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TMI Blog2016 (4) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... By letter dated 23.12.2007, Shri Abhiram Bhattacharjee alongwith his wife Sucharita Bhattacharjee and Shri Ajit Bhattacharjee have stated that they have purchased three different residential flats bearing flat Nos. 1407, 1408 & 1409 from the assessee in the year 2007. The flat was purchased in the joined names. It was stated that three flats were purchased by separate sale deeds and was registered separately as separate residential unit. It was stated that the three units were purchased by the family members in joint names and possession was taken as per sale deeds separately in respect of flats. They have further stated that three units were amalgamated and joined together after their purchase. We find that except the statement given by Mr.Abhiram Bhattacharjee in the course of survey that he had purchased the residential unit having more than 1000 Sq. ft, there is nothing on record to suggest that assessee has sold flats with built-up area of more than 1000 Sq. ft. Mr.Abhiram Bhattacharjee himself later on said that the flats were purchased by separate sale deeds and subsequently they have joined the flats on their own at their own cost. There is no evidence on record to sugg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered Deeds in respect of Smartha Krupa building mentioned the area of plot being less than one acre. 3. In all these appeals the Ld. CIT(A) erred in deleting the disallowing of deduction claimed u/s. 80IB(10) of the Act. In all these appeals the Revenue filed additional ground contending that the Ld. CIT(A) ought not to have admitted additional evidence/retractions statements without complying with the procedure laid down in Rule 46A. 4. The Ld. Departmental Representative submits that in the course of survey, one of the partners gave statement offering income of ₹ 150 crores for the reason that they made a wrong claim of deduction u/s. 80IB(10) of the Act and this statement was later retracted and such retraction was entertained by the Ld. CIT(A) in violation of Rule 46A. Thus, the Ld. DR submits that the Ld. CIT(A) granted relief accepting the retracted statement and therefore the Ld. CIT(A) s order is in violation of Rule 46A. 5. The Ld. Senior Counsel for the assessee Shri Vinayak R. Velhankar objecting to the additional ground filed by the Revenue and inviting our attention to page-2 3 of the Paper Book which is the copy of retraction statement given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of Civil construction/developers and builders. The assessee filed its return of income for all these assessment years i.e. 2004-05 to 2009- 10 claiming deduction u/s. 80IB(10) of the Act. The assessment for all these assessment years were scrutinized by the Assessing Officer and completed the assessments u/s. 143(3) of the Act allowing deduction u/s. 80IB(10) of the Act after satisfying the claim of the assessee u/s. 80IB(10). Subsequently, there was a survey u/s. 133A of the Act conducted by the DDIT (Inv.) on 30.3.2011. On the date of survey one of the partners Shri Vikas Walawalkar offered an amount of ₹ 150 crores for tax in the case of the assessee by withdrawing the excess claim of deduction u/s. 80IB(10) of the Act in the assessment years 2004-05 to 2009-10. Pursuant to the survey conducted on 30.3.2011, the AO issued notice dated 31.3.2011 u/s. 148 for all these assessment years and reopened the assessments. In response to the notice issued u/s. 148 of the Act the assessee filed a letter dated 4.4.2011 alongwith an affidavit of Shri Vikas Walawalkar dated 2.4.2011 retracting offer of tax of ₹ 150 crores which was earlier declared by him in his statement re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g out the disallowance as under: Asstt. Year Deduction claimed Deduction to be disallowed as per the direction u/s. 144A 2004-05 23,67,82,614/- 2,37,35,754/- 2005-06 33,43,52,139/- 3,44,07,056/- 2006-07 52,94,49,427/- 10,78,39,415/- 2007-08 43,69,71,550/- 22,78,72,832/- 2008-09 39,60,40,233/- 32,40,52,511/- 20098-10 41,32,69,580/- 5,72,22,499/- Total 2,34,68,65,543/- 77,51,30,067/- 10. The Ld. Departmental Representative vehemently submits that on the date of survey one of the partners Shri Vikas Walawalkar admitted that there is excess claim for deduction u/s. 80IB(10) of the Act and offered ₹ 150 crores for taxation. The Ld. DR submits that the assessee offered the amount of ₹ 150 crores for taxation for the reason that the total bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that the statement was given by the partner on the advice of his Counsel and the Counsel is not aware of the facts and was under the impression that the assessee had sold one single residential unit by executing three separate sale deeds and also since the flats have been joined by the purchaser was not entitled for claim for deduction u/s. 80IB(10) of the Act. The Ld. Counsel submits that when the mistake was explained, assessee filed an affidavit retracting the statement given at the time of survey. He submits that the statement was duly filed before the AO on 8.4.2011. The Ld. Counsel further submits that in the retracted statement, it was duly explained that there was no wrong claim made in the returns and the deduction u/s. 80IB(10) of the Act was rightly allowed. He further submits that the statement retracted was well in time and since reasons for statement were also given at the time of survey, the statement should not be relied upon. The Ld. Counsel for the assessee submits that the statement was given by the partner of the firm without verifying the facts from the records. The Ld. Counsel for the assessee submits that retraction from admission is permissible in law. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittedly two/three separate units were planned and such units were also sold as separate units only to different buyers. However, subsequent to the sale, the two/three units were combined by making internal modifications at the instance of the buyers. It was also submitted that it is a common occurrence where having booked the flat and paid the required advance amount, many buyers suggest modifications at their own cost to suit their own purpose. This cannot be considered as violation of the conditions. Thus as per plans what was constructed and sold was single residential unit having Built up area below 1,000 sq. ft. per residential unit. Even the occupation certificate was granted by BMC as per approved drawings wherein the built up area of each flat was less than 1000 sq.fts. (ii) Each entity sold as per registered sale deed was a complete residential unit in itself. This can be verified from the sale deed, approved plans of BMC , occupation certificate and etc. which have been filed separately. (iii) The sale documents i.e title deed of each flat has separately been registered with approved plans with the Subregistrar of assurances after paying due stamp duty, in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r these two buildings. Learned AO did not consider host of evidences filed on record such as approved plans by local authority, floor plans certified by Architect, sale deeds duly executed and registered, Audit Report u/s.80IB(10) and even the Enquiry Report of the Inspector who was specifically appointed to verify the submissions of the appellant whose observations are stated above. More importantly he has also obtained written submissions from certain flat owners chosen by him from the very same building namely Samartha Aangan Building i.e. from Mr. Dalmia, Mr. Zinjurte, Mr. Sawant and Mr. Mohile who have categorically confirmed that each of them have purchased two/ three different flats from the appellant by executing separate agreements for each flat which are duly registered and that subsequently for their convenience and at their expenses have joint these flats so that they can be used as one single flat (Refer to Page No.7 of the Assessment Order). (c) Learned AO. has based the entire disallowance for Samartha Aangan Buildng No. 23 24 on the statement of Mr. Abhiram Bhattacharjee. In the submissions of the appellant the said statement is factually incorrect and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment of Urban Land Ceiling, Government of Maharashtra had exempted interalia the said area from ULC and the said exempted land was to be transferred by way of sale to Shree Swami Sarnartha Prasanna Cooperative Housing Society or to its unit or units to be separately registered as distinct societies. In pursuance of the said exemption order and proper management of the individual societies, the said area is subdivided and units of the said society have been separately registered to form individual societies and land is subsequently conveyed to such units, duly registered as cooperative Housing Societies. As such building known as 'Samartha Krupa' constructed on the said plot No.123 is not a separate project, but integral part of said project of Shree Swami Samartha Prasanna Cooperative Housing Society sanctioned by B.M.C. in pursuance of the said exemption order under urban land ceiling Act 1976. The entire plot area constitutes one single project in excess of one acre. I It is pertinent to mention here that section 80IB(10)(b) the project is on the size of a plot of land which has a minimum area of one acre thus with respect to area of the plot it is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11102002 Further, nowhere in relevant that intimation of municipality, it was stated that building 'E' constituted extension of earlier housing project which was already completed Whether approval of building plan for construction of building 'E' could not be said to be an extension of earlier housing project and therefore, deduction under section 80IB( lO) should be allowed to assessee Held, yes [In favour of assessee] Words and Phrases: Expressions 'plot of land' and 'housing projects' as occurring in section 80IB of the Incometax Act, 1961. In view of the above we state that the learned A.O. has erred in disallowance of 80IB claim of Samartha Krupa for all the years. Your attention is drawn to a recent direct decision of Mumbai tribunal in the case of HAWARE CONSTRUCTIONS (P) LTD. VS. LT.O. reported in (2011) 64 DTR (Mumbai)(Trib) 251 where in it is held ' Deduction under section 80 IB - Income from developing and building housing project - Built up area exceeding 1000 sq.ft. B.U. area Built- up area of each flat as approved by CIDCO is less than 1000 sq.ft. B.U. area as per the approved plan and the assessee has so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residential unit were rented into buyers/their family members. The flats were sold as per registered agreements. Thus, the partner of the firm retracted his earlier statement stating that there is no wrong claim u/s. 80IB(10) of the Act. However, the AO completed the assessment based on the directions of the Addl CIT u/s. 144A by withdrawing the claim u/s. 80IB(10) for all these assessment years in respect of the Building No. 23 24 of Samartha Angan and in respect of the Building Samartha Krupa. The AO allowed deduction in respect of the Bldg. No. 21 22 of Samartha Angan, Meghdoot A B Wing and Samartha Deep-11 based on the directions of the Addl. CIT by his order u/s. 144A of the Act. We find that the Addl. CIT considering the report of the Inspector and one Mr. Abhiram Bhattacharjee restricted the disallowance in respect of the Bldg. No. 23 24 of Samartha Angan Samartha Krupa. 17. In this case the disallowance u/s. 80IB(10) was made solely on the basis of the statement of the partner of the assessee firm and the statement of one of the buyer of the flat recorded during the course of survey proceedings . These persons retracted their statements later. The Madras High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee to establish that the admission made in the statement at the time of survey was wrong and that there was no additional income was not even attempted to be discharged and thus, the order of the Tribunal was based on facts and no question of law arose from it. 9. A power to examine a person on oath is specifically conferred on the authorities only under s. 132(4) of the Act in the course of any search or seizure. Thus, the IT Act, whenever it thought fit and necessary to confer such power to examine a person on oath, has expressly provided for it, whereas s. 133A does not empower any ITO to examine any person on oath. Thus, in contradistinction to the power under s. 133A, s. 132(4) of the IT Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act. On the other hand, whatever statement recorded under s. 133A of the Act is not given an evidentiary value, vide a decision of the Kerala High Court in Paul Mathews Sons Vs.. CIT (2003) 181 CTR (Ker) 207: (2003) 263 ITR 101 (Ker). 10. The scope of ss. 132(4) and 133A also came up for consideration befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Senniappan (2006) 203 CTR (Mad) 447 : (2006) 284 ITR 220 (Mad), a Division Bench of this Court, in which one of us was a party (P.P.S. Janarthana Raja, J.), answered the question in the affirmative, against the Revenue and in favour of the assessee, holding that the materials collected during the survey under s. 133A cannot be taken into consideration while determining the undisclosed income in respect of block assessment as per s. 158BB, as the same has no evidentiary value. 12. Again, when an identical question whether the material found in the course of survey in the premises of the builder could be used in the block assessment of the assessee, came up for consideration before this Division Bench in an unreported case in Tax Case (Appeal) No. 2620 of 2006, this Court, by order dt. 22nd November, 2006, since reported in CIT Vs Ajit Kumar (2008) 300 ITR 152, of course, following the earlier decision of this Court in CIT Vs.. G.K. Senniappan's cas reported in (2006) 284 ITR 220, while confirming the order of the Tribunal, answered the question in favour of the assessee, in limine. 13. What is more relevant, in the instant case, is that the attention of the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews Sons Vs.. CIT (2003) 263 ITR 101 (Ker); (iii) The expression such other materials or information as are available with the AO contained in s. 158BB of the IT Act, 1961, would (not) include the materials gathered during the survey operation under s. 133A, vide CIT Vs.. G.K. Senniappan (2006) 284 ITR 220 (Mad); (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this Court in Tax Case (Appeal) No. 2620 of 2006 (between CIT Vs.. S. Ajit Kumar); (v) Finally, the word may used in s. 133A(3)(iii) of the Act, viz., record the statement of any person which may be useful for, or relevant to, any proceeding under this Act , as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under s. 133A are not conclusive piece of evidence by itself. 15. For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the CBDT dt. 10th March, 2003, ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also the finding of the Inspector who visited the flats and stated that the flats are as per approved plans (a) there is no change in the external water and sanitary fittings from the approved drawings (b) there is no commercial establishment into the premises (c) there is no change in the location of the toilets (d) as per the sale deeds the area of each flat sold was less than 1000 Sq. ft. The Inspector in his report also observed as under: The total area of the most of the flats exceeded the original one due to changes done by the flat owner (as informed) by converting common passage area, flower bed, dock area into the premises. After merging flats, the total area of most of the flats have also exceeded 1,000 Sq. ft. When enquired from the society member regarding internal changes of the flats, they informed that in most of the flats common passages in front of flats are merged with the flat area. Kitchen place as per original plan is converted into bedroom. Living room place as per original plan has been converted into bed room. There are internal changes done by the flat owners at their cost as informed by them to me. So it is very difficult to ascertain the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IB( 10) cannot be disallowedFurther, the condition that not more than one residential unit in the housing project is allotted to one person not being an individual has been inserted by Finance (No.2) Act, 2009, w.e.f. 1st April, 2010, and hence it is not applicable to the facts of the case. 22. Similar view has been taken by the Co-ordinate Bench in the case of Emgeen Holdings (P) Ltd Vs DCIT 12 Taxmann. Com 468 (Mum) wherein it has been held as under: We find that the deduction u/s.80IB(10) has been declined by the Assessing Officer on the ground that size of the residential unit was in excess of 1,000 sq.ft which, in turn, proceeds on the basis that the flats sold to the family members admittedly by separate agreements, should be treated as one unit. We are unable to 6 approve this approach. We have noted that the size of each flat, as evident from building plan as duly approved by Muncipal authorities was less than 1,000 sq.ft. We have also noted that it is not even revenue s case that each of flat on standalone basis was not a residential unit. Even if flats were constructed or planned in such a way that two flats could indeed be merged into one larger unit, as long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housing projects is to build housing stock for low and middle income households. This has been ensured by limiting the size of the residential unit. However, this is being circumvented by the developer by entering into agreement to sell multiple adjacent units to a single buyers. Accordingly, it is proposed to insert new clauses in the said sub-section to provide that the undertaking which develops and builds the housing project shall not be allowed to allot more than one residential unit in the housing project to the same person, not being an individual, and where the person is an individual, no other residential unit in such housing project is allotted to any of the following person:- (I) Spouse or minor children of such individual; (II) The Hindu undivided family in which such individual is the karta; (III) Any person representing such individual, the spouse or minor children of such individual or the Hindu undivided family in which such individual is the karta. This amendment will take effect from the 1st April, 2010 and shall accordingly apply in relation to assessment year 2010-2011 and subsequent years. 8. It is thus clear that the aforesaid a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was stated in the occupation certificate issued by the local authority ` No physical verification of any of the building was carried out during the course of survey of the built up area of any of the residential unit. The only evidence that the wing had was the statement of Shri Abhiram Bhattacharjee who stated that he had purchased 3 flats 1407, 1408 and 1409 in Building no 24 and the same was purchased as a single flat. The Addl CIT directed that in VIew of the statement of Shri Abhiram Bhattacharjee, the claim of the appellant u/s 80IB(1O) should be withdrawn only for Building no 23 and 24. The Addl ClT gave the above direction even when he had recorded that the inspector's report clearly shows that in the entire complex each flat when sold was less than 1000 sq. ft. The Addl ClT has also mentioned that the appellant cannot be denied the benefit of the deduction u/ s 80IB(10) if more than one independent unit is sold to a family and they have merged the flats. The direction of the Addl ClT is based on the statement of Shri Abhiram Bhattacharjee which was recorded on March 30, 2011. However Shri Abhiram Bhattacharjee, had filed a letter dated Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Abhiram Bhattacharjee is staying in building No. 23 on the 14th floor. There is no evidence available with the AO or the Addl CIT about building No.23 and therefore the claim of 80IB (l0) cannot be withdrawn for that building. In view of the above, there is no case for denying deduction of claim u/ s 80IB (10) in the case of Building no 23 at all. Further, statement of Shri Abhiram Bhattacharjee was recorded after 4 years of the purchase of the said flat. This statement was also withdrawn vide letter dated December 23, 2011. Apart from the statement of Shri Abhiram Bhattacharjee, there is nothing on record which shows that 2/3 flats were sold as a single unit. However on the basis of spot verification by the Inspector for building No. 23 he had reported that the flats were sold separately and some of the buyers later on merged the flats at their own cost. The inspector has also stated that there has been no change in the position of toilets, external water and sewerage fittings from the sanctioned drawings. This clearly shows that the appellant had constructed flats as per approved drawings and sold the same as separate flats as per registered Agreement. The proper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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