TMI Blog2021 (12) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus did not comply to the provision of section 80IB(10) - HELD THAT:- As in the given facts and circumstances of the case and respectfully following the judgments referred hereinabove and the decision of this Tribunal in assessee s own case for A.Y. 2009- 10 [ 2018 (9) TMI 2064 - ITAT INDORE] and in absence of any contrary binding decisions placed before us by the Revenue, are of the considered view that the assessee has rightly claimed deduction u/s 80IB(10) of the Act for A.Y. 2008-09 to 2014-15 and the same needs to be allowed as claimed in the return of income. Thus the finding of Ld. CIT(A) is set aside and grounds raised on merit pertaining to claim of deduction u/s 80IB(10) of the Act for A.Y. 2008-09 to 2014-15 are allowed. Correct head of Income - gain from sale of land - LTCG or business income - HELD THAT:- We find that assessee has not shown these plots of land as stock-in-trade in the profit and loss account. As it is judicial settled that the accounting treatment is in the books of accounts regularly maintained by the assessee is one of the main indicator of intent of the assessee and the nature of the outlay. The land in question on which assessee has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.01.2014. Subsequently notice u/s 153A of the Act was served upon the assessee for A.Ys. 2008-09 to 2013-14 and u/s 143(2) of the Act for A.Y. 2014-15. In response return of income were filed and the details are mentioned in the following table: A.Y. Date of filing of return u/s 139(1) Returned income (in Rs.) Date of filing of return by the assessee against notice u/s 153A Income declared in Return u/s 153A(in Rs.) Additional income offered by the assessee(in Rs.) 2008-09 26.09.2008 NIL 30.11.2015 NIL NIL 2009-10 29.09.2009 NIL 30.11.2015 NIL NIL 2010-11 14.10.2010 NIL 30.11.2015 NIL NIL 2011-12 29.09.2011 1,44,81,040/- 30.11.2015 1,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal commonly raising grounds on legality and merit challenging the disallowance/additions made by the Ld. AO contending that since no incriminating material were found during the course of search no addition was thus called for non-abated assessment year i.e. A.Y. 2008-09 to 2012-13 and for A.Y. 2013-14, common legal grounds raised by the assessee is reproduced below: The appellant Assessee wishes to raise the following grounds in appeal before the Hon'ble ITAT: 1. That the search was carried out under a mistaken belief that the assessee IS an associate of the Signature Group, as alleged in the Impugned Assessment Order. No evidence of such association was found as a result of the search operations nor any documentary or other evidence is placed on record by the Learned Assessing Officer. The grounds essential to warrant the issue of notice vx ] s 153A did not exist in the case of the assessee; the search is therefore vitiated and the Impugned Assessment Order deserves to be quashed on this ground alone. Thus in the facts and circumstances of the case the Commissioner of Income Tax (Appeals) was not justified in holding the search as justified. 2. That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005-06 to 2012-13 held that in absence of any incriminating documents found and seized during the course of search the A.O. is not justified in making the additions in not abated assessment in the order passed u/s 153A. (The copy of the order is attached herewith). Similar view was taken in the case of Anant Steel reported in 28 ITJ 47. Very recently the Hon ble Indore Tribunal in the case of ACIT(1) vs. Sudeep Maheshwari in ITA No.524/IND/2013 vide order dated 13.02.2019 held in para 6 that during the course of the search and seizure no incriminating material or undisclosed income or investments were found. Under the mental pressure the assessee declared 3 crores but retracted from the admission. It is a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating contents of the statements. The A.O. failed to correlate the disclosure made in the statement with the incriminating material gathered during the search. Therefore, no addition can be made on this account. In view of the above it is humbly prayed that the disallowance made for the claim u/s 80-IB is bad in law and hence the same may please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008- 09 to 2012-13 and assessments are completed u/s 143(1) of the Act. Subsequently, a search action was conducted u/s 132 of the Act in the business group of the assessee and A.O. has asked the assessee to file returns of income for all the assessment years by issue of notice u/s 153A of the Act on 12.9.2014. In response to that, assessee has filed returns of income for A.Yrs. 2008-09 to 2013-14 on 7.11.2014. The case of the assessee is that the return for A.Y. 2012-13 was filed on 7.11.2012. As per section 143(2) of the Act, the last date on which notice for assessment would have been issued was 30.9.2013. All the other returns are filed on earliest date and the time limit for issue of notice u/s 143(2) of the Act in all those cases has expired. The search was initiated in the business premises of the assessee on 29.1.2014 and therefore the time limit for issue of notice u/s 143(2) of the Act is lapsed. All the assessment years from 2008-09 to 2012-13 are concluded and non abated assessments. The A.O. cannot reopen the assessments u/s 153A of the Act. In so far as the above submission is concerned from the assessment order and even from the Ld. CIT(A)'s order, there is noth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of enquiry there of not confined essentially revolves around the search or the requisition u/s 132A of the Act as the case may be. The proviso deals with the cases where the assessment or reassessment, if any relating to assessment years falling within the period of 6 assessment years refer to in sub section 1 of section 153A of the Act were pending. If they were pending on the date of initiation of search u/s 132 of the Act or making requisition u/s 132A of the Act as the case may be, they abate. It is only binding precedence that would abate and not where there are orders made on assessment or reassessment and which are in force on the date of initiation of the search or making the requisition. 13. In the case of Commissioner of Income Tax (Central)-3 Kabul Chawla (2015) 61 Taxman.com 412 (Del.), the Hon'ble Delhi High Court has considered the scope of section 132 of the Act and 153A(1) observed as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(I) will have to be mandatorily issued to the person searched requiring him to file returns for six A Y s immediately preceding the previous year relevant to the A Y in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constructions 387 ITR 529 (Guj.) the Hon'ble Gujarat High Court has observed that the addition was based on statement of the third person and not based on any incriminating material found during the course of search, therefore the addition deleted by the Tribunal was upheld. 17. In the case of PCIT Vs. Lata Jain 384 ITR 543 (Del) (supra), the Hon'ble Delhi High Court has held that the Tribunal was right in holding that there had to be incriminating material recovered during the course of search qua the assessee in each year for the purpose of framing an assessment u/s 153A of the Act. 18. From the above all the decisions, it is very clear that the A.O. to make an addition u/s 153A of the Act and there must be incriminating material available to the A.O. during the course of the search. Unless there is an incriminating material, the concluded/non abated assessments cannot be disturbed again u/s 153A of the Act. 19. In so far as Kerala High Court decision in the case of E.N. Gopakumar (supra) the Hon'ble Kerala High Court has held that even without there being any incriminating material, the A.O. is empowered to make an addition u/s 153A of the Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Gujarat High Court in the case of PCIT Vs. Meeta Gutgutia (supra), we hold that no addition can be made in respect of concluded assessments u/s 153A of the Act unless there is any incriminating material found during the course of search. We would like to make it clear that where the assessment is completed u/s 143(1) or 143(3) of the Act unless A.O. has a time to issue notice u/s 143(2) of the Act, A.O. cannot make an addition u/s 153A of the Act, unless there is an incriminating material found during the course of the search. 23. The coordinate bench of the Tribunal in the case of Sainath Colonisers Vs. ACIT (Central)-II Bhopal in IT(SS)A Nos.289 to 291/Ind/2017 dated 28.2.2019 has considered the similar issue and has held that if there is no incriminating material found during the course of search and the time limit for issue of notice u/s 143(2) of the Act expires, no addition can be made u/s 153A of the Act. For the sake of convenience relevant portion of the order is extracted hereunder: 8. We observe that the assessee has filed regular return of income u/s 139 of the Act for Assessment Year 2008-09 to 2010-11 on 30.9.08, 31.3.2010 and 12.10.2010 aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully following the judgments referred and relied by the Ld. Counsel for the assessee are of the considered view that no addition/disallowance was called for Assessment Year 2008-09 to 2010-11 as no incriminating material was found during the course of search at the premises of the assessee as the time limit of issuance of notice u/s 143(2) of the Act stood expired much before the date of conducting search u/s 132 of the Act. Accordingly all the three appeals of the assessee are allowed. 24. In so far as the arguments of the Ld. D.R. in respect of following the ratio of the Hon'ble Supreme Court in the case of Vegetable Products (supra), the Ld. D.R. by relying on the decision in the case of CCV Dilip Kumar (supra) has submitted that the ratio laid down in the case of Vegetable Products (supra) cannot be applied. We find that in the case of CCV Dilip Kumar (supra) has considered the exemption provisions and held that exemption provisions has to be considered strictly and in a case of ambiguity view which favours the revenue must be adopted. Therefore, the above decision relied by the Ld. D.R. has no application to the ratio laid down by the Hon'ble Supreme Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing amount: Sr. No. A.Y. Deduction claimed u/s 80IB 1 2008-09 ₹ 3,58,65,456/- 2 2009-10 ₹ 2,53,19,824/- 3 2010-11 ₹ 3,34,67,691/- 4 2011-12 ₹ 1,15,75,564/- 5 2012-13 ₹ 3,95,46,668/- 6 2013-14 ₹ 2,90,94,057/- 7 2014-15 ₹ 8,00,000/- 18. The Ld. AO denied the claim observing that the assessee worked in the capacity as contractor and not a developer as the assessee used to sale of vacant plot through a registered deed and thereafter construct the house and thus did not comply to the provision of section 80IB(10) of the Act. 19. When the matter was carried before the Ld. CIT(A) the assessee failed to get any relief and now the assessee is in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal v MIs Swadesh Developers Builders, Bhopal OTAT -INDORE) Para 6 7 2 Principal Commissioner of Income Tax v Green Associates (2018) 105 Taxman 80 (SC) Para 2 3 Principal Commissioner of Income Tax v Green Associates [2019]105 Taxmann.com 79 (Guj.) Para 4 4 Green Associates v Income Tax Officer, Baroda (IT AT AHMEDABAD) Para 7 8 5 Commissioner of Income Tax v. Radhe Developers (2012) 17 Taxman 156(Guj) Para 28 to 45 6 M/s Nagma Developers v. ITO Baroda (I.T.A.T. Ahmedabad) Para 4 to 8 7 M/s Narayan Realty Ltd. V. DCIT, Baroda (I.T.A.T., Ahmedabad) Para 8 to 9 8 M/s Vardhman Builders Developers v. Income Tax Officer 1(1), Bhopal(I.T.A.T., Indore) Para 2 9 DCIT, Hyderabad v. SMR Builders (P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there is no bifurcation of the cost towards land and cost of construction. Thus there remains no dispute to the fact that after the completion of construction possession of the residential house is given to the buyers/colonizers. 26. However, the Coordinate Bench Ahmedabad in the case of Green Associates (supra) dealing with the similar issue and identical set of acts and placing reliance on the decision of Tribunal in the case of Narayan Reality Ltd. ITANo.2293/Ahd/2012 and others dated 02.05.2014 held that the assessee is a developer eligible for deduction u/s 80IB(10) of the Act observing as follows: We have heard the rival submission and perused the material on record. We find that in the present case the assesse was denied deduction u/s 80IB(10) by Ld. CIT(A) for the reason that assessee had not sold residential houses in the house project but had sold developed residential plots with construction up to the plinth only and thus the assessee could not be considered as developer of housing project but was a contractor and therefore assessee was not eligible for deduction u/s 80IB(10) of the Act. we find that on similar facts, in the case of Narayan Reality Ltd. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities is not eligible for deduction u/s.80-IB(10) because the assessee is doing the construction as a contractor for a work and not as a builder or developer and, therefore, the assessee is not eligible for deduction u/s.80-IB(10) of the Act. Against these objections of ld.CIT (A), the assessee is in appeal before us. 5.2 Regarding the 3r objection that the assesse has sold land to the unit holders separately and has done the construction units under a project agreement/contract, it was submitted that it is a joint activity although the agreement and land sale-deed are executed separately, but for this reason alone, it cannot be said that the assessee is not a builder or a developer. He placed reliance on the following Tribunal decisions:- 5.2. He submitted that in the case of Vardhman Builders Developers (supra) also, the assessee had entered into a separate agreement for sale of land and separate agreement for construction of housing on such land and under these facts, it was held by the Tribunal in that case that merely because of two separate agreements, the claim of the assessee for deduction u/s.80-IB (10) of the Act cannot be declined if other conditions are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts are similar. Under these facts, it was held by the Tribunal in that case that the claim of the assessee for deduction u/s.80-IB (10) of the Act cannot be declined if other conditions are being satisfied. Similarly, in the case of DCIT vs. SMR Builders (P.) Ltd. (supra) also, the assessee sold the land along with semi-finished structure to the buyers and as per separate agreement, agreed for construction for completion of balance work. Hence, the facts of this case are also similar because in that case also, the land was sold separately along with partial and unfinished construction of flats and, thereafter, construction agreement was entered into to carry out the balance construction work and under these facts, it was held by the Tribunal in that case that such agreement for construction to complete the balance work is only an incidental facilitation to protect interest of the parties and therefore, the assessee is eligible for deduction u/s.80-IB(10) of the Act. Similarly, in the case of Raghava Estates vs. Dy.CIT (supra) on which reliance was placed by the Id.AR of the assessee, the facts are similar. In that case also, the assessee had sold the plots separately and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully following the decision of the coordinate bench of tribunal in the case of Narayan Reality (supra) hold that the assessee is eligible for deduction u/s 80IB(10). Thus, this ground of assesse is allowed. 27. We further observe that in the assessee s own case for A.Y. 2009-10 wherein during the course of regular assessment proceedings u/s 143(3) of the Act (i.e. before the date of search u/s 132 of the act on 29.01.2014) the Ld. AO denied the claim of deduction u/s 80IB(10) of the Act but assessee succeeded before the Ld. CIT(A) who after appreciating facts and documentary evidences decided in favour of the assessee. The finding of Ld. CIT(A) was challenged by the Revenue before this Tribunal and after considering the facts and settled judicial precedents this tribunal confirmed the finding of Ld. CIT(A) and decided against revenue observing as follows: 6. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The A.O. rejected claim of deduction u/s 80(IB)10 of the Act on the ground that there was discrepancy in the form No.10CCB, wherein as per para-29 of the form, the profit of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere contractor rather than developer of the housing project. 4.2.1 The appellant submitted that as per audit report in the Form No.10CCB the deductible profit was at ₹ 3,81,46,910/- due to typographical error. The appellant has obtained a certificate in this behalf from the Auditor. There can be typographical error in the certificate, but the same cannot be made the basis of disallowance. The appellant has clarified this issue during the course of Assessment proceedings. 4.2.2 The appellant got the building permission on 11.11.2006. The project was required to be completed within a period of 5 years from the end of the Financial year in which the permission was granted. The project was required to be completed by 31.3.2012. The project under consideration has been completed on 22.3.2012 and the appellant obtained the certificate in time on 22.3.2012. 4.2.3 The appellant acted as a developer holding a coloniser s license in his own name. He obtained all the development, building and other permissions from the concern Departments and Agencies for construction under Group Housing Scheme. The rules provided for minimum open space for the gardens, community s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and subsequent construction by the appellant for an on behalf of the customer, as contended by the Assessing Officer the loan would have been disbursed to the individual customer and not to the builder. It was never the intention of the Appellant Assessee to sell the developed plot. Doing so would be against the permissions granted by approving Authority. The Assessing Officer ought to have read the main agreement , the development permission, the building permission, the sale deed and the Possession letter all in chronology of the events and not the sale deed alone in isolation. 4.2.7 Further, it would be important to point out that the appellant has only been engaged into construction of row houses where each house has a common wall with the other house, during the period under assessment. Therefore, there is no question of sale of open plots in between a row of houses. The same is evident from the building permissions on record. The plots A-104, A- 113, B-117 mentioned by the Assessing Officer in para 7 are in fact row houses which are referred to by their plot numbers. Meaning thereby, that even in a dire situation if one wants to buy a plot it cannot be sold as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Developers ITA No.296/Ahd/2013 e) M/s. Nagma Developers, Baroda Vs. ITO Wd 2(5) Baroda ITA No.2385/Ahd/2012 f) Narayan Realty Vs. DCIT in ITA No.2293/Ahd/2012 and 2095/Ahd/2013 vide order dated 2.5.2014 Thus, it is proved beyond doubt that the appellant has acted as a builder and developer and not a contractor of the customer, and the view has been upheld by all the Courts including the ITAT Indore. The appellant has carried only the eligible business during the year under consideration. The Assessing Officer has considered only the consolidated Profit and Loss account. There is some sale relating to the previously completed project and some expenses. However, the appellant has in fact prepared separate profit and loss account for the eligible business. Therefore, the appellant is eligible for deduction u/s 80IB(10) of the I.T. Act. Therefore, the disallowance made by the A.O. amounting to ₹ 2,53,19,825/- is Deleted. The appeal on this ground is Allowed. 7. The above finding of fact by the Ld. CIT(A) is not rebutted by the revenue by furnishing any adverse materials on record. From the finding of the Ld. CIT(A), it is found that the objections of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablishes that the assessee has duly complied to provisions of u/s 80IB(10) of the Act and is eligible for deduction under this section in the capacity of developer of housing project. 29. We, therefore, in the given facts and circumstances of the case and respectfully following the judgments referred hereinabove and the decision of this Tribunal in assessee s own case for A.Y. 2009- 10, and in absence of any contrary binding decisions placed before us by the Revenue, are of the considered view that the assessee has rightly claimed deduction u/s 80IB(10) of the Act for A.Y. 2008-09 to 2014-15 and the same needs to be allowed as claimed in the return of income. Thus the finding of Ld. CIT(A) is set aside and grounds raised on merit pertaining to claim of deduction u/s 80IB(10) of the Act for A.Y. 2008-09 to 2014-15 are allowed. 30. For A.Y. 2011-12 the assessee has also raised following ground no. 4 :- 4. That in the facts and circumstances of the case the Commissioner of Income Tax (Appeals) was not justified in upholding the treatment of long term capital gain on sale of land as business income of the assessee and thereby making an addition of ₹ 38,13,370/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered view that the alleged gain from sale of land shown as assets in the balance sheet has been rightly shown as long term capital gain and it cannot be taxed as business income. Finding of Ld. CIT(A) is set aside and ground no.4 for A.Y. 2010-11 is allowed. 36. Now we take up revenue s appeal for A.Y. 2010-11 in IT(SS)ANO.14/Ind/2019, in which the revenue has raised following grounds of appeal: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of ₹ 3,34,67,692/- made by Assessing Officer on account of disallowance of deduction u/s 80IB(10) of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of ₹ 25,40,000/- made by Assessing Officer on account of profit from sale of unsold units. 3. The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal. 37. As regards ground no.1 revenue has challenged the finding of Ld. CIT(A) deleting the additions of ₹ 3,34,67,692/- made by the ld. AO on account of disallowance of deduction u/s 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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