TMI Blog2013 (1) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... led for deduction under s. 80-IB(10) in respect of flats having built-up area not exceeding 1,500 sq.ft. and not entitled for deduction in respect of those flats having their built-up area exceeding 1,500 sq.ft - against revenue. Whether each of the project could be considered independently for the purpose of working out deduction u/s 80-IB(10) - whether such deduction could be calculated ignoring the losses in some of the projects subject to the limitations placed by Section 80-AB - Held that:- Assessee admittedly was having only one homogenous business activity that was construction and selling of flats. No doubt, it was having five projects, but the question is whether each of the projects were forming part and parcel of one unit or part of one industrial undertaking. There is no claim for the assessee that each of these projects were separate and there was no interlacing, interconnection or interdependence. Assessee was only doing housing project development which is a homogenous business and vis-à-vis the five projects, there was no demarcation of identity, in such a manner that each of the project could be considered as independent units. There is nothing in this sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Appeals) to allow deduction under Section 80-IB(10) on the following reasons:- (a) Some of the flats constructed by the assessee exceeded 1500 sq. ft. and in view of the decision of this Tribunal in the case of Asstt. CIT v. Viswas Promoters (P.) Ltd. [2010] 126 ITD 263 (Chennai), such pro rata deduction could not be allowed. (b) Assessee made a claim of deduction under Section 80-IB(10) only through a revised computation and by virtue of decision of Hon'ble Apex Court in the case of Goetz (India) Ltd. v. CIT [2006] 284 ITR 323, such a claim ought not have been considered. (c) Direction of the CIT (Appeals) to compute deduction under Section 80-IB(10) considering each project separately, was not in accordance with the law laid down by Hon'ble Apex Court in the case of IPCA Laboratory Ltd. v. Dy. CIT [2004] 266 ITR 521. 4. Facts apropos are that assessee, engaged in the business of property development, had filed its return for impugned assessment year declaring an income of Rs. 76,95,292/-. During the course of assessment proceedings, it seems assessee had filed a revised computation by which there was a revision of a claim for deduction originally made under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at such revision made considering each project separately, was justified. As per the assessee, it had already claimed a deduction in the return of income, but, had only revised the quantum during the course of assessment proceedings. Further, as per the assessee, each of the project could be considered as independent and profits of each project had to be independently considered for working out the deduction under Section 80-IB(10) of the Act. In support of this claim, assessee relied on the decisions of Hon'ble Delhi High Court in the case of CIT v. Sono Koyo Steering Systems Ltd. [2010] 321 ITR 463 and CIT v. Dewan Kraft Systems (P.) Ltd. [2008] 297 ITR 305 and that of Hon'ble Apex Court in the case of Synco Industries Ltd. v. Assessing Officer Income-tax [2008] 299 ITR 444. 7. CIT (Appeals) accepted the above contentions of the assessee. According to him, assessee was entitled to claim deduction on those dwelling units which had built-up area less than 1500 sq. ft. on pro rata basis in view of the decision of Kolkata Bench of this Tribunal in the case of Bengal Ambuja Housing Development Ltd. (supra) which was later upheld by the Hon'ble Calcutta High Court. Further, as per CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d power to allow such claim in appellate proceedings. According to him, here on the other hand, assessee had, without doubt, made a claim for deduction under Section 80-IB(10) in the original return, but had thereafter only effected a revision of the quantum during the course of assessment proceedings. Insofar as the computation aspect was concerned, learned A.R. submitted that decision of Hon'ble Apex Court in the case of Synco Industries Ltd. (supra) was in favour of assessee. According to him, Section 80-AB of the Act only fixed the limit for the deductions that could be made on the gross total income. However, for the purpose of computing deduction under any of the clause under Part C of Chapter VI-A of the Act, each of the industrial undertaking had to be considered independently. According to him, loss sustained in one of the units need not be considered in such computation. For canvassing this view, reliance was placed on the decisions of Hon'ble Delhi High Court in the case of Dewan Kraft Systems (P.) Ltd. (supra) and Sono Koyo Steering Systems Ltd. (supra), that of Hon'ble Andhra Pradesh High Court in the case of CIT v. Visakha Industries Ltd. [2001] 251 ITR 471, that of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even where some of the dwelling unis had built-up area exceeding 1500 sq.ft., it stands clearly answered by the Third Member decision of this Tribunal in the case of Sanghvi Doshi Enterprise (supra). Decision of co-ordinate Bench of this Tribunal in the case of Viswas Promoters (P.) Ltd. (supra) was considered in this Third Member decision. It was held at para 48 of this decision as under:- "48. I am only concerned of the binding effect of the judgment of the Hon'ble Calcutta High Court in the case of CIT v. Bengal Ambuja Housing Development Ltd. (supra). In the light of the discussion made above, I am of the considered opinion that I should be led by the judgment of the Hon'ble Calcutta High Court, which is a constitutional and a Court of law. As there is no direct decision of the jurisdictional High Court still available on the subject, I find it my duty to follow the judgment of the Hon'ble Calcutta High Court. I do not think as a good judicial behaviour to dwell upon the technicalities of jurisdiction and ignore the judgment of a competent constitutional Court. So long as there is no decision by my jurisdictional High Court, I am immediately bound by the judgment of any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income had to be arrived considering such loss also. If the ultimate result was a loss, any claim of deduction in respect of such income was to be rejected. Deductions coming under Part C of Chapter VI-A of the Act, are controlled by Section 80-AB of the Act. Gross total income remains gross total income computed as per provisions of the Act. This was reiterated by Hon'ble Apex Court in the case of Synco Industries Ltd. (supra). It was held by Hon'ble Apex Court that gross total income had to be arrived at by making deductions as per appropriate computation provisions, including income under Sections 60 to 64, adjusting intra-head and inter-head losses and setting off brought forward losses and unabsorbed depreciation. Only if resulting gross total income is positive, an assessee is entitled for a deduction. However, if an assessee is having more than one unit, where one unit is claiming deduction and other is not, and if the gross total income is positive despite loss in one of the units, then decision of Hon'ble Apex Court in the case of IPCA Laboratory Ltd. (supra) will not have any applicability. Where an assessee carries on various activities, even though centralized acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in such a manner that each of the project could be considered as independent units. Section 80-IB(10) of the Act clearly specifies that deduction under that sub-section is to be given to an undertaking developing and building housing projects. There is nothing in this sub-section which would require each of the housing projects to be considered by itself as independent undertaking while working out the deduction. No doubt, if an assessee is able to show that each of its projects were independent with no interlacing, interconnection or interdependence, then it might be able to canvass a claim for deduction under Section 80-IB(10) of the Act. Here, there is nothing on record to show that each of the projects were independent, with no interlacing, interconnection or interdependence of various units. The business was a homogenous one. Therefore, in our opinion, all these projects together had to be considered as a single unit for the purpose of working out deduction under Section 80-IB(10) of the Act and the methodology adopted by the assessee in the revised computation filed by it, cannot accepted. In the result this question is answered in favour of the Revenue. 15. Thus we dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the order of CIT (Appeals), submitted that assessee had not made deduction of tax at source required under Section 194C of the Act and invited rigours of Section 40(a)(ia) of the Act. Therefore, disallowance under Section 40(a)(ia) was rightly made. 22. We have perused the orders and heard the rival submissions. There is no dispute that assessee effected the payments to one M/s Macro Marvel Infrastructure Corporation Ltd. Though it is stated that the amounts were contract payments, the nature of expenditure involved is not clear from the assessment order, nor from the order of CIT (Appeals). No doubt, Hyderabad Bench of this Tribunal in the case of Teja Constructions (supra) has made an observation at para 13 of its order that provisions of Section 40(a)(ia) were applicable only to items covered under Sections 30 to 38 and not for expenditure in the nature of direct cost covered by Section 28 of the Act. However, in the said case, books of accounts of the assessee were rejected and profits were estimated. Disallowance under Section 40(a)(ia) was mainly held to be not warranted for the reason that estimation of income took into account all irregularities committed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, submitted that Assessing Officer was not given an opportunity before effecting the rectification. According to him, this was not an issue which was amenable to a rectificatory proceeding under Section 154 of the Act. 27. Per contra, learned A.R. strongly supported the order of CIT (Appeals). 28. We have perused the orders and heard the rival submissions. We have already held in the appeal of the Revenue in I.T.A. No. 1685/Mds/2010 that claim for deduction under Section 80-IB(10) of the Act preferred by the assessee has to be worked out considering all the projects together as a single unit and not as separate units. Admittedly the revised computation was preferred by the assessee, for re-working the deduction under Section 80-IB(10) of the Act, considering each of the project as independent. Since this methodology has not been accepted by us, in our opinion, no purpose would be served by the directions given by the CIT (Appeals). In any case, when Assessing Officer is computing deduction under Section 80-IB(10) of the Act, pursuant to the direction given by us in Revenue's appeal in I.T.A. No. 1685/Mds/2010, he is to give an opportunity to the assessee. Thus, in view of o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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