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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd…..……………….…...……..…….............Appellant Administration Block No.1 City Centre Durgapur - 713216 [PAN : AABCB 8990 N] Vs. Asst. Commissioner of Income Tax, Circle-1, Durgapur……………..………….…................Respondent Appearances by: Shri S.M. Surana, Advocate, appeared on behalf of the assessee. Shri Robin Choudhury, Addl. CIT Sr. D/R. appearing on behalf of the Revenue. Date of concluding the hearing : October 24th, 2018 Date of pronouncing the order : December 5th, 2018 ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)- Durgapur, (hereinafter the ‘Ld. CIT(A)’), dt. 01/07/2016, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2010-11.
The assessee is a company and is in the business of infrastructure development and construction of commercial, residential and township projects. It filed its return of income electronically on 12/10/2010, declaring Nil income. The profit earned by the company of Rs.4,29,78,843/-, was claimed as exempt u/s 80-IB(10) of the Act. The assessee was denied this claim of deduction u/s 80-IB(10) of the Act, by the Assessing Officer on the following grounds:- a) The entire development activity is on a land measuring 74.97 Acres and contains common facilities created in the project which is accessible to all the allottees of the project. As per the agreement with the Government Agency ADDA, the project is not only for housing but for development of an integrated township which consists of commercial, in addition to residential and township project at Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd Kanyapur, Asansol. Hence the residential projects Poorvi and Triveni cannot be held as a housing project for the purpose of Section 80-IB of the Act. b) No evidence is placed on record that the size of all the flats constructed in the two projects do not exceed the limit of 1500 sq. ft. c) No separate accounts have been have been maintained for the two projects, profits from which are claimed to be exempt u/s 80-IB of the Act. d) A perusal of the audit report in Form No. 10CCB under Rule 18BBB points out that copies of approvals, evidence as regards the area, were not placed on record. All the necessary details required for grant of deduction are not filed by the assessee. e) In the audit report, it was wrongly stated against clause 23(f) as not applicable.
The Assessing Officer completed assessment u/s 143(3) on 19/03/2013, assessing total income at Rs.4,52,54,000/-. The claim for deduction u/s 80-IB(10) of the Act, was denied. Further an addition u/s 40(a)(ia) of the Act, was made of interest paid during the year to ADDA on the ground that TDS was not deducted. The claim of deduction of preliminary expenses of Rs.30,232/- and the provision for payment of gratuity was also denied deduction.
2.1. Aggrieved the assessee carried the matter in appeal before the ld. First Appellate Authority. Before the ld. First Appellate Authority, the assessee claimed that all the documents and evidence required to support the claim of deduction u/s 80-IB(10) of the Act were submitted before the Assessing Officer and it was not correct on the part of the Assessing Officer to state that the copies of plan approvals, copies of evidence of areas of the project, evidence that the areas of each flat does not exceed 1500 per sq. ft. etc. were filed before the Assessing Officer. The assessee filed fresh set of documents/evidences before the ld. CIT(A) in support its claim of deductions and to meet the objections of the Assessing Officer. The ld CIT(A) took all these papers on record and called for a remand report. The Assessing Officer in his remand report agreed that all the necessary papers were filed by the assessee. He sought clarifications on these documents and after receiving replies, he based his decision for rejection of the Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd claim of the assessee for deduction u/s 80-IB(10) of the Act, finally only on the three issues. These are:- a) The housing project was not the only project but a part of an integrated township which contained common facilities and commercial buildings. So the entire township and infrastructural development have to be taken together. b) The project where deduction u/s 80-IB(10) of the Act is claimed, no separate signed profit and loss account was furnished. c) That under the scheme of the Act, no more than one residential unit can be allotted any individual and the assessee had not filed the details in this regard. 2.1.1. Before the ld. CIT(A), the assessee relied on a number of decisions for the propositions that independent projects of residential units, have to be treated as separate housing projects and that each block in a larger project has to be taken as an independent building and hence housing project, if such a housing project is separately approved by the municipal authorities and that approval granted by the municipal authorities would be construed as approval granted to housing projects. He further submitted that the claim of the assessee u/s 80-IB(10) of the Act, was allowed to the assessee in the earlier Assessment Years on the same facts and on the principle of consistency, deduction should be allowed. It was also contended that maintenance of separate accounts is not required when the assessee has filed separate statements of accounts and profit and loss account and the Assessing Officer has not found any deficiencies in these profit and loss accounts. He argued that all details as required, has been filed in relation to sale to the same individual/relative which are 8 in number. The ld. CIT(A) rejected the contentions of the assessee by holding as follows:- “I have perused the order of the A.O., grounds of appeal and written arguments submitted by the appellant. In this case the appellant has not controverted the fact that his projects are constructed as per agreement with the ADDA and Bengal Shrishti Infrustructure Development Ltd. for entire land of 74.97 acres. It is also not controverted that the common facility would be available for all the residents as per the maintenance charges. It is also not controverted that in entire project as per original agreement there is scheme for bungalow, multiplex commercial place, ground space, modern commercial market complex, well laid out landscape open green spaces etc. which exceeds the limit laid down under the provision of section 80IB( 10)( d) which shows that the building area of the shop and other commercial establishment included in the housing project does not exceed 3% of the aggregate built up area of Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd the housing project. It is also seen that for allowing extra facilities to the residents only maintenance charges are to be paid which shows that the commercial space and other amenities available are hidden part of sale which is not shown in the sale of flats. As it is clear from the agreement that the entire housing scheme is for development of township which includes more than 40% utilisation of space as commercial and non- residential construction. Scheme also shows that the space for bungalow requires more than 1500 Sft. The sale agreement made between the buyers of the flat and the appellant clearly shows that the particular housing project is a part of entire township scheme. Therefore the phase-wise development of entire township cannot be treated as a separate project and it is obvious also that entire structure cannot be built up at a time. The basic criteria contained in section 80IB (10(d) is violated in this case. On this issue no other argument is given except that each project is separate unit and its map plan approval has been taken separately, cannot be judged in isolation. Therefore treating the construction as a phase-wise development of integrated township where the commercial and other space is exceeding the limit containing section 80IB(10)(d), the action of the A.O. for disallowing deduction of 80IB is upheld and the ground of appeal is dismissed.”
3. Aggrieved the assessee is before us. Only two grounds of appeal have been raised. The first is against the denial of the claim of deduction u/s 80-IB(10) of the Act and the second is on the disallowance made u/s 40(a)(ia) of the Act.
4. The ld. Counsel for the assessee submitted that all the evidences in question were furnished before the Assessing Officer as well as the ld. CIT(A) and that the ld. CIT(A) had called for a remand report and that the Assessing Officer finally rested his objections only on three aspects. The arguments of the ld. A/R are summarized as follows:- a) It is not necessary that the assessee should be exclusively engaged in the housing projects and phase of the project which fulfil the conditions laid down u/s 80-IB of the Act, if separately approved by the local authority is eligible for deduction. b) The nature of business of the assessee, i.e., agreement with ADDA, requires infrastructural development and, construction of commercial, residential and township projects. This continued to be the same for all the earlier years and also the subsequent years and the claim of the assessee for deduction u/s 80-IB of the Act, was allowed in the assessment orders passed u/s 143(3), for the Assessment Years 2005-06 & 2006-07. Hence on the ground of consistency the claim of the assessee should have been allowed. Reliance in this regard was placed on the judgments in the following case-law:- CIT vs. Excel Industries Ltd. 358 ITR 295 SC
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd Radhasoami Satsang v. Commissioner of Income-tax [1992] 193 ITR 321 (SC) CIT vs. JK Charitable Trust (2009) 308 ITR 161 (SC)
4.1. Copy of the map of plan sanctioned by the municipal authorities separately and occupancy certificate given separately was filed and this aspect was not denied by the Assessing Officer. He further submitted that the details of the size of all the flats and other details were specifically filed by them before the Assessing Officer as well as the ld. CIT(A) and in response to the same, the Assessing Officer requested for specific details in the remand proceedings, which was also filed. He pointed out that separate profit and loss accounts were filed before the ld. CIT(A) for each housing project and these were also part of the remand proceedings and replies were filed to the Assessing Officer on queries raised on the same. He argued that all the annexures to audit report in Form No. 10CCB were filed before the lower authorities. He took this Bench through these details which were place at page 262 to 276 and at page 293 of the paper book. He pointed out that it was explained to the ld. CIT(A) that only 8 flats were sold to the same person or persons who were relatives. He submitted that the agreements for these 8 flats were entered into before 01/04/2010 and hence the amendment to the Act, which had come into force after this date is not applicable retrospectively. Alternatively he submitted that out of the total 234 flats of Triveni and 224 flats of Poorvi, only 8 were sold to the same or related persons and hence at best the disallowance can be 1.9%. The ld. Counsel for the assessee submitted that, the ld CIT(A) has wrongly rejected the claim of the assessee, though the deduction on the same facts and circumstances were allowed in respect of the project “Poorvi” and in respect of the project “Triveni”, for the earlier Assessment Years. He submitted that as the municipal authorities sanctioned the plans separately for each housing project, deduction has to granted project wise as per the CBDT Circular as well as the proposition of law laid down in this regard. He relied on a number of judgements on this issue. 4.2. The ld. Counsel for the assessee relied on the following case-law & Circular:- For the issue as to what is housing project:- CIT vs. Vandana Properties; [2012] 206 Taxmann 584 (Bom.)
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd Viswas Promoters P. Ltd. v. ACIT; [2013] 29 taxmann.com 19 (Madras) Madanlal Gupta vs. CIT 9 Taxmann.com 235 ACIT vs. Ashiana Amar Developers, 178 TTJ 424 (ITAT Kolkata) CBDT Circular No. 205/3/2001/ITA-II dated 4th May 2001 Bengal Ambuja Housing Development Ltd. vs. DCIT( and 1735/Kol/2005; dt. 24th April, 2006 (Cal HC)
For the proposition that maintenance of separate books of account is not necessary:- Leo Meridian Infrastructure Projects & Hotels Ltd. vs. DCIT; 144 ITD 445 DCIT vs. SMR Builders Pvt. Ltd.; 54 SOT 105
On the issue of amendment with regard to the sale to the same person or relatives not applicable prior to the amendment coming into force:- Ravi Appasamy vs. ACIT; [2016] 69 taxmann.com 305 Mad
For the proposition of proportional disallowance:- ACIT vs. Ekta Sankalp Developers; 53 taxmann.com 75 Mumbai HC
On the issue of consistency to be maintained:- CIT vs. Excel Industries Ltd. 358 ITR 295 SC Radhasoami Satsang v. Commissioner of Income-tax [1992] 193 ITR 321 (SC) CIT vs. JK Charitable Trust (2009) 308 ITR 161 (SC)
4.3. On the issue of deduction of interest u/s 194A of the Act, it was submitted that ADDA was granted registration by the ITAT and hence no tax was required to be deducted at source even as per the order of the ld. CIT(A). It was argued that ADDA was a statutory body of Government of West Bengal and hence no tax was required to be deducted. Even otherwise, it was argued that disallowance cannot be more than 30% in view of the amendment to Section 40(a)(ia) of the Act, which is retrospective by the Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd decision of the ITAT in the case of Dipak Parui, order dt. 20/07/2018.
The ld. D/R, on the other hand, opposed the contentions of the ld. Counsel for the assessee and submitted that deduction in question was exempt for the impugned Assessment Year 2010-11 and it was found by the Assessing Officer that the assessee was not entitled to any deduction u/s 80-IB of the Act. He submitted that this judicata does not apply to Income tax proceedings and hence reliance place by the assessee for deductions allowed for the Assessment Years 2005-06, 2006-07, 2008-09 & 2009-10 cannot be the basis of seeking deductions for this Assessment Year 2010-11, as the conditions for grant of deduction u/s 80-IB(10) of the Act were not fulfilled by the assessee. He submitted that merely because certain mistakes were committed in the earlier years, by the then Assessing Officer in accepting the claim of the assessee, the Assessing Officer cannot be forced to repeat the same mistake in this year. He relied on the assessment order as well as the order of the ld. CIT(A) and submitted that the assessee has entered into a MoU with ADDA for creation of infrastructural development of township and construction of residential and commercial complex. Thus, he submitted that the entire MoU is one project and the said residential complex combined with all these integrated project and that they cannot be isolated for the purpose of claim of deduction u/s 80-IB(10) of the Act. He relied on the order of the ld. CIT(A) and submitted that at page 15, the following findings are given by the ld. CIT(A):- a) The assessee has not controverted the fact that his projects are constructed as per agreements with ADA for the entire 74.97 Acres. b) It is not controverted that common facilities would be available for all the residents as per maintenance charges. c) It is not controverted that in the entire project, as per original agreement, there is claim for bungalow, multiplex, commercial space, ground space, common commercial multiples, landscaping etc. which would exceed the limit laid down under the provisions of Section 80-IB(1)(d) of the Act, which specifies that the shop and commercial shop built up area should not exceed 3% of the aggregate built up area of the housing project.
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd 5.1. The ld. D/R submitted that under the agreement of the assessee with ADDA, more than 40% space was utilised for commercial and non-residential construction and that the claim also shows that the space for bungalow required more than 1500 sq.ft. This, he pointed out, violated Section 80-IB(10)(d) of the Act. He further argued that the agreement of sale with the buyers clearly shows that the housing project in question is part of the township project and submitted that phase-wise development of the entire town ship cannot be treated as a separate project. He further submitted that the assessee failed to maintain separate books of account and hence the profits from these residential projects cannot be properly ascertained. He further submitted that the assessee had violated the condition that more than one unit cannot be sold to the same person or related person as per the amendment to the Act. Alternatively and without prejudice to the above submissions he relied on the decision of the Hon’ble Supreme Court in the case of Tin Box Co. vs. Commissioner of Income-tax [2001] 249 ITR 216 (SC), and submitted that the issue may be set aside to the file fo the Assessing Officer for examining once again the evidence filed by the assessee before the Assessing Officer as well as the ld. CIT(A). On the issue of tax deduction at source from interest paid to ADDA, he submitted that ADDA is taxable under the Income tax law and as no tax was deducted at source, the disallowance was rightly made.
We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 7. The first issue that has to be examined his the claim of deduction u/s 80-IB(10) of the Act. Though the Assessing Officer, in his order has mentioned a number of points based on which the deduction u/s 80-IB(10) of the Act, was rejected by him, in his remand report to the ld. CIT(A), which is at page 372 & 378 of the paper book. He based the reasons for disallowance on the following points:- a) The project undertaken was an integrated township project and it was not only a housing project according to schedule-1 of the agreement with the Government Agency ADDA. Thus, the claim of the assessee that just because they had Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd prepared separate sanction of plan or map for each projects, i.e., projects Poorvi & Triveni from the local municipal authorities, they cannot be treated as separate housing projects. b) The separate profit and loss account prepared for each separate project was not signed. c) More than one residential unit has been allotted to the same person and/or his family members, in violation of the condition and that the assessee has not executed sale agreement but only an agreement of lease with the purchaser. The assessee violated the condition prescribed u/s 80-IB(10)(d) & (f) of the Act. 7.1. The ld. CIT(A), on the other hand, upheld the rejection of claim for deduction u/s 80-IB(10) of the Act, on the following grounds:- a) The project is an integrated development project and if the entire project is considered, the building area of shops and commercial shops is more than 40% which violates the provision of Section 80-IB(10)(d) of the Act, which prescribes that the shops and commercial shops does not exceed 3%. b) The scheme under the agreement of the assessee with ADDA shows space for bungalow requires more than 1500 sq.ft., which violates conditions stipulate u/s 80-IB(10) of the Act. c) The phase wise development of the entire township cannot be broken up into separate projects. 7.2. Before we deal with the issue, we find that there is no dispute on the issue that the denial of deduction by the Assessing Officer on the ground that the requisite details were not submitted, has been addressed during the course of appellate proceedings before the ld. CIT(A). Copy of Form No. 10CCB with all the required annexure is placed at page 263 of the paper book. At pages 274 to 277 of the paper book, the copy of the agreement with ADDA, sanction plan of the municipal corporation, in respect of the two housing projects on which deduction 80-IB(10) was claimed i.e., Poorvi and Triveni, details of the size of the plot and block-wise and floor-wise list of flats and flat wise area as well as computation of separate profit in respect of the housing project as submitted by the lower authorities have been placed before us. At page 293 of the paper book, we
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd find a copy of the letter written by the Assessing Officer in the remand proceedings calling for further details and at page 294 to 297 is placed. A copy of the letter written by the assessee furnishing all these details is also filed. We also find that the Assessing Officer after examining these details, in his remand report has not stated that the requisite details were not filed, except to the extent indicate by us in this order. In view of the above denial of deduction by the Assessing Officer on the ground of non submission of requisite details had been addressed by the assessee. 7.3. We now consider the main objection of the revenue that the entire integrated township project has to be taken as a whole and not phase wise development. It is true that both these projects “Poorvi” and “Triveni” are part of the integrated township project for which a MoU has been entered into by the assessee with ADDA. But as far as these two projects are concerned, the Asansol Municipal Corporation has granted separate plan approvals. One housing project plan was sanctioned vide building permit no. 61/BP/AMC/H.O (12) dt. 03.01.2008. Occupancy certificate for this housing project was given separately on 30/03/2013, vide office reference no. 980/AMC/PW/Engg/13. The second plan for the housing project was sanctioned vide building permit no. 852/AMC/PW/Engg/07, dt. 06/07/2007. Occupancy certificate for this housing project was given separately for this project on 30/03/2013, vide office reference no. 953/AMC/PW/Engg/08. The above two separate plan approvals and permits and separate occupancy certificates from municipal authorities demonstrates that though these two housing projects are part of the overall plan of development of township which included infrastructural development etc. the municipal corporation of Asansol has treated them as independt projects and granted separate sanctions for construction of housing projects which are “Poorvi” and “Triveni”. Occupancy certificate were also given separately for construction of each of these projects though the construction of the entire infrastructure of the overall township was not complete. The agreement, the assessee has with ADDA, Asanasol Municipal Corporation in an overall broad agreement and the municipal corporation has treated “Poorvi” and “Triveni” housing projects as independent housing projects. On such facts we shall now examine the legal positions.
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd The Hon’ble Bombay High Court in the case of CIT vs. Vandana Properties (supra) held as follows:-
“Whether construction of building 'E' constitutes a 'housing project under section 80- IB(10) The expression 'housing project' is neither defined under section 2 of the Act nor under section 80-IB(10). Even under the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulations for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in section 80-IB(10) would have to be construed as commonly understood. [Para 18] The expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the Explanation in section 80-IB(10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1000 square feet would constitute a 'housing project' under section 80-IB(10). [Para 19] Whether construction of building 'E' is an independent housing project or extension of housing project already existing on plot in question When the plans for A, B, C and D buildings were approved during the period from 1993 to 1996, construction of building 'E' was not even contemplated on the plot in question. It is only in the year 2001 when the status of the land was converted from 'surplus vacant land' into 'within the ceiling limit land' by the State Government that an additional building could be constructed on the plot in question and, accordingly, building plan for construction of building 'E' was submitted and the same was approved by the local authority on 11-10-2002. [Para 20] The fact that the local authority, namely, the Municipal Corporation approved the building plan for building 'E' on the condition that all the objections raised in the intimation dated 12-5-1993 relating to the earlier housing project on the same plot of land would be applicable and should be complied with, cannot be a ground to hold that building 'E' is extension of the earlier housing project because the earlier housing project was completed prior to 1-10-1998 and the housing project for construction of building 'E' was approved for the first time on 11-10-2002. Nowhere in the intimation dated 11-10-2002 it is stated that building 'E' constitutes extension of the earlier housing project which is already completed. From the fact that the objections raised while approving the earlier housing project on the same plot of land were made applicable to the housing project in question, it cannot be inferred that the housing project in question constitutes extension of the earlier housing project. Therefore, in the facts of the present case, where, neither the assessee had sought approval of the building plan for construction of building 'E' as extension of the earlier housing project, nor the Municipal Corporation had granted approval for the said project as extension of earlier housing project, it is not open to the income-tax authorities to contend that approval granted on 11-10-2002 constituted extension of the housing project which was approved in the year 1993. [Para 21] Reliance placed by the revenue on the Explanation to section 80-IB(10)(a) which was introduced with effect from 1-4-2005 is also misplaced. What the said Explanation Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd contemplates is that where the approval in respect of a housing project is granted more than once, then that housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. For example, in respect of a housing project, the assessee may seek amendment of the building plan at several stages of the construction and the same may be approved. In such a case, the Explanation provides that for the purposes of section 80-IB(10) the housing project shall be deemed to have been approved on the date on which the first approval was granted by the local authority. Thus, the Explanation to section 80-IB(10)(a) refers to the approval granted to the same housing project more than once and the said Explanation would not apply where the approval is granted to different housing projects. In the present case, construction of building 'E' constitutes an independent housing project and, therefore, the date on which the earlier housing project had commenced construction could not be applied to the housing project consisting of building 'E' merely because the conditions set out while granting approval to the earlier housing project have also been made applicable to the housing project in question.” The Hon’ble Madras High Court in the case of Viswas Promoters Pvt. Ltd (supra) held as follows:- “11. It is an admitted fact that each one of blocks had separate sanction from the competent authority. Even though the larger area comprised in the name and style of "Agrini" and "Vajra" is stated to be the master plan of the project, it is not denied by the Revenue that each block in each of the projects has its own specification; hence, had gone for planning approval by the competent planning authority. In the background of this, the question that arises for consideration is as to whether the assessee would lose its claim for deduction in respect of those blocks which satisfied the conditions under Section 80IB(10) of the Act by reason of some of the stocks not satisfying the condition under Section 80IB(10) of the Act.
12. It is not denied by the Revenue that there is no definition of the expression "Housing project" under Section 80IB of the Act. The said expression is defined under Explanation to Section 80HHBA of the Income Tax Act, which reads as under: "Section 80HHBA. - Deduction in respect of profits and gains from housing projects in certain cases. ** ** ** Explanation : For the purposes of this section, - (a) "Housing project" means a project for - (i) The construction of any building, road, bridge or other structure in any part of India "
Section 80IA of the Act is a specific provision which deals with deduction in respect of profits and gains from industrial undertakings or enterprises engaged in the development of infrastructural facilities such as roads, bridges and other structure as regards the grant of deduction in respect of development and construction of a housing project. Section 80IB is a specific provision in respect of profits and gains from undertakings engaged in developing and constructing housing projects other than infrastructure development undertakings. Thus, housing projects considered herein under Section 80IB refers to any building other than road, bridge or other structure. Thus, going by the definition of "housing project" to mean the construction of "any building" and the deduction under Section 80IB of the Act is hundred per cent of the profits derived in the previous year relevant to the assessment year from such housing project complying with the condition, each block in the larger project by name "Agrini" and "Vajra", has to be taken as an independent building and hence a housing project, for the purpose of considering a claim of deduction. Section 80IB(10) begins by stating:
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd "(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2007 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if, (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction, ** ** **" Thus the undertaking qualifying for deduction under Section 80IB of the Act is an "undertaking developing and building housing projects" and the deduction is in respect of "profits and gains derived from" such housing project, satisfying the conditions stipulated in the clause therein. Thus, within a composite housing project, where there are eligible and ineligible units, the assessee can claim deduction in respect of eligible units in the project and even within the block, the assessee is entitled to claim proportionate relief in the units satisfying the extent of the built-up area.
7.4. Applying the propositions of law laid down in these case-law to the facts of this case, we hold that “Poorvi” and “Triveni” have to be considered as separate housing projects for the purpose of the grant of deduction u/s 80-IB(10) of the Act. In our view, the ld. CIT(A) as well as the Assessing Officer were not justified in denying the deduction u/s 80-IB(10) of the Act, on the ground that the housing projects are part of a larger infrastructural and township projects and when the entire township project is taken together, the conditions laid down u/s 80-IB(1)(d) of the Act are violated. This is not correct. When the housing projects “Poorvi” and “Triveni” are taken separately, there is no finding by the revenue that the condition specified u/s 80-IB(10)(d) of the Act are violated. Hence we decide this issue in favour of the assessee.
The second issue is whether separate books of account are required to be maintained by the assessee for each housing projects Poorvi and Triveni. There is no provision in the Act prescribing that separate books of account have to be maintained for each of the housing projects. It was so held by the Hyderabad Bench of the ITAT in the case of Leo Meridian Infrastructure Projects & Hotels Ltd. vs. DCIT; 144 ITD 445 and in DCIT vs. SMR Builders Pvt. Ltd.; 54 SOT 105. The assessee has filed separate profit and loss accounts for each project has been filed by the assessee before the Assessing Officer, they cannot be rejected without pointing out deficiencies. The purpose of the exercise is to ascertain the profits of each project separately when the Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd assessee is filing these profit and loss accounts and making a claim, no defects or deficiencies are pointed out by the Assessing Officer and these are rejected only the ground that they are not signed. This is not the correct approach to this issue. When no deficiencies have been pointed out in these statements, the same have to be accepted and deductions granted accordingly. 8.1. In view of the above discussion and in line with the decisions cited above, we hold that the deduction u/s 80-IB(10) of the Act, cannot be disallowed on the ground that separate books of account were not maintained by the assessee and on the ground that signed profit and loss accounts, project-wise, were not submitted. This issue is decided in favour of the assessee.
We now come to the issue whether deduction u/s 80-IB(10) of the Act, can be disallowed when more than one residential unit has been allotted to the same individuals and/or his/her relatives. 9.1. As per the details filed by the assessee it is clear that out of both the projects only 8 flats were sold to persons who were relatives. This fact is not disputed by the Assessing Officer or the ld. D/R before us. Under these circumstances the question is whether deduction can be denied for the profits earned on entire housing projects or it can be denied proportionately. The Hon’ble Madras High Court in the case of Viswas Promoters Pvt. Ltd. (supra), held as follows:- “14. On the facts admitted by the Revenue, in the projects "Agrini" and "Vajra", there are number of flats which are below 1500 sq.ft., and the relevant built-up area requirement is specified under Section 80IB(10)(c) of the Income Tax Act. Thus, the built-up area in some of the flats in both these projects are in excess of 1500 sq.ft., i.e., 32 flats in Agrini and only one flat in Vajra and that the assessee had not claimed any deduction on this. We hold that the Tribunal is not correct in its view, that by reason of these Units being in excess of 1500 sq.ft., the entire claim of the assessee in respect of these two projects would stand rejected under Section 80IB(10) of the Income Tax Act. Thus, going by the definition of "housing project" under Explanation to Section 80HHBA of the Act as referred to above as the construction of "any building" and the wordings in Section 80IB(10) of the Act, the question of rejection in entirety of the project on account of any one of the blocks not complying with the conditions, does not arise. Even in the case of each one of the blocks, wherever there are flats which satisfied the conditions particularly of the nature stated under Section 80IB(10)(c) of the Act, we have already upheld the case of the assessee in T.C. Nos.1348 and 1349 of Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd 2007 dated 10.10.2012 for grant of relief under Section 80IB(10) of the Act on a proportionate basis, by following the decision of the Bombay High Court in CIT v. Brahma Associates [2011] 333 ITR 289/197 Taxman 459/9 taxmann.com 289. Thus applying the decision of this Court in T.C. Nos. 1348 and 1349 of 2007 dated 10.10.2012, we hold that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression "housing project" as referring to construction of any building and the wordings in Section 80IB(10) of the Act. In the circumstances, we hold that the mere fact that one of the blocks have units exceeding built-up area of 1500 sq.ft, per se, would not result in nullifying the claim of the assessee for the entire projects. Consequently, in respect of each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement under Section 80IB(10)(c) of the Act. In so holding, we also agree with the decision of the Bombay High Court in CIT v. Vandana Properties [2012] 206 Taxman 584/19 taxmann.com 316, which was decided by the Bombay High Court on similar lines as in the assessee's case before us.
In the light of the above reasoning, we have no hesitation in allowing the cases filed by the assessee in respect of assessment years 2004-05, 2005-06, 2006-07, 2007- 08 and 2008-09, thereby answering the substantial questions of law in favour of the assessee, that the assessee is entitled to the claim of deduction in respect of all the blocks forming part of the projects called Agrini and Vajra, but to the extent of each of the blocks satisfying the conditions under Section 80IB(10) of the Act, the assessee would be entitled to the relief on a proportionate basis.”
9.2. The judgment of the Hon’ble Bombay High Court in the case of Commissioner of Income-tax-II, Pune v. Brahma Associates, was followed by the Hon’ble Madras High Court and the principle of proportionate disallowance was approved. No contrary judgment is brought to our notice. 9.3. Hence we hold that the Assessing Officer could at best disallowed at 1.9% of the claim made by the assessee u/s 80-IB(10) of the Act, as out of the total of 224 flats of Poorvi and 234 flats of Triveni, only 8 flats were sold to the same individual or their relatives. The Assessing Officer is directed accordingly. 9.4. The assessee relied on a number of decisions for the proposition that the amendment in question specifies that not more than one flat should be purchased by a person or his relative, is not retrospective. It was argued that that the agreements in question were entered into prior to the amendment and hence this condition is not applicable. We find that the assessee has not furnished agreements of sale and only allotment letters were place on record. Hence, we not go into this argument of the assessee that the amendment is prospective only as the facts are not on record.
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd 9.5. We also find force in the arguments of the assessee that the deduction cannot be denied on the same facts for a particular Assessment Year, when similar deduction was granted u/s 80-IB(10) of the Act for the earlier Assessment Years. We find that for the Assessment Year 2006-07, order was passed u/s 143(3) of the Act, dt. 26/12/2008, wherein deduction u/s 80-IB(10) of the Act, for Rs.82,87,396/- was allowed. Similarly, for the Assessment Year 2005-06 vide order dt. 11/12/2007, passed u/s 143(3) deduction u/s 80-IB(10) of the Act was granted for the housing project by segregating the same from the entire township project. The deduction u/s 80-IB of the Act was granted for Rs.1,42,44,914/-. For the Assessment Years 2008-09 & 2009-10, similar claims were made by the assessee for deduction of profits u/s 80-IB(10) of the Act and the same was accepted u/s 143(1) of the Act. Under these circumstances, the principle of consistency comes into play. We are of the view that the Assessing Officer as well as the ld. CIT(A) could not have taken a different view for the impugned Assessment Year 2010-11 than what was taken for the earlier Assessment Years when the same facts continue year after year. The Hon’ble Supreme Court in the case of Commissioner of Income-tax vs. Excel Industries Ltd. 358 ITR 295 SC held as follows:-
“29. In Radhasoami Satsang Saomi Bagh v. CIT [1992] 193 ITR 321/60 Taxman 248 (SC) this Court did not think it appropriate to allow the reconsideration of an issue for a subsequent assessment year if the same "fundamental aspect" permeates in different assessment years. In arriving at this conclusion, this Court referred to an interesting passage from Hoystead v. Commissioner of Taxation, 1926 AC 155 (PC) wherein it was said: "Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken."
Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd 30. Reference was also made to Parashuram Pottery Works Ltd. v. ITO [1977] 106 ITR 1 (SC) and then it was held: "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter - and if there was no change it was in support of the assessee - we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income Tax in the earlier proceedings, a different and contradictory stand should have been taken."
It appears from the record that in several assessment years, the Revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. That being so, the Revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the tax payers' money in pursuing litigation for the sake of it.”
Similar is the decision in the case of CIT vs. JK Charitable Trust (supra) and many other cases.
9.6. Applying the principles of law laid down in this case-law to the facts of this case, we have to necessarily hold that the basis on which deduction was granted in the earlier years could not have been disturbed in the subsequent years as the principle of consistency applies and the revenue has to brought out any new facts on record.
In view of the above discussion, we direct the Assessing Officer to restrict the disallowance to 1.9% of the claim made by the assessee u/s 80-IB(10) of the Act. Accordingly this ground of the assessee is allowed in part.
The next ground is on the disallowance u/s 40(a)(ia) of the Act. The ld. CIT(A) held that ADDA was not registered u/s 12A of the Act and hence was not entitled to the benefits of Section 11. The assessee has produced before us the registration granted to ADDA u/s 12A of the Act, by the order of the Kolkata ‘C’ Bench of Assessment Year: 2010-11 M/s. Bengal Shristi Infrastructure Development Ltd the Tribunal in the case of Dipak Parui, order dt. 20/07/2018.This fact was not before the ld. CIT(A). 11.1. In view of the above discussion, we set aside this issue to the file of the Assessing Officer for considering the issue afresh, in accordance with law, in view of the second proviso to Section 40(a)(ia) of the Act. Accordingly this ground of the assessee is allowed for statistical purposes.
In the result, appeal of the assessee is allowed in part.
Kolkata, the 5th day of December, 2018.