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TMI Blog2011 (8) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... Scope of Revision Proceedings u/s 263 - The AO denied deduction u/s 80IB(10) to the assessee in the assessment year 2006-07 but allowed the deduction for AYs 2004-05 2005-06 - CIT proposed to deny the decision for the AYs 2004-05 and 2005-06 also - An order erroneous but is prejudicial to the Revenue - debateble issue - HELD THAT:- Scope of revision proceedings has been well explained by Hon'ble Supreme Court in the case of MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2000 (2) TMI 10 - SUPREME COURT] , where it was held that the Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1). It is clear that the issue of allowing deduction under section 80IB(10) in respect of aforementioned project in the hands of the assessee is a debatable issue on which two views are possible. There cannot be any doubt that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally concluded that the assessee is not eligible for deduction under section 80IB(10) of the Act, since the Assessing Officer felt that the assessee did not derive profit from development and construction of approved housing project . The reasons cited by the Assessing Officer in this regard have been narrated by Learned CIT(A) in para 3.4 of his order as under: 3.4 The Assessing Officer has finally held on the basis of following observations that the profit derived from Narayanapuram Colony Project cannot be considered to have been derived from development and construction of approved housing project within the meaning of Sec.80IB (10): a) The Narayanapuram Colony project does not have the characteristics of a housing project for the following reasons: (i) The project did not involve construction and sale of a group of houses. (ii) The project involved sale of plots of land only and subsequent construction of the houses thereon as per construction contracts awarded by the buyers of the plots. (iii) There was registration of sale of plots of land only. There was no registration of sale of house in favour of the buyers. The houses were constructed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company from the Local Authority (VGTM-UDA) pertains only to development of the land into residential plots. No approval has been obtained by the assessee for the building plans of the houses to be constructed on the said residential plots from the Poranki Gram Panchayat, which was the appropriate Local Authority for approving the building plans for buildings not having more than ground plus 2 upper floors. iii) The building plan approvals were obtained from the Local Authority by the buyers of the plots in their names. c) The project cannot be considered to have been completed by the specified date of 31-03-2008 for being eligible to claim the deduction under section 80IB(10) for the following reasons: 1) As per the explanation to Section 80- IB(10)(a), 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. In this case, the building plan approvals were given by the Poranki Gram Panchayat and no completion certificate from the said Panchayat has been obtained either by the assessee or by the individual plot owners. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the plot in the name of the buyer. On payment of subsequent instalments, the assessee completed constructions according to the building plan obtained in the name of the plot owner. The above said methodology followed by the assessee is only to ensure reliability upon the execution of project and further to make savings in the stamp duty for the benefit of the customers. Accordingly the learned Authorised Representative submitted that the assessee has undertaken the impugned housing project both as developer and builder. The learned Authorised Representative further submitted that the assessee preferred to obtain the building plan in the name of individual plot owners since it has sold individual houses to them. The said action of the assessee would not deprive it from availing deduction under section 80-IB(10) as held by Hon'ble ITAT Ahmedabad in the case of Radhe Developers Private Ltd., vs. ITO (23 SOT 420). 6. We have heard the rival contentions and carefully perused the record. The issue before us is whether or not the assessee has undertaken developing and building of housing projects as an integrated activity. According to the Department, the assessee has sold the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. d) B.T. Road e) There is alarm for each individual house and compound wall around colony. f) Covered Drainage g) Full Developed Park h) Trees besides Road i) Shopping Complex j) Free club membership for Indore Badminton, Table Tennis, Restaurant Library and Jim etc. Payment conditions Independent House(Rs.) Group Housing (Rs.) At the time of plot booking 75,000 50,000 Within one month of plot booking 1,50,000 1,00,000 Within two months of plot booking 1,50,000 1,00,000 Payment at the time of beginning of house construction 75,000 55,000 Payment when construction is up to plinth 75,000 55,000 Payment after slab concrete 75,000 55,000 Payment after constructing of partition walls 70,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has contended that the house completion certificate was not in vague in and around Vijayawada. However, the moment local tax is levied, it is deemed the house is completed. The house tax was levied on all houses of Narayanapuram Colony before 31/3/2007 which is a full compliance of Explanation of sub section 10 of Sec.80-IB of Income Tax Act, 1961. During appellate proceedings, appellant has furnished a letter dt: 12/2/2008 issued by Panchayat Secretary, Gram Sachivalayam, Poranki stating that there is no procedure for issuing a separate certificate for completion of the house. Panchayat Secretary has further stated that the month in which the house tax is levied shall be finally regarded as the month in which a house is completed. Appellant has also furnished a certified schedule of house tax levied by Gram Panchayat, Poranki in respect of 256 houses built by the assessee containing name of the house owners, date of plan approval, month of house tax levied and door number of these houses. This schedule has been duly certified by the Panchayat Secretary, Gram Panchayat, Poranki and it reveals that house tax in respect of 256 houses has been levied on or before March 2007. The Gram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the said orders of Learned CIT, the assessee is in appeal before us. 12. We have heard the parties on these two appeals. The scope of revision proceedings has been well explained by Hon'ble Supreme Court in the case of Malabar Industrial Company (2000)(243 ITR 83) in the following lines. A bare reading of this provision makes it clear that the pre-requisite to exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous ; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1) of the Act. The pro-vision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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