TaxTMI 
TaxTMI 
2015 (12) TMI 1515
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....d that the assessee has claimed deduction under sec. 80IB(10), for one of its Housing Projects called as "Vasanta Vihar, Madhurawada". To ascertain the correctness of the claim made by the assessee, the Assessing Officer issued a show-cause notice and asked to furnish the details with regard to claim of deduction u/s 80IB(10) for the housing project, like details of land holding, plan approval, date of commencement and date of completion, flat size and amount invested for construction of housing project. In response to show-cause notice, the assessee submitted the details sought by the Assessing Officer, vide letter dated 08/10/2010 and furnished the complete details of the housing project. The Assessing Officer after verification of the books of accounts and other details, completed the assessment and allowed deduction claimed under sec. 80IB(10) of the Act. While doing so, the Assessing Officer observed vide para 2 to 2.1 of the assessment order as under:- "2.0 During the previous year relevant to the assessment year under consideration, the assessee-firm commenced the business of developing and building housing projects in Ac.2.53 of and situated in Madhurawado. F....
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....erefore, the assessee's contention that the land was transferred to firm books of accounts is not correct. The CIT further observed that the plans sanctioned by the municipal authorities was in the name of the partners, therefore, the assessee's contention with regard to development of housing project by the firm was not tenable as per law. The CIT further was of the opinion that the partnership firm could not be said to have played any role in the development of the project, but, such role could be construed as that of a contractor with the two partner and the partners in their individual capacity played a dominant role in executing and completing the project. Therefore, the CIT was of the opinion that the firm's name was used as a front entity or masquerade, while the said project was actually undertaken by Shri V.Vasanth Babu, Shri E. Vallabha Rao and eight others. In fcat, Shri V.Sasanth Babu played the role of the project convener and executor for development and construction of the Madhurawada project. With these observations, the CIT was of the view that the Assessing Officer completed the assessment without examining these issues, thus, the assessment order passed under sec....
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.... sec. 80IB(10) of the Act and also directed to pass consequential order to give effect to the order under sec. 263. Aggrieved by the CIT's order, the assessee is in appeal before us. 6. The Authorized Representative of the assessee submitted that the assessment order is not erroneous insofar as it is not prejudicial to the interest of the Revenue, as during the assessment proceedings, the Assessing Officer has made detailed enquiries with regard to allowability of deduction under sec. 80IB(10) of the Act. The Authorized Representative of the assessee further submitted that during the course of assessment proceedings, the Assessing Officer issued a detailed questionnaire dated 20/09/2010 wherein, he has raised almost 19 questions regarding claim of deduction under sec. 80IB(10). The Authorized Representative of the assessee further submitted that the Assessing Officer has examined the issue with regard to deduction under sec. 80IB(10) of the Act and after satisfied with the details furnished by the assessee, allowed the deduction. The Authorized Representative of the assessee, further submitted that as regards the merits of the issue is concerned, the CIT revised the assessment o....
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....sse had brought this fact to the notice of CIT, then, the CIT would not have proceeded with revision of assessment order. In the absence of required documents to prove the ownership of land, the CIT has revised the assessment order and directed the Assessing Officer to disallow the claim under sec. 80IB(10), therefore, requested to uphold the CIT's order. 8. We have heard both the parties, perused the materials available on record and gone through the orders of the revenue authorities. The CIT, assumed the jurisdiction for the reasons that the Assessing Officer did not conduct proper enquiry before passing the assessment order, thereby his order is erroneous insofar as it is prejudicial to the interest of the Revenue. The CIT revised the assessment order on the sole ground that the land in which housing project was developed was not in the names of the partners, therefore, the assessee is not eligible for deduction under sec. 80IB(10) of the Act. The CIT came to the conclusion that the land was not in the name of the partnership firm, is based on a document which shows, land measuring 44 cents was previously owned by Shri V. Vasanth Babu, one of the partners and eight others und....
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....s transferred to firm books by way of capital contribution which was one of the accepted modes of transfer of capital asset under sec. 45(3) of the Act. Once, the land has been transferred to partnership firm, it become the property of the firm, therefore, even if the sanction plans for building is in individual partners name, the benefit of deduction under sec. 80IB(10), cannot be denied as held by the Hon'ble Gujarat High Court in the case of Radhe Developers & others vs. ITO (2008) 113 TTJ 300. Therefore, we are of the opinion that the CIT was not correct in coming to the conclusion that just because the lands and the relevant sanction plans were not in the name of the partnership firm, the firm is not eligible for claiming deduction under sec. 80IB(10). On careful consideration of the provisions of sec. 80IB of the Act, we noticed that the land should be owned by person, who executes the housing project. As can be seen from the documents available in this case, the assessee has complied with the conditions stipulated under sec. 80IB(10), therefore, eligible for deduction for development of housing project. 11. The CIT assumed his jurisdiction to revise the assessment ord....
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....he CIT for the reason that there is a distinction between lack of enquiry and inadequate enquiry. If there is enquiry, which is inadequate that would not itself give occasion to the CIT to assume jurisdiction under sec. 263 of the Act, merely because he has a different opinion in the matter. The CIT can do this when there is a lack of enquiry by the Assessing Officer. In the present case, the assessment order is a detailed one and also the Assessing Officer has passed a remark in the assessment order on the allowability of deduction under sec. 80IB(10), therefore, it cannot be termed as erroneous. According to CIT, the Assessing Officer has conducted inadequate enquiry, therefore, he wanted further enquiry; this fact was not disputed by the Revenue. The CIT cannot initiate revisionary proceedings with a view to conduct fishing and revolving enquiries on the issues which were examined and allowed by the Assessing Officer. The Department cannot do fresh assessment in the guise of revision, just because it has a power to revise the assessment order under sec. 263 of the Act. Therefore, in our opinion, the order passed by the Assessing Officer cannot be held erroneous and also prejudic....
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....296/2013. The relevant portion is reproduced herein under:- "12. We have heard the parties on these two appeals. The scope of revision proceedings has been well explained by Hon'ble Supreme Court in the case of Malabar Industrial Company (2000)(243 ITR 83) in the following lines. "A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer is erroneous but is not pre-judicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1) of the Act. The pro-vision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect ass....
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....of the assessee, which was later upheld by the Hon'ble Andhra Pradesh High Court in ITTA Nos. 600 & 602/2014. The relevant portion is reproduced hereinunder:- "4. After considering the rival submissions, we are of the opinion that assessee is eligible for deduction to the extent of constructed area of 9763 sq. meters which was originally sanctioned. Therefore, the Revenue ground on allowing proportionate 80IB deduction does not require any reconsideration as the assessee is held otherwise eligible for deduction under section 80IB(10) and the A.O. find out has not any reason to deny except (a) plans are not in the name of the assessee (b) that there is violation of the building plans which. 0'as regularized subsequently on 26.08.2010. To that extent, Revenue grounds are not maintainable as the Coordinate Bench in the, case of Radhe Developers (supra) held that permission in the name of developer is not required and what is required is permission of the' project, on which there is no dispute. Accordingly, these grounds are not maintainable. 5. Other ground contested in the Revenue's appeal is with reference to the estimation of income which learned C....
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.... of built up area by 6543.84 sq. meters or there are, any other increase in the area of additional 'buildings constr4ted. Since the plans are not placed on record, we are unable to give any finding on this. Moreover, the BPS scheme was applicable only to the applications made on or before 31-03- 08. The plans were approved only in July 2007. Payments for penalty were made later as can be seen from copy of approval placed on record. Since revised plans were not placed on record we are unable to decide issue only on legal principles. The A.O. is directed to examine the original plans, revised plans and examine whether the deduction tinder 80IB is eligible for revised plan. In case of area of flats have changed, to verify whether the constructed apartments are within the norms prescribed under section 80IB(10). Needless to say that balconies and common areas are not to be considered as part of 'fiat area' as per the decisions of the Coordinate Bench on the 4sue. However, the pent house constructed and the additional space for which revised plans were taken should be examined whether the project itself is eligible for 80IB (10), on which there is no finding from the A.O. or....
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....ssee and accepted by the Tribunal, need to be seen. Under clause 4 of the agreement, the assessee was to collect a sum of Rs. 600 per sq.ft. on super built-up area for the sale of undivided share of land transferred to the buyer. The said clause also fixes the ceiling as to the consideration, which would be paid to the owner, namely, at Rs. 11,51,94,000. The clause in the agreement further pointed out that the builder has to enter into a builder agreement with the proposed purchaser and it is open to the builder to fix such rate per square foot for construction of the area as it deems fit, over which the owner has no claim at all. The builder has to pay the specified cost of the land on the undivided share of sale in favour of the purchaser to the owner, pro rata to the built-up area. A reading of the agreement of sale with the purchasers further points out that the builder's agreement was entered on the very same day with the assessee. Thus, seen in the background of the data available as regards the date of sale, the clause in the agreement between the owner of the land and the assessee and the sale agreement with the prospective purchasers, it is evident that what the assess....
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....l. Accordingly, the second substantial question of law is answered against the Revenue and in favour of the assessee." 18. The Hon'ble Supreme Court of India, in the case of Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83, while dealing with the issue of revision under sec. 263 held as under:- "A bare reading of provisions of s. 263 makes it clear that the prerequisite to exercise of jurisdiction by the CIT suo motu under it, is that the order of the ITO is erroneous insofar as it is prejudicial to the interests of the Revenue. The CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. I one of them is absent-if the order of the ITO is erroneous but is not prejudicial to the Revenue or it is not erroneous but is prejudicial to the Revenue-recourse cannot be had to s. 263(1). There can be no doubt that the provision cannot be invoked to correct each and every type of mistake an error committed by the AO; it is only when an order is erroneous that the section will be attracted, An incorrect assumption of facts or an incorrect application of law wil....
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....-Malabar Industrial Co. Ltd. vs. CIT (1991) 100 CTR (Ker) 27. (1992) 198 ITR 611 (Ker) TC 57R.321 affirmed." (Para 8) 19. An identical issue came up before the Coordinate Bench of this Tribunal, in the case of Shri Sai Contractors vs. ITO Ward-1 in I.T.A.No. 109/VIZ/2012, wherein the Tribunal after consideration the ratio laid down by the Hon'ble Andhra Pradesh High Court in the case of Spectra Shares and Scrips Pvt Ltd vs. CIT, (2013) 354 ITR 35(AP) and the Hon'ble Delhi High Court's judgment in the case of CIT vs. Sunbeam Auto Ltd (2011) 332 ITR 167 (Del), held that once the Assessing Officer examined the issues, the CIT cannot assume the jurisdiction on the same issue, which is already considered by the Assessing Officer on the guise of revision by stating that the Assessing Officer has conducted inadequate enquiry or there is a lack of enquiry. The relevant portion reads as under:- "10. To invoke the provisions of section 263 of the Act, the twin conditions must be satisfied i.e. the order of the assessing officer is erroneous and further it must be prejudicial to the interest of the revenue. Unless both conditions are satisfied, the CIT cannot assume jurisd....