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Income Tax Appellate Tribunal, “E”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of PR. CIT- 17, Mumbai dated 24/03/2017 for A.Y.2007-08. 2. Following grounds have been taken by the assessee:-
1. The learned Pr. CIT erred in holding the order framed by the assessing officer u/s 143(3) of the I.T Act 1961 on 17.11.2009 to be erroneous and prejudicial to the interest of revenue and accordingly the assumption of jurisdiction by the Pr. CIT u/s 263 of the I.T Act 1961 was not valid and justified.
2. The learned Pr. CIT erred in setting aside u/s 263 of the I.T Act 1961, the assessment framed u/s 143(3) on 17.11.2009, on grounds which were totally different from those raised in the show cause notice dt. 31.01.2012, thereby denying the appellant opportunity of being heard, resulting in the order passed u/s 263 being not sustainable by law.
M/s. Shripal Builders 3. The learned Pr. CIT erred in holding that appellant was not entitled for deduction u/s 80IB(10) of Rs.1,28,65,649/-, in respect of the profits arising from the housing project developed at village Bolinj, Taluka Vasai, Dist. Thane for the reasons that (i) the appellant had acquired only development rights in respect of the housing project and not ownership rights (ii) the appellant had not paid any service tax and (iii) the appellant had not obtained completion certificate from the local authority all of which being not appropriate for denying the claim u/s 80IB(10), the order passed u/s 263 be quashed.
4. The Id. Pr. CIT was not justified in holding that appellant was not entitled for deduction u/s 80IB(10) and setting aside the completed assessment to the file of the Id. AO for passing denovo assessment and therefore the order u/s 263 be quashed. The appellant craves leave to add, alter, amend and/or vary any of the grounds at any time before the decision of the appeal.
Rival contentions have been heard and record perused.
In the order passed u/s.263, CIT observed that assessee was not entitled for deduction u/s.80IB of the IT Act. The assessee failed to fulfill the conditions laid down as per the provisions of the Act in respect of its claim of deduction u/s. 80IB of the Act, the assessment order was erroneous and prejudicial to the interests of Revenue. The assessment order was accordingly, set aside with directions to the AO to reframe the assessment order after examining the assessee's claim of deduction in light of the findings given in the order. In its order u/s.263 the CIT observed that the assessee in this case had entered into a Development Agreement dated 04.06.2003 with M/s. Unitech Limited, whereby it had acquired Development Rights for a housing scheme at Phase IV of land bearing S.No. 316B. Bolinj, Thane District. The approval for the Housing M/s. Shripal Builders Scheme admeasuring 78.228 sq. mtrs. was sanctioned in favour of M/s. Unitech Limited for the entire land by CIDCO, The Planning Authority on 19.09.1990. The owner of the undertaking, i.e., M/s. Unitech Limited had consumed approved F.S.I, of 33,440.65 sq. mtrs. for its own construction and had assigned Development Rights in respect of the balance area of the land to various developers/builders, the assesses being one of them. The subsequent amalgamation and amended plan approvals and the Occupancy Certificate were also granted in favour of M/s. Unitech Limited by the Planning Authority. The CIT observed that all the sanctions/approval letters by CIDCO were in favour of M/s. Unitech Limited, the owner of the undertaking and no such letters were granted in favour of the assessee, making it abundantly clear that M/s. Unitech Limited is the sole dramatis personae in the entire episode, and the assessee had no role or opportunity of ever interacting with the Planning Authority. Since the assesses was not the owner of the undertaking, it was not entitled for the deduction u/s. 80IB of the Act and therefore, the assessment order U/s.80IB of the Act dated 17.11.2009 granting deduction of Rs.1,28,65,649/- u/s. 80IB of the Act was erroneous and prejudicial- to interests of Revenue to that extern, leading to the invocation of revisionary proceedings. The assessee accordingly, was afforded an opportunity of hearing to substantiate its claim in this regard. The assessee has submitted that it has complied with all the provisions of section 801B of the Act and inter alia, has relied upon the decisions of the M/s. Shripal Builders Hon'ble Bombay High Court in the case of ClT vs. Ashray Premises, 34 taxxmann.com 165 and the Pune ITAT in the case of ITO vs. A.V. Bhat Developers, 145 ITD 305, in support of deduction u/s.80IB of the Act. However, the CIT did not agree with the assessee’s contention and held that in the instant case, the assessee has never acquired the Ownership Rights in the property, but by virtue of the Development Agreement dated (14.06.2003, only Development Rights came to be assigned to the assessee by the owner of the undertaking M/s. Unitech Limited. The entire correspondence with the Planning Authority is with M/s. Unitech Limited, establishing beyond any shred of doubt that the owner of the undertaking is M/s. Unitech Limited, and by virtue of such fact is solely entitled for the deduction u/s. 80IB of the Act. It is also seen from the Audit Report in Form No.10CCB that against Column No.4(a) seeking details of ownership of the project undertaking, the assessee has claimed the project to be fully owned by it, whereas the actual fact is that it has no ownership rights in the project.
It was argued by learned AR that order u/s.263 cannot be based on the grounds which are totally different from grounds raised in the show- cause notice. For this purpose reliance was placed on the judicial pronouncements placed on record. It was further argued in support of the proposition that for deduction u/s.80IB developer need not to be the owner of the land and reliance was placed on the various judicial pronouncements placed on record. As per learned AR, housing project M/s. Shripal Builders developed by the assessee has been approved on 25.05.2004 i.e. before 01.04.2005. Accordingly, the conditions of section 80IB(10) as they stood before amendment by Finance (No. 2) Act, 2004, applicable w.e.f. 01.04.2005. would apply to the housing project. Accordingly, it was submitted that the assessee complies with all the conditions of section 80IB(10) as they stood prior lo amendment by Finance (No. 2) Act, 2004. The Hon. Supreme Court in the case of CIT-vs-Sarkar Builders, 57 taxmann.com 313 (SC) (copy submitted on record on 26.07.2018) has held that amendments introduced by Finance (No. 2) Act, 2004, would be applicable to projects approved after 01.04.2005. As per learned AR, even otherwise, the assessee also complied with all the conditions of section 80IB(10) as stand amended by Finance (No.2) Act, 2004 and prior to introduction of sub-clause (e) & (f) by Finance (No.2) Act, 2009. It was further contended by learned AR that sub-section (e) & (f) to section 80IB (10) were introduced by Finance (No.2) Act, 2009 w.e.f. 01.04.2010 and therefore are not applicable in the present case, as the relevant assessment year in the case of the assessee is A.Y.2007-08.
On the other hand, CIT DR contended that no enquiry has been made by the AO with regard to assessee’s eligibility for deduction u/s.80IB, therefore, CIT has correctly invoked his power u/s.263 setting aside the matter to file of the AO for deciding afresh by making detailed enquiry.
M/s. Shripal Builders 7. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the case. From the record, we found that during the year under consideration, assessee has claimed deduction u/s.80IB. The AO found that gross total income from the project was 1,46,14,869/-,out of this profit pertaining to A.Y.2005-06 was Rs.8,25,160/- and for A.Y. 2006-07 Rs.9,24,606/-. Accordingly, after reducing these two amounts which pertains to earlier year, AO allowed assessee’s claim of 80IB amounting to Rs.1,28,65,649/-. While allowing assessee’s claim, AO has nowhere mentioned as to the fulfillment of eligibility condition for grant of deduction u/s.80IB. Nowhere AO has mentioned as to when the project was approved and when the project was completed. The CIT originally passed the order u/s.263 invoking Section 263 dated 01/03/2012. In this order CIT has mentioned various dates when the opportunity was given to assessee to present his case with regard to eligibility u/s.80IB, however, no one appeared on behalf of the assessee, accordingly, CIT passed the order wherein he observed that the housing project had been first approved by the local authority in the year 1990 in the name of M/s Unitech Limited. Further, from the certificate issued by the local authority, which is on the subject of amalgamation and amended approved plan of the housing project,.
M/s. Shripal Builders referring to various commencement certificates and amended plan with the earliest date back to 19.11.1998. If the project was approved in the year 1990, here is no question of deduction 80IB(10) and if the project was under taken in the year 1998 whether the said project had been completed within the stipulated four years period. From the facts gathered it was observed that the construction of the project was not completed within four years from the end of the financial year in which the housing project was first approved. In view of the said facts, it was observed that the assessee was not eligible to claim deductor u/s 80IB(10). The deduction u/s 80IB(10) is to be allowed if the assessee fulfills at the conditions as laid down in the provisions of the income Tax Act. In the said case the assessee had failed to fulfill the conditions required to claim deduction u/s 80IB{10). However, the Assessing Officer had not examined the said issue and allowed the claim of the said deduction thereby rendering the assessment order to be erroneous & prejudicial to the interest of revenue.
Assessee approached to the Tribunal, against above order of CIT, after observing that assessee has not been given opportunity, the matter was set aside by Tribunal to the CIT. The CIT in his order dated 24/03/2017, also observed that assessee failed to fulfill the conditions laid down as per provisions of the Act in respect of its claim of deduction u/s.80IB. It was also observed that project was approved in the name of M/s. Unitech Limited, however M/s. Unitech Ltd., given developmental M/s. Shripal Builders rights at Phase IV of land bearing S. No. 316B, Bolinj, Thane District. The approval, for the Housing Scheme admeasuring 78.228 sq. mtrs. was sanctioned in favour of M/s. Unitech Limited for entire land by CIDCO, the Planning Authority on 19.09.1990. The owner of the undertaking, i.e., 'M/s. Unitech Limited had consumed approved F.S.I. of 33,440.65 sq. mfrs. for its own construction and had assigned Development Rights in respect of the balance area of the land to various developers / builders, the assessee being one of them. The subsequent amalgamation and amended plan approvals and the Occupancy Certificate were also granted in favour of M/s. Unitech Limited by the Planning Authority. It is very pertinent to mention that all the sanctions/approval letters by CIDCO were in favour of M/s. Unitech Limited, the owner of the undertaking and no such letters were granted in favour of the assessee, making it abundantly clear that M/s. Unitech Limited is the sole dramatis personae in the entire episode, and the assessee had no role or opportunity of ever, interacting with the Planning Authority.
So far as assessee’s contention with regard to eligibility u/s.80IB(10) to developer without owning the land is concerned, we are in agreement to the ld. AR to the effect that even if assessee is not a owner of the land but has got the project approved and had undertaken all the activities in terms of Section 80IB (10), then it will be eligible for deduction not withstanding the fact that the plot has not owned by him. However, in the instant case, neither the project was approved by the