Deputy Commissioner of Income-tax, V. M/s. Sukhwani Chawla Combine, Pune

ITA 900/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7414 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 10-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Assessee Lawyers: VIPIN GUJARATHI
• Keywords: Non compliance
• Section: 80IB; 11

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.697/PUN/2015 / ASSESSMENT YEAR : 2010-11 SUKHWANI CHAWLA COMBINE, 208/2A, NEAR SWAMINATHAN CLINIC, STATION ROAD, PIMPIRI, PUNE 411 018. PAN : ABDFS2457H. . / APPELLANT V/S ADDL.COMMISSIONER OF INCOME TAX, RANGE 8, PRATKSHYAKAR BHAVAN, AKURDI, PUNE. . / RESPONDENT . / ITA NO.900/PUN/2015 / ASSESSMENT YEARS : 2010-11 DY. COMMISSIONER OF INCOME TAX, CIRCLE 8, PRATYAKSHAKAR BHAVAN, DR. AMBEDKAR MARG, NEAR AKURDI RAILWAY STATION, AKURDI, PUNE 411 044. . / APPELLANT V/S M/S. SUKHWANI CHA W LA COMBINE, 208/2A, SUKHWANI HOUSE, OPP. SWAMINATHAN CLINIC, STATION ROAD, PIMPIRI, PUNE 411 018. PAN : ABDFS2457H. . / RESPONDENT / ASSESSEE BY : SHRI VIPIN GUJARATHI / REVENUE BY : SHRI M.K. GAUTAM / DATE OF HEARING : 29.06.2017 / DATE OF PRONOUNCEMENT: 25 .09.2017 2 / ORDER PER ANIL CHATURVEDI, AM : 1. THESE CROSS-APPEALS FILED BY ASSESSEE AND REVENUE E MANATE OUT OF ORDER OF COMMISSIONER OF INCOME-TAX (A) PUNE 6 DT.23.03.2015 FOR A.Y. 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A PARTNERSHIP FIRM STATED TO ENGAGED AS PRO MOTER AND BUILDER OF RESIDENTIAL AND COMMERCIAL PROJECTS. ASSESSE E FILED THE RETURN OF INCOME FOR A.Y. 2010-11 ON 29.09.2010 DECLAR ING TOTAL TAXABLE INCOME AT RS. NIL. THE CASE WAS SELECTED FOR SCRU TINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143 (3) OF THE ACT VIDE ORDER DATED 22.03.2013 AND THE TOTAL INCOME WA S DETERMINED AT RS.8,35,95,698/- BY DISALLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. AGGRIEVED BY THE ORD ER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A), WHO VIDE ORDE R DATED 23.03.2015 (IN APPEAL NO.PN/CIT(A)-6/ADDL. CIT. RG-8/173/13-1 4) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE AND REVENUE ARE NOW IN APPEAL BEFORE US. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL NO.697/PUN/2015 READS AS UNDER : 1. THE APPELLANT FIRM CLAIMED DEDUCTION OF RS.8,35 ,95,698/- UNDER SECTION 8018(10) OF THE IT ACT 1961 IN RESPECT OF T HE HOUSING PROJECT NAMED ' SUKHWANI OASIS ' CONSTRUCTED AT SECTOR II, CHIKHALI, PRADHIKARAN. THE LEARNED ASSESSING OFFICER DISALLOW ED THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) ON ACCOUNT OF VIOLAT ION OF THE PROVISION OF SUB-CLAUSE (F) OF SECTION 80IB(10) OF THE INCOME TAX ACT 1961 FOR THE REASON THAT THE APPELLANT HAD SOLD ROW HOUSE NO. 38 AND 39 TO HUSBAND AND WIFE. THE HONOURABLE CIT(A) ALLOWED THE PROPORTIONATE DEDUCTION UNDER SECTION 80IB(10) DENYING THE DEDUCT ION IN RESPECT OF PROFIT DERIVED FROM THE SALE OF ROW HOUSE NO . 38 AND 39. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE HONOURABLE CIT(A) ERRED AND IS NOT JUSTIFIED IN DEN YING THE DEDUCTION IN RESPECT OF PROFITS DERIVED FROM ROW HOUSE NO. 38 AND 39 WITHOUT APPRECIATING THE FACT THAT THE APPELLANT FIRM SOLD THE ROW HOUSE NO. 38 AND 39 TO THE PURCHASERS UNDER THE BONAFIDE IMPRESSION THAT THE P URCHASERS ARE NOT RELATED TO EACH OTHER AS HUSBAND AND WIFE THE PURCHASERS MISREPRESENTED AND MISGUIDED THE APP ELLANT FIRM BY CONCEALING/HIDING THEIR IDENTITY AND GETTING THE AGREEMENT REGISTERED IN DIFFERENT NON EXISTENT NAMES THE PURCHASERS - JEET KAUR ROHIDA GOT THE AGREEMENT REGISTERED IN HER OLD/NON EXISTENT NAME AND MAKING FRAUDULENT REPRESENTATION EVEN BEFORE THE REGISTERING AUTHORIT Y. THE APPELLANT HEREBY REQUESTS TO KINDLY ALLOW THE D EDUCTION IN RESPECT OF HOUSE NO.38 AND 39 AND OBLIGE. 4. ON THE OTHER HAND, THE GROUNDS RAISED BY THE REVE NUE IN APPEAL NO.900/PUN/2015 READS AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U /S 80IB(10) ON PROPORTIONATE BASIS WHEN THE LAW RELATING TO BENEFI T TO BE GIVE U/S 80IB(10) CLEARLY SAYS THAT THE PROJECT AS A WHOLE I S TO BE CONSIDERED FOR FULFILLMENT OF VARIOUS CONDITIONS PRESCRIBED TH EREIN? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 8 0IB(10) OF THE ACT ON PROPORTIONATE BASIS THOUGH THE PROVISIONS OF CLA USE (F) OF SUB- SECTION (10) OF SECTION 80IB ARE VIOLATED ? 5. SINCE THE GROUND RAISED IN BOTH THE APPEALS ARE INTER - CONNECTED BEING IN RELATION OF DEDUCTION U/S 80IB(10) OF THE ACT, THEY ARE CONSIDERED TOGETHER. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICE D THAT DURING THE YEAR THE ASSESSEE WAS ENGAGED IN THE DEVELO PMENT OF A HOUSING SCHEME BY THE NAME OF SUKHWANI OASIS AND THE PROFIT OF RS.8,35,95,698/- EARNED FROM THE PROJECT WAS CLAIMED AS E XEMPT U/S 80IB(10) OF THE ACT. ASSESSEE WAS ASKED TO FURNISH THE DET AILS OF ALL PURCHASERS OF FLATS/ROW HOUSES IN THE PROJECT SUKHWA NI OASIS AND ALSO ASKED TO CLARIFY THE COMPLIANCE OF THE CONDITIONS LAID DOWN IN SEC.80IB(10)(E) OF THE ACT. ON PERUSING THE DETAILS AND T HE COPIES 4 OF THE SALES AGREEMENTS FURNISHED BY THE ASSESSEE, AO NO TICED THAT ROW HOUSE NO.38 WAS ALLOTTED TO ONE MR. ANNEEL RAGHUMAL K HATRRIE (WHO HAD CHANGED HIS PRESENT NAME FROM SHANKAR RAGHUM AL ROHIDA). HE FURTHER NOTICED THAT ROW HOUSE NO.39 WAS ALLOTT ED TO JEET KAUR ROHIDA (WHO WAS CHANGED HER NAME TO JEET K AUR ANNEEL KHATRRIE). HE ALSO NOTICED THAT JEET KAUR WAS IN FACT WIFE OF MR. ANNEEL KHATRRIE. AO AFTER MAKING FURTHER INQUIRIES AND ON TH E BASIS OF REPORT OF HIS INSPECTOR CONCLUDED THAT ALLOTMENT OF ADJ OINING ROW HOUSES NOS.38 AND 39 OF THE PROJECT TO HUSBAND AND W IFE DID NOT MEET THE CONDITIONS STIPULATED IN SEC.80IB(10)(F) OF THE ACT A ND THAT THE ASSESSEE WAS IN FULL KNOWLEDGE THAT THE ADJACENT RO W HOUSES WERE SOLD TO HUSBAND AND WIFE. THE SUBMISSIONS OF THE AS SESSEE INTER-ALIA THAT IN THE BOOKING FORMS THE PURCHASERS HAD U SED THE NAMES AS J K ROHIDA AND ANNEEL KHATRRIE, THE ADDRESSES GIVEN THEM WERE DIFFERENT, THE POSSESSION LETTERS WAS SIGNED BY THE R ESPECTIVE PURCHASERS AS J K ROHIDA AND ANNEEL KHATRRIE AND THAT THE ASSESSEE WAS UNDER THE GENUINE IMPRESSION THAT THE TWO PURCHASERS WERE NOT RELATED TO EACH OTHER WERE NOT FOUND ACCEPT ABLE TO THE AO. AO WAS OF THE VIEW THAT FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT, THE ASSESSEE IS REQUIRED TO CUMULATIVELY FULFILL ALL THE R EQUIRED CONDITIONS STIPULATED IN CLAUSES (A) TO (F) OF SEC.80(IB)(10) OF TH E ACT AND NON-FULFILLMENT OF EVEN ONE CLAUSE WOULD ENTAIL DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE ACT. AO WAS OF THE VIEW THAT THE OBJECT BEHIND THE INTRODUCTION OF CLAUSES (E) AND (F) OF SEC.80IB(10) OF THE ACT BY FINANCE ACT, 2009 WAS TO PUT AN END TO THE PRA CTICE OF ALLOTTING MORE THAN ONE UNIT IN A PROJECT TO CLOSELY RELAT ED PERSONS/ENTITIES. HE CONCLUDED THAT ASSESSEE HAS BREACH ED THE CONDITION LAID DOWN IN CLASUE (F) OF SEC.80IB(10) OF THE ACT A ND HENCE WAS NOT ELIGIBLE FOR DEDUCTION. HE ACCORDINGLY DENIED THE C LAIM OF 5 DEDUCTION OF RS.8,35,95,698/-. AGGRIEVED BY THE ORDER OF A O, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE OR DER DATED 22.3.2015 (IN APPEAL NO.PN/CIT(A)-6/ADDL. CIT. RG-8/173/13-14 ) UPHELD THE ORDER OF AO IN DENYING THE DEDUCTION FOR VIOLATIO N OF CLAUSE (F) OF SEC.80IB(10) OF THE ACT BUT HOWEVER GRANTED P ARTIAL RELIEF BY LIMITING THE DENIAL OF DEDUCTION U/S 80IB(10) ONLY WITH RES PECT TO THE PROFITS IN RESPECT OF ROW HOUSES NOS.38 AND 39 BY H OLDING AS UNDER: 9. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE IT IS SEEN THAT THE APPELLANT FIRM IS ENGAGED IN CONSTRUCTION OF PR OJECT CALLED 'SUKHWANI OASIS' IN SECTOR NO. 11 AT CHIKHAL I, PRADHIKARAN IN RESPECT OF WHICH DEDUCTION U/S. 80IB (10) OF INCOME-TAX ACT HAS BEEN CLAIMED AT RS.8,35,95.69 8/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AFTER GOING THROUGH THE SALE DEEDS OF VARIOUS UNITS, THE ASSESS ING OFFICER CAME TO THE CONCLUSION THAT ROW HOUSE NO. 3 8 & 39 WERE ALLOTTED TO HUSBAND AND WIFE IN CONTRAVENTI ON OF THE PROVISIONS OF SEC. 80IB(10)(F) OF INCOME-TAX ACT. THE APPELLANT CLAIMED IGNORANCE OF THE ABOVE CONTRAVENT ION ON ACCOUNT OF THE FACT THAT THE ALLOTEES MISREPRESENTE D CERTAIN FACTS AT THE TIME OF BOOKING WHICH COULD NOT BE NOT ICED BY THE PARTNER OF THE FIRM. THE APPELLANT