Malies AV Gardens, CHENNAI V. ACIT, CHENNAI

ITA 1108/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8149 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 10-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 30-04-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Gift; Question of law; Competent authority; Revised return
• Section: 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . /ITA NOS. 1109 & 1113/MDS/2014 / ASSESSMENT YEARS : 2009-10 & 2010-11 M/S. MALLES RAJARAJESWARI, NO.19, TANJORE ROAD, T. NAGAR, CHENNAI 600 017. PAN AAQFM2823M ( /APPELLANT) V. THE INCOME-TAX OFFICER, BUSINESS WARD-I(3), CHENNAI. RESPONDENT) . /ITA NO. 1108/MDS/2014 / ASSESSMENT YEAR : 2010-11 M/S. MALLES AV GARDENS, NO.19, TANJORE ROAD, T. NAGAR, CHENNAI 600 017. PAN AAPFM2559M ( /APPELLANT) V. THE ASSISTANT COMMISSIONER OF, INCOME-TAX, BUSINESS WARD-I(3), CHENNAI. RESPONDENT) / APPELLANT BY : SHRI A.S.SRIRAMAN, ADVOCATE / RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT ! / DATE OF HEARING : 10.12.2015 '# ! / DATE OF PRONOUNCEMENT : 05.02.2016 - - ITA 1109/14 ETC . 2 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY DIFFERENT ASSESSEES ARE DIRECTE D AGAINST DIFFERENT ORDERS OF THE C.I.T.(APPEALS) DAT ED 25.2.2014 FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11. SINC E, COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THESE ARE CLU BBED TOGETHER, HEARD TOGETHER AND DISPOSED OFF BY THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEALS IN ITA NOS.1109 & 1113/MDS/14 IN THE CASE OF MALLES RAJARAJESHWARI. THE FACTS OF THE CASE AS NARRATED IN ITA NO.1109/MDS/14 ARE THAT THE ASSESSEE CLAIMED DEDUCTION U/S.80IB(10) OF THE ACT ON ITS PROFITS FROM THE BUSINESS, WHICH IS DENIED BY THE AO AS UND ER: '3(A) SHRI U.CHANDRAPRAKASAM & S MT . U. NAGAMALLESWARI WLO SRI U CHANDRAPRAKASAM, HAVE PURCHASED THE PIECE AND PARCEL OF VACANT LAND OF AN EXTENT OF 44627 SQ . FT COMPRISED OF PLOT NS.1-6, 19-24, 25-33 AND 36 TO 43 IN SURVEY NOS 33/283 AND 3/284 1 50 24 IN ''AV GARDENS' MUGALIVAKKAM , CHENNAI-116 FORMING PART OF AN APPROVED LAYOUT , LAYOUT HAVING BEEN GRANTED BY THE CMOA VIDE PPOILON0 . 41/2006 DATED 12/04/2006 BY AN ABSOLUTE DEED OF SALE DATED 8/2/2007. THE ORIGINAL VENDORS OF THE PLOT HAD ALREADY EXECUTED A GIFT DEED ON 30/3/2006 IN FAVOUR OF THE COMMISSIONER, KUNDRATHUR - - ITA 1109/14 ETC . 3 PANCHAYAT UNION, IN RESPECT OF PART OF THE SAID LANDS NAMELY 2935 SQ . MTRS RESERVED FOR ROADS IN THE SAID LAYOUT . 3(B) LATER SHRI U.CHANDRAPRAKASAM & SMT . U. NAGAMALLESWARI WLO SRI U CHANDRAPRAKASAM FORMS A PARTNERSHIP FIRM NAMED MALLES RAJARAJESWARI VIDE PARTNERSHIP DEED DATED 28/3/2007. 3(C)S HRI U . CHANDRAPRAKASAM & SMT . U . NAGAMALLESWARI, IN INDIVIDUAL CAPACITY SELLS HALF THE UNDIVIDED SHA RE OF A PLOT/ OR ENTIRE PLOT IN THE ALREADY APPROVED LAYOUT RANGING FROM A MINIMUM OF 750 SQ.FT. TO 1590 SQ.FT. AND ALSO UNDIVIDED SHARE IN COMMON AREA TO THE EXTENT O F 140 SQ.FT. TO 161 SQ.FT. TOGETHER WITH SHARE OF LUX URY AMENITIES TO THE EXTENT OF 50 SQ.FT. TO NUMBER OF B UYERS. THE LUXURY AMENITIES SUCH AS SWIMMING POOL, COMMUNITY HALL ETC, ARE COMMON TO THE LAYOUT OWNED BY M/S. MALEES RAJARAJESWARI AND OTHER SEPARATE ADJACE NT LAYOUT OWNED BY ANOTHER FIRM CALLED M/S. A.V.GARDEN S. 3(D) THE SO CALLED, LUXURY AMENITIES SUCH A SWIMMIN G POOL, COMMUNITY HALL ETC. ARE COMMON TO THE LAYOUT OWNED BY MALLES RAJARAJESWARI AND OTHER SEPARATE ADJACENT LAYOUT CALLED AV GARDENS. THE CLUB HOUSE HAVING FACILITIES SUCH AS GYM, INDOOR GAMES & MULTIPURPOSE HALL IS LOCATED IN PLOT NO.1 IN MALLES RAJARAJESWARI. WHERE APPROVAL HAS BEEN OBTAINED AS TWIN HOUSES COMBINED IN ONE PLOT SUCH AS 1A & 1B WHICH ACCORDING TO THE ASSESSEE HAS THE FACILITIES SUCH AS GYM, INDOOR GAMES & MULTIPURPOSE HALL FOR BOTH A.V.GARDENS & MALLES RAJARAJESWARI. FURTHER, AS FAR AS THE SWIMMING POOL IS CONCERNED IT IS BUILT ON PLOT NOS.23 & 24 IN THE OTHER ADJACENT LAYOUT MALLES AV GARDENS. AS PER THE ASSESSEES OWN WORDS, WE HAVE JUST UTILIZED THE EMPTY LAND WHICH WE HAVE CONVERTED AS A SWIMMING POOL. SINCE THE AREA BEING CONTROLLED BY PANCHAYAT, NO SEPARATE PLA N APPROVAL IS REQUIRED FOR SWIMMING POOL. - - ITA 1109/14 ETC . 4 3(E) LATER THE FIRM M/S. MALLES RAJARAJESWARI ENTERS INTO A SEPARATE CONSTRUCTION AGREEMENT WITH THE PERSONS W HO HAVE ALREADY ARRANGED FO R B UY I N G THE PLOT OF LAND IN THE LAYOUT -A V GARDENS (PHASE I) FROM THE O W NERS OF PLO TS S HRI U . CHANDRAPRAKASAM & SMT . U . NAGAMALLESWARI. THE CONST R UCTION AGREEM E N T I S F OR SEMI INDEPENDENT DUPLEX HOUSE COMPRISED OF GROUND FLOOR WITH SUPER BUILT UP AREA WH I CH VARIES ACCORDING TO THE EXTENT OF PLOT OF LAND BOUGHT BY THE BUYERS . TO SOME BUYERS TO WH O M THE WHOLE PLOT IS SOLD INSTEAD OF HALF PLOT AND IT CONSTRUCTS AN INDEPENDENT HOUSE INS TEAD O F SEMI INDEPENDENT DUPLEX HOUSE . IN THOSE CASES THE BU I LT UP AREA E X CEEDS 1500 S Q . FT . 3 (F) THE ASSESSEE W AS REQUESTED TO FILE A COPY OF APPROVAL GRANTED BY THE CONCERNED AUTHORITY FOR THE PROJECT AND COMPLETION CERTIFICATE OF THE PROJECT . IN RESPONSE THE ASSESSEE FILED A COPY OF APPROVAL OBTAINED FOR A RESIDENTIAL HOUSE IN A PLOT NO . 26 /5.NO3/2B3 & 3/284. THE SAME WAS OBTAINED ON 07/3/2007. TH E AS SE SS EE FURTHER INFORMED THAT HE HAS OBTAINED AS MUCH BUILDING PLAN APPROVALS AS THE NUMB ER OF PLOTS SOLD. AS FAR AS THE COMPLETION CERTIFICATE, THE ASSESSEE INFORMED THAT THE PROJ E CT I S ORDINARY BUILDING CATEGORY WITH GROUND FLOOR PLUS 1 FOR WHICH COMPLETION C ERTIFICATE I S NO T MANDATORY . 3(G) THE INTENTION OF THE ASSESSEE FIRM AS PER ITS OWN ADVERTISEMENT OF THE FIRM IN THE WEBSITE IS AS UNDER : 'EXPERIENCE THE FREEDOM OF INDEPENDENT LIFE' THE BENEFITS OF AN INDEPENDENT LIFE START AROUND YOUR HOME. YOUR HO M E A T MALLES A V GARDENS COMES FITTED WITH ITS OWN TERRACE AND A SMALL GARDEN , ALL ENCASED WITHIN ONE COMPOUND WALL GATE AND INDEPENDENT WATER TANK SUPERBLY SERVES YOU EVEN IN DRY WEATHER. THE ABOVE AMPLY GIVES CLEAR PICTURE OF ITS A CTIVITY . - - ITA 1109/14 ETC . 5 2.1 ACCORDING TO THE ASSESSING OFFICER, THE PARTNER S OF THE ASSESSEE AFTER PURCHASE OF LAND AS WELL AS AFTER GE TTING APPROVAL FOR HOUSING PROJECT FROM THE COMPETENT AUTHORITY FO RMED THE PARTNERSHIP, WHICH IN TURN ENTERED INTO CONSTRUCTIO N AGREEMENTS WITH THE PURCHASERS OF INDEPENDENT/TWIN HOUSES FORM ING PART OF THE SAID HOUSING PROJECT. ACCORDING TO THE AO, THE METHOD OF EXECUTING THE HOUSING PROJECT WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF SEC.80IB(10) OF THE ACT. FURTHER, HE OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED ITS COMPLETION CERTI FICATE. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). 3. ON APPEAL, THE COMMISSIONER OF INCOME-TAX(APPE ALS) OBSERVED THAT THE ASSESSEE FAILED TO COMPLY WITH AN Y OF THE CONDITIONS LAID DOWN U/S.80IB(10) OF THE ACT AND TH E ACTIVITY CARRIED BY THE ASSESSEE, CANNOT BE CONSIDERED AS IN TEGRATED HOUSING PROJECT. AS THE PROJECT INVOLVED SALE OF P LOTS OF LAND ONLY AND CONSTRUCTION OF THE HOUSES THEREON AS PER THE C ONSTRUCTION AGREEMENTS SIGNED BY THE BUYERS OF THE PLOTS. THER E WAS REGISTRATION OF SALE OF PLOTS OF LAND ONLY. THERE WAS NO REGISTRATION OF SALE OF HOUSE IN FAVOUR OF THE BUYE RS. THE HOUSES - - ITA 1109/14 ETC . 6 WERE CONSTRUCTED AS PER THE CONSTRUCTION AGREEMENTS SIGNED BY THE BUYERS OF THE PLOTS AND WERE MERELY HANDED OVER TO THEM ON COMPLETION CERTIFICATE. FURTHER, THERE WAS NO APPR OVAL FROM THE LOCAL AUTHORITY FOR THE PROJECT AS A WHOLE I.E. DEV ELOPMENT OF RESIDENTIAL PLOTS AND CONSTRUCTION OF HOUSES THEREO N. THE CIT(APPEALS), FURTHER OBSERVED THAT THE ASSESSEE HA D NOT APPLIED FOR ANY APPROVAL FROM THE LOCAL AUTHORITY. THE PARTNERS OF THE ASSESSEE PURCHASED THE APPROVED LAY OUT ON 28 .2.2007 AND LATER THEY FORMED THE ASSESSEE FIRM ON 28.3.2007. IN HIS OPINION, THERE WAS NO UNIFIED AND INTEGRATED ACTIVITY OF CON STRUCTION AND SALE OF HOUSES. THE CIT(APPEALS), ALSO OBSERVED TH AT THE ASSESSEE FAILED TO DEMONSTRATE THAT THE ACTIVITY CA RRIED OUT BY IT COMES UNDER DEVELOPING AND BUILDING OF HOUSING PROJ ECTS AND THE FINANCIAL RISK. THUS, HE OPINED THAT THE ACTI VITY CARRIED OUT BY THE ASSESSEE WILL BE THAT OF A WORKS CONTRACT AND THEREBY CONFIRMED THE FINDING OF THE A.O. AGAINST THIS, TH E ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AR SUBMITTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMEN T AND FOR THE ASSESSMENT YEAR UNDE R CONSIDERATION , THE ASSESSEE HAD - - ITA 1109/14 ETC . 7 CLAIMED DEDUCTION U/S 80 IB ( 10 ) OF THE ACT IN THE ORIGINAL RETURN OF INCOME AMOUNTING TO ` 40 , 11 , 676 /- WHICH RETURN OF INCOME WAS REVISED LATER IN RESTRICTING THE CLAIM OF THE SAID DEDUCTION AT ` 32 , 91 , 580/- . ACCORDING TO THE LD. AR, THE FINDING OF THE ASSESSING OFFICER TO REJECT THE CLAI M OF DEDUCTION IS ON THE METHOD OF EXECUTION OF THE PROJECT UNDER CON SIDERATION AND ON THE ANALYSIS OF THE FACTS OF THE CASE. FURTHER, THE LD. AR SUBMITTED THAT T HE ASSESSING OFFICER WRONGLY CONCLUDED THAT THE ASSESSEE HAD NOT DEVELOPED A HOUSING PROJECT AS UND ERSTOOD IN THE PROVISIONS GRANTING THE RELIEF UNDER THE ACT . 4.1 THE LD. AR. ALSO SUBMITTED THAT THE PARTNERS OF THE ASSESSEE AFTER PURCHASE OF THE LAND AS WELL AS AFTE R GETTING THE APPROVAL FOR DEVELOPING A HOUSING PROJECT FROM THE COMPETENT AUTHORITY FORMED THE PARTNERSHIP WHICH IN TURN ENTE RED INTO CONSTRUCTION AGREEMENTS WITH THE PURCHASERS OF INDE PENDENT/ TWIN HOUSES FORMING PART OF THE SAID HOUSING PROJEC T. ACCORDING TO THE ASSESSING OFFICER, THE SAID METHOD O! EXECUTING .THE HOUSING PROJECT WAS NOT IN ACCORDANCE WITH THE PROV ISIONS OF SECTION 80IB(10) OF THE ACT. - - - ITA 1109/14 ETC . 8 4.2 IT WA S SUBMITTED THAT THERE WAS NO PRESCRIBED METHOD OF EXECUTION OF A HOUSING PROJECT INASMUCH AS THE METH OD ADOPTED BY THE APPELLANT WAS NOT PROHIBITED BY LAW AND THE ULTIMATE PURPOSE WAS TO DEVELOP A HOUSING PROJECT ON THE CUM ULATIVE CONSIDERATION OF THE FACTS OF THE CASE. THEREFORE, THE FINDINGS OF THE LOWER AUTHORITIES MAY BE REJECTED AS NOT SUSTAI NABLE IN LAW. 4.3 FURTHER, ACCORDING TO THE REVENUE AUTHORITIES, THE APPROVALS OBTAINED SEPARATELY FOR EACH OF THE HOUSE S COMPRISED IN THE SAID HOUSING PROJECT COULD NOT BE CONSTRUED AS A PROJECT DEVELOPED IN ONE ACRE OF LAND INASMUCH AS THE AUTHO RITIES CONSTRUED THE EACH OF THE HOUSES IN VIEW OF THE IND EPENDENT APPROVALS OBTAINED IN RELATION THERETO AS SEPARATE AND NOT A CUMULATIVE AND A SINGLE PROJECT. THE SAID APPROACH OF THE AUTHORITIES IN REJECTING THE CLAIM OF THE SAID DEDU CTION IN THE COMPUTATION OF TAXABLE TOTAL INCOME IS NOT SUSTAINA BLE IN LAW AND WOULD DEFEAT THE PURPOSIVE LEGISLATION. 4.4 THE METHOD OF EXECUTION OF THE PROJECT SHOULD N OT BE TAKEN AS A DECISIVE TEST AND THE HOUSING PROJECT CO ULD BE EXECUTED IN DIFFERENT WAYS INASMUCH AS THE ASSESSEE HAD EXECUTED THE PROJECT UNDER CONSIDERATION IN THE MET HOD AS - - ITA 1109/14 ETC . 9 EXPLAINED TO THE ASSESSING OFFICER WHICH ACCORDING TO THE ASSESSEE WAS NOT PROHIBITED IN LAW. 4.5 THE MULTIPLICITY OF APPROVALS FOR THE VARIOUS HOUSES COMPRISED IN THE HOUSING PROJECT UNDER CONSIDERATIO N IS NOT A BAR TO CLAIM SUCH DEDUCTION IN THE COMPUTATION OF TAXAB LE TOTAL INCOME. THE TRIBUNAL IN THE CASE OF ASST. V. C. RAJ INI(SMT.) REPORTED IN 9 ITR 808 (TRIB), WHEREIN THE BENCH HAD REJECTED THE APPROACH OF THE AUTHORITIES. IN THE PRESENT CASE I N CONSIDERING MULTIPLE APPROVALS OBTAINED FOR VARIOUS HOUSES COMP RISED IN THE HOUSING PROJECT IS NOT BAR TO CLAIM SUCH DEDUCTION IN THE COMPUTATION OF TAXABLE TOTAL INCOME AS HELD BY THE TRIBUNAL IN THE ABOVE CASE AS FOLLOWS: 'NOW IF YOU SEE SUB-S.(10) OF S.80-1B, ITS SPECIFY APPROVAL BY LOCAL AUTHORITY AND WHO OR WHAT IS SUCH LOCAL AUTHORITY IS NOT DEFINED ANYWHERE. WE CANNOT SAY THAT A VAO OR A DY. DIRECTOR OF TOWN PLANNING IS NO T A LOCAL AUTHORITY. HENCE THE QUESTION NOW BOILS DOWN TO WHETHER THE APPROVAL OBTAINED BY THE ASSESSEE WAS FOR A HOUSING PROJECT. AO HIMSELF HAS ADMITTED THAT ASSESSEE HAD PRODUCED A CERTIFICATE DT. 2 ND FEB., 2005 FROM THE VAO, BUT HE REJECTED IT ON THE REASONING T HAT VAO WAS NOT AN AUTHORITY FOR ISSUING A CERTIFICATE OF APPROVAL. IN ANY CASE PARAS REPRODUCED ABOVE, FROM THE LETTER OF DY. DIRECTOR, TOWN PLANNING WOULD SHO W THAT SUCH APPROVAL WAS FOR CONSTRUCTION IN THE PLOT S. 4.6 IT IS ALSO SUBMITTED THAT APPLICANT GOT SANCTIO N FOR BUILDING - - ITA 1109/14 ETC . 10 FROM LOCAL PANCHAYAT. PURSUANT TO THIS, THE INDIVID UAL OWNERS TO WHOM PLOTS WERE GIVEN HAD OBTAINED SANCTION FOR CON STRUCTING THE UNITS, AND CONSTRUCTIONS CARRIED OUT BY THE ASS ESSEE. THE APPROVED LAYOUT SHOWS THE BIFURCATION OF THE SITE T O VARIOUS PLOTS, AREAS EARMARKED FOR SHOPS AND HOUSES. ALL THESE WOU LD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE PROJECT HAD THE APPROVAL OF A LOCAL AUTHORITY, AND EACH INDIVIDUAL HOUSE WAS ONLY PART OF A WHOLE.' THE LD. AR ALSO RELIED ON ANOTHER DECISIO N OF ITS CO- ORDINATE BENCH IN THE CASE OF DEPUTY CIT VS. S.RAVI IN I.T.A.NOS, 1784 TO 1786/MDS/MAD/2008 DATED 19.1.201 0. IN VIEW OF THIS, THE MULTIPLICITY OF APPROVALS SHOULD NOT BE CONSTRUED AS A BAR TO MAKE THE SAID CLAIM OF DEDUCTION. 4.7 FURTHER, THE LD. AR SUBMITTED THAT THE COMPLET ION CERTIFICATE WAS NOT MANDATORILY REQUIRED/TO BE ISSU ED IN VIEW OF THE EXECUTION OF THE HOUSING PROJECT AS AN ORDINARY BUILDING CATEGORY WITH GROUND FLOOR PLUS ONE. THE HOUSING P ROJECT UNDER CONSIDERATION WAS EXECUTED IN A DIFFERENT MANNER AN D THE INDIVIDUAL HOUSES/TWIN HOUSES WERE OFFERED AND SOLD TO THE VARIOUS CUSTOMERS AFTER OBTAINING INDIVIDUAL APPROV ALS FROM THE COMPETENT AUTHORITY. ACCORDING TO THE LD. AR, DEV ELOPMENT - - ITA 1109/14 ETC . 11 REGULATIONS FOR CHENNAI METROPOLITAN WOULD SUPPORT THE CASE OF THE ASSESSEE FOR NON-FURNISHING OF THE COMPLETION C ERTIFICATE AND ACCORDINGLY THE SAID CONDITION FOR FURNISHING OF TH E COMPLETION CERTIFICATE BE CONSIDERED AS COMPLIED WITH WITHIN T HE SCOPE OF SECTION 80 IB (10) OF THE ACT. 4.8 REGARDING THE VIOLATION OF MAXIMUM BUILT-UP ARE A BY THE SAID SECTION IN RELATION TO SOME OF THE HOUSES WAS TAKEN INTO CONSIDERATION BY THE ASSESSEE AND ACCORDINGLY, THE CLAIM OF DEDUCTION WAS RESTRICTED TO THE PROFITS EARNED FROM THE HOUSES CONSTRUCTED AND SOLD COMPLYING WITH THE CONDITIONS PRESCRIBED IN SECTION 80 IB (10) OF THE ACT WHICH FORMED PART OF THE ELIGIBLE HOUSING PROJECT WHILE EXCLUDING THE PROFITS RELATAB LE TO THOSE HOUSES HAVING EXCEEDED THE MAXIMUM BUILT-UP AREA OF 1500 SQ.FT. IN THE REVISED RETURN OF INCOME. HOWEVER, TH E ASSESSING OFFICER IN VIEW OF THE VIOLATION OF THE SAID CONDIT ION IN SOME OF THE HOUSES COMPRISED IN THE ELIGIBLE PROJECT HAD REJECTED THE ENTIRE CLAIM OF DEDUCTION. HE RELIED ON THE DECISI ON OF THE TRIBUNAL IN THE CASE OF M/S SANGHVI & DOSHI ENTERPR ISE (131 ITD 151), WHEREIN IT WAS HELD AS FOLLOWS : - - ITA 1109/14 ETC . 12 'AS A MATTER OF FACT IT IS TO BE SEEN FROM THE ORDE R OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF VISWAS PROMOTERS (P) LTD. THAT THE TRIBUNAL HAS NOT EFFECTIVELY CONSIDERED THE ORDER OF THE CALCUTTA TRIBUNAL AND THE JUDGMENT OF THE CALCUTTA HIGH COUR T. THEREFORE THE ARGUMENT THAT ALL THE EARLIER DECISIO NS ON THE SUBJECT WERE CONSIDERED BY THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF VISWAS PROMOTERS (P) LT D. IS NOT A CORRECT STATEMENT OF FACT. IT IS ALSO CORR ECT TO ARGUE THAT THE SAID ORDER OF THE TRIBUNAL CHENNAI BENCH IN THE CASE OF VISWAS PROMOTERS (P) LTD. HAS BEEN CONFIRMED BY THE MADRAS HIGH COURT. THE MADRAS HIGH COURT IN ITS WRIT ORDER HAS DEALT WITH ONLY THE WRIT APPLICATION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL DISMISSING THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE. THE COURT HAS SPECIFICALLY MENTIONED THAT THE WRIT PETITION WAS MISCONCEIVED AND THEREFORE LIABLE TO BE DISMISSED. THE RATIO LAID DOWN BY THE HIGH COURT IN THE SAID C ASE WAS THAT WRIT PETITION AGAINST ORDER UNDER S. 254(2 ) CANNOT BE REJECTED ON THE GROUND OF AVAILABILITY OF ALTERNATE REMEDY. THE MADRAS HIGH COURT HAS NOT CONSIDERED ANYTHING CONCERNING THE MERIT OF THE ISS UE THAT WHETHER IN THE CIRCUMSTANCES STATED ABOVE THE ASSESSEE COULD CLAIM DEDUCTION UNDER S. 80-IB(10) O R NOT. THE COURT CLARIFIED THAT IT WAS STILL OPEN FOR THE ASSESSEE TO APPEAL AGAINST THE FINDING OF THE TRIBU NAL ON MERITS OF THE ISSUE IN APPEAL BEFORE THE HIGH CO URT PERMITTED UNDER S. 260A. THEREFORE, IT IS PREMATURE TO HOLD THAT THE ORDER OF THE TRIBUNAL, CHENNAI BENCH IN THE CASE OF ASSTT. CIT VS. VISWAS PROMOTORS (P) LTD . HAS BEEN UPHELD BY THE JURISDICTIONAL HIGH COURT. WHERE THE JURISDICTIONAL HIGH COURT HAS DISMISSED T HE APPEAL AGAINST THE ORDER OF THE TRIBUNAL HOLDING TH AT NO SUBSTANTIAL QUESTION OF LAW ARISES, THE SAID DECISI ON OF THE HIGH COURT IS A DECISION ON MERITS CONFIRMING T HE FINDINGS ARRIVED AT BY THE TRIBUNAL AND IT IS NOT P OSSIBLE TO ARGUE THAT THE HIGH COURT HAS NOT CONSIDERED THE MERITS OF THE ISSUE DECIDED BY THE TRIBUNAL. AN APP EAL ALWAYS RAISES QUESTION ARISING OUT OF THE MERITS OF AN - - ITA 1109/14 ETC . 13 ISSUE. WHETHER THE HIGH COURT DISCUSSES A CASE IN VERY MANY WORDS OR DISMISSES THE APPEAL SHORTLY STATING THAT NO QUESTION OF LAW ARISES, THE JUDICIA L RESULT IS THE SAME THAT THE HIGH COURT HAS UPHELD THE REASONINGS AND FINDINGS GIVEN BY THE TRIBUNAL IN IT S ORDER. THE JUDGMENT OF THE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEV. LTD. IN IT APPEAL NO.4S8 OF 2006, DT. 5 TH JAN., 2007 IS A JUDGMENT DIRECTLY ON THE ISSUE UPHOLDING THE VIEW OF THE CALCUTTA 'C' BENCH OF THE TRIBUNAL THAT A PROCEEDINGS RATA DEDUCTION IS PERMISSIBLE UNDER S. 80-IB(10). AS THERE IS NO DIRE CT DECISION OF THE JURISDICTIONAL HIGH COURT STILL AVA ILABLE ON THE SUBJECT, THE JUDGMENT OF THE CALCUTTA HIGH COURT MUST BE FOLLOWED. THE ASSESSEES ARE ENTITLED FOR DEDUCTION UNDER S. 80-IB(10) IN RESPECT OF FLATS HA VING BUILT-UP AREA NOT EXCEEDING 1,500 SQ.FT AND NOT ENT ITLED FOR DEDUCTION IN RESPECT OF THOSE FLATS HAVING THEI R BUILT- UP AREA EXCEEDING 1,500 SQ. FT. - CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. (IT APPEAL NO.458 OF 2006, DECIDED BY THE CALCUTTA HIGH COURT ON 5 TH JAN., 2007)' 4.9. ACCORDING TO THE LD. AR, THE ASSESSING OFFICER HELD THAT THE PROJECT WAS IN FACT EXECUTED AS A WORKS CONTRAC T AND NOT AS A DEVELOPER ON THE STRENGTH OF THE RETROSPECTIVELY INSERTED EXPLANATION BELOW THE SECTION 80 I B (10) OF THE AC T. FURTHER, THE LD. AR SUBMITTED THAT THE DEVELOPER IS TOTALLY DIFF ERENT FROM THE WORKS CONTRACTOR INASMUCH AS THE DISTINGUISHING FEA TURES OUGHT TO HAVE BEEN NOTICED BEFORE APPLYING THE SAID EXPLA NATION TO THE FACTS OF THE CASE. THE DEVELOPER HAVING TAKEN A FIN ANCIAL RISK IN EXECUTING A HOUSING PROJECT SHOULD NOT BE COMPARED WITH THE - - ITA 1109/14 ETC . 14 PERSON WHO EXECUTES A WORKS CONTRACT. IN FACT, THE TRIBUNAL IN THE CASE OF ASST. V. C. RAJINI (SMT.),REPORTED IN 9 ITR 487 (TRIB) HAS APPROVED THE SAID DISTINCTION WHILE UPHOLDING T HE NON- APPLICABILITY OF THE SAID EXPLANATION TO A DEVELOPE R. 5. THE LD. DR RELIED ON THE ORDER OF THE CIT(APPEAL S). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE ASSESSEES CLAIM OF D EDUCTION U/S.80IB(10) OF THE ACT WAS REJECTED ON THE REASON THAT THE ASSESSEE HAS UNDERTAKEN THE WORKS CONTRACT AND DEVE LOPED THE HOUSING PROJECT. ACCORDING TO LD. DR, THE LAND IS NOT OWNED BY THE ASSESSEE-FIRM. IT IS SEEN FROM THE FACTS THAT SHRI U. CHANDRAPRAKASAM & SMT. U. NAGAMALLESWARI FORMED PARTNERSHIP ON 28.3.2007 UNDER THE NAME AND STYLE OF M/S. MALLES RAJARAJAESWARI. BEFORE THE FORMATION OF THIS FIRM, THE ABOVE TWO PARTNERS PURCHASED THE VACANT LAND ME ASURING 44627 SQ.FT. ON 28.2.2007 SITUATED AT PLOT NOS.1-6, 19/24, 25-33 AND 36 TO 43 IN SURVEY NOS.33/283 AND 3/284 1 50 24 IN AV GARDENS MUGALIVAKKAM, CHENNAI 116, FORMING PART OF THE APPROVED LAY OUT. SHRI U.CHANDRAPRAKASAM & SMT.U.NAGAMALLESWARI, IN INDIVIDUAL CAPACITY SELLS HALF THE - - ITA 1109/14 ETC . 15 UNDIVIDED SHARE OF A PLOT/ OR ENTIRE PLOT IN THE AL READY APPROVED LAYOUT RANGING FROM A MINIMUM OF 750 SQ.FT. TO 1590 SQ.FT. AND ALSO UNDIVIDED SHARE IN COMMON AREA TO THE EXTENT O F 140 SQ.FT. TO 161 SQ.FT. TOGETHER WITH SHARE OF LUXURY AMENITI ES TO THE EXTENT OF 50 SQ.FT. TO NUMBER OF BUYERS. THE LUXURY AMENI TIES SUCH AS SWIMMING POOL, COMMUNITY HALL ETC, ARE COMMON TO TH E LAYOUT OWNED BY M/S. MALEES RAJARAJESWARI AND OTHER SEPARA TE ADJACENT LAYOUT OWNED BY ANOTHER FIRM CALLED M/S. A .V.GARDENS. 6.1 THE SO CALLED, LUXURY AMENITIES SUCH A SWIMMING POO L, COMMUNITY HALL ETC. ARE COMMON TO THE LAYOUT OWNED BY MALLES RAJARAJESWARI AND OTHER SEPARATE ADJACENT LAYOUT CA LLED AV GARDENS. THE CLUB HOUSE HAVING FACILITIES SUCH AS GYM, INDOOR GAMES & MULTIPURPOSE HALL IS LOCATED IN PLOT NO.1 I N MALLES RAJARAJESWARI. WHERE APPROVAL HAS BEEN OBTAINED AS TWIN HOUSES COMBINED IN ONE PLOT SUCH AS 1A & 1B WHICH A CCORDING TO THE ASSESSEE HAS THE FACILITIES SUCH AS GYM, IND OOR GAMES & MULTIPURPOSE HALL FOR BOTH A.V.GARDENS & MALLES RAJ ARAJESWARI. 6.2 FURTHER, AS FAR AS THE SWIMMING POOL IS CONCERNED I T IS BUILT ON PLOT NOS.23 & 24 IN THE OTHER ADJACENT LAYOUT MALLES AV GARDENS. AS PER THE ASSESSEES OWN WORDS, WE HAVE JUST - - ITA 1109/14 ETC . 16 UTILIZED THE EMPTY LAND WHICH WE HAVE CONVERTED AS A SWIMMING POOL. SINCE THE AREA BEING CONTROLLED BY PANCHAYAT, NO SE PARATE PLAN APPROVAL IS REQUIRED FOR SWIMMING POOL. 6.3 LATER THE ASSESSEE-FIRM M/S. MALLES RAJARAJESWA RI ENTERS INTO A SEPARATE CONSTRUCTION AGREEMENT WITH THE PER SONS WHO HAVE ALREADY ARRANGED FOR BUYING THE PLOT OF LAND IN THE LAYOUT- AV GARDENS (PHASE I) FROM THE OWNERS OF PLOTS SHRI U.CHANDRAPRAKASAM & SMT.U.NAGAMALLESWARI. THE CONST RUCTION AGREEMENT IS FOR SEMI INDEPENDENT DUPLEX HOUSE COMP RISED OF GROUND FLOOR WITH SUPER BUILT UP AREA WHICH VARIES ACCORDING TO THE EXTENT OF PLOT OF LAND BOUGHT BY THE BUYERS. TO SOME BUYERS TO WHOM THE WHOLE PLOT IS SOLD INSTEAD OF HALF PLOT AND IT CONSTRUCTS AN INDEPENDENT HOUSE INSTEAD OF SEMI INDEPENDENT DUPLEX HOUSE. IN THOSE CASES THE BUILT UP AREA EXCE EDS 1500 SQ.FT. 6 . 4 DURING THE SCRUTINY PROCEEDINGS, T HE ASSESSEE WAS REQUESTED TO FILE A COPY OF APPROVAL GRANTED BY THE CONCERNED AUTHORITY FOR THE PROJECT AND COMPLETION CERTIFICATE OF THE PROJECT. IN RESPONSE THE ASSESSEE FILED A COPY OF APPROVAL OBTAINED FOR A RESIDENTIAL HOUSE IN A PLOT NO.26 /5 .NO3/2B3 & - - ITA 1109/14 ETC . 17 3/284. THE SAME WAS OBTAINED ON 07/3/2007. THE ASSESSEE FURTHER INFORMED THAT IT HAS OBTAINED AS MUCH BUILD ING PLAN APPROVALS AS THE NUMBER OF PLOTS SOLD. AS FAR AS THE COMPLETION CERTIFICATE, THE ASSESSEE INFORMED THAT THE PROJECT IS ORDINARY BUILDING CATEGORY WITH GROUND FLOOR PLUS 1 FOR WHICH COMPLETION CERTIFICATE IS NOT MANDATORY. 6.5 AS THE PROJECT INVOLVED SALE OF PLOTS OF LAND AND SUBSEQUENT CONSTRUCTION OF THE HOUSES THEREON AS PE R CONSTRUCTION AGREEMENTS SIGNED BY THE BUYERS OF THE PLOTS. THERE WAS REGISTRATION OF SALE OF PLOTS OF LAND AND THERE WAS NO REGISTRATION OF SALE OF HOUSE IN FAVOUR OF THE B UYERS. THE HOUSES WERE CONSTRUCTED AS PER THE CONSTRUCTION AGR EEMENTS SIGNED BY THE BUYERS OF THE PLOTS AND WERE HANDED O VER TO THEM ON COMPLETION CERTIFICATE. FOR THAT THERE WAS NO APPROVAL FROM THE LOCAL AUTHORITY FOR THE PROJECT A S A WHOLE I.E DEVELOPMENT OF RESIDENTIAL PLOTS AND CONSTRUCTION O F HOUSES THEREON. 6.6 ON PERUSAL OF THE COPIES OF SALE DEEDS OF THE PLOTS OF LAND AND THE CONSTRUCTION AGREEMENTS SIGNED BY THE BUYERS OF THE PLOTS OF LAND, IT IS SEEN THAT THE PARTNERS OF THE - - ITA 1109/14 ETC . 18 FIRM SOLD THE PLOTS SEPARATELY AND THEREAFTER, THE ASSESSEE FIRM UNDERTAKEN CONSTRUCTION OF THE HOUSES IN THOSE PLOTS AFTER OBTAINING BUILDING PLAN APPROVED IN THE NAME OF INDIVIDUAL PLOT OWNERS. 6.7 THUS, THE LANDED PROPERTY, IN THIS CASE IS OWNED BY THE PARTNERS OF M/S. MALLES RAJARAJESWARI, AND THERE WAS DULY APPROVED LAY OUT IN THEIR NAMES. AF TER FORMATION OF THE FIRM, THE FIRM ENTERED INTO AN CONSTRUCTION AGREEMENT WITH PROSPECTIVE BUYERS TO CONSTRUCT THE HOUSES AS APPRO VED PLAN. NOW, THE QUESTION IS WHETHER ANY WORKS CONTRACT IS INVOLVED. THE CONTENTION OF THE REVENUE IS THAT THE PROSPECTI VE PURCHASERS AWARDED THE WORKS TO THE ASSESSEE AND AS SUCH, IT IS ONLY WORKS CONTRACT. WE ARE UNABLE TO ACCEPT THE C ONTENTION OF THE REVENUE. WHEN THE LAND WAS OWNED BY THE PARTNE RS AND THE BUILDING PERMISSION WAS OBTAINED IN THEIR NAME FROM THE LOCAL BODY TO CONSTRUCT THE BUILDING AND THEREAFTER FORMI NG THE PARTNERSHIP, THE ASSESSEE HAS CONSTRUCTED THE BUILD ING AS PER THE AGREED TERMS OF THE CONSTRUCTION AS PER THE APP ROVED PLAN AND HANDED OVER THE PHYSICAL POSSESSION OF THE PROP ERTY TO THE PROSPECTIVE BUYERS. THE ASSESSEE HAS CONSTRUCTED B UILDINGS AS - - ITA 1109/14 ETC . 19 PER THE APPROVED PLAN AND CREATED INFRASTRUCTURE FA CILITIES LIKE PARKING AREA, DRAINAGE FACILITY, DRINKING WATER FAC ILITY, FIRE EXTINGUISHMENT, LIFT SWIMMING POOL ETC. THESE FACI LITIES CANNOT BE PROVIDED BY THE INDIVIDUAL PURCHASER OF A VILLA OR HOUSE. THE ASSESSEE BEING THE OWNER OF THE LAND, AS THERE IS N O DIFFERENCE BETWEEN THE PARTNERS AND THE FIRM, IT HAS DEVELOPED THE HOUSING PROJECT AND CONSTRUCTED THE FLATS BY CREATING ALL INFRASTRUCTURE FACILITIES AS PER THE APPROVED PLAN AND AGREED TERM S OF CONSTRUCTION. INDIVIDUAL PURCHASER CANNOT AWARD TH E WORK TO ANY OTHER PERSON AS PER THEIR CHOICE. THE INDIVIDUAL P URCHASER HAS TO PURCHASE A VILLA OR A HOUSE ONLY FROM THE CONSTR UCTION MADE BY THE ASSESSEE. WHEN THE PURCHASERS HAVE NO CHOIC E OF SELECTING THE BUILDERS FOR CONSTRUCTION ON A PROJEC T BEING DEVELOPED BY THE ASSESSEE, WE ARE OF THE OPINION TH AT THE PURCHASER CANNOT AWARD ANY WORK TO THE ASSESSEE. T HEREFORE, THE CONTENTION OF THE LD. DR HAS NO MERIT. IT IS A PPROPRIATE TO MENTION THE JUDGMENT OF THE KERALA HIGH COURT IN TH E CASE OF KERALA BUILDERS FORUM V. STATE OF KERALA (2009) (4) KLT 658, WHEREIN IT WAS HELD THAT IT IS THE RESPONSIBILITY O F THE BUILDER / LAND OWNER TO COMPLETE THE APARTMENT IN ACCORDANCE WITH BUILDING - - ITA 1109/14 ETC . 20 PERMIT OBTAINED FROM THE LOCAL AUTHORITY; THEREFORE , IT IS NOT THE WORKS CONTRACTOR. BEFORE THE KERALA HIGH COURT, TH E CONSTITUTIONAL VALIDITY OF THE KERALA STAMP ACT, 19 59 AS AMENDED BY KERALA FINANCE ACT, 2007 WAS CHALLENGED. THE KE RALA LEGISLATURE BY KERALA FINANCE ACT, 2007, HAS AMENDE D THE STAMP ACT, 1959 WHICH PROVIDED LEVY OF STAMP DUTY O N THE FLAT FULLY CONSTRUCTED AND SOLD BY THE BUILDERS TO THE P ROSPECTIVE PURCHASERS. THE PROSPECTIVE PURCHASERS HAS TO ENTE R INTO AN AGREEMENT FOR PURCHASE OF UNDIVIDED SHARE OF LAND A ND SIMULTANEOUSLY HAS TO ENTER INTO CONSTRUCTION OF FL AT ALSO. THE CONTENTION OF THE STATE GOVERNMENT WAS THAT WHEN TH E BUILDERS SOLD THE FULLY CONSTRUCTED FLATS THEN STAMP DUTY HA S TO BE PAID FOR THE LAND AS WELL AS THE FLAT. AND TO AVOID STAMP D UTY ON THE VALUE OF THE BUILDING, THE INDIVIDUALS, WHO PURCHAS ED THE FLAT ENTERED INTO AN AGREEMENT OF SALE OF UNDIVIDED SHAR E OF LAND AND SIMULTANEOUSLY ENTERED INTO AN AGREEMENT FOR CONSTR UCTION OF FLAT FOR HIM. THEREFORE, IT WAS CONTENDED BEFORE THE K ERALA HIGH COURT THAT IT WAS A WORKS CONTRACT. THE KERALA HIG H COURT, AFTER CONSIDERING AN IDENTICAL AGREEMENT AS ENTERED INTO IN THE CASE BEFORE US FOUND THAT IT IS NOT A WORKS CONTRACT. T HE KERALA HIGH - - ITA 1109/14 ETC . 21 COURT FURTHER FOUND THAT THE AGREEMENTS WERE SO MAD E TO APPEAR THE TRANSACTION IS ONE OF WORKS CONTRACT, BUT IN FA CT IT IS NOT A WORKS CONTRACT. 6.8 IN THE CASE BEFORE US, THE ASSESSEE ENTERED INTO CONSTRUCTION AGREEMENT WITH THE PROSPECTIVE BUYERS, WHO HAS NO CHOICE OF GIVING THE CONSTRUCTIO N TO ANOTHER BUILDER AND THEREAFTER, THE ASSESSEE CONSTRUCTED THE BUILDING AS PER THE APPROVED PLAN AND PROVIDED VARIOUS AMENITIES COMMON TO ALL PEOPLE. THEREFORE, LOOKING INTO THE ENTIRE TRANSACTION, AS SUCH, IT IS A DEVELOPMENT OF HOUSIN G PROJECT BY THE ASSESSEE ITSELF AND NO ONE AWARDED ANY WORK TO THE ASSESSEE. EVEN IF, THERE IS AN ENABLING CLAUSE IN THE PARTNERSHIP DEED TO DO THE WORKS CONTRACT, THAT CANNOT BE A REASON TO CONCLUDE THAT THE ASSESSEE UNDERTOOK WORKS CONTRACT. FURTHER, IN SIMILAR CIRCUMSTANCES, THE TRIBUNAL, IN THE CASE OF SANGHVI & DOSHI ENTERPRISES V. ITO (131 ITD 151)(CHEN) HAS TAKEN A SIMILAR VIEW, WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE ENTERED INTO A - - ITA 1109/14 ETC . 22 JOINT DEVELOPMENT AGREEMENT TO BUILD UP A HOUSING PROJECT ON LAND OWNED BY SOME OTHER PERSON AND ASSUMED ALL RISKS THAT ARE ASSUMED BY A DEVELOPER, THEN THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SEC.80IB OF THE ACT. THE RELEVANT PORTION IS AS FOLLOWS : 16 . THE HON'BLE MADRAS HIGH COURT, IN THE CASE OF CIT VS. SANGHVI & DOSHI ENTERPRISE REPORTED IN (2013) 50 (I) ITCL 303 (MAD-HC) HELD THAT WHERE THE ASSESSEE ENTERED I NTO A JOINT DEVELOPMENT AGREEMENT TO BUILD UP A HOUSING P ROJECT ON LAND OWNED BY SOME OTHER PERSON AND ASSUMED ALL RISKS THAT ARE ASSUMED BY A DEVELOPER, THEN THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SEC. 80IB(10) OF THE AC T IN RESPECT OF PROFITS DERIVED FROM THE HOUSING PROJECT . THE RELEVANT PORTION IS REPRODUCED HEREINUNDER:- A READING OF THE VARIOUS CLAUSES OF THE AGREEMENT CLEARLY POINTS OUT THE ROLE OF THE ASSESSEE, WHICH IS NOT JUST AS THAT OF A BUILDER TO PUT UP CONSTRUCTIO N AS PER THE DIRECTIONS OF THE OWNER; ON THE OTHER HAND, AS RIGHTLY POINTED OUT BY THE TRIBUNAL, THE RISK ELEMENT THAT IS INVOLVED IN THE PROJECT UNDERTAKEN BY THE ASSESSEE IS MORE THAN THAT OF A NORMAL BUILDER, UNDERTAKING MERE CONSTRUCTION. IT IS SEEN FROM THE DATA FURNISHED BEFORE THE AO THAT WHILE FLATS IN TH E 6TH FLOOR AND 11TH FLOOR WERE SOLD EVEN AS EARLY AS 2003, FLATS IN FIRST FLOOR WITH NOS. 104 AND 103 WE RE SOLD IN THE YEAR 2009. SO TOO, SOME OF THE FLATS IN SECOND FLOOR AND THIRD FLOOR WERE SOLD IN THE YEARS 2007, 2006 AND 2005. THE FLAT IN 12TH FLOOR WAS SOL D ON 15-10-2063 VALID IN THE 9TH FLOOR ON 5-11-2003. THE FLATS IN THE FIRST FLOOR WITH NOS. 101 AND 102 WERE SOLD ON 17-6-2009. APART FROM THIS, THERE WERE STILL SOME FLATS LEFT UNSOLD. [PARA 29] - - ITA 1109/14 ETC . 23 IN THE BACKGROUND OF THESE FACTS, THE RISK FACTORS, AS PROJECTED BY THE ASSESSEE AND ACCEPTED BY THE TRIBUNAL, NEED TO BE SEEN. UNDER CLAUSE 4 OF THE AGREEMENT, THE ASSESSEE WAS TO COLLECT A SUM OF RS. 600 PER SQ.FT. ON SUPER BUILT-UP AREA FOR THE S ALE OF UNDIVIDED SHARE OF LAND TRANSFERRED TO THE BUYER . THE SAID CLAUSE ALSO FIXES THE CEILING AS TO THE CONSIDERATION, WHICH WOULD BE PAID TO THE OWNER, NAMELY, AT RS. 11,51,94,000. THE CLAUSE IN THE AGREEMENT FURTHER POINTED OUT THAT THE BUILDER HAS TO ENTER INTO A BUILDER AGREEMENT WITH THE PROPOSED PURCHASER AND IT IS OPEN TO THE BUILDER TO FIX SUCH RATE PER SQUARE FOOT FOR CONSTRUCTION OF THE AREA A S IT DEEMS FIT, OVER WHICH THE OWNER HAS NO CLAIM AT ALL . THE BUILDER HAS TO PAY THE SPECIFIED COST OF THE LA ND ON THE UNDIVIDED SHARE OF SALE IN FAVOUR OF THE PURCHASER TO THE OWNER, PRO RATA TO THE BUILT-UP AR EA. A READING OF THE AGREEMENT OF SALE WITH THE PURCHASERS FURTHER POINTS OUT THAT THE BUILDER'S AGREEMENT WAS ENTERED ON THE VERY SAME DAY WITH THE ASSESSEE. THUS, SEEN IN THE BACKGROUND OF THE DATA AVAILABLE AS REGARDS THE DATE OF SALE, THE CLAUSE IN THE AGREEMENT BETWEEN THE OWNER OF THE LAND AND THE ASSESSEE AND THE SALE AGREEMENT WITH THE PROSPECTIVE PURCHASERS, IT IS EVIDENT THAT WHAT THE ASSESSEE HAD UNDERTAKEN IS NOT A MERE CONSTRUCTION, BUT DEVELOPING AND CONSTRUCTING OF A PROJECT, WHICH QUALIFIES FOR A DEDUCTION UNDER SECT ION 80IB. AS RIGHTLY POINTED OUT BY COUNSEL APPEARING F OR THE ASSESSEE, A BARE READING OF SECTION 80-IB SHOWS THAT THE DEDUCTION CONTEMPLATED THEREIN IS ORIENTED TOWARDS THE PROJECT AND NOT WITH REFERENCE TO AN ASSESSEE. IT IS NO DOUBT TRUE THAT THE PROJECT HAS TO BE DONE BY THE ASSESSEE, BUT THEN, WHEN THE DEDUCTION IS SPECIFIC ENOUGH AS REGARDS THE PARTICULAR ACTIVITY, ONE FAILS TO SEE HOW ONE SHOUL D ASSUME ANY SIGNIFICANCE IN THE MATTER OF CONSIDERIN G A DEDUCTION. - - ITA 1109/14 ETC . 24 17. THE HON'BLE MADRAS HIGH COURT, IN THE CASE OF CIT VS. SUBBA REDDY (HUF) (2015) 121 DTR 115 (MAD.), HELD THAT FOR CLAIMING DEDUCTION UNDER SEC. 80IB(10), IT IS NOT N ECESSARY THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPI NG AND CONSTRUCTION OF HOUSING PROJECT SHOULD BE THE OWNER OF THE LAND. THE RELEVANT PORTION IS REPRODUCED HEREINUNDER:- 13. IN THE ABSENCE OF ANY SPECIFIC DEFINITION FOR THE TERM BUILDUP AREA DURING THE RELEVANT PERIOD, THE REASONING OF THE CIT(A) WHICH WAS CONFIRMED BY THE TRIBUNAL IS JUSTIFIED. NEVERTHELESS, WE FIND THAT S . 80IB(10) OF THE IT ACT SPEAKS ABOUT THE RESIDENTIAL UNIT HAVING A MAXIMUM BUILT-UP AREA OF 1,500 SQ.FT. TO CLAIM DEDUCTION. EVEN IN THE DEFINITION UNDER S. 80IB(14)(A), WHICH CAME INTO EFFECT FROM 1ST APRIL, 2005, BUILT-UP AREA WAS DEFINED AS INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS, MEANING THEREBY THE ACTUAL RESIDENTIAL PORTION OF THE PROPERTY. IT, HOWEVER, CLEARLY STATES THAT IT WILL NOT INCLUDE COMMON AREA SHARED WITH OTHER RESIDENTIAL UNITS. HENCE, THE DEFINITION UNDER SEC. 80IB(14)(A) , COULD AT BEST, THROW SOME LIGHT AS TO HOW THE BUILT - UP AREA OF THE RESIDENTIAL UNIT SHOULD BE COMPUTED FOR THE PURPOSE OF DETERMINING DEDUCTION UNDER SEC. 80IB(10) OF THE IT ACT. 14. FROM THE READING OF THE ABOVESAID PROVISIONS, WE FIND THAT THERE IS NO JUSTIFICATION IN INCLUDING THE CAR PARK IN THE DEFINITION OF THE BUILT-UP AREA OF THE RESIDENTIAL UNIT FOR THE PURPOSE OF DETERMINING THE MAXIMUM BUILT-UP AREA. IN SUCH VIEW OF THE MATTER, WE ARE INCLINED TO ACCEPT THE REASONING OF THE CIT(A) DRAWING SUPPORT FROM THE TAMIL NADU APARTMENTS OWNERSHIP ACT, 1994, WHICH WAS CONFIRMED BY THE TRIBUNAL. ACCORDINGLY, THE SECOND SUBSTANTIAL QUESTION OF LAW IS ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. - - ITA 1109/14 ETC . 25 6.9 S IMILAR ISSUE WAS CONSIDERED BY THE TRIBUNAL, VISAKHAPATNAM, RECENTLY IN THE CASE OF M/S. VASANTHA VIHAR IN ITA NO.315/VIZ/2013 DATED 23.12.2015 AND THE SAME VIEW WAS ALSO TAKEN IN THE FOLLOWING CASES: 1. CIT V. SHANTINIKETAN PROPERTY FOUNDATION (P) LTD . (83 CCH 267)[MAD] 2. SREEVATSA REA ESTATES (P) LTD. V. ITO (29 CCH 355)[CHEN-TRIB] 3. VISWAS PROMOTERS PVT. LTD. V. ACIT (255 CTR 149)[MAD] IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF THE OPINION THAT THE CLAIM OF THE ASSESSEE IS TO BE ALLOWED. 7. NOW, WE TAKE UP THE APPEAL IN ITA NO.1108/MDS/14. THE FACTS OF THE CASE ARE SIMILAR AS NARRATED IN ITA NO.1109/MDS/2014 AND THE ASSESSEE HAS RAISED SAME ISSUE IN THIS APPEAL ALSO. AS WE HAVE DISPOSED OF THE APPEAL IN FAVOUR OF THE - - ITA 1109/14 ETC . 26 ASSESSE AS DISCUSSED ABOVE, WE ARE INCLINED TO ALLOW THE APPEAL OF THIS ASSESSEE ALSO. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 05 TH OF FEB., 2016 AT CHENNAI. SD/- SD/- ( $% & ) ( ' ( ) $ ) *%+,-,./01,2345,.62,+778,293 : ;< /JUDICIAL MEMBER ! ;<=>>70.?,.?@A1BA2 ': /CHENNAI, C; /DATED, THE 05 TH FEB., 2016. MPO* ;D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H3 /CIT(A) 4. H /CIT 5. FIJ K /DR 6. JL M /GF.