TaxTMI 
TaxTMI 
2022 (3) TMI 1063
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.....Y. 2006-07 : (1) That on the facts & in the circumstances of the case and in law, on the date of search, no assessment or re-assessment proceedings of the subject year was pending and, therefore, in absence of any incriminating material, relating to this year, found in the search, suggesting escaped income, the assessment is bad in law and without jurisdiction, hence the assessment may be cancelled and the following additions made/sustained by the learned lower authorities be kindly quashed :- S.No. Particulars of addition Amount 1 Disallowance of deduction claimed u/s 80IB(10) 3,33,72,475 2 Disallowance for the alleged bogus payments to sub-contractors sustained by the learned CIT(A) as per page 45 of her order 2,06,252 3 Disallowance for the alleged bogus payments to sub-contractors sustained by the learned CIT(A) as per page 52/53 of her order (10% of total payment amounting to Rs. 34,71,745) 3,47,174 (2) That on the facts & in the circumstances of the case and in law, the learned lower authorities erred and not justified in not allowing the deduction, claimed at Rs. 3,33,72,475 u/s.80IB(lO), in proceedings u/s.153A, when th....
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....s claimed in profit & loss account even if, the additions for the alleged bogus payment of sub-contractors are sustained, then the sustained additions would enhance the profit of the project and such enhanced profit is also eligible for deduction u/s.80lB( 10), hence in such event, the same be kindly also allowed u/s.80IB(lO). (9) That on the facts & in the circumstances of the case and in law, the levy of interest u/s. 234A, 234B & 234C are wholly unlawful and contrary to the provisions of the Act, hence be cancelled. Likewise Assessment Year 2006-07 as above, the assessee has raised similar grounds of appeals for A.Y. 2007-08 to 2012-13 except difference of figures. Revenue has raised following grounds of appeal for A.Y. 2012-13 : 1.On facts and circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 5,91,675/- out of total addition of Rs. 16,25,739/- on account of disallowance of bogus sub-contractor expenses without appreciating the facts and evidences brought into light by the AO during Assessment Proceedings. 2.The appellant reserves his right to add, amend or alter the grounds of appeal on or before the d....
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.... return u/s 139(1) Returned income (In Rs.) Date of filing of return by the assessee against notice u/s 153A Declared in Return u/s 153A Income (In Rs.) Additional income offered by the assessee (In Rs.) 2006-07 31/10/2006 Nil 12/08/2013 Nil Nil 2007-08 30/10/2007 Nil 31/01/2013 Nil Nil 2008-09 09/09/2008 Nil 31/01/2013 Nil Nil 2009-10 18/09/2009 87,97,950/- 31/01/2013 87,97,950/ Nil 2010-11 26/09/2010 73,67,450/- 31/01/2013 73,67,450/ - Nil 2011-12 27/09/2011 32,16,990/- 12/08/2013 32,16,990/ - Nil 4. From the perusal of grounds of appeals, we find that only two issues i.e. addition relating to deduction u/s 80IB(10) and addition regarding alleged bogus payments to sub-contractors are involved in the present groups appeals. Therefore, we decide both the issues as under: Issue No.1 - Deduction u/s 80IB(10) 5. Facts of this issue as culled out from the orders of the Revenue Authorities are that return of income for assessment years 2006-07 to 2008-09 after claiming deduction u/s 80 IB (10) of the I.T Act were filed as below: S.No Assessment yea....
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....laim of the appellant for deduction u/s 80 IB (10) of the Act for assessment years 2006-07, 2007- 08 and 2008-09 was found to be incorrect. Since the appellant has not fulfilled the condition laid down in section 80IB(10) of the Act its claim was disallowed. In CIT v Global reality (2015) 280 CTR (MP) 558, it has been held that:, "(a) at the relevant time was, that the development and construction of the housing project had commenced or commences on or after 01.10.1998.This stipulation has been modified by the amended clause (a).As per amended clause (a), with which we are concerned, the housing project approved before 31.03.2007 by a Local Authority would receive the benefit of deduction - provided the I.T.A.Nos.40/2012, 36/2012 & 35/2012 16 development and construction of the housing project has commenced or commences on or after 01.10.1998 and is completed within specified time. In that, housing projects approved by the Local Authority before 01.04.2004 must be completed before 31.03.2008; and the housing project approved on or after 01.04.2004 but before 31.03.2007 should be completed within four years from the end of the financial year in which the housing pr....
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....inancial year in which the concerned housing project was approved by the Local Authority. If this condition is not fulfilled, the assessee who maintains work in progress accounting method and has claimed deduction under Section 80IB(10)(a) must suffer the consequence of disallowance or withdrawal of the benefit claimed by him on that count". The above judgment of the jurisdictional High Court has been followed in the case of Ajay Sharma v ACIT (2016) 28 ITJ 261 by ITAT Indore bench, where the claim u/s 80 IB (10) of the assesse was rejected on the ground that the assesse did not complete the construction within the time limit and did not get the completion certificate from the local authority. 1.1 From the facts and circumstances cited above and the decision of the jurisdictional High Court in the case of CIT v Global reality (2015) 280 CTR (MP) 558, I am of the view that the A.O was justified in holding that the appellant assessee has not completed the said project in due time as specified under section 80 IB (10) of the Act. In the appellant's case the facts show that it had not fulfilled the conditions laid down in section 80 IB (10) of the Act, yet preferred t....
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....,98,520/- 2. 2010-11 Rs. 2,99,76,155/- 3. 2011-12 Rs. 5,85,94,414/- 8. Before learned CIT(A), written submissions were filed by the assesse and reliance was also been placed on a plethora of judgments to support the assessee's case regarding claim of deduction u/s 80 IB (10) for A.Ys 2009-10, 2010-11 & 2011-12 and learned CIT(A) considering the same deleted the additions observing as under: - "I have carefully considered the facts and circumstances of the case as also the material placed on record, the various decisions cited by the learned AR and also perused the case record. As may be seen from the foregoing discussion of facts, since the housing project is in the name of Sagar Avenue-I was approved from the local authorities on 07/03/2006 vide permission no NC1163-02009-0306, on 02/05/2006 vide permission no NC6311-195-52006 and on 30/03/2007 vide permission no NC6311-2244-42007 and the completion certificate has been obtained vide letter no 312 and 313 on 21/05/2010 from Municipal Corporation Bhopal which are placed on record. Since the project was approved after 01.04.2005 the completion certificate for the same was to be obtained within five year....
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....IT-DR relied upon the order of the Revenue Authorities for the Assessment Years 2006-07 to 2008-09 whereas for the Assessment Years 2009-10 to 2011-12, the ld. CIT-DR relied on the order of the Assessing Officer. 11. We have considered rival contentions and gone through the material available on record. We find that the assessee is a partnership firm doing the business of developing and selling the residential houses. The firm had developed and sold three residential housing projects during the previous years relevant to the assessment years 2006-07 to 2011-12, namely "Sagar Estates" situated at Village Damkheda, Ayodhya Bye Pass Road, Bhopal, "Sagar Green Estates" situated at Village Damkheda, Bhopal and "Sagar Avenue" Nareli Sankari, Bhopal. The assessee claimed the deduction u/s 80-IB(10) for the profits earned during these years. The detailed chart of the projects is summarized as under: - Name of Project Sagar Estates Sagar Green Estates Sagar Avenue Location of the Project Damkheda, Ayodhya Bye Pass Road, Bhopal Damkheda, Ayodhya Bye Pass Road , Bhopal Narela Sankari, Bhopal Area 7.03 Acres 1.07 Acres 8.99 Acres TNCP Approval No. 1....
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....s the eligible project. We find that for the issue of assessee's claim u/s 80IB(10) of the Act for A.Y.2006-07 to 2008-09, vide ITANo.341 & 342/Ind/2012 for A.Y.2005-06 & 2006-07, ITANo.735 & 736/Ind/2014 for A.Y.2007-08 & 2008-09 and others order dated 30.07.2015 passed by Indore Bench of Tribunal, the assessee succeeded as the disallowance made u/s. 80IB(10) of the Act by the lower authorities was deleted and assessee's claim u/s 80IB(10) of the Act was allowed by this Tribunal after examining the facts of the case and also following the settled judicial pronouncements. Relevant extract of the order of this Tribunal are reproduced below: 12. We have heard both the sides. We have also considered the various case laws relied upon by both sides. One of the grounds on which the assessee has been denied deduction u/s 80IB is with regard to measurement of two units taken during the assessment proceedings for the assessment year 2004-05 wherein the definition of built up area by the Departmental Valuer has been taken by applying the provisions of section 80IB(14) of the Act. This appeal for the assessment year 2004-05 reached up to the level of ITAT wherein the Bench has conclu....
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.... with the conditions which were not a part of the statute when the housing project was approved and more so when such conditions are inextricably linked with the approval granted to the housing project by the local authority under its own rules and regulations. If the condition of sub-section (14)(a) of section 80IB is held applicable to the projects approved prior to 1.4.2005 then the assessee has to necessarily seek for a modified plan otherwise the assessee will not be eligible for exemption u/s 80IB(10) and when the assessee obtained valid approval and constructed the building in all respect prior to Ist April, 2005, then also if the provisions are applied retrospectively, the assessee would not be entitled to benefit of tax exemption. Such an interpretation not only would be absurd but also lead to disastrous consequences. Therefore, it cannot be the intention of the legislature while bringing the definition of built up area in the statute. We would like to mention that such beneficial provisions in the Act have been brought into to bring in investment and to encourage infra-structure development of middle income housing projects. If these amended provisions are made effective....
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....mercial establishments or shops also. Now, by way of an amendment, an attempt is made to restrict the size of the shops or commercial establishments. Therefore, necessarily the provision has to be read prospectively and not retrospectively. As is clear from the amendment, this provision came into effect only from the day the provision was substituted. Therefore, it cannot be retrospective. Held, dismissing the appeal, (i) that the assessee obtained approval for building housing project on June 14, 2002 and had built 84 flats in an area which was in excess of one acre of land. The construction was completed within the period stipulated. According to the assessee, 84 flats were within 1500 sq. ft. The material on record disclosed that a head room was constructed. The head room was not included in the sale deed. The local authority after construction of the building, inspected the building and granted the occupancy certificate. Therefore, the construction put up by the assessee prima facie could be said to be in accordance with the sanctioned plan. If after issue of the occupancy certificate and after sale of these residential flats, the owners of the flats on the top floor decided to....
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....mmissioner is empowered is empowered under section 305 require to be set bask or is empowered to give permission to construct or re-construct. shall within one month of the completion of the work deliver to the Commissioner at his office a notice in writing of such completion and shall give to the Commissioner all necessary facilities for the inspection of such work. (2) Within seven days after the receipt of the said notice the Commissioner shall depute an officer to commence the inspection of such work. (3) Within seven days from the date of commencement of such inspection the Commissioner shall - (a) give permission for the occupation of the building erected or for the use of the part of the building re-erected; or (b) refuse such permission in case such erection, construction or re-construction is in contravention of any provision of this Act or any rule or byelaw made thereunder or any other enactment for the time being in force. (4) No person shall occupy or permit to be occupied any such building or use or permit to be used any part affected by the re-erection of such building - (a) Until the permission referred to in clause (a) of subsection (3) has been granted in the mann....
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....5, the conditions for grant of deduction were that in a case where a housing project is approved by the local authority between April 1, 2004 and March 31, 2005 the project should be completed within four years from the end of the financial year in which it is approved by the local authority. The assessee a real estate developer, obtained approval for a housingproject on March 16, 2005 from the Development Authority. It completed the project in 2008 and by letter dated November 5, 2008 applied to the competent authority for the issue of the completion certificate. For the assessment year 2007-08 its claim to deduction under section 80IB(10) of the Income Tax Act, 1961 was denied inter alia on the ground that the assessee had violated the conditions stipulated under section 80IB(10) inasmuch as it had not obtained the completion certificate for the project from the competent authority within four years as stipulated in Explanation (ii). The Commissioner (Appeals) upheld the assessment order. The Tribunal held that the assessee was expected to complete the project in accordance with the approved plan at a particular point of time and the assessee was not expected to do or to fulfill ....
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....ithin the cities of Delhi or Mumbai or within 25 Kms from the municipal limits of these cities, and 1,500 sq.ft. at any other place. Before 1st April 2005, there was no condition and/or restriction on the quantum of the commercial area that could be included in a housing project. That had to be determined on the basis of the rules and regulations of the local authority approving the said housing project. However, the provisions of section 80-IB(10) were substantially amended by way of Finance (No.2) Act, 2004 w.e.f. 1st April, 2005. As can be noted from the amended provisions, there were several conditions that were imposed in the newly substituted section 80- IB(10) that were absent in the said section prior to its amendment. One such condition inserted w.e.f. 1st April, 2005 was clause (d) that put a restriction on the quantum of commercial area that could be included in a housing project in order to entitle the assessee to claim the deduction as set out in the said section. It cannot be said that the legislature intended to give any retrospectivety to cl. (d) of s. 80IB(10). This is more so because it is clearly a condition that relates to time when the housing project is approv....
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....o where an assessee following the project completion method of accounting, has completed the housing project approved by the local authority complying with all the conditions as set out in section 80-IB(10) as it stood prior to 1st April, 2005. If we were to accept the argument of the Revenue, then in that event, despite having completed the entire construction prior to 1st April, 2005 and complying with all the conditions of section 80-IB(10) as it stood then, the assessee would be disentitled to the entire deduction claimed in respect of such housing project merely because he offered his profits to tax in the A.Y. 2005-06. In contrast, if the same assessee had followed the work-in-progress method of accounting, he would have been entitled to the deduction under section 80-IB(10) upto the A.Y. 2004-05, and denied the same from A.Y. 2005-06 and thereafter. It could never have been the intention of the Legislature that the deduction under section 80-IB(10) available to a particular assessee would be determined on the basis of the accounting method followed. This would lead to startling results. Therefore, there is no hesitation in holding that section 80IB(10B) is prospective in nat....
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.... to 2008-09, respectively. Accordingly, grounds regarding deduction u/s 80IB(10) raised in assessee's appeals for the Assessment Years 2006- 07 to 2008-09 stand allowed. 15. As regards the claim of deduction u/s 80IB(10) for A.Y.2009-10 to 2011-12, we find that Ld. CIT(A) after taking into consideration the permission granted by the local authority and completion certificate obtained by the assessee within the prescribed time limit has allowed the claim observing as follows: "2.3 From the facts and circumstances, I am of the view that the AO was not justified in holding that the appellant 32ssesse has committed default in furnishing inaccurate particular of income by claiming deduction u/s 80IB(10) of the Act. In the appellant's case the facts show that he had fulfilled the conditions laid down in section 80IB(10) of the Act, and preferred to make the claim of deduction under section. The appellant has made claim of deduction u/s 80IB(10) wherein, the permission certificate and completion certificate from the local authority have been obtained within cutoff date which is the most basis requirement to claim deduction u/s 80IB(10). 16. We have considered rival....
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....06,252/- 2007-08 12,86,996/- 2008-09 7,18,769/- 2009-10 5,24,825/- 2010-11 41,01,033/- 2011-12 1,38,515/- 2012-13 9,68,322/- total Rs. 79,44,712/- ii. Sub-contractors in whose name bank bills/cash memo/vouchers were seized amounting to Rs. 1,03,20,473/- spread over to A.Y.2007- 08, 2008-09, 2010-11 & 2011-12: A.Y. Amount/payment to subcontractors 2007-08 2,12,594/- 2008-09 12,66,841/- 2010-11 5,15,830/- 2011-12 83,25,208/- total 1,03,20,473/- iii. Sub-contractors with PAN and other details amounting to Rs. 5,47,90,021/- A.Y. Amount/payment to subcontractors 2006-07 34,71,745/- 2007-08 52,97,955/- 2008-09 73,78,352/- 2009-10 1,07,85,632/- 2010-11 1,10,37,187/- 2011-12 1,61,61,733/- 2012-13 6,57,417/- total 5,47,90,021/- iv. Payment to Sub-contractor Rekha Bai at Rs. 15,51,936/- for A.Y.2007-08 to 2010-11 A.Y. Amount/payment to subcontractors 2007-08 2,31,022/- 2008-09 7,60,924/- 2009-10 3,10,481/- 2010-11 2,49,509/- total 15,51,936/- 19. The Ld. CIT(A) upheld the partial disallowance. Regarding the first c....
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....he expenditure is not satisfactorily explained. However, this is not an undisclosed expenditure but the amount is debited in the books of the assessee and the source is clearly proved and is verifiable from the books of accounts. On the other hand, the ld. CIT-DR relied upon the orders of the Revenue Authorities regarding confirmation of additions made by the learned CIT(A) whereas relied upon the order of the Assessing Officer regarding deletion of addition. 21. We have considered rival contentions and gone through the material available on record. We find that for development of a huge housing project, the various contractors were required to be engaged and for small work small contractors/ meson/ labour were required to be engaged and where the PAN was not given, the contract payments were very small as is evident from the perusal of page 43 to 45 of appellate order. We find that the assessee made the TDS even from these payments wherever applicable and for the small work, payments were made to persons engaged and the assessee was unable to produce these small contractors because their whereabouts were not known to the assessee after the completion of the work allotted to the....
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....se material and construct the building with the help of various contractors and sub-contractors. However, the Assessing Officer after considering reply of the assessee did not find the same acceptable and disallowed all the expenses/payments made to subcontractors on the ground that few of the cash memo/voucher were found to be blank and were debited in P& L account. 13. Being aggrieved, the assesse approached the learned CIT(A) who allowed the ground partly. Learned CIT(A) bifurcated the payments under three different heads. Firstly, the petty contractors who were paid Rs. 24,51,850/- and who were not having a PAN and the addresses were not given. Secondly, the subcontractors who were paid Rs. 2,96,00,038/- in whose name blank bills/ cash memos/ vouchers were seized. Thirdly, the subcontractors who were paid Rs. 2,75,28,903/- who have got their respective PAN and other details. The Ld. CIT(A) disallowed the claim of the assessee in respect of the first category on the ground that there is no material evidence and other details like addresses, identity proof and bank statements. In respect of the second category, the Ld. CIT(A) upheld the addition relying on the statement ....
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....premises do not belong to assessee and no part of its activities were functioning at that place as each of the educational institution has its own accounts and finance department at the place of concerned educational institution and all the financial transactions are done independently by each educational institution. The accounts of the educational institution are maintained at the place where the concerned educational institution is located. Therefore, the additions made on the basis of unrelated papers and on the statements of unrelated persons were not justified. Further, the A.O. did not refer to any incriminating materials found at the office premises of the various institutions found in the survey suggesting any suppressed income. The A.O. made the allegation of the bogus payments merely on the basis of unrelated papers found at the business premises of Agarwal Construction Co. and not on the basis of any incriminating materials found. It is pertinent to mention here that all the aforesaid papers and the statements of persons are related to Agarwal Construction Co. and have been adjudicated and discussed by the A.O. in the assessment of Agarwal Construction Co. and the same ....