AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 189
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.... appeals, wherever these are applicable. ITA No.5631/Mum/2014 (Revenue's Appeal) & CO No.175/Mum/2018 A.Y. 2010-11 2. Facts in brief are that return of income declaring total income at Nil after claiming set off of brought forward loss amounting to Rs.44,11,03,164/- was filed on 01/10/2010. A search and seizure action under section 132(1) of the Act was conducted in the case of Rustomjee - Evershine group on 21/10/2010 and assessee's case was also covered in the said search action. The assessee was engaged in the business of builders and developers during previous year under consideration. The assessee has filed revised return of income on 26/10/2011 declaring Nil income after claiming set off of brought forward loss amounting to Rs.44,54,72,764/-. A notice under section 153A of the Act was issued on 27/09/2011. Thereafter, notice under section 143(2) of the Act was issued on 11/02/2013. Further facts of the case are discussed while adjudicating the grounds of appeal filed by the Revenue. GROUNDS 1 & 2 OF REVENUE'S APPEL & GROUNDS 1 & 2 & ADDITIONAL GROUND OF CROSS OBJECTION FILED BY THE ASSESSEE. 3. There is a delay of 843 days in filing cross objection by the assessee has bee....
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.... has contended that the disallowance ought to have been restricted to the extent of exempt income earned during the year. 6. Heard both the sides and perused the material on record on this issue. It is undisputed fact that as per para 4.1 of the order of the Assessing Officer passed under section 143(3) read with section 153A of the Act on 31/03/2013 that assessee company itself had made only disallowance of Rs.2,501/- under section 14A of the Act. However, the Assessing Officer, after taking into consideration the revaluation made in the investments, computed the disallowance under section 14A as per provisions of Rule 8D to the amount of Rs.40,25,86,078/-. The Ld.CIT(A) after excluding the revaluation of the investment re-worked the disallowance to the extent of Rs.4,23,20,580/-. However, the material fact in the case of the assessee is that it had suo motu only made disallowance under section 14A of the Act to the extent of Rs.2,501/-. However, the assessee had earned exempt income during the year under consideration to the amount of R.20,19,580/- only. Under the circumstances, the assessee itself had only made disallowance of Rs.2,501/- and it had earned exempt income of R.20,....
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.... balconies as under:- Flat Built up area of flat Built up area of balconies / Projections Total built up area 2BHK 840.67 sq.ft. 125 sq.ft. 965.67 sq.ft. 2.5 BHK 978.23 sq.ft. 122 sq.ft. 1100.23 sq.ft. 8. The Assessing Officer considered that built up are as per section 80IB(10) means the inner measurements of the residential units at the floor level including the projections and balconies as increased by the thickness of the walls, but does not include the common area shared with other residential units. The Assessing Officer has also not accepted the submission of the assessee that since the level of balconies was slightly lesser than the floor level, than the rest of the flat, the same should not be considered in computing the built up area. In view of the above facts and circumstances, the Assessing Officer observed that assessee has violated the condition for claiming deduction under section 80IB(10) of the Act in respect of the said project since built up area of the flat was exceeding 1000 sq.ft. However, the Assessing Officer has disallowed he claim of deduction under section 80IB(10) of the Act on the ground that all the conditions of the said section were not....
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....on allowable on prorata basis as per appellant's computation is Rs 12,08,36,323/- The assessing officer is directed to allow the deduction after verifying the computation." 10. During the course of appellate proceedings before us, the Ld.DR has supported the order of Assessing Officer and also referred to the decision of Hon'ble Supreme Court in the case of Mettur Chemical & Industrial Corporation Ltd vs CIT (1996) 86 Taxmann 157 (SC). 11. On the other hand, the Ld.Counsel supported the order of Ld.CIT(A) and relied on the order of jurisdictional High Court in the case of Models Construction Pvt Ltd vs DCIT 429 ITR 605 (Bom). 12. Heard both sides and perused the materials on record. Without reiterating the facts elaborated above, the Ld.CIT(A) has allowed the claim of deduction under section 80IB(10) on prorate basis after following the decision of Hon'ble Madras High Court in the case of CIT vs Arun Excello Foundations P Ltd (2013) 259 CTR (Mad) 362 and after following the decision of various ITAT as elaborated in his finding (supra). In this regard, we further notice that the judicial pronouncements referred by the Ld.DR in the case of Mettur Chemical & Industrial Corporat....
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....s granted by the Commissioner (Appeals) by his order dated 26.08.2015 could not have been disturbed by the ITAT. He submits that the High Courts of Madras, Delhi, and Karnataka have held that such prorata deduction is required to be granted in the following decisions: (i) Viswas Promoters Pvt. Ltd. v. Assistant CIT, Circle I, Madras- (2013) 29 TaxMan.Com 19 (Madras); (II) CIT Chennai v. Arun Excello Foundations Pvt.Ltd.- (2013) 29 TaxMan.Com 149 (Madras); (Hi) CIT v. S.G. Estates Pvt. Ltd.- (2015) ITMI 1302 (Delhi); and (iv) CIT & Anr. v. M/s. Brigade Enterprises Limited- ITA No.54 of 2012 decided on 22.09.2020 by the Karnataka High Court. 9. Mr. Pangam, based on instructions, and without prejudice submits that in case the assessee is granted the benefit of pro-rata deductions, the assessee, will not press the contention that there is no breach whatsoever of Section_8OJB(10) of the said Act, even though, the legal position is in favour of the assessee. He, however, submits that such not pressing ought not to come m the way of the assessee in raising such contention in any collateral proceedings i.e. proceedings for penalty, etc. 10. Ms. Linhares, the learned counsel for....
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....eal. 15. This appeal was taken up along with connected Tax Appeal Nos.4 to 8 of 2016 and Tax Appeal Nos.49 and 52 of 2016, in which the issue of pro-rata deductions under Section 80IB(10) of the said Act was involved. In the said connected appeals as well, Ms. Linhares, relying upon the very same decisions had urged that Section 80IB(10) of the said Act does not contemplate grant of any pro-rata deduction. 16. Upon consideration of the rival contentions in the aforesaid connected tax appeals, we have held that pro-rata deductions can be granted under Section 80IB(10) of the said Act. In our decision in Tax Appeal Nos.4 to 8 of 2016 and Tax Appeal Nos.49 and 52 of 2016 decided on 26.11.2020, we answered the substantial question of law as to the allowability of pro-rata deduction in favour of the assessee and against the Revenue after distinguishing the decisions relied upon by Ms. Linhares in those appeals as well as in this appeal. 17. Accordingly, by adopting our reasoning in the Judgment and Order by which we/ disposed of the aforesaid connected Appeals, we answer the additional substantial question of law in favour of the assessee and against the Revenue. 18. This appeal....
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....ng the finding of No.5631/Mum/2014 & CO No.175/Mum/2018, these grounds of appeal of the assessee are partly allowed by directing the Assessing Officer to restrict the disallowance to the extent of exempt income earned by the assessee. 18. Ground 2 raised by the assessee pertains to disallowance of Work-in- Progress (WIP) of Rs.5,51,637/-. During the course of assessment, the assessee was asked to furnish details of expenses claimed in respect of payments made to M/s Jitnat Infrastructure Pvt Ltd. In response, the assessee submitted that during the year under consideration, it has paid total professional fees of Rs.20,36,691/- to M/s Jitnat Infrastructure Pvt Ltd and submitted that out of it, an amount of Rs.11,18,442/- was related to the assessee company. The assessee further explained that out of the aforesaid amount, an amount of Rs.5,66,637/- was transferred to WIP of the relevant project and the balance amount of Rs.5,51,805/- was claimed as expenses in the P&L Account. However, the Assessing Officer has stated that assessee has not furnished any documentary evidence of project management consultancy services provided by M/s Jitnat Infrastructure Pvt Ltd. Further, the assessee....
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....llowed the claim of Rs.27,58,53,742/- under section 40(a)(ia) for non compliance of TDS provisions in computation of income for A.Y. 2011-12 and the same was now allowable under section 40(a)(ia) as the TDS was deducted and paid. These facts were disclosed by the assessee in the original return of income. However, inadvertently, the same remained to be claimed in the revised return of income filed for A.Y. 2012-13. After following the decision of Hon'ble Supreme Court in the case of NTPC vs CIT (supra) as relied upon by the Ld.Counsel for the assessee, we restore this issue to the file of the Assessing Officer to allow the claim of the assessee after verification of the relevant materials and after affording due opportunity of being heard to the assessee. Therefore, this ground of appeal of the assessee is allowed for statistical purpose. ITA NO.1946/MUM/2022 (REVENUE'S APPEAL) & CO NO.17/MUM/2023 (ASSESSEE 24. Both the appeal of the Revenue and Cross Objection filed by the assessee are pertaining to the common issue of levying penalty under section 271(1)(c) of the Act. 25. During the course of assessment made under section 143(3) read with section 153A of the Act vide order da....
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....tice by not striking off the irrelevant matter, the penalty cannot be levied. 29. On the other hand, the Ld.DR supported the order of Assessing Officer. 30. The copy of the notice under section 274 read with section 271(1)(c) the Act is as under:- 31. On perusal of the copy of the notice under section 274 read with section 271(1)(c) of the Act it is clear that Assessing Officer has not specified whether the penalty is being levied on account of concealment of income or furnishing of inaccurate particulars of income. In this regard we have gone through the judgement of the Hon'ble jurisdictional High Court in the case of Mohd Farhan A Shaikh vs DCIT (supra) and the decision of the co-ordinate bench in assessee's own case for A.Y. 2005-06 in ITA No.1227/Mum/2020 dated 18/10/2022. The relevant part of the order of the ITAT in assessee's own case as referred above is reproduced as below:- "8. We have considered the rival submissions and perused the material available on record. In the present case, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act and levied penalty of Rs.7,36,300. From the perusal of the notice dated 31/03/2013 issued under se....