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September, 17th 2013

%                                                    DECIDED ON: 19.07.2013

+                     ITA NOS.210, 214, 215 & 250/2012
       CIT                                                         ..... Appellant
                               Through: Mr. Sanjeev Rajpal, Sr. Standing


                   Through: Ms. Kavita Jha with Mr. Vaibhav
                   Kulkarni, Advocates.


       The following questions of law arise in these appeals for
       consideration: -
       In ITA 210, 214 & 215/2012
           Did the ITAT fall into error in holding that the respondent was
       entitled to the deduction under Section 80 (IB) of the Income Tax
       Act, 1961; and
       In ITA 250/2012
           Was the assessee liable to pay income tax on the annual letting
       value of the unsold flats owned by it under the head income from the

ITA-210, 214, 215 & 250/2012                                                 Page 1
       house property?
       ITA NOS.210, 214 & 215/2012
       1.      The brief facts are that the appellant commenced development
       and construction development and construction of housing projects,
       somewhere in NOIDA, and claimed that it had started development
       and constructions of housing projects in NOIDA after 13.09.1998.
       The Assessing Officer was of the opinion that the materials on record
       did not justify granting the appellant the benefit of Section 80IB in
       view of the language of Section 80 ID (10). The Assessing Officer,
       therefore, made a disallowance in respect of years 1999-2000,
       2002-03 and 2003-04. The assessee carried the matter in appeal
       successfully. In the meanwhile, in respect of the intervened
       assessment years 2000-01, 2001-02, the Assessing Officer appears to
       have accepted the assessee\' contentions.       These led to an action
       under Section 203 by the Commissioner who invoked its revisional
       powers.      Eventually, that culminated in a common order dated
       12.06.2009 of the ITAT itself.       The relevant observations of the
       ITAT upholding the assessee\'s contentions which have been noticed
       in the impugned orders in these cases are extracted below: -
               \"17. Respectfully following the aforesaid three decisions, we
               hold that the deduction to the assessee can be allowed with
               respect to the units which did not exceed the statutory limit of
               1000 sq. Ft. And the assessee would not be entitled to
               reductions of the built up area in 5 houses in East End Loni and
               6 houses in Avantika Aakriti, as referred to in paragraph 10 of
               the order aforesaid. We order accordingly.

                      XXX               XXX                XXX

ITA-210, 214, 215 & 250/2012                                              Page 2
               21. In view of the aforesaid two decisions, we are of the
               opinion that deduction under section 80-IB (10) has been
               rightly allowed on housing projects because the building plants
               of the residential units were approved after 1.10.98 only and
               the construction has to be deemed to have been commenced on
               or after the date of approval itself.

               22. It should not be lost sight that these are the revision
               proceedings and in such proceedings the allowances of
               deduction under section 80IB (10) to the assessee could not be
               revised as the issue in any case, was debatable and one of the
               possible views was taken by the assessing officer while granting
               deduction to the assessee. It was also allowed by the CIT
               (Appeals) in the succeeding assessment years viz. 2002-03 and
               2003-04. The revision of impugned assessment orders as
               sought to be made by the CIT, while exercising jurisdiction
               under section 263, would in such a case be merely a difference
               of opinion and hence not amenable to the revision jurisdiction
               under section 263 of the Act, in view of Supreme Court decision
               in the cases of Malabar Industrial Co. Ltd. v. CIT 243 ITR 83
               (SC) as also later decision in CIT v. Max India Ltd. 295 ITR
               282 (SC).

               23. We hold therefore that CIT is not right in holding that
               AO failed to make enquiries or to apply his mind and allowed
               deduction under section 80IB (10) of the Act. We, therefore,
               vacate his order and restore that of the AO. It is, however,
               except for the construction found to be in excess built up area
               over 1000 sq. ft. as aforesaid and in respect of which the
               assessee would not entitled to deduction.\"

       2.      The Revenue carried the matter further in appeal to this Court
       in respect of the said years 2000-01 and 2001-2002 by preferring ITA
       480/2010, 485/2010 and 437/2011. By a judgment dated 24.09.2012,
       the Revenue\'s contentions were rejected both as to the findings of the
       Tribunal with regard to the tenability of invocation of Section 263 as

ITA-210, 214, 215 & 250/2012                                             Page 3
       well as the merits. This is evident from the following extract of the
       judgment of this Court for the said years dated 24.09.2012:
           \"12. The Tribunal was of opinion that merely because there was a
           honest and bonafide difference of opinion between the assessee
           and the Assessing Officer on the one hand and the CIT on the
           other with regard to the interpretation to be placed on a provision
           of law or there was a possibility of more than one reasonable view
           of the statutory provision, it cannot be said that the assessment
           was erroneous or prejudicial to the interest of the Revenue. In this
           view of the matter, the Tribunal vacated the orders of the CIT
           passed under Section 263 of the Act for both the years. It may be
           added that the Tribunal placed reliance on the following
           judgments of the Supreme Court:-

           (1) Malabar Industries Co. Ltd. V/s. CIT (2000) 243ITR 83, G.M.
           Mittal 263 ITR 255
           (2) CIT Vs Max India Ltd. (SC) (2007) 295 ITR 282
           13. The Tribunal however, observed that since no submissions
           were made by the assessee as regard the disallowance under
           Section 14A, the orders of the CIT on that issue had to be affirmed.

           14. We are not persuaded to take a view different from the view
           taken by the Tribunal. A clear finding was recorded by the
           Tribunal that the assessee had filed the details and calculations
           about the built-up area of the residential units.
           It would be unreasonable to hold that the Assessing Officer
           ignored those details. Moreover the statutory auditors had clearly
           mentioned the dates of approval of the lay out plan of the
           residential colonies. The Assessing Officer was thus made aware
           of the dates on which the approvals were granted in respect of
           each of the four housing projects. The more important aspect was
           the applicability of clause (a) of Section 80IB(10). On this aspect
           the Tribunal held that any construction carried out before the
           receipt of necessary approvals would be unauthorized and could
           not be recognized. It was found by the Tribunal that in any case
           there was only site development by filling of pits, leveling of land,

ITA-210, 214, 215 & 250/2012                                              Page 4
           construction of roads, wells, laying of sewerage and electricity
           lines etc. Further there was no dispute regarding the date of
           commencement of construction with respect to the projects,
           namely, Golf Link-II and East End Loni. The Tribunal has found
           that both these projects commenced after 1 st October, 1998. With
           regard to the other two projects, namely, Golf Link-I and Avantika
           Akruti, the Tribunal held that the date of commencement of
           construction had to be reckoned from the date when the
           construction of the building plan of each project was approved by
           the concerned authority. On examination of the details of the
           chronological events furnished by the assessee, it was held by the
           Tribunal that the building plans of each house submitted by the
           assessee were not sanctioned as such by the competent authority
           before 1st October, 1998. They were rejected and time and again
           modifications were proposed by the authority; finally the
           approvals of the building plans were issued after 1st October,
           1998, except for 26 houses in Avantika Akruti Project. The
           Tribunal has also referred to certain orders of the Pune and
           Bombay Benches of the Tribunal where the date of approval by the
           competent authority was considered crucial to determine the date
           of commencement of development or construction. This discussion
           of the Tribunal shows that the determination of the question as to
           when the undertaking commenced development and construction,
           in the absence of any statutory prescription, has to be decided in a
           pragmatic and reasonable way. It would have been an entirely
           different issue had there been a statutory prescription of what
           would be the date of commencement of construction or
           development. It is certainly a debatable issue on which more than
           one plausible view is reasonably possible and merely because the
           Assessing Officer has taken one plausible view, it cannot be said
           that the assessment is erroneous or prejudicial to the interest of
           the Revenue.
           This position stands well settled by the judgments of the Supreme
           Court cited supra. The Tribunal applied the tests laid down in
           these judgments to the case.

           15. For the above reasons, we are of the view that no substantial
           question of law arises for our consideration in ITA Nos.485/2010

ITA-210, 214, 215 & 250/2012                                             Page 5
            & 480/2010. The orders of the Tribunal are accordingly upheld
            and the appeals filed by the Revenue are dismissed.\"

       3.      In view of above observations which also indicates that this
       Court was satisfied that approval of the building plans were issued
       after 1.10.1998 except in respect of 26 houses in Avantika Aakruti
       Project, this Court is not persuaded that any substantial question of
       law arises and is not inclined to take a different view from the one
       taken in ITA 480/2010, 485/2010 and 437/2011. The Revenue\'s
       appeal so far as they urged this ground is insubstantial and, therefore,
       Point no.2
       4.      So far as the point no.2, i.e., whether the respondents could
       have been assessed on the basis of ALV of the unsold flats, the Court
       is of the view that in a previous decision dated 31.10.2012 passed in
       ITA 18/1999 and connected matters - CIT v. Ansal Housing Leasing
       Finance Ltd., the Court relying upon previous decision of the
       Supreme Court answered an identical question of law in favour of the
       Revenue holding that the assessee could have been assessed on the
       basis of ALV of the unsold flats. This question - which arises in ITA
       215/2012 for assessment year 2003-04 is accordingly answered in
       favour of the Revenue and against the assessee.
       5.      In view of the above findings, ITA Nos.210 and 214/2012 are
       dismissed. ITA 215/2012 is partly allowed but in the above terms.
               ITA 250/2012
       6.      The sole question which arise in this case is identical to point

ITA-210, 214, 215 & 250/2012                                              Page 6
       no.1 decided in ITA 210, 214 & 215/2012. The Tribunal had relied
       upon its previous order dated 12.06.2009 as is evident from
       paragraph-9 of the impugned order. For the reasons mentioned in the
       order on aforesaid appeals, this Court affirms ITAT\'s order dated
       9.9.2011. No substantial question of law arises. Consequently, ITA
       250/2012 is dismissed.
       7.       ITA 210, 214, 215 & 250/2012 are disposed of in the above

                                                   S. RAVINDRA BHAT

                                                         R.V. EASWAR
JULY 19, 2013

ITA-210, 214, 215 & 250/2012                                         Page 7
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