Nyati Builders Pvt. ltd., Pune V. DCIT, Cir.-2, Pune

ITA 619/PUN/2011

• Counselvise Citation: 61924514 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: VIPIN GUJRATI
• Keywords: Depreciation; Assessment record
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.619/PN/2011 (ASSESSMENT YEAR : 2006-07) NYATI BUILDERS PVT. LTD. NYATI COMMERCE HOUSE ROAD NO.6, KALYANI NAGAR PUNE 411 006 PAN : AAACN6418N . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 2, PUNE . RESPONDENT APPELLANT BY : MR. VIPIN GUJRATI RESPONDENT BY : MR. MUKESH VERMA DATE OF HEARING : 14-05-2013 DATE OF PRONOUNCEMENT : 25-06-2013 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED A GAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX-II, PUNE (IN SHORT THE COMMISSIONER) DATED 30.03.2011 PASSED UNDER SECTION 263 OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT) HOLDING THAT THE ASSESSMENT OR DER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT DATED 21.04 .2008 FOR THE ASSESSMENT YEAR 2006-07 WAS ERRONEOUS IN SO FAR AS IT WAS PREJ UDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE AC T. PRIMARILY, THE COMMISSIONER HAS SET-ASIDE THE ASSESSMENT ORDER DAT ED 21.04.2008 (SUPRA) ON THE ISSUE RELATING TO ASSESSEES ELIGIBILITY FOR CLAIMING DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT AND WITHOUT PREJUDICE TO THE SAME, HE HAS ALSO DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE DE DUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT AFTER R E-WORKING THE ELEMENT OF INDIRECT EXPENSES, INTEREST AND DEPRECIATION IN RES PECT TO TWO PROJECTS NAMELY, NYATI MEADOWS & NYATI GARDEN. ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 2. IN BRIEF, THE FACTS ARE THAT THE APPELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS INTER-ALIA ENGAGED IN THE BUSINESS OF BUILDING, CONSTRUCTION AND REAL EST ATE DEVELOPMENT AND DEALING IN LANDS. FOR THE ASSESSMENT YEAR 2006-07 IT FILED A RETURN OF INCOME DECLARING TOTAL INCOME AT RS.9,16,86,210/-, WHEREIN DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT WAS CLAIMED IN RELATION TO TWO PROJECTS NAMELY, NYATI MEADOWS RS.4,90,53,069/- AND NYATI GARDEN RS.43,98,779/- OUT OF THE SEVERAL PROJECTS BEING UNDERTAKEN BY THE ASSESSEE IN AND AR OUND PUNE. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SE CTION 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS.9,20,86,210/- AF TER MAKING AN ADDITION OF RS.4,00,000/- ON ACCOUNT OF UNVERIFIABLE PERSONAL E LEMENT INCLUDED IN EXPENSES. OSTENSIBLY, ASSESSEES CLAIM FOR DEDUCTIO N UNDER SECTION 80-IB(10) OF THE ACT AS MADE IN THE RETURN OF INCOME AND ACCO MPANIED BY THE PRESCRIBED AUDIT REPORT IN FORM NO.10CCB, AT RS.5,34,51,848/- WITH RESPECT TO TWO PROJECTS OF NYATI MEADOWS & NYATI GARDEN WAS A CCEPTED AS SUCH. 3. SUBSEQUENTLY, THE COMMISSIONER HAS INVOKED HIS R EVISIONARY POWER UNDER SECTION 263 OF THE ACT AFTER EXAMINATION OF T HE ASSESSMENT RECORDS WHEREBY THE ACTION OF THE ASSESSING OFFICER IN ALLO WING THE DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT WAS STATED TO BE INFIR M. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE COMMISSIONER HAS F OUND IT FIT TO SET-ASIDE THE ASSESSMENT ORDER QUA THE ACTION OF THE ASSESSIN G OFFICER IN ALLOWING DEDUCTION TO THE ASSESSEE UNDER SECTION 80-IB(10) O F THE ACT. THE AFORESAID ACTION OF THE COMMISSIONER IS IN CHALLENGE BEFORE U S, AND THE ASSESSEE HAS FILED A VOLUMINOUS PAPER BOOK WHEREIN IS PLACED COP IES OF STATEMENT OF FACTS, SUBMISSIONS MADE BEFORE THE COMMISSIONER AND ALSO T O THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143 (3) OF THE ACT, AND OTHER RELEVANT DOCUMENTS. IN THE SUBSEQUENT PARAS, WE SHA LL REFER TO THE MATERIAL IN THE PAPER BOOK, TO WHICH OUR ATTENTION WAS DRAWN IN THE COURSE OF HEARING. ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 4. ON THE OTHER HAND, THE LEARNED CIT(DR) APPEARING FOR THE REVENUE HAS PRIMARILY REITERATED THE REASONING ADVANCED BY THE COMMISSIONER IN SUPPORT OF THE CASE OF THE REVENUE. WE HAVE HEARD THE RIVAL SU BMISSIONS AND PERUSED THE RELEVANT RECORD. 5. THE FIRST AND FOREMOST POINT RAISED BY THE COMMI SSIONER TO ESTABLISH THAT THE ASSESSMENT ORDER DATED 21.04.2008 (SUPRA) WAS ERRONEOUS WITHIN THE MEANING OF SECTION 263 OF THE ACT IS WITH REGARD TO ASSESSEES ELIGIBILITY FOR DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IN REL ATION NYATI MEADOWS PROJECTS. AS PER THE COMMISSIONER, THE ASSESSEE WAS NOT ENTITLED TO THE DEDUCTION UNDER SECTION 80-IB(10) IN RELATION TO N YATI MEADOWS PROJECTS IN VIEW OF THE VIOLATION OF THE PROVISIONS OF SECTION 80-IB (2) OF THE ACT. ACCORDING TO THE COMMISSIONER, ASSESSEE IS TO BE UNDERSTOOD A S AN INDUSTRIAL UNDERTAKING, WHICH WAS REQUIRED TO FULFILL THE CON DITIONS MENTIONED IN CLAUSES (I) TO (IV) OF SUB-SECTION (2) OF SECTION 80-IB OF THE ACT. IN PARTICULAR, THE COMMISSIONER HAS EMPHASIZED THAT CLAUSE (I) OF SUB- SECTION (2) OF SECTION 80-IB OF THE ACT DISENTITLES THE ASSESSEE FOR THE C LAIM OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IN RELATION TO THE NY ATI MEADOWS PROJECT. CLAUSE (I) OF SUB-SECTION (2) OF SECTION 80-IB OF THE ACT REQUIRES THAT AN INDUSTRIAL UNDERTAKING SHOULD NOT HAVE BEEN FORMED BY SPLITTI NG UP OR RE-CONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. ACCORDING TO THE C OMMISSIONER, THE PROJECT NYATI MEADOWS UNDERTAKEN AT SURVEY NOS. 10/1 AND 9/2, WADGAON SHERI, PUNE WAS EARLIER STARTED BY A PARTNERSHIP FIRM NAME LY, M/S OASIS DEVELOPERS CONSTITUTED BY THREE PARTNERS IN 1998 AND ASSESSEE COMPANY WAS ADMITTED AS A PARTNER AT A LATER STAGE THAT IN JANUARY 2000. TH E SAID FIRM WAS SUBSEQUENTLY DISSOLVED IN OCTOBER, 2000 AND ALL THE ASSETS AND L IABILITIES OF THE FIRM WERE TAKEN OVER BY THE ASSESSEE COMPANY. THE ASSESSEE CO MPANY FURTHER ACQUIRED THE ADJOINING PLOTS OF LAND AND AMALGAMATE D THE SAME AND THE AMALGAMATED PLOT WAS SUBDIVIDED INTO THREE PLOTS NA MELY, A, B & C. ON THIS BASIS, THE CHARGE MADE BY THE COMMISSIONER IS THAT THE INDUSTRIAL ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 UNDERTAKING. I.E. NYATI MEADOWS PROJECT WAS STAR TED BY THE SPLITTING UP/RE- CONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE NAM ELY, M/S OASIS DEVELOPERS, WHICH IS VIOLATIVE OF CLAUSE (I) OF SUB-SECTION (2) OF SECTION 80-IB OF THE ACT. AS PER THE COMMISSIONER, THE AFORESAID VIOLATION DISEN TITLES THE ASSESSEE FROM THE DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IN RELATION TO THE NYATI MEADOWS, PROJECT. 6. THE STAND OF THE ASSESSEE BEFORE THE COMMISSIONE R AS WELL AS BEFORE US IS TO THE EFFECT THAT NEITHER IN LAW AND NOR ON FACTS THE AFORESAID STAND OF THE COMMISSIONER IS JUSTIFIED TO DENY THE CLAIM OF DEDU CTION UNDER SECTION 80-IB(10) OF THE ACT IN RELATION TO THE NYATI MEDO WS PROJECT. AS PER THE ASSESSEE, THE VIEW TAKEN BY THE COMMISSIONER THAT S ECTION 80-IB(2) OF THE ACT APPLIED TO ASSESSEE CLAIMING UNDER SECTION 80-IB(10 ) OF THE ACT IN RESPECT OF HOUSING PROJECT IS UNTENABLE AND IN SUPPORT OF THE SAID PROPOSITION RELIANCE HAS BEEN PLACED ON THE FOLLOWING DECISIONS :- (I) P ARTH CONSTRUCTION VS. ITO (2008) 23 SOT 368 (MUMBAI) AND (II) G.V. CORPORATIO N VS. ITO (2010) 38 SOT 174 (MUMBAI). IN THE AFORESAID CASES, ACCORDING TO THE LEARNED COUNSEL SIMILAR SITUATION HAS BEEN CONSIDERED AND IT HAS BEEN HELD THAT SECTION 80-IB(2) DOES NOT CONTROL SECTION 80-IB(10) OF THE ACT WHICH IS I N RELATION TO HOUSING PROJECTS. APART THEREFROM IT HAS ALSO BEEN ARGUED THAT THE CO NSTRUCTION OF A BUILDING OR OF FLATS, ETC. DOES NOT AMOUNT TO MANUFACTURE OR PRODUCTION AS HELD BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. SUNIDHI PROPERTIES 230 ITR 157 (CAL) AND THEREFORE, THE SECTION 80-IB(2) OF TH E ACT IS INAPPLICABLE IN SITUATIONS INVOLVING SECTION 80-IB(10) OF THE ACT. 7. ON THE OTHER HAND, THE LEARNED CIT(DR) APPEARING FOR THE REVENUE HAS POINTED OUT THAT THERE IS NO SPECIFIC EXCLUSION IN SECTION 80-IB(10) OF THE ACT TO SAY THAT THE PROVISIONS OF SUB-SECTION (2) OF SECTI ON 80-IB OF THE ACT ARE NOT APPLICABLE AND REFERRED TO THE WORDING OF SUB-SECTI ON (2) OF SECTION 80-IB OF THE ACT TO POINT OUT THAT THE SAID SECTION IS MADE APPLICABLE ONLY TO THE ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 INDUSTRIAL UNDERTAKING WHICH FULFILLS THE CONDITI ONS PRESCRIBED THEREUNDER, AND IN THE PRESENT CASE THE PROJECT NYATI MEADOWS OF THE ASSESSEE DOES NOT COMPLY WITH SECTION 80-IB(2)(I) OF THE ACT. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. ON THIS ASPECT, IN THE CASE OF PARTH CONSTRUCTION (SUPRA) THE MUMBAI B ENCH OF THE TRIBUNAL CAME TO A CONCLUSION THAT THE NATURE OF DEDUCTION U NDER SECTION 80-IB(10) OF THE ACT IS INDEPENDENT OF THE PROVISIONS OF SUB-SEC TION (2) OF SECTION 80-IB OF THE ACT AND THE CONDITION OF THE ASSESSEE COMPANY B EING AN INDUSTRIAL UNDERTAKING MANUFACTURING OR PRODUCING ANY ARTICLE OR THING IS NOT APPLICABLE TO THE CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) O F THE ACT, IN CASE OF AN ASSESSEE, DEVELOPING AND BUILDING HOUSING PROJECT S UBJECT TO FULFILLMENT OF THE CONDITIONS PRESCRIBED IN SECTION 80-IB(10) OF THE A CT. IN-FACT, IT IS SEEN THAT THE DECISION OF THE PARTH CONSTRUCTION (SUPRA) WAS SUBS EQUENTLY FOLLOWED BY ANOTHER MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SHREEJEE RATNA CORP. VS. ITO (ITA NO. 3106/MUM./2007 DATED 10.02.2009). IN V IEW OF THE AFORESAID, IT IS, THEREFORE, NOT POSSIBLE TO UPHOLD THE VIEW TAKE N BY THE COMMISSIONER THAT AN ASSESSEE CLAIMING DEDUCTION UNDER SUB-SECTION (1 0) OF SECTION 80-IB IS ALSO GOVERNED BY SUB-SECTION (2) OF SECTION 80-IB O F THE ACT. EVEN, OTHERWISE, IN OUR CONSIDERED OPINION, FOR CLAIMING DEDUCTION U NDER SECTION 80-IB(10) IN RELATION TO DEVELOPMENT OF A HOUSING PROJECT AN ASS ESSEE IS NOT REQUIRED TO FULFILL THE CONDITIONS PRESCRIBED IN SUB-SECTION (2 ) OF SECTION 80-IB OF THE ACT. WE SAY SO FOR THE REASON THAT IN THE VERY SCHEME OF SECTION 80-IB, THE AFORESAID PROPOSITION IS EVIDENT. SECTION 80-IB HAS SEVERAL SUB-SECTIONS WHICH SPECIFICALLY REQUIRE THE ASSESSEE CLAIMING DEDUCTIO N THEREUNDER THAT IT SHOULD NOT BE FORMED BY RE-CONSTRUCTION OR SPLITTING UP OF EXISTING BUSINESS AND IN OUR CONSIDERED OPINION, IF SUB-SECTION (2) AND THE COND ITIONS MENTIONED THEREIN ARE TO GOVERN AN ASSESSEE CLAIMING DEDUCTION UNDER THE OTHER SUB-SECTIONS, INCLUDING SUB-SECTION (10), THEN THE LEGISLATURE WO ULD NOT HAVE PROVIDED SPECIFICALLY IN SOME OF THE SUB-SECTIONS THAT THE B USINESS SHOULD NOT HAVE ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 BEEN FORMED BY THE SPLITTING UP OR RE-CONSTRUCTION OF AN EXISTING BUSINESS OR BY THE TRANSFER ON ANY BUILDING OR MACHINERY PREVIOUSL Y USED FOR ANY PURPOSES. A GAINFUL REFERENCE IN THIS REGARD CAN BE MADE TO SUB -SECTIONS (7), (7A) AND (7B) WHICH RELATE TO DEDUCTIONS IN THE CASE OF ANY HOTEL , MULTIPLEX THEATRE AND CONVENTION CENTRE RESPECTIVELY. CLAUSE (C)(I), CLAU SE (C)(II), CLAUSE (B)(I), CLAUSE (B)(II) AND CLAUSE (B)(III) OF SUB-SECTIONS (7), (7 A) AND (7B) RESPECTIVELY CONTAIN CONDITIONS THAT THE DEDUCTION IS AVAILABLE IN RESPE CT OF HOTEL OR MULTIPLEX THEATRE OR CONVENTION CENTRE RESPECTIVELY ONLY IF T HE BUSINESS IS NOT FORMED BY SPLITTING UP OR RE-CONSTRUCTION OF A BUSINESS ALREA DY IN EXISTENCE, ETC. WE ARE ONLY TRYING TO EMPHASISE THAT WHEREVER THE LEGISLAT URE DEEMED IT FIT, THE CONDITIONS ENUMERATED IN SUB-SECTION (2) OF SECTION 80-IB HAS BEEN SPECIFICALLY MADE APPLICABLE BY PROVIDING THE SAME IN THE RELEVANT SUB- SECTIONS OF SECTION 80-IB OF THE ACT AND IN THE ABS ENCE OF SUCH A MANDATE IN SUB-SECTION (10) OF SECTION 80-IB, IT CANNOT BE UND ERSTOOD THAT THE CONDITIONS PRESCRIBED IN SUB-SECTION (2) OF SECTION 80-IB ARE RELEVANT TO EVALUATE CLAIM OF AN ASSESSEE FOR DEDUCTION UNDER SECTION 80-IB(10) O F THE ACT IN RELATION TO DEVELOPING AND BUILDING HOUSING PROJECTS. IN OUR CO NSIDERED OPINION, THE AFORESAID POINT MADE OUT BY THE COMMISSIONER IS UNT ENABLE AND IS HEREBY SET- ASIDE. 9. APART FROM THE LEGAL POSITION, THE LEARNED COUNS EL ALSO FACTUALLY ASSERTED THAT THERE WAS NO SPLITTING UP OR RE-CONST RUCTION OF BUSINESS IN THE PRESENT CASE. IN THIS CONTEXT, THE LEARNED COUNSEL POINTED OUT THAT ON THE DISSOLUTION OF THE FIRM, ASSESSEE HAD TAKEN OVER TH E ASSETS AND LIABILITIES OF THE PARTNERSHIP FIRM, M/S OASIS DEVELOPERS BY WAY OF A DISSOLUTION DEED DATED 12.10.2000. THE ERSTWHILE PARTNERSHIP FIRM HAD MERE LY ENTERED INTO DEVELOPMENT AGREEMENT WITH VARIOUS LAND OWNERS AND PAID A FRACTION OF THE TOTAL CONSIDERATION AND IT WAS ONLY AFTER THE DISSO LUTION OF THE FIRM, ASSESSEE ENTERED INTO SUPPLEMENTARY AGREEMENTS WITH THE LAND OWNERS ON 19.10.2000, WHICH WERE DULY REGISTERED BY PAYING REQUISITE STAM P DUTY. THE LAND OWNERS ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 ALSO EXECUTED A REGISTERED POWER OF ATTORNEY IN FAV OUR OF THE ASSESSEE. THE ASSESSEE MADE SUBSTANTIAL PAYMENTS AS CONSIDERATION TO THE SAID OWNERS AND UNDERTOOK THE ENTIRE OBLIGATIONS OF DEVELOPING AND CONSTRUCTING THE HOUSING PROJECT. THE ASSESSEE ACQUIRED FURTHER ADJOINING PL OTS AND AMALGAMATED THE SAME AND THERE WAS FURTHER SUB-DIVISION INTO SMALLE R PLOTS. THE APPLICATIONS FOR LAYOUT SANCTION AND BUILDING PLAN SANCTION WAS ALSO DONE BY THE ASSESSEE THROUGH ITS ARCHITECT, SHRI SHIRISH DASNURKAR. IT H AS ALSO BEEN POINTED OUT THAT THE ASSESSEE OBTAINED THE FIRST COMMENCEMENT CERTI FICATES FROM THE PUNE MUNICIPAL CORPORATION (PMC) IN DECEMBER, 2000 WHICH WAS MUCH AFTER THE DISSOLUTION OF THE FIRM AND IT WAS THE ASSESSEE WHO EMPLOYED ARCHITECTS, AND INVESTED ITS CAPITAL FOR UNDERTAKING CONSTRUCTION A ND DEVELOPMENT OF THE PROJECT. FACTUALLY, ACCORDING TO THE LEARNED COUNSE L, ASSESSEE VIRTUALLY UNDERTOOK A PROJECT WHICH WAS NOT IN EXISTENCE AT T HE TIME OF THE ERSTWHILE FIRM. 10. THE LEARNED CIT(DR) HAS NOT CONTROVERTED FACTUA L MATRIX SO BROUGHT OUT BY THE ASSESSEE, COPIES OF THE RELEVANT MATERIAL HA VE ALSO BEEN PLACED ON RECORD. IN THE PAPER BOOK FILED, ASSESSEE HAS FURNI SHED THE REGISTERED AGREEMENT WITH THE LAND OWNERS EXECUTED ON 19.10.20 00 AT PAGES 180 TO 202. SIMILARLY, THE DETAILS OF PAYMENT MADE BY THE ASSES SEE TO THE LAND OWNERS HAS ALSO BEEN PLACED IN THE PAPER BOOK. THE AFORESAID, IN OUR VIEW, FACTUALLY DOES NOT JUSTIFY THE ASSERTION OF THE COMMISSIONER THAT THE UNDERTAKING OF THE ASSESSEE QUA THE NYATI MEADOWS PROJECT WAS FORMED BY SPLITTING UP OR RE-CONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE BY WAY OF M/S OASIS DEVELOPERS. 11. IN THE RESULT, ON THE ASPECT OF THE VIOLATION O F SECTION 80-IB(2) OF THE ACT, IN LAW AND ON FACTS ALSO, WE FIND NO SUBSTANCE IN THE STAND OF THE COMMISSIONER WHICH IS HEREBY SET-ASIDE. ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 12. THE SECOND POINT MADE OUT BY THE COMMISSIONER W ITH REGARD TO THE PROJECT NYATI MEADOWS THAT THE COMMENCEMENT CERT IFICATE AND COMPLETION CERTIFICATE ISSUED BY THE PMC CONTAINED NAMES OF O THER PERSONS AND ARE NOT ISSUED IN THE NAME OF ASSESSEE COMPANY. ON THIS BAS IS, IT IS SOUGHT TO BE MADE OUT BY THE COMMISSIONER THAT THE PROJECT NYAT I MEADOWS CANNOT BE SAID TO BE A PROJECT UNDERTAKEN BY THE ASSESSEE AND AS PER HIM, ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80-IB(10) O F THE ACT ON THIS SCORE ALSO. 13. ON THIS ASPECT, THE LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE STAND OF THE COMMISSIONER IS UNTENABLE INASMUCH AS IT IS NOT AT ALL NECESSARY FOR AN ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80 -IB(10) OF THE ACT TO BE THE OWNER OF THE LAND IN QUESTION. IN THIS CONNECTI ON, IT HAS BEEN ASSERTED THAT THE PROVISIONS OF SECTION 80-IB(10) OF THE ACT DO N OT MANDATE THAT THE COMMENCEMENT CERTIFICATE AND THE COMPLETION CERT IFICATE ISSUED BY THE LOCAL AUTHORITY SHOULD BE IN THE NAME OF THE ASSESS EE CLAIMING THE DEDUCTION. IN THIS REGARD, RELIANCE HAS BEEN PLACED ON THE FOL LOWING JUDGEMENTS : (I) CIT VS. RADHE DEVELOPERS 204 TAXMAN 543 (GUJARAT), (II) ESSEM CAPITAL MARKETS LIMITED VS. ITO ((MUM.), ITA NO. 6814/MUM./2006 DAT ED 25.02.2011, (III) AMALTAS ASSOCIATES VS. ITO 142 TTJ 849 (AHD.), AND, (IV) KZK DEVELOPERS VS. CIT 130 TTJ 157 (CUTTAK). 14. ON THIS ASPECT, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS (SUPRA) WAS CONSIDERING AN ASSESSEES CL AIM FOR DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT WHICH WAS SOUGHT TO BE NEGATED BY THE REVENUE ON THE GROUND THAT ASSESSEE WAS NOT THE OWNER OF TH E LAND AND APPROVALS OF THE LOCAL AUTHORITY AS WELL AS THE PERMISSION TO DE VELOP AND COMMENCE CONSTRUCTION WERE NOT IN THE NAME OF THE ASSESSEE. THE HONBLE HIGH COURT DID NOT APPROVE THE OBJECTION OF THE REVENUE AND HE LD THAT THE ASSESSEE WAS ELIGIBLE FOR BENEFIT UNDER SECTION 80-IB(10) OF THE ACT EVEN WHERE THE TITLE OF THE LANDS HAD NOT PASSED ON TO THE ASSESSEE OR THE DEVELOPMENT PERMISSIONS ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 WERE OBTAINED IN THE NAME OF ORIGINAL LAND OWNERS A ND NOT OF THE ASSESSEE. SIMILARLY, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ESSEM CAPITAL MARKETS LIMITED (SUPRA) NOTED THAT EVEN WHERE THE T ITLE OF THE PROPERTY WAS NOT IN THE NAME OF THE ASSESSEE AND THE COMMENCEMENT CE RTIFICATE WAS ALSO IN NAME OF ORIGINAL OWNER, HAVING REGARD TO THE BUSINE SS REALITIES, THE ASSESSEE CANNOT BE DEPRIVED OF DEDUCTION UNDER SECTION 80-IB (10) OF THE ACT INASMUCH AS IT WAS THE ASSESSEE WHO HAD ACTUALLY DEVELOPED A ND CONSTRUCTED THE HOUSING PROJECT. 15. IN THE PRESENT CASE, THE LEARNED COUNSEL HAS TA KEN US THROUGH THE PAPER BOOK WHEREIN IS PLACED THE COMMENCEMENT CERT IFICATE AND ALSO THE COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHOR ITY MAINLY AT PAGES 85 TO 93 OF THE PAPER BOOK. A PERUSAL OF THE AFORESAID SHOWS THAT THE APPROVALS/COMPLETION CERTIFICATES ARE IN THE NAME O F MANAGING DIRECTOR OF THE ASSESSEE COMPANY OR ITS APPOINTED ARCHITECT, SHRI S HIRISH DASNURKAR OR THE NAME OF THE PERSONS BEING ORIGINAL LAND OWNERS. AT PAGE 203 OF THE PAPER BOOK, ASSESSEE HAS FURNISHED A CERTIFICATE BY THE A RCHITECT, SHRI SHIRISH DASNURKAR CERTIFYING THAT HE WAS APPOINTED BY THE A SSESSEE COMPANY TO SUBMIT BUILDING PLAN, LAYOUT PLAN AND TO OBTAIN PER MISSION TO CONSTRUCT AND ALSO TO OBTAIN COMMENCEMENT AND COMPLETION CERTIFIC ATES FROM THE PMC. THE PERMISSIONS ACCORDED BY PMC CONTAIN THE NAME OF THE ARCHITECT APPOINTED ON BEHALF OF THE ASSESSEE AND IN ANY CASE THERE IS NO DISPUTE TO THE FACT THAT THE PERMISSIONS ARE IN RELATION TO THE DEVELOPMENT OF L AND ON WHICH ASSESSEE HAS UNDERTAKEN THE IMPUGNED HOUSING PROJECT. ASSESSEE A CQUIRED THE DEVELOPMENT RIGHTS OF LAND, DEVELOPED HOUSING PROJE CT CONSISTING OF RESIDENTIAL FLATS, INCURRED EXPENSES, UNDERTOOK ALL RISKS INVOL VED AND RECEIVED THE SALE CONSIDERATION FROM THE BUYERS AFTER COMPLETION OF T HE HOUSING PROJECT IN ITS OWN RIGHTS, THEREFORE DEDUCTION UNDER SECTION 80-IB (10) OF THE ACT COULD NOT BE DENIED ON THE GROUND THAT THE PERMISSIONS AND/OR APPROVALS BY THE LOCAL AUTHORITY WERE IN THE NAME OF EITHER THE ORIGINAL L AND OWNERS OR THE NAME OF ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 THE ARCHITECT. IN-FACT, IT IS NOTICED THAT THE SOME OF THE APPROVALS ARE ALSO IN THE NAME OF MR. NITIN NYATI, WHO IS THE MANAGING DIRECT OR OF THE ASSESSEE COMPANY AND THE ARCHITECT, SHRI SHIRISH DASNURKAR, WHO HAVE ACTED ON BEHALF OF THE ASSESSEE COMPANY. MOREOVER, THE INFIRMITY SO UGHT TO BE POINTED OUT BY THE COMMISSIONER IS NOT AT ALL MANDATED IN SECTION 80-IB(10) OF THE ACT AND THEREFORE, IN OUR CONSIDERED OPINION, THE CHARGE MA DE BY THE COMMISSIONER IS WITHOUT MERIT. 16. THEREFORE, IN SO FAR AS THE STAND OF THE COMMI SSIONER THAT THE ASSESSEES NYATI MEADOWS PROJECT IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IS CONCERNED, THE SAME IS HERE BY HELD TO BE WITHOUT MERIT HAVING REGARD TO THE AFORESAID DISCUSSION. 17. FURTHER AS PER THE COMMISSIONER, THE QUANTIFICA TION OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT MADE IN THE ASSESSMENT ORDER DATED 21.04.2008 (SUPRA) WAS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. AS PER THE COMMI SSIONER WHILE ARRIVING AT THE ELIGIBLE PROFITS UNDER SECTION 80-IB(10) OF THE ACT FOR THE TWO PROJECTS IN QUESTION, THE MANNER IN WHICH THE TOTAL ADMINISTRAT IVE INDIRECT EXPENSES OF RS.2,30,25,230/- HAS BEEN ALLOCATED HAS RESULTED IN EXCESS CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE INCURRED TOTAL INDIRECT ADMINISTRATIVE EXP ENSES TO THE TUNE OF RS.2,30,25,230/- AND RS.23,20,253/- EACH WAS ALLOCA TED TO THE TWO PROJECTS NAMELY, NYATI MEADOWS & NYATI GARDEN TO CALCULA TE THEIR RESPECTIVE PROFITS ELIGIBLE FOR BENEFIT OF SECTION 80-IB(10) OF THE AC T. THE ASSESSEE CONTENDED THAT THERE WAS TOTAL 14 PROJECTS ON HAND, OUT OF WH ICH THE ADMINISTRATIVE EXPENSES HAVE BEEN ALLOCATED ON 10 PROJECTS AT 10% TO EACH PROJECT INSTEAD OF 14 PROJECTS. THE ASSESSEE EXPLAINED THAT THE FOU R PROJECTS WERE SUCH, WHICH WERE EITHER COMPLETED BEFORE THE COMMENCEMENT OF TH E YEAR OR THE SAME WERE NOT ACTIVELY PURSUED DURING THE YEAR, AND THER EFORE, THEY WERE NOT ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 CONSIDERED FOR ALLOCATION OF THE INDIRECT ADMINISTR ATIVE EXPENSES. THEREFORE, 10% OF THE EXPENSES ON EACH OF THE 10 PROJECTS WAS ALLOCATED TO COMPUTE THE PROFITABILITY OF RESPECTIVE PROJECTS THE COMMISSION ER IN HIS ORDER HAS DIRECTED THE ASSESSING OFFICER TO ALLOCATE THE INDIRECT EXPE NSES IN THE RATIO OF THE SALES OF THE PROJECTS AND THEREBY RE-COMPUTE THE DEDUCTIO N UNDER SECTION 80-IB(10) ON THE PROFITS OF THE TWO PROJECTS NAMELY NYATI ME ADOWS & NYATI GARDEN. 18. ON THIS ASPECT, THE LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE ASSESSEE HAD EXPLAINED BEFORE THE ASSESSING OFFICER THE MANNER OF ALLOCATION OF INDIRECT EXPENSES, AND A COPY OF ITS SUBMISSIONS IS PLACED AT PAGES 71 TO 78 OF THE PAPER BOOK. THE LEARNED COUNSEL ALSO EXPLAIN ED THAT THE ISSUE RAISED BY THE COMMISSIONER WAS A SUBJECTIVE MATTER AND EVE N IN THE COURSE OF THE PROCEEDINGS BEFORE THE COMMISSIONER, ASSESSEE HAD M ADE THREE ALTERNATIVE WORKINGS FOR ALLOCATION OF INDIRECT EXPENSES TO THE TWO PROJECTS. THE ALTERNATIVE (A) WAS ON THE BASIS OF TOTAL DIRECT EXPENSES INCUR RED ON VARIOUS PROJECTS; ALTERNATIVE (B) WAS ON THE BASIS OF RECEIPT AGAINST EACH PROJECT; AND, ALTERNATIVE (C) WAS ON THE BASIS OF SALE EFFECTED B Y RESPECTIVE PROJECTS. THE LEARNED COUNSEL POINTED OUT THAT WHILE AS FAR AS AL TERNATIVES (A) & (B) ARE CONCERNED, THE EXPENSES ALLOCABLE TO THE TWO PROJEC TS IN QUESTION WERE COMING LOWER THAN THE AMOUNTS ALLOCATED IN THE ASSE SSMENT ORDER, WHEREAS ON THE BASIS OF ALTERNATIVE (C) THE ADMINISTRATIVE EXPENSES ALLOCABLE WOULD WORK OUT TO BE HIGHER, WHICH WOULD RESULT IN REDUCE D DEDUCTION UNDER SECTION 80-IB(10) OF RS. 1,47,361/- ONLY. ON THIS BASIS IT IS SOUGHT TO BE MADE OUT THAT THERE IS NO ERROR IN THE ORDER OF THE ASSESSING OFF ICER WHO HAS APPROVED THE ALLOCATION OF EXPENSES MADE BY THE ASSESSEE AFTER D UE APPLICATION OF MIND. 19. ON THE OTHER HAND, THE LEARNED CIT(DR) HAS CONT ENDED THAT THE COMMISSIONER HAS NOTICED THAT ALLOCATION OF ADMINIS TRATIVE EXPENDITURE WAS MADE BY THE ASSESSEE ON AN ADHOC BASIS AND THEREFOR E THE DIRECTION OF THE ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 COMMISSIONER TO ALLOCATE THE SAME ON THE BASIS OF R ESPECTIVE SALES EFFECTED BY THE PROJECT IS JUSTIFIED. 20. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. AT THE OUTSET, WE MAY NOTICE THAT SECTION 263 OF THE ACT DOES NOT ENV ISAGE A SITUATION WHERE THE COMMISSIONER SUBSTITUTES HIS OWN JUDGEMENT IN PLACE OF THAT OF THE ASSESSING OFFICER WITHOUT ESTABLISHING THAT THE DECISION OF T HE ASSESSING OFFICER WAS ERRONEOUS IN LAW. IN SO FAR AS THE PRESENT ISSUE RE LATING TO THE ALLOCATION OF INDIRECT EXPENDITURE TO SECTION 80-IB(10) ELIGIBLE PROJECTS IS CONCERNED, THERE IS NO HARD AND FAST RULE PRESCRIBED FOR THE SAME. T HE ASSESSEE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER, AS IS REVEALED FRO M THE WRITTEN SUBMISSIONS ADDRESSED TO THE ASSESSING OFFICER PLACED AT PAGES 71 TO 78 OF THE PAPER BOOK, THAT THERE WERE 14 PROJECTS IN HAND OUT OF WH ICH 10 PROJECTS WERE ACTIVELY PURSUED DURING THE YEAR AND ONLY 2 PROJECT S WERE ELIGIBLE FOR 80-IB(10) BENEFIT. THE ASSESSEE ALLOCATED THE INDIRECT ADMINI STRATIVE EXPENSES EQUALLY I.E. 10% ON THE 10 ACTIVELY PURSUED PROJECTS WHETHE R OR NOT ANY SALES WERE EFFECTED BY THE PROJECTS. THE COMMISSIONER HAS SOUG HT TO DIFFER WITH THE AFORESAID ALLOCATION AND INSTEAD ACCORDING TO HIM T HE INDIRECT EXPENSES SHOULD BE ALLOCATED ON THE BASIS OF SALES EFFECTED BY THE RESPECTIVE PROJECTS. THE LEARNED COUNSEL, AT THE TIME OF HEARING REFERRED TO PAGE 305 OF THE PAPER BOOK WHEREIN IS PLACED BALANCE-SHEET FOR PRECEDING YEAR 31.03.2001 WHERE IN RELATION TO A PROJECT IN WHICH NO SALE WAS EFFECTED , THE ASSESSEE ALLOCATED A PORTION OF INDIRECT EXPENDITURE, BASED ON THE SAME METHODOLOGY. THE AFORESAID ASPECT HAS BEEN SOUGHT TO BE POINTED OUT TO JUSTIFY THAT ASSESSEE HAS CARRIED OUT THE ABOVE SAID ALLOCATION UNIFORMLY AND NOT AN ADHOC BASIS. WITHOUT GOING INTO THE MERITS OF THE RIVAL BASIS OF ALLOCATION CANVASSED, IN OUR VIEW, WHAT THE COMMISSIONER HAS ATTEMPTED IS ONLY S UBSTITUTING HIS OWN JUDGEMENT IN PLACE OF THAT OF THE ASSESSING OFFICER , WITHOUT ESTABLISHING ANY ERROR. WE SAY SO FOR THE REASON THAT WHILE FINALIZI NG THE ASSESSMENT, ASSESSING OFFICER EXAMINED THE ISSUE AND APPLIED HI S MIND TO THE MANNER OF ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 ALLOCATION OF INDIRECT EXPENSES. OF COURSE, SUCH A DISCUSSION IS NOT EMERGING IN THE ASSESSMENT ORDER BUT THE DETAILS SUBMITTED B Y THE ASSESSEE TO THE ASSESSING OFFICER PLACED AT PAGES 71 TO 78 OF THE P APER BOOK WERE BEFORE THE ASSESSING OFFICER AND SEEK TO JUSTIFY THE MANNER OF ALLOCATION. BE THAT AS IT MAY, MERELY BECAUSE THE COMMISSIONER DEVISED AN APP ROACH WHICH WOULD RESULT IN A HIGHER ASSESSMENT OF INCOME, IS NOT ENO UGH TO JUSTIFY INVOKING OF SECTION 263 OF THE ACT, UNLESS IT IS POINTED OUT TH AT THERE WAS AN ERROR WITHIN THE MEANING OF SECTION 263 OF THE ACT EITHER IN LAW OR ON FACTS IN THE ASSESSMENT ORDER. WE ARE PRESENTLY CONCERNED WITH T HE ISSUE WHICH INHERENTLY INVOLVES A SUBJECTIVE ASSESSMENT, I.E. ALLOCATION O F INDIRECT EXPENDITURE. THEREFORE, UNLESS THE SUBJECTIVITY EMERGING FROM TH E ASSESSMENT ORDER IS FOUND TO BE GROSSLY UNFAIR OR BEREFT OF REASONABLEN ESS, IT IS NOT OPEN FOR THE COMMISSIONER TO INVOKE SECTION 263 OF THE ACT. IN C OMING TO THE AFORESAID CONCLUSION, WE ARE GUIDED BY THE PARITY OF REASONIN G LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL IN DIA LTD. (1993) 203 ITR 108 (BOM.). THEREFORE, ON THIS ASPECT ALSO WE ARE N OT IN AN AGREEMENT WITH THE COMMISSIONER FOR INVOKING SECTION 263 OF THE AC T AND THE ASSESSEE HAS TO SUCCEED. 21. THE LAST ISSUE RAISED BY THE COMMISSIONER IS WI TH REGARD TO THE ALLOCATION OF INTEREST EXPENDITURE AND DEPRECIATION ON GENERAL AND COMMON ASSETS FOR ALLOCATION TO THE RESPECTIVE PROJECTS IN ORDER TO QUANTIFY THE PROFITS ELIGIBLE FOR THE PURPOSES OF SECTION 80-IB(10) OF T HE ACT. ON THIS ASPECT, THE FIRST POINT MADE OUT BY THE ASSESSEE WAS THAT THE I SSUE OF DEPRECIATION ON GENERAL ASSETS INSTALLED IN THE ADMINISTRATIVE OFFI CES, WAS NOT CONTAINED IN THE SHOW-CAUSE NOTICE ISSUED UNDER SECTION 263 OF THE A CT AND THEREFORE, THE COMMISSIONER HAS PROCEEDED TO ADJUDICATE THE ISSUE WITHOUT JURISDICTION. AT THE TIME OF HEARING, THE LEARNED COUNSEL FAIRLY CON CEDED THAT THOUGH THE SAME WAS NOT RAISED IN THE SHOW-CAUSE NOTICE ISSUED ORIG INALLY, HOWEVER IN THE COURSE OF THE PROCEEDINGS, THE COMMISSIONER CONFRON TED THE ASSESSEE ON THIS ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 ASPECT AND ALSO ALLOWED OPPORTUNITY TO THE ASSESSEE TO MAKE OUT ITS CASE. CONSIDERING THE AFORESAID, WE FIND NO ERROR ON THE PART OF THE COMMISSIONER IN EXAMINING THE SAME IN THE IMPUGNED PROCEEDINGS. 22. WITH REGARD TO THE INTEREST EXPENDITURE, THE CO MMISSIONER HAS DIRECTED THE ASSESSING OFFICER TO ALLOCATE THE INTEREST EXPE NDITURE ON THE BASIS OF THE LOANS DIRECTLY UTILIZED FOR THE RESPECTIVE PROJECTS AND FOR INTEREST ON OTHER LOANS RAISED FOR GENERAL PURPOSES, THE COMMISSIONER DIREC TED THAT THE INTEREST THEREOF BE ALLOCATED AMONGST THE VARIOUS PROJECTS O N THE BASIS OF SALES. 23. IN OUR CONSIDERED OPINION, AFTER CONSIDERING TH E RIVAL STANDS, THE DIRECTIONS OF THE COMMISSIONER REQUIRE MODIFICATION . NO DOUBT THE COMMISSIONER IS CORRECT IN DIRECTING THE ASSESSING OFFICER TO EXAMINE THE ELIGIBLE PROFITS FOR 80-IB(10) PROJECTS BY CONSIDER ING THE RELATABLE INTEREST EXPENDITURE. THE ASSESSEE HAS INCURRED INTEREST EXP ENDITURE TO THE TUNE OF RS.1,04,73,519/- AND NO EXPENDITURE WAS ALLOCATED T O THE 80-IB(10) PROJECTS. THE CASE OF THE ASSESSEE IS THAT IT HAD ALSO RECEIV ED INTEREST INCOME TO THE TUNE OF RS.1,25,30,316/- AND THEREFORE NO EXPENDITU RE REMAINED TO BE ALLOCATED TO THE RESPECTIVE PROJECTS. THE ASSESSEE ALSO POINTED OUT BEFORE THE COMMISSIONER THAT THERE WAS NO SPECIFIC LOAN FOR TH E 80-IB(10) PROJECTS AND ALSO THE FACT THAT IT HAD RECEIVED ADVANCES FROM CU STOMERS IN RELATION TO THE SALE OF FLATS IN 80-IB(10) PROJECTS WHICH WAS MORE THAT THE AMOUNT INVESTED IN WORK-IN-PROGRESS OF THE RESPECTIVE PROJECTS, AND TH US NO LOAN FUNDS WERE USED IN SUCH PROJECTS. THE COMMISSIONER, ON THE OTHER HA ND, OBSERVED THAT THE INTEREST INCOME EARNED BY THE ASSESSEE WAS OUT OF S URPLUS FUNDS, WHICH WAS ASSESSABLE UNDER THE HEAD OTHER SOURCES AND IT HA D NO LINK TO THE PROJECT UNDERTAKEN AND THUS SUCH INTEREST INCOME WOULD NOT OFF-SET THE EXPENDITURE BY WAY OF INTEREST ON LOANS. ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 24. THE PLEA OF THE ASSESSEE, IN OUR VIEW, DESERVES TO BE EXAMINED AS TO WHETHER OR NOT ANY INTEREST EXPENDITURE HAS BEEN IN CURRED IN RELATION TO THE 80-IB(10) PROJECTS. EVEN IN THE COURSE OF HEARING B EFORE US, THE LEARNED COUNSEL SUBMITTED TO THE PROPOSITION THAT INTEREST EXPENDITURE, IF ALLOCABLE, SHOULD BE ALLOCATED ON THE BASIS OF ACTUAL UTILIZAT ION OF THE CORRESPONDING LOANS AND NOT ON THE BASIS OF THE SALES EFFECTED BY THE RESPECTIVE PROJECTS AS DIRECTED BY THE COMMISSIONER. ON THE AFORESAID ASPE CT WE ARE IN AGREEMENT WITH THE ASSESSEE AND ACCORDINGLY MODIFY THE DIRECT IONS OF THE COMMISSIONER. THE ASSESSING OFFICER SHALL EXAMINE THE UTILIZATION OF THE INTEREST BEARING LOANS RAISED AND ON THAT BASIS ALLOCATE THE INTERES T EXPENDITURE TO THE 80-IB(10) PROJECTS, IF ANY, OF THE AMOUNT OF LOAN T HAT HAS BEEN UTILIZED FOR SUCH PROJECTS. THE ASSESSEE SHALL ALSO BE ALLOWED AN OPP ORTUNITY TO DEMONSTRATE AS TO WHETHER OR NOT THE INTEREST INCOME EARNED TO THE TUNE OF RS.1,25,30,316/- HAS A NEXUS WITH THE INTEREST EXPENDITURE CLAIMED O F RS. 1,04,75,190/-. THEREFORE, WHILE UPHOLDING THE ACTION OF THE COMMIS SIONER IN PRINCIPLE, WE DIRECT THE ASSESSING OFFICER TO CARRY OUT THE VERIF ICATION EXERCISE AS DIRECTED ABOVE AND RECOMPUTE THE PROFITS OF PROJECTS NYATI MEADOWS & NYATI GARDEN FOR THE PURPOSES OF SECTION 80-IB(10) OF THE ACT, I F WARRANTED ON FACTS. 25. LASTLY, WITH REGARD TO THE DEPRECIATION ON VEHICLES, FURNITURE & FIXTURE AND OFFICE EQUIPMENTS INSTALLED IN THE ADMINISTRATI VE OFFICE, LEARNED COUNSEL FAIRLY SUBMITTED THAT SUCH DEPRECIATION WAS NOT ALL OCATED TO THE 80-IB(10) PROJECTS. THE SAME, IN OUR VIEW, DESERVES TO BE ALL OCATED IN ORDER TO COMPUTE THE ELIGIBLE PROFITS FOR THE 80-IB(10) PROJECTS. ON THIS ASPECT, THE ORDER OF THE COMMISSIONER IS UPHELD. 26. IN THE RESULT, THE ORDER OF THE COMMISSIONER IS MODIFIED AS ABOVE AND ASSESSEE PARTLY SUCCEEDS. ITA NO.619/PN/2011 NYATI BUILDERS PVT. LTD. A.Y. 2006-07 27. RESULTANTLY, APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 25 TH JUNE, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-II, PUNE; 4) THE DR, A BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE