AI OCR 
TaxTMI 
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2017 (4) TMI 913
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.....w.s 153A on non-existing entity, is void-ab-initio and hence same is liable to be quashed under the provisions of Income Tax Act 1961. 2. On the facts and circumstances of the appellant case and under Law, the CIT(A) as well as Ld. AO erred in solely placing the reliance of the valuation report issued by the Ld. DVO, the appointment of which itself was bad in law as ld.DVO was not the member of the Search Party. 3. On the facts and circumstances of the appellant case and under the Law, Ld. CIT (A) erred in denying the claim of deduction u/s 801B(10) of Rs. 179,28,44,008/ - by including the following areas as a part of Built up are prescribed u/s 80IB(14)(a) of the Act: a) "Flower Bed area" which are "Open to Sky" and not at "Floor Level"; b) "50% of Common Wall area even though the "Common area" is specifically excluded from the said definition. 4. On the facts and circumstances of the appellant case and under the Law, Ld. CIT (A) as well as Ld. AO erred in not appreciating the understated material facts: a) The local authority is the appropriate Government Authority for development of housing project and area a roved by the local Authority Certificate issued by Municipal....
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.... u/s 133A were carried out on 2.2.2012 on Nahar Group of cases and its associate concerns. The search was concluded on 28.3.2012 being the last date on which authorization was executed. The assessee and its entire group of concerns were engaged in the business of development of commercial and residential projects. A search warrant was issued in the name of erstwhile firm "M/s Nahar Enterprises" a non existent entity and so was the search whereas as a matter of fact the business of M/S Nahar Enterprises was taken over by "M/s Nahar Builders Ltd" upon dissolution on the date of search and was non-existent. The assessee firm was dissolved on 20.11.2011 and not in existence when the warrant was served on 2.2.2012. Thus, the warrant was issued in the name of assessee firm which was dissolved with effect from 20.11.2011 even though the department was informed to this fact of dissolution of assessee firm by a letter dated 1.12.2011. Whereas in Punchanama No. 9303, dated 27.3.2012 and in the Punchanana dated 28.3.2012 the name was mentioned as "Nahar Enterprises" (now known as "M/s Nahar Builders Ltd). The assessee contended before the AO that since the search warrant was issued in the nam....
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....f M/s.Nahar Enterprises only and the name of M/s. Nahar Builders Ltd. has not been' mentioned. But that may be because of some oversight. 14. From the assessment order, therefore, it appears that warrant of authorization for search was apparently issued in the name of M/s. Nahar Enterprises (now known as M/ s. Nahar Builders Ltd.) and the correct address of the office premises as also the project site were mentioned therein. On conclusion of the search proceedings, the Panchnama has been drawn in the name of M/s. Nahar Enterprises (now known as M/s. Nahar Builders Ltd.) and the entire proceedings were carried out in the presence of two independent Panchas, who have signed and verified the Panchnamas. Further, the Panchnamas have also been signed and verified by Shri Sukhraj Nahar, the main person of the group. Accordingly, the objections raised by the learned AR about the validity of the search proceedings are misplaced and untenable and the same are therefore rejected. Accordingly, the proceedings initiated u] s.153A of the Act and assessment completed u/s 143(3) read with section 153A are held valid. I further hold that the ratio of the judgment of Hon'ble Punjab & Harya....
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....AFN1599D which was disallowed on 20.11.2011 meaning thereby that the assessment proceedings were initiated against the non-existing person and ultimately the assessment order was passed on the very same entity which is not in existence and therefore the assessments made on such entity u/s 143(3) r.w.s.153A were bad in law and prayed that the same should be quashed as being invalid and void-abinitio. 10. The ld. DR , on the other hand, strongly opposed the arguments of the ld. AR and submitted that there is only one Punchanama bearing No.9303 dated 27.3.2012 which was executed in the name of several parties out of which one name appearing was "NAHAR ENTERPRISES" whereas other Punchanama bearing No.9302 dated 28.3.2012 was issued in the name of M/s Nahar Enterprises (now known as M/s Nahar Builders Ltd) and thus correctly issued. The ld. DR argued that Punchanama was drawn in the name of M/s Nahar Enterprises (now known as M/s Nahar Builders Ltd) and thus cannot be said to be it was issued invalidly. The ld. DR also argued that since both the entities were at the same premises, the Punchanama was drawn in the name of both entities and hence cannot be held to be invalid. The ld. DR f....
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....n-est. It is an admitted fact and also apparent from the AO in the assessment order that the search warrant was issued in the name of the erstwhile firm i.e.Nahar Enterprises and the same is evident from the Punchanama itself. The AO observed that while drawing up the Punchanama some clerical mistake or by one sight the full name was not mentioned but just it was mentioned as Nahar Enterprises. It is the observation of the AO that it is a procedural mistake and no way affects the legality of the search as the warrant is correctly issued according to law. The relevant observations are as under : " The above allegation is absolutely unfounded, baseless and arbitrary and it seems has been made with a motive to divert attention from the main issue and/ or to dilute the sanctity of search action conducted u/s 132(1) of the Income Tax Act, 1961. In support of your allegation you have taken support of the copy of Panchnama enclosed by you. A per this in Col A it is written as- Warrant in the case of Nahar Enterprises. This Panchnama relates to warrant no.9303 and was drawn at Nahar Amrit Shakti (sales office), Chandivali Farm Road, Near Chandivali Studio, Andheri(E), Mumbai-72. While e....
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.... evidence and information in the hands of the department. The revenue is expected to exercise utmost precaution while exercising these powers as search action is normally conducted after detailed enquiry and investigation by investigating authority after analyzing the background of group companies, partners, and directors, their PAN, residential status, address etc. We are therefore not in agreement with the conclusion of the authorities below that mistake is simply a clerical and procedural mistake of either side in mentioning the full name of the existing entity. Moreover, the appellant has duly informed the department vide its letter dated 1.12.2011 which was acknowledged by the office of the Dy.CIT on 1.12.2011 with reference to the dissolution of the firm. For the sake of convenience, we reproduce the letter dated 30.11.2011 intimating the AO about the dissolution as under : "Udani Mehta and Co, Chartered Accountants Tushar D Udani B.Com(Hon)LLB(Gen),FCA, Ref :No:------------------- Date November 30th, 2011 ACIT/NE/2011-12 To, The Asstt.CIT, Circle 16(2), Mumbai. Re : M/s Nahar Enterprises, PAN AAAFN1599D, Intimation of dissolution of firm. With reference t....
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....nd in the circumstances of the case, the Tribunal erred in law in holding that the action of the AO in framing assessment in the name of 'Spice Corp. Ltd.', after the said entity stood dissolved consequent upon its amalgamation with MCorp (P) Ltd. w.e.f 1st July, 2003, was a mere procedural defect ? (ii) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that in view of the provisions of s. 292B of the Act, the assessment, having in substance and effect, been framed on the amalgamated company which could not be regarded as null and void ?" 4. The rationale given by the Tribunal, giving it to be a mere procedural defect is summed up as under : (i) Spice Corporation Ltd. (the amalgamating company) was an income-tax assessee in the status of a company incorporated under the provisions of Companies Act, 1956. (ii) The amalgamating company was in existence during the relevant asst. yrs. 2002-03 and 200304. (iii) The returns of income for these assessment years were filed on 30th Nov., 2002 and on 30th Oct., 2003 respectively by M/s Spice. (iv) The scheme of amalgamating was sanctioned much subsequently on 11th Feb., 2004 by t....
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....ssessment against the item 'name of the assessee' is not fatal to the validity of assessment but is a procedural defect covered by s. 292B of the Act. We hold accordingly." 7. The aforesaid line of reasoning adopted by the Tribunal is clearly blemished with legal loopholes and is contrary to law. No doubt, M/s Spice was an assessee and as an incorporated company and was in existence when it filed the returns in respect of two assessment years in question, however, before the case could be selected for scrutiny and assessment proceedings could be initiated, M/s Spice got amalgamated with MCorp (P) Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was duly sanctioned vide orders dt. 11th Feb., 2004. With this amalgamation made effective from 1st July, 2003, M/s Spice ceased to exist. That is the plain and simple effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as simultaneous with the sanctioning of the scheme, M/s Spice was also stood dissolved by specific order of this Court. With the dissolution of this company, its name was struck off from the rolls of companies maintained b....
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....undertakings to an existing company. Strictly amalgamation does not cover the mere acquisition by a company of the share capital of other company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See Halsburys Laws of England 4th Edition Vol. 7 para 1539. Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity." 9. The Court referred to its earlier judgment in General Radio & Appliances Co. Ltd. vs. M.A. Khader (1986) 60 Comp Cas 1013 (SC). In view of the aforesaid clinching position in law, it is difficult to digest the circuitous route adopted by the Tribunal holding that the assessment was in fact in the name of amalgamated company and there was only a procedural defect. 10. Sec. 481 of the Companies Act provides for dissolution of the company. The Company Judge in the High Court can order dissolution of a company on the g....
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....e above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the provisions of the Act. To put it differently, s. 292B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other words, if the notice, summons or other proceeding taken by an authority suffers from an inherent lacuna affecting his/its jurisdiction, the same cannot be cured by having resort to s. 292B." 17. In the case of CIT V/s Intel Technology India (P.) Ltd. [2016] 380 ITR 272 (Karnataka), the Hon'ble High Court of Karnataka held as under : "5. The tribunal had rejected the claim of the department on the ground that the as....
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....ment Ltd. (supra), these appeals are dismissed and we decide the substantial questions of law in favour of the assessee and against the revenue." 18. In the case of CIT V/s Micron Steels (P.) Ltd. [2015] 372 ITR 386 (Delhi), the Hon'ble High Court of Delhi has held as under : "The Revenue in these appeals claims to be aggrieved by the order of the Income-tax Appellate Tribunal ("the ITAT"), dated February 19, 2013. The Income-tax Appellate Tribunal had affirmed the order of the Commissioner of Income-tax (Appeals) who had set aside the block assessment of M/s. Micron Steels Pvt. Ltd. (the original assessee which subsequently amalgamated with M/s. Lakhanpal Infrastructure Pvt. Ltd. with effect from February 1, 2008, by virtue of an order dated February 19, 2010). The assessment years in question are 2003-04 to 2008-09. 2. The grounds on which the Commissioner of Income-tax (Appeals) and later the Income-tax Appellate Tribunal set aside the assessment was that the assessee had amalgamated with M/s. Lakhanpal Infrastructure Pvt. Ltd. and neither was it assessed in the relative periods and that the amalgamation of the original assessee corporate had rendered the assessment framed ag....
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.... Income-tax (Appeals) that a company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets life with incorporation and it dies with the dissolution as per the provisions of the Companies Act. On amalgamation, the company ceases to exist in the eye of the law. Thus, assessment upon a dissolved company is impermissible as there is no provision in the Income-tax Act to make an assessment thereupon. The learned Commissioner of Income-tax (Appeals), in our view, has, therefore, rightly held that the assessment on a company which has been dissolved by amalgamation under sections 391 and 394 of the Companies Act, 1956, is invalid. Admittedly, the assessee-company in the present case stood dissolved on September 19, 2010, on amalgamation with M/s. Lakhanpal Infrastructure Pvt. Ltd. and the assessment order in the present case was framed on December 31, 2010. Hence, we uphold the order of the learned Commissioner of Income-tax (Appeals). 9. In view of the above finding on the maintainability of the assessment order itself, which has been held to be a nullity, the issue raised in the other grounds of appeals preferred by the Revenue and cross-objecti....
