TMI Blog2017 (5) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... consequent assessment order also passed u/s 143(3) r.w.s.153(A) of the Act and hence quashed. - Decided in favour of assessee. Disallowance of claim of deduction u/s 80IB(10) - necessary approvals were never obtained from the designated authorities by the assessee - Held that:- The project under consideration was approved on 27.1.2006 and the project was completed as per the occupancy certificate issued on 1.10.2007. The total area constructed and completed of building was 12439.70 Square mtr. which is equivalent to 133901 sq.ft which is more than 1 acre and the built up area of each completed flat in the said project was not more than 1000 sq. ft. The above facts have been confirmed by M/s Avinash Mhatre & Associates , architect by issuing the certificate to this effect. Thus we hold the assessee has satisfied all the conditions of section 80(IB)(10) of the Act as developer and is entitled to deduction under the said section - Decided in favour of assessee. - I.T.A. No. 1077/Mum/2014 - - - Dated:- 11-5-2017 - Shri D. T. Garasia, JM And Shri Rajesh Kumar, AM Appellant by : Shri Sashi Tulsiyan Assessee by : Mrs.Padmaja ORDER Per Rajesh Kumar, A. M: This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oshi was given Development rights only in the year 2000 vide agreement Dt.12.09.2000 and thereafter entire layout of Sector No.1 was approved for the first time on 27.01.2006 and also disregarding the clarification given by the Local Authority vide their letter Dt.21.04.2011 'in response to our application under Right to Information Act that no approval for construction of buildings in Sector 0.1 of shantinagar Project was givento Shri Harshad P. Doshi pnor to the one given by us vide our letter No.MB/MNPINR/2600105-06 dt.27.01.2006 confirming the fact that approval Dt.27.01.2006 was the first approval so far as H. P. Doshi group related buildings are concerned. c) On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the contention of Assessing Officer that the commencement certificate is not in the name of the appellant discarding the fact that the Commencement Certificate No. MB/MNPINR/2600105-06 dated 27.01.2006 was issued in the name of M/s Shanti Star Builders and Others and the clarification issued by Mira Bhayander Mahanagarpalika under Right to Information Act(RTI Act) vide their letter dated 22.10.2010 clearly stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y his nephew Shri Dilesh C Shah. In the year under appeal, the appellant has developed a project namely Harsh Vihar at Mira Road. The appellant started construction in the immediately preceding previous year and completed the project during the year. The Appellant followed project Completion Method and it accordingly filed its Return of income on 1.10.2008 for the assessment AY 2008-09 declaring gross income of ₹ 6,84,62,992/- claimed deduction u/s 80-IB(10) of the Act to the tune of ₹ 6,84,62,992/-. During the period relevant to the assessment year under consideration the office address of the appellant was 201, Shraddha Residency, Chandavarkar Lane, Behind BMC Garden, Borivali (W), and Mumbai-400092. A search was conducted at the residential premises of the member of the AOP on 17.10.2008, wherein panchanama was drawn in the name of members of the AOP and certain documents were seized. However, no documents were seized with regard to the appellant AOP. The AO issued and served a notice u/s 153A, dated 12.10.2010 and in response to which, the assessee filed return of income on 2.8.2010. The AO framed the assessment u/s 143(3) r.w.s 153A assessing the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.07.2012 [24 taxmann.com 26) (Full Bench). In the earlier decision of High Court of Allahabad in the case of Raghuraj Pratapsingh vs. ACIT [Writ Petition No.5731 (MB) of 2004] decided on 14.07.2006 the division bench held that the warrant of authorization issued in joint names does not suffer from any infirmity and at the same time another division bench of the same court in Income Tax Appeal No.21 of 2009 in the case of Smt. Vandana Verma decided on 09.10.2009 held that the joint warrant of authorization cannot be issued and it would be incumbent upon the authority to issue warrant in individual name and if the warrant has been issued in the joint names, the assessment will have to be made collectively names of both the partners in the status of AOP (Association of Persons) or BOI(bodyof Individuals). Finding conflicting views expressed in two sets of cases decided by bench had different coordinate benches of the Allahabad High Court, the division bench had referred the case of Shri Devesh Singh to a larger bench to resolve the controversy in question which is of public importance. The larger bench, after hearing the case, came we find that the warrant of authorisation un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only against the person and not against the place. In connection with the person authorised u/s.132(1) of the Act, there is no bar in respect of which place to be searched as long as the authorised officer has reason to suspect that the money bullion, jewellery or other valuable article or thing, books of account and other documents of the person named in the warrant of authorization is suspected to be kept in that place. Therefore, it is not correct to say that since there is no search in the premises in possession of the appellant no valid search has been conducted in spite of the fact that the appellant name appears in the warrant of authorization and search has taken place in the premises as mentioned in the warrant of authorization. 9.6 The appellant's submission that the warrant of authorization has been merely issued and it has not been executed is also found to be not true. The warrant of authorization has been duly executed in the joint names. The signatures of witnesses alongwith the signatures of the persons in possession of searched premise appear on the warrant of authorization indicating the execution of search u/s 132 of the Act, Ashas been already held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant to the previous year in which such search is conducted u/s 132 of the Act or requisition is made u/s 132A of the Act. While referring to the provisions of section 153B, the ld. AR argued that the authorization of warrant shall be deemed to be executed consequent upon search as recorded in the last panchanama drawn in relation to a person in whose case warrant of authorization is issued. The ld. AR submitted that the panchanama has to be drawn in relation to the persons on which the search was conducted whereas in the case of the assessee there was no panchanama executed and premises of the assessee were not searched. Therefore, there was no search conducted and panchanama drawn as the proof of conduct of the search which was vital. Finally the ld.AR stressed upon the fact that the search has to be carried out in the case of the assessee in order to fame the assessment under section 153A of the Act and conjoint reading of section 153A of the Act and 153B of the Act adequately clarify that assessment for preceding six assessment years were permissible to be framed only when there was a search conducted. In defense of his arguments the ld.AR also placed reliance on a serious of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents were found and seized in the premises belonging to the member of assessee AOP and not the assessee and no specific panchanama was drawn corroborating the fact that search was actually conducted in the assessee s premises and therefore the proceedings under section 153A of the Act were totally unsustainable invalid and consequently has to be quashed. In defense of his arguments, the ld. AR relied on a series of decisions namely J M Trading Corporation V/s ACIT reported in (2008) 20 SOT 489 (ITAT, Mum), Dr.Mansukh Kanjibhai Shah V/s ACIT reported in (2012) 18 ITR 80) (Ahd) and Sarvamangalam Builders and Developers Pvt ltd V/s ACIT in ITA No.115 to 117/Del/2011. The ld. AR submitted that in the case of Sarvamangalam Builders and Developers Pvt ltd(supra) it has been held by the Hon ble High Court that no assessment under section 153A of the Act can be made where the residential premises of the assessee is not subject to search, no documents were seized from the premises searched and no panchanama were drawn in the name of the assessee. The ld. AR also distinguished the decision relied upon by rebuttal the ld.CIT(A) in the case of CIT V/s Devesh Singh reported in 76 DTR 403(All) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id and deserved to be quashed. 6. The ld. DR while opposing the arguments and submissions of the ld.AR strongly pleaded before the Bench that the search warrant in fact issued exactly on the date when the search was conducted in the case of the assessee and therefore the assessment under section 153A was correctly framed by the AO and upheld by the ld.CIT(A). The ld. DR submitted that in all these cases the search was conducted and accordingly assessments were framed and the same has been affirmed by the ld.CIT(A) by dismissing the appeal of the assessee. The ld. DR in support of his arguments heavily relied upon the following decisions : i) MDLR Resorts (P.) Ltd. v/s CIT [2013] 40 taxmann.com 365 (Delhi) ii) CIT V/s Devesh Singh ((2012) 24 Taxmann.com 26 (All)(FB); Finally, the ld. DR prayed before the Bench that in view of the foregoing facts the appeal of the assessee raising technical issue should be dismissed by upholding the order of the FAA. 7. In the Rebuttal , the ld. AR submitted that there is no substance in the arguments of the ld.DR as the premises of the assessee-AOP were not searched and no incriminating documents were found and seized during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made 153B. (1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment,- (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed : (2) The authorisation referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee or re-assess the income of six assessment years immediately preceding assessment years relevant to the previous year in which the search has been conducted or requisition is made. The said sub-section using the term search is conducted had also specified assessment year for which the re-assessment proceedings are triggered after search. It is clear from the above that the provisions of section 153A of the Act come into play only after search has been conducted. The provisions of section 153B of the Act provides that authorization of warrant shall be deemed to be executed upon the conclusion of search as recorded in the last panchanama drawn in relation to the persons in whose case the warrant or authorization has been issued. So, in all the sections the term used is important that fresh panchanama drawn in relation to any person. Thus, in order to complete the search there is a initiation of proceedings u/s 132(1) of the Act, conduction of search in terms of search warrant issued which includes search in the premises of the assessee and other places and also the last stage panchanama which is conclusive proof of conclusion of search from which the period of limitation will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s whether the Tribunal can examine the validity of any aspect of the search, i.e., from commencement till completion thereof. As already pointed out, the scheme of Chapter XIV-B requires the Assessing Officer to examine such aspects at three stages. The first stage is when the Assessing Officer has to issue notice under section 158BC. At this stage, he is required to satisfy himself that search has been initiated and carried out in the case of an assessee on whom such notice is to be served. In this connection he should see the authorization issued under section 132(1) and the panchanama prepared by the search party so as to satisfy himself that search was initiated and carried out in the case of the person on whom notice under section 158BC is to be served. In this connection he should see the authorization issued under section 132(1) and the panchanama prepared by the search party so as to satisfy himself that search was initiated and carried out in the case of the person on whom notice under section 158BC is to be served. The scope of examination is very limited, i.e., to ascertain that search operation was carried out in the case of such person and nothing more. If the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In case of non-compliance to the provisions of the Act by the Authorised Officer, such searches are invalid and illegal. In the instant case, no search was conducted against the assessee as the premises occupied by the assessee were not entered upon and searched by the Authorised Officer. Mere search of the premises owned by the assessee but rented to another concern does not by any implication prove the conduct of search against the assessee in view of the fact that the assessee was not available at the address searched upon. Mere mentioning of name in the panchanama does not lead to the conclusion that a valid search was conducted against the assessee. In the totality of circumstances, where no search had been conducted against the assessee there was no merit in the issue of notice under section 153A under which the jurisdictional area of operation is six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. In case, no search is conducted against a person, the period of operation to which the provisions of section 153A would apply, cannot be determined and the invoking of provisions of section 153A is baseless. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn in the name of the assessee but in the present case before us no search was carried out at the business premises of the assessee and so much so that no incriminating documents were found and seized from premises searched of others and no panchanama was drawn in the name of the assessee. The case law relied upon by the ld. DR in the case of Devesh Singh(supra), we find that the facts of the case in hand and that of relied upon by the ld.DR are clearly distinguishable as in the said case panchanama was drawn jointly in the name of all parties and there was no doubt as to conduct of the search on various parties. However, no search has actually been taken place on assessee-AOP and the name of the assessee did not appear on the panchanama neither the business premises of the assessee searched nor were there any incriminating documents found and seized from the premises of members of assessee AOP. Similarly, in the case of MDLR Resorts Pvt (supra), the findings was also distinguishable on facts as in the said case there was no dispute with regard to search and seizure conducted and it has not been denied by the assessee. No panchanama was drawn in the name of the assessee, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for construction of projects for certain reasons. In its place the builder had made available the plot bearing survey No.131(old survey no.745) and 100 (old survey No.746) admeasuring 2,91,655 sq.feet for construction of building. This plot was located in sector 1. The builder thereafter executed a Power of Attorney in favour of Mr. Harshad P Doshi to enable him to obtain various permissions from government department for purposes of construction of residential project. c. Another Power of Attorney was executed in favour of Mr. Harshad P Doshi and his wife Madhuben Doshi by the landlords of the plot of land of which Mls Shanti Star Builder were the developers. Mr. Harshad Doshi had acquired development rights from M/s Shanti Star Builders. d. In April 2006, a Joint Venture was created cornpnsmg of Mr. Harshad Doshi, Mr.Chandrakant Doshi Mr. Hemal Doshi to execute the project as Mr. Harshad Doshi who had acquired the development rights was handicapped and was not in a position to move about and attend the affairs of construction and co-ordination with various departments by himself. The assessee along with Mls Shanti Star Builders has applied for sanction of construction p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e projects which commenced construction after 01.10.98 . 14. The CIT(A) confirmed the order of assessing officer account of the fact that: a) The AOP was not the owner of the land on which the project was developed. b) It was not in existence on the date on which commencement certificate was issued. c) The commencement and occupancy certificate were not issued in the name of the AOP. d) The commencement certificate refers to the approval of original plan prior to 01.10.98. 15. The ld AR for the assessee submitted that the Ld. CIT(A) has completely misunderstood the facts of the case and passed a perverse order. Moreover, the entire assessment has been framed u/s 153A of the Act even though no incriminating material has been seized or found during the search which had taken place at the premises of the third party. The assessment order nowhere stated that the material seized in the course of search evidenced the existence of any undisclosed income on part of the appellant to justify assessment u/s 153A of the Act. Coming to the facts of the case the ld counsel for the assessee submitted that in terms of agreement for development dated 11.10.1998 between M/s Shanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing this section was to provide tax benefits to the person who undertakes housing project and constructs as per the scheme and specifications approved by appropriate authority. Thus, the deduction is mainly for the person who undertake such development of the project. This can be clearly seen from the conditions prescribed in the section wherein all the conditions as required to be fulfilled is clearly provided and thus where no condition as to the ownership of plot on which the project is to be constructed is provided and therefore, the same cannot be enforced. What is essential is that the assessee should construct a building approved as a housing project by the local authority and such construction should be by the assessee in its capacity as a developer and not as a contractor. It is therefore apparent that the eligibility criteria for grant of deduction u/s 80IB(10) applies to the undertaking which executes the project and the eligibility conditions are project centric and not assessee centric. This issue has been settled by the various judicial authorities. Reliance for this proposition is placed on the decision of Hon'ble ITAT Ahmedabad in the case of Radhe Developers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 80(IB)(10) of the Act as developer and is entitled to deduction under the said section while coming to this conclusion, we extract relevant observations of the Ahmedabad Bench of the Tribunal in the case of Radhe Developers and others (supra) as under : A bare reading of the provision ofs.80-IB (l 0), as they stood in the year under consideration, shows that the requirements for claiming deduction for housing project are that (i) there must be an undertaking developing and building housing project (U) such housing project is approved by local the authority (iii) the development and construction of housing project has commenced on or after J day of October, 1998; (iv) the housing project is on a size of a plot of land which has minimum area of one acre; and (v) the residential unit developed and built has a built up area of 1,000 sq. ft . if it is situated in Delhi and Mumbai or within 25 kms of municipal limit of these cities and J,500 sq. ft. at any other places. There is no other condition, which is to be complied by an assessee for claiming deduction on profits of the housing project. The contention of the Revenue authorities that to claim deduction under s. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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