Indra Housing, CHENNAI V. ACIT, CHENNAI

ITA 1133/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96540 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 29-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2015
• Court: TRIBUNAL
• Department Lawyers: JOE SABASTIANCIT
• Assessee Lawyers: T BANUSEKARC A
• Keywords: Benefit of exemption

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , ! , ' #$ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.1133 /MDS./2015 ( / ASSESSMENT YEAR :2010-11) M/S.INDRA HOUSING , NO.19,GOVINDAN STREET, AYYAVOO COLONY, AMINJIKARAI, CHENNAI 600 029. VS. ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE XIII, CHENNAI -34. PAN AACFI 5832 J ( () / APPELLANT ) ( %*() / RESPONDENT ) / APPELLANT BY : MR.T.BANUSEKAR,C.A /RESPONDENT BY : MR.JOE SABASTIAN,CIT, D.R / DATE OF HEARING : 29.09.2015 /DATE OF PRONOUNCEMENT : 18.12.2015 + / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: ITA NO.1133 /MDS/2015 INDRA HOUSING 2 THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-12, CHENN AI DATED 16.03.2015 IN OLD ITA NO.1794/2013-14 (ITA NO.96/CI T(A)-12/2013- 14) PASSED UNDER SEC.143(3) READ WITH SECTION 25 0 OF THE ACT. 2. THE ASSESSEE HAS RAISED SIX ELABORATE GROUNDS I N ITS APPEAL; HOWEVER THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT (A) WHO HAD DENIED THE ASS ESSEES CLAIM OF DEDUCTION U/S.80-IB (10) OF THE ACT. 3.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF REAL E STATE AND CONSTRUCTIONS, FILED ITS RETURN OF INCOME ON 11.10. 2010 FOR A.Y.2010- 11, ADMITTING NIL INCOME AFTER CLAIMING EXEMPTION U/S.80-IB (10) OF THE ACT. SUBSEQUENTLY THE ASSESSEE FILED REVISED RE TURN ON 12.10.2010 DECLARING THE INCOME AGAIN AS NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THE NOTICE U/S.142(1) WAS ISSUED TO THE ASSESSEE ON 24.07.2012 AND THEREAFTER, ASSESSMENT U/S.143(3) OF ITA NO.1133 /MDS/2015 INDRA HOUSING 3 THE ACT WAS COMPLETED ON 30.03.2013 WHEREIN THE LD. ASSESSING OFFICER DENIED THE BENEFIT OF EXEMPTION U/S. 80-IB (10) OF THE ACT. 3.2. THE ASSESSEE IS A PARTNERSHIP FIRM, CONSTITUT ED VIDE PARTNERSHIP DEED DATED 29.11.2007. THE OBJECT OF THE PARTNERSHI P DEED IS TO DEVELOP RESIDENTIAL APARTMENTS IN NOOLAMBURBUR VILL AGE, CHENNAI. THE FIVE PARTNERS OF THE ASSESSEE FIRM ARE I) SMT. D. G. LAKSHMI II) SHRI D.L MADHUSUDHAN III) SMT. KASTURI IV) SHRI DAM ODHARAN & V) SHRI V.G.RAJENDRAN (WHO HAS EXPERTISE SKILL IN PROMOTION OF RESIDENTIAL PROJECTS). AS PER THE PARTNERSHIP DEED THE FIRST FO UR PARTNERS WHO OWNS LAND IN NOOLAMBURBUR VILLAGE BROUGHT LAND TO T HE EXTENT OF 106 CENTS FOR DEVELOPMENT OF RESIDENTIAL APARTMENTS. TH E FIFTH PARTNER SHRI V.G.RAJENDRAN WAS TO BRING IN NECESSARY FUNDS TO DE VELOP THE PROJECTS. THE PROFIT SHARING RATIO OF ALL THE PARTN ERS OF THE FIRM WERE EQUAL I.E. 20% OF THE PROFIT EACH. THE FIRST FOUR PARTNERS OF THE ASSESSEE FIRM WHO WERE THE