TMI Blog2017 (10) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee should be able to establish that the assessee was jointly engaged along with the other JDA partner in actual development activities also in addition to holding the land. Keeping this in mind, we examine the facts of the present case and we find that as per the JDA, several activities are to be done by the assessee but what is more important is the doing of actual activity and not that what was agreed to be done by the assessee. In this regard, we find that the assessee has brought on record the evidence regarding land leveling activity undertaken by the assessee. The assessee also had undertaken the activity of obtaining khata etc. Hence the only aspect which is not established by the assessee is regarding joint supervision of the construction activity but this is very important because mere certificate by JDA partner cannot be a basis to hold that the assessee was actually involved in joint supervision of the construction activity. Hence in our considered opinion, the matter should go back to the file of the AO for limited purpose of examining this claim of the assessee that the assessee was jointly supervising the construction activity along with SPL and if it is fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was submitted by ld. AR of assessee that as per the judgment of Hon ble Karnataka High Court rendered in the case of CIT Vs. Lancy Constructions as reported in 383 ITR 168 (Kar), it was held by Hon ble Karnataka High Court that merely because a search is conducted in the premises of the assessee, it would not entitle the revenue to initiate the process of reassessment, for which there is a separate procedure. It was also held by Hon'ble Karnataka High Court that if assessment is allowed to be reopened on the basis of search, in which no incriminating material had been found, and merely on the basis of further investigating the books of account which had been already submitted by the assessee and accepted by the AO at the time of regular assessment, the same would amount to the revenue getting a second opportunity to reopen the concluded assessment, which is not permissible under the law. He submitted that in the present case also, no incriminating material was found in the course of search and original assessment for the Assessment Year 2007-08 was completed u/s. 143(3) on 30.12.2009 and the copy of the assessment order is available on pages 54 to 55 of the paper book. He als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 263 of the Act to review the order of assessment passed by the Assessing Authority? 7. Hence it is seen that in that case, the issue under consideration of Hon'ble Karnataka High Court was not this as to whether the finding of incriminating material in course of search is essential or not for the purpose of assessment u/s. 153A but the issue under consideration was this the as to whether the Commissioner can invoke the power of revision u/s. 263 of the IT Act to review the order of assessment passed by the AO u/s. 153A of the IT Act. As per the facts of that case, return of income was filed by the assessee for the Assessment Year 2008-09 and the case was taken up for scrutiny and assessment order u/s. 143(3) of IT Act was passed on 31.12.2010 and thereafter, a search took place in the premises of assessee on 12.04.2011. This is also noted in Para no. 2 of the judgment that in the course of search, incriminating material leading to income was seized and the proceeding was initiated u/s. 153A of the IT Act calling upon the assessee to file the return of income u/s. 153A of the IT Act. This notice was issued on 13.01.2012. In pursuance to that notice, the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. Therefore, it is clear even if an assessment order is passed under Section 143(1) or 143(3) of the Act, the Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search. After such reopening of the assessment, the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. The condition precedent for application of Section 153A is there should be a search under Section 132. Initiation of proceedings under Section 153A is not dependent on any undisclosed income being unearthed during such search. The proviso to the aforesaid section makes it clear the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment years referred to in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest of the revenue which confers jurisdiction on the Commissioner to exercise the power of the jurisdiction. 11. The Tribunal has proceeded' on the assumption by virtue of the judgment of the special bench of the Mumbai, the scope of enquiry under Section 153A is to be confined only to the undisclosed income unearthed during search and if there is any other income which is not the subject-matter of search, the same cannot be taken into consideration. Therefore, the revisional authority can exercise the power under Section 263. In the entire scheme of 153A, of the Act, there is no prohibition for the assessing authority to take note of such income. On the contrary, it is expressly provided under Section 153A of the Act the Assessing Officer shall assess or reassess the total income of six assessment years which means the said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject-matter of aforesaid two income. If the commissioner has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch. After holding that the same is not incriminating material, it was held by the Hon'ble Karnataka High Court that assessment cannot be reopened on the basis of search in which no incriminating material was found. For the sake of ready reference, we reproduce Para no. 6 of this judgment of Hon'ble Karnataka High Court and the same is as under:- 6. In our view, if assessment is allowed to be reopened on the basis of search, in which no incriminating material had been found, and merely on the basis of further investigating the books of account which had been already submitted by the assessee and accepted by the Assessing Officer at the time of regular assessment, the same would amount to the Revenue getting a second opportunity to reopen the concluded assessment, which is not permissible under the law. Merely because a search is conducted in the premises of the assessee, would not entitle the Revenue to initiate the process of reassessment, for which there is a separate procedure prescribed in the statute. It is only when the conditions prescribed for reassessment are fulfilled that a concluded assessment can be reopened. The very same accounts which were submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble by the ld. CIT(A). In our considered opinion, once the assessment order which were framed by the AO u/s. 153A of IT Act itself are quashed by us for three Assessment Years 2006-07, 2007-08 and 2008-09, the appeals of revenue for these three years do not survive. Hence these three appeals of revenue are dismissed. 14. Now we decide the remaining one appeal of revenue for Assessment Year 2009-10 in ITA no. 1717/Bang/2013. The grounds raised by the revenue are as under. GROUND NO.1 . The learned CIT(Appeals) erred in law and in fact in holding that 80IB (10) is also available to the contributor of land in a joint development agreement with the builder and thus allowed the claim of ₹ 61,61,991/- made by the assessee u/s.80IB of the I.T. Act. GROUND NO.2 The learned CIT(Appeals) erred in law and fact by relying on the decision of the Hon'ble High Court of Karnataka in the case of M/s.Shravanee Constructions as the facts are distinguishable. The land owner there had undertaken developmental works and evidences were furnished to substantiate the same. GROUND NO.3 The learned CIT(Appeals) has not considered the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court rendered in the case of Shravanee Constructions as reported in 209 Taxman 006. She submitted that in the absence of any finding on factual aspect that the said construction was carried out by the assessee jointly with the builder as per JDA, the order of CIT (A) is not sustainable and it should be reversed and that of the A.O. should be restored. 17. As against this, the learned AR of the assessee supported the order of CIT (A). Regarding the additional grounds, he submitted that there is no estoppels against the right of the assessee to file appeal if the concession is on legal position. He drawn our attention to page 8 of the impugned order of CIT(A) and pointed out that a clear finding is given by CIT (A) that the concession given by the assessee was on account of legal issue and not on lack of evidence in determining the facts. He also pointed out that the CIT (A) has followed a tribunal order rendered in the case of bambino Investment trading Co. Ltd. vs. DCIT in ITA No. 27/Mum/1996. He also drawn our attention to page 10 of the assessment order for 2006 07 and pointed out that on that page, the A.O. has reproduced the letter of the assessee and from that, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable on pages 100 and 101 of paper book and pointed out that as per this Para of JDA, the assessee had the obligation to carry out such acts, deeds and things as may be reasonably required by the second party in order to enable them to successfully develop the property in question. Thereafter he drawn our attention to page no. 81 of paper book in which a certificate dated 10.06.2013 issued by Shriram Properties Pvt. Ltd. as per which it is certified by them that the project was implemented under the Joint Control and Supervision of M/s. Corner Stone Properties Private Limited (CPPL) i.e. the assessee and SPL i.e. Shriram Properties Pvt. Ltd. He also pointed out that as per this certificate, the assessee was involved in various decision making process such as project planning, design, appointment of architects, contractors etc, finalization of contract term and rate relating to construction, deciding on the sale price etc and for this purpose, a joint committee consisting of members from both sides was formed which met at regular intervals during the implementation of the project. He submitted that from these facts it is very much clear and apparent that the property in question wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Co. Ltd. vs. DCIT (Supra), there is no infirmity in the order of CIT (A) on this aspect and therefore, the additional grounds raised by the revenue are rejected. 19. On merit, we find that in Para no. 4.11 of assessment order for Assessment Year 2009-10, the AO has summarized the reasons for his decision that the assessee is not eligible for deduction u/s. 80IB(10) of the IT Act. Therefore for the sake of reference, we reproduce this Para herein below. 4.11 After careful consideration of the assessee's case and relying upon the replies filed by the assessee, it is clear that the assessee is not eligible for deduction u/s 80IB(10) of IT Act, for the following reasons.: 1. The assessee is only a land owner as per original JDA and SPL was developer of project. 2. The assessee did not involve in any manner in project construction and entire development was carried out by M/s. SPL. 3. The core committee consisting of two members from M/s. CPPL and M/s. SPL and supervision of construction activity or without any objective proof or does not confer the right upon the assessee to claim deduction u/s. 80IB. 4. The books of accounts produced by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eveling of the road and removal of rocky surface in the said land and making usable for the purpose of construction of the apartment complexes. In our considered opinion, this is not the ratio of this judgment that all these activities are to be necessarily done by the assessee in each and every case. In our considered opinion, the ratio is this that the assessee should be able to establish that the assessee was jointly engaged along with the other JDA partner in actual development activities also in addition to holding the land. Keeping this in mind, we examine the facts of the present case and we find that as per the JDA, several activities are to be done by the assessee but what is more important is the doing of actual activity and not that what was agreed to be done by the assessee. In this regard, we find that the assessee has brought on record the evidence regarding land leveling activity undertaken by the assessee. The assessee also had undertaken the activity of obtaining khata etc. Hence the only aspect which is not established by the assessee is regarding joint supervision of the construction activity but this is very important because mere certificate by JDA partner cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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