Itxa/1672/2017 Of Commissioner Of Income Tax-24 v. Neeta Enterprises

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO.1699 OF 2017 Pr. Commissioner of Income Tax-24 V/s. ….Appellant Neeta Enterprises …Respondent---- Mr. Suresh Kumar for AppellantMs Aasifa Khanam Khan i/b Mr. Niraj Punmiya for Respondent ---- WITHINCOME TAX APPEAL NO.1672 OF 2017WITHINCOME TAX APPEAL NO.1673 OF 2017WITHINCOME TAX APPEAL NO.966 OF 2018WITHINCOME TAX APPEAL NO.951 OF 2018WITHINCOME TAX APPEAL NO.940 OF 2018 CORAM : K.R. SHRIRAM & AMIT B. BORKAR, JJ DATED : 23[rd] NOVEMBER 2021 P.C. : 1Respondent filed Rs. Nil return of income for A.Y.-2007-2008 on 31[st]October 2007. The assessment order under Section 143(3) of Income TaxAct (the Act) was passed on 17[th] December 2009 assessing the total incomeof respondent at Rs.13,50,93,090/-. In the assessment order, respondent’sclaim of deduction under Section 80IB(10) (Deduction in respect of profitsand gains from certain industrial undertakings other than infrastructuredevelopment undertakings) of the Act of Rs.13,50,93,090/- was disallowedholding that development and construction of the housing project commenced from a date prior to 1[st] October 1998, thereby violating clause(a) of Section 80IB(10), hence respondent was ineligible to claim thededuction. According to Assessing Officer, it was found that BMC had issuedcommencement certificate to assessee’s project Gundecha Gardens on 28[th]November 1992 to one Bombay Gas Co. Ltd. for development of theproposed residential building and club house. This had been revalidated upto 27[th] November 2003 and the same was being extended for further periodas evidenced in the notings in the commencement certificate dated 28[th]November 1992. The part occupation certificate, on the basis of whichdeduction under Section 80IB(10) of the Act was claimed in respect ofcompletion of Wing A, B & C was also issued in favour of Bombay Gas Co.Ltd. on 18[th] February 2006 by BMC. The Assessing Officer also found that asum of Rs.1,80,46,496/- was incurred before 1[st] October 1998 on thedevelopment of the project by one Bombay Gas Developers in whichBombay Gas Co. Ltd. was a partner. Subsequently assessee purchased thedevelopment right of the project from Bombay Gas Developers videdevelopment agreement dated 10[th] July 2003. The Assessing Officer heldthat the assessee, therefore, had stepped into the shoes of Bombay Gas Co.Ltd and continued the project was first approved by the local authority on28[th] November 1992. As the housing project that was first approved by thelocal authority on 28[th] November 1992 and thereafter the sum ofRs.1,80,46,496/- was also incurred on the development of the project before1[st] October 1998, the Assessing Officer concluded that the assessee did not satisfy the condition of commencing the housing project on or after 1[st]October 1998 and disallowed the deduction claimed by respondent underSection 80IB(10) of the Act. We have to note that the Commissioner ofIncome Tax-24 (CIT) Mumbai had invoked his revisionary jurisdiction ofSection 263 of the Act and set aside the assessment order under Section143(3) dated 17[th] December 2009 by holding the same to be erroneous andprejudicial to the interest of revenue. CIT observed that while rejecting theclaim for deduction under Section 80IB(10) the Assessing Officer had onlyfocused on commencement date of the project but had not enquired orverified about respondent complying with every condition of completion ofproject on or before 31[st] March 2008. Against that order of CIT underSection 263 of the Act, an appeal was preferred by respondent beforeIncome Tax Appellate Tribunal (ITAT) and the appeal came to be dismissed.Respondent has preferred an appeal in this court being Income Tax AppealNo.1517 of 2013 and the same has been admitted on 7[th] May 2015 and isstill pending. 2Based on the revisionary orders passed by the CIT, an assessmentorder under Section 143(3) read with Section 263 of the Act was passed on22[nd] March 2013 assessing total income of the assessee at the same figure ofRs.13,50,93,090/-. The assessee’s claim of deduction under Section80IB(10) of Rs.13,50,93,090/- was disallowed for violation of bothconditions prescribed under Section 80IB(10) regarding commencement aswell as completion of the project. The Assessing Officer concluded that the commencement date was prior to 1[st] October 1998 for the same reasons asnoted earlier and also that the project also was not completed before 31[st]March 2008 as the assessee had not obtained completion certificate fromlocal authority on or before 31[st] March 2008 and had only obtained partoccupation certificate. 3Aggrieved by this order, respondent preferred an appeal beforeCIT(Appeals), who by order dated 21[st] May 2014 allowed the appeal andheld that respondent was entitled to the deduction under Section 80IB(10)of the Act. Revenue challenged this order before the ITAT and ITAT upheldthe finding of the CIT(Appeals). Against that order of ITAT passed on 21[st]October 2016, this appeal has been preferred by Revenue. 4Appellant has proposed the following substantial questions of law: “(i) Whether on the facts and in the circumstances of the case and inlaw, the Hon’ble Income Tax Appellate Tribunal erred in allowingdeduction u/s 80IB(10) of the Income Tax Act 1961, withoutappreciating the fact that the commencement certificate of the localauthority for the housing project was obtained on 28[th] November1992, i.e., much before 1[st] October 1998, the date on or after whichthe development and construction of the housing project should havecommenced to be eligible for deduction u/s 80IB(10) of the IncomeTax Act 1961. (ii)Whether on the facts and in the circumstances of the case and inlaw, the Hon’ble Income Tax Appellate Tribunal erred in allowingdeduction u/s 80IB(10) of the Income Tax Act 1961, withoutappreciating the fact that the completion certificate of the localauthority for the housing project was not obtained upto 31[st] March2008, the date on or before which the construction of the housingproject should have been completed, to be eligible for deduction u/s80IB(10) of the Income Tax Act 1961.” 5As regards second question proposed, Mr. Suresh Kumar submitted that in view of the finding of this court in its order dated 16[th] January 2019 in Income Tax Appeal No.1027 of 2016, this question has been answered. 6As regards first question, CIT(Appeals) as well as ITAT has come to aconclusion on facts that though permission was obtained by Bombay Gas Co.Ltd. in 1992, Bombay Gas Co. Ltd. had not incurred any expenditure on thedevelopment and construction of the aforesaid housing project before 1[st]October 1998. It has also been held on facts, after considering alldocuments filed, that even the expenses which were incurred by BombayGas Co. Ltd. was only for strengthening the boundary wall and not for anydevelopment or construction of the housing project. 5As regards second question proposed, Mr. Suresh Kumar submitted that in view of the finding of this court in its order dated 16[th] January 2019 in Income Tax Appeal No.1027 of 2016, this question has been answered. 6As regards first question, CIT(Appeals) as well as ITAT has come to aconclusion on facts that though permission was obtained by Bombay Gas Co.Ltd. in 1992, Bombay Gas Co. Ltd. had not incurred any expenditure on thedevelopment and construction of the aforesaid housing project before 1[st]October 1998. It has also been held on facts, after considering alldocuments filed, that even the expenses which were incurred by BombayGas Co. Ltd. was only for strengthening the boundary wall and not for anydevelopment or construction of the housing project. 7On the plan approved by local authority on 28[th] November 1992 it hasbeen concluded and held on facts that the plan based on which the assesseecommenced development and construction, was totally different from theplan which was approved on 28[th] November 1992 and the revised planbased on which the assessee commenced the development and construction,was entirely different from the original plan and that plan has beenapproved by the local authority only in 2003. It has been factually held thatas per the original plan approved on 28[th] November 1992, two buildingswere to be constructed on the aforesaid plot of land. As per the revisedbuilding plan approved by the local authority in 2003, seven buildings wereto be constructed on the said plot of land. It is also not disputed thatassessee is a different entity from Bombay Gas Co. Ltd. which had gotoriginal plan approved in 1992 and the assessee had taken possession of theplot of land only in the year 2003 and thereafter got the revised plan approved. 8In our view, the ITAT has not committed any perversity or appliedincorrect principles to the given facts and when the facts and circumstancesare properly analysed and correct test is applied to decide the issue at hand,then, we do not think that question as pressed raises any substantialquestion of law. 9The appeal is devoid of merit and is dismissed with no order as tocosts. 10Mr. Suresh Kumar states that this order will apply to all the appealswhich are listed today namely; ITXA No.1672 of 2017, ITXA No.1673 of2017, ITXA No.966 of 2018, ITXA No.951 of 2018 and ITXA No.940 of2018. These appeals are also accordingly dismissed. 11In view of the above order, Ms Khan seeks leave to withdraw ITXANo.1517 of 2013. Leave granted. ITXA No.1517 of 2013 dismissed aswithdrawn. 12Ms Khan in view of the above order states ITXA(L) No.1968 of 2014filed by appellant will also not survive. This appeal be listed for directionson 29[th] November 2021. (AMIT B. BORKAR, J) (K.R. SHRIRAM, J.)