DCIT CIR 23(3), MUMBAI V. SHIRISH M DALVI, MUMBAI

ITA 4317/MUM/2014

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9387 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-10-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 17-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Related party transaction; Capital asset; Business income; Depreciation; Business expenditure; Opportunity of being heard; Tax effect; Additional evidence; Tax effect; Capital receipt; Onus to prove; Revised return
• Section: 63; 271(1)(c); 143(3); 80IB; 37(1); 80IA; 44AB; 48; 72; 13; 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 3545/MUM/2014 Assessment Year: 2010-11 Shirish M. Dalvi, D’ Block, 1 st floor, Zojwala Complex, Sahajanand Chowk, Kalyan-421 301. Vs. DCIT Circle-23(3), 3 rd floor, C-10, Pratyaksha Kar Bhavan, Bandra East, Mumbai-400051. PAN No. AADPD 0358 H Appellant Respondent ITA No. 4317/MUM/2014 Assessment Year: 2010-11 DCIT Circle-23(3), Room No. 402, 4 th floor, C-10 Bldg., Pratyakshakar Bhavan, Bandra Kurla Complex, Bandra (E), Mumbai-400051. Vs. Shirish M. Dalvi, D’ Block, 1 st floor, Zojwala Complex, Sahajanand Chowk, Kalyan-421 301. PAN No. AADPD 0358 H Appellant Respondent ITA No. 4640/MUM/2016 Assessment Year: 2012-13 Shirish M. Dalvi, D’ Block, 1 st floor, Zojwala Complex, Sahajanand Chowk, Kalyan-421 301. Vs. DCIT-29(3), Room No. 402, 4 th floor, C- 10, Pratyaksha Kar Bhavan, Bandra Kurla Complex, Bandra, Mumbai-400051. PAN No. AADPD 0358 H Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 2 Appellant Respondent Assessee by : Mr. Jai Prakash Chauhan, AR Revenue by : Mr. Anil Kumar Das, Sr. DR Date of Hearing : 21/10/2022 Date of pronouncement : 31/10/2022 ORDER PER OM PRAKASH KANT, AM The cross appeals by the assessee and the Revenue for assessment year 2010-11 are directed against order dated 31/03/2014 passed by the Ld. Commissioner of Income- tax (Appeals)-33, Mumbai [inshort‘the Ld. CIT(A)’] and appeal by the assessee for assessment year 2012-13 is directed against order dated 03/05/2016 passed by the Ld.Commissioner of Income-tax (Appeals)-40 [in short‘the Ld. CIT(A)’]. These appeals being connected with one assessee, having common facts and circumstances, same Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 3 were heard together and disposed off by way of this consolidated order for convenience. 2. The grounds of appeal raised by the assessee for assessment year 2010-11 are reproduced as under: 1(a) On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in holding, and the learned CIT(A) has erred in confirming, that land at village Dushmi was not agricultural land. (b) On the facts and in the circumstances of the case & in law the learned Assessing Oficer has erred in holding, and the learned CIT(A) has erred in confirming, that the appellant had not regularly carried on agricultural activities on the said agricultural land at village Dushmi. (c) On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in holding, and the learned CIT(A) has erred in confirming, that the appellant had not developed a fruit orchard by regularly carrying on agricultural/horticultural cultivation activities on the land at village Dushmi. (d) On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in holding, and learned CIT(A) has erred in confirming, that the appellant had not Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 4 acquired the agricultural land at village Dushmi as a personal asset for carrying on horticultural activities. (e) On the facts and in the circumstances of the case, the learned Assessing Officer has erred in holding, and learned CIT(A) has erred in confirming, that the agricultural land at village Dushmi 'has ultimately been converted' into non- agricultural land. 2. On the facts and in the circumstances of the case & in law, the learned Assessing Officer has erred in holding, and learned CIT(A) has erred in confirming, that the appellant had engaged himself in 'an adventure in the nature of trade' by purchasing and selling the agricultural land at village Dushmi. 3. On the facts and in the circumstances of the case & in law, the learned Assessing Officer has erred in holding, and learned CIT(A) has erred in confirming, that Rs.3.00 Cr. received by the appellant on account of compensation for his being asked to get out of and cancel the joint venture agreement with Godrej Properties Ltd. was not a capital receipt but a revenue receipt chargeable to tax. 4. On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in holding, and learned CIT(A) has erred in confirming, that Rs.4132000/- out the sale consideration for VD land which was offered as income to tax in AY 1995-96 was again chargeable to tax in AY 2010-11. 5. On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in and learned CIT(A) Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 5 has erred in confirming disallowance to the extent of 50% out of the expenses of Rs 29666101- though they were incurred wholly for the purposes of business of the appellant. 2.1 The grounds raised by the Revenue for assessment year 2010-11 are reproduced as under: 1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in inferring the rejection of books of account us. 145(3) was not warranted without appreciating the facts that all the transactions which are not reflected in the books of accounts maintained has got proximity to the business transactions and are not personal transactions. 2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs. 79,04,548/- made by the A.O. on account of disallowance of expenses claimed by the assessee for the expenses incurred for MPM land without appreciating the facts that as per para 2(c) of the agreement the assessee was authorized to incur the expenses of not more than Rs. 12 lacs only. 3. On the facts and circumstances of the case and in law, the learned CIT(A) erred in allowing assessee's claim u/s. 80IB(10) in respect of Aum Residency project totally ignoring the facts of the case and explanation to section 80IB(10)(a). 3. Briefly stated facts of the case are that the assessee,an individual, claimed to have carrying out business of development of real estate properties and trading in land. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 6 For the year under consideration, the assessee filed return of income on 22/09/2010 declaring total income of ₹6,99,84,040/-. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Income-Tax Act, 1961 (in short of ‘the Act’) were issued and complied with. In the assessment completed under section 143(3) of the Act on 31/01/2013 , the Assessing Officer (AO) made observation/addition/ disallowance as under: (i) The books of accounts of the assessee were rejected on the ground that the assessee (a) failed to report some transactions of purchase and sale of the properties with M/s Godrej properties Ltd (GPL), (b) failed to report financial statement of joint-venture, (c) non-accounting of sale proceeds of agricultural land in profit and loss account, (d) Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 7 nonaccounting of compensation received, (e) non- reporting of related party transactions in terms of section 40A(2)(b) of the Act etc. (ii) The receipt of ₹8,95,12,000/-on account of sale of land at Village “Dushmi” treated by the assessee as exempt being agricultural land, was rejected and receipt was held as business receipt subject to deduction of cost of expenses (₹1,00,34,111/-) incurred thereon, resulting into addition of ₹7,94,77,889/- (iii) The compensation of ₹ 3 crore on account of cancellation of joint-venture with M/s Godrej properties Ltd (GPL), which was held by the assessee as capital receipt and exempt from taxation, was has held as business profit. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 8 (iv) Disallowance of expenses of ₹79,04,548/-out of the expenses claimed as incurred towards development of the “Madhukar Pandurang Mirkute (MPM) project”. (v) Addition of ₹41,32,000/-for amount received on sale of land (GVD), which was not accounted for in return of incomefor the year under consideration. (vi) Disallowance of ₹40,00,000/-paid on account of NLM land to M/s Godrej properties Ltd (GPL) as non-business expenditure. (vii) Disallowance of claim of deduction under section 80IB of the Act (viii) Disallowance of various expenses debited to profit and loss account Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 9 4. On further appeal by the assessee, the Ld. CIT(A) allowed part relief to the assessee by way of impugned order. Aggrieved, both the assessee and the Revenue are before the Income-tax Appellate Tribunal (ITAT) by way of raising the grounds as reproduced above. 4.1 At the outset, the learned Counsel of the assessee submitted that in the appeal filed by the Revenue, three grounds have been raised. The first ground being related to rejection of books of accounts, is having no tax effect. The third ground is challenging the disallowance of deduction under section 80 IB(10) of the Act. The learned Counsel submitted that during the year under consideration there was loss from the corresponding housing project so actually no deduction was available to the assessee, and thus this ground is also having zero tax effect. In ground No. 2 ,the addition disputed is of ₹ 79, 04, 548/-, therefore, Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 10 the amount of tax effect on said addition would be less than the limit of tax effect prescribed by the CBDT vide circular no. 19 of 2018 , for not filing of the appeals. Therefore according to him, the appeal of the Revenue need to be dismissed on the grounds of low tax effect. The learnedDR also could not controvert the position of the low tax effect in the appeal of the Revenue. 4.2 We have heard the parties with regard to the appeal of the Revenue. We are of the opinion that tax effect in appeal of the Revenue is below the prescribed limit i.e. Rs. 50.00 lakhs , which has been prescribed for filing appeal before the ITAT vide CBDT Circular (supra). Accordingly, the appeal of the Revenue is dismissed being covered by the tax effect below the amount of tax prescribed by the CBDT for not filing appeal to the ITAT. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 11 5. Regarding appeal of the assessee, before us, the assessee filed a paperbook in seven volumes containing pages as per index of respective paper book. 6. The assesseevide letter dated 07/05/2018 filed additional grounds on the issue of sale of ‘Dushami’ Land as follows: “Additional Ground of appeal no. 1 "Without prejudice to the grounds of appeal and as alternate additional claim and on the facts and in the circumstances of the case and in law the AO has erred in holding and the CIT(A) has erred in confirming that the agricultural land transferred by the appellant by agreement dated 22.09.2009 was a capital asset though the agricultural land transferred by the appellant did not fall within the definition of capital asset as defined us 2(14) of the Act." Additional ground of appeal no. 2 "Without prejudice to the grounds of appeal and as alternate additional claim and on the facts and in the circumstances of the case and in law the consideration received by the appellant for transfer of agricultural land is revenue derived by the appellant from land which is situated in India and is used for Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 12 agricultural purposes is agricultural income as defined u/s 2(IA) of the Act and is not liable to tax in the hands of the appellant." 7. The additional/modified ground raised being connected with the ground No. 1 to 4 of the appeal, same were admitted for adjudication in view of settled principles in the case of NTPC Ltd. 229 ITR 383 (SC). 8. The ground No. 1 to 4 of the appeal of the assessee relates to the issue of receipt on sale of land at Village ‘Dushami’, which was treated by the assessee as exempted income being sale of agriculture land, however the Assessing Officer(AO) has treated the same as business income of the assessee. 9. Before us the Ld. Counsel of the assessee referred to relevant part of the order of the Assessing Officer as well as order of the Ld. CIT(A) and submitted that both the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 13 lowerauthorities have not appreciated the facts brought on record by the assessee. 10. The Ld. Counsel of the assessee drawn our attention to the application filed under Rule 18 (4) of the ITAT Rules, 1963 for admitting additional evidences contained in paperbook volume 5. In the said application, the assessee has contended that assessee has gathered certain evidences by way of Right to Information Act, 2005 from the State Government authorities, to support his contention that he was carrying on regular agricultural activity on land at Village ‘Dushami’, therefore nature of land was agriculture on the date of sale. According to the assessee, those documents have bearing on the issue raised in ground Nos. 1 to 4 and additional ground Nos. 1 and 2. The documents sought to be filed by the assessee as Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 14 additional evidences listed by the assessee are reproduced as under: Sr. No. (1) Particulars (2) Page Nos. (3) Before which lower authority (4) 1. Copies of applications under Rights to Information Act (RTI) and copies of replies received and English Translation thereof 1 to 8A -- 2. Copy of letter dated 08.04.2017 filed before DCIT 29(3) for providing copy of summons issued on 05.11.2012 to Talathi, Village, Dushmi 9 -- 3. Copy of letter dated 31.03.1998 regarding permission for construction of water reservoir on the land and English translation thereof 10 to 11 -- 4. Copy of Certificate from Circle Officer, Hamrapur in Marathi & translation thereof of regarding distance of land 12 to 13 -- 5. Copy of Zoning of Village Dushmi Under Regional Development Plan 1999 to 2011 of Mumbai Metropolitan Regional Development Athority (MMRDA) 14 to 15 -- 6. Copy of resolution in Marathi of Gram Panchayat Dushmi passed in Gram Panchayat Meeting held on 29.03.1999 granting permission for Digging pits for Tree plantation & Translation thereof 16 to 17 -- 7. Copies of receipts for payment of land revenue 18 to 30 -- 8. Copy of Pages 01, 24, 28, 29 and 102 of NABARD report about Mango Plantation Economies 31 to 35 -- 9. Copy of report on sustaining & Expanding the Horticulture revolution in Maharashtra 36 to 39 -- 10. Google Photos of Dushmi Land from 40 to 42 -- Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 15 2005, 2009 & 2013 11. Copy of relevant sections of Bombay Tenancy & Agricultural Lands Act, 1948 43 to 46, 53 to 54 -- 12. Copy of relevant sections of Maharashtra Land Revenue Code 47 to 52 -- 13. Copy of section 2 of Maharashtra Regional and Town Planning Act, 1966 55 to 56 -- 14. Copy of Circular No. 45 dated 02.09.1970 regarding amendment to section 2(14)(iii) 57 to 58 -- 10.1 In view of the additional evidences filed, the Ld. Counsel of the assessee submitted that matter may be restored back to the file of the learned assessing officer for deciding afresh. The Ld DR did not seriously objected, but submitted that the lower authorities have already analyzed the case of the assessee on the principles laid down by the Hon’ble Supreme Court and other High Courts and then came to conclusion that land in question was not in the nature of agricultural land as on the date of sale. 11 We have heard rival submissions on the issue in dispute and perused the order of lower authorities and Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 16 documents filed by the assessee before us. For qualifying the land for exemption from the capital gain it should be agricultural land situated, beyond the prescribed distance from the outer limit of municipal Corporation etc. The assessee has claimed the land in question as beyond the prescribed limit from municipal corporations and this fact has not been questioned/disputed by the Revenue also. The lower authorities have questioned the nature of the land. According to the lowerauthorities, in view of the principles laid down by the Hon’ble Supreme Court in Sarifabibi Mohamad Ibrahim Vs ACIT 70 Taxman 301 (SC) and other decisions cited in the impugned assessment/appellate order, nature of land is not agricultural land. The Ld. AO observed that (a) in 7/12 extract at the time of the sale of land shows the nature of the land as uncultivated and crop was shown as grass Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 17 (Gavat ) only. (b) in response of the summon issued , the Land Revenue authority of Village ( i.etalathi) stated that the land in question was purchased in 1995 and thereafter no agricultural activity was carried out. 11.1 In view of above observation, theLd AOissued show cause as why the exemption claimed on sale of the land might be denied.The assessee submitted that ‘horticulture activity’ was carried out on the said land and 200 mango trees were planted. The assessee further submitted that Government has allowed subsidy to the assessee for carrying out horticulture activities. The assessee also submitted that a dam was constructed/repaired on the land for watering the plants. For verification of the claim of the assessee, the Ld.Assessing Officer sent inspector of his office for visiting the land in question. The Inspector reported that there was no irrigation facility or any Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 18 infrastructure facility nearby the land and the land had sprouting shrubs, wild grass and few trees. The Ld AO further observed that land in question was entered in the books of accounts of the assessee under the head ‘project account’ and expensesincurred thereon on the land were also debited under the head ‘project account’. Thus according to the Ld. AO the assessee had no intention of cultivating such land and it was treated as stock-in-trade for the project of real estate. 11.2 Before the Ld. CIT(A), the assessee further explained the horticulture activity carried on the land. The assessee submitted that 200 Alphonso Mango trees were planted on the land under the scheme of horticulture development by the Government of Maharashtra under Employment Guarantee scheme 1998. The assessee filed a certificate from the Agriculture Officerof the area in this regard. The Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 19 assessee also filed an evidence in support of subsidy received from Government of Maharashtra for development and maintenance of the trees. It was also submitted that assessee filed a copy of application for construction of Dam on the land to the Government department. The assessee had regularly paid the agricultural land revenue. The assessee contested that he was not given the opportunity to cross examine the village ‘Talathi’, who stated that land in question was not cultivated. Further, the assessee also submitted that Assessing Officer failed to understand that expenses were incurred on the land under‘projectaccount’for the purpose of identifying the expenses incurred in relation to the land in question. According to the assessee, horticulture activity takes a very long period of time to yield real income and therefor the expenditure went into land was capital in nature. Further, Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 20 it was submitted that presentation of the asset in financial statement under particular ‘head of account’ cannot override the fact that land in question was agricultural land and it was a personal asset of the assessee held for 14 years. Further the assessee claimed that no regular crop like paddy, wheat or Jowar was cultivated on the land and the ‘Talathi’ (i.e. Village land revenue official) nowhere denied horticulture activities carried out by the assessee. The land was agricultural land at the time of the purchase by the assessee and was also agricultural land at the time of the sale by the assessee. The assessee also filed detailed submissions in support of its claim that land in question was agricultural land. 11.3 The contention raised by the assessee were rejected by the Ld. CIT(A) by way of detail finding in para 3.3 of the impugned order. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 21 11.4 For determining, whether a land, is agricultural land or not, Hon’ble Supreme Court in the case of CIT Vs Raja Benoy Kumar SahasRoay 32 ITR 466 (SC) held that agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby ‘tilling of land’, ‘sowing of the seeds’ , ‘planting’ and similar operations on the land which would require expenditure of human skill and labour upon the land . The Hon’ble Supreme Court in the case of Sarifabibi M Ibrahim (supra) has laid down following test for a land to be agriculture: 1. Whether the land was classified in the Revenue records as agricultural and whether it was subject to the payment of land revenue? 2. Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? 3. Whether such user of the land was for a long period or whether it was of a temporary character or by any of a stopgap arrangement? Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 22 4. Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land? 5. Whether, the permission under s. 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date 6. Whether the land, on the relevant date, had ceased to be put to agricultural use? If so, whether it was put to an alternative use? Whether such cesser and/or alternative user was of a permanent or temporary nature? 7. Whether the land, though entered in Revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes? 8. Whether the land was situated in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural? 9. Whether the land itself was developed by plotting and providing roads and other facilities? 10. Whether there were any previous sales of portions of the land for nonagricultural use? 11. Whether permission under s. 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 23 the sale or intended sale was in favour of a non- agriculturist? If so, whether the sale or intended sale to such nonagriculturists was for non-agricultural or agricultural user? 12. Whether the land was sold on yardage or on acreage basis? 13. Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?" 11.5 Before us, the assessee has filed further additional evidence gathered under the Right to Information Act, 2005 from different Government Authorities. Those evidences filed by the assessee are crucial in determining the nature of the land whether it was agricultural land or not. Those evidenceswere not available with the assessee during proceedings before the lower authorities and same have been obtained by way of exercising route of obtaining documents under the Right to Information Act, 2005. In the circumstances, we admit the additional evidence filed Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 24 by the assessee and restore the ground No. 1 to 4 and additional ground No. 1 and 2 to the file of the Ld. AO for deciding afresh in accordance with law, alogwith the direction to the assessee to produce all those additional evidences before the Ld.Assessing Officer. The Ld. AO will be at liberty to carry out inquiries as deemed fit in the facts and circumstances of the case including obtaining maps of the land for relevant period from the ‘Google’ or from Indian space research Organisation (ISRO) for verifying the claim of horticulture activity of the assessee. It is needless to mention that adequate opportunity of being heard should be provided to the assessee.The objection of the assessee against treating the income from sale of ‘Dushami land’ as business income are not being adjudicated at this stage, as that issue is subsequent to the adjudication of whether the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 25 income on sale of said land is exempted or not, which we have already restored to the file of the Assessing Officer. 12. The ground Nos. 1 to 4 and additional ground Nos. 1 and 2 of the appeal of the assessee are accordingly allowed for statistical purposes. 13. The ground No. 5 of the appeal of the assessee relates to compensation of ₹3 crore received by the assessee from M/s Godrej properties Ltd which was claimed by the assessee as capital receipt, however assessed by the Assessing Officer as business receipt. 14. The facts in brief for adjudication of the issue in dispute are that the assessee acquired development rights in respect of the land admeasuring 11,441.22square metres situated at Village ‘Barave’, District Thane vide agreement for sale dated 07/07/1997, from Mr Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 26 MadhukarPandurang Mirkute and others (hereinafter said land has been referred as ‘MPM’ land). The assessee entered into a joint-venture agreement with Godrej properties Ltd (GPL) on 05/05/2004 for undertaking development of housing project on said‘MPM’ land. Under the agreement, the development of the land was responsibility of the GPL and the assessee was to receive 60% of gross sales receipt after reducing the cost of construction. It is contention of the assessee that GPL in view of the change in the business environment as well as the respective divergent views of the parties on certain matters relating to the project proposed to the assessee for dissolving of their association. The GPL cancelled the joint- venture agreement by deed of cancellation dated 08/04/2009 and land was sold to GPL. According to the assessee for cancellation and having to opt out of the joint- Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 27 venture, he received a compensation for a sum of ₹3 crore along with ₹6.5 crore for conveyance of MPM land to GPL. The relevant finding of the Ld CIT(A) on the issue in dispute are reproduced as under: “8.6 I have gone through the contention of the appellant as well as that of the AO and find that the AO has stated that the project profit has been inflated. However, the A0 having rejected the claim of the appellant for deduction 4/s.801B(10), he has not dealt with this issue further and therefore the only issue remains is as to whether the appellant is entitled to benefit of deduction w/s 801B(10). According to the AO the project Aum Residency is nothing but the extension of the earlier project approved in 1993 whereas according to the appellant he had submitted the plans on 28.6.2006 and that for two buildings wing A and B and that the same were approved independent of earlier project, and had nothing to do with the earlier plan passed in 1993. In this regard, the appellant has submitted the copies of I O D as also approval granted by KDMC. On perusal of the IOD, it is seen that the Aum Residency has been approved as independent plan on the plot of land nevertheless, it is no where mentioned in the IOD that the IOD was for amended plan passed in the year 1993. Thus, what is clear is that the project Aum Shanti is an independent project and has been approved by KDMC on 28.06.2006 and, therefore, prima facie the appellant is Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 28 entitled to benefit of deduction u/s 801B (10). In so far as the AO's observation that this is an extension of the earlier project is not discernible from the IOD produced by the appellant before me. However the AO has not dealt with other conditions applicable for availing the benefit u/s 801B(10). Therefore the AO is directed to llow the benefit of deduction u/s 801B (10) to the appellant in respect of project Aum Residency subject, however, to the appellant meets the other conditions specified in the said section like area of flat, commercial area, etc. In the result, this ground of appeal is allowed.” 15. Before us the Ld. Counsel of the assessee referred to ‘JV cancellation agreement’ dated 08/04/2009, which is placed on page No. 32 to 37 of the paperbook volume No. 2 (two)and submitted that said sum of ₹3 crore was received against foregoing or the deprivation of a source of income under the JV agreement and therefore, the amount received was in the nature of Capital receiptand not taxable as revenue income. The Ld.counsel of assessee submitted that surplus arising on conveyance of MPM land has already been offered to tax. The Ld. Counsel in Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 29 support of his contention relied on the decision in the case of PCIT Vs IND Sing Developers Private Limited (2016) 228 CTR 154 (Karnataka) and ACIT vs.Om Metals Infra Project Limited (2018) 99 taxmann.com 229 (SC). 16. The learned DR on the other hand submitted that assessee had treated cost of acquisition of Land in the books of account under the ‘Project Account’ (i.e. land as stock-in-trade) and therefore what was received by the assessee is nothing but compensation on account of sale of development rights of that land, which was not capital asset but was in the nature of the stock-in-trade. According to Ld. DR, in the case what was transferred is not a capital asset, but development right, which was part and parcel of the business asset and it was not a compensation for loss of source of income or income earning apparatus. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 30 Accordingly on the issue in dispute, he relied on the order of the lower authorities. 17. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The assessee entered into a joint venture development agreement with M/s Godrej properties Ltd, wherein the assessee brought in development rights of the property (the land property as contribution to JV) and M/s GPL was to develop of the said property. Under the JV agreement, the assessee was to receive 60% of the profit. This JV agreement has been cancelled and the assessee conveyed the development right of the property (or the land alongwith development rights therein) to M/s GPL. On the event of the cancellation and conveying of the property to M/s GPL, the assessee received two sums. The First sumof ₹3 crore which has been claimed by the assessee as Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 31 compensation for cancellation of the JV. The second sum of ₹ 6.5 crore has been claimed by the assessee as forconveyance of development rights of the property in favour of M/s GPL. There is no dispute regarding taxability of the second sum of ₹ 6.5 crore. The only dispute is regarding sum of ₹ 3.0crore which according to the assessee is a compensation for loss of source of income which being capital receipt, not taxable, whereas according to the Revenue said sum of ₹ 3 crores is actually a part of the conveyance of development rights of the property. 17.1 The cancellation deed is placed on page 32 to 37 of the paperbook volume 2. For ready reference ,the relevant clauses of the said cancellation deed, are reproduced as under: “1. The parties hereto do hereby aver and accept that they have cancelled the agreement which was executed between themselves on 5th May, 2004 for the development on joint Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 32 venture basis of all those pieces and parcels of land or ground bearing survey no.13 hissa no.6 (part), survey no.16 and survey no.21(part) admeasuring 812.20 square meters, 830 square meters and 9799.02 square meters respectively situate at Village Barave, Taluka Kalyan, District Thane, hereinafter referred to as "The Said Land" 2. As and by way of compensation and consideration for the said cancellation and his having to opt out of the joint venture as aforesaid, Godrej have agreed to pay and have accordingly paid to Mr.Dalvi a sum of Rs.3,00,00,000/ - (Rupees Three Corers Only), the receipt whereof Mr. Dalvi does hereby accept and acknowledge and acquit and discharge Godrej forever therefrom. 3. It is declared and confirmed that the said Agreement dated 5% May, 2004 executed between the parties hereto is hereby mutuallycancelled and treated as ineffective. 4. Mr.Dalvi does hereby declare and confirm that he shall at the earliest hereafter execute and register the conveyance of the said entire land in favour of Godrej at the consideration which is mutually hereby decided to be as pr the ready reckoner of the Stamp Duty Authorities which shall be paid by Godrej to Mr. Dalvi on or before the execution thereof.” 17.2 Thus, under the cancellation agreement not only the joint-venture between the assessee and M/s GPL has been cancelled but simultaneously, the assessee agreed to Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 33 transfer the land for development to M/s GPL at ready reckoner rate, without specifying any fixed sumof consideration against the said sale. Further, the assessee has not explained as how cancellation of JV resulted in loss of source of income because assessee has not been barred under the cancellation agreement from carrying outany real estate activity. In the case of the Joint Venture ,the assessee brought land and other party agreed for carrying out construction on the said land and bot parties agreed for sharing of the profit in the project. Now, if they cancel their agreement of carrying out the development activity on said land andon cancellation, the second party has agreed to purchase the land and to make payment for the land,thus, whatever compensation is actually towards the land. The assessee has not brought to our notice as by way of entering into land development agreement, any right Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 34 accrued in favour of the assessee and for which the another party was liable for making compensation. At least, before us , the assessee has not reffered any such clause of the development agreement. The AO has referred to certain clause of the development agreement according to which sole responsibility of construction administration and marketing of the project was with M/s GPL and the assessee was given responsibility of liasioning withMunicipal authorities in relation to obtaining approvals etc. The assessee was further given responsibility of filling or levelling the plot, limited to expenses of ₹ 12 lakh. From the list of payments made by M/s GPL to the assessee, we find that the assessee has been paid as consultancy charges for liasioning workto Municipal Corporations. We also find that payment of more than ₹50.50 lakhs has been reimbursed to the assessee for expenses incurred towards Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 35 the project. Therefore, we do not find any reason for whichthe assessee could have been paid compensation. The only right which the assessee was having in the joint- venture was development right in the land, which was treated by the assessee as stock-in-trade in its books of accounts and therefore any amount, either it is conveyance or compensation, by wahtatever name called, received by the assessee against the said land is trading or reveneue receipt. 17.3 In case of Ind Sing Developers P Ltd (supra), the parties went ahead with development of the property and the dispute arose between the partes, for which suit was filed before the Court and then matter went for arbitration and conciliation. Under the comciliation, the parties came to settlement where the land owner agreed to forgo his right and interest as per development agreement. But in Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 36 the case in hand before us even prior to commencement of development of property, the parties agreed for conveyance of land to developer, which resulted into cancellation of JV between the assessee and developer. Thus, ratio in the decision in the case of Ind Sing Developers P Ltd (supra)is not applicale over the facts of the case. 17.4 Merely by way of mentioning in the cancellation agreement as the amount of compensation, the said amount cannot be treated as compensation for surrendering right of carrying on business by the assessee. After cancellation of agreement, the assessee was at liberty to sale land to any other party, however the assessee chose to sale the land to the JV partner and for such sale it has received payment including the alleged compensation and conveyance amount. Before the Assessing Officer the assessee explained that compensation is for loss of asset. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 37 The land or developmentof land in question was treated by the assessee as stock-in-trade only and amount of ₹6.5 crores received on conveyence of land has been credited in trading acoount by the assessee,therefore the AO has rightly treated the amount received of ₹ 3.00 crores as profit ( receipt ) from the Joint venture agreement. 17.5 In the case of Om Metal Infraproject Ltd. (supra), the Hon’ble Supreme Court relied on Oberoi Hotel (P.) Ltd. (supra) as under : “4.1 In Oberoi Hotel (P) Lid v. CIT L19991 103 Taxman 236 (SC) wherein it has been held as under: "11. The aforesaid principle is relied upon in the case of Karam Chand Thapar and Bras's case (Supra). Considering the aforesaid principles laid down as per Article XVIlI of the Principal Agreement, the amount received by the assessee is for the consideration for giving up his right to purchase and or to operate the property or for getting it on lease before it is transferred or let out to other persons. It is not for settlement of rights under trading contract, but the injury is inflicted on the capital asset of the assessee and giving up the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 38 contractual right on the basis of Principal Agreement has resulted in loss of source of assessee's income." 18. Thus, in above case, the consideration received was for injury of capital asset, which is not present in instant case before us. Therefore, we do not find the claim of the assessee of receipt of ₹ 3 crore as toward loss of income apparatus.Accordingly this claim of the assessee is rejected. The finding of the Ld. CIT(A) on the issue in dispute is accordingly upheld. The ground No. 5 of the appeal is accordingly dismissed. 19. The ground No. 6of the appeal of the assessee relates to additional income of ₹ 41,32,000/-, which according to the assessee has already been declared and offered to tax for assessment year 1995-96, but according to the ld AO same is taxable in the assessment year under consideration. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 39 20. The Ld. AO observed credit of ₹1,51,05,000/-on account of the sale of GVD land to M/s GPL, however on verification of details from M/S GPL, the Assessing Officer found the amount received as of ₹1,76,32,000/-. The assessing officer asked the assessee as why the balance amount might not be taxed. It was submitted by the assessee that out of the amount of ₹1,76,32,000/-, amount of ₹30,00,000/- and ₹11,32,000/- were received by the assessee in financial year corresponding to assessment year 1996-97 as part of consideration for GVD Land at survey No. 6/1. 6/19, and 13/17 at Village Barve, Kalyan which was wrongly offered to tax in assessment year 1996- 97. The assessee submitted that this land was finally conveyed to M/s GPL by agreement dated 22/03/2010. The Ld.Assessing Officer rejected the contention of the assessee of alleged offering said amount of ₹41,32,000/-for Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 40 taxes in assessment year 1996-97. Without prejudice,the Assessing Officer also rejected the contention of the assessee to offer the said amount for tax in assessment year 1996-97 on cash basis, because according to him the assessee was following mercantile system of accounting.The relevant finding of the Ld. Assessing Officer is reproduced as under: “9.3 I have considered submission of the assessee and also copies of the endosures submitted by the assessee. The explanation submitted by the assessee and evidences/documents relied upon by him are not acceptable. 9.4 Letter dated 22.12.1999 claimed to have been submitted before JCIT, Spl. Range -46 do not bear any receipt of the Department. Moreover none of the document submitted by the assessee establishes beyond doubt that amount of Rs.41,32,000/- received as deposits on account of sale of GD land have been offered for taxation in A.Y. 1996-97. The audit report u/s 44AB filed during the assessment proceedings do not qualify the above claim of the assessee. 9.5 Without prejudice to these facts it is pertinent to mention that income of an assessee Is to be assessed on the basis of accounting system followed by him. The assessee is following Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 41 mercantile system of accounting and therefore amount of Rs. 1,76,32,000/- is subjected to tax in this Assessment Year in which the land is actually sold. 9.6 Further, the assessee was not prevented from filing revised return from A.Y.1996-97 for correcting such mistake. In the result, amount of Rs.41,32,000/- is added to the income of the assessee.” 21. The Ld. CIT(A) also rejected the claim of the assessee. According to him the amount in question was not bearing character of income in AY 1996-97 and it was only in the nature of a deposit. The relevant finding of the Ld. CIT(A) is reproduced as under: “6.3 I have gone through the contention of the appellant as well as that of the AO. It is well settled that the income accrues to the person when he has acquired rights as debts and not when he has received merely a deposit. In the instant case, it is not in doubt that the appellant had received deposit in the year 1995-96, and that, there was no formal agreement entered into for sale of such land. Thus, what was received was purely a deposit and not what is called an income. Since the amount in question did not bear the character of income, then it is irrelevant as to whether the appellant was following accrual system of accounting or mixed system of account and, Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 42 therefore, in the instant case the appellant was in his rights entitled to income only in the year under consideration and not in earlier year as has been claimed. Therefore, I am not inclined to accept the argument of the appellant that since the appellant was following the mixed system of accounting, the same should have been deducted from the current years income. Considering the fact of the case as well as laid down principles of accounting, I do not find any infirmity in the order of the AO and, hence, addition made by the AO is confirmed. Accordingly, this ground of appeal stands dismissed.” 22. Before us, Ld. Counsel of the assessee submitted a copy of confirmation from M/s GPL related to payment of ₹ 30 lakh and ₹11,32,000/-on 06/03/1995 and 1/2/1996 respectively. The Ld. Counsel also filed copy of profit and loss account to indicate that said sum was recorded by the assessee against land sales. In support of the claim thatmixed system of accounting was followed by the assessee, the assessee filed a copy of the income tax return for assessment year 1996-97 along with copy of the tax audit report. It was contended that all these documents Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 43 were filed before the Ld. Assessing Officer, despite no benefit of income, for which tax has already been paid, was given by the lower authorities. 23. The Ld. Counsel relied on the decision of the Hon’ble Supreme Court in the case of LaxmipatSinghnia Vs CIT (1969) 72 ITR 291 (SC), to highlight that same income cannot be taxed twice, once on accrual basis and subsequently on the basis of the receipt. 24. The Ld. DR on the other hand submitted that assessee has failed to establish the fact that tax was paid on the amount of ₹41,32,000/-in assessment year 1996-97. He also submitted that otherwise also said receipt is taxable in the year under consideration as the land in question has been sold in the year under consideration only. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 44 25. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that the first dispute between the party in respect whether the said amount of ₹41,32,000/- was offered for taxation by the assessee in assessment year 1996-97. The second dispute is whether that amount is taxable in the year under consideration on accrual basis. The contention of the assessee that said amount was received as advance against sale of the land and the assessee was following mixed system of accounting i.e. cash as well as accrual, therefore said amount was offered for tax in assessment year 1996-97 treating as received and offered to tax on cash basis. 25.1 In our opinion, first of all it needs verification whether the assessee has considered the amount of ₹41,32,000/-in relevant year as a deposit or income on which tax was paid. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 45 The assessee has filed profit and loss account for assessment year 1996-97, which contains total land sales of ₹7,12,51,460/-, and therefore readily it cannot be inferred that said amount of ₹41,32,000/-was included in the amount of ₹7,12,51,460/-. For this purpose, verification of the books of accounts of the assessee and other evidences is required. Regarding the second contention of the assessee of mixed system of the accounting in respect of the sale of the land also need verification from books of account. We find that Hon’ble Supreme Court in the case of Laxmipat Singhania (supra) has had as under : “It is a fundamental rule of the law of taxation that, unless otherwise expressly provided, income cannot be taxed twice. Again, it is not open to the Income-tax Officer, if income has accrued to the assessee, and is liable to be included in the total income of a particular year, to ignore the accrual and thereafter to tax it as income of another year on the basis of receipt.” Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 46 25.2 We are bound to follow the ratio in the case of the decision relied upon above, but factual verification as discussed above is needed. In view of above facts and circumstances, we feel it appropriate to restore this issue back to the file of the Assessing Officer for deciding afresh in accordance with law. 25.3 Now we take up appeal of the assessee for assessment year 2012-13. The Grounds raised by the assessee are reproduced as under: 1. On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in considering and the learned CIT(A)-40. Mumbai has erred in confirming 13.08.1993, as the date on which the plans of the housing project being building A of complex Aum Residency, as developed by the appellant at Kalyan. were first sanctioned by KDMC the concerned local authority and not on 20.06.2006 as per the facts of the case. 2) On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in not allowing the deduction and the leaned CIT(A) 40 has erred confirming the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 47 action of the AO of not allowing deduction of Rs. 31776302/- on account of the profits derived by the appellant from the eligible housing project being building A of complex Aum Residency under the provisions of section 80IB(10) of the Act. 3) On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in disallowing and the learned CIT(A)-40 has erred in confirming the disallowance on ad hoc basis of Rs. 277212/-being 20% out of expenditure under various head incurred by the appellant in FY 2011-12 as para 6 of the assessment order. 4) On the facts and in the circumstances of the case & in law the learned Assessing Officer has erred in disallowing and learned CIT(A)-40 has erred in confirming on ad hoc basis, Rs. 83301/- being 20% out of Motor car expenses and Motor car depreciation as para 7 of the assessment order. 25.4 The ground No.1 and 2 of the appeal of the assessee relate to denying of deduction under section 80IB of the Act in respect of building namely “Aum Residency”. The Ld. Assessing Officer in the year under consideration has referred to the finding of his predecessor in assessment year 2010-11, wherein the Assessing Officer has disallowed the claim of deduction under section 80IB(10) on the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 48 ground that said project was commenced on 30/08/1993, when approval was taken by M/s Tiruma construction for first time for part I of the project. 25.5 In AY 2010-11, the assessee claimed eligibility of its housing project namely “Aum residency” by way of form no. 10CCB of Income-tax Rules,1962, filed before the Assessing Officer. It was submitted by the assessee that this project was developed on a plot of land admeasuring 7700 m² and allotment rights of which were acquired by the assessee from M/s Tiruma constructions by way of agreement stated 25/01/1994 and 31/01/1995. The assessee further submitted that M/sTiruma construction had obtained approval on a plot of land admeasuring 3110 m² on 13/08/1993 for a plan for construction of a building consisting of ground floor plus four upper floors through architects namely‘Acherkar and associates’. Subsequently, Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 49 on 05/02/2000, the assessee entered into a joint-venture agreement with M/s GPL for development of the land under the name of “Aum Residency”. The architect Mr. DM Dalvi applied for approval of the project on 27/12/2005 and same was approved by the ‘Kalyan and DombivelMunicipal Corporation’ (KDMC) on 28/06/2006. According to the assessee ,occupation certificate of the project was received before the prescribed period under section 80IB of the Act and therefore, profits from the project is eligible for deduction, though there was no profit in the year under consideration. According to Ld. Assessing Officer (for AY 2010-11) , project was consisting of two parts. The first part relates to area of 3110 m² of land and second part consist of the remaining land of total area of 7700 m². According to the Assessing Officer date of commencement of construction of part one of the project is 13/08/1993, Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 50 when the plan was approved. In view of the Assessing Officer, the part II of the project is merely extension of the project already in existence and therefore in view of explanation to section 80IB(10) of the Act, which says that where approval in respect of housing project is obtained more than once, then project should be deemed to be approved on the date, when the building plan is first approved by the local authority. The Ld. Assessing Officer in AY 2010-11 also noted that in the amended plan dated 28th June 2006 approved by the local authority, the assessee has been shown merely as Power ofAttorney (POA) holder and not owner of the land and therefore also the assessee is not entitled for deduction under section 80IB of the Act. The Ld. CIT(A) in AY 2010-11, however rejected the finding of the Assessing officer as absurd and based on surmises. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 51 25.6 In the year under consideration, the assessing officer further inquired the occupation certificate provided by the assessee. According to the Ld. Assessing Officer, the approval obtained by the assessee on 28/06/2006 was for the entire project consisting of A and B wings, whereas assessee has submitted of completing the project A on 31/03/2012 and therefore the entire project was not completed on 31/03/2012 as required by the section 80IB(10)(a)(iii) of the Act for claiming deduction under section 80IB(10) of the Act. The Assessing Officer also considered the submission of the assessee and found that till 31/03/2011, the assessee has maintained a common account for both the wings (i.e. A & B) under the project completion method, however for the current year only splitted the accounts for wing A and B. The relevant finding of the learned assessing officer is reproduced as under: Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 52 “5.5 The explanation offered by the assessee has been carefully perused and considered and following points was observed. a) Even the cursory glance at assessee's submission especially para 6 and 7 of the same leaves no iota of doubt in inferring that even assessee admits that only Wing A is completed and he is totally silent about Wing B of the same project in his submission for obvious reason that part of project was not completed on or before crucial date of 31/03/2012. The wing B was not completed on 31/03/2012 is also evident from the project completion certificate issued by the KDMC vide letter dated 31/03/2012. This certificate clearly mentions that the certificate issued only for Wing A. The copy of the same certificate forms the part of this order as annexure B. b) It is important to point out that the assessee is following the project completion method for the entire project and till the year ending 31-3-2011 and has maintained a common account for both the wings A & B. However during the current year relevant to the assessment year has prepared the separate accounts for both the wings. This act of the assessee proves that the entire project for which a single commencement certificate was issued is not complete before meeting the crucial date of completion i.e.31-3-2012 and assessee has tried to claim deduction u/s 80 IB (10) without meeting the specific requirement of completion of the project. Hence on this point also assessee's claim for the deduction u/s 80 IB is not acceptable. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 53 In the backdrop of the discussions made in the forgoing paras and assessee's submission the claim of deductions by the assessee u/s 80IB(10) of Rs.3,17,76,302 stands denied. Penalty proceeding u/s 271(1)(c) initiated for furnishing inaccurate particulars and concealment of income.” 26. On further appeal, Ld. CIT(A) in the year under consideration has disallowed the claim of the assessee for deduction under section 80IB of the Act on two grounds. Firstly, the plan was approved for first time in the year 1993, and therefore, as held by the assessing officer in assessment year 2010-11, the assessee is not eligible for deduction being the approval dated 28/06/2006 only an extension of the earlier approval. Secondly, only a part of the project was completed as on 31/03/2012 and therefore even if the approval date is taken as 28/06/2006, then the entire project was not completed within the stipulated period and therefore assessee was not entitled for deduction. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 54 36.1 As far as first ground of rejection of claim of the assessee for deduction, is concerned in assessment year 2010-11, the Ld. CIT(A) accepted the claim on the basis of following two reasons: (a) in the approval dated 28/06/2006, it was not mentioned that it was for amended plan passed in the year 1993 and (b) the assessing officer’s observation that extension of the earlier project was not discernible from the approval produced by the assessee before him. 26.1 However in the year under consideration, the Ld. CIT(A) after examination of approval granted in the year 1993 and approval dated 28/06/2006 found that the approval dated 28/06/2006 was mere extension of Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 55 approval granted in 1993. The relevant finding of Ld. CIT(A) in the year under consideration is reproduced as under: “4.2.3 I have carcfully gone through the facts and circumstances of the case and the arguments of the appellant justifying his claim of deduction which has been accepted by my Ld. Predecessor in his order of appeal for AY 2010-11 Daring this year the appellant has placed refrance on the order of my Id. Prodosessor, relevant portion of which has feet reproduced above. However after carcfully analyzing the facts of the case and the evinces on record, am of the considered opinion that the Id. AO has richtls held that the assessce is not eligible for deduction U/s 80IB(10) of the Act. Coming to the facts of the case. the appellant had prosfucedonty copy of the IOD andsince on the face of the (OD it was not mentioned that the lOl) was for amended plan passed in the year 1993. my Ld predecessor ascepted the argument of the appellant that approval dated 28.6.2006 was for independent plan. To ascertan. sasther this is an extenston of flieearlier project as claimed by the l.d. 10 or not, deno, the appellate proceedings. Theappellant was asked to produce the copy of the application made for approval alongwithsupporting documents with respect to the plan aporosed an 28.6.2006, to ascertain whether itwas an independent project or it was an extension of the sariter project approsed in 1995 Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 56 4.2.4On examination of the documents produce the following facts menses a) The IOD under consideration was issued on 28.6 2006 on the basis of application dated 27.12.2005. It is most important to note that the subject for the application Jated 27.12.2005 was amended plans of proposed residential development plot... and it had the following references i. Original IOD no. KDMC/TP/BP/KV/200-86 dt. 13.8.1993 ii. letter dt. 10.10.2002. of the applicant iii. letter no. DMDA/536 04-114 dt. 8.11.2004, of the applicant Further it is clears mentioned in the said letter that it was in respest of submission of an amended plan of the earlier plan of proposed residential development on the said plot vide letter dated 8.11.2004, for approval. Meanwhile, they have made certain amendments in the pregiously submitted plans and therefore this amended plan was submitted. .......................................................................................... ... b) Copy of letter dt. 8.11.2004 wherein plan was submitted and which has been intended to be amended vide letter dt. 27.12.2005. .......................................................................................... .... Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 57 From the copies of the letter dt. 08.11.2004 and 27.12.2005 on the basis of which IOD was issued, on 28.06.2006, the following facts emerges – (i) IOD of the said hosing project was obtained vide IOD no KDMC/TP/BP/KV/290-86 dt. 13.08.1993,and all the subsequent letters are nothing but proposed amendment to the original housine project. as statedcleadly in the applications made in this regard on subsequent dates. (ii) In the letter de. 8.11.2004, i has ivenelears mentioned that it is a request for approval of amended plans and has referred to previous 1OD dated 13,8.1993. It has been further mentioned therein that thes have submitted all other relevant papers and documents with the previous 1OD and that they are enclosing one set of amended building plans for proposed develogment, which further clarities that the subsequent correspondence were in extension to the original plan approved on 13.8.1993 (iii) In the letter de. 27.12.2005 it has lenclearis mentioned that it is a request for approval of amended plans and has referred to previous 1O1 dated 13.8.1993 and previous letter de. 8,11.2004. It has been further mentioned that they have submitted all other relevant papers and documents earlier and that that they are enclosing ons set of amended building plans for proposed development. which further clarifies that the subsequent corresporalance were not in respect of any new proset but was in fact for amendment to the original plan approved on 13.8.1993. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 58 4.2.5 Thus. it is abundanily clear that the IOD de. 28.6.2006 has been issued on the basis of proposal of amendment made to the IOD dated 13.8.1993. Thus IOD dated 28.6.2006 is nothing but approval of the housing projeet on the basis of amendment made to the housing project approved on 13.8.1993. It has been clarified by way of explanation to Section 801B(10) that in a case where the approval in respeet of the housing project is obtained more than once. such housing project shall he deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. In view of the discussions made carlier and as evident from the facts of the case. the approval of the housing project under consideration was first granted on 138.1993, and subsequent 10D issued on 286.2006 was to approve the proposed amendments in the original housing project as approved on 13.8.1993. Hence the claim of the appellant that the subsequent approval dated 28.6.2006 was in respect of an independent housing project is not acceptable. in the given facts and circumstances of the case. 4.2.6 As per provisions of section SOIB10). the amount of deduction in the case of an undertaking developing and building housinsprojeets approved before the 31st day of March. 2008 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment vear from such housing project it- (a) such undertaking has commenced or commences development and construction of the housing project on or after the ist day of October. 1998 and completes such construction, Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 59 (a) in a case where a housing projess has been approved by the local authority before the Ist day of April, 2004, on or before the 3 Ist day of March. 2008: In the case of the housing project under consideration it is found that the project was originally approved on 13.8.1993 and therefore for daim of dedection tis 801B410). the project should have been completed on or before the 3lst day of March. 2008. However. it is an admitted fact that the said project has not been completed by the 31 st day of March 2008. In fact as per the submission of the appellant only occupation certification in respect of building A out of the approved project which had building And B. was issued on 31.3.2012. Therefore it is evident that the appellant is not eligible for claim of deduction Us.8OIB(10), for the reason that the project was not complied within the period as stipulated in the Act. Therefore Ground Nos 1 & 2 of appeal are dismissed.” 27. Before us, the Ld. Counsel of the assessee filed a synopsis on ground No. one and two and submitted that the approval dated 13/08/1993 was in respect of a housing project on area of plot admeasuring 3110 m², consisting of sanctioned construction area of 3058 m², having sanctioned for buildings containing ground plus four floors,but the construction of the project never Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 60 commenced. Whereas, the approval granted on 28/06/2006, was in respect of a plot admeasuring 7700 m² (which included the plot in respect of which approval was granted on 13/08/1993), consisting of sanctioned construction area of 9640 m², having two buildings containing 141 flats and the construction of the project commenced on 28/06/2007, and one building was completed on 31/03/2012. The learned Counsel has filed a comparative chart for the approval dated 13/08/1993 and 28/06/2006. The relevant chart is reproduced as under: Date of commencement of the Project Particulars Approval 13.08.1993 Approval 28.06.2006 Area of plot 3,110 sq Mtrs 7,700 Sq Mtrs Sanctioned construced area 3,058 Sq Mtrs 9,640 Sq Mtrs Tenement sanctioned 85 Flats Building A – 83 Flats Building B – 58 Flats Number of buildings 4 Buildings 2 Buildings Description of buildings Ground plus 4 upper floors Building A – Stilt plus 12 floors Building B – stilt plus 10 floors Name of builder and developer Tiruma Constructions Mr. S M Dalvi – Proprietor Aum Residency Name of land owners Hiru Kalu Bhoir and others Hiru Kalu Bhoir and others and Ram Shankar Mirkute Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 61 and others Survey No/s. 55/3 55/3, 55/4, 55/5, 56/2 Architects Achrekar & Associates D M Dalvi & Associates Status of construction Never commenced any construction Commenced the construction after 28.06.2007 Completion of construction No question of completion as no construction started Building A – 31.03.2012 Building B – 05.11.2012 28. The learned Counsel submitted that permission dated 13/08/1993 granted by the Kalyan Municipal Corporation had lapsed at the end of the 12 months from the date of the sanction i.e. 12/08/1994, as per the provisions of section 48 of Maharashtra Regional and Town Planning Act, 1966 as no application for extension of the said permission from year to year was made to the local authority. The permission finally and permanently lapsed at the end of four years from 13/08/1993 i.e. 12/08/1997, as no application for extension of the said permission was ever filed nor any development of building beyond plinth level or a proper level of basement or stilled as the case may be, was ever carried out. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 62 28.1 The Ld. counsel further submitted that the assessee had purchased development rights from M/s Tiruma construction by way of agreement dated 25/11/1994 and therefore assessee had no connection whatsoever nature with the development permission and sanction building plan as per the approval dated 13/08/1993. Further, the Ld. Counsel submitted that assessee had purchased other lands adjoining to the land purchased from M/s Tiruma construction and entered into a joint-venture on 25/02/2000 with M/s Godrej properties Ltd for development of entire amalgamated plot and measuring 7470 m². The joint-venture agreement was cancelled by way of cancellation agreement dated 31/03/2009 and the housing project on the amalgamated plot of the land was developed and constructed by the assessee alone. The project developed by the assessee was first approved by the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 63 Kalyan Dombivali municipal Corporation (KDMC), as per the IOD dated 28/06/2006, which was a fresh permission and not as an amended permission with reference to permission granted on 13/08/1993. The assessee further applied for use of TDR of 3193 square metre, which was purchased by the assessee. The approval was granted by KDMC for use of TDR vide approval dated 23/04/2008. This construction permission to use TDR of 3193 square metre is not granted as amended construction permission by KDMC. The assessee further acquired some area and applied permission for amalgamated plot of the land, which increased to 7700 m² and carpet area sanction for construction was increased to 9640.14 m². The approval for amended housing project was granted by the local authority KDMC on 14/09/2011, as amended construction permission. The Ld. Counsel submitted that plan sanction Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 64 on the plot of land for developer M/sTiruma construction is not relevant for considering the eligibility of the assessee for deduction under section 80IB(10) as said, sanction was for different assessee, for a different project, which was never commenced and constructed and the said permission had permanently lapsed under the provisions of section 48 of MRTP Act, which could not be revived and renewed in view of the provisions of section 48 of the MRTP Act, 1966. 28.2 In support of the contention the Ld. counsel relied on the decision of (i) the Mumbai Bench of the Tribunal in the case of ITO Vs Ashray Premises P Ltd reported in (2012) 27 taxman.com 149 (Mum). (ii) Tribunal Pune bench in the case of ITO Vs AV Bhatt developers reported in 145 ITD 305(Pune) Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 65 (iii) Tribunal Mumbai bench in the case of ITO Vs Kasturi construction reported in 54 SOT 384 (iv) Hon’ble Bombay High Court in the case of Vandana properties reported in 353 ITR 36. 28.3 In respect of the second reasoning given by the assessing officer for disallowance of deduction under section 80 IB, the Ld. Counsel the assesseesubmitted that from reading of explanation to section 80IB(10), it is evident that date of approval of the building plan shall be the date of the approval of the housing project. The explanation is worded keeping in view the provisions of the development control rules of the local authorities which provide for a sanction of a building plan and don’t give sanction to any project plan for development of a housing project under the development rules. Therefore building ‘A’ofcomplex‘Aum Residency’ is independent housing Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 66 project, which is completed on or before 31/03/2012 and therefore it fulfils all the conditionsof section 80IB(10) of the Act. A chart of fulfilling other conditions in respect of building filed by the assessee is reproduced as under: Status of compliance of conditions in respect of ‘Building A’ of complex Aum Residency Section Condition Status of compliance 80IB(10)(a) Project is completed within five years from the compliance end of financial year in which the project was first Complied approved. (Date of approval is 28-06-2006, Occupation certificate received on 31- 03-2012 from the local authority) Complied 80IB(10)(b) The project is on the size of a plot of land which Complied exceeds one acre. Size of the Land beneath 'Building A' is 4828 Sq. Mtrs. Complied 80IB(10)(d) Built up area of each residential unit is below Complied 1500 sq ft. Complied 80IB(10)(d) The built-up area of the shops and other Complied commercial establishments included in the housing project does not exceed three per cent of the aggregate built-up area of the housing project or five thousand square feet, whichever is higher. There is no commercial area in case of the project developed by the appellant. Complied 80IB(10)(e) Not more than one residential unit in the housing Complied project is allotted Complied Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 67 to any person not being an individual 80IB(10)(f) In a case where a residential unit in the housing Complied project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely (i) the individual or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta. Complied In support of the contention, the learned Council relied on the decisions of (i) Hon’ble Madras High Court in the case of Vishwas promoters Private Limited Vs ACIT reported in 255 CTR 149 (ii) Hon’ble Bombay High Court in the case of CIT Vs Makwana research and company reported in 1 NYPCTR 949 (Bom) (iii) Hon’ble Bombay High Court in the case of Vandana Properties 353 ITR 36 Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 68 29. The Ld. DR on the other hand relied on the order of the Ld. Assessing Officer and the Ld. CIT(A). 30. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record including the order of the lower authorities and written submission of the assessee. The Assessing officer has rejected the claim of the assessee due to two reasons. Firstly, according to the assessing officer the approval dated 28/06/2006, is only an extension or amendment of earlier approval granted on 13/08/1993. Secondly, without prejudice, even if the approval dated 28/06/2006 is considered as approval of the housing project consisting building A and building B, therefore entire housing project was not completed on 31/03/2012 because occupation certificate in respect of building A was only received on 31/03/2012 and building B was not completed. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 69 30.1 As far as first issue of approval for housing project granted more than once is concerned, the Ld.counsel has relied on the decision by the Hon’ble Bombay High Court in the case Vandana properties (supra). In said case the assessee had constructed building A, B, C and D on the plot of land and measuring 2.36 acres over a period of years. The concerned Municipal Corporation approved construction of those buildings in the year 1993 to 1996 and the assessee offered to tax the income earned from construction building A to D from time to time and no deduction under section 80IB(10) of the Act was claimed in respect of buildings A to D as approval for construction of those buildings were granted prior to 01/10/1998. Subsequently, pursuant to an order of the State government in the year 2001, permitting conversion of the status of the land, the assessee became entitled to Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 70 construct an additional building “E” with several residential units on aforesaid plot of land , accordingly the assessee submitted building plan for construction of building E with several residential units, which was approved by the municipal Corporation on 11/10/2002 and commencement certificate for construction of E building was issued on 10/03/2003. According to the Revenue, this approval was only an extension of the earlier approval granted between the period 1993 to 1996 and therefore assessee was not entitled for deduction under section 80IB(10) invoking explanation. The argument forwarded by the Counsel of the Revenue before the Hon’ble High Court is reproduced as under: “12. Mr.Suresh Kumar, learned Counsel for the Revenue argued before us that the amount of deduction under Section 80IB (10) of the Act is available to an undertaking where the development and construction of the housing project has commenced on or after 1st Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 71 October 1998 and is completed within the time stipulated therein. In the present case, approval for construction of 'E' building was granted on 11th October 2002 as and by way of extension of the approval granted to the earlier housing project consisting of A, B, C and D buildings. Since approval to the housing project consisting of A, B, C, D and E building was first granted in the year 1993, it must be held in view of the Explanation to Section 80IB (10)(a) of the Act that the housing project has commenced development and construction when the first approval was granted in the year 1993 and to such a housing project which has commenced prior to 1st October 1998, the deduction under Section 80IB (10) could not be granted.” 30.2 The Hon’ble High Court after considering submission of the rival parties held as under: “17. The first question to be considered herein is, whether, in the facts of the present case, construction of 'E' building constitutes building a 'housing project' under Section 80IB (10) of the Act. 18. The expression 'housing project' is neither defined under Section 2 of the Act nor under Section 80IB (10) of the Act. Even under the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulations for Greater Mumbai, 1991, the expression Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 72 ‘housing project’ is not defined. Therefore, the expression 'housing project' in Section 80IB (10) would have to be construed as commonly understood. 19. As rightly contended by Mr.Inamdar, learned Senior Advocate appearing on behalf of the assessee and Mr.Mistri, learned Senior Advocate and Mr.Joshi, learned Advocate appearing on behalf of the intervenors, the expression ‘housing project’ in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the Explanation in Section 80IB (10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1000 square feet (‘E’ building in the present case) would constitute a 'housing project' under Section 80IB (10) of the Act. 20. The question, then, to be considered is, whether construction of 'E' building is an independent housing project or extension of the housing project already existing on the plot in question. It is the contention of the Revenue that since the approval for construction of 'E' building was granted by the local authority subject to the conditions set out in the first approval granted on 12th May 1993 for construction of A and B building, construction of 'E' building must be considered to be the extension of the earlier housing project for which Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 73 approval was granted prior to 1st October 1998 and, therefore, the benefit of Section 80IB (10) cannot be granted. There is no merit in the above argument, because, when the plans for A, B, C and D buildings were approved during the period from 1993 to 1996, construction of ‘E’ building was not even contemplated on the plot in question. It is only in the year 2001 when the status of the land was converted from surplus vacant land into within the ceiling limit land by the State Government, an additional building could be constructed on the plot in question and accordingly building plan for construction of ‘E’ building was submitted and the same was approved by the local authority on 11th October 2002. 21. The fact that the local authority, namely the Municipal Corporation approved the building plan for 'E' building on the condition that all the objections raised in the Intimation of Disapproval dated 12th May 1993 relating to the earlier housing project on the same plot of land shall be applicable and should be complied with, cannot be a ground to hold that 'E' building is extension of the earlier housing project because the earlier housing project was completed prior to 1st October 1998 and the housing project for construction of ‘E’ building was approved for the first time on 11 th October 2002. Nowhere in the Intimation for Disapproval granted for construction of 'E' building on 11th October 2002, it is stated that building 'E' constitutes extension of the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 74 earlier housing project which is already completed. The fact that the objections raised while approving the earlier housing project on the same plot of land were made applicable to the housing project in question, it cannot be inferred that the housing project in question constitutes extension of the earlier housing project. Therefore, in the facts of the present case, where, neither the assessee had sought approval of the building plan for construction of 'E' building as extension of the earlier housing project, nor the Municipal Corporation has granted approval for the housing project consisting of 'E' building as extension of the earlier housing project, it is not open to the incometax authorities to contend that approval to the housing project granted by the Municipal Corporation on 11th October 2002 constitutes extension of the housing project which was approved in the year 1993. 22. Reliance placed by the Revenue on the Explanation to Section 80IB (10)(a) which was introduced with effect from 1st April 2005 is also misplaced. What the said Explanation contemplates is that where the approval in respect of a housing project is granted more than once, then, that housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. For example, in respect of a housing project, the assessee may seek amendment of the building plan at several stages of the construction and the same may be Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 75 approved. In such a case, the explanation provides that for the purposes of Section 80IB (10) the housing project shall be deemed to have been approved on the date on which the first approval was granted by the local authority. Thus, the Explanation to Section 80IB (10)(a) refers to the approval granted to the same housing project more than once and the said Explanation would not apply where the approval is granted to different housing projects. In the present case, as noted earlier, construction of 'E' building constitutes an independent housing project and, therefore, the date on which the earlier housing project had commenced construction could not be applied to the housing project consisting of 'E' building merely because the conditions set out while granting approval to the earlier housing project have also been made applicable to the housing project in question.” 30.3 Thus, we find that in the above case the approval granted in respect of buildings A to D considering as a housing project was totally separate and during relevant time the idea of building E did not even conceive. The idea of building E came only after permission of the State government in the year 2001 for converting status of the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 76 land and thereafter only the assessee applied for approval for construction, which was granted by the Municipal Corporation on 11/10/2002. In these circumstances the Hon’ble High Court held that housing project constituting of building E, is not extension of earlier housing projects consisting of building A to D and it is an independent housing project and therefore date on which the earlier housing project commenced construction, could not be applied to the housing project consisting of E building merely because the conditions set out while granting approval to the earlier housing project were also made applicable to the housing project consisting E building. 30.4 In other decisions of Tribunal relied by the assessee, decision of the Hon’ble Bombay High Court in the case of Vandana properties (supra) has been followwed. The coordinate Bench of Tribunal in the case of Kasturi Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 77 Constructions held that what is to be seen is original vis-à- vis new approval, whether there is any substantial change in building plan. If there is substantial change , then date of commencement has to be taken from the new approval. Relevant finding of the Tribunal is reproduced as under: “9. We have considered the rival contentions as well as relevant material on record. It is evident from the record that there are three sanctioned plans approved by the local authority at different point of time in respect of the housing project. No doubt that in case when more than one approval have been granted by the local authority, the Ist approval and sanction of building plan of the housing project shall be deemed to be the date of approval as per clause (i) of Explanation to section 80-IB (10). The assessing officer denied the deduction under section 80-IB(10) on the ground that the project was commenced prior to 1-4-2004 and the assessee has not completed the project up to 31-3.2008; therefore, the assessee failed to fulfil the conditions as per clause (a) of section 80-1B(10). The assessing officer took the commencement date when the Ist approval was granted by the local authorities on 12-9-2003 in response to the plan put up by Ms Mohan Kheda Builders & Developers. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 78 9.1 There is no doubt that there is more than one approval obtained from the local authorities at different point of time. However, it is to be seen whether all the approvals are for the same housing project or the project itself is changed which has necessitated subsequent approval.” 30.5 Further, in Para 11, the Tribunal (supra) held as under: “11. As it is clear from the language of the explanation that in case where the approval in respect of the housing project is obtained more than once, then the first approval shall be deemed to be the date of approval for the purpose of clause (a) of section 80-IB(10). The material and relevant aspect is whether more than one approval are in respect of one housing project or the housing project itself has been changed and the change is not a minor or superficial but a substantial change from its original planned project. In the first case, the project shall be deemed to have been approved on the date of first approval whereas in the later case, the earlier approval cannot be said to be an approval in respect of the changed housing project. Therefore, the project, which was finally executed and developed by the assessee is the project which was approved by the local authorities on 28-9-2005 and accordingly, the period of completion would reckoned from the approval Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 79 dated 28-9-2005. Therefore, the conditions as provided under sub clause (i) of clause (a) of section 80-IB(10) would be applicable in the case of the assessee which contemplates that where a housing project has been or is approved by the local authorities on or after 1-4-2004 and completes such construction within 4 years from the end of the financial year in which the housing project is approved by the local authorities.” 30.6 In the instant case however the approvals granted for construction can be summarised as under: 1. approval was granted by the local authority i.e. Kalyan Dombivali municipal Corporation on 13/08/1993 for construction on plot of land at survey No. 55/3 admeasuring 3110 m² to M/s Tiruma construction for a plan of construction of building A to E consisting of ground plus 4 floors, each building admeasuring 611.80 squaremetrestotalling 23194.05 m². Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 80 2. The joint-venture of assessee and M/s Godrej properties Ltd applied on 27/12/2005 for approval of housing projects to develop on land at survey No. 55/3, 55/4, and 56/2( i.e. including the plot of land on which approval was granted earlier by the municipal Corporation) ad measuring 6942 m² for construction of a housing project with building plan for building A and B having stilt plus 6 floors in the clubhouse having ground floor, which was approved on 28/06/2006 by the Municipal Corporation. 3. After acquisition of TDR of 3193 square metre, permission was again applied on 23/11/2007 for construction for using said TDR on plot of land, which was approved by the municipal Corporation on 23/04/2008. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 81 4. The joint-venture agreement between the assessee and M/s Godrej properties Ltd was cancelled, and the assessee himself took up the construction of the project at his own. 5. The housing project of the assessee was again amended by the as per application dated 01/04/2011 as the assessee had purchase and acquired survey No. 55/5 and thus the area of the amalgamated plot of land had increased to 7700 m² and the carpet area sanction for construction was increased to 9640.14 m². The building plan was sanctioned for two buildings having building A consisting of stilt plus 12 upper floors and building B having stilt plus 10 upper floors. The approval for the amended housing project was Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 82 granted by the local authority on 14/09/2011 as amended construction permission. 30.7 When we examine the facts of the case in hand in the light of the issue in the case of Vandana Properties (supra) prima facie, we need to establish that approval granted on 28/06/2006 is distinct and separate from the permission granted in the year 1993. The Ld. CIT(A) has analysed the applications filed by the assessee for seeking permission dated 28/06/2006. The Ld. CIT(A) in the impugned order has mentioned that the assessee has sought approval of amended plans referring the previous approval dated 13/08/1993 and including relevant papers and documents with previous approval, and therefore the approval dated 28/06/2006 is merely an amendment to the original plan approved on 13/08/1993. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 83 30.8 On perusal of submission of the assessee, we find that No. of buildings and No. of residential units have totally changed in plan approved on 28/06/2006 as compared to the plan approved on 13/08/1993. The assessee has also filed a letter form the Municipal Corporation to the effect that approval dated 13/08/1993 was already cancelled. But the certificate filed from the Municipal Coroporation has not referred the relevant clauses of approval and also not specified as why the approval granted vide letter dated 28.06.2006 was classified as amended. The assessee has also filed the maps approved in the year 1993 and 28/06/2006 to show that there is substantial change in plan of building. We are of opinion that the issue need expert comment from Department Valuation Officer to that effect that there is substantial change in design of the project as held in the case of KasuriConstruciton (supra). Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 84 Accordingly , in the interest of substantial justice , we feel appropriate to restore the matter to the Ld. AO with the direction to obtain expert opinion on the issue and confront the same to the assessee before adjudication on the same. It is needless to mention that assessee shall be offered adequate opportunity of being heard. 31. The second issue in dispute is regarding completion of the housing project. The contention of the assessee is that each building is a separate housing project and therefore on completion of building ‘A’ within the stipulated period from the date of the approval, the assessee is entitled for deduction under section 80IB(10) in respect of the profit earned in respect of building ‘A’, considering it as a housing project separate from building ‘B’, which is another housing project. The contention of the Revenue is however that plan of construction submitted before the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 85 local authority vide application dated 17/12/2005 was in respect of the both building A and B, and therefore construction of building A and B together, constitute a single housing project for eligibility under section 80IB(10) and the commencement and completion has to be seen from the angle of completion of both the buildings A and B, and not separately for each building treating them as separate housing project. 32. The Ld. counsel of the assessee has relied on the decision of the Hon’ble Madras High Court in the case of Vishwas promoters Private Limited (supra). The relevant finding of the Hon’ble High Court is reproduced as under: “13. Section 80IA of the Act is a specific provision which deals with deduction in respect of profits and gains from industrial undertakings or enterprises engaged in the development of infrastructural facilities such as roads, bridges and other structure as regards the grant of deduction in respect of development and construction of Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 86 a housing project. Section 80IB is a specific provision in respect of profits and gains from undertakings engaged in developing and constructing housing projects other than infrastructure development undertakings. Thus, housing projects considered herein under Section 80IB refers to any building other than road, bridge or other structure. Thus, going by the definition of "housing project" to mean the construction of "any building" and the deduction under Section 80IB of the Act is hundred per cent of the profits derived in the previous year relevant to the assessment year from such housing project complying with the condition, each block in the larger project by name "Agrini" and "Vajra", has to be taken as an independent building and hence a housing project, for the purpose of considering a claim of deduction. Section 80IB(10) begins by stating: "(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2007 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if, (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,..." Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 87 Thus the undertaking qualifying for deduction under Section 80IB of the Act is an "undertaking developing and building housing projects" and the deduction is in respect of "profits and gains derived from" such housing project, satisfying the conditions stipulated in the clause therein. Thus, within a composite housing project, where there are eligible and ineligible units, the assessee can claim deduction in respect of eligible units in the project and even within the block, the assessee is entitled to claim proportionate relief in the units satisfying the extent of the built-up area.” 33. The Ld. counsel also relied on the decision of the Hon’ble Bombay High Court in the case of Makwana Bros & Co (supra), wherein the Hon’ble High Court has relied on the decision of the in the case of one the Vandana Properties (supra), which we have already reproduced above. The Hon’ble Bombay High Court in the case of Vanadana Properties held that word ‘housing project’has neither been defined in Act nor under the Mumbai Municipal Corporation Act, 1988 and therefore the Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 88 expression housing project in section 80IB(10) has to be construed as commonly understood. The Hon’ble High Court has held that building ‘E’ in said case was to be treated as a separate housing project. 33.1 The Ld. counsel has further referred to the decision of the Tribunal in the case of Siddhivinayak Venture Vs Addl CIT in ITA No. 1112 and 1527/Pune/2011, wherein the Tribunal in para 30 has held as under: “30. From the aforesaid discussion, it can be inferred that in order to understand the meaning of the expression 'housing project' for the purpose of section 80-IB(10) of the Act, in the absence of any definition section 80-IB(10) of the Act or even in the Local Development Control Rules for PCMC, it has to be construed as "commonly understood". The plea of the Revenue that expression 'housing project' should be understood to mean the project as approved by the 'local authority' is not justified because evidently the Development Control Rules of the 'local authority' i.e. PCMC does not define a 'housing project'. In-fact, from the discussion in the foregoing paragraphs it is evident Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 89 that even a building or a group of buildings comprised in a larger project approved by a 'local authority' can be construed as a 'housing project' for the purpose of considering a claim of deduction u/s. 80-IB(10) of the Act. Considered in this background, in the instant case, the plea of the assessee that 'SWRH' project is an independent project for the purpose of considering a claim of deduction u/s. 80-IB(10) of the Act cannot be shut-out merely because PCMC approved it alongwith the 'S3' project. Therefore, while evaluating the compliance with the condition of completion of construction of the project contained in section 80- IB(10)(a)(i) of the Act, we uphold assessee's plea that 'SWRH' project be construed as a 'housing project', especially when the claim for deduction u/s. 80-IB(10) of the Act is confined to the profits of 'SWRH' project.” 33.2 In the above case, in the approval sought, two projects have been referred namely SWRH and S3 projects, therefore Tribunal is justified in allowing the claim of the assessee confining to the profit of SWRH project. 33.3 But in the instant case before us approval has been sought under a single application for housing project constituting building plan of two buildings. The Assessing Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 90 Officer has also brought on record that assessee followed percentage completion of method for accounting revenue and expenses, under which revenue and expenses of both the buildings were accounted together, without any bifurcations of buildings and therefore construction of the both the building was treated by the assessee as a single project. However only in the assessment year under consideration, the assessee splitted the revenue and expenditure in respect of the buildings A and B. In circumstances, we are of the opinion that issue need futher examination of documents filed by the assessee before the the Municipal Corporation for approval of project and find out whether in application for approval , the assessee has treated the two projects separately or not .In the interest of justice , the issue is accordingly restored to the file of the Assessing Officer for deciding afresh. It is Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 91 needless to mention that assessee shall be offered adequate opportunity of being heard. 34. The ground Nos. 1& 2 of the appeal of the assessee are allowed for statistical purposes. 35. The ground 3 of the appeal relates to the disallowance of ₹2,77,212/-out of various expenses at the rate of the 20% of those expenses. The finding of the Ld.Assessing Officer in this regard is reproduced as under: “6. On perusal of the P & L A/c, it is seen that the assessee has debited following expenses: Business Promotion : ₹87,000/- Maintenance : ₹67,495/- Site Expenses : ₹3,40,882/- Travelling Expenses : ₹28,907/- Advertising Expenses : ₹1,17,914/- Office Expenses : ₹1,33,562/- Sundry Expenses : ₹10,300/- ₹13,86,060/- The assessee was asked to furnish the requisite details in respect of expenses claimed under the above heads, in response to which, the assessee has produced sample bills for verification. Some of the bills are cash memos without indicating the name of the assessee. The Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 92 element of non business purpose in this kind of expenditure cannot be avoided. Hence, these expenses cannot be considered as expenses incurred wholly and exclusively for the purpose of business. The assessee has failed to establish the nexus of these expenses with the business of the assessee and thus has failed to discharge its onus to prove its ciaim. The onus to prove any claim made by the assessee is on the assessee itself as is held by the Apex Court in the case of CIT v/s Calcutta Sales Agency P Ltd (19 IT 191). Hence, for the reasons stated above, an amount of Rs.2,77,212/-, being 20% of Rs.13,86,060/- is hereby disallowed and added back to the total income of the assessee.” 36. Ld. CIT(A) has observed that during appellate proceeding also the assessee failed to produce any evidence to prove genuineness of the expenditure claimed and therefore he confirmed the disallowance made by the Assessing Officer. 37. Before us the Ld. counsel of the assessee has submitted that disallowance has been made on ad hoc basis on verification of voucher produced by the assessee. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 93 According to him some of the bills were cash memos, without indicating the name of the assessee. He submitted that shopowners while issuing cash memos don’t ask for any details from the buyers . As petty expenditures are incurred by the employees at construction site, and they are not familiar with the need of the name of the assessee on the cash memo. He submitted that absence of name on the cash memo by itself does not lead to any conclusion that said expenditure has not been incurred wholly and exclusively for the purpose of the business. He also submitted that books of accounts of the assessee were duly audited in terms of section 44AB of the Act and out of the total expenses of ₹13,86,060/-advertising expenses amounted to ₹7,17,914/-which constitute 51% of the total expenditure which were subjected to deduction of tax at Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 94 source. Therefore he submitted that disallowance made need to be deleted. 38. The Ld. DR on the other the other hand relied on on the order of the lower authorities. 39. We have heard rival submissions of the parties. We find that the assessing officer verified books & voucher on test check basis and he found that name of the assessee was not written on some cash bills, therefore ,he held the 20% of the expenses incurred of ₹13,86,060/-as not incurred wholly and exclusively for the purpose of the business. In our opinion the action of the Assessing Officer, merely on the reason that name of the assessee was not written on the cash bill so the expenditure attract disallowance, is not justified. If he was having any doubt regarding the bills, he could have carried out inquiries from the party who had issued the bills and verified. The action Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 95 of the Ld.Assessing Officer of disallowing 20% expenses on ad-hoc of basis and confirmation of the same by the Ld. CIT(A) is rejected. The disallowance made by the assessing officer is accordingly deleted. The ground No. 3 of the assessee is accordingly allowed. 39.1 In ground No. 4, the assessee challenged disallowance of ₹83,301/-being 20% out of motorcar expenses and motorcar depreciation. The relevant finding of the Ld.Assessing Officer is reproduced as under: “7. Motorcar Expenses & Depreciation on Motorcar:- The assessee has debited an amount of Rs.1,12,096/- under the head 'motor car expenses', Rs.19,116/- under the head 'petrol & vehicle and Rs.2,85,294/- under the head 'depreciation on car'. The assessee was asked to furnish the details of expenditure claimed under these heads, in response to the same, it has been claimed by the assessee that these are exclusively used for the purpose of business. However, from the detals Furnished by the assessee the exact use of has also not Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 96 given any bifurcation of the expenses for business purpose and non business purpose. Further, the assessee is not maintaining any log book for usage of car. Use of car for the personal benefit of the assessee other than business could not be ruled out in absence of any log book being maintained for running of cars. Therefore, the said expenses cannot be claimed to have been expended wholly and fully for the purpose of business of the assessee within the meaning of provisions of Section 37(1) of the Act. On similar lines, since the car is not used exclusively for business purposes, therefore, considering the provisions of Sec. 38(2) depreciation on car also shall be restricted proportionately. Therefore, 20% of the total motor car expenses, petrol expenses and depreciation on car amounting to Rs.83,301/- is hereby disallowed and added back to the income of the assessee.” 39.2 The Ld. CIT(A) confirmed the disallowance observing as under: “6.1 I have considered the reasoning of the Ld. AO as well in the argument of the appellant. It is seen that the appellant has not heen able to prove that the ear was used onlv for the purpose of business. by producing log book to this effest. The appellant has tried to shift the onus on the Id. AO to prove that the ear was used for personal use. The appellant has Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 97 debited the expenses and claimed it as deduction U/s. 37, and onus was on the appellant to prove that the entire expenditure was incurred wholly and exclusively tor the purpose of business, which he has not been able to discharge. I am inclined to as with the Ld. AO that use of the motor ear for personal use can not be ruled out and even during the appellate proceedings the appellant has not been able to produce any evidence to prove that the ear was not used for personal purpose. The Ld. AO has disallowed 20% of sch expenditures and in my considered opinion no interference to the order of the Id AO is called for. Therefore the disallowance is confirmed and ground No. 4 of appeal is dismissed.” 40. Before us the Ld. counsel of the assessee submitted that after the concept of block of asset, the individual asset merges with the block of assets and the depreciation claimed relates to block of complete assets and not in relation to any specific assets forming part of the block. He further submitted that assessing officer has not brought on record any evidence as to the personal use of the vehicles and therefore disallowance made by him is on the basis of Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 98 surmise and conjecture only. The Ld. counsel relied on the decision of the Tribunal (ITAT) Jaipur Bench in the case of Raj Enterprises v. Income-tax Officer [1995] 51 TTJ 408 (JP.)and Tribunal, Ahmedabad Bench in Monarch Food Private Limited v. ACIT [1996] 054 TTJ 0405. 41. We have heard rival submissions of parties on the issue in dispute and perused the relevant material on record. The section 38 (2) of the Income-tax Act has provided for restriction of the depreciation for non-business use. The relevant section is reproduced as under: “Section 38(2) of the Act (2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions under sub clause (in of clause (a) and clause (c) of section 30, clauses (1) and (it) of section 31 and clause (it) of sub-section (1)] of section 32 shall be restricted to a fair proportionate part thereof which the "Assessing] Officer may determine, having regard to the user of Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 99 such building, machinery, plant or furniture for the purposes of the business or profession”. 41.1 Therefore in our opinion, there is no restriction on disallowance of depreciation for nonbusiness purposesd of the asset, even if it is part of the block of the asset. Further the onus was an the assessee to justify that the motor vehicle was used wholly and exclusively for the purpose of the business and therefore assessee was required to produce the logbook of the vehicles. Due to failure on the part of the assessee in justifying use of the vehicle wholly and exclusively for the purpose of the business, the Ld. CIT(A) is justified in confirming the disallowance made by the Assessing Officer. The decision relied upon by the assessee are distinguishable on facts. Accordingly, we uphold the finding of Ld CIT(A). The ground No. four of the appeal of the assessee is accordingly dismissed. Shirish M. Dalvi ITA Nos. 3545, 4317/M/2014 & 4640/M/2016 100 42. In the result, appeal of the Revenue for assessment year 2010-11 is dismissed, whereas appeal of the assessee for assessment year 2010-11 is allowed partly for statistical purposes and appeal for 2012-13 is allowed partly. Order pronounced in the open Court in 31/10/2022. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 31/10/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai