TaxTMI 
TaxTMI 
2017 (3) TMI 1615
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.... 2004-05. 3. Brief facts of the case are that in the relevant assessment year, the assessee carried on the business of real estate, development of mini townships, promotion, development and construction of houses, flats, villas and commercial complexes. It had filed its return of income declaring total income of Rs. 1,58,08,470/- on 01.11.2004. The assessment was completed at a total income of Rs. 5,27,28,907/- after making following additions :- (a) Addition on account of Notional ALV of unsold flats/spaces - Rs. 1,56,35,782/-. (b) Denial of deduction u/s 80IB(10) - Rs. 2,12,84,740/-. 4. Ld. CIT(A) partly allowed assessee's appeal. Being aggrieved, the assessee is in appeal before us and has taken following grounds of appeal :- "1. That on the facts and circumstances of the case and in law, the Commissioner of Income-tax erred in similarly dismissing the ground taken by the appellant challenging the action of the Assessing Officer in not considering the revised computation of income filed by the appellant vide letter dated 21st December, 2006. 2. That on the facts and circumstances of the case and in law, the CIT(A) erred in not directing ....
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....nt and construction of housing project prior to 1st October, 1998 without appreciating that the appellant had merely commenced construction of a preparatory nature on experimental scale prior to that date, which could not have been the basis for denying deduction u/s 80IB(10) of the Act. 11. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the findings of the Assessing Officer that residential units constructed by the appellant exceeded the prescribed maximum built-up area of 1000 sq.ft. that too, by relying upon certain amendments made by Finance Act, 2004 with prospective effect from 1/4/2005 which were not applicable to the year under consideration. 12. That on the facts and circumstances of the case and in law, the CIT(A) erred in holding that in order to claim deduction u/s 80IB(10) of the Act, the entire housing project should have been completed before the prescribed date. 13. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the charging of interest u/s 234B of the Act. 14. The appellant craves leave to add to, alter, amend, or vary the above grounds of appea....
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....see and the operators i.e. M/s RHW Hotel Management Services Ltd., agreed on a formula for two types of fee. The amount in question for A.Y. 2001-02 & 2002-03 was on account of providing of technical know-how and expert knowledge prior to the commencement. By own admission of assessee it was not engaged into hospitality business and diversified from business of construction of buildings. In these circumstances, we see no infirmity in the order of CIT(A), holding that the restaurant business was a new business and expenditure was for setting up the same and the expenses were not allowable as business in nature. We uphold CIT(A)'s order. Assessee's ground no.1 for A.Y. 2002-03 and additional ground in respect of assessment years 2001-02 & 2002-03 are dismissed." 9. Ld. CIT(A)'s order is placed at pages 44 to 59 of Paper Book-II and at page 52 after upholding the assessment order, ld. CIT(A) directed the Assessing Officer to allow depreciation as per Rules. Therefore, in view of aforementioned discussion, the Assessing Officer is directed to allow depreciation as allowed in the past. In the result, ground nos.2 and 3 are allowed for statistical purposes. 10. Apropos ground nos.6....
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.... 8018(10) that the residential unit has a maximum built up area of 1000 sq. feet within the cities of Delhi and Mumbai or within twenty five kilometers from the municipal limits of these cities, the assessee filed sanctioned plan only in respect of housing project at Ghaziabad. A perusal of said sanction plan of housing project at Ghaziabad revealed that the size of the plot is 200 sq. meter (approx. 2000 sq. feet) and permissible ground floor coverage is 134 sq. meter (approx. 1340 sq. feet) This fact itself indicates that maximum built up area of residential unit permissible as per the building by-laws was beyond 1000 sq. feet. In the housing project, Golf Link-II, on enquiry, it was found that type C & E residential units were with built up area of 1177 and 1133 sq. feet respectively. Enquiry further revealed that the arial distance of all the three projects are within 25 kilometers. Spcl. enquiry of Avantika Akriti housing project at Ghaziabad revealed that most of the residential units were with built up area exceeding 1000 sq. feet and some of them were with two storeyed construction. The assessee's claim that built up area of residential units are less than 1000 sq. feet....
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....87.10 acres 16th January, 1999 11. The fact and information as regards the third condition i.e., the built up area of each residential unit forming part of the eligible housing projects, the calculation of built-up area, on the basis of which price as charged from customers, as reflected in the drawings as certified by the Architect, were submitted before the assessing officer. The assessee had computed size of each residential flat by taking 50% of the size of verandah and 25% of platform being appurtenant to the flat. By making the computation as above, the size of each flat worked out to less than 1,000 sq ft. This calculation was made on the basis of agreement entered with customers as also certified by the architect. The assessing officer in the assessment proceedings accepted the calculation of built up area so made by the assessee in the absence of statutory definition of the same. The completion certificates of the residential houses provided by the relevant authority also approved the constructed area of each house. The local authorities as per the municipal bye laws did not consider the size of the verandah/platform or any projection to the....
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.... the assessee can be allowed with respect to the units which did not exceed the statutory limit of 1000 sq.ft. and the assessee would not be entitled to reductions of the built up area in 5 houses in East End Loni and 6 houses in Aavantika Aakriti, as referred to in paragraph 10 of the order aforesaid. We order accordingly. 18. The completion certificates issued by the relevant approving authorities certifying the area constructed by the assessee were also submitted before the assessing officer. Therefore the next condition of completion of housing projects before March 31, 2001, (as extended to March 31, 2003 by the Finance Act, 2000 and thereafter removed), was also complied with. In fact a query to the aforesaid effect was specifically raised by the assessing officer, and replied by the assessee vide letter dated 15 March 2003 during the course of assessment proceedings for the assessment year 2000-01 stating that the completion certification of the houses that were completed after the earlier time limit of 31.3.01, but before the completion of assessment for the relevant assessment year were produced and it was highlighted that the proposed amendment in section 80-IB(1....
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.... rejected and time and again modifications in plans were proposed by the authority. The approval of building plan was after 1.10.98 except for 26 houses in Avantika Aakriti project. .......... 21. In view of the aforesaid two decisions, we are of the opinion that deduction under section 80-IB(10) has been rightly allowed on housing projects because the building plans of the residential units were approved after 1.10.98 only and the construction has to be deemed to have been commenced on or after the date of approval itself. ........... 23. We hold therefore that CIT is not right in holding that AO failed to make enquiries or to apply his mind and allowed deduction under section 80IB(10) of the Act. We therefore vacate his order and restore that of the AO. It is, however, except for the construction found to be in excess built up area over 1000 Sq. ft. as aforesaid and in respect of which the assessee would not entitled to deduction. 15. Thus, the claim had been denied in respect of units mentioned in para 11 of the above Tribunal's order. Ld. counsel further pointed out that this decision has been approved by Hon'ble Delhi High Court wherein it has bee....
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....t and construction, in the absence of any statutory prescription, has to be decided in a pragmatic and reasonable way. It would have been an entirely different issue had there been a statutory prescription of what would be the date of commencement of construction or development. It is certainly a debatable issue on which more than one plausible view is reasonably possible and merely because the Assessing Officer has taken one plausible view, it cannot be said that the assessment is erroneous or prejudicial to the interest of the Revenue. This position stands well settled by the judgments of the Supreme Court cited supra. The Tribunal applied the tests laid down in these judgments to the case. 16. Ld. counsel further referred to the decision of Hon'ble Delhi High Court in assessee's own case in ITA Nos.210, 214, 215 & 250/2012, order dated 19.07.2013 in regard to regular assessments for assessment years 2000-01 and 2001-02, wherein, the Hon'ble Delhi High Court held in para 3 as under :- "3. In view of above observations which also indicates that this Court was satisfied that approval of the building plans were issued after 1.10.1998 except in respect of 26 houses in Ava....
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....o reductions of the built up area in 5 houses in East End Loni and 6 houses in Avantika Aakriti, as referred to in paragraph 10 of the order aforesaid. We order accordingly. .... 21. In view of the aforesaid two decisions, we are of the opinion that deduction under section 80-IB(10) has been rightly allowed on housing projects because the building plants of the residential units were approved after 1.10.98 only and the construction has to be deemed to have been commenced on or after the date of approval itself. 22. It should not be lost sight that these are the revision proceedings and in such proceedings the allowance of deduction under section 80IB(10) to the assessee could not be revised as the issue in any case, was debatable and one of the possible views was taken by the assessing officer while granting deduction to the assessee. It was also allowed by the CIT(Appeals) in the succeeding assessment years viz. 2002-03 and 2003-04. The revision of impugned assessment orders as sought to be made by the CIT, while exercising jurisdiction under section 263, would in such a case be merely a difference of opinion and hence not amenable to the revision jurisdict....
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....red to as assessment year 2003-04" 21. Ld. counsel referred to page 152A, wherein, the approval for erection of residential building-8, Golf Link-I, Greater Noida is contained. He further referred to page 153, wherein, the profitability regarding Green Glade-I as on 31.03.2004 has been computed. Ld. counsel further referred to page 156 of Paper Book, wherein, the Form No.10CCB in regard to Green Glade-II (Golf Link-II) Housing Project is contained, wherein, the date of commencement of operation by undertaking has been indicated :- "Development of the township project of which the said housing project is part commenced in the financial year 1996-97. Construction of houses commenced in the financial year 2001-02 and the initial assessment year from when claim was mentioned in assessment year 2003-04" 22. From the above orders, ld. counsel submitted that all these projects have been considered viz. East End Loni, Avantika Aakriti, Golf Link-I, Golf Link- II, Green Glade-I and Green Glade-II. Ld. counsel pointed out that as far as Green Glade-I and Green Glade-II projects are concerned they are second phase of construction of housing project in Golf Link-I and Golf Link-....
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.... ITA Nos. 809/Mum/ 2011 & 3644/Mum/2012 (Mum. Trib.) * Raj Reality v. DCIT: 152 ITD 716 (Indore Trib.) * ITO v. Kura Homes P. Ltd.: 151 ITD 31 (Hyd. Trib.) * DCIT v. Mangalam Estates: 148 ITD 446 (Chennai Trib.) * ACIT v. Sterling Estates & Properties: ITA No. 316, 336/ Mds/2013 (Mad. Trib.) 23. He, therefore, submitted that conditions of filing the completion certificate of all the projects is not relevant for the purpose of claiming deduction u/s 80IB(10) of the Act for the projects under consideration. Ld. counsel further submitted that analogy can be drawn from the following cases rendered in the context of insertion of definition of built-up area or statutory limit on commercial area by the same Act w.e.f. 01.04.2005, wherein, it has been held that, the aforesaid amendment being prospective in nature, will not apply, while computing the deduction on project approved prior to the aforesaid date, notwithstanding the assessment year involving the claim of deduction as under :- * Brahma Associates v. JCIT 333 ITR 289 (Bom.) * CIT v. Jogani Constructions: 217 Taxman 95 (Bom. HC) * CIT v. Shreenathji Constructions: 22....
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.... 6.12.2010, ITAT Indore Bench, BCAJ p. 24, Vol. 42-B, Part 5, February 2011. (Trib.) * RNS Infrastructure Ltd. v. Dy. CIT: [2012] 54 SOT 94 (Bangalore -Trib.) * Siddhivinayak Kohinoor Venture [TS-590-ITAT-2013(PUN)]/159 TTJ 390 25. Ld. DR relied on the order of ld. CIT(A). 26. We have considered the submissions of both the parties and have perused the record of the case. Section 80IB(10) prior to its substitution by the Finance (No.2), 2004 w.e.f. 01.04.2005 as amended by the Finance Act, 2000 w.e.f. 01.04.2001 and Finance Act, 2003 w.e.f. 01.04.2002 read as under :- "(10) The amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if,-" 27. As per Explanation to section 80IB(10), 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 legal authority. The first objection raised by the Assessing Officer wa....
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....sessing Officer is directed to verify this aspect and allow the claim in accordance with law. In the result, this ground is partly allowed for statistical purpose. 29. In the result, the appeal of the assessee is partly allowed for statistical purposes. ITA No.1254/Del/2009 (A.Y. 2005-06) : 30. This is an appeal filed by the Revenue against the order dated 23.01.2009 passed by the Commissioner of Income Tax (Appeals)-1, New Delhi, u/s 143(3) of the Act relating to assessment year 2005-06. 31. The assessee had filed return of income declaring total income of Rs. 5,35,53,249/-. The business activities of the assessee company during the year continued to be the same as in earlier years i.e. real estate, development of mini townships, promotion, development and construction of houses, flats, villas and commercial complexes, etc.. The Assessing Officer noticed that assessee was the owner and was having possession of various commercial and residential flats and spaces etc. which were lying in its stock in trade as on 31st March, 2003. He noted that the assessee had not disclosed any income from house property in respect of these properties. The assessee in its reply submitted....
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.... tax in the case of one holding house property is premised not on whether the assessee carries on business, as landlord, but on the ownership. The incidence of charge is because of the fact of ownership. Undoubtedly, the decision in Vikram Cotton indicates that in every case, the Court has to discern the intention of the assessee; in this case the intention of the assesse was to hold the properties till they were sold. The capacity of being an owner was not diminished one whit, because the assessee carried on business of developing, building and selling flats in housing estates. The argument that income tax is levied not on the actual receipt (which never arose in this case) but on a notional basis, i.e. ALV and that it is therefore not sanctioned by law, in the opinion of the Court is meritless. ALV is a method to arrive at a figure on the basis of which the impost is to be effectuated. The existence of an artificial method itself would not mean that levy is impermissible. Parliament has resorted to several other presumptive methods, for the purpose of calculation of income and collection of tax. Furthermore, application of ALV to determine the tax is regardless of whether actual ....
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....2016, passed in the assessee's own case for assessment year 1994-95, reported at 389 ITR 373, has summarily rejected the aforesaid reliance placed by the assessee on the decision of the Hon'ble Supreme Court in the case of Chennai Properties (supra), on the ground that the main object of the assessee, in the present case, was not letting out of properties, as laid down by the Apex Court in Chennai Properties where the main object of assessee was holding the properties and earning income by letting out properties. Ld. counsel pointed out that the Hon'ble Supreme Court has admitted the SLP filed by the assessee against the decision of Hon'ble High Court dated 19.09.2016. In the alternative, ld. counsel submitted that section 23 and 24 of the Act relating to computation of annual letting value of residential property were amended by the Finance Act, 2001 w.e.f. 01.04.2002 i.e. assessment year 2002-03. He pointed out that the amended provisions were applicable to the year under consideration and were not subject matter before the Hon'ble High Court in the aforesaid decision of the assessee for the preceding years. He submitted that in terms of the amended provisions of section 23(1)(c)....
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....the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable : Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him. Explanation.-For the purposes of clause (b) or clause (c) of this sub-section, the amount of actual rent received or receivable by the owner shall not include, subject to such rules27 as may be made in this behalf, the amount of rent which the owner cannot realize." 37. A bare reading of this clause makes it clear that this provision is applicable in respect of let out/ letiable property. However, in the present case, admittedly, the assessee was holding various commercial and residential flats and spaces for being sold to the prospective buyers. The assessee in its reply, inter-alia, clearly stated that spaces/flats formed part of stock-in-trade of the assessee company as....
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....that too, by relying upon certain amendments made by the Finance Act, 2004 with prospective effect from 1/4/2005 which were not applicable to the project under consideration. 4. That on the facts and circumstances of the case and in law, The CIT (A) erred in upholding the charging of interest u/s 234B of the Act. 5. The appellant craves leave to add to, alter, amend, or vary the above grounds of appeal at or before the time of hearing." 42. The impugned issue has been considered by us while deciding the assessee's appeal for assessment year 2004-05 vide ITA No.3193/Del/2008 while disposing of grounds no.8 to 12 of the said assessment year. The decision for assessment year 2004-05 shall apply mutatis-mutandis in this assessment year also. Accordingly, the appeal of the assessee is partly allowed for statistical purposes. ITA No.1576/Del/2010 (A.Y. 2006-07) : 43. This is an appeal filed by the Revenue against the order dated 08.01.2010 passed by the Commissioner of Income Tax (Appeals)-1, New Delhi, u/s 143(3) of the Act relating to assessment year 2006-07. 44. The Revenue has raised following grounds of appeal :- "1. The order of the Ld. CIT(Ap....