SONAM BUILDERS, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-3, THANE

ITA 6277/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8082 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 16-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Documents seized
• Section: 142(1); 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 6277 / MUM/ 2017 ( / ASSESSMENT YEAR: 2012 - 13 ) SONAM BUILDERS 1 ST FLOOR,SHANTI NIWAS, NE W GOLDEN NEST, PHASE XIII, 100FT ROAD, OPP. HANUMAN MANDIR, BHAYANDAR (E), THANE.. . / VS. DY. CIT, CENTRAL CIRCLE - 3 THANE / I .T.A. NO. 6389 / MUM/ 20 1 7 ( / ASSESSMENT YEAR: 2012 - 13 ) DY. CIT, CENTRAL CIRCLE - 3 THANE . / VS. SONAM BUILDERS 1 ST FLOOR,SHANTI NIWAS, NEW GOLDEN NEST, PHASE XIII, 100FT ROAD, OPP. HANUMAN MANDIR, BHAYANDAR (E), THANE. ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 13 . 12 . 201 8 / DATE OF PRONOUNCEMENT : 19. 12 .2018 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE AS WELL AS REVENUE HAVE FILE D THE ABOVE MENTIONED APPEALS AGAINST THE ORDER DATED 21 .0 8 .20 17 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 11 , PUNE [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2012 - 13 . REVENUE BY: SHRI VIMAL PUNMIYA ASSESSEE BY : SHRI ABH IJIT PATANKAR ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 2 ITA. NO .6277 / M/ 20 1 7 : - 2 . THE ASSESSEE HAS FILED THE PRESENT A PPEAL AGAINST THE ORDER DATED 21 . 0 8 .20 1 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2003 - 04 . 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1.1 ON THE FACTS AND CIRCUMST ANCES OF CASE AND IN LAW, LD. CIT(A) FAILED TO CONSIDER THAT CONTENTION OF APPELLANT THAT VALUATION WAS NOT PROPERLY TAKEN BY THE LD. VALUATION OFFICER CANNOT HE RULED OUT ON GROUND THAT ASSESSEE NOT DISPUTED QUALIFICATION OF DVO 1.2 ON THE FACTS AND CIRCU MSTANCES OF CASE AND IN LAW, THE LD. CIT(A) ERRED IN DISALLOWING DEDUCTION U/S 80IB(10) ON 24 FLATS OF B WING OF PHASE XV OF GOLDEN NEST PROJECT ON GROUND THAT AS PER VALUATION OFFICER THESE FLATS HAD VILATED THE CONDITION OF AREA LESS THAN 12000 SQ.FT. WI THOUT CONSIDERING THE FACTS THESE FLATS ARE LESS THAN 1000 SQ.FT. AND ELIGIBLE OR DEDUCTION U/S 80IB(10). 1.3 ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, LD. CIT(A) ERRED IN IGNORING THE OTHER VALUER MR. NITTN LELE OBTAIN BY THE DEPARTMENT WHERE IT IS CLEARLY CERTIFIED THAT AREA OF FLAT IS BELOW 1000 SQ. FT. AND ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S80IB(10). 1.4 ON THE FACTS AND CIRCUMSTANCES OF CASE ARID IN LAW, LD. CIT(A}FAILED TO CONSIDER THAT IN FLAT NO. B - 904 THE VALUATION OFFICER HAD ADDED THE AREA WHICH IS OPEN TO SKY (I.E. NOT A BALCONY) AND NOT APPROACHABLE FROM THE FLAT HENCE, CANNOT BE PART OF THE BUILT - UP AREA. THE SIMILAR AREA IS NOT TAKEN INTO PART OF BUILT - UP AREA BY THE SAME DVO IN FLAT NO. B - 303. THUS, THE BUILT - UP AREA OF A LL THE FLATS ARE LESS THAN 1000 SQ,FT ARID ASSESSES IS ELIGIBLE FOR DEDUCTION U/S 80IB(I0). 2} THE ASSESSEE CRAVES LEAVE TO ADD FURTHER GROUNDS OR TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 3 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH AND SEIZER ACTION U/S 132 OF THE I.T. ACT, 1961 WAS CARRIED OUT IN SONAM GROUP OF CASES ON 12.9.2012 AND SUBSEQUENT DATES. DURING THE SEARCH ACTION ON THE GROUP , OFFICE PREMISES OF M/S. SONAM BUILDERS AS WELL AS RESIDENTIAL PR EMISES OF ITS PARTNERS TOO WAS SEARCHED. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 30.09.2012 DECLARING TOTAL INCOME TO THE TUNE OF RS.96,22,931/ - . THEREAFTER, THE NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE AS SESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN BUSINESS ACTIVITIES OF BUILDER & DEVELOPERS IN NAME & STYLE M/S. SONAM BUILDER. IN THE YEAR, THE ASSESSEE DERIVED NET PROFIT AT RS.40,41,60,130/ - , INCOME FROM HOUSE PROPERTY OF RS.14,63,042/ - AND INTEREST OF RS.8 2,36,389/ - . AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT TO THE TUNE OF RS.40,41,60,130/ - AND U/S 80G OF THE ACT TO THE TUNE OF RS.76,500/ - , THE ASSESSEE DECLARED TOTAL INCOME TO THE TUNE OF RS.96,22,931/ - . THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(1 0) OF THE ACT IN RESPECT OF PROJECT IN GOLDEN NEST. PHASE WISE DEDUCTION AS UNDER.: - S.N PHASE 2012 - 13 1 PHASE VI - 66 2 PHASE VII - 39,133 3 PHASE VIII - 14,078 4 PHASE IX - 2,720 5 PHASE X - 18,420 6 PHASE XI - 293,888 7 PHASE XI - A 11,712 8 PHASE XII 4,079 9 PHASE XIIA - 12,569 10 PHASE XIII - 2756 ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 4 10 PHASE XIV 1,302,972 11 PHASE XV 419,896,542 TOTAL 420,831,674 LESS 12 - 2,756 13 - 16,671,544 TOTAL CLAIMED IN RETURN 404,160,131/ - AT THE TIME OF ASSESSM ENT STAGE, THE AO APPOINTED A GOVERNME NT APPROVED VALUER NAMED MR. NITIN M LELE TO MEASURE AREA OF FLATS AND HE REPORTED THAT ALL FLATS WERE BELOW THE PRESCRIBED LIMIT OF 1000 SQ.FT. HOWEVER, THE AO AGAIN DIREC TED THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT TO MEASURE THE AREA OF FLA TS AGAIN. THE VALUATION OFFICER REPORTED THAT THE AREA OF TWENTY FOUR FLATS ( 3 BHK FLATS ) SITUATED IN B WING OF APPELLANT PROJECT GOLDEN NEST PHASE XV WERE ABOVE 1000 SQ.FT . T HEREFORE, THE AO DISALLOWED THE CLAIM DEDUCTION OF RS.40,41,60,131/ - MADE U/S 80IB(10) OF THE ACT BY OBSERVING THAT THE ASSESSEE HAS VIOLATED THE CONDITIONS PRESCRIBED IN THAT SECTION BY CONSTRUCTING SOME FLATS EXCEEDING THE PRESCRIBED AREA . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE DISALL OWANCE PRORATA BASIS ON THE 24 FLATS ONLY. STILL AGGRIEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO S . 1 TO 4 : - 5 . ALL THE ISSUES ARE IN CONNECTION WITH THE DISALLOWANCE OF CLAIM OF THE ASSESSEE U/S 80IB(10) OF THE ACT. INITIALLY FOR T HE MEASUREMENT OF FLAT S, MR. NITIN M. LELE WAS APPOINTED BY THE AO WHO REPORTED THAT THE AREA OF THE FLAT S ARE LESS THAN 1000/ - SQ.FT. THE AO , HOWEVER, AGAIN DIRECTED THE VALUATION OFFICER TO MEASURE THE FLATS, WHO REPORTED THAT THE AREA OF TWENTY ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 5 FOUR ( 3 BHK FLAT S) SITUATED AT B WING OF APPELLANT PROJECT GOLDEN NEST PHASE XV WAS ABOVE 1000 SQ.FT. . T HEREFORE, ON RELYING UPON THE REPORT OF DVO , THE CLAIM OF ASSES SEE WAS DECLINED BY AO AND THE F INDING OF THE AO WAS PARTIALLY CONFIRMED BY CIT(A). AT TH E TIME OF ARGUMENT BEFORE US, THE ASSESSEE CONTENDED THAT THE AREA OF THE FLAT IN QUESTION IS LESS THAN THE 1000 SQ.FT., THEREFORE, THE ASSESSEE IS ELIGIBLE OF DEDUCTION U/S 80IB(10) OF THE ACT. IT WAS CONTENDED THAT THE DVO HAS TAKEN THE AREA OF PROJEC TIONS (CALLED FLOWER BED AREA OR CHAJJAS AREA) BELOW THE FLOOR LEVEL ALSO AS BUILT UP AREA. THE REGISTERED VALUER APPEARING ALONG WITH THE LD A.R ALSO ACCEPTED THE CONTENTIONS OF LD A.R. IN VIEW OF THE ABOVE CONTENTIONS, THE BENCH DIRECTED THE DVO TO AP PEAR BEFORE THE BENCH AND EXPLAIN THE REPORT GIVEN BY HIM. SINCE THE DVO WHO HAD GIVEN THE REPORT HAS SINCE BEEN TRANSFERRED, THE INCUMBEND DVO APPEARED AND SUBMITTED THAT HE CAN GIVE HIS OPINION ONLY AFTER CARRYING OUT INSPECTION OF FLATS. ACCORDINGLY T HE BENCH DIRECTED THE ASSESSEE AS WELL AS THE DVO TO CARRY OUT JOINT INSPECTION OF THE FLATS AND THE DVO WAS DIRECTED TO GIVE HIS REPORT THEREAFTER. 6. ACCORDINGLY, THE DVO HAS SUBMITTED HIS REPORT, WHEREIN IT IS MENTIONED THAT THE AREA OF FLATS ARE LES S THAN 1000 SQ.FT. 7. IN VIEW OF THE ABOVE, THE LD A.R CONTENDED THAT THE REPORT OF MR. NITIN M. LELE IS ON THE FILE WHICH IS ALSO CONF IRMED BY THE REPORT OF DVO SUBMITTED NOW BEFORE HONBLE ITAT . AFTER CONSIDERATION OF THE ARGUMENT S AND ADVANCED BY T HE LD. REPRESENTATIVE OF THE PARTIES AND ON PERUSAL THE RECORD, WE NOTICED THAT THE REPORT OF MR. NITIN M. LELE AND THE DEPARTMENT VALUATION OFFICER ARE CONTRARY TO EACH OTHER. THEREFORE, IN THE SAID CIRCUMSTANCES, THE HONBLE ITAT VIDE ORDER DATED 20.06. 2018 DIRECTED THE ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 6 DVO TO RE - EXAMINE THE MATTER IN THE PRESENCE OF MR. RAJESH J SHAH REGISTERED VALUATION OFFICER AND MR. VIMAL PUNMIYA C A OF CONCERNED FIRM. THEREAFTER, IN COMPLIANCE OF THE SAID ORDER , SHRI D.R. RAWAT , VALUATION OFFICER SUBMITTED HIS REPOR T DATED 07.12 .2018 AND THE SAME IS KEPT ON THE FILE . THE DVO, IN THE ABOVE SAID REPORT , HAS CLEAR LY STATED THAT THE BUILT UP AREA OF THE FLAT S IS BELOW 1000 SQ.FT. H OWEVER, AREA OF ARCHITECTURAL BAND S, CORNICE, PROJECTIONS HAVE BEEN SHOWN SEPARATELY. THE HONBLE ITAT IN THE CASE OF M/S. NAHAR ENTERPRISES VS. DCIT IN ITA. NO.2853 TO 2855/M/2015 DATED 07.04.2017 HAS ALREADY HELD THAT CUPBOARD PROJECTION, SERVICE AREA, AND WINDOW PROJECTION AND WALL IS NOT A PART OF BUILT UP AREA . THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 30 TO 32 WHICH ARE REPRODUCED AS UNDER.: - .AFTER CONSIDERING THE RIVAL SUBMISSIONS AND MATERIALS PLACED BEFORE US INCLUDING THE DECISIONS OF THE RIVAL PARTIES WE FIND THAT THE FLOWER BEDS WHICH ARE BELOW THE FLOOR LEVEL CAN NOT FORM PART OF CONSTRUCTED AREA OF FLAT FOR THE PURPOSE OF D ETERMINING THE ELIGIBILITY OF THE ASSESSEE TO DEDUCTION U/S 80(IB)(10) OF THE ACT. CO MING TO THE REVENUES APPEALS, DEPARTMENT HAS CHALLENGED THE ORDERS OF THE LD.CIT(A) IN DIRECTING THE AO TO EXCLUDE THE SERVICE AREA, WINDOW AREA, WINDOW PROJECTION, CUPBOARD PROJECTION FROM THE DEFINITION OF BUILT UP AREA FOR CALCULATING THE DEDUCTION U/S 80IB(10) OF THE ACT AND THE ELIGIBLE AREA OF 1000 SQ. FT. THE LD. CIT(A) E XCLUDED THE SAID SERVICES AREA, CUPBOAR D PROJECTION AND WINDOW PROJEC TION BY OBSERVING AS UNDER: C CUPBOARD PROJECTIONS; THE NEXT OBJECTION IS ABOUT INCLUSION OF CUPBOARD AREA. IT IS GATHERED THAT CUPBOARDS ARE NORMALLY CARVED OUT OF WALL AREA ONLY. IN SOME CASES, CUPBOARDS MAY BE PROJECT ED A FEW INCHES OUTSIDE THE WALLS. CONSIDERING THE FACTS OF THE CASE, I AM OF THE VIEW THAT AS CUPBOARD AREA IS ALREADY INCLUDED IN THE WAIL AREA ITSELF, SO ADDITION ON THIS ACCOUNT MAY NOT BE WARRANTED IN BUILT - UP ARE, IN SOME CASES, WHEN IT IS PROJECTED IN OTHER ROOM, IT WOULD HAVE ALREADY INCLUDED IN THE AREA OF OTHER ROOM, THEREFORE, ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 7 SEPARATE ADDITION L THIS REGARD MAY NOT BE WARRANTED. I F THEREFORE, HOLD THAT CUPBOARD ARE IS NOT LIABLE TO BE ADDED SEPARATELY IN THE BUILT - UP AREA AND WALL AREA WILL TAKE CARE OF IT. D) SERVICE AREA; NEXT ISSUE IS RELATING TO INCLUSION OF SERVICE AREAS. THE SERVICE AREA IS IN THE NATURE OF SERVICE PIPE DUCT, WHICH CONTINUES FROM TOP FLOOR TO GROUND FLOOR AND CARRIES SERVICE PIPES, NAME, SOIL PIPE, WASTE WATER PIPE, WATER M AMS, ETC. DURING THE COURSE OF PHYSICAL INSPECTION OF VARIOUS APARTMENT ON 5/6/2014, IT WAS NOTICED THAT THIS AREA IS QUITE SMALL CARRIES AS MANY AS 12 - 14 PIPES ABOUT 4 PIPES HAVING 4' DIAMETER, ABOUT' J - PIPES HAVING 2 DIAMETER, AND SOME PIPES HAVING ABO UT ONE INERT. NO DOUBT, A SLAB HAS BEEN CONSTRUCTED AT EVERY FLOOR AND A DOOR I - PROVIDED IN THE BATHROOM TO ENTER INTO THE SERVICE AREA, BUT THIS IS PRIMARILY MEANT FOR REPAIR OF SERVICE PIPES AND IT CANNOT BE USED FOR ANY OTHER PURPOSES. FURTHER, THIS S ERVICE DUCT IS SOME KIND OF COMMON AREA LIKE STAIR CASE, FLOWING FROM TOP TO BOTTOM, AND IN CASE OF ANY BLOCKAGE OF PIPES OR REPAIR OR LEAKAGE, ETC, THE MECHANIC HAS TO ENTER THIS AREA FOR REPAIRING THE SAME. GENERALLY SPEAKING, THIS AREA, TWIG SMALT, CANN OT BE USED FOR ANY OTHER PURPOSES. THIS AREA HAS ALSO ROT BEEN SOLD BY THE ASSESSEE TO THE FLAT OWNERS, AS IS EVIDENT FROM SALE AGREEMENTS. FURTHER, IT IS ALSO