IS NO SUBSTANCE SINCE IT IS UNDISPUTED FACT THAT EACH OF PRESCRIBED LIMIT.. AREA AND IF AFTER PURCHASING OF TWO FLATS OWNERS OF FLATS MERGES IT INTO A LARGER FLAT , THE CLAIM OF DEDUCTION TO THE ASSESSEE CANNOT DENIED ON THIS BASIS. FURTHER ALSO, WE PERUSED THE DECISION OF COORDINAT E BENCH ITAT, MUMBAI IN THE CASE OF G.V. CORPORATION 38 SOT 174 AND FIND PARA 12 IS RELEVANT AND THE SAME READ AS FOLLOWS,- IT IS COMMON KNOWLEDGE THAT MEMBERS OF THE SAME FAM ILY WHO PURCHASE SEPARATE RESIDENTIAL UNITS ADJACENT OR CONTIGUOUS TO EACH OT HER OFTEN JOIN THEM BY BREAKING DOWN A WALL OR BY OPENING A DOOR WAY OR IN MANY OTH ER WAYS SO THAT THE ENTIRE FAMILY LIVES TOGETHER AND GETS MORE SPACE TO LIVE. IN MANY CASES, A REQUEST IS MADE BY THE PURCHASERS TO THE BUILDER OR DEVELOPER OF THE HOUSI NG PROJECT TO JOIN THE FLATS/RESIDENTIAL UNITS AND THE REQUEST IS CARRIED OUT BY THE BUILDER. IN SUCH CASES, IT IS NOT POSSIBLE TO HOLD THAT THE BUILDER BUILT THE RES IDENTIAL FLAT OF MORE THAN 1,000 SQ.FT. OF BUILT-UP AREA. THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE ITSELF ADVERTISED THAT THE FLATS WERE OF MORE THAN 1,000 S Q.FT. AND THAT MERELY TO GET THE BENEFIT OF SECTION 80-IB HE DREW THE PLANS IN SUCH A MANNER THAT EACH RESIDENTIAL UNIT WAS SHOWN AS NOT MORE THAN 1,000 SQ.FT. OF BUILT-UP AREA. IT IS NOT ALSO THE CASE OF THE CIT THAT EACH FLAT IN THE HOUSING PROJECTS UNDERTAK EN BY THE ASSESSEE COULD NOT HAVE BEEN USED AS AN INDEPENDENT OR SELF-CONTAINED RESID ENTIAL UNIT NOT EXCEEDING 1,000 SQ.FT. OF BUILT-UP AREA AND THAT THERE WOULD BE A C OMPLETE, HABITABLE RESIDENTIAL UNIT ONLY IF TWO OR MORE FLATS ARE JOINED WITH EACH OTHE R, WHICH WOULD ULTIMATELY EXCEED 1,000 SQ.FT. OF BUILT-UP AREA. IN SUCH A SITUATION, MERELY BECAUSE 9 OUT OF 140 PURCHASERS DESIRED TO JOIN THE FLATS PURCHASED BY T HEM INTO ONE SINGLE UNIT, WHICH EXCEEDED 1,000 SQ.FT. OF BUILT-UP AREA, CANNOT DISE NTITLE THE ASSESSEE TO THE DEDUCTION. IN OTHER WORDS, TAKING THE EXAMPLE OF THE FLATS PUR CHASED BY THE SONAWANES', THERE IS NO ALLEGATION THAT THE FLAT NO. 704 MEASURING 244 S Q.FT. PURCHASED BY MEERA SONAWANE, FLAT NO. 705 MEASURING 578 SQ.FT. PURCHAS ED BY SUPRIYA SONAWANE AND FLAT NO. 706 MEASURING 780 SQ.FT. PURCHASED BY ETHIN SON AWANE WERE NOT INDEPENDENT RESIDENTIAL UNITS BY THEMSELVES AND COULD BECOME IN DEPENDENT RESIDENTIAL UNITS ONLY WHEN THEY WERE JOINED OR COMBINED TOGETHER. IF EACH RESIDENTIAL UNIT DOES NOT EXCEED THE BUILT-UP AREA OF 1,000 SQ.FT., THE FACT THAT THEY WERE JOINED TOGETHER BY THE PURCHASERS FOR BETTER LIVING OR FOR MORE SPACE OR FOR ANY OTHER REASON DOES NOT DISENTITLE THE ASSESSEE TO THE CLAIM FOR DEDUCTION UNDER SECTION 80-IB. DRAWING PARALLEL IN THE INSTANT CASE, WE FIND THAT THERE IS IOTA OF DIRECT EVEIDENCE TO DEMONSTRATE THAT IT IS THE ASSESSEE WH O MERGED THE TWO 1-BHK FLATS 18 ITA NO.2443/MUM/2012 & 3704/MUM/2012 IN TO DUPLEX ONE WITH ONE KITCHEN. ON THE CONTRARY THERE IS EVIDENCE TO SUGGEST THAT THE FLAT BUYERS HAVE DONE IT SO TO THEIR BETTE R LIVING IN THE RESIDENTIAL UNITS. IN OUR OPINION, MERE MAKING A PROVISIONS OF HOLE AND P ROVIDING METHODS/DESIGN VIDE THE BROCHURE TO THE ADVANTAGE OF THE FLAT BUYERS DO ES NOT AMOUNT TO CONSTRUCTION OF DUPLEX FLATS BY THE DEVELOPER, WHO IS AWARE OF T HE CONSEQUENCES IN MATTERS OF CLAIMS OF DEDUCTION ONE SIDE AS WELL AS THE OBTAINI NG THE COMPLETION /OCCUPANCY CERTIFICATES FROM THE AUTHORITIES, WHO APPROVED THE PROJECT WITH 1 TO 3 BHK FLATS ONLY AND NOT TO THE DUPLEX FLATS. 25. THUS, THE DISCREPANCY OF MERE PROVIDING A HOLE FOR INTENDED STAIR CASE FOR FLAT BUYERS AND SUPPLYING OF THE DESIGN TO MERG E THE FLATS INTO A DUPLEX FLAT IN OUR OPINION CONSTITUTES A MARKETING STRATEGY TO BOO ST THE SALE OF THE 1-BHK. OTHERWISE, THE ASSESSEE CONSTRUCTED THE FLATS IN AC CORDANCE WITH THE PLAN APPROVED BY THE AUTHORITIES AND SOLD THEM AS SUCH TO THE BUY ERS. SO LONG AS THE PERMANENT STRUCTURE LIKE PILLARS OF FLAT ARE CONSTRUCTED AS P ER THE APPROVED PLAN OF A RESIDENTIAL UNIT WITH BUILT UP ARE OF LESS THAN LOOKS LIKE SMAL L AND MINOR DEVIATION MADE FOR MARKETING REASONS MUST NOT COME ON THE WAY OF GRANT ING DEDUCTION. AS SUCH THERE IS NO PROHIBITION FOR SALE OF THE MORE FLATS TO THE MEMBERS OF A FAMILY. THE AMENDMENTS ARE UNDISPUTEDLY INAPPLICABLE TO THE PRO JECTS UNDER CONSIDERATION. THEREFORE, WE ARE OF THE OPINION, THE ASSESSEE IS E NTITLED TO DEDUCTION IN RESPECT OF THE PROFITS ATTRIBUTABLE TO ALL THE 1-BHK FLATS OF THE PROJECT TOO. TO THIS EXTENT WE REVERSE THE ORDER OF THE CIT(A). ACCORDINGLY, WE AL LOW THE APPEAL OF THE ASSESSEE. 26. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ITA NO. 3704/MUM/2012 AY 2009-10 27. THIS IS THE APPEAL FILED BY THE REVENUE AGAINST THE CONCLUSIONS OF THE CIT(A ) ON THE ISSUE OF ALLOWABILITY OF THE DEDUCTI ON ON PRORATE BASIS. IN ADDITION TO THE ARGUMENTATIVE GROUND, THE EFFECTIVE GROUNDS REA D AS FOLLOWS,- 19 ITA NO.2443/MUM/2012 & 3704/MUM/2012 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION U/S 80IB(10) OF THE ACT ON PRORATE BASIS RELYING ON THE JUDGMENT OF HONBLE ITAT, MUMBAI IN THE CASE OF M/S EKTA HOUSING P LTD, WHICH HAS OT BEEN ACCEPTED BY THE DEPARTMENT: 28. IN THE ASSESSMENT, WITHOUT PREJUDICE, THE AO HE LD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION ON PROPORTIONATE BASIS ON 11358 SQ. FT. AREA ACCOUNTING TO 7.25% OF THE PROJECT. HE ALSO HELD THAT THE ASS ESSEE SHOULD BE ENTITLED TO 92.75% OF THE DEDUCTION CLAIMED BY IT U/S 80 IB(10) OF THE ACT. THE PROFITS QUA FLATS COMPLYING WITH THE MEASUREMENT CONDITIONS AND OTHERWISE CAN BE WORKED OUT ON STAND-ALONE BASIS. THE CIT(A) CONFIRMED THIS AL TERNATE CONTENTION OF THE AO AND THUS, PARTLY CONFIRMED THE ADDITION AND HELD TH AT THE ASSESSEE IS ENTILED TO DEDUCTION ON PRORATE BASIS. WE HAVE DISCUSSED THE R ELEVANT FACTS IN THE OTHER PARAGRAPHS OF THE ORDER. BEFORE US, WHILE LD DR REL IED ON THE ORDER OF THE AO AND LD COUNSEL KEPT RELIANCE ON VARIOUS BINDING JURISDI CTIONAL HIGH COURTS AS WELL AS THE CO-ORDINATE BENCH DECISIONS, WHICH ARE AS FOLLO WS,- I. SANGHVI & DOSHI ENTERPRISE VS ITO (60 DTR CHENNAI 306); II. SJR BUILDERS VS ACIT (3 ITR 569 - BANG BENCH OF ITAT.; III. BEN GAL AMBUJA HOUSING DEVELOPMENT'S CASE IN ITA NO. 1595/KOL/2005 DATED 24TH MARCH, 206 ( KOLKATA ITAT) APPROVED BY KOL. HIGH COURT; IV. BRAHMA ASSO CIATES VS. JT. CIT (22 DTR 1 / 30 SOT 155) PUNE; V. DY CIT VS. EKTA HOUSING PRI VATE LIMITED IN ITA NO. 3649/MUM/2009 - MUMBAI; VI. EMGEEN HOLDING PVT. LTD ., MUMBAI VS. DCIT RANGE 9(1), MUMBAI DECIDED BY 'E' BENCH OF THE MUMBAI TR IBUNAL IN ITA NO.332/MUM/2010; VII. DY CIT VS BRIGADE ENTERPRISE - ( 14 DTR 371 -BANGALORE TRIBUNAL; VIII. SREE VATSA REAL ESTATE P. LTD. VS. ITO ( 49 SOT 55) - CHENNAI; AND IX. ITA VS. AIR DEVELOPERS (122 ITD 125) NAGPUR. 29. ON HEARING THE PARTIES AND THE JUDGMENTS CITED AND DISCUSSED IN THIS ORDER WE ARE OF THE OPINION THE GROUNDS RAISED NEED S TO BE DISMISSED AND AGAINST THE REVENUE. THERE LARGE NUMBER OF DECISIONS RELATI NG TO THIS ISSUE CONFIRMING THE VIEW TAKEN BY THE CIT(A). THEREFORE, THE GROUND OF THE REVENUE IS UNSUSTAINABLE IN LAW. IN ANY CASE, CONSIDERING OUR DECISION REVERSIN G THE ORDER OF THE CIT(A) IN MATTERS OF PART CONFIRMING OF THE DISALLOWANCE AND THEREBY, GRANTING THE IMPUGNED DEDUCTION ON THE PROFITS OF THE ENTIRE PROJECT UNDE R CONSIDERATION, THE ISSUE RAISED BY THE REVENUE BECOMES INFRUCTUOUS. ACCORDINGLY, TH E GROUNDS RAISED BY THE 20 ITA NO.2443/MUM/2012 & 3704/MUM/2012 REVENUE IN THE APPEAL ARE DISMISSED. 30. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/09/ 20 14. ! ' #$ % & 30/09/2014 ' ( SD/- SD/- AMIT SHUKLA D.KARUNAKARA RAO (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) MUMBAI, DATED: 30/09/2014 SHEKHAR, P.S. ! )*+ ,+ / COPY OF THE ORDER FORWARDED TO : (1) )-./ / THE ASSESSEE; (2) / THE REVENUE; (3) 0 ( ) / THE CIT(A); (4) 0 / THE CIT, MUMBAI CITY CONCERNED; (5) +1' ))2- , 2- , # 3 / THE DR, ITAT, MUMBAI; (6) '4. 5 / GUARD FILE. + ) / TRUE COPY ! / BY ORDER 6 / 7 / (DY./ASSTT. REGISTRAR) 2- , # 3 / ITAT, MUMBAI,