SUBMITTED TH AT WHILE UNIT NO. 38 WAS ALLOTTED TO SHRI. ANNEEL RAGHUMAL KHATRRIE AS PER CHANGED NAME,(HE WAS EARLIER KNOWN AS SHANKAR RAGHUMAL ROHIDA), UNIT, NO. 39 WAS ALLOTTED TO 'URVASHI ENTERPRISES' PROP JEET KAUR ROHIDA WHEREIN EARLIER NAME OF PROPRIETOR WAS USED DESPITE CHANGE IN NAME TO JEET KAUR ANIL KHATRRIE AS PER MAHARASHTRA GAZETTE DATED 16.11.2006. THE APPELLANT ALSO CLAIMED THAT EVEN PAN CARD FILED SHOWED OLD NAME OF JEET KA UR ROHIDA AND DUE TO THIS MISREPRESENTATION OF FACTS A ND ALSO DIFFERENT TIMING OF BOOKINGS, THE APPELLANT FIRM'S PARTNER WAS NOT ABLE TO EXERCISE DUE DILIGENCE AT THE TIME OF BOOKING AS WELL AS REGISTRATION. 10. AFTER GOING THROUGH THE ABOVE FACTS, BOOKING FORMS AND SALE DEEDS, I AM OF THE VIEW THAT THERE IS SUFFICIE NT MERIT IN THE CASE MADE OUT BY THE ASSESSING OFFICER THAT THE APPELLANT FIRM HAS FAILED TO EXERCISE DUE DILIGENCE EXPECTED OF IT. IT IS SEEN FROM THE BOOKING FORMS AS WELL AS REGISTERED SALE DEED THAT SIGNATURE OF J . A. KHATRRIE HAS BEEN SHOWN ON BOTH THE DOCUMENTS. THE SIMILARITY OF SURNAME AND PROXIMITY OF THE UNITS BEING 38 & 39 IS TOO GLARING TO BE MISSED OUT. THE FACT THAT BOTH THE DO CUMENTS WERE REGISTERED ON THE SAME DAY IN THE SUB-REGISTRA R'S OFFICE ON 08.06.2010 IS ALSO DIFFICULT TO BE IGNORED. THOUGH ONE CAN ARGUE AS CLAIMED BY THE APPELLANT AS TO WHA T BENEFIT THE APPELLANT WILL DERIVE IN INDULGING INTO SUCH COMPLICITY AS ALLEGED BY THE ASSESSING OFFICER SO A S TO JEOPARDIZE ITS CLAIM OF DEDUCTION U/S. 80IB(10) OF INCOME- 6 TAX ACT WITH SUCH A HUGE TAX IMPLICATION, THE FACT REMAINS THAT CONDITIONS STIPULATED IN SEC. 80IB(10)(F) OF I NCOME-TAX ACT HAVE BEEN BREACHED BY LACK OF DUE DILIGENCE ON THE PART OF THE APPELLANT. ONE MAY ALSO SAY THAT OF ALL THE SALE DEEDS WHY THE APPELLANT WOULD HAVE SUBMITTED T HE COPIES OF THESE TWO SALE DEEDS TO THE ASSESSING OFFICER AS SAMPLE COPIES IF THERE WAS COMPLICITY ON BEHALF OF THE APPELLANT FIRM, BUT THAT IN ITSELF WILL NOT ABSOLVE THE APPELLANT FROM LACK OF DUE DILIGENCE. MAY BE THE AP PELLANT COULD HAVE EXERCISE MORE PRECAUTION BY WAY OF ASKIN G FOR AFFIDAVIT IN THIS REGARD. THERE APPEARS TO BE CLEAR CASE OF MISREPRESENTATION ON THE PART OF ALLOTEES OF UNIT N O. 38 & 39, BUT THE APPELLANT CANNOT TAKE SHELTER BEHIND SU CH MISREPRESENTATION WITHOUT CARING FOR DUE DILIGENCE ON THIS ACCOUNT AS STIPULATED IN THE ACT. IF THE APPELLANT INTENDS TO AVAIL DEDUCTION U/S. 80IB(10) OF INCOME-TAX ACT, IT IS SUPPOSED TO PUT SYSTEMS IN PLACE SO THAT CONDITIONS STIPULATED IN THE SECTION ARE NOT VIOLATED TO JEOPA RDIZE IT'S CLAIM OF DEDUCTION. THEREFORE, CONSIDERING THE TOTA LITY OF FACTS, I DO NOT FIND ANY MERIT IN THE GROUND TAKEN BY THE APPELLANT AND ACTION OF THE ASSESSING OFFICER IN DE NYING CLAIM OF DEDUCTION U/S. 80IB(10) OF INCOME-TAX ACT IS UPHELD. ACCORDINGLY, GROUND NO.2 IS DISMISSED. 14. COMING TO THE ISSUE OF PROPORTIONATE DEDUCTION , IT IS IMPERATIVE TO NOTE THE INTENTION OF LEGISLATURE BEH IND INCORPORATING CLAUSE (E) & CLAUSE (F) OF SEC. 80IB(10) OF INCOME- TAX ACT. THE ASSESSING OFFICER HAS REPRODUCED THE E XPLANATORY MEMORANDUM TO FINANCE ACT 2009 IN PARA 4.6 OF THE ASSESSMENT ORDER. THE SAME IS REPRODUCED AGAINST TO HAVE IDEA OF THE INTENTION OF THE LEGISLATURE. 15. THUS, FROM THE ABOVE EXPLANATORY NOTE, IT IS CLEAR THAT CLAUSE (E) & (F) TO SEC. 80IB (10) OF INCOME TAX AC T WAS BROUGHT INTO THE STATUTE TO PREVENT CIRCUMVENTION OF CLAUSE (C) OF SEC. 80IB (10) OF INCOME-TAX ACT WHICH LIMITS THE SIZE OF THE RESIDENTIAL UNITS. THIS BEING SO, CLAUSE (E) & (F) ARE NOTHING BUT EXTENSION OF PROVISION OF SEC. 80IB(10)(E) OF I NCOME-TAX ACT TO BE APPLIED IN MORE RESTRICTIVE MANNER. IT HA S ALREADY BEEN HELD THAT THE APPELLANT FAILED TO APPL Y DUE DILIGENCE IN PREVENTING BREACH OF THE PROVISIONS OF SEC. 80IB(10)(F) OF INCOME-TAX ACT. BUT CAN THIS BREACH IN RESPECT OF JUST TWO UNITS IN THE ENTIRE PROJECT WIL L DISENTITLE THE APPELLANT TO CLAIM DEDUCTION U/S. 80IB(10) OF INCOME- TAX ACT IN RESPECT OF ENTIRE PROJECT PARTICULARLY W HEN THERE ARE NO VIOLATIONS IN RESPECT OF OTHER UNITS OF THE PROJECT. IT HAS BEEN ALREADY STATED THAT APPELLANT CANNOT TAKE SHELTER ON ACCOUNT OF MISREPRESENTATION OF FACTS BY THE ALLOTEES BUT DISALLOWING DEDUCTION U/S. 80IB(10) OF INCOME- TAX ACT IN RESPECT OF ENTIRE PROJECT ON ACCOUNT BRE ACH OF THE PROVISIONS OF SEC.80IB(10)(F) OF INCOME-TAX ACT IN RESPECT OF JUST TWO UNITS THAT TOO ON PECULIAR FACTS AND CIRCU MSTANCES OF THE CASE WILL BE A BIT TOO HARSH ON THE APPELLAN T. HON'BLE PUNE TRIBUNAL HAD OCCASION TO DEAL WITH ALM OST SIMILAR ISSUE IN CASE OF PHARANDE DEVELOPERS IN ITA NO. 715/PN/2009 FOR A.Y. 2005-06 IN RESPECT OF VIOLATION OF CLAUSE (C) OF SEC. 80IB(10) OF INCOME-TAX ACT IN RE SPECT OF TWO BUNGLOW UNITS G1 & G2 IN 'LAKSHDWEEP' PROJECT WHICH WERE SOLD TO ONE FAMILY AND AREA OF THE TWO U NITS AGGREGATED TO 1975 SQFT. THE BUNGLOWS WERE TREATED AS ONE UNIT AS THE SAME WERE AMALGAMATED INTO ONE. THE 7 TRIBUNAL WHILE EXAMINING THE CLAIM OF DEDUCTION U/S. 80IB(10) HELD THAT THE APPELLANT WAS ENTITLED TO DE DUCTION U/S. 80IB(10) OF INCOME-TAX ACT EXCLUDING BUNGLOW N O. G1 & G2. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDER: . 