NOT PART OF THE CARPET AREAS OR BUA CALCULATED BY THE BMC AUTHORITIES. THIS IS NOT ALSO CONSIDER ED FOR FSI COMPUTATION OF THE BUILDING, AS PER BYE LAWS. IN FACT, ON PHYSICAL INSPECT; - IT WAS NOTICED THAT SOME OF THESE PIPES WERE LEAKING, GIVING A - 'OUT SMELL, AND, THEREFORE, I AM OF THE VIEW THAT IT CANNOT BE USED FOR ANY OTHER PURPOSES. THE PHOTOGRA PHS SUBMITTED BY THE ASSESSEE CLEARLY SHOW THAT THESE DUCTS ARE OPEN AND DANGEROUS, AND A CHILD MAY IN FACT FALL THROUGH IT. THESE PHOTOS WERE FORWARDED TO THE AO FA: HER COMMENTS. ALSO, FOR THE SAKE OF CLARITY, THE SAME ARE ENCLOSED AS ANNEXURE TO THIS OR DER. THOUGH THE AO HAS ENCLOSED SOME PHOTOS OF SUCH AREAS IN RESPECT OF SOME FLATS, WHERE SUCH AREAS ARE BEING USED TOWARDS STORAGE, ETC. BY A FEW FLAT OWNERS BUT IT IS ON THEIR OWN PERIL AND BUILDER CANNOT BE BLAMED FOR IT. AS PER THE BYE LAWS, THIS AREA CANNOT BE USED FOR ANY PURPOSE AND FLAT OWNERS ARE PROHIBITED FROM DOING SO. BUT STILL, IF SOME PEOPLE BECAUSE OF ANY REASONS ARE ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 8 USING THE SAME FOR STORAGE OR PUTTING A WASHING MACHINE OR A LPG CYLINDER, THEY ARE DOING IT ON THEIR OWN ACCORD. MOREOVER, TH ERE IS NO EVIDENCE TO SUGGEST THAT THE ASSESSEE HAS SOLD THESE AREAS TO RESPECTIVE BUYERS OR OTHERWISE, BUYER OWN SUCH AREAS. THEREFORE, THE OBSERVATION OF THE AO THAT SUCH AREA WAS UNDER EXCLUSIVE POSSESSION OF FLAT OWNERS, REMAINS UNSUBSTANTIATED, AS IN MY OPINON, THE FLAT OWNERS MAY BE USING THE AREA, BUT LARGELY THE AREA IS MEANT FOR COMMON FACILITIES FOR ALL THE FLATS AND ACTS AS DUCT FOR VARIOUS KINDS OF FACILITIES FOR ALL THE FLOORS. IN ANY CASE, IT DOES NOT ALTER THE MATERIAL POSITION. CONSIDERING THE OVERALL FACTS OF THE CASE, I AM OF THE OPINION THAT THIS AREA. SHOULD NOT FORM PART OF THE BUA AS IT IS IN THE NATURE OF COMMON AREA MEANT FOR ALL THE FLAT OWNERS FROM TOP FLOOR TO GROUND FLOOR, AND PURPOSE OF THIS AREA IS TO PROVIDE A PLATFORM FOR REP AIR, AND REPLACEMENT OF THE SERVICE PIPES, INCLUDING SOIL PIPE, WASTE WATER PIPES, WATER MAINS, ETC. SIMILAR OPINION HAS BEEN GIVEN BY THE OTHER EXPERTS. ACCORDINGLY, CONSIDERING OVERALL FACTS OF THE CASE, I DIRECT THE AO TO EXCLUDE THIS AREA FROM THE BUA. E) WINDOW PROJECTIONS: IT IS GATHERED THAT THE VALUATION OFFICER, IN RESPECT OF SOME OF THE FISTS, HAS ADDED CERTAIN AREA IN THE NATURE OF WINDOW PROJECTIONS. DURING THE COURSE OF PHYSICAL INSPECTION, IT WAS NOTICED THAT: THESE WINDOW PROJECTIONS ARE AREA S IN THE NATURE OF ORNAMENTAL PROJECTIONS DONE WITH A VIEW TO BEAUTIFY THE BUILDING. THESE AREAS ARE SITUATED AT WINDOW - SILL LEVEL, ABOUT THREE FEET ABOVE THE FLOOR LEVEL, AND SOME KIND OF PROJECTIONS / EXTENSION OF THE BUILDING. IN MY OPINION, THESE PROJE CTIONS CANNOT BE USED FOR ANY PURPOSES, BECAUSE THE AREA IS HIGHLY UNSAFE AND ANYBODY CAN FALL FROM SUCH AREA. HOWEVER, IT WAS NOTICED THAT SOME PEOPLE ARE USING THE AREA TO PUT AIR CONDITIONER, FLOWERPOTS, ETC. CONSIDERING THE FACTS OF THE CASE, I AM OF T HE VIEW THAT THIS IS ESSENTIALLY AN ELEVATIONS FEATURE AND HAS NOTHING TO DO WITH CARPET AREA OF THE FLAT THEREFORE, IT CANNOT FORM PART OF BUA. IT IS LIKE A SILL OF A WINDOW, WHICH IS SLIGHTLY EXTENDED AND IN SOME CASES MAY BE USED FOR PROTECTION FROM SUN LIGHT AND RAIN. IT IS ALSO NOT THE CASE THAT THE BUILDER HAS ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 9 SOLD THIS AREA TO VARIOUS FIAT OWNERS. ACCORDINGLY, THIS AREA IS ALSO DIRECTED TO BE EXCLUDED. WHILE CALCULATING BUA. I WOULD LIKE TO FURTHER CLARIFY THAT THIS AREA IS VERY SMALL AND STILL HAVE V ERY INSIGNIFICANT BEARING UPON OVERALL BUA. 32. ON GOING THROUGH THE ABOVE FINDINGS OF THE LD. CIT(A) WE DO NOT FIND ANY VALID REASON TO INCLUDE SERVICE AREA, WINDOW AREA, WINDOW PROJECTIONS AND CUPBOARD PROJECTION IN THE BUILD UP AREA FOR CALCULATING ELI GIBLE BUILT UP AREA OF 1000 SQ.FT. FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80IB(10) OF THE ACT. 8 . IN VIEW OF THE REPORT OF THE DVO FILE D BEFORE US AND IN VIEW OF THE LAW RELIED UPON THE LD. REPRESENTATIVE OF THE ASSESSEE IN THE CASE OF M/S.NAHAR ENTERPRISES VS. DCIT IN ITA. NO.2853 TO 2855/M/2015 DATED 07.04.2017 , W E ARE OF THE VIEW THAT THE CIT(A) HAS WRONGLY CONFIRMED THE FINDING OF THE AO WHICH IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW . T HEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A ) ON THIS ISSUE AND DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE U/S 80IB(10) OF THE ACT FULLY . ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ITA . NO. 6389 /M/20 1 7 : - 9 . THE REVENUE HAS FILED THE PRESENT APPEA L AGAINST THE ORDER DATED 21 .0 8 .20 1 7 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS) - 11, PUNE [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2012 - 13 . 10 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS . : - ,' ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.8,09,32,500/ - MADE ON THE ACCOUNT OF SALE OF PARKING SPACES. ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 10 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN LAW, THE LD. CIT(A) WHILE DELETING THE ADDITION OF RS,8,09,32,500/ - FAILED TO APPRECIATE THE FACT THAT IN THE ASSESSMENT ORDER IT HAS BEEN HELD THAT SOME DOCUMENTS SEIZED DURING THE SEARCH NOTABLE THE HARD DISC SHOWS THAT SEVERAL PARKING ARE NOT MENTIONED IN THE AGREEMENT TO SALE. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTE R, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 11 . T HE FACTS OF THE PRESENT CASE ARE QUITE SIMILAR TO THE FACTS OF THE CASE AS NARRATED ABOVE WHILE DECIDING IN ITA. NO.6277 /M/20 1 7 NARRATED ABOVE, THEREFORE, THERE IS NO NEED TO REPEAT THE SAME . B U T IN THE INSTANT CASE, THE AO MADE ADHOC ADDITION OF RS. 8,09,00,000/ - ON ASSUMPTION THAT THE APPELLANT HAD SOLD 305 CAR PARKING @ RS.3,50,000/ - PER CAR PARKING. THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF EVIDENCE S PRODUCED BEFORE HIM . IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 9.3 I HAVE CONSIDERED THE DETAILS FURNISHED BY THE APPELLANT BEFORE THE AO AND DURING THE APPEAL PROCEEDINGS. THE AO HAS MENTIONED THAT A DATA SHEET CONTAINING DETAILS OF SAFE OF PARKING S PACES WAS FOUND DURING THE COURSE OF THE SEARCH. THE APPELLANT EXPLAINED THAT THE SALE OF THE PARKING SPACE IS DULY RECORDED IN THE BOOKS - IN SOME CASES THE PARKING SPACE HAS BEEN SOLD ALONG WITH THE FLAT AND THE SALE CONSIDERATION RECEIVED FS INCLUDED IN THE OVERALL SALES CONSIDERATION, IN OTHER CASES THE PARKING SPACE HAS BEEN SOLD SEPARATELY AND THE CONSIDERATION IS BOOKED AS 'SAFE OF AMENITIES' IN THE P&L ACCOUNT. 9.4 THE AO HAS REPRODUCED THE RELEVANT DETAILS FROM THE SEIZED MATERIAL ON PAGE 96 TO 101 OF THE ASST ORDER, IT CAN BE SEEN THAT THE DETAILS SHOWS TOTAL 280 FLAT SALES OUT OF WHICH IN 73 CASES EITHER PARKING IS NOT PROVIDED OR THE FLAT ITSELF IS UNSOLD. THUS DETAILS IN THIS SHEET SHOW SALE OF 207 PARKING SPACES. FURTHER IT CAN BE SEEN THAT IN ABOUT 81 CASES THE AMOUNT OF PARKING IS SHOWN AS INCLUDED. TOTAL OF THIS COLUMN COMES TO 2 50 CR. THE APPELLANT EXPLAINED THAT ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 11 NO SEPARATE CHARGE WAS MADE FOR THE PARKING SPACE. THE TOTAL CONSIDERATION OF THE FLAT INCLUDED THE COST OF THE PARKING SPACE. IN THE SHEET WHERE THE PARKING SPACE SALE IS SHOWN AS INCLUDED, THE COLUMN OF 'AMOUNT RECEIVED' AND 'BALANCE 1 ARE SHOWN BLANK. THIS SUGGESTS THAT THE SALE PRICE OF THE PARKING SPACE WAS COLLECTED AND N WITH THE SALE OF FLAT. WHEREAS UNDER THE COLUMN 'NOT INC LUDED' ARE 126 ENTRIES SHOWING TOTAL SALE CONSIDERATION OF RS.3.46 CR BUT AMOUNT ACTUALLY COLLECTED TILL THE DATE OF THE SEARCH WAS ONLY RS.50 LAKHS. THE REMAINING AMOUNT OF RS.2.80 CR IS SHOWN UNDER THE COLUMN 'BALANCE'. 9.5 IT IS SURPRISING THAT THOUGH T HE AO BASED THE ADDITION ON THE ABOVE SEIZED MATERIAL HE FINALLY COMPUTED THE ADDITION IN A VERY ARBITRARY MANNER. THE AO HELD THAT THE APPELLANT HAD SOLD TOTAL 305 PARKING SLOT @ 3,50,000/ EACH. THUS THE AO ARRIVED AT THE TOTAL SALE PRICE OF RS.10,67,50,0 00/ - , THE AO THEN ACCEPTED THE APPELLANT'S CONTENTION THAT IN SOME INSTANCES THE PARKING SPACE WAS - SOLD ALONG WITH THE FLAT AND HENCE THE SALE PRICE IS INCLUDED IN THE SALE AMOUNT CREDITED AS SALE OF FLAT. THE AO ALLOWED A DEDUCTION OF RS.2,47,50,000/ - (OU T OF TOTAL 2.50 CR MENTIONED IN THE CHART ABOVE AS COST INCLUDED) AS THE SAFES ALREADY ACCOUNTED BY THE APPELLANT. THE DIFFERENCE BETWEEN RS.10,67,50,000 AND RS.2,47,50,000/ - WAS TREATED BY THE AO AS UNDISCLOSED RECEIPTS OF THE APPELLANT FROM SALE OF PARKI NG SPACE, 99% OF THIS DIFFERENCE WAS ADDED TO THIS YEAR'S INCOME. 