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TMI Blog2015 (7) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... income detected consequent to search is entitled to claim of deduction u/s. 80IB(10) of Act which is part of sale proceeds of flats of the project in question including cost of land totaling to ₹ 2.75 crore detected as result of search. This view is fortified by decision of Hon’ble Gujarat High Court in case of CIT Vs. Suman Paper Boards Ltd. [2009 (2) TMI 66 - GUJARAT HIGH COURT ] wherein held the assessee will be eligible for deduction u/s. 801/80IA of the Act in respect of undisclosed income under the block period, by holding that the assessee can't be denied the deduction u/s.80IA. As assessee firm has already submitted special audited report u/s. 80IB of the Act (Form No. 10 CCB) [P.B. 183] wherein at column 24 of the referred audited report, it is clearly stated that the assessee firm has no other business activities (i.e. other then developing a building housing projects as defined 80IB(10) of the Act). In the said report, the assessee has claimed special deductions u/s. 80IB(10) of the Act. Accordingly, assessee is eligible to claim deduction u/s.80IB(10) of the Act as discussed above.- Decided in favour of assessee. - IT(SS)A Nos. 380 to 382/ Ahd/2014 - - - Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming the initiation of penalty proceedings u/s 271(1)(c) of the Act. He may be directed to withdraw the same. 2.3 IT(SS)A No.382/hd/2014 Asst. Year 2008-09 Ground No.1. In law, on the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in not considering the appellant s submissions made before him as such the order is against principle of natural justice, bad in law and deserves to be cancelled. Ground No.2 On the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming the legitimate deduction u/s 80IB(10) of the Act of ₹ 1,42,65,490/-. The same may kindly be directed to be allowed such legitimate claimed. Ground No.3 On the facts and in the circumstances of the case, the ld. CIT(A)-1, Ahmedabad has grossly erred in confirming addition of ₹ 85,66,228/-, being additional claim of deduction u/s 80IB(10) on the basis of seized records. The same may kindly be directed to be allowed on such legitimate claim. Ground No.4 On the facts and in the circumstances of the case, the ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the claim of deduction under section 80IB(10) was rejected and the same has been confirmed by CIT(A)-XV/ITO/9(2)/266/09-10 dated 7th January, 2011. This issue is common in all three years. Assessee is before us opposing rejection of its claim while Departmental Representative made detailed submission to support the orders of authorities below. Rival claim of both parties are being dealt in coming paragraphs. 4. Regarding disallowance of deduction claimed u/s 80IB(10) we find that the disallowance was made as per reasons summarized in para 3.23 of the assessment order. The crux is that the appellant did not own the land so in view of the Assessing Officer assessee is not eligible for deduction because it worked as a contractor/agent of the land owners. According to the Assessing Officer the assessee is a works contractor not eligible for deduction. It did not sell any unit to the purchaser but the society executed the sale deeds as a seller, according to the Assessing Officer this also proved that the assessee was merely a contractor. 4.1 In first appeal written submissions dated 26.4.2010, 26.10.2010, 13.12.2010, 28.12.2010 and 4.1.2011 were filed by the appellant have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permission for these units was granted by development permission dated 16/07/2008 for only these 18 shops 54 residential units + electric substation as detailed in P.B. page No.147. After that completion of the said 18 shops and 54 flats the BU permission was granted on 16.06.2012 by the competent authority as detailed in page No.366 of P.B. In this factual background, the CIT(A) was not justified to observe that assessee has completed construction of all types i.e. A to E types of residential units and 18 shops and thereby erred in holding that assessee violates condition (a) of provisions of section 80IB(10). In fact assessee has developed 74 residential tenements on separate area of land of 14,843.27 sq.mts. only. The BU permission was granted on 22/09/2008. Whereas the revised development permission for 18 shops 54 flats was granted BU on 16/07/2008 and since the construction of the same was completed in February 2012 the BU permission for the same was granted on 16/06/2012, which were constructed by altogether a separate and different firm namely Panchamrut Developers from assessee i.e. Madhav Corporation. It is not in dispute that an area of 14,843.27 sq.mts. was undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal ground No.3 On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-I, Ahmedabad, has grossly erred in confirming addition of ₹ 85,66,228/- being additional claim of deduction u/s. 80IB(10) on the basis of seized records. The same may kindly be directed to be allowed on such legitimate claim, 5.1 In this regard stand of assessee has been that during the course of the appellate proceedings, the appellant has vehemently contended before the CIT(A) as to how its claim of eligible deduction u/s.80IB(10) on additional income ( on money receipts ) is admissible. The CIT (A) has noted on page 25 at item (ii) of appellate order dated 26/09/2014 that. The additional income shown by the appellant in the block return and is claimed to be exempt u/s. 80IB of the Act. This income is calculated by the appellant based on the seized material (Page 116 of annexure A/19-Party No.40). This amount of additional income (of ₹ 1,47,83,193), an amount of ₹ 8,59,151/- and ₹ 53,57,814/- is to be reduced as discussed in Para 5.1 of this order. However, the CIT(A) has misdirected herself in observing that the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer is directed accordingly. 5.3 In case before us, assessee has earned additional income which amount is disclosed consequence upon the search, hence it partakes the character of business income and the assessee has admitted that the said amount was a part of income earned from the project undertaken namely by it. Therefore, the amount has direct and proximate connection with the normal business/development activities, hence as eligible for deduction u/s. 80IB (10) of the Act. Once on the basis of declaration of the assessee, the income of the assessee was accepted and has been assessed in the hands of the assessee, the department has only disputed the factum that the project undertaken by the assessee firm is not eligible for housing project u/s. 80IB of the Act. Thus, viewing correct interpretation of the provision of the Act in the tune of the aforesaid judgments, the undisclosed income i.e. on money being part of business income only. The same forms part of book profit and it has no other sources of income and whatever income arising to the assessee firm is business income. The head of income has to be determined from the nature of business which assessee was being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/-being claimed on the basis of seized document and statement u/s. 132(4). While disposing of appeals, the CIT(A) has dealt with the issue of deductions u/s. 80IB (10) of the Act at para 5.3(ii) of the appellate order appealed against. According to CIT(A), the additional income which is not shown in regular books of accounts cannot be considered for the purpose of deductions u/s. 80IB(10) of the Act. In this regard, stand of assessee has been that it is inbuilt provision of the Act that if an income is exempt either u/s. 2 (14), (10) or otherwise, due effect of the same has to be given while framing the assessment. Likewise, deductions u/s. VIA shall have to be allowed while computing total income such as 80C, 80IB(10) etc. even in respect of assessment under Chapter-XIVB i.e. 158BC/BD and also under Chapter XIV i.e. u/s. 153A/153C as it is specifically provided under Explanation to Section 153A of IT Act 1961, that all other provisions of this Act shall apply to the assessment made under this Section, therefore, allowable in both the above Chapters. 6.1 Let us analyse this legal preposition in factual matrix of the case. The Assessing Officer has accepted the additional inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng projects under the name and style Madhav Park (Nikol) and there was no other business activity of assessee as certified by the auditor in the above said report in form No. 10CCB as per Sr. No. 24 of the report. We find that Hon ble Gujarat High Court in case of Kirit Dahyabhai Patel Vs. ACIT, in tax Appeal No.1181,82 85 order dated 03/12/2014 (Guj) held that: It is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provisions of section 153A of the Act, the return of income filed in response to notice u/s.153A of the Act is to considered as return filed under section 139 of the Act and the A.O. has made assessment on the said return. ITAT, Ahmedabad Bench in case of Jaynaben Rameshbhai Tailor Vs. DCIT, in ITA. No. 760 / Ahd / 2010 in order dated 30/01/2015 applying the ratio of Kirti Dahyabhai Patel (supra) held as under: The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.2B is under the head business income from industrial undertaking, which has been all along assessed as business income. The undisclosed income is in accordance with assessee's statement u/s. 132(4) of the Act. Thus, a correct interpretation of the provisions of Sec.l58BB(l), 158BB(4) and 158BH as applicable to the facts and circumstances of the case, the assessee is eligible for deduction u/s.80I/80IA in respect of undisclosed income assessed by Assessing Officer under the block period. On appeal by revenue, the Hon ble High Court observed that we are of the opinion that the assessee will be eligible for deduction u/s. 801/80IA of the Act in respect of undisclosed income under the block period, by holding that the assessee can't be denied the deduction u/s.80IA. Similar view has been taken by Hon ble Bombay High Court in case of C.I.T Vs. Sheth Developers (P) Ltd. [2012] 25 Taxmann.Com 123 (Bom), wherein the assessee company carried on business as a builder. Consequent to a search carried out u/s. 132 of the Act, the assessee declared the undisclosed income at ₹ 7 Crores for the block period, received by it during the course of carrying out its business activities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Because of the factual as also legal aspect of the case, we hereby confirm the finding of Ld. CIT(Appeals) and dismiss this ground of the Revenue. In the instant case, Hon'ble Tribunal allowed the appeal of the assessee holding that as per provisions of Sec. 80IB deduction is allowable in respect of income deriving from the eligible housing project. In the instant case, it is not in dispute that business of the assessee is that of developing and building residential project in the name and style of Nilkanth Heights Projects was eligible housing project u/s. 80IB of the Act. Therefore, in view of the facts and circumstances of the case statutorily allowable deduction to the assessee cannot be denied with regard to the grounds of the assessee. In this background, we find that the assessee firm has already submitted special audited report u/s. 80IB of the Act (Form No. 10 CCB) [P.B. 183] wherein at column 24 of the referred audited report, it is clearly stated that the assessee firm has no other business activities (i.e. other then developing a building housing projects as defined 80IB(10) of the Act). In the said report, the assessee has claimed special deductions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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