KASHISH PARK REALTORS, THANE V. ITO WD 1(3), THANE

ITA 5777/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0121 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 15-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV; R P MEENA
• Assessee Lawyers: SUBODH RATNAPARKHI
• Section: 143(3); 92F; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.5777/MUM/2014(AY. 2010-11) M/S.KASHISH PARK REALTORS FGP COMPLEX, KASHISH PARK, LBS MARG NEAR MULUND CHECK NAKA THANE (W) 400 604 PAN: AAGFK2620J ...... APPELLANT VS. ITO, WARD 1(3), THANE ROOM NO.10, B WING 6 TH FLOOR, ASHAR I.T. PARK ROAD NO.16Z, WAGLE INDL. ESTATE THANE (W) 400 604 .... RESPONDENT ITA NO.6172/MUM/2014(AY. 2010-11) ITO, WARD 1(3), THANE ROOM NO.10, B WING 6 TH FLOOR, ASHAR I.T. PARK ROAD NO.16Z, WAGLE INDL. ESTATE THANE (W) 400 604 .... APPELLENT VS. M/S.KASHISH PARK REALTORS FGP COMPLEX, KASHISH PARK, LBS MARG NEAR MULUND CHECK NAKA THANE (W) 400 604 PAN: AAGFK2620J ...... RESPONDENT 2 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 APPELLANT BY : SHRI NIKHIL S. PATHAK & SHRI SUBODH RATNAPARKHI RESPONDENT BY : SHRI R.P. MEENA & SHRI RAJESH KUMAR YADAV DATE OF HEARING : 18/12/2017 DATE OF PRONOUNCEMENT : 09 /03/2018 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEALS ARE CROSS APPEALS BY THE ASS ESSEE AND REVENUE PERTAINING TO A.Y.2010-11 AND INVOLVE COMMON ISSUE, THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE CROSS APPEALS ARE IN RELATION TO AN ORDER PA SSED BY CIT(A)-II, THANE DATED 15/07/2014, PERTAINING TO THE ASSESSMENT YEAR 2010-11, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING O FFICER DATED 26/03/2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT). 3. SUBSTANTIVELY SPEAKING, IN CROSS-APPEALS, THE ON LY ISSUE RAISED BY THE ASSESSEE AND REVENUE RELATE TO THE DEDUCTION CLAIME D BY THE ASSESSEE U/S.80IB(10) OF THE ACT OF RS.19,83,97,563/- IN THE RETURN OF INCOME. BEFORE WE PROCEED TO ADJUDICATE THE RESPECTIVE GRIEVANCES, WE DEEM FIT AND PROPER TO REPRODUCE HEREINAFTER THE RESPECTIVE GROUNDS OF APPEAL RAISED BEFORE US. 4. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY ASSESSE E:- 1.ON THE FACTS AND IN LAW, THE HON. CIT (A) ERRED IN RE-COMPUTING THE PROFIT OF THE HOUSING PROJECT ELIGIBLE FOR DEDUCTIO N U/S 80IB (10) THEREBY CONFIRMING ADDITION TO THE EXTENT OF RS.1,02,02,930/- ON THE BASIS OF PROVISIONS OF SEC. 80IB (13) R.W.S. SEC. 8 0IA(10) NOT 3 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 APPRECIATING THAT SUCH DISALLOWANCE WAS NOT JUSTIFI ED BY LAW AND BY FACTS. 2. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER , AMEND, DELETE AND/OR VARY ANY OF THE ABOVE GROUND OF APPEAL/RELIEF CLAIM ED AT ANY TIME BEFORE THE DECISION OF THE APPEAL. 5. THE GROUNDS TAKEN BY REVENUE ARE AS UNDER:- 01. 'WHETHER THE LD. CIT(A) ERRED IN NOT APPRECIATI NG THE FACT THAT FSI CONSUMED BY THE 3 BUILDINGS MN-6 , MN-7 AND MN-8 IT SELF IS ONLY 4067.45 SQ. MTS, OR 43,782 SQ. FT. AND THE CONDITIO N OF THE REQUIREMENTS OF LAND WHICH SHOULD BE MORE THAN 1 AC RE AS PER PROVISIONS OF SECTION 80IB(10) PLOT OF LAND IS NOT FULFILLED. 02. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN APPLICATION OF CBDT NOTIFICATIO N NO. 205/3/2001/ITA-LL FT. 4/5/2001 BY TREATING ADDITION AL HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE BY -CONSUMING TDR ON EX ISTING HOUSING PROJECT SITE AS INFRASTRUCTURAL FACILITY U/S. 80IB( 10) ?.' 03. THE ORDER OF THE CIT(A) MAY TEE VACATED AND THA T OF THE ASSESSING OFFICER BE RESTORED. 04. THE APPELLANT CRAVES FOR LEAVE TO ADD, ALTER, A MEND AND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 6. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE ASS ESSEE BEFORE US IS A PARTNERSHIP FIRM CONSISTING OF TWO PARTNERS NAMELY M/S. KASHISH PARK REALTY PVT. LTD. AND SHRI SAURABH AGGARWAL. THE ASSESSEE F IRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND WAS INCORPORATED ON 01 /12/2003. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT FILED RETUR N OF INCOME DECLARING NIL INCOME WHICH, INTERALIA, INCLUDED A CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT OF RS.19,83,97,563/-. NOTABLY, THE DEDUCTION U/ S.80IB(10) OF THE ACT WAS CLAIMED WITH RESPECT TO THE PROFITS DERIVED FROM DE VELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT SITUATED AT SURVE Y NO.2 TO 21, 37,38,39 AND 40(PART) ON L.B.S. ROAD, THANE (W). IN THE RETURN O F INCOME ASSESSEE HAD DETERMINED PROFIT ON THE CONSTRUCTION OF THE PROJEC T AT RS.19,83,97,563/- 4 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 AND THE ENTIRE AMOUNT WAS CLAIMED AS EXEMPT U/S. 80 IB(10) OF THE ACT. IN THE ASSESSMENT FINALISED BY THE ASSESSING OFFICER U/S.1 43(3) OF THE ACT, HE FOUND ASSESSEE INELIGIBLE FOR THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT FOR THE REASONS ASSIGNED THEREIN, WHICH WE SHALL DETAIL A LITTLE LATER. FURTHER, THE ASSESSING OFFICER ALSO MADE AN ALTERNATE FINDING TH AT IF AT ALL ASSESSEE IS FOUND ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S.80IB( 10) OF THE ACT, EVEN THEN THE QUANTUM OF PROFITS DECLARED BY THE ASSESSEE FRO M THE PROJECT WAS UNACCEPTABLE AND FOR THAT REASON HE SCALED DOWN THE CLAIM OF DEDUCTION BY RELYING ON SECTION 80IA(10) R.W.S. 80IB (13) OF THE ACT. ACCORDING TO THE ASSESSING OFFICER, THE NET PROFIT ELIGIBLE FOR THE DEDUCTION AS CLAIMED BY THE ASSESSEE WAS TO BE REDUCED BY A SUM OF RS.6,18,67,8 01/-. BOTH THE ASPECTS WERE CHALLENGED BY THE ASSESSEE IN APPEAL BEFORE TH E CIT(A). THE CIT(A) UPHELD THE CLAIM OF THE ASSESSEE FOR THE DEDUCTION U/S.80IB(10) OF THE ACT IN PRINCIPLE BUT HE UPHELD THE ACTION OF THE ASSESSING OFFICER IN RECOMPUTING THE PROFIT OF THE HOUSING PROJECT ELIGIBLE U/S.80IB (10) OF THE ACT PARTIALLY IN AS MUCH AS ACCORDING TO HIM THE DEDUCTION WAS LIABLE T O BE SCALED DOWN BY A SUM OF RS.1,02,02,930/- AND NOT RS.6,18,67,801/- AS DONE BY THE ASSESSING OFFICER. 7. IN THIS BACKGROUND, REVENUE IN ITS APPEAL HAS CH ALLENGED THE ACTION OF THE CIT(A) IN HOLDING THE ASSESSEE ELIGIBLE FOR A C LAIM U/S.80IB(10) OF THE ACT IN TERMS OF AFORESTATED GROUNDS OF APPEAL WHEREAS, ASSESSEE IN ITS CROSS APPEAL HAS ASSAILED DECISION OF THE CIT(A) IN PART SUSTAINING THE SCALING DOWN OF DEDUCTION U/S.80IB(10) OF THE ACT. SINCE THE CR OSS APPEALS RELATE TO SAME ISSUE OF THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT, THE SAME ARE BEING DEALT WITH TOGETHER. 5 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 8. NOW, WE MAY TAKE UP FOR CONSIDERATION THE RELEVA NT FACTS AND THE BASIS FOR THE ASSESSING OFFICER TO DENY THE CLAIM O F DEDUCTION U/S.80IB(10) OF THE ACT. NOTABLY, THE ASSESSEE CLAIMED THE DEDUCTIO N IN RELATION TO THE PROFITS DERIVED FROM CONSTRUCTION OF THREE BUILDING S VIZ., MN-6, MN-7 AND MN-8 WHICH COVERED THE TOTAL ESTIMATED AREA OF 43,7 82 SQ.FT. SITUATED ON LBS ROAD, THANE (W). 9. IT WAS NOTICED THAT THE LAND ON WHICH THE HOUSIN G PROJECT IS CONSTRUCTED WAS ORIGINALLY OWNED BY ONE M/S. FGP LT D., (FORMERLY KNOWN AS FIBERGLASS PILKINGTON LTD.,). IT TRANSPIRES THAT TH E SAID CONCERN OWNED LAND ADMEASURING 58,267.79 SQ.MTRS, INCLUDING THE SURVEY NUMBERS ON WHICH THE IMPUGNED PROJECT OF THE ASSESSEE WAS CONSTRUCTED. O UT OF THE SAID LAND, M/S. FGP LTD., SOLD DEVELOPMENT RIGHTS OF CERTAIN L ANDS TO M/S.KASHISH PARK REALTY PVT. LTD., AND M/S. LADAM HOMES LTD., BOTH THESE CONCERNS CONSTRUCTED THEIR PROJECTS ON THE LANDS OBTAINED FR OM M/S. FGP LTD.,. THE RELEVANT DISCUSSION IN THE ASSESSMENT ORDER REVEALS THAT ON A PART OF LAND OWNED BY FGP LTD., THANE MUNICIPAL CORPORATION (HER EINAFTER REFERRED TO AS THE TMC) HAD PUT CERTAIN RESERVATIONS ON ACCOUNT OF WHICH M/S. FGP LTD., WAS ENTITLED TO TDR-FSI OF 9,591 SQ. MTRS, AS A COM PENSATION FOR THE LAND TO BE ACQUIRED BY TMC. SUBSEQUENTLY M/S.FGP LTD., ENTE RED INTO AN AGREEMENT WITH THE ASSESSEE FIRM ON 03/12/2003 FOR TRANSFER O F TDR-FSI OF 9,591/- SQ. MTRS. FOR A TOTAL CONSIDERATION OF RS.4,09,43,549/- . ALONGWITH FSI, M/S.FGP LTD., ALSO TRANSFERRED LAND ADMEASURING 12,484/- SQ .MTRS. TO THE ASSESSEE FIRM. THE CONSIDERATION AFORESTATED WORKED OUT TO R S.386.10 PER SQ. FT. THE ASSESSEE FIRM CONSTRUCTED BUILDINGS MN-6, MN-7, MN- 8 AND TOWER A BY UTILISING THE AFORESAID FSI. IN THE YEAR UNDER CONS IDERATION, ASSESSEE SOLD 6 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 UNITS IN BUILDINGS MN-6, MN-7 AND MN-8 AND THE PROF ITS DERIVED THEREFROM OF RS. 19,83,97,563/- HAVE BEEN CLAIMED AS EXEMPT U /S.80IB(10) OF THE ACT. 10. THE OBJECTIONS OF THE ASSESSING OFFICER TO DISA LLOW THE DEDUCTION U/S.80IB(10) OF THE ACT ARE TWOFOLD. FIRSTLY, AS PE R THE ASSESSING OFFICER, THE ASSESSEE FIRM WAS A SHAM ENTITY AND HE DOUBTED THE GENUINENESS OF THE ASSESSEE FIRM. IN COMING TO SUCH A DECISION, VARIE D REASONS HAVE BEEN GIVEN BY THE ASSESSING OFFICER. FOR INSTANCE, AS PER TH E ASSESSING OFFICER, IT WAS M/S. KASHISH PARK REALTY PVT. LTD., WHICH HAD THE R IGHT TO PURCHASE ANY ADDITIONAL FSI FROM M/S. FGP LTD.; AND, WHEN IN THE MONTH OF NOVEMBER 2003, IT WAS OFFERED TO M/S.KASHISH PARK REALTY PVT . LTD., IT WAS ONLY ON THE REQUEST OF M/S. KASHISH PARK REALTY PVT. LTD., THAT FSI AND TDR RIGHTS WERE TRANSFERRED BY THE M/S. FGP LTD., TO THE ASSESSEE F IRM. IT IS ALSO NOTED THAT THE ACTUAL FSI WAS GRANTED BY TMC SOMEWHERE IN 2006 WHEREAS THE PAYMENTS WERE PARTLY MADE ON AN EARLIER DATE EVEN I N THE PERIOD 2003-04. THE ASSESSING OFFICER ALSO NOTED THAT WHEN THE NEW FSI CAME IN, THE PROJECT OF M/S. KASHISH PARK REALTY PVT. LTD., WAS ALREADY IN PROGRESS AND IF THE DEVELOPMENT OF THE LAND UNDER THE NEW FSI WAS ALSO TO BE UNDERTAKEN BY IT, THE SAME WOULD NOT BE ELIGIBLE FOR SECTION 80IB(10) BENEFITS AND THEREFORE, ACCORDING TO THE ASSESSING OFFICER THIS PROMPTED TH E INCORPORATION OF THE ASSESSEE-FIRM IN WHICH M/S. KASHISH PARK REALTY PVT . LTD., IS ALSO A PARTNER. ALL THESE ASPECTS HAVE BEEN MADE OUT BY THE ASSESSI NG OFFICER TO DOUBT THE GENUINENESS OF THE ASSESSEE FIRM AND ITS CLAIM U/S. 80IB(10) OF THE ACT. HOWEVER, WHEN ALL THESE ASPECTS WERE CHALLENGED BY THE ASSESSEE IN APPEAL BEFORE CIT(A), HE HAS DISAGREED WITH THE ASSESSING OFFICER. QUITE CLEARLY IN PARA 4 (A) AT PAGE 40 OF HIS ORDER, THE CIT(A) CONC LUDES THAT THERE IS NOTHING ON THE RECORD TO DOUBT THE GENUINENESS OF THE APPEL LANT FIRM AND 7 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 ACCORDINGLY, THE ARGUMENTS OF THE LD. A.R. ON THIS ACCOUNT ARE F OUND ACCEPTABLE . PERTINENTLY, WHEN WE PERUSE THE GROUNDS OF APPEA L RAISED BY THE REVENUE BEFORE US, THERE IS NO CHALLENGE TO THI S FINDING OF THE CIT(A) AND RATHER THE CHALLENGE IS BASED ONLY ON THE OTHER OBJ ECTIONS RAISED BY THE ASSESSING OFFICER, NAMELY, NON-ADHERENCE OF ASSESSE ES PROJECT TO THE REQUIREMENT OF BEING ON A LAND MEASURING NOT LESS T HAN ONE ACRE, ETC. THEREFORE, WE DO NOT DWELL IN FURTHER ON ALL SUCH A SPECTS IN THE ASSESSMENT ORDER WHICH DEAL WITH ASSESSING OFFICERS STAND AB OUT THE INGENUINENESS OF THE ASSESSEE FIRM, WHICH NOW STANDS REPUDIATED AS P ER THE ORDER OF THE CIT(A); AND, WHICH IS NOT CHALLENGED BY THE REVENUE BEFORE US. 11. THE OTHER REASONS ADVANCED BY THE ASSESSING OFF ICER WERE THAT THE FSI USED BY THE ASSESSEE FOR THE THREE BUILDINGS IN QUE STION WAS 4067.45 SQ.MTRS WHICH WAS LESS THAN ONE ACRE. AS PER THE ASSESSING OFFICER, IN TERMS OF SUB- CLAUSE-(B) OF SECTION 80IB (10) OF THE ACT, THE EL IGIBLE HOUSING PROJECT IS TO BE ON THE SIZE OF PLOT OF LAND WHICH HAS MINIMUM AREA OF ONE ACRE. HENCE, AS PER THE ASSESSING OFFICER, THE THREE BUILDINGS HAV E BEEN CONSTRUCTED ON LAND AREA LESS THAN ONE ACRE AND THEREFORE, DEDUCTI ON UNDER SECTION 80 IB (10) WAS NOT ALLOWABLE. SECONDLY, THE ASSESSING OFF ICER ALSO NOTED THAT IT WAS A PART OF AN EXISTING HOUSING PROJECT IN AS MUCH AS M/S.KASHISH PARK REALTY PVT. LTD., AND M/S. LADAM HOMES HAD CARRIED OUT THE IR OWN CONSTRUCTION ON RESPECTIVE PARTS OF LAND SOLD TO THEM BY M/S.FGP L TD. THEREFORE, ACCORDING TO HIM, BEING A PART OF AN EXISTING PROJECT, IT WAS NOT ELIGIBLE FOR THE BENEFIT OF SECTION 80IB(10) OF THE ACT. 12. ON ALTERNATE BASIS, THE ASSESSING OFFICER WAS O F THE VIEW THAT IF ON A LATER DATE ASSESSEE IS FOUND ENTITLED TO THE BENEFI T OF SECTION 80IB(10) OF THE 8 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 ACT, YET THE QUANTUM OF DEDUCTION WAS NOT JUSTIFIE D AS THE PROFITS OF THE HOUSING PROJECT WERE OVERSTATED AND HE APPLIED THE PROVISIONS OF SECTION 80IB(13) READ WITH SECTION 80IB(10) OF THE ACT AND SCALED DOWN THE PROFIT BY A SUM OF RS.6,18,67,801/-. 13. BEFORE THE CIT(A), THE ASSESSEE RAISED VARIOUS OBJECTIONS WITH RESPECT TO THE STAND OF THE ASSESSING OFFICER AND ON THE IS SUE OF THE AREA OF PLOT BEING LESS THAN ONE ACRE, THE CIT(A) FOUND THAT THE TOTAL AREA COVERED UNDER THE HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE FIR M WAS RS.8,952.45 SQ.MTRS. ON THIS ASPECT THE FINDING OF THE CIT(A) I S AS FOLLOWS:- THE A.O. HAS RAISED THE ISSUE THAT THE AREA OF THE PLOT ON WHICH THE APPELLANT FIRM HAS CONSTRUCTED A HOUSING PROJECT IS LESS THAN ONE ACRE. THIS OBSERVATION OF THE A.O. IS DEVOID OF ANY MERITS AS FROM THE DEVELOPMENT AGREEMENT DATED 3.12.2003 ITSELF IT IS CLEAR THAT T HE APPELLANT FIRM HAS ACQUIRED DEVELOPMENT RIGHTS OF FSI TO THE TUNE OF 9 851.81 SQ. MTRS. UNDISPUTEDLY, THE BUILDINGS OF THE HOUSING PROJECTS DEVELOPED BY THE APPELLANT FIRM HAVE BEEN CONSTRUCTED ON THE OPEN PL OT OF LAND AND NONE OF THE BUILDINGS HAS BEEN CONSTRUCTED ON THE EXISTING BUILDINGS. DURING THE YEA UNDER CONSIDERATION, THE APPELLANT FIRM HAS CON STRUCTED BUILDINGS MN-6, MN-7 & MN-8 COVERING TOTAL AREA OF 4067.46 SQ.MTRS. FURTHER, DURING THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR, THE APPELLA NT FIRM HAS CONSTRUCTED TOWERS 'A' & 'B' ON TOTAL AREA OF 4885 SQMTRS. ON W HICH DEDUCTION U/S.80IB(10) HAS ALSO BEEN CLAIMED. THUS, THE TO TAL AREA COVERED UNDER HOUSING PROJECTS CONSTRUCTED BY THE APPELLANT FIRM WORKS OUT TO 8952.45 SQ.. MTRS. THESE FACTS ARE ALSO VERIFIABLE FROM THE PARA 9 OF THE ASSESSMENT ORDER WHERE A.O. HIMSELF HAS CONSIDERED TOTAL AREA AT 96,364 SQ.FTS. EQUIVALENT TO 8842.36 SQ.MTRS. FROM THE APPROVED LAY OUT PLAN DT . 29/3/2006, IT IS ALSO CLEAR THAT THE FSI UTILIZED IS 0.98 ONLY AND HENCE, THE PLOT AREA IS CERTAINLY MORE THAN THE BUILT UP AREA. HOWEVER, THE A.O. HAS ERRONEOUSLY CONSIDERED THE AREA OF BUILDING CONSTRUCTED DURING THE YEAR UN DER CONSIDERATION ONLY IGNORING THE AREA OF THE BUILDINGS CONSTRUCTED IN S UBSEQUENT ASSESSMENT YEAR. IN VIEW OF THIS FACTUAL POSITION DULY SUPPORTED FRO M DOCUMENTARY EVIDENCES, IT IS CLEAR THAT THE LAND AREA UTILIZED UNDER THE HOUSING PROJECTS OF THE APPELLANT FIRM IS MORE THAN ONE ACRE ( 4,000 SQ . MTRS.). THUS, I HOLD THAT THE FINDINGS OF A.O. IN THIS REGARD ARE NOT CORRECT . 14. AGAINST THE AFORESAID DECISION OF THE CIT(A), REVENUE HAS CANVASSED IN ITS APPEAL THAT THE CIT(A) SHOULD HAVE APPRECIATED THAT THE DEDUCTION 9 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 U/S.80IB (10) OF THE ACT HAS BEEN CLAIMED WITH RESP ECT TO THREE BUILDINGS MN-6, MN-7 AND MN-8 WHICH CONSUMED LAND AREA OF 406 7.45 SQ.MTRS OR 43,782/- SQ.FT WHICH WAS LESS THAN ONE ACRE. SECOND LY, THE LEARNED DR ALSO SUBMITTED THAT THE CIT(A) ERRED IN GRANTING RELIEF TO THE ASSESSEE BY PLACING RELIANCE ON THE CBDT CIRCULAR NO. 205/3/2001/ITA II (SUPRA) AND THAT ASSESSEE COULD NOT PROVE THAT THE INSTANT HOUSING P ROJECT WAS AN INDEPENDENT PROJECT AND THEREFORE, THE ASSESSING OF FICER WAS JUSTIFIED IN DENYING THE CLAIM OF DEDUCTION. 15. ON THE OTHER HAND, LEARNED REPRESENTATIVE FOR T HE ASSESSEE DEFENDED THE DECISION OF THE CIT(A) ON THIS ASPECT. FIRSTLY IT HAS BEEN BROUGHT OUT THAT THE ENTIRE PIECE OF LAND WAS OWNED BY M/S.FGP LTD., AND ONLY A PART OF IT WAS TRANSFERRED EARLIER TO M/S. KASHISH PARK REALTY PVT. LTD., AND M/S. LADAM HOMES LTD., AND SO FAR AS THE LAND TRANSFERRED TO T HE ASSESSEE IS CONCERNED, IT MEASURED 12,484 SQ.MTRS. ALONGWITH FSI OF 9851.8 2 SQ. MTRS. IN THIS CONTEXT, OUR ATTENTION WAS DRAWN TO PAGE 31 AND 32 OF THE ORDER OF THE CIT(A) WHEREIN THE BIFURCATION OF LAND AREA ALONGWI TH FSI DEVELOPED BY DIFFERENT ENTITIES HAVE BEEN TABULATED. 16. ON THIS BASIS, IT IS SOUGHT TO BE DEMONSTRATED THAT THE PLOT AREA OF THE ASSESSEE FIRM WAS 12,484 SQ.MTRS. AND THE TOTAL FSI TRANSFERRED WAS 9,581.82 SQ.MTRS AND THEREFORE, THE AREA OF LAND WAS MORE TH AN ONE ACRE. ACCORDING TO LEARNED REPRESENTATIVE, THE ASSESSING OFFICER ER RED IN CONSIDERING ONLY THE LAND COVERED BY THE THREE BUILDINGS IN QUESTION AND IGNORING THE AREA WHICH WAS COVERED BY TOWER A & B WHICH WAS ALSO CONSTRUCT ED BY THE ASSESSEE THOUGH IN THE SUBSEQUENT PERIOD. 10 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 17. WITH REGARD TO THE OBJECTION OF THE LEARNED DR BASED ON THE GROUND OF APPEAL NO.2 OF THE REVENUE, THAT THE PROJECT WAS NOT AN INDEPENDENT PROJECT. LEARNED REPRESENTATIVE EXPLAINED THAT THE ASSESSEE FIRM HAD ACQUIRED THE FSI FROM M/S. FGP LTD., VIDE AGREEMENT DATED 03/12/2003 AND IT WAS ONLY THEREAFTER, THE BUILDING PLANS WERE SAN CTIONED BY THE TMC VIDE COMMENCEMENT CERTIFICATE DATED 10/11/2006, A COPY O F WHICH HAS BEEN PLACED AT PAGE 63 OF THE PAPER BOOK. IT WAS THEREFO RE, POINTED OUT THAT PRIOR TO THIS DATE, NO DEVELOPMENT PLAN OF THE BUILDINGS MN-6, MN-7, MN-8 AND TOWER-A WERE AVAILABLE AND THEREFORE, IT CANNOT BE SAID THAT ASSESSEES PROJECT WAS A PART OF AN EXISTING PROJECT. THEREFOR E, ACCORDING TO HIM, THE PROJECT OF THE ASSESSEE WAS INDEPENDENT PROJECT ELI GIBLE FOR THE BENEFITS OF SECTION 80IB(10) OF THE ACT. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE FIRST OBJECTION OF THE ASSESSING OFFICER IS BASED ON SUB-CLAUSE (B) OF SECTION 80IB(10) OF THE ACT WHICH PRESCRIBES THAT IN ORDER TO CLAIM THE DE DUCTION, THE HOUSING PROJECT SHALL, INTERALIA, BE ON THE SIZE OF A PLOT OF LAND WHICH HAS MINIMUM AREA OF ONE ACRE. THE CASE MADE OUT BY THE ASSESSIN G OFFICER IS THAT SINCE THE CLAIM OF DEDUCTION IS WITH RESPECT TO THE PROFITS D ERIVED FROM CONSTRUCTION AND DEVELOPMENT OF THREE BUILDINGS NAMELY MN-6, MN- 7 AND MN-8, THE LAND COVERED BY SUCH BUILDINGS ALONE SHOULD BE CONSIDERE D TO EXAMINE ITS COMPLIANCE WITH SUB-CLAUSE (B) OF SECTION 80 IB(10) OF THE ACT. ON THIS ASPECT, IN OUR CONSIDERED OPINION, THE FINDINGS OF CIT(A) WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER ARE JUS TIFIED AND DO NOT REQUIRE ANY INTERFERENCE. AS BROUGHT OUT BY THE CIT(A), THE TOT AL AREA OF LAND WITH THE ASSESSEE IS 12,484 SQ.MTRS WITH AN FSI OF 9,581.82 SQ. MTRS. THE CIT(A) FURTHER NOTES THAT APART FROM CONSTRUCTING THREE BU ILDINGS IN THIS YEAR, IN THE 11 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 IMMEDIATELY SUBSEQUENT ASSESSMENT YEAR, THE ASSESSE E FIRM CONSTRUCTED TOWERS A & B OF TOTAL AREA OF 4885 SQ. MTRS AND THU S, THE TOTAL AREA COVERED BY THE HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE FIRM WORKS OUT TO 8952.45 SQ. MTRS, WHICH IS MORE THAN ONE ACRE. WE F IND NO REASONS TO NEGATE THE FINDINGS OF THE CIT(A), WHICH ARE FAIR AND PR OPER. APART THEREFROM, WE FIND THAT THE CASE OF THE ASSESSING OFFICER IS THAT THE AREA OF THREE BUILDINGS IS 4067.46 SQ. MTRS OR 43,782 SQ.FT WHICH IS LESS T HAN ONE ACRE. AT THE TIME OF HEARING, LEARNED REPRESENTATIVE FOR THE ASSESSEE PO INTED OUT THAT EVEN SUCH CONCLUSION OF THE ASSESSING OFFICER IS FACTUALLY U NTENABLE, IN AS MUCH AS SIMILAR ISSUE HAS COME UP BEFORE THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF BUNTY BUILDERS VS. ITO REPORTED AT 127 ITD 286. IN THE SAID DECISION, IT HAS BEEN EXPLAINED THAT ONE ACRE WOULD MEAN 4046 SQ.MTR S OR 43,560 SQ.FT. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF PU NE BENCH OF THE TRIBUNAL IN THE CASE OF BABA PROMOTERS AND DEVELOPMENT VS. I TO 25 TAXMANN.COM 84 (PUNE) WHEREIN ALSO IT HAS BEEN ACCEPTED THAT ONE A CRE WOULD MEAN 4046 MTRS OR 43,560 SQ.FT. CONSIDERED IN THIS LIGHT, EVE N IF ONE GOES ALONG WITH THE STAND OF THE ASSESSING OFFICER AND CONSIDER ONLY TH E LAND COVERED BY THE THREE BUILDINGS EVEN THEN THE AREA IN QUESTION FULF ILS THE REQUIREMENT OF BEING NOT LESS THAN ONE ACRE. THEREFORE, ON THIS AS PECT, WE FIND NO MERIT IN THE PLEA OF THE REVENUE AND THE DECISION OF THE CIT (A) IS AFFIRMED. 19. THE OTHER OBJECTION BY THE LEARNED DR IS THAT T HE PROJECT OF THE ASSESSEE WAS NOT AN INDEPENDENT PROJECT, THE SAME H AS BEEN DEALT WITH BY CIT(A) IN PARA -4(B) ON THIS ASPECT THE CIT(A) NOTE S THAT THE MAIN REASON GIVEN BY THE ASSESSING OFFICER WAS THAT M/S. KASHI SH PARK REALTY PVT. LTD. WHICH IS ONE OF THE PARTNERS OF THE ASSESSEE FIRM H AD INITIALLY THE RIGHT TO ACQUIRE TDR-FSI FROM M/S. FGP LTD., HOWEVER, M/S. K ASHISH PARK REALTY PVT. 12 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 LTD., SUBSEQUENTLY DECIDED NOT TO ACQUIRE THE FSI-T DR AND REQUESTED M/S. FGP LTD., TO SELL THE SAME TO THE ASSESSEE FIRM. AS PER THE ASSESSING OFFICER, IF M/S. KASHISH PARK REALTY PVT. LTD., WOULD HAVE D EVELOPED THE PROJECT BY ACQUIRING TDR-FSI, IT WOULD NOT BE ENTITLED TO THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT. IN THIS CONTEXT, THE CIT(A ) HAS NOTED THAT THE CBDT COMMUNICATION DATED 04/05/2001(SUPRA) PERMITTED THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT EVEN WHERE THE ADDITIONAL H OUSING PROJECT WAS CONSTRUCTED BY CONSUMING TDRS ON AN EXISTING HOUSI NG PROJECT, PROVIDED THE PROJECT IS TAKEN UP BY A SEPARATE UNDERTAKING HAVIN G BOOKS OF ACCOUNTS MAINTAINED IN SUCH MANNER TO ENSURE ASCERTAINING OF CORRECT PROFITS. ON THIS BASIS, THE CIT(A) FOUND ASSESSING OFFICERS OBJECTI ON AS UNTENABLE BECAUSE AS PER THE CBDT, THE DEDUCTION WAS AVAILABLE EVEN ON C ONSTRUCTION OF A HOUSING PROJECT ON TDR-FSI ACQUIRED IN RESPECT OF EXISTING HOUSING PROJECT SITE. IN OUR CONSIDERED OPINION NO FAULT CAN BE FOUND WITH THE C ONCLUSION BY THE CIT(A) ON THIS ASPECT. THE CHARGE MADE BY THE ASSESSING OF FICER IS THAT THERE IS A COLLUSIVE ARRANGEMENT IN ORDER TO CLAIM THE BENEFIT U/S.80IB(10) OF THE ACT; THIS CHARGE, IN OUR VIEW, IS NOT MAINTAINABLE BECA USE EVEN IF M/S. KASHISH PARK REALTY PVT. LTD., WOULD HAVE CARRIED OUT THE DEVELOPMENT, IN TERMS OF CBDT COMMUNICATION DATED 04/05/2001(SUPRA), SUCH PR OJECT WOULD ALSO BE ELIGIBLE FOR THE BENEFITS OF SECTION 80IB(10) OF TH E ACT. THUS, THE ORDER OF CIT(A) ON THIS ASPECT IS ALSO AFFIRMED. CONSIDERING ALL THESE ASPECTS, WE CONFIRM THE ORDER OF CIT(A) AND THEREFORE, SO FAR A S THE GROUNDS RAISED BY THE REVENUE ARE CONCERNED THE SAME ARE DISMISSED. 20. NOW, WE MAY TAKE UP THE APPEAL OF THE ASSESSEE WHEREIN IT HAS CHALLENGED THE ADDITION OF RS.1,02,02,930/- MADE BY INVOKING SECTION 13 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 80IB(13) READ WITH SECTION 80IA (10) OF THE ACT. ON THIS ASPECT, THE RELEVANT FACTS ARE THAT THE ASSESSING OFFICER NOTED THAT ASS ESSEE HAD ACQUIRED THE DEVELOPMENT RIGHTS OF THE LAND FROM M/S. FGP LTD., AT A PRICE MUCH LESSER THAN THE MARKET PRICE AND THEREFORE, THERE WAS UNRE ASONABLE PROFITS GENERATED FOR THE PURPOSE OF CLAIMING DEDUCTION U/S .80IB(10) OF THE ACT. SECONDLY, THE ASSESSING OFFICER NOTED THAT PROJECTS DEVELOPED BY M/S. KASHISH PARK REALTY PVT. LTD., WAS IN THE VICINITY AND ASSESSEE FIRM WAS USING COMMON FACILITY OF OTHER PROJECTS AND ESTIMATED VA LUE OF SUCH COMMON AMENITIES AT RS.70,05,120/- WHICH ACCORDING TO HIM SHOWED EXCESSIVE PROFITS EARNED BY THE ASSESSEE TO THAT EXTENT. THUS, THE AS SESSING OFFICER DETERMINED TOTAL ADDITION OF RS. 6,18,67,801/- ON T HIS ACCOUNT, BY APPLYING THE SECTION 80IA(10) READ WITH SECTION 80IB(13) OF THE ACT. THE CIT(A) DELETED THE ADDITION OF RS.70,05,120/- AND THIS ASP ECT HAS BECOME FINAL AS THE SAME HAS NOT BEEN CHALLENGED BY THE REVENUE BEF ORE US. SO, HOWEVER WITH REGARD TO THE CHARGE OF THE ASSESSING OFFICER THAT ASSESSEE HAS PAID LESSER PRICE TO M/S. FGP LTD., FOR PURCHASE OF TDR- FSI, THE CIT(A) NOTED THAT CONSIDERATION AT RS.386.10 PER SQ.FT WAS FIXED IN 2 001 ITSELF BY M/S. KASHISH PARK REALTY PVT. LTD., WHEN ASSESSEE WAS NOT EVEN I N EXISTENCE. THE CIT(A) NOTED THAT THE READY RECKONER PRICE AT THAT POINT O F TIME WAS RS.270 PER SQ.FT, THUS HE INFERRED THAT THE MARKET RATE WAS 43% HIGHER THAN THE READY RECKONER RATE. IN THE YEAR 2003, WHEN ASSESSEE TRAN SACTED FOR THE PURCHASE OF TDR-FSI FROM M/S. FGP LTD., THE READY RECKONER R ATE WAS RS.372 PER SQ.FT AND ON THE SAME ANALOGY OF ENHANCING THE RATE BY 43 %, CIT(A) HELD THAT THE NEGOTIATED PRICE OUGHT TO HAVE BEEN RS.539.96 PER S Q.FT. AS AGAINST WHICH ASSESSEE HAD PAID ONLY RS.386.10 PER SQ.FT; AND, TH EREFORE, HE HELD THAT ASSESSEE HAD MADE UNREASONABLE PROFITS WHICH WAS TO BE RESTRICTED IN TERMS 14 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 OF SECTION 80IA(10) AND 80IB(13) OF THE ACT. THE CI TA) DETERMINED AN AMOUNT OF RS.1,02,02,903/- ON THIS ACCOUNT ON PROPO RTIONATE BASIS CONSIDERING THE AREA SOLD DURING THE YEAR AND THE B ALANCE OF THE ADDITION HAS BEEN DELETED BY HIM. 21. BEFORE US, LEARNED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT THE CIT(A) OUGHT TO HAVE ALLOWED COMPLETE RELIEF IN AS MUCH AS THE PROVISIONS U/S.80IA(10) READ WITH SECTION 80IB(13) OF THE ACT ARE NOT APPLICABLE AT ALL, SINCE ASSESSEE HAS NO CLOSE CONN ECTION WITH M/S.FGP LTD., FROM WHOM THE DEVELOPMENT RIGHTS HAVE BEEN PURCHASE D. 22. ON THIS ASPECT, LEARNED DR HAS PRIMARILY RELIED ON THE ORDER OF THE CIT(A), WHICH WE HAVE ALREADY NARRATED IN THE EARLI ER PARTS AND NOT REPEATED FOR THE SAKE OF BREVITY. 23. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 80IB(13) OF THE ACT PRESCRIBES THAT PROVISIONS OF SECTION 80 IA(10) OF THE ACT, SO FAR AS MAY BE, SHALL APPLY TO THE ELIGIBLE BUSINESS REFERR ED TO IN SECTION 80IB(10) ALSO. SECTION 80IA(10) WHICH HAS BEEN INVOKED BY TH E ASSESSING OFFICER IN THE PRESENT CASE READS AS UNDER:- SEC.80IA(10) WHERE IT APPEARS TO THE ASSESSING OFF ICER THAT, OWING TO THE CLOSE CONNECTION BETWEEN THE ASSESSEE CARRYING ON THE ELI GIBLE BUSINESS TO WHICH THIS SECTION APPLIES AND ANY OTHER PERSON, OR FOR ANY OT HER REASON, THE COURSE OF BUSINESS BETWEEN THEM IS SO ARRANGED THAT THE BUSIN ESS TRANSACTED BETWEEN THEM PRODUCES TO THE ASSESSEE MORE THAN THE ORDINARY PRO FITS WHICH MIGHT BE EXPECTED TO ARISE IN SUCH ELIGIBLE BUSINESS, THE ASSESSING O FFICER SHALL, IN COMPUTING THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION, TAKE THE AMOUNT OF PROFITS AS MAY BE REASONABLY DEEMED TO HAVE BEEN DERIVED THEREFROM: PROVIDED THAT IN CASE THE AFORESAID ARRANGEMENT INVOLVES A SPECIFIED DOMESTIC TRANSACTION REFERRED TO IN SECTION 92BA , THE AMOUNT OF PROFITS FROM SUCH 15 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 TRANSACTION SHALL BE DETERMINED HAVING REGARD TO AR M'S LENGTH PRICE AS DEFINED IN CLAUSE (II) OF SECTION 92F . 24. THE PERUSAL OF THE AFORESAID WOULD SHOW THAT IT ENTITLES THE ASSESSING OFFICER TO RECOMPUTE THE PROFITS AND GAINS OF ELIGI BLE BUSINESS UNDER THE CIRCUMSTANCES PRESCRIBED THEREIN. HOWEVER, IT IS CL EAR THAT THE PROHIBITION CONTAINED THEREIN IS INVITED ONLY DUE TO CLOSE CONN ECTION BETWEEN THE ASSESSEE CARRYING ON THE ELIGIBLE BUSINESS AND AN Y OTHER PERSON. FURTHER, IT ALSO REQUIRES THE ASSESSING OFFICER TO ESTABLISH THAT THE COURSE OF BUSINESS BETWEEN THEM IS SO ARRANGED THAT THE BUSINESS TRANS ACTED BETWEEN THEM PRODUCES TO THE ASSESSEE MORE THAN THE ORDINARY PRO FITS WHICH MIGHT BE EXPECTED TO ARISE IN SUCH ELIGIBLE BUSINESS. WHAT WE ARE ONLY TRYING TO EMPHASISE IS THAT THE FIRST AND FOREMOST REQUIREM ENT IN ORDER TO INVOKE SECTION 80IA(10) IS TO ESTABLISH THE CLOSE CONNECT ION BETWEEN THE ASSESSEE HEREIN AND M/S. FGP LTD., WITH WHOM THE TRANSACTION OF ACQUISITION OF TDR- FSI HAS BEEN DONE. ON THIS ASPECT, THERE IS NOT EVE N AN ALLEGATION BY THE ASSESSING OFFICER, MUCH LESS REFERENCE TO ANY EVI DENCE IN THIS REGARD. BEFORE US, IT HAS BEEN POINTED OUT THAT M/S. FGP LT D., AND ASSESSEE FIRM ARE UNRELATED PARTIES AND THEREFORE, THERE IS NO QUE STION OF INVOKING SECTION 80IA(10) OF THE ACT QUA THE TRANSACTION OF PURCHASE OF TDR-FSI BY THE ASSESSEE. THUS, ON THIS PERTINENT POINT ITSELF WE F IND THAT THE INVOKING OF SECTION 80IA(10) READ WITH SECTION 80IB(13) OF THE ACT IS UNTENABLE. WE HOLD SO. THUS, WE HEREBY SET ASIDE THE ORDER OF THE CIT( A) TO THE ABOVE EXTENT AND ALLOW THE APPEAL OF THE ASSESSEE. 16 ITA NOS.5777/MUM/2014 & 6172/MUM/2014 25. RESULTANTLY, APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/03/2 018 SD/- SD/- (AMARJIT SINGH ) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 09/03/2018 KARUNA, SR. PS 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/ (DY./ASSTT. REGISTRAR), ITAT, MUMBAI