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2015 (7) TMI 992 - ITAT AHMEDABAD

2015 (7) TMI 992 - ITAT AHMEDABAD - [2015] 44 ITR (Trib) 193 (ITAT [Ahm]) - Disallowance of deduction claimed u/s 80IB(10) - Held that:- Assessee has demonstrated with supportive documentary evidence that it is eligible for the claim of deduction u/s. 80IB(10) of the Act and the same is allowable not only on the profit disclosed in the pre-search returns of income filed u/s. 139(1) but also on the entire profit including the one disclosed additionally subsequent to the search proceeding u/s. 132 .....

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zed document and statement u/s. 132(4) - Held that:- Assessee is entitled for claim of deduction in respect of additional income detected consequent to search is entitled to claim of deduction u/s. 80IB(10) of Act which is part of sale proceeds of flats of the project in question including cost of land totaling to ₹ 2.75 crore detected as result of search. This view is fortified by decision of Hon’ble Gujarat High Court in case of CIT Vs. Suman Paper Boards Ltd. [2009 (2) TMI 66 - GUJARAT .....

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g a building housing projects as defined 80IB(10) of the Act). In the said report, the assessee has claimed special deductions u/s. 80IB(10) of the Act. Accordingly, assessee is eligible to claim deduction u/s.80IB(10) of the Act as discussed above.- Decided in favour of assessee. - IT(SS)A Nos. 380 to 382/ Ahd/2014 - Dated:- 28-7-2015 - S/Shri Shailendra Kumar Yadav and Anil Chaturvedi, JJ. For the Petitioner : Shri Anil Kshatriya, AR For the Respondent : Shri O.P. Vaishnav, CIT, DR ORDER PER S .....

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ural justice, bad in law and deserves to be cancelled. Ground No.2 On the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming the legitimate deduction u/s 80IB(10) of the Act of ₹ 8,59,151/-. The same may please be directed to be allowed such claimed. Ground No.3 On the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming the charging interest u/s 234A, 234B, 234C & 234D of the Act. H .....

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sions made before him as such the order is against principle of natural justice, bad in law and deserves to be cancelled. Ground No.2 On the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming the legitimate deduction u/s 80IB(10) of the Act of ₹ 53,57,814/-. The same may kindly be directed to be allowed such claimed. Ground No.3 On the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming .....

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in not considering the appellant s submissions made before him as such the order is against principle of natural justice, bad in law and deserves to be cancelled. Ground No.2 On the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming the legitimate deduction u/s 80IB(10) of the Act of ₹ 1,42,65,490/-. The same may kindly be directed to be allowed such legitimate claimed. Ground No.3 On the facts and in the circumstances of the case, the l .....

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Though the same is forming part of total profit of the Housing project and therefore, the same may kindly be considered as part of profit of the Housing Project. The same may kindly be directed to consider as part of profit of the Housing Project and be allowed as deduction u/s 80IB(10) of the Act. Ground No.5 On the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming the charging interest u/s 234A, 234B, 234C & 234D of the Act. He may be d .....

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wn as Madhav Park . On 21/07/2011 a search operation was conducted at the business premises of the assessee firm and partners residence premises. During the course of search proceedings certain incriminating materials were found and seized by the department. The assessee firm was issued notice under section 153A(1)(a) of the Income-tax Act, 1961 to file block return of income. In response thereto, the assessee firm has filed return for the block period showing total income at Rs.NIL after claimi .....

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there which will be dealt at appropriate place. The Assessing Officer also relied on the regular assessment u/s 143(3) of the Act in the assessee s case in this year and also in AY 2007-08 in which the claim of deduction under section 80IB(10) was rejected and the same has been confirmed by CIT(A)-XV/ITO/9(2)/266/09-10 dated 7th January, 2011. This issue is common in all three years. Assessee is before us opposing rejection of its claim while Departmental Representative made detailed submission .....

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assessee is a works contractor not eligible for deduction. It did not sell any unit to the purchaser but the society executed the sale deeds as a seller, according to the Assessing Officer this also proved that the assessee was merely a contractor. 4.1 In first appeal written submissions dated 26.4.2010, 26.10.2010, 13.12.2010, 28.12.2010 and 4.1.2011 were filed by the appellant have been placed on record by way of duly certified paper book. According to assessee for availing itself of the deduc .....

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ssing Officer s objection is that land being integral part of the project should have been owned by the appellant. According to the Assessing Officer the land was owned by the society, the approvals of local authority are not in the name of the appellant and that the appellant worked merely as a contractor of the land owners. Accordingly the claim was rejected and as stated above same was confirmed by CIT(A). 4.3 We find that the original development permission was obtained on 01/05/2004 as deta .....

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l flats + 18 shops as detailed at page no.366 of P.B. Originally total area owned by the society was of 16,815 sq.mtrs. out of which 14,843.27 sq. mts. of land was entrusted to the assessee firm to develop 74 residential tenements + 1 electric sub-station + 1 room and over head tank by an agreement in writing English translation of same annexed at P.B.page Nos.75 to 79 of the Stay Petition Nos.117 to 119 of 2014 which has also been filed before us as well. Balance land of 1971.73 sq. mtrs. was e .....

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aid 18 shops and 54 flats the BU permission was granted on 16.06.2012 by the competent authority as detailed in page No.366 of P.B. In this factual background, the CIT(A) was not justified to observe that assessee has completed construction of all types i.e. A to E types of residential units and 18 shops and thereby erred in holding that assessee violates condition (a) of provisions of section 80IB(10). In fact assessee has developed 74 residential tenements on separate area of land of 14,843.27 .....

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lop residential housing scheme which is more than 1 acre by itself. So condition as laid down under clause (a) of section 80IB(10) is fulfilled. There is no dispute over the area of construction as stipulated in clause (c). Further there is no violation of clause (d) as far as construction of 74 tenements is concern these are on a separate area 14.843.27 sq.mts. BU permission was granted on 22.09.2008 which has been properly appreciated by lower authorities. There is no violation of this clause .....

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ce of land measuring 14.843.27 sq.mts. on which the activity of construction fulfilled the conditions of section 80IB(10) as discussed above. The claim of the assessee cannot be negated on the ground that some portion was constructed by other firm assigned by the society which does not fulfill the condition of section 80IB(10). The claim of section 80IB(10) of non-allowable area is separate altogether which should not be mixed and confused with assessee s claim. In fact same has to be looked in .....

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ssessee u/s 80IB(10) of the Act for all three years as discussed above. The assessee fulfills all the conditions laid down in section 80IB(10). Assessing Officer is directed accordingly. This take care of ground no.2 in A.Ys. 2006- 07 to A.Y.2008-09. 5. Next issue in A.Y 2008-09 is regarding additional claim of deduction u/s.80IB(10) of the Act. "Modification of the correct figure in original ground No.3 On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax ( .....

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is admissible. The CIT (A) has noted on page 25 at item (ii) of appellate order dated 26/09/2014 that. "The additional income shown by the appellant in the block return and is claimed to be exempt u/s. 80IB of the Act. This income is calculated by the appellant based on the seized material (Page 116 of annexure A/19-Party No.40). This amount of additional income (of ₹ 1,47,83,193), an amount of ₹ 8,59,151/- and ₹ 53,57,814/- is to be reduced as discussed in Para 5.1 of th .....

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bad has an occasion to consider allow-ability of assessee's claim of deduction u/s. 54B of the Act against Capital Gain taxation on the "On money components" in the case of Shri Bhagwanbhai R. Prajapati in IT(SS)Appeal No. 377/Ahd/2014, wherein it has held that beneficial provisions play in their own sphere and they are meant for benefit of the tax payers. Relevant portion of the order dated 24/06/2015, is as under:- "6.2 Regarding allowability of claim of "On-money" .....

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losed income of the block period. 6.3 In the case before us the issue is with regards to the benefit of exemption under section 54B with regard to the on money. Both are beneficial provisions in their own spheres so drawing the same analogy, we are of the view that assessee is entitled for getting benefit of exemption u/s. 54B with regard to the 'On money'. This view is fortified by decision of Hon'ble Bombay High Court in the case of CIT vs. Sheth Developers (P) LTD. in ITA No. 3724 .....

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ssing Officer is directed accordingly. 5.3 In case before us, assessee has earned additional income which amount is disclosed consequence upon the search, hence it partakes the character of business income and the assessee has admitted that the said amount was a part of income earned from the project undertaken namely by it. Therefore, the amount has direct and proximate connection with the normal business/development activities, hence as eligible for deduction u/s. 80IB (10) of the Act. Once on .....

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ook profit and it has no other sources of income and whatever income arising to the assessee firm is business income. The head of income has to be determined from the nature of business which assessee was being carryied at the time of search. Therefore, additional income disclosed by the assessee being part and parcel of business income only i.e. already disclosed by the assessee firm during the course of search has been business income and the assessee is eligible for deduction u/s. 80IB(10) of .....

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said returns income. The said assessment orders were challenged before the concern CIT(A), who passed appellate orders on it negating claim of assessee. We find that assessee has demonstrated with supportive documentary evidence that it is eligible for the claim of deduction u/s. 80IB(10) of the Act and the same is allowable not only on the profit disclosed in the pre-search returns of income filed u/s. 139(1) but also on the entire profit including the one disclosed additionally subsequent to .....

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.Y. 2007- 08 in the case of Golden Developers Vs. ITO (OSD), Range-9, Ahmedabad dated 13/11/2014, it was held that in case the appellant is entitled for claim of deduction u/s. 80IB(10) in A.Y.2006-07 then the appellant is also eligible for the said deduction in A.Ys.2007-08 & 2008-09. Following same reasoning, we hold that the assessee on this additional income of ₹ 85,66,228/- for A.Y. 2008-09 is entitled for claiming deduction u/s. 80IB(10) of the Act as discussed above. Assessing O .....

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f deductions u/s. 80IB(10) of the Act. In this regard, stand of assessee has been that it is inbuilt provision of the Act that if an income is exempt either u/s. 2 (14), (10) or otherwise, due effect of the same has to be given while framing the assessment. Likewise, deductions u/s. VIA shall have to be allowed while computing total income such as 80C, 80IB(10) etc. even in respect of assessment under Chapter-XIVB i.e. 158BC/BD and also under Chapter XIV i.e. u/s. 153A/153C as it is specifically .....

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), has held that the on money is not recorded in the books of accounts. The finding of CIT (A) is without properly addressing the objections of the assessee. It is not in dispute that the 'On Money' is relatable to business income only, and there is no finding of the Revenue Authorities that it is otherwise, once it has been disclosed pursuant to search in the hands of the assessee. The department is unable to dislodged the same by any cogent reasoning. In such situation, Revenue Authori .....

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in the regular books of accounts which was in fact offered as income during the course of recording of statement u/s. 132(4) of the Act during the course of search proceedings carried out u/s. 132 of the Act will not be entitled to claim of deduction u/s.80IB(10) because same was also disclosed in return of income as per law. As stated in the assessment order, the assessee in view of the provisions of section 139(1) of the Act, has filed his original return for pre-search period. Subsequently, p .....

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Act only. The said books of accounts are duly audited and supported by the requisite audit report u/s. 80IB in form No. 10CCB dated 25/01/2012. It is an undisputed fact that the business activity of the firm is that of developing the housing projects under the name and style "Madhav Park (Nikol)" and there was no other business activity of assessee as certified by the auditor in the above said report in form No. 10CCB as per Sr. No. 24 of the report. We find that Hon ble Gujarat High C .....

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assessment on the said return. ITAT, Ahmedabad Bench in case of Jaynaben Rameshbhai Tailor Vs. DCIT, in ITA. No. 760 / Ahd / 2010 in order dated 30/01/2015 applying the ratio of Kirti Dahyabhai Patel (supra) held as under: "The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the I.T. Act, the return .....

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the case of the assessee having consistently shown income the assessment order is also framed on the basis of this return of income filed in response to notice u/s.153A of the Act. Therefore, it is not open to the revenue department to not allow statutory allowable deduction after accepting the same as additional income of the assessee. For the purpose of grant of relief u/s. 80IB(10) of the Act, the claim of the assessee is quite in tune with the ratio laid down in the above cases. In view of a .....

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bove factual and legal discussion, we are of the view that assessee is entitled for claim of deduction in respect of additional income detected consequent to search is entitled to claim of deduction u/s. 80IB(10) of Act which is part of sale proceeds of flats of the project in question including cost of land totaling to ₹ 2.75 crore detected as result of search. This view is fortified by decision of Hon ble Gujarat High Court in case of CIT Vs. Suman Paper Boards Ltd. [2009] 221 CTR 781 (G .....

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see's statement u/s. 132(4) of the Act. Thus, a correct interpretation of the provisions of Sec.l58BB(l), 158BB(4) and 158BH as applicable to the facts and circumstances of the case, the assessee is eligible for deduction u/s.80I/80IA in respect of undisclosed income assessed by Assessing Officer under the block period. On appeal by revenue, the Hon ble High Court observed that we are of the opinion that the assessee will be eligible for deduction u/s. 801/80IA of the Act in respect of undis .....

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ut its business activities. Assessee claimed deduction u/s.80IB(10) while computing undisclosed income. The Assessing Officer rejected the claim of the assessee. The CIT (Appeals) allowed the claim in its favour. On second appeal, the Tribunal upheld the order of the CIT(Appeals). On revenue's appeal to High Court held that: Consequent to the amendment by the Finance Act, 2002, with retrospective effect from 01/07/1995, the total income or loss has to be computed in accordance with provision .....

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o. 2610/Ahd/2014 order dated 19/12/2014 by ITAT C Bench, Ahmedabad, wherein ITAT while disposing of the appeal, the Hon ble Tribunal vide para 12 observed as under:- "12. We find that this Bench of the Tribunal in the case of CIT v. M/s. Shree Padmavati Developers (Supra) has held as under:- "7. We have heard both the sides. We have also perused the impugned statement of Mr. Mahendra Kataria recorded on 27/28.12.2006. In reply to a question, it was categorically stated, quote "(i) .....

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the character of business income and eligible for the deduction u/s. 80IB/80IA of the I.T. Act. In the present case, the assessee has admitted that the impugned amount was part of the sale consideration received in cash at the time of booking of flats and, therefore, the amount had direct and proximate connection with the normal business of construction activity, hence eligible for the deduction u/s 80IB(10) of the I. T. Act. Because of the factual as also legal aspect of the case, we hereby co .....

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