TMI Blog2015 (3) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... been held to be bogus. Notably, assessee had furnished the invoices raised by the said parties and had also explained that all the payments were made by the cheques. Assessee had also furnished their sales-tax numbers. With respect to the transportation, assessee had explained that the responsibility of transportation was of the supplier and therefore assessee could not produce the transport receipts. The explanations put-forth by the assessee were not subject to any enquiry or verification by the Assessing Officer but have been merely disbelieved. The Assessing Officer, in our view, was influenced by the outcome of enquiries made with respect to the other six parties. However, in the absence of any material on record to negate the position canvassed by the assessee with respect to the said five parties, the explanation of the assessee could not be disbelieved. - Decided partly in favour of assessee. Disallowance of deduction u/s 80IA(4) - profits derived from the Industrial Park 'Giga Space' - Held that:-considering the amendment of rule 18C of the Rules made w.e.f. 01.08.2008 where an undertaking begins to develop an Industrial Park is also eligible for the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, if the action of the assessee is to reduce the tax liability by paying brokerage to Regenesis PMCPL then such company would not have paid tax on the huge income declared nor the assessee would have paid service tax to the Government Account. Therefore, the allegation of the revenue that Regenesis PMCPL has offered NIL to nominal income and the assessee claimed the brokerage to reduce the capital gain tax also does not find much force.Expenditure on payment of brokerage to M/s Regencies PMCPL was an allowable expenditure - Decided in favour of assessee. - ITA Nos.1411 to 1415/PN/2013, ITA Nos.1478 to 1483/PN/2013 - - - Dated:- 20-2-2015 - Shri G.S. Pannu And Shri R.S. Padvekar JJ. For the Appellant : Mr. Sunil Pathak Mr. Nikhil Pathak For the Respondent : Mr. A. K. Modi ORDER PER G. S. PANNU, AM The captioned appeals relate to same assessee belonging to different assessment years and involve certain common issues, therefore they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 2. At the time of hearing, cross-appeals of the assessee and the Revenue for assessment year 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us raising the following Grounds of Appeal :- 1) On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (A) erred in treating the bogus purchases of steel from five parties namely (a) Vora Mercantile Pvt. Ltd., (b) M/s Mayoora Metal Trade Corporation, (c) M/s Yash Trading Co., (d) M/s Shree Surya Steel and (e) M/s Satyam Steel as genuine ignoring the materials available on records brought by the A.O. 2) On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (A) erred in allowing benefit of telescopy on unexplained investment in land against inflated purchase of steel. 5. The first Ground of Appeal in assessee s appeal is with regard to a disallowance of ₹ 5,61,48,006/- sustained by the CIT(A) out of a total addition of ₹ 7,75,34,092/- made by the Assessing Officer on account of purchase of steel held to be bogus. The CIT(A) partly upheld the addition made by the Assessing Officer out of the total addition of ₹ 7,75,34,092/- and deleted a sum of ₹ 2,13,86,086/-. The Revenue by way of Ground of Appeal No.1 in the cross-appeal has agitated the addition deleted by the CIT(A). Since, the two Cross-Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of two concerns, namely, M/s Narendrakumar Co. and M/s R.D. Jain Co.. In his statement, Shri Narendrakumar Timbadia admitted that his proprietory concerns had issued accommodations bills to the assessee-company. The statement of the Transporter, Shri Bhaskar M. Darandale of New ARC Transport has also been referred to wherein the said person admitted that he had issued bogus lorry receipts to M/s M/s R.D. Jain Co. without actual delivery of any material. 7. In addition to the statement of the aforesaid suppliers of steel and the Transporter, the Assessing Officer has also referred to the statements of the employees of the assessee-company. In this connection, reference has been made to the statements of Shri S.V. Ranaware, Asstt. Vice President, Accounts as well as Shri Hemant Y. Wadnerkar, Sr. Executive, Purchase. As per the Assessing Officer, above two persons admitted that the delivery challans and Goods Receipt Note (GRN) were required before passing of the purchase bills. The Assessing Officer has contended that both of them also admitted that in many cases purchase bills were passed without verifying the delivery challans and GRNs. The Assessing Officer required the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2007-08. Similar additions have been made in other captioned assessment years though of varying amounts but the parties/suppliers remain the same set of 11 suppliers referred above. The Assessing Officer has furnished various reasons to support the disallowance. Firstly, the Assessing Officer has contended that the assessee was not able to furnish the supporting documents viz. delivery challans/GRNs, etc. with regard to the purchases effected from the said 11 suppliers. Secondly, the Assessing Officer has also noted that assessee could not submit any inward register/stock register to prove that the material was indeed received at the respective construction sites. Thus, as per the Assessing Officer, assessee was not able to demonstrate that it had actually received delivery of steel in respect of impugned purchase. Thirdly, the Assessing Officer also held that the six parties were not in possession of any transport bills or octroi receipts or the challans to substantiate delivery of goods to the assessee. Fourthly, the Assessing Officer also referred to the statements of six parties recorded u/s 131 of the Act wherein they had categorically denied having supplied the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased. The Assessing Officer also referred to the plea raised by the assessee regarding certain contradictions in the statement of Shri Narendrakumar Timbodia. This plea has been rejected on the ground that Shri Narendrakumar Timbodia clearly deposed that he was providing accommodation/bogus bills for a profit on commission basis. 11. For all the aforesaid reasons, the Assessing Officer held that the six parties whose statements were recorded u/s 131 of the Act had actually not made any supply of steel to the assessee and therefore assessee had not effected the purchase of steel, etc. from such parties. Now, with regard to the other set of five suppliers, Assessing Officer noted that such purchases were not supported by the basic supporting evidences like GRN, transport bill, payment slip, octroi challan, delivery challan, etc.. The purchase from such five suppliers were also held to be bogus. In this manner, the purchases of ₹ 7,75,34,092/- from the aforesaid 11 parties was held to be bogus and accordingly the said amount was added to the returned income. 12. In appeal before the CIT(A), assessee assailed the addition in law and on facts. The CIT(A) has referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not brought on record any material which could prove that the purchases made from the said parties were not genuine. In sum and substance, with respect to the purchase made from five parties, the CIT(A) disagreed with the Assessing Officer and held the same to be genuine purchases. 14. In this background, the rival counsels have made their submissions. The Ld. Representative for the assessee has vehemently argued that the CIT(A) ought to have held that the purchases from six parties were also genuine. According to the Ld. Counsel, the purchases effected from all the parties are supported by the bills and the payments were made to the suppliers by account payee cheques. It was vehemently argued that there was no evidence found in the course of search which could substantiate that cash was returned back to the assessee by any of the above six parties against cheque payments made by the assessee. The objection raised before the lower authorities of denial of appropriate opportunity of cross-examination was also reiterated before us. On this aspect, it has been submitted that in the course of assessment proceedings, the Assessing Officer had issued summons to these parties for cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom whom such agents have obtained the material and supplied to the assessee. In such a scenario, if the suppliers/agents have evaded sales-tax or income-tax, they would obviously give statements disowning the transaction for their own vested purposes. It was therefore contended that merely because the six suppliers in question disowned the transactions, it would not show that the purchase were indeed bogus. 17. In the course of the hearing, it has also been pointed out that the affidavit of one of Shri Narendrakumar Timbodia, who is the Prop. of M/s Narendrakumar Co. and partner of M/s R.D. Jain Co. was furnished before the CIT(A). By referring to such affidavit, a copy of which is placed in the Paper Book at pages 85 to 88, it was submitted that the genuineness of the purchase stands established. According to the Ld. Representative, such affidavit of Shri Narendrakumar Timbodia has been unjustly rejected by the CIT(A) and the addition sustained. 18. Another point made by the Ld. Representative for the assessee is based on the fact that the consumption of steel has indeed taken place. According to the Ld. Representative, if the steel purchased from the above parties is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that due opportunity was allowed at the time of search but assessee did not avail of the same. The Ld. CIT-DR has further highlighted that the assessee has not substantiated the purchases with any supporting documents and therefore the onus cast on the assessee was not discharged. With regard to the plea of the assessee based on the factum of consumption of steel, the Ld. CIT-DR submitted that such plea of the assessee was not backed by proper material and evidence. He has referred to the certification of Chartered Engineer relied upon by the assessee in this regard and it is submitted that the same is vague and quite general. The Ld. CIT-DR has also opposed the alternate plea of the assessee to the effect that only element of gross profit be taxed and not the entire amount of unproved purchases. 21. With regard to the purchases from five parties, which have been found to be genuine by the CIT(A), the Ld. CIT-DR has argued that the conclusion drawn by the Assessing Officer was quite justified. According to him, even for such five parties, the modus operandi of making the purchases was similar to the six parties wherein the statements of the parties were recorded. The Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded u/s 131 of the Act, which elucidated that all of them denied of having made actual supply of goods to the assessee. In one of the cases, the Assessing Officer has also referred to the statement recorded of the Transporter wherein also it was confirmed by him that no actual transportation of goods was effected. The aforesaid adverse material obtained by the Revenue was put across to the assessee right from the beginning. In this context, it would also be relevant to observe that neither the six suppliers and nor the assessee has been able to produce on record even the primary evidence to show the movement of goods from them to the assessee. For instance, no delivery challans or octroi receipts or any other form of evidence of delivery has been brought out. The plea of the assessee was that the payments have been made through cheques and that the purchases are evidenced by the bills raised by the said suppliers. Assessee also asserted that cross-examination of the said parties was not allowed to the assessee. 24. As per the Revenue, in the course of post-search investigations itself, Shri Rajesh Patil, CMD of the assessee-company was confronted on this aspect and was offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on 15.09.2008, whose relevant portion has been extracted in the assessment order itself. In his deposition, he has categorically confessed that there is no actual supply of goods to the assessee and he explained that in order to give a colour of genuineness to the sale bills, they have prepared the Lorry Receipt of M/s New ARC Transport showing transportation of goods to the assessee. The aforesaid averment of the said person made in the course of post-search enquiries stood corroborated by the statement deposed by the Transporter, M/s New ARC Transport. In contrast, the affidavit furnished in the course of the appellate proceedings before the CIT(A) does not deal with the above circumstance and it does not even explain the reasons for retraction of his statement, and in any case, the retraction is uncorroborated. In-fact, the statement made by him in the course of post-search enquiries stands corroborated by the statement of the Transporter whereas there is no such corroboration to his averments made in the affidavit furnished before the CIT(A). Under these circumstances, in our view, the original admission of the said person made at the time of post-search enquiries would hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, multiple projects of the assessee were under construction and there is no material to co-relate as to whether at the time when the impugned purchases were effected any projects were being carried out. Therefore, the ratio of the judgements of the Hon ble Gujarat High Court in the case of (i) Bholanath Poly Fab Pvt. Ltd. (supra); and, (ii) Sanjay Oilcake Industries (supra) cannot be applied in the present case. Therefore, the action of the CIT(A) in holding the purchases effected from six parties as bogus is affirmed. 28. Now, we may deal with the decision of the CIT(A) whereby the purchases made from five parties have been accepted. In this context, we find that the Assessing Officer did not carry out any third party verification as he had undertaken with respect to the six parties discussed earlier. The five parties i.e. (i) Vora Mercantile Pvt. Ltd.; (ii) M/s Mayoora Metal Trade Corporation; (iii) Yash Trading Co.; (iv) M/s Shri Surya Steel; and, (v) M/s Satyam Steel were not put through any enquiry or verification by the Assessing Officer. It was only on the basis of the documents put-forth by the assessee that purchases from the said parties have been held to be bogus. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion date of commencement as defined in clause 2(f) of the IPS, 2008, and as per the said definition the date of commencement was 09.05.2007. As per the Assessing Officer, the deduction u/s 80-IA(4)(iii) of the Act could be claimed only when the project is complete and since in this case the date of completion is to be understood as 09.05.2007, which is beyond the end of the previous year under consideration, therefore, assessee was not eligible for claiming deduction u/s 80-IA(A)(iii) of the Act in the instant assessment year 2007-08. Secondly, as per the Assessing Officer, in the previous year relevant to the assessment year under consideration, the Industrial Park of the assessee did not fulfill the criteria of locating the minimum number of thirty industrial units. In this connection, the Assessing Officer has enumerated in para 5.4 of the assessment order that as on 31.03.2007 only 21 industrial units were operational in the Industrial Park - Giga Space. The Assessing Officer referred to sub-clause (2) of clause (5) of the IPS, 2008 to say that the tax benefits under the Act will be available to the undertaking only after minimum number of thirty units are located in the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to support his conclusion. In sum and substance, the CIT(A) has confirmed the stand of the Assessing Officer, against which assessee is in appeal before us. 32. Before us, the Ld. Representative for the assessee vehemently pointed out that the project of the assessee was approved under the IPS, 2008 and in term of which, it is permitted to commence the Industrial Park between 01.04.2006 and not later than 31.03.2009, a date which has been further extended to 31.03.2011 by the statute. It was contended that the final completion certificate for the project was obtained from the local authority on 09.05.2007 and therefore it has complied with the requirements of IPS, 2008 as the commencement is within the stipulated period. It was contended that there was no condition in the IPS, 2008 that before claiming deduction for a particular year the Industrial Park should be completed within that year; and, that so long as the Industrial Park was completed within the timeframe stipulated in IPS, 2008 there was no reason to disallow the claim of the assessee. Elaborating further, it was pointed out that in IPS, 2008 there is no stipulation that the profits arising the date of commence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible for benefit of section 80-IA(4)(iii) of the Act. 34. At this stage, the Ld. Representative for the assessee has referred to the provisions of section 80-IB(10) of the Act which envisage deduction with regard to the profits derived from development and construction of a housing project. It was emphasized that one of the conditions for availing deduction u/s 80-IB(10) of the Act is to the effect that the housing project should be constructed within the stipulated period prescribed therein. The Ld. Representative pointed out that the aforesaid stipulation did not imply that the deduction u/s 80-IB(10) of the Act shall be allowed only once the housing project of the assessee is completed. In the present case, it was pointed out that so long as the Industrial Park has been developed within the period prescribed in the statute and in accordance with the IPS, 2008, the profits arising from such activity are to be allowed deduction u/s 80-IA(4) of the Act even if it pertains to a period prior to the completion of construction of the Industrial Park. At this point, it is also sought to be emphasized that section 80-IA(4)(iii) of the Act uses the expression develops and not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In this context, the reliance placed by the CIT(A) on the decision of the Third Member of the Tribunal in the case of Marigold Premises Pvt. Ltd. (supra) was reiterated. 37. We have carefully considered the rival submissions. Factually speaking, the Industrial park - Giga Space developed by the assessee is notified by the Central Government in accordance with the IPS, 2008. There is also no denying the fact that the Industrial Park - Giga Space approved under the IPS, 2008 has been found to be eligible for deduction u/s 80- IA(4)(iii) of the Act in the subsequent assessment years. In the subsequent assessment years, the profits derived from the development of Industrial Park - Giga Space have been considered for deduction u/s 80-IA(4)(iii) of the Act by the Assessing Officer. In the instant assessment year 2007-08, which is the first year of claim by the assessee, the Assessing Officer as well as the CIT(A) have rejected the claim. The grounds on which the said claim has been denied, have already been enumerated by us in the earlier part of this order. 38. Before we proceed to address the controversy surrounding the objections raised by the Revenue, it would be appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words 31st day of March, 2006 , the figures, letters and words 31st day of March, 2011 had been substituted;] 39. In terms of the aforesaid, any undertaking which is engaged in (i) developing; (ii) developing and operating; or (iii) maintaining and operating an industrial park notified by the Central Government in accordance with the scheme framed by the Central Government for the period beginning on 1st day of April, 1997 and ending on 31st March, 2006 shall be eligible for the benefit of section 80-IA of the Act. It may be noted that by the Finance (No.2) Act, 2006, the applicability of sub-clause (iii) was extended from 31.03.2006 to 31.03.2009. In other words, any undertaking which was engaged in (i) developing; (ii) developing and operating; or (iii) maintaining and operating an industrial park shall be eligible for deduction for the period beginning on 1st day of April, 1997 and ending on 31st March, 2009. 40. Notably, for the period under consideration before us, the Central Government formulated a Scheme in exercise of the powers under clause (iii) of sub-section (4) of section 80-IA of the Act and it was called Industrial Park Scheme, 2008 . The said Scheme defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea; (2A) The area allocated or to be allocated for commercial activity shall not be more than ten per cent of the allocable area; (3) There shall be a minimum of thirty industrial units located in an industrial park; (4) For the purpose of computing the minimum number of industrial units; all units of a person and his associated enterprises will be treated as a single unit; (5) The minimum constructed floor area shall not be less than 15,000 square meters; (6) No industrial unit, along with the units of an associated enterprise, shall occupy more than twenty-five per cent of the allocable area; (7) The industrial park should be owned by only one undertaking; and, (8) Industrial units shall only undertake activities defined in clause (j) of para (2). 45. Clauses 5 and 6 of the Scheme pertain to General Conditions and Withdrawal of approval which read as under :- General Conditions. 5. (1) The industrial park shall be constructed as developed on the date of commencement. (2) Tax benefits under the Act will be available to the undertaking only after minimum number of thirty units are located in the Industrial Park. (3) The tax benefits under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and operating; or (iii) maintaining and operating an industrial park notified by the Central Government in accordance with the scheme shall be eligible for the benefits of section 80-IA(4)(iii) of the Act. The aforesaid three categories are distinct and so far as the assessee is concerned, it has claimed approval under the scheme on the strength of it being engaged in developing of an industrial park. Therefore, it is in the aforesaid context that one has to determine the requirements which the assessee is called upon to fulfill in order to claim deduction u/s 80-IA(4)(iii) of the Act. 48. Under the scheme, assessee was eligible to be considered for notification under clause (iii) of sub-section (4) of section 80-IA of the Act, if it fulfilled the criteria laid down in clause 4 of the Scheme, which we have reproduced above. The foremost requirement was that the date of commencement of the Industrial Park should be on or after the 1st day of April, 2006 and not later than 31st March, 2009. Clause 4 of the Scheme has seven other criterion for approval which we are not dealing individually, as undisputedly the Industrial Park of the assessee fulfills all the criteria prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not complete as on 31.03.2007, and thus deduction u/s 80-IA of the Act could not be allowed for assessment year 2007-08. 50. It is to be appreciated that clause 2(f) of the Scheme defining the expression date of commencement is relevant in the context of condition (1) of clause 4 of the Scheme which prescribes the criteria for approval of an Industrial Park. Condition (1) of clause 4 of the Scheme prescribes that an undertaking shall be considered for notification under clause (iii) of sub-section (4) of section 80-IA of the Act if the date of commencement of the Industrial Park is on or after 01.04.2006 and not later than 31.03.2009. In this case, date of commencement of 09.05.2007 determined in accordance with clause 2(f) of the Scheme fulfills the condition (1) of clause 4 of the Scheme. Pertinently, the meaning of the expression date of commencement contained in clause 2(f) of the Scheme is to be understood in the context of the Scheme. The question is as to whether the date of commencement in clause 2(f) of the Scheme can be used to deny a claim of deduction u/s 80-IA(4) of the Act, especially in the face of an undisputed fact-situation that the undertaking of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Moreover, the eligibility conditions prescribed in rule 18C of the Rules, which we have reproduced in the earlier paras and which is relevant for the year under consideration, belies the stand of the Revenue. The opening sentence in sub-rule (1) of rule 18C of the Rules says that the undertaking shall begin to develop; develop and operate; and, maintain and operate . The aforesaid wordings show that the Industrial Park in question is eligible for the benefit of section 80-IA(4)(iii) of the Act in the instant year also. Quite clearly, an undertaking which begins to develop is also eligible for the benefit of section 80-IA(4)(iii) of the Act. In this case, in the instant assessment year, assessee has developed and sold 21 units out of the total 30 units envisaged in the approval and it has obtained the completion certificate on 09.05.2007 after completing the balance units. The units sold by the assessee have yielded profits during the year under consideration which the assessee has declared in its Profit Loss Account. Thus, going by the eligibility conditions contained in rule 18C of the Rules, the undertaking of the assessee which stands notified for the purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated .. . The implication of the said condition, as understood by the Revenue, is that a minimum number of thirty units should be located before the end of the financial year for which the deduction is being claimed. Quite clearly, the aforesaid condition in clause 5 of the Scheme does not prescribe that the compliance for the location of minimum number of thirty units in the Industrial Park is to be seen in the context of every assessment year in which the assessee is claiming deduction u/s 80-IA of the Act. The compliance has to be seen in the context of the period permissible under the Scheme for development of the Industrial Park. Ostensibly, the period permissible in the Scheme for location of minimum thirty units has been complied with by the assessee as its date of completion is 09.05.2007 i.e. much earlier than the outer limit of 31.03.2009 prescribed by the Scheme. On this aspect, the Ld. Representative for the assessee has pointed out that clause 5(2) of the Scheme merely implies that when the claim of deduction is before an incometax authorities, it should be seen that the minimum number of thirty units are located in the Industrial Park. It is pointed out that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant assessment years, any profits derived from the eligible business categorized in section 80-IA(4)(iii) of the Act shall be entitled for a deduction u/s 80-IA(4)(iii) of the Act. In our view, so long as the profits are derived from the eligible business and the business of the undertaking has been developed in accordance with the Scheme in which it is notified, then assessee shall be eligible for the benefit of section 80-IA(4)(iii) of the Act. 56. In this context, we may mention that a similar controversy had arisen in the context of the claim of deduction u/s 80-IB(10) of the Act, wherein an assessee can claim deduction in the years when it sells some of the residential units although the housing project is still under construction period as stipulated in section 80-IB(10) of the Act. The CBDT vide Instruction No.4 of 2009 dated 30.06.2009 clarified that the deduction u/s 80-IB(10) of the Act can be claimed on a year to year basis where an assessee was showing profits from partial completion of the project in every year. It has also been clarified by the CBDT that on a later date, if it is found that the condition of the completion of project within the stipulated time is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the conditions prescribed for deduction u/s 80- IA(4)(iii) of the Act were complied with and that in the subsequent assessment year 2006-07 assessee was indeed allowed the deduction by the Assessing Officer. The Tribunal held that the denial of deduction on the aforesaid grounds in assessment yeas 2004-05 and 2005-06 was not justified. It was specifically noted that because in the first two years the minimum number of units were not located in the Industrial Park was not a valid ground for disallowing the claim especially when in the ultimate analysis the Industrial Park was developed in accordance with the approval granted by the Central Government. The following discussion in the order of the Tribunal worthy of notice :- 25. From the reasons assigned by the revenue authorities for rejecting the claim of the Assessee for deduction u/s.80-IA(4)(iii) of the Act, it is clear that an Assessee who adopts the percentage completion method of accounting of income from developing industrial park can get deduction of only that part of the profits that are offered to tax in the year in which the notification is received. Had the Assessee in the present case followed project completio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the same as admittedly the conditions for grant of such deduction were satisfied though at a later point of time but nevertheless before completion of assessment for those assessment years. We direct accordingly. The appeals of the Assessee are accordingly allowed. 58. The aforesaid decision of the Tribunal in the case of Ferani Hotels Pvt. Ltd. (supra), in our view, fully covers the controversy before us. In the present case also it is not in dispute that the assessee has developed and located the minimum number of 30 industrial units in the Industrial Park within the period specified in the Scheme as well as the provisions of section 80-IA(4)(iii) of the Act. It is also not in dispute that in the subsequent assessment years, the Assessing Officer has allowed the deduction u/s 80-IA(4)(iii) of the Act. In the instant assessment year, assessee has operationalised 21 industrial units out of the minimum 30 required to be developed. The balance of the 9 units have been completed on 09.05.2007 i.e. the date on which assessee has obtained the completion certificate from the Pune Municipal Corporation. Hypothetically speaking, if the assessee had not recognized the profits on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore its claim for assessment year 2007-08 was unjustly disallowed. 59. Before parting, we may also refer to the decision of the Hon ble Third Member of the Tribunal in the case of Marigold Premises Pvt. Ltd. (supra) relied upon by the Revenue before us. The issue in the case of Marigold Premises Pvt. Ltd. (supra) was the claim of deduction u/s 80-IA(4)(iii) of the Act in the context of the Industrial Park Scheme, 2002. In the case before the Hon ble Third Member of the Tribunal, assessee had undertaken construction of an Industrial Park approved under the IPS, 2002. Assessee claimed deduction for assessment year 2003-04 which was denied by the Assessing Officer on the ground that as per the approval under the IPS, 2002 assessee had to locate 30 units in the Industrial Park while assessee was able to locate only 6 units by 31.03.2003. The Hon ble Third Member of the Tribunal held that the deduction u/s 80-IA(4)(iii) of the Act could availed by the assessee only when the undertaking begins to operate an Industrial Park and such a conclusion was arrived at by the Hon ble Third Member of the Tribunal on the basis of the provisions of section 80-IA(4)(iii) of the Act read wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the scheme. (4) On approval under sub-rule (2), the Central Board of Direct Taxes, shall notify industrial parks for benefits under section 80-IA. 31.1 As could be noticed from the aforementioned Rule, in order to avail benefit under section 80IA, an industrial park has to begin its operations which can only be a subsequent event i.e., after it has developed to an extent where it fulfills the minimum criteria to be treated as an industrial park. However, Sub-Rule (1A), which refers to an undertaking set up in a Special Economic Zone, used the expression shall begin to develop ; if the intention was to give the same treatment to an undertaking which develops an industrial park, the same could have been mentioned in Sub-Rule (1) or it could have been included in Sub-Rule (1A). Rule making authority, in exercise of its delegated legislation, appears to have consciously maintained a distinction between an industrial park and an undertaking set up in a special economic zone whereby an industrial park gets eligibility to claim deduction only after it begins to operate the park and not before. During the developmental stage, particularly when the minimum development is not achi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the decision of the Third Member in the case of Marigold Premises Pvt. Ltd. (supra) does not help the case of the Revenue qua the instant assessee. Moreover, the claim before the Hon ble Third Member was with respect to an Industrial Park which was approved under the Industrial Park Scheme, 2002 whereas assessee s case is covered by the Industrial Park Scheme, 2008. 61. Therefore, considering the amendment of rule 18C of the Rules made w.e.f. 01.08.2008 where an undertaking begins to develop an Industrial Park is also eligible for the deduction so long as the development is otherwise complete within the period specified in the Scheme as well as it fulfills the conditions envisaged in the Scheme. The decision in the case of Marigold Premises Pvt. Ltd. (supra) went against the assessee because at the relevant point of time rule 18C of the Rules mandated that the deduction was available to the assessee when the assessee began to operate an Industrial Park whereas in the subsequently amended rule 18C of the Rules, which is applicable to the case before us, it is differently worded. The aforesaid difference has also been appreciated by the Hon ble Third Member in its decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the unexplained investment stands established. Therefore, in-principle, we uphold the stand of the income-tax authorities in making an addition of ₹ 99,00,000/- u/s 69C of the Act. Thus, Ground of Appeal No.3 raised by the assessee is dismissed. 66. With respect to the grievance of the Revenue against the telescopic benefit allowed by the CIT(A) in respect of unexplained investment of ₹ 99,00,000/- against the bogus purchase, we find that there is no error on the part of the CIT(A). The CIT(A) noted that after the sustenance of addition on account of bogus steel purchases in assessment year 2007-08 to the extent of ₹ 5,61,48,006/- that much cash would be available with the assessee to be set-off against the unexplained investment of ₹ 99,00,000/-. There is no material to find fault with the aforesaid finding of the CIT(A), which we hereby affirm. Thus, Revenue fails in its Ground of Appeal No.2 also. 67. In the result, appeal of the assessee for assessment year 2007-08 is partly allowed and that of the Revenue is dismissed. 68. Now, we may take-up the cross-appeals pertaining to assessment year 2008-09 vide ITA Nos.1414 1482/PN/2013 respective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2009-10 of ₹ 19,80,90,000/- and ₹ 3,16,31,476/- respectively. The said claim of deduction has been denied by the Assessing Officer as well as the CIT(A) primarily on the ground that the Industrial Park of the assessee was not notified by the CBDT as an eligible Industrial Park. In brief, the facts are that the project of the assessee consisted of three buildings, the details of which have been furnished by the assessee before the Assessing Officer and there is no dispute on these aspects. The sum and substance of the objection of the Assessing Officer was to the effect that the project E - Space was not duly notified by the CBDT and that the assessee also did not fulfill the condition of 30 units as laid down in the Industrial Park Scheme, 2002. The Assessing Officer has also observed that more than 25% of the allocated area is allotted to one Shri Ashok Puri which was also in violation of the provisions of section 80-IA(4)(iii) of the Act. The CIT(A) has also affirmed the decision of the Assessing on similar grounds. 72. In the above background, the plea of the assessee before us was that the construction of the said project was stared on 09.02.2005 and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial Park Scheme, 2002. The Ld. Representative submitted that the question of complying with the various conditions in Industrial Park Scheme, 2008 would not arise as on the date of completion of the project on 25.04.2007, the Industrial Park Scheme, 2008 was not notified. 74. On this aspect, the stand of the Revenue is that the assessee was entitled to claim deduction u/s 80-IA(4)(iii) of the Act only if the Industrial Park is notified under Industrial Park Scheme, 2002 or Industrial Park Scheme, 2008. In the present case, the project of the assessee has not been notified in either of the two schemes and therefore there is no question of allowing deduction u/s 80-IA(4)(iii) of the Act to the assessee. 75. We have carefully considered the rival submission. In the present case, there is no dispute that assessee has not received any notification in respect of the Industrial Park E - Space developed by it either under the Industrial Park Scheme, 2002 or Industrial Park Scheme, 2008. Notably, section 80-IA(4)(iii) of the Act provides that any undertaking which develops, develops and operates or maintains and operates an Industrial Park notified by the Central Government in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2009 which was rejected on the ground that the park developed by the assessee did not fulfill the requirements of Industrial Park Scheme, 2008. Contesting the aforesaid stand of the CBDT, assessee filed a Writ Petition before the Hon ble High Court contending that it was entitled for registration under Industrial Park Scheme, 2002 and was therefore eligible for exemption u/s 80-IA(4)(iii) of the Act. The aforesaid stand of the assessee was dismissed by the Hon ble High Court on the ground that when assessee filed the application for registration on September 23, 2006, the Industrial Park Scheme, 2002 had come to an end as such scheme was applicable only upto March 31, 2006. The Hon ble High Court noted that Industrial Park setup by the assessee was not operational/functional by March 31, 2006, and it became operational on a subsequent date. Under these circumstances, the Hon ble High Court negated the plea of the assessee that its claim be considered under Industrial Park Scheme, 2002. 77. In our view, the judgement of the Hon ble Delhi High Court in the case of Regency Soraj Infrastructures (supra) clearly covers the present controversy against the assessee. In the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce for the project. The assessee formed a subsidiary M/s Regencies PMCPL and inducted some professionals therein who were assigned the job of finding a joint venture partner. The said subsidiary company was instrumental in identifying an investor M/s ICICI ventures, with whom assessee formed a joint venture company. The subsidiary company was instrumental in negotiating a good price for the land to be transferred to the said joint venture company by the assessee. It was explained that because of the efforts of M/s Regencies PMCPL, appellant could sell the land to the joint venture and hence the claim of brokerage payment to M/s Regencies PMCPL was justified. The CIT(A) has also disagreed with the assessee and has sustained the addition. As a consequence, assessee is in appeal before us. 81. At the time of hearing, it was a common point between the parties that the brokerage paid to M/s Regencies PMCPL was on same lines as was paid by Shri Rajesh Patil, CMD of the assessee-company in his personal capacity. It was submitted that in the hands of Shri Rajesh Patil also, similar transaction had been carried out whereby the brokerage was paid to M/s Regencies PMCPL. The Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land. We find merit in the above submission of the Ld. Counsel for the assessee. From the various details furnished by the assessee in the paper book we find Regenesis had employed various persons with high educational qualifications and vast experience in the field of realty market since some of the employees had worked with Renonwed organisations in the realty market like Mahendra realty, Knightfrank, ICICI one source Ltd. ICICI Bank (property service Division), HDFC, Reliance Industries Ltd., DLF universal Ltd. etc. In our opinion by appointing Regenesis, the assessee and other persons could sell the vast land at a time and in some cases over the market price and therefore, the brokerage/commission so paid is an expenditure incurred wholly and exclusively in connection with such transfer and is allowable u/s.48(i) of the I.T. Act. 13.3 So far as the claim of the revenue that the assessee had sold the land at prevailing market rates and that the assessee has not received anything extra than the prevailing market price and for which reliance has been placed on one instance, we find from the copy of the development agreement dated 19-01-2007 (placed at pages 189 to 247 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively in connection with the transfer of the land which is an allowable expenditure u/s.48(i) of the I.T. Act. We therefore set-aside the order of the CIT(A) and direct the AO to delete the disallowance made. 82. The Ld. Departmental Representative has not disputed the aforesaid factual matrix and in view of the precedent by way of order of the Tribunal dated 30.06.2014 (supra) in the case of Rajesh Patil, we hold that the lower authorities have erred in disallowing the expenditure represented by the payment of ₹ 5,44,375/- to M/s Regencies PMCPL. As a result, the order of the CIT(A) is set-aside and the Assessing Officer is directed to delete the M/s Kolte Patil Developers Ltd. 55 addition of ₹ 5,44,375/-. Thus, assessee succeeds on Ground of Appeal No.3. 83. In the result, the appeal of the assessee for assessment year 2008-09 is partly allowed. 84. In the cross-appeal of the Revenue for assessment year 2008-09 the only issue is with regard to the addition of ₹ 1,68,41,376/- on account of bogus purchases, which has been deleted by the CIT(A). On this aspect, it was a common point between the parties that the issue related to purchases from the five par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax authorities. The facts and circumstances of the dispute relating to the deduction u/s 80-IA(4) of the Act in respect of E - Space project in assessment year 2009-10 continues to be similar to that considered by us in assessment year 2008-09. Therefore, out decision in the Ground of Appeal No.2 in assessee s appeal for assessment year 2008-09 would apply mutatismutandis herein also. As a consequence, the action of the lower authorities in denying assessee s claim for deduction u/s 80-IA(4) of the Act amounting to ₹ 3,16,31,476/- in respect of profits derived from the project E - Space is hereby affirmed. Thus, on this Ground assessee fails. 89. The last Ground of Appeal in appeal of the assessee is with regard to the disallowance of ₹ 12,23,903/- in respect of brokerage paid to M/s Regencies Project Management Company Pvt. Ltd.. The facts and circumstances on this issue are similar to those considered by us in the appeal of the assessee for assessment year 2008-09 vide Ground of Appeal No.3. Therefore, out decision in assessment year 2008-09 shall apply mutatismutandis in this appeal also. As a consequence, the order of the CIT(A) is set-aside and the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Co. is hereby affirmed. Thus, appeal of the assessee for assessment year 2003-04 is dismissed. 95. Now, we may take-up the appeal of the Revenue for assessment year 2004-05 vide ITA No.1478/PN/2013, which is directed against the order of the Commissioner of Income Tax (Appeals)-II, Pune dated 28.03.2013 which, in turn, has arisen from an order dated 31.12.2010 passed by the Assessing Officer u/s 143(3) r.w.s. 153A of the Act. 96. It was a common point between the parties that so far as the dispute in this appeal is concerned with regard to the disallowance of ₹ 38,32,375/- on account of bogus purchases, it is similar to the issue which has been dealt with by us in the Department s appeal for assessment year 2007-08 vide Ground of Appeal No.1. As a consequence, our decision in assessment year 2007-08 in the Department s appeal on this aspect shall apply mutatismutandis herein also. Thus, the Ground raised by the Revenue is dismissed. 97. In the result, the appeal of the Revenue for assessment year 2004-05 is dismissed. 98. Now, we may take-up the appeal of the assessee for assessment year 2005-06 vide ITA No.1412/PN/2013, which is directed against the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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