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2016 (2) TMI 698 - ITAT KOLKATA

2016 (2) TMI 698 - ITAT KOLKATA - TMI - Revision u/s 263 - Deduction u/s 80IB(10) to be disallowed - Held that:- Cl. (d) of s. 80-IB(10) inserted w.e.f. 1st April, 2005 which provides that deduction under s. 80-IB(10) would be allowable where the commercial user does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less. In the absence of any restriction under the Act, it was not open to the Tribunal to hold that the project .....

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, therefore, it cannot be applied for the period prior to 1st April, 2005. In the present case, the plan for construction of the Housing Project at 1/1, R.R.L.Mitra Road, Kolkata 700085 was sanctioned by the Kolkata Municipal Corporation 09.12.1999, i.e., prior to 1-4-2005. In view of the aforesaid decision on the point, we do not find that any useful purpose will be served by examining this issue again by the AO, as admittedly the plan sanction in the case of the Assessee was prior to the statu .....

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t enquire or examine as to whether commercial area in the project exceeded to statutory limits laid down in Sec.80IB(10)(d) of the Act. We, therefore, quash the order u/s 263 of the Act and allow the appeal of the assessee. - ITA No.807/Kol/2012 - Dated:- 15-1-2016 - Shri N.V.Vasudevan, JM & Shri Waseem Ahmed, AM For The Appellant : Shri D.S.Damle, FCA For The Respondent : Shri Sandeep Chaube, CIT(DR) ORDER Per Shri N.V.Vasudevan, JM This is an appeal by the assessee directed against the ord .....

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o claim of deduction u/s 80IB(10) of the Act : a) Copy of the floor wise Sanctioned Plan made by the CMC (dated 09.02.1999) a) Details and Certificate regarding date of completion of the project obtained from CMC. c) Details regarding the name and address of the Flat Purchaser, with area of flat, and consideration received from them. d) Details of changes made in promoter and Developer since inception of Project Construction. 3. On 29.09.2009 the Assessee filed details of flat sold with name of .....

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sued another show cause letter dated 30.11.2009, in which the AO pointed out as follows:- 1. During the course of hearing you had been requested. vide note sheet dated f01.09.2009, 29.09.2009 and 27.10.2009 to produce the following details:- a) Copy of floor wise & flat wise plan sanctioned by Calcutta Municipal Corporation (CMC). b) Details of changes made in promoters & Developers since very inception of the housing project. c. Details of reconstruction of existing Business, if any. Th .....

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with the return for the Assmt.Year. 2004-05. As per 1. T Act, the plan sanctioned during the F.Y. 1999-2000, requires that the construction of the project should be completed within four years from the end of the Financial Year it which the plan. has been sanctioned i.e. on or before 31.03.2004 and completion order of the construction to be obtained from the plan sanctioning authority for the purpose of claiming deduction u/s 80IB(10). As per 1. T. Act, the date of completion certificate issued .....

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.e. Assessment year, : 2007-08, as submitted by you, reveals that the total area of some of the flats were more than '1500 S. ft. and shown the same as "Super B area. During the course of hearing, you were requested to submit the copy of detailed floor wise plan sanctioned, in order to verify the area of flats constructed in each floor, but for reasons best known to you, you have failed to submit the same for verification and hence failed to substantiate that the area of flats sold were .....

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Road, Kolkata-700085 ( under the jurisdiction of Calcutta Municipal Corporation) on the basis of a sanctioned plan of CMC dated 09.12.1999. From the records of earlier years, it further appears that the plot of land was originally owned by one "Shree Shree Iswar Brojeswar Mahadev Thakur Jew Trust as Debottar Estate" and in May, 1995 by virtue of an order of the Hon ble High Court, Kolkata the said property was leased out to 5 (five) persons who on their part nominated 10 (ten) persons .....

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Agreements with other nominees Oil 28.06.1996 to develop the said premises for construction of multistoried building. By virtue of the said Joint Venture Agreements 4 (four) sale agreements were executed on 29.-6.1996 between the out going leases as "Vendor" and the intending purchasers. Afterwards, the remaining existing leases for better result executed a MOU between eight leases to construct the building and as per clauses of the MOU, the leases handed over the said plot of land in .....

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d. c) Hence in .your case,. the first condition required to be satisfied. for availing deduction u/s 80-IB(10), as above was not satisfied, since the present A. 0. P. with 5 (five) members is the re-constituted AOP, debarring you the claim of deduction u/s 80-IB(10) amounting to ₹ 1,62,09,343/-, which has wrongly been claimed by you. d)From the records of earlier years. it is also seen that the original members of the A.O.P. have contributed their portions of lands for construction of the .....

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paid on such members capital in the form of land should not be disallowed. Considering the above facts and in the circumstances stated above, you are requested to show cause all to why your claim of 'deduction u/s 80IB(10) to the tune of ₹ 1,62,09,343/- and 'interest paid on members capital in the form of land' should not be disallowed for non satisfying the conditions laid down in the Act for allowing such deduction. 5. The AO did not allow the claim of the assessee for deduc .....

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cial years from the end of the financial year in which original plan was sanctioned on 09.12.1999 relevant to financial year 1999-2000. For all the above reasons the AO denied the benefit of deduction u/s 80IB(10) of the Act to the assessee. 6. It is not in dispute before us that the assessee filed an appeal against the order of assessment by the AO and the CIT(A) vide his order dated 10.05.2010 held that the assessee fulfilled all the conditions for grant of deduction u/s 80IB (10) of the Act a .....

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gone RECONSTRUCTION within the meaning of sec. 80IB(2) and hence ineligible for deduction u/s 80IB(10). (ii) The assessee AOP s business of development and construction had come existence well before 01-10-1998 and hence ineligible for deduction u/s 80IB(10). (iii) The assessee AOP has committed infringement of provisions of sec. 80IB(10)(c) of the I.T.Act, 1961 and hence ineligible for deduction u/s 80IB(10). (iv) The assessee AOP has committed infringement of provisions of sec.80IB(10)(d) of .....

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ion makes an order erroneous as the Assessing Officer is required to act as an Investigator. Such an order is also prejudicial to the interest of the Revenue. 8. After hearing the submissions of the assessee the C.I.T. ultimately passed the impugned order in which he held as follows :- 5.1 There is no dispute that the A.O has not considered the above issue while verifying the claim of deduction under section 80IB of the Act. The Assessing Officer has been entrusted the role of an investigator, p .....

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right of appeal against the orders of the Assessing Officer. Section 263 has therefore been enacted to empower the Commissioner to correct an erroneous order passed by the Assessing Officer which he considers to be prejudicial to the interest of the revenue. The provisions of section 263 would loose significance if they were to be interpreted in a manner that prevented the Commissioner from revising the erroneous order passed by the Assessing Officer, which was prejudicial to the interest of the .....

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lso, I am of the view that the orders passed on an incorrect assumption of facts or incorrect application of law or without applying the principles of natural justice or without application of mind or without making requisite inquiries will satisfy the requirement of the order being erroneous and prejudicial to the interest of the revenue within the meaning of section 263. 5.2 Considering above, the assessment order passed by the A.C. is set aside with a direction to the AO to verify that the ab .....

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d decided by CIT(A) in the regular appeal filed by the assessee against the order of AO dated 18.12.2009 passed u/s 143(3) of the Act. It was his submission that in view of clause (c) to Explanation - 1 to section 263(1) of the Act, the C.I.T. does not have jurisdiction to consider the matter which has already been considered and decided in an appeal by CIT(A). It was further submitted by him that though factually the issues considered in the proceedings u/s 263 of the Act were already considere .....

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such a plea before the Tribunal. The learned DR however placed reliance on the order of C.I.T. 11. We have given a careful consideration to the rival submissions. It is clear from the order of AO dated 18.12.2009 u/s 143(3) of the Act and the show cause notice issued u/s 263 of the Act dated 30.01.2012 that the three out of the four issues set out in the show cause notice u/s 263 of the Act were considered by the AO while framing the assessment. It is not in dispute that the CIT(A) has given a .....

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aised by C.I.T. in the show cause notice dated 30.1.2012 u/s 263 of the Act is concerned, the same relates to the existence of build up area of more than 2000 sq.ft in the project completed by the assessee. On this issue we find that the assessee in reply to the show cause notice u/s 263 of the Act had specifically pointed out before CIT as follows :- d)Built-up area of Shops more than 2000 sq ft. In this regard we would like to put forward as under : 1. That your assessee has built and construc .....

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oned plan also. 13. The C.I.T. has not found this plea of the assessee to be false. Apart from the above we find that the existence of covered area in the housing project will not be applicable for housing projects, whose building plans had been sanctioned prior to the amendment to section 80IB(10)(d) of the Act. It has been so held by the Hon ble Bombay High Court in the Brahma Associates 333 ITR 289 (Bom). The Hon ble Bombay high Court held that on the date when the legislature introduced 100 .....

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Thus, it was evident that the legislature intended to allow deduction to all housing projects approved by a local authority with or without commercial user to the extent permitted under the DC Rules. Once the local authorities can approve a project to be a housing project with or without commercial user, then the project approved is eligible for deduction under s. 80-IB(10) irrespective of the fact that the project is approved as housing project or as residential plus commercial . Fact that prio .....

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conclusion is further fortified by cl. (d) of s. 80-IB(10) inserted w.e.f. 1st April, 2005 which provides that deduction under s. 80-IB(10) would be allowable where the commercial user does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less. In the absence of any restriction under the Act, it was not open to the Tribunal to hold that the projects approved by the local authorities having residential buildings with commerci .....

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