Income Tax Appellate Tribunal - Mumbai
Hermes Developers, Mumbai vs Assessee on 16 April, 2012
ITA Nos.143 to 146 (4 appeals)
Hermes Developers Mumbai H Bench
IN THE INCOME TAX APPELLATE TRIBUNAL
"H" Bench, Mumbai
Before Shri B. Ramakotaiah, Accountant Member
and Shri S.S.Godara, Judicial Member
ITA Nos.143 to 146/Mum/2012
(Assessment years: 2003-04 to 2006-07)
Hermes Developers Asstt. CIT 12(1)
Dhiraj Chambers, 9 Hazarimal Vs Mumbai
Somani Marg, Fort Mumbai-01
PAN - AAAFH 2179 K
(Appellant) (Respondent)
Assessee by: Shri Jitendra Sanghavi
Department by: Shri Goli Srinivas Rao, CIT DR
Date of Hearing: 16/04/2012
Date of Pronouncement: 04/05/2012
ORDER
Per B. Ramakotaiah, A.M.
These are appeals filed by assessee for assessment years 2003-04 to 2006-07 involving the deduction under section 80IB(10) in these assessment years. Assessee's contentions are on the disallowance of deduction under section 80IB(10). In assessment years 2003-04 and 2004-05, there were further contentions with reference to reopening of the assessment under section 147.
2. Briefly stated, assessee is engaged in the business of developing and building housing projects. Assessee constructed group housing scheme project named "Hermes Heritage" on a plot of land admeasuring 1,15,621 sq. meters set out at Survey No.185-A Yerwada, Pune. Group housing project consisted of several projects/buildings. Assessee has claimed deduction under section 80IB in respect of projects consisting of building E-3, E-4, E-5 in assessment year 2003-04, E-3, E-4, E-5 and I in assessment year 2004-05 and E-3, E-4, E-5, I & J in assessment years 2005-06 and Page 1 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench 2006-07. Originally assessment for assessment years 2003-04 and 2004-05 were completed under section 143(3) allowing the deduction under section 80IB(10). Survey operations under section 133A were conducted on 29-01-2009. During the course of survey it was noticed that the three projects E-3,E-4,E-5 were on an earmarked area of 5,097.30 sq. meters. AO considered that area of E-5 building was marked by the architect at 1697.31 sq. meters and by excluding the above area of E-3 and E-4 buildings comes to 3,399.99 sq. meters which is less than 1 acre per project/building. Thus the deduction claim under section 80IB(10) was disallowed on the reason that E-3 and E-4 does not have one acre plot area and E-5 does not qualify as some of the apartments are having more than 1500 sq. ft as measured by AO in the course of survey.
3. The issue was originally discussed in assessment year 2007- 08 which was not subject matter of present appeal, in which AO for the deleted reasons mentioned therein held that the deduction claimed with reference to three buildings was not available for the above reasons. As regards building I, AO noticed that project area earmarked for the project was 5097 sq. meters but the actual measurement certified was about 2682.49 sq. meters and thus the area of the project I is below 1 acre limit. With reference to building J, AO measured the area and came to a conclusion that comes to only 3591.5 sq. meters which is less than one acre and thus all the projects having been constructed on a plot of one acre or less are not eligible for deduction under section 80IB(10). With reference to the apartment sizes in block E-5 and I, it was specifically mentioned by AO that on measurement the built up area of the flat is more than 1500 sq. ft and therefore disallowed deduction claimed under section 80IB(10) on this issue as well. There is no dispute with reference to the fact that apartment sizes are less than 1500 sq. ft with reference to projects in E-3, E4 and J. The CIT (A) for the reasons stated in 2007-08 however, upheld that the project was Page 2 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench constructed on less than one acre area. However, considering the issue on size of apartment, CIT(A) has given a finding in assessment year 2003-04 with reference to the apartment size as under:
"The present appeal relates to AY 2003-04, whereas the amendment in the statute defining built up area was brought on statute w.e.f. 1.4.2005. In ACIT vs. Saroj Kapoor 38 DTR 475 (Ind), the Indore Bench held that the contention of Revenue that the provisions of section 80IB(14)(a) are of retrospective nature is rejected. In Sheth Developers case, 33 SOT 277 (Mumbai), the ITAT held that prior to 1st April, 2005, balcony would not form part of the built-up area. Built up area meant what is understood in the common parlance namely carpet area aggregated with the area covered by the thickness of the walls and no part of the balcony would be included therein. In AIR Developers 123 TTJ 959 (Nagpur), it was held that the insertion of the definition would be application from 1st April, 2005 onwards. That where there is no definition of built up area under the IT Act, the definition of the same in the Development Control Regulation, 2000 for Nagpur City would be applicable. In appeal for AY 2007-08, it was held that the decisions in Sheth Developers and AIR Developers were inapplicable since they relate to A.Y 2003-04 which was before the amendment came into effect. The present appeal is for A.Y 2003-04 and hence the built up area would have to be computed in accordance with the definition of built up area contained in the Development Control Regulations of the area which are applicable. However, in view of the finding that the appellant has not fulfilled the condition of clause (b) of section 80IB(10), the appellant would not be entitled to deduction under section 80IB(10)."
The Revenue is not in appeal on this issue. Therefore, as far as the apartment size of the E-5 and I are concerned, there is no dispute with reference to the built up area to be considered for deduction under section 80IB, as the amended provisions are not applicable to the projects approved earlier.
4. The learned Counsel, however, referred to details of various plans on record to submit that assessee has constructed the project on an area of 28 acres (of approximately 1,25,600 sq. meters) and so as far as the area of 1 acre as specified under section 80IB (10) Page 3 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench stands fulfilled, following the principles laid down by the Hon'ble Bombay High Court in the case of CIT vs. Vandana Properties. It was submitted that since the entire project is having more than one acre, individual calculation of appurtenant area as was done by AO does not arise. With reference to the disputed measurements of certain flats in Block E-5 and I are concerned, it was submitted that as rightly pointed out by the CIT (A), the projects were approved before 2005 and as considered by the ITAT in the case of Asstt CIT v Sheth Developers (P) Ltd (2009) 33 SOT 277 (Mumbai ITAT), the built up area can not include balcony, terrace etc. He referred to the measurements taken by AO particularly of Block E-5 which according to AO comes to 1559.1sq.ft and if the balcony area and window sills were excluded to the extent of 77.91 sq. ft, the area of the flat is less than 1500 sq.ft i.e. 1481.22 sq. ft. However, it was the contention that even this working by simply excluding the balcony area alone indicates that size of flat is within norms whereas the actual carpet area/built up area according to the plan is much less.
5. The learned Counsel submitted even by simply excluding the balcony area included in the measurement taken by AO, the flat size becomes less than 1500 sft. Therefore, there cannot be any dispute in the 'built up area' concept. Similarly with reference to the building I, AO's measurement of 1597 sft and according to assessee, it is 1372 sft. AO working included a terrace area of 208 sft, and if this is removed the flat area comes to 1372sft which is lesser than 1500 sft prescribed. So the contention of the Revenue on the size of the apartment of more than 1500 sft is not correct. However, it was submitted that the CIT (A) has given a finding that the balcony area cannot be considered for the built up area which was not disputed by the Revenue either by way of cross appeal or cross objection.
Page 4 of 15ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench
6. Apart from the issue on merits of section 80IB claim, the learned Counsel also made submissions on the issue of reopening of assessments. It was submitted that the assessments were originally completed under section 143(3) after obtaining information and he referred to the orders of AO. Further he also placed on record, the office note of AO to submit that there is an inquiry and the ITI report in February 2006 of verification before allowing the deduction under section 80IB (10) and therefore, the action taken in survey in 2009 and reopening of the assessment years 2003-04 and 2004-05 after four years from the end of relevant AY is not correct, Further referring to the reasons recorded by AO for reopening the assessment in 2004-05, the submissions was that assessee claimed deduction for Block I also and there was no mention about Block I in the reasons recorded. In view of the decision of the Hon'ble Bombay High Court in the case of CIT vs. Jet Airways 331 ITR 236, the disallowance on Block I could not have been considered by AO in the re-assessment.
7. The learned Counsel further submitted that not only the question of reopening but also on merits of issue assessee succeeds on all issues and relied on various case law on reopening:
i) CIT vs. Kelvinator of India Ltd 187 Taxman 312(SC)/320 ITR 561
ii) CIT vs. Eicher Ltd 163 Taxman 259 (Del)
iii) CIT vs. Raj Kumar Mahajan, 18 Taxmann.com 79 (Del.)
iv) HCL Corporation Ltd vs. ACIT 17 Taxmann.com 270 (Del.)
v) Atma Ram Properties (P) Ltd vs. DCIT 16 Taxmann.com 67 (Del.)
vi) Lok Housing & Construction Ltd v. DCIT, WP No.1634 of 2011 (Bom.) (2011TIOL 725 High Court Mum-IT).Page 5 of 15
ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench
vii) RRB Consultants and Engineers Pvt. Ltd vs. DCIT WP No.7313 of 2010
viii) CIT vs. Jet Airways (I) Ltd 331 ITR 236 (Bom.)
ix) Shri Balwant Rai Wadhwa vs. Income Tax Officer (ITA No.4806/Del/10(ITAT)
x) Haryana Acrylic Mft. Co. v. CIT, 308 ITR 38 (Del.)
8. In response, the learned Departmental Representative submitted that assessee has sold the apartment showing the super built up area and on the basis of the agreement placed on record, what AO has considered area is according to the physical measurement and also assessee's brochure and agreements. It was further submitted that with reference to the plot area, the decision of the Hon'ble Bombay High Court is in favour of assessee but assessee's Architect himself earmarked the project area of less than one acre. Therefore, AO contentions are to be upheld.
9. We have considered the issue. As far as the claim of 80IB on merits are concerned, there is no dispute with reference to the fact that the entire area on which the projects stand is more than one acre. AO himself arrives at the total area of 5097 sq. meters even with reference to building E-3, E-4 and E-5 which is more than one acre. However, AO's contention was that one has to consider the area on which building was standing + 10% of the garden area (and FAR), then each of the building is standing on a plot area of less than one acre. This contention of AO cannot be accepted in view of the fact that the entire project consisting of various buildings was approved by the Municipal Corporation on a plot of area to an extent of 28 acres. There is no dispute with reference to the fact that other conditions for eligibility under section 80IB(10) with reference to the commencement of the project etc., were satisfied. The only objection by AO with reference to individual building/project is that the building stands on area of less than one Page 6 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench acre. This issue was considered by the Hon'ble Bombay High Court in the case of CIT vs. Vandana Properties in ITA No.3633 of 2009 and 4361 of 2010 dated 28.3.2012 wherein the objections with reference to 'housing project' and 'area' was considered and held as under:
"23. The next argument of the Revenue is that to avail the deduction under Section 80IB (10), the housing project must be on the size of a vacant plot of land which has minimum area of one acre. In the present case, there are five buildings (A, B, C, D and E) on a plot admeasuring 2.36 acres, hence, the proportionate area for each building would be less than one acre and, therefore, the benefit of Section 80IB (10) could not be granted in respect of the housing project consisting 'E' building.
24. As rightly contended by the counsel for the assessee and the interveners, Section 80IB (10)(b) specifies the size of the plot of land but not the size of the housing project. The size of the plot of land, as per Section 80IB (10) must have minimum area of one acre. The Section does not lay down that the plot having minimum area of one acre must be a vacant plot.
25. The question, therefore, to be considered is, whether the Revenue is justified in reading the expression 'plot of land' in Section 80IB(10)(b) as 'vacant plot of land' ?
26. The object of Section 80IB (10) in granting deduction equal to one hundred per cent of the profits of an undertaking arising from developing and constructing a housing project is with a view to boost the stock of houses for lower and middle income groups subject to fulfilling the specified conditions. The fact that the maximum size of the residential unit in a housing project situated within the city of Mumbai and Delhi is restricted to 1000 square feet clearly shows that the intention of the legislature is to make available large number of medium size residential units for the benefit of the common man. However, in the absence of defining the expression 'housing project' and in the absence of specifying the size or the Page 7 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench number of housing projects required to be constructed on a plot of land having minimum area of one acre, even one housing project containing multiple residential units of a size not exceeding 1000 square feet constructed on a plot of land having minimum area of one acre would be eligible for Section 80IB (10) deduction. If the construction of Section 80IB (10) put forth by the Revenue is accepted, it would mean that if on a vacant plot of land, one housing project fulfilling all conditions is undertaken, then deduction would be available to that housing project and if thereafter several other housing projects are undertaken on the very same plot of land, the deduction would not be available to those housing projects as the plot ceases to be a vacant plot after the construction of the first housing project. Such a construction if accepted would defeat the object with which Section 80IB (10) was enacted.
27. Moreover, plain reading of Section 80IB (10) does not even remotely suggest that the plot of land having minimum area of one acre must be vacant. The said Section allows deduction to a housing project (subject to fulfilling all other conditions) constructed on a plot of land having minimum area of one acre and it is immaterial as to whether any other housing projects are existing on the said plot of land or not. In these circumstances, construing the provisions of Section 80IB (10) by adding words to the statute is wholly unwarranted and such a construction which defeats the object with which the Section was enacted must be rejected.
28. Apart from the above, the Central Board of Direct Taxes (CBDT) by its letter dated 4th May 2001 addressed to the Maharashtra Chamber of Housing Industry has stated thus:
"The undersigned is directed to refer to your letter No.MCHI:RSA:m:388/ 19799/3 dated 1st January 2001 and to state that the additional housing project on existing housing project site can qualify as infrastructure facility under Section 10(23G) and 80IB (10) provided it is taken up by a separate undertaking, having Page 8 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench separate books of accounts, so as to ensure that correct profits can be ascertained for the purpose of Section 80IB and also to identify receipts and repayments of long term finances under the provisions of Section 10(23G), separately financing arrangements and also, if it separately fulfills all other statutory conditions listed in Sections 10(23G) and 80(B(10). With regard to your query regarding the definition of Housing Project, it is clarified that any project which has been approved by a local authority as a housing project should be considered adequate for the purpose of Section 10(23G) and 80IB (10)."
29. From the aforesaid letter of CBDT, it is clear that for the purposes of Section 80IB (10) it is not the mandate of the Section that the housing project must be on a vacant plot of land having minimum area of one acre and that where a new housing project is constructed on a plot of land having minimum area of one acre but with existing housing projects would qualify for Section 80IB (10) deduction. Even otherwise, the argument of the Revenue does not stand to reason because, in the city of Mumbai where there is acute space crunch, it is difficult to find a vacant plot having minimum area of one acre and even if few such plots are existing it cannot be said that Section 80IB (10) deduction was intended to give benefit only to the undertakings who construct housing projects on those few plots. Therefore, it is clear that on a plot of land having minimum area of one acre, there can be any number of housing projects and so long as those housing projects are approved by the local authority and fulfill the conditions set out under Section 80IB (10), the deduction there under cannot be denied to all those housing projects. Section 80IB (10) while specifying the size of the plot of land, does not specify the size or the number of housing projects that are required to be undertaken on a plot having minimum area of one acre. As a result, significance of the size of the plot of land is lost and, therefore, the assessee Page 9 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench subject to fulfilling other conditions becomes entitled to Section 80IB(10) deduction on construction of a housing project on a plot having area of one acre, irrespective of the fact that there exist other housing projects or not. In these circumstances, the decision of the Tribunal in rejecting the contention of the Revenue regarding the size of the plot cannot be faulted".
10. In view of the above judgment of the Hon'ble Bombay High Court and also on the fact that the entire area of the plot is more than one acre on which various buildings were constructed, the contention of AO that each of the building should have one acre, cannot be accepted. Therefore, the reasoning for which the deduction under section 80IB was denied being not valid and not based on any facts, it is to be held that assessee is eligible for deduction under section 80IB(10). The same cannot be denied for the reasons stated by AO.
11. With reference to the other objections that some of the flats in Block E-5 & I are having more than 1500 sft, the findings of the CIT (A) are not disputed to the extent of Flat E-5. Similar facts apply to the building I also. If one excludes the balcony area, the built up area is less than 1500 sft. The CIT (A) finding on this issue is based on the Coordinate Bench decision in the case of Asstt. CIT vs. Sheth Developers 33 SOT 277 and AIR Developers 123 TTJ 959. In the case of Sheth Developers (Supra) it was held that:
"the definition of built-up area as introduced by the Finance (No. 2) Act, 2004, itself starts with 'inner measurement of the residential unit' to start with. Even as per the Assessing Officer, the common parlance meaning of built-up area is the area enclosed within the external walls of a flat. Thus, whether it is the inner measurement or the outer measurement, one thing is amply clear that it should be the actual measurement and not any estimate. There was no dispute between the parties with regard to carpet areas, for both the assessee as well as the Assessing Officer had taken the same carpet areas while starting their respective work-outs. However, the Assessing Officer relied on a ratio he worked out from the map Page 10 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench attached with the occupancy certificate, for arriving at the built- up area from the carpet area. Even by the Assessing Officer's own work-out such ratio drastically varied. For Aishwariya project, he had taken 1.08 to 1.10; for Neptune 1.18 to 1.32, and for Jupiter he had taken 1.10 to 1.20. Thus, he had not adopted any standard methodology in his work-outs. This type of grossing up method based on carpet area would not give the correct built-up area. For arriving at correct built-up area, actual measurements alone ought to have been considered. The assessee had given a measurement-based work-out of built-up area for the specimen flats in each of the projects, wherever there was any chance of area exceeding 1000 sq. ft. per unit. The work-out given by the assessee was aggregating the carpet area with the area of the wall thickness which was available for every case where the carpet area of a unit flat exceeded 80 sq. meters, which is equivalent to 861.12 sq. ft. The stand of the assessee that there was no chance of the balcony area exceeding 25 per cent of the carpet area and, hence, work-outs which were relevant were all given by it, was seen to be correct and accepted by the Commissioner (Appeals). [Para 17] The definition of 'built-up area' says built-up area include projections and balconies. The accepted rules of interpretation for an inclusive definition as elucidated by the Apex Court in the case of CIT v. Taj Mahal Hotel AIR 1972 SC 168 is that if the word 'include' is used in an interpretation clause, it must be construed as comprehending not only such things as it signifies according to their nature and import, but also things which the interpretation clause declares that they shall include. So, normal meaning of built-up area, but for the definition including projections and balconies, would definitely exclude the latter. Even according to the Assessing Officer himself, built-up area as normally understood in common parlance means area enclosed within the external lines of the external walls. Therefore, there can be no doubt that prior to the introduction of the definition clause, aforesaid built-up area would not include projections and balconies as normally understood. The question as to whether the definition clause, mentioned above can be deemed as retrospective, was to be answered against the revenue. Number one, the enactment itself clearly specifies that clause will have effect from 1-4- 2005. Number two, it is not a procedural section but a definition section, where an enlarged meaning is given to the term 'built-up area' and such enlarged meaning would not have been in the realm of understanding of any person prior to its introduction and the assessee would have gone ahead with its respective projects based on a common understanding of the Page 11 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench term 'built-up area'. Thus, the enlarged meaning, if given a retrospective effect, will definitely affect the vested rights of an assessee. Therefore, the definition had only prospective effect from 1-4-2005. Even otherwise, the revenue was precluded from taking the plea that such definition was having retrospective effect for the simple reason that the Assessing Officer himself had accepted it to be only prospective. The contention of the revenue, that there could be no estoppels against law even if the Assessing Officer himself had taken a different view, became irrelevant on the face of the finding that definition of 'built-up area' is only prospective with effect from 1-4-2005. Thus, prior to 1-4-2005, balcony would not form part of the built-up area, irrespective of the area of such balcony. [Para 18] The BMC Rules were concerned with calculation of FSI and it was not in any way meant that built-area can include balcony in excess of 10 per cent of the carpet area. There was considerable strength in the argument of the assessee that adopting a definition formulated in a regulation promulgated based on a State law, that too relevant only for limited localized area, could not be a basis for understanding a common term like 'built-up area' for the purpose of the Act and application of section 80-IB thereof. Wherever the Income-tax Act required adoption of definition from another enactment, it has clearly specified so. Clause (22AA) of section 2 defines a document to include an electronic record as defined in the Information Technology Act, 2000. Again in clause (20) of section 2, director, manager and managing agent have been given meanings assigned to them in the Companies Act, 1956. However, there is no such definition of built-up area, prior to the amendment which came into effect from 1-4-2005, whereby its meaning was linked to any other enactments. Therefore, it was not possible to accept the stand of the revenue that the assessee was obliged to work out the built-up area based on the BMC Rules which were predominantly intended for calculation and utilization of FSI. Thus, prior to the introduction of clause (a) to section 80-IB(14), built-up area would mean what was understood in the common parlance, which would only be carpet area aggregated with the area covered by the thickness of the walls and no part of balcony could be included therein. Character of a balcony remains and would not change whether it is in excess of 10 per cent of the carpet area or otherwise. [Para 19]"
12. Since on facts, even if we exclude the balcony area from the measurements taken by AO, even without considering the other exclusions as considered by assessee, the flat area is less than 1500 Page 12 of 15 ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench sft. In view of this on merits, assessee is eligible for deduction under section 80IB(10) and we order accordingly.
13. The Departmental Representative's contention that the agreement indicates super built up area of more than 1500 sft cannot be accepted as super built up area includes common areas, stair cases and also balcony areas. Concept of super built up area is utilised by builders for commercial purposes for getting good price/ or representing less price per sq.ft. This super built up area concept cannot be equated with 'built up area' as per regulations which refers only to carpet area excluding balcony and terrace etc. Therefore, the argument of the Revenue on this cannot be accepted. Moreover the finding of the CIT (A) in favor of assessee in assessment year 2003-04 and 2004-05 on the same blocks was not disputed by Revenue. Therefore, on this reason also, we hold that there is no dispute with reference to the area of the flat being less than 1500 sft in block E-5 & I. Since the entire project is standing on more than one acre area and the apartments constructed therein the project are within1500 sft, assessee is eligible for deduction under section 80IB(10). Accordingly the grounds on this issue are allowed.
14. With reference to the contention that the assessments in AY 2003-04 and 2004-05 were reopened beyond 4 years without any valid reasons, we have to uphold the contentions of assessee. The assessment order under section 143(3) in assessment year 2003-04 dated 29.3.2006 was completed after enquiry and there is a finding in Para 3.1 of the order that assessee filed various details and copies of various certificates and approved plans in support of its claim under section 80IB. The same was examined and found to be in order. Not only the above finding in the assessment order, AO (Additional Commissioner of Income Tax Range(12)-1, Mumbai gives a note in the file as under:
Page 13 of 15ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench "3. There is no difference in the sale price per sq.ft between 80IB and non-80IB project. Cost of construction shown in 80IB and non-80IB project is within norms.
4. The CCIT and CIT were appraised on assessee's case vis-à-vis the ratio of ITAT Special Bench in Wall Street Construction Ltd and the 80IB deduction claimed by the assessee.
5. Inspector Report of the 80IB project shows that the actual project has in no way deviated from the approved plan and complies with all the conditions laid down in S.80IB. It has also been observed that there is no joining of adjacent flats to violate the area limit of 1500sft per flat. Neither any part of the building has been used for commercial purposes. Commencement Certificate & Completion Certificate of the 80IB buildings are within the time frame specified under section 80IB. S.80IB project was also scrutinized under section 143(3) in the preceding A.Y 2002-03"
15. This leaves us no scope than to come to a conclusion that reopening was bad in law as there is a finding that there is no joining of adjacent flats violating the area of 1500 sft. Therefore, the entire exercise undertaken by AO so as to deny the claim in the reopened proceedings cannot be upheld as AO examined these issues while granting the deduction under section 80IB(10) originally. There is no material to come to reasonable belief for reopening assessments. Therefore, the reopening done after 4 years without having any basis has to be held bad in law following the propositions laid down by the Hon'ble Supreme Court in the case of CIT vs. Kelvinator India Ltd., 320 ITR 561, Asian Paints Ltd vs. DCIT 308 ITR 195 (Mum). As pointed out there is no mention about the deduction claimed on Building-I in the reasons recorded and therefore, following the principles laid down in the case of Jet Airways vs. CIT 331 ITR 236, the issue of deduction on building I could not have been considered by AO in re-assessment proceedings. Moreover it was also contention that there is no reason mentioned by AO in arriving at the area of the flat at 1597 sft of Building I, as nothing was communicated to assessee in this regard.
Page 14 of 15ITA Nos.143 to 146 (4 appeals) Hermes Developers Mumbai H Bench Be that as it may, since assessee succeeds in getting the deduction under section 80IB(10) in other grounds, the reopening issue becomes academic in nature. However, we place it on record that reopening itself is bad in law having been done after 4 years from the end of respective assessment year and that too after completion of the assessments u/s 143(3). There is no failure on the part of assessee in furnishing the necessary details at the time of original scrutiny proceedings. Therefore, the grounds on this issue are also considered allowed. AO is directed to grant the deduction as claimed by assessee.
16. In the result assessee's appeals are allowed Order pronounced in the open court on 4th May, 2012.
Sd/- Sd/-
(S.S. Godara) (B. Ramakotaiah)
Judicial Member Accountant Member
Mumbai, dated 4th May, 2012.
Vnodan/sps
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, "H" Bench, ITAT, Mumbai
By Order
Assistant Registrar
Income Tax Appellate Tribunal,
Mumbai Benches, MUMBAI
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