THE DCIT, (CENTRAL)- I, BHOPAL vs. M/S. AG8 VENTURES LTD., BHOPAL

आदेश / O R D E R

PER KUL BHARAT, J.M: These two appeals by the revenue and cross objection

by the assessee are directed against two different orders of

the CIT(A), Bhopal, both dated 23.3.2015 pertaining to the

assessment years 2007-08 & 2010-11. Since identical

grounds have been raised, both the appeals and cross

objections were taken up together for the sake of

convenience and brevity. First we take up ITA

No.472/Ind/2015, wherein the revenue has raised

following grounds of appeal:

“Whether on the facts and in the circumstances of the case the CIT(A) erred in deleting the addition of Rs.65,41,636/- made under section 80IB(10) of the Income Tax Act, 1961.” 2. The only effective ground in the revenue’s appeal is

against deletion of addition of Rs.65,41,636/- made on

account of disallowance of deduction u/s 80IB(10) of the

Income Tax Act, 1961 (hereinafter called as ‘the Act’). The facts in brief are that the case of the assessee was reopened

for assessment and the assessment u/s 143(3) r.w.s. 147

of the Act was framed vide order dated 7.3.2013. The A.O.

after considering the submissions disallowed claim of

deduction u/s 80IB(10) of the Act in respect of M/s. Aakriti

Eco City Project and made addition accordingly.

before Ld. CIT(A), who after considering the submissions

deleted the addition made on account of disallowance of

deduction u/s 80IB(10) of the Act holding that the assessee

is entitled for deduction u/s 80IB(10) of the Act.

Tribunal. Ld. D.R. vehemently argued that Ld. CIT(A) was

not justified in deleting the addition. He submitted that

the A.O. has brought out material facts to infer that the

deduction is not available to the assessee. Ld. D.R.

strongly supported the order of the A.O. and submitted

that it has been categorically observed by the assessing

officer that the assessee had taken permission from

Municipal Corporation, Bhopal on 17.1.2006. the said

permission was taken in the land admeasuring area of 5.34

acres. It is noted by the A.O. that permission from Nagar

Nigam was taken on 17.1.06. However, the land was

acquired on 28.4.06 and 6.8.2007. Thus, the permission

was taken from the Nagar Nigam even when the lands were

not acquired by the assessee. It was observed by the

assessing officer that the permission was in the name of

the assessee for which the lands were not owned by it.

Therefore, the A.O. was of the view that the permission was

not validly issued. It is therefore inferred that when the

permission was not validly issued, therefore completion

certificate for the same would also not be validly given.

Therefore, the A.O. disallowed the claim of deduction and Ld. D.R. submitted that under these facts, the A.O. was

justified in disallowing the claim of deduction u/s 80IB(10)

of the Act. Ld. Counsel for the assessee opposed the

submissions and submitted that the A.O. failed to

appreciate the facts in right perspective. Ld. Counsel

submitted that the issue of allowability of deduction has

been examined by this Tribunal in respect of the

assessment years 2004-05 to 2007-08, in the quantum

proceedings relating to the original assessment proceedings

u/s 143(3) of the Act. Ld. Counsel for the assessee

reiterated the submissions as made in the written

submissions. Ld. Counsel for the assessee submitted that

the issue of deduction was thoroughly examined in the

proceedings u/s 143(3) of the Act. He submitted that the

deduction was allowed. He further submitted that the

assessee is engaged in the business of development and

construction of housing projects. Deduction u/s 80IB(10)

of the Act was claimed w.e.f. assessment year 2004-05. Ld.

Counsel reiterated the submissions as made in the written

synopsis. For the sake of clarity, submissions of the

assessee are reproduced as under:

materials available on record and gone through the orders

of the authorities below. Objection of the A.O. is that the

assessee is not undertaking development and construction

of housing projects. The assessee is not owner of the land

of which project is claimed to have been undertaken. The

similar issue was before the Hon'ble Gujarat High Court in the case of CIT Vs. Radhe Developers 341 ITR 403, wherein

the Hon'ble High Court was of the view that the ownership

of the land is not sine-qua-non for claiming deduction u/s

80IB(10) of the Act. Therefore, in our considered view, this

objection of the A.O. is contrary to the judicial

pronouncements cannot be sustained. Further, the A.O’s

objection that the assessee is merely acting as a contractor

to the customer to whom land is independently sold and

there after construction is being done as per agreement.

This issue was examined by the Tribunal in original

proceedings, wherein it has been decided in favour of the

assessee. There is no change into facts and circumstances.

Hence, this objection is also not sustained and lastly the

A.O. of the view that when the permission from the Nagar

Nigam is not valid since same has been taken before

acquiring the land, since we have not sustained the

objection of the A.O. that ownership of land on which project is claimed to have been undertaken, we therefore,

do not find any merit into this objection of the A.O. This

objection is also not sustainable. Hence, same is rejected.

In view of the above discussion, we do not see any infirmity

in the finding of the Ld. CIT(A). Same is hereby upheld.

No.473/Ind/2015. The revenue has raised following

grounds of appeal:

“Whether on the facts and in the circumstances of the case the CIT(A) erred in deleting the addition of Rs.2,24,27,273/- made under section 80IB(10) of the Income Tax Act, 1961.”

additions made on account of disallowance of deduction

u/s 80IB(10) of the Act of Rs.2,24,27,273/-. The facts are

identical as were in ITA No.472/Ind/2015. The respective

representatives of the parties have adopted the same

argument as were in ITA No.472/Ind/2015. The issue of allowability of deduction has been considered in the ITA

No.472/Ind/2015, wherein we have held as under:

“5. We have heard rival submissions, perused the materials available on record and gone through the orders of the authorities below. Objection of the A.O. is that the assessee is not undertaking development and construction of housing projects. The assessee is not owner of the land of which project is claimed to have been undertaken. The similar issue was before the Hon'ble Gujarat High Court in the case of CIT Vs. Radhe Developers 341 ITR 403, wherein the Hon'ble High Court was of the view that the ownership of the land is not sine-qua-non for claiming deduction u/s 80IB(10) of the Act. Therefore, in our considered view, this objection of the A.O. is contrary to the judicial pronouncements cannot be sustained. Further, the A.O’s objection that the assessee is merely acting as a contractor to the customer to whom land is independently sold and there after construction is being done as per agreement. This issue was examined by the Tribunal in original proceedings, wherein it has been decided in favour of the assessee. There is no change into facts and circumstances. Hence, this objection is also not sustained and lastly the A.O. of the view that when the permission from the Nagar Nigam is not valid since same has been taken before acquiring the land, since we have not sustained the objection of the A.O. that ownership of land on which project is claimed to have been undertaken, we therefore, do not find any merit into this objection of the A.O. This objection is also not sustainable. Hence, same is rejected. In view of the above discussion, we do not see any infirmity in the finding of the Ld. CIT(A). Same is hereby upheld.” 8. Therefore, taking a consistent view, we do not see any

infirmity in the order of the Ld. CIT(A) and the same is

hereby upheld.

C.O. No.19/Ind/2016, wherein the assessee has raised

following grounds of appeal:

“On the facts and in the circumstances of the case, the lower authorities were not justified in making the disallowance of expenditure u/s 14A at Rs.64,96,645/- said to have been incurred in relation to the income which did not form part of total income under the Act or otherwise.” 10. The only effective ground in the cross objection is

related to disallowance of expenditure by invoking the facts

giving rise to the present cross objections are that the

assessing officer while framing assessment u/s 143(3) of

the Act, the A.O. observed that from the balance sheet of

the assessee company, it was noticed that it had shown

investment of Rs.10,04,97,600/- as on 31.3.2010 in equity

shares/share applications of various group companies. It

was observed that there was investment of

Rs.6,82,39,760/- in equity share/share application of

these companies as on 31.3.2009 and thus net investment of Rs.3,22,57,840/- had been made by the assessee

company during the year under consideration. The

assessee in the balance sheet had claimed loans and

advances to the group companies on 31.3.2009 and

31.3.2010 respectively of Rs.8,63,800/- and

Rs.1,71,87,000/-. It was further noticed that these

advances have been shown under the head of ‘Advances for

purchase of land’. However, during the course of

assessment proceedings, it was submitted that group

companies had allowed equity shares in the subsequent

years against the advances given to them. Thus, the

advances given to these companies were in the nature of

deposits for allotment of equity shares and reflected the

investment made by the assessee and not as advance given

for purchase of land. It was further observed that dividend

received from investment in such companies is exempt

from tax. Therefore, the assessing officer while invoking provisions of section 14A of the Act computed disallowance

as per rule 8D of the Income Tax Rules, 1962 of

Rs.64,95,645/-.

appeal before Ld. CIT(A). Ld. CIT(A) has noted that during

the course of appellate proceedings, ground against

disallowance made u/s 14A of the Act was withdrawn.

Further, the assessee has filed present cross objection. Ld.

Counsel for the assessee admitted the fact that this ground

was withdrawn. Ld. Counsel for the assessee submitted

that the Counsel for the assessee did not press claim before

Ld. CIT(A). However, he contended that where

disallowance u/s 14A of the Act could be made if there was

no exempt income is a question involving interpretation of

law. Any admission of facts may be binding upon the

assessee but an admission of law cannot be binding on the

assessee. Ld. Counsel placed reliance on the judgement of 18 the Hon'ble High Court of Kolkata in the case of Bagodia

Udyog Vs. CIT 244 CTR 339. Further, it is contended that

there can be no estoppels against the law. He contended

that at the time when the counsel Shri Rohit Pathakwas

contesting the matter before the Ld. CIT(A), the law on the

subject had not developed fully and being unaware of the

legal plea, he did not press the claim. However, the

judgement had come subsequently where it has been held

that if there is no exempt income, disallowance cannot be

made.

assessee. He submitted that the assessee cannot blow hot

and cold at the same time. He submitted that the counsel

for the assessee under the instruction of the assessee

consciously had withdrawn ground. Hence, the assessee

cannot be allowed further opportunities.

materials available on record and gone through the orders

of the authorities below. In this case, the contention of the

assessee is that the judicial pronouncement wherein it has

been held that if the assessee has not earned exempt

income in a particular accounting year, the resort to

section 14A of the Act cannot be adopted. It is also

submitted that there is no estoppel against the law. We

have given our thoughtful consideration to the submission

of the assessee. Admittedly, the assessee had not pressed

ground against invoking the provisions of section 14A of

the Act. In the ordinary circumstances, the assessee would

have not been given an opportunity, but in the present case

where the judicial pronouncement came later to the

assessee’s withdrawal of the ground, we deem it proper in

the interest of justice that atleast an opportunity by the Ld.

CIT(A) should be given. We therefore restore this ground of cross objection to the file of the Ld. CIT(A) for decision

afresh. The cross objection filed by the assessee is allowed

for statistical purposes.

dismissed and the cross objection filed by the assessee is

allowed for statistical purposes.

Order was pronounced in the open court on 08 .01.2019.

Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIALMEMBER

Indore; �दनांक Dated : 08/01/2019 VG/SPS

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order

Assistant Registrar, Indore