M/S. VENUS INFRASTRUCTURE & DEVELOPERS PVT. LTD.,,AHMEDABAD vs. THE DCIT, (OSD) CIRCLE-8,, AHMEDABAD

आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned cross appeals have been filed at the instance of the Assessee and the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-1, Ahmedabad, dated 31/07/2019 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2012-2013.

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4.1 However, the AO during the assessment proceedings found that there was only one asset being immovable property available in the company namely M/s ARGHPL. Accordingly, the AO was of the view that the assessee has transferred the immovable property in the garb of transferring the shares as discussed above. According to the AO the shares held by the assessee in the company was for a period of less than 36 months and therefore the same needs to be calculated as short term capital gain without providing the benefit of cost of indexation. As such the assessee to escape from the tax liability has used the colourable device by declaring long term capital loss instead of short term capital gain on the sale of

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property. Consequently, the AO sought clarification from the assessee vide letter dated 11/03/2014 by proposing to tax the short term capital gain of Rs. 5,55,22,760/- for transferring the land to the Friends Group.

4.2 The assessee in response to such show cause notice vide letter dated 11/04/2014 contended that it has acquired and sold the shares of M/s ARGHPL at the fair market value. It has also paid the tax under the provisions of MAT on the amount of Rs. 5,55,22,760/- only.

4.3 The shares were acquired in the Assessment Year 2009-10 which was also accepted as genuine by the then AO. There were additions made u/s 14A of the Act in the earlier years on the dividend income received from M/s ARGHPL.

4.4 The shareholders and the company are separate legal entity and therefore the asset belonging to the company cannot become the property of the shareholders.

4.5 However, the AO dis-regarded with the contention of the assessee and held that the assessee in order to escape from tax liability has transferred the shares after claiming index cost of acquisition by adopting the colourable device which is not permissible under the provision of law. Accordingly, the AO worked out the short term capital gain of Rs. 5,55,22,760/- and added to the total income of the assessee.

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human probabilities, lead to the inference that the sales transactions of shares were only to reduce the tax liability. In substance, it was sale of immovable property resulting in short term capital gain. This ground of appeal is accordingly dismissed and the action of the AO in this regard is upheld.

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property. As such the assessee has sold the shares to the ‘Friends Group’ which eventually has resulted the transfer of the impugned property held by the company.

9.1 Accordingly, the AO was of the view that the assessee by transferring the shares has effectively transferred the land to the buyer i.e. ‘Friends Group’. It was also observed by the AO that the shares in question were held by the assessee only for 34 months which were treated as long-term asset in view of the provisions of section 2(42A) of the Act. As the assessee, effectively, in the given case has transferred the land by adopting the colourable device by showing the sale of shares. In other words, the assessee held the shares for 34 months only before transferring the same to the ‘Friends Group’. Accordingly the AO held that the assessee had adopted the colourable device by transferring the so called shares which were held for 34 months only instead of the land held by the company M/s ARGHPL. Accordingly, the AO denied the benefit of indexation claimed by the assessee on the sale of shares by treating the same as transfer of land and computed the short-term capital gain of Rs. 5,55,22,760/- which was added to the total income of the assessee. The view taken by the AO was also subsequently confirmed by the learned CIT (A).

9.2 Now the issue arises for our adjudication whether the assessee has adopted the colourable device by transferring the land in the garb of transfer of shares in the given facts and circumstances.

9.3 The concept and meaning of "colourable device" refers to the transactions which appear to be authentic on the face but in actuality they are false. It refers to something false, fake or fictitious that purports to be genuine, someone who leads you to believe something that is not true. From the concept of colourable device it is apparent that "wherever the parties to the transaction adopt a colourable device, they conceal the true nature of the transaction and purport to show it differently with ostensible intention of avoidance of tax. If the facts of the case so indicate authorities are within their jurisdiction to ignore the device and look through the

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transaction to find out the true nature of the transaction and ascertain as to what was the real intention of the parties for carrying out the transaction the way they have carried out and why it has been presented the way it has been done?

9.4 A colourable device is not an instrument or a specific document but it is whole set of series of transaction which create a different impression when they are looked at their form alone or seen from result they create, but when it is looked through and the substance of the transaction is brought into limelight and such substance of the transaction clearly indicates an intention of tax evasion as well as manipulation, dodging, or even fraud, such device has to be ignored and the effect coming out of the substance has to be applied for working out taxable income.

9.5 However, the tax planning, on the other hand is held not illegal or illegitimate or impermissible, but it is the task of the Court to ascertain the legal nature of the transaction and while doing so, entire transaction has to be looked at as a whole and not in pieces. In this regard we draw support and guidance from the judgment of Hon’ble Jurisdictional High court "in the case of Banyan & Berry v. CIT reported in [1996] 84 Taxman 515 (Guj.), where it was held that every Act which results in tax deduction, exemption of tax or not attracting tax authorized by law cannot be treated as a device of tax avoidance and the real question to be asked is whether the act of the assessee falls in the category of a colourable device, a dubious method or subterfuge which the judicial process may not accord approval.

9.6 In the backdrop of the above stated discussion, we analyze the facts of the existing case. The assessee in the present case had two legal courses open to dispose of the land held by M/s ARGHPL. One was to directly sale the land and pay the capital gains tax in the hands of M/s ARGHPL either as long term or short term depending upon period of holding of land by impugned company i.e. more than 36 month or less as the case may be in accordance with the provisions provided under section 2(29A) and 2(42A) of the Act. In the other case by selling the shares of M/s ARGHPL so that control over the company as a whole was transferred. In the latter

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situation, the M/s ARGHPL would continue to hold the land and, the assessee company would pay long term capital gain on transfer of share after claiming indexed cost of acquisition as the holding period of shares by assessee was for more than 12 month by virtue of proviso to section 2(42A) of the Act read with section 2(29A) of the Act. Thus, the assessee choses one option out of two legally permissible options which it deem most tax effective or viable option. There was no inserting of any device and, therefore, it could not be said that any colourable device was used to reduce the tax liability.

9.7 Furthermore, we find that the entire basis of holding the transaction on hand as colourable device was that M/s ARGHPL was holding only one assets which is land, thus what was held by the assessee by virtue of purchase of shares was land which was transferred after holding period of 34 month which was less than 36 months for qualifying as long term capital assets. In other words, had these shares been transferred by the assessee after the expiry of 36 months, then the transaction would have been accepted as genuine by the revenue. However to our understanding, the period of holding for 34 months cannot be a criteria/reason to hold the transaction in dispute as colourable device. The assessee could have easily postpone the transaction by two months in order to avoid the possible hassle of the income tax proceedings.

9.8 In the present case, the assessee has not adopted the colourable device by hiding the truth or by carrying out the transaction in order to give the appearance of genuine transaction. Hence, we do not find any reason to uphold the finding of the authorities below.

9.9 Moving further we also find that, as per companies Act shareholder and company both are two separate legal person capable of holding property of any kind in their own name. The land in question was held by M/s ARGHPL and not by the shareholder i.e. Assessee company. By being shareholder, the assessee cannot be said to be the owner of the land held by impugned company for the reason that a

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company is perpetual succession not affected by incoming and outgoing of its shareholder. Therefore, to our understanding what can be transferred by the assessee being shareholder is only the shares, held by it. Thus the transfer of share by the assessee cannot be equated with transfer of land which is not held by it.

9.10 We also find that the throughout the period the assessee has treated the said shareholdings as investment in shares and not in land. The assessee was subject to disallowances under section 14A of the Act for the expenses incurred to earn dividend from such investment. Therefore to our mind principle of consistency should be followed. As such the revenue cannot change the stand as per its will. Thus in view of above stated discussion we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.

I have duly considered the order of the AO and the submission filed by the Appellant Company in this regard. Ratio decidencli laid down by Hon’ble Supreme Court in the case of S. A. Builders Ltd. is square!) applicable in this ease. For allowance of interest expenditure u/s 36(lj(iii) of the Act, what needs to be seen is the commercial expediency, business

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purpose and the utilization of the impugned fund which was advanced. It is not disputed that the Appellant is having mixed fund. It was held in the case of 5.A. BUILDERS LTD. VS. COMMISSIONER OF INCOME-TAX (APPEALS) ANR 288 1TR 1 JSC) as under: "Interest on borrowed funds cannot be disallowed if the assessee has advanced interest free loan to a sister-concern as a measure of commercial expediency; what is to be seen is "business purpose" and what the sister-concern did with the money advanced". On going through facts of the case the appellant company has not proveit's commercial expediency therefore this expenses cannot be allowed. Following the ratio of the judgment mentioned supra, interest paid on borrowed capital is allowable as deduction u/s. 36(l){iii) only when the borrowed funds were utilized for the purpose of business. The Appellant Company has not been able to establish the commercial expediency of the alleged transaction. The Appellant has not been able to justify the business purpose of the said transaction and the ultimate utilization of the said amount. The Appellant had submitted during the assessment proceedings that Reserves were already utilized in so many projects of the appellant company. As on 31/03/2012, projects under development was to the tune of Rs. 227.95 crores. The appellant company was not having any idle funds available. The cash and cash equivalent of Rs, 12.03 crores mainly consist of fixed deposits with banks against which over draft limits were already utilized. Current assets of this 20.73 crores is in fact utilization of funds. Therefore, as the Appellant itself, there is no idle fund available with the Appellant. The AO has correctly pointed out that if this fund were not given as interest free advance, the same could have been utilized for payment of debt lowering the burden of interest expenditure on the Appellant Company. The appellant company has not proved that interest bearing borrowed fund \\crc not diverted to interest free loans & advances. I am inclined to agree with the decision, of the AO to disallow interest of Rs. 9,90,000/-. Accordingly, this ground of appeal is dismissed.

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16.1 In holding so we draw support and guidance from the judgment of Hon’ble Bombay High Court in the case of Reliance Utilities and Power Ltd. reported in 313 ITR 340 wherein it was held as under:-

“The principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the CIT(A) and Tribunal”.

16.2 Similarly, we also rely on the judgment of the Hon’ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd reported in 366 ITR 505 (Bom). The relevant extract of the order is reproduced below:-

“Where assessee's capital, profit reserves, surplus and current account deposits were higher than the investment in tax-free securities, it would have to be presumed that investment made by the Assessee would be out of the interest-free funds available with Assessee and no disallowance was warranted u/s 14A.”

16.3 Similarly, we also find support from the judgment of Hon’ble Gujarat High Court in the case of UTI Bank Ltd. reported in 32 Taxmann.com 370 where the headnote reads as under :

“If there are sufficient interest free funds to meet tax free investments, they are presumed to be made from interest free funds and not loaned funds and no disallowance can be made under section 14A”.

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16.4 In view of the above proposition, we hold that no disallowance of interest expense claimed by the assessee can be made on account of such interest free loans and advances as discussed above. Hence the ground of appeal of the assessee is allowed.

16.5 In the result the appeal of the assessee is allowed.

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2012. As per the assessee, it has entered into the international transaction with its AE namely ‘ATTCO International’ based in Dubai.

19.2 It was explained by the assessee that it has taken the advance for booking of the shops/ showrooms in K-Mall for ₹ 11,34,51,000.00 crores from its sister concern namely M/s Sunderdeep Infrastructure Private Limited (for short SIPL) in the financial year 2007-08. Subsequently, Shri Narsingh T Khanchandani a key person of ‘ATTCO International’ (for short ATTCO) approached to the assessee for booking the shops/showrooms in K-Mall for the customers based in Gulf. The assessee agreed to provide the showrooms/shops to Shri Narsingh T Khanchandani subject to the condition that ‘ATTCO’ furnishes the guarantee to the tune of ₹15 crores with respect to the advance given by SIPL. On fulfilling this condition, it was possible for booking the showroom in K-mall for the proposed buyers based in Gulf. Shri Narsing K T Khanchandani agreed to furnish the guarantee. Therefore, a tripartite agreement was signed among the assessee, SIPL and ATTCO dated 04th April 2011 for furnishing the guarantee. Thus guarantee given by the ATTCO for Rs. 11.34 crores was more than 10% of total borrowing of the assessee.

19.3 Besides the above, the assessee also explained that the ATTCO has approached to the assessee in the financial year 2007-08 for booking the flats for its Gulf-based customers in ‘Venus Parkland’. For this purpose ATTCO has made block booking of 5 flats after depositing a sum of ₹1 crore in the financial year 2007- 08. Accordingly, there was made a brokerage agreement of it with ATTCO in the month of May 2011 with respect to purchase of the flats in Venus Parkland, a residential project of the assessee. In this connection the assessee has credited the account of ATTCO for the sum of ₹ 3,47,495/- on account of brokerage in the year under consideration.

19.4 Based on the above, the auditor of the assessee advised that M/s ATTCO has become the deemed associated enterprises of the assessee for furnishing the guarantee as discussed above in pursuance to the provisions of section 92A(2)(d)

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of the Act. Thus the transaction of brokerage was to be benchmarked to justify the arm length price. Accordingly, the auditor of the assessee advised to submit transfer pricing study as per section 92E of the Act in form 3CEB with respect to its international transactions carried out with the ATTCO as discussed above. Accordingly, the assessee furnished form 3CEB dated 27-11-2012. Consequently, the assessee contended that its due date for filing the return of income got extended by 2 months i.e. a 30-11-2012.

19.5 The assessee during the assessment proceedings to justify its stand that the time limit for filing the return of income got extended by 2 months, has furnished the expert opinion of 2 persons namely Shri Shri KC Patel a senior advocate and Shri K A Puj retired judge of Hon’ble Gujarat High Court. Thus as per the assessee there was no delay in filing the return of income as alleged by the AO.

19.6 The assessee on merit submitted that its residential project namely ‘Venus Parkland’ was approved by the local authority dated 30th March 2007. Thus as per the provisions of section 80-IB (10) of the Act the project was to be completed as on 31st March 2012. The assessee, as such has completed the project before the due date and obtained BU permission from AUDA dated 3rd August 2011 for 240 units. Subsequently, the assessee has paid the fees for the entire project on 25th November 2011 to AUDA for obtaining the permission. Likewise, the assessee obtained the permission for another 240 units from AUDA dated 20th March 2012. Thus, the assessee was able to obtain permission aggregating to 480 units before the due date of completion of the project. However, for the balance 360 units, the permission was not granted by the AUDA before the due date of completion of the project on account of procedural lapse on the part of the AUDA. As such the assessee from its side has completed all the formalities including the payment of fees to AUDA.

19.7 Furthermore, the jurisdiction of the location was transferred from AUDA to AMC with effect from 1 April 2012. As such there was some confusion with respect

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to the records to be transferred from AUDA to AMC which has resulted delay in obtaining the completion certificate from the authority. Likewise, there was also some issue that which of the authority will issue the completion certificate i.e. AUDA or AMC.

19.8 It was also submitted that the assessee has transferred and handed over the possession of the property for few of the units of its project Venus Parkland before the due date of completion of the project.

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question of brokerage expenses does not arise. This fact can also be verified from the clause 7 of the brokerage agreement. As such the brokerage agreement requires for the payment of commission on the sale of units of Venus Parkland. Likewise there was no payment of the brokerage expenses to ATTCO up to 24th December 2013. 20.1 In view of the above the AO concluded that ATTCO was not associated enterprises of the assessee, inviting the transfer pricing provisions for the transactions as discussed above. Likewise, there was no international transaction with ATTCO in the year under consideration. Accordingly the due date for filing the return of income under section 139(1) of the Act was 30th September 2012. As such, the assessee has contravened the provisions of section 80AC of the Act and therefore the assessee is not eligible for deduction under section 80-IB (10) of the Act.

20.2 The AO with respect to the issue on merit, observed that AUDA in response to the notice issued under section 133(6) of the Act has categorically stated that BU permission was granted to the assessee only for 480 units and for the balance 360 units, no permission was granted for the reason that these units were not completed during the relevant time. Likewise, it was also submitted by AUDA vide letter dated 8th January 2014 that there is no application pending for approval of the assessee.

20.3 Similarly, the inspector of AUDA in his report dated 2nd February 2012 has clearly stated that the construction work was still undergoing for remaining units of the project namely Venus Parkland. Thus, the project of the assessee was not completed at the time of inspection.

20.4 Likewise, the AMC in response to the notice issued under section 133(6) of the Act has submitted that only 480 units which got BU permission were provided the water connection.

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20.5 The permission for the installation of the lift in respect of 10 blocks was given to the assessee after 31 March 2012.

20.6 The assessee is still incurring the expenses towards the building material in the financial year 2012-13 which is evident from the copy of the ledgers.

20.7 In view of the above, the AO on merit concluded that the project of the assessee has not been completed within the time provided under section 80- IB (10) of the Act. Therefore the assessee cannot be allowed the deduction claimed for ₹ 32,13,73,570/- under section 80-IB(10) of the Act and accordingly the same was added to the total income of the assessee.

A. On technical issue i.e. return filed within the time limit provided (i) It has paid all the tax liability in the form of advance tax, tax deducted at source and self-assessment tax before June 2012. It got its books of account audited under Companies Act and under section 44AB of the Act and also got report under from 10CCB before 30th September 2012. Thus it has no reason to file return after 30th September 2012. As such, being a law abiding assessee, it acted upon the advice of the auditor who is a qualified and expert professional. The Auditor advised that the guarantee deed entered with ATTCO and further booking of flats and brokerage agreement and consequent commission expenses attract the provisions of transfer pricing. Thus to safeguard it from penalty and litigation on account of failure to get TP report in form 3CEB it complied with auditor

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advice. Further if it would not have obtained the TP report in form 3CEB, then AO himself would have levied penalty especially in circumstances where Auditor in his report has suggested to do so. (ii) The observation that no guarantee was sought with respect to the advances received from other 12 parties is misplaced. As these parties have deposited very nominal amount, thus the question of guarantee doesn’t arise. (iii) The AO’s observation that advance from SIPL for Rs. 11.34 was treated as security deposit is also misplaced. As such, till A.Y. 2011-12, the same was treated as security deposit against booking but in the year under consideration, the nature of the same changed to short term borrowing by virtue of guarantee given by the ATTCO. Accordingly, the same was shown under the head short term borrowing in the audited balance sheet. (iv) The brokerage/ commission to ATTCO was paid at a later stage after deducting withholding tax which was deposited to the department. B. On merit: (i) The AO for holding that the project was not completed before 31st March 2012 has relied only on the fact that BU permission for 360 unit was pending. As such the AO ignored the other documentary evidences such as detailed below:

(a) Certificate from engineer that project was completed before 31st March 2012. (b) Copy of conveyance deed with respect to unit where BU permission was pending but the same were sold before 31st March 2012 as well conveyance deed made during April to June 2012 along with possession letter. (c) Copy of electricity bills of units where BU permission was pending which are evidencing that the buyers are living in those units.

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(d) Copy of application for BU permission submitted to AUDA along with copy of challans showing fee paid for entire project. (ii) AUDA in reply to notice under section 133(6)/131 has stated that application was made for entire project but permission was issued for only 480 unit. Thus it proves that it has made application. (iii) BU permission was delayed due to the reason that there was the issue with regard to jurisdiction between AUDA and AMC from April 2012. However the AMC issued BU permission based on the application made before AUDA and certified that the project was completed before 31st March 2012. Thus there was no fault at the end of it (the assessee). (iv) The AO’s observation that construction expenses like cement and steel purchase are incurred in subsequent year is misplaced as it has incurred cost on such materials for more than 20 crores with respect to 860 units whereas in subsequent year only an expense of Rs. 7 lakh was incurred for some petty work and repair of playground area and road etc. (v) The report of the inspector of AUDA is very general. In the report nowhere, it was mentioned which blocks are completed and which one are not completed. It also did not mention what amount of work is pending. In the report of the inspector, it was nowhere stated that BU permission will not be granted.

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applicable in the case of the assessee where Transfer Pricing Audit Report is required to. be submitted u/s 92E of the Act. Therefore, the return of income filed by the appellant company is within the statutory time limit as per the provisions of section 139(1) of the Act. 7.10 The AO has further stated that no separate Books of Account were maintained for the residential housing project "Venus Parkland" which is a mandatory requirement for claim of deduction u/s 80IB(10) of the Act. It is noted that it is an erroneous observation by the AO, since, the residential housing project in the name of "Venus Parkland" was with another group company Venus Real Estates Pvt. Ltd., which got merged / amalgamated with Venus Infrastructure & Developers Pvt. Ltd., in pursuance of the order of Hon'ble Gujarat High Court dated 22/12/2011 and therefore, the Books of Accounts of Venus Real Estates Pvt. Ltd. for the accounting year 2011-12, which was maintained separately, was consolidated with the accounts of Venus Infrastructure & Developers Pvt. Ltd for A.Y. 2012-13 in view of the order of Hon'ble High Court of Gujarat. The AO has also observed that no evidence was recovered from the office premises of the Appellant Company during the course of survey U/S.133A of the Act on 23/10/2013 in respect of transaction entered into with ATTCO International. It was submitted by the Appellant that the Deed of Guarantee and other Agreements were available in the computer back up taken during the course of survey proceedings and in the Audit Report u/s.92E of the I.T Act, 1961 on 27-11 -2012, the Deed of Guarantee and brokerage transaction entered into with VIDPL & ATTCO International, LLC, Dubai and the copy of the Report u/s. 92E was also submitted to the Income tax department on 29-11- 2012. The AO has observed that brokerage is shown as outstanding against ATTCO international and no Flats were sold by AATCO International in Venus Parkland. The Appellant has contended that the brokerage has been credited to the account of ATTCO international and the same was subsequently paid. Further, it is evident from the ledger account that flats were sold/booked in the Project Venus Parkland through AATCO International and the observation of the AO is erroneous and contrary to the facts on records to that extent. The AO has not considered deed of guarantee and brokerage agreement because they were not registered and not notarised, and therefore according to the AO, they had no legal validity. The AO has held that the deed are not enforceable in court of law and thus, it cannot be held that "ATTCO International has given guarantee is respect of 10% of borrowings of the assessee company and thus, it cannot be held "ATTCO International" is associated enterprise of assessee company within the meaning of Sec.92 (A)(D) of the Act. However, it is noted that that both agreements are stamped and duly signed by authorised persons. As per Section 10 of Indian Contract Act, 1972, both the agreements are valid and can be challenged in court. The AO has observed that the Appellant company had received Rs. 12.38 crores as deposits from 12 other parties for K Mall and no party had taken guarantee. The above finding of the AO is factually incorrect and contrary to the evidence on record. It is seen from thee perusal of Balance Sheet for the year under consideration that total deposit received by the company is Rs 12.47 crores which includes deposit of Rs. 11.34 crores from Sunderdeep Infrastructure Private Limited. It means other parties had given total deposit of Rs. 1.04 crores only. The details of deposit of Rs. 1.04 crores taken from other persons are as under:-

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Sr.No Party Name Amount Rs. 1. Aaryan Collection - Shop No. 105 321030/-

The Appellant submitted that due to delay in projects, some parties took back the amount deposited by them while others like Shoppers Stop Ltd who had given deposit of Rs. 60.84 lacs took shops in K Mall project on rent after completion of the project against MOU/Agreement. The Appellant has submitted that the genuineness of the transaction between ATTCO international and Venus Infrastructure & Developers Private Limited as well as deed of guarantee entered into between Venus Infrastructure & Developers Private Limited, ATTCO international and M/s. Sunderdeep Infrastructure Private limited cannot be doubted as it is a commercial transaction with a third party and ATTCO International LLC is an associated enterprise only in pursuance of deeming provisions of section 92A(2}(d) of the Income-tax Act, 1961. 7.11 The Hon'ble jurisdictional High Court in the case of MANGAL TEXTILE MILLS PVT. LTD. dated 25.02.2002 reported at 2002 (81) ECC 47 held inter-alia as under : ! "There is no dispute as to the fact that the certificate produced by the petitioner of its Chartered Accountant was not disputed by the respondents by bringing on record any opinion of another qualified person so as to displace the opinion of the professional expert. In fact, the petitioner supported the Certificate of the Chartered Accountant by a further letter tendered after Notification No.41/2001, dated 21-9-2001 wherein the Chartered Accountant

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had specifically stated that they had followed the contents of the Accounting Standards (A.S.10) while issuing the original certificate. The opinion rendered by the competent expert has not been dislodged by the respondents in any manner whatsoever and the opinion expressed by the Deputy Commissioner would remain merely an opinion in the face of the certificate issued by an expert." The facts of the instant case are squarely covered by the binding ratio of judgement of the jurisdictional High Court quoted supra. In the instant case, the deed of guarantee as well as agreement for brokerage are governed by the relevant provisions of section 92 as certified in the report in Form No. SCEBby the Chartered Accountant who is a competent expert. The Transfer Pricing Audit Report certified by the Chartered Accountant was not disputed by the AO by bringing on record any opinion of another qualified person so as to displace the opinion of the professional expert. Therefore, as held by the Hon'ble Jurisdictional High Court, opinion expressed by the Deputy Commissioner would remain merely an opinion in the face of the certificate issued by an expert. Respectfully following the binding Ratio decidendi in the case of MANGAL TEXTILE MILLS PVT. Ltd. quoted supra, it is held that the Appellant Company was subjected to Transfer Pricing Audit as per provisions of section 92(E) of the Act. Where Transfer Pricing audit report was obtained by the Appellant Company, as per provisions of section 92E of the Act, the statutory time limit (due date) for filing return of income by the Company for F.Y, 2011-2012, relevant to A.Y. 2012-2013 is 30.11.2012. Considering the aforesaid reasons, the disallowance of claim of deduction u/s.80IB(10) of the Act is not sustainable on the technical ground that the return of income for A.Y. 2012-13, filed by the appellant company on 28.11.2012, was beyond the due date for filing the return of income as per section 139(1) of the Act. Therefore, it is held that the return of income filed by the company is within the statutory time limit as per provisions of section 139(1) of the Act. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 8.12 The facts of the case referred supra is squarely applicable in the case of appellant Company. The AO has not rejected the Engineer's certificate, certifying that the entire project was completed before 31/03/2012 and factum of possession of flats given to members before 31/03/2012. The Hon'ble Jurisdictional High Court of Gujarat in the case of ITO vs. Saket Corporation (supra), held that where the assessee had completed construction of its entire housing project and applied for building use permission/completion certificate within prescribed time-limit, it would be entitled to deduction u/s. 80-fB(10) of the Act notwithstanding fact that it could not receive permission for its entire project. In the present case also the assessee completed the construction of project and also applied for BU permission within prescribed time limit on 25/01/2012 therefore, respectfully following the binding ratio decidendi of the Hon'bie Jurisdiction High Court, it is held that the Appellant is entitled for deduction u/s. 80-18(10) of the Act despite the fact that the Appellant could not receive building completion certificate for the project on or before last date of 31/03/2012 from the competent authority. The delay on the part of competent authority in issuing building completion certificate cannot be attributed to the Appellant for denying deduction u/s. SO-IB(IO) of the Act. It is held that there was no default on the part of the appellant company and the delay cannot be attributed the appellant company. The appellant company had applied for BU for entire project and paid prescribed fees also on 25/01/2O12 well prescribed time-limit of 31/03/2012 and the appellant company also obtained BU Permission by AMC for its entire project based on the BU Application dated 25/01/2O12 certifying completion date as on 25/01/2012. This is further

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substantiated by copy of Municipal tax for AY 2012-13 for all blocks of the project evidencing completion of the project. I do not see any reason to deny the claim of the assesses for deduction u/s. 80IB(10) of the Act. Where the appellant had completed construction of its entire housing project and applied for Building use permission/completion certificate within prescribed time-limit, it would be entitled to deduction under section 80-IB(10) notwithstanding fact that it could not receive permission for its entire project within prescribed time limit. Accordingly, this ground of Appeal is Allowed.

Assessee claimed deduction of'Rs.32,13,73,570/- u/s 80-IB(IO) in respect of a residential project namely "Venus Parkland" developed by the assessee. AO denied deduction u/s 80-18(10) on the following two counts: On technical count: Assessee failed to file return of income within the due date prescribed u/s 139(1): On merits: Assessee failed to complete the project in question within the permissible time limit. CIT(A) held both the issues in favor of the assessee and allowed deduction u/s 80-18(10). Hence, revenue is in appeal. Technical count: Filing return of income within the due date prescribed ii/s 1390) of the Act Assessee had entered into following transactions during the year in question: Deed of guarantee" was executed between assessee, Sunderdeep Infrastructure Pvt. Ltd. ("SIPL") and "ATTCO International LLC, Dubai" ("ATTCO") whereby loan of Rs.l 1,34,51,OOO/- taken by assessee from S1PL was guaranteed by A TTCO - Pg.160 of P/B.

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Assessee had incurred expenses of Rs.3,47,495/- in the form of "commission" to "ATTCO" pursuant to "brokerage agreement" entered into between assessee and ATTCO - Pgs.174 & 181 of P/B. Some of the vital facts are as follows (Pg.68, Para 7,2 of CIT(A)'s order): Self-assessment tax of Rs.7,00,00,000/- was paid on 31.05.12; Statutory Audit Report was obtained on 29.09.12; Tax Audit Report was obtained on 29.09.12; Form 10CCB for deduction u/s 80-18(10) was obtained on 29.09.12; (Note: All the above events took place before 30.09.12) The Statutory Auditor, during the course of statutory audit, pointed out that assessee had entered into "international transactions" during the year in question and hence. Audit Report prescribed u/s 92E was to be obtained. Thus, assessee was advised to obtained Audit Report in Form 3CEB. At this stage, the following facts as well as statutory provisions may be kept in mind so as to appreciate the controversy in the correct perspective: Since ATTCO guaranteed more than 10% of total borrowings of the assessee, it was an "Associated Enterprise " ("AE") - S.92A(2)(d) & Pg.l60ofP/B). Since ATTCO is a non-resident and AE of assessee, above referred transactions are "international transactions " - S.92B(1). Since assessee had entered into "international transactions", it was supposed to obtain Audit Report in Form 3CEB - S.92E. Since assessee was supposed to obtain Audit Report in Form 3CEB, "due-date" for filing return of income was 30.1L12 - Clause "aa" of Explanation 2 to 8.139(1). Assessee obtained Audit Report in Form 3CEB on 27.11.12 (Pg.19 of AO) and filed the return of income on 28.11.12 (Pg.19 of AO) (i.e. within the due date prescribed for furnishing return of income). Assessee obtained opinions of two experts (Pgs.64-66 of AO) both of whom were of the opinion that the assessee had entered into international transactions and hence, due date of furnishing return of income for the year in question was 30.11.12. AO was of the view that ATTCO was not an "Associate Enterprise". Thus, there was no "international transaction" entered into by the assessee. Accordingly, due date for filing return of income was "30.09.12" whereas assesssee had filed return of income on 28.11.12. Hence, in view of S.80AC, deduction u/s 80-113(10) cannot he allowed. AO failed to appreciate that "deed of guarantee" and "brokerage agreement" are governed by relevant provisions of S.92 (discussed above) as certified in Audit Report in Form 3CEB by a "Chartered Accountant" who is a "competent expert". The said Form 3CEB was not dislodged by AO in any manner whatsoever by bringing on record "opinion of any other expert". Under such circumstances, contents of Form 3CEB cannot be disbelieved. Reliance is placed on "Mangal Textile Mills P. Ltd. vs. UOI - (2002) 2002 taxmann.com 1665 (Gujarat) (Annexure "A").

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Thus, AO was not justified in holding that assessee had filed return of income beyond due date for furnishing return of income. Since return of income has been furnished before the due date, deduction u/s 80-13(10) cannot be denied by taking recourse to S.80AC. As regards AO's stand that amount given by SIPL to the assessee could not be termed as "borrowing" since it was in the nature of "booking deposit", kind attention of Hon'ble Bench is invited lo clause (f) of sub-section (8) of section 5 of "The Insolvency and bankruptcy Code, 2016" defining the term "financial debt" and so also the Explanation thereto. The same reads as follows: S.5(8) - "fin uncial debt" means a debt along with interest, if any. which is disbursed against the consideration for the time value of money and includes – xxxx... (f) any amount raised under any other transaction, including any forward sale OIL purchase agreement having the commercial effect of a Borrowing. Explanation. - For the purpose of this sub-clause, - (i) Any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) The expressions, "allottee " and "real estate project" shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); In view of the above, the "booking deposit" given by SIPL to assessee shall be treated as "borrowing". Further, "customer advance" is to be treated as "borrowings" is also accepted by Hon'ble Supreme Court in the case of "Pioneer Urban Land and Infrastructure Limited & Others vs. Union of India-(2019) 8 SCC 416" As regards Ground # 4 of revenue's appeal that "Deed of guarantee" and "Brokerage agreement" are neither registered nor notarized, it is submitted that both such documents are "signed" as well as "stamped" and hence, as per S.IO of Indian Contract Act, 1972, the same are valid and can be challenged in the Court of law (Pgs.76 of CIT(A)'s order). As regards Ground # 5 of revenue's appeal that block booking of 5 flats was made by Narsingh Khanchandani and hence, deduction u/s 80-IB(10) is not permissible in view of clause (f), it is submitted that such booking was cancelled and amount was returned to him on 22.12.11 without interest (Pg.63 of Asst. Order & 73 of CIT(A)'s order). Thus, there is no violation of clause (Qof S.80-16(10) as there was no actual "allotment" As regards AO's observation that commission was payable to ATTCO despite the fact that no fact in Venus Parkland has been sold to foreign buyer through ATTCO, it is submitted that flats were sold / booked in Venus Parkland through ATTCO (as is evident from ledgers) and hence, such an observation of AO was contrary to the facts (Pg.76 of CIT(A)'s order). As regards AO's allegation that assessee had received 12.38 crores as deposits from 12 other parties for K-Mall and no party had taken guarantee, it is submitted that such an observation is factually incorrect.

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Total unsecured loan of the assessee were Rs.12.47 crore including Rs. 11.34 crore received from SIPL; Other twelve parties had given aggregate sum of mere Rs.1.13 crore (12.47-11.34); Break-up of 1.13 crores appears on Pg.77 of CIT(A)'s order read withPgs,161 & 208 of P/B. As regards the averment that assessee had sufficient surplus funds and could have returned Rs.l1.34 crore to SIPL, it is submitted that the commercial expediency would essentially fall within the domain of a businessman. AO cannot decide as to how business to be conducted by an assessee. Reliance is placed on "S.A. Builders vs. CIT - 288 ITR 1 (SC)". In view of the above, AO was not justified in denying SO-IB(IO) deduction. The same be held so now. Merits: Completion of project before 31.03.12 On merits, AO denied deduction u/s 80-IB(10) on the alleged count that the housing project was not completed on or before 31.03.12 (i.e. five years from the end of FY 06-07 - since approval of project was granted on 30.03.07). While holding so, AO had been carried away by the following facts: In respect of certain units, the "Building Use" ("BU") permission was not received before 31.03.12; Even as per the Inspector's report pursuant to inspection carried out on 02.02.12, project was incomplete as on 31.03.12. (Pg.104 of AO) BU permission & AUDA’s Inspector's report: AO called for details from AUDA u/s 133(6) in response to which, AUDA staled as follows vide letter dated 21.01.14 (Pg.99 of AO): BU permission was applied for and issued w.r.t. 480 units; BU permission was neither applied nor issued w.r.t. 360 units; BU permission charges are Rs.100 for each case and for entire project; Assessee, vide letter dated 11.04.14 (Pgs.100-101 of AO), submitted the following documentary evidences after getting a copy of AUDA's reply: Assessee had applied for the BU permission for the entire project on 25.01.12 (Exb. XIII); AUDA asked assessee to pay BU permission charges for entire project in writing specifying working for 98,500 Sq. Mtrs. (E\b. XIV); Assessee paid BU permission fees for entire project on 25.01.12 by account payee cheque and receipt was issued by AUDA (Exb. XV); Entire housing project was completed before 31.03.12 for which Engineer's certificate was furnished (Exb. XVI);

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Statement of flats sold in April to June 2012 with conveyance deeds of 10 Hats for which BU permission was not there (Exb. XI7}!); Possession letters issued to members duly signed by members for • blocks for which BU permission was not there (Exb. XVIII); Electricity bills issued by Torrent Power Ltd. of different units for which BU permission was not there (Exb. XIX); Thus, it was submitted that BU permission was merely a procedural aspect and that the construction of the project was completed before the specified date (31.03.12); Flats, for which BU permission was not issued by AUDA, were also sold to members & possession was given. In fact, in AUDA's letter dated 24.10.13 to AO, it is specified that application was for 22 blocks out of which, BU permission was granted in respect of 12 blocks and in respect of 10 blocks, BU permission was pending {Pg.71of AO). Pursuant to assessee's application dated 25.01.12, an Inspecting Officer of AUDA went for inspection on 02.02.12 and furnished its Inspection Report (Pgs.l02-104of AO). It is categorically mentioned in the said report that "In all these 6 block, furnishing work has been completed" (Pg.104 of AO); AO incorrectly interpreted the said report so as to erroneously conclude that project was incomplete as on 31.03.12; Running English translation of Inspector's report is also incorrect since "percolating well" has been translated as "Borewell". AO failed to appreciate that there were 12 percolating wells whereas there was only / borewell for the entire project which was complete; As per "General Development Control Regulations" ("GDCR" for short), the competent authority shall carry out final inspection pursuant to notice of completion of project received from developer concerned and in case it has any query, it shall communicate the same to the developer concerned who, in turn, snail have to do the needful in the prescribed time frame. It is submitted that after the inspection was carried out by AUDA on 02.02.12, no communication was received from AUDA which implies that even AUDA was of the view that project was completed or else, it would have raised query in terms of GDCR (Pgs.84-85 of ClT(A)'s order & Pgs.130-133 of P/B).

To summarize- Assessee applied for BU per mis ft ion for "entire project" on 25.01.12. Inspection \vas carried out by A UDA but no query was raised ever; BU permission was issued by AUDA only for 480 units by 31.03.12; As regard's balance 380 units – Construction wax completed by 31.03.12; BU permission application was pending with AUDA', At this stage, it is clarified that record was transferred from AUDA to AMC and hence, there was an issue as to who will issue BU permission in a case where application for BU was made

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along with payment of prescribed fees lo AUDA and the same pending on the date of transfer of record. Under such circumstances, BU permission application made by assessee was pending for quite some time. Eventually, BU permission was granted by AMC on the basis of original application dated 25.01.12 pending before AUDA (Pg.83 of CIT(A) 's order). Following are some of the vital aspects: AMC granted BU permission based on application made he/ore AUDA; No additional fees for BU permission were collected by AMC; No separate inspection was carried out by AMC; No penalty has been levied for use of units without BU; In view of the above, project was completed before 31.03.12 but mere BU permission (pending application) was not issued for few units. In view of documentary evidences placed on record (Pg.89 of CIT(A) 's order), following aspects are clear (Para 8.12, Fg.94 of ClT(A)'s order): AO has not rejected either the Engineer's certificate w.r.t. completion of project before 31,03.12; AO has also not rejected the factum of handing over possession of flats to members before 31.03.12; Thus, it becomes clear that - Entire project was completed before 31.03.12; & Application for BU permission wax pending before A UDA; It is a settled legal position where construction of the entire housing project has been completed and assessee has applied for BU permission within the prescribed time limit, assessee will be eligible for deduction u/s 80~IB(10) notwithstanding the fact that assessee could not receive BU permission for the entire project within prescribed time limit. Reliance is placed on: CIT vs. Tarnctar Corporation - (2012) 362 rTR 174 (Gujarat) (Annexure "B"); ITO vs. Saket Corporation - (2015) 234 Taxman 435 (Gujarat) (Annexure "C"); CIT vs. Hindustan Samuh Awas Ltd. - (2015) 377 ITR 150 (Bombay) (Annexure "D"); PCIT vs. Ambcy Developer P. Ltd. - (2018) 399 ITR 216 (P&H) (Annexure “E"); In view of (he above, deduction u/s 80-IB(10) cannot be denied to the assessee especially when there is no fault on the part of the assessee and when delay in getting BU permission cannot be attributable to the assessee. Hence, CIT(A) has rightly allowed deduction u/s 80-IB(10). Other issues raised by AO: As regards Ground # 6 of revenue's appeal that no separate P&L a/c is maintained for "Venus Parkland", it is submitted that "Venus Parkland" was within another group company "Venus Real Estate P. Ltd." ("VH.EPL") which got merged with assessee pursuant to order of Hon'ble High Court of Gujarat dated 22.12.11 and therefore, books_ of VREPL (which were maintained separately), were consolidated with the accounts of assessee. Thus, there is no violation, as alleged by AO (Pg.75 of CIT(A)'s order).

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As regards certain lifts being certified as fit for use after 31.03.12, it is submitted that during the course of survey itself it was clarified that lifts were not as per requirements and there was some dispute with the lift installer. After settlement of such dispute, lifts were approved after 31.03.12 so as to avail the benefit of warranty period. Assessee had placed on record ledgers from which it was clear that majority payments were made during the year and only Rs. 1 0,58,400/- was paid subsequently (Pg.86 of CIT(A)'s order). As regards water connection permission, it is submitted that water was already being supplied on site through borewell (Pg.86 of CIT(A)'s order). As regards expenses in relation to cement purchase, steel purchase, etc., it is submitted that the entire project was of over 20 crore wherein petty expenses of few lakhs were merely in respect of minor repairs & maintenance, club house road, children play area activities, etc. and not for any construction (which was over by 3 1 .03.12) (Pg.86 of CIT(A)'s order). In view of the above. Id. CIT(A) has rightly held that assessee is eligible for the claim of deduction u/s 80-16(10).

26.1 Both the learned DR and the AR vehemently supported the order of the authorities below as favourable to them.

27.1 However, the learned CIT (A) was pleased to delete the addition made by the AO for the reasons which have been elaborated in the preceding paragraph. Therefore for the sake of brevity and convenience, we are not inclined to repeat the same.

27.2 Now the 1st issue arises for our adjudication, whether the assessee has furnished the return of income beyond the due date in the given facts and

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circumstances and consequently ineligible for deduction under section 80-IB(10) of the Act. There is no dispute to the fact that the assessee was to file the return of income on our before 30 November 2012 in the event if it was to file TP report in form 3CEB for having international transactions with its associated enterprise. Admittedly, the assessee has filed form 3CEB for having international transactions with the AE. These transactions include the guarantee furnished by the AE as well as the brokerage agreement with the AE. This fact of filing the form 3CEB report has not been controverted by the AO. The chartered accountant being the expert of his field, his advice cannot be faulted by the AO without bringing any cogent material on record. Therefore, the opinion of the chartered accountant should be admitted. In this regard we place our reliance on the judgment of Hon’ble Gujarat High Court in the case of Mangal Textile Mills Private Ltd vs. Union of India reported in 2002 taxmann.com 1665 wherein it was held as under:

“The opinion rendered by the competent expert has not been dislodged by the respondents in any manner whatsoever and the opinion expressed by the Deputy Commissioner would remain merely an opinion in the face of the certificate issued by an export.”

27.3 Likewise, the assessee has also furnished the opinion of the expert consultant which was not doubted by the AO. In these opinions, it was advised to comply the transfer pricing provisions for having international transactions as discussed above.

27.4 We are also conscious to the fact that assessee has paid all tax due in the form of advance tax and self-assessment tax before 30th September 2012. Its books of account got audited under Companies Act. The Tax Audit report under section 44AB of the Act and audit in form 10CCB for claiming deduction under section 80- IB were obtained before 30th September 2012 except getting TP report in form 3CEB. Thus there was not any reason preventing the assessee to file return of income on or before 30th September 2012. In circumstances where TP report is required, then the time limit for filing the return got extended up-to 30th November 2012. Admittedly, the assessee has submitted TP report in form 3CEB under section

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92E of the Act dated 28th November 2012. Thus the intention of Assessee cannot be doubted.

27.5 Going further we also find learned CIT (A) has given clear finding that by virtue of guarantee deed entered between assessee, ATTCO and SIPL, the advance given by SPIL were converted into secured short term loan. Thus guarantee with respect to such short term loan of Rs. 11.34 constitute more than 10% of total borrowing of the assessee. Hence the ATTCO became the AE of the assessee by virtue of provision of section 92A(2)(d) of the Act. The Learned CIT(A) also given finding that the assessee through ATTCO sold flats in ‘Venus Parkland’ project, thus the assessee was liable to pay commission as per brokerage agreement entered by the assessee which was ultimately paid to the ATTCO after deducting withholding tax.

27.6 From the above it is inferred that there was relationship of AE created between assessee and ATTCO and further entered into international transaction by crediting brokerage commission in the name of ATTCO. Thus as per the provision of section 92E, the assessee was required to get TP report in form 3CEB. Accordingly it enjoy the extended period of due date for filing return of income.

27.7 At the time of hearing, the learned DR has not brought anything on record contrary to the finding of the learned CIT (A). Accordingly, we do not find any infirmity in the order of the learned CIT (A).

27.8 Coming to the merit of case we note that the AO has disallowed the deduction claimed by the assessee for the reason that it has not got the BU permission for entire project up-to 31st March 2012. Accordingly, the AO concluded that the project

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was not completed within the period prescribed under the provision of section 80- IB(10) of the Act. However, we find that assessee before the AO has submitted that

the entire project i.e. 860 units was completed before 31st March 2012 and it has applied for BU permission for entire project on 25th January 2012 along with the

fees but till 31st March 2012 permission was received for only 480 units. The assessee also furnished other documentary evidences such conveyance deed, electricity bills, possession letter for the unit in respect of which BU permission was not received.

27.9 It was also contended that there was dispute for the jurisdiction over issuance of BU permission between AMC and AUDA from April 2012. Therefore, the permission for remaining units was delayed. However the AO ignored all these evidence and placed his reliance heavily on letter submitted by the AUDA in compliance with the notice issued under section 133(6) of the Act and made disallowances of claim of the assessee.

27.10 In this regard we find that the learned CIT(A) has given flawless finding that after resolution of dispute of jurisdiction over issuance of BU permission, the AMC has issued such permission for remaining units to the assessee and certified that the project was completed before due date i.e. 31st March 2012. These permission are placed at page 120 to 123 of paper book. This fact was not controverted by the revenue before us.

27.11 Therefore in view of the above finding, there remains no ambiguity with respect to completion of project within the prescribed time limit. Hence we do not

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find any reason to interfere in the finding of the learned CIT (A) given on merit. Thus the grounds of Revenue’s appeal are dismissed.

27.12 In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Court on 17/09/2021 at Ahmedabad.

Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True copy) Ahmedabad; Dated 17/09/2021 manish