TMI Blog2017 (3) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... inal date of completion and completion certificate were also received for majority of the units/houses. Therefore, we do not consider it necessary to go into the issue regarding amendment being prospective or not. The claim of assessee is that actually it has complied with the condition as per amended provisions. The Assessing Officer is directed to verify this aspect and allow the claim in accordance with law. In the result, this ground is partly allowed for statistical purpose. Benefit of section 23(1)(c) - Held that:- This provision is applicable in respect of let out/ letiable property. However, in the present case, admittedly, the assessee was holding various commercial and residential flats and spaces for being sold to the prospective buyers. The assessee in its reply, inter-alia, clearly stated that spaces/flats formed part of stock-in-trade of the assessee company as the same was for business purposes and was kept in self possession till the time it was sold. The vacant possession thereof was handed over to the buyers on sale. Thus, the assessee never claimed that the properties were letiable properties and, therefore, assessee cannot get the benefit of section 23(1)(c). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground taken by the appellant challenging the action of the Assessing Officer in not considering the revised computation of income filed by the appellant vide letter dated 21st December, 2006. 2. That on the facts and circumstances of the case and in law, the CIT(A) erred in not directing the Assessing Officer to allow depreciation u/s 32 of the Income tax Act, 1961 ( the Act ) on consultation/ development fees paid in the Assessment Year 2002-03 as the said fees was held to be capital expenditure in that year. 3. Without prejudice and in the alternative, that on the facts and circumstances of the case and in law, the appellant should be held entitled to claim depreciation u/s 32 of the Act on consultation/ development fees paid in the assessment year 2002-03 as the said fees was held to be capital expenditure in that year treating the said ground as an additional ground raised before the Tribunal for the first time. 4. That on the facts and circumstances of the case and in law, the CIT(A) erred in not directing the Assessing Officer to allow deduction of ₹ 35,907/- u/s 35D of the Act, as had been allowed in the Assessment Year 2003-04. 5. Without prejudice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. 13. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the charging of interest u/s 234B of the Act. 14. The appellant craves leave to add to, alter, amend, or vary the above grounds of appeal at or before the time of hearing. 5. As regards ground no.1, ld. counsel for the assessee fairly conceded that this ground is to be decided against the assessee because the Delhi Bench of ITAT and Hon ble Delhi High (ITA Nos.1261 of 2008, 1278 of 2008, 1287 of 2008, 1402 of 2008 placed at pages 1-16 of Paper Book-II dated 03.03.2014), in the asessee s own case for assessment year 1994-95 to 1998-99, has rejected the assessee s plea on this count. Accordingly, ground no.1 is dismissed. 6. Apropos ground nos.2 and 3, ld. counsel pointed out that during the assessment year 2002-03, the assessee incurred consultancy/ technical assistance expenditure towards extension of existing business of construction in the field of hospitality by setting up/ running of restaurants. This expenditure was claimed as revenue expenditure by the assessee, which was disallowed by the Assessing Officer by treating the same to be capital asset. Ld. CIT(A) uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, in view of aforementioned discussion, the Assessing Officer is directed to allow depreciation as allowed in the past. In the result, ground nos.2 and 3 are allowed for statistical purposes. 10. Apropos ground nos.6 and 7, ld. counsel pointed out that during the course of assessment proceedings, the assessee vide letter dated 21.12.2006, filed revised computation of income claiming additional TDS of ₹ 50,192/-. The certificates were also annexed to the said letter justifying the claim made by the assessee. However, the Assessing Officer completed the assessment u/s 143(3) of the Act, without acknowledging the revised claim of TDS made by the assessee. Further, vide letter dated 29.01.2007 assessee also filed rectification application requesting to give effect to the aforesaid TDS claimed. He submitted that ld. CIT(A) also did not consider the aforesaid revised computation and completed the assessment in accordance with the original return filed by the assessee. 11. After hearing both the parties, we find that before ld. CIT(A) the assessee had taken following specific ground of appeal :- (vi.iii.ii). That on the law, facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residential units were with built up area exceeding 1000 sq. feet and some of them were with two storeyed construction. The assessee's claim that built up area of residential units are less than 1000 sq. feet cannot be accepted as the assessee has taken the area of varanda and other projections at 50% 25 %. The built up area has now been defined and Finance (No.2) Act, 2002 has inserted clause (a) In sub section 14 of section 80I8(10) defining the meaning of built up area as under:- 80IB(14)(a): built-up area means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common area shared with other residential units; This insertion in section 80IB is clarificatory in nature and is applicable for all pending proceedings. The definition of built up area, spot enquiries made in the earlier year, scrutiny of sanctioned plan filed and all other facts prove beyond doubt that the assessee does not fulfill the conditions in regard to maximum built up area as laid down in clause (c) of section 8018(10). 14. Ld. CIT(A) confirmed the Assessing Officer s a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted the calculation of built up area so made by the assessee in the absence of statutory definition of the same. The completion certificates of the residential houses provided by the relevant authority also approved the constructed area of each house. The local authorities as per the municipal bye laws did not consider the size of the verandah/platform or any projection to the residential unit as part of the built up area in case size of such projections having width up to 1.00 meter. The size of such projections was covered within the constructed/built up area of the residential unit, if the same exceeded 1.00 meter. The built up area as per the completion certificate is less than 1000 sqft in almost all the cases except in case of following few houses forming part of the housing project at East End Loni and Aavantika Aakriti: S.No. ( as per reconciliation) House No. Built up area as per completion certificate. East End Loni 1. A/c 184 1397.49 2. A/c 185 1397.49 7. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. We order accordingly. 18. The completion certificates issued by the relevant approving authorities certifying the area constructed by the assessee were also submitted before the assessing officer. Therefore the next condition of completion of housing projects before March 31, 2001, (as extended to March 31, 2003 by the Finance Act, 2000 and thereafter removed), was also complied with. In fact a query to the aforesaid effect was specifically raised by the assessing officer, and replied by the assessee vide letter dated 15 March 2003 during the course of assessment proceedings for the assessment year 2000-01 stating that the completion certification of the houses that were completed after the earlier time limit of 31.3.01, but before the completion of assessment for the relevant assessment year were produced and it was highlighted that the proposed amendment in section 80-IB(10) sought to totally remove the time limit for completion of housing project before a particular date. It cannot therefore be said no enquiries were made by AO making the assessment erroneous nor prejudicial and the CIT is not right in observing so. 19. The submission of the assessee, as regards the las ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly allowed on housing projects because the building plans of the residential units were approved after 1.10.98 only and the construction has to be deemed to have been commenced on or after the date of approval itself. .. 23. We hold therefore that CIT is not right in holding that AO failed to make enquiries or to apply his mind and allowed deduction under section 80IB(10) of the Act. We therefore vacate his order and restore that of the AO. It is, however, except for the construction found to be in excess built up area over 1000 Sq. ft. as aforesaid and in respect of which the assessee would not entitled to deduction. 15. Thus, the claim had been denied in respect of units mentioned in para 11 of the above Tribunal s order. Ld. counsel further pointed out that this decision has been approved by Hon ble Delhi High Court wherein it has been held as under :- 14. We are not persuaded to take a view different from the view taken by the Tribunal. A clear finding was recorded by the Tribunal that the assessee had filed the details and calculations about the built-up area of the residential units. It would be unreasonable to hold that the Assessing Officer ignored those d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble view is reasonably possible and merely because the Assessing Officer has taken one plausible view, it cannot be said that the assessment is erroneous or prejudicial to the interest of the Revenue. This position stands well settled by the judgments of the Supreme Court cited supra. The Tribunal applied the tests laid down in these judgments to the case. 16. Ld. counsel further referred to the decision of Hon ble Delhi High Court in assessee s own case in ITA Nos.210, 214, 215 250/2012, order dated 19.07.2013 in regard to regular assessments for assessment years 2000-01 and 2001-02, wherein, the Hon ble Delhi High Court held in para 3 as under :- 3. In view of above observations which also indicates that this Court was satisfied that approval of the building plans were issued after 1.10.1998 except in respect of 26 houses in Avantika Aakruti Project, this Court is not persuaded that any substantial question of law arises and is not inclined to take a different view from the one taken in ITA 480/2010, 485/2010 and 437/2011. The Revenue s appeal so far as they urged this ground is insubstantial and, therefore, rejected. 17. In view of the above decision, ld. counsel su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential units were approved after 1.10.98 only and the construction has to be deemed to have been commenced on or after the date of approval itself. 22. It should not be lost sight that these are the revision proceedings and in such proceedings the allowance of deduction under section 80IB(10) to the assessee could not be revised as the issue in any case, was debatable and one of the possible views was taken by the assessing officer while granting deduction to the assessee. It was also allowed by the CIT(Appeals) in the succeeding assessment years viz. 2002-03 and 2003-04. The revision of impugned assessment orders as sought to be made by the CIT, while exercising jurisdiction under section 263, would in such a case be merely a difference of opinion and hence not amenable to the revision jurisdiction under section 263 of the Act, in view of Supreme Court decision in the cases of Malabar Industrial Co. Ltd. Vs. CIT 243 ITR 83(SC) as also later decision in CIT v. Max India Ltd. 295 ITR 282 (SC). 23. We hold therefore that CIT is not right in holding that AO failed to make enquiries or to apply his mind and allowed deduction under section 80IB(10) of the Act. We therefore vacate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Link-II) Housing Project is contained, wherein, the date of commencement of operation by undertaking has been indicated :- Development of the township project of which the said housing project is part commenced in the financial year 1996-97. Construction of houses commenced in the financial year 2001-02 and the initial assessment year from when claim was mentioned in assessment year 2003-04 22. From the above orders, ld. counsel submitted that all these projects have been considered viz. East End Loni, Avantika Aakriti, Golf Link-I, Golf Link- II, Green Glade-I and Green Glade-II. Ld. counsel pointed out that as far as Green Glade-I and Green Glade-II projects are concerned they are second phase of construction of housing project in Golf Link-I and Golf Link-II respectively. Permission for erection of residential houses in the aforesaid projects was granted on 31.03.2001 and 01.05.2002 respectively and, therefore, the question of said projects not satisfying the condition of section 80IB(10) does not arise. He further pointed out that the built-up area of each house in the aforesaid projects was less than 1000 sq.ft.. He pointed out that the deduction u/s 80IB(10) for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the projects under consideration. Ld. counsel further submitted that analogy can be drawn from the following cases rendered in the context of insertion of definition of built-up area or statutory limit on commercial area by the same Act w.e.f. 01.04.2005, wherein, it has been held that, the aforesaid amendment being prospective in nature, will not apply, while computing the deduction on project approved prior to the aforesaid date, notwithstanding the assessment year involving the claim of deduction as under :- Brahma Associates v. JCIT 333 ITR 289 (Bom.) CIT v. Jogani Constructions: 217 Taxman 95 (Bom. HC) CIT v. Shreenathji Constructions: 220 Taxman 154 (Guj. HC) Manan Corporation v. ACIT: 255 CTR 415 (Guj. HC) (A Y 2006-07) ITO vs. Chheda Construction Co.: ITA No. 2764/Mum/2009 (Mum. Trib.) (A Y2005-06) Bhumiraj Homes Ltd v Dy CIT: II ITR(Trib.) 699: (Mum) (Trib) ITO v. Yash Developers: ITA Nos. 809/Mum/ 2011 3644/ Mum/2012 (Mum. Trib.) (AY 2007-08 2008-09) DCIT v. M/s Shah Builders Developers: ITA No. 6250/Mum12010 (AY 2007- 08) ITO v. Velentine Developers: ITA No. 6901 8469/Mum/2010 (Mum. Trib.) / 31 ITR(Trib) 452: A Y 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if,- 27. As per Explanation to section 80IB(10), the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the legal authority. The first objection raised by the Assessing Officer was that the development and construction had already commenced prior to 01.10.1998. This objection was confirmed by ld. CIT(A). As far as this objections is concerned, we find that this issue is covered by order dated 24.09.2012 of Hon ble Delhi High Court in the assessee s own case for assessment years 2000-01 and 2001-02 projects covered East End Loni, Avantika Aakriti, Golf Link-I, Golf Link-II, Green Glade-I and Green Glade-II. Further, by Tribunal s order in the assessee s own case for assessment years 1999-2000, 2002-03 and 2003-04 vide ITA Nos.4277/Del/2009, 4817/Del/2005, 3304/Del/2007 dated 19.07.2013 and ITA No.3192/De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see company during the year continued to be the same as in earlier years i.e. real estate, development of mini townships, promotion, development and construction of houses, flats, villas and commercial complexes, etc.. The Assessing Officer noticed that assessee was the owner and was having possession of various commercial and residential flats and spaces etc. which were lying in its stock in trade as on 31st March, 2003. He noted that the assessee had not disclosed any income from house property in respect of these properties. The assessee in its reply submitted that the spaces/flats form part of stock in trade of the company and the same are for business purposes to be kept in self possession till the time they were sold. It was pointed out that the vacant possession thereof is handed over to the buyers at the time of their sale. The assessee s contentions were that the flats/spaces being in self occupation for the purposes of company s business, the profits of which were chargeable to income-tax under the profits and gains of business or profession, no notional ALV thereof could be assessed/charged to tax u/s 22 of the Act. The Assessing Officer did not accept the assessee s con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building and selling flats in housing estates. The argument that income tax is levied not on the actual receipt (which never arose in this case) but on a notional basis, i.e. ALV and that it is therefore not sanctioned by law, in the opinion of the Court is meritless. ALV is a method to arrive at a figure on the basis of which the impost is to be effectuated. The existence of an artificial method itself would not mean that levy is impermissible. Parliament has resorted to several other presumptive methods, for the purpose of calculation of income and collection of tax. Furthermore, application of ALV to determine the tax is regardless of whether actual income is received; it is premised on what constitutes a reasonable letting value, if the property were to be leased out in the marketplace. If the assessee s contention were to be accepted, the levy of income tax on unoccupied houses and flats would be impermissible which is clearly not the case. 14. As far as the alternative argument that the assessee itself is occupier, because it holds the property till it is sold, is concerned, the Court does not find any merit in this submission. While there can be no quarrel with the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the Hon ble Supreme Court has admitted the SLP filed by the assessee against the decision of Hon ble High Court dated 19.09.2016. In the alternative, ld. counsel submitted that section 23 and 24 of the Act relating to computation of annual letting value of residential property were amended by the Finance Act, 2001 w.e.f. 01.04.2002 i.e. assessment year 2002-03. He pointed out that the amended provisions were applicable to the year under consideration and were not subject matter before the Hon ble High Court in the aforesaid decision of the assessee for the preceding years. He submitted that in terms of the amended provisions of section 23(1)(c), where a residential property remains vacant during, inter-alia, whole of the previous year and owing to such vacancy actual rent received or receivable (which would be NIL in case of total residential property vacant throughout the year) is less than the fair rent, then such former amount shall be deemed as annual letting value for the purposes of section 22 of the Act. He relied on the decision in the case of Premsudha Exports (P.) Ltd. vs. ACIT, 110 ITD 158. He also relied on the following decisions :- (i) Shakuntala Devi vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of actual rent received or receivable by the owner shall not include, subject to such rules27 as may be made in this behalf, the amount of rent which the owner cannot realize. 37. A bare reading of this clause makes it clear that this provision is applicable in respect of let out/ letiable property. However, in the present case, admittedly, the assessee was holding various commercial and residential flats and spaces for being sold to the prospective buyers. The assessee in its reply, inter-alia, clearly stated that spaces/flats formed part of stock-in-trade of the assessee company as the same was for business purposes and was kept in self possession till the time it was sold. It was further stated that the vacant possession thereof was handed over to the buyers on sale. Thus, the assessee never claimed that the properties were letiable properties and, therefore, assessee cannot get the benefit of section 23(1)(c). The next objection of ld. counsel for the assessee is in regard to determination of annual letting value in respect of farm lands. 38. We find that no findings have been recorded in this regard by lower revenue authorities, as to whether annual letting value coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no.8 to 12 of the said assessment year. The decision for assessment year 2004-05 shall apply mutatis-mutandis in this assessment year also. Accordingly, the appeal of the assessee is partly allowed for statistical purposes. ITA No.1576/Del/2010 (A.Y. 2006-07) : 43. This is an appeal filed by the Revenue against the order dated 08.01.2010 passed by the Commissioner of Income Tax (Appeals)-1, New Delhi, u/s 143(3) of the Act relating to assessment year 2006-07. 44. The Revenue has raised following grounds of appeal :- 1. The order of the Ld. CIT(Appeals) is not correct in law and facts. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in deleting the addition of ₹ 57,89,199/- made by AO on account of notional ALV in respect of unsold spaces flats treating the same as income from house property. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in allowing part relief towards claim under section 80-IB(10) when there is substantial evidence that the assessee company had made investment to the extent of ₹ 103,01,73,852/- prior to 01.04.1998 in all these projec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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