ITO 9(2)(1), MUMBAI vs. SHABBIR K. KANCHWALA, MUMBAI

This appeal has been filed by Revenue against the order of Commissioner of Income-Tax (Appeals)-20, Mumbai, dated 16.07.2012 for A.Y. 2007-08 on following grounds:

“1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in law in holding that the initiation of reassessment proceedings u/s.147 of the Act and subsequent issuance of notice u/s.148 of the Act for A.Y. 2007- 08 in assessee’s case is due to change in opinion and is bad in law?

2. Whether on the facts and in the circumstances of the case the Ld. CIT(A) is correct in law in directing the Assessing Officer to allow deduction u/s.80- IB(10) of the Act amounting to Rs.55,67,567/- to assessee despite non-compliance to the provisions of this section?”

2.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted relief to assessee.

2.2 Same has been opposed on behalf of Revenue before us inter alia submitting that CIT(A) was not justified in granting relief to assesse. Same should be set aside and the order of Assessing Officer be restored. On the other hand, ld. Authorized Representative supported the order of CIT(A).

2.3 After going through rival submissions and material on record, we find that CIT(A) observed from the record that development construction activity in respect of present housing project was started only after receiving the commencement certificate dated 04.09.2003. It clearly shows that project commenced after 01.10.1998. Assessing Officer had come to an erroneous conclusion that development/construction activity in respect of impugned housing project had commenced before 01.10.1998 and, A.Y. 07-08 [ITO vs. Shabbir K. Kanchwala] Page 4 therefore, Assessing Officer was not justified on this point. It is undisputed fact that assessee started only after requisite date of commencement.

2.4 Regarding Assessing Officer’s observation that housing project included shops having more than area of 2000 sq. ft., it was observed from the lay out plan that assessee’s project was fully residential. The land acquired by assessee was only 4341.62 sq.mtrs. or 1.07 acres which was reflected in the copy of building lay out plan also filed before the Assessing Officer. In above, lay out plan, non residential of 7330.11 sq.mtr. shown with red ink was constructed by other developers. From the Architect Certificate, CIT(A) observed that there were no shops or other commercial establishment in the project involved in the construction as assessee had constructed 100% residential property. In this situation, Assessing Officer was not justified in gathering the impression that the area of shop is 7331 sq.mtr. i.e. 73310 sq.ft. In facts and circumstances, CIT(A) rightly concluded the development construction of the impugned housing project cannot be said to have commenced before 01.10.1998 and the area of residential unit was less than 1000 sq.ft. There was no construction of shops and commercial establishments as per Architect Certificate and building plan. Accordingly, CIT(A) was justified in allowing the deduction u/s.80IB(10) of the Act as claimed by assessee. Thus, this A.Y. 07-08 [ITO vs. Shabbir K. Kanchwala] Page 5 reasoned finding of CIT(A) needs no interference from our side. We uphold the same.

Pronounced in the open Court on this the 24th day of June, 2016.

Sd/- Sd/- (RAJESH KUMAR) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: Dated 24/06/2016 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार, आयकर अपील�य अ�धकरण, मुंबई ।