OWNERS OF THE LAND GAVE GENERAL POWER OF ATTORNEY IN FAVOUR OF M/S.ISHWARAYLAKSHMI PROPER TIES PVT. LTD., REPRESENTED BY ITS MANAGING DIRECTOR SHRI D.L MADHU SUDHAN, WHO IS ALSO ONE OF THE PARTNERS OF THE ASSESSEE FIRM TO LO OK AFTER THE MATTERS RELATING TO SALE AND ALLIED WORK. SUBSEQUENTLY, TH E OWNERS OF THE LAND ITA NO.1133 /MDS/2015 INDRA HOUSING 4 THROUGH THEIR POWER AGENT M/S.ISHWARAYLAKSHMI PROPE RTIES PVT LTD., REPRESENTED BY ITS MANAGING DIRECTOR SHRI D.L.MADHU SUDHAN ENTERED INTO JOINT VENTURE ON 21.12.2005 WITH THE ASSESSEE FIRM REPRESENTED BY ITS PARTNER SHRI V.G.RAJENDRAN FOR DEVELOPMENT O F FLATS IN NOOLAMBURBUR VILLAGE ON THE LAND BROUGHT IN BY THE FIRST FOUR PARTNERS OF THE ASSESSEE FIRM. SINCE THE FIRST FOUR PARTNERS OF THE ASSESSEE FIRM CONTRIBUTED THE LAND TO THE PROJECT THEY WERE ENTIT LED FOR 50% OF THE CONSTRUCTED AREA. THE PROJECT WAS APPROVED BY CMDA ON 20/3/2007 AND THE APPROVAL LETTER WAS ISSUED TO M/S.ISHWARAYL AKSHMI PROPERTIES PVT. LTD., FOR CONSTRUCTION OF THE FLATS. THE APPR OVAL INFORMATION DOWNLOADED FROM CMDA BY THE LD. ASSESSING OFFICER I S REPRODUCED HEREIN BELOW FOR REFERENCE:- 1 6 9 M/S.ISHWARAY LAKSHMI PROPERTIES PVT. LTD REP.BY D.L.MADHU SUDHAN & 3 OTHERS S.NO.97/1A,1 B,1C & 1D, NOOLAMBUR VILLAGE, MOGAPPAIR AMBATTUR SALAI CHENNAI. B/SPL BUILDING/1 07-A- C/10 LR.NO.B3/ 27473/05 DT.20.3.07 STILL + 2 FLOORS (2 BLOCKS) RESIDEN TIAL BUILDING WITH 60 DWELLING UNITS EN3/72 92/07 DT.31.12 .2008 EC/NORTH/ 169/20/08 DT.31.12. 2008 3.3 DURING THE ASSESSMENT PROCEEDINGS THE LD. ASSE SSING OFFICER OBSERVED THE FOLLOWING DISCREPANCIES:- ITA NO.1133 /MDS/2015 INDRA HOUSING 5 I) THE ASSESSEE FIRM HAD ADMITTED HUGE NET PROFIT OF 30.31% AND CLAIMED EXEMPTION U/S.80-IB(10) OF THE ACT WHEREAS THE ASSESSEES GROUP OF CONCERNS IN THE SIMILAR BUSINES S WERE DECLARING NEGLIGIBLE PROFITS. II) FROM THE JOINT VENTURE AGREEMENT ENTERED BETWE EN THE ASSESSEE FIRM AND THE OWNERS OF THE LAND, IT WAS RE VEALED THAT THE LAND TO THE EXTENT OF 106 CENTS WAS BROUGHT IN FOR DEVELOPMENT OF RESIDENTIAL FLATS AGAINST WHICH THE FIRST FOUR PARTNERS WERE ELIGIBLE FOR 50% OF THE CONSTRUCTED A REA ALONG WITH THE UNDIVIDED SHARE IN LAND. THEREFORE THE ASS ESSEE HAS NOT COMPLIED WITH THE PROVISIONS FOR DEVELOPING THE MINIMUM REQUIRES LAND OF ONE ACRE. III) THE CONSTRUCTION APPROVAL HAS BEEN OBTAINED FR OM CMDA IN THE NAME OF M/S.ISHWARAYLAKSHMI PROPERTIES PVT. LTD ., AND NOT IN THE NAME OF THE ASSESSEE. CONSEQUENTLY ALL OTHER RELEVANT CERTIFICATES WERE ALSO NOT ISSUED IN THE NAME OF TH E ASSESSEE THEREFORE IT WAS APPARENT THAT THE ASSESSEE FIRM HA D NO ROLE IN THE DEVELOPMENT OF THE PROJECT. ITA NO.1133 /MDS/2015 INDRA HOUSING 6 IV) THE ASSESSEE FIRM HAS NOT PRODUCED BOOKS OF ACC OUNTS, BILLS, VOUCHERS IN ORDER TO VERIFY AS TO WHO HAS ACTUALLY CONSTRUCTED THE PROJECTS. ALL CORRESPONDENCES PRODUCED BEFORE T HE DEPARTMENT INDICATED THAT M/S.ISHWARAYLAKSHMI PROPE RTIES PVT. LTD., HAD DEVELOPED THE PROJECT. FROM THE ABOVE THE LD. ASSESSING OFFICER CAME TO A CONCLUSION THAT THE ASSESSEE FIRM HAD PEAKED ITS NOSE IN ORDER TO G ET THE EXEMPTION U/S.80IB(10) OF THE ACT, THOUGH IT WAS NOT ELIGIBLE . ACCORDINGLY THE LD. ASSESSING OFFICER DISALLOWED THE CLAIM OF EXEMPTION U/S.80-IB OF THE ACT TO THE ASSESSEE. 4. ON APPEAL, THE LD. CIT (A) EXAMINED THE ACCOUN TS OF M/S.ISHWARAYLAKSHMI PROPERTIES PVT. LTD., AND FOUND THAT IT HAD DECLARED LOSS AND ALSO HAD CARRIED FORWARD OF LOSSE S. THEREFORE HE CAME TO A CONCLUSION THAT THE ENTIRE TRANSACTIONS H AS BEEN SO ARRANGED BY EXECUTING A JOINT VENTURE AGREEMENT IN ORDER TO THE CLAIM THE DEDUCTION UNDER SECTION-80IB(10) OF THE ACT IN THE HANDS OF THE ASSESSEE FIRM INSTEAD OF CLAIMING IT IN THE HANDS O F ITA NO.1133 /MDS/2015 INDRA HOUSING 7 M/S.ISHWARAYLAKSHMI PROPERTIES PVT. LTD., WHICH WAS A LOSS MAKING COMPANY AND HENCE WILL NOT BE BENEFITED EVEN IF THE CLAIM U/S. 80IB(10) OF THE ACT IS ALLOWED. THEREAFTER TAKING A NOTE OF THE OBSERVATION MADE BY THE LD. ASSESSING OFFICER THAT NO BOOKS OF ACCOUNTS WERE PRODUCED TO EXAMINE THE VERACITY OF T HE CLAIM OF THE APPELLANT FOR TAKING THE FULL RESPONSIBILITY OF THE PROJECTS AND THE RISK ASSOCIATED THEREIN, CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER. 5. BEFORE US, THE LD. A.R MADE THE FOLLOWING SUBM ISSIONS:- 1. THE APPELLANT IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DEVELOPMENT OF RESIDENTIAL APARTMENTS. IN THE RETUR N OF INCOME FILED FOR THE ASSESSMENT YEAR 2010-11 THE APPELLANT HAD ADMIT TED A GROSS TOTAL INCOME OF RS.7,94,98,817/- AND CLAIMED DEDUCTION U/ S.80-LB(1 0) OF RS.7,94,98,817/-. 2. THE APPELLANT HAD DEVELOPED A HOUSING PROJECT CO NSISTING OF STILT FLOOR PLUS FOUR FLOORS IN 2 BLOCKS COMPRISING 60 DWELLING UNITS AT NOLAMBUR, MOGAPPAIR. THE SAID PROJECT WAS DEVELOPED IN A LAND ADMEASURING 1.06 ACRES. 3. THE SAID LAND WAS OWNED BY 4 INDIVIDUALS NAMELY SMT.D.G.LAKSHMI, SHRI.D.L.MADHUSUDHAN, SMT.D.V.KASTURI AND SHRI.G.DA MODHARAN. THE SAID FOUR LAND OWNERS HAD GIVEN A GENERAL POWER OF ATTORNEY TO ITA NO.1133 /MDS/2015 INDRA HOUSING 8 M/S.LSWARYALAXMI PROPERTIES PVT LTD REPRESENTED BY ITS MANAGING DIRECTOR SHRI.D.L.MADHUSUDHAN. 4. THE 4 LAND OWNERS THROUGH THEIR POWER AGENT ENTE RED INTO A JOINT VENTURE DEVELOPMENT AGREEMENT WITH THE APPELLANT ON 21.12.2005 FOR DEVELOPING THE ABOVE SAID PROPERTY. 5. THE APPROVAL WAS OBTAINED BY M/S.LSWARYALAXMI PR OPERTIES PVT LTD SINCE APPROVAL FOR BUILDING CONSTRUCTION WILL BE GI VEN ONLY IN THE NAME OF THE LAND OWNERS. THEREAFTER THE PROPERTY WAS DEVELO PED BY THE APPELLANT AND THE COMPLETION CERTIFICATE WAS GIVEN IN THE NAME OF M/S.LSWARYALAXMI PROPERTIES PVT LTD. 6. AT THIS JUNCTURE IT IS MOST HUMBLY SUBMITTED THA T THE APPELLANT NEED NOT BE THE LANDOWNER FOR CLAIMING DEDUCTION ULS.80-IB(1 0) AND FURTHER THE APPROVALS OR THE COMPLETION CERTIFICATE NEED NOT BE IN THE NAME OF THE APPELLANT WHO IS THE DEVELOPER OF THE PROPERTY. 7. FOR CLAIMING DEDUCTION U/S.80-IB(10) THE APPELL ANT HAS TO SATISFY ONLY THE CONDITIONS LAID DOWN IN THE SAID SECTION. IN TH E INSTANT CASE THE APPELLANT HAD SATISFIED ALL THE CONDITIONS IN SECTI ON 80-IB(10). 8. THE ONLY CONDITION WITH REGARD TO LAND IN SECTIO N 80-IB(10) IS THAT THE PROJECT SHOULD BE ON THE SIZE OF PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE WHICH IN THE INSTANT CASE IS SATISFIED SINCE THE PLOT OF LAND IS ADMEASURING 1.06 ACRES. THERE IS NO CONDITION IN SE CTION 80-IB(10) TO STATE THAT THE LAND SHOULD BE OWNED BY THE DEVELOPE R. ITA NO.1133 /MDS/2015 INDRA HOUSING 9 9. FOR THIS PROPOSITION ATTENTION IS INVITED TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT V RADHE DEVELOPERS [2012] 341 ITR 403 (GUI) WHERE IT HAS BEEN HELD THAT THE ASSESSEES WE RE ENTITLED TO THE BENEFIT U/S.80LB(10) OF THE ACT EVEN WHERE THE TITL E OF THE LANDS HAD NOT PASSED ON TO THE ASSESSEES AND IN SOME CASES, THE D EVELOPMENT PERMISSIONS MAY ALSO HAVE BEEN OBTAINED IN THE NAME OF THE ORIGINAL LAND OWNERS. 10. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT V SANGHVI AND DOSHI ENTERPRISE [2013] 255 CTR (MAD) 156 FOLLOWING THE D ECISION OF THE HONBLE GUJARAT HIGH COURT IN RAD HE DEVELOPERS REF ERRED TO SUPRA HELD AS FOLLOWS: 31. AS RIGHTLY POINTED OUT BY LEARNED SENIO R COUNSEL APPEARING FOR THE ASSESSEE, IN THE DECISION REPORTED IN (2012) 34 1 ITR 403 (COMMISSIONER OF INCOME-TAX V. RADHE DEVELOPERS), T HE GUJARAT HIGH COURT CONSIDERED THE QUESTION ON OWNERSHIP AS A CON DITION FOR GRANT OF DEDUCTION UNDER SECTION 801B(10) IN DEPTH AND ACCEP TED THE CASE OF AN ASSESSEE SIMILARLY PLACED. IT HELD THAT THE PROVISI ONS NOWHERE REQUIRE THAT DEVELOPERS WHO ARE THE OWNER OF THE LAND ALONE WOULD BE ENTITLED FOR GRANT OF DEDUCTION UNDER SECTION 80IB(10). GOIN G THROUGH THE DECISION OF THE GUJARAT HIGH COURT, WE HAVE NO HESI TATION IN HOLDING THAT WE ARE IN RESPECTFUL AGREEMENT WITH THE LAW DECLARE D BY THE GUJARAT HIGH COURT. 11. ATTENTION IS FURTHER INVITED TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT V MOON STAR DEVELOPERS [2014] 367 ITR 621 (GUI) WHERE ALSO THE LAND ON WHICH THE HOUSING PROJECT WAS CONS TRUCTED WAS NOT OWNED BY THE ASSESSEE AND THE DEVELOPMENT PERMISSIO N BY THE LOCAL AUTHORITY WAS GIVEN IN THE NAME OF THE LANDOWNERS A ND NOT THE ITA NO.1133 /MDS/2015 INDRA HOUSING 10 ASSESSEES. THE HONBLE GUJARAT HIGH COURT FOLLOWING ITS OWN DECISION IN RADHE DEVELOPERS REFERRED TO SUPRA HELD THAT THE AS SESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S.80-LB(10) EVEN THOUGH THE LAND WAS NOT OWNED BY THE ASSESSEE AND THE DEVELOPMENT PERMISSION WAS ALS O IN THE NAME OF THE LANDOWNERS. 12. IN THE LIGHT OF THE ABOVE DECISIONS IT IS THERE FORE MOST HUMBLY SUBMITTED THAT THE APPELLANT IS ELIGIBLE FOR CLAIMI NG DEDUCTION U/S.80- IB(10) EVEN THOUGH THE APPELLANT IS NOT THE OWNER O F THE LAND AND THE APPROVAL FOR CONSTRUCTION OF BUILDING AND THE COMPL ETION CERTIFICATE IS IN THE NAME OF THE LAND OWNER. 13. IN ORDER TO CARRY ON THE PROJECT MORE EFFECTIVE LY AND EFFICIENTLY THE 4 LAND OWNERS REPRESENTED BY THEIR POA HOLDER M/S. M/ S.ISWARYALAXMI PROPERTIES PVT LTD ENTERED INTO PARTNERSHIP WITH SH RI.V.G.RAJENDRAN AND BECAME PARTNER OF THE APPELLANT FIRM VIDE DEED EXEC UTED ON 29.11.2007 THEREBY BRINGING IN THE LAND OWNED BY THEM AS CAPIT AL CONTRIBUTION TO THE APPELLANT FIRM AND SHRI.V.G.RAJENDRAN BROUGHT IN FU NDS TO MEET THE COST OF CONSTRUCTION OF THE PROJECT. 14. BY BRINGING THE LAND INTO THE PARTNERSHIP FIRM AS CAPITAL CONTRIBUTION ON WHICH THE SAID PROJECT WAS DEVELOPED, THE LANDOWNER S HAVE AGREED THAT THE LAND BELONGS TO THE PARTNERSHIP FIRM I.E THE AP PELLANT FIRM. 15. THEREFORE BY VIRTUE OF THE DEED OF PARTNERSHIP ENTERED INTO AMONG THE LAND OWNERS AND SHRI.V.G.RAJENDRAN THE APPELLANT FI RM HAS BECOME THE OWNER OF THE LAND AND HENCE IT IS MOST HUMBLY SUBMI TTED THAT THE APPELLANT IS ELIGIBLE FOR CLAIMING DEDUCTION U/S.80 -IB(10) SINCE THE PROJECT HAS BEEN DEVELOPED BY THE APPELLANT ON ITS OWN LAND. ITA NO.1133 /MDS/2015 INDRA HOUSING 11 16. THE ASSESSING OFFICER HAS STATED THAT THE CONST RUCTION APPROVAL HAS BEEN OBTAINED FROM CMDA IN THE NAME OF M/S.LSWARYAL AXMI PROPERTIES PVT LTD AND FURTHER CMDA VIDE LETTER DATED 31.12.20 08 ISSUED THE COMPLETION CERTIFICATE CERTIFYING THAT M/S.LSWARYAL AXMI PROPERTIES PVT LTD REPRESENTED BY THIRU.D.L.MADHUSUDHANAN & 3 OTHERS H AS CONSTRUCTED THE RESIDENTIAL BUILDING. 17. IN THIS REGARD IT IS SUBMITTED THAT M/S.LSWARYA LAXMI PROPERTIES PVT LTD IS ONLY THE POWER OF ATTORNEY HOLDER OF THE 4 LANDOWNE RS NAMELY SMT. D.C. LAKSHMI, SHRI. D.L. MADHUSUDHAN, SMT. D.V. KASTURI AND SHRI.G. DAMODHARAN. THE 4 LANDOWNERS HAVE APPOINTED M/S.LSW ARYALAXMI PROPERTIES PVT LTD ONLY AS THEIR POWER OF ATTORNEY HOLDER AND M/S.ISWARYALAXMI PROPERTIES PVT LTD ON BEHALF OF TH E LAND OWNERS HAD ENTERED INTO THE JOINT VENTURE AGREEMENT WITH THE A PPELLANT ARID HAS AGREED THAT THE APPELLANT WOULD DEVELOP THE PROPERT Y. 18. IT IS THEREFORE SUBMITTED THAT THOUGH THE BUILD ING PLAN APPROVAL AND THE COMPLETION CERTIFICATE WERE ISSUED IN THE NAME OF M /S.ISWARYALAXMI PROPERTIES PVT LTD AS THEY WERE THE POWER OF ATTORN EY HOLDER OF THE LAND OWNERS, THE PROJECT HAS BEEN DEVELOPED ONLY BY THE APPELLANT AND THE APPELLANT IS ELIGIBLE TO CLAIM THE DEDUCTION ULS.80 -IB(L0). 19. THE ASSESSING OFFICER HAS DENIED THE CLAIM OF D EDUCTION U/S.80-IB(10) FOR THE REASON THAT THE APPELLANT IS NOT THE OWNER OF THE LAND, THE BUILDING PLAN APPROVAL AND THE COMPLETION CERTIFICA TE WERE NOT IN THE NAME OF THE APPELLANT COMPANY. ITA NO.1133 /MDS/2015 INDRA HOUSING 12 20. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS AL SO CONCLUDED THAT SINCE M/S.LSWARYALAXMI PROPERTIES PVT LTD HAS SHOWN LOSSES IN THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2010-11 AND HAS ALSO GOT BROUGHT FORWARD LOSSES THE DEDUCTION ULS.80-LB(10) COULD NOT BE CLAIMED FULLY AND HENCE BY VIRTUE OF JOINT VENTURE AGREEMEN T THE APPELLANT HAS CLAIMED DEDUCTION U/S.80-LB(10). 21. IT MAY BE NOTED THAT THE LANDOWNERS MAY CHOOSE TO GIVE THEIR PROPERTY FOR DEVELOPMENT TO ANY PERSON. SINCE ONE OF THE LAN DOWNERS IN THE INSTANT CASE HAPPENS TO BE THE MANAGING DIRECTOR OF M/S.LSWARYALAXMI PROPERTIES PVT LTD, IT DOES NOT MEAN THAT THEY HAVE CHOSEN THE APPELLANT FIRM FOR DEVELOPING THE PROPERTY, SINCE M /S.LSWARYALAXMI PROPERTIES PVT LTD IS A LOSS MAKING ENTITY. EVEN IF M/S.LSWARYALAXMI PROPERTIES PVT LTD MAKES PROFIT THE LANDOWNERS ARE AT WILL TO CHOOSE ANY PERSON TO ENTER INTO A JOINT VENTURE AGREEMENT. 22. LT IS SUBMITTED THAT BY SHOWING THE INCOME IN T HE HANDS OF M/S.LSWARYALAXMI PROPERTIES PVT LTD OR IN THE HANDS OF THE APPELLANT FIRM THERE IS NO LOSS TO THE REVENUE SINCE BOTH ENTITIES ARE ELIGIBLE TO CLAIM DEDUCTION U/S.80- IB(10) ON THE INCOME IF THEY HAD DEVELOPED THE PROPERTY. 23. .AT THIS JUNCTURE ATTENTION IS INVITED TO THE F ACT THAT THAT THE ASSESSING OFFICER HAS ACCEPTED THE INCOME OFFERED BY THE APPE LLANT ON ACCOUNT OF SALE OF RESIDENTIAL FLATS AND HAS ALSO ACCEPTED EXP ENSES INCURRED IN CONNECTION WITH DEVELOPMENT OF THE PROPERTY. HE HAS DENIED ONLY THE CLAIM OF DEDUCTION U/S.80-LB(10). IN THIS CONNECTIO N IT IS MOST HUMBLY SUBMITTED THAT IF THE APPELLANT IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S.80- LB(10) FOR THE REASON THAT THE APPELLANT IS NOT THE DEVELOPER THEN THE ITA NO.1133 /MDS/2015 INDRA HOUSING 13 INCOME ADMITTED AND THE EXPENSES CLAIMED WILL ALSO NOT BELONG TO THE APPELLANT. 24. IN THE LIGHT OF THE ABOVE SUBMISSIONS, IT IS T HEREFORE MOST HUMBLY PRAYED THAT THE HONBLE ITAT MAY BE PLEASED TO ALLO W THE DEDUCTION U/S.80-IB(10) AS CLAIMED BY THE APPELLANT. 6. THE LD. D.R REITERATED THE OBSERVATIONS OF THE LD. ASSESSING OFFICER AND THE LD. CIT (A) BEFORE US AND ARGUED JU STIFYING THEIR STAND AND PRAYED FOR CONFIRMING THEIR ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE ORDERS OF THE REVENUE, IT IS APPARENT THAT THE REVENUE HAS REJECTED THE CLAIM OF THE ASSESSEE UNDER SECTION-80IB(10) OF THE ACT ONLY FOR THE REAS ON THAT, (A) THE APPELLANT WAS NOT THE OWNER OF THE LAND, (B) THE BU ILDING PLAN APPROVAL AND COMPLETION CERTIFICATE WERE NOT IN THE NAME OF THE APPELLANT, (C) M/S.ISHWARAYLAKSHMI PROPERTIES PVT. LTD., ON WHOS NAME THE BUILDING PLAN APPROVAL & COMPLETION CERTIFICATE OBTAINED WAS A LOSS MAKING COMPANY HAVING CARRIED FORWARD LOSSES AND THEREFORE WOULD NOT BE ITA NO.1133 /MDS/2015 INDRA HOUSING 14 WORTHWHILE TO CLAIM THE BENEFIT OF SECTION-80IB(10) OF THE ACT, ETC.. FURTHER, THE LD. ASSESSING OFFICER THOUGH HAD MADE REMARKS IN HIS ORDER THAT THE ASSESSEE HAD NOT PRODUCED BILLS AND VOUCHERS, BOOKS OF ACCOUNTS ETC., TO JUSTIFY THE VERACITY OF ITS CL AIM, HAS SIMPLY ACCEPTED THE PROFIT DECLARED BY THE ASSESSEE. THIS SHOWS THAT THE LD. ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACC OUNTS OF THE ASSESSEE BUT HAS ACCEPTED THE INCOME AND EXPENDITUR E SHOWN BY IT IN ITS P&L A/C AND THE BALANCE SHEET. FURTHER IT IS PERTINENT TO MENTION AT THIS JUNCTURE THAT THE ASSESSEE HAS NO BAR FOR A RRANGING ITS STATE OF AFFAIRS IN ANY MANNER THAT IS LEGALLY ACCEPTABLE TO CONDUCT ITS BUSINESS ACTIVITIES AND DERIVE MAXIMUM BENEFIT UNDE R THE PROVISIONS OF THE ACT. ON ANALYZING THE JOINT VENTURE DEVELOPM ENT AGREEMENT DATED 21 ST DECEMBER, 2005 ENTERED BETWEEN THE FOUR OWNERS OF THE LAND AND THE ASSESSEE FIRM THE FOLLOWING FACTS EMER GES:- CLAUSE 1: THE PARTY OF THE SECOND PART (ASSESSEE FIRM) SHALL PUT UP RESIDENTIAL FLATS IN THE PROPERTY MENTIONED IN THE SCHEDULE HEREUNDER TO THE EXTENT APPROVED BY THE CMDA AND THE CORPORAT ION/MUNICIPALITY OF CHENNAI. THE PARTY OF SECOND PART (ASSESSEE FIR M) SHALL ITA NO.1133 /MDS/2015 INDRA HOUSING 15 CONVENIENTLY DIVIDE/SUB-DIVIDE THE SCHEDULE MENTION ED PROPERTIES AS THE CASE MAY BE, BUT STRICTLY IN ACCORDANCE WITH TH E RULES. CLAUSE 2: 50% OF THE CONSTRUCTED AREA IS ASSIGNED TO THE OWNERS OF THE LAND WHO ARE IN JOINT VENTURE WITH THE ASSESSEE FIRM SHARING THE RISK IN THE PROJECT IN ORDER TO REALIZE THE SALE PR OCEEDS DIRECTLY ON THEIR OWN AS THEIR REWARD FOR CONTRIBUTION OF LAND. CLAUSE 3: THE ASSESSEE HAS PROVIDED SECURITY DEPOS IT TO THE OWNERS OF THE LAND ONLY TO THE EXTENT OF RS. 50,00,000/- T HOUGH THE OVERALL PROJECT VALUE IS MUCH MORE. CLAUSE 4: POWER IS GRANTED BY THE OWNERS OF THE LA ND TO THE ASSESSEE FIRM FOR DEVELOPMENT OF THE PROJECT AS A J OINT VENTURE, IE., THE PROJECT IS TO BE JOINTLY DEVELOPED BY BOTH THE PARTIES UNDERTAKING ALL THE RISK INVOLVED AMONGST THEMSELVES. CLAUSE 5: THE POSSESSION OF THE LAND IS GIVEN TO THE ASSESSEE FIRM IN ORDER TO INSTALL ADVERTISEMENT BOARD, CLEAN AND MAKE THE LAND READY FOR CONSTRUCTION, FOR DESIGNING THE PROJECT A ND EXECUTING THE SAME ETC., ITA NO.1133 /MDS/2015 INDRA HOUSING 16 CLAUSE 6: THE ASSESSEE FIRM HAS TO BEAR THE ENTIRE COST OF THE PROJECT LEGAL EXPENSES ARCHITECT FEES CMDA SECURITY DEPOSIT S AND ANY OTHER INCIDENTAL EXPENSES CLAUSE 7: THE ASSESSEE FIRM HAS ALSO BEEN GIVEN THE RIGHT TO NOMINATE ANY PERSON OF ITS CHOICE FOR ALL OR ANY OF THE RIGHTS ARISING OUT OF THE JOINT VENTURE AGREEMENT. CLAUSE 8: THE ASSESSEE FIRM SHALL EXECUTE THE PROJ ECT AFTER OBTAINING APPROVAL FROM THE CMDA /CORPORATION/LOCAL BODY CLAUSE 9: THE OWNERS OF THE LAND SHALL BE AT LIBER TY TO OVERSEE THE PROGRESS OF THE PROJECT WITHOUT CREATING ANY HINDRA NCE OR OBSTRUCTION IN THE CONSTRUCTION ACTIVITY. CLAUSE 10: THE ASSESSEE FIRM HAS TO BEAR ANY EXPENS ES TOWARDS STAMP DUTY, REGISTRATION FEES, ANY INCIDENTAL EXPEN SES TOWARDS SALE OF UNDIVIDED INTEREST IN LAND ASSIGNED TO THEM OR THEI R NOMINEES. CLAUSE 11: THE CONSTRUCTED AREA WILL BE IDENTIFIED AND DIVIDED BETWEEN THE ASSESSEE FIRM AND THE OWNERS OF THE LAN D IN A REASONABLE MANNER. ITA NO.1133 /MDS/2015 INDRA HOUSING 17 CLAUSE 12: THE ASSESSEE FIRM SHALL BE ENTITLED TO A LL THE ORIGINAL DOCUMENTS OF THE LAND IN ORDER TO OBTAIN NOC FROM T HE APPROPRIATE AUTHORITIES. CLAUSE 13: AFTER COMPLETION OF THE ENTIRE PROJECT AND SALE OF THE ENTIRE FLATS, AN ASSOCIATION SHALL BE FORMED AMONGS T THEM WITH RULES AND BYE-LAWS FOR THE PURPOSE OF MAINTAINING COMMON AMENITIES, COMMON AREAS OVERHEAD TANK AND OTHER COMMON INFRAST RUCTURES. THE OWNERS OF THE LAND SHALL ALSO BECOME THE MEMBERS IN LIEU OF THE AREA ALLOTTED TO THEM. FROM THE ABOVE, IT IS APPARENT THAT THE ASSESSEE HA D UNDERTAKEN TO COMPLETE THE PROJECT WITH ALL RISKS ATTACHED TO THE PROJECT AND ACCORDINGLY IT IS ELIGIBLE TO CLAIM THE REWARD ALSO . IT IS PERTINENT TO MENTION HERE THAT THE ENTIRE PROJECT IS DEVELOPED A S JOINT VENTURE BETWEEN THE OWNERS OF THE LAND AND THE ASSESSEE FIR M. THE OWNERS OF THE LAND AND THE ASSESSEE FIRM HAVE THEIR RESPECTIV E ROLES IN THE DEVELOPMENT OF THE PROJECT JOINTLY, SHARING THE RIS K INVOLVED IN THE PROJECT AND ALSO EXECUTING THE PROJECT. FURTHER, IT IS EVIDENT THAT THE ENTIRE PROJECT IS JOINTLY DEVELOPED BY BOTH THE PAR TIES IE., THE OWNERS ITA NO.1133 /MDS/2015 INDRA HOUSING 18 OF THE LAND AND THE ASSESSEE FIRM ON THE LAND EXTEN DING MORE THAN ONE ACRE(106 CENTS) AS STIPULATED UNDER THE ACT. NO OTHER ASSOCIATE CONCERN OF THE ASSESSEE HAS CLAIMED THE BENEFIT OF SECTION-80IB (10) OF THE ACT ON THE SAME PROJECT AS THE ENTIRE PROFIT WAS DECLARED IN THE HANDS OF THE ASSESSEE FIRM AND DEDUCTION CLAIMED AC CORDINGLY. IN THESE CIRCUMSTANCES CONSIDERING THE DECISION OF THE CASES CITED BY THE ASSESSEE ON THE IDENTICAL FACTS SUPRA, WE ARE O F THE CONSIDERED VIEW THAT THE ASSESSEE HAS EXECUTED THE PROJECT UND ERTAKING THE RISKS AND REWARDS AND THEREFORE, THE CLAIM OF SECTION-80I B(10) OF THE ACT IS JUSTIFIED. NEEDLESS TO MENTION THAT THE APPELLANT NEED NOT BE THE LANDOWNER FOR CLAIMING DEDUCTION ULS.80-IB(10) OF T HE ACT AND FURTHER THE APPROVALS OR THE COMPLETION CERTIFICATE NEED NOT BE IN THE NAME OF THE APPELLANT WHO IS THE DEVELOPER OF THE PROPERTY AS HELD BY THE DECISIONS CITED BY THE ASSESSEE SUPRA. HENCE, WE HEREBY DIRECT THE LD. ASSESSING OFFICER T O GRANT DEDUCTION U/S.80IB (10) OF THE ACT TO THE ASS ESSEE. ITA NO.1133 /MDS/2015 INDRA HOUSING 19 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THE 18 TH DECEMBER, 2015 AT CHENNAI. SD/- SD/- ( ' #$ % ) ((CHALLA NAGENDRA PRASAD) ( . ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 18 TH DECEMBER, 2015. K S SUNDARAM. !'## $%#&% /COPY TO: # 1. /APPELLANT 2. /RESPONDENT 3. # '#() /CIT(A) 4. # ' /CIT 5. %*+# , /DR 6. +-#. /GF