THE ACIT, CENTRAL-2, INDORE vs M/S. LIFE STYLE INFRATECH PVT. LTD., INDORE

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: MS. SUCHITRA RAGHUNATH KAMBLE & SHRI B.M. BIYANI

For Appellant: Shri Prakash Jain and Shreya Jain, C.A.& Ars

For Respondent: Shri P.K. Mishra, CIT DR

Hearing: 14.03.2023Pronounced: 09.06.2023

आदेश/O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by four separate appeal-orders for Assessment-Year [“AY”] 2010-11 to 2013-14, all dated 23.12.2015 and passed by learned Commissioner of Income-Tax (Appeals)-III, Indore [“Ld. CIT(A)”], which in turn arise out of a consolidated assessment-order dated 24.03.2015 passed by learned DCIT, Central-I, Indore [“Ld. AO”] u/s 153A/143(3) of Income-tax Act, 1961 [“the Act”], the revenue has filed the captioned four appeals. All these appeals relate to the same assessee; are represented by the same counsels; emanate from a consolidated assessment-order passed by AO and the issues are also common/identical; therefore they were heard together Page 1 of 36

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 and are being disposed of by this common-order for the sake of clarity, brevity and convenience.

The grounds raised in Appeal Memos are as under:

Revenue’s IT(SS)A NO. 27/Ind/2016 – AY 2010-11: “(1) On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition made by the AO on account of unaccounted receipts of Rs. 1,73,20,677/- without appreciating the facts and evidences brought into light by the AO during the assessment-proceedings. (2) On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition of Rs. 1,34,95,019/- made by the AO on account of disallowance of deduction u/s 80-IB(10).”

Revenue’s IT(SS)A NO. 28/Ind/2016 – AY 2011-12: “(1) On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition made by the AO on account of unaccounted receipts of Rs. 5,30,63,169/- without appreciating the facts and evidences brought into light by the AO during the assessment-proceedings. (2) On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition of Rs. 3,03,13,706/- made by the AO on account of disallowance of deduction u/s 80-IB(10).”

Revenue’s IT(SS)A NO. 29/Ind/2016 – AY 2012-13: “(1) On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition made by the AO on account of unaccounted receipts of Rs. 8,12,61,621/- without appreciating the facts and evidences brought into light by the AO during the assessment-proceedings.”

Revenue’s AY 2013-14: “(1) On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition made by the AO on account of unaccounted receipts of Rs. 7,10,88,897/- without appreciating the facts and evidences brought into light by the AO during the assessment-proceedings.” 3. Heard the learned Representatives of both sides at length and case- records perused.

Brief facts leading to present appeals are such that the assessee is one of the entities of “Chug Group” of Indore engaged in the business of housing

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 projects. A search u/s 132 was conducted on assessee on 21.09.2012 and in pursuance thereof the assessments of past six years, namely AY 2007-08 to 2012-13, were framed u/s 153A/143(3) and the assessment of search- year, namely AY 2013-14, was framed u/s 143(3) after making certain additions. The assessee carried matter in first-appeal and succeeded. Now, the revenue is in appeal for AY 2010-11 to 2013-14 assailing the order of first-appellate authority.

Ground No. 1 of all Assessment Years:

This ground is common in all years. In this ground, the revenue claims that CIT(A) has erred in deleting the addition made by AO on account of unaccounted receipts.

Facts apropos to this ground are such that during search-proceeding, a loose paper inventorized as “LPS-4-Page No. 84” was seized from assessee, which is scanned by AO in Para No. 9 of assessment-order. The AO observed that the seized-document contained the details of prices and club/parking/ M.P.E.B. (electricity)charges and payment-schedule of different categories of flats/houses marked as Block No. F, G, I, J and Row Houses. He further noted that the assessee was developing a project named “Ocean Park” at Village-Nipania, Indore consisting of Block No. F, G, H, I, J and Row Houses for which amounts had been received in Financial Year 2008-09 to 2012-13 relevant to AY 2009-10 to 2013-14 towards sale/allotment of flats/row houses of same sizes as mentioned in the seized-document. Based thereon, the AO inferred that the seized-document was a “Price-list” related to those very flats/houses which had been sold/allotted by assessee. Then, the AO also observed that the sale prices recorded by assessee for sale of flats/houses in books of account were lesser than the prices mentioned in seized-document. Therefore, the AO confronted the assessee on such difference, to which the assessee filed a detailed reply which is re-produced by AO in Para No. 9.3 of assessment-order. In the said reply, the assessee

