ADDL CIT RG 15(1), MUMBAI V. BHUMIRAJ CONSTRUCTIONS, NAVI MUMBAI

ITA 8803/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1578 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 29-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-12-2011
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Condonation of delay
• Section: 80IB

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.8803/MUM/2011 ASSESSMENT YEAR: 2006-07 JCIT(OSD), CIRCLE-15(1), ROOM NO.104, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 / VS. M/S BHUMIRAJ CONSTRUCTIONS D/5-6, BIG SPLASH, SECTOR-17, NAVI MUMBAI-400703 ( / REVENUE) ( ! ' /ASSESSEE) PAN. NO. AAFFB3546H ITA NO.8750/MUM/2011 ASSESSMENT YEAR: 2006-07 M/S BHUMIRAJ CONSTRUCTIONS D/5-6, BIG SPLASH, SECTOR-17, NAVI MUMBAI-400703 / VS. JCIT(OSD), CIRCLE-15(1), ROOM NO.104, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 ( ! ' /ASSESSEE) ( / REVENUE) PAN. NO. AAFFB3546H ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 2 ITA NO.1445/MUM/2012 ASSESSMENT YEAR: 2006-07 JCIT(OSD), CIRCLE-15(1), ROOM NO.104, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 / VS. M/S BHUMIRAJ CONSTRUCTIONS D/5-6, BIG SPLASH, SECTOR-17, NAVI MUMBAI-400703 ( / REVENUE) ( ! ' /ASSESSEE) PAN. NO. AAFFB3546H CROSS OBJECTION NO.60/MUM/2013 (ARISING OUT OF ITA NO.1445/MUM/2012) ASSESSMENT YEAR: 2006-07 M/S BHUMIRAJ CONSTRUCTIONS D/5-6, BIG SPLASH, SECTOR-17, NAVI MUMBAI-400703 / VS. JCIT(OSD), CIRCLE-15(1), ROOM NO.104, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 ( ! ' /ASSESSEE) ( / REVENUE) PAN. NO. AAFFB3546H / REVENUE BY SHRI SUMAN KUMAR-DR ! ' / ASSESSEE BY SHRI PRADIP KAPASI # $ % ' & / DATE OF HEARING : 19/12/2016 % ' & / DATE OF ORDER: 20/12/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE AS WELL AS THE ASSESSEE ARE IN CROSS A PPEAL FOR ASSESSMENT YEAR 2006-07 ON QUANTUM ADDITION U/S 80IB(10) OF THE INCOME TAX ACT, 1961 (HEREINAFTER T HE ACT), WHEREAS, FOR SAME ASSESSMENT YEAR THE REVENUE IS IN APPEAL ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 3 AGAINST DIRECTION TO THE ASSESSING OFFICER TO RESTR ICT THE PENALTY IMPOSED U/S 221(1) OF THE ACT, BEING 10% OF THE TAX DEMAND OUTSTANDING TO RS.4,38,383/-, WHEREAS, THE A SSESSEE IS IN CROSS OBJECTION CLAIMING THAT SINCE THE PROFI T AND TAXES FOR THE YEAR UNDER CONSIDERATION WILL BE REDUCED TO NIL, THUS, NO PENALTY IS LEVIABLE U/S 221(1) OF THE ACT FOR NO N-PAYMENT OF SELF ASSESSMENT TAX. 2. FIRST, WE SHALL TAKE UP THE APPEAL OF THE REVEN UE (ITA NO.8803/MUM/2011), WHEREIN, THE ONLY GROUND RA ISED PERTAINS TO NON-CONSIDERATION OF AMENDED PROVISIONS OF SECTION 80IB(10), W.E.F. 01/04/2005 ON THE HOUSING PROJECTS APPROVED BEFORE 01/04/2004, AS PER SUB-CLAUSE (I) T O CLAUSE (A) TO SECTION 80IB(10) OF THE ACT. 2.1. DURING HEARING, THE LD. DR, SHRI SUMAN KUMAR, DEFENDED THE ADDITION MADE BY THE LD. ASSESSING OFF ICER BY ARGUING THAT THE PROJECT WAS SANCTIONED IN THE YEAR 2003 VIDE COMMENCEMENT CERTIFICATE DATED 03/07/2003 AND COMPL ETION CERTIFICATE WAS ISSUED ON 02/03/2006, THUS, THE AME NDMENT MADE BY THE FINANCE ACT IS NOT APPLICABLE TO THE PR OJECTS APPROVED BEFORE 01/04/2004. ON THE OTHER HAND, SHR I PRADIP KAPASI, LD. COUNSEL FOR THE ASSESSEE DEFENDE D THE IMPUGNED ORDER BY CLAIMING THAT, IDENTICALLY, IN TH E CASE OF SISTER CONCERN, THE CLAIM OF THE ASSESSEE WAS ALLOW ED AND PLACED RELIANCE UPON THE DECISION IN THE CASE OF SA RKAR BUILDERS (375 ITR 392)(SC). THIS FACTUAL ASSERTION OF THE ASSESSEE WAS NOT CONTROVERTED BY THE REVENUE. ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 4 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. DURING THE RELEVANT PERIOD, THE ASSES SEE CONSTRUCTED FOUR PROJECTS NAMELY WOODS, HERMITAGE, MEADOWS, IRAISA. THE ASSESSEE BOOKED THE PROFIT OF THE PROJECT NAMELY WOODS, THE ASSESSEE SHOWED THE PROFIT AT RS.10,07,55,447/-, OUT OF WHICH THE ASSESSEE CLAIME D DEDUCTION U/S 80IB(10) ONLY ON THE PROFIT, AMOUNTIN G TO RS.8,76,68,359/-, ARISING FROM SALE OF FLATS AND ON THE REMAINING PROFIT AROSE FROM SALE OF SHOPS, BEING CO MMERCIAL PORTION, NO DEDUCTION WAS CLAIMED U/S 80IB(10) OF T HE ACT. THE LD. ASSESSING OFFICER DISALLOWED THE CLAIM OF T HE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FULFILLED T HE CONDITIONS PROVIDED U/S 80IB(10) OF THE ACT AS COMM ERCIAL AREA WAS ALSO INVOLVED IN THE PROJECT, WHICH IS MOR E THAN 5% OF THE TOTAL CONSTRUCTED AREA. THE CLAIMED DEDUCTI ON FOR THE RESIDENTIAL FLATS WAS ALSO DISALLOWED. 2.3. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEAL), THE FIRST APPELLATE AUTHORITY FOLLOWI NG VARIOUS DECISIONS LIKE M/S SAROJ SALES ORGANISATION (ITA NO.4008/MUM/2007) DATED 24/01/2008, BRAHMA ASSOCIAT ES VS JCIT, ORDER DATED 06/04/2009, BHUMIRAJ HOMES LTD . (ITA NO.2170/MUM/2009) ORDER DATED 25/03/2011 AND HIRANANDANI AAKRUTI JV (ITA NO.5416/MUM/2009) ORDER DATED 30/03/2010 FOR THE RESIDENTIAL UNIT, ALLOWED THE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT. FOR THE PROFIT ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 5 DERIVED FROM SALE OF COMMERCIAL AREA, THE RELIEF WA S DENIED ON THE PLEA THAT THE ASSESSEE HAS TAKEN TWO APPROVALS FOR CONSTRUCTION OF RESIDENTIAL AND COMMERCIAL PROJECTS , WHICH ARE TWO PROJECTS AND OCCUPANCY CERTIFICATES WERE AL SO OBTAINED SEPARATELY BY THE ASSESSEE. THIS ISSUE OF ALLOWABILITY OF DEDUCTION ON COMMERCIAL PORTION WILL BE DEALT WI TH SEPARATELY. THE REVENUE IS AGGRIEVED AND IS IN APP EAL BEFORE THIS TRIBUNAL. 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, SO FAR AS, CLAIMED DEDU CTION U/S 80IB(10) OF THE ACT ON THE RESIDENTIAL PORTION IS C ONCERNED, IT IS APPARENT FROM THE RECORD THAT THE ASSESSEE CONST RUCTED THE RESIDENTIAL FLATS AS PER APPROVED PLANS OF THE COMP ETENT AUTHORITY AND THERE IS NO FINDING THAT ANY VIOLATIO N WAS MADE BY THE ASSESSEE IN CONSTRUCTION PLAN. IN A LATER D ECISION, THE HON'BLE APEX COURT IN THE CASE OF CIT VS M/S SARKAR BUILDERS 375 ITR 392 (SC) HAS DECIDED THE ISSUE, WHEREIN, TH E DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES WAS ALSO CONSIDERED, WHEREIN, HON'BLE BO MBAY HIGH COURT HAS HELD THAT CLAUSE (D) HAS PROSPECTIVE OPERATION, VIZ., WITH EFFECT FROM 01/04/2005, AND THIS LEGAL P OSITION IS NOT DISPUTED BY THE REVENUE BEFORE US. WHAT FOLLOWS FROM THE ABOVE IS THAT PRIOR TO 01/04/2005, THE DEVELOPERS/A SSESSEES WHO HAD GOT THEIR PROJECTS SANCTIONED FROM THE LOCA L ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 6 AUTHORITIES AS 'HOUSING PROJECTS', EVEN WITH COMMER CIAL USER, THOUGH LIMITED TO THE EXTENT PERMITTED UNDER THE DC RULES, WERE CONVINCED THAT THEY WOULD BE GETTING THE BENEF IT OF 100% DEDUCTION OF THEIR INCOME FROM SUCH PROJECTS UNDER SECTION 80IB OF THE ACT. THEIR PROJECTS WERE SANCTIONED MUC H BEFORE 01/04/2005. AS PER THE PERMISSIBLE COMMERCIAL USER ON WHICH THE PROJECT WAS SANCTIONED, THEY STARTED THE PROJECTS AND THE DATE OF COMMENCING SUCH PROJECTS IS ALSO BE FORE 01/04/2005. THE ASSESSEE BEFORE US GOT THE PLAN/PRO JECT APPROVED/SANCTIONED ON 03/07/2003, WHICH IS MUCH BE FORE 01/04/2005, THEREFORE, THE PROVISION WILL BE APPLIC ABLE ON THAT PARTICULAR TIME. THUS, THE REVENUE CANNOT DENY THE BENEFIT OF THIS SECTION APPLYING THE PRINCIPLE OF RETROACTIVIT Y EVEN WHEN THE PROVISION HAS NO RETROSPECTIVITY. TAKE FOR EXAM PLE, A CASE WHERE UNDER THE EXTANT DC RULES, FOR SHOPS AND COMM ERCIAL ACTIVITY CONSTRUCTION PERMITTED WAS, SAY, 10% AND T HE PROJECT WAS ALSO SANCTIONED ALLOWING A PARTICULAR ASSESSEE TO CONSTRUCT 10% OF THE AREA FOR COMMERCIAL PURPOSES. THE SAID DEVELOPER STARTED WITH ITS PROJECT MUCH PRIOR TO 01 /04/2005 WITH THE AFORESAID PERMISSIBLE USE AND THE CONSTRUC TION WAS AT A VERY ADVANCED STAGE AS ON 01/04/2005. CAN IT BE A RGUED BY THAT REVENUE THAT HE IS TO DEMOLISH THE EXTRA COVER AGE MEANT FOR COMMERCIAL PURPOSE AND BRING THE SAME WITHIN TH E LIMITS PRESCRIBED BY THE NEW PROVISION IF HE WANTED TO AVA IL THE BENEFIT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE LAW PREVAILING AS ON THAT DATE WOULD BE APPLICABLE BECA USE THE ASSESSEE WILL ACT AS PER THE LAW PREVAILING PRIOR T O 01/04/2005 ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 7 AS THE ASSESSEE ACTED AND ACQUIRED VESTED RIGHT THE REBY WHICH CANNOT BE TAKEN AWAY. IT IS LUDICROUS ON THE PART O F THE REVENUE AUTHORITIES TO EXPECT THE ASSESSEE TO DO SO METHING WHICH IS ALMOST IMPOSSIBLE 2.5. IN M/S. RELIANCE JUTE AND INDUSTRIES LTD. V. C.I.T., WEST BENGAL, CALCUTTA, (1980) 1 SCC 139, THIS COURT HAD, NO DOUBT, POINTED OUT THE CARDINAL PRINCIPLE O F TAX LAW THAT THE LAW TO BE APPLIED HAS TO BE THE LAW IN FOR CE IN THE ASSESSMENT YEAR. HOWEVER, THIS IS QUALIFIED BY THE EXCEPTION WHEN IT IS PROVIDED OTHERWISE EXPRESSLY OR BY NECESSARY IMPLICATION , AS IS CLEAR FROM THE FOLLOWING OBSERVATIONS: 6. THE ASSESSEE CLAIMS A VESTED RIGHT UNDER SECTION 24(2)(III), AS IT STOOD BEFORE ITS AMENDMENT IN 195 7, TO HAVE THE UNABSORBED LOSS OF 1950-51 CARRIED FORWARD FROM YEAR TO YEAR UNTIL THE LOSS IS COMPLETELY ABSORBED. THE CLAIM IS BASED ON A MISCONCEPTION OF THE FUNDAMENTA L BASIS UNDERLYING EVERY INCOME TAX ASSESSMENT. IT IS A CAR DINAL PRINCIPLE OF THE TAX LAW THAT THE LAW TO BE APPLIED IS THAT IN FORCE IN THE ASSESSMENT YEAR UNLESS OTHERWISE PROVIDED EXPRESSLY OR BY NECESSARY IMPLICATION... IN THE SAME PARAGRAPH, THE COURT ALSO REMARKED THAT 'A RIGHT CLAIMED BY AN ASSESSEE UNDER THE LAW IN FORCE IN A PARTICULAR ASSESSMENT YEAR IS ORDINARILY AVAILABLE ONLY IN RELATION TO A PROCEEDING PERTAINING TO THAT YEAR'. THUS, IT CLEARLY FOLLOWS THAT THOUGH NORMALLY THE LAW WHICH IS IN FORCE IN THE ASSESSMENT YEAR WOULD PREVAIL, BUT THIS IS N OT AN ABSOLUTE PRINCIPLE AS THE COURT ITSELF CARVED OUT E XCEPTIONS THERETO BY MAKING IT CLEAR THAT SUCH EXCEPTION CAN BE EITHER EXPRESS OR IMPLIED BY NECESSARY IMPLICATION. EVEN T HE PRINCIPLE ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 8 WHICH IS MENTIONED IS QUALIFIED WITH THE WORDS 'ORD INARILY AVAILABLE'. 2.6. ON EXAMINING THE SCHEME OF SUB-SECTION (1) O F SECTION 80IB OF THE ACT, ITS HISTORICAL TURN AROUND BY AMENDMENTS FROM TIME TO TIME AND KEEPING IN VIEW OF THE REAL PURPOSE BEHIND SUCH A PROVISION, WE ARE OF THE VIEW THAT IN THE PECULIAR SCENARIO AS PROJECTED IN THIS PROVISION, T HE AFORESAID CARDINAL PRINCIPLE OF TAX LAW IS NOT TO BE APPLIED AS, BY NECESSARY IMPLICATION, APPLICATION THEREOF STANDS E XCLUDED. FOR THE PURPOSE OF DISCUSSING THIS PARTICULAR ISSUE , IT IS REQUIRED TO BE NOTED THAT WITH EFFECT FROM 01/04/20 01, SECTION 80IB(10) STIPULATED THAT ANY HOUSING PROJECT APPROV ED BY THE LOCAL AUTHORITY BEFORE 31/03/2001 WAS ENTITLED TO A DEDUCTION OF 100 PER CENT OF THE PROFITS DERIVED IN ANY PREVI OUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING P ROJECT, PROVIDED (I) THE CONSTRUCTION/DEVELOPMENT OF THE SAID HOUSIN G PROJECT COMMENCED ON OR AFTER 1/10/1998 AND WAS COMPLETED B EFORE 31/03/2003; (II) THE HOUSING PROJECT WAS ON A SIZE OF A PLOT OF LAND WHICH HAD A MINIMUM AREA OF ONE ACRE; AND (III) EACH INDIVIDUAL RESIDENTIAL UNIT HAD A MAXIMU M BUILT-UP AREA OF 1000 SQ.FT., WHERE SUCH HOUSING PROJECT WAS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN 25 K MS. FROM ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 9 THE MUNICIPAL LIMITS OF THESE CITIES, AND A MAXIMUM BUILT-UP AREA OF 1500 SQ.FT. AT ANY OTHER PLACE. THEREFORE, FOR THE FIRST TIME, A STIPULATION WAS AD DED WITH REFERENCE TO THE DATE OF APPROVAL, NAMELY, THAT APP ROVAL HAD TO BE ACCORDED TO THE HOUSING PROJECT BY THE LOCAL AUT HORITY BEFORE 31/03/2001. BEFORE THIS AMENDMENT THERE WAS NO DATE PRESCRIBED FOR THE APPROVAL BEING GRANTED BY THE LO CAL AUTHORITY TO THE HOUSING PROJECT. PRIOR TO THIS AME NDMENT, AS LONG AS THE DEVELOPMENT/CONSTRUCTION COMMENCED ON O R AFTER 1/10/1998 AND WAS COMPLETED BEFORE 31/03/2001, THE ASSESSEE WAS ENTITLED TO THE DEDUCTION. ALSO BY THI S AMENDMENT, THE DATE OF COMPLETION WAS CHANGED FROM 31/03/2001 TO 31/03/2003. EVERYTHING ELSE REMAINED UNTOUCHED. THEREAFTER, BY FINANCE ACT, 2003, FURTHE R AMENDMENTS WERE MADE TO SECTION 80IB(10), WHICH REA D AS UNDER: (10) THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKI NG DEVELOPING AND, BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH 2005 BY A LOCAL AUTHORITY, SH ALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PREV IOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING P ROJECT IF - (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER 1998; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE; AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWEN TY-FIVE ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 10 KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. 2.7. AS CAN BE SEEN FROM THE AFORESAID PROVISION, NOW THE ONLY CHANGES THAT WERE BROUGHT ABOUT WERE THAT WITH EFFECT FROM 01/04/2002: (I) THE HOUSING PROJECT HAD TO BE APPROVED BEFORE 3 1/03/2005; AND (II) THERE WAS NO TIME LIMIT PRESCRIBED FOR COMPLET ION OF THE SAID PROJECT. THOUGH THESE CHANGES WERE BROUGHT ABO UT BY THE FINANCE ACT, 2003, THE LEGISLATURE THOUGHT IT FIT T HAT THESE CHANGES BE DEEMED TO HAVE BEEN BROUGHT INTO EFFECT FROM 01/04/2002. ALL THE REMAINING PROVISIONS OF SECTION 80IB(10) REMAINED UNCHANGED. 2.8. THEREAFTER, SIGNIFICANT AMENDMENT, WITH WHICH WE ARE DIRECTLY CONCERNED, WAS CARRIED OUT BY FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 01/04/2005. THE LEGISLATURE M ADE SUBSTANTIAL CHANGES IN SUB-SECTION (10). SEVERAL NE W CONDITIONS WERE INCORPORATED FOR THE FIRST TIME, IN CLUDING THE CONDITION MENTIONED IN CLAUSE (D). THIS CONDITION/R ESTRICTION WAS NOT ON THE STATUTE BOOK EARLIER WHEN ALL THESE PROJECTS WERE SANCTIONED. ANOTHER IMPORTANT AMENDMENT WAS MA DE BY THIS ACT TO SUB-SECTION (14) OF SECTION 80IB WITH E FFECT FROM 01/04/2005 AND FOR THE FIRST TIME UNDER CLAUSE (A) THEREOF THE WORDS 'BUILT-UP AREA' WERE DEFINED. SECTION 80IB(14 )(A) READS AS UNDER: ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 11 (14) FOR THE PURPOSES OF THIS SECTION - (A) BUILT-UP AREA MEANS THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH O THER RESIDENTIAL UNITS; PRIOR TO INSERTION OF SECTION 80IB(14)(A), IN MANY OF THE RULES AND REGULATIONS OF THE LOCAL AUTHORITY APPROV ING THE HOUSING PROJECT BUILT-UP AREA DID NOT INCLUDE PRO JECTIONS AND BALCONIES. PROBABLY, TAKING ADVANTAGE OF THIS FACT, BUILDERS PROVIDED LARGE BALCONIES AND PROJECTIONS MAKING THE RESIDENTIAL UNITS FAR BIGGER THAN AS STIPULATED IN SECTION 80IB(10), AND YET CLAIMED THE DEDUCTION UNDER THE S AID PROVISION. TO PLUG THIS LACUNA, CLAUSE (A) WAS INSE RTED IN SECTION 80IB(14) DEFINING THE WORDS BUILT-UP AREA TO MEAN THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT T HE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS, BUT DID NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. 2.9. CAN IT BE SAID THAT IN ORDER TO AVAIL THE BEN EFIT IN THE ASSESSMENT YEARS AFTER 1.4.2005, BALCONIES SHOU LD BE REMOVED THOUGH THESE WERE PERMITTED EARLIER? HOLDIN G SO WOULD LEAD TO ABSURD RESULTS AS ONE CANNOT EXPECT A N ASSESSEE TO COMPLY WITH A CONDITION THAT WAS NOT A PART OF T HE STATUTE WHEN THE HOUSING PROJECT WAS APPROVED. WE, THUS, FI ND THAT THE ONLY WAY TO RESOLVE THE ISSUE WOULD BE TO HOLD THAT CLAUSE (D) IS TO BE TREATED AS INEXTRICABLY LINKED WITH TH E APPROVAL AND CONSTRUCTION OF THE HOUSING PROJECT AND AN ASSESSEE CANNOT BE ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 12 CALLED UPON TO COMPLY WITH THE SAID CONDITION WHEN IT WAS NOT IN CONTEMPLATION EITHER OF THE ASSESSEE OR EVEN THE LEGISLATURE, WHEN THE HOUSING PROJECT WAS ACCORDED APPROVAL BY T HE LOCAL AUTHORITIES. 2.10. THE PROVISIONS OF SECTION 80IB(10) MENTION N OT ONLY A PARTICULAR DATE BEFORE WHICH SUCH A HOUSING PROJE CT IS TO BE APPROVED BY THE LOCAL AUTHORITY, EVEN A DATE BY WHI CH THE HOUSING PROJECT IS TO BE COMPLETED, IS FIXED. THESE DATES HAVE A SPECIFIC PURPOSE WHICH GIVES TIME TO THE DEVELOPERS TO ARRANGE THEIR AFFAIRS IN SUCH A MANNER THAT THE HOUSING PRO JECT IS STARTED AND FINISHED WITHIN THOSE STIPULATED DATES. THE BASIC OBJECTIVE BEHIND SECTION 80IB(10) IS TO ENCOURAGE D EVELOPERS TO UNDERTAKE HOUSING PROJECTS FOR WEAKER SECTION OF TH E SOCIETY, INASMUCH AS TO QUALIFY FOR DEDUCTION UNDER THIS PRO VISION, IT IS AN ESSENTIAL CONDITION THAT THE RESIDENTIAL UNIT BE CONSTRUCTED ON A MAXIMUM BUILT UP AREA OF 1000 SQ.FT. WHERE SUC H RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF D ELHI AND MUMBAI OR WITHIN 25 KMS. FROM THE MUNICIPAL LIMITS OF THESE CITIES AND 1500 SQ.FT. AT ANY OTHER PLACE. IT IS TH E CARDINAL PRINCIPLE OF INTERPRETATION THAT A CONSTRUCTION RES ULTING IN UNREASONABLY HARSH AND ABSURD RESULTS MUST BE AVOID ED. CLAUSE (F) AND (D) MAKES IT CLEAR THAT A HOUSING PR OJECT INCLUDES SHOPS AND COMMERCIAL ESTABLISHMENTS ALSO. BUT FROM THE DAY THE SAID PROVISION WAS INSERTED, THEY WANTE D TO LIMIT THE BUILT UP AREA OF SHOPS AND ESTABLISHMENTS TO 5% OF THE AGGREGATE BUILT UP AREA OR 2000 SQ.FT., WHICHEVER I S LESS. HOWEVER, THE LEGISLATURE ITSELF FELT THAT THIS MUCH COMMERCIAL ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 13 SPACE WOULD NOT MEET THE REQUIREMENTS OF THE RESIDE NTS. THEREFORE, IN THE YEAR 2010, THE PARLIAMENT HAS FUR THER AMENDED THIS PROVISION BY PROVIDING THAT IT SHOULD NOT EXCEED 3% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PR OJECT OR 5000 SQ.FT., WHICHEVER IS HIGHER. THIS IS A SIGNIFI CANT MODIFICATION MAKING COMPLETE DEPARTURE FROM THE EAR LIER YARDSTICK. ON THE ONE HAND, THE PERMISSIBLE BUILT U P AREA OF THE SHOPS AND OTHER COMMERCIAL SHOPS IS INCREASED F ROM 2000 SQ.FT. TO 5000 SQ.FT. ON THE OTHER HAND, THOUGH THE AGGREGATE BUILT UP AREA FOR SUCH SHOPS AND ESTABLISHMENT IS R EDUCED FROM 5% TO 3%, WHAT IS SIGNIFICANT IS THAT IT PERMI TS THE BUILDERS TO HAVE 5000 SQ.FT. OR 3% OF THE AGGREGATE BUILT UP AREA, 'WHICHEVER IS HIGHER'. IN CONTRAST, THE PROVI SION EARLIER WAS 5% OR 2000 SQ.FT., 'WHICHEVER IS LESS'. THEREF ORE, IT IS CLEAR THAT THE HOUSING PROJECT CONTEMPLATED UNDER SUB-SEC TION (10) OF SECTION 80IB INCLUDES COMMERCIAL ESTABLISHMENTS OR SHOPS ALSO. NOW, BY WAY OF AN AMENDMENT IN THE FORM OF CL AUSE (D), AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SAID SHOPS AND/OR COMMERCIAL ESTABLISHMENTS. THEREFORE, BY NEC ESSARY IMPLICATION, THE SAID PROVISION HAS TO BE READ PROS PECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMEND MENT, THIS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PR OVISION WAS SUBSTITUTED. THEREFORE, IT CANNOT BE APPLIED TO THO SE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR TO 01.04. 2005 AND COMPLETED BY THE STIPULATED DATE, THOUGH SUCH S TIPULATED DATE IS AFTER 01.04.2005. ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 14 2.11. THESE ASPECTS ARE DEALT WITH BY VARIOUS HIGH COURTS ELABORATELY AND CONVINCINGLY IN THEIR JUDGMENTS. IT IS NOT NECESSARY TO GO INTO THE DETAILED REASONING GIVEN B Y THESE HIGH COURTS. HOWEVER, WE WOULD LIKE TO EXTRACT THE FOLLO WING DISCUSSION FROM THE JUDGMENT DATED 25.07.2014 OF TH E BOMBAY HIGH COURT IN ITA NOS. 201 AND 308 OF 2012, WHERE THIS VERY ASPECT IS ANSWERED IN THE FOLLOWING MANNE R: 36. THERE IS YET ANOTHER REASON FOR COMING TO THE AFORESAID CONCLUSION. TAKE A SCENARIO WHERE AN ASSE SSEE, FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTI NG, HAS COMPLETED THE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY COMPLYING WITH ALL THE CONDITIONS AS SET OUT IN SECTION 80-IB(10) AS IT STOOD PRIOR TO 1ST APRIL, 2 005. IF WE WERE TO ACCEPT THE ARGUMENT OF THE REVENUE, THEN IN THAT EVENT, DESPITE HAVING COMPLETED THE ENTIRE CONSTRUC TION PRIOR TO 1ST APRIL, 2005 AND COMPLYING WITH ALL THE CONDITIONS OF SECTION 80-IB(10) AS IT STOOD THEN, T HE ASSESSEE WOULD BE DISENTITLED TO THE ENTIRE DEDUCTI ON CLAIMED IN RESPECT OF SUCH HOUSING PROJECT MERELY B ECAUSE HE OFFERED HIS PROFITS TO TAX IN THE A.Y. 2005-06. IN CONTRAST, IF THE SAME ASSESSEE HAD FOLLOWED THE WOR K-IN- PROGRESS METHOD OF ACCOUNTING, HE WOULD HAVE BEEN ENTITLED TO THE DEDUCTION UNDER SECTION 80-IB(10) U PTO THE A.Y. 2004-05, AND DENIED THE SAME FROM A.Y. 2005-06 AND THEREAFTER. IT COULD NEVER HAVE BEEN THE INTENTION OF THE LEGISLATURE THAT THE DEDUCTION UNDER SECTION 80-IB( 10) AVAILABLE TO A PARTICULAR ASSESSEE WOULD BE DETERMI NED ON THE BASIS OF THE ACCOUNTING METHOD FOLLOWED. THIS, TO OUR MIND AND AS RIGHTLY SUBMITTED BY MR. MISTRY, WOULD LEAD TO STARTLING RESULTS. WE THEREFORE HAVE NO HESITATION IN HOLDING THAT SECTION 80-IB(10) IS PROSPECTIVE IN NATURE AND CAN HAVE NO APPLICATION TO A HOUSING PROJECT THAT IS AP PROVED BEFORE 31ST MARCH, 2005. AS THE DEDUCTION SOUGHT TO BE CLAIMED UNDER SECTION 80-IB(10) IS INSEPARABLY LINK ED WITH THE DATE OF APPROVAL OF THE HOUSING PROJECT, IT WOU LD MAKE NO DIFFERENCE IF THE CONSTRUCTION OF THE SAID PROJE CT WAS COMPLETED ON OR AFTER 1ST APRIL, 2005 OR THAT THE P ROFITS WERE OFFERED TO TAX AFTER 1ST APRIL, 005 I.E. IN A. Y. 2005-06 OR THEREAFTER. WE THEREFORE FIND NO SUBSTANCE IN TH E ARGUMENT OF THE REVENUE THAT NOTWITHSTANDING THE FA CT ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 15 THAT THE HOUSING PROJECT WAS APPROVED PRIOR TO 31ST MARCH 2005, IF THE CONSTRUCTION WAS COMPLETED ON OR AFTER 1ST APRIL, 2005 OR IF THE PROFITS ARE BROUGHT TO TAX IN THE A.Y. 2005-06 OR THEREAFTER, THE SAID HOUSING PROJECT WOU LD HAVE TO COMPLY WITH THE PROVISIONS OF CLAUSE (D OF SECTI ON 80- IB(10). TO OUR MIND, WE DO NOT THINK THAT THE CONDITION/RESTRICTION LAID DOWN IN CLAUSE (D) OF SE CTION 80- IB(10) HAS TO BE REVISITED AND/OR LOOKED AT AND COM PLIED WITH IN THE ASSESSMENT YEAR IN WHICH THE PROFITS AR E OFFERED TO TAX BY THE ASSESSEE. WHEN THE ASSESSEE CLAIMS A DEDUCTION UNDER SECTION 80-IB(10), THE ASSESSEE IS REQUIRED TO COMPLY WITH SUCH A CONDITION ONLY IF IT IS ON THE STATUTE-BOOK ON THE DATE OF THE APPROVAL OF THE HOU SING PROJECT AND IT HAS NOTHING TO DO WITH THE YEAR IN W HICH THE PROFITS ARE BROUGHT TO TAX BY THE ASSESSEE. WE HAVE COME TO THIS CONCLUSION ONLY BECAUSE WE FIND THAT CLAUSE (D) OF SECTION 80-IB(10) IS INEXTRICABLY LINKED TO THE DAT E OF THE APPROVAL OF THE HOUSING PROJECT AND THE SUBSEQUENT DEVELOPMENT/CONSTRUCTION OF THE SAME, AND HAS NOTHI NG TO DO WITH THE PROFITS DERIVED THEREFROM. WE MAY HASTE N TO ADD THAT IF A PARTICULAR CONDITION IS NOT INSEPARAB LY LINKED TO THE DATE OF APPROVAL OF THE HOUSING PROJECT, DIF FERENT CONSIDERATIONS WOULD ARISE. HOWEVER, WE ARE NOT CAL LED UPON TO DECIDE ANY SUCH CONDITION AND HENCE WE ARE NOT LAYING DOWN ANY GENERAL PROPOSITION OF LAW, SAVE AN D EXCEPT THAT CLAUSE (D) OF SECTION 80-IB(10), BEING A CONDITION LINKED TO THE DATE OF THE APPROVAL OF THE HOUSING PROJECT, WOULD NOT APPLY TO ANY HOUSING PROJECT THA T WAS APPROVED PRIOR TO 31ST MARCH, 2005 IRRESPECTIVE OF THE FACT THAT THE PROFITS OF THE SAID HOUSING PROJECT ARE BR OUGHT TO TAX AFTER THE SAID PROVISION WAS BROUGHT INTO FORCE . CONSIDERING THE FACTUAL MATRIX AND SINCE THE PROJEC T WAS SANCTIONED ON 03/07/2003, PRIOR TO ENACTMENT/AMENDM ENT, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION FROM HON'BLE APEX COURT IN SARKAR BUILDERS AND HON'BLE JURISDICTIONAL HIGH COURT IN BRAHMA ASSOCIATES (SUPRA), WE FIND NO INFI RMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TA X (APPEAL) AND MORE SO THE DEPARTMENT IN THE CASE OF SISTER CONCERN OF THE ASSESSEE I.E. BHUMIRAJ HOMES LTD. (I TA NO.2170/MUM/2009) ORDER DATED 25/03/2011, THE ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 16 DEPARTMENT ALLOWED THE CLAIM OF THE ASSESSEE. IT IS WORTH MENTIONING THAT THE PROJECT WAS APPROVED AS A COMPO SITE PROJECT (RESIDENTIAL + COMMERCIAL) PAGE-5 OF THE PA PER BOOK AND COMPLETION CERTIFICATE WAS ALSO ISSUED FOR A CO MPOSITE PROJECT, THUS, WE AFFIRM THE STAND TAKEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) WITH RESPECT TO ALLOWABILITY OF CLAIMED DEDUCTION FOR RESIDENTIAL U NITS OF THE PROJECT. 3. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E (ITA NO.8750/MUM/2011), WHEREIN, PARTIAL DENIAL OF CLAIM OF DEDUCTION AMOUNTING TO RS.1,30,87,088/-, U/S 80IB(1 0) OF THE ACT, BEING PART OF THE PROFIT DERIVED FROM HOUSING PROJECT HAS BEEN CHALLENGED. THE STAND OF THE ASSESSEE IS THAT THE ASSESSEE VOLUNTARILY OFFERED THE PROFIT DERIVED FRO M COMMERCIAL PORTION/SHOPS, ON THE BASIS OF DECISION OF THE TRIB UNAL FROM THE CALCUTTA BENCHES. IT WAS EXPLAINED THAT BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE ASSESSEE M OVED ADDITIONAL CLAIM, HOWEVER, WHICH WAS DENIED BY THE FIRST APPELLATE AUTHORITY. OUR ATTENTION WAS INVITED TO THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). IT WAS EXPLAINED THAT THE PROJECT OF THE ASSESSEE WAS APPR OVED AS A SINGLE PROJECT, WHICH INCLUDES RESIDENTIAL AS WELL AS COMMERCIAL AND THERE IS WRONG FINDING BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) THAT THE PROJEC T WAS APPROVED BY WAY OF SEPARATE SANCTION PLANS. THE CRU X OF THE ARGUMENT IS THAT THERE ARE DECISIONS IN FAVOUR OF T HE ASSESSEE ON THE SALE OF COMMERCIAL AREA ALSO, THEREFORE, THE DEDUCTION ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 17 U/S 80IB(10) OF THE ACT HAS TO BE ALLOWED IN FULL. ON THE OTHER HAND, THE LD. DR, DEFENDED THE DENIAL OF CLAIMED DE DUCTION BY CLAIMING THAT THERE IS A CONFUSION IN THE AREA MENT IONED IN THE SANCTION PLAN, COMPLETION CERTIFICATE AND THE ORDER OF THE LD. ASSESSING OFFICER BY INVITING OUR ATTENTION TO THE RELEVANT PAGES. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WITHOUT G OING INTO MUCH DELIBERATION WE FIND THAT THE COMPETENT AUTHOR ITY APPROVED THE SANCTION PLAN VIDE LETTER DATED 03/07/ 2003 (PAGES 5 & 6 OF THE PAPER BOOK), WHEREIN, THERE IS A MENTION OF COMMERCIAL AS WELL AS RESIDENTIAL AREA. THE COMMEN CEMENT CERTIFICATE (PAGE-7 AND 8 OF THE PAPER BOOK) ALSO M ENTIONS RESIDENTIAL AS WELL AS COMMERCIAL, MEANING THEREBY, NO SEPARATE PLANS WERE APPROVED RATHER THE SANCTION PLAN/COMMENCEMENT CERTIFICATE AS WELL AS OCCUPANCY CERTIFICATE SPEAKS OF ONE COMPOSITE PLAN, THEREFORE , SO FAR AS THE CONTENTION OF THE FIRST APPELLATE AUTHORITY THA T TWO SEPARATE PLANS ARE THERE IS FACTUALLY INCORRECT. HO WEVER, WE FIND THAT THERE IS A CONFUSION IN THE AREA AS IN TH E COMMENCEMENT CERTIFICATE DATED 03/07/2003 (PAGE-7 O F THE PAPER BOOK), THE RESIDENTIAL AREA MENTIONED IS 1049 1.137 MTS. AND THE COMMERCIAL AREA IS 459.911 MTS., THUS, THE TOTAL AREA COMES TO 10951.048 MTS. AT THE SAME TIME, IN THE OC CUPANCY CERTIFICATE, THE RESIDENTIAL AREA MENTIONED IS 1063 6.203 SQ.MTS. AND THE COMMERCIAL AREA MENTIONED IS 536.77 9 SQ. MTS. THUS, THE TOTAL AREA COMES TO 11172.982 SQ. MT S., THUS, ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 18 THERE IS A CONFUSION IN THE AREA. CONSIDERING THE T OTALITY OF FACTS, WE DIRECT THE ASSESSEE TO FILE THE NECESSARY DETAILS BEFORE THE LD. ASSESSING OFFICER AND CLEAR THE FACTUAL MAT RIX. THE LD. ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW, CONSIDERING THE DE CISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN BRAHMA AS SOCIATES 333 ITR 289 (BOM.) AND CIT VS VEENA DEVELOPERS (201 5) (277 CTR 297) (SC) ORDER DATED 30/04/2015. NEEDLESS TO MENTION HERE THAT THE ASSESSEE BE PROVIDED DUE OPPORTUNITY OF BEING HEARD. THE ASSESSEE IS AT LIBERTY TO FURNISH NECESS ARY EVIDENCE, IF ANY, IN SUPPORT OF ITS CLAIM, THUS, THIS APPEAL OF THE ASSESSEE, AS AGREED FROM BOTH SIDES, IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 4. NOW, WE SHALL TAKE UP APPEAL OF THE REVENUE (IT A NO.1445/MUM/2012), WHEREIN, RESTRICTING THE PENALTY OF RS.43,25,013/-, IMPOSED U/S 221(1) OF THE ACT, BEIN G 10% OF THE TAX DEMAND OUTSTANDING, TO RS.4,38,383/- OF THE UNDISPUTED DEMAND, WHICH WAS NOT PAID BY THE ASSESS EE HAS BEEN CHALLENGED. THE LD. COUNSEL INVITED OUR ATTEN TION TO SECTION 221(2) OF THE ACT BY EXPLAINING THAT THE AS SESSING OFFICER LEVIED PENALTY WITH RESPECT TO THE ASSESSED TAX, WHICH INCLUDES INTEREST ALSO, WAS REDUCED SUBSTANTIALLY. IT WAS CONTENDED THAT THE PENALTY IS NOT LEVIABLE. ON THE OTHER HAND, THE LD. DR, DEFENDED THE PENALTY ORDER. 4.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 19 ARE THAT THE CLAIMED RELIEF U/S 80IB(10) OF THE ACT AND THE ASSESSMENT WAS MADE BY THE LD. ASSESSING OFFICER AT AN INCOME OF RS.10,07,55,450/-, AGAINST THE DECLARED I NCOME OF RS.1,30,87,087/-, THUS, ADDITION OF RS.8,76.68,359/ - WAS MADE, WHILE DENYING THE CLAIMED DEDUCTION U/S 80IB( 10) OF THE ACT. THE APPEAL OF THE ASSESSEE WAS DISMISSED B Y THE LD. COMMISSIONER OF INCOME TAX (APPEAL) ON TECHNICAL GR OUND AS THE DUE TAX WAS NOT PAID. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL, WHERE, THE MATTER WAS R ESTORED TO THE LD. COMMISSIONER OF INCOME TAX (APPEAL). MEANW HILE, THE LD. ASSESSING OFFICER PRESSED FOR DEMAND. THE ASSES SING OFFICER TREATED THE ASSESSEE IN DEFAULT U/S 221(1) OF THE ACT FOR OUTSTANDING TAX TO THE TUNE OF RS.4,32,50,133/- AND ACCORDINGLY LEVIED THE PENALTY AT THE RATE OF 10% W HICH COMES TO RS.43,25,013/-. IT IS NOTED THAT THE MAJOR DISP UTE WAS ON ACCOUNT OF ALLOWABILITY OF DEDUCTION U/S 80IB(10). AS MENTIONED EARLIER, THE LD. COMMISSIONER OF INCOME T AX (APPEAL) AS WELL AS THIS TRIBUNAL (IN PRECEDING PAR A OF THIS ORDER) HAS ALLOWED THE CLAIMED DEDUCTION U/S 80IB(1 0) ON RESIDENTIAL UNIT AND ON COMMERCIAL PORTION RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER, BEING CONFUSI ON ON THE AREA MENTIONED DIFFERENTLY IN DIFFERENT DOCUMENTS, THUS, IN OUR VIEW, AT LEAST, THE ASSESSEE, SO FAR AS PENALTY IS CONCERNED, CANNOT BE SAID TO BE ASSESSEE IN DEFAULT. SECTION 221(2) OF THE ACT SAYS WHERE AS A RESULT OF ANY FINAL ORDER THE AMOUNT OF TAX, WITH RESPECT TO DEFAULT IN THE PAYMENT OF WHIC H THE PENALTY WAS LEVIED, HAS BEEN WHOLLY REDUCED THE PEN ALTY LEVIED ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 20 SHALL BE CANCELED AND THE AMOUNT OF PENALTY PAID SH ALL BE REFUNDED. IN THE PRESENT APPEAL, THE SUBSTANTIAL P ORTION OF DEDUCTION U/S 80IB(10) HAS BEEN DECIDED IN FAVOUR O F THE ASSESSEE AND THE COMMERCIAL PORTION/SHOPS, DUE TO C ONFUSION OF THE AREA HAS BEEN SENT TO THE FILE OF THE LD. AS SESSING OFFICER, THEREFORE, THE BASIS ON WHICH PENALTY WAS IMPOSED, NO MORE REMAINS IN EXISTENCE, THEREFORE, WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE, CONSEQUENTLY, THE CONCL USION DRAWN IN THE IMPUGNED ORDER IS PARTIALLY CORRECT. 5. NOW, WE SHALL TAKE UP THE CROSS OBJECTION OF TH E ASSESSEE (C.O. NO.60/MUM/2013), WHEREIN, THERE IS D ELAY OF 9 DAYS. THE ASSESSEE HAS MOVED APPLICATION FOR CONDON ATION OF DELAY, SUPPORTED BY AN AFFIDAVIT, STATING THE REASO NS OF DELAY IN FILING THE CROSS OBJECTION BEFORE THIS TRIBUNAL. ON THE OTHER HAND, THE LD. DR, CONTENDED THAT THERE IS NO BONA-FIDE REASON FOR THE DELAY, THEREFORE, DELAY MANY NOT BE CONDONE D. 5.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, SO F AR AS, CONDONATION OF DELAY IS CONCERNED NO DOUBT FILING O F AN APPEAL/CROSS OBJECTION IS A RIGHT GRANTED UNDER THE STATUTE TO THE ASSESSEE AND IS NOT AN AUTOMATIC PRIVILEGE, THE REFORE, THE ASSESSEE IS EXPECTED TO BE VIGILANT IN ADHERING TO THE MANNER AND MODE IN WHICH THE APPEALS/CROSS OBJECTIONS ARE TO BE FILED IN TERMS OF THE RELEVANT PROVISIONS OF THE ACT. NEV ERTHELESS, A LIBERAL APPROACH HAS TO BE ADOPTED BY THE APPELLATE ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 21 AUTHORITIES, WHERE DELAY HAS OCCURRED FOR BONA-FIDE REASONS ON THE PART OF THE ASSESSEE OR THE REVENUE IN FILING T HE APPEALS. IN MATTERS CONCERNING THE FILING OF APPEALS, IN EXE RCISE OF THE STATUTORY RIGHT, A REFUSAL TO CONDONED THE DELAY CA N RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE THRESHOL D, WHICH MAY LEAD TO MISCARRIAGE OF JUSTICE. THE JUDICIARY I S RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE IN JUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUS TICE AND IS EXPECTED TO DO SO. 5.2. THE HONBLE APEX COURT IN A CELEBRATED DECIS ION IN COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS. 1 67 ITR 471 OPINED THAT WHEN TECHNICAL CONSIDERATION AND SUBSTA NTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE COURTS A RE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JUSTICE. THIS IS FOR THE REASON THAT AN OPPOSING PARTY, IN A DISPUTE, CANNOT HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A N ON- DELIBERATE DELAY. THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTERS RELATING TO THE CONDONATION OF DELAY, JUDIC IOUS AND LIBERAL APPROACH IS TO BE ADOPTED. IF SUFFICIENT C AUSE IS FOUND TO EXIST, WHICH IS BONA-FIDE ONE, AND NOT DUE TO NE GLIGENCE OF THE ASSESSEE, THE DELAY NEEDS TO CONDONED IN SUCH C ASES. THE EXPRESSION SUFFICIENT CAUSE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY LAW IN A MEANINGFUL MANNER, WHICH S UB-SERVES THE END OF JUSTICE- THAT BEING THE LIFE PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF THE COURTS. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTH ER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERR ED. THE ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 22 HONBLE APEX COURT IN VEDABHAI VS SANTARAM 253 ITR 798 OBSERVED THAT INORDINATE DELAY CALLS OF CAUTIOUS AP PROACH. THIS MEANS THAT THERE SHOULD BE NO MALAFIDE OR DILA TORY TACTICS. SUFFICIENT CAUSE SHOULD RECEIVE LIBERAL C ONSTRUCTION TO ADVANCE SUBSTANTIAL JUSTICE. THE HONBLE APEX COUR T IN 167 ITR 471 OBSERVED AS UNDER:- 3. THE LEGISLATURE HAS CONFERRED THE POWER TO COND ONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 1963 I N ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PART IES BY DISPOSING OF MATTERS ON DE MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC T O ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHIC H SUBSERVES THE ENDS OF JUSTICE THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT IS COMMON KNOWLEDGE T HAT THIS COURT HAS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN M ATTERS INSTITUTED IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHERS COURTS IN THE HIE RARCHY. 5.3. FURTHERMORE, THE HON'BLE SUPREME COURT IN THE CASE OF VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL V S. SHANTARAM BABURAO PATIL 253 ITR 798 HELD THAT THE C OURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CAS E KEEPING IN MIND THAT IN CONSTRUING THE EXPRESSION SUFFICIENT CAUSE, THE PRINCIPLE OF ADVANCING SUBSTANTIAL JUSTICE IS OF PR IME IMPORTANCE. THE COURT HELD THAT THE EXPRESSION SUF FICIENT CAUSE SHOULD RECEIVE LIBERAL CONSTRUCTION. ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 23 5.4. THE DECISION OF THE TRIBUNAL IN PEOPLE INFOCO M PRIVATE LTD. V/S CIT (ITA NO.210/MUM/2013) ORDER DA TED 19/05/2016, M/S NEUTRON SERVICES CENTRE PVT. LTD VS ITO (ITA NO.1180/MUM/2012) ORDER DATED 18/02/2016, SHRI SAIDATTA COOP-. CREDIT SOCIETY LTD. V/S ITO (ITA NO.2379/MUM/2015) ORDER DATED 15/01/2016 AND MR. NIKUNJ BAROT (PROP. ENIGMA) VS ITO (ITA NO.4887/MUM/2015) ORDER DATED 06/01/2016, WHEREIN, SUBSTANTIAL DELAY WAS CONDONED, SUPPORTS T HE CASE OF THE PRESENT ASSESSEE. HAVING MADE THE AFORESAID OBS ERVATION AND VARIOUS DECISIONS DISCUSSED HEREINABOVE, INCLUD ING FROM HONBLE APEX COURT, THE CIRCUMSTANCES NARRATED BY T HE ASSESSEE, WHEREIN, HE HAS STATED THE REASONS WHICH CAUSED THE DELAY, THEREFORE, THE DELAY IS CONDONED. 5.5. SO FAR AS, MERITS OF THE CROSS OBJECTION IS C ONCERNED, SINCE THE ASSESSEE HAS CHALLENGED PARTIAL CONFIRMAT ION OF PENALTY THROUGH C.O. NO.60/MUM/2013) (ARISING OUT O F ITA NO.1445/MUM/2012) AND WE HAVE HELD THAT PENALTY DOE S NOT SURVIVE, THEREFORE, THE CROSS OBJECTION OF THE ASSE SSEE DESERVES TO BE ALLOWED, BECAUSE THE BASIS FOR IMPOSING PENAL TY, NOW, NO MORE REMAIN IN EXISTENCE, CONSEQUENTLY, WE DIRECT T HE LD. ASSESSING OFFICER TO DELETE THE FULL PENALTY IMPOSE D U/S 221(1) OF THE ACT, THUS, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. FINALLY, A. ITA NO.8803/MUM/2011 IS DISMISSED ITA NOS 8803, 8750-2011, ITA NO 1445-2012 & CO-60-2013 M/S BHUMIRAJ CONSTRUCTION 24 B. ITA NO.8750/MUM/2011 IS ALLOWED FOR STATISTICAL PURPOSES. C. ITA NO.1445/MUM/2012 IS DISMISSED. D. C.O. NO.60/MUM/2013 IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 19/12/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ' DATED : 20/12/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / # 0' ( )* ) / THE CIT, MUMBAI. 4. / / # 0' / CIT(A)- , MUMBAI 5. 23 -' , / )*& ) 4 , # $ / DR, ITAT, MUMBAI 6. 5 6 $ / GUARD FILE. / BY ORDER, .2*' -' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI