The validity of an assessment under the Income Tax Act hinges on the lawful existence of the assessed entity at the time of the assessment, with deductions contingent upon definitions of habitable built-up area.

JUDGMENT :

B.P. Colabawalla, J.

1. The above Income Tax Appeal is filed by the Appellant-Revenue being aggrieved by the judgment and order dated 7^th April 2017 passed by the Income Tax Appellate Tribunal, “G” Bench, Mumbai (for short “ITAT”) in ITA No. 2853/Mum/2015. The assessment year in question is AY 2010-11. According to the Revenue, the impugned order gives rise to the following Substantial Questions of Law :-

“6.1 Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was justified in holding that assessment made u/s 143(3) r.w.s. 153A is bad in law being nullity in eyes of law as the search warrant was issued in the name of non-existing entity when the search warrant specifically mentioned the name of the merged entity and the existing entity as Nahar Enterprises (now known as Nahar Builders Limited)?

6.2 Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is justified in holding that search warrant was issued in the name of non-existing entity, when, the said entity had only merged with other entity and there was no stoppage or discontinuation of business operations?

6.3 Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is justified in holding that search warrant was issued in the name of non-existing entity, when, the such merged entities take over all the assets, liabilities and business operations of the merging entity including assessment proceedings and tax liabilities?

6.4 Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT is justified in directing the AO to delete the disallowance of deduction u/s 80IB(10) of the INCOME TAX ACT , 1961 by holding that flower beds are below the floor level and so not covered in BUA in terms of provisions of section 80IB(14)(a), when, the ‘Floor Level’ mentioned in section 80IB(14)(a), refers to the bottom area of the unit and does not imply to exclude any area which is lower than floor level of rooms?

6.5 Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was justified in placing reliance on the decision in case of commonwealth Developers 44 Taxmann.com 303 when the same is distinguishable as it is with reference to courtyard appurtenant to residential unit whereas, in this case it is the Flower Bed?

6.6 Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was justified in placing reliance on the decision of Co-ordinate Bench of the Tribunal dated 12.03.2014 when the same was misplaced as it has tried to read into the meaning of Floor Level with the Development Control Rules which is neither warranted nor appropriate. The BUA has to be understood for the purpose of income tax and what customer gets actually and not what is put in the agreement or satisfies some structural issues?

6.7 Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was justified in directing the AO to delete disallowance of deduction u/s 80IB(10) by holding that service area, window area, window projection and cupboard projection are not to be included in the total area for determining the built up area of the flats, when in terms of provisions of section 80(IB)(14)(a) the projections are includable and all these are nothing but projections only?

6.8 Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was justified in directing the AO to hold that even the part complete project which has received