M/s Swadesh Developers & Builders, Bhopal V. The ACIT Central-2, Bhopal

ITSSA 309/Ind/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8270 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-04-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 14-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GAGAN TIWARY ARS; SUMIT NEMA SR ADV DESHPANDEY
• Keywords: Business income; Search and seizure; Document seized; Assessment record; Documents seized; Set aside
• Section: 143(3); 153A; 80IB; 143(1); 251; 143(2); 192; 139(1); 44AB; 13; 153; 22; 132; 15; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI RAJPAL YADAV HON'BLE VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A NOS.304 TO 309/IND/2017 ASSESSMENT YEARS:2008-09 TO 2013-14 M/S. SWADESH DEVELOPERS AND BUILDER BHOPAL / VS. A CIT(CENTRAL) - II BHOPAL (APPELLANT) (REVENUE ) P.A. NO. AARFS6977P ITA NO.705/IND/2017 ASSESSMENT YEAR:2014-15 M/S. SWADESH DEVELOPERS AND BUILDER BHOPAL / VS. ACIT(CENTRAL) - II BHOPAL (APPELLANT) (REVENUE ) P.A. NO. AARFS6977P IT(SS)A NO.14/IND/2019 ASSESSMENT YEAR:2010-11 ACIT(CENTRAL) - II BHOPAL / VS. M/S. SWADESH DEVELOPERS AND BUILDER BHOPAL (APPELLANT) (RE SPONDENT ) P.A. NO. AARFS6977P APPELLANT BY S/SHRI SUMIT NEMA , SR. ADV. , DESHPANDEY , AND GAGAN TIWARY, ARS REVENUE BY SHRI S.S. MANTRI, CIT - DR SWADESH DEVELOPERS 2 DATE OF HEARING: 25.05.2021 DATE OF PRONOUNCEMENT: 10.08.2021 / O R D E R PER MANISH BORAD: THE ABOVE CAPTIONED APPEALS AT THE INSTANCE OF ASS ESSEE & REVENUE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-II, (IN SHORT CIT(A)), INDORE DATED 31.08.2017 & 06.12.2018. 2. SINCE ONE OF THE IMPUGNED ORDER OF LD. CIT(A) DA TED 07.03.2017 IS CONSOLIDATED ORDER FOR A.YS. 2008-09 TO 2014-15 GIV ING RISE TO APPEALS IT(SS) ANOS.304 TO 309/IND/2017 FOR A.YS. 2 008-09 TO 2013-14 & ITANO.705/IND/ FOR A.Y. 2013-14, WE WILL FIRST TAKE THESE APPEALS. 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSIN ESS OF BUILDERS AND DEVELOPERS. SEARCH ACTION U/S 132 OF THE ACT WA S CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM ON 29.01 .2014. SUBSEQUENTLY NOTICE U/S 153A OF THE ACT WAS SERVED UPON THE ASSESSEE FOR A.YS. 2008-09 TO 2013-14 AND U/S 143(2 ) OF THE ACT FOR SWADESH DEVELOPERS 3 A.Y. 2014-15. IN RESPONSE RETURN OF INCOME WERE FIL ED AND THE DETAILS ARE MENTIONED IN THE FOLLOWING TABLE: A.Y. DATE OF FILING OF RETURN U/S 139(1) RETURNED INCOME (IN RS.) DATE OF FILING OF RETURN BY THE ASSESSEE AGAINST NOTICE U/S 153A INCOME DECLARED IN RETURN U/S 153A(IN RS.) ADDITIONAL INCOME OFFERED BY THE ASSESSEE(IN RS.) 2008-09 26.09.2008 NIL 30.11.2015 NIL NIL 2009-10 29.09.2009 NIL 30.11.2015 NIL NIL 2010-11 14.10.2010 NIL 30.11.2015 NIL NIL 2011-12 29.09.2011 1,44,81,040/- 30.11.2015 1,44,81,040/- NIL 2012-13 30.09.2012 NIL 30.11.2015 NIL NIL 2013-14 01.10.2013 70,72,070/- 30.11.2015 70,72,070/- NIL 2014-15 30.11.2014 38520/- 30.11.2015 NIL NIL 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND WHILE FRAMING THE ASSESSMENT ORDER, LD. AO MENTIONED THAT NO INCR IMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH BUT ASSERTED THAT SINCE THE ASSESSEE HAS BEEN SUBJECTED TO SEARCH ADD ITIONS CAN BE MADE ON OTHER ISSUES WHICH COMES ACROSS DURING THE ASSESSMENT PROCEEDINGS. LD. AO ALSO EXAMINED THE ASSESSEES CL AIM OF DEDUCTION U/S 80IB(10) FOR THE PROFIT EARNED FROM THE PROJECT NAMELY PALACE ORCHARD SITUATED AT KOLA ROAD, BHOPAL. THOUGH THE ASSESSEE HAS BEEN CONSISTENTLY CLAIMING DEDUCTION U/S 80IB(10) O F THE ACT IN THE ORIGINAL RETURNS FILED DURING THE A.YS. 2008-09 TO 2013-14 ALONG WITH FURNISHING AUDIT REPORT U/S 44AB OF THE ACT AN D ALSO HAVE BEEN FILED AUDIT REPORT ON FORM NO.10CCB IN SUPPORT OF T HE DEDUCTION U/S SWADESH DEVELOPERS 4 80IB(10) OF THE ACT, BUT LD. AO WAS NOT SATISFIED. HE WAS OF THE VIEW THAT ASSESSEE HAS MERELY SOLD THE PLOT OF LAND AND THEREAFTER CONSTRUCTED HOUSE IN THE CAPACITY OF CONTRACTOR AND SINCE THE ASSESSEE IS NOT A DEVELOPER BUT A CONTRACTOR, DEDUC TION U/S 80IB(10) OF THE ACT CANNOT BE ALLOWED. HE ACCORDINGLY DENIED THE DEDUCTION FOR ALL THE ASSESSMENT YEARS. 5. LD. AO WHILE EXAMINING OTHER TRANSACTION OF SALE OF LAND DURING A.Y. 2011-12 OBSERVED THAT ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN AT RS. 1,82,94,410/- BUT THE LD. AO WAS OF THE VIEW THAT THE ASSESSEE BEING ENGAGED IN THE REAL ESTATE BUSINESS, SUCH INCOME FROM SALE OF LAND NEEDS TO BE TAXED AS BUSINESS INC OME AND ACCORDINGLY TREATED THE INCOME OF THE ASSESSEE AS B USINESS INCOME AND CALCULATED TAX ACCORDINGLY. INCOME OF THE ASSES SEE FOR A.Y. 2008-09 TO 2014-15 WAS ASSESSED AS PER THE DISALLOW ANCE OF DEDUCTION AND OTHER ADDITIONS REFERRED HEREINABOVE. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) BUT FAILED TO SUCCEED. 7. NOW ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL C OMMONLY RAISING GROUNDS ON LEGALITY AND MERIT CHALLENGING THE DISALLOWANCE/ADDITIONS MADE BY THE LD. AO CONTENDIN G THAT SINCE SWADESH DEVELOPERS 5 NO INCRIMINATING MATERIAL WERE FOUND DURING THE COU RSE OF SEARCH NO ADDITION WAS THUS CALLED FOR NON-ABATED ASSESSMENT YEAR I.E. A.Y. 2008-09 TO 2012-13 AND FOR A.Y. 2013-14, COMMON LE GAL GROUNDS RAISED BY THE ASSESSEE IS REPRODUCED BELOW: THE APPELLANT ASSESSEE WISHES TO RAISE THE FOLLOWI NG GROUNDS IN APPEAL BEFORE THE HON'BLE ITAT: 1. THAT THE SEARCH WAS CARRIED OUT UNDER A MISTAKEN BE LIEF THAT THE ASSESSEE IS AN ASSOCIATE OF THE SIGNATURE GROUP, AS ALLEGED IN THE IMPUGNED ASSESSMENT ORDER. NO EVIDENCE OF SUCH ASSOCIATION WAS FOUND AS A RESULT OF THE SEARCH OPERATIONS NOR ANY DOCUMENTARY OR OTHER EVIDENCE IS PLACED ON RECORD B Y THE LEARNED ASSESSING OFFICER. THE GROUNDS ESSENTIAL TO WARRANT THE ISSUE OF NOTICE VX ] S 153A DID NOT EXIST IN THE CASE OF THE ASSESSEE; T HE SEARCH IS THEREFORE VITIATED AND THE IMPUGNED ASSES SMENT ORDER DESERVES TO BE QUASHED ON THIS GROUND ALONE. THUS I N THE FACTS AND CIRCUMSTANCES OF THE CASE THE COMMISSIONER OF I NCOME TAX (APPEALS) WAS NOT JUSTIFIED IN HOLDING THE SEARCH A S JUSTIFIED. 2. THAT THE IMPUGNED ASSESSMENT ORDER PASSED BY THE LE ARNED ASSESSING OFFICER IS VOID AB INITIO AS NO INCRIMINATING DOCUMENTS, WHATSOEVER, WERE RECOVERED FROM THE ASSESSEE AS A R ESULT OF THE SEARCH. THE IMPUGNED ASSESSMENT ORDER DESERVES TO B E QUASHED ON THIS GROUND. IT WAS INCUMBENT ON THE COMMISSIONE R OF INCOME TAX (APPEALS) TO EXAMINE THE ASSESSMENT RECORD S TO VERIFY THE TRUTH IN THE STATEMENT MADE BY THE APPELLANT ASSESS EE. IN VIEW OF THE FACT THAT THERE WAS NO ADDITION WHICH CAN BE AT TRIBUTED TO THE SO CALLED SEIZED DOCUMENTS THE COMMISSIONER OF INCO ME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THAT THERE WE RE INCRIMINATING DOCUMENTS WERE FOUND IN SEARCH AND WHICH WERE DULY HANDED OVER TO THE APPELLANT ASSESSEE AND ADDITIONS MADE O N THAT BASIS. 8. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REQU ESTED FOR NOT PRESSING THIS LEGAL GROUND FOR A.Y. 2014-15. FOR RE MAINING YEARS LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO INCRIMIN ATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH WITH REG ARD TO THE ALLEGED ADDITIONS. LD. AO HAS ALSO NOT REFERRED TO ANY INCRIMINATING SWADESH DEVELOPERS 6 MATERIAL BEFORE DENYING DEDUCTION U/S 80IB(10) OF T HE ACT. RETURNS OF INCOME WERE REGULARLY FILED. ASSESSMENT FOR A.Y. 2009-10 & 2010- 11 WERE ALREADY CONCLUDED U/S 143(3) OF THE ACT ORD ER DATED 20 TH DECEMBER 2011 AND 28 TH MARCH 2013. AS REGARDS THE ASSESSMENT YEARS 2008-09, 2011-12 & 2012-13 THE TIME LIMIT FOR SELECTING THE CASE FOR SCRUTINY PROVIDED U/S 143(2) OF THE ACT AL READY STOOD EXPIRED BEFORE THE DATE OF INITIATING THE SEARCH WH ICH MAKES THE ASSESSMENT YEAR 2008-09 TO 2012-13 AS NON-ABATED/C OMPLETED ASSESSMENT. FOR A.Y. 2013-14, THE ADDITION WAS NOT BASED ON ANY INCRIMINATING MATERIAL AND ALL DOCUMENTARY EVIDENCE S IN SUPPORT OF THE CORRECTNESS OF CLAIM U/S 80IB(10) OF THE ACT ST OOD FILED. IN THIS CONNECTION LD. COUNSEL FOR THE ASSESSEE DREW OUR AT TENTION TO THE FOLLOWING DECISIONS: A. CIT VS. KABUL CHAWLA 281 CTR 85 (DELHI) B. PCIT VS. MEETA GUTGUTIA 395 ITR 296 (DELHI) C. PCIT VS. SOUMYA CONSTRUCTION 387 ITR 529 (GUJ.) D. CIT VS. DEEPAK AGRAWAL 251 TAXMANN PG.22 (BOM.) E. PCIT VS. LATA JAIN 384 ITR 543 (DEL.) F. SAINATH COLONIZER VS. ACIT (ITANO.289 TO 291/IND/20 17 DATED 28.02.2019. 9. FURTHER LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE HONBLE INDORE TRIBUNAL IN THE CASE OF SHRI OMPRAKASH GUPTA VS. ACIT IN IT(SS) NO.277 TO 281 A.Y. 2005-06 TO 2012-13 HELD THAT IN SWADESH DEVELOPERS 7 ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND AND SE IZED DURING THE COURSE OF SEARCH THE A.O. IS NOT JUSTIFIED IN M AKING THE ADDITIONS IN NOT ABATED ASSESSMENT IN THE ORDER PASSED U/S 15 3A. (THE COPY OF THE ORDER IS ATTACHED HEREWITH). SIMILAR VIEW WAS T AKEN IN THE CASE OF ANANT STEEL REPORTED IN 28 ITJ 47. VERY RECENTLY THE HONBLE INDORE TRIBUNAL IN THE CASE OF ACIT(1) VS. SUDEEP MAHESHWARI IN ITA NO.524/IND/2013 VIDE ORDER DATED 13.02.2019 HELD IN PARA 6 THAT DURING THE COURSE OF THE SEARCH AND SEIZURE NO INCR IMINATING MATERIAL OR UNDISCLOSED INCOME OR INVESTMENTS WERE FOUND. UNDER THE MENTAL PRESSURE THE ASSESSEE DECLARED 3 CRORES BUT RETRACTED FROM THE ADMISSION. IT IS A SETTLED POSITION OF LAW THAT THE ADDITION CANNOT BE SUSTAINED MERELY ON THE BASIS OF THE STAT EMENT. THERE HAS TO BE SOME MATERIAL CORROBORATING CONTENTS OF THE S TATEMENTS. THE A.O. FAILED TO CORRELATE THE DISCLOSURE MADE IN THE STATEMENT WITH THE INCRIMINATING MATERIAL GATHERED DURING THE SEAR CH. THEREFORE, NO ADDITION CAN BE MADE ON THIS ACCOUNT. IN VIEW OF TH E ABOVE IT IS HUMBLY PRAYED THAT THE DISALLOWANCE MADE FOR THE CL AIM U/S 80-IB IS BAD IN LAW AND HENCE THE SAME MAY PLEASE BE ALLO WED . SWADESH DEVELOPERS 8 10. PER CONTRA LD. DR VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF BOTH LOWER AUTHORITIES. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIALS AVAILABLE BEFORE US AND CAREFULLY GONE THROUGH THE DECISIONS REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. THR OUGH THIS LEGAL GROUND ASSESSEE HAS CHALLENGED THE FINDING OF LD. C IT(A) CONFIRMING THE ADDITION AND DENYING THE DEDUCTION U/S 80IB(10) OF THE ACT ON THE GROUND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND ADDITIONS WERE PURELY MADE ON THE BASIS OF INFORMATION CALLED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 12. WE NOTE THAT THE SEARCH WAS CONDUCTED AT THE AS SESSEE BUSINESS PREMISES ON 29.01.2014. THE ASSESSEE HAS BEEN FILIN G REGULAR RETURN INCOME U/S 139(1) OF THE ACT. BEFORE THE DATE OF SE ARCH RETURN OF INCOME FOR A.Y. 2008-09 TO 2013-14 ALREADY STOOD FI LED. TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT FOR SE LECTION OF THE CASE OF THE ASSESSEE FOR SCRUTINY PROCEEDINGS FOR A.YS. 2008-09 TO 2012- 13 STOOD EXPIRED AS ON THE DATE OF SEARCH. 13. NOW FOR A.YS. 2008-09 TO 2012-13 IT IS AN ESTAB LISHED FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COUR SE OF SEARCH. NO SWADESH DEVELOPERS 9 SUCH REFERENCE HAS BEEN MADE BY THE LD. AO IN THE A SSESSMENT ORDER. UNDER THESE GIVEN FACTS WHETHER THE ADDITION/DISALLOWANCES/DENYING OF CLAIM OF DEDUCTIO N U/S 80IB(10) OF THE ACT BY THE LD. AO WAS JUSTIFIED OR NOT NEED S TO BE EXAMINED IN THE LIGHT OF SETTLED JUDICIAL PRECEDENTS. 14. LD. COUNSEL FOR THE ASSESSEE HAS REFERRED TO ON E OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF OMPRAKASH GUPTA (SUPRA) WHEREIN ALSO SIMILAR TYPE OF ISSUE CAME UP FOR ADJUDICATION BEFO RE THIS TRIBUNAL. AFTER DISCUSSING THE SETTLED JUDICIAL PRECEDENTS, T HUS TRIBUNAL HOLD THAT THE ADDITIONS FOR NON-ABATED/COMPLETED ASSESSM ENT CAN BE MADE ONLY ON THE BASIS OF ANY INCRIMINATING MATERIA L FOUND DURING THE COURSE OF SEARCH AND THE ADDITIONS SO MADE SHOU LD HAVE A NEXUS WITH SUCH MATERIAL. THE RELEVANT FINDING OF THIS TR IBUNAL IN CASE OF OMPRAKASH GUPTA(SUPRA ) CONSIDERING SETTLED JUDICIAL PRECEDENTS IS REPRODUCED BELOW: 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS AN INDIVIDUAL FI LED RETURNS OF INCOME FOR ALL THE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2008- 09 TO 2012-13 AND ASSESSMENTS ARE COMPLETED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, A SEARCH ACTION WAS CONDUCTED U/ S 132 OF THE ACT IN THE BUSINESS GROUP OF THE ASSESSEE AND A .O. HAS SWADESH DEVELOPERS 10 ASKED THE ASSESSEE TO FILE RETURNS OF INCOME FOR AL L THE ASSESSMENT YEARS BY ISSUE OF NOTICE U/S 153 A OF THE ACT ON 12.9.2014. IN RESPONSE TO THAT, ASSESSEE HAS FILED RETURNS OF INCOME FOR A.YRS. 2008-09 TO 2013-14 ON 7.11.2014. THE CASE OF THE ASSESSEE IS THAT THE RETURN FOR A.Y. 2012-13 WA S FILED ON 7.11.2012. AS PER SECTION 143(2) OF THE ACT, THE LAST DATE ON WHICH NOTICE FOR ASSESSMENT WOULD HAVE BEEN ISSUED WAS 30.9.2013. ALL THE OTHER RETURNS ARE FILED ON EARLI EST DATE AND THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) OF THE AC T IN ALL THOSE CASES HAS EXPIRED. THE SEARCH WAS INITIATED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 29.1.2014 AND THEREFORE THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT IS LAPSED. ALL THE ASSESSMENT YEARS FROM 2008-09 TO 2012-13 ARE CONCLU DED AND NON ABATED ASSESSMENTS. THE A.O. CANNOT REOPEN THE ASSESSMENTS U/S 153 A OF THE ACT . IN SO FAR AS THE ABOVE SUBMISSION IS CONCERNED FROM THE ASSESSMENT ORDER A ND EVEN FROM THE LD. CIT(A)'S ORDER, THERE IS NOTHING ON TH E RECORD WHICH SAYS THAT THE ADDITIONS MADE BY THE A.O. ARE BASED ON ANY INCRIMINATING MATERIAL. EVEN WHEN THE SAME WAS POIN TED OUT TO LD. D.R., SHE IS NOT ABLE TO ESTABLISH THE FACT THA T ADDITIONS ARE BASED ON ANY INCRIMINATING MATERIAL, THEREFORE WE F IND THAT THE ADDITIONS MADE BY THE A.O. FOR ALL THE YEARS ARE NO T BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IT IS ONLY BASED ON SUBSEQUENT SEARCH BY ISSUE OF NOTI CE U/S 153 A OF THE ACT CALLING FOR THE VARIOUS DOCUMENTS FROM THE ASSESSE E ADDITIONS ARE MADE. IN SO FAR AS THE ARGUMENTS OF T HE LD. COUNSEL FOR THE ASSESSEE IN RESPECT OF CONCLUDED A SSESSMENTS CANNOT BE REOPENED, WE FIND THAT IN ALL THE ASSESSM ENT YEARS FROM 2008-09 TO 2012-13, THERE IS NO SCOPE FOR THE A.O TO ISSUE A NOTICE U/S 143(2) OF THE ACT FOR THE REASON THAT TH E TIME LIMIT IS ALREADY OVER BEFORE THE DATE OF SEARCH ITSELF I.E. ON 29.1.2014. THEREFORE, IN OUR OPINION, ALL THE ASSESSMENT YEARS FROM 2008-09 TO 2012-13 ARE CONCLUDED ASSESSMENTS AND NON ABATED ASSESSMENTS AND ANY ADDITION HAS TO BE MADE IN RESP ECT OF THOSE ASSESSMENT YEARS, THERE MUST BE AN INCRIMINAT ING MATERIAL. IN THE PRESENT CASE, THERE IS NO INCRIMIN ATING MATERIAL AND THEREFORE, THE ADDITIONS MADE BY THE A.O. CANNO T SURVIVE. SWADESH DEVELOPERS 11 12. THIS VERY ISSUE HAS BEEN CONSIDERED BY THE HON' BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREH OUSING CORPORATION (2015) 120 DTR (BOM) 89 AND HAS OBSERVE D THAT U/S 153 A OF THE ACT WHICH ENABLES CARRYING OUT A SEARCH OR EXERCISE OF A POWER OF REQUISITION, ASSESSMENT IN FURTHERAN CE THEREOF IS CONTEMPLATED. THERE IS A MANDATORY ISSUE OF NOTICE U/S 153(1 A) OF THE ACT AND ASSESS AND REASSESS THE TOTAL INCOME OF 6 ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THAT THE CRUCIAL WORD 'SEAR CH AND REQUISITION' APPEAR FOR THE SUBSTANTIVE PROVISION O N THE PROVISOS. THAT WOULD THROW THE LIGHT ON THE ISSUE OF APPLICAB ILITY OF THE PROVISION. TRUE IT IS THAT THE ASSESSMENT, WHICH HA S TO BE MADE IN PURSUANCE OF THE NOTICE IS IN RELATION TO THE 6 YEARS. AN ORDER WILL HAVE TO BE MADE IN THAT RECORD WHILE MAKING TH E ORDER, THE INCOME OR THE RETURN OF INCOME FILED FOR ALL THOSE ASSESSMENT YEARS IS TO BE TAKEN INTO ACCOUNT. A REFERENCE WILL HAVE TO BE MADE TO THE INCOME DISCLOSED THEREIN. HOWEVER, THE SCOPE OF ENQUIRY THERE OF NOT CONFINED ESSENTIALLY REVOLVES AROUND THE SEARCH OR THE REQUISITION U/S 132 A OF THE ACT AS THE CASE MAY BE. THE PROVISO DEALS WITH THE CASES WHERE THE ASSESSME NT OR REASSESSMENT, IF ANY RELATING TO ASSESSMENT YEARS F ALLING WITHIN THE PERIOD OF 6 ASSESSMENT YEARS REFER TO IN SUB SECTION 1 OF SECTION 153A OF THE ACT WERE PENDING. IF THEY WERE PENDING ON THE DATE OF INITIATION OF SEARCH U/S 132 OF THE ACT OR MAKING REQUISITION U/S 132 A OF THE ACT AS THE CASE MAY BE, THEY ABATE. IT IS ONLY BINDING PRECEDENCE THAT WOULD ABATE AND NOT WHERE THERE ARE ORDERS MADE ON ASSESSMENT OR REASSESSMENT AND WHICH ARE IN FORCE ON THE DATE OF INITIATION OF THE SEARCH OR MAKING THE REQUISITION. 13. IN THE CASE OF COMMISSIONER OF INCOME TAX (CENT RAL)-3 KABUL CHAWLA (2015) 61 TAXMAN.COM 412 (DEL.), THE HON'BLE DELHI HIGH COURT HAS CONSIDERED THE SCOPE OF SECTION 132 OF THE ACT AND 153A(1) OBSERVED AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A(I) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX A Y S IMMEDIA TELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE A Y IN WHICH THE SEARCH TAKES PLACE. SWADESH DEVELOPERS 12 II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH A YS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A Y IN WHICH THE SEA RCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INC OME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESS MENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISC LOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE O F THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE .ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN SSESSMENT HAS TO BE MADE UND ER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD ' REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH A YON THE BASIS OF THE FINDINGS OF THE SEARCH AND A NY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. 14. FROM THE ABOVE DECISION, IT IS VERY CLEAR THAT IN RESPECT OF CONCLUDED ASSESSMENTS ADDITIONS CANNOT BE MADE WITH OUT INCRIMINATING MATERIAL. 15. THE HON'BLE DELHI HIGH COURT IN THE CASE OF PCI T VS. MEETA GUTGUTIA 395 ITR 296 (DELHI) HAS HELD THAT IT WAS O NLY IF DURING THE COURSE OF THE SEARCH U/S 132 OF THE ACT INCRIMI NATING MATERIAL JUSTIFYING THE REOPENING OF THE ASSESSMENT YEARS FOR 6 PREVIOUS YEARS WAS FOUND THAT INVOCATION OF SECTION 153A OF THE ACT QUA EACH OF THE ASSESSMENT YEAR WOULD JUSTIFY. SWADESH DEVELOPERS 13 16. IN THE CASE OF PRINCIPAL CIT VS. SOUMYA CONSTRU CTIONS 387 ITR 529 (GUJ.) THE HON'BLE GUJARAT HIGH COURT HAS O BSERVED THAT THE ADDITION WAS BASED ON STATEMENT OF THE THIRD PE RSON AND NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH, THEREFORE THE ADDITION DELETED BY THE TRIBU NAL WAS UPHELD. 17. IN THE CASE OF PCIT VS. LATA JAIN 384 ITR 543 ( DEL) (SUPRA), THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE TRIB UNAL WAS RIGHT IN HOLDING THAT THERE HAD TO BE INCRIMINATING MATERIAL RECOVERED DURING THE COURSE OF SEARCH QUA THE ASSES SEE IN EACH YEAR FOR THE PURPOSE OF FRAMING AN ASSESSMENT U/S 1 53 A OF THE ACT . 18. FROM THE ABOVE ALL THE DECISIONS, IT IS VERY CL EAR THAT THE A.O. TO MAKE AN ADDITION U/S 153 A OF THE ACT AND THERE MUST BE INCRIMINATING MATERIAL AVAILABLE TO THE A.O. DURING THE COURSE OF THE SEARCH. UNLESS THERE IS AN INCRIMINATING MATERI AL, THE CONCLUDED/NON ABATED ASSESSMENTS CANNOT BE DISTURBE D AGAIN U/S 153 A OF THE ACT . 19. IN SO FAR AS KERALA HIGH COURT DECISION IN THE CASE OF E.N. GOPAKUMAR (SUPRA) THE HON'BLE KERALA HIGH COURT HAS HELD THAT EVEN WITHOUT THERE BEING ANY INCRIMINATING MATERIAL , THE A.O. IS EMPOWERED TO MAKE AN ADDITION U/S 153 A OF THE ACT . THE SAME VIEW HAS BEEN EXPRESSED BY THE HON'BLE KARNATAKA HI GH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY ( SUPRA). 20. IN THE ABOVE CIRCUMSTANCES, WHETHER THE DECISIO N OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETA BLE PRODUCTS (SUPRA) HAS TO BE APPLIED OR NOT. THE LD. D.R. HAS SUBMITTED THAT THE DECISION HELD IN CIT VS. VEGETABLE PRODUCTS (SU PRA) CANNOT BE APPLIED IN EACH AND EVERY CASE IN THE LIGHT OF THE DECISION OF CCV DILIP KUMAR (SUPRA). IN THE PRESENT CASE, THE ASSES SEE HAS FILED ALL THE RETURNS BEFORE CONDUCTING THE SEARCH AND TH E TIME LIMIT TO ISSUE NOTICE U/S 143(2) OF THE ACT ALREADY LAPSED A ND A SEARCH IS CONDUCTED AND NO INCRIMINATING MATERIAL IS FOUND. T HE A.O. CALLED FOR BOOKS OF ACCOUNTS AND OTHER RELEVANT DOC UMENTS AND ASSESSMENT IS COMPLETED U/S 153A R.W.S. 143(3) OF T HE ACT. SWADESH DEVELOPERS 14 21. THERE ARE MANY DECISIONS IN FAVOUR OF THE ASSES SEE, WHICH SAYS THAT 'ONCE ASSESSMENTS ARE CONCLUDED WITHOUT INCRIMINATING MATERIAL, ADDITIONS CANNOT BE MADE BY REOPENING U/S 153 A OF THE ACT . THERE ARE TWO DECISIONS, ONE IS OF HON'BLE KERALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR (SU PRA) AND THE SECOND ONE IS OF HON'BLE KARNATAKA HIGH COURT IN TH E CASE OF CANARA HOUSING DEVELOPMENT COMPANY VS. DCIT CENTRAL CIRCLE- 1, BANGALORE (SUPRA) IN FAVOUR OF THE REVENUE IN WH ICH IT WAS HELD THAT NO INCRIMINATING MATERIAL IS NECESSARY TO REOPEN THE ASSESSMENTS AND TO MAKE AN ADDITION. IN THE PRESENT CASE, DECISIONS OF HON'BLE DELHI, GUJARAT AND BOMBAY HIGH COURTS ARE IN FAVOUR OF THE ASSESSEE. THE DECISIONS OF HON'BLE KERALA HIGH COURT AND KARNATAKA HIGH COURT ARE AGAINST THE ASSE SSEE. WE FIND THAT AFTER EXAMINING THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS (SUPRA) HAS TO BE FOLLOWED. THE HON'BLE SUPREME COURT IN THE ABOVE CASE HAS HELD THAT 'IF T WO REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THEN THAT CONSTRUCTION, WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED.' 22. IN THE INTEREST OF JUSTICE, THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS (SUPRA) HAS TO BE FOLLOWED. THEREFORE, WE RESPECTIVELY FOLLOWING THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWL A (SUPRA), HON'BLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTA L WAREHOUSING CORPORATION (SUPRA) AND ALSO HON'BLE GU JARAT HIGH COURT IN THE CASE OF PCIT VS. MEETA GUTGUTIA (SUPRA ), WE HOLD THAT NO ADDITION CAN BE MADE IN RESPECT OF CONCLUDE D ASSESSMENTS U/S 153 A OF THE ACT UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. WE WOULD LIKE TO MAKE IT CLEAR THAT WHERE THE ASSESSME NT IS COMPLETED U/S 143(1) OR 143(3) OF THE ACT UNLESS A. O. HAS A TIME TO ISSUE NOTICE U/S 143(2) OF THE ACT, A.O. CANNOT MAKE AN ADDITION U/S 153 A OF THE ACT , UNLESS THERE IS AN INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH. 23. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CAS E OF SAINATH COLONISERS VS. ACIT (CENTRAL)-II BHOPAL IN IT(SS)A NOS.289 TO SWADESH DEVELOPERS 15 291/IND/2017 DATED 28.2.2019 HAS CONSIDERED THE SIM ILAR ISSUE AND HAS HELD THAT IF THERE IS NO INCRIMINATIN G MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE TIME LIMI T FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT EXPIRES, NO ADDITION C AN BE MADE U/S 153 A OF THE ACT . FOR THE SAKE OF CONVENIENCE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREUNDER: '8. WE OBSERVE THAT THE ASSESSEE HAS FILED REGULAR RETURN OF INCOME U/S 139 OF THE ACT FOR ASSESSMENT YEAR 2008-09 TO 2010-11 O N 30.9.08, 31.3.2010 AND 12.10.2010 AFTER CLAIMING DEDUCTION U/S 80IB(10 ) AT RS.8,92,452/-, RS.2,66,948/- AND RS.2,44,417/- RESPECTIVELY. THE T IME LIMIT FOR ISSUANCE OF NOTICES U/S 143(2) OF THE ACT STOOD EXPIRED IN R ELATION TO THE ASSESSMENT YEAR 2008-09 TO 2010-11 MUCH BEFORE THE DATE OF CON DUCTING THE SEARCH I.E. 29.1.2014 AND THEREFORE THESE THREE ASSESSMENT YEAR S FALLS UNDER THE CATEGORY OF UNABATED/NON ABATED ASSESSMENTS. NOW IN THE GIVEN FACTS LD. COUNSEL FOR THE ASSESSEE HAS RELIED FEW JUDGMENTS A ND LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED TO FEW JUDGMENTS IN ITS F AVOUR. HOWEVER, THE HON'BLE APEX COURT IN THE CASE OF CIT V/S VEGETABLE PRODUCTS LTD 88 ITR 192 HAS 'HELD THAT IF TWO REASONABLE CONSTRUCTION O F A TAXING PROVISIONS ARE POSSIBLE, THEN THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED'. IN THE LIGHT OF ABOVE JUDGMENT OF HON'BLE APEX COURT WE HAVE GONE THROUGH THE JUDGMENTS REFERRED AND RELIED BY B OTH THE PARTIES AND ARE INCLINED TO FOLLOW THE VIEW TAKEN BY HON'BLE COURTS ON THE ISSUE IN QUESTION BEFORE US FAVOURING THE ASSESSEE. 9. THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF PCIT VS. DESAI CONSTRUCTION (SUPRA) CONFIRMED THE VIEW TAKEN BY TH E TRIBUNAL UPHOLDING THE CONTENTION OF THE ASSESSEE THAT AS NO INCRIMINA TING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH WHICH COULD HAVE ENABLE D THE ASSESSING OFFICER TO RE-EXAMINE ITS CLAIM FOR DEDUCTION U/S 80IB WHIC H WAS PART OF THE ASSESSMENT PRIOR TO THE SEARCH AND SUCH ASSESSMENT UNABATED. SIMILARLY HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CONTINE NTAL WAREHOUSING CORPORATION AND ALL CARGO GLOBAL LOGISTICS LTD (SUP RA) CONFIRMED THE VIEW TAKEN BY THE SPECIAL BENCH OF I.T.A.T. MUMBAI BENCH DECIDED IN FAVOUR OF ASSESSEE DISMISSING THE REVENUE'S APPEAL HOLDING TH AT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH, THE TRIBUNAL WAS RIGHT IN HOLDING THE POWER CONFERRED U/S 153A BEING NOT EXPECTED TO BE EXERCISED ROUTINELY, SHOULD BE EXERCISED IF THE SEA RCH REVEALED ANY INCRIMINATING MATERIAL. IF THAT WAS NOT FOUND THEN IN RELATION TO THE SECOND PHASE OF THREE YEARS, THERE WAS NO WARRANT FOR MAKI NG AN ORDER WITHIN THE MEANING OF THIS PROVISION'. 10. SIMILAR VIEW WAS ALSO TAKEN BY THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF KABUL CHAWLA (2015) 61 TAXMANN 412. 11. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDGMENTS REFERRED AND R ELIED BY THE LD. COUNSEL SWADESH DEVELOPERS 16 FOR THE ASSESSEE ARE OF THE CONSIDERED VIEW THAT NO ADDITION/DISALLOWANCE WAS CALLED FOR ASSESSMENT YEAR 2008-09 TO 2010-11 A S NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AT T HE PREMISES OF THE ASSESSEE AS THE TIME LIMIT OF ISSUANCE OF NOTICE U/ S 143(2) OF THE ACT STOOD EXPIRED MUCH BEFORE THE DATE OF CONDUCTING SEARCH U /S 132 OF THE ACT. ACCORDINGLY ALL THE THREE APPEALS OF THE ASSESSEE A RE ALLOWED.' 24. IN SO FAR AS THE ARGUMENTS OF THE LD. D.R. IN R ESPECT OF FOLLOWING THE RATIO OF THE HON'BLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS (SUPRA), THE LD. D.R. BY RELYING ON THE DECISION IN THE CASE OF CCV DILIP KUMAR (SUPRA) HAS SUBMITTED THAT THE RATIO LAID DOWN IN THE CASE OF VEGETABLE P RODUCTS (SUPRA) CANNOT BE APPLIED. WE FIND THAT IN THE CASE OF CCV DILIP KUMAR (SUPRA) HAS CONSIDERED THE EXEMPTION PROVISIONS AND HELD THAT EXEMPTION PROVISIONS HAS TO BE CONSIDERED STRICTLY AND IN A CASE OF AMBIGUITY VIEW WHICH FAVOURS THE REVENUE MUST BE ADOPTED. THEREFORE, THE ABOVE DECISION RELIED BY THE LD. D.R . HAS NO APPLICATION TO THE RATIO LAID DOWN BY THE HON'BLE S UPREME COURT IN THE CASE OF VEGETABLE PRODUCTS (SUPRA). THEREFOR E, ARGUMENT OF THE LD. D.R. IS REJECTED. 15. ON EXAMINING THE FACTS OF THE INSTANT CASE IN L IGHT OF THE ABOVE DECISION OF THIS TRIBUNAL IN CASE OF OMPRAKASH GUP TA (SUPRA) WHEREIN VARIOUS OTHER JUDGMENTS AND DECISIONS HAVE BEEN REFERRED, WE FIND THAT IN THE CASE OF ASSESSEE, ASSESSMENT YE ARS 2008-09 TO 2012-13 COMES UNDER THE CATEGORY OF NON-ABATED/COMP LETED ASSESSMENT AND THE ADDITIONS MADE BY THE LD. AO TOW ARDS DENYING THE BENEFIT OF DEDUCTION U/S 80IB(10) OF THE ACT AS WELL AS TAXING LONG TERM CAPITAL GAIN ON SALE OF LAND AS BUSINESS INCOME ARE NOT SUPPORTED BY ANY INCRIMINATING MATERIAL FOUND DURIN G THE COURSE OF SEARCH AND THEREFORE, ASSESSEE SUCCEEDS ON THIS LEG AL GROUND AND SWADESH DEVELOPERS 17 THE ADDITION MADE FOR A.Y. 2008-09 TO A.Y. 2012-13 ARE DELETED AND DEDUCTION U/S 80IB(10) OF THE ACT CLAIMED BY THE AS SESSEE IS ACCEPTED. WE, THUS, SET ASIDE THE FINDING OF LD. CI T(A) AND ALLOW THIS COMMON LEGAL GROUND RAISED BY THE ASSESSEE FOR A.YS . 2008-09 TO 20120-13. HOWEVER FOR A.Y. 2013-14 ASSESSEE FAILS T O SUCCEED ON THIS LEGAL GROUND AS TIME LIMIT FOR ISSUANCE OF NOT ICE U/S 143(2) OF THE ACT HAS NOT EXPIRED AS ON THE DATE OF SEARCH. A S FAR AS LEGAL GROUND RAISED FOR A.Y. 2014-15 IS CONCERNED, THE SA ME IS DISMISSED AS NOT PRESSED. 16. NOW WE TAKE UP GROUNDS RAISED ON MERIT COMMONLY CHALLENGING THE FINDING OF LD. CIT(A) CONFIRMING THE ACTION OF THE LD. AO OF TREATING THE ASSESSEE AS A CONTRACTOR AND DENYING T HE BENEFIT OF DEDUCTION U/S 80IB(10) OF THE ACT ALLOWABLE TO DEV ELOPER, WHICH HAS BEEN CLAIMED BY THE ASSESSEE DURING A.Y. 2008-09 TO 2014-15. GROUND NO.3 OF ASSESSEES APPEALS IS REPRODUCED BELO W: THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WAS N OT JUSTIFIED IN HOLDING THE DISALLOWANCE OF DEDUCTION RIGHTFULLY CL AIMED AND SUPPORTED BY ALL DOCUMENTARY EVIDENCE NECESSARY U/S 80IB(10) OF THE INCOME TAX ACT, 1961 FOR THE VARIOUS ASSESSMENT YEARS. 17. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSEE DEVELOPED THE PROJECT NAMELY PALACE ORCHARD SITUATED AT VIL LAGE DHAMKERA SWADESH DEVELOPERS 18 TEHSIL HUZUR KOLAR ROAD, BHOPAL. THIS HOUSING PROJE CT IS DEVELOPED ON 7.75 ACRES LAND. THE PERMISSION FOR CONSTRUCTION WAS GRANTED ON 11.11.2006 BY GRAM PANCHAYAT, DAMKHEDA BLOCK FANDA, BHOPAL. COMPLETION OF CERTIFICATE WAS GIVEN BY CHIEF MUNICI PAL OFFICER, BHOPAL ON 22.03.2012. DEDUCTION U/S 80IB OF THE ACT WAS CLAIMED FOR THE FOLLOWING AMOUNT: SR. NO. A.Y. DEDUCTION CLAIMED U/S 80IB 1 2008-09 RS.3,58,65,456/- 2 2009-10 RS.2,53,19,824/- 3 2010-11 RS.3,34,67,691/- 4 2011-12 RS.1,15,75,564/- 5 2012-13 RS.3,95,46,668/- 6 2013-14 RS.2,90,94,057/- 7 2014-15 RS.8,00,000/- 18. THE LD. AO DENIED THE CLAIM OBSERVING THAT THE ASSESSEE WORKED IN THE CAPACITY AS CONTRACTOR AND NOT A DEVELOPER A S THE ASSESSEE USED TO SALE OF VACANT PLOT THROUGH A REGISTERED DE ED AND THEREAFTER CONSTRUCT THE HOUSE AND THUS DID NOT COMPLY TO THE PROVISION OF SECTION 80IB(10) OF THE ACT. SWADESH DEVELOPERS 19 19. WHEN THE MATTER WAS CARRIED BEFORE THE LD. CIT( A) THE ASSESSEE FAILED TO GET ANY RELIEF AND NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 20. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED REFERRING TO THE FOLLOWING WRITTEN SUBMISSIONS: THE LD. AO AT PAGE 13 HAS DISALLOWED THE CLAIM OF THE ASSESSEE ON A SHORT GROUND THAT THE ASSESSEE HAS SOLD THE OPEN PLOT AND HANDED OVER THE POSSESSION . THE ASSESSEE HAS RECEIVED THE REMAININ G AMOUNT FROM THE CUSTOMER ON ACCOUNT OF CONSTRUCTION OF THE BUNGLOW, AS SUCH THE ASSESSEE HAS NOT SOLD THE BUNGLOW AND SIMPLY ACTED AS A CONT RACTOR. IT IS SUBMITTED THAT THE ASSESSEE IS A DEVELOPER AND IS A REGISTERE D OWNER OF THE LAND ON WHICH THE PROJECT HAS COME UP. THE ASSESSEE HOLDS T HE COLONISERS LICENSE AND THE PROJECT IS APPROVED BY THE APPROPRIATE AUTH ORITY. THE ASSESSEE HAS DEVELOPED THE GROUP HOUSING PROJECT. THE ASSESSEE H AS ENTERED INTO THE AGREEMENT FOR THE SALE OF THE DEVELOPED PREMISES. H OWEVER FOR THE SAKE OF CONVENIENCE OF THE BUYERS TO GET THE LOAN FACILITIE S THE ASSESSEE AGREES TO SALE THE PLOTS KEEPING THE POSSESSION WITH HIM FOR THE CONSTRUCTIONS OF THE HOUSES. ( PG. 102 OF PB) CLAUSE 13 OF THE SAID AGR EEMENT CLEARLY PROVIDES THAT THE ASSESSEE WOULD DO ALL THE ACTS TO GET THE PROPERTY REGISTERED IN THE NAME AND IN THE STATE AS REQUESTED BY THE SAID PART Y. HOWEVER, THE BUILDER SHALL CONTINUE TO HAVE THE POSSESSION OF THE PROPER TY TILL THE COMPLETION OF THE AGREEMENT. UNDER THESE CIRCUMSTANCES THE BUILDER IS A DEVELOPE R AND NOT A CONTRACTOR. THE HONBLE INDORE BENCH IN THE CASE OF VARDHAMAN B UILDERS AND DEVELOPERS VS. ITO IN ITA NO. 559/IND/2010 VIDE OR DER DATED 09.05.2012 HAS HELD IN FAVOUR OF THE ASSESSEE ON THE SIMILAR F ACTS. THIS HONBLE TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA 17/IND/ 2017 FOR THE A.Y 2009- 10 VIDE ORDER DATED 26.09.2018 HAS ALLOWED THE CLAI M OF THE ASSESSEE ON THE SIMILAR FACTS. IN VIEW OF THE ABOVE SUBMISSION IT IS HUMBLY PRAYED THAT THE DEDUCTION CLAIMED BY THE ASSESSEE MAY PLEASE BE ALLOWED. SWADESH DEVELOPERS 20 21. RELIANCE WAS PLACED ON FOLLOWING DECISIONS INCL UDING THE DECISIONS OF THE THIS TRIBUNAL IN ASSESSEES OWN CA SE FOR A.Y. 2009- 10 VIDE ITANO.17/IND/2017 DATED 26.09.2018. SR. NO. PARTICULARS RELEVANT PARA I ON THE ISSUE OF SECTION 80LB (10) EXPLANATION 'WORKS CONTRACT' 1 ASSISTANT COMMISSIONER OF INCOME TAX(CENTRAL)- BHOPAL V MIS SWADESH DEVELOPERS & BUILDERS, BHOPAL OTAT -INDORE) PARA 6 & 7 2 PRINCIPAL COMMISSIONER OF INCOME TAX V GREEN ASSOCIATES (2018) 105 TAXMAN 80 (SC) PARA 2 3 PRINCIPAL COMMISSIONER OF INCOME TAX V GREEN ASSOCIATES [2019]105 TAXMANN.COM 79 (GUJ.) PARA 4 4 GREEN ASSOCIATES V INCOME TAX OFFICER, BARODA (IT AT AHMEDABAD) PARA 7 &8 5 COMMISSIONER OF INCOME TAX V. RADHE DEVELOPERS (2012) 17 TAXMAN 156(GUJ) PARA 28 TO 45 6 M/S NAGMA DEVELOPERS V. ITO BARODA (I.T.A.T. AHMEDABAD) PARA 4 TO 8 7 M/S NARAYAN REALTY LTD. V. DCIT, BARODA (I.T.A.T. , AHMEDABAD) PARA 8 TO 9 8 M/S VARDHMAN BUILDERS & DEVELOPERS V. INCOME TAX OFFICER 1(1), BHOPAL(I.T.A.T., INDORE) PARA 2 9 DCIT, HYDERABAD V. SMR BUILDERS (P. LTD. (2012) 2 4 TAXMAN 194 (HYDERABAD) PARA 31 TO 33 II ON ISSUE OF ABATED ASSESSMENT ON DATE OF SEARCH 10 OMPRAKASH GUPTA V. ACIT, BHOPAL (I.T.A.T.-INDORE ) PARA 10 TO 24 12 SAINATH COLONISERS V. ACIT, BHOPAL (I.T.A.T.-IND ORE) PARA 8 TO 11 22. PER CONTRA LD. DR APART FROM RELYING ON THE FIN DING OF BOTH LOWER AUTHORITIES ALSO SUBMITTED THAT THE ASSESSEE IS MERELY A CONTRACTOR NOT A DEVELOPER AS IT SOLD THE VACANT LA ND AND THEREAFTER SWADESH DEVELOPERS 21 CONSTRUCTED THE HOUSES AND THUS DID NOT COMPLIED TO THE PROVISION OF SECTION 80IB(10) OF THE ACT. 23. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE COMMON ISSUE HAS BEEN RAISED BY THE ASSESSEE CHALLENGING THE FINDING OF LD. CIT(A) CONFIRMING TH E ACTION OF THE LD. AO DENYING THE BENEFIT OF DEDUCTION U/S 80IB(10) OF THE ACT TREATING THE ASSESSEE AS A CONTRACTOR AND NOT A DEVELOPER. 24. WE OBSERVE THAT THE ASSESSEE HAS DEVELOPED HOUS ING PROJECT NAMELY PALACE ORCHARD AT BHOPAL. BEFORE THE DATE OF SEARCH THE ASSESSEE HAD ALREADY FILED THE RETURNS FOR A.YS. 20 08-09 TO 2013-14 AND HAS CONSISTENTLY CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT ON FURNISHED NECESSARY REPORT AS PRESCRIBED UNDER THE ACT TO CLAIM THIS DEDUCTION AND AFTER OBTAINING NECESSARY APPROVAL AN D COMPLETION CERTIFICATE AS PROVIDED UNDER THE PROVISION OF SECT ION 80IB(10) OF THE ACT. 25. IT HAS BEEN CONTENDED BEFORE US THAT THE ASSESS EE HOLDS THE COLONISERS LICENSE AND THE PROJECT IS APPROVED BY T HE APPROPRIATE AUTHORITY. THE PROJECT PALACE ORCHARD IS A GROUP HO USING PROJECT. AASSESSEE ENTERED INTO THE AGREEMENT FOR THE SALE O F DEVELOPED SWADESH DEVELOPERS 22 PREMISES. IT WAS ALSO CONTENDED THAT FOR THE SAKE O F CONVENIENCE THE BUYERS AND IN ORDER TO FACILITATE THEM TO TAKE HOUS ING LOAN THE ASSESSEE AGREED TO SALE THE PLOTS WITHOUT GIVING TH E POSSESSION AND AFTER THE CONSTRUCTION OF HOUSE USED TO HAND OVER T HE POSSESSION. THIS SUBMISSION BY THE LD. COUNSEL FOR THE ASSESSEE HAS SUFFICIENT WEIGHTAGE AS THIS CONDITION IS ALREADY PROVIDED IN CLAUSE 13 OF THE AGREEMENT ENTERED INTO BETWEEN ASSESSE AND BUYERS P LACED AT PAGE 102 OF PAPER BOOK. WE ALSO OBSERVE THAT IN THE ALLO TMENT CUM ACCEPTANCE LETTER CONSIDERATION IS TOWARDS THE COMP LETE BUNGLOW AND THERE IS NO BIFURCATION OF THE COST TOWARDS LAN D AND COST OF CONSTRUCTION. THUS THERE REMAINS NO DISPUTE TO THE FACT THAT AFTER THE COMPLETION OF CONSTRUCTION POSSESSION OF THE RE SIDENTIAL HOUSE IS GIVEN TO THE BUYERS/COLONIZERS. 26. HOWEVER, THE COORDINATE BENCH AHMEDABAD IN THE CASE OF GREEN ASSOCIATES (SUPRA) DEALING WITH THE SIMILAR ISSUE AND IDENTICAL SET OF ACTS AND PLACING RELIANCE ON THE DECISION OF TRIBUNAL IN THE CASE OF NARAYAN REALITY LTD. ITANO.2293/AHD/2012 AND OTHERS DATED 02.05.2014 HELD THAT THE ASSESSEE IS A DEVELOPER ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT OBSERVING AS FOLL OWS: SWADESH DEVELOPERS 23 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THE PRESENT CASE THE ASSESS E WAS DENIED DEDUCTION U/S 80IB(10) BY LD. CIT(A) FOR THE REASON THAT ASSESSEE HAD NOT SOLD RESIDENTIAL HOUSES IN THE HOU SE PROJECT BUT HAD SOLD DEVELOPED RESIDENTIAL PLOTS WITH CONST RUCTION UP TO THE PLINTH ONLY AND THUS THE ASSESSEE COULD NOT BE CONSIDERED AS DEVELOPER OF HOUSING PROJECT BUT WAS A CONTRACTOR A ND THEREFORE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10 ) OF THE ACT. WE FIND THAT ON SIMILAR FACTS, IN THE CASE OF NARAY AN REALITY LTD. (SUPRA) THE ISSUE WAS DECIDED IN FAVOR OF THE ASSES SEE BY HOLDING AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE ORDER OF CIT(A), IT IS SEEN THAT CIT(A) HAS HELD THAT THE ISSUE RELATING TO DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE ACT ON THE 2095/A/2013 . A.YS. 2008-09, 2009-10 & 2010-201 1 GROUND THAT ASSESSEE IS NOT THE OWNER OF THE LAND AND THE APPRO VAL OF THE PROJECT NOT BEING IN THE NAME OF THE ASSESSEE IS COVERED IN FAV OUR OF ASSESSEE BY THE DECISION OF HIS PREDECESSOR IN ASSESSEES OWN CASE F OR AY 2008-09. WE FURTHER FIND THAT CIT(A) HAD DISALLOWED THE CLAIM O F THE ASSESSEE ON THE GROUND THAT ASSESSEE HAD ENTERED INTO TWO AGREEMENT S NAMELY 'SALE DEED' FOR THE SALE OF LAND AND 'CONSTRUCTION AGREEMENT' F OR THE CONSTRUCTION THE UNIT AND THEREFORE ACCORDING TO HIM, THE ASSESSEE W AS A CONTRACTOR AND THEREFORE NOT ELIGIBLE FOR DEDUCTION U/S 8018(10). WE ALSO FIND THAT ON IDENTICAL FACTS, THE CO-ORDINATE BENCH OF THE TRIBU NAL IN THE CASE OF SATSANG DEVELOPERS (ITA NO 1011, 2498 AND 1221 OF 2012 ORDE R DATED 12.11.2013 HAS ALLOWED THE DEDUCTION TO ASSESSEE BY HOLDING AS UNDER:- SR. NO. DECISION IN THE CASE OF REPORTED IN 1. DCIT VS. SMR BUILDERS P.)LTD. (2012)24 TAXMAN.CO M 194(HYD.) 2 SKY BUILDERS & DEVELOPERS VS. ITO (2011) 14 TAXMAN.COM 78(INDORE) 3 M/S. VARDHMAN BUILDERS AND DEVELOPERS VS. ITO INCOME-TAX ACT, 1961. NO.559/IND/2010 DATED 09.05.2012 4 RAGHAVA ESTATES VS. DY.CIT INCOME-TAX ACT, 1961. NOS. 248 & 49/VIZAG/2009 DATED 04.08.2011 SWADESH DEVELOPERS 24 4.2. IN ADDITION TO ABOVE TWO OBJECTIONS, THE ID.CI T (A) HAS RAISED ONE MORE OBJECTION THAT THE ASSESSEE HAS SOLD THE LAND TO TH E UNIT HOLDERS SEPARATELY AND HAS DONE THE CONSTRUCTION OF UNITS UNDER SEPARA TE AGREEMENT/CONTRACT AND, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DE DUCTION U/S.80-IB(10) OF THE ACT BECAUSE AS PER LD.CIT(A), PROFIT EARNED BY THE ASSESSEE IN RESPECT OF SALE OF LAND IS NOT ELIGIBLE FOR DEDUCTION U/S.80-I B(10) OF THE ACT AND SIMILARLY, THE PROFIT EARNED BY THE ASSESSEE FOR CO NSTRUCTION ACTIVITIES IS NOT ELIGIBLE FOR DEDUCTION U/S.80-IB(10) BECAUSE THE AS SESSEE IS DOING THE CONSTRUCTION AS A CONTRACTOR FOR A WORK AND NOT AS A BUILDER OR DEVELOPER AND, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DE DUCTION U/S.80-IB(10) OF THE ACT. AGAINST THESE OBJECTIONS OF LD.CIT (A), TH E ASSESSEE IS IN APPEAL BEFORE US. 5.2 REGARDING THE 3R OBJECTION THAT THE ASSESSE HAS SOLD LAND TO THE UNIT HOLDERS SEPARATELY AND HAS DONE THE CONSTRUCTION UN ITS UNDER A PROJECT AGREEMENT/CONTRACT, IT WAS SUBMITTED THAT IT IS A J OINT ACTIVITY ALTHOUGH THE AGREEMENT AND LAND SALE-DEED ARE EXECUTED SEPARATEL Y, BUT FOR THIS REASON ALONE, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT A BUILDER OR A DEVELOPER. HE PLACED RELIANCE ON THE FOLLOWING TRIBUNAL DECISI ONS:- 5.2. HE SUBMITTED THAT IN THE CASE OF VARDHMAN BUIL DERS & DEVELOPERS (SUPRA) ALSO, THE ASSESSEE HAD ENTERED INTO A SEPAR ATE AGREEMENT FOR SALE OF LAND AND SEPARATE AGREEMENT FOR CONSTRUCTION OF HOUSING ON SUCH LAND AND UNDER THESE FACTS, IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT MERELY BECAUSE OF TWO SEPARATE AGREEMENTS, THE CLAIM OF TH E ASSESSEE FOR DEDUCTION U/S.80-IB (10) OF THE ACT CANNOT BE DECLI NED IF OTHER CONDITIONS ARE BEING SATISFIED. 5.3. HE FURTHER SUBMITTED THAT IN THE CASE OF DCIT VS. SMR BUILDERS (P) LTD. (SUPRA) ALSO, THE FACTS WERE THAT THE ASSESSEE HAD SOLD FLATS IN A SEMI- FINISHED STAGE. IN THAT CASE, THE AO HAD NOTED THAT AS PER THE SALE-DEED, THE ASSESSEE-COMPANY HAS SOLD UNDIVIDED SHARE OF LA ND WITH SUPER- STRUCTURE OF SEMI- FINISHED BUILT-UP AREA FOR A CER TAIN CONSIDERATION. THE AO HELD THAT THE SEMI-FINISHED STRUCTURE HAS NEVER BEE N CONSIDERED AS A RESIDENTIAL UNIT. IT WAS ALSO NOTED BY THE AO IN TH AT CASE THAT ON THE SAME DATE WHEN THE SALE DEED WAS EXECUTED, A CONSTRUCTIO N AGREEMENT WAS ALSO ENTERED INTO WITH THE TRANSFEREE FOR FURTHER CONSTR UCTION OF THE SAME FLATS BY THE BUILDER COMPANY ITSELF. HE SUBMITTED THAT THE F ACTS IN THE PRESENT CASE ARE SIMILAR. HE ALSO POINTED OUT THAT IN THAT CASE, IT WAS HELD BY THE TRIBUNAL THAT THE STAND OF THE REVENUE WITH REGARD TO THE SEMIFINISHED CONDITION OF THE FLATS IS DEVOID OF ANY MERIT IN AS MUCH AS WHAT IS SOUGHT TO BE CONSTRUCTED AND SOLD BY THE ASSESSEE IS A RESIDE NTIAL UNITS AND WHAT IS SOUGHT TO BE PURCHASED BY THE BUYER IS THE OWNERSHI P OF THE SPECIFIED UNIT AND REGISTRATION OF FLAT IN SEMI-FINISHED CONDITION IS ONLY TO FACILITATE THE CONVENIENCE OF THE PARTIES AND AGREEMENT FOR DEVELO PMENT AND COMPLETION SWADESH DEVELOPERS 25 OF BALANCE WORK IN RELATION TO THE FLATS IS ONLY AN INCIDENTAL FORMALITY AND THIS CANNOT BE VIEWED AS FATAL TO THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IB(10) OF THE ACT. IT WAS ALSO HELD BY THE T RIBUNAL THAT THE ENTIRE WORK FROM THE STAGE OF THE COMMENCEMENT TO THE STAG E OF MAKING THE RESIDENTIAL UNIT HABITABLE HAVE BEEN CARRIED OUT BY THE ASSESSEE ONLY AND, THEREFORE, ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.8 0-IB(L 0) OF THE ACT. 9.2. NOW WE TAKE UP THE THIRD AND LAST OBJECTION OF ID.C IT (A) THAT THE ASSESSE HAD SOLD THE LAND SEPARATELY AND UNDERTOOK THE CONS TRUCTION WORK AS PER A SEPARATE AGREEMENT AND, THEREFORE THE ASSESSEE IS N OT A BUILDER OR A DEVELOPER BUT A LAND DEALER AND CONTRACTOR. IN THIS REGARD, IN OUR CONSIDERED OPINION, THE ISSUE INVOLVED IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF ITAT INDORE BENCH RENDE RED IN THE CASE OF M/S.VARDHMAN BUILDERS AND DEVELOPERS VS. ITO (SUPRA ). IT IS NOTED BY THE TRIBUNAL IN THAT CASE THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR A SALE OF LAND AND A SEPARATE AGREEMENT FOR CONSTRUCT ION OF THE HOUSE ON THE LAND AND, THEREFORE, THE FACTS ARE SIMILAR. UNDER T HESE FACTS, IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT THE CLAIM OF THE ASS ESSEE FOR DEDUCTION U/S.80-IB (10) OF THE ACT CANNOT BE DECLINED IF OTH ER CONDITIONS ARE BEING SATISFIED. SIMILARLY, IN THE CASE OF DCIT VS. SMR B UILDERS (P.) LTD. (SUPRA) ALSO, THE ASSESSEE SOLD THE LAND ALONG WITH SEMI-FI NISHED STRUCTURE TO THE BUYERS AND AS PER SEPARATE AGREEMENT, AGREED FOR CO NSTRUCTION FOR COMPLETION OF BALANCE WORK. HENCE, THE FACTS OF THI S CASE ARE ALSO SIMILAR BECAUSE IN THAT CASE ALSO, THE LAND WAS SOLD SEPARA TELY ALONG WITH PARTIAL AND UNFINISHED CONSTRUCTION OF FLATS AND, THEREAFTE R, CONSTRUCTION AGREEMENT WAS ENTERED INTO TO CARRY OUT THE BALANCE CONSTRUCT ION WORK AND UNDER THESE FACTS, IT WAS HELD BY THE TRIBUNAL IN THAT CA SE THAT SUCH AGREEMENT FOR CONSTRUCTION TO COMPLETE THE BALANCE WORK IS ONLY A N INCIDENTAL FACILITATION TO PROTECT INTEREST OF THE PARTIES AND THEREFORE, T HE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB(10) OF THE ACT. SIMILARLY, IN T HE CASE OF RAGHAVA ESTATES VS. DY.CIT (SUPRA) ON WHICH RELIANCE WAS PL ACED BY THE ID.AR OF THE ASSESSEE, THE FACTS ARE SIMILAR. IN THAT CASE ALSO, THE ASSESSEE HAD SOLD THE PLOTS SEPARATELY AND THEREAFTER, CONSTRUCTED THE HO USES AND UNDER THESE FACTS, THE REVENUE HELD THAT THE ASSESSEE HAS TO BE CONSIDERED AS A MERE CONTRACTOR AND, THEREFORE, THE ASSESSEE IS NOT ELIG IBLE FOR DEDUCTION U/S.80- IB (10) OF THE ACT. THIS GOES TO SHOW THAT THE FACT S IN THAT CASE WERE IDENTICAL. IN THAT CASE, IT WAS NOTED BY THE TRIBUN AL THAT THE ASSESSEE HAD CHOSEN TO REGISTER THE PLOT IN THE NAME OF THE BUYE R ON PAYMENT OF SPECIFIED AMOUNT IN ORDER TO ACHIEVE COST SAVING AND TO ENSUR E RELIABILITY AND THEREAFTER, THE ASSESSEE HAD PROCEEDED TO CONSTRUCT THE HOUSE AS PER BUILDING PLAN OBTAINED IN THE NAME OF THE PLOT-OWNE RS ON PAYMENT OF SUBSEQUENT INSTALLMENTS. IT IS ALSO NOTED THAT THE ASSESSEE HAD ALSO DEVELOPED VARIOUS PUBLIC AMENITIES WITHIN THE PROJE CT. THEREAFTER, IT WAS HELD BY THE TRIBUNAL THAT ON A TOTALITY OF A FACT, THE TRIBUNAL IS OF THE VIEW THAT THE ASSESSEE HAS UNDERTAKEN DEVELOPING AND BUI LDING HOUSING PROJECTS AS PER THE SCHEME PROVIDED IN SECTION 80-IB (10) OF THE ACT. SWADESH DEVELOPERS 26 9.3. SINCE THE FACTS IN THE PRESENT CASE ARE SIMILA R TO THE FACTS IN ABOVE NOTED THREE TRIBUNAL DECISIONS, WE DO NOT FIND ANY DEFECT IN THE CONSTRUCTION IN THE PRESENT CASE AND HENCE RESPECTF ULLY FOLLOWING THESE DECISIONS, WE DECIDE THE ISSUE IN FAVOUR OF THE ASS ESSEE. THERE IS NO OTHER OBJECTION OF THE LD. CIT(A) 2095/A/2013 . A.YS. 200 8-09, 2009-10 & 2010- 2011 REGARDING ALLOWABILITY OF DEDUCTION TO THE ASS ESSEE U/S. 80IB(10) OF THE ACT. HENCE, WE DIRECT THE A.O TO GRANT THE DEDU CTION TO THE ASSESSEE U/S. 80IB(10) OF THE ACT. 9. BEFORE US, THE REVENUE COULD DID NOT PLACE ANY C ONTRARY DECISION ON RECORD NOR COULD DISTINGUISH THE FACTS OF THE CASE WHICH WAS RELIED BY THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS, WE RESPEC TFULLY FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, IN THE CASE OF SATSANG DEVELOPERS (SUPRA) HOLD THAT ASSESSEE IS EL IGIBLE FOR DEDUCTION U/S 80IB(10). THUS THIS GROUND OF ASSESSEE IS ALLOWED. 8. WE FIND THAT IN THE CASE OF NARAYAN REALITY LTD. (SUPRA) THE CO-ORDINATE BENCH OF TRIBUNAL, AFTER PLACING RELIANCE ON THE VA RIOUS DECISIONS CITED THEREIN DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. BE FORE US, REVENUE COULD NOT POINT OUT ANY DISTINGUISHING FEATURE OF THE PRE SENT CASE WITH THAT OF NARAYAN REALITY LTD. (SUPRA) NOR HAS BROUGHT ANY CO NTRARY BINDING DECISION ON RECORD IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACTS, WE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF T RIBUNAL IN THE CASE OF NARAYAN REALITY (SUPRA) HOLD THAT THE ASSESSEE IS E LIGIBLE FOR DEDUCTION U/S 80IB(10). THUS, THIS GROUND OF ASSESSE IS ALLOWED. 27. WE FURTHER OBSERVE THAT IN THE ASSESSEES OWN C ASE FOR A.Y. 2009-10 WHEREIN DURING THE COURSE OF REGULAR ASSESS MENT PROCEEDINGS U/S 143(3) OF THE ACT (I.E. BEFORE THE DATE OF SEARCH U/S 132 OF THE ACT ON 29.01.2014) THE LD. AO DENIED THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT BUT ASSESSEE SUC CEEDED BEFORE THE LD. CIT(A) WHO AFTER APPRECIATING FACTS AND DOC UMENTARY EVIDENCES DECIDED IN FAVOUR OF THE ASSESSEE. THE FI NDING OF LD. CIT(A) WAS CHALLENGED BY THE REVENUE BEFORE THIS TRIBUNAL AND AFTER SWADESH DEVELOPERS 27 CONSIDERING THE FACTS AND SETTLED JUDICIAL PRECEDEN TS THIS TRIBUNAL CONFIRMED THE FINDING OF LD. CIT(A) AND DECIDED AGA INST REVENUE OBSERVING AS FOLLOWS: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE A.O. REJECTED CLAIM OF DEDUCTION U/S 80(IB)10 OF THE ACT ON THE GROUND THAT THERE WAS DISCREPANCY IN THE FORM NO.10CCB, WHEREIN AS PE R PARA-29 OF THE FORM, THE PROFIT OF THE ASSESSEE FROM THE ELIGIBLE BUSINESS WAS STATED AT RS.3,81,46,910/-, WHEREAS THE DECLARED NET PROFIT A S PER AUDITED PROFIT & LOSS ACCOUNT WAS RS.2,53,19,825/-. SIMILARLY, IN PA RA NO.30, THE ELIGIBLE DEDUCTION U/S 80IB(10) OF THE ACT IS STATED AT RS.3 ,81,46,910/-, WHEREAS THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT AT RS.2,53,19,825/-. IT IS FURTHER OBSERVED BY THE A.O . THAT IN RESPECT TO THE QUESTION OF COMPLETION, THE ASSESSEE SUBMITTED THAT THE PROJECT OF DEVELOPING AND BUILDING HOUSING PROJECT IS STILL IN PROCESS AND HENCE COMPLETION CERTIFICATE IS NOT PRODUCED. THE A.O. OB SERVED THAT ONE OF THE CONDITIONS PRESCRIBED FOR ALLOWANCE OF DEDUCTION U/ S 80IB OF THE ACT IS THAT WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LO CAL AUTHORITY ON OR AFTER FIRST DATE OF APRIL, 2005, THE COMPLETION SHO ULD BE WITHIN 5 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. THE SECTION DEFINES THE DATE O F COMPLETION AS THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT S HALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY LOCAL AUTHORITY. FURTHER, A.O. OBSERVED T HAT AS PER THE ASSESSEES REPLY, IT IS CLEAR THAT NO SUCH CERTIFICATE HAS BEE N ISSUED, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. FURTHER, THE A.O. OBSERVED THAT ASSESSEE HAD GOT THE PLOT REGIST ERED IN NAME OF THE CUSTOMERS AND THERE AFTER CONSTRUCTED THE HOUSE THE IR OWN, THAT ITSELF MAKES IT CLEAR THAT THE ASSESSEE HAS ACTED AS MERE CONTRACTOR FOR THE CUSTOMERS AND NOT AS A DEVELOPER OF THE HOUSING PRO JECT. THUS, THE A.O. REJECTED THE CLAIM ON THESE GROUNDS. HOWEVER, THE L D. CIT(A) ALLOWED THE CLAIM BY OBSERVING AS UNDER: GROUND NO.2:- THROUGH THIS GROUND OF APPEAL THE AP PELLANT HAS CHALLENGED THE DISALLOWANCE OF RS.2,53,19,8252/- ON ACCOUNT OF REJECTION OF CLAIM U/S 80IB(10). THE A.O. DISALLOWED THE CLAIM OF THE APPE LLANT ON THE GROUND THAT THE AUDIT REPORT IN FORM NO.10CCB, DATED 15.9.2009 MENTIONS THE PROFIT FROM THE ELIGIBLE BUSINESS AT RS.3,81,46,910/-, WHE REAS THE APPELLANT DECLARED THE NET PROFIT AS PER AUDITED PROFIT AND L OSS ACCOUNT AT RS.2,53,19,825/-. THE A.O. ALSO MENTIONED THAT THE APPELLANT HAS NOT FURNISHED THE COMPLETION CERTIFICATE. THE A.O. ALSO MENTIONED THAT THE SWADESH DEVELOPERS 28 APPELLANT WORKED AS A MERE CONTRACTOR RATHER THAN D EVELOPER OF THE HOUSING PROJECT. 4.2.1 THE APPELLANT SUBMITTED THAT AS PER AUDIT REP ORT IN THE FORM NO.10CCB THE DEDUCTIBLE PROFIT WAS AT RS.3,81,46,91 0/- DUE TO TYPOGRAPHICAL ERROR. THE APPELLANT HAS OBTAINED A C ERTIFICATE IN THIS BEHALF FROM THE AUDITOR. THERE CAN BE TYPOGRAPHICAL ERROR IN THE CERTIFICATE, BUT THE SAME CANNOT BE MADE THE BASIS OF DISALLOWANCE. THE APPELLANT HAS CLARIFIED THIS ISSUE DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. 4.2.2 THE APPELLANT GOT THE BUILDING PERMISSION ON 11.11.2006. THE PROJECT WAS REQUIRED TO BE COMPLETED WITHIN A PERIOD OF 5 Y EARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PERMISSION WAS GRANTED. THE PROJECT WAS REQUIRED TO BE COMPLETED BY 31.3.2012. THE PROJECT UNDER CONSIDERATION HAS BEEN COMPLETED ON 22.3.2012 AND THE APPELLANT OBTAI NED THE CERTIFICATE IN TIME ON 22.3.2012. 4.2.3 THE APPELLANT ACTED AS A DEVELOPER HOLDING A COLONISERS LICENSE IN HIS OWN NAME. HE OBTAINED ALL THE DEVELOPMENT, BUILDING AND OTHER PERMISSIONS FROM THE CONCERN DEPARTMENTS AND AGENCI ES FOR CONSTRUCTION UNDER GROUP HOUSING SCHEME. THE RULES PROVIDED FOR MINIMUM OPEN SPACE FOR THE GARDENS, COMMUNITY SERVICES, ROADS WATER SU PPLY, ELECTRICITY TRANSFORMERS/SUB-STATIONS, PROVISION FOR THE ECONOM ICALLY WEAKER SECTION ETC. SUCH PROVISIONS ARE APPLICABLE TO HOUSING PROJ ECTS AND NOT TO INDIVIDUAL HOUSES. THE APPROVING AUTHORITY APPROVED THE PROJEC T AS A WHOLE AND ISSUED THE COMPLETION CERTIFICATE. 4.2.4 THE APPELLANT IS THE OWNER OF THE PROJECT LAN D. THERE IS A COMPREHENSIVE AGREEMENT WITH THE BUYER OF THE HOU SE, WHEREIN EACH AND EVERY DETAIL IS MENTIONED AS TO THE OWNERSHIP OF LA ND, THE DETAILS OF THE COMMON AMENITIES TO BE PROVIDED, THE BUILT UP AREA OF THE HOUSE, THE TYPE OF ELECTRICAL AND SANITORY FITTINGS TO BE PROVIDED, TH E TOTAL COST OF THE HOUSE AND THE CONSTRUCTION STAGE WISE PAYMENT SCHEDULE AN D THE PROBABLE TIME PERIOD WITH IN WHICH THE POSSESSION SHALL BE HANDED OVER. THE PROJECTS ARE ADVERTISED AND SUCH IN THE MEDIA AND BY WAY OF PAMP HLETS AND HOARDING IN THE TOWN AND EXHIBITIONS ETC. THE COPIES OF THE VARIOUS AGREEMENTS, SALE DEEDS EMPHASIZE THE FACT THAT THE SUBJECT MATTER OF SALE IS A COMPLETE RESIDENTIAL UNIT AND NOT AN OPEN PLOT OR AN INCOMPL ETE STRUCTURE. THE SAID MAIN AGREEMENT WHICH IS THE DOCUMENT THAT GOVERNS THE SALE CONTAINS A CLAUSE WHEREBY THE CUSTOMER HAS AN OPTION TO GET TH E SALE DEED EXECUTED IN HIS FAVOUR WHILE THE CONSTRUCTION IS IN PROGRESS. 4.2.5 THE AGREEMENTS GO TO PROVE THAT THE APPELLANT HAS IN FACT ACTED AS A DEVELOPER AND NOT AS A CONTRACTOR. MOST OF THE HOUS ES SOLD ARE FINANCED BY ONE BANK OR THE OTHER. AS AN ESSENTIAL CONDITION OF FINANCE, THE BANKS NEED THE EQUITABLE MORTGAGE OF THE HOUSE BEFORE THE RELE ASE OF THE LOAN AMOUNT. THEREFORE, FOR THE MUTUAL CONVENIENCE OF THE SELLER AND THE BUYER A SALE DEED IS EXECUTED IN RESPECT OF THE PLOT WITH THE CO NSTRUCTION THEREON, IN THE STATE IT IS AT THAT TIME: WITHOUT WHICH THE BANK WO ULD NOT ENTERTAIN THE LOAN SWADESH DEVELOPERS 29 PROPOSAL. THEREAFTER, THE BANK RELEASES THE INSTALM ENTS AND EACH TIME IT DOES SO, IT OBTAINS A CERTIFICATE FROM ITS ARCHITEC T AS TO THE STAGE OF CONSTRUCTION. HENCE THE SALE DEED EXECUTED DURING T HE COURSE OF CONSTRUCTION IS ONLY TO FACILITATE THE SANCTIONING OF LOAN AS MANDATORY CONDITION OF THE BANKS. 4.2.6 IT MAY ALSO BE OBSER5VED THAT THE LOAN AMOUNT S ARE RELEASED BY THE BANK TO THE DEVELOPER/BUILDER DIRECTLY ON THE BASIS OF THE AGREEMENT/ ACCEPTANCE LETTER AND SUBMISSION OF SALE DEED AND N OT TO THE CUSTOMER; HOWEVER, IF THE CASE WAS THAT OF SALE AND SUBSEQUEN T CONSTRUCTION BY THE APPELLANT FOR AN ON BEHALF OF THE CUSTOMER, AS CONT ENDED BY THE ASSESSING OFFICER THE LOAN WOULD HAVE BEEN DISBURSED TO THE I NDIVIDUAL CUSTOMER AND NOT TO THE BUILDER. IT WAS NEVER THE INTENTION OF T HE APPELLANT ASSESSEE TO SELL THE DEVELOPED PLOT. DOING SO WOULD BE AGAINST THE PERMISSIONS GRANTED BY APPROVING AUTHORITY. THE ASSESSING OFFICER OUGHT TO HAVE READ THE MAIN AGREEMENT, THE DEVELOPMENT PERMISSION, THE BUILDIN G PERMISSION, THE SALE DEED AND THE POSSESSION LETTER ALL IN CHRONOLOGY OF THE EVENTS AND NOT THE SALE DEED ALONE IN ISOLATION. 4.2.7 FURTHER, IT WOULD BE IMPORTANT TO POINT OUT T HAT THE APPELLANT HAS ONLY BEEN ENGAGED INTO CONSTRUCTION OF ROW HOUSES WHERE EACH HOUSE HAS A COMMON WALL WITH THE OTHER HOUSE, DURING THE PERIOD UNDER ASSESSMENT. THEREFORE, THERE IS NO QUESTION OF SALE OF OPEN PLO TS IN BETWEEN A ROW OF HOUSES. THE SAME IS EVIDENT FROM THE BUILDING PERMI SSIONS ON RECORD. THE PLOTS A-104, A- 113, B-117 MENTIONED BY THE ASSESSI NG OFFICER IN PARA 7 ARE IN FACT ROW HOUSES WHICH ARE REFERRED TO BY THE IR PLOT NUMBERS. MEANING THEREBY, THAT EVEN IN A DIRE SITUATION IF ONE WANTS TO BUY A PLOT IT CANNOT BE SOLD AS SUCH UNDER THE APPROVAL OBTAINED FROM THE D EPARTMENT. IT WOULD BE A VIOLATION OF THE BUILDING PERMISSION AT THE SAME TIME. REGISTRATION OF SUCH PLOTS IS NOT PERMITTED BY THE SUB-REGISTRAR OF PROP ERTIES WHEN THE PERMISSION IS GRANTED FOR THE CONSTRUCTION OF ROW H OUSES. THE COMPLETION CERTIFICATE HAS BEEN GRANTED FOR THE PROJECT AS WHO LE AND NOT FOR INDIVIDUAL HOUSES. THE SAME STANDS TESTIMONY TO THE FACT THAT THE APPELLANT HAS CONSTRUCTED ALL THE HOUSES AS A SINGLE PROJECT AND NOT AS A CONTRACTOR. IT MAY ALSO BE SEEN THAT THE DEVELOPER/BUILDER HAS HAN DED OVER THE COLONY AS A WHOLE TO THE MUNICIPAL CORPORATION AND NOT INDIVI DUAL HOUSES AT DIFFERENT POINTS OF TIME. 4.2.8 THE ASSESSING OFFICER HAS NOT BROUGHT ON RECO RD EVEN A SINGLE INSTANCE WHERE THE HOUSE HAS BEEN LATER CONSTRUCTED BY THE CUSTOMER HIMSELF OR BY A DIFFERENT CONTRACTOR OR IS STILL LY ING UNCONSTRUCTED. EACH AND EVERY HOUSE HAS BEEN BUILT BY THE APPELLANT ALONE. THIS BEING THE CASE IT ONLY MEANS THAT THE APPELLANT IS THE DEVELOPER AND BUILDER OF THE PROJECT AS A WHOLE AND NOT A CONTRACTOR FOR INDIVIDUAL CUSTOME R. THE POSSESSION LETTERS AND THE SALE DEEDS HAVE BEEN EXAMINED BY THE CONCER NED SUB-REGISTRAR OF PROPERTIES OF BHOPAL AND THE REGISTRIES HAVE TAKEN PLACE ACCORDINGLY, NO DEFICIENCIES, WHATSOEVER, HAVE BEEN POINTED OUT BY THEM EVER SINCE THE PROJECT HAS BEEN STARTED. IN THE LIGHT OF THE ABOVE FACTS ON RECORD IT IS CLEAR SWADESH DEVELOPERS 30 THAT THE CASE CITED BY THE ASSESSING OFFICER (SKY B UILDERS & DEVELOPERS VS. ITO BHOPAL 2011 14 TAXMANN.COM 78) IS NOT APPLICABL E TO THE ISSUE AT HAND AS THE FACTS AND CIRCUMSTANCES OF THE CTWO CAS ES ARE ENTIRELY DIFFERENT. THE SKY BUILDERS CASE HAS BEEN DECIDED ON THE ISSUE OF NON- GRANTING OF COMPLETION CERTIFICATE WITH IN THE FINA NCIAL YEAR WHICH IS NOT THE CASE OF THE APPELLANT. FURTHERMORE, THE SAME BENCH OF ITAT INDORE HAS COME OUT CLEARLY ON THE IDENTICAL ISSUE IN FAVOUR O F THE ASSESSEE IN THE CASE OF M/S. VARDHMAN BUILDERS AND DEVELOPERS VS. ITO IN ITA NO.559/IND/2010 DATED 9.5.2012. 4.2.9 THE FOLLOWING CASES WHEREIN THE HONBLE ITATS HAVE OPINED IN FAVOUR OF THE APPELLANT IN IDENTICAL ISSUES REFERRED TO TH EM: A) GREEN ASSOCIATES VS. ITO WD.5(2), BARODA: ITA N O.822/AHD/2013. B) SATSANG DEVELOPERS ITA NO.1011, 2498 AND 1221 O F 2012 ORDER DATED 12.11.2013. C) DCIT SMR BUILDERS (P) LTD (2012) 24 TAXMANN.COM 194 (HYD) D) ITO VS. MEGHAL DEVELOPERS ITA NO.296/AHD/2013 E) M/S. NAGMA DEVELOPERS, BARODA VS. ITO WD 2(5) BA RODA ITA NO.2385/AHD/2012 F) NARAYAN REALTY VS. DCIT IN ITA NO.2293/AHD/2012 AND 2095/AHD/2013 VIDE ORDER DATED 2.5.2014 THUS, IT IS PROVED BEYOND DOUBT THAT THE APPELLANT HAS ACTED AS A BUILDER AND DEVELOPER AND NOT A CONTRACTOR OF THE CUSTOMER, AND THE VIEW HAS BEEN UPHELD BY ALL THE COURTS INCLUDING THE ITAT INDORE. THE APPELLANT HAS CARRIED ONLY THE ELIGIBLE BUSINESS DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS CONSIDERED ONLY THE CONSOLIDA TED PROFIT AND LOSS ACCOUNT. THERE IS SOME SALE RELATING TO THE PREVIOU SLY COMPLETED PROJECT AND SOME EXPENSES. HOWEVER, THE APPELLANT HAS IN FACT P REPARED SEPARATE PROFIT AND LOSS ACCOUNT FOR THE ELIGIBLE BUSINESS. THEREFO RE, THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE I.T. ACT . THEREFORE, THE DISALLOWANCE MADE BY THE A.O. AMOUNTING TO RS.2,53, 19,825/- IS DELETED. THE APPEAL ON THIS GROUND IS ALLOWED. 7. THE ABOVE FINDING OF FACT BY THE LD. CIT(A) IS N OT REBUTTED BY THE REVENUE BY FURNISHING ANY ADVERSE MATERIALS ON RECORD. FROM THE FINDING OF THE LD. CIT(A), IT IS FOUND THAT THE OBJECTIONS OF THE ASSE SSING OFFICER HAS BEEN MET BY THE ASSESSEE AS THE ASSESSEE HAS PRODUCED A CERT IFICATE FROM THE CHARTERED ACCOUNTANT STATING THE DISCREPANCY AS TYP OGRAPHICAL ERROR AND ALSO BY FURNISHING COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY. FURTHER, AS PER THE CBDT INSTRUCTION NO.4 OF 2009 D ATED 30.6.2009, THE ASSESSEE CAN CLAIM DEDUCTION ON A YEAR TO YEAR BASI S. WE THEREFORE, DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AN D THE GROUND OF THE REVENUES APPEAL IS REJECTED. 8. PART OF THE GROUND NO.1 IS AGAINST DELETING THE ADDITION OF RS.16,74,394/- ON ACCOUNT OF BOGUS CREDITORS. LD. D.R. SUPPORTED T HE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT LD. CIT(A) WAS NOT JUSTI FIED IN DELETING THE ADDITION. LD. D.R. SUBMITTED THAT THE NOTICES SENT TO THESE CREDITORS WERE SWADESH DEVELOPERS 31 RETURNED UNSERVED, THEREFORE, THE A.O. WAS JUSTIFIE D IN MAKING THE ADDITION. LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER FAILED TO APPR ECIATE THE FACTS THAT ALL THESE WERE SUPPLIERS AND THE ASSESSEE HAS BEEN PURC HASING MATERIAL FROM THEM. THE LD. CIT(A) HAS DELETED THIS ADDITION BY O BSERVING AS UNDER: THE ABOVE CREDITORS ARE OLD SUPPLIERS IN THE BUSIN ESS OF THE APPELLANT. ALL THE THREE PARTIES ARE FILING THEIR INCOME TAX RETUR NS. THE APPELLANT IS FREQUENTLY MAKING PURCHASES FROM THE ABOVE PARTIES. THE A.O. HAS NOT DISALLOWED THE EXPENSES CLAIMED BY THE APPELLANT AS A RESULT OF TRANSACTION WITH THE ABOVE PARTIES. THE APPELLANT FURNISHED THE LEDGER ACCOUNT, COPY OF BILLS AND BANK STATEMENT WHICH PROVES THAT THE PAYM ENT HAS BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE. THE A.O. IS NOT JUSTI FIED IN TREATING THE ABOVE CREDITORS AS BOGUS. THEREFORE, THE ADDITION M ADE BY THE A.O. AMOUNTING TO RS.16,74,394/- IS DELETED. THE APPEAL ON THESE GROUNDS IS ALLOWED. 9. WE DO NOT SEE ANY REASON TO INTERFERE IN THIS FI NDING OF THE LD. CIT(A) AS THE FINDINGS ARE BASED UPON THE EVIDENCES FURNISHED BY THE ASSESSEE. MOREOVER, THE ASSESSEE HAS FILED AFFIDAVITS OF THE CREDITORS, THEIR BANK ACCOUNT AND ALSO THE SUPPORTING BILLS. THIS GROUND OF THE REVENUES APPEAL IS DISMISSED. 28. THE ABOVE FINDING OF THIS TRIBUNAL PERTAINING T O THE ASSESSEE IS FOR THE SAME PROJECT I.E. PALACE ORCHARD FOR WHIC H THE ALLEGED DEDUCTION U/S 80IB(10) OF THE ACT HAS BEEN CLAIMED FOR A.Y. 2008- 09 TO 2014-15 AND IT CLEARLY ESTABLISHES THAT THE A SSESSEE HAS DULY COMPLIED TO PROVISIONS OF U/S 80IB(10) OF THE ACT AND IS ELIGIBLE FOR DEDUCTION UNDER THIS SECTION IN THE CAPACITY OF DEV ELOPER OF HOUSING PROJECT. 29. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDGMENTS REFERRED H EREINABOVE AND THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CAS E FOR A.Y. 2009- SWADESH DEVELOPERS 32 10, AND IN ABSENCE OF ANY CONTRARY BINDING DECISION S PLACED BEFORE US BY THE REVENUE, ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS RIGHTLY CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT F OR A.Y. 2008-09 TO 2014-15 AND THE SAME NEEDS TO BE ALLOWED AS CLAIMED IN THE RETURN OF INCOME. THUS THE FINDING OF LD. CIT(A) IS SET AS IDE AND GROUNDS RAISED ON MERIT PERTAINING TO CLAIM OF DEDUCTION U/ S 80IB(10) OF THE ACT FOR A.Y. 2008-09 TO 2014-15 ARE ALLOWED. 30. FOR A.Y. 2011-12 THE ASSESSEE HAS ALSO RAISED F OLLOWING GROUND NO. 4 :- 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIF IED IN UPHOLDING THE TREATMENT OF LONG TERM CAPITAL GAIN O N SALE OF LAND AS BUSINESS INCOME OF THE ASSESSEE AND THEREBY MAKI NG AN ADDITION OF RS.38,13,370/- TO THE ASSESSED INCOME F OR THE ASSESSMENT YEAR 2011-12. 31. SINCE WE HAVE ALREADY ALLOWED THE LEGAL GROUND IN FAVOUR OF THE ASSESSEE AND DELETED THE ADDITIONS MADE FOR A.YS. 2 008-09 TO 2012- 13 DEALING THIS GROUND IS MERELY ACADEMIC IN NATURE . STILL FOR ACADEMIC PURPOSE WE WILL ADJUDICATE THIS GROUND NO. 4 ON MERIT WHEREIN LD. AO HAS TREATED THE LONG TERM CAPITAL GA IN ON SALE OF LAND AS BUSINESS INCOME SWADESH DEVELOPERS 33 32. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS P ERUSED. LD. AO DISALLOWED THE CLAIM OF CAPITAL GAIN ON THE SALE OF PLOTS, ON THE GROUND THAT THE ASSESSEE HAS INCURRED SOME DEVELOPM ENT EXPENSES IN THE YEAR OF PURCHASE OF PLOTS AND HENCE TRANSACT ION IS A BUSINESS TRANSACTION. WHEN THE MATTER WAS CARRIED OUT BEFORE THE LD. CIT(A) HE ALSO COULD NOT GIVE RELIEF TO THE ASSESSE HOLDIN G THAT IF THE LAND FOR WHICH LONG TERM CAPITAL GAIN IS CLAIMED, IS DIFFERE NT FROM THE PROJECT LAND THEN WHY THE DEVELOPMENT EXPENSES WERE CLAIMED ON THE SAID LAND. 33. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBU NAL LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DEVELOPMENT EXP ENSES INCURRED ON THE PLOT OF LAND ARE ONLY IN RESPECT OF THE LEVE LING AND PUTTING UP THE BOUNDARY. NO EFFORTS WERE MADE TO DEVELOP THE P LOT FOR GETTING ANY PERMISSION. HE PRAYED THAT ALLEGED AMOUNT SHOUL D NOT BE TREATED AS BUSINESS INCOME BUT TREATED AS CAPITAL G AIN. 34. WE FIND THAT ASSESSEE HAS NOT SHOWN THESE PLOTS OF LAND AS STOCK-IN-TRADE IN THE PROFIT AND LOSS ACCOUNT. AS I T IS JUDICIAL SETTLED THAT THE ACCOUNTING TREATMENT IS IN THE BOOKS OF AC COUNTS REGULARLY MAINTAINED BY THE ASSESSEE IS ONE OF THE MAIN INDIC ATOR OF INTENT OF SWADESH DEVELOPERS 34 THE ASSESSEE AND THE NATURE OF THE OUTLAY. THE LAND IN QUESTION ON WHICH ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN PUR SUANT TO THEIR SALE, HAVE BEEN SHOWN IN THE BALANCE SHEET AS AN ASSET AND NEVER SHOWN THEM AS PART OF STOCK-IN-TRADE. THE COS T OF THE SAID LAND IS SHOWN AS AN INVESTMENT IN FIXED ASSET IN TH E BALANCE SHEET OF THE ASSESSEE SINCE THE YEAR ENDED MARCH 2007 TILL T HE YEAR ENDED WHEN THESE WERE SOLD. THE COPIES OF THE BALANCE SH EET AND PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PERIOD SHOWING TH AT THE LAND IN QUESTIONS HAS NOT BEEN SHOWN AS STOCK-IN-TRADE BUT AS AN ASSETS DIRECTLY IN THE BALANCE SHEET STANDS FAILED BEFORE BOTH THE LOWER AUTHORITIES AND BEFORE US. 35. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE, ARE OF THE CONSIDERED VIEW THAT THE ALLEGED GAIN FR OM SALE OF LAND SHOWN AS ASSETS IN THE BALANCE SHEET HAS BEEN RIGHT LY SHOWN AS LONG TERM CAPITAL GAIN AND IT CANNOT BE TAXED AS BUSINES S INCOME. FINDING OF LD. CIT(A) IS SET ASIDE AND GROUND NO.4 FOR A.Y. 2010-11 IS ALLOWED. SWADESH DEVELOPERS 35 36. NOW WE TAKE UP REVENUES APPEAL FOR A.Y. 2010-1 1 IN IT(SS)ANO.14/IND/2019, IN WHICH THE REVENUE HAS RAI SED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.3,34,67,692/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.25,40,000/- MA DE BY ASSESSING OFFICER ON ACCOUNT OF PROFIT FROM SALE OF UNSOLD UNITS. 3. THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR A LTER THE GROUNDS OF APPEAL ON OR BEFORE THE DATE, THE APPEAL IS FINALLY HEARD FOR DISPOSAL. 37. AS REGARDS GROUND NO.1 REVENUE HAS CHALLENGED T HE FINDING OF LD. CIT(A) DELETING THE ADDITIONS OF RS.3,34,67,692 /- MADE BY THE LD. AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB (10) OF THE ACT, WE FIND THAT THIS ISSUE OF DEDUCTION U/S 80IB(10) O F THE ACT HAS ALREADY BEEN DEALT BY US IN THE PRECEDING PARAS AND UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND FINDING OF THIS TRIBUNA L IN ASSESSEES OWN CASE FOR A.Y. 2009-10, WE HAVE ALLOWED THE CLAI M OF DEDUCTION U/S 80IB(10) OF THE ACT MADE BY THE ASSESSEE TOWARD S PROFIT EARNED FROM THE HOUSING PROJECT NAMELY PALACE ORCHARD. T HEREFORE, THIS GROUND OF THE REVENUE DESERVES TO BE DISMISSED. WE ACCORDINGLY, ORDER SO. SWADESH DEVELOPERS 36 38. AS REGARDS GROUND NO,.2 RELATING TO ADDITION OF RS.25,40,000/- DELETED BY LD. CIT(A) WHICH WAS MADE BY THE LD. AO ON ACCOUNT OF PROFIT FROM UNSOLD UNITS, WE OBSERVE THAT LD. AO IN THE ASSESSMENT PROCEEDINGS FOUND THAT THE OPENING BALANCE UNDER TH E HEAD WORK COMPLETE UNIT UNSOLD WAS RS.73,65,000/- HOWEVER CL OSING BALANCE WAS RS.49,05,000/-. AS THE ASSESSEE COULD NOT FURNI SH REPLY FOR THE SAID DIFFERENCE LD. AO ASSUMED SALE VALUE AT RS.50, 00,000/- AND CALCULATED THE PROFIT AT RS.25,40,000/- AFTER REDUC ING THE COST OF UNIT OF RS.24,60,000/-. WE FIND THAT LD. CIT(A) AFT ER APPRECIATING THE FACTS OF THE CASE DELETED THE ADDITION OBSERVING TH AT FOLLOWS: APPELLANT DURING APPELLATE PROCEEDINGS SUBMITTED T HAT THE ASSESSEE IS IN FOURTH PHASE OF PROJECT AND THE OPENING STOCK RELAT ES TO THE UNSOLD UNITS OF THIRD PROJECT. FURTHER, THE SALE PRICE OF UNITS SOL D HAS ALREADY BEEN INCLUDED IN THE VALUE OF SALES AS CREDITED TO THE PROFIT AND LOSS ACCOUNT. ON PERUSAL OF LEDGER ACCOUNT STATEMENT IT IS SEEN THAT APPELLA NT HAS CREDITED SALE PRICE FOR PURCHASE IV OF RS.10,91,70,400/- AND FOR PHASE III OF RS.41,75,000/-. THUS, FROM THE FACTS AND DOCUMENTS ON RECORD, IT IS VERY CLEAR THAT APPELLANT HIMSELF HAS SHOWN PROFIT ON UNSOLD UNITS AND HAS CR EDITED TO THE PROFIT AND LOSS ACCOUNT. FURTHER IT IS IMPORTANT TO NOTE THAT PROFIT FROM SALE OF UNITS IS EXEMPTED U/S 80IB(10) OF THE ACT. THEREFORE, THE AO WAS NOT JUSTIFIED IN ASSUMING SALE PRICE OF RS.50,00,000/- AND PROFIT OF RS.25,40,000/- ARISING OVER IT. THUS, THE ADDITION MADE BY THE AO ON ACCOU NT OF PROFIT FROM SALE OF UNSOLD UNIT OF RS.25,40,000/- IS DELETED. THEREFORE , APPEAL ON THIS GROUND IS ALLOWED. 39. FROM PERUSAL OF THE ABOVE FINDING OF LD. CIT(A) AND FACTS PLACED ON RECORD WE FIND THAT THE ASSESSEE HAS ITSELF SHOW N THE PROFIT ON UNSOLD UNIT AND HAS CREDITED THE PROFIT AND LOSS AC COUNT. EVEN SWADESH DEVELOPERS 37 OTHERWISE SINCE THE UNIT IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT AS HELD BY US IN THE PRECEDING PARAS, THERE REM AINS NO JUSTIFICATION ON THE PART OF THE LD.AO TO ASSUME TH E SALE PRICE AND MAKE ADDITION FOR UNSOLD UNITS. THUS, WE FIND NO ME RIT IN THE GROUND NO.2 RAISED BY THE REVENUE. 40. IN THE RESULT, APPEALS OF THE ASSESSEE IN IT(SS )ANO.304 TO 308/IND/2017 FOR A.Y. 2008-09 TO 2012-13 ARE ALLOWE D AND IN ITANO.705/IND/2017 & IT(SS)NO.309/IND/2017 FOR A.Y . 2013-14 & 2014-15 ARE PARTLY ALLOWED. APPEAL FILED BY THE REV ENUE FOR A.Y. 2010-11 IN IT(SS)ANO.14/IND/2019 IS DISMISSED. ORDER PRONOUNCED AS PER RULE 34 OF I.T.A.T., RULES 1963 ON 10.08.2021. SD/- (RAJPAL YADAV) SD/- (MANISH BORAD) VICE PRESIDENT A CCOUNTANT MEMBER INDORE; DATED : 10/08/2021 PATEL/PS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE