ACIT, Trichy V. M/s. Harihar Dwellings Pvt.Ltd., Trichy

ITA 1275/CHNY/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7175 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S SRIDHAR
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # $ , % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 1275/MDS/2012 ( / ASSESSMENT YEAR: 2008-09) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I(1), TRICHY. VS M/S. HARIHAR DWELLINGS PVT. LTD., B-101,HARIHAR RESIDENCY, 20,MANNARPURAM MAIN ROAD, TRICHY-20. PAN:AABCD8064D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.DAS GUPTA, JCIT /RESPONDENT BY : MR. S.SRIDHAR, ADVOCATE / DATE OF HEARING : 8 TH SEPTEMBER, 2014 /DATE OF PRONOUNCEMENT : 31 ST OCTOBER, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), TIRUCH IRAPALLI DATED 21.03.2012 FOR THE ASSESSMENT YEAR 2008-09. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CO NSIDER THAT THE COMPLETED HOUSING PROJECT DID NOT SATISFY THE CONDITION WHICH MANDATES EACH RESIDENTIAL UNIT SHOU LD NOT EXCEED BUILT UP AREA OF 1500 SQ.FT. IN OTHER WORDS, IT IS THE 2 ITA NO.1275/MDS/2012 CONTENTION OF THE REVENUE THAT COMMISSIONER OF INCO ME TAX (APPEALS) SHOULD NOT HAVE GRANTED DEDUCTION UNDER S ECTION 80IB(10) PROPORTIONATELY IN RESPECT OF THE FLATS W HERE BUILT UP AREA IS LESS THAN 1500 SQ.FT.. 2. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER O F THE ASSESSING OFFICER IN REJECTING THE CLAIM OF THE ASS ESSEE UNDER SECTION 80IB(10) OF THE ACT. 3. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSUE IN APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE B Y THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO. 113/MDS/2013 BY ORDER DATED 10.0 5.2013, COPY OF THE ORDER IS PLACED ON RECORD. 4. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND DECISION OF THIS TRIBUNAL RELIED ON. ON GOING T HROUGH THE ABOVE ORDER OF THE CO-ORDINATE BENCH, WE FIND THAT THE ISSUE IN APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSE E FOR THE ASSESSMENT YEAR 2006-07 BY FOLLOWING THE JURISDICTI ONAL HIGH 3 ITA NO.1275/MDS/2012 COURT DECISION IN THE CASE OF CIT VS. SANGHVI AND D OSHI ENTERPRISE IN TAX APPEAL NOS. 581 & 582 OF 2011 AND 314 & 315 OF 2012 AND M.P.NO.1 OF 2011 BY ORDER DATED 01. 11.2012 AND THE TRIBUNAL CONFIRMED THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) WHO ALLOWED THE CLAIM FOR DEDU CTION UNDER SECTION 80IB(10) OF THE ACT TO THE ASSESSEE F OR THOSE APARTMENTS WITH BUILT UP AREA OF LESS THAN 1500 SQ. FT. WHILE HOLDING SO, THE TRIBUNAL OBSERVED AS UNDER:- 10. IN ASSESSMENT YEAR 2006-07, THE SOLE ISSUE INVOLVED IN THE APPEAL OF THE REVENUE IS THAT THE L D. CIT(A) ERRED IN ALLOWING DEDUCTION U/S 80IB(10) OF THE ACT TO THE ASSESSEE EVEN THOUGH THE HOUSING PROJECT DID NOT SATISFY THE CONDITION WHICH MANDATE S THAT EACH RESIDENTIAL UNIT SHOULD NOT EXCEED BUILT- UP AREA OF 1500 SQ FT. 11. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE- COMPANY, DURING THE YEAR UNDER CONSIDERATION, CONSTRUCTED 52,099 SQ FT OF BUILT-UP AREA OUT OF WH ICH DEDUCTION U/S 80IB(10) WAS CLAIMED ON THE BUILT- UP AREA OF 18,129 SQ FT. THE ASSESSEE-COMPANY HAD SHOWN NET PROFIT OF ` 48,34,827/- FOR THE ASSESSMENT YEAR UNDER CONSIDERATION FOR THE TOTAL BUILT-UP ARE A OF 52,099 SQ FT. THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) ON THE BUILT-UP AREA OF 18,129 SQ FT ON PROPORTIONATE AMOUNT OF ` 16,82,411/-. THE ASSESSING OFFICER DID NOT ALLOW THE PROPORTIONATE CLAIM FOR THE BUILT-UP AREA FOR APARTMENTS BELOW 1500 SQ FT ON THE GROUND THAT SECTION 80IB(10) DOES NOT CONSIDER PROPORTIONATE DISALLOWANCE. 12. BEING AGGRIEVED BY THE SAID ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A), FOLLOWING THE DECISION OF THE HON'BLE CALCUTTA HIGH 4 ITA NO.1275/MDS/2012 COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN IT APPEAL NO.453 OF 2006, ALLOWED THE CLAIM FOR DEDUCTION U/S 80IB(10) TO THE ASSESSEE FOR THOSE APARTMENTS WITH BUILT UP AREA OF LESS THAN 1500 SQ FT. 13. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 14. DURING THE COURSE OF HEARING, THE LD. DR VERY FAIRLY CONCEDED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS M/S SANGHVI AND DOSHI ENTERPRISE, TAX CASE APPEAL NOS.581 & 582 OF 2011 AND 314 & 315 OF 2012 AND M.P NO.1 OF 2011, ORDER DATED 1.11.2012, REPORTED IN AIT-2012-347-HC. 15. ON THE OTHER HAND, THE LD. A.R OF THE ASSESSEE FULLY JUSTIFIED THE ORDER OF THE LD. CIT(A). 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CONSTRUCTED TOTAL BUILT-UP AREA OF 52,099 SQ FT OUT OF WHICH 18 ,129 SQ FT BUILT-UP AREA COMPRISES OF APARTMENTS BELOW 1500 SQ FT. THE ASSESSEES NET PROFIT WAS OF ` 48,54,827/- ON THE TOTAL BUILT-UP AREA OF 52,099 SQ FT. THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) WHICH IS ONLY ON THE BUILT-UP AREA OF 18,129 SQ FT WHICH COMPRISED OF APARTMENTS BELOW 1500 SQ FT AND THEREBY MADE A PROPORTIONATE CLAIM FOR DEDUCTION U/S 80IB(10) OF ` 16,82,411/-. THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION TO THE ASSESSEE OBSERVING THAT SECTION 80IB(10) DOES NOT CONSIDER PROPORTIONATE DISALLOWANCE. 17. ON APPEAL, THE LD. CIT(A), FOLLOWING THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. (SUPRA) ALLOWED THE CLAIM OF THE ASSESSEE. 5 ITA NO.1275/MDS/2012 18. THE LD. DR VERY FAIRLY CONCEDED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS M/S SANGHVI AND DOSHI ENTERPRISE (SUPRA). 19. WE FIND THAT THE LD. DR HAS NOT DISPUTED THAT T HE FACTS IN THE CASE OF THE PRESENT ASSESSEE BEFORE US ARE IDENTICAL TO THE FACTS OF THE CASE IN M/S SANGH VI AND DOSHI ENTERPRISE(SUPRA). WE FIND THAT THE HON'BLE MADRAS HIGH COURT, IN THE ABOVE QUOTED CASE, HAS UNDER AS UNDER: 29. WE HAD ALREADY SEEN THE VARIOUS CLAUSES IN THE AGREEMENT BETWEEN THE ASSESSEE AND THE OWNER DATED 28.4.2003. A READING OF THE VARIOUS CLAUSES THEREIN CLEARLY POINTS OUT THE ROLE OF THE ASSESSEE , WHICH IS NOT JUST AS THAT OF A BUILDER TO PUT UP CONSTRUCTION AS PER THE DIRECTIONS OF THE OWNER; ON THE OTHER HAND, AS RIGHTLY POINTED OUT BY THE