Skyline Builders, Ernakulam V. ACIT, Ernakulam

ITA 921/COCH/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52339 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 22-12-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 05-11-2008
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: A S NARAYANAMOORTHY CAAR
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Revised return
• Section: 143(3); 153A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A. NOS. 209,210,222,223, 224/COCH/2009 & 921/CO CH/2008 ASSESSMENT YEAR: 2000-01 TO 2005 -06 SKYLINE BUILDERS, RAJAJI NAGAR, ERNAKULAM. [PAN: AAMFS 8117N] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI A.S.NARAYANAMOORTHY, CA-AR REVENUE BY SHRI S.R.SENAPATI, SR. DR DATE OF HEARING 22/12/2011 DATE OF PRONOUNCEMENT 30/12/2011 O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF SIX APPEALS BY THE ASSESSEE DIR ECTED AGAINST THE SEPARATE ORDERS BY THE COMMISSIONER OF INCOME-TAX (CENTRAL), KOCHI (CIT FOR SHORT) FOR SIX CONSECUTIVE ASSESSMENT YEARS (A.YS.), BEING AYS 2000-01 TO 2005 -06, IN HIS CAPACITY AS A REVISIONARY AUTHORITY U/S. 263 OF THE INCOME-TAX ACT, 1961 ('TH E ACT', HEREINAFTER). THE SAME RAISING COMMON ISSUES, WERE HEARD TOGETHER, AND ARE BEING D ECIDED BY THIS COMMON, CONSOLIDATED ORDER. 2. WE SHALL PROCEED TO DISCUSS THE VARIOUS ISSUES, YEAR-WISE; THE PRIMARY GRIEVANCE OF THE ASSESSEE BEING THE INVOCATION OF SEC. 263 BY TH E LD. CIT BY TREATING THE ORDER/S FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT AS ERRONEOUS IN- SO-FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 2 A.Y. 2000-01 (IN I.T.A. NO.209/COCH/2009) 3.1 THE BASIS FOR INVOCATION OF S. 263 FOR THIS YEAR WAS THAT A PERUSAL OF THE RECORDS REVEALED THAT THE EXPENDITURE ON CONTRACTS PENDING COMMENCEMENT, VIZ. PINEWOOD, KUMBALAM, KUMARAKOM AND EROOR, REFLECTED A DE BIT BALANCE, DENOTING EXPENDITURE INCURRED THERON AS AT THE END OF THE RELEVANT PREVI OUS YEAR, (MUCH) LESS THAN THE AMOUNT AS REFLECTED IN THE SAID ACCOUNT AS AT THE END OF THE IMMEDIATELY PRECEDING YEAR. THE LD. AR WOULD SUBMIT THAT VIDE THE ORDER PASSED BY THE ASSE SSING OFFICER (AO) ON 24-12-2009 IN PURSUANCE TO SEC. 263 ORDER, HE HAS ACCEPTED THE SA ID REDUCTION, FINDING THE SAME, UPON VERIFICATION, AS ON ACCOUNT OF ALLOCATION OF COMMON EXPENDITURE, I.E., INCURRED FOR MORE THAN ONE PROJECT, WHICH STANDS TRANSFERRED, SO THAT IT WAS A REVENUE-NEUTRAL TRANSACTION. HE ADVERTED FOR THE PURPOSE TO PARA 5 OF THE SAID ORDE R, PLACED AT PAPER-BOOK (PB PGS. 5 TO 7). 3.2 THE LD. DR WOULD SUBMIT THAT THE SET ASIDE ORDE R, OR THE FATE OF THE DIRECTION BY THE LD. CIT, WHICH WAS AN OPEN DIRECTION TO THE ASSESSI NG AUTHORITY TO VERIFY THE NATURE AND THE REVENUE IMPACT OF THE SAID REDUCTION, WOULD BE OF NO MOMENT. AS SUCH, NO RELIANCE THEREON COULD BE PLACED BY THE ASSESSEE. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE FIND MERIT IN THE ARGUMENT OF THE LD. DR. IN FACT, THE VERY FACT OF THE AOS FINDING, TO WHICH THE LD. AR DREW OUR ATTENTION TO DURING THE COURSE OF HEARING, WOULD ITSELF ESTABLISH THAT NO VERIFICATION ON THESE LINES WAS MADE DURING THE COU RSE OF EARLIER ASSESSMENT, WHICH IS THE SUBJECT MATTER OF SEC. 263. ABSENCE OF PROPER INQU IRY, WHERE DUE, WOULD MAKE AN ORDER PER SE ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO TH E INTEREST OF THE REVENUE, IS TRITE LAW (ALSO REFER PARA 7.3 OF THIS ORDER). THAT THE SAME DID NO T RESULT IN ANY ADDITION BY THE REVNEUE IS IMMATERIAL; THE LD. CIT HAVING ONLY GIVEN AN OPE N-ENDED DIRECTION AND, PRINCIPALLY FOR VERIFICATION, AND A DECISION IN ACCORDANCE WITH LAW IN VIEW OF THE ENSUING FINDINGS. THE ASSESSEES APPEAL IS, IN FACT, INFRUCTUOUS. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 3 5. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 20 00-01 (IN I.T.A. NO. 209/COCH/2009) IS DISMISSED. A.Y. 2001-02 (I.T.A. NO. 210/COCH/2009) 6.1 THE ONLY ISSUE ARISING IN THE INSTANT CASE IS A DIRECTION BY THE LD. CIT TO CONSIDER THE CLAIM OF DEDUCTION U/S. 80IB ON MERITS AFTER EX AMINING ALL THE RELEVANT FACTS, INCLUDING THE FACTS RELEVANT TO THE DETERMINATION O F THE PROFITS OF THE ELIGIBLE BUSINESS, I.E., AS MADE BY THE SAID AUTHORITY IN THE ASSESSEES CAS E FOR A.Y. 2002-03. WITH REFERENCE THERE-TO, IT WAS SUBMITTED BY THE LD. AR THAT THE A SSESSEES ORIGINAL ASSESSMENT, MADE U/S. 143(3) OF THE ACT PRIOR TO SEARCH ON 24-01-2006, WA S CARRIED IN APPEAL BY IT BEFORE THE FIRST APPELLATE AUTHORITY; THE AO HAVING DENIED ITS CLAIM FOR DEDUCTION U/S. 80IB AT ` 70615/-. THE FIRST APPELLATE AUTHORITY (OR `CIT(A) FOR SHORT), VIDE HIS ORDER DATED 10- 06-2005 (PLACED AT PB PGS. 9 & 10), VIDE PARA 5 THE REOF, DIRECTED THE AO TO ALLOW DEDUCTION U/S. 80IB, IF THE APPELLANT WAS OTHERWISE FOUND ELIGIBLE FOR THE SAME. THE ISSUE OF DEDUCTION U/S. 80IB THUS HAS BEEN A SUBJECT MATT ER OF APPEAL, AND WAS THEREFORE BEYOND THE SCOPE OF THE REVISION. REFERENCE WAS MADE BY HI M TO EXPLANATION (C) BELOW U/S. 263(1), AS WELL AS TO THE DECISION BY THE APEX COUR T IN THE CASE OF CIT VS. SHRI ARBUDA MILLS (1998) 231 ITR 50 (SC). FURTHER, S. 153A(2) CLARIF IES THAT, SAVE AS PROVIDED IN SS. 153A, 153B AND 153C, ALL THE OTHER PROVISIONS OF TH E ACT WOULD BE APPLICABLE TO AN ASSESSMENT U/S.153A. AS SUCH, THE PROVISION OF SEC . 263 WOULD ALSO BE APPLICABLE TO AN ASSESSMENT FRAMED U/S. 153A, WHICH IS SUBJECT TO RE VISION IN THE INSTANT CASE. 6.2 THE LD. DR, ON THE OTHER HAND, WOULD SUBMIT THA T THE REASON FOR THE IMPUGNED DIRECTION BY THE LD. CIT WAS CLEARLY DIFFERENT FROM THAT WHICH PREVAILED AND WAS, THEREFORE, THE SUBJECT MATTER OF CONSIDERATION BY T HE FIRST APPELLATE AUTHORITY IN ADJUDICATING THE ASSESSEES APPEALS AGAINST THE S. 143(3) ASSESSMENT. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 4 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AND GIVEN OUR CAREFUL CONSIDERATION TO THE MATTER. 7.1 WITHOUT DOUBT, S. 263 IS APPLICABLE, AND WHI CH WOULD IMPLY IN ITS TOTALITY TO A SEC. 153A ASSESSMENT AS WELL. IF THAT BE NOT SO, IN FACT , ALL THE ASSESSMENT ORDERS PASSED UNDER THE SAID SECTION WOULD BE OUTSIDE THE PURVIEW OF RE VISION BY THE ADMINISTRATIVE- COMMISSIONER, AND ALL THE APPEALS BY THE ASSESSEE I N THE INSTANT CASE STAND TO BE ALLOWED AT THE THRESHOLD, ON THE BASIS OF A LEGAL STAND. TH E ISSUE IS NOT OF THE POWER OR THE COMPETENCE, BUT OF THE SCOPE OF EXPLANATION (C) BELOW S. 263 (1), WHICH READS AS UNDER:- 263(1) THE COMMISSIONER MAY CALL FOR AND EXAMINE T HE RECORD OF ANY PROCEEDINGS UNDER THIS ACT, AND IF HE CONSIDERS THA T ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN O PPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUST IFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLIN G THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT, FOR THE PURPOSE OF THIS SUB-SECTION, - (A) (B) (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTI ON AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF A NY APPEAL FILED ON OR BEFORE THE 1 ST DAY OF JUNE, 1988, THE POWERS OF THE COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. THE ALLOWANCE OF ANY DEDUCTION MAY HAVE VARIOUS FACETS TO IT, ALL OF WHICH MAY NOT BE IN DISPUTE IN A PARTICULAR CASE, SO THAT ONL Y THE ONE UNDER DISPUTE CAN BE SAID TO BE THE SUBJECT MATTER OF CONSIDERATION BY THE APPELLAT E AUTHORITY, PRECLUDING ITS REVISION BY THE REVISIONARY AUTHORITY UNDER THE ACT. THE LAW IN THE MATTER IS AMPLY CLARIFIED BY THE WORDS EMPLOYED BY THE STATUTE AS WELL AS THE DECISI ONS BY THE APEX COURT RENDERED IN THE I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 5 MATTER, FOR WHICH WE MAY REFER TO THE DECISION IN T HE CASE OF CIT VS. SHRI ARBUDA MILLS LTD. (SUPRA) AND CIT VS. ALAGENDRAN FINANCE LTD . (2007) 293 ITR 1 (SC). 7.2 COMING TO THE FACTS OF THE PRESENT CASE, TH E DEDUCTION IN THE FIRST INSTANCE WAS DENIED BY THE ASSESSING AUTHORITY, AS THE ASSESSEE S CLAIM WAS NOT PRESSED VIDE ITS ORIGINAL RETURN, FILED ON 31-10-2001, SO THAT THE SUBSEQUENT CLAIM MADE PER THE RETURN FILED ON 12- 11-2003 WAS CONSIDERED BY HIM AS OUT OF TIME; THE S ECOND RETURN BEING FILED BEYOND ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR, SO THAT IT WOULD NOT IN LAW BE CONSIDERED AS A REVISED RETURN. THE LD. CIT(A) EXA MINED THE ISSUE IN THE LIGHT OF THE DECISION BY THE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383 (SC) AND IN THE CASE OF CIT VS . RAI BAHADUR BISSESWARLAL MOTILAL MALWASIE TRUST (1992) 195 ITR 825 (CAL.), RELIED UPON BY THE ASSESSEE, AN D HELD AS UNDER VIDE HIS ORDER DATED 10/6/2005 (PB PGS. 9,10):- 5. I HAVE CONSIDERED THE ARGUMENTS OF THE APPELLAN T. THE APPELLANT HAS MADE THE CLAIM OF DEDUCTION U/S. 80IB EVEN WHILE THE ASSESS MENT PROCEEDINGS WERE PENDING. IN VIEW OF THE DECISIONS CITED ABOVE AND THE CIRCU LAR OF THE BOARD, THE AO WAS NOT RIGHT IN IGNORING THE CLAIM OF THE APPELLANT. HE I S DIRECTED TO ALLOW THE APPROPRIATE DEDUCTION U/S. 80IB IF THE APPELLANT IS FOUND ELIGIBLE FOR THE DEDUCTION. CLEARLY, THEREFORE, THE LD. CIT(A) HAS NOT ADJUDIC ATED ANY ISSUE APART FROM THE `ADMISSIBILITY OF THE ASSESSEES CLAIM FOR DEDUCTI ON U/S. 80IB, I.E., OF IT BEING ELIGIBLE FOR BEING CONSIDERED ON MERITS. A DECISION, IT IS WELL SETTLED, IS AN AUTHORITY ONLY FOR WHAT IT ACTUALLY DECIDES. ACCORDINGLY, WE DO NOT CONSIDER T HAT THE LD. CIT WAS IN ANY MANNER PRECLUDED FROM GIVING A DIRECTION WITH REFERENCE TO THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB FOR THE RELEVANT YEAR, OTHER THAN OF COURSE QUA ITS ADMISSIBILITY. REFERENCE FOR THE PURPOSE IS ALSO DRAWN TO PARAS 10.2 & 19.2 OF THIS ORDER, WHEREIN THIS ASPECT STANDS DEALT WITH IN GREATER DETAIL. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 6 7.3 WE MAY NOW TURN TO THE DIRECTION/S BY THE LD. C IT PER THE IMPUGNED ORDER. IN FACT, IT (PER ITS PARA 3 & 4) REFERS TO THE REASONS RECOR DED VIDE THE REVISIONARY ORDER DATED 22- 09-2008 FOR A.Y. 2002-03 IN THE MATTER, WHEREIN REL EVANT DIRECTION READS AS UNDER:- 5. FOR THE REASONS DISCUSSED IN DETAIL AT PARA 4 ABOVE , THE ORDER U/S. 153A R.W.S. 143(3) PASSED BY THE AO ON 28-12-2007 IS THUS ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF THE PROV ISIONS OF SECTION 263. THE ORDER OF THE AO, THEREFORE, REQUIRES TO BE REVISED. THE AO IS ACCORDINGLY