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The I.T.O. 10 (1) (4) , Mumbai Versus Shri Krishna Kumar Pittie And Vice-Versa

2016 (5) TMI 51 - ITAT MUMBAI

Reopening of assessment - Disallowance u/s. 80-IB(10) - housing project was approved and commenced prior to 1998, therefore, not eligible for claim of deduction - Held that:- After considering the remand report sent by the AO, the CIT(A) has recorded a finding to the effect that on plot CTS No.261, 261/1 & 2, 263 various buildings were to be constructed and that assessee had constructed/developed building No.4 only. Even during the original assessment proceedings and appellate proceedings and al .....

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tter was Building No.4 of CTS No. 261, 261/1 & 2, 263. The A.O. received commencement 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 appr .....

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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 finding recorded by the CIT(A) at para 3 of his appellate order are as per material on record. Accordingly, we do not find any reason to interfere in the findings recorded by the CIT(A) for allowing claim of dedu .....

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ar For the Respondent : Shri Vijay Kothari/Sh.Ajit Shetty ORDER Per R. C. Sharma (A.M) This is an appeal filed by the revenue and cross objection filed by the assessee against the order of CIT(A) 21, Mumbai, dated 21-09-2011, for the assessment year 2004-2005, in the matter of order passed u/s.147 r.w.s.144 of the I.T.Act. Assessee has filed the Cross Objection against the order of CIT(A). 2. The grounds raised by the revenue reads as under:- 1. On the facts and in the circumstances of the case .....

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iled to appreciate that: a. The AO has assumed jurisdiction in pursuance to an invalid notice u/s. 148. b. The AO has not provided the appellant with copy of reasons recorded in writing inspite of the fact that the appellant had made a specific request vide letter dated 20.04.2010. c. The appellant had truly and fully disclosed his income and all the material facts necessary for the assessment. d. There was no income chargeable to tax which had escaped assessment. e. The reasons recorded for reo .....

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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 s .....

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7.05.2009 the Tribunal dismissed revenue s appeal whereas appeal of assessee was allowed. The Department further filed appeal before Hon'bIe Bombay High Court and the same was dismissed by the Court vide order dated 11-4-2011.Thereafter, the A.O. received information on 18.03.2009 from Jt.CIT (CIB) and on 31.03.2009 from ITO (CIB). The A.O. received new information from the CIB as enclosing thereof the following: (i) enclosing a copy of the commencement certificate dated 19.06.1998 for the d .....

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r dtd.30.10.2006 addressed to Manoj Paresh Consultants referring to for Building CTS No.261, 261/1 & 2 and 263 at Caves Road, Jogeshwari. From the above information, the A.O. noted that the project of residential building at CTS No.261, 261/1 & 2 and 263 at Caves Road, Jogeshwari were approved earlier and commenced before 01.10.1998. The A.O. was of the opinion that during original assessment proceedings, the assessee did not furnish this correct and true fact to the A.O. The Certificate .....

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ns of entire project and had misrepresented Bldg. No.4 as a housing project and that project as one which commenced only on 25.01.2001. On the basis of above information, the A.O. 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 appell .....

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d 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 was scrutinized u/s.143(3) of the Act vide order dtd.26.12.2006. In the return of income the appellant claimed deduction u/s.80-IB .....

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terated that the construction of project had started after 01.10.1998. This condition inter alia is one of the condition and important condition for deciding as to whether the deduction u/s. 80-IB(10) was eligible or not. However, subsequent to original assessment proceedings, the A.O. received information from CIB that the commencement of housing project was prior to 01.10.1998. In the facts and circumstances the A.O. was justified in forming the opinion that prime condition of sec.80- IB 10) w .....

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ssessment. Such reasons should be based on some information/material available with the A.O. As per explanation 2 to sec.147, the case of assessment of income subjected to excessive relief under the Act have been considered as sufficient reason for reopening the assessment. In the case under consideration the A.O. reopened assessment on the basis of some information. Such information was relevant to the appellant's claim of deduction u/s. 80-IB(10) of the Act. Therefore, the A.O. was having .....

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f 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 .....

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project commenced after 01.10.1998. However, subsequent to original assessment proceedings, the A.O. received information from CIB that the housing project was commenced before 01.10.1998. The facts in detail have been mentioned in earlier para. In the reassessment order u/s. 147 of the Act, the A.O. held that the deduction u/s.80-IB(10) was subject to one of the condition that the undertaking should have commenced development of housing project on or after 01.10.1998. The commencement certifica .....

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mention as to whether Bldg. No.4 was a separate project or not. In the reassessment proceedings, on the basis of information and documents received from CIS the A.O. held that Building NO.4 had also been issued a commencement certificate before 01.10.1998. The A.O. held that the first commencement certificate was dtd.19.06.1998 and hence approval will have to be prior to that date and eligible condition of the project was that such undertaking had commenced or commences development and construct .....

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t was not fulfilled. The A.O. therefore, disallowed appellant's claim of deduction u/s.80IB(10) of the Act. 3.2 During appellate proceedings, the appellant repeatedly argued that it had claimed deduction u/s. 801B(10) of the Act on housing project completed in respect of Building no.4 of CTS No.261, 261/1 & 2, 263 at caves Road, 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 construct .....

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ying 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. .....

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ing developed/constructed by appellant was Building No.4. The appellant further argued that during original assessment proceedings, during appellate proceedings and during appellate proceedings before ITAT this was very much explained that the appellant had developed/constructed housing project on Building No.4 and housing project commenced after 01.10.1998. The appellant further argued that subsequent to original assessment proceedings, the information received by A.O. from CIB Branch (on the b .....

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to the appellant's claim of deduction u/s. 80-IB(10) of the Act since the deduction was claimed for housing project completed on Building No.4. In view of the above contradictory facts, i.e. Building No.3 or 4, vide this office letter dtd.24.03.2011, the A.O. was asked to explain the following. The contents of this office letter dtd.24.03.2001 are reproduced hereunder: "The appellant Shri Krishna Kumar Pittie, proprietor of M/ s. Victoria Construction was the builder and developer. 2. .....

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e 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 .....

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7 has been made solely on the ground that during original assessment proceedings the appellant mispresented completion of residential project at Bldg. no.4 whereas the actual residential project completed was on Bldg. No.3. On this basis the reopening has been made and since there was no compliance from appellant's side during reassessment proceedings, the assessment was completed u/ s. 144 rejecting appellant's claim of deduction u/s. 80-IB. 9. The appellant has contended that there exi .....

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. 10. In view of the above, you are requested to, (a) report as to whether the documents enclosed herewith as page No. 1, 2 & 3 were filed by appellant during original assessment proceedings. (b) furnish copies of all documents mentioned in para 2 of assessment Order u/s.144 r.w.s. 147 to this office. (c) report-how the documents mentioned in para 2 of reassessment order were pertaining to the appellant or project completed by the appellant. 11. The report on the above issues may be forwarde .....

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to the building constructed by assessee at any stage and hence, no further enquiry was done at this end. Had the assessee objected, further information. would have been collected from the concerned department of BMC regarding the building no.4 and its earlier approvals, if any, through further enquiries. As such it is placed that assessee may not be granted any relief on this point unless the original facts as ascertained and forwarded by CIB Wing is proved as incorrect and no such approval in .....

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ned 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 an .....

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w of appellant's this claim, the onus was on the A.O. to prove that the appellant constructed housing project on building no.3. The Addl. ClT 10(I) was requested to direct the A.O. to prove that the appellant constructed housing project on building no.3. The A.O., ITO 10(1)(4), Mumbai furnished his report d td.30.08. 2011. The A.O's this remand report was mechanically sent by Addl. CIT Rg 10(I) to this office vide his letter dtd.07.09.2011. Acting as a post office, the Addl. CIT Rg 10(1) .....

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area of 21,644 Sq. mts. As one housing project on plot CST No.261 /261 /2 & 263 and proposed building no.4 is only a part of the project on part of the plot. There is neither separate/independent Municipal demarcation of plot for building no.4 nor there is separate/independent area calculation for Municipal purposes. The order under ULC Act was also not made available. The correspondence and/ or approval by local authority was to Mr. Pankaj Shah, C.A. to Caron Ltd. and was in reference to t .....

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44 sq. mts. It directly implies that building no.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 tha .....

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ed 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 MCGB vice letter no.CE/72-76/WS/AE dtds.12.11.2011 addressed to Manoj Paresh Consultants Pvt. Ltd. The A.O. has stated that as per the said communication MCGM had considered the construction of entire area for the plot area of 21,644 sq. mts. as one housing .....

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oject plans for the proposed Bldg. No.4 were approved and that the area on which Bldg. No.4 was to be constructed and developed was 5,500 sq. mts. Having regard to these facts it was clear that Bldg. No.4 was on a separate/independent earmark portion on the plot of land. In this respect the appellant invited attention to the copies of plans filed in the paper book during appellate proceedings. In para 9 of remand report dtd.30.08.20 11, the A.O. had stated that correspondence/approval by Local A .....

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he C.A. to Carona Ltd. From these certificates, it could be seen that the occupancy certificate bearing no. CE/6597 dtd. 29.10.2001 was for the completion of development work of Bldg. No.3 on plot bearing CST No.261, 261/2 & 263. The commencement certificate bearing no. CE/6597 dtd.19.06.1998 was for the development work of Bldg. No.3 on plot bearing CST No.261, 261/2 & 263 as per approved plan dtd. 17.11.1998. The appellant further explained that Bldg. No.4 was not a part of approval gr .....

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, 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 res .....

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f a building on the larger plot it could not be said that the said building gets amalgamated to the other buildings which were subsequently constructed on that plot. The appellant further stated that the findings recorded in para 8 to 11 of remand report were incorrect on facts and law. 3.3 I have carefully considered the facts in detail as explained above and various documents on the basis of which the A.O. had reopened the completed assessment. The appellant has explained that on plot CTS No.2 .....

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s 01 Municipality letter dtd.12.11.2000 addressed to its Consultants Shri Manoj Paresh, Municipality letter dtd.12.11.2001 addressed to its Consultants, Municipality intimation of disapproval dtd.7.11.2000, commencement certificate dtd.25.01.2001 with reference to appellant's application no. 3501 dtd.29.09.2000 shows that the subject matter was Building No.4 of CTS No. 261, 261/1 & 2, 263. The A.O. received commencement certificate dtd.19.06.1998, occupancy certificate on 29.10.2001 and .....

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hence, no further enquiry was done at this end." Thus the A.O. also accepted that the documents received from CIB were pertaining to building no.3. However, in the remand report, the A.O. objected allowing any relief to the appellant or the ground that 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 .....

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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 mentioned in the said remand report were incorrect. Th .....

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mentioned by A.O. In the facts and circumstances, the appellant s claim of deduction u/s. 80-IB(10) of the Act appears to be correct that it had constructed Building No.4 on the aforesaid plot of land and commencement of the said project was made after 01.10.1998. The documents pertaining to Building No.3 cannot be used against the appellant as it had not constructed any Building No.3. In the facts and circumstances the A.O. was not justified in disallowing appellant s claim of deduction u/s.80 .....

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gh the orders of the authorities below and also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by ld. AR and DR during the course of hearing before us. From the record we found that in the remand proceedings, the AO declined claim of deduction u/s.80IB(10) on the plea that housing project was approved and commenced prior to 1998, therefore, not eligible for claim of deduction. The CIT(A) after calling for the remand report had .....

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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 buil .....

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commenced the construction. Merely because there was a construction and development of a building on the larger plot it could not be said that the said building gets amalgamated to the other buildings which were subsequently constructed on that plot. After considering the remand report sent by the AO, the CIT(A) has recorded a finding to the effect that on plot CTS No.261, 261/1 & 2, 263 various buildings were to be constructed and that assessee had constructed/developed building No.4 only. .....

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rence to assessee's application no. 3501 dtd.29.09.2000 shows that the subject matter was Building No.4 of CTS No. 261, 261/1 & 2, 263. The A.O. received commencement 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 .....

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