Deputy Commissioner of Income-tax, V. Kumar Housing Corporation Ltd., Pune

ITA 690/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6995 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Transfer pricing; Business expenditure; Opportunity of being heard; Earning of tax free income; Reason to believe
• Section: 143(3); 5(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 843 /P U N/201 4 / ASSESSMENT YEAR: 20 06 - 07 M/S. KUMAR HOUSING CORPORATION LTD., 10 TH FLOOR, KUMAR BUSINESS CENTRE (KBC), OPP PUNE CENTRAL, BUND GARDEN ROAD, PUNE 411001 . / APPELLANT PAN: AACCS9537K VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE . / RESPONDENT . / ITA NO. 690 /P U N/201 4 / ASSESSMENT YEAR: 20 0 6 - 0 7 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE . / APPELLANT VS. KUMAR HOUSING CORPORATION LIMITED, 2 ND FLOOR, KUMAR CAPITAL, 2413, EAST STREET, PUNE 411001 . / RESPONDENT PAN: AACCS9537K ASSESSEE BY : S HRI NIKHIL PATHAK REVENUE BY : SHRI SUHAS KULKARNI / / / DATE OF HEARI NG : 23 . 0 1 .201 7 / DATE OF PRONOUNCEMENT: 10 . 0 3 .201 7 ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 2 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT( A ) - III , PUNE , DATED 2 9 . 0 1 .201 4 RELATING TO ASSESSMENT YEAR 2006 - 07 AGAINS T ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - III, PUNE , DATED 29 . 01 .201 4 RELATING TO ASSESSMENT YEAR 2006 - 07 AGAINST ORDER PASSED UNDER SECT ION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. THE APPEAL FILED BY THE ASSESSEE IS AGAINST REOPEN ED ASSESSMENT PROCEEDINGS AND APPEAL FILED BY THE REVENUE IS AGAINST ORIGINAL ORDER PASSED UNDER SECTION 143(3) OF THE ACT WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST, WE SHALL TAKE UP THE APPEAL FILED BY THE ASSESSEE, IN WHICH THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED: - 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE D ISALLOWANCE U/S 80IA(4)(III) OF RS.3,47,04,325/ - IN RESPECT OF THE PROFITS DERIVED BY THE ASSESSEE COMPANY FROM CEREBRUM IT PARK. 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS GRANTED NOTIFICATION UNDER INDUSTRIAL PARK SCHEME, 2008 AND TH E SAME WAS APPLICABLE FOR THE IT PARKS WHICH COMMENCED AFTER 1 ST APRIL, 2006 AND HENCE, THE PROFITS DERIVED BY THE ASSESSEE IN A. Y. 2006 - 07 WERE NOT COVERED BY THE SAID SCHEME AND THEREFORE, THE ASSESSEE COMPANY WAS NOT ENTITLED TO CLAIM DEDUCTION U/S 8 0IA(4)(III). 3] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE INDUSTRIAL PARK SCHEME, 2008 WAS NOT APPLICABLE TO A.Y. 2006 - 07 AND HENCE, THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S 80IA(4)(III) FOR THIS YEAR. 4] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD RECEIVED APPROVAL IN RESPECT OF THE CEREBRUM IT PARK UNDER INDUSTRIAL PARK SCHEME, 2008 AND HENCE, THE PROFITS OF THE ASSESSEE COMPANY FROM THE CEREBRUM IT PARK WERE ELIGIBLE FOR DEDUCTION U/S 80IA(4)(III) OF THE ACT. 5] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE APPROVAL UNDER THE INDUSTRIAL PARK SCHEME WAS IN RESPECT OF THE IT PARKS WHICH COMMENCED AFTER 1 ST DAY OF APRIL, 2006 AND SINCE THE ASSESSEE HAD COMMENCED ITS IT ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 3 PARK AFTER 1 ST DAY OF APRIL, 2006, TH E ASSESSEE COMPANY WAS JUSTIFIED IN CLAIMING THE DEDUCTION U/S 80IA(4)(III). 6] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE INDUSTRIAL PARK SCHEME, 2008 WAS NOT APPLICABLE TO A.Y. 2006 07 WITHOUT APPRECIATING THAT THE SAID SCHEME WAS APPLICABLE TO ALL P ARKS WHICH WERE COMPLETED IN THE PERIOD FROM 1 ST APRIL, 2006 TO 31 ST MARCH, 2009 AND SINCE THE CEREBRUM IT PARK WAS COMPLETED WITHIN THAT PERIOD, THE ASSESSEE OUGHT TO HAVE BEEN GRANTED DEDUCTION U/S 80IA(4)(III). 7] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT ONCE THE APPROVAL WAS RECEIVED BY THE ASSESSEE UNDER INDUSTRIAL PARK SCHEME, 2008, ALL THE PROFITS OF THE CEREBRUM IT PARK FOR ANY OF THE YEARS WERE ELIGIBLE FOR DEDUCTION U/S 80IA(4)(III). 8] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ADMINISTRATI VE AND INTEREST EXPENSE INCURRED BY THE ASSESSEE COMPANY WERE TO BE APPORTIONED BETWEEN THE PROJECTS ELIGIBLE TO CLAIM DEDUCTION U/S 80IB(10) AND THE PROJECTS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80IB(10) WITHOUT APPRECIATING THAT NO SUCH ALLOCATION OF EXPE NSES WAS WARRANTED. 9] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT SOME OF THE ADMINISTRATIVE AND INTEREST EXPENSES WERE INCURRED BY THE ASSESSEE FOR NON 80IB(10) PROJECTS AND THEREFORE, THERE WAS NO REASON TO ALLOCATE SUCH EXPENSES TO PROJECTS ELIGIBLE F OR DEDUCTION U/S 80IB(10). 10] WITHOUT PREJUDICE, THE ASSESSEE SUBMITS THAT THE METHOD OF ALLOCATION OF THE COMMON EXPENSES AND INTEREST IS NOT CORRECT AND THE SAME SHOULD BE RECTIFIED. 11] THE LD CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF INTEREST OF RS. 67,283/ - 11] THE LD CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF INTEREST OF RS. 67,283/ - U/S 36(1)(III) IN RESPECT OF INVESTMENT IN IMMOVABLE PROPERTIES BY IGNORING THE FACT THAT THAT LAND IS NOT A CAPITAL ASSET BUT A CURRENT ASSET FOR THE ASSESSEE IN VIEW OF THE NATURE OF ITS BUSINESS. 12] THE LD CIT(A) ERRED IN MAINTAINING DISALLOWA NCE OF INTEREST OF RS.83,02,554/ - U/S 36(1)(III) IN RESPECT OF INTEREST FREE ADVANCES TO SISTER CONCERN BY IGNORING THAT FACT : I) SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE WITH THE ASSESSEES. II) THE ADVANCES WERE GIVEN ON CERTAIN BUSINESS CONSIDERA TION. 13] THE LD CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF CLAIM FOR DEPRECIATION IN RESPECT OF KUMAR CITY CLUB HOUSE & GYM EQUIPMENTS BY RS.28,16,993/ - I) IGNORING THE FACT THAT THIS EXPENDITURE WAS IN THE NATURE OF COST OF CONSTRUCTION OF THE PROJECT A ND THEREFORE IT WAS A PART OF THE WIP UP TO AY 2003 - 04; II) IGNORING THE FACT THAT IT IS A COMMON PRACTICE AND A PART OF BUSINESS THAT A BUILDER AND DEVELOPER PROVIDES BASIC AMENITIES INCLUDING CLUB HOUSE AND GYM FACILITIES IN A HOUSING PROJECT; III) IGNOR ING THE FACT THAT THE ASSESSEE, INSTEAD OF CLAIMING ENTIRE EXPENDITURE IN ONE YEAR AS PART OF ITS COST OF CONSTRUCTION, CHOSE TO CLAIM DEPRECIATION THEREON YEAR ON YEAR BY CAPITALIZING IN ITS BOOKS THE EXPENDITURE ON THIS ACCOUNT; IV) IGNORING THE FACT THE CLUB HOUSE FACILITY WAS BEING USED BY THE FLAT OWNERS OF THE PROJECT FREE OF COST AND ONLY IN CASE OF OUTSIDERS FEES WERE BEING CHARGED; ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 4 V) IGNORING THE FACT THAT THE SAID EXPENDITURE WAS IN THE NATURE OF THE AMENITIES PROVIDED TO THE CUSTOMERS OF THE ASS ESSEE AND THEREFORE ALLOWABLE AS BUSINESS EXPENDITURE. 4. THE ISSUE RAISED IN GROUNDS OF APPEAL NO.1 TO 7 BY THE ASSESSEE IS AGAINST DENIAL OF DEDUCTION CLAIMED UNDER SECTION 80IA(4)(III) OF THE ACT AT RS.3,47,04,325/ - THE GROUNDS OF APPEAL NO.8 TO 13 AR E NOT PRESSED AND HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.85,73,785/ - . THE ORIGINAL ASSESSMENT WAS COMPLETED ON 30.12.2008 AND FOLLOWING ADDITIONS WERE MADE IN THE HANDS OF ASSESSEE. 1) DEDUCTION CLAIMED U/S 80IB(10) WAS DENIED FOR THE REASON THAT THE PROJECT, KUMARA PURAM COMMENCED MUCH BEFORE 1/10/1998 AND THEREFORE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION. THIS DISALLOWANCE AMOUNTED TO RS.16,13,700/ - . 2) DISALLOWANCE OF INTEREST EXPENSES U/S 36(1)(III) AMOUNTING TO RS.2,78,038/ - 3) DISALLOWANCE OF DEPRECIATION ON KUMAR CITY CLUB SWIMMING POOL AND GYM 3) DISALLOWANCE OF DEPRECIATION ON KUMAR CITY CLUB SWIMMING POOL AND GYM EQUIPMENT AMOUNTING TO RS.28,16,993/ - 4) DISALLOWANCE OF THE DEPRECIATION CLAIMED ON CARS AMOUNTING TO RS.55,000/ - 6. THEREAFTER, PROCEEDINGS WERE REOPENED UNDER SECTION 147 OF THE ACT AND NOT ICE UNDER SECTION 148 OF THE ACT WAS ISSUED. THE ASSESSEE IN REPLY STATED THAT THE ORIGINAL RETURN FILED BE TREATED AS FILED UNDER SECTION 148 OF THE ACT. THE ASSESSEE SOUGHT THE REASONS FOR REOPENING THE ASSESSMENT. THE REASONS FOR REOPENING THE ASSESSMENT ARE REPRODUCED UNDER PARA 5 OF THE ASSESSMENT ORDER, WHEREIN THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIMED INTEREST EXPENDITURE OF RS.3.01 CRORES ON SECURED LOANS RAISED FROM THE BANKS. THE ASSESSEE HAD ADVANCED LOANS TO GROUP COMPANIES TO THE TUNE OF RS.6.15 CRORES ON WHICH NO INTEREST WAS EARNED. ON ENQUIRIES DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2008 - 09, THE A SSESSEE COULD NOT ESTABLISH THAT THE LOANS WERE ADVANCED FOR BUSINESS PURPOSE. ACCORDINGLY, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INTEREST EXPENDITURE ON ADVANCES GIVEN TO GROUP ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 5 CONCERNS WAS NOT AN ALLOWABLE EXPENDITURE UNDER SECTION 36(1)(III) O F THE ACT TO THE TUNE OF RS.83,02,554/ - AND HENCE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT THE SAID INCOME HAD ESCAPED THE ASSESSMENT. THE SECOND REASON FOR INITIATING REOPENING PROCEEDINGS WAS THE DEDUCTION CLAIMED UNDER SECTION 80IA(4)(III) OF THE ACT AMOUNTING TO RS. 3.47 CRORES IN RESPECT OF C ER E BRUM PROJECT AT WADGAON SHERI , PUNE. THE ENQUIRIES CONDUCTED BY DDIT ((INV) UNIT , PUNE REVEALED THAT THE ASSESSEE HAD NOT FULFILLED THE CONDITIONS FOR AVAILING THE SAID DEDUCTION UNDER SECTION 80IA OF THE ACT AND HENCE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED REPLY TO THE FIRST QUERY I.E. THE DETAILS OF ADVANCE GIVEN TO THE GROUP COMPANIES AND T HE ASSESSING OFFICER DISALLOWED THE INTEREST EXPENDITURE UNDER SECTION 36(1)(III) OF THE ACT. THE CIT(A) UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, AGAINST WHICH THE ASSESSEE IS NOT IN APPEAL. ASSESSEE IS NOT IN APPEAL. 7. WITH REGARD TO DEDUCTION CLAIMED UNDER SECTION 80IA OF THE ACT IN RESPECT OF KUMAR CEREBRUM PROJECT , IT WAS EXPLAINED BY THE ASSESSEE THAT IT HAD FIRST APPLIED UNDER THE IPS 2002 SCHEME FOR CLAIMING THE SAID DEDUCTION . A S PER IPS 2002, THE PROJECT MUST COMMENCE FROM 01.04.1997 AND WAS TO BE COMPLETED BY 31.03.2006. IN CASE, IT WAS NOT SO COMPLETED, THEN APPLICATION FOR EXTENSION OF TIME FOR MAXIMUM PERIOD OF ONE YEAR HAD TO BE MADE. THE ASSESSING OFFICER NOTED THAT IN THE CASE OF ASSESSEE, THE APPLICATION WAS MADE FOR NOTIFICATION UNDER IPS 2002 ON 09.12.2004 BUT THE PROJECT COULD NOT BE COMPLETED EVEN BY 31.03.2006. SO AN APPLICATION FOR FURTHER EXTENSION WAS MADE BUT THE PROJECT WAS NOT COMPLETED EVEN BY 31.03.2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THE ASSESSEE HAD SUBMITTED BEFORE THE ASSESSING OFFICER THAT IT HAD OBTAINED PERMISSION VIDE NOTIFICATION DATE D 15.02.2005 UNDER THE IPS 2002. AS PER POINT NO.3 OF THE NOTIFICATION, THE INDUSTRIAL PARK SHOULD BE IN OPERATION ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 6 DURING THE PERIOD IN WHICH THE BEN EFIT UNDER SECTION 80IA(4) OF THE ACT WAS BEING AVAILED. IN PARA 5 OF THE SAID NOTIFICATION IT WAS MADE CLEAR THAT TAX BENEFITS WILL BE AVAILABLE ONLY AFTER THE PROPOSED NUMBER OF INDUSTRIAL UNITS MENTIONED IN PARA 1 (VII) I.E. 12 UNITS ARE LOCATED IN IND USTRIAL PARK. THE ASSESSEE BEFORE THE DIT (INV) HAD SUBMITTED THAT ONLY 7 UNITS WERE IN OPERATION TILL MARCH, 2009. AS PER THE ASSESSING OFFICER, BOTH THESE CONDITIONS REMAINED TO BE SATISFIED FOR AVAILING THE BENEFIT UNDER THE SCHEME IPS 2002. THE ASSE SSEE THEREAFTER, WAS ASKED TO MAKE AN APPLICATION FOR NOTIFICATION TO CBDT AS PER IPS 2008 AS THE PROJECT WAS NOT COMPLETE EVEN AFTER EXTENSION OF TIME TILL 31.03.2007 . THE NOTIFIED SCHEME OF IPS 2008 IS REPRODUCED AT PAGES 9 TO 13 OF THE ASSESSMENT ORDER . THE ASSESSING OFFICER NOTES THAT THE ASSESSEE HAD NOT RECEIVED THE NOTIFICATION FROM THE CBDT FOR THE PROJECT ; NO COMPLETION CERTIFICATE WAS OBTAINED AND THE MINIMUM NUMBER OF UNITS REQUIRED FOR AVAILING THE DEDUCTION WAS ALSO LESS THAN 30. THE ENQUIRI ES CONDUCTED BY THE DIT (INV) ALSO REVEALED THAT NO SINGLE ENTITY OR ITS RELATED CONDUCTED BY THE DIT (INV) ALSO REVEALED THAT NO SINGLE ENTITY OR ITS RELATED ENTERPRISE OCCUPIED MORE THAN 25% OF THE ALLOCABLE AREA, WAS ALSO VIOLATED. THE ASSESSING OFFICER MADE ENQUIRIES AND SOUGHT THE REPLY FROM THE ASSESSEE AND ALSO CONSIDERED TH E REPORT OF DIT (INV). THE CONCLUSION OF THE ASSESSING OFFICER WAS THAT THE PROJECT CONSISTED OF THREE BUILDINGS I.E. B1, B2 AND B3 BUT THE CONSTRUCTION OF INDUSTRIAL PARK WAS NOT YET COMPLETE AS BUILDING B3 WA S STILL UNDER CONSTRUCTION. IN REPLY, THE AS SESSEE POINTED OUT THAT AS PER SECTION 80IA(4)(III) OF THE ACT, THE INDUSTRIAL PARK SHOULD HAVE COMMENCED OPERATIONS BEFORE 31.03.2011 AND IT FULFILS THE CONDITIONS. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED AS IT HAD APPLIED FOR NOTIFICATION OF ITS PROJECT UNDER IPS 2008 AND ONE OF THE CONDITIONS FOR AVAILING THE BENEFITS WAS TO COMPLETE THE PROJECT BEFORE MARCH, 2009 AND ALSO APPROPRIATE COMPLETION CERTIFICATE HAD TO BE OBTAINED FROM THE RELEVANT LOCAL AUTHORITY. THE COMMENCEMENT AND COMPLETION OF OPERATIONS AND AVAILING OF BENEFITS WERE HELD TO BE TWO DIFFERENT THINGS AND THE ASSESSING OFFICER HELD THAT THE ASSESSEE MUST HAVE COMPLETED THE PROJECT FOR AVAILING THE BENEFITS AND CLEARLY ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 7 FOR THE YEAR UNDER CONSIDERATION IT WAS NOT THE CASE. THE OTHE R CONDITION THAT THE PROJECT SHOULD BE NOTIFIED BY THE CBDT WAS ALSO NOT SATISFIED. IN THIS REGARD, HE SAYS THAT THE DELAY IN NOTIFICATION BEING ISSUED WAS NOT ATTRIBUTABLE TO IT. THIS CONTENTION OF ASSESSEE WAS ALSO NOT ACCEPTED BY THE ASSESSING OFFICER SINCE AS PER CLAUSE (3) OF PARA 5 OF THE IPS 2008, IT WAS MANDATORY THAT THE TAX BENEFIT WOULD BE AVAILABLE ONLY IF THE REQUISITE NOTIFICATION WAS ISSUED BY THE CBDT. ANOTHER CONDITION THAT MINIMUM NUMBER OF 30 UNITS SHOULD BE OPERATIONAL FOR AVAILING TH E BENEFIT WAS ALSO VIOLATED AS ON THE DATE OF REPORT OF DIT (INV) IN ALL 16 UNITS WERE OPERATIONAL. WHEN CONFRONTED, THE ASSESSEE POINTED OUT THAT TILL DATE OF REPORT OF DIT (INV), IT HAD LOCATED MORE THAN 15 UNITS AND IT HAD TIME TILL 31.03.2011 FOR COMP LYING WITH TH E CONDITION. WHEN CONFRONTED DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS THE ASSESSEE POINTED OUT THAT IT HAD LOCATED MORE THAN 30 UNITS AND HAD FULFILLED THE ABOVE CONDITIONS. THE ASSESSING OFFICER OBSERVED THAT EVEN IF THE ASSESSEE HAD LOCATED MORE THAN 30 UNITS AS ON 31.03.2011 BUT THE THAT EVEN IF THE ASSESSEE HAD LOCATED MORE THAN 30 UNITS AS ON 31.03.2011 BUT THE DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT WAS AVAILABLE ONLY AFTER 30 UNITS WERE LOCATED AND FOR THE ASSESSMENT YEAR 2006 - 07, IT WAS NOT THE CASE. ANOTHER ASPECT WHICH WAS TAKEN NOTE OF BY THE ASSE SSING OFFICER , THAT DURING THE FINANCIAL YEAR 2005 - 06, THE ASSESSEE HAD SOLD ONE FLOOR OF BUILDING B1 TO M/S . MASTEK LTD., AND ALL REMAINING FLOORS OF THE BUILDING WAS SOLD TO POONAWALAS DURING FINANCIAL YEAR 2006 - 07. SIMILARLY, ENTIRE BUILDING B2 WAS SOL D TO M/S. MILESTONES DEVCON PVT. LTD. DURING FINANCIAL YEAR 2008 - 09 AND AROUND 3,36,494 SQ.FT. OF BUILDING B3 WAS SOLD TO ONE OF THE SISTER CONCERNS CEREBRUM IT PARK PVT. LTD . DURING THE FINANCIAL YEAR 2008 - 09. THEREFORE, DURING THE FINANCIAL YEAR 2009 - 10 , THE ASSESSEE OWNED ONLY 1,24,961 SQ.FT. OF THE BUILDING B3, IN WHICH ONLY ON E COMMERCIAL UNIT WAS LOCATED. HENCE, THE CONDITION THAT NO SINGLE ENTITY OR RELATED ENTERPRISE SHOULD OCCUPY MORE THAN 25% OF THE ALLOCABLE AREA WAS ALSO VIOLATED. WHEN CONFRO NTED, THE ASSESSEE EXPLAINED THAT THE CBDT IN MAY, 2010 HAD DECLARED THAT IT HAD AMENDED THE IPS 2008 AND RULE 18C THE INCOME TAX RULES, 1962 (IN SHORT THE ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 8 RULES) . UNDER THE INDUSTRIAL PARK SCHEME, ANY UNDERTAKING UNDER RULE 18C OF THE RULES, WHICH DEVE LOPS AND OPERATES AND MAINTAINS AND OPERATES AN INDUSTRIAL PARK DURING THE PERIOD BETWEEN 01.04.2006 AND 31.03.2009 WOULD REAP BENEFITS UNDER SECTION 80IA(4)(III). AFTER THE AMENDMENT UNDER THE FINANCE (NO.2) ACT, 2009 THE END DATE FOR THE CLAIM WAS MOVED FROM 31.03.2009 TO 31.03.2011. THE ASSESSEE ALSO SUBMITTED A COPY OF NOTIFICATION DATED 09.07.2010 APPROVING CEREBRUM PARK AS ELIGIBLE FOR CLAIMING THE DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT. ANOTHER CONTENTION RAISED BY THE ASSESSEE THAT AS PE R IPS, 2008 THE DATE OF COMMENCEMENT MEANS THE DATE OF OBTAINING THE COMPLETION CERTIFICATE OR OCCUPATION CERTIFICATE, AS THE CASE MAY BE, FROM THE RELEVANT LOCAL AUTHORITY, CERTIFYING THAT ALL THE REQUIRED DEVELOPMENT ACTIVITIES FOR THE PROJECT HAVE BEEN COMPLETED. THE ASSESSING OFFICER OBSERVED THAT IN THE CASE OF ASSESSEE, THE BUILDINGS WERE NOT COMPLETE DURING THE FINANCIAL YEAR 2005 - 06 AND EVEN THE COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY MENTIONS THAT THE PARK WAS COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY MENTIONS THAT THE PARK WAS PARTIALLY COMPLETE. FUR THER, THE REQUISITE NUMBER OF UNITS I.E. 30 WAS NOT FUNCTIONALLY OPERATIONAL WHICH WAS NECESSARY FOR ISSUE OF NOTIFICATION. THE ASSESSEE ALSO DID NOT SUBMIT THE COPY OF ANNUAL REPORT TO THE CBDT IN REQUISITE FORM IPS - II. SINCE THE ASSESSEE HAD NOT FULFIL LED ANY OF THE CONDITIONS AND THERE WAS BLATANT VIOLATION OF THE REQUIRED CONDITIONS, THE DEDUCTION CLAIMED UNDER SECTION 80IA(4)(III) OF THE ACT WAS DENIED TO THE ASSESSEE, RESULTING IN ADDITION OF RS.3.47 CRORES. 8. IN RESPECT OF ISSUE OF DISALLOWANCE U NDER SECTION 80IA(4)(III) OF THE ACT, THE CIT(A) AFTER CONSIDERING VARIOUS POINTS RAISED BY THE ASSESSEE NOTED THE PROVISIONS OF SECTION 80IA(4)(III) OF THE ACT AND IT WAS HELD THAT SECTION POSTULATES AND REQUIRES THAT THERE WAS SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMENT AND THE UNDERTAKING IN QUESTION WHICH DEVELOPS; DEVELOPS AND OPERATES; OR MAINTAINS AND OPERATES, AN INDUSTRIAL PARK OR SPECIAL ECONOMIC ZONE ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 9 SHOULD BE NOTIFIED UNDER THE SAID SCHEME. THE CIT(A) FURTHER NOTES THAT THE ASSESSEE HA D ORIGINALLY APPLIED FOR NON - AUTOMATIC APPROVAL IN FORM IPS - I FOR SETTING UP OF THE INDUSTRIAL PARK TO DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION (DIPP) ON 09.12.2004 AND THE SAME WAS GRANTED VIDE LETTER DATED 15.02.2005. HOWEVER, THE ASSESSEE MADE A REV ISED APPLICATION UNDER IPS 2002 SCHEME ON 06.11.2007 AS THE EXPECTED DATE OF COMMENCEMENT OF INDUSTRIAL PARK WAS EXTENDED FROM 01.01.2006 TO 31.03.2009 AND FURTHER TIME LIMIT FOR COMPLETING THE INDUSTRIAL PARK WAS EXTENDED UP TO 31.03.2009 . THE CIT(A) FUR THER NOTES THAT THE ASSESSEE MADE A FRESH APPLICATION FOR APPROVAL UNDER THE REVISED SCHEME I.E. IPS 2008 WITH THE CBDT. THE SCHEME HAD BEEN ACCEPTED BY THE CBDT UNDER IPS 2008 AND THE SAID INDUSTRIAL PARK WAS NOTIFIED FOR THE PURPOSE OF SECTION 80IA(4)(I II) OF THE ACT VIDE NOTIFICATION DATED 09.07.2010 BY THE CBDT. THE ASSESSEES PLEA WAS THAT SINCE IT HAD RECEIVED THE NOTIFICATION UNDER IPS 2008, THE ELIGIBILITY OF DEDUCTION UNDER SECTION 80IA OF THE ACT HAD TO BE SEEN VIS - - VIS IPS 2008 ONLY AND NOT UNDER SECTION 80IA OF THE ACT HAD TO BE SEEN VIS - - VIS IPS 2008 ONLY AND NOT UN DER THE IPS 2002. THE CIT(A) THEREAFTER, VIDE PARA 10.3.2 NOTED THE PROVISIONS OF IPS 2002 AND VIDE PARA 10.3.3 , PROVISIONS OF IPS 2008 AT PAGES 41 TO 45 OF THE APPELLATE ORDER. THE CIT(A) FURTHER VIDE PARA 10.3.4 NOTES THAT THE INDUSTRIAL PARK OF THE AS SESSEE WAS NOTIFIED BY THE CBDT VIDE NOTIFICATION DATED 09.07.2010 UNDER THE IPS 2008 AND THE NOTIFICATION IS SCANNED AND REPRODUCED AT PAGE 46 OF THE APPELLATE ORDER. THE CIT(A) VIDE PARA 10.3.5 DENIES THE DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT AND HELD AS UNDER: - 10.3.5 AS HIGHLIGHTED ABOVE, THE NOTIFICATION SPECIFIES THAT THE INDUSTRIAL PARK OF THE APPELLANT IS NOTIFIED UNDER CLAUSE (III) OF SUB - SECTION (4) OF SEC.80IA, SUBJECT TO THE PROVISIONS OF THE INDUSTRIAL PARK SCHEME, 2008 AS IS THE A RGUMENT OF THE APPELLANT. AS PER CRITERIA FOR APPROVAL UNDER THE IPS 2008 AS EXTRACTED HEREINABOVE, THE PRIME CONDITION FOR AN UNDERTAKING TO BE CONSIDERED FOR NOTIFICATION UNDER CLAUSE (III) OF SUB - SECTION (4) OF SECTION 80 - IA OF THE ACT, IS THAT THE DAT E OF COMMENCEMENT OF THE INDUSTRIAL PARK SHOULD BE ON OR AFTER THE 1 ST DAY OF APRIL, 2006 AND NOT LATER THAN 31 ST OF MARCH, 2009 (SUBSEQUENTLY, EXTENDED TO 31 ST MARCH, 2011) BY THE FINANCE ACT NO.2 OF 2009. THIS CLEARLY IMPLIES THAT THE BENEFIT OF DEDUCTI ON U/S.80IA(4)(III) IN RESPECT OF PROJECTS APPROVED UNDER THE IPS - 2008 CANNOT BE EXTENDED FOR A PERIOD PRIOR TO 1 ST DAY OF APRIL, 2006. SINCE THE PREVIOUS YEAR RELATING TO THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 01/04/2005 TO 31/03/2006, FALLS OUTSID E THIS PERIOD, THE PROFITS DERIVED BY THE APPELLANT FROM THE PROJECT DURING THIS PERIOD IN QUESTION WILL NOT BE ELIGIBLE FOR DEDUCTION U/S. 80IA(4)(III) R.W.S. IPS 2008 . AS BROUGHT OUT HEREINABOVE, ADMITTEDLY, THOUGH THE ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 10 PROJECT WAS ORIGINALLY NOTIFIED UN DER THE IPS - 2002, IT DID NOT FULFILL THE CONDITIONS LAID DOWN THEREIN. THIS HAS LEAD TO A SITUATION WHERE THE IMPUGNED PROJECT CAN NEITHER SAID TO BE ELIGIBLE FOR DEDUCTION U/S. 80IA(4) R.W. IPS - 2002 NOR IPS - 2008 DURING THE ASSESSMENT YEAR UNDER CONSIDERA TION. 9. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) AGAINST RE - ASSESSMENT PROCEEDINGS. 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS ENGAGED IN CONSTRUCTION OF INDUSTRIAL PARK AT K ALYANI NAGAR AN D AS PER THE PROVISIONS OF SECTION 80IA(4)(III) OF THE ACT, ENTIRE PROFITS FROM THE PROJECT ARE DEDUCTIBLE. IN THIS REGARD, INDUSTRIAL PARKS SCHEME , 2002 WAS FORMULATED. THE ASSESSEE MADE AN APPLICATION TO THE COMMERCE MINISTRY AND UNLESS THE PROJECT OF THE ASSESSEE WAS NOT NOTIFIED, NO DEDUCTION IS ALLOWED TO THE ASSESSEE. UNDER THE IPS, 2002, THERE WERE TWO RULES I.E. ONE WAS THE AUTOMATIC ROUTE AND ANOTHER WAS NON - AUTOMATIC ROUTE OF APPROV AL . THE PRELIMINARY CONDITION WAS THAT GOOD IT PARKS SHOULD BE BUILT UP WHICH SHOULD HAVE MINIMUM OF 30 UNITS I.E. HAVING 30 DIFFERENT CONCERNS . UNDER THE IPS - 2002, CONSTRUCTION WAS TO BE COMPLETED BY 31.03.2006. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAD STARTED THE DE VELOPMENT FROM 2004. IT HAD ALSO MADE AN APPLICATION UNDER NON - AUTOMATIC ROUTE, WHEREIN THE APPROVAL WAS RECEIVED IN 2005 FOR CONSTRUCTION OF 12 UNITS IN A, B AND C BUILDINGS. IN ASSESSMENT YEAR 2006 - 07, THE ASSESSEE CLAIMS TO HAVE SOLD SOME UNITS IN BUI LDING A BUT ADMITTEDLY, ALL THE UNITS WERE NOT COMPLETED WITHIN STIPULATED DATE OF 31.03.2006 . HE POINTED OUT THAT UNDER THE ORIGINAL ASSESSMENT, DEDUCTION WAS ALLOWED TO THE ASSESSEE, BUT ADMITTEDLY, THE IT PARK WAS NOT COMPLETED BY 31.03.2006. HE FURTH ER POINTS OUT THAT THE PROVISIONS OF SECTION 80IA(4)(III) OF THE ACT WERE AMENDED AND TIME WAS EXTENDED TO 01.03.2009 AND THEN TO 31.03.2011. AS PER IPS, 2002, THE CONSTRUCTION HAD TO BE COMPLETED UP T O 31.03.2006 BUT LATER IPS 2008, A NEW SCHEME UNDER TH E FINANCE MINISTRY WAS APPROVED, UNDER WHICH ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 11 THE APPROVAL WAS ONLY T HROUGH THE AUTOMATIC ROUTE. SINCE THE ASSESSEE HAD NOT COMPLETED IT PARK B Y 31.03.2006 , NEW APPROVAL WAS SOUGHT UNDER THE IPS 2008. THE ASSESSEE POINTS OUT THAT THE NOTIFICATION FOR THE APPROVAL OF NEW SCHEME WAS RECEIVED ON 09.07.2010. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AS THE ASSESSEE HAD NOT COMPLETED THE IT PARK UNDER IPS 2002 SCHEME, THE ASSESSING OFFICER DISALLOWED DEDUCTION FOR ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09 ALSO. ADMITTEDLY, NO APPROVAL WAS RECEIVED TILL DATE OF COMPLETION OF ASSESSMENT. HOWEVER, IT WAS LATER RECEIVED AND THE CIT(A) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER. OUR ATTENTION WAS DRAWN TO THE PAGE 9 OF RE - AS SESSMENT ORDER, WHEREIN THE ASSESSING OFFICER HAS SCANNED AND PUT THE SCHEME IN THE CASE OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE PERUSAL OF ASSESSMENT ORDER AT PAGE 10 UNDER CLAUSE 2 (F), THE DA TE OF COMMENCEMENT MEANS THE DATE OF OBTAINING THE COMPLETION CERTIFICATE OR OCCUPATION CERTIFICATE FROM THE LOCAL AUTHORITY. REFERRING COMPLETION CERTIFICATE OR OCCUPATION CERTIFICATE FROM THE LOCAL AUTHORITY. REFERRING TO CLAUSE 4 OF THE SAID SCHEME, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE D ATE OF COMMENCEMENT SHOULD BE ON OR AFTER 01.04.2006 AND NOT LATER THAN 31.03.2009. REFERENCE WAS MADE TO THE ORDER OF CIT(A) IN PARA 10.3.4 AT PAGE 45, WHEREIN THE CIT(A) NOTES THAT THE SCHEME OF ASSESSEE WAS NOTIFIED BY THE CBDT ON 09.07.2010 UNDER THE IPS, 2008. HE POINTED OUT THAT THE CIT(A) REFERS TO THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK TO BE AFTER 01.04.2006 AND NOT LATER THAN 31.03.2009 AND SUBSEQUENTLY 31.03.2011 BUT SINCE THE PREVIOUS YEAR RELATING TO ASSESSMENT YEAR UNDER CONSIDERATIO N WAS ENDING ON 31.03.2006 IT FALLS OUTSIDE THE PERIOD AND THE PROFITS DERIVED BY THE ASSESSEE FROM THE PROJECT DURING THE PERIOD IN QUESTION WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NARROW DISPUTE WAS WHE RE THE APPROVAL WAS RECEIVED LATER, IS THE ASSESSEE ELIGIBLE TO CLAIM DEDUCTION? HE POINTED OUT THAT AS PER IPS 2008, DATE OF COMMENCEMENT MEANS DATE OF ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 12 COMPLETION AND THAT DATE SHOULD BE AFTER 01.04 .2006 TILL 31.03.2011 I.E. WHEN THE ASSESSEE RECEIVED THE APPROVAL ON 31.03.2010, IT SATISFIES ONE OF THE CONDITIONS LAID DOWN IN THE SCHEME. ONCE THE IT PARK IS APPROVED, DESPITE ASSESSMENT YEARS INVOLVED DEDUCTION SHOULD BE ALLOWED IN THE HANDS OF ASSES SEE. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN M/S. KOLTE PATIL DEVELOPERS LTD. VS. DCIT IN ITA NOS.1411 TO 1415/PN/2013 , RELATING TO ASSESSMENT YEARS 200 3 - 04, 2005 - 06, 2007 - 08 TO 2009 - 10 AND DCIT VS. M/S. KOLTE PATIL DEVELOPERS LTD. IN ITA NOS.1478 TO 1483/PN/2013, RELATING TO ASSESSMENT YEARS 2004 - 05 TO 2009 - 10, VIDE ORDER DATED 20.02.2015. HE FURTHER REFERRED TO RULE 18C OF THE RULES, WHEREIN IT IS PROV IDED THAT THE DEDUCTION IS ALLOWABLE IF IT PARK IS DEVELOPED; OR DEVELOPED AND OPERATED; OR MAINTAINED AND OPERATED. HE POINTED OUT THAT THE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 HAVE BEEN DECIDED BY THE TRIBUNAL AND THE CONDITION OF MINIMUM NUMBER OF 30 UNITS IS DECIDED BY THE TRIBUNAL AND THE CONDITION OF MINIMUM NUMBER OF 30 UNITS IS SATISFIED. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN FERANI HOTELS PVT. LTD. VS. DCIT IN ITA NOS.1828/M/2009 AND 1829/M/2009 , RELATING TO ASSESSMENT YEARS 2004 - 05 AND 2005 - 06, ORDER DATED 24 .02.2012, WHEREIN THE SCHEME WAS IPS 2002 WHERE THE APPROVAL WAS RECEIVED ON 12.07.2006 I.E. AFTER THE CLOSING OF YEAR UNDER CONSIDERATION BUT THE TRIBUNAL ALLOWED THE CLAIM OF ASSESSEE. THEREAFTER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY BANGALORE BENCH OF TRIBUNAL IN PRIMAL PROJECTS (P) LTD. DCIT (2011) 139 TTJ 233, WHEREIN THE TRIBUNAL HAD HELD THAT THE APPROVAL OF SCHEME DATES BACK. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE ASSESSEE HAD SOUGHT APPROVAL UNDE R THE IPS, 2002 SCHEME AND ONCE IT HA D FAILED TO FULFILL THE CONDITIONS OF COMPLETION OF UNITS BY THE STIPULATED DATE, THERE IS NO QUESTION OF GRANT OF ANY DEDUCTION TO THE ASSESSEE UNDER SECTION 80IA(4)(III) OF THE ACT. HE PLACED RELIANCE ON THE ORDERS O F AUTHORITIES BELOW. ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 13 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT. THE ASSESSEE STARTED A PROJECT OF DEVELOPMENT OF IT PARK IN 2004 AND IN VIEW OF SCHEME IPS 2002, AS PER THE CONDITIONS LAID DOWN IN IPS 2002, THE PROJECT HAD TO BE COMPLETED BY 31.03.2006 AND IN CASE THE SAME IS NOT COMPLETED, THEN APPLICATION FOR EXTENSION OF TIME FOR MAXIMUM PERIOD OF ONE YEAR HAD TO BE MADE. ADMITTEDLY, THE ASSESSEE HAS NOT COMPLETED THE SAID PROJECT BY 31.03.2006. THE ASSESSEE DID MAKE AN APPLICATION FOR FURTHER EXTENSION BUT THE PROJECT COULD NOT BE COMPLETED BY 31.03.2007. CONSEQUENTLY, THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM THE SA ID DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT IN RESPECT OF IPS 2002. THE ASSESSEE THEREAFTER, MADE AN APPLICATION FOR NOTIFICATION TO THE CBDT AS PER IPS 2008. UNDER IPS 2008 SCHE ME, CERTAIN CONDITIONS WERE LAID DOWN AS CRITERIA FOR APPROVAL AND TH E FIRST CONDITION AS PER CLAUSE 4(1) WAS THAT THE DATE OF COMMENCEMENT OF INDUSTRIAL PARK SHOULD BE ON OR AFTER 01.04.2006 AND THE DATE OF COMMENCEMENT OF INDUSTRIAL PARK SHOULD BE ON OR AFTER 01.04.2006 AND NOT LATER THAN 31.03.2009. SUBSEQUENTLY, THE ENDING DATE OF 31.03.2009 WAS EXTENDED TO 31.03.2011 BY THE CBDT. OTHER CONDITIONS WERE LAID DOWN VIS - - VIS AREA TO BE ALLOCATED TO INDUSTRIAL UNITS AND THE CONDITION OF MINIMUM OF 30 INDUSTRIAL UNITS LOCATED IN AN INDUSTRIAL PARK. GENERAL CONDITIONS WERE ALSO LAID DOWN IN ORDER TO AVAIL THE TAX BENEFITS. WHILE DEFINING VARIOUS TERMS REFERRED TO IN THE SCHEME VIDE CLAUSE 2 (F), DATE OF COMMENCEMENT MEANS THE DATE OF OBTAINING THE COMPLETION CERTIFICATION OR OCCUPATION CERTIFICATE, AS THE CASE MAY BE, FROM THE RELEVANT LOCAL AUTHORITY CERTIFYING THAT ALL THE REQUIRED DEVELOPMENT ACTIVIT IES FOR THE PROJECT HAVE BEEN COMPLETED. SO THE DATE OF COMMENCEMENT IN THIS CASE WAS THE DATE OF COMPLETION AND THE WORD DATE OF COMMENCEMENT IS OTHERWISE START OF THE PROJECT BUT UNDER THE SCHEME, IT WAS SPECIFICALLY PROVIDED THAT THE DATE OF COMMENCE MENT WOULD BE DATE OF COMPLETION OF THE PROJECT BY WAY OF RECEI VING THE COMPLETION CERTIFICATE, THEN DATE OF COMMENCEMENT HAD TO BE BETWEEN 01.04.2006 AND NOT LATER THAN 31.03.2009. IN OTHER WORDS, THE ASSESSEE HAD TO COMPLETE ITS ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 14 PROJECT AND RECEIVE THE COMPLETION CERTIFICATE BETWEEN THE PERIOD FROM 01.04.2006 TO 31.03.2009, WHICH WAS LATER EXTENDED TO 31.03.2011. THE ASSESSEE THUS, HAD TO START THE CONSTRUCTION BEFORE 01.04.2006 IN ORDER TO COMPLETE THE SAME BETWEEN THE SAID PERIOD AND OBTAIN THE COMPLE TION CERTIFICATE OR OCCUPANCY CERTIFICATE, AS THE CASE MAY BE. THIS SCHEME HAS BEEN ELABORATELY REFERRED AND CONSIDERED BY THE PUNE BENCH OF TRIBUNAL IN M/S. KOLTE PATIL DEVELOPERS LTD. VS. DCIT (SUPRA), WHEREIN IT WAS HELD AS UNDER: - 35. IT WAS CONTENDE D BY THE LD. REPRESENTATIVE THAT THE EMPHASIS LAID BY THE LOWER AUTHORITIES ON THE DATE OF COMMENCEMENT MENTIONED IN THE IPS, 2008 IS RELEVANT ONLY TO DECIDE WHETHER THE INDUSTRIAL PARK OF THE ASSESSEE IS WITHIN THE SCOPE OF IPS, 2008. IT WAS CONTENDED THAT ONE OF THE GROUNDS FOR APPROVAL OF THE INDUSTRIAL PARK IS THAT IT SHOULD COMMENCE AFTER FIRST DAY OF APRIL, 2006 AND NOT LATER THAN 31 ST MARCH, 2009. IT WAS POINTED OUT THAT THE SAID CONDITION HAS BEEN COMPLIED WITH BY THE ASSESSEE AS THE DATE OF COM MENCEMENT IS 09.05.2007. IN SUM AND SUBSTANCE, THE STAND OF THE ASSESSEE IS THAT THE LOWER AUTHORITIES HAVE MISDIRECTED THEMSELVES IN DENYING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80 - IA(4) OF THE ACT. 36. ON THE OTHER HAND, THE LD. DEPARTMENTAL REP RESENTATIVE HAS REITERATED THE TWO OBJECTIONS RAISED BY THE INCOME - TAX AUTHORITIES IN SUPPORT OF THE CASE OF THE REVENUE. THE LD. CIT - DR HAS ALSO REITERATED THE RELIANCE PLACED BY THE LOWER AUTHORITIES ON THE DECISION OF THE THIRD MEMBER OF THE TRIBUNAL I N THE CASE OF AUTHORITIES ON THE DECISION OF THE THIRD MEMBER OF THE TRIBUNAL I N THE CASE OF MARIGOLD PREMISES PVT. LTD. (SUPRA). AS PER THE LD. CIT - DR, THE ANALOGY OF SECTION 80 - IB(10) OF THE ACT RELIED UPON BY THE ASSESSEE IS NOT RELEVANT IN THE PRESENT CASE SINCE THE WORDINGS OF THE SECTIONS ARE DIFFERENT. THE LD. CIT - DR HAS REF ERRED TO THE DISCUSSION MADE BY THE CIT(A) IN PARA 5.2 OF HIS ORDER TO JUSTIFY THAT THE ASSESSING OFFICER WAS CORRECT IN EXAMINING AS TO WHETHER OR NOT THE INDUSTRIAL PARK IN QUESTION WAS COMPLETED DURING THE PREVIOUS YEAR UNDER CONSIDERATION. IT HAS BEEN EMPHASIZED THAT IPS, 2008 ITSELF PROVIDES THAT THE DATE ON WHICH THE COMPLETION CERTIFICATE OR OCCUPATION CERTIFICATE IS OBTAINED FROM THE LOCAL AUTHORITY, THE INDUSTRIAL PARK WOULD BE UNDERSTOOD TO HAVE COMMENCED FROM THAT DATE. IN THE PRESENT CASE, THA T DATE IS 09.05.2007 AND THEREFORE AS ON 31.03.2007 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE INDUSTRIAL PARK OF THE ASSESSEE COULD NOT BE SAID TO BE COMPLETED OR DEVELOPED SO AS TO SEEK DEDUCTION U/S 80 - IA(4)(III) OF THE ACT. IN THIS C ONTEXT, THE RELIANCE PLACED BY THE CIT(A) ON THE DECISION OF THE THIRD MEMBER OF THE TRIBUNAL IN THE CASE OF MARIGOLD PREMISES PVT. LTD. (SUPRA) WAS REITERATED. 37. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. FACTUALLY SPEAKING, THE INDUSTRIAL P ARK GIGA SPACE DEVELOPED BY THE ASSESSEE IS NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE IPS, 2008. THERE IS ALSO NO DENYING THE FACT THAT THE INDUSTRIAL PARK GIGA SPACE APPROVED UNDER THE IPS, 2008 HAS BEEN FOUND TO BE ELIGIBLE FOR DEDUC TION U/S 80 - IA(4)(III) OF THE ACT IN THE SUBSEQUENT ASSESSMENT YEARS. IN THE SUBSEQUENT ASSESSMENT YEARS, THE PROFITS DERIVED FROM THE DEVELOPMENT OF INDUSTRIAL PARK GIGA SPACE HAVE BEEN CONSIDERED FOR DEDUCTION U/S 80 - IA(4)(III) OF THE ACT BY THE ASSES SING OFFICER. IN THE INSTANT ASSESSMENT YEAR 2007 - 08, WHICH IS THE FIRST YEAR OF CLAIM BY THE ASSESSEE, THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE REJECTED THE CLAIM. THE GROUNDS ON WHICH THE SAID CLAIM HAS BEEN DENIED, HAVE ALREADY BEEN ENUMERAT ED BY US IN THE EARLIER PART OF THIS ORDER. ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 15 38. BEFORE WE PROCEED TO ADDRESS THE CONTROVERSY SURROUNDING THE OBJECTIONS RAISED BY THE REVENUE, IT WOULD BE APPROPRIATE TO BRIEFLY TOUCH - UPON THE RELEVANT PROVISIONS OF THE ACT AND THE CLAUSES OF THE IPS, 2 008 IN QUESTION. SECTION 80 - IA OF THE ACT PRESCRIBES FOR DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT, ETC.. SUB - SECTION (1) OF SECTION 80 - IA PRESCRIBES THAT WHERE THE GROSS T OTAL INCOME OF ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB - SECTION (4), THERE SHALL BEEN ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE A DEDUCTION OF AN AMOUNT EQUAL TO HUN DRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE SECTION. SUB - SECTION (2) OF SECTION 80 - IA PRESCRIBES THAT THE DEDUCTION SPECIFIED IN SUB - SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY OR STARTS PROVID ING TELECOMMUNICATION SERVICES OR DEVELOPS AN INDUSTRIAL PARK OR DEVELOPS A SPECIAL ECONOMIC ZONE OR GENERATES POWER OR COMMENCES TRANSMISSION OR DISTRIBUTION OF POWER OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNIZATION OF THE EXISTING TRANSMISSION OR D ISTRIBUTION LINES. SHORN OF OTHER DETAILS, WE MAY NOW COME TO SUB - SECTION (4) OF SECTION 80 - IA, WHICH ENUMERATES THE VARIOUS BUSINESSES TO WHICH THE PROVISIONS OF SECTION 80 - IA OF THE ACT ARE APPLICABLE, SUCH BUSINESS BEING REFERRED TO AS THE ELIGIBLE BU SINESS. FOR THE PURPOSE OF THE PRESENT CONTROVERSY, WE ARE CONCERNED WITH THE SUB - CLAUSE (III) OF SUB - SECTION (4) TO SECTION 80 - IA OF THE ACT, WHOSE RELEVANT PORTION READS AS UNDER : - (III) ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINT AINS AND OPERATES AN INDUSTRIAL PARK [OR SPECIAL ECONOMIC ZONE] NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THAT GOVERNMENT FOR THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 1997 AND ENDING ON THE 31ST DAY OF MAR CH, [2006] : [ PROVIDED THAT . .. [ PROVIDED FURTHER THAT IN THE CASE OF ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK, THE PROVISIONS OF THIS CLAUSE SHALL HAVE EFFECT AS IF FOR THE FIGURES, LETT ERS AND WORDS 31ST DAY OF MARCH, 2006, THE FIGURES, LETTERS AND WORDS 31ST DAY OF MARCH, 2011' HAD BEEN SUBSTITUTED;] 39. IN TERMS OF THE AFORESAID, ANY UNDERTAKING WHICH IS ENGAGED IN (I) DEVELOPING; (II) DEVELOPING AND OPERATING; OR (III) MAINTAININ G AND OPERATING AN INDUSTRIAL PARK NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL GOVERNMENT FOR THE PERIOD BEGINNING ON 1 ST DAY OF APRIL, 1997 AND ENDING ON 31 ST MARCH, 2006 SHALL BE ELIGIBLE FOR THE BENEFIT OF SECT ION 80 - IA OF THE ACT. IT MAY BE NOTED THAT BY THE FINANCE (NO.2) ACT, 2006, THE APPLICABILITY OF SUB - CLAUSE (III) WAS EXTENDED FROM 31.03.2006 TO 31.03.2009. IN OTHER WORDS, ANY UNDERTAKING WHICH WAS ENGAGED IN (I) DEVELOPING; (II) DEVELOPING AND OPERATI NG; OR (III) MAINTAINING AND OPERATING AN INDUSTRIAL PARK SHALL BE ELIGIBLE FOR DEDUCTION FOR THE PERIOD BEGINNING ON 1 ST DAY OF APRIL, 1997 AND ENDING ON 31 ST MARCH, 2009. 40. NOTABLY, FOR THE PERIOD UNDER CONSIDERATION BEFORE US, THE CENTRAL GOVERNMENT FORMULATED A SCHEME IN EXERCISE OF THE POWERS UNDER CLAUSE (III) OF SUB - SECTION (4) OF SECTION 80 - IA OF THE ACT AND IT WAS CALLED INDUSTRIAL PARK SCHEME, 2008. THE SAID SCHEME DEFINES INDUSTRIAL PARK IN CLAUSE 2(H) AS UNDER: - 2(H) INDUSTRIAL PARK MEANS A PROJECT IN WHICH PLOTS OF DEVELOPED SPACE OR BUILT UP SPACE OR A COMBINATION, WITH COMMON FACILITIES AND QUALITY INFRASTRUCTURE FACILITIES, IS DEVELOPED AND MADE AVAILABLE TO THE UNITS FOR THE ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 16 PURPOSES OF INDUSTRIAL ACTIVITIES OR COMMERCIAL ACTIVIT IES IN ACCORDANCE WITH THIS SCHEME. 41. SIMILARLY, CLAUSE 2(I) OF THE SCHEME DEFINES INFRASTRUCTURE FACILITY AS UNDER: - 2(I) INFRASTRUCTURE FACILITY MEANS FACILITIES REQUIRED FOR DEVELOPMENT OPERATION AND MAINTENANCE OF THE INDUSTRIAL PARK AND INCL UDE ROADS (INCLUDING APPROACH ROADS), WATER SUPPLY, SEWERAGE AND EFFLUENT TREATMENT FACILITIES, SOLID WASTE MANAGEMENT FACILITIES, TELECOM NETWORK, GENERATION AND DISTRIBUTION OF POWER, AIR CONDITIONING. 42. CLAUSE 2(F) OF THE SCHEME DEFINES THE TERM DA TE OF COMMENCEMENT AS UNDER : - 2(F) DATE OF COMMENCEMENT MEANS THE DATE OF OBTAINING THE COMPLETION CERTIFICATE OR OCCUPATION CERTIFICATE, AS THE CASE MAY BE, FROM THE RELEVANT LOCAL AUTHORITY, CERTIFYING THEREBY THAT ALL THE REQUIRED DEVELOPMENT ACTI VITIES FOR THE PROJECT HAVE BEEN COMPLETED. 43. CLAUSE 3 OF THE SCHEME PROVIDES FOR THE PROCEDURE FOR APPROVAL, WHICH READS AS UNDER : - (1) ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK MAY MAKE AN A PPLICATION FOR NOTIFICATION UNDER CLAUSE (III) OF SUB - SECTION (4) OF SECTION 80 - IA OF THE ACT, IN THE PRESCRIBED FORM, IPS - I, TO THE SECRETARY (ITA - I SECTION), CENTRAL BOARD OF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, OF DIRECT TAXES, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELH I. (2) THE CENTRAL BOARD OF DIRECT TAXES SHALL PROCESS THE APPLICATION FOR APPROVAL AND NOTIFICATION BY THE CENTRAL GOVERNMENT AND FOR THIS PURPOSE IT MAY CALL FOR REPORTS FROM OTHER DEPARTMENTS OR AGENCIES, AS IT MAY DEEM FIT. 44. CLAUSE 4 OF THE SCHEM E PROVIDES THE CRITERIA FOR APPROVAL, WHICH READS AS UNDER : - 4. AN UNDERTAKING SHALL BE CONSIDERED FOR NOTIFICATION UNDER CLAUSE (III) OF SUB - SECTION (4) OF SECTION 80 - IA OF THE ACT, IF IT FULFILS ALL OF THE FOLLOWING CONDITIONS, NAMELY : - (1) THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK SHOULD BE ON OR AFTER THE 1 ST DAY OF APRIL, 2006 AND NOT LATER THAN 31 ST OF MARCH, [2011]; (2) THE ARE ALLOCATED OR TO BE ALLOCATED TO INDUSTRIAL UNITS SHALL NOT BE LESS THAN SEVENTY - FIVE PER CENT OF THE ALLOCABLE ARE A; (2A) THE AREA ALLOCATED OR TO BE ALLOCATED FOR COMMERCIAL ACTIVITY SHALL NOT BE MORE THAN TEN PER CENT OF THE ALLOCABLE AREA; (3) THERE SHALL BE A MINIMUM OF THIRTY INDUSTRIAL UNITS LOCATED IN AN INDUSTRIAL PARK; (4) FOR THE PURPOSE OF COMPUTING THE MIN IMUM NUMBER OF INDUSTRIAL UNITS; ALL UNITS OF A PERSON AND HIS ASSOCIATED ENTERPRISES WILL BE TREATED AS A SINGLE UNIT; (5) THE MINIMUM CONSTRUCTED FLOOR AREA SHALL NOT BE LESS THAN 15,000 SQUARE METERS; ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 17 (6) NO INDUSTRIAL UNIT, ALONG WITH THE UNITS OF AN A SSOCIATED ENTERPRISE, SHALL OCCUPY MORE THAN TWENTY - FIVE PER CENT OF THE ALLOCABLE AREA; (7) THE INDUSTRIAL PARK SHOULD BE OWNED BY ONLY ONE UNDERTAKING; AND, (8) INDUSTRIAL UNITS SHALL ONLY UNDERTAKE ACTIVITIES DEFINED IN CLAUSE (J) OF PARA (2). 45. CLA USES 5 AND 6 OF THE SCHEME PERTAIN TO GENERAL CONDITIONS AND WITHDRAWAL OF APPROVAL WHICH READ AS UNDER : - GENERAL CONDITIONS. 5. (1) THE INDUSTRIAL PARK SHALL BE CONSTRUCTED AS DEVELOPED ON THE DATE OF COMMENCEMENT. (2) TAX BENEFITS UNDER THE ACT W ILL BE AVAILABLE TO THE UNDERTAKING ONLY AFTER MINIMUM NUMBER OF THIRTY UNITS ARE LOCATED IN THE INDUSTRIAL PARK. (3) THE TAX BENEFITS UNDER THE ACT WILL BE AVAILABLE TO THE UNDERTAKING ONLY IF THE UNDERTAKING AND THE INDUSTRIAL PARK HAVE BEEN NOTIFIED BY CENTRAL BOARD OF DIRECT TAXES UNDER SECTION 80 - IA OF THE ACT. (4) THE TAX BENEFITS UNDER THE ACT WILL BE AVAILABLE ONLY TO THE UNDERTAKING NOTIFIED BY THE CENTRAL GOVERNMENT AND NOT TO ANY OTHER PERSON WHO MAY SUBSEQUENTLY DEVELOP, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES THE NOTIFIED INDUSTRIAL PARK, FOR ANY PERSON. (5) THE UNDERTAKING MUST KEEP SEPARATE BOOKS OF ACCOUNT FOR THE INDUSTRIAL PARK AND MUST FILE ITS INCOME - TAX RETURNS BY THE DUE DATE TO THE INCOME - TAX DEPARTMENT. INCOME - TAX DEPARTMENT. (6) AN INDUSTRIAL PARK APPROVED UNDER INDUSTRIAL PARK SCHEME, 2002 WILL CONTINUE TO BE GOVERNED BY THE PROVISIONS OF THAT SCHEME TO THE EXTENT IT IS NOT IN CONTRAVENTION WITH THE PROVISIONS OF ACT, AS AMENDED FROM TIME TO TIME. (7) THE UNDERTAKING SHALL ELECTRONICALLY FURNISH A N ANNUAL REPORT TO THE CENTRAL BOARD OF DIRECT TAXES IN FORM IPS - II. WITHDRAWAL APPROVAL. 6. THE CENTRAL GOVERNMENT MAY WITHDRAW THE APPROVAL GIVEN TO AN UNDERTAKING UNDER THIS SCHEME IF THE UNDERTAKING FAILS TO COMPLY WITH ANY OF THE CONDITIONS LISTED IN PARAGRAPHS 4 AND 5 OF THIS SCHEME : PROVIDED THAT BEFORE WITHDRAWAL OF APPROVAL, THE UNDERTAKING SHALL BE GIVEN AN OPPORTUNITY OF BEING HEARD BY THE CENTRAL GOVERNMENT. 13. HAVING TAKEN NOTE OF THE PROVISIONS OF THE SCHEME, REFERENCE WAS MADE TO RUL E 18C OF THE RULES, WHICH IN TURN, DEALS WITH ELIGIBILITY FOR CLAIMING THE DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT, WHICH READS AS UNDER: - 46. HAVING TAKEN NOTE OF THE PROVISIONS OF THE SCHEME, WE MAY ALSO REFER TO RULE 18C OF THE INCOME TAX RULES , 1962 (IN SHORT THE RULES) WHICH DEALS WITH THE ELIGIBILITY OF AN INDUSTRIAL PARK FOR BENEFITS OF SECTION 80 - IA(4)(III) OF THE ACT. RULE 18C OF THE RULES, AS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION READS AS UNDER : - ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 18 ELIGIBILITY OF INDU STRIAL PARKS FOR BENEFITS UNDER SECTION 80 - IA(4)(III). 18C. (1) THE UNDERTAKING SHALL BEGIN TO DEVELOP, DEVELOP AND OPERATE OR MAINTAIN AND OPERATE AN INDUSTRIAL PARK ANY TIME DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 2006, AND ENDING ON THE 31 S T DAY OF MARCH, [2011]. (2) THE UNDERTAKING AND THE INDUSTRIAL PARK SHALL BE NOTIFIED BY THE CENTRAL GOVERNMENT UNDER THE INDUSTRIAL PARK SCHEME, 2008. (3) THE UNDERTAKING SHALL CONTINUE TO FULFILL THE CONDITIONS ENVISAGED IN THE INDUSTRIAL PARK SCHEME, 20 08. 47. FROM A PERUSAL OF THE AFORESAID RELEVANT PROVISIONS OF THE ACT, RULES AND SCHEME, IT IS NOTICED AS FOLLOWS. THAN AN UNDERTAKING WHICH IS ENGAGED IN (I) DEVELOPING; (II) DEVELOPING AND OPERATING; OR (III) MAINTAINING AND OPERATING AN INDUSTRIAL P ARK NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE SCHEME SHALL BE ELIGIBLE FOR THE BENEFITS OF SECTION 80 - IA(4)(III) OF THE ACT. THE AFORESAID THREE CATEGORIES ARE DISTINCT AND SO FAR AS THE ASSESSEE IS CONCERNED, IT HAS CLAIMED APPROVAL UNDER THE SCHEME ON THE STRENGTH OF IT BEING ENGAGED IN DEVELOPING OF AN INDUSTRIAL PARK. THEREFORE, IT IS IN THE AFORESAID CONTEXT THAT ONE HAS TO DETERMINE THE REQUIREMENTS WHICH THE ASSESSEE IS CALLED UPON TO FULFILL IN ORDER TO CLAIM DEDUCTION U/S 80 - IA(4) (III) OF THE ACT. 14. THE TRIBUNAL THEN REFERRED TO THE FACTUAL ASPECTS OF THE CASE AND THE PROVISIONS OF THE ACT AND HELD AS UNDER: - 49. NOW, THE CLAIM OF THE ASSESSEE IS THAT IT STARTED THE PROCESS OF DEVELOPMENT OF THE INDUSTRIAL PARK SOMEWHERE IN OCTOBER, 2004 AND THE DEVELOPMENT OF THE INDUSTRIAL PARK SOMEWHERE IN OCTOBER, 2004 AND THE CONSTRUCTION WAS SPREAD OVER A NUMBER OF YEARS. AS AND WHEN THE INDIVIDUAL UNITS WERE BEING COMPLETED, ASSESSEE SOLD IT TO THE CLIENTS. THE ASSESSEE WAS OFFERING AND RECOGNIZING INCOME ON SUCH SALES IN THE RESPECTIVE YEARS, AND THE INCOME UNDER CONSIDERATION THIS YEAR IS FROM THE SALE OF UNITS. DURING THE YEAR UNDER CONSIDERATION, ASSESSING OFFICER HAS NOTED THAT ONLY 21 UNITS WERE LOCATED IN THE INDUSTRIAL PARK. IN OTHER WORDS, ONLY 21 UNITS WERE OPERATIONAL AND NOT THE COMPLETE 3 0 UNITS, I.E. THE TOTAL NUMBER OF UNITS WHICH WERE TO BE DEVELOPED IN THE INDUSTRIAL PARK. THE ASSESSING OFFICER HAS REFERRED TO CLAUSE 2(F) OF THE SCHEME TO SAY THAT THE DATE OF COMMENCEMENT OF INDUSTRIAL PARK IS THE DATE ON WHICH THE COMPLETION CERTIF ICATE WAS OBTAINED FROM THE LOCAL AUTHORITY CERTIFYING THEREBY THAT ALL THE REQUIRED DEVELOPMENT ACTIVITIES OF THE PROJECT HAS BEEN COMPLETED. AS PER THE ASSESSING OFFICER, IN THIS CASE, THE CERTIFICATE FROM THE LOCAL AUTHORITY HAS BEEN OBTAINED ON 09.05. 2007 AND THEREFORE IN TERMS OF THE SCHEME, THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK IS TO BE UNDERSTOOD AS 09.05.2007 WHICH FALLS BEYOND THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. ON THIS BASIS, IT IS SAID THAT THE INDUS TRIAL PARK OF THE ASSESSEE WAS NOT COMPLETE AS ON 31.03.2007, AND THUS DEDUCTION U/S 80 - IA OF THE ACT COULD NOT BE ALLOWED FOR ASSESSMENT YEAR 2007 - 08. 50. IT IS TO BE APPRECIATED THAT CLAUSE 2(F) OF THE SCHEME DEFINING THE EXPRESSION DATE OF COMMENCEM ENT IS RELEVANT IN THE CONTEXT OF CONDITION (1) OF CLAUSE 4 OF THE SCHEME WHICH PRESCRIBES THE CRITERIA FOR APPROVAL OF AN INDUSTRIAL PARK. CONDITION (1) OF CLAUSE 4 OF THE SCHEME PRESCRIBES THAT AN UNDERTAKING SHALL BE CONSIDERED FOR NOTIFICATION UNDER CLAUSE (III) OF SUB - SECTION (4) OF SECTION 80 - IA OF THE ACT IF THE DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK IS ON OR AFTER 01.04.2006 AND NOT LATER THAN 31.03.2009. IN THIS CASE, DATE OF COMMENCEMENT OF 09.05.2007 DETERMINED IN ACCORDANCE WITH CLAUSE 2 (F) OF THE SCHEME FULFILLS THE CONDITION (1) OF CLAUSE 4 OF THE SCHEME. PERTINENTLY, THE MEANING OF THE EXPRESSION DATE OF COMMENCEMENT CONTAINED IN CLAUSE 2(F) OF THE SCHEME IS TO BE UNDERSTOOD IN THE CONTEXT OF THE SCHEME. THE QUESTION IS AS TO WHETH ER THE DATE OF COMMENCEMENT IN CLAUSE 2(F) OF THE SCHEME CAN BE USED TO DENY A CLAIM ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 19 OF DEDUCTION U/S 80 - IA(4) OF THE ACT, ESPECIALLY IN THE FACE OF AN UNDISPUTED FACT - SITUATION THAT THE UNDERTAKING OF THE ASSESSEE CONTAINS TO BE APPROVED/NOTIFIED UNDER THE SCHEME. IF A CONDITION PRESCRIBED IN THE SCHEME IS FOUND TO FULFILLED FOR THE PURPOSES OF NOTIFICATION OF THE SCHEME U/S 80 - IA(4)(III) OF THE ACT, CAN IT BE SIMULTANEOUSLY SAID THAT THE SAME CONDITION IS NOT FULFILLED IN THE CONTEXT OF APPLICATION OF SECTION 80 - IA(4)(III) OF THE ACT R.W. RULE 18C OF THE RULES; AND, THE ANSWER, IN OUR VIEW, IS OBVIOUSLY NO. 51. AT THIS POINT, WE MAY ALSO REFER TO RULE 18C OF THE RULES WHICH PRESCRIBES THE ELIGIBILITY OF AN INDUSTRIAL PARK FOR BENEFITS OF SECTION 80 - I A(4)(III) OF THE ACT. THE PROVISIONS OF THE RULE AS APPLICABLE FOR THE YEAR UNDER CONSIDERATION HAVE BEEN REPRODUCED BY US IN THE EARLIER PARAGRAPHS. SUB - RULE (1) OF RULE 18C OF THE RULES SAYS THAT THE UNDERTAKING OUGHT TO BEGIN TO DEVELOP, DEVELOP AND O PERATE OR MAINTAIN AND OPERATE AN INDUSTRIAL PARK AT ANY TIME DURING THE PERIOD BEGINNING ON 01.04.2006 AND ENDING ON 31.03.2009. SUB - RULE (2) OF RULE 18C OF THE RULES SAYS THAT THE UNDERTAKING OF AN INDUSTRIAL PARK SHALL BE NOTIFIED BY THE CENTRAL GOVERN MENT UNDER THE IPS, 2008. SUB - RULE (3) OF RULE 18C OF THE RULES SAYS THAT THE UNDERTAKING SHALL CONTINUE TO FULFILL THE CONDITIONS ENVISAGED THE IPS, 2008. NOTABLY, THERE IS NO DISPUTE THAT THE UNDERTAKING OF THE ASSESSEE I.E. INDUSTRIAL PARK GIGA SPAC E IS DULY NOTIFIED BY THE CENTRAL GOVERNMENT UNDER THE IPS, 2008 AND IT CONTINUES TO FULFILL THE CONDITIONS ENVISAGED IN THE IPS, 2008 INASMUCH AS THERE IS NO WITHDRAWAL OF APPROVAL BY THE CENTRAL GOVERNMENT, AS PROVIDED FOR IN CLAUSE 6 OF THE SCHEME. THE REFORE, TO SAY ON THE STRENGTH OF CLAUSE 2(F) OF THE SCHEME THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF THE SCHEME FOR STAKING CLAIM U/S 80 - IA(4)(III) OF THE ACT IN THE FACE OF THE FACT THAT THE UNDERTAKING I.E. THE AN INDUSTRIAL PARK CONTI NUES TO BE NOTIFIED BY THE CENTRAL GOVERNMENT, IS UNJUSTIFIED AND UNCALLED FOR. 52. THE REVENUE HAS EMPHASIZED THAT THE DEVELOPMENT ENVISAGED IN THE APPROVAL OUGHT TO HAVE BEEN COMPLETED BY THE ASSESSEE BEFORE 31.03.2007 ITSELF APPROVAL OUGHT TO HAVE BEEN COMPLETED BY THE ASSESSEE BEFORE 31.03.2007 ITSELF I.E. WITHIN THE PREVIOUS YE AR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, BEFORE IT COULD CLAIM THE BENEFITS OF SECTION 80 - IA(4)(III) OF THE ACT. THERE IS NO DISPUTE THAT THE UNDERTAKING OF THE ASSESSEE IS NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE IPS, 2008 FOR THE PURPOSES OF CLAUSE (III) OF SECTION 80 - IA(4) OF THE ACT. MOREOVER, THE ELIGIBILITY CONDITIONS PRESCRIBED IN RULE 18C OF THE RULES, WHICH WE HAVE REPRODUCED IN THE EARLIER PARAS AND WHICH IS RELEVANT FOR THE YEAR UNDER CONSIDERATION, BELIES THE ST AND OF THE REVENUE. THE OPENING SENTENCE IN SUB - RULE (1) OF RULE 18C OF THE RULES SAYS THAT THE UNDERTAKING SHALL BEGIN TO DEVELOP; DEVELOP AND OPERATE; AND, MAINTAIN AND OPERATE . THE AFORESAID WORDINGS SHOW THAT THE INDUSTRIAL PARK IN QUESTION IS ELIGIBLE FOR THE BENEFIT OF SECTION 80 - IA(4)(III) OF THE ACT IN THE INSTANT YEAR ALSO. QUITE CLEARLY, AN UNDERTAKING WHICH BEGINS TO DEVELOP IS ALSO ELIGIBLE FOR THE BENEFIT OF SECTION 80 - IA(4)(III) OF THE ACT. IN THIS CASE, IN THE INSTANT ASSESSMENT YEA R, ASSESSEE HAS DEVELOPED AND SOLD 21 UNITS OUT OF THE TOTAL 30 UNITS ENVISAGED IN THE APPROVAL AND IT HAS OBTAINED THE COMPLETION CERTIFICATE ON 09.05.2007 AFTER COMPLETING THE BALANCE UNITS. THE UNITS SOLD BY THE ASSESSEE HAVE YIELDED PROFITS DURING THE YEAR UNDER CONSIDERATION WHICH THE ASSESSEE HAS DECLARED IN ITS PROFIT & LOSS ACCOUNT. THUS, GOING BY THE ELIGIBILITY CONDITIONS CONTAINED IN RULE 18C OF THE RULES, THE UNDERTAKING OF THE ASSESSEE WHICH STANDS NOTIFIED FOR THE PURPOSES OF SECTION 80 - IA(4 )(III) OF THE ACT, IS ENTITLED TO THE BENEFITS OF SECTION 80 - IA(4)(III) OF THE ACT QUA THE PROFITS FROM SUCH DEVELOPMENT WHICH HAVE BEEN DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION. THE STAND OF THE REVENUE THAT THE C LAIM OF DEDUCTION CAN BE AVAILED ONLY AFTER THE PARK IS DEVELOPED I.E. ONLY AFTER ISSUANCE OF COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY DOES NOT EMERGE FROM THE READING OF SECTION 80 - IA(4)(III) OF THE ACT R.W. RULE 18C OF THE RULES, AS IT STANDS FOR THE PERIOD UNDER CONSIDERATION. 53. AT THIS STAGE, WE MAY ALSO REFER TO THE STAND OF THE REVENUE BASED ON THE CLAUSE 5 OF SCHEME. AS PER THE CONDITION (2) OF CLAUSE 5, IT IS PRESCRIBED THAT THE TAX BENEFITS UNDER THE ACT WILL BE AVAILABLE TO THE UNDERTAK ING ONLY AFTER MINIMUM NUMBER OF THIRTY UNITS ARE LOCATED IN THE INDUSTRIAL PARK. ON THE STRENGTH OF THIS, IT ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 20 IS POINTED OUT THAT AS ON 31.03.2007 I.E. BEFORE THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE MINIMUM NUMBER OF THIRTY UNITS ARE NOT LOCATED IN THE INDUSTRIAL PARK; AND, THUS AS PER THE REVENUE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION IN THIS ASSESSMENT YEAR. THE AFORESAID CONDITION CONTAINED IN CLAUSE 5(2) OF THE SCHEME HAVE TO BE UNDERSTOOD IN THE CONTEXT OF CONDITION (3) OF CLAUSE 4 OF THE SCHEME. THE CONDITION (3) OF CLAUSE 4 OF THE SCHEME PRESCRIBES THAT FOR OBTAINING APPROVAL, THE INDUSTRIAL PARK SHOULD HAVE A MINIMUM OF THIRTY INDUSTRIAL UNITS LOCATED IN IT. THE GENERAL CONDITION CONTAIN ED IN CLAUSE 5(2) ONLY ECHOES THE CRITERIA FOR APPROVAL PRESCRIBED IN CLAUSE 4 OF THE SCHEME. HOWEVER, THE CONDITIONS PRESCRIBED IN THE SCHEME ARE FOR THE PURPOSES OF ENABLING THE CENTRAL GOVERNMENT TO CONSIDER AN UNDERTAKING FIT FOR NOTIFICATION FOR THE PURPOSES OF SECTION 80 - IA(4)(III) OF THE ACT. THE APPROVAL GRANTED TO THE INDUSTRIAL PARK OF THE ASSESSEE UNDER THE SCHEME CONTINUES TO HOLD THE FIELD AND THERE IS NO CASE OF THE REVENUE THAT IT HAS BEEN WITHDRAWN IN TERMS OF CLAUSE 6 OF THE SCHEME. THUS , IT IS SAFE TO DEDUCE THAT THE INDUSTRIAL PARK OF THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS PRESCRIBED IN CLAUSE 5 OF THE SCHEME. 15. THE NEXT ASPECT WHICH WAS CONSIDERED BY THE TRIBUNAL WAS THAT WHETHER THE ASSESSEE CAN CLAIM THE DEDUCTION UNDER SE CTION 80IA(4)(III) OF THE ACT IN THE YEAR WHEN IT PARK IS UNDER DEVELOPMENT AND HAS NOT BEEN COMPLETED AND THE MINIMUM NUMBER OF 30 UNITS IN THE INDUSTRIAL PARK HAVE NOT BEEN COMPLETED, THEN IS THE ASSESSEE ELIGIBLE TO CLAIM THE DEDUCTION IN THOSE YEARS WH EN IT PARK IS BEING DEVELOPED. THE TRIBUNAL HELD AS UNDER: - DEVELOPED. THE TRIBUNAL HELD AS UNDER: - 55. WE FIND ENOUGH MERIT IN THE INTERPRETATION PUT - FORTH BY THE ASSESSEE. OSTENSIBLY, THE CONDITIONS IN THE SCHEME HAVE BEEN INSERTED WITH AN OBJECTIVE THAT ONCE AN UNDERTAKING IS CONSIDERED FO R NOTIFICATION U/S 80 - IA(4)(III) OF THE ACT, THERE IS A MECHANISM AVAILABLE TO CHECK AS TO WHETHER THE CONDITIONS PRESCRIBED IN THE SCHEME HAVE BEEN COMPLIED WITH. IN OTHER WORDS, IN THE CONTEXT OF THE PRESENT CONTROVERSY VIS - - VIS CLAUSE 5(2) OF THE SCHE ME THE OBJECTIVE IS TO ENSURE THAT THE ASSESSEE DOES NOT CLAIM DEDUCTION WITHOUT PUTTING THE PARK TO USE FOR MINIMUM 30 INDUSTRIAL UNITS IN ACCORDANCE WITH THE SCHEME APPROVED BUT IT DOES NOT ENVISAGE THAT THE LOCATION OF MINIMUM 30 INDUSTRIAL UNITS BE SEE N FOR EVERY ASSESSMENT YEAR FOR WHICH THE CLAIM IS LODGED, MORESO, WHEN THE PROFITS ARE DECLARED BY AN ASSESSEE BASED ON ITS NORMAL METHOD OF INCOME RECOGNITION. IT MAY BE POINTED OUT THAT THE PROVISIONS OF SECTION 80 - IA(4)(III) OF THE ACT ITSELF ENVISAGE S DEDUCTION IN CASE OF AN UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK FOR THE PERIOD BEGINNING ON THE 1 ST APRIL, 2006 AND ENDING ON OR BEFORE 31 ST MARCH, 2009. SIMILARLY, THE SCHEME ALSO ENVISAGES THAT TH E DATE OF COMMENCEMENT OF AN INDUSTRIAL PARK SHOULD BE ON OR AFTER 01.04.2006 BUT NOT LATER THAN 31.03.2009. WHERE THE PROJECTS INVOLVE A PERIOD OF GESTATION IN ITS CONSTRUCTION, THE PERIOD OF DEVELOPMENT MAY EXTEND BEYOND ONE ASSESSMENT YEAR. THEREFORE, ASSESSEE WOULD BE ELIGIBLE TO CLAIM DEDUCTION WITH RESPECT TO THE PROFITS FROM INDUSTRIAL PARK OVER MULTIPLE ASSESSMENT YEARS SO LONG AS THE DATES PRESCRIBED IN THE ACT AS WELL AS IN THE SCHEME FOR DEVELOPMENT OF THE INDUSTRIAL PARK ARE ADHERED TO. THE A SSESSEE WOULD DECLARE PROFITS ON THE BASIS OF ITS METHOD OF ACCOUNTING AND IN OUR VIEW, IN RESPECT OF THE RELEVANT ASSESSMENT YEARS, ANY PROFITS DERIVED FROM THE ELIGIBLE BUSINESS CATEGORIZED IN SECTION 80 - IA(4)(III) OF THE ACT SHALL BE ENTITLED FOR A DEDU CTION U/S 80 - IA(4)(III) OF THE ACT. IN OUR VIEW, SO LONG AS THE PROFITS ARE DERIVED FROM THE ELIGIBLE BUSINESS AND THE BUSINESS OF THE UNDERTAKING HAS BEEN DEVELOPED IN ACCORDANCE WITH THE SCHEME IN WHICH IT IS NOTIFIED, THEN ASSESSEE SHALL BE ELIGIBLE FO R THE BENEFIT OF SECTION 80 - IA(4)(III) OF THE ACT. ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 21 56. IN THIS CONTEXT, WE MAY MENTION THAT A SIMILAR CONTROVERSY HAD ARISEN IN THE CONTEXT OF THE CLAIM OF DEDUCTION U/S 80 - IB(10) OF THE ACT, WHEREIN AN ASSESSEE CAN CLAIM DEDUCTION IN THE YEARS WHEN IT SE LLS SOME OF THE RESIDENTIAL UNITS ALTHOUGH THE HOUSING PROJECT IS STILL UNDER CONSTRUCTION PERIOD AS STIPULATED IN SECTION 80 - IB(10) OF THE ACT. THE CBDT VIDE INSTRUCTION NO.4 OF 2009 DATED 30.06.2009 CLARIFIED THAT THE DEDUCTION U/S 80 - IB(10) OF THE ACT CAN BE CLAIMED ON A YEAR TO YEAR BASIS WHERE AN ASSESSEE WAS SHOWING PROFITS FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. IT HAS ALSO BEEN CLARIFIED BY THE CBDT THAT ON A LATER DATE, IF IT IS FOUND THAT THE CONDITION OF THE COMPLETION OF PROJECT WITHIN THE STIPULATED TIME IS NOT FULFILLED BY THE ASSESSEE THEN THE ASSESSING OFFICER CAN WITHDRAW THE DEDUCTION ALLOWED TO THE ASSESSEE IN EARLIER YEARS. IN OUR CONSIDERED OPINION, A SIMILAR ANALOGY HAS TO BE APPLIED IN THE PRESENT CASE TO UNDERSTAND TH E IMPORT AND MEANING OF CONDITION (2) OF CLAUSE 5 OF THE SCHEME. IN OUR CONSIDERED OPINION, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN DISALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80 - IA(4)(III) OF THE ACT MERELY BECAUSE THE MINIMUM NUMBER OF THIR TY UNITS ARE NOT LOCATED IN THE INDUSTRIAL PARK BEFORE 31.03.2007 WHEN OTHERWISE IT IS FACTUALLY TRUE THAT THE MINIMUM NUMBER OF UNITS HAVE BEEN LOCATED IN INDUSTRIAL PARK IN COMPLIANCE WITH PERIOD STIPULATED AND APPROVED IN THE SCHEME. THEREFORE, ON THIS ASPECT, WE FIND NO REASON TO UPHOLD THE OBJECTION OF THE REVENUE. 57. IN - FACT, THE CONTROVERSY BEFORE US IN RELATION TO THE CLAIM OF DEDUCTION U/S 80 - IA(4)(III) OF THE ACT PERTAINING TO THE INSTANT ASSESSMENT YEAR IS SIMILAR TO WHAT WAS CONSIDERED BY TH E MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FERANI HOTELS PVT. LTD. VS. DCIT, VIDE ITA NOS.1828 & 1829/MUM/2009 DATED 24.02.2012 PERTAINING TO ASSESSMENT YEARS 2004 - 05 AND 2005 - 06. THE AFORESAID DECISION WAS RELIED UPON BY THE ASSESSEE IN THE COURSE OF HEARING. IN THE CASE BEFORE THE MUMBAI BENCH OF THE TRIBUNAL, ASSESSEE HAD CLAIMED DEDUCTION U/S 80 - IA(4)(III) OF THE ACT IN RESPECT OF PROFITS FROM DEVELOPMENT OF AN INDUSTRIAL PARK. THE CLAIM WAS DISPUTED BY THE REVENUE FOR ASSESSMENT YEARS 2004 - 05 AND 2005 - 06. THE DISPUTED BY THE REVENUE FOR ASSESSMENT YEARS 2004 - 05 AND 2005 - 06. THE OBJECTION OF THE REVENUE WAS THAT THE NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT NOTIFYING THE INDUSTRIAL PARK WAS DATED 12.07.2006. IT WAS ALSO THE CASE OF THE REVENUE THAT AS ON THE LAST DAY OF THE RELEVANT ASSESSMENT YEARS I.E. 2004 - 0 5 AND 2005 - 06, ALL THE 33 UNITS APPROVED IN THE SCHEME WERE NOT DEVELOPED IN THE INDUSTRIAL PARK. AS PER THE REVENUE, THE NOTIFICATION WAS ALSO ISSUED BY THE CENTRAL GOVERNMENT ON 12.07.2006, WHICH WAS POSTERIOR TO THE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 . THE CLAIM OF THE ASSESSEE WAS THAT IT WAS FOLLOWING PERCENTAGE COMPLETION METHOD OF ACCOUNTING AND WAS OFFERING INCOME ON THE BASIS OF THE PERCENTAGE OF CONSTRUCTION COMPLETED. THUS, THE PROFITS FROM THE INDUSTRIAL PARK WERE ALSO OFFERED FOR ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 ON WHICH CLAIM FOR DEDUCTION U/S 80 - IA(4)(III) OF THE ACT WAS MADE. ASSESSEE ALSO SUBMITTED THAT ULTIMATELY ALL THE CONDITIONS PRESCRIBED FOR DEDUCTION U/S 80 - IA(4)(III) OF THE ACT WERE COMPLIED WITH AND THAT IN THE SUBSEQUENT A SSESSMENT YEAR 2006 - 07 ASSESSEE WAS INDEED ALLOWED THE DEDUCTION BY THE ASSESSING OFFICER. THE TRIBUNAL HELD THAT THE DENIAL OF DEDUCTION ON THE AFORESAID GROUNDS IN ASSESSMENT YEAS 2004 - 05 AND 2005 - 06 WAS NOT JUSTIFIED. IT WAS SPECIFICALLY NOTED THAT BE CAUSE IN THE FIRST TWO YEARS THE MINIMUM NUMBER OF UNITS WERE NOT LOCATED IN THE INDUSTRIAL PARK WAS NOT A VALID GROUND FOR DISALLOWING THE CLAIM ESPECIALLY WHEN IN THE ULTIMATE ANALYSIS THE INDUSTRIAL PARK WAS DEVELOPED IN ACCORDANCE WITH THE APPROVAL GRA NTED BY THE CENTRAL GOVERNMENT. THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL WORTHY OF NOTICE : - 25. FROM THE REASONS ASSIGNED BY THE REVENUE AUTHORITIES FOR REJECTING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80 - IA(4)(III) OF THE ACT, IT IS CLEAR THAT AN ASSESSEE WHO ADOPTS THE PERCENTAGE COMPLETION METHOD OF ACCOUNTING OF INCOME FROM DEVELOPING INDUSTRIAL PARK CAN GET DEDUCTION OF ONLY THAT PART OF THE PROFITS THAT ARE OFFERED TO TAX IN THE YEAR IN WHICH THE NOTIFICATION IS RECEIVED. HAD THE ASSESSEE IN THE PRESENT CASE FOLLOWED PROJECT COMPLETION OF METHOD OF ACCOUNTING OF INCOME FROM DEVELOPING INDUSTRIAL PARK, THE ASSESSEE WOULD HAVE GOT THE BENEFIT OF DEDUCTION OF THE ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 22 ENTIRE PROFITS FROM THE DEVELOPMENT OF INDUSTRIAL PARK. IT WILL RESULT IN A SITUATION WHERE THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE (SUCH AS THE ONE IN THE PRESENT CASE) WILL DENY THE BENEFIT AVAILABLE UNDER THE LAW. THE METHOD OF ACCOUNTING IS SUCH THAT THE ASSESSEE CAN NEVER GET THE BENEFIT EVEN IN A LATER YEAR. I T IS NO DOUBT TRUE THAT THE SATISFACTION OF THE CONDITIONS FOR GRANT OF DEDUCTION AS ON THE LAST DATE OF THE PREVIOUS YEAR IS NECESSARY. IF DUE TO SUBSEQUENT EVENTS THAT TAKE PLACE AFTER THE LAST DATE OF THE PREVIOUS YEAR, CONDITIONS FOR GRANT OF DEDUCTION ARE SATISFIED, THEN THE ASSESSING OFFICER CAN TAKE COGNIZANCE OF THE SAME. THE CBDT IN INSTRUCTION NO.4/2009 DT. 30.06.2009 CLARIFIED THE POSITION WITH REGARD TO ALLOWING DEDUCTION U/S.80 - 18(10) OF THE ACT. U/S.80 - IB(10) OF THE ACT, DEDUCTION OF 100% PRO FITS DERIVED FROM DEVELOPING AND BUILDING HOUSING PROJECTS IS ALLOWED. ONE OF THE CONDITIONS TO BE SATISFIED FOR CLAIMING SUCH DEDUCTION WAS THAT THE HOUSING PROJECT SHOULD HAVE COMMENCED CONSTRUCTION ON OR AFTER 1.10.1998 AND COMPLETED THE CONSTRUCTION WI THIN 4 YEARS FROM THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. THE QUESTION AROSE WHETHER THE DEDUCTION CAN BE CLAIMED BY ASSESSEES WHO FOLLOW PERCENTAGE COMPLETION METHOD OF ACCOUNTING BY SHOWING PART OF THE PROFITS OR THE DEDUCTION WOULD BE AVAILABLE ONLY IN THE YEAR OF COMPLETION OF THE PROJECT U/S.80 - IB(10) OF THE ACT. THE CBDT CLARIFIED THAT DEDUCTION CAN BE CLAIMED ON A YEAR TO YEAR BASIS WHERE THE ASSESSEE IS SHOWING PROFIT FROM PARTIAL COMPLETION OF THE PROJECT EVERY YEAR. IT FURTHER CLARIFIED THAT IF THE CONDITION FOR COMPLETION OF THE PROJECT WITHIN THE SPECIFIED TIME LIMIT IS NOT SATISFIED, THE DEDUCTION GRANTED TO AN ASSESSEE IN EARLIER YEARS CAN BE WITHDRAWN. WE ARE OF THE VIEW THAT THERE IS NO REASON WHY S IMILAR BENEFIT SHOULD NOT BE EXTENDED TO ASSESSEE CLAIMING BENEFIT U/S.80 - IA(4)(III) OF THE ACT WHEN THE CONDITIONS FOR GRANT OF DEDUCTION WERE SATISFIED BY THE ASSESSEE EVEN BEFORE THE AO PASSED THE ORDER OF ASSESSMENT. THE FACTS OF THE PRESENT CASE JUSTI FY CONSIDERING THE PLEA OF THE ASSESSEE FOR GRANT OF DEDUCTION U/S.80 - IA(4)(III) CONSIDERING THE PLEA OF THE ASSESSEE FOR GRANT OF DEDUCTION U/S.80 - IA(4)(III) OF THE ACT IN RESPECT OF PROFITS DECLARED IN AY 04 - 05 AND 05 - 06 AND ALLOWING THE SAME AS ADMITTEDLY THE CONDITIONS FOR GRANT OF SUCH DEDUCTION WERE SATISFIED THOUGH AT A LATER POINT OF TIME BUT NEVERTHELESS BEFORE COMPLETION OF ASSESSMENT FOR THOSE ASSESSMENT YEARS. WE DIRECT ACCORDINGLY. THE APPEALS OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. 58. THE AFORESAID DECISION OF THE TRIBUNAL IN THE CASE OF FERANI HOTELS PVT. LTD. (S UPRA), IN OUR VIEW, FULLY COVERS THE CONTROVERSY BEFORE US. IN THE PRESENT CASE ALSO IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS DEVELOPED AND LOCATED THE MINIMUM NUMBER OF 30 INDUSTRIAL UNITS IN THE INDUSTRIAL PARK WITHIN THE PERIOD SPECIFIED IN THE SCHEM E AS WELL AS THE PROVISIONS OF SECTION 80 - IA(4)(III) OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT IN THE SUBSEQUENT ASSESSMENT YEARS, THE ASSESSING OFFICER HAS ALLOWED THE DEDUCTION U/S 80 - IA(4)(III) OF THE ACT. IN THE INSTANT ASSESSMENT YEAR, ASSESSEE HAS OPERATIONALISED 21 INDUSTRIAL UNITS OUT OF THE MINIMUM 30 REQUIRED TO BE DEVELOPED. THE BALANCE OF THE 9 UNITS HAVE BEEN COMPLETED ON 09.05.2007 I.E. THE DATE ON WHICH ASSESSEE HAS OBTAINED THE COMPLETION CERTIFICATE FROM THE PUNE MUNICIPAL CORPORATION. HYPOTHETICALLY SPEAKING, IF THE ASSESSEE HAD NOT RECOGNIZED THE PROFITS ON THE 21 UNITS SOLD DURING THE YEAR UNDER CONSIDERATION BUT WOULD HAVE WAITED RECOGNITION OF INCOME AFTER THE COMPLETION OF THE COMPLETE 30 UNITS, THEN SUCH PROFITS WOULD HAVE BEEN O FFERED BY THE ASSESSEE TO TAX IN THE SUBSEQUENT ASSESSMENT YEAR, WHEREIN IN ANY CASE THE ASSESSING OFFICER HAS HELD THE ASSESSEE ENTITLED FOR THE DEDUCTION U/S 80 - IA(4)(III) OF THE ACT. HOWEVER, ASSESSEE HAS DECLARED INCOME FROM THE SALE OF UNITS ON A PRO GRESSIVE BASIS I.E. IN THE YEAR IN WHICH THE PARTICULAR INDUSTRIAL UNITS HAVE BEEN SOLD. THIS HAS LEAD TO A CONFLICT BETWEEN THE ASSESSEE AND THE REVENUE WITH REGARD TO THE ASSESSEES CLAIM FOR DEDUCTION U/S 80 - IA(4)(III) OF THE ACT. THE MOOT QUESTION IS CAN THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE BE DETERMINATIVE OF ASSESSEES CLAIM FOR DEDUCTION U/S 80 - IA(4)(III) OF THE ACT ESPECIALLY IN A SITUATION WHERE ASSESSEE IS OTHERWISE SAID TO HAVE COMPLIED WITH THE REQUIREMENTS OF SECTION 80 - IA(4)(I II) OF THE ACT READ ALONG WITH THE PROVISIONS OF THE IPS, 2008 UNDER WHICH THE INDUSTRIAL PARK OF THE ASSESSEE HAS BEEN NOTIFIED. IN - FACT, IF THE STAND OF THE ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 23 REVENUE IS TO BE ACCEPTED, WHAT WOULD HAPPEN IS THAT ASSESSEES CLAIM FOR DEDUCTION U/S 80 - IA(4) (III) OF THE ACT SHALL BE DENIED IN THE INSTANT YEAR AND IN THE SUBSEQUENT YEARS ALSO ASSESSEE WOULD NOT BE ABLE TO CLAIM THE BENEFIT BECAUSE THE IMPUGNED PROFITS WOULD NOT HAVE BEEN ACCOUNTED FOR BY THE ASSESSEE IN THE SUBSEQUENT YEARS. THAT WOULD MEAN T HAT THE ASSESSEE WOULD NEVER GET THE BENEFIT OF SECTION 80 - IA(4)(III) OF THE ACT QUA THE IMPUGNED PROFITS DERIVED FROM THE DEVELOPMENT OF THE INDUSTRIAL PARK MERELY BECAUSE OF THE METHOD OF ACCOUNTING FOLLOWED. IN - FACT, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FERANI HOTELS PVT. LTD. (SUPRA) OBSERVED THAT THE REVENUE DESERVES TO BE SATISFIED THAT THE CONDITIONS FOR GRANT OF DEDUCTION ARE FULFILLED ON THE LAST DAY OF THE PREVIOUS YEAR, SO HOWEVER, IF THE SUBSEQUENT EVENTS AFTER THE LAST DATE OF THE P REVIOUS YEAR SHOW THAT THE CONDITIONS FOR GRANT OF DEDUCTION ARE FULFILLED, THEN THE ASSESSING OFFICER OUGHT TO TAKE COGNIZANCE OF THE SAME AND ALLOW THE CLAIM OF THE ASSESSEE. FOLLOWING THE AFORESAID PARITY OF REASONING, IN OUR VIEW, IN THE PRESENT CASE TOO IT IS UNDENIABLE THAT ASSESSEE HAS COMPLIED WITH THE REQUIREMENT OF LOCATING MINIMUM OF 30 INDUSTRIAL UNITS IN THE INDUSTRIAL PARK WITHIN THE PERIOD PRESCRIBED IN THE SCHEME, AND THEREFORE ITS CLAIM FOR ASSESSMENT YEAR 2007 - 08 WAS UNJUSTLY DISALLOWED. 16. THE BANGALORE BENCH OF TRIBUNAL IN PRIMAL PROJECTS (P) LTD. VS. DCIT (SUPRA) WHILE CONSIDERING THE IPS 2002 OBSERVED THAT WHETHER THE PROJECTS ARE APPROVED AND NOTIFICATIONS HAVE MADE BY THE APPROPRIATE AUTHORITIES, THE APPROVAL AND NOTIFICATION RUN BACK TO THE DATE OF COMMENCEMENT OF ACTIVITIES, THEREFORE, THE DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT CANNOT BE DECLINED ON THE GROUND DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT CANNOT BE DECLINED ON THE GROUND THAT THE ASSESSEE HAS STARTED FUNCTIONING EVEN BEFORE THE FORMAL ORDER OF APPROVAL AND NOTIFICATION. THE RELEVA NT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: - 19. THE IT PARKS DEVELOPED BY THE ASSESSEE COMPANY WERE APPROVED UNDER THE INDUSTRIAL PARK SCHEME, 2002. THE ASSESSEE HAD APPLIED THROUGH NON - AUTOMATIC APPROVAL TO GET ITS CAMPUSES APPROVED UNDER S. 80 - IA(4)( III) OF THE ACT. IN FACT THE ASSESSEE MADE APPLICATIONS IN RESPECT OF FIVE UNITS IN CAMPUS II - A AND FOUR UNITS EACH IN CAMPUSES 4A AND 4B. THE APPROVAL AS SOUGHT FOR BY THE ASSESSEE WAS GRANTED VIDE APPROVAL LETTER DT. 5TH DEC., 2006. CAMPUS II - A WAS NOTIF IED BY THE CBDT THROUGH LETTER DT. 31ST MAY, 2007. IN RESPECT OF CAMPUSES 4A AND 4B, THE MINISTRY'S APPROVAL WAS RECEIVED VIDE LETTER DT. 10TH APRIL, 2007 AND LATER ON NOTIFIED BY THE CBDT ON 31ST MAY, 2007. IT IS TO BE SEEN THAT ONCE THE PROJECTS ARE APPR OVED AND NOTIFICATIONS ARE MADE BY THE APPROPRIATE AUTHORITIES, THE APPROVAL AND THE NOTIFICATION RUN BACK TO THE DATE OF COMMENCEMENT OF THE ACTIVITIES. THIS IS FOR THE SIMPLE REASON THAT ONCE THE ASSESSEE HAS ACQUIRED THE LAND FROM A GOVERNMENT AGENCY FO R A SPECIFIC PURPOSE, THE ASSESSEE HAS TO START COMPLYING WITH THE CONDITIONS STIPULATED BY THE STATE GOVERNMENT AGENCY. DEVELOPING OF IT PARKS TAKES SUFFICIENT LONG TIME. THE ASSESSEE APPLIES FOR THE APPROVAL AND NOTIFICATION AS SOON AS THE PROJECT IS INI TIATED. IF THE ASSESSEE WAITS TO GET ORDER OF APPROVAL AND THE NOTIFICATION ORDER TO INITIATE THE PROJECT, THE PROJECT WOULD BE A NON - STARTER. IT IS ON THE BASIS OF THE APPLICATIONS ALREADY MADE TO THE CONCERNED AUTHORITIES THAT THE ASSESSEE IS CARRYING ON THE ESSENTIAL CONSTRUCTION ACTIVITIES WHICH CONSUMES A LOT OF TIME. THEREFORE, IT IS ALMOST IMPOSSIBLE TO INSIST THAT THE ASSESSEE CAN INITIATE THE PROJECT ONLY AFTER GETTING THE FINAL APPROVAL AND THE NOTIFICATION OF THE CONCERNED AUTHORITIES. THE MORE E QUITABLE CONSTRUCTION OF THE SITUATION AS ALWAYS APPROVED BY LAW IS THAT THE GOVERNMENT APPROVAL AND THE CBDT NOTIFICATION ONCE GRANTED TO THE ASSESSEE, TAKE CARE AND COVER OF THE EARLIER PERIOD AS WELL. THIS IS FOR THE REASON THAT THE APPROVAL AND NOTIFIC ATION HAVE BEEN ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 24 GRANTED TO THOSE ELIGIBLE UNDERTAKINGS AS SUCH. THE CRUCIAL QUESTION TO BE EXAMINED IS WHETHER THE ELIGIBLE UNDERTAKING FOR WHICH THE ASSESSEE HAS SOUGHT DEDUCTION HAS BEEN IN FACT APPROVED AND NOTIFIED. IF THE ANSWER IS YES, THE ASSESSEE Q UALIFIES THE CONDITION LAID DOWN IN THE PROJECT SCHEME. THEREFORE, IT IS NOT PROPER ON THE PART OF THE AO TO DECLINE THE DEDUCTION ON THE GROUND THAT THE ASSESSEE HAS STARTED FUNCTIONING EVEN BEFORE THE FORMAL ORDER OF APPROVAL AND NOTIFICATION. THIS IS NO T A GROUND TO DENY EXEMPTION TO THE ASSESSEE. 17. NOW, COMING TO THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD INITIALLY MADE AN APPLICATION FOR NOTIFICATION OF IPS 2002 ON 09.12.2004 BUT THE SAID PROJECT COULD NOT BE COMPLETED BY 31.03.2006 OR EVEN WI THIN EXTENDED PERIOD UP TO 31.03.2007. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT WHICH WAS ALLOWED TO THE ASSESSEE VIDE THE ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THEREAFTER, RE - ASSESSMENT PROCEED INGS WERE INITIATED IN THE CASE OF THE ASSESSEE RELATING TO ASSESSMENT YEAR 2006 - 07 . IN THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTES THAT THE ASSESSEE WAS ASKED TO MAKE AN APPLICATION FOR NOTIFICATION TO THE CBDT AS PER IPS 2008 SCHEME. THE ASSESSEE ADMITTEDLY, MADE AN APPLICATION UNDER IPS, 2008. THE SCHEME. THE ASSESSEE ADMITTEDLY, MADE AN APPLICATION UNDER IPS, 2008. THE CONDITION UNDER THE SCHEME WAS THAT MINIMUM NUMBER OF 30 UNITS SHOULD BE OPERATIONAL FOR AVAILING THE BENEFIT. THE ASSESSEE CLAIMS THAT IT HAD LOCATED MORE THAN 30 UNITS TILL 31.03.2011 . IT WAS ALSO POINTED OUT THAT THE NOTIFICATION FROM THE CBDT WAS RECEIVED IN 2010. THE QUESTION WHICH ARISES IS THAT FOR THE FINANCIAL YEAR 01.04.2005 TO 31.03.2006, WHERE THE ASSESSEE HAS NOT COMPLETED THE FULL SCHEME AND HAD PARTIALLY CONSTRUCTED THE UNITS AND EVEN THE APPROVAL WAS NOT RECEIVED FROM THE CBDT UNDER IPS, 2008 SCHEME, CAN THE ASSESSEE AVAIL THE BENEFIT OF DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT. WHERE THE PROJECT IS APPROVED BY THE CBDT UNDER THE INDUSTRIAL PARKS SCHEME, 2008 FOR THE D EVELOPMENT, MAINTENANCE AND OPERATIONS OF CEREBRUM IT PARK AND AS PER THE NOTIFICATION ISSUED BY THE CBDT, THE DATE OF COMMENCEMENT OF THE SAID INDUSTRIAL PARK WAS 31.03.2010. THE ASSESSEE ADMITTEDLY, HAS CONSTRUCTED THE SAID CEREBRUM IT PARK FOR WHICH TH E CONSTRUCTION HAD STARTED EARLIER IN 2004 . T HE ASSESSEE HAD APPLIED FOR APPROVAL UNDER IPS 2002, BUT BECAUSE OF NON - FULFILLMENT ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 25 OF CONDITIONS, NO APPROVAL UNDER THE SAID SCHEME WAS GRANTED BUT THE ASSESSEE DID RECEIVE THE APPROVAL UNDER IPS 2008 SCHEME F OR THE SAME PROJECT AND SINCE THE DATE OF THE PROJECT IS OVER A PERIOD OF YEAR, THEN THE QUESTION WHICH ARISES IS THAT WHERE THE PROJECT HAS BEEN APPROVED ON A LATER DATE, THIS APPROVAL RELATE BACK TO THE DATE OF COMMENCEMENT OF ACTIVITIES. THE ANSWER IS YES. SINCE THE PROJECT TO DEVELOP IT PARK IS SUBSTANTIAL ACTIVITY WHICH IS DEVELOPED OVER A PERIOD OF TIME AND SUCH PROJECT IS APPROVED AND NOTIFICATION MADE IN THIS REGARD, THEN SUCH APPROVAL AND NOTIFICATION RELATES BACK TO THE DATE OF START OF THE AC TIVITIES. ACCORDINGLY, WE HOLD SO. 18. THE DATE OF COMMENCEMENT OF INDUSTRIAL PARK IS TO BE UNDERSTOOD IN LINE WITH THE MEANING ASSIGNED TO THE TERM UNDER THE SCHEME, WHEREIN AS PER CLAUSE 2 (F), THE DATE OF COMMENCEMENT MEANS DATE OF OBTAINING THE COM PLETION CERTIFICATE OR OCCUPATION CERTIFICATE, AS THE CASE MAY BE, FROM THE RELEVANT LOCAL AUTHORITY CERTIFYING THAT ALL THE REQUIRED DEVELOPMENT ACTIVITIES FOR THE PROJECT HAVE BEEN COMPLETED. SUCH A DATE OF COMMENCEMENT OF THE INDUSTRIAL PARK AS PER IPS 2008 SHOULD BE ON OR AFTER 01.04.2006 AND NOT LATER THAN 31.03.2009 WHICH WAS LATER EXTENDED TO 31.03.2011. THE NOTIFICATION ISSUED TO THE ASSESSEE IS DATED 31.03.2010 AND HENCE, IS WITHIN PERIOD STIPULATED UNDER IPS 2008 SCHEME. SINCE THE ASSESSEE HAS FULFILLED THE CONDITIONS OF IPS 2008 AND ALSO THE CONDITIONS LAID DOWN IN RULE 18C OF THE RULES AND HENCE, THE ASSESSEE IS ELIGIBLE TO CLAIM THE DEDUCTION UNDER SECTION 80IA(4)(III) OF THE ACT DURING THE YEAR UNDER CONSIDERATION. WE HOLD SO AND ALLOW THE GROUNDS OF APPEAL NO.1 TO 7 RAISED BY THE ASSESSEE ARE THUS, ALLOWED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 1 9 . NOW, COMING TO THE APPEAL FILED BY THE REVENUE AGAINST THE ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) OF THE ACT. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED: - ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 26 1. THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE IT ACT, 1961. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF ASSESSEE ON DEPRECIATIO N OF MOTOR CARS. 3. THE LD. CIT(A) IS NOT JUSTIFIED IN PROVIDING THE RELIEF IN RESPECT OF INTEREST DISALLOWANCE U/S 36(1)(III) MADE TOWARDS INVESTMENTS IN SHARES AND PARTNERSHIP FIRMS. 4. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEA RING, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) MAY BE VACATED AND THAT OF THE A.O. BE RESTORED. 20 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUES RAISED IN THE REVENUES APPEAL ARE SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2007 - 08 AND 2008 - 09. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF KUMAR PURAM PROJECT. 2 1 . BRIEF FACTS REL ATING TO THE ISSUE ARE THAT THE ASSESSEE HAD DEVELOPED A 2 1 . BRIEF FACTS REL ATING TO THE ISSUE ARE THAT THE ASSESSEE HAD DEVELOPED A HOUSING PROJECT KUMAR PURAM AND CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AT RS.16,13,700/ - . THE ASSESSING OFFICER DENIED THE SAID CLAIM OF ASSESSEE ON THE GROUND THAT WHERE THE PROJECT WAS SANCTIONED IN 24.04.1998 AND THE CONSTRUCTION OF THE SAID PROJECT HAD STARTED IMMEDIATELY, BUT AS PER THE PROVISIONS OF SECTION 80IB(10) OF THE ACT, PROJECT SHOULD HAVE BEEN COMMENCED ON OR AFTER 01.10.1998. ANOTHER ISSUE RAISED BY THE ASSESSING OFFIC ER WAS THAT THE COMMERCIAL AREA IN THE PROJECT WAS MORE THAN 5% OF THE TOTAL AREA OF THE PROJECT. THE THIRD REASON FOR DISALLOWING THE DEDUCTION WAS THAT THE ASSESSEE HAD DEVELOPED THE HOUSING PROJECT KUMAR PURAM AND COMMERCIAL PROJECT BUSINESS COURT IN THE SAME PLOT AND HAD DIVIDED THE PLOT BY MAKING SUB - PLOTS AND HENCE, VIOLATED THE CONDITIONS PRESCRIBED IN THE SECTION. THESE OBJECTIONS WERE RAISED IN ASSESSMENT YEAR 2001 - 02 AND THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT WAS DENIED. TH E TRIBUNAL IN M/S. SUKUMAR ESTATES LTD. VS. ACIT IN ITA NOS.336/PN/2006, RELATING TO ASSESSMENT YEAR 2001 - 02, VIDE ORDER DATED ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 27 08.02.2013 HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE TRIBUNAL THEREAFTER IN ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 IN T HE APPEALS FILED BY THE REVENUE HAD RELIED ON THE EARLIER DECISION OF THE TRIBUNAL AND UPHELD THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF ASSESSEE UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF PROJECT KUMAR PURAM. THE RELEVANT FINDINGS OF THE TRIBUNA L (SUPRA) IN ASSESSMENT YEAR 2007 - 08 ARE AS UNDER: - 3.3 W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE OBSERVE THAT THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2001 - 02 HA D RAISED SIMILAR OBJECTIONS IN DISALLOWING THE CLAIM OF DEDUCTION U/S. 80IB(10) ON THE HOUSING PROJECT KUMAR PURAM DEVELOPED BY THE ASSESSEE. IN APPEAL FILED BY THE ASSESSEE BEFORE THE TRIBUNAL, THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDER HAS FOLLOWED THE ORDER OF TRIBUNAL IN ITA NO. 336/PN/2006 (SUPRA) AND ACCEPTED THE CLAIM OF THE ASSESSEE IN ASSESSMENT YEARS UNDER APPEAL. THE RELEVANT EXTRACT OF THE ORDER OF TRIBUNAL IN ASS ESSEES OWN CASE IN ASSESSMENT YEAR 2001 - 02 IS REPRODUCED HERE - IN - UNDER : 9. IN CASE BEFORE US, WHETHER SUB - PLOT NO.6 IS A PART OF PLOT NO.411 AT MUKUND NAGAR, PUNE, THOUGH THE BUILDING PLAN IN RESPECT OF SAID PLOT AS A WHOLE WAS OBTAINED ON 24.04.1998. HOWEVER, ASSESSEE DID NOT START ANY CONSTRUCTION ON THE SAID PLOT IN THE YEAR RELEVANT TO THE F.Y. 1998 - 99. CONSTRUCTION WAS STARTED ONLY ON 18.04.1999 AS INDICATED BY THE ASSESSEE CONSTRUCTION WAS STARTED ONLY ON 18.04.1999 AS INDICATED BY THE ASSESSEE TO THE PUNE MUNICIPAL CORPORATION ON 05.05.1999 EVIDENT FROM THE PAGE 300. AS PER THE RULE 7.2 OF DC RULES OF PMC, ASSESSEE HAS TO INTIMATE THE CORPORATION ABOUT STARTING OF THE PROJECT. HENCE, THE INTIMATION OF STARTING OF DEVELOPMENT OF PROJECT WAS GIVEN BY ASSESSEE IN APRIL, 1998 WHICH MAKES IT CLEAR THAT CONSTRUCTION WAS NOT COMMENCED BEFORE 1.10.1998 EVEN THOUGH PLAN WAS APPROVED PRIOR TO 01.10.1998. THE ESSENCE OF STARTING OF DEVELOPMENT AND CONSTRUCTION IS THAT SAME STARTED ON 18.04.1999. THE CONSTRUCTION STARTED ON 18.04.1999 AND SAME WAS INTIMATED BY THE ASSESSEE TO CONCE RNED MUNICIPAL CORPORATION ON 05.05.1999. 10. XXXXXXXXXX 11. XXXXXXXXXX 12. THE OTHER OBJECTION OF THE REVENUE IS THAT THAT BUILDING BUSINESS COURT CONSTRUCTED ON PLOT NO.5 IS A COMMERCIAL BUILDING, HENCE, THE ASSESSEE HAS CONSTRUCTED COMMERCIAL AREA IN EXCESS OF 2000 SQ.FT. OR 5% OF THE BUILT UP AREA WHICHEVER IS LESS, AS DISCUSSED IN PRECEDING PARAS OF THIS ORDER. IN THIS REGARD, STAND OF THE ASSESSEE HAS BEEN THAT THE PROJECT BUSINESS COURT IS CONSTRUCTED ON PLOT NO.5 WHICH IS AN INDEPENDENT PLOT. IT WAS SPECIFICALLY POINTED OUT FROM THE LAYOUT PLAN THAT PLOTS NOS.5 AND 6 ARE NOT EVEN ADJOINING PLOTS. THEY ARE SEPARATE AS SHOWN IN THE CITE PLAN SUBMITTED ON BEHALF OF THE ASSESSEE. IN THIS BACKGROUND, IT WAS SUBMITTED BUSINESS COURT IS NOT PART OF PROJECT KUMAR PURAM AND HENCE, CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT ASSESSEE HAS CONSTRUCTED COMMERCIAL PROJECT KUMAR PURAM. THE ASSESSEE HAS FILED THE FACTUAL SITUATION WITH REGARD TO THE LAYOUT OF PROJECT KUMAR PURAM WHEREIN KUMAR PURAM PROJECT IS O N PLOT NO.6 WHILE BUSINESS COURT IS ON PLOT NO.5 ON PLOT NO.411 AND THEY ARE NOT ADJOINING PLOTS. IN THIS SITUATION, IT IS NOT JUSTIFIED ON THE PART OF THE CIT(A) TO MIX TWO ISSUES OF TWO PLOTS WHICH ARE DISTANTLY LOCATED. THE THIRD OBJECTION OF THE REVE NUE HAS BEEN THAT EXPENDITURE HAS BEEN INCURRED ON ITEMS OF ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 28 IRON AND STEEL, SECURITIES CHARGES, LABOUR CHARGES, LABOUR CONTRACTOR CHARGES IN F.Y. 1998 - 99 WHICH INDICATED THAT ASSESSEE HAS STARTED CONSTRUCTION OF THE PROJECT BEFORE 01.10.1999. IN THIS REGAR D, WE FIND THAT BUILDING PLAN IN RESPECT OF PLOT NO.6 WAS OBTAINED ON 24.04.1998. THERE IS NOTHING ON RECORD TO SUGGEST THAT ASSESSEE STARTED CONSTRUCTION ON THE SAID PLOT. THE EXPENDITURE INCURRED BY THE ASSESSEE AS POINTED OUT BY THE CIT(A) IS SMALL ITEM S LIKE PURCHASE OF IRON AND STEEL, SECURITY CHARGES, LABOUR CHARGES AND LABOUR CONTRACTOR CHARGES WHICH WERE INCURRED FOR UPKEEP, FENCING CHARGES, SECURITY EXPENSES ETC., AND IT CANNOT BE SAID TO BE INCURRED FOR THE DEVELOPMENT AND CONSTRUCTION OF THE PROJ ECT. FOR ACTUAL DEVELOPMENT, EXPENDITURE INCURRED ON A BIG WAY AS HAS BEEN DONE IN F.Y. 1999 - 2000. EVEN THE BOOKING OF THE FLATS STARTED IN F.Y. 1999 - 2000. THE FACT HAS BEEN INTIMATED BY THE ASSESSEE TO THE PUNE MUNICIPAL CORPORATION ON 05.05.1999 WHEREIN IT WAS SUBMITTED THAT AS PER RULE 7.2 OF DC RULES OF PMC, ASSESSEE HAS TO INTIMATE THE CORPORATION ABOUT THE STARTING OF THE PROJECT. HENCE, THE ESTIMATION OF STARTING OF THE DEVELOPMENT OF THE PROJECT WAS GIVEN BY THE ASSESSEE IN APRIL, 1999 WHICH SHOWS T HAT CONSTRUCTION HAS NOT COMMENCED BEFORE 01.10.1999. EVEN THOUGH PLAN WAS APPROVED PRIOR TO 01.10.1999, THE DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT STARTED AFTER 01.10.1999 AND CONSTRUCTION IN FACT HAS COMMENCED ONLY AFTER APRIL, 1999. IT HAS BEEN THE CONSISTENT STAND OF THE ASSESSEE THAT BUILDING BUSINESS COURT STARTED BY SHRI SUPNEKAR EVEN IN THE AGREEMENT FOR PURCHASE OF LAND, IT WAS MENTIONED THAT BUILDING IS PARTLY CONSTRUCTED. THE AMOUNT OF RS.23,00,000/ - INCURRED ON CONSTRUCTION WAS SHOWN BY SHRI SUPNEKAR IN HIS BALANCE SHEET. THUS, THE SAID EXPENDITURE WAS INCURRED BY SHRI SUPNEKAR. THEREFORE, THE ASSESSEE DID NOT RECORD THE SAME IN ITS BOOKS OF ACCOUNT. THE ASSESSEE HAS DEMOLISHED THE CONSTRUCTION AND NEW CONSTRUCTION WAS STARTED SUBSEQUE NTLY AS INDICATED ABOVE. THEREFORE, NO WIP WAS SHOWN IN THE BOOKS FOR BUSINESS COURT UPTO 31.03.2000. FOR THE BUSINESS COURT, THE ARCHITECT WAS M/S.PUNDALIK & PUNDALIK WHILE FOR KUMAR BUSINESS COURT, THE ARCHITECT WAS M/S.PUNDALIK & PUNDALIK WHILE FOR KUMAR PURAM PROJECT THE ARCHITECT WAS M/S.BUTALA AND NIVSARKAR AS EVIDENT FR OM THE DETAILS ON PAGE 300 OF THE PAPER BOOK. THUS, THE LETTER OF ARCHITECT M/S.BUTALA AND NIVSARKAR DATED 18.03.1999 REFERRED TO BY THE ASSESSING OFFICER IN THE REMAND REPORT AS MENTIONED AT PAGE 34 OF THE ORDER OF THE CIT(A) DOES NOT PERTAIN TO KUMAR PUR AM PROJECT BUT IT PERTAINS TO BUSINESS COURT. IN VIEW OF ABOVE, THE CIT(A) WAS NOT JUSTIFIED IN OBSERVING THAT PROJECT HAS COMMENCED PRIOR TO 01.10.1998 BY RELYING ON THE CERTIFICATE FROM M/S.PUNDALIK & PUNDALIK WHO IS THE ARCHITECT OF BUSINESS COURT. AT PAGE 37, THE CIT(A) HAS OBSERVED THAT COMMENCEMENT CERTIFICATE WAS ISSUED ON 10.03.2000 AND ACCORDING TO HIM, IT WAS REVISED CERTIFICATE. IT IS REVISED COMMENCEMENT CERTIFICATE AND PROJECT KUMAR PURAM IS DIFFERENT IDENTITY. FACTUALLY, ENTIRE LAND ON PLO T NO.411 AS STATED ABOVE WAS ALREADY DIVIDED INTO VARIOUS PLOTS WHICH WAS PURCHASED BY VARIOUS PARTIES SO IT WAS NOT JUSTIFIED ON PART OF THE REVENUE TO HOLD THAT ALL CONSTRUCTION ON THE TOTAL LAND WAS ONE PROJECT. THIS VIEW IS SUPPORTED BY THE DECISIONS I N THE CASES OF M/S.RAHUL CONSTRUCTIONS (SUPRA), M/S.ADITYA DEVELOPERS (SUPRA) AND VANDANA PROPERTIES (SUPRA) AND MUDIT MADANLAL GUPTA VS. ACIT 51 DTR 217 (BOM) AND BRIGADE ENTERPRISES (P) LTD. 119 TTJ 269 (BANG.). IN VIEW OF ABOVE, WE HOLD THAT ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) WITH REGARD TO KUMAR PURAM PROJECT CONSTRUCTED ON PLOT NO.6 OF ORIGINAL PLOT NO.411. 3.4 A PERUSAL OF THE ORDER OF TRIBUNAL SHOWS THAT THE ISSUE IN THE PRESENT APPEALS IS IDENTICAL. THE LD. DR HAS NOT PLACED ON RECO RD ANY MATERIAL TO CONTROVERT THE FINDINGS OF TRIBUNAL. IN THE ABSENCE OF ANY CONTRARY MATERIAL, WE FIND NO INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. ACCORDINGLY, THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE ARE AFFIRMED AND THE GROUND RAISED BY THE DEPARTMENT AGAINST ALLOWING CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT TO THE ASSESSEE IS DISMISSED. ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 29 2 2 . FOLLOWING THE SAME PARITY OF REASONING AND SINCE THE ISSUE RAISED BEFORE US BY THE REVENUE VID E GROUND OF APPEAL NO.1 IS IDENTICAL TO THE ISSUE IN ASSESSMENT YEAR 2001 - 02 AND THEREAFTER IN ASSESSMENT YEARS 2007 - 08 AND 2008 - 09, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE. 2 3 . THE ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.2 IS AGAINST THE DENIAL OF DEPRECIATION ON MOTOR CARS. THE DEPRECIATION ON VEHICLES WAS DENIED AS THE VEHICLES WERE REGISTERED IN THE NAMES OF DIRECTORS OF THE ASSESSEE COMPANY THOUGH THE PAYMENTS FOR OTHER FORMALITIES WERE COMPLIED WI TH ON BEHALF OF THE ASSESSEE. THE FUNDS FOR THE PURCHASE OF VEHICLES WERE PROVIDED BY THE ASSESSEE COMPANY AND VEHICLES WERE DULY REFLECTED IN THE LIST OF FIXED ASSETS. 2 4 . SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09 AND THE CLAIM OF DEDUCTION ON SUCH MOTOR CARS WHICH WERE REGISTERED IN THE NAMES OF DIRECTORS OF THE ASSESSEE COMPANY WAS ALLOWED. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON THE VEHICLES WHICH ARE REGISTERED IN THE NAMES OF DIRECTORS AND CONSEQUENTLY, DISMISS THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE. 2 5 . THE NEXT ISSUE RAISED IS AGAINST RELIEF GRANTED BY THE CIT(A) VIS - - VIS INTEREST DISALLOWANCE UNDER SECTION 36(1)(I II) OF THE ACT. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT NOTED THAT THE ASSESSEE HAD MADE INVESTMENTS IN IMMOVABLE PROPERTIES, FUNDS OF WHICH WERE SOURCED FROM COMMON POOL INCLUDING BORROWED FUNDS, AGAINST WHICH INTEREST EXPENDITURE WAS CLAIMED B Y THE ASSESSEE. THE ASSESSING OFFICER ALSO MADE DISALLOWANCE OF INTEREST ATTRIBUTABLE TO INVESTMENT MADE IN THE FIRMS WHICH WERE EXEMPT FROM TAX. CONSEQUENTLY, TOTAL DISALLOWANCE OF RS.2,78,038/ - WAS MADE. ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 30 2 6 . BEFORE THE CIT(A), THE CLAIM OF ASSESSEE WAS THAT THE INVESTMENT IN THE PARTNERSHIP FIRM WAS A BUSINESS DECISION AS THE SAID FIRM WAS ALSO ENGAGED IN THE SIMILAR LINE OF BUSINESS OF CONSTRUCTION AND REAL ESTATE DEVELOPMENT. APART FROM THAT, THE ASSESSEE ALSO CLAIMED THAT TOTAL INVESTMENT IN THE FIR M AS ON 31.03.2006 WAS RS.7.66 CRORES, WHEREAS THE ASSESSEE HAD INTEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL VIS - - VIS SURPLUS TO THE EXTENT OF RS.20.93 CRORES AS ON 31.03.2006. IN SUCH CIRCUMSTANCES, THERE WAS NO MERIT IN DISALLOWANCE OF ANY PART OF INTEREST EXPENDITURE. WITH REGARD TO INTEREST EXPENDITURE DISALLOWED BY THE ASSESSING OFFICER RELATING TO INVESTMENT IN IMMOVABLE PROPERTIES, THE ASSESSEE POINTED OUT THAT IT WAS IN THE BUSINESS OF CONSTRUCTION, PURCHASE AND PROPERTY DEVELOPMENT AND THE A CQUISITION OF IMMOVABLE PROPERTY, SUCH AS LAND WAS PART OF BUSINESS ACTIVITY AND HENCE, NO DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT WAS WARRANTED IN RESPECT OF FUNDS UTILIZED FOR SUCH ACQUISITION OF ASSET. THE CIT(A) NOTED THAT SIMILAR ISSUE AROSE BEFORE THE CIT(A) IN THE EARLIER YEARS, WHEREIN IT WAS NOTED THAT SIMILAR ISSUE AROSE BEFORE THE CIT(A) IN THE EARLIER YEARS, WHEREIN IT WAS HELD THAT EXPENDITURE IN RELATION TO EXEMPTED INCOME BE ESTIMATED AT 10% OF THE EXEMPT INCOME. SINCE THE FACTUAL POSITION WAS SAME, THE ASSESSING OFFICER WAS DIRECTED BY CIT(A) TO RESTRICT 10% OF THE EXEMPT INCOME W ITH REFERENCE T O THE ISSUE OF CAPITALIZATION OF INTEREST ON BORROWED CAPITAL FOR ACQUISITION OF IMMOVABLE PROPERTIES. REFERENCE WAS MADE TO PROVISO IN SECTION 36(1)(III) OF THE ACT, WHEREIN IT IS PROVIDED THAT IRRESPECTIVE OF WHETHER AN AS SET IS CAPITALIZED IN THE BOOKS OF ACCOUNT OR NOT, THE INTEREST PAID ON CAPITAL BORROWED FOR ACQUISITION OF ASSET TILL DATE, IT IS FIRST PUT TO USE SHALL NOT BE ALLOWED AS DEDUCTION. IN VIEW THEREOF, THE ADDITION MADE BY THE ASSESSING OFFICER WAS UPHELD. IT MAY BE POINTED OUT HEREIN ITSELF THAT THE ASSESSEE IS NOT IN APPEAL AGAINST THE ORDER OF CIT(A) ON EITHER OF COUNTS. THE REVENUE IS AGGRIEVED BY RESTRICTION OF DISALLOWANCE @ 10% OF EXEMPT INCOME IN RESPECT OF INVESTMENT IN PARTNERSHIP FIRM. THE ASSE SSEE ADMITTEDLY, IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF IMMOVABLE PROPERTIES AND HAS MADE INVESTMENT IN PARTNERSHIP FIRM WHICH IS ALSO ITA NO . 690 / P U N /201 4 ITA NO. 843 /P U N/201 4 KUMAR HOUSING CORPORATION LTD. 31 ENGAGED IN THE SAME LINE OF BUSINESS OF CONSTRUCTION AND REAL ESTATE DEVELOPMENT. FURTHER, INVEST MENT MADE BY THE ASSESSEE IN THE FIRM AS ON 31.03.2006 TO THE EXTENT OF RS.7.66 CRORES; AS AGAINST WHICH THE ASSESSEE CLAIMS THAT IT HAD INTEREST FREE FUNDS TO THE EXTENT OF RS.20.93 CRORES. IN THE ABOVE SAID SCENARIO, WE FIND MERIT IN THE ORDER OF CIT(A) IN RESTRICTING THE DISALLOWANCE TO 10% OF INCOME. UPHOLDING THE SAME, WE DISMISS THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. 2 7 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 10 TH DAY OF MARCH , 2017 SD/ - SD/ - ( ANIL CHATURVEDI ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 10 TH MARCH , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - III , PUNE ; 4. / THE C I T - III , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE