TMI Blog2008 (5) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... business formed by splitting up or the reconstruction of the business already in existence. 5. The provision of section 80-IB(2) neither be invoked nor be made applicable to the case of the appellant for the reason that the same are not applicable to the appellant. 6. The units of flats constructed separately and clearly identifiable not to be treated as one unit and the area of the flat not be treated as exceeding 1000 sq. ft. under any circumstances. 7. The assessment order passed by the Assessing Officer neither be treated as erroneous nor as prejudicial to the interest to the revenue. 8. The deduction under section 80-IB(10) be allowed to the appellant." 2. The Ld. Counsel for the assessee submitted that the original assessments in these cases were framed by the Assessing Officer in scrutiny assessments under section 143(3) of the Act. The assessee has claimed, in its returns of income filed, deduction under section 80-IB(10) of the Income-tax Act, 1961 on its residential units as all the conditions for grant of deduction under section 80-IB(10) were satisfied in this case. The necessary details were filed with the Assessing Officer in support of the claim of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plain language of section 80-IB(2) and 80-IB(10) of the Act and contended that mere reading of the language of section 80-IB(2) makes it clear that it relates to industrial undertaking which manufactures or produces any article or thing , whereas section 80-IB(10) relates to deduction in the case of undertaking in developing and building housing projects if the other conditions laid down under section 80-IB(10) are satisfied in the case. Learned Counsel for the assessee referred to the circular of the CBDT No. 772 dated 23-12-1998 on the old provisions of section 80-IA(4F) [corresponding to the provision of section 80-IB(10)] making it clear that with a view to promote investments in housing, a new sub-section (4F) has been inserted in section 80-IA of the Income-tax Act and has laid down three conditions for deduction under this section namely, that the project were approved by the local authority, the size of the plot of the land should be minimum of one acre and the residential unit has built up area not exceeding 1,000 sq. ft. and that the undertaking commences development and construction of the housing project after 30-9-1998 and complete the same before 31-3-2001. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he area of three coupled flats is less than 1,000 sq. ft. each. The Ld. Counsel for the assessee submitted that in re-assessment proceedings in consequence of setting aside order under section 263, the District Valuation Officer (DVO) in its report has submitted the even the combined area of the coupled flats comes to 978 sq. ft. only and the area of none of the 98 flats built by the assessee exceeds 1,000 sq. ft. Learned Counsel for the assessee has filed copy of the report of the DVO along with Annexure-A before the Tribunal. 5. Learned Counsel for the assessee contended that apart from the merits of the issue before the Tribunal, the assessee is entitled for cancellation of the order of the CIT passed under section 263 on the legal issue that the Assessing Officer at the time of original assessment has made full enquiry into the issue of grant of deduction under section 80-IB(10) of the Act to the assessee and has allowed the claim of the assessee for deduction under section 80-IB(10) of the Act. He contended that on page-8 of the order of CIT under section 263, the CIT has admitted that the Assessing Officer and the inspector have visited the plot in question on 10-2-2006. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee. He submitted that the law provides the remedy in case of mistake on the part of the Assessing Officer against the interest of the revenue and accordingly, the CIT has been empowered under section 263 of the Act to take the appropriate action. In this case, the Assessing Officer has passed the original assessment order in a hurry, although the assessment was not going to be time barred and the Assessing Officer has passed a brief Assessment order consisting of two small paras only. He submitted that there is no valid reason for not referring the issue of area of different residential units built by the assessee to the DVO at the time of original assessment. He submitted that it is a case of a reconstruction of the business as per the terms of Joint Venture Agreement dated 10-12-1999 between M/s. Gautam Enterprise and M/s. Parth Enterprise. He submitted that the plan for construction was approved already on 9-6-1994 by the local authorities. The Ld. DR submitted that section 80-IB(1) is the main charging section and the heading thereof refers to the deduction in respect of profits and gains from certain industrial undertakings other than infrastructure devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea comes to maximum of 978 sq. ft., which is less than 1,000 sq. ft. built up area as provided in section 80-IB(10) of the Act. The Ld. Counsel for the assessee submitted that out of 98 residential units built by the assessee, there are only three coupled flats and the DVO in its report has certified that none of the residential unit (including the coupled flats) has a built up area of more than 1,000 sq. ft. He submitted that the electric meters are separately installed for all the residential units in question. The Ld. Counsel for the assessee submitted that all the case law relied upon by the Ld. DR are distinguishable, since relates to cases where enquiry was not conducted by the Assessing Officer, whereas in the case of the assessee a complete enquiry was undertaken by the Assessing Officer at the time of original assessment itself. The Ld. Counsel for the assessee submitted that Ld. DR is patently wrong in saying that the assessee has got the construction plan approved in the year 1994 and, therefore, it is a case of re-construction of business, as it is only the approval of division of larger plot, which was sanctioned by the Mumbai Municipal Corporation vide his order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rren land only. We find that it is not a case of reconstruction of business and it is not correct to say that the approval for building plans were obtained on 9-6-1994. Recitals of "Joint Venture Agreement" dated 10-12-1999 between M/s. Gautam Enterprises and M/s. Parth Enterprises clearly provides that it is the division of larger plot into five plots which were sanctioned by the Mumbai Municipal Corporation vide their letter dated 9-6-1994. It is further provided in the joint venture agreement that M/s. Gautam Enterprises is desirous of developing further portion of the larger plot bearing serial No. 37 measuring 4050 sq. meters i.e. a little more than one acre for residential purposes. 8. The other mistake pointed out by the CIT in his order under section 263 is that the assessee not being an "Industrial undertaking", does not qualify for deduction under section 80-IB(10) of the Act as the conditions of section 80-IB(2) of the Act are not satisfied in this case. This plea of the CIT is not sustainable. We find that the provision of section 80-IB(2) of the Act has no application for claiming deduction under section 80-IB(10) by an assessee and therefore, the condition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial undertaking manufacturing or producing any article or thing, is not applicable for claiming deduction under section 80-IB(10) in the case of an undertaking developing and building housing projects subject to the fulfilment of other conditions provided in section 80-IB(10) of the Act. 9. Apart from the merits of the issue before us, we find that the order of the CIT passed under section 263 is liable to be cancelled on the legal issue raised by the assessee. The assessee in its return of income filed has claimed the deduction under section 80-IB(10) in respect of its housing project building 98 residential units by it. The Assessing Officer at the time of original assessment has made enquiry into the issue of grant of deduction under section 80-IB(10) of the Act to the assessee. The CIT in his order under section 263 has recorded that the Assessing Officer and the inspector have visited the plot in question on 10-2-2006. The Assessing Officer during the course of original assessment proceedings has raised a specific query with regard to the allowability of deduction under section 80-IB to the assessee. The assessee has filed a detailed reply dated 21-10-2005 wherein a det ..... X X X X Extracts X X X X X X X X Extracts X X X X
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