TMI Blog2016 (5) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... cement certificate dtd.19.06.1998, occupancy certificate on 29.10.2001 and other documents from the CIB Branch. However, all these documents were pertaining to Building No.3 on the aforesaid plot. The said building no.3 was never constructed by the assessee. Thus, we found that even reopening of assessment was not based on correct reasoning insofar as building No.4 constructed by the assessee was after receipt of approval letter from the municipality dated 25-1-2001 with reference to application No.3501, dated 29-9-2000. Thus, there was no reason to believe that there was any escapement of income with respect to building No.4. As per materials placed on record, we found that assessee was a developer of housing project as a whole and not merely a contractor, insofar as entire development was to be undertaken as per the approval given by municipal authority for development of entire housing project with basic service like sewerage, electricity etc. Thus, assessee is not adversely affected by the explanation inserted by Finance (No.2) Act, 2009, w.e.f.1.4.2001 below section 80IB(10). All the preconditions for availing benefit of section 80IB(10) had been complied with. The detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the order passed u/s. 143(3) had examined in detail the claim made by the appellant u/s. 80IB(10) of the Act. g. Merely on the basis of change of opinion jurisdiction for reassessment cannot be assumed; and h. The appellant was not a works contractor. 4. Rival contentions have been heard and record perused. The facts of the case are that the assessee filed return of income for A.Y.2004-05 declaring income of ₹ 1,20,550/-. The assessment u/s. 143(3) of the Act was made vide order dtd. 26.12.2006 determining the total income at ₹ 5,05,30,950/-. The assessment order made on enhanced income on account of disallowance of assessee s claim of deduction u/s. 80-IB of ₹ 5,00,55,978/-. As per certificate of Auditors in Form No.10CCB housing project was approved by local authority on 25.01.2001 and the project was completed on 21.08.2003 and comprised of 208 flats and 16 shops aggregating to 1,23,978.62 sq. ft. and none of the units exceeded 1000 sq. ft. The A.O. noticed that assessee violated the conditions of restriction of commercial area and it had actually developed 5227 sq. ft. commercial area. In the original assessment order u/s. 143(3), the A.O. deni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . initiated proceedings u/s. 147 of the Act recording his reasons thereof on the ground that the date of commencement of housing project was before 01.10.1998 and hence assessee was not eligible to claim deduction u/s. 80-IB(10) of the Act. The A.O. issued notice u/s. 148 of the Act dtd.25.03.2010. In response the appellant's Authorized Representative requested that the return filed earlier may be treated as return filed in pursuance to notice u/s.148 of the Act. Thereafter, the A.O. issued notice ujs.142(1) which was delivered on assessee on 28.10.2010. The A.O. asked the assessee to furnish all the original documents submitted to Municipal Authorities and Town authorities for obtaining approval of the plan, all letters conveying approval original as well as modified ones and documents and evidence produced before CA for data mentioned in the certificate for date, residential area, commercial area, etc. 5. By the impugned order CIT(A) upheld the reopening of assessment u/s. 147, however he has allowed assessee s claim for deduction u/s.80-IB after having the following observations: 2.3 I have considered the facts of the case. The appellant filed return of income which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reasons should conclusively prove the non assessment/ concealment of income, consequently reasons was not to be questioned so long there was a prima facie case of escapement / non assessment. Considering the facts and circumstances of the case as mentioned above, the A.O. was justified in assuming jurisdiction ujs.147 of the Act. This ground of appeal is therefore, dismissed. 3. The 2nd ground of appeal is that the A.O. erred in not allowing deduction u/s.80-IB(10) of the Act. 3.1 The facts of the case has been explained in above paras. As explained above the appellant claimed deduction u / s. 80- IB(10) of the Act on some housing project. The same was disallowed by A.O. However, the appellant's claim was allowed by CIT(A) and ITAT. As explained above, as per sec.80-IB(10) the deduction was eligible if the housing project had been commenced on or after 1st day of October, 1998. In the original assessment proceedings, the deduction u/s.80-IB(10) of the Act was disallowed by the A.O. on some different reasons and not on the ground that housing project was commenced before 01.10.1998. In the original assessment proceedings, on the basis of documents furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad, Jogeshwari. The appellant further explained that during reassessment proceedings, vide its letter dtd. 13.12.2010 it was intimated to the A.O. that the construction of housing project was at Building No.4 of CTS No. 261/161/1 2, 263 at caves Road, Jogeshwari. During appellant proceedings, the appellant filed copy of Municipal Corporations letter dtd.12.11.2001 addressed to appellant's Consultant Shri Manoj Paresh in support of its argument that the plan/application made to the Municipality was in respect of proposed Building no.4 on said plot of land. The appellant also filed Municipality letter dtd.12.11.2001 addressed to its Consultant conveying no objection to the construction of proposed Building No.4 at property bearing the above said CTS No. The appellant also filed intimation of disapproval issued by Municipality dtd.07.11.2000 in which it was specifically mentioned that the construction was on proposed building no. 4 of CTS No. 261/161/1 2, 263 at caves Road, Jogeshwari. A copy of commencement certificate issued by Municipality dtd.25.01.2001 had also been filed with reference to appellant's application No.3501 dtd.29.09.2000 for development/permission and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,261/1 to 2. The appellant has argued that these documents were furnished to the A. O. during assessment proceedings. 4. Page No. 4 5 are extracts from CIT(A) order. The CIT(A) also considered that the appellant completed the construction of housing project at Bldg. No.4. 5. Page no. 6 is grounds of appeal taken by Department before ITAT against the order of CIT(A). The ground was in respect of element of commercial area in the residential project. There was no ground that the project was completed on Bldg. No.3 or on 4. 6. Page No.7 is ITAT order in which the ITAT allowed the appellant's appeal. 7. Page No.8, 9 10 are the appeal filed by Department in the High Court against the ITAT order. In the statement of facts on page 10, the Department stated that the appellant constructed project at Bldg. No.4. 8. Please refer Page No. 11 12 i. e. copy of assessment order u/s.147 r.w.s.144. In para 2(1),2(2),2(3) 2(4) of the assessment order there is a reference of Bldg. No.3 at CST No.261, 261/1 to 2,263. The reopening u/s. 147 has been made solely on the ground that during original assessment proceedings the appellant mispresented completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no such approval in the form of commencement certificate had been issued before 1.10.98 for the building no.4 constructed by assessee. The copy of Remand Report was furnished to the appellant for furnishing its counter comments. The appellant vide letter dtd.06.05.2011 submitted its submissions reiterating its arguments that: (i) Information received from CIB was pertaining to Building No.3 whereas it had claimed deduction u/s. 80-IB on housing project at Building No.4. (ii) This issue had already been examined during original assessment proceedings / appellate proceedings that the appellant claimed deduction u/s. 80-IB(10) of the Act on completion of housing project of Building No.4. The appellant requested that it had fulfilled all the conditions laid down u/s. 80-IB(10) of the Act and therefore the disallowance made by A.O. should be deleted. In the remand report dated 05.04.2011, the A.O. did not furnish his report on the appellant's claim that the appellant had constructed building No.4 and not building no.3. The A.O's remand report dtd.05.04.2011 was incomplete and was not based on the facts of the case. Therefore, vide this office letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.4 is not an independent housing project. Building no.4 is only a building plan under a housing project on the plot bearing CST No.261,261 /2 263 which includes 'existing' building no.1 and also includes building no2 and building no.3. The remand report of A.O. was made available to the appellant for its counter comments. In its submissions dtd.19.09.2011, the appellant filed detailed counter submissions. The appellant pointed out that the A.O. had not disputed that the appellant had constructed and developed housing project (Bldg. No.4) and that the commencement certificate for this project was 12.11.2001. Relying on the record of another building, which had neither been constructed or developed by him, could not disentitle his claim for deduction u/s.80-IB(10). Further, relying on the commencement certificate of Bldg. No.3, reopening/reassessment proceedings could not be justified when the factum of commencement certificated for Bldg. No. 4 dated12.11.2001 was not in dispute. The appellant further explained that in para 8 of remand report dtd.30.08.2011, the A.O. has without prejudice to the facts stated in assessment order has referred to the communication by MCG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to the development work for Bldg. No.3 and not at all with reference to the approved plan for Bldg. No.4. merely because plans were approved by the MCGM for Bldg. No.3 it could not be presumed that the plans for Bldg. No.4 were deemed to have been approved on the same date. In respect of A.O's comments regarding the proforma-1, the appellant in its counter reply stated that the A.O. has enclosed the proforma-1 which was forming part of the approved plans for Bldg. No.4 vide approval granted by MCGM in CE/7276/WS/AK dtd.12.11.2001. Thus the A.O. himself has admitted that the construction and development of the housing project of Bldg. No.4 was commenced only on or after the commencement certificated dtd.12.11.200 1. The A.O. also admitted that the approval for the housing project was granted only on 12.11.2001. In respect of para 11 of remand report dtd.30.08.20 11, the appellant explained that the A.O. was incorrect and not justified. Bldg. No.3 had not been constructed or developed by the appellant. The appellant had obtained an independent approval of local authority for construction and development of Bldg. No.4 on 12.11.2001. The appellant has commenced t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in case of objection from appellant, further information would have been collected from BMC in respect of building no.4 and its earlier approval. However, such approvals, etc. issued by BMC in respect of building no.4 were already on record during original and reassessment proceeding. In the remand report, the A.O. conveniently ignored to comment on the issue that building no.3 was not constructed by the appellant. In the facts and circumstances, vide this office letter dtd. 11.08.2011, the Addl. CIT Range 10(1), Mumbai was directed to obtain a fresh report from the A.O. to prove that the appellant constructed housing project on Bldg Bo.3 and not Bldg. No.4. The A.O. was also asked to explain the other aspects. In response the A.O. furnished remand report dtd. 30.08.2011. This contents of this report had been reproduced in above paras. However, in the said report the A.O. did not furnish comments on the points asked for by the undersigned. In the said report the A.O. also failed to prove that the documents received from CIB Branch were pertaining to Bldg. No.4. In its counter reply to the A.O. s remand report dtd. 30.08.2011, the appellant has explained that the facts ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by AO bearing No.CE/6597, dated 19-6-1998 passed for the development and work of building No.3 on plot bearing No.CST No.261, 261/1, 261/2 and 263 as per approved plan dated 17-11-1998. Furthermore, the occupancy certificate bearing No.CE/6597 dated 29-10-2001 was for completion of development work of building No.3 on plot bearing CST No. No.261, 261/1, 261/2 and 263. We further found that building No.4 was not a part of approval granted in CE/6597 dated 19-6-1998 on plot bearing CST No. No.261, 261/1, 261/2 and 263. Thus, the plan approved by MCGM was only with reference to the work of building No.3 not at all with reference to the approved plan of building No.4. Mere because plan approved by MCGM for building No.3 it cannot be presumed that plans for building No.4 were deemed to have been approved on the same date. It is also in not dispute and also a matter of record that building No.3 had not been converted or developed by the assessee and the assessee has obtained an independent approval of local authority for construction and development of Bldg. No.4 on 12.11.2001. Only after receipt of approval from the local authority, the assessee has commenced the construction. Merely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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