TaxTMI 
TaxTMI 
2026 (3) TMI 54
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.... 3. Learned Assessing Officer has passed Assessment Order u/s 143(3) rws 147 dated 06/02/2014 and assessed the income at Rs. 11,61,57,413. 4. Against this assessment order our firm has preferred an appeal before Learned CIT Appeal, and Learned CIT Appeal has passed the order u/s 250 dated 23/03/2023. 5. Against this order firm wanted to file an appeal accordingly prepared the documents and also transferred Rs. 10,000/- to tax consultant account for the payment of appeal fee. 6. It was informed to us by the Tax Consultant that currently Payment is to be made through E-Portal under the tab E-Pay tax and said tab for A.Y. 2006-07 do not give the option of "300- Self Assessment Tax". In support of the Same they have also given us the screenshot which is attached as Annexure No-1 to this affidavit. In spite of raising specific grievance still issue was not resolved yet. 7. Accordingly, after several attempts the tax has been paid by changing the year as 2007-08 where in such option of payment "300- self assessment tax' was available and accordingly on 9th June 2023 appeal fee challan was paid. 8. Further, on 12th June 2023 an applic....
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....delete all above or any grounds." 5. Brief facts of the case are that the assessee is a partnership firm engaged in the business as Builders and Developers. Nil income declared in the return of income for A.Y. 2006-07 on 27.10.2006 after claiming deduction u/s.80IB(10) of the Act at Rs. 11,61,57,413. Return processed u/s.143(1) of the Act. Thereafter, the case reopened for scrutiny after obtaining approval for reopening from Additional CIT, Range-4, Pune and notice u/s.148 of the Act dated 20.03.2013 duly served upon the assessee. The main reason for reopening is that the assessee has made a wrong claim of deduction u/s.80IB(10) of the Act. Ld. Assessing Officer observed that the assessee during the year has entered into an Agreement with Kausar Baug Society on 12.04.2000 followed with a Deed of confirmation cum Supplemental Agreement on 15.05.2005 for development of piece of land held by the Kausar Baug Cooperative Society Ltd. The assessee acquired the land at Kondhwa Khurd, Pune from Kausarbaug Coop. Housing Society vide Development Agreement dated 12.05.2005 and in lieu thereof assessee was required to construct and handover the flats on the area of 2,40,000 sq.ft. built up ....
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....nts at 32:68 is intended to compensate the two parties for their respective contribution and expenses incurred. 7. Para 13 of the JV agreement reads as under: "The first and second party agrees that as consideration for jointly developing the said property the parties have mutually confirmed that the outlay of the First Party to the Joint Venture shall be the said property and the second party shall invest the entire requisite wherewithal, capital and efforts to implement the building project to complete the same together with all infrastructural development at their own cost and responsibility and on its own account. The parties have determined to share the gross sale proceeds received from the sale of the units and from all saleable areas including parking, terrace, garden and any other specified or unspecified areas whatever as consideration save and except the amount/item specified hereinafter in the ratio 32:68 i.e. 32% to the first party and 68% to the second party It is understood and agreed between the parties that the revenue sharing arrangement of 32:68 is intended to compensate the two parties for their respective contribution and expenses incurred." ....
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.... grossly erred in treating the stamp duty valuation mentioned in the Joint Development Agreement at Rs. 11,33,80,800 as Revenue for the year and was erroneously shown as income on Receipt side of profit and loss account even though it was a notional figure adopted by the stamp duty valuation authority and accordingly shown net profit for the year at Rs. 11,32,54,065.92 and claimed deduction u/s.80IB(10) of the Act at Rs. 11,61,57,413. However, ld.CIT(A) after discussing the contentions made by the assessee dismissed the assessee's appeal observing as follows : "12. Facts of the case and material available on record have been gone through. The appellant partnership firm M/s Skyline Developers (appellant), filed its ITR for A.Y. 2006-07 on 27.10.2006 declaring NIL income, after claiming deduction u/s 80IB of Rs. 11,61,57,413/-. Subsequently, notice u/s 148 was issued on 20.03.2013, in response to which, the AR of the appellant attended from time to time and furnished the details. The appellant acquired land at Sl. No. 12, 11 and 30 at Kondbwa Khurd, Pune from Kausarbang Co-op Housing Society vide a Development Agreement dated 12.05.2005. As per this agreement, it constructed....
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.... of filing Form-56G as per section 10B(5), exemption under section 10B could not allowed - Held, yes [Para 19] [In favour of Revenue]. Thus, it can be seen that even if deduction is claimed in wrong section u/s 10A instead of 10B, then also the claim was denied, whereas, in the case of the appellant, the deduction was not claimable at all by the appellant. 1. Dilip S. Dahanukar vs ACIT - [2001] 117 Taxman 241 (Bombay) wherein it was held that whether since reasons recorded clearly indicated that there was material on basis of survey and statements of persons to show that assessee had wrongly claimed deduction, there was no reason to interfere with impugned notice issued under section 148 -Held, yes, 1. Jeans Knit (P.) Ltd. vs. DCIT [2013] 38 taxmann.com 112 (Karnataka) wherein it was held that where sister concern could not make claim for deduction under section 10B after expiry of specified period, assessee-company was incorporated to which business and assets of sister concern were transferred and assessee claimed deduction under section 10B, said claim being wrong, would form 'reasons to believe' so as to initiate reassessment (This case is Aff....
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....actual project commencement date was 03/03/2007, and it was completed in the Financial Year (FY) 2008-09. 5. It was mutually agreed between the JV partners that the project would adhere to the provisions of Section 80IB(10) of the Income Tax Act, 1961, to avail the benefit of the corresponding deduction. 2. Facts Pertaining to the Impugned Assessment Year (AY 2006-07) 1. Erroneous Accounting Entry: While finalising accounts for FY 2005-06 (AY 2006-07), the then Tax Consultant of Skyline erroneously advised that, as the project was eligible for Section 80IB(10) deduction, the firm should offer its income in that year and claim the entire profit as exempt. 2. Turnover & Profit Claimed: Relying on this incorrect advice, a sum of Rs. 11,33,00,800/- (value adopted for stamp duty as per the 21/03/2006 agreement) was accounted for as Turnover. A profit of Rs. 11,32,54,065/- was worked out and accordingly deduction was claimed u/s 80IB(10) in the Return of Income filed on 27/11/2006 3. Absence of Project Activity/Accrual of Income: It is crucial to note that since the JDA was executed on 21/03/2006, no major activities regarding the housing proj....
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.... in the subsequent and correct years, i.e.. AY 2009-10 and AY 2010-11. Considering the turnover for AY 2006-07 in the computation of total income will result in the clear and illegal double taxation of the same revenue stream. The Appellant, M/s. Skyline Developers, therefore, humbly prays before the Hon'ble Bench to appreciate the facts and circumstances of the case, uphold the principle of 'Real Income', and delete the assessed income as finalized by the Learned Assessing Officer for AY 2006-07, thereby preventing double taxation. For this act of kindness, your Appellant shall be highly obliged. 9. Ld. Counsel for the assessee also submitted that the Joint Development Agreement with Brahma Builders was entered on 21.03.2006, i.e. just seven days prior to the close of the financial year in question and the housing project actually commenced on 03.03.2007 and was completed in subsequent years and further the assessee has offered the income during the year of receiving the share of the sale proceeds as agreed in the Joint Development Agreement and after claiming the expenditure incurred for constructing flats for the Members out of the remai....
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....bsequent assessment proceedings carried out in the case of assessee and he had formed reason to believe that assessee has made wrong claim of deduction u/s.80IB(10) of the Act. We are therefore of the view that valid notice u/s.148 of the Act has been issued recording proper reasons and there was certainly reason to be believe that income has escaped assessment in the form of deduction u/s.80IB(10) of the Act. We therefore hold that issuance of notice u/s.148 of the Act as well as reassessment proceedings are valid. Ground No.1 raised by the assessee is dismissed. 13. Ground Nos. 2 and 3 revolve around the merits of the case regarding the disallowance of deduction/s.80IB(10) of the Act. Assessee in the instant case is a partnership firm entered into a Development Agreement with Kausar Baug Cooperative Housing Society on 12.03.2000 which was subsequently confirmed on 12.05.2005. Kausar Baug Cooperative Housing Society owned land at S.No.12, 11 and 30 Kondhwa Khurd, Pune. On the part of this land admeasuring 2,40,000 sq.ft. assessee was required to construct the flats for the Members of the society. Towards consideration for constructing the flats the Members of Kausar Baug Cooper....
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....ur years from the end of the financial year in which the housing project is approved by the local authority; (iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority. Explanation.-For the purposes of this clause,- (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruct....
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....ruction of housing project commenced. It was only seven days before the close of the year when Joint Development Agreement was entered. This fact has not been controverted by the Revenue authorities at any stage that for the year under consideration assessee has started the housing project. So it remains an admitted fact that only the notional income has been credited to the profit and loss account based on the stamp duty valuation of the Joint Development Agreement and there being no actual transaction of construction of housing project, sale of flats or other conditions which requires to be complied prior to claiming deduction u/s.80IB(10) of the Act. Ld. Counsel for the assessee fairly admitted that even though Audit Report on Form 10CCB has been submitted along with the return but that is only for the notional income. In other words, there is no real income earned by the assessee and only on the advice of the Accounting experts such entries have been made in the books of account and further the deduction has been claimed u/s.80IB(10) of the Act. The Real Income principle or Real income theory is a foundational concept in income tax law that indicates that tax should be levied o....
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....n A.Y. 2006-07 if again assessed to tax then it will amount to double taxation because the actual sale proceeds from the Brahma Skyline Developers Joint Venture has already been shown in the profit and loss account for the respective years and there is no dispute about the correctness of the turnover shown by the assessee for these two years. 17. We therefore are of the considered view that the notional income shown in A.Y. 2006-07 is merely erroneous accounting entry and not a real income accrued to the assessee as the substantial project activities commenced much later and since the actual income from the project in question has been offered to tax by the assessee in the correct assessment years, there is no real income during A.Y. 2006-07 and therefore, there cannot be any claim u/s.80IB(10) of the Act. We therefore delete the impugned addition/disallowance made by the Assessing Officer u/s.80IB(10) of the Act. Finding of ld.CIT(A) on merits is set aside. Ground Nos. 2 and 3 raised by the assessee are allowed. 18. In the result, the appeal of the assessee is partly allowed. Order pronounced on this 20th day of January, 2026. ============= Document 1 - SKYLINE DE....