TMI Blog2012 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... an one acre, then the condition as prescribed u/s 80IB(10)(b), is fulfilled because the plan was sanctioned and occupancy certificate was issued by the local authorities to the project on more than one acre of land - approval of the project has per clause (a) of sec. 80IB is relevant for completion of the project within the prescribed time period - assessee has complied with the requirement of having the project on the area of plot of land minimum of one acre - in favour of assessee Deduction u/s.80IB(1O) - ownership of land – alleged that the assessee is not the full-fledged owner in respect of an area of one acre which is the minimum requirement for eligibility for deduction uls.80IB(1O) as the assessee has sold undivided interest over the land held by entering into agreements with individuals for transfer of undivided share of interest in land and into contracts for construction of residential units – Held that:- Assessee has developed the project in its own name; therefore, transfer of undivided share in the land to the identified buyers of the constructed residential units is only a modus-operandi by the assessee to transfer the project in two parts viz constructed units an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of an area of one acre which is the minimum requirement for eligibility for deduction uls.80IB(1O) as the assessee has sold undivided interest over the land held by entering into agreements with individuals for transfer of undivided share of interest in land and into contracts for construction of residential units. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the disallowance of interest of Rs.75,750/- without appreciating the fact that the interest bearing funds were diverted by the assessee for giving interest free advances to assessee s sister concern. 3. Ground no.1 is late filing of the audit report in form 10CCB. 3.1 The Assessing Officer noticed that the audit report in form 10CCB for the AY under consideration was not filed along with the original return of income but was filed with the revised return in response to the notice u/s 148. The Assessing Officer further observed that the audit report filed on 8.12.2008 is defective as clause 23 in form 10CCB has been left blank. Accordingly, the Assessing Officer considered the belated audit report filed by the assessee as not valid report. 3.2 On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment, then the requirement of section 80-lA(7) would be met. In CIT Vs. Berger Paints (India) Ltd. (No. 2)(2003) 126 Taxman 435, the Hon ble High Court of Calcutta has held that, furnishing of auditor s report on date of filing of return was not mandatory, but only directory in nature, and, therefore, the assessee could not be denied investment allowance merely on the ground that it failed to tender the auditor s report on the date of filing of return. 27. In CIT Vs. Gujarat Oil Allied Industries (1993) 201 lTR 325, the Hon ble High Court of Gujarat has held that, where an assessee could riot file audit report along with return, but filed it later before completion of assessment by ITO, he was entitled to deduction under section 80J. In CIT Vs. A.N. Arunachalam (1994) 122 CTR 87, the Hon ble High Court of Madras has held. that where the return filed by assessee was not accompanied by the audit report as required by section 8OJ(6A), the assessee could still claim deduction under section 80J. In ITO Vs. Vijayadurga Offset Printers (1988) 30 TTJ173, the Hon ble Hyderabad Bench of ITAT has held that, the requirement to file the audit report along with the return under section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than one acre and therefore, the conditions prescribed u/s 80IB(10) is fulfilled. He has referred the site plan sanctioned on 9.2.2005 and submitted that the size of the plot is more than one acre and the project plan has been sanctioned by the local authorities. The ld AR has further submitted that the requirement of the provisions is that the project should be on the plot of land having minimum area of one acre and therefore, when the project, which is completed by the assessee is admittedly on the plot of land having size of more than one acre then the said condition is fulfilled. The ld AR has submitted that the assessee held 0.96 acres and 0.5 acre was held by the partner of the firm. It was further submitted that the section does not require that the land should be one acre at the starting of the project. The assessee however has a total one acre of land at the time of completion.. 7.2 He has further submitted that the project was completed on 28.6.2005 as per the occupancy certificate issued by the local authorities and the completion of the project is as per the revised plan sanctioned by the local authorities on 9.2.2005 having more than one acre of land. 8. We have co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deed for sale of undivided interest in the land and entered into separate agreements for construction of building; therefore, what was done by the assessee for execution of contract for construction of the building on behalf of the persons to whom the undivided interest in land has been transferred. Accordingly, the Assessing Officer held that the assessee was not the owner of the land but has constructed the project on behalf of the individual and therefore, the assessee is a contractor not eligible for deduction u/s 80IB as per Explanation to sec. 80IA. 10.2 On appeal, the CIT(A) has held that there is no requirement of the assessee must be the owner of the land on which the housing project was constructed. The CIT(A) relied upon the decision of the Ahmedabad Bench of the Tribunal in the case of Radhe Developers reported in 113 TTJ 300 and held that the assessee need not to be the owner of the land to be eligible for deduction. 10.3 As regard the assessee has constructed the building as a Contractor, the CIT(A) has held that the transfer of undivided shares in the land to the prospective owners of residential units is only a method of sale of the project and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee firm had advanced a peak interest free loan of Rs. 16 lacs to the sister concern and an amount of Rs. 10 lacs was outstanding at the end of the year. The Assessing Officer held that there was diversion of interest bearing funds for non-business and accordingly disallowed a sum of Rs. 75,750/-. 13.2 On appeal, the CIT(A) deleted the addition made by the Assessing Officer on the ground that there was sufficient credit balance in the bank account of the assessee on each occasion when the advance was given to the sister concern. Further, substantial amount of interest free advances were received from the customers; therefore, in the absence of direct nexus, disallowance is not justified. 14. We have heard the rival contention as well as the relevant material on record. Nothing has been brought before us by the revenue to controvert the factual finding of the CIT(A) that the assessee was having sufficient credit balance in the bank account as well as advances received from the customers when the advance was given to the sister concern. Therefore, in the absence of direct nexus between the interest bearing funds and advance given to the sister concern, the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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