TaxTMI 
TaxTMI 
2019 (5) TMI 1120
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....03.2013 5. 3084/Ahd/2015 2011-12 20.08.2015 26.03.2014 6. 3085/Ahd/2015 2012-13 21.08.2015 29.12.2014 2. The assessee has also filed cross objections and cross appeals (in AYs. 2008-09 & 2009-10) in the Revenue's appeals primarily to support the action of the CIT(A). 3. We first take up Revenue's appeal for AY 2008-09 for adjudication as stated to be lead year by the parties present. ITA No. 2122/Ahd/2011 A.Y. 2008-09 (Revenue's appeal) 4. The grounds of appeal raised by the Revenue reads as under:- "1. The Ld. CIT(A) has erred in law and on facts in directing the assessing officer to treat the amount of sale consideration as advance money and give appropriate effect to the same in the A.Y. 2012-13 as per law, without appreciating the fact that sale of land transaction is completed and the amount payable for the same is shown by the purchaser as current liability. 2. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 17,15,66,503/- made by the AO on account of deduction u/s 80IB(10), without appreciating fact that with proper evidences A.O. has established that the assessee does not fulf....
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....spection of the SEZ site as well as the details furnished by the assessee reveals that no development activity has been carried out. The uneven and widely vegetated land is lying vacant and it is not even covered by boundary walls. The SEZ proposal of the assessee company was stated to be approved by the Ministry of Commerce vide letter dated 20th December, 2006 subject to certain conditions as prescribed. For the profits declared by the assessee to be derived for SEZ business, the AO inquired into the eligibility of claim of deduction of Rs. 97.72 Crores claimed under s.80IAB of the Act by issue of show cause notice. In response, the assessee provided a tabulated statement giving details about the various stages of compliance of the general conditions associated to proposed SEZ project as reproduced by the AO in para 5.5 of the assessment order. 5.2 The AO made further inquiries with the Development Commissioner of the SEZ and gathered various information and explanation from the assessee and found that no undertaking as on date has been allowed to set up business in the IT SEZ and concluded that the gains arising on alleged sale of land to AIPL does not emanate from business o....
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....i) the disallowance of claim of deduction under s.80IAB of the Act amounting to Rs. 97,72,11,000/- is not justified at all in the facts of the case and (ii) in the alternative to the first contention, it was also contended before the CIT(A) that the amount received from AIPL in pursuance of lease agreement is merely an 'advance receipt' which cannot be subjected to tax at all as it cannot be treated as 'accrued income' of the assessee in the peculiar factual matrix of the case at all during the relevant assessment year. 6.2 To support the first contention regarding claim of deduction under s.80IAB, the assessee reiterated various submissions made before the AO as noted by the CIT(A) in length and contended that the AO has wrongly appreciated the facts of the case and has wrongly observed that the assessee has not developed SEZ and merely sold notified vacant land without any development as contemplated under s.80IAB of the Act. It was contended that the AO has wrongly treated the concept of development of a SEZ provided in Section 80IAb of the Act as construction activity simplicitor whereas the development of a SEZ includes various stages of execution of the project of SEZ such....
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....e development commissioner, in its Directors; Reports etc. has admitted that no development has been made at the proposed site of SEZ." 4.3.1 The A.O has discussed this issue elaborately in the assessment order, and reached to the logical conclusion that the land in SEZ can be leased out either to the approved undertaking by the Development Commissioner, or to the Co developer of SEZ , if that Codeveloper has been approved by the administrative ministry of the Central Govt. It is an admitted fact that impugned land has been leased out to M/s Abir Investments Pvt Ltd. which is neither an approved undertaking by the Development Commissioner nor it has Co developer status approved by the respective ministry of the Central Govt. The A O further mentioned that even if M/s Abir Investment is granted the status of Co developer by the Central Govt., still the impugned receipt would not be entitled for deduction u/s 801 AB in the hands of the appellant. On the other hand, the Ld. A.R filed voluminous submissions, stating that for leasing out the land in SEZ, the development of SEZ, and construction activities are not mandatory. But nowhere in his entire submission....
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....e accrued to the assessee and crystalized during the year notwithstanding such sale/lease consideration has been treated as revenue receipt in the books of accounts of the assessee. The CIT(A) having taken note of the facts of the case and having regard to the long line of judicial precedents, directed the AO to treat the amount arising from the proposed lease agreement as 'advance receipt' being contingent in nature on account of non-fulfillment of prescribed conditions of the lease agreement qua rules and regulations of SEZ. The CIT(A) accordingly granted relief to the assessee in respect of alternative conditions to advance. 6.4 It will be appropriate to reproduce the deliberations made by the CIT(A) while dealing with the alternative contentions for the sake of proper reference: "4.3.3. Now I take up the alternative ground taken by the appellant on this issue mentioning that the amount paid by M/s Abir Investments (Pvt ) Ltd is in the nature of advance receipt in respect of lease of land in the notified and approved SEZ, since impugned receipts were charged with several obligations at the part of the lessor visa vis lessee. 4.3.4. The reply of Ld. AR echoes....
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....ppellant company for the reason that the said lease agreement is subject to fulfillment of obligations of the appellant company and lessee M/s. Abir Investments Pvt.Ltd., and contingent upon the approval of M/s. Abir Investments Pvt.Ltd., as a co-developer by the Appropriate Authority of Government of India. 6.1. The appellant company invite your honour's attention to the lease agreement entered into between the appellant company and M/s. Abir Investments Pvt.Ltd., which has been compiled at Page No. 672 to 731 of Paper Book No. 111. From the perusal of the said lease agreement, in Para 2 the title given is " conditions precedent and obligations of the Parties " and in Para 2.1 it has been stated that " The obligations of the proposed Lessee to complete the proposed transaction and execute the Lease Deed with the Developer shall be conditional upon fulfillment of the each of the following conditions ( in each case to the satisfaction of the Proposed Lessee) and thereafter in Para (a) to (i) , the conditions to be fulfilled by the Developer (Appellant Company) have been stated. In Para 2.2 of the Lease Agreement, it has been provided that :- "The devel....
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....estments Pvt.Ltd. as it is an understanding between the appellant company and M/s. Abir Investments Pvt. Ltd. to execute formal lease deed on fulfillment of the conditions laid down in the so-called Lease Agreement wherein the obligations of both the parties have been specified. The appellant company invites your honour's attention to Para 2.1 as referred herein above The appellant company has entered into the lease agreement with M/s. Abir Investments Pvt Ltd., simplicitor on a 100 rupees stamp paper as it is not a formal Lease Deed and the same has not been registered with the Registrar. The said land of Notified SEZ Project of the appellant is still standing in the name of appellant company in the Land Revenue Records and as stated above, the so-called lease agreement is not registered with Registrar even the leasehold rights in the Said Land has not been created in favour of M/s. Abir Investments Pvt. Ltd on the Land Revenue Records of the Government and therefore, under no circumstances, it can be treated as sale of land as observed by the Ld. A.O in the assessment order. It is further submitted that Abir Investments Pvt. Ltd has also not given the enjoyment of said land o....
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.... the transaction of lease as a transaction of sale of land and therefore there is a violation of provisions of SEZ. Act and hence income earned out of such activity cannot quality for deduction u/s. 80IAB of the Act. The Appellant most respectfully submits that the objection raised by the Ld. A.O is without any substance both on facts as well as in law in as much as treatment given in the books of accounts is a matter of no consequence when it comes to deciding a particular character of an income under the IT. Act. The Appellant submits that a transaction of lease for the user of land in any case is outside the purview of Accounting Standard - 19 issued by the ICAI of India. The appellant further submits that it is very settled law that accounting entries made in the books of accounts of the assessee is not the decisive factor to determine whether the income is chargeable to tax or whether the expenditure is allowable or not to the assessee. The Hon'ble Supreme Court in number of cases already held that mere book keeping entry cannot be termed as income unless income has actually resulted. The appellant company rely upon the decision of Hon'ble Supreme Court in the....
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....nciples of accountancy, conceal profit or show loss and the entries made by him cannot, therefore, be regarded as conclusive one way or the other. What is necessary to be considered is the true nature of the transaction and whether in fact it has resulted in profit or loss to the assessee". 6.4. On the other hand, the absence of an entry in the books is also not fatal to a claim for deduction. It has been held that in a case where the mercantile system is adopted, for deduction can be made even in the absence of entries in the books. This was a case where no entries were passed in the books of account towards a disputed sales tax liability. However, the Supreme Court held that if under the law, a deduction must be allowed by the Assessing Officer, the assessee will not lose the right of claiming or will not be denied the deduction. The entitlement to a particular deduction or not will depend on the provision of law relating thereto and the existence or absence of entries in the books of account will not be decisive or conclusive in the matter - Kedarnath Jute Mfg. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC). The same principle will apply where no credit entry is made for any i....
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....hat there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. In the case on hand, it was obligatory on the part of the Assessing Officer to apply him mind to the facts disclosed in the return and assess the assessee keeping in mind the law holding the field. From the principle and ratio laid down in the afore stated judgments of the various High Courts, the appellant company has to submit that the advance receipt from Abir Investments Pvt. Ltd. in pursuance of so-called lease agreement in respect of which income was not accrued to the appellant company during the year under consideration even though the same has been considered by the appellant company in the return of income, the same cannot be subjected to tax and the appellate authorities has to find out whether a particular income was assessable or not. Merely because the assessee wrongly included the income in its return of income it cannot be confe....