TRIBU NAL, THE RISK ELEMENT THAT IS INVOLVED IN THE PROJECT UNDERTAKEN BY THE ASSESSEE IS MORE THAN OF A NORMAL BUILDER, UNDERTAKING MERE CONSTRUCTION. IT IS SEEN FROM THE DATA FURNISHED BEFORE THE ASSESSING OFFICE R THAT WHILE FLATS IN THE 6TH FLOOR AND 11TH FLOOR WE RE SOLD EVEN AS EARLY AS 2003, FLATS IN FIRST FLOOR WI TH NOS.104 AND 103 WERE SOLD IN THE YEAR 2009. SO TOO, SOME OF THE FLATS IN SECOND FLOOR AND THIRD FLOOR W ERE SOLD IN THE YEAR 2007, 2006 AND 2005. THE FLAT IN 12TH FLOOR WAS SOLD ON 15.10.2003 AND IN THE 9TH FL OOR ON 5.11.2003. THE FLATS IN THE FIRST FLOOR WITH NOS .101 AND 102 WERE SOLD ON 17.6.2009. APART FROM THIS, WE FIND THAT THERE WERE STILL SOME FLATS LEFT UNSOLD. 30. IN THE BACKGROUND OF THESE FACTS, THE RISK FACT ORS, AS PROJECTED BY THE ASSESSEE ACCEPTED BY THE TRIBUNAL, NEEDS 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 SALE 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 6 ITA NO.1275/MDS/2012 PER SQUARE FOOT FOR CONSTRUCTION OF THE AREA AS 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 CLA USE 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 SECTION 80IB OF THE INCOME TAX ACT. AS RIGHTLY POINTED OUT BY LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, A BARE READING OF SECTION 80IB OF THE INCOME TAX ACT 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 PARTICU LAR ACTIVITY, WE FAIL TO SEE HOW ONE SHOULD ASSUME ANY SIGNIFICANCE IN THE MATTER OF CONSIDERING A DEDUCTI ON. 31. AS RIGHTLY POINTED OUT BY LEARNED SENIOR COUNSE L APPEARING FOR THE ASSESSEE, IN THE DECISION REPORTE D IN (2012) 341 ITR 403 (COMMISSIONER OF INCOME-TAX V. RADHE DEVELOPERS), THE GUJARAT HIGH COURT CONSIDERED THE QUESTION ON OWNERSHIP AS A CONDITION FOR GRANT OF DEDUCTION UNDER SECTION 80IB(10) IN DEPTH AND ACCEPTED THE CASE OF AN ASSESSEE SIMILARLY PLACED. IT HELD THAT THE PROVISIONS NO WH ERE REQUIRE THAT DEVELOPERS WHO ARE THE OWNER OF THE LAND ALONE WOULD BE ENTITLED FOR GRANT OF DEDUCTION UNDER SECTION 80IB(10). GOING THROUGH THE DECISION OF THE GUJARAT HIGH COURT, WE HAVE NO HESITATION IN HOLDING THAT WE ARE IN RESPECTFUL AGREEMENT WITH TH E LAW DECLARED BY THE GUJARAT HIGH COURT. 20. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HON'BLE MADRAS HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS 7 ITA NO.1275/MDS/2012 CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 5. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THI S TRIBUNAL, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB(10) O F THE ACT FOR THE RESIDENTIAL UNITS WHERE BUILT UP AREA IS 15 00 SQ.FT OR LESS. WE AFFIRM THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS) ON THIS ISSUE AND REJECT THE GROUNDS OF A PPEAL RAISED BY THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 3 1 ST DAY OF OCTOBER, 2014 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGEND RA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 31 ST OCTOBER, 2014 SOMU 12 32 /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .