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TMI Blog2019 (2) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee by consuming TDR on existing housing project site as infrastructural facility u/s 801B(10). 3. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored. 4. The appellant craves leave to add, amend, alter or delete any ground of appeal." 3. The brief facts of the case are that the assessee filed its return of income on 01.10.2013 declaring total income to the tune of Rs. Nil for the A.Y.2013-14. The case was selected for scrutiny under CASS. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee is a partnership firm consisting of Two Partners namely Kashish Park Realty Pvt. Ltd. and Shri Saurabh Aggarwal sharing profit ratio @ 25% and 75% respectively engaged in the business of Construction. The assessee in its profit and loss account declared tax to the tune of Rs. 1,05,94,383/- against the total sales in sum of Rs. 7,01,30,000/-. The tax was claimed as exempt under chapter VIA i.e. u/s 80IB(10) of the Act and showed the income at Rs. Nil. The exemption u/s 80IB(10) of the Act was subjected to compliance of various conditions. Originally the entire piece of land covering the above survey Nos. was owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artners of the firm. It leaves scope for doubt about the legality of the document. It is further noticed that the assessee firm had started making payment much before the firm came into existence through one of the partners and said even were not covered or incorporated in the deed of the partnership firm. How there can be payments to the landlords on behalf of the non-existing firm. The consideration as arrived at by way first supplementary agreement was already completed by the assessee firm before the execution of the supplementary agreement dated 07.01.2005, which shows that the consideration was pre-decided and the changed in the documentations are made as per the whims and fancies of the parties to the document, since all are the unregistered documents. The payments made to the landlord's M/s FGP Ltd. prior to the existence of the firm whereas under: Sr. No. Date Amount From which A/c Payment made Name of the Bank 1 06.10.2003 9000000 Kashish Park Realtors Pvt. Ltd. HDFC Bank Thane BR. 2 17.11.2003 1100000 Kashish Park Realtors Pvt. Ltd. HDFC Bank Thane BR. 3 24.11.2003 1000000 Kashish Park Realtors Pvt. Ltd. HDFC Bank Than eBR. 4 03.12.2003 51000 Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plan and such further approval and regulations as may be applicable." It is pertinent to note here that this was the first venture for the assessee firm and there was no concern therefore of the assessee firm of the plans already approved. The above clause definitely goes tangent against the scheme of the assessee of creating the separate firm for the purpose of 80IB[10). Further, the said agreement also envisages the utilization of the TDR/ FSI not only in particular pockets but also by way of additional construction on the buildings constructed by M/s Kashish Park Realtors Pvt. Ltd. and Ladam Homes Ltd. The above understanding and consent by Pvt. Ltd speaks volumes about nature of paper entity in the form of the assessee firm to take the advantage of provisions. This is further proved by the fact that the payments to landlord mentioned herein above were also made by M/s Kashish Park Realty Pvt, Ltd. before formation of partnership firm and the same also appears to have not been credited to capital A/c of private Ltd in the books of the assesses firm. It is also seen that the assessee firm has completed the construction of three bldgs. Viz, MN-6, MN-7 & MN-8 based on the plan san ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rong against law and facts and is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has refuted the said contention and argued that the claim of the assessee has been allowed by CIT(A) on the basis of the decision of earlier year for the A.Y. 2010-11 to 2012-13 decided by CIT(A), therefore, the claim of the assessee has rightly been allowed. Before going further, we deemed it is necessary to advert the finding of the CIT(A) on record: - "7. I have carefully considered the appellant's submissions, observations of the AO in assessment order and the fuels of the case. The issue involved in this case and the facts: case for the year under consideration are identical to the facts of the earlier years i,e, 2010-l1 to A.Y, 2012-13. The claim of deduction u/s, 80IB(10) is also in respect of the same buildings i.e. MN-6, MN-7, MN-8 and Tower 'A, which is the subject matter of present appeal as they were in the earlier years. The issue of deduction u/s. 80IB(10) of the Act was discussed in detail by the then CIT(A)-I Thane in his order dated 15.07.2014 for A.Y. 2010-11 and the same was allowed. The observations of the CIT(A)-II, Thane are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y AO as collusive transactions. On perusal of the documentary evidence placed on record and also the fact brought on the record by the A.O., it is noticed that the landlord, M/s. FGP Ltd. was the owner of a large plot of land admeasuring 58258 sq. mtrs. at Village Naupada, Near Mulund Check Naka, LBD Marg Thane. The vendor jirst granted the development rights of 5805 sq. mtrs. to M/s. Ladam Homes Ltd vide an Agreement dt. 5.7.2000 us amended by subsequent agreement from time to time. Thereafter, the development rights in respect of another 19690 sq. mtrs, of the land were granted to Kashish Pork Realty Pvt. Ltd vide an Agreement dt. 5.7.2000 as amended from time to time. The balance area of land of 32773 sq.mtrs. remained with M/s. FGP Ltd. and for which this concern was entitled to internal TDR of 9851 sq. mtrs. to the consumed on balance land area As a result of Agreement dt, 03/12/2003, the appellant firm had acquired development rights of the TDR-FSI of 9851 sq. mtrs. which have been consumed by the appellant firm in the buildings constructed during the year under consideration and in the subsequent assessment year. In fact, in the year under consideration the appellant firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 80IB(10) provided it if taken up by a separate undertaking having hooks of account maintained in such manner to ensure ascertainment of the correct profit The appellant firm vide ifs letter dt. 13/03/2013 has painted out this clarification to the A.O. also. Therefore, in view of the clarification issued by the CBDT which is highest authority for administration of the Income Tax Laws, the constitution of the firm and construction of the housing project on TDR-FSI acquired jn rejpect of the existing housing _project site cannot be considered as a collusive device in order to claim deduction u/s 80IB(10). This position of law has also been explained by the Hon'ble jurisdictions! High Court in the case of CIT Vs. M/s. Vandana Properties, 206 Taxman 584 (2012). The Ld. A.R has very heavily relied upon the decision of Hon' High Court in the case of M/s. Vandana Properties (supra) on the ground (hat the fact.': of the appellant's case are identical. In the case of M/s. Vadana Properties, the buildings A, B, C & D were already constructed on a plot area of 2.36 Acres situated at Kandivali (W), Mumbai, Subsequently, the assesses became entitled to construct on additional b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal TDR-FSI in view of the above decision. Thus, the arguments of Ld. A.R. are found acceptable on this account. (c) Issue of area of plot less than one acre; The A.O. has raised the issue that the area of the plot on which the appellant firm has constructed a housing project is less than one acre. This observation of the A.O. is devoid of any merits as from the development agreement dt. 3.12.2003 itself it is clear that the appellant firm has acquired development rights of FSI to the tune of 9851.81 sq. mtrs. Undisputedly, the buildings of the housing projects developed by the appellant firm have been constructed on the open plot of land and none of the buildings has been constructed on she existing buildings. During the year under consideration, the appellant firm has constructed buildings MN-6, MN-7 & MN-8 covering total area of 4067.46 sq.mtrs. Further, during the immediately succeeding assessment year, the appellant firm has constricted Towers "A " & "B" on iota! area of 4885 sq. mtrs. on which deduction it u/s.80IB(JO) has also been claimed. Thus the total area covered under housing projects constructed by the appellant firm works out to 8952.45 sq. mtrs These facts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the landlord was a collusive transaction. b. The observation of the AO that had M/s Kashish Park Realtors Pvt Ltd developed the additional TDR-FSL then it would not have been eligible for deduction u/s SOIB(IO) is without any legal basis because as held by the jurisdictional High Court in the case of Vandana Properties, even the additional building tied on the same plot of land where other buildings had already existed was eligible for the deduction provided other conditions were fulfilled. 3. The project had been constructed on a plot of land of more than one acre as is apparent from the fact that the appellant firm had acquired the development rights of FSI to the tune of 9851 sq. mts. 14. Therefore, deduction u/ 80IB(10) was available to the appellant as no violation of any other conditions has been pointed out by the AO." 6. On appraisal of the above mentioned order, we noticed that the CIT(A) has already adjudicated the matter of controversy while deciding the issue in the A.Y. 2011-12 and 2012-13 in which the claim of the preceding year has been allowed. The decision of the CIT(A) for the A.Ys. 2011-12 & 2012-13 dated 15.07.2014 nowhere changed and varied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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