9 IT IS APPARENT THAT THE ENTIRE ADDITION MADE BY THE AO IS BASED ON HIS SURMISES AND CONJECTURES. THE RELEVANT SEIZED MATERIAL DOES NOT SHOW THAT THE APPELLANT HAD SOLD 305 PARKING SLOTS O R THAT EACH PARKING WAS SOLD @ 3,50,000/ - THERE IS NOTHING IN THE APPELLANT'S SUBMISSIONS OR IN THE SEIZED MATERIAL THAT THE SALE OF PARKING HAPPENED IN THIS ASST YEAR. THERE IS ABSOLUTELY NO EVIDENCE THAT ANYBODY HAD PAID CASH TO THE APPELLANT AGAINST PUR CHASE OF PARKING OR THE FLAT, 9.7 THE SEIZED CHART SHOWS THAT AN AMOUNT OF RS.2.50 CR ON SALE OF PARKING WAS DULY INCLUDED IN THE SALE PRICE OF THE FLATS. THE AO HAS ALSO ACCEPTED THIS. THERE IS NO VISIBLE CAUSE WHY THE AO DID NOT ACCEPT THE REST OF THE CO NTENTS OF THE SAME SEIZED MATERIAL! WHICH SHOWS THAT TOTAL PARKING SLOTS SOLD INDEPENDENT OF THE FLAT SALES WERE ABOUT 126 SLOTS AGAINST WHICH THE APPELLANT HAD ACTUALLY RECEIVED AN AMOUNT OF RS.50.36 LACS TILL THE DATE AND BALANCE TO BE RECEIVED WAS RS.2. 80 CR. THUS TOTAL AMOUNT RECEIVED SEPARATELY FOR ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 12 SALE OF PARKING SLOTS WOULD COME TO 3.35 CRS. THE APPELLANT HAS INCLUDED AN AMOUNT OF RS.3,13,30,000/ - ON ACCOUNT OF SALE OF PARKING IN THE SALES ACCOUNT IN THE A.Y. 2013 - 14. THUS VIZ A VIZ THE CONTENTS OF T HE SEIZED MATERIAL, THERE IS NOTHING TO HOLD THAT THE APPELLANT HAD COLLECTED CASH OUTSIDE THE BOOKS OF ACCOUNTS AGAINST SALE OF PARKING AREA. THE CALCULATIONS DONE BY THE AO TO MAKE THE ADDITION ARE NOT BASED ON ANY SATISFACTORY EVIDENCE. THE ADDITION MAD E BY THE AO IS THEREFORE DIRECTED TO BE DELETED. 10 . ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE AS PER THE SEIZED DOCUMENT S, PARKING PLACES HAVE EITHER BEEN SOLD ALONG WITH THE FLATS OR SEPARATELY. WHEN THE CAR PARKING IS SOLD ALONG WITH THE FLATS, THE SAME IS SHOWN UNDER THE COLUMN INCLUDED. WHEN CAR PARKING IS NOT INCLUDED THE SAID SALE IS SHOWN UNDER THE COLUMN NOT INCLUDED. THE SALE OF PARKING HAS BEEN SHOWN AT RS.3,13,30,000/ - IN THE BOOKS OF ACCOUNT . THE ASSESSEE HAS AL SO DECLARED SALE OF CAR PARKING IN THE NEXT YEAR ALSO. WE NOTICE THAT THE LD CIT(A), A FTER THE EXAMINATION OF BOOKS OF ACCOUNT S, SEIZED MATERIAL AND SUBMISSION OF THE ASSESSEE, HAS ALLOWED THE CLAIM OF THE ASSESSEE. THE FACTS WE RE NOT DISTINGUISH ED BEFORE US NOR ANY MATERIAL WAS PLACED TO CONTRADICT T HE FINDING GIVEN BY CIT(A) . T HEREFORE, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) ON THIS ISSUE IS UPHELD. ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE. ITA. NO.6277 / M /20 1 7 & 6389 / M/20 1 7 A.Y. 2012 - 13 13 11 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCE D IN THE OPEN COURT ON 19.12. 2018 . SD/ - SD/ - ( B. R. BASKARAN ) (AMARJIT SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBA I DATED : 19.12. 201 8 VIJAY / 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