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2015 (8) TMI 1160 - ITAT AHMEDABAD

2015 (8) TMI 1160 - ITAT AHMEDABAD - TMI - Income disclosed during the survey - treated as Income from Other Sources or Business Income - disallowance of deduction u/s 80IB on the income disclosed during the survey - Held that:- We do not find any justification for the different stand of the Revenue authorities - one at the time of survey and another at the time of regular assessment. During the course of survey, the Revenue authorities themselves have considered the receipt noted in the diary t .....

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e House project.

Similar issue is considered by the ITAT, Ahmedabad Bench in the case of M/s. Nilkanth Developers [2014 (12) TMI 928 - ITAT AHMEDABAD] to hold that the amount was the receipt from developing and building of housing project in the name and style of ‘Ornate House’ which was eligible for deduction u/s 80IB(10) - Decided in favour of assessee. - ITA No. 2966/Ahd/2014 - Dated:- 7-8-2015 - SHRI G.D. AGRAWAL AND SHRI KUL BHARAT, JJ. For The Assessee : Shri Mehul Shah, AR For .....

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the time of hearing before us, the ld. Counsel for the assessee did not press this ground of appeal; accordingly the same is rejected as not pressed. 4. The ground No.2 of the assessee s appeal reads as under:- 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in treating income of ₹ 76,25,000/- disclosed during the survey as Income from Other Sources instead of Business Income and disallowing deduction u .....

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, after claiming deduction u/s 80IB(10) at ₹ 1,18,96,902/-. The Assessing Officer accepted the assessee s computation of income except holding that the sum of ₹ 76,25,000/- which was surrendered by the assessee during the course of survey is to be assessed under the head income from other sources and thus, not entitled for deduction u/s 80IB(10). Consequently, he assessed the income of the assessee at ₹ 76,25,000/-. On appeal, the CIT(A) upheld the finding of the Assessing Offi .....

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to receipt of on-money from Ornate House project. The Survey Authorities recorded the statement of the assessee and in reply to the question No.11, it was admitted by the assessee that the noting in the diary was related to the receipt of on-money for the booking in the project Ornate House . The assessee surrendered the said on-money amounting to ₹ 76,25,000/-. In the books of accounts, the assessee credited the sum of ₹ 76,25,000/- as business income. That, the entire income was f .....

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ment of on-money. The assessee did not have any other details except that was recorded in the diary found during the course of survey and seized by the Revenue. During the course of survey, the survey team held that in the said diary the assessee has recorded the details of onmoney received for booking of flat. The assessee accepted the view of the survey team and offered the same as its income. That, the assessee did not have any other business activity except the one housing project which was .....

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most identical. He, therefore, stated that since the facts of the case of the assessee and M/s. Nilkanth Developers are identical, the decision of ITAT in the case of M/s.Nilkanth Developers would be squarely applicable to the case of the assessee. 8. The ld. Departmental Representative, on the other hand, relied upon the orders of the authorities below and he pointed out that the CIT(A) has discussed the issue at length and he has sustained the disallowance made by the Assessing Officer on two .....

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en by the CIT(A) is that before the Assessing Officer the assessee did not furnish the complete date-wise details of the receipt of on-money, i.e, name of the person from whom the on-money was received and the date of receipt of such on-money. He, therefore, submitted that the order of the Assessing Officer has rightly been sustained by the CIT(A) and the same should be upheld. 9. We have carefully considered the arguments of both the sides and perused the material placed before us. The first le .....

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uction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 but not later than the 31st day of March, 2005, within four years from the end of the financial year in which th .....

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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 a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in acco .....

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nd one thousand and five hundred square feet at any other place; (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed three per cent of the aggregate built-up area of the housing project or five thousand square feet, whichever is higher; (e) not more than one residential unit in the housing project is allotted to any person not being an individual; and (f) in a case where a residential unit in the housing project is allotted to a .....

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eclared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central or State Government). 10. From the above, it is evident that the assessee is entitled for 100% deduction of the profit derived from such housing project . Therefore, the only requirement to be eligible for deduction u/s 80IB(10) is that the profit should be derived from the eligible housing projects. In the case unde .....

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(10) would be allowed only in respect of the profit which is worked out as per receipt recorded in the regular books of accounts found at the time of survey and not in respect of the on-money which was found recorded in a diary. In our opinion, the deduction u/s 80IB(10) is to be allowed on the 100% of the profit derived from the housing project. 11. Now, the question is whether the sum of ₹ 76,25,000/- is the profit derived from the housing project. Admittedly, during the accounting year .....

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No.11 put by the officer, while recording the statement of the assessee. For ready reference question No.11 and reply thereto are reproduced below:- Q.11 During your survey, we have found one diary Valentinel as Annexure BF-5 in which you have written in page no. 2 to 9, the details of on money received for booking of plat in Ornate House and the details of distributionof the same and the total on which is ₹ 76,25,000/- (Seventy Six Lakhs Twenty Five Thousand). So you are asked to give th .....

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fore 31.03.2010. (Original statement is recorded in Gujarati, however, its English translation was supplied by the assessee) 12. From the above, it is evident that, as per Revenue, the noting in the diary is the details of on-money received for booking of the flat in Ornate House project and the total of such receipt is ₹ 76,25,000/-. The assessee was asked to state how it is reflected in the assessee s books of accounts. In response to which the assessee admitted the receipt was on-money .....

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Ornate House by the Revenue authorities as well as the assessee. Now, the Revenue is taxing the sum of ₹ 76,25,000/-, but instead of business income, treating the same as income from other sources. We do not find any justification for the different stand of the Revenue authorities - one at the time of survey and another at the time of regular assessment. During the course of survey, the Revenue authorities themselves have considered the receipt noted in the diary to be on-money received f .....

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ncome from Ornate House project. We find that similar issue is considered by the ITAT, Ahmedabad Bench in the case of M/s. Nilkanth Developers vide ITA No.2610/Ahd/2014, wherein the ITAT after considering the factual and legal position in detail held as under:- 13. In the instant case, we find that it is not in dispute that the only business of the assessee was of developing and building of housing project styled Nilkanth Heights Project . No material has been brought before us to show that the .....

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