TMI Blog2016 (6) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... ture, deemed as income u/s. 69C, or would appropriately be disallowable as an expenditure u/s. 37(1)? - Held that:- We are at loss to understand as to how and on what basis the assessee having claimed the expenditure through its’ books of account, so that the source is explained with reference thereto, the Revenue regards it as unexplained expenditure and, consequently, deems it as income u/s. 69-C. We, accordingly, agree with the ld. CIT(A) that even if regarded as bogus purchase, the same would stand to be disallowed u/s. 37(1), leading to an increase in the assessable profits of the eligible unit. We may here also clarify that had it not been so, the addition of income u/s. 69C, i.e., on account of expenditure not explained as to its sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilt-up area of 1000 sq. ft. per section 80-IB(10)(c). The Revenue pleads its case with reference to the decision by the Tribunal in the case of Asst. CIT vs. Viswas Promoters (P.) Ltd. [2010] 126 ITD 263 (Chen), advocating literal interpretation of the statute, so that the word project appearing therein, not defined, is to be considered as one single project as approved by the local authority. The assessee, on the other hand, has relied on a series of the decisions by the tribunal, which though have been rendered without considering the decision in Viswas Promoters (P.) Ltd. (supra). More importantly, the said decision stands since disapproved by the Hon'ble High Court in Viswas Promoters (P) Ltd. v. Asst. CIT [2013] 29 taxmann.com 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed per clause (c) of section 80-IB(10), does not apply to the housing project as a whole, but only qua each residential unit. We may reproduce herein under the relevant part of the said order (refer para 5): 5. We, faced with the decision by the hon ble jurisdictional high court in the case of Brahma Associates (supra), .. The provision is accordingly examined closely, to find clause (c) as worded differently from the other clauses of section 80- IB(10), setting forth the conditions precedent for the eligibility to deduction of the profits of the project. The said clause, on a fair construction, was found to contain a condition with reference to the residential unit comprising the housing project. The condition, by necessary i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 188 (SC) relied upon by the tribunal in the various orders, as far as appears on a reading of their extracts as listed in the tribunal s order for A.Y. 2007-08 (supra). The interpretation is also in accord with a purposive and liberal approach, advocated by the apex court in, inter alia, Bajaj Tempo Ltd. (supra). The provision being an incentive provision, toward promoting the growth of affordable housing in the country, the construction enables the same, while at the same time operating to exclude the extension of the incentive to housing that is not covered or targeted by the provision, as sought to be included by the ld. AR. Again, it is trite law that the benefit of any ambiguity, if any, in the language of the provision, so that two r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. AR would before us raise an alternative argument, i.e., even granting so, the assessee would stand to be allowed deduction u/s.80-IB(10) on the enhanced profit, i.e., to the extent of an addition u/s. 69C. 5. We have heard the parties, and perused the material on record. The ld. CIT(A), we find, has disallowed 15% of the impugned purchases, restricting thus the addition to income to ₹ 3,41,440/-, following the decision in CIT vs. Simit P. Sheth [2013] 356 ITR 451 (Guj). Further, she regarded the same as a disallowance u/s. 37(1). The first question therefore that arises is if the addition is of unexplained expenditure, deemed as income u/s. 69C, or would appropriately be disallowable as an expenditure u/s. 37(1). This is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or otherwise of the decision in the case of Simit P. Sheth (supra), i.e., with reference to which the ld. CIT(A) has allowed relief to the assessee, and which decision was not even referred to during hearing, does not consequently arise. Further, even if therefore the assessee is not in appeal, with there further being no plea, similarly, for deduction u/s.80-IB(10) on the sum disallowed, we regard the same as in the nature of a consequential plea legal in nature. We have already held that the addition as made has been rightly regarded by the ld. CIT(A) as a disallowance u/s. 37(1). We, therefore, accepting the assessee s plea that the entire amount added be regarded as a disallowance, approve of the allowance of the assessee s clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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