16. THEREFORE, CONSIDERING THE PECULIAR FACTS OF TH E CASE LEADING TO VIOLATION OF CLAUSE (F) OF SEC. 80IB(10) OF INCOME- TAX ACT AND ALSO RELYING UPON THE ABOVE REFERRED DE CISION OF HON'BLE PUNE TRIBUNAL IN THE CASE OF PHARANDE DEVELOPERS(SUPRA), THE ASSESSING OFFICER IS DIRECTE D TO RECOMPUTE THE DEDUCTION U/S. 80IB(10) OF INCOME-TAX ACT IN RELATION TO 'SUKHWANI OASIS' PROJECT BY LIMITING THE DENIAL ONLY TO THE PROFITS IN RESPECT OF ROW HOUSES NO. 38 & 39 WHERE CONDITIONS OF CLAUSE (F) OF SEC. 80IB(10) OF INCOME-TAX ACT HAVE BEEN BREACHED. FOR THE REMAININ G PROJECT THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S. 80IB(10) OF INCOME-TAX ACT. THUS, THE GROUND IS PARTLY ALLOWED. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD AR REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THERE IS NO DISP UTE AS FAR THE COMPLIANCE OF CONDITIONS STIPULATED IN CLAUSES (A) TO (D) OF SEC.80IB(10) OF THE ACT ARE CONCERNED. THE ONLY ISSUE IS WITH RESPECT TO CLAUSE (F) OF SEC.80IB(10) ON ACCOUNT OF SALE OF TWO ADJAC ENT ROW HOUSES BEARING NUMBERS 38 AND 39 AS THEY HAVE BEEN P URCHASED BY HUSBAND AND WIFE. BEFORE US LD AR SUBMITTED THAT ROW H OUSE NO.39 WAS BOOKED BY URVASHI ENTERPRISES THROUGH PROPRIE TOR JEET KAUR ROHIDA WHO USED HER OLD NAME JEETKAUR ROHIDA THOU GH HER NAME WAS CHANGED TO JEETKAUR ANNEEL KHATRRI VIDE GAZAT EE NOTIFICATION DATED 16.11.2006 AND SHE SUBMITTED HER PAN CA RD BEARING HER OLD NAME. THE AGREEMENT WAS REGISTERED WITH THE OFFICE OF SUB-REGISTRAR ON 08.06.2010. WITH RESPECT TO ROW HOUS E NO.38, LD AR SUBMITTED THAT IT WAS BOOKED BY SHRI ANNEEL KHATR RIE ON 22.01.2010 AND THE AGREEMENT WAS REGISTERED ON 08.06.2 010. SHRI ANNEEL KHATRRIE SUBMITTED HIS OLD PAN CARD WHICH WAS IN TH E NAME OF SHANKAR ROHIDA THOUGH THE NAME WAS CHANGED VIDE GAZ ATTE 8 NOTIFICATION DATED 16.11.2006. LD AR SUBMITTED THAT THOUGH THE NAME OF ANNEEL KHATRRIE WAS CHANGED ON 16 TH NOV 2006 BUT STILL HE OBTAINED PAN CARD IN HIS OLD NAME ON 16 TH MAY 2007 AND SIMILAR IS THE CASE OF JEETKAUR ROHIDA. HE SUBMITTED THAT THE ADDR ESSES SUBMITTED BY BOTH THE PERSONS WERE NOT COMMON BUT WE RE DIFFERENT ADDRESSES. HE THEREFORE SUBMITTED THAT THE ASSESSEE WA S UNAWARE OF THEIR RELATIONSHIP AND WAS UNDER A GENUINE IMPRESSION THA T THE TWO PERSONS ARE NOT RELATED TO EACH OTHER. HE FURTHER SU BMITTED THAT IN THE BOOKING FORM SINCE THE NAMES WERE DIFFERENT AND THE ADDRESSES WERE DIFFERENT, THE ASSESSEE DID NOT DOUBT THE TRANSACTIO N AND THEIR RELATIONSHIP. HE THEREFORE SUBMITTED THAT WITH DUE DILIGENCE AS EXPECTED WAS TAKEN BY THE ASSESSEE AND THEREFORE THE CLAIM OF DEDUCTION BE NOT DENIED TO THE ASSESSEE. AS AN ALTERNAT E PLEA HE SUBMITTED THAT THE DISALLOWANCE OF SEC.80IB(10) BE RESTRICT ED TO THE TWO ROW HOUSES ONLY AND NOT TO THE ENTIRE PROJECT. LD DR ON THE OTHER HAND TOOK US THROUGH THE FINDINGS OF AO AND SUPPO RTED THE ORDER OF AO. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON THE ISSUE OF REVENUES APPEAL WHEREIN REVE NUE IS AGGRIEVED BY THE ORDER OF LD.CIT(A) WHEREBY HE HAS HELD T HAT DISALLOWANCE BE RESTRICTED ONLY WITH RESPECT TO PARTIES O F ROW HOUSES 38 AND 39, WE FIND THAT LD.CIT(A) WHILE GRANTING PARTIAL RELIEF H AD RELIED ON THE DECISION OF INCOME TAX APPELLATE TRIBUNAL, PUNE BENCH IN THE CASE OF PHARANDE DEVELOPERS (ITA NO.715/PN/2009). BEFORE US, NO MATERIAL HAS BEEN PLACED BY REVENUE TO DEMONSTRA TE THAT THE AFORESAID DECISION OF PUNE ITAT IN THE CASE OF PHARANDE D EVELOPERS (SUPRA) HAS BEEN SET ASIDE BY HIGHER JUDICIAL AUTHORITY. ON THE ISSUE OF PROPORTIONATE DEDUCTION, WE ALSO FIND THAT HONBLE MADRAS 9 HIGH COURT IN THE CASE OF CIT VS. ARUN EXCELLO FOUNDATIONS (P.) LTD [2013] 29 TAXMANN.COM 149 (MADRAS) HAS APPROVED THE PRI NCIPLE OF PROPORTIONATE DEDUCTION TO THE EXTENT THE ASSESSEE HA S COMPLIED WITH THE PROVISIONS OF SEC.80IB(10) OF THE ACT. FOLLOWING THE AFORESAID DECISION OF HONBLE MADRAS HIGH COURT WE ARE OF T HE VIEW THAT THE ASSESSEE CANNOT BE DENIED THE DEDUCTION FOR THE COMPLETE HOUSING PROJECT AND THEREFORE FIND NO FAULT IN THE ORDER O F LD.CIT(A) AND THUS THE GROUNDS OF REVENUE ARE DISMISSED. 9. ON THE ISSUE OF DENIAL OF DEDUCTION U/S 80IB(10) ON ACCOU NT OF NON COMPLIANCE OF THE CONDITION STIPULATED IN CLAUSE (F) TO SEC . 80IB(10) OF THE ACT, CLAUSES (E) AND (F) WERE INSERTED TO SEC .80IB(10) BY FINANCE (NO.2) ACT, 2009 W.E.F 01.04.2010. THE OBJECT BE HIND THE INTRODUCTION AS EXPLAINED BY THE MEMORANDUM EXPLAINING T HE PROVISIONS IS THAT THE OBJECTIVE OF THE TAX BENEFIT FOR HOU SING PROJECTS WAS TO BUILD HOUSING STOCK FOR LOW AND MEDIUM INCOME HOUSE HOLDS BY ENSURING THE SIZE OF THE RESIDENTIAL UNIT. IT WAS CIRCUMV ENTED BY THE DEVELOPERS BY ENTERING INTO AGREEMENT TO SELL MULTIPLE ADJACENT UNITS TO A SINGLE BUYER. ACCORDINGLY THE NEW CLAUSE WAS IN SERTED TO PROVIDE THAT THE UNDERTAKING WHICH DEVELOPS AND BUILDS TH E HOUSING PROJECT SHALL NOT BE ALLOWED TO ALLOT MORE THAN ONE RESIDE NTIAL UNIT IN THE HOUSING PROJECT TO THE SAME PERSON NOT BEING AN IN DIVIDUAL AND WHERE THE PERSON IS AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT TO SPOUSE OR MINOR CHILDREN OF SUCH INDIVID UAL, TO HUF IN WHICH THE INDIVIDUAL IS A KARTA. IN THE PRESENT CA SE IT IS AN UNDISPUTED FACT THAT ROW HOUSE NO.38 HAS BEEN SOLD TO SHRI ANNEEL RAGHUMAL KHATRRIE AND ROW HOUSE NO.39 HAS BEEN SOLD TO M/S URVASHI ENTERPRISES THROUGH ITS PROPRIETOR/AUTHORISED SIG NATORY IS JEETKAUR ROHIDA. THE BOOKING FORM WHICH HAS BEEN PLACED A T PAPER 10 BOOK REVEALS THAT THE BOOKINGS WERE MADE BY TWO DIFFEREN T PERSONS WHOSE NAMES PRIMA FACIE APPEARED TO BE NOT RELATED TO E ACH OTHER MORE SO WHILE BOOKING ROW HOUSE NUMBER 39, THE ADDRESS OF JEETKAUR ROHIDA WAS STATED AS PLOT NO 16, GANESH VISION, AKURDI, PUNE AND FOR BOOKING THE ROW HOUSE NO.38 THE ADDRESS O F THE PURCHASER, SHRI ANNEEL KHATRRIE WAS STATED TO BE C/16 S UKHWANI LAWNS, PIMPRI, PUNE. THE AGREEMENTS FOR BOTH THE ROW HOUS ES WERE REGISTERED WITH THE OFFICE OF SUB-REGISTRAR ON 8 TH JUNE 2010. MR ANNEEL KHATRRIE WAS EARLIER KNOWN AS SHANKAR RAGHUMAL RO HIDA AND HE CHANGED HIS PRESENT NAME FOR WHICH A NOTIFICATION WAS ISSUED IN THE GOVERNMENT OF MAHARASTRA GAZETTE DATED 1 6.11.2006. AT THE TIME OF REGISTRATION HE FURNISHED THE COPY OF THE P AN CARD WHICH SHOWED HIS OLD NAME I.E SHANKAR ROHIDA. IN CASE OF R OW HOUSE NO.39, THE AGREEMENT WAS SIGNED IN THE NAME OF JEE TKAUR ROHIDA THOUGH SHE HAD GOT HER NAME CHANGED TO JEETKA UR ANIL KHATRI VIDE GOVERNMENT OF MAHARASHTRA GAZETTE NOTIFICATION DATED 16 TH NOVEMBER 2006 AND THE COPY OF THE PAN CARD FURNISHED ALSO HAVING HER OLD NAME I.E. JEETKAUR ROHIDA. THE POSSESSION LETTERS DATED 20.7.2010 SIGNED BY THE RESPECTIVE PURCHASERS WER E SIGNED AS JEETKUMAR ROHIDA AND ANNEEL KHATRRIE RESPECTIVELY. WE ARE OF THE VIEW THAT AT THE TIME OF MAKING SALE/BOOKING A UNIT AND FO R COMPLYING WITH THE REQUIREMENT OF CLAUSE (E) AND (F), THE ASS ESSEE IS REQUIRED TO EXERCISE NORMAL DUE DILIGENCE EXPECTED OF A NO RMAL BUSINESSMAN AND PROCEED ON THE BASIS OF THE DOCUMENTS/INFORMATION FURNISHED BY THE OTHER PERSON AND IS NOT SUPPOSED TO ACT LIKE A DETECTIVE AND MICROSCOPICALLY INVES TIGATE AND GO BEHIND THE DOCUMENTS AND VERIFY THE BACKGROUND OF T HOSE SUBMISSIONS. FURTHER NO GUIDELINES HAVE ISSUED BY REVENU E DEPARTMENT TO SHOW AS TO WHAT AND HOW THE VERIFICATION HAS TO BE 11 CONDUCTED AND THEREFORE IT IS NOT A CASE OF REVENUE THA T THE REQUIRED GUIDELINES ISSUED BY REVENUE DEPARTMENT SO AS TO CHECK THE COMPLIANCE OF CLAUSE (E) AND (F) HAVE NOT BEEN FOLLOWED BY ASSE SSEE. IN VIEW OF THE FOREGOING, WE ARE OF THE VIEW THAT IN THE PRESENT CASE, THE ASSESSEE HAD PRIMA FACIE EXERCISED NORMAL DUE DILIGENCE EXPECTED OF A NORMAL BUSINESSMAN MORE SO WHEN THE PURC HASERS AT THE TIME OF BOOKING HAD GIVEN DIFFERENT ADDRESSES, WERE HAV ING DIFFERENT SURNAMES AND THEN LATER ON THEY TURNED OUT TO BE CLOSELY RELATED. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT BE DENIED THE DEDUCTION U/S 80IB(10) OF THE ACT. W E THEREFORE HOLD THAT THE CLAIM OF DEDUCTION U/S 80IB(10) B E ALLOWED AND THUS THE GROUNDS OF ASSESSEE ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 25 TH DAY OF SEPTEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ' / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER PUNE; ! DATED : 25 TH SEPTEMBER, 2017. YAMINI 12 $%&'()(& / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-6, PUNE. PRINCIPAL CIT-5, PUNE. #$% &&'(,* '(, / DR, ITAT, A PUNE; %-.// GUARD FILE. / BY ORDER , / / TRUE COPY / / 012&3'4 / SR. PRIVATE SECRETARY * '(, / ITAT, PUNE