Income Tax Appellate Tribunal - Mumbai
Dy. Commissioner Of Income Tax, Mumbai vs Bombay Slum Redevelopment Corporation ... on 23 December, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "B" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER)
ITA No. 6126/MUM/2025
Assessment Year: 2015-16
Dy. CIT, Bombay Slum Redevelopment
Room No. 420, Kautilya Corporation Pvt. Ltd.,
Bhawan, G Block, Bandra Vs. 707, Trade Centre, Bandra
Kurla Complex, Kurla Complex,
Mumbai-400051. Mumbai-400051.
PAN NO. AABCB 0248 H
Appellant Respondent
Assessee by : Mr. Mahaveer Jain a/w
Mr. Bhavesh Bhatia
Revenue by : Mr. Solgy Jose T. Kottaram, CIT-DR
Date of He aring : 04/12/2025
Date of pronouncement : 23/12/2025
ORDER
PER OM PRAKASH KANT, AM
This appeal by the Revenue is directed against order dated 05.07.2025 passed by the Ld. Commissioner of Income-tax (Appeals) - 52, Mumbai [in short 'the Ld. CIT(A)'], raising the sole ground is reproduced as under:
Whether on the facts and in the circumstances of the case, the Ld. CIT A is justified in not sustaining the disallowance made u s 801B 10 d of the Act amounting to Rs. 17,32,03,590 despite the fact that Bombay Slum Redevelopment 2 Corporation Pvt. Ltd.ITA No. 6126/MUM/2025
the Department has filed a Special Leave Petition SLP before the Hon ble Supreme Court which is pending for adjudication and thus the issue is sub judice
2. Briefly stated, the assessee, a limited company engaged in the real estate business, was originally assessed under section 143(3) of the Income-tax tax Act, 1961 ("the Act") on 30.12.2016, determining total income at ₹8,03,24,790/ 8,03,24,790/-.. Thereafter, the assessment assessm was reopened under section 147 of the Act. Owing to alleged non-
non compliance during reassessment proceedings, the Assessing Officer, vide order dated 12.02.2022 passed under section 144 read with section 147, disallowed the deduction claimed by the asses assessee under section 80IB amounting to ₹17,32,03,590/-.
3. On appeal, the Ld. CIT(A) allowed the assessee's claim. The reopening was based solely on the premise that the allowability of deduction under section 80IB(10) in respect of sale of FSI/TDR was pending consideration before the Hon'ble Supreme Court in the case of M/s Sonasha Enterprises (supra). The Ld. CIT(A), after an elaborate examination of the judicial record, noted that:
(i) The issue had already been decided in favour of the assessee by the Coordinate Bench of the Tribunal in Sonasha Enterprises;
(ii) The said decision stood affirmed by the Hon'ble Bombay High Court, which held that no substantial question of law arose;
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(iii) The deduction under section 80IB(10) could not be denied merely because an SLP was stated to be pending before the Hon'ble Supreme Court.
3.1 The Ld. CIT(A) further relied upon consistent decisions of the (supra), wherein Tribunal, including Aarti Projects and Constructions (supra) deduction under section 80IB(10) on profits arising from sale of FSI/TDR received in lieu of development of slum rehabil rehabilitation projects had been upheld. On this reasoning, the disallowance was deleted.
3.2 The relevant finding of ld CIT(A) is reproduced as under:
6. I have considered the facts of the case and the details submitted "6.
by the appellant. In this case, assessment assessment was completed under section 143(3) on 30.12.2016 with an assessed income of Rs. 8,03,24,790/ . Subsequently, the case was reopened under section 8,03,24,790/-.
147 and notice u/s 148 was issued on 30.06.2021 mentioning that the appellant had claimed a deduction of Rs. 17,32,03,590/-
17,32,03,590/ under section 801B on the income from the sale of FSI (Floor Space Index). The case was re opened by the Assessing Officer on the basis of the re-opened fact that the allowability of deduction u/s 801B on this issue in the Enterprises is pending before Hon'ble Supreme case of M/s Sonasha Enterprises Court in SLP vide D.N 11467/2015, however, the matter has not reached finality. Thus, the deduction u/s 801B claimed by the appellant required to be disallowed. Accordingly, the assessment was completed and Rs. 17,32,03,590/-
17,32,0 was disallowed by the Assessing Officer. Aggrieved by the order of Assessing Officer, the appellant filed appeat before the undersigned with various grounds which are dealt as under:
7. With respect to Ground No.4, the appellant has raised appeal against gainst the disallowance of deduction of Rs. 17,32,03,590/-
17,32,03,590/ u/s 80IB(10) of the Act. The AO has made disallowance u/s u/s 80IB(10) of the Act relying on the fact that identical issue is involved in case of M/s Sonasha Enterprises and the same is pending bef before Hon'ble Supreme Court in SLP vide D.N 11467/2015. In this regard, it is Bombay Slum Redevelopment 4 Corporation Pvt. Ltd.