DIRECTED TO:- (I) (II) CONSIDER THE CLAIM OF DEDUCTION U/S. 80IB ON MERITS AS PER LAW AFTER EXAMINATION OF ALL RELEVANT FACTS INCLUDING THE FA CTS RELATING TO DETERMINATION OF PROFITS OF THE ELIGIBLE BUSINESS. THE ASSESSMENT IS SET ASIDE ON THIS ISSUE TO BE MADE AFRESH. WE FIND THAT THE ASSESSMENT ORDER IS BEREFT OF ANY DISCUSSION IN RESPECT OF THE DEDUCTION U/S. 80IB, AS CLAIMED BY THE ASSESSEE PER ITS RETURN OF INCOME. THE ASSESSEES INCOME STANDS COMPUTED FROM THE RETURNED INCOME VID E RETURN U/S. 153A FILED ON 11-12- 2006, MAKING ADJUSTMENTS THERE-TO AS LISTED AT PARA S 3, 4 & 5 OF THE ASSESSMENT ORDER DATED 28-12-2007. AS SUCH, THE DEDUCTION CLAIMED U/S. 80IB STANDS IMP LICITLY ALLOWED. THERE IS NOT EVEN A MENTION OF THE CLAIM HAVING BEEN EXAMINED AND HAVING BEEN FOUND IN ORDER, SO THAT IT COULD BE INFERRED T HAT THERE HAS BEEN AN APPARENT CONSIDERATION OF THE MATTER. THE LD. CIT HAS FOUND THAT NEITHER ANY SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED NOR ANY REPORT OF AUDIT IN FORM 10CCB AS FILED, EVEN DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT IS TR ITE LAW THAT ABSENCE OR LACK OF ANY ENQUIRY, WHERE ONE IS DUE, WOULD MAKE THE ORDER PER SE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, SO THAT IT IS LIABLE TO BE SET ASIDE FOR THE SAID CONSIDERATION U/S. 263. REFERENCE IN THIS CONTEXT IS MADE TO A HOST O F CASE LAW, AS IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT (2000) 243 ITR 83 (SC); RAMPYARI DEVI SAROGI V. CIT (1968) 67 ITR 84 (SC); CIT V. MCMILLAN & CO . (1958) 33 ITR 182 (SC); JAI BHARAT TANNERS V. CIT , 264 ITR 673 (MAD.); GEE VEE ENTERPRISES V. CIT (ADDL.) , 99 ITR 375 (DEL.); RAJALAKSHMI MILLS LTD. V. ITO , 121 ITD 343 (CHENNAI) (SB), TO CITE SOME. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 7 ALSO, IT NEEDS TO BE EMPHASIZED THAT THE DIRECTION BY THE LD. CIT IS AN OPEN-ENDED DIRECTION, ONLY REQUIRING THE ASSESSING AUTHORITY T O EXAMINE THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB ON MERITS, AND DECIDE ON IT IN ACCORDANCE WITH LAW. THEREFORE, WE SEE NO PREJUDICE BEING CAUSED TO THE ASSESSEE IN ANY MA NNER. UNDER THE CIRCUMSTANCES, WE FIND NO INFIRMITY IN AND, CONSEQUENTLY, UPHOLD THE IMPUGNED ORDER. WE DECIDE ACCORDINGLY. 8. IN THE RESULT, THE ASSESSEE S APPEAL FOR A.Y. 2 001-02 (IN I.T.A. NO.210 /COCH/2009) IS DISMISSED. A.Y. 2002-03 (I.T.A. NO.921/COCH/2008) 9. THE REVISIONARY ORDER FOR THIS YEAR CONTAINS TWO DI RECTIONS, OF WHICH ONE, I.E., IN RELATION TO SEC. 80IB DEDUCTION, STANDS ALREADY REP RODUCED AT PARA 7.3 ABOVE, WHILE DISCUSSING THE ISSUE FOR A.Y.2001-02. THE OTHER ( FIRST) DIRECTION READS AS UNDER, WHICH OF COURSE HAS TO BE READ ALONG WITH AND IN CONJUNCT ION WITH THE SECOND DIRECTION AFORE- REFERRED: 5. FOR THE REASONS IN DETAIL AT PARA 4 ABOVE, THE ORDER UNDER SECTION 153A . . THE AO IS ACCORDINGLY DIRECTED TO: (I) MAKE THE ADDITION ON THE ISSUE OF INVOKING THE PROVISIONS OF SECTION 143(3) AND ESTIMATION OF PROFIT @ 8% OF RECEIPTS, AS WAS DONE IN THE REGULAR ASSESSMENT ORDER DATED 29-03-2005, AND (II) .. 10.1 WE SHALL TAKE UP BOTH THE ISSUES IN SERIATIM. WITH REGARD TO THE FIRST ISSUE, IT WOULD BE RELEVANT TO RECOUNT THE BACKGROUND FACTS O F THE CASE. THE REGULAR ASSESSMENT IN THIS CASE WAS COMPLETED VIDE ORDER U/S. 143(3) DATE D 29-03-2005, ESTIMATING THE INCOME AT ` 1,48,57,690/-, AS AGAINST THE RETURNED INCOME OF ` 46,91,241/- (PB PG. 17-25). IN DOING SO, THE ASSESSEE STOOD ALLOWED DEDUCTION U/S. 80IB AS CLAIMED, I.E., IN RESPECT OF ITS TRIPUNITHURA PROJECT AT ` 11,88,622/-. THE PROFITS STOOD ESTIMATED, AFTER REJ ECTING THE I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 8 ASSESSEES ACCOUNTS, AT THE RATE OF 8% OF THE TOTAL CONTRACT RECEIPT, I.E., BEFORE ALLOWING DEDUCTION IN RESPECT OF INTEREST AND DEPRECIATION, WHICH WERE SEPARATELY ALLOWED. THE ASSESSEE CARRIED THE MATTER IN APPEAL ON BOTH THE I SSUES, WHICH WAS ADJUDICATED BY THE FIRST APPELLATE AUTHORITY VIDE HIS ORDER DATED 25.0 8.2005 (PB PGS. 11 TO 16), HOLDING AS UNDER: 7. ON GOING THROUGH THE DETAILS AS STATED ABOVE EV EN ON FACTS I DO NOT FIND ANY MERIT IN THE AO REJECTION THE BOOK RESULTS OF THE ASSESSEE AND ESTIMATION OF THE PROFIT. THE AO IS DIRECTED TO ACCEPT THE RETURN OF INCOME AND ALLOW DEDUCTIONS CLAIMED INCLUDING THAT U/S. 80IB. 10.2 IN RESPONSE TO NOTICE U/S. 153A, THE ASSESSEE RETURNED THE SUM AS ORIGINALLY RETURNED UNDER CHAPTER IV (VIDE REVISED RETURN FILE D ON 12-11-2003), I.E., AT ` 46,91,241/-, AND WHICH STOOD CONFIRMED AT THE SAME SUM BY THE FI RST APPELLATE AUTHORITY IN APPEAL. UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO SEE AS TO HOW, IN VIEW OF THE CLEAR PROVISION OF EXPLANATION (C) BELOW S. 263(1), COULD THE LD. CIT ISSUE THE I MPUGNED DIRECTIONS. IF THE REVENUE HAD OR HAS ANY GRIEVANCE WITH THE ORDER OF THE FIRST APPELLATE AUTHORITY, IT IS OPEN FOR IT TO FOLLOW THE APPELLATE PROCEDURE, AND WHICH IT HAS, IN FACT, DONE. THE ASSESSEE IS RELYING ON THE SAME SET OF ACCOUNTS IN RETURNING IT S INCOME FOR THE RELEVANT YEAR AS WAS RELIED UPON BY IT FOR FILING THE RETURN U/S. 139. IN FACT, WE OBSERVE THAT THE DISALLOWANCES MADE U/S. 153A ASSESSMENT, EVEN AS THE SAME APPEAR TO HAVE BEEN ACCEPTED BY THE ASSESSEE, ARE THE DISALLOWANCES IN RESPECT OF ITS C LAIM PER THE REGULAR BOOKS OF ACCOUNTS, I.E., IN VIEW OF THE SAME BEING UNVERIFIABLE AND/OR INCLUSIVE OF THE EXPENDITURE INCURRED TOWARD NON-BUSINESS PURPOSES. IN FACT, THE LD. AR ALSO RAISED ANOTHER PLEA, I.E., WITH REGARD TO THE DIRECTION QUA DEDUCTION U/S. 80IB BEING TIME BARRED FOR THE REAS ON THAT THE SAID DEDUCTION STOOD CLAIMED AND ALLOWED IN THE REG ULAR ASSESSMENT. AS SUCH, THE TIME LIMITATION IN ITS RESPECT WOULD BEGIN FROM THE END OF THE RELEVANT FINANCIAL YEAR, SO THAT THE ASSESSMENT FOR THE YEAR, BEING DATED 29-03-2005 , THE TIME LIMITATION OF TWO YEARS EXPIRES ON 31/3/2007, WHILE THE IMPUGNED ORDER IS D ATED 22.09.2008. RELIANCE, FOR THE PURPOSE, STANDS PLACED ON THE DECISION BY THE APEX COURT IN THE CASE OF CIT VS. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 9 ALAGENDRAN FINANCE LTD. (SUPRA). WE FIND THE SAME AS PERFECTLY VALID IN-A S-MUCH AS THE DEDUCTION U/S. 80IB HAS BEEN SUBJECT TO ASSESSMENT IN THE FIRST INSTANCE AS WELL, SO THAT THE SEC.153A ASSESSMENT WOULD NOT OPERATE TO THE EXTEND THE TIME LIMIT IN ITS RESPECT. NO DOUBT, S. 263 IS IN RESPECT OF A SEPARATE ASSESSMEN T, BUT, NEVERTHELESS, THERE IS NO MATERIAL DIFFERENCE AS REGARDS THE ASSESSEES CLAIM, WHICH R EMAINS THE SAME, AND BASED ON THE SAME SET OF FACTS AND CIRCUMSTANCES. THIS FLOWS, EV EN AS EXPLAINED BY THE APEX COURT IN THE CASE OF CIT VS. ALAGENDRAN FINANCE LTD. (SUPRA), ON THE PREMISES THAT THERE HAS BEEN IN EFFECT A MERGER IN TERMS OF S. 263(1) OF THAT PA RT OF THE ASSESSMENT WITH THE ORDER OF THE APPELLATE AUTHORITY. IT IS FOR THIS REASON ALONE TH AT IN VIEW OF THE DOCTRINE OF MERGER, AS STATUTORILY ENSHRINED PER EXPLANATION (C) TO S. 263(1), WE FIND THE REVENUES INTERFEREN CE U/S. 263 AS NOT SUSTAINABLE IN LAW. 10.3 THE LD. DR RAISED THE ISSUE OF ABSENCE OF A SP ECIFIC GROUND QUA SEC. 80IB DEDUCTION, WHICH STOOD MET BY THE LD. AR BY STATING THAT VIDE GROUND NO. 2 OF ITS APPEAL, THE ASSESSEE HAS CHALLENGED THE COMPETENCE OF THE L D. CIT TO REVISE THE ORDER IN VIEW OF THE ASSESSMENT HAVING BEEN ALREADY SUBJECT TO FIRST APPEAL. BESIDES, THE PRAYER IS FOR PROVIDING LEAVE TO URGE ANY OTHER GROUND DEEMED REL EVANT AT THE TIME OF HEARING. THE OBJECTION BY THE LD. DR IS WITHOUT M ERIT. THE ASSESSEES GROUND NO. 2 IS, FIRSTLY, WIDELY WORDED. FURTHER, RULE 11 OF THE INC OME TAX APPELLATE TRIBUNAL RULES, 1963, MAKES PROVISION FOR ADMISSION AND ADJUDICATIO N OF ANY GROUND NOT SPECIFICALLY SET FORTH IN THE MEMORANDUM OF APPEAL, OF COURSE, WITH THE CAVEAT THAT SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE OPPOSITE PARTY IS TO BE ALLOWED, AN INVIOLABLE PRINCIPLE OF NATURAL JUSTICE. 10.4 IN VIEW OF THE FOREGOING, WE FIND NO MERIT IN THE REVENUES CLAIMS, AND DIRECT THE CANCELLATION OF THE IMPUGNED ORDER. WE DECIDE ACCO RDINGLY. 11. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2 002-03 (IN I.T.A. NO. 921/COCH/2008) IS ALLOWED. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 10 A.Y. 2003-04 (I.T.A. NO. 222/COCH/2009) 12. THE DIRECTIONS BY THE LD. CIT FOR THIS YEAR ARE ON TWO COUNTS. THE FIRST PERTAIN TO THE VERIFICATION OF THE EXPENDITURE INCURRED IN RES PECT OF MEADOWS-3 PROJECT, WHICH, AS AT THE YEAR END (31-03-2003), REFLECTED EXPENDITURE AT LESS THAN THAT INCURRED AS AT THE CLOSE OF THE IMMEDIATELY PRECEDING YEAR. IT WAS INFORMED BY THE LD. AR, WITH REFERENCE TO THE SUBSEQUENT ASSESSMENT DATED 24-12-2009 (PB PGS. 26 - 30), THAT THE AO HAS FOUND THE ASSESSEES EXPLANATION IN ITS RESPECT SATISFACTORY, SO THAT THE SAME HAS NOT RESULTED IN ANY ADDITION AND/OR DISALLOWANCE TO ITS RETURNED INCOME ON THIS COUNT. THE SAID GROUND, AS WELL AS THE FACTS AND CIRCUMSTANCES AND THE RESPECT IVE CASES OF BOTH THE PARTIES, ARE THE SAME AS OBTAINING IN ITS CASE FOR A.Y. 2000-01, DEC IDED BY US VIDE PARA 4 OF THIS ORDER. FOLLOWING THE SAME, WE UPHOLD THE REVISION, NOTWITH STANDING THAT THE SAME HAS NOT RESULTED IN ANY POSITIVE ADDITION TO THE ASSESSEES INCOME. THE ASSESSEES APPEAL IS IN FACT INFRUCTUOUS. 13. THE SECOND ISSUE FOR THIS YEAR IS IN RESPECT OF SEC. 80IB CLAIM, WHICH IS PLEADED BY THE LD. AR AS BEING TIME BARRED. DEDUCTION UNDER T HE SAID SECTION, CLAIMED AT ` 1,88,867/- , STOOD IMPLICITLY ALLOWED ON THE ACCEPTANCE OF THE RETURNED INCOME OF ` 163.53 LAKHS VIDE ORDER U/S. 143(3) DATED 27-02-2006 (PB PG. 30A, 31 & 32). THE LD. CIT HAS FOR THE SAME REASONS, AS OBSERVED BY HIM FOR A.Y. 2002-03, MADE LIKE DIRECTION IN RESPECT OF THIS DEDUCTION VIDE HIS IMPUGNED ORDER DATED 25-03-2009. 14. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. WE ARE UNABLE TO BE IN AGREEMENT WITH THE ASSESSEES CASE. THE CIT( A) HAS GIVEN A DEFINITE FINDING THAT THE ASSESSEES CLAIM WAS NOT SUPPORTED BY MAINTENAN CE OF SEPARATE BOOKS OF ACCOUNTS IN RESPECT OF ELIGIBLE BUSINESS, AS ALSO BY AN AUDIT R EPORT REQUIRED TO BE FILED U/S. 80IA(7) R.W.S. 80IB(13). FURTHER, THE DIRECTION BY THE LD. CIT IS ONLY TOWARD CONSIDERATION OF THE ASSESSEES CASE ON MERITS AFTER EXAMINING ALL THE R ELEVANT FACTS, INCLUDING IN RELATION TO THE DETERMINATION OF PROFITS OF THE ELIGIBLE BUSINE SS. AS SUCH, AS FOR A.Y. 2001-02, WE DO I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 11 NOT FIND ANY INFIRMITY IN THE SAID DIRECTION IN EXE RCISE OF HIS POWER U/S. 263, AND NEITHER IT IS, AS WE OBSERVE, PREJUDICIAL TO THE INTEREST OF T HE ASSESSEE. WE MAY CLARIFY THAT THERE HAS BEEN NO EXAMINATION OF THE ASSESSEES CLAIM VIDE TH E ASSESSMENT ORDER, MUCH LESS ALONG THE LINES AS INDICATED PER THE IMPUGNED ORDER. ALSO , IT IS CLEAR THAT THE ASSESSEE IS UNDERTAKING SEVERAL PROJECTS, ALL OF WHICH MAY NOT BE ENTITLED TO DEDUCTION U/S. 80IB AS ELIGIBLE UNDERTAKING OR ELIGIBLE BUSINESS. WE DECI DE ACCORDINGLY. 15. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2 003-04 (IN I.T.A. NO. 222/COCH/2009) IS DISMISSED. A.Y. 2004-05 (I.T.A NO. 223/COCH/2009) 16. THE SUBJECT MATTER OF REVISION FOR THIS YEAR IN CLUDES A DIRECTION IN RESPECT OF EXPENDITURE CLAIMED UNDER EROOR PROJECT, AS IN THE CASE OF MEADOWS- 3 PROJECT FOR A.Y. 2003-04. THE SECOND DIRECTION IS IN RESPECT OF S. 80IB DEDUCTION, WHICH IS THE SAME, AS ALSO THE REASONS UNDERLYING THE SAME, AS FOR THE PR ECEDING YEARS (AYS 2002-03 & 2003- 04). IT WAS SUBMITTED BY THE LD. AR DURING HEARING THAT WHILE NO ADJUSTMENT IN RESPECT OF EXPENDITURE ON THE EROOR PROJECT WAS MADE PER THE S UBSEQUENT ASSESSMENT DATED 24-12- 2009, SEC. 80IB DEDUCTION WAS DENIED IN THE ABSENCE OF THE AUDIT REPORT BEING FILED, TAKING US TO THE RELEVANT PARTS OF THE ASSESSMENT O RDER, PLACED ON RECORD (PB PGS. 33-37). FOR THE SAME REASONS AS STATED IN RESPECT OF OUR DE CISION FOR A.Y. 2001-02 & 2003-04 (REFER PARAS 7, 12 TO 14 OF THIS ORDER), WE FIND TH E ASSESSEES CLAIM AS INVALID IN RESPECT OF BOTH THE DIRECTIONS BY THE LD. CIT, WHOSE ORDER, TH US, MERITS BEING UPHELD. THE FATE OF THE SUBSEQUENT DIRECTION, I.E., AS TO WHETHER IT TRANSL ATES INTO AN ADDITION TO THE RETURNED INCOME OR NOT, IS A MATTER SUBSEQUENT, AND, THEREFO RE BY ITSELF OF NO CONSEQUENCE. WE DECIDE ACCORDINGLY. 17. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2 004-05 (IN I.T.A. NO. 223/COCH/2009) IS DISMISSED. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 12 A.Y. 2005-06 (IN I.T.A. NO. 224/COCH/2009) 18. IT WAS FOUND, ON AN EXAMINATION OF THE RECORDS BY THE LD. CIT, THAT THE COST OF THE BUILDING (GATEWAY) APPEARED TO BE CLAIMED AS A RE VENUE EXPENDITURE, EVEN AS NO REVENUE RECEIPT IN ITS RESPECT WAS OBSERVED. THE IS SUE HAVING NOT BEEN EXAMINED IN ASSESSMENT, THE SAME WAS DIRECTED TO BE SO BY THE L D. CIT VIDE PARA 5 OF HIS IMPUGNED ORDER. THE OBSERVATIONS AND DIRECTIONS IN RESPECT O F DEDUCTION U/S. 80IB ARE THE SAME AS FOR THE PRECEDING YEARS (I.E., AYS 2002-03 TO 2004- 05); THERE BEING NO EXAMINATION OF THE ASSESSEES SAID CLAIM IN THE ASSESSMENT U/S. 153A R .W.S. 143(3) OF THE ACT DATED 28-12- 2007. 19.1 THE FACTS AND CIRCUMSTANCES FOR THIS YEAR ARE THE SAME AS THAT FOR THE IMMEDIATELY PRECEDING YEAR, I.E., A.Y. 2004-05. WE, THEREFORE, HAVE NO HESITATION IN UPHOLDING THE IMPUGNED ORDER ON BOTH THE GROUNDS. THE ASSESSEE, N O DOUBT, HAS SOUGHT TO DRAW A DISTINCTION FOR THIS YEAR BY SUBMITTING THAT THE DE DUCTION U/S. 80IB WAS THE SUBJECT MATTER OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, FOL LOWING THE SEC. 153A ASSESSMENT DATED 28-12-2007. WE HAVE PERUSED THE SAID ORDER (PLACED AT PB PGS. 43-47). THE DEDUCTION U/S. 80IB HAVING BEEN ALLOWED AT THE CLAIMED AMOUNT IN ASSESSMENT, THE ONLY ISSUE BEFORE THE FIRST APPELLATE AUTHORITY WAS THE ASSESSEES EN TITLEMENT THERETO ON THE ADDITIONAL INCOME, I.E., IN RESPECT OF THE ADDITION/S TO THE R ETURNED INCOME ON ASSESSMENT, AND WHICH HE FOUND AS VALID. THE DEDUCTION U/S. 80IB HAS NEC ESSARILY TO BE ALLOWED ON THE AMOUNT OF INCOME DERIVED FROM THE ELIGIBLE BUSINESS AS INC LUDED IN THE `GROSS TOTAL INCOME. AS SUCH, WHERE THE `GROSS TOTAL INCOME STANDS INCREAS ED ON ACCOUNT OF ANY ADDITION IN RESPECT OF INCOME DERIVED FROM THE ELIGIBLE BUSINES S, THE SAME WOULD AUTOMATICALLY QUALIFY FOR DEDUCTION. THIS ISSUE STANDS DECIDED CO NCLUSIVELY BY THE LD. CIT, PRECLUDING INTERFERENCE U/S. 263 ON THE BASIS OF THE DOCTRINE OF MERGER. THE LD. CIT, HOWEVER, QUESTIONS THE ELIGIBILITY OF THE ASSESSEE TO THE DE DUCTION, AN ASPECT WHICH HAS NOT BEEN EXAMINED EITHER IN THE ASSESSMENT U/S. 143(3) OR IN SEC. 153A ASSESSMENT. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 13 19.2 THIS ASPECT OF THE MATTER, I.E., THE SCOP E OF DOCTRINE OF MERGER, WHICH FINDS A STATUTORY ARTICULATION PER EXPLANATION (C) BELOW SECTION 263(1), BEING AN ABIDING FEATURE OF THE PRESENT APPEALS, WE CONSIDER IT RELEVANT AND IN ORDER TO DWELL THEREON IN SOME DETAIL; THE SAME HAVING BEEN THE SUBJECT MATTER OF CONSIDERATION AND ELUCIDATION BY THE HIGHER COURTS OF LAW, INCLUDING BY THE APEX COURT ( ALSO REFER PARA 10.2 OF THIS ORDER). IT STANDS ABUNDANTLY CLARIFIED THAT THE PRINCIPLE WOUL D APPLY ONLY WHERE THE DECISION REACHED BY AN INFERIOR AUTHORITY HAS BEEN REVERSED, MODIFIED OR EVEN CONFIRMED BY THE APPELLATE AUTHORITY, AND WOULD HAVE NO APPLICATION WHERE THE SAME (I.E., THE DECISION BY AN INFERIOR AUTHORITY) DOES NOT COME IN FOR CONSIDE RATION BY THE APPELLATE AUTHORITY, SO THAT THERE IS NO DECISION BY HIM, EITHER BY WAY OF AFFIRMATION OR BY WAY OF REVERSAL OR MODIFICATION ON THE POINT DECIDED BY THE INFERIOR A UTHORITY. THE REAL TEST IS WHETHER ANY SUCH POINT WAS ACTUALLY CONSIDERED AND DECIDED BY T HE APPELLATE AUTHORITY, AND NOT WHETHER THE SAME COULD HAVE BEEN AGITATED BEFORE TH E SAID AUTHORITY AND DECIDED BY HIM. AS SUCH, WHERE THERE IS NO DECISION BY THE APPELLAT E AUTHORITY, THE ORDER OF THE ASSESSING AUTHORITY REMAINS UNTOUCHED, AND IT IS OPEN TO THE COMMISSIONER IN EXERCISE OF HIS POWER OF REVISION TO REVISE IT. REFERENCE IN THIS CONTEXT MAY BE MADE BY US TO THE FULL BENCH DECISION IN THE CASE OF CIT VS. R.S. BANWARILAL (1983) 146 ITR 3 (M.P.) (FB), RENDERED AFTER AN EXTENSIVE REVIEW OF THE CASE LAW ON THE SU BJECT, INCLUDING BY THE APEX COURT. THE SAME STANDS FOLLOWED SUBSEQUENTLY BY OTHER HIGH COU RTS AS WELL, AS IN THE CASE OF CIT VS. MAQBOOL ALAM & CO ., 231 ITR 77 (PATNA). 20. IN VIEW OF THE FOREGOING, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER AND, CONSEQUENTLY, UPHOLD THE SAME. WE DECIDE ACCORDINGL Y. I.T.A. NOS. 209,210,222,223& 224/COCH/2009 & 921/COCH/2008 SKYLINE BUILDERS VS. ACIT, CENTRAL, EKM. 14 21. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2 005-06 (IN I.T.A. NO. 224/COCH/2009), IS DISMISSED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 30TH DECEMBER, 2011 GJ COPY TO: 1. SKYLINE BUILDERS, RAJAJI NAGAR, ERNAKULAM - 682 035. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE-1, ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, (CENTRAL), KOCHI . 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .