D.C.I.T.C.C. 7, MUMBAI V. SAMARTHA DEVELOPMENT CORPORATION, MUMBAI

ITA 5477/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3640 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 16-10-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 30-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Assessee Lawyers: VINAYAK R VELHANKAR
• Keywords: Search and seizure; Principle of natural justice; Retrospective amendment; Additional evidence; Question of law; Wrong claim; Assessment record; Block assessment; Retraction
• Section: 143(3); 133A; 80IB; 131; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .T A NO S . 547 7 TO 5482/MUM/2012 ( / ASSESSMENT YEAR S : 2004 - 05 TO 2009 - 10 THE ACIT, CENTRAL CIR. 7, OLD C.G.O. BLDG.(ANNEX), M.K. ROAD, MUMBAI - 400 020 / VS. M/S. SAMARTHA DEVELOPMENT CORPN., 11 - A, SUYASH, GOKHALE ROAD, NORTH, DADAR (W), MUMBAI - 400 028 ./ ./ PAN/GIR NO. AABFS 7754E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI MANJUNATHA SWAMY / RESPONDENT BY: SHRI VINAYAK R. VELHANKAR / DATE OF HEARING : 04 . 0 2 . 201 6 / DATE OF PRONOUNCEMENT : 09 . 0 3 .201 6 / O R D E R PER C.N. PRASAD, JM : ALL T H ESE APPEAL S ARE FILED BY THE REVENUE AGAINST THE ORDER S OF THE LD. CIT(A) PERTAINING TO ASSESSMENT YEAR S 200 4 - 0 5 TO 2009 - 10 . . AS COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS, THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE REVENUE HAS RAISED FOLLOWING TWO COMMO N GROUNDS: ITA NOS.5477 TO 5482/M/2012 2 '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.L,80,79,839/ REPRESENTING DISALLOWANCE U/S 801B(10) ON THE GROUND THAT AREA OF FLAT BEING MORE THAN 1000 SQ. FT RELYING ONLY ON THE RE TRACTION STATEMENT OF SHRI ABHIRAM BHATTACHARJEE , ONE OF THE PURCHASERS OF THE FLATS, WHO DURING SURVEY U/S 133A ADMITTED PURCHASE OF A FLAT MEASURING MORE THAN 1000 SQ.FT. AS A SINGLE UNIT IGNORING THE FACT THAT THE RETRACTION STATEMENT OF SHRI ABHIRAM B HATTACHARJEE WAS NOT BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER AND ADDL.CIT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THUS ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES. ' (II) 'ON THE FACTS AND IN THE CIRCUMS T ANC ES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING ADDITION OF RS.56,55,861 / REPRESENTING DISALLOWANCE OF DEDUCTION U /S 80LB( 10) ON THE GROUND BEING AREA OF PLOT LESS THAN ONE ACRE IGNORING THE FACT THAT THE REGISTERED DEEDS IN RESPECT OF SMARTHA KRUPA BUILDING MENTIONED THE AREA OF PLOT BEING LESS THAN ONE ACRE. ' 3. IN ALL THESE APPEALS THE LD. CIT(A) ERRED IN DELETING THE DISALLOWING OF DEDUCTION CLAIMED U/S. 80IB(10) OF THE ACT . IN ALL THESE APPEALS THE REVENUE FILED ADDITIONAL GROUND CONTENDING THAT THE LD. CIT(A) OUGHT NOT TO HAVE ADMITTED ADDITIONAL EVIDENCE/RETRACTIONS STATEMENTS WITHOUT COMPLYING WITH THE PROCEDURE LAID DOWN IN RULE 46A. 4. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT IN THE COURSE OF SURVEY, ONE OF THE PARTNE R S GAVE STATEMENT OFFERING INCOME OF RS. 150 CRORES FOR THE REASON THAT THEY MADE A WRONG CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT AND THIS STATEMENT WAS LATER RETRACTED AND SUCH RETRACTION WAS ENTERTAINED BY THE LD. CIT(A) IN VIOLATION OF RULE 46A. T HUS, THE LD. DR SUBMITS THAT THE LD. CIT(A) ITA NOS.5477 TO 5482/M/2012 3 GRANTED RELIEF ACCEPTING THE RETRACTED STATEMENT AND THEREFORE THE LD. CIT(A)S ORDER IS IN VIOLATION OF RULE 46A. 5. THE LD. SENIOR COUNSEL FOR THE ASSESSEE SHRI VINAYAK R. VELHANKAR OBJECTING TO THE ADDITI ONAL GROUND FILED BY THE REVENUE AND INVITING OUR ATTENTION TO PAGE - 2 & 3 OF THE PAPER BOOK WHICH IS THE COPY OF RETRACTION STATEMENT GIVEN BY ONE OF THE PARTNERS OF THE ASSESSEE SHRI VIKAS WALAWALKAR , SUBMITS THAT THIS STATEMENT DATED 2.4.2011 WAS FURNISH ED TO THE ACIT, CENTRAL CIRCLE - 7 RETRACTING THE STATEMENT MADE ON 30.3.2011 WITHDRAWING THE OFFER OF RS. 150 CRORES TO BE TAXED . T HE LD. COUNSEL SUBMITS THAT THE RETRACTED STATEMENT OF THE PARTNER IS PART OF ASSESSMENT RECORDS AND IT CANNOT BE CONSIDERED A S ADDITIONAL EVIDENCE AT ALL. THE LD. COUNSEL FURTHER REFERRING TO PAGE - 24 & 25 OF THE PAPER BOOK SUBMITS THAT THE PURCHASER OF THE FLATS WHO EARLIER STATED THAT THE FLATS PURCHASED BY THEM ARE MORE THAN 1000 SQ. FT HAVE LATER RETRACTED BY LETTER DATED 23 .12.20 11 AND THIS STATEMENT WAS INFACT FILED BEFORE THE ASSTT. DIRECTOR OF INCOME - TAX (INV.) , UNIT - IX(2), MUMBAI AND IT FORMS PART OF SURVEY RECORD . HE SUBMITS THAT THESE STATEMENTS I.E. STATEMENT GIVEN BY THE PARTNER OF THE ASSESSEE FIRM AND THE STATEMEN TS GIVEN BY THE BUYERS OF THE FLAT ARE THE ONLY BASIS FOR ENTIRE PROCEEDINGS OF WITHDRAWAL OF DEDUCTION ALLOWED U/S. 80IB(10) OF THE ACT. THE LD. SR. COUNSEL FOR THE ASSESSEE SUBMITS THAT SIMILAR LETTER WAS FILED BEFORE THE ACIT ON 21.11.2011. THEREFORE THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT ALL THESE STATEMENTS GIVEN BY THE PARTNER AS WELL AS THE BUYERS RETRACTING THE IR EARLIER STATEMENTS SINCE FORM PART OF THE SURVEY PROCEEDINGS OR ASSESSMENT PROCEEDINGS, THEY CAN NOT BE CONSIDERED AS ADDITIONAL EVIDENCE AND THEREFORE THE ADDITIONAL GROUND FILED BY THE REVENUE IS UNTENABLE AND LIABLE TO BE DISMISSED. ITA NOS.5477 TO 5482/M/2012 4 6. WE HAVE HEARD BOTH PARTIES. IN SO FAR AS THE ADDITIONAL GROUND RAISED BY THE REVENUE, ON GOING THROUGH THE RECORDS AND STATEMENT OF THE PART NER OF THE ASSESSEE FIRM AND THE STATEMENT OF BUYERS WHO HAVE RETRACTED THEIR EARLIER STATEMENTS , WE FIND ALL THESE STATEMENTS WERE FORM PART OF EITHER SURVEY PROCEEDINGS OR ASSESSMENT PROCEEDINGS AND THEREFORE NONE OF THE STATEMENT CAN BE SAID TO BE ADDITIONAL EVIDENCE PRODUCED BEFORE THE LD. CIT(A) AND THEREFORE THE QUESTION OF VIOLATION OF RULE 46A DOES NO T ARISE AT ALL. IN THE CIRCUMSTANCES, WE HOLD THAT THE ADDITIONAL GROUNDS RAISED BY THE REVENUE IN ALL THESE APPEALS DO NOT EMANATE FROM THE ORDER OF THE LD. CIT(A) AND THEREFORE THEY ARE DISMISSED. 7. COMING TO THE REGULAR GROUNDS OF APPEAL I.E. DELET ION OF DISALLOWANCE OF DEDUCTION U/S. 80IB(10) OF THE ACT , T HE BRIEF FACTS ARE THAT T HE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION/ DEVELOPERS AND BUILDERS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ALL THESE ASSESSMENT YEARS I.E. 2004 - 05 TO 2009 - 10 CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT. THE ASSESSMENT FOR ALL THESE ASSESSMENT YEARS WERE SCRUTINIZED BY THE ASSESSING OFFICER AND COMPLETED THE ASSESSMENTS U/S. 143(3) OF THE ACT ALLOWING DEDUCTION U/S. 80IB(10) OF THE ACT AFTER SATISFYING THE CLAIM OF THE ASSESSEE U/S. 80IB(10) . SUBSEQUENTLY, THERE WAS A SURVEY U/S. 133A OF THE ACT CONDUCTED BY THE DDIT (INV.) ON 30.3.2011. ON THE DATE OF SURVEY ONE OF THE PARTNERS SHRI VIKAS WALAWALKAR OFFERED AN AMOUNT OF RS. 150 CRORES FOR TAX IN THE CASE OF THE ASSESSEE BY WITHDRAWING THE EXCESS CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT IN THE ASSESSMENT YEARS 2004 - 05 TO 2009 - 10. PURSUANT TO THE SURVEY CONDUCTED ON 30.3.2011, THE AO ISSUED NOTICE DATED 31.3.2011 U/S. 148 FOR A LL THESE ASSESSMENT YEARS AND REOPENED THE ASSESSMENTS. IN ITA NOS.5477 TO 5482/M/2012 5 RESPONSE TO THE NOTICE ISSUED U/S. 148 OF THE ACT THE ASSESSEE FILED A LETTER DATED 4.4.2011 ALONGWITH AN AFFIDAVIT OF SHRI VIKAS WALAWALKAR DATED 2.4.2011 RETRACTING OFFER OF TAX OF RS. 150 CROR ES WHICH WAS EARLIER DECLARED BY HIM IN HIS STATEMENT RECORDED U/S. 131 ON 30.3.2011 STATING THAT DEDUCTION CLAIMED U/S. 80IB(10) ON THE PROJECTS WAS PERFECTLY JUSTIFIED AND THEY ARE IN ACCORDANCE WITH LAW AND THEREFORE WITHDREW HIS OFFER OF RS. 150 CRORES FOR TAXATION. 8. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT SURVEY REPORT DID NOT CONTAIN ANY PHYSICAL ENQUIRY IN RESPECT OF ALL THE PROJECTS WHERE DEDUCTION U/S. 80IB(10) WAS CLAIMED BY THE ASSESSEE AND ALLOWED IN ORIGINAL ASSESSMENTS U/S. 143(3) OF THE ACT. THE AO DEPUTED INSPECTOR FOR SPOT VERIFICATION AND ENQUIRY . THE INSPECTOR AFTER THE ENQUIRY SUBMITTED HIS REPORT STATING THAT AS PER SALE DEED, THE AREA OF EACH FLAT SOLD WAS LESS THAN 1000 SQ. FT BUT THE TOTAL AREA OF MOST OF TH E FLAT S EXCEEDED 1000 SQ.FT DUE TO CHANGES DONE BY THE FLAT OWNERS BY CONVERTING COMMON PASSAGE AREA, FLOWER BED ETC., INTO PREMISES, THUS THE FLAT AREA EXCEEDED 1000 SQ. FT. IN VIEW OF THE INSPECTORS REPORT AND ALSO SINCE THE ASSESSEE RETRACTED FROM TH E DECLARATION RECORDED U/S. 131 OF THE ACT IN THE COURSE OF SURVEY PROCEEDINGS AND SINCE SUBSTANTIAL INVOLVEMENT OF REVENUE, THE ASSESSING OFFICER REFERRED THE MATTER U/S. 144A OF THE ACT TO THE ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE - 2 FOR HIS DIR ECTION AS TO THE AMOUNT TO BE DISALLOWED U/S. 80IB(10) OF THE ACT FOR ASSESSMENT YEARS 2004 - 05 TO 2009 - 10. THE ADDL CIT, RANGE - 2 BY ORDER DATED 23.11.2011 ISSUED DIRECTIONS TO THE AO TO WITHDRAW THE DEDUCTION ALLOWED TO THE ASSESSEE FOR ALL THE ASSESSMENT YEARS IN THE CASE OF SAMARTHA ANGAN BUILDING NO. 23 & 24. HE FURTHER HELD THAT ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10) IN RESPECT OF THE ITA NOS.5477 TO 5482/M/2012 6 BUILDING SAMARTHA KRUPA FOR ALL THESE ASSESSMENT YEARS FOR THE REASON THAT AS PER THE SALE DEED THE ARE A OF PLOT MENTIONED IS LES S THAN ONE ACRE AND THEREFORE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. HE FURTHER DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE U/S. 80IB(10) FOR THE BUILDINGS SAMARTHA ANGAN NO. 21 AND SAMARTHA ANG AN NO. 22, MEGHDOOT A & B WING AND SAMARTHA DEEP BUILDING NO. 11 FOR ALL THESE ASSESSMENT YEARS HOLDING THAT ASSESSEE COMPLIED WITH ALL THE CONDITIONS OF DEDUCTION U/S. 80IB(10) OF THE ACT. 9. IN VIEW OF THE DIRECTIONS OF THE ADDL CIT U/S. 144A, THE A O PASSED ASSESSMENT ORDERS U/S. 143(3) R.W.S. 147 OF THE ACT FOR THE ASSESSMENT YEARS 2004 - 05 TO 2009 - 10 DISALLOW ING CLAIM U/S. 80IB(10) OF THE ACT BY REWORKING OUT THE DISALLOWANCE AS UNDER: ASSTT. YEAR DEDUCTION CLAIMED DEDUCTION TO BE DISALLOWED AS P ER THE DIRECTION U/S. 144A 2004 - 05 23,67,82,614/ - 2,37,35,754/ - 2005 - 06 33,43,52,139/ - 3,44,07,056/ - 2006 - 07 52,94,49,427/ - 10,78,39,415/ - 2007 - 08 43,69,71,550/ - 22,78,72,832/ - 2008 - 09 39,60,40,233/ - 32,40,52,511/ - 20098 - 10 41,32,69,580/ - 5,72,22,499/ - TOTAL 2,34,68,65,543/ - 77,51,30,067/ - 10 . THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITS THAT ON THE DATE OF SURVEY ONE OF THE PARTNERS SHRI VIKAS WALAWALKAR ADMITTED THAT THERE IS EXCESS CLAIM FOR DEDUCTION U/S. 8 0 IB(10) OF THE ITA NOS.5477 TO 5482/M/2012 7 ACT AND OFFERED RS. 150 CRORES FOR TAXATION. THE LD. DR SUBMITS THAT THE ASSESSEE OFFERED THE AMOUNT OF RS. 150 CRORES FOR TAXATION FOR THE REASON THAT THE TOTAL BUILT UP AREA OF THE FLAT S SOLD WAS MORE THAN THE SPECIFIED LIMIT OF 1000 SQ . FT AS CONTEMPLATED IN THE PROVISIONS OF SEC. 80IB(10) OF THE ACT SINCE THE FLAT WHICH WERE SOLD TO THE PARTY/FAMILY WERE SINGLE UNIT AND THE TOTAL AREA OF THE SAME IS MORE THAN THE THRES HOLD LIMIT OF 1000 SQ. FT. FOR THIS REASON, THE ASSESSEE AGREE D TO FORGO THE DEDUCTION CLAIMED EARLIER AS IT WAS A WRONG CLAIM AND SUCH CLAIM WAS WORKED OUT AT RS. 148,76,32,704/ - . THEREFORE, THE LD. DR SUBMITS THAT ASSESSEE OFFERED A ROUND FIGURE OF RS. 150 CRORES FOR TAXATION IN ITS STATEMENT RECORDED IN THE COURSE OF SURVEY ON 30.3.2011. THE LD. DR SUBMITS THAT HAVING STATED THAT THE CLAIM WAS WRONGLY MADE BY THE ASSESSEE U/S. 80IB(10) OF THE ACT IN RESPECT OF THE FLATS MORE THAN THRESHOLD LIMIT EXCEEDED 1000 SQ. FT WHICH IS AGAINST THE PROVISIONS OF SEC. 80IB(10) AN D HAVING OFFERED RS. 150 CRORES FOR TAXATION FOR SUCH WRONG CLAIM MADE BY THE ASSESSEE, THE ASSESSEE CANNOT GO BACK ON HIS STATEMENT RECORDED U/S. 131 OF THE ACT. THEREFORE, THE LD. DR SUBMITS THAT THE LD. CIT(A) SHOULD NOT HAVE RELIED ON THE RETRACTED ST ATEMENT OF THE ASSESSEE FOR DELETING THE DISALLOWANCE OF DEDUCTION U/S. 80IB(10) OF THE ACT. 11 . THE LD. DR FURTHER SUBMITS THAT IN THE COURSE OF SURVEY, A STATEMENT WAS RECORDED FROM ONE OF THE BUYERS OF THE FLAT SHRI ABHIRAM BHATTACHARJEE WHO STATED THAT HE HAD PURCHASED THREE FLATS NOS.1407, 1408 & 1409 FROM THE ASSESSEE IN SAMARTH ANGAN BUILDING NO. 24 AND THE FLAT PURCHASED WAS SINGLE FLAT EXCEEDING 1000 SQ. FT OF AREA. T HEREFORE, THE LD. DR SUBMITS THAT SINCE THE ASSESSEE SOLD 2 OR 3 FLATS AS A SINGLE UNIT TO ONE PERSON, IT EXCEEDED 1000 SQ. FT, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. ITA NOS.5477 TO 5482/M/2012 8 1 2 . THE LD. SR. COUNSEL FOR THE ASSESSEE SHRI VINAYAK R. VELHANKAR SUBMITS THAT THERE WAS A SU RVEY IN THE PREMISES OF THE ASSESSEE ON 30.3.2011 AND IN THE COURSE OF SURVEY, STATEMENT WAS RECORDED FROM ONE OF THE PARTNERS SHRI VIKAS WALAWALKAR WHO STATED THAT THE FLATS SOLD TO DIFFERENT PARTIES, THE BUILT UP AREA WAS MORE THAN THE SPECIFIED LIMIT . I N VIEW OF THE PROVISIONS OF SEC. 80IB(10) OF THE ACT, THE TOTAL AREA OF THE FLAT IS MORE THAN THE THRESHOLD LIMIT OF 1000 SQ.FT. IT HAS BEEN STATED THAT ASSESSEE MADE A WRONG CLAIM AND OFFERED FOR TAXATION RS. 150 CRORES BY WITHDRAWING THE CLAIM U/S. 8 0IB(10) OF THE ACT . THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE STATEMENT WAS GIVEN BY THE PARTNER ON THE ADVICE OF HIS COUNSEL AND THE COUNSEL IS NOT AWARE OF THE FACTS AND WAS UNDER THE IMPRESSION THAT THE ASSESSEE HAD SOLD ONE SINGLE RESIDENTIAL UNIT BY EXECUTING THREE SEPARATE SALE DEEDS AND ALSO SINCE THE FLATS HAVE BEEN JOINED BY THE PURCHASER WAS NOT ENTITLED FOR CLAIM FOR DEDUCTION U/S. 80IB(10) OF THE ACT. THE LD. COUNSEL SUBMITS THAT WHEN THE MISTAKE WAS EXPLAINED, ASSESSEE FILED AN AFFID AVIT RETRACTING THE STATEMENT GIVEN AT THE TIME OF SURVEY. HE SUBMITS THAT THE STATEMENT WAS DULY FILED BEFORE THE AO ON 8.4.2011. THE LD. COUNSEL FURTHER SUBMITS THAT IN THE RETRACTED STATEMENT, IT WAS DULY EXPLAINED THAT THERE WAS NO WRONG CLAIM MADE IN THE RETURNS AND THE DEDUCTION U/S. 80IB(10) OF THE ACT WAS RIGHTLY ALLOWED. HE FURTHER SUBMITS THAT THE STATEMENT RETRACTED WAS WELL IN TIME AND SINCE REASONS FOR STATEMENT WERE ALSO GIVEN AT THE TIME OF SURVEY , THE STATEMENT SHOULD NOT BE RELIED UPON. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE STATEMENT WAS GIVEN BY THE PARTNER OF THE FIRM WITHOUT VERIFYING THE FACTS FROM THE RECORDS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT RETRACTION ITA NOS.5477 TO 5482/M/2012 9 FROM ADMISSI ON IS PERMISSIBLE IN LAW . F OR THIS PROPOSITION HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: 1) PULLANGODE RUBBER PRODUCE CO. LTD VS STATE OF KERALA (91 ITR 18)(SC) 2. PANGAMBAN KALANJOY SINGH VS STATE OF MANIPUR - AIR (1956) (SC) 09 13. THE LD. COUNSE L FURTHER REFERRING TO PAGE - 13 OF THE ASSESSMENT ORDER SUBMITS THAT THE ADDL. CIT HAD INFACT ACCEPTED THE RETRACTION STATEMENTS FOR BUILDING NOS. 21 & 22 OF SAMARTH ANGAN AND DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80IB(10 ) IN FULL. SIMILARLY, HE ALSO DIRECTED THE AO TO ALLOW DEDUCTION IN RESPECT OF THE BUILDING A & B WING OF MEGHDOOT AND SAMARTHA DEEP - 11 FOR ALL THE ASSESSMENT YEARS. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE ADDL. CIT HAVING ACCEPTED THE STATEMENT RETRACTED BY THE PARTNER OF THE ASSESSEE FIRM AND ALLOWED THE CLAIM U/S. 80IB(10) OF THE ACT IN RESPECT OF THE ABOVE BUILDINGS I.E. SAMARTH ANGAIN BLDG. NO. 21 & 22 AND MEGHADOOT A & B WING AND SAMARTHA DEEP - 11 , H E SUBMITS THAT THERE IS NO JUSTI FICATION IN DISALLOWING THE CLAIM IN RESPECT OF BLDG. NO. 23 & 24 OF SAMARTHA ANGAN . THE LD. COUNSEL SUBMITS THAT THE CLAIM WAS DISALLOWED SOLELY ON THE BASIS OF THE STATEMENT RECORDED FROM ONE MR. ABHIRAM BHATTACHARJEE WHO LATER ON RETRACTED HIS STATEMEN T BY LETTER DATED 23.12.2011. 14. THE LD. COUNSEL SUBMITS THAT IN RESPECT OF SAMARTHA KRUPA, THE DISPUTE IS IN RESPECT OF AREA OF THE PLOT. ACCORDING TO THE AO, THE AREA OF PLOT IS LESS THAN ONE ACRE AND THEREFORE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. THE LD. COUNSEL SUBMITS THAT ITA NOS.5477 TO 5482/M/2012 10 BUILDING SAMARTHA KRUPA IS PART OF ENTIRE PROJECT CONSISTING OF VARIOUS PLOTS AND THEREFORE PROJECT AS A WHOLE HAS TO BE CONSIDERED FOR RECKONING THE AREA OF THE PLOT. HE SUBMITS THAT SAMARTH KRUPA IS INTEGRAL PART OF THE PROJECT SANCTIONED BY THE LOCAL AUTHORITIES HAVING PLOT AREA OF MORE THAN ONE ACRE AND THEREFORE THERE IS NO JUSTIFICATION IN HOLDING THAT THE AREA OF THE PLOT IS LESS THAN ONE ACRE AND DISALLOWING THE CLAIM U/S. 80IB(10) OF THE AC T. 1 5 . THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED AS UNDER: PARTNER OF THE FIRM MADE FACTUALLY INCORRECT STATEMENT AS IS EVIDENT FROM THE PLANS SUBMITTED AND THE AGREEMENTS MADE. THIS IS NOT A CASE WHERE ORIGINALLY A SINGLE UNIT WITH MORE THAN SPECIFIED AREA WAS PLANNED AND WAS ARTIFICIALLY DIVIDED INTO TWO/THREE F LATS. ON THE CONTRARY, THIS IS REVERSE CASE WHERE ADMITTEDLY TWO/THREE SEPARATE UNITS WERE PLANNED AND SUCH UNITS WERE ALSO SOLD AS SEPARATE UNITS ONLY TO DIFFERENT BUYERS. HOWEVER, SUBSEQUENT TO THE SALE, THE TWO/THREE UNITS WERE COMBINED BY MAKING INTERN AL MODIFICATIONS AT THE INSTANCE OF THE BUYERS. IT WAS ALSO SUBMITTED THAT IT IS A COMMON OCCURRENCE WHERE HAVING BOOKED THE FLAT AND PAID THE REQUIRED ADVANCE AMOUNT, MANY BUYERS SUGGEST MODIFICATIONS AT THEIR OWN COST TO SUIT THEIR OWN PURPOSE. THIS CANN OT BE CONSIDERED AS VIOLATION OF THE CONDITIONS. THUS AS PER PLANS WHAT WAS CONSTRUCTED AND SOLD WAS SINGLE RESIDENTIAL UNIT HAVING BUILT UP AREA BELOW 1,000 SQ. FT. PER RESIDENTIAL UNIT. EVEN THE OCCUPATION CERTIFICATE WAS GRANTED BY BMC AS PER APPROVED D RAWINGS WHEREIN THE BUILT UP AREA OF EACH FLAT WAS LESS THAN 1000 SQ.FTS. (II) EACH ENTITY SOLD AS PER REGISTERED SALE DEED WAS A COMPLETE RESIDENTIAL UNIT IN ITSELF. THIS CAN BE VERIFIED FROM THE SALE DEED, APPROVED PLANS OF BMC , OCCUPATION CERTIFICATE AND ETC. WHICH HAVE BEEN FILED SEPARATELY. (III) THE SALE DOCUMENTS I. E T ITLE DEED OF E ACH FL AT HAS SEPA R ATELY BEEN REGISTERED W ITH APPROVED PLANS WITH THE SUB REGISTRAR OF ASSURANCES AFTER PAYING DUE STAMP DUTY, IN WHICH ITA NOS.5477 TO 5482/M/2012 11 AREA OF EACH FLAT HAS ALSO BEEN MENTIONED AND DULY VERIFIED BY THE STAMP DUTY AUTHORITIES, I.E ANOTHER STAT UTORY BODY. (IV) NO DOCUMENTARY EVIDENCE IS AVAILABLE TO ESTABLISH THAT APPELLANT HAS MADE SALE OF ANY EXTRA SPACE IN ADDITION TO THE FLAT, WHICH HAS A BUILT UP AREA OF 1000 SQ.FTS. B.U. AREA. (V) THE ABOVE FACTS WERE CONFIRMED BY THE INSPECTOR IT IN H IS REPORT, WHICH WAS FURNISHED AFTER VISITING THE SITE AND AFTER MAKING NECESSARY ENQUIRIES. (VI) PHYSICAL VERIFICATION WAS NOT CARRIED OUT DURING THE COURSE OF SURVEY. (VII) DURING THE COURSE OF SURVEY DUE TO VARIOUS PSYCHOLOGICAL FACTORS, PRESSURE OF THE MAN POWER CONDUCTING THE SURVEY AND FEAR PSYCHICS, THE STATEMENT MIGHT HAVE BEEN GIVEN WITHOUT REALIZING THE ACTUAL FACT OF THE CASE. (VIII) ABSENCE OF ANY REPORT OF THE PHYSICAL VERIFICATION OF THE BUILT UP AREA DURING THE COURSE OF SURVEY ITSELF I S A SUFFICIENT AND REASONABLE EVIDENCE THAT THE FACTS STATED ABOVE ARE CORRECT. (IX) THAT THERE HAD BEEN NO CHANGE IN THE WATER AND SEWERAGE FITTINGS AND THEY ARE ALSO AS PER THE APPROVED LAYOUT PLAN. (X) THE CONDITION OF B. U. AREA 1000 SQ. FTS. HAS T O BE LOOKED INTO WITH RESPECT TO THE FLAT BEING SOLD AT THE TIME OF SALE AND THE FLAT SHOULD BE A COMPLETE UNIT WHICH CAN BE USED AS A RESIDENTIAL UNIT THEN ONLY DEDUCTION IS TO BE ALLOWED. IN THE CASE OF APPELLANT ALL THESE CONDITIONS ARE FULFILLED SO IF AT ALL ANY CHANGES HAVE BEEN MADE BY THE PURCHASER LATER ON, THEN THE DEDUCTION CANNOT BE DENIED ON THIS ACCOUNT . ENCLOSED PLEASE FIND COPIES OF OUR VARIOUS LETTERS DATED 18.08.2011, 12.09.2011, 29.09.2011 & 17.10.2011. REGARDING SAMARTHA AANGAN THE APPELLANT HAS FILED ON RECORD VARIOUS INFORMATION AND DETAILS AS STATED ABOVE AND THAT EACH OF THE FLAT HAS BEEN SOLD SEPARATELY AND THE BUILT UP AREA OF EACH SOLD FLAT IS LESS THAN 1,000 ITA NOS.5477 TO 5482/M/2012 12 SQ.FT. IN THIS CONTEXT LEARNED A O HAS REFERRED TO THE STATEMENT OF ONE MR. ABHIRAM BHATTACHARJEE WHO AND HIS FAMILY MEMBERS HAVE ACQUIRED THREE FLATS IN SAMARTHA AANGAN, BUILDING NO.24. HE IS ALLEGED TO HAVE STATED THAT THE SAID FLATS WERE PURCHASED AS A SINGLE UNIT. RELYING ENTIRELY AND EXCLUSIVELY ON THE STATEMENT M ADE BY MR. ABHIRAM BHATTACHARJEE, THE LEARNED A O CONCLUDED THAT ALL THE FLATS SOLD BY THE APPELLANT IN SAMARTHA ANGAN BUILDING NO.23 & 24 ARE MORE THAN 1,000 SQ.FT. AND DISALLOWED THE ENTIRE CLAIM U/S.80IB FOR THESE TWO BUILDINGS. LEARNED A O DID NOT CONSIDER HOST OF EVIDENCES FILED ON RECORD SUCH AS APPROVED PLANS BY LOCAL AUTHORITY, FLOOR PLANS CERTIFIED B Y ARCHITECT, SALE DEEDS DULY EXECUTED AND REGISTERED, AUDIT REPORT U/S.80IB(10) AND EVEN THE ENQUIRY REPORT OF THE INSPECTOR WHO WAS SPECI FICALLY APPOINTED TO VERIFY THE SUBMISSIONS OF THE APPELLANT WHOSE OBSERVATIONS ARE STATED ABOVE. MORE IMPORTANTLY HE HAS ALSO OBTAINED WRITTEN SUBMISSIONS FROM CERTAIN FLAT OWNERS CHOSEN BY HIM FROM THE VERY SAME BUILDING NAMELY SAMARTHA AANGAN BUILDING I .E. FROM MR. DALMIA, MR. ZINJURTE, MR. SAWANT AND MR. MOHILE WHO HAVE CATEGORICALLY CONFIRMED THAT EACH OF THEM HAVE PURCHASED TWO/ THREE DIFFERENT FLATS FROM THE APPELLANT BY EXECUTING SEPARATE AGREEMENTS FOR EACH FLAT WHICH ARE DULY REGISTERED AND THAT S UBSEQUENTLY FOR THEIR CONVENIENCE AND AT THEIR EXPENSES HAVE JOINT THESE FLATS SO THAT THEY CAN BE USED AS ONE SINGLE FLAT (REFER TO PAGE NO.7 OF THE ASSESSMENT ORDER). (C) LEARNED AO. HAS BASED THE ENTIRE DISALLOWANCE FOR SAMARTHA AANGAN BUILDNG NO. 23 & 24 ON THE STATEMENT OF MR. ABHIRAM BHATTACHARJEE . IN THE SUBMISSIONS OF THE APPELLANT THE SAID STATEMENT IS FACTUALLY INCORRECT AND APPEARS TO HAVE BEEN GIVEN ON SPUR OF A MOMENT WHEN HE HAPPENED TO VISIT APPELLANTS' OFFICE FOR SOME PERSONAL WORK. IN ANY CASE, IT WILL BE NOTED THAT MR. ABHIRAM BHATTACHARJEE PURCHASED FLATS IN BUILDING NO.23 VIDE AGREEMENTS DATED 27/03/2007 AND HENCE TO MAKE DISALLOWANCES ON THE BASIS OF HIS STATEMENT FOR ALL TRANSACTIONS WHICH TOOK PLACE PRIOR TO MARCH 2007 WAS INCORRECT AND AGAINST PRINCIPLE OF EQUITY & NATURAL JUSTICE. ITA NOS.5477 TO 5482/M/2012 13 FURTHER ASSESSEE FIRM WAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE MR. ABHIRAM BHATTACHARJEE. HENCE WE SUBMIT THAT ADDITION ON THE BASIS OF MR. ABHIRAM BHATTACHARJEE'S STATEMENT IS AGAINST PROVISION OF LAW A ND CANNOT SURVIVE. IT WILL NOT BE OUT OF PLACE TO MENTION THAT SHRI ABHIRAM BHATTACHARJEE PURCHASED FLAT NO.1407,1408 & 1409 IN BUILDING NO.23 VIDE AGREEMENTS DATED :27/03/2007 WHEREAS FLATS IN BUILDING NO.24 WERE SOLD MUCH EARLIER VIDE AGREEMENTS EXECUT ED ON 26/12/2003 & 01/09/2005. HENCE IN OUR OPINION THE ASSESSING OFFICER HAS ERRED IN DISALLOWING 80 IB CLAIMS IN RESPECT OF BUILDING NO.24, FLATS OF WHICH WERE SOLD MUCH PRIOR TO MR. ABHIRAM BHATTACHARJEE CAME INTO PICTURE. WE .FURTHER STATE THAT THE AO . HAS ALSO ERRED IN DISALLOWING CLAIMS U/S.80 IB(10) IN RESPECT OF FLATS SOLD FROM BUILDING NO.23 PRIOR TO 27/03/2007 WHEN ABHIRAM BHATTACHARJEE CAME INTO PICTURE. EVEN IN RESPECT OF SALE OF FLATS OF BUILDING NO.23 EFFECTED AFTER 27/03/2007, WE STATE THA T DEPARTMENT HAS NOT BEEN ABLE TO POINT OUT ONE SINGLE INSTANCE OF SALE OF TWO/THREE FLATS TOGETHER. FURTHER REPORT OF INSPECTOR ALSO CONFIRMS THAT ALL THE FLATS WHEREIN INSPECTION TOOK PLACE WERE AMALGAMATED BY PURCHASERS AFTER PURCHASE. HENCE WE SUBMIT THAT ON THE BASIS OF STATEMENT OF SHRI ABHIRAM BHATTACHARJEE, 80 IB EXEMPTION CANNOT BE WITHDRAWN FOR SALE OF FLATS OF BUILDING NO.23 EFFECTED AFTER 27/03/2007. LEARNED A.O. HAS ALSO DISALLOWED CLAIM U/S.80IB WITH REFERENCE TO SAMARTHA KRUPA BUILDING HOL DING THAT THOUGH EACH FLAT SOLD HAS BUILT UP AREA OF LESS THAN 1,000 SQ. FT., THE CLAIM IS DISALLOWED ON THE GROUND THAT THE AREA OF THE PLOT IS LESS THAN ONE ACRE. IN THIS CONNECTION THE LEARNED AO APPEARS TO HAVE MISDIRECTED HIMSELF IN AS MUCH AS PLOT NO.123 IS A PART OF A LAYOUT ADMEASURING 4,25,537.25 SQUARE METERS DULY SANCTIONED BY THE MUNICIPAL CORPORATION OF GREATER MUMBAI AND THAT APPELLANT HAS ALREADY FILED ALL THE PLANS ON RECORD. . ITA NOS.5477 TO 5482/M/2012 14 THE DEPARTMENT OF URBAN LAND CEILING, GOVERNMENT OF MAHARASH TRA HAD EXEMPTED INTERALIA THE SAID AREA FROM ULC AND THE SAID EXEMPTED LAND WAS TO BE TRANSFERRED BY WAY OF SALE TO SHREE SWAMI SARNARTHA PRASANNA CO OPERATIVE HOUSING SOCIETY OR TO ITS UNIT OR UNITS TO BE SEPARATELY REGISTERED AS DISTINCT SOCIETIES. IN PURSUANCE OF THE SAID EXEMPTION ORDER AND PROPER MANAGEMENT OF THE INDIVIDUAL SOCIETIES, THE SAID AREA IS SUB DIVIDED AND UNITS OF THE SAID SOCIETY HAVE BEEN SEPARATELY REGISTERED TO FORM INDIVIDUAL SOCIETIES AND LAND IS SUBSEQUENTLY CONVEYED TO SUCH UNIT S, DULY REGISTERED AS CO OPERATIVE HOUSING SOCIETIES. AS SUCH BUILDING KNOWN AS 'SA M ARTHA KRUPA' CONSTRUCTED ON THE SAID PLOT NO.123 IS NOT A SEPARATE PROJECT, BUT INTEGRAL PART OF SAID PROJECT OF SHREE SWAMI SAMARTHA PRASANNA COOPERATIVE HOUSING SOCIET Y SANCTIONED BY B.M.C. IN PURSUANCE OF THE SAID EXEMPTION ORDER UNDER URBAN LAND CEILING ACT 1976. THE ENTIRE PLOT AREA CONSTITUTES ONE SINGLE PROJECT IN EXCESS OF ONE ACRE. I IT IS PERTINENT TO MENTION HERE THAT SECTION 80IB(10)(B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE' THUS WITH RESPECT TO AREA OF THE PLOT IT IS TO BE CONSTRUCTED WITH REFERENCE TO THE AREA OF THE SITE ON WHICH THE HOUSING PROJECT IS CONSTRUCTED AND NOT WITH REFERENCE TO THE DEMARCATION OF LAND DONE BY THE LAND DEVELOPMENT AUTHORITY AS PER CI R CULAR NO 5/205 DATED IS' JULY, 2005. WE ARE ENCLOSING HEREWITH A NOTE WITH RESPECT TO THE LAND AREA MENTIONED IN THE SALE DEED WHICH IS AS PER THE DEMARCATION DONE BY THE BMC WHILE ACTUALLY THE AREA OF THE LAND IS WELL ABOVE THE THRESHOLD LIMIT OF ONE ACRE. IN THE CASE OF CIT 25 V VANDANA PROPERTIES [2012] 19 TAXMANN.COM 316 (BO M .) THE SIMILAR ISSUE HAS BEEN DEALT WITH REGARDING THE SIZE OF THE PLOT AND THE LORDSHIPS HAVE HELD THAT: SECTION 80 IB OF THE INCOME TAX ACT, 1961 DEDUCTIONS PROFITS AND GAINS FROM INDUSTRIAL ITA NOS.5477 TO 5482/M/2012 15 UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS ASSESSMENT YEARS 2004 05 AND 2005 06 WHETHER SECTION 8 O IB( 10) DEDUCTION IS ALLOWED OIL CONSTRU CTION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE ACRE, IRRESPECTIVE OF FACT THAT THERE EXIST OTHER HOUSING PROJECTS OR NOT HELD, YES ASSESSEE, A FIRM, WAS ENGAGED IN BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECTS ON A PLOT ADMEAS URING 2.36 ACRES, IT CONSTRUCTED BUILDINGS A,B, C AND D PRIOR TO 1 10 1998 AFTER TAKING PERMISSION OF STATE GOVERNMENT IN YEAR 2002 FOR CONVERSION, ASSESSEE CONSTRUCTED AN ADDITIONAL BUILDING 'E' IN VACANT LAND IT CLAIMED DEDUCTIONS UNDER SECTION 80 FB (10) FOR SAID BUILDING ASSESSING OFFICER DISALLOWED CLAIM FOR DEDUCTION ON GROUNDS THAT APPROVAL FOR BUILDING 'E' WAS AN EXTENSION OF APPROVALS GRANTED EARLIER FOR OTHER BUILDINGS AND, HENCE, PROJECT COMMENCED PRIOR TO 1 10 1998 DISENTITLING PROJECT FROM CLAIMING DEDUCTION UNDER SECTION 80 IB; THAT IF SAID PLOT WAS PROPORTIONATELY DIVIDED BETWEEN FIVE BUILDINGS, LAND PERTAINING TO BUILDING 'E' W OULD BE LESS THAN ONE ACRE, THUS, VIOLATING PRECONDITION FOR CLAIMING SECTION 8 O IB DEDUCTION IT WAS FOUND TH AT WHEN APPROVAL FOR OTHER BUILDINGS WAS SOUGHT CONSTRUCTION OF BU ILDING 'E' WAS NOT EVEN CONTEMPLATED ON PLOT IN QUESTION IT WAS ONLY IN YEAR 2001 WHEN STATUS OF LAND WAS CONVERTED FROM 'SU R PLUS VACANT L AND' INTO 'WITHIN CEILING LIMIT LAND' BY STAT E GOV ERNMENT THAT A N ADDITIONAL BUILDING COULD BE CONSTRUCTED ON PLOT IN QUESTION AND, ACCORDINGLY, BUILDING PLAN FOR CONSTRUCTION OF BUILDING 'E' WAS SUBMITTED AND SAME WAS APPROVED BY LOCAL AUTHORITY ON 11 10 2002 FURTHER, NOWHERE IN RELEVANT THAT INTIMATIO N OF MUNICIPALITY, IT WAS STATED THAT BUILDING 'E' CONSTITUTED EXTENSION OF EARLIER HOUSING PROJECT WHICH WAS ALREADY COMPLETED WHETHER APPROVAL OF BUILDING PLAN FOR CONSTRUCTION OF BUILDING 'E' COULD NOT BE SAID TO BE AN EXTENSION OF EARLIER HOUSING PRO JECT AND THEREFORE, DEDUCTION UNDER SECTION 80 IB(LO) SHOULD BE ALLOWED TO ASSESSEE HELD, YES [IN FAVOUR OF ASSESSEE] WORDS AND PHRASES: EXPRESSIONS 'PLOT OF LAND' AND 'HOUSING PROJECTS' AS OCCURRING IN SECTION 80 IB OF THE INCOME TAX ACT, 1961 . ITA NOS.5477 TO 5482/M/2012 16 IN V IEW OF THE ABOVE WE STATE THAT THE LEAR N ED A.O. HAS ERRED IN DISALLOWANCE OF 80 IB CLAIM OF SA M ARTHA KRUPA F O R ALL THE YEARS. YOUR ATTENTION IS DRAWN TO A RECENT DIRECT DECISION OF MUMBAI TRIBUNAL IN THE CASE OF HAWARE CONSTRUCTIONS (P) LTD. VS. LT.O. RE PORTED IN (2011) 64 DTR (MUMBAI)(TRIB) 251 WHERE IN IT IS HELD ' ' DEDUCTION UNDER SECTION 80IB - INCOME FROM DEVELOPING AND BUILDING HOUSING PROJECT - BUILT UP AREA EXCEEDING 1000 SQ.FT. B.U. AREA BUILT - UP AREA OF EACH FLAT AS APPROVED BY CIDCO IS LES S THAN 1000 SQ.FT. B.U. AREA AS PER THE APPROVED PLAN AND THE ASSESSEE HAS SOLD EACH FLAT UNDER SEPARATE AGREEMENTS AND NOT SOLD TWO FLATS BY COMBINING THEM TOGETHER AS ONE FLAT TO ONE PARTY - FURTHER, THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS DRAWN THE PLAN IN SUCH A MANNER THAT EACH RESIDENTIAL UNIT IS SHOWN AS SMALLER THAN 1000 SQ.FT. MERELY TO GET BENEFIT OF DEDUCTION U/S.80 - IB(10) - IT IS ALSO NOT THE CASE OF REVENUE THAT EACH FLAT IN THE HOUSING P ROJECT COULD NOT HAVE BEEN USED AS AN INDEPENDENT OF AS A SELF CONTAINED RESIDENTIAL UNIT AND THAT THERE WOULD BE A COMPLETE HABITABLE RESIDENTIAL UNIT ONLY IF TWO OR MORE FLATS ARE JOINED TOGETHER . THEREFORE, MERELY BECAUSE SOME OF THE PURCHASERS HAVE PUR CHASED MORE THAN ONE FLAT AND COMBINED THE SAME, ASSESSEE'S CLAIM FOR DEDUCTION U/ . S80 - IB(10) CANNOT BE DISALLOWED - FURTHER, THE CONDITION THAT NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOT T ED TO ONE PERSON NOT BEING AN INDIVIDUAL HAS BEEN INSERTED BY FI NANCE (NO.2) ACT, 2009, W.E.F. 1 ST APRIL, 2010, AND HENCE IT IS NOT APPLICABLE TO THE FACTS OF THE CASE.' AGAIN IN THE MUDHIT MADANLAL GUPTA VS ASSTT. COMMISSIONER OF INCOME TAX ITAT MUMBAI BENCH (2011) 51 DTR (MUMBAI)(TRIB) 217 HAVE HELD SOME OF THOSE FLATS WERE/LATER CONVERTED BY THE BUYERS BY JOINING THE SAME WHEREVER THE BUYERS HAD PURCHASED MORE THAN ONE UNIT INDEPENDENT UNITS ARE RESIDENTIAL UNITS AND HAVE TO BE TREATED AS SEPARATE HOUSE PROJECTS FOR THE PURPOSE OF DEDUCTION U/ S. 80IB(10). ITA NOS.5477 TO 5482/M/2012 17 1 6 . HEARD BOTH SIDES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PLACED BEFORE US. THERE WAS A SURVEY IN THE PREMISES OF ASSESSEE ON 30.3.2011. ON THE DATE OF SURVEY ONE OF THE PARTNERS STATED THAT THERE WAS A WRONG CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT BY THE ASSESSEE FOR ALL THESE ASSESSMENT YEARS THEREFORE OFFERED RS. 150 CRORES FOR TAXATION. THIS STATEMENT WAS RETRACTED BY THE PARTNER ON 2.4.2011 STATING THAT THE CLAIM MADE BY THE ASSESSEE FIRM U/S. 80IB(10) OF THE ACT IS IN ACCOR DANCE WITH LAW. IT WAS STATED THAT THE CORRECT FACTUAL POSITION IS THAT WHEN THE BUILDING PLANS WERE PREPARED, SUBMITTED AND APPROVED, EACH FLAT WAS A SEPARATE RESIDENTIAL UNIT AND IT CAN BE VERIFIED FROM THE PLANS. IT WAS SUBMITTED THAT AS PER THE APPRO VAL, SEPARATE FLATS WERE CONSTRUCTED AND OCCUPATION CERTIFICATE WAS RECEIVED AS THE FLATS WERE CONSTRUCTED AS PER BMC APPROVED PLANS. SEPARATE AGREEMENTS IN RESPECT OF EACH RESIDENTIAL UNIT WERE RENTED INTO BUYERS/THEIR FAMILY MEMBERS. THE FLATS WERE SOL D AS PER REGISTERED AGREEMENTS. THUS, THE PARTNER OF THE FIRM RETRACTED HIS EARLIER STATEMENT STATING THAT THERE IS NO WRONG CLAIM U/S. 80IB(10) OF THE ACT. HOWEVER, THE AO COMPLETED THE ASSESSMENT BASED ON THE DIRECTIONS OF THE ADDL CIT U/S. 144A BY WIT HDRAWING THE CLAIM U/S. 80IB(10) FOR ALL THESE ASSESSMENT YEARS IN RESPECT OF THE BUILDING NO. 23 & 24 OF SAMARTHA ANGAN AND IN RESPECT OF THE BUILDING SAMARTHA KRUPA. THE AO ALLOWED DEDUCTION IN RESPECT OF THE BLDG. NO. 21 & 22 OF SAMARTHA ANGAN, MEGHDOO T A & B WING AND SAMARTHA DEEP - 11 BASED ON THE DIRECTIONS OF THE ADDL. CIT BY HIS ORDER U/S. 144A OF THE ACT. WE FIND THAT THE ADDL. CIT CONSIDERING THE REPORT OF THE INSPECTOR AND ONE MR. ABHIRAM BHATTACHARJEE RESTRICTED THE DISALLOWANCE IN RESPECT OF TH E BLDG. N O . 23 & 24 OF SAMARTHA ANGAN & SAMARTHA KRUPA . ITA NOS.5477 TO 5482/M/2012 18 17. IN THIS CASE THE DISALLOWANCE U/S. 80IB(10) WAS MADE SOLELY ON THE BASIS OF THE STATEMENT OF THE PARTNER OF THE ASSESSEE FIRM AND THE STATEMENT OF ONE OF THE BUYER OF THE FLAT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS . THESE PERSONS RETRACTED THEIR STATEMENTS LATER. THE MADRAS HIGH COURT IN THE CASE OF CIT VS S. KHADER KHAN SON (300 ITR 157) CONSIDERED THE EVIDENTIARY VALUE OF THE STATEMENTS RECORDED DURING SURVEY PROCEEDINGS AND HELD AS UNDER: 6. IN THE INSTANT CASE, THERE WAS A SURVEY OPERATION CONDUCTED UNDER S. 133A OF THE ACT IN THE ASSESSEE'S PREMISES AND A STATEMENT WAS RECORDED FROM ONE OF THE PARTNERS. ASSUMING THERE WERE DISCREPANCIES AND IRREGULARITIES IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE, AN OFFER OF ADDITIONAL INCOME FOR THE RESPECTIVE ASSESSMENT YEARS WAS MADE BY THE PARTNER OF THE FIRM. BUT, SUCH STATEMENT, IN VIEW OF THE SCOPE AND AMBIT OF THE MATERIALS COLLECTED DURING THE COURSE OF SURVEY ACTION UNDER S. 133A SHALL NO T HAVE ANY EVIDENTIARY VALUE, AS RIGHTLY HELD BY THE COMMISSIONER AND THE TRIBUNAL, SINCE SUCH STATEMENT WAS N OT ATTACHED TO THE PROVISIONS OF SEC. 133A OF THE ACT. IT COULD NOT BE SAID SOLELY ON THE BASIS OF THE STATEMENT GIVEN BY ONE OF THE PARTNERS OF T HE ASSESSEE FIRM THAT THE DISCLOSED INCOME WAS ASSESSABLE AS LAWFUL INCOME OF THE ASSESSEE . SINCE THERE WAS NO MATERIAL ON RECORD TO PROVE THE EXISTENCE OF SUCH DISCLOSED INCOME OR EARNING OF SUCH INCOME IN THE HANDS OF THE ASSESSEE, IT COULD NOT BE SAID THAT THE REVENUE HAD LOST LAWFUL TAX PAYABLE BY THE ASSESSEE. 7. IN THE DECISION IN PULLANGODE RUBBER PRODUCE CO. LTD. VS.. STATE OF KERALA 1972 CTR (SC) 253 : (1973) 91 ITR 18 (SC), THE APEX COURT HELD THAT AN ADMISSION IS EXTREMELY AN IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. 8. WHERE A SURVEY WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE, A MEDICAL PRACTITIONER, AND A STATEMENT WAS RECORDED FROM HIM, IN WHICH THE ASSESSEE SURRENDERED ADDITIONAL INCOME AND PURSUANT TO THE SAME, THE AO REOPENED THE ASSESSMENT, BUT ITA NOS.5477 TO 5482/M/2012 19 DURING THE COURSE OF WHICH THE ASSESSEE RETRACTED THE ADDITIONAL INCOME OFFERED AND CONTENDED THAT THE STATEMENT WAS THE RESULT OF DURESS, WHICH WAS NOT ACCEPTED BY THE AO AND ALSO BY THE TRIBUNAL HOLDING THAT THE STATEMENT IS VALID AND THAT IT WAS MADE WITHOUT DURESS, A DIVISION BENCH OF THE ALLAHABAD HIGH COURT IN DR. S.C. GUPTA VS.. CIT (2001) 170 CTR (ALL) 421 : (2001) 248 ITR 782 (ALL), OF COURSE, PLACING RELIANCE ON THE DECISION OF THE APEX COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS.. STATE OF KERALA HELD THAT THE BURDEN THAT WAS LAID ON THE ASSESSEE TO ESTABLISH THAT THE ADMISSION MADE IN THE STATEMENT AT THE TIME OF SURVEY WAS WRONG AND THAT THERE WAS NO ADDITIONAL INCOME WAS NOT EVEN ATTEMPTED TO BE DISCHARGED AND THUS, THE ORDER OF THE TRIBUNAL WAS BASED ON FACTS AND NO QUESTION OF LAW AROSE FROM IT. 9. A POWER TO EXAMINE A PERSON ON OATH IS SPECIFICALLY CONFERRED ON THE AUTHORITIES ONLY UNDER S. 132(4) OF THE ACT IN THE COURSE OF ANY SEARCH OR SEIZURE. THUS, THE IT ACT, WHENEVER IT THOUGHT FIT AND NECESSARY TO CONFER SUCH POWER TO EXAMINE A PERSON ON OATH, HAS EXPRESSLY PROVIDED FOR IT, WHEREAS S. 133A DOES NOT EMPOWER AN Y ITO TO EXAMINE ANY PERSON ON OATH. THUS, IN CONTRADISTINCTION TO THE POWER UNDER S. 133A, S. 132(4) OF THE IT ACT ENABLES THE AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE IT ACT. ON THE OTHER HAND, WHATEVER STATEMENT RECORDED UNDER S. 133A OF THE ACT IS NOT GIVEN AN EVIDENTIARY VALUE, VIDE A DECISION OF THE KERALA HIGH COURT IN PAUL MATHEWS & SONS VS.. CIT (2003) 181 CTR (KER) 207: (2003) 263 ITR 101 (KE R). 10. THE SCOPE OF SS. 132(4) AND 133A ALSO CAME UP FOR CONSIDERATION BEFORE THE KERALA HIGH COURT IN PAUL MATHEWS & SONS VS.. CIT (203) 263 ITR 101 . IN THE SAID CASE, THE ASSESSEE THEREIN MADE AN ATTEMPT TO DRAW A DISTINCTION BETWEEN THE TWO PROVISIONS , VIZ., SS. 132(4) AND 133A. ACCORDING TO THE ASSESSEE, THERE IS NO PROVISION TO ADMINISTER OATH OR TO TAKE ANY SWORN STATEMENT AND THAT A MERE ADMISSION OR AN ACQUIESCENCE CANNOT BE A FOUNDATION FOR AN ASSESSMENT AND THAT ANY STATEMENT GIVEN DURING A SURV EY HAS NO EFFECT AS AN 'ADMISSION' NOR CAN IT BE A STATEMENT ON OATH. ACCORDING TO THE ASSESSEE, HIS STATEMENT DURING THE SURVEY WITH REFERENCE TO ANY BOOKS OF ACCOUNT CAN HARDLY BE THE BASIS FOR ANY ASSESSMENT. IT WAS ALSO CONTENDED ON BEHALF OF THE ASSES SEE THAT ANY MATERIAL COLLECTED OR ANY ITA NOS.5477 TO 5482/M/2012 20 STATEMENT RECORDED DURING THE SURVEY UNDER S. 133A CANNOT BE PUT AGAINST THE ASSESSEE, AS THE SAME HAS NO EVIDENTIARY VALUE. THE DIVISION BENCH OF THE KERALA HIGH COURT, APPRECIATING THE STAND TAKEN BY THE ASSESSEE AN D AFTER REFERRING TO S. 133A OF THE ACT, HELD AS HEREUNDER ( PAGE 108) : '.......WE FIND THAT THE POWER TO EXAMINE A PERSON ON OATH IS SPECIFICALLY CONFERRED ON THE AUTHORISED OFFICER ONLY UNDER S. 132(4) OF THE IT ACT IN THE COURSE OF ANY SEARCH OR SEIZURE . THUS, THE IT ACT, WHENEVER IT THOUGHT FIT AND NECESSARY TO CONFER SUCH POWER TO EXAMINE A PERSON ON OATH, THE SAME HAS BEEN EXPRESSLY PROVIDED WHEREAS S. 133A DOES NOT EMPOWER ANY ITO TO EXAMINE ANY PERSON ON OATH. THUS, IN CONTRADISTINCTION TO THE POWER UNDER S. 133A, S. 132(4) OF THE IT ACT ENABLES THE AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE IT ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDE D UNDER S. 133A OF THE IT ACT, IT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED UNDER LAW. THEREFORE, THE, STATEMENT ELICITED DURING THE SURVEY OPERATION HAS NO EVIDENTIARY VALUE AND THE ITO WAS WELL AWARE OF THIS.' (EMPHASIS SUPPLIED) 11. SIMILARLY, WHEN THE ISSUE, WHETHER THE EXPRESSION 'SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE AO' IN S. 158BB OF THE IT ACT, 1961, WOULD INCLUDE THE MATERIALS GATHERED DURING THE SURVEY OPERATION UNDER S. 133A, CAME UP FOR CONSIDERATION BEFORE THIS COURT IN CIT VS G.K. SENNIAPPAN (2006) 203 CTR (MAD) 447 : (2006) 284 ITR 220 (MAD), A DIVISION BENCH OF THIS COURT, IN WHICH ONE OF US WAS A PARTY (P.P.S. JANARTHANA RAJA, J.), ANSWERED THE QUESTION IN THE AFFIRMATIVE, AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE, HOLDING THAT THE MATERIALS COLLECTED DURING THE SURVEY UNDER S. 133A CANNOT BE TAKEN INTO CONSI DERATION WHILE DETERMINING THE UNDISCLOSED INCOME IN ITA NOS.5477 TO 5482/M/2012 21 RESPECT OF BLOCK ASSESSMENT AS PER S. 158BB, AS THE SAME HAS NO EVIDENTIARY VALUE. 12. AGAIN, WHEN AN IDENTICAL QUESTION WHETHER THE MATERIAL FOUND IN THE COURSE OF SURVEY IN THE PREMISES OF THE BUILDER COULD BE USED IN THE BLOCK ASSESSMENT OF THE ASSESSEE, CAME UP FOR CONSIDERATION BEFORE THIS DIVISION BENCH IN AN UNREPORTED CASE IN TAX CASE (APPEAL) NO. 2620 OF 2006, THIS COURT, BY ORDER DT. 22ND NO VEMBER , 2006, SINCE REPORTED IN CIT VS AJIT KUMAR (2 008) 300 ITR 152, OF COURSE, FOLLOWING THE EARLIER DECISION OF THIS COURT IN CIT VS.. G.K. SENNIAPPAN'S CAS REPORTED IN (2006) 284 ITR 220 , WHILE CONFIRMING THE ORDER OF THE TRIBUNAL, ANSWERED THE QUESTION IN FAVOUR OF THE ASSESSEE, IN LIMINE. 13. WHAT IS MORE RELEVANT, IN THE INSTANT CASE, IS THAT THE ATTENTION OF THE CIT(A) AND THE TRIBUNAL WAS RIGHTLY INVITED TO THE CIRCULAR OF THE CBDT DT. 10TH MARCH, 2003 WITH REGARD TO THE CONFESSION OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND SEIZUR E AND SURVEY OPERATIONS. THE SAID CIRCULAR DT. 10TH MARCH, 2003 READS AS FOLLOWS: '....... .INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHERE ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF THE S EARCH AND SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCERNED ASSESSEES WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, ON CONFESSIONS DURING THE COURSE OF SEARCH AND SEIZURE AN D SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFOR E THE IT DEPARTMENT. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. ITA NOS.5477 TO 5482/M/2012 22 FURT HER, IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO, AOS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE COURSE OF SEARCH/ SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDERS.' 14 . FROM THE FOREGOING DISCUSSION, TH E FOLLOWING PRINCIPLES CAN BE CULLED OUT: (I) AN ADMISSION IS EXTREMELY AN IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THAT THE ASSESSEE SHOUL D BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT THE BOOKS OF ACCOUNTS DO NOT CORRECTLY DISCLOSE THE CORRECT STATE OF FACTS, VIDE DECISION OF THE APEX COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS.. STATE OF KERALA (1973) 91 ITR 18 ; (II) IN CONTRADISTINCTION TO THE POWER UNDER S. 133A, S. 132(4) OF THE IT ACT ENABLES THE AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE IT ACT. ON THE OTHER HAND, WHATEVER STATEME NT IS RECORDED UNDER S. 133A OF THE IT ACT IT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED UNDER LAW, VID E PAUL MATHEWS & SONS VS.. CIT (2003) 263 ITR 101 (KER) ; (III) THE EXPRESSION 'SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE AO' CONTAINED IN S. 158BB OF THE IT ACT, 1961, WOULD (NOT) INCLUDE THE MATERIALS GATHERED DURING THE SURVEY OPERAT ION UNDER S. 133A, VIDE CIT VS.. G.K. SENNIAPPAN (2006) 284 ITR 220 (MAD) ; (IV) THE MATERIAL OR INFORMATION FOUND IN THE COURSE OF SURVEY PROCEEDING COULD NOT BE A BASIS FOR MAKING ANY ADDITION IN THE BLOCK ASSESSMENT, VIDE DECISION OF THIS COURT IN TAX C ASE (APPEAL) NO. 2620 OF 2006 (BETWEEN CIT VS.. S. AJIT KUMAR); ITA NOS.5477 TO 5482/M/2012 23 (V) FINALLY, THE WORD 'MAY' USED IN S. 133A(3)(III) OF THE ACT, VIZ., 'RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT', AS ALREADY E XTRACTED ABOVE, MAKES IT CLEAR THAT THE MATERIALS COLLECTED AND THE STATEMENT RECORDED DURING THE SURVEY UNDER S. 133A ARE NOT CONCLUSIVE PIECE OF EVIDENCE BY ITSELF. 15. FOR ALL THESE REASONS, PARTICULARLY, WHEN THE COMMISSIONER AND THE TRIBUNAL FOLLOWED THE CIRCULAR OF THE CBDT DT. 10TH MARCH, 2003, EXTRACTED ABOVE, FOR ARRIVING AT THE CONCLUSION THAT THE MATERIALS COLLECTED AND THE STATEMENT OBTAINED UNDER S. 133A WOULD NOT AUTOMATICALLY BIND UPON THE ASSESSEE, WE DO NOT SEE AN Y REASON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL. 18. IN VIEW OF THE ABOVE DECISION OF THE HIGH COURT OF MADRAS, WE ARE OF THE CONSIDERED VIEW THAT THE STATEMENT GIVEN BY ONE OF THE PARTNERS STATING DURING SURVEY PROCEEDINGS THAT THERE IS WRONG CLAIM MADE U/S. 80IB OF THE ACT AND OFFERING THE SAME FOR TAXATION HAS NO EVIDENTIARY VALUE UNLESS THERE IS CORROBORATIVE EVIDENCE ON RECORD SUGGESTING THAT THE CLAIM OF THE ASSESSEE IS WRONG. IN THE ABSENCE OF ANY EVIDENCE ON RECORD, THESE STATEMENTS CANNOT BE A CONCLUSIVE PIECE OF EVIDENCE FOR WITHDRAWING THE DEDUCTION. 1 9 . IN SO FAR AS THE DISALLOWANCE U/S. 80IB(10) OF THE ACT IN RESPECT OF BLDG. NO. 23 & 24 OF SAMARTHA ANGAN IS CONCERNED, THE ADDL CIT DIRECTED THE AO TO DISALLOW THE CLAIM SOLELY ON THE BASI S OF THE STATEMENT OF SHRI ABHIRAM BHATTACHARJEE, ONE OF THE BUYER WHO GAVE STATEMENT AT THE TIME OF SURVEY , WHO BOUGHT THE RESIDENTIAL UNIT IN 2007. THIS STATEMENT WAS ALSO RETRACTED LATER ON BY MR. ABHIRAM BHATTACHARJEE STATING THAT THE STATEMENT WAS TA KEN IN THE COURSE OF SURVEY WAS ON A SPUR OF MOMENT WHEN HE VISITED THE BUILDERS OFFICE ITA NOS.5477 TO 5482/M/2012 24 FOR PERSONAL WORK. THE STATEMENT WAS GIVEN UNDER TENSION ON ACCOUNT OF OFFICE RELATED WORK. BY LETTER DATED 23.12.2007, SHRI ABHIRAM BHATTACHARJEE ALONGWITH HIS WIFE SUCHARITA BHATTACHARJEE AND SHRI AJIT BHATTACHARJEE HAVE STATED THAT THEY HAVE PURCHASED THREE DIFFERENT RESIDENTIAL FLATS BEARING FLAT NOS. 1407, 1408 & 1409 FROM THE ASSESSEE IN THE YEAR 2007. THE FLAT WAS PURCHASED IN THE JOINED NAMES. IT WAS STATED T HAT THREE FLATS WERE PURCHASED BY SEPARATE SALE DEEDS AND WAS REGISTERED SEPARATELY AS SEPARATE RESIDENTIAL UNIT. IT WAS STATED THAT THE THREE UNITS WERE PURCHASED BY THE FAMILY MEMBERS IN JOINT NAMES AND POSSESSION WAS TAKEN AS PER SALE DEEDS SEPARATELY IN RESPECT OF FLATS. THEY HAVE FURTHER STATED THAT THREE UNITS WERE AMALGAMATED AND JOINED TOGETHER AFTER THEIR PURCHASE. 2 0 . WE ALSO FIND FROM THE ASSESSMENT ORDER THAT THE INSPECTOR IN HIS REPORT HAS CATEGORICALLY STATED THAT THE PURCHASERS ACQUIRED THE FLAT S BY SEPARATE SALE DEEDS, AFTER THE POSSESSION THE NECESSARY CHA N GES HAVE BEEN MADE BY THEMSELVES TO MAKE IT BIGGER FLAT AS PER THEIR REQUIREMENT AT THEIR OWN COST. IT IS ALSO THE FINDING OF THE INSPECTOR WHO VISITED THE FLATS AND STATED THAT THE FLATS ARE AS PER APPROVED PLANS (A) THERE IS NO CHANGE IN THE EXTERNAL WATER AND SANITARY FITTINGS FROM THE APPROVED DRAWINGS (B) THERE IS NO COMMERCIAL ESTABLISHMENT INTO THE PREMISES (C) THERE IS NO CHANGE IN THE LOCATION OF THE TOILE T S (D) AS PER THE S ALE DEEDS THE AREA OF EACH FLAT SOLD WAS LESS THAN 1000 SQ. FT. THE INSPECTOR IN HIS REPORT ALSO OBSERVED AS UNDER: THE TOTAL AREA OF THE MOST OF THE FLATS EXCEEDED THE ORIGINAL ONE DUE TO CHANGES DONE BY THE FLAT OWNER (AS INFORMED) BY CONVERTING COMMON PASSAGE AREA, FLOWER BED, DOCK AREA INTO ITA NOS.5477 TO 5482/M/2012 25 THE PREMISES. AFTER MERGING FLATS, THE TOTAL AREA OF MOST OF THE FLATS HAVE ALSO EXCEEDED 1,000 SQ. FT. WHEN ENQUIRED FROM THE SOCIETY MEMBER REGARDING INTERNAL CHANGES OF THE FLATS, THEY INFORMED THAT IN MO ST OF THE FLATS COMMON PASSAGES IN FRONT OF FLATS ARE MERGED WITH THE FLAT AREA. KITCHEN PLACE AS PER ORIGINAL PLAN IS CONVERTED INTO BEDROOM. LIVING ROOM PLACE AS PER ORIGINAL PLAN HAS BEEN CONVERTED INTO BED ROOM. THERE ARE INTERNAL CHANGES DONE BY THE FLAT OWNERS AT THEIR COST AS INFORMED BY THEM TO ME. SO IT IS VERY DIFFICULT TO ASCERTAIN THE CHANGES CARRIED OUT ARE BY THE BUILDER/DEVELOPER IF ANY, AND ALSO INDIVIDUAL AREA OF EACH FLAT, SINCE THEY HAVE BEEN MERGED. 2 1 . WE FIND THAT EXCEPT THE S TATEMENT GIVEN BY MR.ABHIRAM BHATTACHARJEE IN THE COURSE OF SURVEY THAT HE HAD PURCHASED THE RESIDENTIAL UNIT HAVING MORE THAN 1000 SQ. FT, THERE IS NOTHING ON RECORD TO SUGGEST THAT ASSESSEE HAS SOLD FLATS WITH BUILT - UP AREA OF MORE THAN 1000 SQ. FT. . M R. A BHIRAM BHATTACHARJEE HIMSELF LATER ON SAID THAT THE FLATS WERE PURCHASED BY SEPARATE SALE DEEDS AND SUBSEQUENTLY THEY HAVE JOINED THE FLATS ON THEIR OWN AT THEIR OWN COST . THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE BUILDER HAS CONSTRUCTED THE R ESIDENTIAL UNIT WITH A BUILT - UP AREA OF MORE THAN 1000 SQ. FT. IN VIOLATION OF THE MASTER PLAN AND SOLD TO THE PURCHASERS. THERE IS NO DISPUTE INFACT THAT AS PER THE APPROVED PLANS BUILT UP AREA OF EACH RESIDENTIAL UNIT IS LESS THAN 1000 SQ. FT, AND THE RESIDENTIAL UNITS WERE SOLD BY EXECUTING SEPARATE SALE DEEDS. IN SUCH CIRCUMSTANCES, MERELY BECAUSE THE PURCHASER HAS JOINED THE FLATS AND THE BUILT - UP AREA OF THE FLAT IS EXCEEDED MORE THAN 1000 SQ. FT., THE ASSESSEE CANNOT BE DENIED BENEFIT U/S. 80IB(1 0) OF THE ACT. MORE OR LESS AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE MUMBAI BENCH IN THE CASE OF H AWARE C ONSTRUCTIONS (P) L TD . VS. I.T.O REPORTED IN (2011) 64 DTR (MUMBAI)(TRIB) 251 WHEREIN IT WAS HELD AS UNDER: ITA NOS.5477 TO 5482/M/2012 26 ' DEDUCTION UNDER SECTION 80IB INCOME FROM DEVELOPING AND BUILDING HOUSING PROJECT BUILT UP AREA EXCEEDING 1000 SQ.FT. B.U. AREA BUILT UP AREA OF EACH FLAT AS APPROVED BY CIDCO IS LESS THAN 1000 SQ.FT. B.U. AREA AS PER THE APPROVED PLAN AND THE ASSESSEE HAS SOLD EACH FLAT UNDER SEPAR ATE AGREEMENTS AND NOT SOLD TWO FLATS BY COMBINING THEM TOGETHER AS ONE FLAT TO ONE PARTY FURTHER, THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS DRAWN THE PLAN IN SUCH A MANNER THAT EACH RESIDENTIAL UNIT IS SHOWN AS SMALLER THAN 1000 SQ. FT. MERELY TO GET BENEFIT OF DEDUCTION U/S.80 IB(10) IT IS ALSO NOT THE CASE OF REVENUE THAT EACH FLAT IN THE HOUSING PROJECT COULD NOT HAVE BEEN USED AS AN INDEPENDENT OF AS A SELF CONTAINED RESIDENTIAL UNIT AND THAT THERE WOULD BE A COMPLETE HABITABLE R ESIDENTIAL UNIT ONLY IF TWO OR MORE FLATS ARE JOINED TOGETHER. THEREFORE, MERELY BECAUSE SOME OF THE PURCHASERS HAVE PURCHASED MORE THAN ONE FLAT AND COMBINED THE SAME, ASSESSEE'S CLAIM FOR DEDUCTION U/.S80 IB(10) CANNOT BE DISALLOWED FURTHER, THE CONDITI ON THAT NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ONE PERSON NOT BEING AN INDIVIDUAL HAS BEEN INSERTED BY FINANCE (NO.2) ACT, 2009, W.E.F. 1 ST APRIL, 2010, AND HENCE IT IS NOT APPLICABLE TO THE FACTS OF THE CASE.' 2 2. SIMI LAR VIEW HAS BEEN TAKEN BY THE CO - ORDINATE BENCH IN THE CASE OF EMGEEN HOLDINGS (P) LTD VS DCIT 12 TAXMANN. COM 468 (MUM) WHEREIN IT HAS BEEN HELD AS UNDER: WE FIND THAT THE DEDUCTION U/S.80IB(10) HAS BEEN DECLINED BY THE ASSESSING OFFICER ON THE GROUND THAT SIZE OF THE RESIDENTIAL UNIT WAS IN EXCESS OF 1,000 SQ.FT WHICH, IN TURN, PROCEEDS ON THE BASIS THAT THE FLATS SOLD TO THE FAMILY MEMBERS ADMITTEDLY BY SEPARATE AGREEMENTS, SHOULD BE TREATED AS ONE UNIT. WE ARE UNABLE TO 6 APPROVE THIS APPROACH. WE HA VE NOTED THAT THE SIZE OF EACH FLAT, AS EVIDENT FROM BUILDING PLAN AS DULY APPROVED BY MUNCIPAL AUTHORITIES WAS LESS THAN 1,000 SQ.FT. WE HAVE ALSO NOTED THAT IT IS NOT EVEN REVENUES CASE THAT EACH OF FLAT ON STANDALONE BASIS WAS NOT A RESIDENTIAL UNIT. E VEN IF FLATS WERE CONSTRUCTED OR PLANNED IN SUCH A WAY THAT TWO FLATS COULD INDEED BE MERGED INTO ONE LARGER UNIT, AS LONG EACH FLAT WAS AN INDEPENDENT RESIDENTIAL UNIT, DEDUCTION U/S.80IB(10) COULD NOT BE ITA NOS.5477 TO 5482/M/2012 27 DECLINED. IT IS IMPORTANT TO BEAR IN MIND THE FACT THAT WHAT SECTION 80IB(10) REFERS TO IS RESIDENTIAL UNIT AND, IN THE ABSENCE OF ANYTHING TO THE CONTRARY IN THE INCOME TAX ACT, THE EXPRESSION RESIDENTIAL UNITS MUST HAVE THE SAME CONNOTATIONS AS ASSIGNED TO IT BY LOCAL AUTHORITIES GRANTING APPROVAL T O THE PROJECT. THE LOCAL AUTHORITY HAS APPROVED THE BUILDING PLAN WITH RESIDENTIAL UNITS OF LESS THAN 1,000 SQ.FT, AND GRANTED COMPLETION CERTIFICATE AS SUCH. THAT LEAVES NO AMBIGUITY ABOUT THE FACTUAL POSITION. WE HAVE FURTHER NOTED THAT THE PROHIBITION A GAINST SALE OF MORE THAN ONE FLAT IN A HOUSING PROJECT TO MEMBERS OF A FAMILY HAS BEEN INSERTED SPECIFICALLY WITH EFFECT FROM 1ST APRIL, 2010, AND, IN OUR HUMBLE UNDERSTANDING, THIS AMENDMENT IN LAW CAN ONLY BE TREATED AS PROSPECTIVE IN EFFECT. WHAT IS, TH EREFORE, CLEAR IS THAT SO FAR AS PREAMENDMENT POSITION IS CONCERNED , AS LONG A RESIDENTIAL UNIT HAS LESS THAN SPECIFIED AREA, IS AS PER THE DULY APPROVED PLANS AND IS CAPABLE OF BEING USED FOR RESIDENTIAL PURPOSES ON STANDALONE BASIS, DEDUCTION U/S.80IB(1 0) CANNOT BE DECLINED IN RESPECT OF THE SAME MERELY BECAUSE THE END USER, BY BUYING MORE THAN ONE SUCH UNIT IN THE NAME OF FAMILY MEMBERS, HAS MERGED THESE RESIDENTIAL UNITS INTO A LARGER RESIDENTIAL UNIT OF A SIZE WHICH IS IN EXCESS OF SPECIFIED SIZE. THA T PRECISELY IS THE CASE BEFORE US. WHILE ON THE SUBJECT, IT IS USEFUL TO TAKE NOTE OF LEGISLATIVE AMENDMENT BY THE VIRTUE OF WHICH LEGISLATURE PUT CERTAIN RESTRICTIONS ON SALE OF RESIDENTIAL UNITS TO CERTAIN FAMILY MEMBERS OF A PERSON WHO HAS BEEN SOLD A R ESIDENTIAL UNIT IN THE HOUSING PROJECT. SECTION 80IB(10) NOW PROVIDES AN ADDITIONAL ELIGIBILITY CONDITION THAT IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ANY PERSON BEING AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSIN G PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSON, NAMELY (I) THE INDIVIDUAL OR THE SPOUSE, OR THE MINOR CHILDREN OF SUCH INDIVIDUAL, (II) THE HUF IN WHICH SUCH INDIVIDUAL IS A KARTA (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR MINOR CH ILDREN OF SUCH INDIVIDUAL, OR THE 7 HUF IN WHICH SUCH INDIVIDUAL IS A KARTA. THE EXPLANATION MEMORANDUM EXPLAINED THE LEGISLATIVE AMENDMENT AS FOLLOWS: (314 ITR(ST) 203) FURTHER, THE OBJECT OF THE TAX BENEFIT FOR HOUSING PROJECTS IS TO BUILD HOUSING STOCK FOR LOW AND MIDDLE INCOME HOUSEHOLDS. THIS HAS BEEN ENSURED BY LIMITING THE SIZE OF THE ITA NOS.5477 TO 5482/M/2012 28 RESIDENTIAL UNIT. HOWEVER, THIS IS BEING CIRCUMVENTED BY THE DEVELOPER BY ENTERIN G INTO AGREEMENT TO SELL MULTIPLE ADJACENT UNITS TO A SINGLE BUYERS. ACCORDINGLY, IT IS PROPOSED TO INSERT NEW CLAUSES IN THE SAID SUB - SECTION TO PROVIDE THAT THE UNDERTAKING WHICH DEVELOPS AND BUILDS THE HOUSING PROJECT SHALL NOT BE ALLOWED TO ALLOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT TO THE SAME PERSON, NOT BEING AN INDIVIDUAL, AND WHERE THE PERSON IS AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSON: - ( I ) SPOUSE OR 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 MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. THIS AMEND MENT WILL TAKE EFFECT FROM THE 1ST APRIL, 2010 AND SHALL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2010 - 2011 AND SUBSEQUENT YEARS. 8. IT IS THUS CLEAR THAT THE AFORESAID AMENDMENT HAS BEEN BROUGHT WITH PROSPECTIVE EFFECT I.E. FROM 1ST DAY OF APRI L, 2010, AND THERE IS NO INDICATION WHATSOEVER TO SUGGEST THAT THESE RESTRICTIONS NEED TO BE APPLIED WITH RETROSPECTIVE EFFECT. THE AMENDMENT SEEKS TO PLUG A LOOPHOLE BUT RESTRICTS THE REMEDY WITH EFFECT FROM 1ST DAY OF APRIL, 2010, I.E. AY 2010 - 2011. THE LAW IS VERY CLEAR THAT UNLESS PROVIDED IN THE STATUTE, THE LAW IS ALWAYS PRESUMED TO BE PROSPECTIVE IN NATURE. IT WILL, THEREFORE, BE CONTRARY TO THE SCHEME OF LAW TO PROCEED ON THE BASIS THAT WHEREVER ADJACENT RESIDENTIAL UNITS ARE SOLD TO FAMILY MEMBERS, ALL THESE RESIDENTIAL UNITS ARE TO BE CONSIDERED AS ONE UNIT. IF LAW PERMITTED SO, THERE WAS NO NEED OF THE INSERTION OF CLAUSE (F) TO SECTION U/S 80IB(10). IT WILL BE UNREASONABLE TO PROCEED ON THE BASIS THAT LEGISLATIVE AMENDMENT WAS INFRUCTUOUS OR UNCA LLED FOR PARTICULARLY AS THE AMENDMENT IS NOT EVEN STATED TO BE FOR REMOVAL OF DOUBTS. ON THE CONTRARY, THIS AMENDMENT SHOWS THAT NO SUCH ELIGIBILITY CONDITIONS COULD BE READ INTO PREAMENDMENT LEGAL POSITION. ITA NOS.5477 TO 5482/M/2012 29 9. AS REGARDS THE AOS STAND THAT THE ASSESSEE HIMSELF HAS OFFERED THE DEDUCTION U/S.80IB(10) IN RESPECT OF THESE UNITS DURING THE COURSE OF SURVEY PROCEEDINGS, IT IS ONLY ELEMENTARY THAT NEITHER STATEMENT RECORDED U/S.133A HAS AN EVIDENTIARY VALUE, 8 NOR A LEGAL CLAIM CAN BE DECLINED ONLY BECAUSE ASSESSEE, AT SOME STAGE, DECIDED TO GIVE UP THE SAME. IN VIEW OF THESE DISCUSSIONS, AND BEARING IN MIND ENTIRETY OF THE CASE, ARE OF THE CONSIDERED VIEW THAT THE DEDUCTION U/S.80IB(10) OUGHT TO HAVE BEEN ALLOWED TO THE ASSESSEE ENTIRELY. TO THIS EXTENT, WE MODIFY THE ORDER OF THE CIT(A) AND ALLOW FURTHER RELIEF TO THE ASSESSEE . 2 3. THE LD. CIT(A) ALSO HELD THAT CLAIM U/S. 80IB(10) WAS ALLOWED IN THE ORIGINAL ASSESSMENTS MADE U/S. 143(3) OF THE ACT AND IT IS AL SO THE FINDING OF THE LD. CIT(A) THAT ADDL. CIT HAS MENTIONED IN HIS ORDER THAT THE INSPECTOR HAD FOUND THAT IN NONE OF THE ABOVE FIVE BUILDINGS AREA OF THE FLATS ARE MORE THAN 1000 SQ. FT. AT THE TIME OF SALE OF ITS FLATS. THE LD. CIT(A) FURTHER OBSERVE D AS UNDER: THE APPELLANT HAD FURNISHED EVIDENCE TO THE ADDL CIT OF THE FOLLOWING TO SHOW THAT THE AREA OF EACH FLAT IS LESS THAN 1000 SQ. FT. APPROVED BUILDING PLANS AREA STATED IN THE TITLE DEED REGISTERED WITH THE SUB REGISTRAR AREA FOR WHICH THE SALE AMOUNT WAS OBTAINED AREA WHICH WAS STATED IN THE OCCUPATION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY `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