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TMI Blog2015 (3) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... -05 and 2006-07. Respectfully following the same, we uphold the First Appellate Order in this regard with this finding that the Learned CIT(Appeals) was justified in directing the Assessing Officer to delete the disallowance of ₹ 1,19,04,619 which was made by the Assessing Officer while denying the claimed deduction under section 80-IB of the Act in respect of the above stated four projects. - Decided in favour of assessee. Disallowance under the head ‘charity and donations’, prior period expenses and interest on TDS (UPTT) - Held that:- CIT(Appeals) has simply upheld the addition on the basis of First Appellate Order for the assessment year 2004-05 without discussing the related facts on the issue for the assessment year under consideration, we set aside the matter to the file of the Assessing Officer to decide the issue afresh noting down the facts of the case for the assessment year under consideration by passing a speaking order. - Decided in favour of assessee for statistical purposes. Disallowance of expenses claimed on repair, maintenance, travelling, conveyance, stationery etc.- Held that:- Assessing Officer has made the disallowance considering the element of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors of the assessee company, addition can be made in the hands of the employees directors on account of perquisites but no disallowance can be made in the hands of company by alleging that there is personal use of cars. Respectfully following this decision, we direct the Assessing Officer to delete the addition - Decided in favour of assessee. - ITA No. 5250/Del/2010, ITA No. 5588/Del/2010 - - - Dated:- 19-3-2015 - Shri I.C. Sudhir And Shri B.C. Meena JJ. For the Appellant : Shri Prateek Gupta, CA For the Respondent : Shri BRR Kumar, Sr.DR ORDER Per I.C. Sudhir: JUDICIAL MEMBER In these cross-appeals, the Revenue has preferred the appeal against the First Appellate Order on the following grounds: 1. The Learned CIT(Appeals) has erred in law and on facts by allowing the deduction u/s. 80IB(10) amounting to ₹ 1,19,04,619 in respect of sub projects namely Brahmputra, kaveri, Amravati and Damodar which are the part of main project i.e. Shipra Riviera in which the development and construction work was started before Ist October, 1998 and assessee did not fulfill the requisite conditions as laid down in sec. 80IB(10) of I.T. Act, 1961, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of flats of various sizes. The Shipra Riviera Complex was sub-divided into six projects while Shipra Sun City Complex was sub-divided into five projects. The development and construction of four projects, namely, Brahamputra, Kaveri, Amravati and Damodar in Shipra Riviera Complex were claimed to have been commenced after 01.10.1998. The development and construction of Shipra Sun City Complex was claimed to have been undertaken in the year 1999. The assessee had claimed benefit of tax holidays relief as available under sec. 80IA(4F) and 80IB (10) of the Income-tax Act, 1961. There was no dispute about the tax holiday benefit in respect of Shipra Sun City Complex, however, the Assessing Officer disallowed the claimed benefit in respect of Brahamputra, Kaveri, Amravati and Damodar Projects falling in Shipra Riviera Complex. The Assessing Officer observed that the development and construction on the above projects in Shipra Riviera Complex had commenced much before the prescribed dates as contained under the provisions of sec. 80IA(4F) and section 80IB(10) of the Act. The Learned CIT(Appeals) following the decision of ITAT on an identical issue in the case of assessee itself for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in which the housing project Is approved by the local authority. Explanation-For the purposes of this clause,- (i) In a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) 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 local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained In clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board In this behalf; (c) the residential unit has a maximum built-up area of one thousand square feet where such residential Unit is situated within the city of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has undertaken earth filling activity of the land so purchased for undertaking the construction of the project prior to 01.10.1998. 23. From the order of the AO, we found that the AO himself has observed that for the commencement of development and construction, a person might own land which may be ancestral or even purchased prior to 01.10.1998, and the assessee may think of constructing housing project for availing deduction u/s 80IA in view of the newly inserted provisions for development and construction after the specified date. Thus, as per AO, the date of purchase of land alone cannot be and should not be considered as a criteria for deciding the actual time of commencement of development and construction of housing project. Similarly, the AO himself has observed at page 10 in para 7.4 that approval of plan by the lower authorities may either get automatically cancelled for the expiry of the time limit when no construction Is carried out, or may be cancelled by the assessee himself at his own and replaced by a new plan depending upon the changed circumstances. These observations of the AO clearly indicate that in all reasonable probabilities the purchase of land and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter only construction work starts. Once the construction is undertaken by the contractors, the bills are raised by him and the required tax at source out of every payment made to the contractor for each specific project, is deducted at sources. Thus, the presumption of the AO to the effect that construction contract/agreement has no relevance to the implementation of the project undertaken by the assessee is factually Incorrect and not supported by any material on record. From the record, we also found that during the course of assessment proceedings Itself, complete details of all agreements entered into with various contractors, details of payments made to them for various projects and the tax deducted at source thereon, has already been filed. The language used. In the Section is development and construction, of housing project . The development is an integral part of the construction. Both cannot be segregated. There is always development for a purpose. Had it been development of Independent park only, it could be done at any point of time. Even if it is development of a farm house or a garden, it can also be done at any point of time but if it is development of a housing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king into account all the 13 evidences placed on record, the CIT(A) held that the activities performed, if any incidental to achieve the main object by the assessee company to undertake housing construction would not snatch away from him the benefit, otherwise provided under the law. Thus mere act of levelling the earth will not amount to construction of housing project within the meaning of sec 80IA(4F). Therefore assessee's act of mere levelling the earth prior to 30-9-1998 will not snatch the deduction permissible on account of construction of housing project which was undisputedly carried out only after 30-9-1998. The CIT(A), also observed that the technical interpretation taken by the AO carried a statute away from the original meaning and intention of the legislature and found that earth filling activities if at all performed, at the time of starting of first two projects and booking the amount received in few cases would not change the situation as available under the law, insofar as main construction activities as mentioned u/s 80IA(4F) and 80IB( 10) were undertaken only after 30.9.1998. As per CIT(A), the evidence filed on record proved that contracts for construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has incurred expenditure on cleaning of land and towards puja prior to 1.10.1998 will not take away assessee's right to claim deduction u/s 80IB( 10) which he is entitled in respect of housing project to be commenced after 1.10.1998. It was specifically observed that these expenses do not indicate that development and construction of housing project had been commenced before1.10.1998. Expenses were incurred on cleaning of land so that correct measurement of the land could be done. The issue with regard to expenditure on levelling of land, approval of plan, marketing of booking the residential units, receipt of advance booking money etc. has arisen in the instant case and by taking shelter of some of these activities having taken place prior to 1.10.1998, the AO has denied claim of deduction u/s 80IB. Respectfully following the decision of the Coordinate Bench, we do not find any merit in the action of the Assessing Officer . 6. In the present assessment year under consideration as well as, no reason to assume that commencement of development and construction of the housing projects was started prior to 01.10.1998 for the purpose of declining the claim of deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the decision of the ITAT in the assessment years 2004- 05 and 2006-07 - order dated 03.12.2010 in the case of the assessee in ITA Nos.2613/Del/2010 and Ors. (supra). 11. The learned Sr.DR on the other hand placed reliance on the orders of the authorities below. 12. On perusal of orders of the authorities below, we find that the Learned CIT(Appeals) has upheld the additions in question following the First Appellate Order for the assessment year 2004-05 in the case of the assessee on similar issues. The submissions of the Learned AR before us is that the very basis on which the Learned CIT(Appeals) has upheld the additions and disallowances in question was order of his predecessor in the assessment year 2004-05 wherein the ITAT has taken a different view in the appeal preferred by the assessee in the assessment year 2004-05 against the said First Appellate Order. Having gone through the order of the ITAT for the assessment year 2004-05, we find that the ITAT has deleted the additions/disallowances in question by passing a detailed order. In the assessment year 2004-05, the ITAT has held that three disallowances under the head charity and donations , prior period expenses an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year 1998 under the aegis of Union Ministry of Housing Urban Poverty Alleviation, Government of India for the development and promotion of housing and real estates sector in India. The ITAT held that since the assessee is in the business of housing development and real estates, this subscription is relating to business purpose of the assessee. Following the same, we direct the Assessing Officer to delete the addition. The ground No. 5 is accordingly allowed. 14. In ground No.6, addition of ₹ 87,616 on account of depreciation on car has been questioned. The Assessing Officer has made this disallowance at 10% of the claimed depreciation of ₹ 8,76,150 on cars on account of possible personal use by the directors of the company. The Learned CIT(Appeals) has upheld the same on the basis of his predecessor order in this regard for the assessment year 2004-05. The ITAT in the assessment year 2004-05 has deleted the disallowance on the basis that the depreciation was claimed as per the schedule attached with the balance sheet and following the decision of Hon'ble Gujarat High Court in the case of Saya Ji Iron holding that even if there is personal use of cars by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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