DY CIT, CENTRAL CIRCLE-3(4), MUMBAI vs. M/S AHCL PEL, MUMBAI

& 2011/Mum/2020 Assessment Year: 2012-13 2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in not granting the enhanced deduction claimed u/s 80IB (10) of the Act on the alleged increased sales revenue of Rs. 2,66,75,360/-.”

3.1. There was a search action in the case of one Shri Samir N. Bhojwani Group on 30.11.2010 of which M/s. Jivesh Developers & Properties P. Ltd. was one of the entities. In course of the said search action, two sets of building plans in respect of "Quantum Park Project" were found. As per one plan, there were two flats per floor having built up area of around 2000 sq. ft. whereas as per the second plan, each floor had four flats of area less than 1000 sq. ft. Keeping in view the evidences found including the plan as per which the flats had area of more than 1000 sq. ft, the statements recorded, the AO was of the view that the Assessee's claim for deduction u/s. 80IB was incorrect. Therefore, the AO disallowed the Assessee's claim of INR 11,08,40,454/- for deduction u/s. 801B. Further, during the course of assessment proceedings, the AO observed that the Assessee had sold 3 residential units on the same date for different sale consideration per sq. ft. Therefore, the AO concluded that the Assessee had indulged in on-money transactions which are not recorded in the books of accounts. & 2011/Mum/2020 Assessment Year: 2012-13 The Assessing Officer made an addition of INR 4,31,13,672/- treating the differential price as the undisclosed income of the Assessee. The Assessing Officer completed assessment under Section 143(3) of the Act at income of INR 16,06,16,890/-.

3.2. Being aggrieved, the Assessee preferred appeal before the CIT(A) who allowed the claim of the Assessee for deduction under Section 80IB of the Act following the decision of the Tribunal, dated 26.10.2016, in the case of the Assessee for the Assessment Years 2005-06 to 2011-12 (ITA No. 2845- 2851/MUM/2016). Further, the CIT(A) also granted relief to the Assessee by restricting the disallowance of INR 4,31,13,672/- made by the Assessing Officer by treating the differential price as undisclosed income to INR 2,66,75,360/-.

3.3. Being aggrieved the, the Revenue is appeal before us. The Assessee was also not satisfied as the CIT(A) had confirmed the addition of INR 2,66,75,360/- and therefore, the Assessee has also filed appeal.

Ground No.1 of Revenue‟s Appeal 4. Ground No. 1 raised by the Revenue is directed against the order of CIT(A) allowing the claim of the Assessee for deduction under Section 80IB(10) of the Act.

4.1. Learned Departmental Representative appearing before us placed reliance on the Assessment Order and submitted that the CIT(A) was not justified in granting the benefit of deduction under Section 80IB(10) of the Act. He submitted that the project was not eligible, inter alia, as the construction was not & 2011/Mum/2020 Assessment Year: 2012-13 as per municipal plan, and the flats had area of more than 1000 Sq Ft. Referring to the judgment of the Hon‟ble Supreme Court in the case of Sumati Dayal Vs. CIT: 214 ITR 801 SC, he submitted that in the facts of the present case the apparent cannot be considered as real and the Assessing Officer was justified in denying deduction under Section 80IB(10) of the Act.

4.2. Responding to the above, the Learned Authorized Representative for the Assessee submitted that the issue has been decided in the favour of the Assessee by the Tribunal in appeal for the Assessment Years 2005-06 to 2011-12 wherein identical contentions raised by the Revenue in respect of the same project have been rejected. By way of a consolidated order, dated 26.10.2018, the appeals filed by the Revenue for the aforesaid assessment years against the order passed by CIT(A) allowing the benefit of deduction under Section 80IB(10) of the Act to the Assessee, in identical facts and circumstances, have been dismissed.

4.3. We have considered the rival submission and perused the material on record including the decision of the Tribunal in the case of the Assessee for the Assessment Year 2005-06 to 2011- 12. We note that identical issue stands decided in favour of the Assessee. In identical facts and circumstances, the Tribunal has held that the same project (i.e., „Quantum Park‟) is eligible for deduction under Section 80IB(10) of the Act as the Assessee has fulfilled all the conditions prescribed for claiming deduction under Section 80IB(10) of the Act. The construction plan has been approved by the local authority and the Assessee has constructed residential units with built-up area of less than

ITA. No. 1859 & 2011/Mum/2020 Assessment Year: 2012-13 1000 Sq. Ft. The fact that two adjacent flats have been merged to make bigger flat is of no consequence and deduction under Section 80IB(10) of the Act would be available since prescribed conditions stand satisfied. The CIT(A) has, in paragraph 5.2 of the order, reproduced relevant extract of the aforesaid decision of the Tribunal before deciding the issues in favour of the Assessee in paragraph 5.3 of the order impugned. Since CIT(A) has granted relief to the Assessee by following the decision of the Tribunal in the case of the Assessee for the Assessment Years 2005-06 to 2011-12 in dated 26.10.2018, we do not see any reason to interfere with the decision of the CIT(A) on this issue. Accordingly, Ground No. 1 raised by the Revenue is dismissed.

Ground No.2 of Revenue‟s Appeal and Ground No.1 & 2 of Assessee‟s Appeal

“6.5 However, the claim the assessee the Unit had a premium rate on account of availability of the terrace is reasonable to an extent. But such a premium would not extend to the actual rate of the flats but could at best be thought to be a premium of say 10% to 20% of the normal flat rates. Assuming a 20% premium for the terrace on the rate of Unit no. 1104, the per sq ft. rate of the unit can be computed at Rs. 52,356/-. Since the assessee has charged a rate of Rs. 35,000 from other flat owners, it is clear that the rates charged from other flat owners are understated. The AO is directed to compute the additional receipts accruing to the assessee on account of such price differential.” (Emphasis Supplied) 12. Thus, the CIT(A) accepted the contention of the Assessee that on account of the additional right, being access to the terrace, & 2011/Mum/2020 Assessment Year: 2012-13 per square feet price for flats could vary. Once the CIT(A) had concluded as aforesaid, the very premise on which the Assessing Officer had proceeded to draw adverse inference was found to be incorrect by the CIT(A). In our view, the Assessing Officer had concluded that the Assessee had indulged in on- money transactions on the incorrect premise that the per square feet sale price of the flats were equal. Apart from differences in the per square feet price, there is nothing on record to show, either directly or indirectly, that the Assessee has indulged in on-money transactions. There is no basis for the additions made by the Assessing Officer. Even, the assumption of per square feet price of INR 62,893/- pertaining to Flat No. 1104 being inclusive of 20% of premium on account of terrace rights made by the CIT(A) is also without any basis. The fact that the sales have been made to unrelated third parties at price higher than value adopted for stamp duty is also not disputed. It is apparent that Flat No. 1104 which had access to the terrace would fetch a higher price than Flat No. 1105/1106. Thus, in our view, which also draws strength from the decision of the co- ordinate bench of the Tribunal in the case Ms/ Shah Realators Vs ACIT (ITA No. 2656/Mum/2016, dated 25.05.2018), the additions made by the Assessing Officer on account of differential price of the flats to the extent confirmed by the CIT(A) are not sustainable and therefore, we delete the same. Since the additions stand deleted as aforesaid, the alternative claim for deduction under Section 80IB of the Act in respect of additional income on account of the aforesaid addition has become infructuous.

Order pronounced on 22.07.2022.