9911796707
TMI Blog2017 (6) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised following three grounds: - "1. On the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in holding that the surplus on sale of land is taxable as capital gain in the assessee's hands, despite the fact that the assessee business consists of purchase and sale of land/buildings and that it is reasonable to infer that any transaction in a commodity which is in the normal line of business of the assessee constitutes a business transaction unless the contrary is proved by the assessee. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred inholding that the surplus on sale of land is taxable as capital gain in the assessee's hands, though the assessee has failed to discharge the onus cat on him by law to establish that the transaction in land which falls within the purview of the regular business of the assessee, was unrelated to the business of the assessee and that the land was held only as investment and not as stock-in-trade. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the surplus on sale of land is taxable as capital gain in the assessee's hands, int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT, only noted that the issue has been appealed by department before the Hon'ble Bombay High Court under section 260A of the Act. This effect is deliberated by CIT(A) in his order vide Para 3.1 to 3.3 which reads as under: - "3.1 In this case the Hon'ble ITAT, Mumbai's order in this very assessment year is available wherein Hon'ble authority has decided that the income has to be assessed as capital gain despite the fact that same Hon'ble authority has decided in subsequent A.Yrs the income from sale of flat as business income. The relevant portion of the decision given in ITA No.5262/Mum/07 are reproduced from the order as under: '8.3 In respect to the remaining grounds, and the additional grounds filed by the assessee, the matter is liable to be set aside to the file of the AO because of the reason that the AO has not granted exemption ufs.54EC for the reason that the sale consideration was treated under the head 'business income'. Since we have allowed the issue that the sale consideration is liable for capital gain; therefore, allowability of exemption is to be examined as per law. Accordingly, we restore this issue to the file of the AO to"ess a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds of capital assets ignoring the fact that transfer of capital asset took place on 07.05.2003 (vide sale deed df. 07.052003) being land sold to MIS. Brahma Builders for a consideration of 13.90 crore, whereas investment in NABARD Bonds was not made within six months from the date of transfer of capital asset i.e. on 07.05.2003. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to verify the authenticity of investment claimed to have been made in the NABARD Bond Inspite of the fact that investment was mode beyond six months from the date of transfer of asset dtd. 07.05.2003, as receipt of sale consideration in installments is not material for eligible exemption against capital gain and the date of transfer is relevant as provided u/s. 54EC of I.T. Act, 1961. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing The AC to verify the authenticity of investment claimed to have been made in the NABARD Bond, Inspite of the fact that investments 19-111, not made in stipulated time u/s. 54EC of full amount." 8. We have heard the rival contentions and gone through the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.Y. 2007-08 only, the appellant is entitled to exemption. In view of this the A.O. is directed verify the authenticity of these investments claimed to have been made in the bonds and according T1Tièxemption u/s.54EC of the Act." 10. From the above facts it is clear that during the year under consideration the assessee has invested in NABARD Bonds after receiving the installments of Rs. 2,51,00,000/- on 07-05-2003 and Rs. 50,00,000/- on 21-05-2003 made investment of Rs. 2,00,00,000/- on 13-06-2003 and 1,00,00,000/- on 22-10-2003. 11. From the above, we find that the investment in NABARD Bonds is made and when payment is received by assessee. This issue is covered by the Tribunals decision in the case of Chanchal Kumar Sircar Vs. Income Tax (2012) 50 SOT 0289 wherein considering the decision of Hon'ble Andhra Pradesh High Court in the case of S Gopal Reddy Vs. CIT (1990) 181 ITR 378 (AP); CIT vs. Janardhan Dass (late through legal heir Shyam Sunder) (2008) 299 ITR 210 (All); Darapaneni Chenna Krishnayya (HUF) Vs. CIT (2007) 291 ITR 98 (A) and wherein it is held that the period of six months for making deposit u/s. 54EC of the Act should be reckoned from the dates of act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o an extent of 75% of the claim of the assessee is an estimate without appreciating the fact that the disallowance is based on lack of evidence and bogus claim of expenses. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that bogus claim of expenses without supporting evidences is not amounting to giving mac rate particulars of income." 13. Briefly stated facts are that the AO completed the assessment under section 143(3) of the act determining the total income at Rs. 7,25,25,000/- after making following additions: - (i) Business income on account of sale of land (development rights) to M/s. Satyam Builders 3,19,97,000/- (ii) Business income on account of sale of land (development rights) to M/s. Brahma Builders 3,07,81,300/- (iii) Amount received in pursuance of Court's order 49,03,620/- (iv) Out of unproved/ unsubstantiated purchase expenses 41,28,262/- 14. The CIT(A) vide her order dated 09-03-2009 in appeal No. CIT(A)/ITAT/132/2007-08 granted the relief on account of additions made on account of business income on account of sales of land (development rights) to M/s Saytam Builders treating the same as cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bill/vouchers etc. in support of its claim of above expenses. During the course of penalty proceedings, the assessee has relied upon certain judgments as mentioned in para 2 of its submission. It is seen that most of these judgments relate to additions made on estimated and adhoc basis without any sound basis. in the present case, it has been proved beyond doubt that the assessee did not have bills or collateral confirmations regarding the impugned purchases." 16. Similarly, in respect to business income computed by the AO in pursuance to Tribunals order in respect to sale of land (development rights) to M/s Satyam Builders amounting to Rs. 3,19,97,000/-, to M/s Brahma Builders Rs. 3,7,81,300/-, an amount received as compensation from Mr. Waghere i.e. the surplus of Rs. 49,3,620/- as business income. The AO levied penalty on the basis of the Tribunal order by observing in Para 8 and 8.1 as under: - "8. Thus, it is evident from the above discussions and the rulings of the Hon'ble ITAT on the issue of the consideration arising out of the sale of land (transfer of development right) to M/s. Shyam Builders and Brahma Builders as also the compensation received by the assessee fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars. As regards enhancement of disallowance of bogus purchase. the A.O opined that same is furnishing of inaccurate particulars. In fact for the bogus purchases, the appellant have not furnished the bills and hence 759", of the amount was disallowed as bogus purchases on estimated basis by Hon'ble ITAT. Further, treatment of capital gain declared by the appellant; as business income is again a matter of opinion on the facts. 3.2. In view of this, I am convinced that it is neither a case of concealment of income nor filing of inaccurate particulars. Taking a different opinion or interpreting the details do not amount to furnishing of inaccurate particulars and/or concealment of income. It was so decided by Hon'ble Calcutta High Court in the case of Burmah-Shell Oil Storage and Distribution Co. of India Ltd Vs. 110 (112 ITR 592). Then the Honbie Bombay High Court in the case of CIT Vs. Shivial Desai & Sons (1978) (114 ITR 388) and again in the case of CIT Vs. Ajaib Singh & Co. (170 CTR 489), the Hon'ble Punjab & Haryana High Court decided that merely because there are certain additions / disallowances same will not attract penalty. On the facts, the case of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been concealment of income or furnishing of inaccurate particulars. At the very highest, it can only be a case of a claim of being taxed under a particular head of income being not accepted. The supreme Court in the matter of Commission of Income Tax vs. Reliance Petro products (P) Ltd. reported in 322 ITR 158 has held that mere rejection of a claim would not lead to imposition of penalty. In the above circumstances, we see no reason to entertain the proposed question of law." That means the issue in respect of the items of sale of land (development rights) to M/s Saytam Builders & sale of land (development rights) of M/s Brahma builders and an amount received as compensation from M/s Wagmare i.e. the surplus of Rs. 49,03,620/- is covered in favour of assessee by Hon'ble Bombay High Court decision in assessee's own case for 2004-05. Respectfully following the same, we confirm the order CIT(A) deleting the penalty. 19. In respect to the business expenses disallowance made by AO, which was deleted by reducing to 50% by CIT(A) subsequently enhanced to 75% by Tribunal has confirmed by observing in Para 6 as under: - "6. We have considered the rival submissions made by both the sid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has just estimated and AO has simply levied the penalty on the basis of confirmation of Tribunal order. We are of the view that mere on confirmation of disallowance of expenses and that also on estimate basis, the penalty for concealment of income u/s 271(1)(c) of the Act cannot be levied and hence, we confirm the order of CIT(A) deleting the penalty. This appeal of revenue is dismissed. 21. The only issue in ITA No. 2954/Mum/2012 for the AY 2007-08 in assessee's appeal is against the order of CIT-22, Mumbai revising the assessment under section 263 of the Act on account of sale of land as business income as against the assessee's claim accepted by AO as income chargeable as capital gains. For this assessee has raised following three grounds: - "1. The order of commissioner of Income Tax-22, passed U/s263 being bad in law the same should be quashed. 2. The Commissioner of Income Tax -22, Mumbai has grossly erred in selling aside the order of the AO for the AN 2007-08 to decide the chargeability of entire Gain on sale of land as Business income as against Assesse& s claim as accepted by AO of Income partly chargeable as capital gains and partly as business income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one hand has given effect to the Hon'ble ITAT order for A.Y. 2004-05 in the assessment order for A.Y. 2007-08 and on the other hand has not accepted the findings of the Hon'ble ITAT for A.Y. 2004-05 by preferring the appeal to the Hon'ble Bombay High Court. Moreover, for A.Y. 2005-06, the Hon'ble ITAT has given a finding in the assessee's own case which is in favour of the Department. This is the sole reason why the assessment order passed u/s. 143(3) for A.Y. 2007-08 is prejudicial to the interest of Revenue." 23. Accordingly, he held that the assessment order framed by the AO is erroneous as well as prejudicial to the interest of the Revenue and directed the AO to reframe the assessment afresh after proper enquiry and opportunity to the assessee. Aggrieved, now assessee is in appeal against the revision order passed by CIT-22 Navi Mumbai under section 263 of the Act. 24. Before us, the assessee contended that the Tribunal in assessee's own case for AY 2004-05 in ITA No. 5262/Mum/2007 vide order dated 26-11-2009 has considered exactly identical issues and held that sale of plot is liable for capital gains. The relevant finding of Tribunal in Para 8 and 8.2 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are that in this year the AO has discussed the facts while framing the assessment under section 143(3) and finally assessed the income arising out of the sale of plot of land by entering into development agreement with Kubix Realities Pvt. Ltd. on 27-04-2006 as long term capital gain. Similarly, in assessee's own case sale of plot of land was assessed as business income. But, Tribunal finally held that the same should be assessed as long term capital gain for AY 2004-05. However, in AY 2005-06, the Tribunal took a different view in assessee's own case and held that the profit on sale of plot of land is to be assessee as business income. It means there are two view possible and once there are two views possible, the revision under section 263 of the Act is not possible. This view of ours is supported by the decision of Hon'ble Supreme Court in the case of M/s Malabar Industrial Co. Ltd. Vs CIT (2000) 243 ITR 83 (SC) wherein it is held as under: - "The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act was carried out in the case of the assessee on 23-12-2008 whereby it was noticed that the assessee commenced construction activity for this project in FY 2003-04 with sanction planned of 8 buildings. Admittedly, assessee obtained completion certificate for 7 buildings on 31-03-2008 and claimed deduction under section 80IB of the Act. The survey party on verification of project noticed that the project Manish Garden consists of 8 buildings i.e. A1, A2, B1, B2, C1, C2 and building D. It was admitted that the 7 buildings were completed but D building which is a commercial building was incomplete. During the survey, it was noticed that part of completion certificate was obtained as there was no water connection given by Pune Municipal Corporation and only to building A3 and buildings A2 water connection was given in the month of November 2008. Survey party also noticed that building C1 and C2 consists of 12 shops having total commercial area about 4,000 sq. ft. which is in contravention of the provisions of section 80IB (10) of the Act that commercial area should be less than 5% of the total plot area and not more than 2,000 sq. ft. In view of this, the AO noted that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue is covered in favour of the appellant by the said decision. 7.5 However, coming to the second aspect if rebate on profit of the part of the project can be claimed when appellant has not been able to compete remaining part of the project within the prescribed period of four years, I find that the same decision given by Hon'ble High Court does not allow grant of 80IB(10) on part profit of the project. It is not the case of appellant that he is offering profit on part completion method and then in any case four years of period is already over on 31.03.2008 as the project has commenced on 03.05.2003. I find that the case of appellant is covered against him by the very decision of Brahma Associates on the issue, as per highlighted portion of the decision reproduced above. 7.6. The appellant then has quoted decision of Vandana Properties vs. ACIT before A.O. I have gone through the same and found that the said matter has traveled to Hon'ble Bombay High Court to consider the following questions on interpretation of s.80IB (10) : (i) what is 'housing project' u/s.8016(10)?, (ii) Whether if approval for construction of 'E' Building was granted by the local auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .80IB(1O). In view of this the claim made by the appellant is not tenable and hence rejected. Ground No.5 is dismissed." Aggrieve now, assessee is in second appeal before us. 30. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the Revenue during the course of survey proceedings u/s 133A of the Act on assessee on 23-12-2008 noted that the assessee has commenced the construction for this project at Pimpri, Pune known as Manish Garden in the FY 2003-04 with a sanctioned lay out plan of eight buildings. But finally obtain completion certificate in respect to seven buildings as on 31-03-2008 and claimed deduction u/s 80IB of the Act. But according to Revenue the eight building i.e. the building D a commercial building in incomplete. The survey findings summarily recorded by the CIT(A) reads as under: - "The assessee has commenced the construction activity of this project in the FY 2003-0, with sanctioned lay out plan of eight buildings. The assessee has obtained completion certificate for the seven buildings on 31-03-2008 and claimed deduction u/s 80IB(10). During the survey, physical verification was carried out and stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction equal to one hundred per cent of the profits of an undertaking arising from developing and constructing a housing project is with a view to boost the stock of houses for lower and middle income groups subject to fulfilling the specified conditions. The fact that the maximum size of the residential unit in a housing project situated within the city of Mumbai and Delhi is restricted to 1000 square feet clearly shows that the intention of the legislature is to make available large number of medium size residential units for the benefit of the common man. However, in the absence of defining the expression 'housing project' and in the absence of specifying the size or the number of housing projects required to be constructed on a plot of land having minimum area of one acre, even one housing project containing multiple residential units of a size not exceeding 1000 square feet constructed on a plot of land having minimum area of one acre would be eligible for Section 80IB (10) deduction. If the construction of Section 80IB (10) put forth by the Revenue is accepted, it would mean that if on a vacant plot of land, one housing project fulfilling all conditions is underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat where a new housing project is constructed on a plot of land having minimum area of one acre but with existing housing projects would qualify for Section 80IB (10) deduction. Even otherwise, the argument of the Revenue does not stand to reason because, in the city of Mumbai where there is acute space crunch, it is difficult to find a vacant plot having minimum area of one acre and even if few such plots are existing it cannot be said that Section 80IB (10) deduction was intended to give benefit only to the undertakings who construct housing projects on those few plots. Therefore, it is clear that on a plot of land having minimum area of one acre, there can be any number of housing projects and so long as those housing projects are approved by the local authority and fulfill the conditions set out under Section 80IB (10), the deduction thereunder cannot be denied to all those housing projects. Section 80IB (10) while specifying the size of the plot of land, does not specify the size or the number of housing projects that are required to be undertaken on a plot having minimum area of one acre. As a result, significance of the size of the plot of land is lost and, therefore, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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