TaxTMI 
TaxTMI 
2016 (4) TMI 421
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....se of a flat measuring more than 1000 Sq.Ft. as a single unit ignoring the fact that the retraction statement of Shri Abhiram Bhattacharjee was not brought to the notice of the Assessing Officer and Addl.CIT during the course of assessment proceedings, thus admitting additional evidence in violation of Rule 46A of the Income Tax Rules. " (ii) "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting addition of Rs. 56,55,861/representing disallowance of deduction u/s 80lB( 10) on the ground being area of plot less than one acre ignoring the fact that the Registered Deeds in respect of Smartha Krupa building mentioned the area of plot being less than one acre. " 3. In all these appeals the Ld. CIT(A) erred in deleting the disallowing of deduction claimed u/s. 80IB(10) of the Act. In all these appeals the Revenue filed additional ground contending that the Ld. CIT(A) ought not to have admitted additional evidence/retractions statements without complying with the procedure laid down in Rule 46A. 4. The Ld. Departmental Representative submits that in the course of survey, one of the partners gave statement offering income of Rs. 150 c....
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....urvey proceedings or assessment proceedings and therefore none of the statement can be said to be additional evidence produced before the Ld. CIT(A) and therefore the question of violation of Rule 46A does not arise at all. In the circumstances, we hold that the additional grounds raised by the Revenue in all these appeals do not emanate from the order of the Ld. CIT(A) and therefore they are dismissed. 7. Coming to the regular grounds of appeal i.e. deletion of disallowance of deduction u/s. 80IB(10) of the Act, the brief facts are that the assessee is a partnership firm engaged in the business of Civil construction/developers and builders. The assessee filed its return of income for all these assessment years i.e. 2004-05 to 2009- 10 claiming deduction u/s. 80IB(10) of the Act. The assessment for all these assessment years were scrutinized by the Assessing Officer and completed the assessments u/s. 143(3) of the Act allowing deduction u/s. 80IB(10) of the Act after satisfying the claim of the assessee u/s. 80IB(10). Subsequently, there was a survey u/s. 133A of the Act conducted by the DDIT (Inv.) on 30.3.2011. On the date of survey one of the partners Shri Vikas Walawalkar of....
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....ed for deduction u/s. 80IB(10) of the Act. He further directed the AO to allow the claim of the assessee u/s. 80IB(10) for the buildings Samartha Angan No. 21 and Samartha Angan No. 22, Meghdoot A & B Wing and Samartha Deep Building No. 11 for all these assessment years holding that assessee complied with all the conditions of deduction u/s. 80IB(10) of the Act. 9. In view of the directions of the Addl CIT u/s. 144A, the AO passed assessment orders u/s. 143(3) r.w.s. 147 of the Act for the assessment years 2004-05 to 2009-10 disallowing claim u/s. 80IB(10) of the Act by reworking out the disallowance as under: Asstt. Year Deduction claimed Deduction to be disallowed as per the direction u/s. 144A 2004-05 23,67,82,614/- 2,37,35,754/- 2005-06 33,43,52,139/- 3,44,07,056/- 2006-07 52,94,49,427/- 10,78,39,415/- 2007-08 43,69,71,550/- 22,78,72,832/- 2008-09 39,60,40,233/- 32,40,52,511/- 20098-10 41,32,69,580/- 5,72,22,499/- Total 2,34,68,65,543/- 77,51,30,067/- 10. The Ld. Departmental Representative vehemently submits that on the date of survey one of the partners Shri Vikas Walawalkar admitted that ....
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....hold limit of 1000 sq.ft. It has been stated that assessee made a wrong claim and offered for taxation Rs. 150 crores by withdrawing the claim u/s. 80IB(10) of the Act. The Ld. Counsel for the assessee submits that the statement was given by the partner on the advice of his Counsel and the Counsel is not aware of the facts and was under the impression that the assessee had sold one single residential unit by executing three separate sale deeds and also since the flats have been joined by the purchaser was not entitled for claim for deduction u/s. 80IB(10) of the Act. The Ld. Counsel submits that when the mistake was explained, assessee filed an affidavit retracting the statement given at the time of survey. He submits that the statement was duly filed before the AO on 8.4.2011. The Ld. Counsel further submits that in the retracted statement, it was duly explained that there was no wrong claim made in the returns and the deduction u/s. 80IB(10) of the Act was rightly allowed. He further submits that the statement retracted was well in time and since reasons for statement were also given at the time of survey, the statement should not be relied upon. The Ld. Counsel for the assessee ....
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....bmitted and the agreements made. This is not a case where originally a single unit with more than specified area was planned and was artificially divided into two/three flats. On the contrary, this is reverse case where admittedly two/three separate units were planned and such units were also sold as separate units only to different buyers. However, subsequent to the sale, the two/three units were combined by making internal modifications at the instance of the buyers. It was also submitted that it is a common occurrence where having booked the flat and paid the required advance amount, many buyers suggest modifications at their own cost to suit their own purpose. This cannot be considered as violation of the conditions. Thus as per plans what was constructed and sold was single residential unit having Built up area below 1,000 sq. ft. per residential unit. Even the occupation certificate was granted by BMC as per approved drawings wherein the built up area of each flat was less than 1000 sq.fts. (ii) Each entity sold as per registered sale deed was a complete residential unit in itself. This can be verified from the sale deed, approved plans of BMC , occupation certificat....
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.... entirely and exclusively on the statement made by Mr. Abhiram Bhattacharjee, the learned AO concluded that all the flats sold by the appellant in Samartha Angan Building No.23 & 24 are more than 1,000 sq.ft. and disallowed the entire claim u/s.80IB for these two buildings. Learned AO did not consider host of evidences filed on record such as approved plans by local authority, floor plans certified by Architect, sale deeds duly executed and registered, Audit Report u/s.80IB(10) and even the Enquiry Report of the Inspector who was specifically appointed to verify the submissions of the appellant whose observations are stated above. More importantly he has also obtained written submissions from certain flat owners chosen by him from the very same building namely Samartha Aangan Building i.e. from Mr. Dalmia, Mr. Zinjurte, Mr. Sawant and Mr. Mohile who have categorically confirmed that each of them have purchased two/ three different flats from the appellant by executing separate agreements for each flat which are duly registered and that subsequently for their convenience and at their expenses have joint these flats so that they can be used as one single flat (Refer to Page ....
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....d AO appears to have misdirected himself in as much as Plot No.123 is a part of a layout admeasuring 4,25,537.25 square meters duly sanctioned by the Municipal Corporation of Greater Mumbai and that appellant has already filed all the plans on record. . The Department of Urban Land Ceiling, Government of Maharashtra had exempted interalia the said area from ULC and the said exempted land was to be transferred by way of sale to Shree Swami Sarnartha Prasanna Cooperative Housing Society or to its unit or units to be separately registered as distinct societies. In pursuance of the said exemption order and proper management of the individual societies, the said area is subdivided and units of the said society have been separately registered to form individual societies and land is subsequently conveyed to such units, duly registered as cooperative Housing Societies. As such building known as 'Samartha Krupa' constructed on the said plot No.123 is not a separate project, but integral part of said project of Shree Swami Samartha Prasanna Cooperative Housing Society sanctioned by B.M.C. in pursuance of the said exemption order under urban land ceil....
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....rom 'surplus vacant land' into 'within ceiling limit land' by State Government that an additional building could be constructed on plot in question and, accordingly, building plan for construction of building 'E' was submitted and same was approved by local authority on 11102002 Further, nowhere in relevant that intimation of municipality, it was stated that building 'E' constituted extension of earlier housing project which was already completed Whether approval of building plan for construction of building 'E' could not be said to be an extension of earlier housing project and therefore, deduction under section 80IB( lO) should be allowed to assessee Held, yes [In favour of assessee] Words and Phrases: Expressions 'plot of land' and 'housing projects' as occurring in section 80IB of the Incometax Act, 1961. In view of the above we state that the learned A.O. has erred in disallowance of 80IB claim of Samartha Krupa for all the years. Your attention is drawn to a recent direct decision of Mumbai tribunal in the case of HAWARE CONSTRUCTIONS (P) LTD. VS. LT.O. reported in (2011) 64 DTR (Mumbai)(Trib) ....
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.... approved, each flat was a separate residential unit and it can be verified from the plans. It was submitted that as per the approval, separate flats were constructed and occupation certificate was received as the flats were constructed as per BMC approved plans. Separate agreements in respect of each residential unit were rented into buyers/their family members. The flats were sold as per registered agreements. Thus, the partner of the firm retracted his earlier statement stating that there is no wrong claim u/s. 80IB(10) of the Act. However, the AO completed the assessment based on the directions of the Addl CIT u/s. 144A by withdrawing the claim u/s. 80IB(10) for all these assessment years in respect of the Building No. 23 & 24 of Samartha Angan and in respect of the Building Samartha Krupa. The AO allowed deduction in respect of the Bldg. No. 21 & 22 of Samartha Angan, Meghdoot A & B Wing and Samartha Deep-11 based on the directions of the Addl. CIT by his order u/s. 144A of the Act. We find that the Addl. CIT considering the report of the Inspector and one Mr. Abhiram Bhattacharjee restricted the disallowance in respect of the Bldg. No. 23 & 24 of Samartha Angan & Samartha Kru....
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....it was made without duress, a Division Bench of the Allahabad High Court in Dr. S.C. Gupta Vs.. CIT (2001) 170 CTR (All) 421 : (2001) 248 ITR 782 (All), of course, placing reliance on the decision of the apex Court in Pullangode Rubber Produce Co. Ltd. Vs.. State of Kerala held that the burden that was laid on the assessee to establish that the admission made in the statement at the time of survey was wrong and that there was no additional income was not even attempted to be discharged and thus, the order of the Tribunal was based on facts and no question of law arose from it. 9. A power to examine a person on oath is specifically conferred on the authorities only under s. 132(4) of the Act in the course of any search or seizure. Thus, the IT Act, whenever it thought fit and necessary to confer such power to examine a person on oath, has expressly provided for it, whereas s. 133A does not empower any ITO to examine any person on oath. Thus, in contradistinction to the power under s. 133A, s. 132(4) of the IT Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT ....
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....his."(emphasis supplied) 11. Similarly, when the issue, whether the expression "such other materials or information as are available with the AO" in s. 158BB of the IT Act, 1961, would include the materials gathered during the survey operation under s. 133A, came up for consideration before this Court in CIT vs G.K. Senniappan (2006) 203 CTR (Mad) 447 : (2006) 284 ITR 220 (Mad), a Division Bench of this Court, in which one of us was a party (P.P.S. Janarthana Raja, J.), answered the question in the affirmative, against the Revenue and in favour of the assessee, holding that the materials collected during the survey under s. 133A cannot be taken into consideration while determining the undisclosed income in respect of block assessment as per s. 158BB, as the same has no evidentiary value. 12. Again, when an identical question whether the material found in the course of survey in the premises of the builder could be used in the block assessment of the assessee, came up for consideration before this Division Bench in an unreported case in Tax Case (Appeal) No. 2620 of 2006, this Court, by order dt. 22nd November, 2006, since reported in CIT Vs Ajit Kumar (2008) 300 I....
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....he authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act. On the other hand, whatever statement is recorded under s. 133A of the IT Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews & Sons Vs.. CIT (2003) 263 ITR 101 (Ker); (iii) The expression "such other materials or information as are available with the AO" contained in s. 158BB of the IT Act, 1961, would (not) include the materials gathered during the survey operation under s. 133A, vide CIT Vs.. G.K. Senniappan (2006) 284 ITR 220 (Mad); (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this Court in Tax Case (Appeal) No. 2620 of 2006 (between CIT Vs.. S. Ajit Kumar); (v) Finally, the word "may" used in s. 133A(3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant ....
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....malgamated and joined together after their purchase. 20. We also find from the assessment order that the Inspector in his report has categorically stated that the purchasers acquired the flats by separate sale deeds, after the possession the necessary changes have been made by themselves to make it bigger flat as per their requirement at their own cost. It is also the finding of the Inspector who visited the flats and stated that the flats are as per approved plans (a) there is no change in the external water and sanitary fittings from the approved drawings (b) there is no commercial establishment into the premises (c) there is no change in the location of the toilets (d) as per the sale deeds the area of each flat sold was less than 1000 Sq. ft. The Inspector in his report also observed as under: " The total area of the most of the flats exceeded the original one due to changes done by the flat owner (as informed) by converting common passage area, flower bed, dock area into the premises. After merging flats, the total area of most of the flats have also exceeded 1,000 Sq. ft. When enquired from the society member regarding internal changes of the flats, they informed ....
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....each flat in the housing project could not have been used as an independent of as a self contained residential unit and that there would be a complete habitable residential unit only if two or more flats are joined together. Therefore, merely because some of the purchasers have purchased more than one flat and combined the same, assessee's claim for deduction u/.s80IB( 10) cannot be disallowedFurther, the condition that not more than one residential unit in the housing project is allotted to one person not being an individual has been inserted by Finance (No.2) Act, 2009, w.e.f. 1st April, 2010, and hence it is not applicable to the facts of the case." 22. Similar view has been taken by the Co-ordinate Bench in the case of Emgeen Holdings (P) Ltd Vs DCIT 12 Taxmann. Com 468 (Mum) wherein it has been held as under: "We find that the deduction u/s.80IB(10) has been declined by the Assessing Officer on the ground that size of the residential unit was in excess of 1,000 sq.ft which, in turn, proceeds on the basis that the flats sold to the family members admittedly by separate agreements, should be treated as one unit. We are unable to 6 approve this approach. We have n....
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....e minor children of such individual, (ii) the HUF in which such individual is a karta' (iii) any person representing such individual, the spouse or minor children of such individual, or the 7 HUF in which such individual is a karta. The explanation memorandum explained the legislative amendment as follows: (314 ITR(St) 203) "Further, the object of the tax benefit for housing projects is to build housing stock for low and middle income households. This has been ensured by limiting the size of the residential unit. However, this is being circumvented by the developer by entering into agreement to sell multiple adjacent units to a single buyers. Accordingly, it is proposed to insert new clauses in the said sub-section to provide that the undertaking which develops and builds the housing project shall not be allowed to allot more than one residential unit in the housing project to the same person, not being an individual, and where the person is an individual, no other residential unit in such housing project is allotted to any of the following person:- (I) Spouse or minor children of such individual; (II) The Hindu undivided family in which such individual i....
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.... 1000 Sq. ft. at the time of sale of its flats. The Ld. CIT(A) further observed as under: "The appellant had furnished evidence to the Addl CIT of the following to show that the area of each flat is less than 1000 sq. ft. * Approved building plans * Area stated in the title deed registered with the Subregistrar * Area for which the sale amount was obtained * Area which was stated in the occupation certificate issued by the local authority ` No physical verification of any of the building was carried out during the course of survey of the built up area of any of the residential unit. The only evidence that the wing had was the statement of Shri Abhiram Bhattacharjee who stated that he had purchased 3 flats 1407, 1408 and 1409 in Building no 24 and the same was purchased as a single flat. The Addl CIT directed that in VIew of the statement of Shri Abhiram Bhattacharjee, the claim of the appellant u/s 80IB(1O) should be withdrawn only for Building no 23 and 24. The Addl ClT gave the above direction even when he had recorded that the inspector's report clearly shows that in the entire complex each flat when sol....
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....t. apart from the statement of Shri Abhiram Bhattacharjee, wherein also neither physical measurement of his flat were taken nor the copies of his sale deed were inspected and verified to check whether indeed the sale of flat to him was of more than 1000 sq .. ft. It was also not verified whether the builder himself modified the flat and gave it to him or he had got it modified after obtaining possession the flat from the builder. Shri Abhiram Bhattacharjee is staying in building No. 23 on the 14th floor. There is no evidence available with the AO or the Addl CIT about building No.23 and therefore the claim of 80IB (l0) cannot be withdrawn for that building.* In view of the above, there is no case for denying deduction of claim u/ s 80IB (10) in the case of Building no 23 at all. Further, statement of Shri Abhiram Bhattacharjee was recorded after 4 years of the purchase of the said flat. This statement was also withdrawn vide letter dated December 23, 2011. Apart from the statement of Shri Abhiram Bhattacharjee, there is nothing on record which shows that 2/3 flats were sold as a single unit. However on the basis of spot verification by the Inspector for b....