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 made mainly two-fold submissions, namely (i) the seized-document does not contain any date, any signature, even the name of assessee-company or even the name of project “Ocean Park” is nowhere mentioned, therefore the seized document cannot be attributed to the flats/houses sold by assessee; and (ii) without prejudice, the assessee also contended that it had not collected any extra-amount from buyers than what was mentioned in the registered-deeds; that the prices and other charges collected by assessee as shown in the registered sale-deeds and recorded in books of account were reasonable having regard to the prevailing market prices in that area, slack in property market, bargaining power of buyers and other factors. The assessee also submitted affidavits of as many as 10 buyers on sample basis wherein the buyers confirmed that they had paid prices as mentioned in the registered-deeds only and they haven’t made any extra-payment. However, the AO rejected assessee’s submissions in Para No. 9.4 of assessment-order. Ultimately, the AO adopted the prices mentioned in the seized-document for the flats/row houses sold in AY 2013-14 and for preceding assessment- years, he computed/adopted prices by giving 10% decrease for every earlier year. Accordingly, the AO estimated selling prices of flats/row houses for different years and based thereon made a working of extra-collection by assessee; accordingly made addition on account of unaccounted receipts.

During first-appellate proceeding, the assessee made a detailed submission. After considering AO’s order and assessee’s submission, the Ld. CIT(A) deleted entire addition. The order passed by CIT(A) in this regard for AY 2010-11, is extracted below:

“6. Ground Nos. 6.1, 6.2 and 6.3: In these grounds of appeal

, the appellant has challenged the addition of Rs. 1,73,20,677/- on the basis of Page 84 of LPS-4 found during the course of the search giving the calculations and the rate per sq. ft. for 2 and 3. BHK flats with the service-tax at the rate of 3.09%

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14

Before us, Ld. DR representing the revenue made vehement contentions as under:

(i) Ld. DR made a preliminary submission that the CIT(A)’s approach is faulty. He submitted that the CIT(A) has himself accepted in Para No. 4.1.5 of appeal-order (although while adjudicating a different ground of assessee on the legality of addition) that the seized-document gave a “Price list” of the flats/houses built by assessee; the document was incriminating in nature and found from assessee’s premise. Ld. DR contended that when the CIT(A) has himself accepted such vital aspects, how was he justified in deleting addition made by AO? In short, Ld. DR contended that the addition made by AO on the basis of such incriminating-document was automatically sustainable on merit and no interference was required by CIT(A).

(ii) That, CIT(A) has made a wrong conclusion in Para No. 6.9.11 of appeal-order that the AO has not brought any material to corroborate the seized-document. Ld. DR drew our attention to Page No. 9 of the assessment-order and submitted that the AO has scanned one more document inventorised as “Page No. 41” seized from one Shri Sunil Lilani’s house (director of assessee-company) which contained exact Blocks as in “LPS-4-Page No. 84” seized from assessee. Further, this other document categorically bears the name of assessee-company as well as the name of project “Ocean Park”. Ld. DR pointed out that although there are variations in the prices, club charges and MPEB charges in the two documents, but as observed by AO the same may be owing to the two documents belonging to different periods. Thus, according to Ld. DR, the document “LPS-4-Page No. 84” seized from assessee is definitely corroborated by the document “Page No. 41” seized from Shri Sunil Lilani’s House.

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 (iii) That, the contention of assessee that none of the flats had been sold below the guideline prices fixed by Stamps Authority is out of place and has no relevance because the guideline prices are fixed for levy of stamp duty; they do not represent actual sale consideration collected by assessee.

(iv) That, the contention raised by assessee that there was slack in last 3 years in real estate market, is baseless.

(v) That, the assessee has charged different prices from different buyers for similar flats/houses; which also indicates that there is unaccounted element of receipts.

(vi) That, the decision of Rajasthan Chemist Association Vs. State of Rajasthan relied upon by Ld. CIT(A) in Para No. 6.8 of appeal-order is not applicable to assessee’s case as the said decision was concerned with “MRP” but the assessee’s case relates to the seized-document which is a “Price list” published by assessee itself. Ld. DR submitted that there is a big difference between “MRP” and “Price list”. “MRP” is the maximum retail price and the seller has choice to sell for any price which could be equal to MRP or even much lesser. But the “Price list” declares the prices at which the flats were necessarily and actually sold by assessee. The contention of assessee that the flats could not be sold at the “Price list” and there was a discount of 25 to 30%, is also baseless because the “Price lists” are made up after taking into account all factors.

(vii) That, the assessee has declared in books of account, club/parking/M.P.E.B. charges recovered from buyers in some cases and not in all cases; this again proves that there is under-disclosure in books of account.

(viii) Lastly, he strongly relied upon assessment-order passed by AO.

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 9. Per contra, Ld. AR representing the assessee supported assessee’s case on following grounds:

(i) That, the CIT(A) has accepted seized-document as incriminating in nature while deciding an independent ground of legal nature raised by assessee. But that acceptance does not have any relevance in deciding the merit of addition for the reason that in Para No. 9.1 of assessment-order, the AO has himself stated “On examination of the above page, it is seen that it contains the details of price to be charged for sale of various flats ….”. Thus, the AO himself accepts that the seized-document merely contains the “price to be charged” and not the “price actually charged”.

(ii) That, another document marked “Page No. 41” seized from Shri Sunil Lilani (assessee-company’s director) is dated 23.09.2012. Firstly, this document does not have any applicability or relevance for assessment- years prior to AY 2013-14 at all. Secondly, there are significant differences in the prices mentioned in “LPS-4-Page No. 84” seized from assessee and “Page No. 41” seized from director. When there is a complete mis-matching of two documents, how can it be said that there is a corroboration?

(iii) During assessment-proceeding, the assessee filed affidavits of as many as 10 buyers and the same are also placed at Page No. 633 to 642 of the Paper-Book. Drawing our attention to those affidavits, Ld. AR demonstrated that the buyers have clearly averred that they have paid prices as declared in the registered-deeds; further averred that no payment was made to the assessee-company or its directors over and above what is stated in registered-deeds.

(iv) That, there was in fact a recession in property market and the assessee had to issue several advertisements and offers to attract customers which is very much evident from series of advertisements

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 issued in Dainik Bhaskar newspaper and expenditure running in lacs of rupees incurred thereon. Copies of several advertisement bills of M/s Deepak Advertising and newspaper cuttings of Dainik Bhaskar are filed in the Paper-Book. Ld. AR drew our attention to several offers made in newspaper from time to time such as “inaugural offer – save Rs. 1.85 lacs” “buy 2 BHK, get 3 BHK” “2 BHK luxury flats starts from 21.41 lacs only”, “Save Rs. 1.85 lacs”, “just for today – prices are escalating tomorrow onwards”, “Deepawali offer”, etc. to demonstrate that the flats/houses had to be sold at discounted prices/varying prices to attract customers and not at uniform prices or even the prices mentioned in seized-document.

(v) That, the variation in prices charges from different buyers was on account of different offers/scheme given by assessee to customers from time to time.

(vi) That during assessment-proceeding, the assessee submitted a complete list of flats/houses sold to different buyers, a copy placed at Page No. 591 to 611 of Paper-Book. This list contained all details in Columns such as S.No., Unit No., Saleable area, Built-up area, Booking date, Registry Date, Buyer’s name, Address, PAN, Rate per square feet, Amount received, Parking/Club/MPEB charges received. The list clearly shows the amounts of Parking/Club/MPEB charges wherever received by assessee and where not received, the same are marked as “-” which indicates “Nil”. Ld. AR contended that despite such comprehensive details submitted by assessee which included complete identification of buyers by way of names, addresses and PAN data, the AO has not summoned any of the buyers so that the truth would have come on record.

(vii) That, the assessee also agrees that it had received Club/Parking/MPEB charges from some of the buyers and not all;

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 this was due to the incentives/offers given by assessee from time to time as well as bargaining power of the buyers. Further, the fact that some buyers have not paid such charges is also evident from the sample affidavits given by 10 buyers.

(viii) That during search-proceeding, statements of two directors of assessee-company, Shri Umesh Kumar Lilani and Shri Rajendra Kumar Mansukhani, were recorded but no question was asked qua the seized-document.

(ix) That, despite extensive investigation conducted during search, no excess cash, assets or stock was found either with assessee-company or any of its directors. Had there been any unaccounted receipt as claimed by Ld. AO, it would have been certainly reflected in some tangible form with the assessee or its directors.

(x) That, no independent, corroborative, concrete, positive, tangible or adverse material whatsoever was found by authorities despite extensive search conducted on assessee by which it can be established that the assessee has recovered any extra-money on account of sale consideration or charges from buyers. The entire case made out by revenue is based on mere surmise and presumption and in utter disregard of factual position submitted by assessee.

(xi) That the AO has not rejected the books of account of assessee, which means the books of account as maintained by assessee were acceptable without any objection. It is well-settled law that without rejecting books of account, the trading results cannot be disturbed/ objected and no addition on account of estimated sales/receipts can be made.

(xii) Lastly, Ld. AR relied strongly upon the order of CIT(A). He submitted that the order passed by CIT(A) is after a thorough consideration of ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 factual aspects, evidences and judicial rulings mentioned therein; same must be upheld.

10.

We have considered rival submissions of both sides and perused the material held on record and given our mindful consideration. Accordingly, we would deal with various contentions advanced by learned Representatives of both sides. First of all, we do not find any weightage in the preliminary submission of Ld. DR that since the CIT(A) has accepted the “LPS-4-Page No. 84” seized from assessee as an incriminating-document for deciding a legal ground, the addition based on such document should automatically be sustained. We may mention that the consideration of a document from legality point of view is a technical matter but drawing inference from the very same document for making or not making additions is another matter; the former cannot automatically lead to the later. As the impugned document was seized during search, CIT(A) was justified in making first-hand conclusion that it was an incriminating-material seized during search, hence the assessee could not succeed on legal ground raised before him. But when it came to the additions based thereon, CIT(A) was again justified to take an independent view based on what the document contained or not contained and whether other evidences/explanations available on record supported to make addition or not. Therefore, there is nothing wrong in the approach of CIT(A) as claimed by Ld. DR. Then we observe that the AO has made addition solely on the basis of “LPS-4-Page No. 84” seized from assessee which was neither signed, nor dated, nor even bore the name of assessee-company or the alleged housing project “Ocean Park”. Therefore, while the AO claims the seized-document as “Price List” of “Ocean Park” project undertaken by assessee, the assessee is strongly denying the same. We find that the AO has attempted to corroborate “LPS-4- Page No. 84” seized from assessee with “Page No. 41”, another document seized from Shri Sunil Lilani (assessee’s director). On comparison of two documents, the AO has observed certain congruence in Block Numbers and ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 Sizes of the flats/houses but at the same time also noted divergence in prices. Thus, we find that although there is some resemblance in those two documents yet there is a significant mis-matching in the prices due to which the corroboration is diluted to a large extent. It is also noteworthy that “Page No. 41” found from assessee’s director is dated 25.09.2012 and it cannot have relevance at all for any assessment-year prior to AY 2013-14. It is also a fact that during search-proceeding, statements of two directors of assessee-company, namely Shri Umesh Kumar Lilani and Shri Rajendra Kumar Mansukhani, were recorded but no question was asked qua “LPS-4- Page No. 84” seized from assessee. Thus, the document seized from assessee cannot be said to be a clinching-evidence nor it can be said to have been perfectly corroborated by other document. Then, we find that in Para No. 9.1 of assessment-order, the AO has himself accepted that the seized document merely contained the details of “price to be charged”; that means it did not show the prices actually charged. Then, we find that the sale consideration/charges recorded by assessee in books of account are as per registered-deeds which were executed before stamps authorities and the amounts paid/received are duly mentioned those registered-deeds. It is noteworthy the registered-deeds are statutory documents which cannot be brushed aside lightly on presumption or assumption. Then, we find that during assessment-proceeding, the assessee filed affidavits of as many as 10 buyers. Ld. AR has analysed the contents of some affidavits during hearing before us in the presence of Ld. DR and demonstrated that the buyers have clearly averred that they have paid only prices as declared in the registered- deeds; they have not made any payment to the assessee-company or its directors over and above what is stated in registered-deeds. Notably, the AO has not summoned or examined any of those 10 buyers. Thus, the revenue has miserably failed to contradict or rebut the averments of buyers. Then, we also find that the assessee had in fact issued several advertisements in the leading newspaper “Dainik Bhaskar” and made offers therein to attract buyers. On perusal of advertisements, we find that the assessee has made

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 varying offers, even offers like “buy 2 BHK, get 3 BHK”, to buyers which in itself indicates that the assessee could not collect any uniform price from buyers. This supports assessee’s stand that it could not sell flats/houses at the prices mentioned in any price-list. Then, we also find that during assessment-proceeding, the assessee submitted a meticulous list of flats/ houses sold to different buyers which contained full details of properties, prices received, name, address, PAN of the buyers, etc. but the AO has not made any enquiry from any single buyer. Then, regarding Parking/Club/MPEB charges, the assessee’s explanation that they were charged from some buyers and not charged from all buyers, is also plausible particularly when the assessee has been making different ffers to attract buyers. Then, we also find merit in the contention of Ld. AR that despite extensive investigation conducted during search, no excess cash, assets or stock was found either with the assessee-company or directors of assessee- company and even no evidence or material was found which could evident the factum of receipt of extra-money from any of the buyers. Had there been any unaccounted receipt as claimed by AO, it would have been certainly reflected in some tangible form with the assessee or its directors or at least some paper/document/agreement revealing the receipt of extra-money must have been found but there is no iota of such evidence. Thus, there is no independent, corroborative, concrete, positive, tangible or adverse material whatsoever found by revenue despite extensive search on the assessee by which it can be established that the assessee has in fact recovered any extra-money on account of sale consideration or charges from buyers. The entire case made out by revenue is based on mere surmise and presumption and in utter disregard of factual position submitted by assessee. Then, we also find that the AO has not rejected the books of account of assessee, which means the books of account as maintained by assessee were acceptable without any objection. It is well-settled law that without rejecting books of account, the trading results cannot be disturbed/objected and no addition on account of estimated sales/receipts can be made. Lastly, on ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 perusal of first-appeal order, we find that the Ld. CIT(A) has made a well- reasoned order granting relief to assessee.

11.

In view of above discussions, we do not find any infirmity or perversity in the order of Ld. CIT(A). Being so, we are inclined to uphold the action of Ld. CIT(A) without any interference. The revenue fails in these grounds.

Ground No. 2 of AY 2010-11 & 2011-12:

12.

This ground relates to deduction u/s 80-IB(10) disallowed by AO but re-allowed by CIT(A).

13.

Referring to the orders of lower-authorities, Ld. DR made following contentions:

(i) The assessee did not satisfy the conditions laid down in section 80- IB(10) for allowability of deduction which is very much clear from following defaults made by assessee:

(a) First condition of section 80-IB(10)(a)(iii) requires completion of construction within 5 years from end of the financial year in which the housing-project is approved by local authority. Further, Explanation to that section clarifies that in a case where the approval is obtained more than once, the project shall be deemed to have been approved on the date on which the building plan of housing project is first approved by the local authority. In this case, the AO has observed that the assessee obtained sanction for 15 buildings but completion-certificate has been obtained for 5 blocks/buildings only. Further the AO has also noted certain variations in the built-up areas of different blocks/buildings. The AO has observed “In absence of proper and accurate details, it cannot be stated that the assessee has completed the construction within due time and therefore the claim of deduction u/s 80IB is not tenable at all.”

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 (b) Second condition as prescribed in section 80-IB(10)(c) requires that each residential unit of the project has a maximum build- up area of 1500 square feet. But, however, during the course of survey u/s 133A, physical inspection of certain units were carried out wherein no middle wall was found in-between Unit No. I-201 & I-202. Shri Umesh Lilani, director of assessee- company, in his statements submitted that two units had been jointed to create a sample flat for ascertaining the response of customers. Thus, it was factually found that the assessee has constructed unit exceeding 1500 square feet and thereby violated the condition prescribed in section.

(c) Third condition of section 80-IB(10)(f) is such that in a case where a residential unit in the project is allotted to any person being an individual, no other residential unit in the project shall be allotted to such individual or the spouse or minor child of such individual. But the assessee had allotted two units, namely F-1301 & 1302, to Smt. Seema Prashant Jain. Further, the assessee has allotted two adjoining units, namely J-703 and J- 704, to Smt. Vinita Gupta and Shri Prakash Gupta who are spouses. This way, the assessee has violated the conditions prescribed in section.

(ii) That, Shri Umesh Lilani, director of assessee-company himself admitted in his statements recorded on 18.10.2011 (during survey proceeding u/s 133A) to withdraw the deduction and disclose income accordingly in the returns/revised returns and his statement was also accepted by another director Shri Rajendra Kumar Mansukhani in statement recorded during search u/s 132(4)/131 on 21.09.2012. The directors have made such admission realizing that the assessee- company would not satisfy conditions, namely (i) the project could not be constructed within five years, and (ii) keeping in mind market

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 requirement for bigger flats, the sizes would exceed 1500 square feet. The admission by directors is based on facts and there is no retraction by directors also. The decisions relied upon by Ld. CIT(A) in this regard as mentioned in appeal-order are not applicable to assessee.

14. Per contra, Ld. AR made following submissions with respect to the contentions raised by Ld. DR:

(i) It is incorrect to say that the conditions prescribed in section 80-IB were not satisfied; this is very clear from following facts/evidences:

(a) Regarding completion of construction within 5 years, there is a mis-understanding/confusion on the part of AO. Such mis- understanding/confusion has arisen because of twin reasons, namely (i) the Layout plans were sanctioned by Town & Country Planning Authority and Approvals were given by Local Authority (Gram Panchayat, Nipania); and (ii) The Layout plan was originally sanctioned on 04.08.2007 and thereafter revised on 01.07.2008 and 16.07.2009. Similarly, the Approval by Local Authority was initially given on 13.03.2008 which was revised on 12.09.2009 (for row houses)/14.10.2009 (for 5 blocks/ buildings). Ld. CIT(A) has noted all these details in Para No. 7.6 of appeal-order. This way, the lastly revised Approval was accorded on 12.09.2009/14.10.2009 for construction of Row Houses and 5 Blocks/Buildings only. The revisions were necessitated due to change in permissible usage of land area as well as designs of Blocks/Buildings. Subsequently, Completion- Certificates were also issued by the Local Authority for Row Houses and 5 Blocks/Buildings from time to time. The CIT(A) has noted complete details of Completion-Certificates in a Tabular Format in Para No. 7.6.3 of appeal-order, according to which the Completion-Certificates were issued on 02.12.2010,

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 01.07.2011, 01.09.2011, 23.06.2012 and 03.07.2012; this way last Completion-Certificate was issued on 03.07.2012. Ld. AR pointed out that it is a case of revisions of approvals and not multiple approvals, therefore ideally Ld. CIT(A) should have reckoned the period of 5 years from 12.09.2009/14.10.2009 (date of lastly revised Approval by Local Authority) as against from 13.03.2008 but even if the CIT(A) has reckoned from 13.03.2008, the assessee is not prejudiced because ultimately CIT(A) has found that the Completion date of project i.e. 03.07.2012 was within 5 years from end of the financial year in which the date of first-approval (13.03.2008) was falling. Ld. AR submitted that irrespective of whether the period of 5 years is reckoned with reference to 13.03.2008 or 12.09.2009/ 14.10.2009, the assessee has completed construction within 5 years and certainly eligible for deduction. Ld. AR submitted that the mis-understanding/confusion gained by AO is fully resolved by CIT(A) in appeal-order and thereafter there remains no doubt as to the completion of project within the prescribed period.

(b) The assessee has constructed only one sample unit, namely Unit No. I-201 & I-202, having area exceeding 1500 square feet which was ineligible. Therefore, the assessee has claimed deduction on pro-rata basis without claiming any deduction for this ineligible unit. Ld. CIT(A) has rightly accepted this approach of assessee placing reliance upon Vishwas Promoters Pvt. Ltd. Vs. ACIT 255 CTR 149 (Madra), CIT Vs. Shree Rathindran dated 22.07.2015 (Madras), Smt. Saroj Kapoor 14 TTJ 585 (ITAT, Indore) and Sarkar Builders (2015) 232 Taxman 731 (SC). Ld. AR also placed reliance on the decision of ITAT, Indore in ITO- 5(1), Indore Vs. M/s Su. Sampada, Indore ITA No.

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 298/Ind/2017 order dated 06.12.2017, relevant paragraphs are extracted below:

“13. Further the jurisdictional ITAT in the case of Smt. Saroj Kapoor (supra), while adjudicating the similar issue relating to pro rata deduction u/s 80IB(10) of the Act, confirmed the view in favour of the assessee by observing as follows :-

" Having stated so, now we shall deal with other aspects. On the aspect of nature of provisions of section 80IB(14)(a),we find that it is a settled proposition of law that when a particular term is defined by an amendment, which results into increase/levy of civil liability, the same has to be considered as the substantive one, hence prospective. The judicial decisions cited by the assessee also support this view. Accordingly, we reject the contention of the revenue that the provisions of section 80IB(14)(a) are of retrospective nature. This view leads us to another question i.e. in the absence of any specific term in the Act how that term should be interpreted. In this regard, it is also a settled principle that some common sense approach or dictionary meaning if the term is of general nature should be found out or if the term is of technical nature, then the definition of such term used in other laws should be taken into consideration. Accordingly, we hold that the meaning of term "built up area" prior to insertion of definition clause in the Act has to be found out as per the local law i.e. rules and regulations of Bhopal Municipal Corporation as well as from M.P. Bhoomi Vikas Rules and as a consequence thereof, the built up area of such flats is undisputedly less than the specified limit. Hence, the assessee, in our opinion, is eligible for deduction u/s 80IB(10). In this view of the matter, there remains no question for any pro-rata deduction. However, we consider it pertinent to state that it is beneficial provision and, therefore, it should be interpreted in a liberal manner and in case it is necessary then the assessee can be granted pro rata deduction. In this regard, we are further of the view that if the legislator did not want to give any pro-rata deduction, it could have been provided by the legislator specifically that if one house was found to be having built up area on the ground of specified limit, then the assessee would not be entitled for any deduction u/s 80IB(10). In this view of the matter, we dismiss all the grounds raised by the Revenue".

Similar view was also taken by the coordinate Bench, Madras, in the case of Vishwas Promoters Pvt. Ltd. vs. ACIT (2013) 255 ITR 149 (Mad.) observing 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

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 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 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 reported in [2011] 333 ITR 289 (CIT Vs. Brahma Associates). 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 reported in [2012] 206 TAXMAN 584 (CIT v. Vandana Properties), which was decided by the Bombay High Court on similar lines as in the assessee's case before us."

14.

Moving further relating to pro rata eligibility permission, pro rata simply means a proportionate division relating to each of the respective portions. On a critical analysis as to how the principle of pro rata is applied here is that the assessee may seek pro rata deduction in case of units that have complied with the provisions and the Assessing Officer may disallow for the units that have not complied. The issue here is whether such proportionatelity can be claimed in respect of these provisions?

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 15. We find that in the case of Emgeen Holdings Pvt. Ltd.; order dated 11.5.2011 it was held that "even if some flats are not eligible u/s 80IB(10) of the Act, the remaining flats are eligible". Similar view was also taken by the coordinate Bench, Bangalore, in the case of DCIT vs. Brigade Enterprise Pvt. Ltd.; 24 DTR 371 holding that disallowance, if any, under these provisions, will have to be restricted to the extent of non-compliance with the provisions alone. Further, the issue stands finally settled by the judgment of Hon'ble Bombay High Court in the case of Brahma Associates vs. CIT; 333 ITR 289 wherein it has been held that the assessee shall be eligible for deduction u/s 80IB(10) of the Act insofar as there is compliance with the conditions of section 80IB(10) of the Act.

16.

We, therefore, in the given facts and circumstances of the case and respectfully following the judgment of the Hon'ble Bombay High Court and other decisions of the Coordinate Benches consistently holding that the disallowance of deduction u/s 80IB(10) of the Act is to be made only on the units which fail to comply with the conditions laid out u/s 80IB(10) of the Act which, in the instant case, relates to few flats and row houses, which were not able to satisfy the provisions of section 80IB(10)(c) of the Act having built up area of more than 1500 sq. ft. ITO vs. SuSampada We, therefore, find no infirmity in the order of the Commissioner of Income Tax (Appeals) partly allowing the assessee's claim of deduction u/s 80IB(10) of the Act.” (c) Although the assessee has allotted Unit F-1301 & 1302 and J- 703 & J-704 to the same individual or spouse, the assessee has claimed pro-rata deduction without claiming deduction in respect of these units. Therefore, the position is same as in Point no. (b) above.

(ii) The assessee-company is an independent person liable to taxation in terms of section 2(7), 2(31) and 4 of the Income-tax Act, 1961. Shri Umesh Lilani and Shri Rajendra Kumar Mansukhani, the directors of assessee-company, were not having any authority to make statements disentitling the assessee-company from claiming statutory deduction when the assessee-company was eligible for claiming deduction. Even otherwise the directors made those statements under the bad impression that the assessee-company would not be able to satisfy the conditions prescribed in section 80-IB(10), but as seen above, the ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 company has completed approved project within 5 years. Further, the company has claimed only pro-rata deduction without claiming any deduction qua ineligible units. Thus, the statutory conditions are satisfied and the wrong or bad statement made by directors cannot snatch the deduction legally allowable to the assessee-company.

15.

We have considered rival submissions of both sides and perused the material held on record. We would like to present our analysis as under:

(i) Firstly, we would like to present our analysis on the satisfaction or violation of conditions as observed by Ld. AO:

(a) Regarding completion of construction within 5 years, on perusal of assessment-order we find that the AO has not conclusively mentioned that the assessee had not completed construction within 5 years. He has simply noted the details of various sanctions/approvals taken by assessee and some variations in the sizes of blocks/buildings and concluded thus “In absence of proper and accurate details, it cannot be stated that the assessee has completed the construction within due time and therefore the claim of deduction u/s 80IB is not tenable at all.” However, Ld. CIT(A) has addressed this issue properly as mentioned in Para No. 7.6 of his order and thereafter came to a reasoned conclusion that the assessee has completed construction within 5 years. We have already noted the AR’s pleading in foregoing paragraph No. 14(i)(a) of this order, which are on the same line of reasoning as made by Ld. CIT(A), from which it is clearly discernible that the assessee had completed construction of approved projected within 5 years. Without re-producing the same for the sake of brevity, we only conclude that the CIT(A)’s finding are very clear and conclusive on this point. Ld. DR, though supported the order of AO, but could not exactly

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 controvert the findings/conclusion made by CIT(A) and even pleaded by Ld. AR before us as already mentioned in the foregoing paragraph. Therefore, we agree with the conclusion taken by CIT(A) and hold that the assessee has complied with condition.

(b) Regarding built-up area exceeding 1500 square feet, firstly we observe that there is only one unit, namely Unit No. I-201 & I- 202 which is noted by AO violating the condition. Then, we find that the Ld. AR has made a clear assertion during hearing that the assessee has not claimed deduction in respect of this ineligible unit; the deduction was claimed pro-rata qua the eligible portion only. Now, a question arises as to whether such approach of assessee is correct or not? In this regard, we take note of the decisions relied upon by assessee, more particularly the decision of ITAT, Indore itself in M/s Su. Sampada (Supra) which categorically approves the assessee’s approach. Therefore, although there is a violation of condition, but there is no fallacy in the part/pro-rata deduction claimed by assessee. Respectfully, adopting the same view, we too hold that the CIT(A) has rightly allowed the pro-rata deduction as claimed by assessee.

(c) Regarding allotment of F-1301 & 1302 and J-703 & J-704 to the same individual or spouse, Ld. AR has again made a clear assertion that the assessee has not claimed deduction in respect of these units; the deduction had been claimed pro-rata for eligible portion only. To support this approach of assessee, Ld. AR placed a heavy reliance on the same decisions including M/s Su. Sampada (Supra). At that stage, the Bench raised a query that those decisions adjudicate the controversy of another condition, namely “built-up area exceeding 1500 square feet” in ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 assessee’s favour but not the violation of this condition, namely allotment of multiple units to the same individual or spouse of individual. Ld. AR submitted that the ratio laid down in M/s Su. Sampada (Supra) should be equally applicable. On a mindful consideration, we agree with the submission of Ld. AR that the ratio and logic as enunciated by the Bench in the context of condition of excess built-up area should equally apply to the case of multiple allotment of units to an individual or spouse. We do not find any reason to allow pro-rata deduction in case of violation of one condition and disallow deduction fully in case of violation of another condition, when both of those conditions are prescribed in the same manner in section 80-IB(10), the only difference is that former is prescribed in clause (c) and later is prescribed in clause (f) of section 80-IB(10). Ld. DR could not substantiate as to how any discrimination can be done in interpretation of two set of conditions. Therefore, we find merit in the pleading made by Ld. AR that the assessee has righlty claimed and the CIT(A) has rightly allowed pro-rata deduction to assessee.

(ii) Regarding statements made by Shri Umesh Lilani and Shri Rajendra Kumar Mansukhani, directors of assessee-company for deduction not to be claimed by assessee-company, we find much substance in the submission of Ld. AR that the assessee-company is an independent assessee/person for taxation under section 2(7), 2(31) and 4 of the Income-tax Act, 1961 and its directors do not have valid authority to make statements so as to disentitle it from claiming valid deduction u/s 80-IB(10) as permissible. Further, it is also a well-established law that the Income-tax Act creates a liability of tax on “total income” and the “total income” has to be computed in accordance with the provisions of Income-tax Act, 1961 including giving effect to deduction

ACIT (Central)-2, Indore Vs. Lifestyle Infratech P. Ltd. IT(SS)A Nos 27 to 29 and 2013-14 u/s 80-IB(10) as allowable. Therefore, if the assessee is eligible to claim deduction u/s 80-IB(10), it cannot be denied to it merely because directors have given some statement admitting that the assessee shall not be claiming deduction. At the cost of repetition, we may mention that the condition of completion of project in statutory time frame of 5 years is satisfied. Further, the assessee has claimed pro-rata deduction for eligible portion and not availed deduction for certain units whose area exceeded 1500 square feet/which were allotted to same individual or spouse of individual and such approach of pro-rata deduction is found valid. Therefore, even if the directors have agreed for whatever reasons best appealing to them at the time of giving statements, the department cannot deny legally allowable deduction to the assessee-company.

16. In view of above discussion, we are of the view that the assessee was justified in claiming deduction u/s 80-IB(10) as allowable to it and the CIT(A) has also rightly allowed the same. We do not find any infirmity in the order of CIT(A) and therefore uphold the same. The revenue fails in these grounds.

17.

Resultantly, these appeals of revenue are dismissed.

Order pronounced in the open court on 09/06/2023.

THE ACIT, CENTRAL-2, INDORE vs. M/S. LIFE STYLE INFRATECH PVT. LTD., INDORE