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Kamala Brothers, Kuber Chamber, CTS 141-A, Next to COD, Dutt Mandir Road, Malad (E) Mumbai -400097 Vs. ITO 24(2)(1) C-13 Bandra Kurla Complex, Bandra(E) Mumbai
January, 12th 2016
    ,   Û,I,  
      IN THE INCOME TAX APPELLATE TRIBUNAL
           MUMBAI BENCHES "I", MUMBAI
             [, Û è 
         æ ,  è,  ¢

      Before Shri Sanjay Garg, Judicial Member, and
        Shri Ashwani Taneja, Accountant Member

              ITA NO.1139/Mum/2011
              Assessment Year: 2003-04

Kamala Brothers,               ITO 24(2)(1)
Kuber Chamber, CTS      /      C-13 Bandra Kurla
141-A, Next to COD,            Complex, Bandra(E)
                        Vs.
Dutt Mandir Road,              Mumbai
Malad (E)
Mumbai -400097
        (Assessee)                     (Revenue)
P.A. No.AAAFK0111D

              ITA NO.1334/Mum/2011
              Assessment Year: 2003-04

ITO 24(2)(1)                  Kamala Brothers,
C-13 Bandra Kurla     /       Kuber Chamber, CTS 141-
Complex, Bandra(E)            A, Next to COD, Dutt
                      Vs.
Mumbai                        Mandir Road, Malad (E)
                              Mumbai -400097
     (Revenue)                        (Respondent)
                                 P.A. No. AAAFK0111D

               C.O. No.180/Mum/2013
      (Arising out of ITA No.1334/Mum/2011)
             Assessment Year: 2003-04
                            2         Kamala Brothers

Kamala Brothers,                ITO 24(2)(1)
Kuber Chamber, CTS     /        C-13 Bandra Kurla
141-A, Next to COD,             Complex, Bandra(E)
                       Vs.
Dutt Mandir Road,               Mumbai
Malad (E)
Mumbai -400097
        (Revenue)                      (Respondent)
P.A. No. AAAFK0111D

               ITA NO.1140/Mum/2011
               Assessment Year: 2006-07

Kamala Brothers,                ACIT RG 24(2)
Kuber Chamber, CTS     /        C-13 Bandra Kurla
141-A, Next to COD,             Complex, Bandra(E)
                       Vs.
Dutt Mandir Road,               Mumbai
Malad (E)
Mumbai -400097
        (Assessee)                       (Revenue)
P.A. No.AAAFK0111D

               ITA NO.1335/Mum/2011
               Assessment Year: 2006-07

ACIT RG 24(2)                   Kamala Brothers,
R.NO.606 6th Floor,   /         Kuber Chamber, CTS 141-
Bandra Kurla                    A, Next to COD, Dutt
                      Vs.
Complex, Bandra(E)              Mandir Road, Malad (E)
Mumbai-400051                   Mumbai -400097
      (Revenue)                         (Respondent)
                                   P.A. No. AAAFK0111D

               C.O. No.181/Mum/2013
      (Arising out of ITA No.1335/Mum/2011)
             Assessment Year: 2006-07

Kamala Brothers,                ITO 24(2)(1)
Kuber Chamber, CTS     /        C-13 Bandra Kurla
141-A, Next to COD,             Complex, Bandra(E)
                       Vs.
Dutt Mandir Road,               Mumbai
Malad (E)
Mumbai -400097
                            3         Kamala Brothers

        (Revenue)                      (Respondent)
P.A. No. AAAFK0111D

              ITA NO.1160/Mum/2011
              Assessment Year: 2007-08

Kamala Brothers,                ITO 24(2)(1)
Kuber Chamber, CTS     /        C-13 Bandra Kurla
141-A, Next to COD,             Complex, Bandra(E)
                       Vs.
Dutt Mandir Road,               Mumbai
Malad (E)
Mumbai -400097
        (Assessee)                       (Revenue)
P.A. No.AAAFK0111D

              ITA NO.1336/Mum/2011
              Assessment Year: 2007-08

ITO 24(2)(1)                    Kamala Brothers,
C-13 Bandra Kurla     /         Kuber Chamber, CTS 141-
Complex, Bandra(E)              A, Next to COD, Dutt
                      Vs.
Mumbai                          Mandir Road, Malad (E)
                                Mumbai -400097
     (Revenue)                          (Respondent)
                                   P.A. No. AAAFK0111D

               C.O. No.182/Mum/2013
      (Arising out of ITA No.1336/Mum/2011)
             Assessment Year: 2006-07

Kamala Brothers,                ITO 24(2)(1)
Kuber Chamber, CTS     /        C-13 Bandra Kurla
141-A, Next to COD,             Complex, Bandra(E)
                       Vs.
Dutt Mandir Road,               Mumbai
Malad (E)
Mumbai -400097

     Appellant by      Dr. K. Shivram
                       Shri Devang Shah
                       Mrs. Neelam Jadhav (AR)

     Revenue by        Shri B. Yadagiri ( DR)
                                4        Kamala Brothers




      / Date of                            02/12/2015
 Hearing :
     /Date of Order:                       8/01/2016

                           / O R D E R

Per Bench:

      These appeals have been filed by the assessee and
revenue against the order of Ld. Commissioner of Income Tax
(Appeals), Mumbai {(in short `CIT(A)'}, for the assessment years
2003-04,     2006-07     and   2007-08   decided   against   the
assessment order passed by the Assessing Officer (in short
`AO') u/s 143(3) of the Act.


2. During the course of hearing, arguments were made by Shri
Dr. K. Shivram, Shri Devang Shah & Mrs. Neelam Jadhav,
Authorised Representative (AR) on behalf of the Assessee and
by Shri B. Yadagiri, Departmental Representative (DR) on
behalf of the Revenue.




First we take up ITA No.1139/Mum/2011 for A.Y. 2003-
04.


3.Ground No.1: In this ground the assessee has challenged
the action of Ld. CIT(A) in holding that lease of immovable
property was governed by section 2(47) of the Act and in
                                 5       Kamala Brothers

holding that sec.50C would be applicable on the transactions
of lease done by the assessee.


3.1. During the course of hearing Ld. Counsel has stated that
on this issue the assessee is satisfied with the decision of
Hon'ble Ld. CIT(A). Thus, without going into the controversy
that whether a lease transactions would be covered u/s 50C,
this ground is dismissed.


4. Ground No.2: In this ground the assessee has challenged
the action of Ld. CIT(A) in confirming the estimate made by the
AO of lease rent at Rs.13,74,353/- as against the actual
amount received by the assessee.





4.1. The brief facts are that the assessee is partnership firm
which was formed for the purpose of developing and
constructing the building at Malad, Mumbai. During the year
under consideration, the assessee firm had shown lease rent
from the Shradha Gyanpeeth Trust for consideration of
Rs.251/- and 125/- for the portion of land given on lease to
the send entity bearing no. 141B and 141C respectively, in
pursuance to the lease deed dated 18.10.2002 entered with
the said entity for a period of 99 years. The said transaction
was treated as `transfer' covered u/s 2(47) by the AO. The AO
also estimated the lease rent received by the assessee.


4.2. The assessee challenged all the actions of AO before Ld.
CIT(A). It was inter alia held by Ld. CIT(A) that value of
                                6         Kamala Brothers

consideration was to be taken as the value as was adopted by
the Stamp Valuation Officer. However, Ld. CIT(A) also
estimated the lease rent on the basis of fair market value in
substitution of the lease rent actually received by the assessee.


4.3. Being aggrieved, the assessee has filed an appeal before
the Tribunal challenging the order of Ld. CIT(A).


4.4. During the course of hearing, it has been argued by the
Ld. Counsel that once it has been accepted by the Ld. CIT(A)
that stamp value assessed by Stamp Valuation Officer was to
be adopted as full value of consideration on deemed basis, as
per law, as there was no scope of substitution of any other
estimated value under the law. It was also submitted that even
otherwise, impugned land was reserved for the school building
and therefore the lease rentals could not have been presumed
on the basis of market rates. Reliance has been placed on the
judgment of Jodhpur Bench of ITAT in the case of Lake Palace
Hotels & Motels Ltd. 83 TTJ 1031 which was later confirmed
by Hon'ble Rajasthan High Court reported at 321 ITR 165, for
the proposition that there is no provision under the law to tax
notional amount of lease rent on deemed or presumptive
basis.


4.5. On the other hand, Ld. DR has submitted that impugned
transaction is a transaction of sale, which has been disguised
as a lease transaction. It was also submitted that lower
authorities have rightly treated the transaction as transactions
                                7         Kamala Brothers

of sale. It was further submitted that since the lease rentals
were too low, therefore, lease income has been rightly
estimated at an appropriate higher value by the lower
authorities.


4.6. We have gone through the submissions made by both the
sides and orders of the lower authorities. It is noted by us that
Ld. CIT(A) has held, after recording detailed findings in his
order, that amount of consideration was to be determined as
per the value as assessed by Stamp Valuation Officer. The
relevant findings from the order of Ld. CIT(A) are reproduced
below:


     "From the above, it is again clear that out of the
     total stamp duty paid by the appellant to the tune of
     Rs.3,420/- first Rs.1250/- pertains to the value of
     Rs.2,50,000/- and the rest of Rs.2,170/- is 3% of the
     value of Rs.72,233.33 and in this way the total value to
     arrive at the stamp duty of Rs.3,420/- adopted by the
     stamp valuation authority is Rs.3,22,334/- only. It is a
     conscious decision of the parliament while inserting the
     provisions of Sc.50C through Finance Act 2002 w.e.f.
     1/4/2003 that the value adopted or assessed by any
     authority of State Government i.e. Stamp Valuation
     Authority for the purpose of payment of stamp duty in
     respect of such transfer would be deemed to be the full
     value of consideration received or accruing as a result of
     such transfer for the purposes of Section 48 unless
                          8         Kamala Brothers

that valuation is disputed in any appeal or revision
before the higher authorities than the stamp valuation
authority, court or high court. Since the value adopted by
the stamp duty authority to the tune of Rs.3,22,334/-
for arriving at stamp duty © Rs.1250/- plus 3% of
the value excess over Rs 250,000/- of the total value is
not challenged or disputed in any appeal or revision
before any authority under the Bombay Stamp Act 1958
or court or High Court, the value of the impugned land
for the purposes of stamp valuation is freezed with the
amount of Rs.3,22,333/- and becomes final and inter and
it becomes the full value of consideration for the purposes
of sec. 48 by virtue of the provisions of Sec.50C. There is
no material on record to suggest that this valuation has
been revised by any authority u/s 53A of the Bombay
Stamp Act 1958 too. Thus, I do not find any merit in the
part of ground of the appellant that Assessing Officer
has erred in not referring it to District Valuation Officer
(DVO) for valuing the same as the value of the land on
which stamp duty is paid and the rates of stamp duty
in the instant case are not challenged by any person
before any court of law or any appellate authority
under the state legislature. Therefore, I find that
the value of the impugned land adopted by the
stamp valuation authority at Rs.3,22,334/- on
which stamp duty of Rs.3,420/- is paid becomes
final and cannot be tinkered with. Accordingly, the
Assessing Officer is directed to re-compute the capital
                                 9          Kamala Brothers

       gains by taking the full value of consideration of the asset
       under transfer to be Rs.3,22,334/- . However, since
       this deemed value u/s 50 C is not the actual value of
       the impugned land as there is no transfer of absolute
       title of the land to lessee and the ownership is retained
       by the appellant, there is no question of allowing any
       cost or indexed cost of acquisition along with other
       expenses such as cost of improvement or the expenses
       incurred in relation to such transfer against the same
       while computing the capital gains within the meaning
       of Sec. 49 of the IT Act, 1961 except the stamp duty paid
       to the tune of Rs. 3,420/-Accordingly, this ground is partly
       allowed.


4.7. From the above findings, it is clear that full value of
consideration of the impugned asset has been determined at
Rs. 3,22,334/- based upon value as was assessed by the
stamp valuation authority. The action of Ld. CIT(A) has been
accepted by the assessee. Under these circumstances, once
the amount of sales consideration has been determined
keeping in view particular provisions of law which were
applicable in a given situation, then no further question arises
of estimating the value of consideration once again. Thus, in
our view, the action of Ld. CIT(A) in estimating lease rent was
not only self-contradictory but also beyond the provisions of
law.
                               10         Kamala Brothers

4.8. It is further noted by us that impugned plot of land was
under reservation, and thus, the only utility for the assessee
for this plot was that it could have been used for development
and construction of school building. The assessee firm was not
able to construct the school building and develop play ground
upon the said land. The partners of the assessee firm felt that
they did not have requisite experience to run an educational
institute or school and they found it appropriate for a
charitable trust to do this job. Under these circumstances, the
assessee firm gave said land to charitable trust that could run
school effectively. It is further noted that the said lease was
approved by the BMC and Maharashtra Government. The
property records were still in the name of the assessee firm,
indicating that the assessee firm did not transfer full-fledged
rights and interest in the said land to the lessee. Detailed
discussion in this regard has been made by us at Para 7.1. of
this order, which should read here also. Thus, keeping in view
these facts also, we find that estimation of lease rent in
substitution of actual lease rent received by the assessee was
not justified in the given facts and circumstances of the case.


4.9. Thus, taking into account all the facts and circumstances
of the case and the judgments in the case of Lake Palace
Hotels & Motels Ltd. (supra) and also keeping in view the
decision of Ld. CIT(A) in determining the full value of
consideration of the asset at Rs.3,22,334/-, we find that action
of the Ld. AO in estimating the lease rent at Rs.13,74,353/-
                               11        Kamala Brothers

was self contradictory and unjustified, and therefore the same
is reversed. Ground no.2 of assessee's appeal is allowed.


5. Ground No.3: This ground is general and does not require
any specific adjudication.


Cross Objection No.180/Mum/2013 for A.Y. 2003-04


6. In the cross objections, the assessee has challenged the
action of Ld. CIT(A) in assessing the lease rental as income
from house property u/s 22 of the Act.


6.1. Since, we have held in our order while deciding the appeal
of the assessee that AO was not justified in estimating lease
rental of the assessee and action of Ld. AO in this regard has
been reversed by us and action of Ld. CIT(A) in adopting full
value of consideration at Rs.3,22,334/- for the purpose of
computation of capital gains has been upheld, and therefore,
we find there is no grievance left to be addressed, as has been
raised in its cross objection by the assessee. The same is
treated as infructuous and dismissed as such.


ITA No. 1334/Mum/2011 Revenue's appeal for A.Y. 2003-
04:


7. Ground No.1: In this ground, the Revenue has challenged
the action of Ld. CIT(A) in holding the lease transactions
entered into by the assessee with Shradha Gyanpeeth Trust as
                                12        Kamala Brothers

a genuine transaction and not a sham transactions as was
held by the AO.


7.1. In this regard, we have heard both the parties. It is noted
by us that Ld. CIT(A) has recorded detailed findings for holding
that impugned transaction was a transactions of lease only.
Taking into account facts on record, it has been noted by the
Ld. CIT(A) that lease deed is properly registered and stamp
duty was paid as per Bombay Stamp Act, 1958. The lease deed
was approved by BMC and State Government Authorities. The
title of the property continued to remain in the name of the
assessee. Nothing has been brought before us to negate the
detailed findings of the Ld. CIT(A). The transactions cannot be
held to be sham merely on the basis of some doubts and
apprehensions. Duly registered documents cannot be brushed
aside or rewritten by the revenue authorities that too without
bringing any contrary material on record. It is further noted
that as per terms of the lease deed, if any additional TDS/FSI
is allowed by the Government on the said land, then, the same
shall be within the exclusive right and ownership of the lesser
assessee. All these facts indicate that the absolute title has not
yet been transferred by the assessee to the lessee. Thus,
taking into account all the facts of the case, material placed
before us for our consideration and detailed and well reasoned
findings of Ld. CIT(A), we find that no interference is called for
in the order of Ld. CIT(A) and same is upheld on this issue.
Ground no.1 of Revenue's appeal is dismissed.
                                 13       Kamala Brothers

8. Ground No.2: In this ground, the Revenue has challenged
the action of Ld. CIT(A) in directing the AO to adopt the market
value of the property at Rs.3,22,334/- on the basis of stamp
value of the lease deed as was assessed by the Stamp
Valuation Authority as per Bombay Stamp Duty Act, 1958.


8.1. During the course of hearing, it has been argued by the
Ld. DR that value for transfer of immovable property if the
same is transferred by way of sale is different from the value if
same is transferred by way of lease. He submitted that as per
section 50C, value of sales consideration should be adopted as
if the transfer is by way of sale.


8.2. We have gone through these submissions made before us
and provisions of law as contained in section 50C in this
regard. We do not find force in the arguments made by the Ld.
DR on this issue. We have already held that the impugned
transaction is a transaction of lease, executed through a Lease
Deed duly registered with the concerned authorities after
payment of stamp duty as determined by the Stamp Valuation
Authority according to Bombay Stamp Act, 1958. In the earlier
part of this order, it has been mentioned that the assessee has
accepted the action of the AO in holding that impugned lease
transaction would be covered under the provisions of section
50C. Thus, we have refrained ourselves from going into the
controversy that whether a lease transaction would be covered
under section 50C or not. In the aforesaid facts, the limited
question to be decided by us here is that whether full value of
                               14         Kamala Brothers




consideration within the meaning of section 50C shall be the
value adopted by the Stamp Authorities for the lease deed as
registered or the value that would have been adopted by the
stamp authorities if the same would have been registered as
sale deed, as if it was a case of `transfer' by way of `sale'. As
per the AO, the value should be adopted as if it was a case of
transfer by way of `sale', whereas as per the Ld. CIT(A), the
value would be that as has been actually adopted for the lease
deed actually registered. In our considered view, the provisions
of section 50C are clear. It lays down that the value adopted or
assessed by the Stamp Valuation Authority shall be deemed to
be full value of consideration in a given case. Section 50C
creates a deeming fiction. Law is well settled that scope of
deeming fiction cannot be extended beyond what has been
mentioned clearly in the law. Deeming provisions have to be
construed strictly and applied literally. It is further noted by
us that the word `assessable' has been added in section 50C
by Finance Act 2009, w.e.f. 01.10.2009. This word has been
added to take care of those situations, where no deed
whatsoever, is registered by the parties, to evade the taxes.
With a view to take care of such kind of situations, it was
prescribed by the legislature that if no deed is registered by
the parties, then in such a case if the deed would have been
registered then whatever value would have been adopted, the
same shall be adopted u/s 50C. But in the case before us,
Lease Deed has been registered on which Stamp Valuation
Officer has assessed the value for the purpose of ascertaining
amount of stamp duty payable and therefore the same value
                               15        Kamala Brothers

should be adopted in the case before us. The clear mandate of
the law is that the value adopted or assessed by the Stamp
Valuation Authority shall be adopted for determining full value
of consideration. Even, otherwise the word `assessable' has
been added w.e.f. 01.10.2009, and the case before us pertains
to A.Y. 2003-04 i.e. prior to 01.10.2009 and therefore only pre-
amended law shall be applied in the case before us.


8.3. Thus, keeping in view the facts of the case and the clear
position of law before us, we find that action of Ld. CIT(A) in
adopting the value as adopted by the Stamp Valuation
Authority under the Bombay Stamp Act 1958, for the purpose
of determining full value of consideration is justified, and the
same is upheld. Ground no. 2 of Revenue's appeal is
dismissed.


9. Ground No.3: This ground is general does not require any
specific adjudication, and therefore dismissed.


ITA No. 1140/Mum/2011 Assessee's Appeal for A.Y. 2006-
07:


10. The Grounds raised and issues arising in this appeal are
identical to A.Y. 2003-04. No distinction has been made out by
either party before us. Thus, AO is directed to follow our order
for A.Y. 2003-04 here also.
                                 16          Kamala Brothers

11. The assessee has raised additional ground which is
reproduced as under:
     "On the facts and circumstances of the case and in law,
     the learned CIT(A) has erred in confirming the action
     of   AO   in    assessing    the    sales     proceeds         from
     residential housing project (alleged to be received
     as donation) in AY 2006-07, ignoring the fact the
     Appellant was following project completion method, of
     accounting in respect of the said residential housing
     project, which was only completed in December 2006,
     and hence the income arising from the project
     accrued only in A.Y. 2007 - 2008 i.e. subsequent year and
     not in the impugned year. Hence, the addition of
     Rs,62,39,236/- may be deleted.
     Without        prejudice    to    above,     assessee          has
     undertaken housing project which is the eligible for
     deduction u/s 80-IB(10) and hence, if the amoun t of
     Rs.62,39,236/-        is   held    to   be   tax able     in    the
     impugned year i.e. A.Y. 2006 - 2007, then the
     consequential deduction u/s 80-IB(10) may be granted."


11.1. During the course of hearing, it was argued by the Ld.
Counsel that the aforesaid ground is purely legal and can be
decided on the basis of facts already on record. No serious
objections were raised by the Ld. DR for admission of the legal
ground.
                                  17       Kamala Brothers

11.2. It is noted by us that the ground raised by the assessee
is purely legal and can be decided on the basis of facts on
records of the lower authorities. Therefore, keeping in view the
decision of Hon'ble Supreme Court in the case of NTPC 229
ITR 383, this ground is admitted. It is noted by us that there is
no adjudication or application of mind by the lower authorities
on this issue. Therefore, in the interest of justice and fair play,
we send this issue back to the file of the AO for deciding the
same in accordance with law and facts. The AO shall give
adequate opportunity of hearing to the assessee before
deciding this issue. The assessee shall also extend requisite
cooperation to the AO by furnishing required details and
documents, as may be required by the AO and as may be
considered appropriate by it, as per law and facts. Thus, this
ground is partly allowed for statistical purposes.


ITA   No.1335/Mum/2011            Revenue's    appeal   and      C.O.
No.181/Mum/2013 for AY 2006-07:


12. The Grounds raised and issues arising in this appeal and
CO are identical to A.Y. 2003-04. No distinction has been
made out by either party before us. Thus, AO is directed to
follow our order for A.Y. 2003-04 here also.


Assessee's   appeal    in   ITA    No.1160/Mum/2011          &    CO
No.182/Mum/2013 for A.Y. 2007-08:
                                  18           Kamala Brothers

13. It is noted that grounds raised in assessee's appeal and
Cross Objection filed by it are identical to the grounds raised
for A.Y. 2003-04. The AO is directed to follow our order for A.Y.
2003-04 here also.


14. The assessee has raised additional ground as under:


      "Without prejudice to above, assessee has undertaken
      housing project which is the eligible for deduction u/s
      80IB(10) and hence, if the amount of Rs.62,39,236/- is
      held to be taxable in the impugned year i.e. A.Y. 2007-08
      (as   per   the   project   completion    method),     then   the
      consequential deduction u/s 80-IB(10) may be granted."


15. The additional ground raised is identical to the ground
raised in A.Y. 2006-07, therefore, following our order for A.Y.
2006-07, this ground is admitted and sent back to the AO for
afresh adjudication with the same directions as are given
above in our order. Additional ground is partly allowed for
statistical purposes.


ITA No.1336/Mum/2011 Revenue's Appeal for A.Y. 2007-
08:


16. Ground No.1: In this ground, the Revenue has challenged
the action of Ld. AO in allowing the claim of deduction u/s 80-
IB(10).
                              19        Kamala Brothers

16.1. During the course of hearing, it has been submitted by
the Ld. DR that assessee did not fully comply with the
requirements of section 80-IB(10) and therefore, it was not
eligible for claiming the deduction and Ld. CIT(A) has wrongly
allowed the same. It has been submitted that the project of the
assessee was not having sufficient minimum areas that was
required for the eligibility for claiming deduction u/s. 80-
IB(10). He has relied before us order of the AO, wherein
reasoning has been given by the Ld. AO for denying the benefit
of deduction u/s 80-IB(10) to the assessee.


16.2. On the other hand, Ld. Counsel of the assessee has
drawn our attention to various documents filed in the paper
book to demonstrate that facts were not properly appreciated
by the AO and benefit of deduction was denied under some
confusion and wrong understanding of facts. He has relied
upon the order of Ld. CIT(A) and detailed findings contained
therein and requested for upholding the order of Ld. CIT(A) on
this issue.


16.3. We have heard both the sides and gone through the
orders of lower authorities. It is noted by us that Ld. CIT(A)
has gone through all the facts and circumstances of the case
and has examined all the documentary evidences, and
thereafter only he has recorded detailed findings with proper
reasoning for allowing the claim of the assessee and reversing
the action of Ld. AO. The CIT(A) has met each and every
adverse observation of the AO with proper reasoning. It was
                              20        Kamala Brothers

observed by the Ld. AO in the assessment order that the
assessee did not fulfill first condition as prescribed u/s 80-
IB(10) (a) of the Act, as it had commenced development and
construction of the project prior to 1st October 1998, as the
land was purchased on 2nd May 1996 and substantial
development expenses were incurred during the F.Y. 1996-97.
The Ld. CIT(A) analysed these observations and found that
requisite plans were approved by MCGB on 15th March 2002.
It is well known fact that no project can be started without
requisite approval. Under these circumstances, it has been
held by the Ld. CIT(A) that it cannot be inferred that housing
project was commenced prior to 1st October 1998. During the
course of hearing before us, Ld. Counsel has drawn our
attention to the commencement certificate exhibited in the
paper book showing that the same was granted by the local
authority on 15.03.2002 and a separate notice was given to
BMC thereafter only. It has been further shown to us that the
land was earlier an agricultural land, which was got converted
to non-agricultural land, vide permission dated 15th September
2001. Thus, development and constructions work was not
permissible unless such conversion was done. It has been
further shown to us that development/construction expenses
were incurred from A.Y. 2002-03 on words. It is further shown
that payment to BMC or property tax or architect fee etc. have
been incurred only after the commencement, development and
construction of the project. We find that findings recorded by
the Ld. CIT(A) are in accordance with law and facts on this
issue. Our view finds support from the decisions of the
                               21         Kamala Brothers

Tribunal in the case of Smt. Manju Gupta vs. ACIT 134 ITD
503 (Mum) and Nirmiti Constructions v. DCIT 4 SOT 383
(Pune).


16.4. Other objection of the Ld. AO was that housing project
was constructed on plot of land admeasuring 3,200 sq.
meters, and thus, not meeting the stipulated minimum areas
of one acre as prescribed u/s 80-IB(10)(b) of the Act. It is
noted by us that Ld. CIT(A) has met this objection of the AO on
the basis of findings recorded by him in his order. During the
course of hearing before us it has been submitted that the
requirement of the law is that project should be on the size of
plot of land of minimum one acre, and here the area `project'
means project as proved by the local authority. It was shown
to us on the basis of the document enclosed in the paper book
that entire plot admeasuring 8612.40 sq. mts. was approved
by the local authority as `housing project', and commencement
certificate was issued in respect of the entire plot. It was
further shown to us that plot was sub-divided by BMC and
some portion out of the total land was segregated for the
purpose   of   common    amenities   in   terms   of   rules   and
regulations of a local body. It was submitted that when a
portion has been earmarked as per the mandate of the law for
the purpose of common amenities then that portion of land
should also to be considered as part of the project. It has been
further submitted that limits on the extent of commercial area
of housing project was inserted w.e.f. 01.04.2005 and does not
apply to projects approved before that date, and since project
                               22        Kamala Brothers

of the assessee was approved prior to 01.04.2005, therefore,
these restrictions were not applicable on the case of the
assessee. It is noted that reliance in this regard has been
rightly placed on the judgment of Hon'ble Bombay High
Court in the case of CIT vs. Happy Home Enterprise 372
ITR 1 (BOM) which has been affirmed by the Supreme Court
in a subsequent judgment in the case of CIT vs             Sarkar
Builders 375 ITR 392. These judgments apply on the facts of
the case before us.


16.5. It is further noted by us that Ld. CIT(A) has observed
that it was wrongly presumed by the AO that construction and
development activity was carried out on a plot which was less
than one acre. It has also been held by him that housing
project was consolidated project that was approved through
single approval for the whole plot consisting of portion such as
141A, 141B, 141C & 141D. We find that findings given by the
Ld. CIT(A), are legally correct. Our view finds support from the
decision of the Tribunal in the case of Sigma Construction vs.
ITO 59 SOT 83( Hyd) wherein it has been held that where a
portion of plot area was earmarked for laying Roads, same
should be considered as part of housing project in order to
determine the prescribed limit u/s 80IB. Similar view has been
taken in the case of Bunty Builders vs ITO 127 ITD 286 (Pune)
and Haware Engineers & Builders P. Ltd. v. ACIT 46 SOT 27
(Mum)(URO). Thus, keeping in view the facts, the documentary
evidences brought before us, un-assailed factual findings of
Ld. CIT(A) and aforesaid judgments placed before us, we find
                                 23         Kamala Brothers

  that no interference is called for in the order of Ld. CIT(A) and
  therefore same is upheld, and therefore ground no. 1 of
  Revenue's appeals is dismissed.


  17. Ground No.2: This ground deals with action of Ld. CIT(A)
  in directing to take ALV of Rs.13,74,353/-. It has already been
  held by us while adjudicating the appeal of the assessee that it
  was not permissible under the law to make estimate of lease
  rent in the given fact of this case and the addition made by the
  AO in this regards was deleted in full, and therefore, this issue
  raised by the Revenue becomes academic in nature, and
  therefore, ground no.2 of Revenue's appeal is dismissed.


  18. Ground No3: This ground is general and does not require
  any specific adjudication, therefore dismissed.


  19. In the result, appeal filed by the Revenue is dismissed,
  and assessee's appeal as well as and CO filed by the assessee
  are partly allowed.


     Order pronounced in the open court on 8th January, 2016.


            Sd/-                                  Sd/-
        (Sanjay Garg )                         (Ashwani Taneja)
Û è / JUDICIAL MEMBER              è / ACCOUNTANT MEMBER

    Mumbai;  Dated : 8/01/2016
  
  ctàxÄ? P.S/...
                                 24     Kamala Brothers

    /Copy of the Order forwarded to :
1.    / The Assessee
2.   × / The Respondent.
3.     () / The CIT, Mumbai.
      È
4.      / CIT(A)-
      È                    , Mumbai
5.    ,   ,             / DR,
     ITAT, Mumbai
6.   [  / Guard file.
                                              / BY ORDER,
           ×  //True Copy//
                              /  (Dy./Asstt. Registrar)
                               ,   / ITAT, Mumbai

 
 
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