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....a formal lease deed and the same has not been registered with the Registrar. The said land of Notified SEZ of the appellant is still standing in the name of the appellant in Land Revenue Records, and as such lease hold rights in the impugned land has not been created in favour of M/s AIPL. As per provisions of S.2 (47) of the Act, the so called lease agreement which is unregistered does not amount to lease of land/ sale of land. The AIPL has not been approved as Codeveloper by the Central Govt. till the time of writing this appellate order. As per letter No. F.2/494/2006-EPZ dated 26/11/2010 the Central Govt. has approved the extension to the appellant to develop the SEZ till 19.12.2011. Therefore, it is must for the survived of the lease agreement either to get the approval of Central Govt. as Co developer for AIPL before 19.12.2011 or to terminate the lease agreement and to refund the amount received from AIPL accordingly. 4.3.9 The Ld. A.R also drew my attention towards the Board Resolution passed in the Board Meeting dated 20 June, 2011, . The contains of the Board Resolution are as under :- CERTIFIED TURE COPY OF THE EXTRACT OF MINUTES OF THE MEETING OF BOARD....
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....It was also opined that the income can be booked as income from the development of SEZ and within the meaning of provisions contained u/s 80IAB of the Act, 1961. With the above referred background the matter was discussed at length and it was decided to reverse the income of Rs. 97.72 crores as income from perpetual lease of land situated in SEZ by cancelling the agreements entered with Abir Investment Pvt ltd. This reversal of income and accounting the same as advance for the perpetual lease is to be made by the company before the end of F.Y. 2011-12. The members of the Board held detailed discussion involving various facts of the proposal. After the prolonged discussions, the members of the Board passed the following resolutions Unanimously. RESOLVED THAT four agreements for proposed lease entered into with ABIR Investment Private Limited (AIPL) on 26-06-2007, 26-09-2007, 0811-2007 and 21-03-2008 for leasing various pieces of land situated in the notified area of Special Economic Zone for Information Technology (IT SEZ) Vill: Chharodi and Vill: Tragad, Dist: Ahmedabad be terminated in view of the failure on the part of AIPL to fulfill certain conditions....
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.... only within the sold plots but also to provide the common facilities for the entire park, and then only deliver the possession of the plots sold to the parties". The Hon'ble ITAT Hyd., in the case cited supra has also followed the principles laid down by the Apex Cu7ourt in the case of Calcutta Co. Ltd. Vs. C1T 37 1TR 1. 4.11 Now the next question arises whether simply for the reason that the appellant company has booked the gain in prematurity in its books of account, whether the income can be taxed. It is a settled legal position that such income cannot be taxed, as held by Hon'ble Supreme Court in the case of CIT Vs. Shoorji Vallabhdas and held as under:- "Income tax is a levy on income. Though the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz.. the accrual of the income or its receipt, yet the substance of the matter is the income. It income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a "hypothetical income" which does not materialize. Where income has, in fact, been received and is subsequently given up in such circumstances that-it remains t....
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....inding, I direct the AO to treat this amount as advance receipt being contingent in nature on account of non-fuifillment of prescribed conditions of the lease agreement visa vis rules and regulation of SEZ and accordingly the same cannot be eligible for deduction u/s 80IAB, also." 6.5 The CIT(A) in conclusion held that the AO was fully justified in rejecting the claim of the assessee under s.80IAB of the Act and consequently confirmed the action of the AO toward such disallowance of claim. The CIT(A) however accepted the alternative plea took by the assessee before it and directed the AO to treat the revenue declared from SEZ project as mere advance receipt not susceptible to taxation in the year under consideration on account of non-fulfillment of the major conditions of the lease agreement qua SEZ regulations. The CIT(A) consequently held that notwithstanding revenue income declared by the assessee in its books of accounts such income had not really accrued and crystalized during the year in the light of facts and the judicial precedents available in this regard. The taxable income of the assessee was thus reduced to the extent of revenue income arising from SEZ project as cla....
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....efore, the transaction recorded by the assessee itself in a particular manner does not warrant any exception as claimed. It was thus contended that no reasons exist to deviate from the declared intentions (as revenue income) of the assessee in this regard. The learned CITDR accordingly submitted that the sale consideration (subject to deduction of cost of land and expenses) requires to be taxed as ordinary profits of the assessee during the year as claimed in its annual accounts after rightful denial of deduction under s.80IAB of the Act wrongly claimed by the assessee. As regards re-computation of book profit under s.115JB of the Act, the learned CITDR observed that the assessee itself has considered the advance receipt as part of statement of profit and loss and therefore no adjustments to book profit on account of the advance receipt is plausible as claimed in the cross appeal of the assessee on the issue. The CITDR accordingly relied upon the order of AO. 10. The learned AR for the assessee, on the other hand, reiterated various submissions made before the CIT(A) in great length. The learned AR for the assessee pointed out that it is engaged in the business of developing SEZ....
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....e Act is eligible at the option of the assessee beginning from the year in which SEZ has been notified by the Central Government. Delineating further, the learned AR canvassed that the gross total income of the assessee developer should include profit and gains derived from any business of developing SEZ and such SEZ should have been notified on or after first April, 2005 under SEZ Act, 2005. The learned AR thus strongly harped that beginning from the year in which the SEZ project is notified, the assessee is entitled to deduction under s.80IAB of the Act computing its income for ten consecutive assessment years. In this context, the learned AR submitted that the assessee has obtained formal approval for 10.38 hectares from the Government of India on 20th December, 2006 and formal approval for another 21.11 hectares was received on 22.06.2007 from the Government of India for developing IT/ITES SEZ. The learned AR thus submitted that land in MOU was duly notified as SEZ by the Government of India which is one of the required conditions under s.80IAB of the Act. Adverting to the second limb of contention, the learned AR pointed out that requirement envisaged is that profit and gain s....
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....y been proposed to be leased out to AIPL vide MOU/agreement dated 26th June, 2007. The learned AR contended that as per SEZ Act, 2005 and Rules thereunder, it was permissible for the assessee to lease out the undivided land to the proposed co-developer who intend to create infrastructure facilities in the zone without prior approval of Development Commissioner. The application was made to the Central Government for addition of AIPL as a co-developer of SEZ project. The learned AR thus submitted that in the light of subsection (2) of Section 80IAB of the Act, the assessee is sufficiently entitled for claim of deduction on profit and gains as soon as the SEZ is notified even while the development process has not completed. The learned AR canvassed that the important difference between the language employed under s.80IAB of the Act and other deduction provisions requires to be noted in the light of Section 80IAB(2) of the Act in terms of which the assessee is entitled to claim deduction for specified number of years beginning from year in which an SEZ has been 'notified' by the Central Government. Thus, where the assessee in the instant case has demonstrated that land in question has ....
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....sessee immediately from the beginning of the year in which SEZ has been notified and thus, no strings are attached for claim of deduction. In essence, the learned AR submitted that it is not the requirement of the scheme of the Act that development work should be completed but on the contrary, the benefit of Section 80IAB is dependent upon notification of SEZ alone. 10.7 The learned AR thereafter adverted to another observation of the AO to the effect that in the books of accounts, the assessee has treated the transaction of lease as a transaction of sale of land which sale is without permission of Development Officer SEZ is a violation of provision of SEZ Act and hence, income earned out of such activity cannot be qualified for deduction under s.80IAB of the Act. In rebuttal of the aforesaid objection of the AO, the assessee pointed out that it is well settled law that treatment given in the books of accounts is not decisive for determining a particular character of income. The transaction was intended for lease of land in substance with a view to induct the lessee as co-developer subject to necessary approvals from competent authority. It was further observed that a transactio....
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.... rights of the part of the land of SEZ project stood assigned in favour of AIPL and the execution of formal lease deed was to follow on fulfillment of the substantive conditions laid down in the so called lease agreement wherein the obligation of both parties have been specified. 11.2 It was also pointed out that the impugned lease deed relied upon by the AO for the purposes of chargeability of income are not registered and the terms have been simply put on 100 rupees stamp paper. The said land of the notified SEZ project of the assessee continues to stand in the name of the assessee in the land revenue records. As pointed out to the revenue authorities in the assessment and appellate proceedings, the leasehold rights in the said land has not been created in the name of AIPL on the land revenue records of the Government nor has the full payment been received as agreed upon and therefore, under no circumstances, it could be treated as sale of land as labeled by the AO. It was also pointed out that the possession or enjoyment of the said land has not been parted to AIPL either and therefore, in terms of Section 2(47) of the Act, the so called unregistered lease agreement cannot ca....
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.... the decision of Hon'ble Gujarat High Court in the case of CIT vs. Shivalik Buildwell (P.) Ltd. [2013] 40 taxmann.com 219 (Guj) & Paras Buildtech India (P.) Ltd. Vs. CIT [2016] 382 ITR 630 (Delhi) for the proposition that receipt of advance or booking amount per se could not be treated as trading receipt of the year under consideration where the project never took place and part of advance was returned in the ensuing financial year. It was thus submitted that the amount of advance without its becoming legally due to assessee could not be taxed as accrued income in the hands of the assessee in view of express judicial fiat enunciating the position of law. 11.7 The learned AR for the assessee thus essentially submitted that the MOU executed for proposed lease is contingent on a substantial condition i.e. approval from the GOI for inclusion of the proposed lease as a co-developer for the part of the land of the proposed SEZ project as per SEZ Act, 2005, the assessee is under obligation to return the advance money together with interest in case the substantive condition alongwith other crucial conditions are not made and the MOU do not culminate into formal lease agreement. The lear....
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.... and conditional upon fulfillment of obligations associated to the agreement cannot be taxed as income notwithstanding its incorrect recognition as income in the books. The learned AR adverted to factual aspects to say that the assessee has merely received Rs. 1 Crore during the year only whereas the sale consideration was recognized at staggering amount of Rs. 1,04,23,58,400/-. As a corollary, the assessee has shown outstanding receivable of Rs. 1,03,23,58,400/-. The net income from SEZ project was recognized at Rs. 97,72,11,000/- without the actual receipt of amount and without fulfillment of obligations and conditions of substantial lease has neither accrued nor received by the assessee and therefore cannot be taxed as income. Besides, as contended, the advance received over years in pursuance of the MOU was ultimately returned owing to non-fulfillment of substantive conditions associated to the MOU which further fortifies its claim of receipt being contingent in nature. 12. We have carefully considered the rival submissions on the issue and perused the orders of the authorities below and material placed on record. The Revenue has challenged the conclusion of the CIT(A) for n....
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.... development is fully completed. It is the case of the assessee that the profit and gain should arise from business of developing SEZ which is notified by the Central Government and it is therefore contended on behalf of the assessee that assessee can claim deduction from the year of its beginning of operation and the assessee is entitled to deduction at its option from the first year of notifying of SEZ. The assessee has extensibly relied upon the provisions of the SEZ Act and contended that approval of the Development Commissioner of SEZ need not be taken where the land is simply proposed to be leased out but not sold. It is also contended that the consideration received/receivable on fulfillment of condition of lease agreement is inextricably related to the carrying on of the business of development of SEZ for the purposes of claim of deduction under s.80IAB of the Act and falls within the expression 'any profits and gains derived by the assessee from any business of developing SEZ'. The assessee accordingly has justified its action of claim of deduction under s.80IAB of the Act. The AO however has declined to grant the claim of deduction under s.80IAB of the Act. The CIT(A) als....
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....ke a look at the first principles for taxability of income on the grounds of its accrual and doctrine of real income theory. It is well settled that income tax cannot be levied on hypothetical income unless the statute provides otherwise and only real income actually accrued to an assessee is chargeable to tax in ordinary course. The income accrues when it becomes due and must also be accompanied by a corresponding liability of the other party to pay the amount and only then it can be said for the purposes of taxability that the income is not hypothetical and it has really accrued to the assessee. Useful reference in this regard can be made to the decision of the Supreme Court in Morvi Industries Ltd. vs. CIT(Central) [1971] 82 ITR 835 (SC). As observed by the Hon'ble Supreme Court in Shoorji Vallabhdas (supra), if the income does not result at all, there cannot be a tax even though in book keeping, an entry was made about a hypothetical income which did not materialize. Similar proposition has been recognized in Godhra Electricity Co. Ltd. vs. CIT [1997] 225 ITR 746 (SC), wherein it was observed that the assessee is obliged to pay tax only when the profit became actually due and t....
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....authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. 12.7 When the first principles noted above are applied, we straight away concur with the conclusion drawn by the CIT(A) for non taxability of consideration from the impugned lease agreement in the absence of accrual thereof and in the absence of any liability of the lessee to pay the same to the assessee as successfully demonstrated on behalf of the assessee. An income from the MOU/lease agreement cannot be said to have accrued or arisen or become legally due to assessee till the time the underlying integral conditions of MOU are fulfilled. We also take note of the crucial fact that the advance received from the lessee was ultimately returned to them owing to continued non-fulfillment of terms and the conditions of the proposed lease. This subsequent conduct of overwhelming significance also vindicates the contingent nature in the possibility of accrual of income. Contextually, it may be noted here that Section 209 of the Companies Act was amended w.e.f. 15.06.1988 making it obligatory for all limited companies to maintain ....
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....is possible without land. If the assessee fits into both the roles, then the role of the owner of the land would not come in picture. But it is seen above that the local authority has approved the plans in the name of the owners of land and the final approval ( BU certificate) will also be issued in the name of the same person. (4) Without prejudice to above points, it is also seen that the built up area of the residential units is also beyond the prescribed limit of 1500 Sq. Feet. (5) Without prejudice to above reasons, it has been seen in the discussion regarding individual projects that alongwith built up area the assessee company has also sold open land with the independent residential units. The profit derived from the sale of the same would not qualify for the deduction u/s. 80IB(10). The AO thus claimed that the assessee has not fulfilled the conditions stipulated for claiming deduction under s.80IB(10) of the Act and consequently disallowed the deduction claimed amounting to Rs. 17,55,66,503/-. 13.2 Aggrieved by the denial of relief by the AO, the assessee preferred the appeal before the CIT(A). In the first appeal, the CIT(A) on appraisal of facts a....
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....laiming the deduction on profits of the housing project. The contention of the Revenue authorities that to claim deduction u/s 8016(10), there is condition precedent that the assessee must be owner of the land on which housing project is constructed has no force. There is no such condition as appearing in the provisions of the section. It might be true that the land belongs to the person who has entered into an agreement with the assessee to develop and build housing project but on a perusal of the agreement it is evident that the development and building work has been carried out by the assessee in pursuance to tripartite agreement and it is not by the landowners. Therefore, the mere fact that the landowner and the undertaking developing and building housing project, are two different entities would not make any difference. The deduction would be eligible to the person who is developing and building housing project and not to the mere owner thereof. Having entered into agreements with landowners for development and building the housing project, assessee was obviously a contractor but it does not derogate the assessee for being a developer, as well. The term 'contractor1 is not....
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....nd Gulati (Civil Appeal No. 3302 of 2005) will not assist the Revenue, as the agreement is not sharing of constructed area." 5.3.7. I have carefully gone through the relevant clauses of the development agreements and other documents filed before the Assessing Officer as well as before me. On consideration of the relevant documents, I came to the conclusion that the appellant had acquired the dominance over the land and the land is under the possession of the appellant company. The appellant company was the de-facto landowner for all practical purposes and had developed the housing project by incurring all the expenses and taking all the risks involved therein. The land owners were eligible to get only price of land fixed by the development agreements and not to get any share in the development profits of the project. 5.3.8. The Ld. A.R also filed before me the copy of plans, various sanctions and certificate of Govt. approved Engineer alongwith detail of each unit of the scheme. The certificate clearly indicates that build up area of each unit is below 1500 Sq.Ft. 5.3.9 Looking to the above referred submissions of Ld AR, facts of the case, findings of the....
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.... of the Act. 13.6 We have carefully considered the rival submissions on the issue concerning deduction under s.80IB(10) of the Act. On appraisal of the development agreements, various approvals granted by the Municipal Corporation for the relevant projects, the CIT(A) came to a justifiable conclusion that the assessee has exercised dominant control over the ownership of the land and has carried out construction and development at its own risks and liabilities. The CIT(A) has taken into account the detailed submissions made on behalf of the assessee while adjudicating the issue in favour of the assessee applying the judicial interpretations available in this regard. The objection towards excessive built up area has also been addressed by the CIT(A) based on documentary evidences. Documentary evidences revealed that built up area was within the permissible limit. The Revenue before us could not point out any deficiency in the order of the CIT(A). We also take note of the significant plea on behalf of the assessee that the claim of deduction under s.80IB(10) of the Act was duly allowed by the AO in subsequent year 2010-11 and 2011-12 in the assessment framed under s.143(3) of the A....
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....T(A) in this regard is reproduced hereunder: "6.3 I have gone through the facts of the case, finding of the DCIT and also submission made along with various judicial pronouncements. It is also observed that the appellant has Share capital of Rs. 32.65 Crores and Reserves and Surplus to the tune of Rs,385.17 Crores as against business advances of Rs. 259,00 Crores aggregating to Rs. 417.82 crores. It is also further observed that Rs. 66.28 crores have been outstanding on 01/04/2007 in Ganesh Plantations Ltd. and Rs. 11.79 crores have been advanced to 100% subsidiary company. It is further submitted that advances are given to a subsidiary company and other companies so that the agricultural land can be bought by them and after converting the same to N.A., the same can be sold/transferred to the appellant company. This practice is done for the basic fact that the appellant company cannot buy agricultural land in its own name. Further, the Reliance was placed on the judgement of CIT v/s Reliance Utilities and Power Ltd. 313 ITR 340 (Bombay), Torrent Financiers (73 TTJ 624 (Ahmedabad) wherein it was held that "Tribunal having recorded a clear finding that the assessee ....
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....he issue in proper perspective and reversed the wrongful disallowance made by the AO. We thus see no perceptible reason to interfere with the order of the CIT(A). 15.8 Ground No.3 of the Revenue's appeal is dismissed. 15.9 In the result, appeal of the Revenue in ITA No. 2122/Ahd/2011 for AY 2008-09 is dismissed. ITA No. 2179/Ahd/2011 A.Y. 2008-09 (Assessee's appeal) 16. The grounds of appeal raised by the assessee reads as under:- "I. TAXING THE ADVANCE RECEIPT BEING CONTINGENT IN NATURE UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT - Rs. 97,72,11,000/- 1. The Ld. CIT(A) has erred in law and on facts while holding that the appellant company is liable to tax on advance receipt which is contingent in nature as Book Profit u/s.115JB of the Act. 2. The Ld. CIT(A) has erred in law and on facts while giving contradictory findings in respect of amount received from Abir Investments Pvt. Ltd., while treating the said amount as advance receipt being contingent in nature on account non-fulfillment of prescribed conditions of the lease agreement vis-à-vis rules and regulations of SEZ on one hand and holding that the appellant company is liable ....
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.... in the books was illusory and was ultimately refunded to the proposed lessee in the subsequent year 2014-15 as the approval of the Central Government could not be approved. It is further case of the assessee that where such proposed income from proposed lease is outside the sweep of 'income' in Section 2(24) of the Act and does not enter into computation under normal provisions of the Act, the same cannot be subjected to tax under the said provisions of Section 115JB of the Act in view of saving clause provided in sub-section 5 thereof. A reference was to the decision of the Hon'ble Supreme court in Indo Rama Synthetics (I) Ltd. vs. CIT (2011) 330 ITR 363 (SC) to submit that the object of MAT provision is to bring out the true working result of the companies. It was contended that where the income not accrued or arising to the company at all, the inclusion thereof in the P&L account would not be in accordance with Part II & III of Schedule VI of the Companies Act. Further a reference was made to another decision of the Hon'ble Supreme Court in the case of Padmaraje R. Kadambande Vs. CIT (1992) 195 ITR 877 (SC) wherein it has been held by the Apex court that the capital receipts ar....
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....le VI to the Companies Act, it would be permissible to alter the net profit so as to make it compliant with the same which is the starting point for computation of book profit in terms of Section 115JB of the Act. In the said judgment, inclusion of sales tax subsidy in P&L account was not found to be in accordance with Schedule VI - Pat II & III. It was held that needful adjustment to exclude the same is not only permissible but is mandatory so as to making P&L account sync with the basic requirement of Section 115JB of the Act. The reliance was placed on yet another decision of the co-ordinate bench of the Tribunal in DCIT vs. Bombay Diamond Company Ltd. (2010) 33 DTR 59 (Mumbai) and that of Bangalore Tribunal in the case of Syndicate Bank vs. ACIT (2006) 7 SOT 51 (Bang.) where the adjustments were permitted to the P&L account drawn by the assessee so as to comply with Schedule VI Part II & Part III of the Companies Act, which is pre-requisite for Section 115JB of the Act. The learned AR thereafter submitted that there are large number of judicial pronouncements to the effect that tax liability under s.115JB of the Act cannot be applied where it has been demonstrated on facts that....
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....taxed under s.115JB of the Act in view of sub section 5 thereof. Such consideration receivable on happening of certain events is not chargeable to tax under s. 4 r.w.s. 5 of the Act. 16.5 The issue is no longer res integra and examined by the Hon'ble Supreme Court in Indo Rama Synthetics (supra). We also take note of the decision of the co-ordinate bench in JSW Steel Ltd. (2017) 82 taxmann.com 210 (Mum); Shivalik Venture Pvt. Ltd. vs. DCIT (2015) 60 taxmann.com 314 (Mum); ACIT vs. Shree Cement Ltd. (2015) 52 ITD 561 (Jaipur) and other decisions relied upon on behalf of the assessee for the proposition that book profit can be suitably adjusted where the P&L account is not drawn in accordance with Part II and Part III of the Schedule VI to the Companies Act, 1956. In view of the peculiar facts of the case and in the light of long line of judicial precedents available in this regard, we have no hesitation to hold that the consideration recognized as revenue income in connection with MOU/lease agreement with AIPL, which is only hypothetical at present and neither accrued nor earned income of the assessee is outside the purview of income under s.2(24) of the Act and consequently, suc....
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....iled by the assessee in Revenue's appeal merely supports the order of the CIT(A). As per Section 253(4) of the Act, the assessee is entitled to file cross objection against any part of the order of the Commissioner (Appeals). In the absence of any objection to the order of the CIT(A) on issues raised in the Revenue's appeal, the cross objection is hollow and a damp squib. This apart, the Revenue's appeal is dismissed and consequently, the cross objection is rendered infructuous. 17.2 In the result, cross objection of the assessee dismissed as infructuous. ITA No. 2898/Ahd/2013 A.Y. 2007-08 (Revenue's appeal) 18. The grounds of appeal raised by the Revenue reads as under:- "1. The ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 23,11,02,617/- made u/s. 80IB(10) of the Act relying on the decision in the case of Radhe Developers for A.Y. 2003-04 without properly appreciating the facts of the case that the assessee did not satisfy the conditions as laid down in the said Section. 2. The ld. CIT(A), however, failed to appreciate the fact that the assessee company did not satisfy the condition with regard to built up area as th....
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....after considering the facts of the case, submission of the Respondent has rightly held that "The facts of the current year are identical, projects for which the deduction is claimed are also the same and therefore respectfully following the decision of predecessor the claim of the appellant is allowed for this year as well and thus the CIT(A)-VIII has rightly given direction to the Ld. A.O. to delete the disallowance made of Rs. 17,15,66,503/-. 3. The Ld. CIT(A)-VIII has rightly directed the Ld. A.O. to allow the claim of deduction u/s. 80IB(10) in view of the decision of jurisdictional Hon'ble Gujarat High Court in the case of Commissioner of Income-tax Vs. Radhey Developers reported in (2012) 341 ITR 403 (Guj) and affirmed by the Apex Court in the case of ACIT (OSD), Baroda Vs. M/s. Someshwara Developers arising from the judgment and Order dated 11-1-2012 in ITA No. 1300/2008 of the Hon'ble Gujarat High Court following the decision of Radhe Developers. 4. The Ld. CIT(A) - VIII, Ahmedabad after carefully considering the facts of the case, submission of the Respondent as well as the various case laws relied upon by the Respondent and respectfully following....
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....s appeal) 32. The grounds of appeal raised by the assessee reads as under:- "I. TAXING THE ADVANCE RECEIPT BEING CONTINGENT IN NATURE UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT - RS. 50,30,13,540/- 1. The Ld. CIT(A) has erred in law and on facts while holding that the appellant company is liable to tax on advance receipt which is contingent in nature as Book Profit u/s.115JB of the Act. 2. The Ld. CIT(A) has erred in law and on facts while giving contradictory findings in respect of amount received from Abir Investments Pvt. Ltd., while treating the said amount as advance receipt being contingent in nature on account non-fulfillment of prescribed conditions of the lease agreement vis-à-vis rules and regulations of SEZ on one hand and holding that the appellant company is liable to tax on such receipt as book profit u/s.115JB of the Act on the other hand. 3. The Ld. CIT(A) has erred in law and on facts in giving the direction to the A.O. to re-compute the book profit u/s.115JB of the Act by following the appellate order passed for A.Y. 2008-09." 33. The grounds raised by the assessee in its appeal seeks to assail the alleged obs....
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....any objection per se to the order of the CIT(A) and also in the light of the fact that Revenue's appeal concerning AY 2007-08 is dismissed, the cross objection of the assessee is rendered infructuous. 37. In the result, cross objection of the assessee dismissed as infructuous. ITA No. 3011/Ahd/2014 A.Y. 2010-11 (Revenue's appeal) 38. The grounds of appeal raised by the Revenue reads as under:- "1. The Ld. CIT(A) has further erred in law and on facts in deleting the disallowance of Rs. 8,67,06,000/- made u/s.36(1)(iii) of the Act, without properly appreciating the facts of the case and the material brought on record." 39. The objection of the Revenue in AY 2010-11 concerning eligibility of interest expenditure under s.36(1)(iii) of the Act is identical to the similar objections raised as per Ground No.3 of AY 2008-09. In line with the detailed discussion made in AY 2008-09 in revenue's appeal, we do not see any force in the objection of the Revenue. 40. In the result, appeal of the Revenue in ITA No. 3011/Ahd/2014 for AY 2010-11 is dismissed. CO No. 322/Ahd/2014 A.Y. 2010-11 (in ITA No.3011/Ahd/2014) 41. The grounds of appeal raised by the assessee read....
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....grounds raised in the memorandum of cross objection filed by the assessee merely supports the order of the CIT(A). In the absence of any objection per se to any part of the order of the CIT(A) and also in the light of the fact that Revenue's appeal concerning AY 2007-08 is dismissed, the cross objection of the assessee is rendered infructuous. 49. In the result, cross objection of the assessee dismissed as infructuous. ITA No. 3085/Ahd/2015 A.Y. 2012-13 (Revenue's appeal) 50. The grounds of appeal raised by the Revenue reads as under:- "1. The Ld. CIT(A) has further erred in law and on facts in deleting the disallowance of interest expenses of Rs. 8,36,975/- made u/s.36(1)(iii) of the Act, without properly appreciating the facts of the case and the material brought on record." 2. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 6,96,18,668/- made u/s.14A of the Act, without properly appreciating the facts of the case and the material brought on record." 51. The objection of the Revenue in AY 2010-11 concerning eligibility of interest expenditure under s.36(1)(iii) of the Act is identical to the similar objections raised ....