ITA No. 6126/MUM/2025worthwhile to mention here that the Hon'ble ITAT in the case of M/s Sonasha Enterprises (relied by the AO) vide ITA No.4911 & 4912/Mum/2010 for A.Y 2007-08 2007 & 2008-09 31.10.20 09 dated 31.10.2011, the revenue has filed appeal before Honb'le ITAT. Further, the Tribunal vide its pronouncement has rejected the contention of the revenue. The relevant portion of the decision of Hon'ble ITAT is furnished as under:
These appeals by the revenue are directed directed against separate orders both dated 22.3.2010 of the CIT(A) for the AYs 2007 2007--08 and 2008-09 respectively.
2 The revenue has raised the following common grounds in these appeals:
1. On the facts and circumstances of the case and in law, the Id.
rred in allowing the claim of deduction u/s. 801B(10) of the I.T. CIT(A) erred Act. 1961 made by the assessee even though the Assessing Officer rejected the claim of such deduction on the grounds:
i) that the build up area of the 68 shops included in the housing projec project of tenements exceeded 5% of the aggregate built built--up area of the housing project. thereby contravening the provisions of Sec.
801B(10)(d) of the Act.
ii) that the assessee was a contractor and not a builder and iii) that the assessee has sold TDR and the same same being movable asset, the provisions of Sec 801B (10) of the Act did not apply being applicable lo the housing projects only.
2) On the facts and circumstances of the case and in law, the id CIT(A) erred in appreciating that the assessee has not justified justifi and substantiated the payment to the above persons with any documentary evidence.
3. The assessee is a firm engaging in the business of builder and developer. The assessee has developed the housing project under SRA scheme as sectioned by MMRDA. The ass assessee essee claimed deduction u/s 80IB(10) for the AYs under consideration. The Assessing Officer denied the claim of the assessee mainly on two grounds viz that the assessee is having commercial establishment in the project which is more than 5% as provided under under clause (d) of sec. 80IB(10) and secondly, the assessee is a contractor and not a builder who has sold Transfer of Development Right (TDR) which is a moveable asset and the provisions of the section does not apply. 3.1 On appeal, the CIT(A) issued a nd order and after considering the remand report of the remand Assessing Officer, allowed the claim of the assessee vide the impugned order.
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4. Before us, the Id DR has submitted that the assessee has sold TDR under the SRA scheme and therefore, as per the first proviso to sec. 80IB(10) the scheme of SRA shall be notified by the Government of India. He has submitted that the assessee has not furnished any record to show that the said scheme has been notified by the Govt of India. He has further submitted that the assessee received TDR against the development of the project under consideration from MMRDA and the income of the assessee is not directly from the development of the project but by sale of TDR, which is not entitled for deduction u/s 80IB(10) of the Act. He has further submitted that the assessee has constructed 68 shops in the housing project which exceeds the prescribed limit of 5%. Even the commercial area in the project exceeds 10% of the total constructed aree of the project; therefore, the assessee iis s not entitled to the deduction. He has further contended that the housing project was sanctioned after 31.3.2005; therefore, the amended provisions of sec. 80IB(10) is applicable. He has relied upon the order of the Assessing Officer.
hand, the Id AR of the assessee has submitted that 4.1. On the other hand, the housing project was approved on 11.5.2004 which is prior to 31.3.2005 and therefore, the same is governed by the un un-amended provisions of sec. 80IB(10) and clause (d) of sec. 801 B is not applicable, as the project was approved prior to 1.4.2005. He has further submitted that the Hon'ble High Court, in the case of Income tax v. Brahma Associates reported in 333 ITR Commissioner of Income-tax 289 has upheld the order of the Tribunal on the point of prospective amendment ent by which the clause (d) of sec. 80IB(10) is inserted and not retrospective. He has further submitted that the assessee has not sold out the commercial establishments in the project and all the shops were built as per the instructions and requirement of MMRDA for which the assessee did not receive any consideration. The assessee has received TDR only in respect of the residential part of the project. Therefore, the consideration received by the assessee in the form of TDR, which was sold by the assessee and accordingly, the assessee is entitled for deduction u/s 8018(1).
5. We have considered the rival contention and perused the relevant material on record. The first objection raised by the Id DR that the SRA scheme was not notified by CBDT, it has to be seen that this objection has not been raised by the Assessing Officer either while passing the assessment order or during the remand report. Further, we note that the assessee never sought any relaxation in the conditions under clause (a) or (b) of sec. 80IB(10) 80IB(10) by virtue of first proviso therefore, when the assessee has not claimed any benefit under the proviso, the question of the scheme of SRA, as notified or not, does not arise.
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Accordingly, we do not find any merit in the objection raised by the Id DR.
5.1 As regards the objection regarding the commercial mmercial e establishment is concerned, as per remand report, the Assessing Officer has accepted the fact that the project was approved vide agreement dt 11.5.2004; therefore, the preamendment of provision provis of sec. 80IB(10) are applicable. Accordingly, in view of the decision of the jurisdictional High in the case of Brahma Associates (supra), there is no bar of commercial establishment in the housing project for availing deduction u/s 80IB(10) prior to the the insertion of clause (d) w.r.f 1.4.2005. The Hon'ble High Court in para 33 has observed as under:
"In the absence of any provisions under the Income-tax Income Act, the Tribunal was not justified in holding that up to March 31, 2005 deduction under section 80 80- IB(10) would be allowable to projects approved by the local authority having residential building with commercial user up to 10 per cent. of the total builtup area of the plot."
Therefore, when the project was approved prior to 1.4.2005 then, there ar for allowing deduction u/s 801B once the residential project is no bar has been approved by the local authorities.
5.2 As regard the last contention of the revenue is that the assessee is not a builder and the income received by sale of TDR and not by sale sing project is concerned, we find that there is no dispute about of housing the fact that the assessee received the TDR as a consideration against the development of the project in question. We further note that the TDR was received only for residential portion of tthe he housing project and not for the commercial establishment. Thus, when the TDR received by the assessee was immediately sold and the sale consideration was shown as receipt from the housing project, then, against the sale of TDR there is no other element in the said receipt against other than the income from housing project.
5.3 It is not the case of the revenue that the assessee sold the TDR after appreciation of the value and therefore, the entire amount cannot be treated as sale consideration of the housing pro ject. The assessee project.
has given the details of the receipts of TDR and sale of the TDR as in the same year and immediately after receiving from the MMDRA. Therefore, there is no element of any appreciation in the value in the sale consideration. In view of th thee above facts and circumstances of the case, we do not find any reason to interfere with the order of the Id CIT(A) for both the AYs. 6 In the result, the appeals filed by the revenue are dismissed.
7.1 Further, aggrieved by the order of Hon'ble ITAT, the revenue has preferred appeal before Hon'ble Bombay High Court on the same issue Bombay Slum Redevelopment 7 Corporation Pvt. Ltd.
ITA No. 6126/MUM/2025which was contested before Hon'ble ITAT. However, the Hon'ble Bombay High Court vide ITA No. 1391 of 2012 dated 31.10.2014 has dismissed the appeal of the revenue on the issue of disallowance u/s 80IB(10)(d) and hence allowed the appeal of the assessee. The relevant portion of the decision of Hon'ble Bombay High Court is incorporated as under:
In this case, the only argument of the learned Advocate appearing in support of this Appeal is that the Tribunal should not have allowed the Respondent-Assessee's Assessee's claim.
2. The Tribunal by the impugned order dated 8 June 2012 has held that the objection raised by the Assessing Officer that the Respondent will not be entitled to deduction under under Section 801B(10)(d) cannot be sustained. Upon scrutiny of the entire materials including the agreement, it is apparent that the Respondent Assessee cannot be Respondent-Assessee termed as a mere contractor. He is a developer and claiming rights in property, that is how he proceeded to execute the land/immoveable property, necessary agreements and appoint agents to carry out the construction.
3. In these circumstances, the Tribunal's order, confirming that of the Commissioner, does not raise any substantial question of law. It was not ot for the Assessing Officer to have sat in judgment over the satisfaction of the statutory Authorities. The documents in that behalf together with recitals were conclusive of the rights of the Assessee. 4.
In these circumstances, the Appeal has no merits. It is, accordingly, disposed of.
7.2 Without prejudice to the above, reliance is placed on the decision of Hon'ble ITAT, Mumbai in the case of Aarti Projects and Constructions vide ITA No. 4190/Mum/2016 wherein, the Tribunal has allowed the appeal in favo ur of the assessee on the issue of deduction favour u/s.80IB(10) of the Act.
29. From the record we also found that group concern of assessee M/s. Ackruti City Ltd. (formerly Akruti Nirman Ltd.) has undertaken various slum rehabilitation projects in various suburbs subur in Mumbai.
Slum Rehabilitation Authority gives FSI in lieu of construction of slum rehabilitation building as consideration in kind. The consideration of said FSI is offered to tax and the profit derived therefrom was claimed as deduction u/s. 801B (10) of the Act. Ackruti has claimed such deduction in various years. The AO has accepted eligibility of revenue from sale of FSI /TDR. AO, however, denied deduction u/s.801B(10) of the Act for want of compliance of other pre conditions of Section pre-conditions 801B(10). These ese matters went up to Hon'ble Tribunal and in all these Bombay Slum Redevelopment 8 Corporation Pvt. Ltd.
ITA No. 6126/MUM/2025years, Hon'ble ITAT has upheld the claim of said deduction u/s. 80IB(10) of the Act. Subsequently the Dept. filed appeal before Hon'ble Bombay High Court against the orders of Tribunal raising the ququestion that profits derived by assessee from housing project are eligible for deduction u/s.801B(10) of I.T. Act. Hon'ble Bombay High Court has dismissed this appeal of the Dept. vide its order dated 09/01/2013 20/03/2012 in case of Vandana relying on its earlier decision dated 20/03/2012 Properties. Thereafter, the Dept. preferred SLP before Hon'ble Supreme Court. These matters were tagged along with other matters. The Hon'ble Supreme Court has dismissed the SLP vide its order dated 30/04/2015. Thus the decision of Hon'ble Hon'ble Bombay High Court has attained finality. 30. In view of the above discussion, we do not find any merit for decline of claim of deduction u/s.801B(10). Accordingly, AO is directed to allow the same.
8. In view of the above, it is noted that the Hon'b le ITAT as well as Hon'ble Hon'ble Bombay High Court has allowed the disallowance u/s 80IB(10)(d) of the Act in the case of M/s Sonasha Enterprises on the basis of which the disallowance u/s.80IB(10) of the Act was made in the case of the appellant. It is fine that that revenue has preferred appeal SLP before Hon'ble Supreme Court and the same is pending for adjudication. However, it is worthwhile to mention here that the Hon'ble ITAT later the Hon'ble Bombay High Court has affirmed the decision of Ld.CIT(A) in the case of M/s Sonasha Enterprises and rejected the contention of the revenue by discussion the issue on merits. Hence, following the decision of Hon'ble Bombay High Court in the case of M/s Sonasha Enterprises and decision of Hon'ble ITAT in the case of Aarti Pr ojects and Constructions (Supra), I am of the Projects considered view that the deduction u/s 80IB (10) of the Act is rightly claimed by the appellant in its ROI for A.Y 2013-14.
2013 Hence, the Assessing Officer is directed to delete the disallowance made u/s 80 IB of the vide order u/s 144 r.w.s 147 of the Act. Hence, the Ground No.4 raised by the appellant is hereby allowed.
9. Since, the undersigned has allowed the appeal of the appellant on quantum, the other grounds raised by the appellant become academic and hence need no separate adjudication."
4. Before us, the Ld. counsel for the assessee submitted that the assessee had challenged the very initiation of reassessment proceedings by filing a writ petition before the Hon'ble Bombay High Court. It was submitted that the Hon'ble High Court, vide order in Bombay Slum Redevelopment 9 Corporation Pvt. Ltd.
ITA No. 6126/MUM/2025Writ Petition No. 2611 of 2024, has quashed the notice issued under section 148 as well as all consequential proceedings, including the reassessment order. Consequently, it was contended that the present appeal filed by the Revenue has become purely academic.
5. We have heard the rival submissions and perused the material on record. It is an admitted position that the Hon'ble Bombay High Court, while following its earlier judgment in Hexaware AC , has quashed the reassessment notice Technologies Limited v. ACIT, issued to the assessee. The operative portion of the High Court's order reads as under:
1. We are informed by counsel for Petitioner/s that these "1.
Petitions will be covered by the judgment in Hexaware Limited v. Assistant Commissioner of Income Tax Technologies Limited Circle 15(1)(2) Mumbai and Ors.' Counsel for Respondent/s concur.
2. Therefore, the notices and orders impugned in these petitions re assessment order is are quashed and set aside. In case any re-assessment passed, the same also will stand quashed. So also, consequential demand notice or penalty notice will also stand quashed and set aside."
5.1 The legal consequence of the above order is unambiguous. Once the very foundation of the reassessment proceedings stands invalidated d by the jurisdictional High Court, the reassessment order passed pursuant thereto ceases to exist in the eye of law. Any appeal arising out of such reassessment order does not survive for adjudication on merits.
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5.2 In this view of the matter, the grounds raised by the Revenue,
which seek to challenge the deletion of disallowance made in the reassessment order, are rendered merely academic. It is well settled that appellate authorities do not decide academic or infructuous issues. In view of the binding order of the Hon'ble Bombay High order Court quashing the reassessment proceedings, we hold that no adjudication on merits is called for in the present appeal.
6. In the result, the appeal of the Revenue is dismissed.
Order pronounced ounced in the open Court on 23/12/2025.
/12/2025.
Sd/- Sd/-
Sd/
(SANDEEP
SANDEEP SINGH KARHAIL
KARHAIL) OM PRAKASH KANT)
(OM KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 23/12/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai