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TMI Blog2017 (3) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel is that the amendment is prospective. However, he has also pointed out that in the case of assessee, all the projects were completed before the terminal date of completion and completion certificate were also received for majority of the units/houses. Therefore, we do not consider it necessary to go into the issue regarding amendment being prospective or not. The claim of assessee is that actually it has complied with the condition as per amended provisions. The Assessing Officer is directed to verify this aspect and allow the claim in accordance with law. In the result, this ground is partly allowed for statistical purpose. Benefit of section 23(1)(c) - Held that:- This provision is applicable in respect of let out/ letiable property. However, in the present case, admittedly, the assessee was holding various commercial and residential flats and spaces for being sold to the prospective buyers. The assessee in its reply, inter-alia, clearly stated that spaces/flats formed part of stock-in-trade of the assessee company as the same was for business purposes and was kept in self possession till the time it was sold. The vacant possession thereof was handed over to the buyers on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground taken by the appellant challenging the action of the Assessing Officer in not considering the revised computation of income filed by the appellant vide letter dated 21st December, 2006. 2. That on the facts and circumstances of the case and in law, the CIT(A) erred in not directing the Assessing Officer to allow depreciation u/s 32 of the Income tax Act, 1961 ('the Act') on consultation/ development fees paid in the Assessment Year 2002-03 as the said fees was held to be capital expenditure in that year. 3. Without prejudice and in the alternative, that on the facts and circumstances of the case and in law, the appellant should be held entitled to claim depreciation u/s 32 of the Act on consultation/ development fees paid in the assessment year 2002-03 as the said fees was held to be capital expenditure in that year treating the said ground as an additional ground raised before the Tribunal for the first time. 4. That on the facts and circumstances of the case and in law, the CIT(A) erred in not directing the Assessing Officer to allow deduction of ₹ 35,907/- u/s 35D of the Act, as had been allowed in the Assessment Year 2003-04. 5. Without prejudice and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the charging of interest u/s 234B of the Act. 14. The appellant craves leave to add to, alter, amend, or vary the above grounds of appeal at or before the time of hearing." 5. As regards ground no.1, ld. counsel for the assessee fairly conceded that this ground is to be decided against the assessee because the Delhi Bench of ITAT and Hon'ble Delhi High (ITA Nos.1261 of 2008, 1278 of 2008, 1287 of 2008, 1402 of 2008 - placed at pages 1-16 of Paper Book-II dated 03.03.2014), in the asessee's own case for assessment year 1994-95 to 1998-99, has rejected the assessee's plea on this count. Accordingly, ground no.1 is dismissed. 6. Apropos ground nos.2 and 3, ld. counsel pointed out that during the assessment year 2002-03, the assessee incurred consultancy/ technical assistance expenditure towards extension of existing business of construction in the field of hospitality by setting up/ running of restaurants. This expenditure was claimed as revenue expenditure by the assessee, which was disallowed by the Assessing Officer by treating the same to be capital asset. Ld. CIT(A) upheld the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned discussion, the Assessing Officer is directed to allow depreciation as allowed in the past. In the result, ground nos.2 and 3 are allowed for statistical purposes. 10. Apropos ground nos.6 and 7, ld. counsel pointed out that during the course of assessment proceedings, the assessee vide letter dated 21.12.2006, filed revised computation of income claiming additional TDS of ₹ 50,192/-. The certificates were also annexed to the said letter justifying the claim made by the assessee. However, the Assessing Officer completed the assessment u/s 143(3) of the Act, without acknowledging the revised claim of TDS made by the assessee. Further, vide letter dated 29.01.2007 assessee also filed rectification application requesting to give effect to the aforesaid TDS claimed. He submitted that ld. CIT(A) also did not consider the aforesaid revised computation and completed the assessment in accordance with the original return filed by the assessee. 11. After hearing both the parties, we find that before ld. CIT(A) the assessee had taken following specific ground of appeal :- "(vi.iii.ii). That on the law, facts and in the circumstances of the case, the Learned Deputy Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xceeding 1000 sq. feet and some of them were with two storeyed construction. The assessee's claim that built up area of residential units are less than 1000 sq. feet cannot be accepted as the assessee has taken the area of varanda and other projections at 50% & 25 %. The built up area has now been defined and Finance (No.2) Act, 2002 has inserted clause (a) In sub section 14 of section 80I8(10) defining the meaning of built up area as under:- 80IB(14)(a): "built-up area" means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common area shared with other residential units; This insertion in section 80IB is clarificatory in nature and is applicable for all pending proceedings. The definition of built up area, spot enquiries made in the earlier year, scrutiny of sanctioned plan filed and all other facts prove beyond doubt that the assessee does not fulfill the conditions in regard to maximum built up area as laid down in clause (c) of section 8018(10)." 14. Ld. CIT(A) confirmed the Assessing Officer's action. Ld. counsel submitted that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the size of the verandah/platform or any projection to the residential unit as part of the built up area in case size of such projections having width up to 1.00 meter. The size of such projections was covered within the constructed/built up area of the residential unit, if the same exceeded 1.00 meter. The built up area as per the completion certificate is less than 1000 sqft in almost all the cases except in case of following few houses forming part of the housing project at East End Loni and Aavantika Aakriti: S.No. ( as per reconciliation) House No. Built up area as per completion certificate. East End Loni 1. A/c 184 1397.49 2. A/c 185 1397.49 7. A/c 1890 1097.93 22 A/D 103 1255.94 23. A/d 104 1255.94 Aavantika Aakriti 5 AD0/047 1301.91 16 AD0/076 1301.91 66 BDo/269 1301.91 76 BDo/295 1301.91 145 DD1/009 1301.91 148 DD1/012 1301.91 12. Subsequent to the completion of assessment, the definition of built up area for the purposes of section 80-IB(10) of the Act was inserted in clause (a) to sub-section (14) thereof by the Finance (No.2) Act, 2004, with effect from 1.4.2005. Assessment under section 143(3) was completed for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t before a particular date. It cannot therefore be said no enquiries were made by AO making the assessment erroneous nor prejudicial and the CIT is not right in observing so. 19. The submission of the assessee, as regards the last condition, that construction of the housing projects was to commence on or after 1.10.98, is that the date of commencement of construction is to be adjudged after receipt of relevant statutory approvals. Any construction carried out before receipt of necessary approvals would not be authorized. In any case, there was only site development by filling of pits, leveling of land, construction of roads, wells, laying of sewerage and electricity lines, etc. Out of the four housing projects constituting subject matter of consideration in the assessment years and there is no dispute as regards commencement of construction with respect to two housing projects, viz., Golf Link II and East End Loni , which commenced after 1.10.98. The lay out plan for the construction of the housing colony, Golf Link II was approved by the approving authority on 11th March 1999 itself. Similarly, lay out plan for development of housing colony at East End Loni was approved by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Tribunal. A clear finding was recorded by the Tribunal that the assessee had filed the details and calculations about the built-up area of the residential units. It would be unreasonable to hold that the Assessing Officer ignored those details. Moreover the statutory auditors had clearly mentioned the dates of approval of the lay out plan of the residential colonies. The Assessing Officer was thus made aware of the dates on which the approvals were granted in respect of each of the four housing projects. The more important aspect was the applicability of clause (a) of Section 80IB(10). On this aspect the Tribunal held that any construction carried out before the receipt of necessary approvals would be unauthorized and could not be recognized. It was found by the Tribunal that in any case there was only site development by filling of pits, leveling of land, construction of roads; wells, laying of sewerage and electricity lines etc. Further there was no dispute regarding the date of commencement of construction with respect to the projects, namely, Golf Link-Il and East End Loni. The Tribunal has found that both these projects commenced after 1st October, 1998. With regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclined to take a different view from the one taken in ITA 480/2010, 485/2010 and 437/2011. The Revenue's appeal so far as they urged this ground is insubstantial and, therefore, rejected." 17. In view of the above decision, ld. counsel submitted that projects covered are East End Loni, Avantika, Aakriti, Golf Link I and Golf Link II. He submitted that the following facts stand confirmed :- (a) The construction of all the housing projects effectively commenced after the statutory date of 01.10.1998 and, therefore, deduction u/s 80IB(10) was rightly claimed and allowed in the original assessment proceedings, except 26 houses in Avantika Aakriti Projects and, therefore, proportionate deduction was allowed. (b) The built-up area of houses in the project, except 5 houses in East End Loni and 6 houses in Aavantika Aakriti, did not exceed the statutory limit of 1000 sq. ft., as per the completion certificate issued by the appropriate authority and, therefore, deduction could not be disallowed in respect of such houses. Ld. counsel further referred to the decision of the Tribunal for assessment years 1999-2000, 2001-02 to 2003-04 vide ITA Nos.4277/Del/2009, 4817/Del/2005, 3304/Del/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in CIT v. Max India Ltd. 295 ITR 282 (SC). 23. We hold therefore that CIT is not right in holding that AO failed to make enquiries or to apply his mind and allowed deduction under section 80IB(10) of the Act. We therefore vacate his order and restore that of the AO. It is, however, except for the construction found to be in excess built up area over 1000 sq. ft. as aforesaid and in respect of which the assessee would not entitled to deduction." 5.1. Respectfully following the ITAT order in assessee's own case, we uphold the order of CIT(A) on this issue. In the result, revenue's appeal being ITA no. 4277/Del/09 for A.Y. 1999-2000 is dismissed. ITA no. 3192/Del/08 (Assessee's appeal for A.Y. 2001-02:" 18. Ld. counsel pointed out that as far as projects Green Grade I and Green Grade II are concerned, the same commenced in assessment year 2003-04 and, therefore, there was no dispute regarding its commencement prior to 01.10.1998. In this regard, ld. counsel referred to page 42 of Paper Book-II, wherein, the Tribunal's order in ITA No.3304/Del/2007 for assessment year 2003-04 is contained, wherein, the ground raised by the Revenue before the Tribunal was as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfying the condition of section 80IB(10) does not arise. He further pointed out that the built-up area of each house in the aforesaid projects was less than 1000 sq.ft.. He pointed out that the deduction u/s 80IB(10) for the aforesaid projects was disallowed without going into the details of satisfaction of aforesaid various conditions by simply following the assessment order for the earlier years. He submitted that the deduction for the aforesaid projects was also claimed in the assessment year 2003-04 which has been upheld in the order passed by the ITAT for that year which has been subsequently confirmed by Hon'ble High Court. Ld. counsel further submitted that in so far as the issue regarding non-filing of completion certificate is concerned, the requirement of completion of eligible projects prior to the specified date and, consequentially, requirement of obtaining certificate was introduced u/s 80-IB(10) by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005. He submitted that considering the projects under consideration started prior to 01.04.2005, the aforesaid amendment being prospective in nature, was not applicable for computation of deduction u/s 80IB(10). In this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) 699: (Mum) (Trib) • ITO v. Yash Developers: ITA Nos. 809/Mum/ 2011 & 3644/ Mum/2012 (Mum. Trib.) (AY 2007-08 & 2008-09) • DCIT v. M/s Shah Builders & Developers: ITA No. 6250/Mum12010 (AY 2007- 08) • ITO v. Velentine Developers: ITA No. 6901 & 8469/Mum/2010 (Mum. Trib.) / 31 ITR(Trib) 452: A Y 2006-07 and 2007-08 • Haware Constructions (P) Ltd v. ITO (2011) 64 DTR 251 (Mum) (Trib) • ACIT v. Magnete Enterprises: ITA No. 5802/Mum/2012 (Mum. Trib.) • DCIT v. Mangalam Estates: 37 taxmann.com 288 (Mad. Trib.) (AY 2004-05 to 2008-09) • ACIT v. Sterling Estates & Properties: ITA No. 316, 336/ Mds/2013 (Mad. Trib.) 24. Ld. counsel further submitted that, in any view of the matter, all the projects were completed before the terminal date of completion and completion certificates were also received for the majority of the units/houses. Therefore, deduction could not be denied in respect of these units. As regards the balance units, ld. counsel pointed out that the assessee had filed the application for obtaining of completion certificate after the completion of the unit/ house and completion certificate was not issued by the local authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment years 2000-01 and 2001-02 projects covered East End Loni, Avantika Aakriti, Golf Link-I, Golf Link-II, Green Glade-I and Green Glade-II. Further, by Tribunal's order in the assessee's own case for assessment years 1999-2000, 2002-03 and 2003-04 vide ITA Nos.4277/Del/2009, 4817/Del/2005, 3304/Del/2007 dated 19.07.2013 and ITA No.3192/Del/2008 and 4595/Del/2005 dated 03.03.2014, this issue is covered in respect of following projects East End Loni, Avantika Aakriti, Golf Link-I, Golf Link-II, Green Glade-I and Green Glade-II. 28. As far as projects Green Glade-I and Green Glade-II are concerned, the assessee has pointed out that they are second phase of construction of housing project in Golf Link-I and Golf Link-II respectively. Ld. counsel pointed out that the permission for erection of residential houses in the aforesaid projects was granted on 31st March, 2001 and 04th May, 2002 respectively and, therefore, the question of said projects not satisfying the conditions of clause (a) of section 80IB(10) does not arise. These facts are not controverted by the ld. DR and, therefore, there could not be any dispute as regards non-compliance of clause (a) to section 80IB(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions were that the flats/spaces being in self occupation for the purposes of company's business, the profits of which were chargeable to income-tax under the profits and gains of business or profession, no notional ALV thereof could be assessed/charged to tax u/s 22 of the Act. The Assessing Officer did not accept the assessee's contention for the reason that the assessee was the owner of the properties and as such, notional annual letting value had to be assessed within meaning of provisions u/s 23 of the Act in assessee's hands particularly as the issue was pending adjudication before the Hon'ble Delhi High Court in the earlier years of the assessee. He, accordingly, made an addition of ₹ 57,54,533/- as under :- Notional ALV as computed above 82,20,761.04 Less : 30% for repairs 24,66,228.31 Net notional ALV 57,54,532.73 32. Ld. CIT(A) following the orders for assessment year 2004-05 deleted the addition made by Assessing Officer. Being aggrieved, the Department is in appeal before us and has taken following grounds of appeal :- "2. Whether on the facts and in the circumstances of the case, the ld. CIT(A) has erred in law in granting relief of ₹ 57,54,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument that the assessee itself is occupier, because it holds the property till it is sold, is concerned, the Court does not find any merit in this submission. While there can be no quarrel with the proposition that "occupation" can be synonymous with physical possession, in law, when Parliament intended a property occupied by one who is carrying on business, to be exempted from the levy of income tax was that such property should be used for the purpose of business. The intention of the lawmakers, in other words, was that occupation of one's own property, in the course of business, and for the purpose of business, i.e. an active use of the property, (instead of mere passive possession) qualifies as "own" occupation for business purpose. This contention is, therefore, rejected. Thus, this question is answered in favour of the revenue, and against the assessee." 34. Ld. counsel pointed out that assessee has filed SLP before the Hon'ble Supreme Court against the decision of Hon'ble Delhi High Court, which is pending for disposal. He further pointed out that subsequent to the decision of Hon'ble Delhi High Court in the assessee's own case for earlier years, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letting value for the purposes of section 22 of the Act. He relied on the decision in the case of Premsudha Exports (P.) Ltd. vs. ACIT, 110 ITD 158. He also relied on the following decisions :- (i) Shakuntala Devi vs. DDIT, 31 CCH 32 (Bang.) (ii) Kamal Mishra vs. ITO, 19 SOT 251 (Del.) (iii) ACIT vs. Dr. Prabha Sanghi, 139 ITD 504 (Del.) (iv) Vikas Keshav Garud vs. ITO, 160 ITD 7 (Pune-Trib.) (v) S.M. Chandrashekar vs. ITO, 76 taxman.com 278 (Bang.-Trib.) (vi) CIT vs. Joy Jacob, 151 ITR 19 (Kerala) 35. Ld. counsel further pointed out that the properties at Sl. Nos.12, 13 and 14 were merely farm lands, on which no residential unit has been constructed. Accordingly, annual letting value cannot be determined in respect of such farm lands in terms of section 22 of the Act. 36. We have considered the submissions of both the parties and have perused the record of the case. As far as assessee's claim of taxability of impugned property being stock-in-trade under the head income from business is concerned, the said issue stands decided against the assessee by the decision of Hon'ble Delhi High Court in assessee's own case, as noted earlier, in the arguments advanced by ld. cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is in regard to determination of annual letting value in respect of farm lands. 38. We find that no findings have been recorded in this regard by lower revenue authorities, as to whether annual letting value could be determined in respect of such farm lands in terms of section 22 or not. We may observe that if there was no building on farm lands then it will not come within the ambit of section 22. On this aspect, the Assessing Officer is directed to examine the issue afresh. 39. In the result, the ground raised by the Department is allowed for statistical purposes in terms of aforementioned observations. ITA No.1248/Del/2009 (A.Y. 2005-06) : 40. This is an appeal filed by the assessee against the order dated 23.01.2009 passed by the Commissioner of Income Tax (Appeals)-1, New Delhi, u/s 143(3) of the Act relating to assessment year 2005-06. 41. The assessee has raised following grounds of appeal :- "1. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeal)-I has erred in upholding the disallowance of deduction u/s 80IB(10) amounting to ₹ 2,43,22,929/- made by the Assessing Officer vide Assessment Order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds claim under section 80-IB(10) when there is substantial evidence that the assessee company had made investment to the extent of ₹ 103,01,73,852/- prior to 01.04.1998 in all these projects as also admitted to have launched these projects in the Annual reports of 1996-97. 4. Whether there was any material evidence before Learned CIT(A) to hold that the three projects were launched after 01.10.98 and were completed on or before 31.03.2008. 5. The appellant craves leave to add, alter or amend any/ all of the grounds of appeal before or during the course of the hearing of the appeal." 45. As far as ground no.2 is concerned, this issue has been considered by us while deciding the Departmental appeal vide ITA No.1254/Del/2009 for assessment year 2005-06. The decision for assessment year 2005-06 shall apply mutatis-mutandis in this assessment year also. Accordingly, this ground is allowed for statistical purposes. 46. Vide ground nos.3 and 4, the Department is primarily assailing the findings of ld. CIT(A) regarding projects being launched after 01.10.1998 and completed on or before 31st March, 2008. As far as launching of the project after 01.10.1998 is concerned, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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