TMI Blog2011 (10) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... the conditions laid down for allowance of the deduction u/s.80IB were not justified, and hence not allowable. iv. The ld. CIT (A) further failed to appreciate that the assessee consciously tried to give colour to a claim, otherwise not allowable, to look and appear as allowable which proved the mens rea to evade tax. 2. The facts which are revealed from the record as under. The assessee is an AOP engaged in the business of civil construction and as a Developer and carries on its business activity under the name and style of M/s. Poonam Corporation. The assessee had undertaken a building project at Lokhandwala Complex, Oshiwara, Andheri (W) Mumbai. As noted by the A.O. the said project was consisting of six buildings viz A, B, C, D, E F. The assessee completed buildings A B partly and completed the construction of buildings D, E F. So far as building C is concerned, the assessee has aborted construction of the said building due to Costal Zone Regulations (CZR). The assessee filed the return of income for the A.Y. 2003-04 claimed the deduction u/s.80IB(10) of the Act of ` 59,49,677/-. The return filed by the assessee was processed u/s.143(1) of the Act and there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee why the deduction u/s.80IB(10) should not be denied. It appears that after lot of deliberations with the A.O. the assessee gave the letter withdrawing the claim of deduction u/s.80IB(10) and the reasons given by the assessee, which are reproduced in his letter dated 24.02.2006 addressed to the A.O. are as under:- 13. The written submission of the assessee was found to be absolutely unacceptable and therefore to prove beyond doubt that the project has clearly violated the norms of section 81IS(1) of the I.T. Act, the assessee was offered anopportunity for a joint inspection of the project in the presence of their architect and Departmental engineer. However, the assessee has come forward with a letter dated 24.02.2006 in which it has given up its stand by surrendering its claim of deduction u/s.80IB(10) and has admitted that the project is not likely to be entitled for such deductions. The letter addressed by Shri S.N. Shah, Managing Trustee of the assessee is reproduced below: This refers to our ongoing assessment wherein we have claimed deduction of ` 59,49,677/- u/s.80IB(10) in respect of profits from residential housing project at Versova, Andheri. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that it is not possible for them to complete the project by the deadline of 31.03.2008 prescribed under the section due to certain Coastal Zone Regulations. Instead of surrendering its rights on the basis of violations already pointed out, has chosen to surrender under apprehension that the project will not be completed before the target under the section. Thus the assessee has made it clear that it has no further arguments to offer in its defence. 4. The A.O. completed the assessment by disallowing the entire claim of the assesse under sec. 80IB(10) of the Act. In this background, the A.O. initiated the penalty proceedings u/s.271(1)(c) of the Act and levied the penalty of ` 18,46,849/- vide order dated 21.08.2006. The assessee challenged the penalty order before the Ld. CIT (A) and the Ld. CIT (A) deleted the penalty by giving the following reasons:- 10. I have gone through the written submissions made and the arguments before me of the A.R. and has found force in it. The learned A.R. has explained in detail each issue raised by the assessing officer. I have also gone through the copy of the plan approved by the BMC and F.S.I. granted by the BMC for the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect of contumacious conduct on the part of the assessee while filing the original return and penalty is leviable in such a case. However, as observed by Their Lordship of the Madras High Court in Ramdas Pharmacy s case (77 ITR 276), the entirety of circumstances must be taken into consideration and the conduct of the assessee from the inception to the conclusion of the assessment proceedings must be viewed, in order to find out whether a criminal intention of conscious concealment of true particulars of income of deliberately furnishing inaccurate particulars by the assessee has been established. 14. In view of above findings, I am of the opinion that the three issues on the basis of which deduction u/s.80IB(10) was to be disallowed are legal issues involving interpretation of the section. The appellant has interpreted the section from his legal point view as against the view taken by the A.O. In such cases it cannot be said that the assessee has concealed any income or has furnished inaccurate particulars of income. Looking to the facts and circumstances of the case that the appellant has voluntarily surrendered his claim in order to avoid litigation, there is no criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the plots were subsequently consolidated. The effect of the consolidation order is given subsequently, but as per the approved lay-out, both the flats were shown as a single plot and same has been approved by the BMC. Merely because the City Survey nos. are different otherwise the plots are adjoining to each other then it cannot be said that the plots were totally different having distance between the two. 9. Now, let us deal with the an other objection of the A.O. that the assessee has completed the building project in such a way that two units/flats can be sold to members of the same family like husbandwife, father-mother and same can be combined as a one residential unit. Now, this issue has been considered by the co-ordinate Bench in the case of Emgeen Holdings P. Ltd. vs. Dy. CIT Mumbai 47 SOT 98 and it is held that the amendment introduced to sec. 80IB(10) w.e.f. 1.04.2010 is prospective in nature and deduction u/s.80IB(10) cannot be denied merely because end-user by buying more than one unit on the name of the different family members has made one larger residential unit. The assessment year before us is 2003-04, hence, the amendment made to sec.80IB(10) that if by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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