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.... Ltd (2015) 231 Taxman 809 (Delhi), the Hon'ble Delhi High Court has held as under: "10. In the present case, no doubt there was participation during the course of assessment; however, the AO, despite being told that the original company was no longer in existence, did not take remedial measures and did not transpose the transferee as the company which had to be assessed. Instead, he resorted to a peculiar procedure of describing the original assessee as the one in existence; the order also mentioned the transferee's name below that of M/s Micra India Pvt. Ltd. Now, that did not lead to the assessment being completed in the name of the transferee company. According to the AO, M/s Micra India Pvt. Ltd. was still in existence. Clearly, this was a case where the assessment was contrary to law, as having being completed against a non-existent company. The ITAT's decision is, in the circumstances, justified and warranted. 11. For the above reasons it is held that these appeals do not involve any substantial question of law and of liability. The appeals are accordingly dismissed." Therefore, following the above decisions, we hold that the assessment made u/s 143(3) r.w.s.153A ....
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.... therefore he denied the assessee the benefit of deduction 80IB(10) of the Act on various flats. 24. However, the ld. CIT(A) sustained the action of the AO in including sunken area (flower bed) and 50% of common wall area for the purpose of computing eligible area of 1000 sq. ft of built up area for the purpose of computing deduction u/s 80IB(10) of the Act. 25. The assessee before us filed detailed written submissions and argued extensively and submitted that the flower bed area should not be included in the definition of built up area as the flower bed area is below the floor level open to sky and outside the scope of definition of built up area. It was submitted that the flower bed area is open to sky and area open to sky including terrace shall not be included in the built up area. The ld. Counsel also contended that when the survey was carried out on 2.2.2012 the allowability for claiming deduction u/s 80IB(10) was duly verified by the survey party. They have visited project site. They have conducted exercise during the course of survey with regard to measurement of flats by the CPWD, Departmental Valuation Officers. They have satisfied with the construction area of each fla....
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....loor level. Second Word ", including the projections and balconies, " The word start from "," and end with "," and rest of the word are in continuity and independently. Thus, the second word is attached with first word. Means i.e. area inside & outside but at floor level. Because when inner area is considered only when at floor level. therefore, the outer area will also be consider at floor level. The whole weight age is given in section is to word "at the floor level". After calculation of area as per first and second word, the area was further extended by third word independently which is as under: Third word "as increased by the thickness of the walls" As without wall residential unit will be open and under open area person cannot live. Therefore the WALL area will also be included. It is important to point that WALLS are always at floor level and without WALL unit cannot be completed. After calculating inner, outer and wall at floor level, habitable area is arrived. In housing project, common area are also shared by the unit holder. But common area is not habitable independently and are shared with other residential units. Therefore, legislature specifically excluded the ....
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.... look merely at what is clearly said There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used" 19. Further, His Lordship the Hori'ble Bhagwati J. of the Supreme Court of India, in his judgment in the case of A. V. Femandez v. State of Kerala [AIR 1957 SC 657] stated the aforesaid principle as follows: "In construing fiscal statues and in determining the liability of a subject to tax one must have regard to the strict letter of the law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed If on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter" 20. The Hon'ble Supreme Court in the case of Mathuram Agarwal v. State of Madhya Pradesh [AIR 2000 SC 109J quoted with approval the judgment in the case of IRC V. Duke of Westminster (1936)AC 1 pp 19 and 2....
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....ords or to say anything in vain and a construction which attributes redundancy to the Legislature will not be accepted except for compelling reasons. This principle has been applied by the Hon'ble Supreme Court in case Aswini Kumar Ghose Arabinda Bose [AIR 1952 SC 369J wherein it was held that: "it is not a sound principle of construction to brush aside words in a statute as being inapposite surplusage. if they' can have appropriate application in circumstances conceivably within the contemplation of the statute" 27. The aforesaid judgment was cited with approval by the Hon 'ble Supreme Court in the case of State of Orissa & Ors. v. Joginder Patjoshi & Anr. [AIR 2004 SC 1039J. In view of the aforesaid. in the present case, as the projections and balconies are at a level lower than the floor level of the residential unit. in our opinion, the same cannot be included while calculating the built up area of the unit for the purposes of Section 80-IB(lO) Act as such inclusion would render the phrase 'at the floor level' used in the definition of 'built up area' in Section 80-IB(14)(a) of the Act, redundant" * Scope of Built up area as defined under the Dev....
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....ord "includes" cannot exclude the words "at the floor level", which expression finds place in the "means" part of the definition of BUA u/s.80IB [14j(a}. If the ornamental projections are not at the floor level, they cannot be included in the BUA. The AO has erred in not giving weightage to the words "at the floor level" in the "means" .part of the definition. Accordingly on the basis of the above, there is no conflict between definition of BUA in section 80 IB[14[(a} and DC Regulations" * Even department appointed valuer in case of M/s Sonam Builders while calculating the area as per section 80IB (14)(a) excluded the area of flower bed which are below the floor level from the calculation of Built-up area. In support of our contention we rely on following judicial pronouncement:- Poddar Ashish Developers ITA 3408/M/2010 ITAT Facts:- As regards 3 BHK units, AO held that flower bed, drybalcony, window projections should be taken as part of the built up area of the flat, that such total area being in excess of the prescribed limit of 1000 Sq.ft. Finding:- "1O. 7 What all areas are taken into accounts to make up the built up area of a Flat needs to be understood at this stage....
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....rea and projection and balconies and thickness of wall is to be included as per IT Act, 1961. The counsel referring to the sanctioned plans filled before me which was also filed before the AO, submits that the DCR allows a part of the balcony not exceeding 10% of the carpet area of the flat to be on the same floor level and the same could be enclosed with the wall. He submits that the DCR however does not take such balcony area as consumption of FSI available in relation to the plot area. It is free of FSI under the DCR. But, the same being on the floor level as that of the flat, the appellant has included the balcony area in The calculation of the built up area. To the same effect is the certificate issued by the architect, which is on records of the AO. The sheet shown as CHE/ 8711/ BP(WS}AP 11/11 is the relevant plan referred. It gives typical floor plan, floor-wise various accommodation in each flat and carpet area thereof, built up area of all the flats in each floor which tallies with the aggregate area of the flats shown in the agreements of sale, permissible balcony area, actual balcony area which in case of the flat appears to be slightly in excess of what is allowable and....
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....hed to it. The DC Rules have provisions of floor level difference in case of ornamental projections to claim areas of free FSI and accordingly, the definition of Built -up area was amended w.e.f. 01..04.2005 specifying the floor level concept with regards to projections and balconies so that any areas including projections and balconies, if at floor level shall form a part of Built -up area. This proves beyond doubt that intention of legislature was to have harmony with local development laws. Even the section was designed on the basis of DRC Rules. The concept of at floor level and area open to Sky was based on the Section 30 DRC Rules, for ready ref. Sec. 30 were produced below:- Section 30, features permitted in open spaces (DCR 1991) (e) a chajja, cornice, weather shade, sun-breaker and other ornamental projection projecting not more than 1.2 m from the face of the building No chajja, cornice, whether shade, sun-breaker or other ornamental projection, etc shall be permissible, which will reduce the width of he required open space to less than 2.5 m; f) A chajja, cornice, weather shade, and sun-breaker over a balcony or gallery, its projection not exceeding from the balcony o....
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....ions permitted in the sanctioned Building Plans. It is clear from scrutiny of the Plans that Balconies are permitted in level with the Floor of the entire Flat whereas there is definitely a level difference between the floor of the flat and the various elevation features such as Flower Beds, Service Slabs, Ducts, Voids: and various such elevation features incorporated thereat. v] After completion of the Building, the Building Completion Certificate/occupation Certificate is granted by Municipal Corporation and these Plans show the work actually carried out at side. Accordingly it couyld be said beyond doubt that the local authority is the sole authority to govern and decide whether the area is below /above 1000 sq. ft. (vi) Provisions of section 80IB(10) itself empowers local authority on various stages for eligibility to claim deduction u/s 80IB(10). The underlying eligibility of section 80IB(10 is highlighted and is solely dependent on the various provisions and approval of local planning and approving authority i.e. in the case of the assessee, MCGM; i) The housing project has to be approved by the local authority (ii) The housing project has to be completed within the peri....
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....01B(10). The relevant extract from the Ld. A.O. assessment order u/s 143(3) r.w.s 153. is reproduced as under: "17.2.1 The assessee is under firm intention that BMC (Brihmumbai Municipal Corporation (hereinafter it will be referred as the MMC) is the ultimate authority in deciding the area as the Income Tax Act, 1 961. In this regard it is vital and irrefutable to note in view of the following points that the BMC is not the ultimate authority to rely, to decide, to certify and prove that the construction of the each unit! block/flat is less that 1000 sq ft and as per the wording and definition given in the Act itself- a. The BMC just processes, takes into account and uerifes the documents, building plans and other written submission given/ submitted by the assessee. It is just mechanical procedural aspect on the part of the BMC to verify and thereby process the application received by it and consequently issue requisite certificates for building the housing projects. b. The commencement certificate is being issued as a rule only before the actual commencement of the construction activities initiated. c. They have no mechanism to monitor whether construction is being done as....
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....provals and accordingly the MCGM has approved and certified that Buildings are duly constructed as per sanctioned plans and the appellant has been issued the Occupation certificate including water connections etc. Hence it is submitted that no cognizance of the comments of the Ld.AO on MCGM and its working mechanism should be taken into consideration. Reliance is placed on the following: "The Tribunal pointed out that as far as the construction of the building is concerned, the Local Authority, the Chennai Corporation, is the appropriate authority to regulate construction as per the building bye-laws and sanction plans. The Tribunal observed that when it is not disputed that the Corporation is the local authority, the certificate issued by it could not be disregarded. The building was inspected on 23.11.2007 by the Corporation local authorities and was found to be m accordance with the permit conditions. Looking from the angle of the role of the Chennai Corporation as well as Chennai Metropolitan Development Authority, the Tribunal pointed out that the certificate issued on 13.6.200B by the Chennai Metropolitan Development Authority cannot, in any manner, negate the relevance of ....
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....he record and gone through the orders of the authorities below. The CIT(A) after considering the paper book filed by the assessee gave a specific finding that as per the agreement, the carpet area of the three flats 780 sq.ft. only. He further gave a finding that built up area and super built up area worked out separately by the assessee. On perusal of the details of sale of flats with agreement value, the built up area comes to 1092 sq.ft. Thereefore, the assessee fulfilled the conditions of the built up area as required by section 80IB(10) and allowed the claim of the assessee. The learned DR simply supported the order of the AO and nothing was brought on record to contradict the above findings given by the CIT(A). We, therefore) find no infirmity in the order of the CIT(A) and uphold the same, dismissing the ground raised by the revenue. Addl.Comm. of IT, Financial Services ITA No.5498/M/2010 "Built up area" is to be considered as on the day when the assessee had sold, and handed over the possession of the residential unit to the buyer; The assessee humbly submits that the residential flats after having sold, registered and even physical possession been handed over to....
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....mstances, merely because the purchaser has joined the flats and the built-up area of the flat is exceeded more than 1000 Sq. ft., the assessee cannot be denied benefit u/s. 80IB(10) of the Act. More or less an identical issue has been considered by the Mumbai Bench in the case of Haware Constructions (P) Ltd. VS.ITO. ACIT vs M/S SAMARTHA DEVELOPMENT CORPORATION ITA NO. 5477 TO 5482/MUM/201 "In such a situation, it is not possible to draw the inference that the appellant builder built the residential flats of more than 1500 sq.ft. of built-up area and the impugned units were combined by the appellant before handing over possession of flats to the purchasers in violation of the condition in clause (c) of sec.80IB(10). If each residential unit does not exceed the built-up area of 1500 sq.ft. as per approved plan, the fact that they were joined together by the flat holders for better living or for more space or for any other reason does not disentitle the appellant to the claim for deduction u/s 80IB, particularly when these changes in the flats were made after handing over possession of flats to the flat holders. Kasturi Housing Pvt. Ltd. vs. Addl CIT [ITA No. 1231....
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....xmann.com 287 (Mum) The measurement taken by the ;d.DVO were not taken accurately and were rough and approximate. The wall thickness adopted by the Ld. DVO for calculation purpose wee on he higher side as compared to those approved as per the plan sanctioned by the MCGM. The appellant totally disagrees with the measurement undertaken by the Income tax valuer. The measurements of various flats taken by the department's valuer are not taken accurately. From the sketches drawn by the Ld. DVO during the course of search, it can be seen that the measurements and calculations are rough and approximate (Copy enclosed in PB 53-57) Even the calculation of Carpet areas are not taken accurately. Further, the measurements taken by department valuer are not taken exactly to the scale and the calculations are not made in precise manner, rather have been roughly worked out. The appellant measurement sheets submitted and approved at all sages of approvals are made using a scientific and most appropriate method i.e. AutoCAD Software. What is AutoCad Software and its usefulness? Computer-aided design and drafting (CADD) is the process of using a computer with CADD software to design and ....
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....xure A" to this submission. * Common area and area open to sky is not part of the built-up area. Common area defined in section 80IB(10) is clearly stated that a area which is shared with any other unit i.e. shared' with even a single unit is consider as common area. Hence, common area will be excluded from the built-up area calculation. The Above issue is also elaborated by hon'ble HIGH COURT OF KARNATAKA in case of CIT V/s Raghavendra Constructions IT Appeal No. 177 of 2011 and held as under:- "14(a) "built- up area means the inner measurement of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units. " 8. Therefore the intention m clear. In calculating the built-up area it is only the inner measurements of the residential unit on the floor level, which has to be taken into consideration.. If there are any projections and balconies and if it exclusively belongs to the residential units, then, that also has to be taken into consideration for deciding the built-up area. However, if the residential unit is provided the facility....
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....various judicial authority as under:- Finding Judgment We are unable to uphold the stand of the Assessing Officer to include area of terrace as a part of the 'built up in a case where such terrace is a projection attached to the residential unit and there being no room. under such terrace, even if the same is available exclusively for use of the respective unit holders. - a}Naresh Wadhwani ITA No. 18/ PN/2013 To claim deduction under section 80-IB(10), open terrace area cannot form part of built up area . b) Ceebros Hotels (P.) Ltd. v. Dy. CIT TC No.581,1186 of 2008 and 136 of 2009 (Mad HC) c) CIT v/s Mahalakshmi Housing [2014J 41 taxmann. com 146 (Mad HC) d) CIT v/s Sanghvi and Doshi Enterprise TAX CASE (APPEAL) No.581 & 582 OF 2011 and 314 & 315 of 2012 M.P. No.1 of 2011 (Mad HC) Whether definition of built-up-area as provided in Act is inclusive of balcony which is not open terrace - Held, yes - whether since open terrace being -not part of balcony/ verandah lower authorities were not justified in denying deduction to assessee by considering same as part of built-up area - Held, yes e) Amaltas Associates v. ITO [2011] 11 taxmann.com 420 (Ahd.) Area of courty....
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....ld be includible in the definition of built area or not and the co-ordinate Bench held: "10.9 By a combined reading of the provisions of the IT Act and the Development control regulations, it transpires that the area of a unit the floor level used in the IT Act and the exception of area with the level difference of 0.3 Mts under the DCR have a greater significance. They have not been used in the relevant provisions without any meaning or reason. The areas stipulated under the DCR to be with the level difference to the floor lever are chajjas, flower beds, dry balcony etc which are to be provided for proper ventilations, light and protection from weather to the actual useable flat area of the flat. They are not on the same floor level as the useable area for the occupant and therefore under the definition of built up area, these areas are not includable. In the case of Commonwealth Developers V/s ACIT (2014) 44 taxmann.com 303, the Hon'ble Jurisdictional High Court held that "Area of courtyard which is open to sky and appurtenant to residential unit is not to be included to compute built-up area in terms of section 80-IB(10)" 28. Therefore as could be seen from the above, the co-....
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....at as cupboard area is already included in the wall area itself, so separate addition on this account may not be warranted in built-up area. In some cases, when it is projected in other room, it would have already included in the area of other room. Therefore, separate addition in this regard may not be warranted. I, therefore, hold that cupboard area. is not liable to be added separately in the built-up area and wall area will take care of it. d) Service area: Next issue is relating to inclusion of service areas. The service area is in the nature of service pipe duct, which continues from top floor to ground floor and carries service pipes, namely soil pipe, waste water pipe, water mains, etc. During the course of physical inspection of various apartments on 5/6/2014, it was noticed that this area is quite small and carries as many as 12 - 14 pipes - about 4 pipes having 4" diameter, about 3 pipes having 2" diameter, and some pipes having about one inch diameter. No doubt, a slab has been constructed at every floor and a door is provided in the bathroom to enter into the service area, But this area is primarily meant for repair of service pipes and it cannot be used for any other....
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....waste water pipes, water mains, etc. Similar opinion' has been given by the other experts. Accordingly, considering overall facts of the case, I direct the AO to exclude this area from the BUA. e) Window projections: It is gathered that the Valuation Officer, in respect of some of the flats, has added certain area in the nature of window projections. During the course of physical inspection, it was noticed that these window projections are areas in the nature of ornamental projections done with a view to beautify the building. These areas are situated at window-sill level, about three feet above the floor level, and some kind of projections / extension of the building. In my opinion, these projections cannot be used for any purposes, because the area is highly unsafe and anybody can fall from such area. However, it was noticed that some people are using the area to put Air Conditioner, flower pots, etc. Considering the facts of the case, I am of the view that this is essentially an elevational feature and has nothing to do with carpet area of the flat. Therefore, it cannot form part of BUA. It is like a sill of a window, which is slightly extended and in some cases may be use....
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....0 floors in the said housing projects had been completed during impugned year and the completion certificate (OC) had been duly obtained on 30/3/2011 and according to the audited balance sheet as on 31.3.2011, the profits of the said project (10 floors) worked out to be Rs. 61,56,52,158/- and accordingly claimed the deduction u/s 80IB(10).The ld AR took us through the provisions of section 80(IB)(10) and submitted that according to the said provisions the assessee was fully entitled to the deduction u/s 80(IB)(10) which are as under:- Sec.80lB (10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2008 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1 st day of October, 1998 and completes such construction, - (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case ....
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.... be construed as understood in common parlance. The expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In effect, the Explanation in section 80-IB(10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1000 sq.ft. would constitute a 'housing project' under section 80-IB(10) of the Act. 32.3. In present case also appellant completed upto 10th floor which contains several residential units. Therefore, the building upto 10th floor itself is an housing project eligible for claiming deduction u/s 80IB( 10). The appellant further submits that as per Explanation(ii) to Sec 801B(10), it is stated that "the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority." In impugned case, the local authority being BMC had issued the completion certificat....
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....ated that as Occupation certificate of 10 floors is obtained, thus the appellant had even allowed the flat buyers to shift their furniture with a general advice to reside after some time since internal construction work of balance 12 floors was in progress. The retraction cum clarification of the managing partner Mr. Sukhraj B.Nahar provided in his affidavit which is already placed on assessment record vide letter submission dated 29/01/2014 before Ld. AO. 37. The appellant humbly submits that any adverse inference on the basis of the statement of the managing partner may kindly not be drawn as such statement was given under stress, in confused state of mind and under serious confusion that the appellant would not be adversely effected since is not required to pay any tax and that the sales disclosed in audited P&L account would be treated as an advance(since Ld. DDIT(lnv) alleged that the project is not complete and appellant consistently followed the project completion method) and that the appellant would be eligible to claim the deduction u/s 80IB in subsequent years. On the issue that the completion of construction of the housing project, in part, is also entitled for deducti....