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2015 (3) TMI 880 - ITAT DELHI

2015 (3) TMI 880 - ITAT DELHI - TMI - Deduction u/s. 80IB(10) - Sub projects namely Brahmputra, kaveri, Amravati and Damodar which are the part of main project i.e. Shipra Riviera in which the development and construction work was started before Ist October, 1998 and assessee did not fulfill the requisite conditions as laid down in sec. 80IB(10) as held by AO - separate project v/s whole project - CIT(A) allowed the claim - Held that:- In the present assessment year under consideration as well a .....

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assessment years 2000-01 and 2001-02 which has also been followed by the ITAT in the case of assessee itself for the assessment years 2004-05 and 2006-07. Respectfully following the same, we uphold the First Appellate Order in this regard with this finding that the Learned CIT(Appeals) was justified in directing the Assessing Officer to delete the disallowance of ₹ 1,19,04,619 which was made by the Assessing Officer while denying the claimed deduction under section 80-IB of the Act in resp .....

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ng down the facts of the case for the assessment year under consideration by passing a speaking order. - Decided in favour of assessee for statistical purposes.

Disallowance of expenses claimed on repair, maintenance, travelling, conveyance, stationery etc.- Held that:- Assessing Officer has made the disallowance considering the element of non-business expenditure as well as self-made vouchers on record in a few instances. The ITAT in the assessment year 2004-05 has deleted this addi .....

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he same has been rectified by the Learned CIT(Appeals) vide its order dated 09.12.2011 under sec. 154 substituting the correct amount as ₹ 2,54,750 as added by the Assessing Officer - Held that:- We find that the Assessing Officer has made the disallowance of ₹ 2,54,750 debited in P & L account as membership fee on the basis that the amount is not expended wholly and exclusively for the purpose of business and cannot be even equated with the business promotion or similar such expense .....

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lopment and real estates, this subscription is relating to business purpose of the assessee. Following the same, we direct the Assessing Officer to delete the addition. The ground No. 5 is accordingly allowed. - Decided in favour of assessee

Depreciation on car disallowed - AO has made this disallowance at 10% of the claimed depreciation account of possible personal use by the directors of the company - CIT(Appeals) has upheld the same on the basis of his predecessor order in this reg .....

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tfully following this decision, we direct the Assessing Officer to delete the addition - Decided in favour of assessee. - ITA No. 5250/Del/2010, ITA No. 5588/Del/2010 - Dated:- 19-3-2015 - Shri I.C. Sudhir And Shri B.C. Meena JJ. For the Appellant : Shri Prateek Gupta, CA For the Respondent : Shri BRR Kumar, Sr.DR ORDER Per I.C. Sudhir: JUDICIAL MEMBER In these cross-appeals, the Revenue has preferred the appeal against the First Appellate Order on the following grounds: 1. The Learned CIT(Appea .....

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rned CIT(Appeals) has erred in law and on facts by allowing the deduction under sec. 80IB(10), ignoring the fact that assessee had started the construction activities prior to 01.10.1998 and was not fulfilling the conditions as laid down under sec. 80IB(10) of the I.T. Act, 1961. 3. That the Learned CIT(Appeals) has erred on facts and in law in allowing the deduction under sec. 80IB(10) on the part of the project treating it a separate project, while approval of the whole project and constructio .....

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iviera is covered by the order dated 30.10.2009 of the Delhi Bench of the ITAT in the case of assessee itself for the assessment years 2000-01, 2001-02 and 2002- 03 in ITA Nos.4628/Del/2003. 3719/Del/2004 & 1329/Del/2005, a copy whereof has been made available on record. The learned AR referred para Nos.17 to 26 of the said order of the ITAT in support. The Learned AR pointed further that the same issue has again decided in favour of the assessee by the ITAT for the assessment year 2004-05 a .....

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nt and construction of houses of different categories. The assessee company had undertaken the commencement of construction on two major complexes mainly M/s. Shipra Riviera at Indirapuram and M/s. Shipra Sun City at Indrapuram. Each complex was further sub-divided in two small projects consisting of number of flats of various sizes. The Shipra Riviera Complex was sub-divided into six projects while Shipra Sun City Complex was sub-divided into five projects. The development and construction of f .....

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ng Officer disallowed the claimed benefit in respect of Brahamputra, Kaveri, Amravati and Damodar Projects falling in Shipra Riviera Complex. The Assessing Officer observed that the development and construction on the above projects in Shipra Riviera Complex had commenced much before the prescribed dates as contained under the provisions of sec. 80IA(4F) and section 80IB(10) of the Act. The Learned CIT(Appeals) following the decision of ITAT on an identical issue in the case of assessee itself f .....

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r the assessment year 2000-01 & 2001-02 (supra). For a ready reference, para nos. 17 to 26 thereof are being reproduced hereunder: 17. We have considered the rival contentions and have gone through the orders of the authorities below and the relevant provision of law. Section 80lA Inserted by Finance (No.2) Act 1991, subsection (4F) during the relevant assessment year reads as under:- 80lA(4F) This section applies to an undertaking, engaged in developing and building housing projects approve .....

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.4.2000. Sub-section 10 of Section 80IB at the relevant time reads as under:- "80IB(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March,2008 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1 .....

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use,- (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 .....

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nd square feet where such residential Unit is situated within the city of Delhi or Mumbai or within twenty-five Kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; (and) (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less." 19. It is crystal clea .....

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ith the condition of commencement of development and construction of four projects of Shipra Riviera Complex after 1.10.1998. He therefore declined the exemption claimed. 21. The assessee company had claimed benefit of Section 80lA subsequently amended to 80IB in respect of the four projects from out of the Shipra Riviera Complex, and in respect of one project from out of the Shipra Sun City Complex. The income derived from out of the housing projects was claimed to be exempt from tax, subject t .....

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r from the order of the AO that he has basically declined deduction u/s 80IA/80IB on following plea:- i. The assessee has purchased the land on which proposed construction was to be done prior to 01.10.1999. ii. The development authority had sanctioned the plan of construction prior to 01.10.1999. (iii). The assessee has advertised for booking of flats in the newspaper prior to the insertion of section 80IA i.e. 01.10.1998. (iv). The assessee has undertaken earth filling activity of the land so .....

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AO, the date of purchase of land alone cannot be and should not be considered as a criteria for deciding the actual time of commencement of development and construction of housing project. Similarly, the AO himself has observed at page 10 in para 7.4 that approval of plan by the lower authorities may either get automatically cancelled for the expiry of the time limit when no construction Is carried out, or may be cancelled by the assessee himself at his own and replaced by a new plan depending u .....

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rtaking the construction and development thereon prior to 1.10.1998. In this respect, we found from the record that foundation 10 laying ceremony and Bhoomi Pujan was performed by the assessee only after the specified date i.e. 1.10.1998 and that construction contracts with the contractors were entered into by the assessee in the form of written agreement only after the specified date i.e. 1.10.1998. In this respect, the observation of the AO was that foundation laying ceremony can be held after .....

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nd/or the construction material was available at the site when project was Initiated before bhoomi pujan was performed. In respect of the observation of the AO to the effect that construction contracts with the sub contractors in writing always be framed for convenience is wrong and incorrect, as nothing was brought on record by the "AO to substantiate his assertion that these agreements were entered Into after the specified date. The assessee is a big company and had undertaken a huge proj .....

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ction contract is awarded to them hand thereafter only construction work starts. Once the construction is undertaken by the contractors, the bills are raised by him and the required tax at source out of every payment made to the contractor for each specific project, is deducted at sources. Thus, the presumption of the AO to the effect that construction contract/agreement has no relevance to the implementation of the project undertaken by the assessee is factually Incorrect and not supported by a .....

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s development for a purpose. Had it been development of Independent park only, it could be done at any point of time. Even if it is development of a farm house or a garden, it can also be done at any point of time but if it is development of a housing project, it cannot be said that such development can be undertaken prior to undertaking of the construction of the housing project itself. The language so used by 'the legislature is, the commencement of the development and construction of the .....

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using project, lot of different material is required to be stored around ,the project like sand, bricks, roll, iron and steel, huts for labourers etc. For all these purposes, the "and was required to be leveled or cleaned, but It cannot be taken as commencement of development insofar as development itself has no meaning unless it is in reference to construction of project. In Section 80IA, the legislature has used the language in a very simple form "commences development and constructi .....

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cussing in length and recording a categorical finding with respect to each of the project undertaken by the assessee for which claim was made and also the projects for which no claim u/s 80IA was made by the assessee, the CIT(A) held that all the conditions contained u/s 80IA(4F) subsequently amended to Section 801B(10) of the Act were compiled with, the assessee was eligible for claim of benefit. It was further observed that language used in the Act is very clear and unambiguous wherein exempti .....

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h will not amount to construction of housing project within the meaning of sec 80IA(4F). Therefore assessee's act of mere levelling the earth prior to 30-9-1998 will not snatch the deduction permissible on account of construction of housing project which was undisputedly carried out only after 30-9-1998. The CIT(A), also observed that the technical interpretation taken by the AO carried a statute away from the original meaning and intention of the legislature and found that earth filling act .....

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performed after 30.9.1998, A categorical observation was made by the CITCA) with respect to the findings, recorded by the AO in his assessment order for AY 1998-99 wherein AO himself has stated 'In bold letters that four projects in question commenced in the next financial year. Merely getting booking money in advance in respect of project which commenced development and construction of housing project after 1st October,1998 will not disentitle the assessee from the benefit of deduction u/s .....

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x are as under:- (i) Brahmputra 5.10.1998 (ii ) Cavery 10.10.1998 (iii) Amravati 6.10.1998 (Iv) Damodar 15.10.1998 25. Since the work order itself in case of all the four projects were subsequent to 1.10.1998, there is no reason to assume that commencement of development and construction of housing project was started prior to 1.10.1998 for the purpose of declining the claim of deduction u/s 80IA(4F)/80IB( 10) of IT Act. As per evidence placed on record, contract for construction of all the four .....

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ncement of development construction of housing projects was also held that merely on the plea that assessee has incurred expenditure on cleaning of land and towards puja prior to 1.10.1998 will not take away assessee's right to claim deduction u/s 80IB( 10) which he is entitled in respect of housing project to be commenced after 1.10.1998. It was specifically observed that these expenses do not indicate that development and construction of housing project had been commenced before1.10.1998. .....

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any merit in the action of the Assessing Officer . 6. In the present assessment year under consideration as well as, no reason to assume that commencement of development and construction of the housing projects was started prior to 01.10.1998 for the purpose of declining the claim of deduction under sec. 80IA(4F)/80IB(10) of the Income-tax Act, 1961, has been shown by the Revenue and keeping in mind the fact that contract for construction of all the four projects of Shipra Riviera was awarded on .....

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which was made by the Assessing Officer while denying the claimed deduction under section 80-IB of the Act in respect of the above stated four projects. The related ground Nos. 1 to 3 involving the issue are thus rejected. 7. In result, the appeal is dismissed. ITA No.5588/Del/2010: 8. The assessee has questioned First Appellate Order on the following grounds: 1. Because the Learned CIT(Appeals) has erred in confirming addition of ₹ 232,556 on account of charity and donation without assign .....

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onfirming addition of ₹ 854,750 as non-business expenses. 6. Because the Learned CIT(Appeals) has erred in confirming addition of ₹ 87,616 on account of depreciation on car. 9. The Learned AR submitted that the assessee does not wish to press ground Nos. 3 and 4 having a nominal amount. These grounds are accordingly rejected as such. 10. Regarding the other grounds, questioning the additions made on account of charity and donations, out of various expenses claimed on repair, maintena .....

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CIT(Appeals) has upheld the additions in question following the First Appellate Order for the assessment year 2004-05 in the case of the assessee on similar issues. The submissions of the Learned AR before us is that the very basis on which the Learned CIT(Appeals) has upheld the additions and disallowances in question was order of his predecessor in the assessment year 2004-05 wherein the ITAT has taken a different view in the appeal preferred by the assessee in the assessment year 2004-05 aga .....

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disallowance made by the Assessing Officer is justified. Since the Learned CIT(Appeals) has simply upheld the addition on the basis of First Appellate Order for the assessment year 2004-05 without discussing the related facts on the issue for the assessment year under consideration, we set aside the matter to the file of the Assessing Officer to decide the issue afresh noting down the facts of the case for the assessment year under consideration by passing a speaking order. The ground No.1 is ac .....

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ce cannot be made in absence of even a single specific instance of non-verifiablity of the expenses or expenses having been incurred for nonbusiness purposes. Following this decision of the ITAT for the assessment year 2004-05, we direct the Assessing Officer to delete the addition of ₹ 1,00,000 in question. The ground No.2 is accordingly allowed. 13. Regarding the addition of ₹ 8,54,750 as non-business expenses questioned in ground No.5, the Learned AR submitted that the amount is w .....

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such expenses. The ITAT in the assessment year 2004-05 has deleted similar addition with the finding that it was for the business purpose of the assessee. The membership fee was paid to National Real Estates Development Council which was established in the year 1998 under the aegis of Union Ministry of Housing & Urban Poverty Alleviation, Government of India for the development and promotion of housing and real estates sector in India. The ITAT held that since the assessee is in the business .....

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