TaxTMI 
TaxTMI 
2023 (4) TMI 225
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.....CIT(Appeals) has erred in law and on facts in deleing other alternative addition made by the AO of Rs.1,77,54,552/- 3. That the Ld.CIT(Appeals) has erred in law and on facts in deleting other alternative addition made by the AO of Rs.4,51,16,680/- 4. that the Ld.CIT(Appeals) has erred in law and on facts in allowing the adjustment of relief granted by the CIT(A) of Rs.18,04,810/- 3. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of deduction under section 80-IB(10) of the Act for Rs. 4,54,86,974/- only. 4. The facts in brief are that the assessee is a private company and engaged in the business of real estate developer and builder. During the year under consideration, the assessee was having five different housing projects. The assessee with respect to one project namely "Vedika E-Series" claimed that its profit is eligible for deduction under section 80IB(10) of the Act. As such, the assessee claimed deduction of Rs. 4,54,86,974/- being 100% of profit derived from such eligible project. The assessee submitted that the project "Vedika E-Series" met all the condition prescribed under section 80IB(10) of the Act. 4.1 Howeve....
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....Sq. Meters which was allotted plot no. 89 under the town planning scheme approved by GUDA dated 6th of February 2008. Thus, according to the assessee the 1st approval was granted by GUDA dated 6 February 2008 for the housing project which was completed with the BU permission dated 30 March 2012 which is well within the time prescribed under the provisions of law. Thus, it was contended by the assessee that its project is eligible for deduction under the provisions of section 80 IB(10) of the Act. 7. The learned CIT-A after considering the assessment order and submission of the assessee observed that the right in the property was purchased initially by Shri Paras Pandit proprietor of M/s Sheetal Developer wherein the plots were developed and sold. The transaction of developing plots by Shri Paras Pandit proprietor of M/s Sheetal Developer and the development of the housing project are different and independent to each other. Even, the AO in his remand report has admitted that the 1st approval was granted by GUDA dated 6th February 2008 and the BU permission was obtained dated 30 March 2012 which is within the time prescribed under the provisions of law. However, the remand report o....
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....nothing to do with the housing project of the assessee. Accordingly, no credence can be given to such permission as given by Panchayat Kudasan in the context of the housing project in dispute. 12.1 At this juncture, it is also important to note that Shri Paras Pandit proprietor of M/s Sheetal Developer has already taken permission from the GUDA in the financial year 2004-05 while developing the plots on the same piece of land. Maybe for that reason, the GUDA has also written the revised approval in the letter dated 6 February 2008 as on earlier occasion, the permission for the development of the plots was granted on the same piece of land. Be that as it may be, GUDA vide letter dated 1 May 2017 has categorically stated that the 1st approval for the housing project was granted as on 6th February 2008. The relevant contents of the letter read as under: Subject:Regarding information of Final Plot No.89, Original Plot No.89 of Town Planning Scheme No.03 (Kobra-Kudasan) of Revenue Survey No.529/A/Paiki of Mouje Kudasan. Ref: Letter No.CIT(A)-8/Misc./2017-18/55 dated 20/04/2017 of your Goodself. Respected Sir, It is submitted with regard to the above subject that Cedika E-Series....
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....ver, the ratio of both the decisions is that where the deduction is granted for an initial assessment year, the same cannot be rejected for the subsequent assessment years unless the relief for the initial year has withdrawn.-3.We may quote the relevant observations made by the Bombay High Court in Simple Food Products (supra). "According to us. the entire issue is no longer res-Integra. The impugned order of the Tribunal has. after recording that the appellant Assessee relies upon the decision of this Court in Paul Brothers (supra) has not dealt with the same. It gives no finding as to why and in what manner it would not apply to the present facts. Further, we find that distinction which has been made in the impugned order of the Tribunal with regard to Dinshaw Frozen Foods Ltd. (supra) viz. that the assessment in that case has been completed under Section 143(3) of the Act in initial year and it is only in such cases that the Revenue be barred from denying the claim for deduction in the subsequent Assessment Years, unless the claim for deduction has been withdrawn in the initial year when deduction was claimed and allowed unlike an assessment which is completed under Section 14....
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....e year unless the relief for initial year is also withdrawn at the time of withholding the relief under Section 80IA/IB of the Act (I) Mr. Bhattad also points out that under the Act, there is distinction between assessment which has been completed under Section 143(3) of the Act and intimation given to Assessee under Section 143(1) of the Act. In support of, he places reliance in Rajesh jhaveri Stock Brokers, (supra) which brings out the distinction, by pointing out that an intimation under Section 143(1) of the Act is only a ministerial act and no examination of the claim is made by the Assessing Officer. However, one must recognize the fact that the aforesaid decision in case of Rajesh jhaveri Stock Brokers (supra) was rendered in the context of reopening of assessments. As against that the decisions of this Court in Paul Brothers (supra) and Dinshaw Frozen Food Ltd. Nagpur (supra) were while dealing with deduction under Chapter VI-A of the Act. This Court in the above two cases has very categorically held that in absence of relief/deduction for the initial year being withdrawn, the relief under Chapter Vl-A of the Act (Section 801 A/801 B of the Act) in case of Dinshaw Frozen ....
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....tice that Section 10B pertains to special provisions in respect of newly established hundred per cent export-oriented undertakings. Sub-section (1) of Section 10B provides for deduction of profits and gains derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive years beginning with assessment relevant to the previous year in which the undertaking begins to manufacturer, produce articles or things or computer software from the total income of the assessee. Thus, the provision envisaged is for a period of ten consecutive years commencing from the first year during which the undertaking begins to manufacture or produce articles, things or computer software, as the case may be. When the Revenue therefore, did not question the certification by the Director, Software Technology Park of India, in the initial year of the claim made by the assessee as well as in the subsequent years, it would not be open for the Revenue to pick one year out of a total of ten consecutive years for different treatment that too without offering any explanation for the same. We would refer to Gujarat High Court Judgeme....
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....of the revenue is hereby dismissed. 13. The next issue raised by the revenue is that the learned CIT-A erred in not allocating the common expenses to the eligible and non-eligible units based on the turnover which has resulted higher amount of deduction to the assessee under the provisions of section 80IB(10) of the Act. 14. The AO in his order also observed that the common expenses has not been allocated by the assessee in eligible and non-eligible project properly. This observation was made by the AO alternatively and without prejudice to the fact that the assessee is not eligible for deduction under the provisions of section 80IB (10) of the Act. As per the AO, the assessee has shown identical gross profit ratio for its eligible and noneligible projects i.e. 44.13% and 43.79% of the turnover whereas there was vast difference in the net profit declared by the assessee for its eligible and non-eligible projects i.e. 33.42% and 10.48% of the turnover which was mainly on account of improper allocation of common indirect expenses. As such, the assessee has allocated 81.20% of the common expenses being administrative, selling, finance and other expenses to the taxable projects where....
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....t criteria should be the turnover of each project. As per the appellant the turnover is not the most scientific method in their case for the reasons that (a) they have followed the method of allocation on the basis of saleable area consistently , (b) if the method is now changed it has to be changed * for all the years in which the income is recognized of any project, and in some years including the year under consideration after considering the specific allocation of finance cost the profits of eligible project would / increase and fc) the appellant follows percentage of completion method (POCM) and the actual profit of the project can only be ascertained when the project is completed; the turnover on the basis of sales reflected in the earlier years before the final completion may not be a true indicator of the work carried out in the project as in some projects even after fully completing the project there may not be enough sales whereas in some projects not fully completed there may be more sales than the percentage of area constructed. I find that appellant has been following the method of allocation of common expense on the basis of saleable area of a particular project till ....
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.... reasons, none of which have been pointed out by the learned counsel for the Revenue. 29. In Radhasoami Satsang Saomi Bagh v. CIT [1992] 193 ITR 321/60 Taxman 248 (SC) this Court did not think it appropriate to allow the reconsideration of an issue for a subsequent assessment year if the same "fundamental aspect" permeates in different assessment years. In arriving at this conclusion, this Court referred to an interesting passage from Hoystead v. Commissioner of Taxation, 1926 AC 155 (PC) wherein it was said: "Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or ass....
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....51,16,680 65,37,600 Therefore, as a result of apportionment of the common expenditure between the sales and the CWIP, there is increase of Rs, 5,16,54,280 in Closing WIP of the company. This increase will go to increase of profit of the company in P&L account. Therefore Rs. 5,16,54,280 needs to be added to gross total income admitted. On account of allocation of common expenses the deduction u/s 80IB also gets increased by Rs.65,37,600 which is allowed from Gross Total income. The total income for the year is worked out as under: Gross total income as per working of the assessee 7,13,68,873 Add: Increase in revised CWIP 5,16,54,280 12,30,23,153 Revised working of 80IB deduction Deduction worked out by assessee 4,54,86,974 Add: increase in CWIP of 80IB project 65,37,600 5,20,24,574 Revised total income [before working other deductions] 12,30,23,153 Ch VI A deduction 5,20,24,574 Donation 25.000 5,20,49,574 5,20,49,574/- 7,09,73,479 (Alternate add....
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....or more are received and the construction is carried out to this extent. The expenses relating to construction and directly attributable to a particular project is also recognized to the extent of sales by matching principle taken out from WIP. The finance cost, selling and administrative expenses and selling and marketing expense are not part of WIP as per PCOM according to AS-7, AS-16 and Guidance Notes. Para 17 of AS- 7 states as below: " I7. Costs that may be attributable to contract activity in general and can be allocated to specific contracts include: (a) insurance; (b) costs of design and technical assistance that is not directly related to a specific contract; and (c) construction overheads. Such costs are allocated using methods that am systematic and rational and are applied, consistently to all costs having similar characteristics. The allocation is based on the normal level of construction activity. Construction overheads include cost such as the preparation and processing of construction personnel payroll. Costs that may be attributable to contract activity in general and can be allocated to specific contracts also include borrowing costs as per Accounting Standard ....
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..... Hence, we direct the AO to delete the addition made by him. Thus, the ground of appeal of the revenue is hereby dismissed. 24.2 In the result the appeal filed by the revenue is hereby dismissed. Now Coming to the ITA No. 524/Ahd/2019 for A.Y. 2013-14. 25. The first issue raised by the Revenue is that the Ld. CIT(A) has erred in law and on facts in deleting the disallowance of deduction u/s 80IB(10) of the Income Tax Act, 1961 of Rs. 2,95,62,785/- 26. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the A.Y 2013-14 are identical to the issues raised by the Revenue in ITA No. 523/Ahd/2018 for the assessment year 2012-13. Therefore, the findings given in 523/Ahd/2018 shall also be applicable for the year under consideration i.e. AY 2013- 14. The ground appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph No. 12 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012- 13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 26.1 In the res....