DCIT, CHENNAI V. M/s. Arihant Foundations & Housing Ltd., CHENNAI

ITA 1326/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57770 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 18-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RANGARAJAN JUNIOR
• Assessee Lawyers: DEVENDRA KUM AR BHANDARI
• Section: 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NOS. 1326 & 1327/MDS/2011 (ASSESSMENT YEARS : 2006-07 & 2008-09) THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), CHENNAI 600 034. (APPELLANT) V. M/S ARIHANT FOUNDATIONS & HOUSING LTD., 271, POONAMALLEE HIGH ROAD, CHENNAI 600 010. PAN: AAACA7402P (RESPONDENT) APPELLANT BY : SHRI K.E.B. RANGARAJAN, JUNIOR STANDING COUNSEL RESPONDENT BY: SHRI DEVENDRA KUMAR BHANDARI, FCA DATE OF HEARING : 04.01.2012 DATE OF PRONOUNCEMENT : 13.01.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE REVENUE AGAINST TH E ORDERS DATED 27.4.2011 AND 15.4.2011 OF COMMISSIONER OF IN COME TAX (APPEALS)-III, CHENNAI, FOR THE RESPECTIVE ASSESSME NT YEARS. I.T.A. NOS. 1326 & 1327/MDS/11 2 2. APPEAL FOR ASSESSMENT YEAR 2006-07 IS TAKEN UP F IRST FOR DISPOSAL. 3. REVENUE HAS TAKEN FOUR GROUNDS IN TOTAL, OUT OF WHICH GROUNDS NO.1 AND 4 ARE GENERAL NEEDING NO ADJUDICATION. 4. GROUND NO.2 IS A GRIEVANCE THAT LD. CIT(APPEALS) DELETED WITHDRAWAL OF DEDUCTION UNDER SECTION 80-IB(10) OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT). AS PER THE REVENUE, COM PLETION CERTIFICATE GIVEN BY THE CORPORATION OF CHENNAI DID NOT SUFFICE FOR THE PURPOSE OF SATISFYING THE CONDITION LAID DOWN UNDER SECTION 80 -IB(10) AND ASSESSEE OUGHT HAVE PRODUCED COMPLETION CERTIFICATE FROM CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY (CMDA) ITSELF. FURTHER, AS PER REVENUE, THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS COMPLETED ON 30.12.2008 AND THE COMPLETION MENTIONE D WAS NEVER PRODUCED BY THE ASSESSEE MUCH PRIOR TO THAT DATE. REVENUE IS ALSO AGGRIEVED THAT LD. CIT(APPEALS) RELIED ON DECISIONS IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004-05 AND 2005-06 FOR R ULING IN FAVOUR OF ASSESSEE, WHEN APPEALS STOOD PREFERRED AGAINST S UCH ORDERS BY I.T.A. NOS. 1326 & 1327/MDS/11 3 THE DEPARTMENT BEFORE THIS TRIBUNAL AND HON'BLE JUR ISDICTIONAL HIGH COURT. 5. SHORT FACTS APROPOS ARE THAT ASSESSEE, ENGAGED I N THE BUSINESS OF REAL ESTATE AND CONSTRUCTION, HAD FOR A HOUSING PROJECT NAMED ARIHANT VAIKUNTH CLAIMED DEDUCTION UNDER SECTION 80-IB ` 2,92,85,827/-, IN ITS RETURN FOR THE IMPUGNED ASSES SMENT YEAR. SEPARATE P&L ACCOUNT WAS PREPARED FOR SUCH PROJECT AND INCOME RECOGNIZED THEREIN ON PERCENTAGE COMPLETION METHOD. ASSESSING OFFICER NOTED THAT PLAN PERMISSION FOR BUILDING WAS TAKEN FROM CMDA ON 14.11.2003 AND THEREFORE, THE PROJECT HAD TO BE COMPLETED BEFORE 31.3.2008 BY VIRTUE OF SUB-CLAUSE (I) OF CLAUSE(A) TO SECTION 80-IB(10) OF THE ACT. THE A.O. ASKED THE ASSESSEE TO FURNISH SUCH COMPLETION CERTIFICATE, BUT IT SEEMS THE ASSESSEE DID NOT FURN ISH IT. A.O. ADDRESSED A LETTER TO CMDA ON THIS ASPECT AND CMDA REPLIED THAT ASSESSEE HAD CONSTRUCTED STILT + 11 FLOORS IN FOUR BLOCKS AGAINST STILT + 4 FLOORS FOR WHICH THE PERMISSION WAS ACCORDED AND SUCH CONSTRUCTION NOT BEING IN ACCORDANCE WITH APPROVED PLAN, THE QUE STION OF ISSUING OF COMPLETION CERTIFICATE DID NOT ARISE. A.O., BAS ED ON THIS, CAME TO I.T.A. NOS. 1326 & 1327/MDS/11 4 A CONCLUSION THAT THE LOCAL AUTHORITY WHICH, ACCORD ING TO HIM, WAS CMDA, HAD NOT GIVEN A COMPLETION CERTIFICATE TO THE ASSESSEE BEFORE THE STIPULATED DATE OF 31.3.2008. SINCE ASSESSEE C OULD NOT FURNISH COMPLETION CERTIFICATE FROM CMDA, DEDUCTION UNDER S ECTION 80- IB(10) WAS DENIED. 6. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT THE PROJECT STOOD COMPLETED IN EVERY MANNE R AND EVEN PROPERTY TAX WAS COLLECTED BY CORPORATION OF CHENNA I THEREOF. AS PER THE ASSESSEE, CORPORATION OF CHENNAI HAD GIVEN APPR OVAL TO THE CHANGED PLAN AFTER CONSTRUCTION OF THE MULTI-STOREY ED BUILDING ON 17.5.2004. THEREFORE, AS PER THE ASSESSEE, THE CHA NGE IN PLAN FOR CONSTRUCTION STILT + 11 FLOORS WAS TAKEN COGNIZANCE OF BY CORPORATION OF CHENNAI AFTER APPROVAL WAS RECEIVED FROM THE GOV ERNMENT FOR SUCH CHANGE AND ON COMPLETION OF THE BUILDING, CORP ORATION OF CHENNAI HAD ISSUED A CERTIFICATE ON 6.7.2009 CERTIF YING THAT THE BUILDING STOOD COMPLETED IN FEBRUARY, 2008. THEREF ORE, AS PER THE ASSESSEE, IT HAD SATISFIED ALL THE CONDITIONS PRESC RIBED UNDER SECTION 80-IB(10) OF THE ACT. AS PER THE ASSESSEE, LOCAL A UTHORITY WOULD I.T.A. NOS. 1326 & 1327/MDS/11 5 INCLUDE CORPORATION ALSO AND A CERTIFICATE ISSUED B Y CORPORATION OF CHENNAI WAS SUFFICIENT FOR CONSIDERING THE CLAIM OF ALLOWANCE. 7. LD. CIT(APPEALS) WAS APPRECIATIVE OF THE CONTENT ION OF THE ASSESSEE. ACCORDING TO HIM, THE CERTIFICATE ISSUED BY CORPORATION OF CHENNAI CLEARLY PROVED THAT THE PROJECT STOOD COMPL ETED IN FEBRUARY, 2008. LD. CIT(APPEALS) NOTED THAT THE ASSESSING OF FICER HAD DISALLOWED THE CLAIM ONLY FOR A REASON THAT ASSESSE E COULD NOT PRODUCE COMPLETION CERTIFICATE FROM CMDA. ACCORDIN G TO HIM, ASSESSEE HAD PRODUCED COMPLETION CERTIFICATE FROM C ORPORATION OF CHENNAI. LD. CIT(APPEALS) ALSO NOTED THAT ON SIMIL AR ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004-05 AN D 2005-06, THE DECISION HAD GONE IN FAVOUR OF ASSESSEE. HE, T HEREFORE, DIRECTED THE A.O. TO GRANT THE ASSESSEE DEDUCTION UNDER SECT ION 80-IB(10) OF THE ACT AS CLAIMED BY IT. 8. NOW BEFORE US, LEARNED D.R. STRONGLY ASSAILING T HE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT CMDA HAD GIVEN INITIAL PERMIT AND THEREFORE, SUCH AUTHORITY ALONE COULD GIVE COMPLETI ON CERTIFICATE. AS PER LEARNED D.R., THE COMPLETION CERTIFICATE ISSUED BY CORPORATION OF I.T.A. NOS. 1326 & 1327/MDS/11 6 CHENNAI COULD NOT BE CONSIDERED AS A COMPLETION CER TIFICATE ISSUED BY LOCAL AUTHORITY, AS REQUIRED UNDER EXPLANATION ( II) TO CLAUSE (A) OF SUB-SECTION (10) OF SECTION 80-IB OF THE ACT. FURT HER, AS PER LEARNED D.R., APPROVAL GIVEN BY CORPORATION OF CHENNAI COUL D NOT BE CONSIDERED AS THE ASSESSEE HAD TO OBTAIN APPROVAL O F PLAN FROM CMDA AND THEN ONLY IT COULD BE SAID THAT THERE WAS PROPER COMPLIANCE OF SUB-SECTION (10) OF SECTION 80-IB OF THE ACT. 9. PER CONTRA, LEARNED A.R. STRONGLY SUPPORTED THE ORDER OF LD. CIT(APPEALS) AND SUBMITTED THAT SUFFICIENT RECORDS WERE PRODUCED BY THE ASSESSEE AND THE REVENUE HAD TAKEN NO GROUND TH AT THERE WAS ANY VIOLATION OF RULE 46A OF INCOME-TAX RULES, 1962 . 10. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. WE FIND THAT THE A.O. HAD ADDRESSED A LETTER TO CMD A WITH REGARD TO COMPLETION OF THE PROJECT AND THE CMDA IN ITS REPLY HAD STATED THAT THE CONSTRUCTION WAS NOT ACCORDING TO ORIGINAL PERM ISSION AND NO COMPLETION CERTIFICATE WAS GIVEN BY IT UPTO 31.3.20 08. NEVERTHELESS, ASSESSEE BEFORE LD. CIT(APPEALS) STATED THAT THERE WAS NEW PERMISSION ISSUED BY CORPORATION OF CHENNAI AFTER G ETTING APPROVAL OF I.T.A. NOS. 1326 & 1327/MDS/11 7 GOVERNMENT FOR BUILDING STILT + 11 FLOORS AGAIN THE ORIGINAL PLAN OF STILT + 4 FLOORS. ASSESSEE HAD ALSO PRODUCED BEFORE LD. CIT(APPEALS) CERTIFICATE FROM CORPORATION OF CHENNAI STATING THA T THE BUILDING WAS COMPLETED DURING FEBRUARY, 2008. THERE IS NO GRIEV ANCE RAISED BY THE REVENUE THAT LD. CIT(APPEALS) HAD ACCEPTED SUCH RECORDS WITHOUT PUTTING IT BEFORE THE A.O. ONLY GRIEVANCE IS THAT LD. CIT(APPEALS) HAD CONSIDERED SUCH CERTIFICATE WHICH WAS ISSUED BY COR PORATION OF CHENNAI, WHEREAS, SUCH CERTIFICATE SHOULD HAVE BEEN ISSUED BY CMDA. THUS, THE QUESTION BOILS DOWN TO THE VALIDIT Y OF THE CERTIFICATE ISSUED BY CORPORATION OF CHENNAI WITH REGARD TO THE COMPLETION OF THE PROJECT. REVENUE HAS ALSO NOT QUESTIONED THE FINDI NG OF LD. CIT(APPEALS) THAT A NEW PLAN PERMISSION WAS ISSUED BY CORPORATION OF CHENNAI BASED ON APPROVAL FROM GOVERNMENT FOR ST ILT + 11 FLOORS. THUS, WHAT REMAINS TO BE ANSWERED IS WHETHER THE CO RPORATION OF CHENNAI CAN BE CONSIDERED A LOCAL AUTHORITY. EXPLA NATION (II) TO SUB- CLAUSE (III) OF CLAUSE (A) OF SECTION 80-IB(10) REA DS AS UNDER:- (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WH ICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING P ROJECT IS ISSUED BY THE LOCAL AUTHORITY. I.T.A. NOS. 1326 & 1327/MDS/11 8 NO DOUBT, LOCAL AUTHORITY HAS NOT BEEN DEFINED AN YWHERE IN SECTION 80-IB(10) OF THE ACT. HOWEVER, SUB-SECTION (2) OF SECTION 10 EXEMPTS INCOME OF A LOCAL AUTHORITY WHICH IS OTHERWISE CHAR GEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY, CAPITAL GAINS OR INCOME FROM OTHER SOURCES. EXPLANATION THEREUNDER STATES THAT LOCAL AUTHORITY WILL DEFINITELY INCLUDE A MUNICIPAL COMMITTEE, PANCHAYAT AND CANTONMENT BOARD. THEREFORE, WE ARE OF THE OPINION THAT LD. C IT(APPEALS) WAS CORRECT IN REACHING A CONCLUSION THAT A LOCAL AUTHO RITY WILL INCLUDE CORPORATION OF CHENNAI. WE CANNOT SAY THAT CMDA AL ONE WAS THE AUTHORITY TO ISSUE PLAN PERMITS AND COMPLETION CERT IFICATES AND CORPORATION OF CHENNAI WAS NOT A LOCAL AUTHORITY AT ALL. IN THE OFFICIAL WEBSITE OF CORPORATION OF CHENNAI, IT IS CLEARLY ST ATED THAT THE CHENNAI CORPORATION WAS ISSUING BUILDING PERMITS TO ALL THE BUILDINGS INCLUDING CMDAS SPECIAL BUILDINGS, MULTI-STOREY BU ILDINGS AND LAY OUTS AFTER TAKING OVER THE LAND LEFT OVER FOR ROAD PORTION AND THE LAND RESERVED FOR OPEN SPACE, AFTER THE PLANNING PERMITS WERE ISSUED BY CMDA. IN THE CASE IN HAND, IT WOULD BE FOOLHARDY T O PRESUME THAT THE CMDA WAS THE ONLY LOCAL AUTHORITY FOR THE PURPOSE O F GIVING PERMITS FOR BUILDINGS AND CORPORATION OF CHENNAI COULD NOT BE CONSIDERED AS I.T.A. NOS. 1326 & 1327/MDS/11 9 A LOCAL AUTHORITY AT ALL. FURTHER, IN THE EARLIER YEARS, BASED ON THE SIMILAR FACTS, APPELLATE AUTHORITIES HAD ALLOWED DE DUCTION UNDER SECTION 80-IB(10) OF THE ACT TO THE ASSESSEE. LEAR NED D.R. WAS NOT ABLE TO PRODUCE ANY ADVERSE ORDER OF ANY HIGHER AUT HORITY FOR SUCH EARLIER YEARS. WE ARE, THEREFORE, OF THE OPINION T HAT LD. CIT(APPEALS) WAS JUSTIFIED IN DIRECTING GRANT OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. 11. GROUND NO.2 TAKEN BY THE REVENUE STANDS DISMISS ED. 12. THE NEXT GROUND RAISED BY THE REVENUE IS REGARD ING RESTRICTION OF DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT T O 5% DIVIDEND INCOME. 13. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD EARNE D A DIVIDEND INCOME OF ` 2,13,201/- WHICH WAS CLAIMED EXEMPT UNDER SECTION 10(34) OF THE ACT. ASSESSEE HAD MADE INVESTMENTS I N ITS SISTER CONCERN TOTALLING TO ` 16,63,73,217/- BY WAY OF SHARE APPLICATION MONEY. AS PER THE A.O., WHILE THE ASSESSEE CLAIMED DIVIDEND INCOME EXEMPT, IT HAD NOT ATTRIBUTED ANY PORTION OF ITS EXPENDITURE I.T.A. NOS. 1326 & 1327/MDS/11 10 TOWARDS EARNING OF SUCH INCOME. A.O. NOTED THAT AS SESSEE INCURRED ROUTINE EXPENDITURE FOR ESTABLISHMENT AND ADMINISTR ATION PURPOSES. HE WAS, THEREFORE, OF THE OPINION THAT A PORTION OF THE MANAGERIAL STAFF REMUNERATION AND DIRECTORS REMUNERATION COULD BE A TTRIBUTED TO SUCH INVESTMENTS. AS PER THE A.O., ASSESSEE COULD NOT S HOW CORRECT UTILIZATION OF FUNDS, WHICH RESULTED IN AN INTEREST CHARGE OF ` 8,78,46,108/-. THEREFORE, ACCORDING TO HIM, A PORT ION OF INTEREST HAD TO BE CONSIDERED AS EXPENDED IN RELATION TO BORROWE D FUNDS UTILIZED FOR SUCH INVESTMENTS. A.O. CONSIDERING RULE 8D OF INCOME-TAX RULES, 1962 AND RELYING ON DECISION OF SPECIAL BENCH OF TH IS TRIBUNAL IN THE CASE OF ITO V. DAGA CAPITAL MANAGEMENT PVT. LTD. 31 2 ITR (AT) 1 (MUMBAI) CAME TO AN OPINION THAT A SUM OF ` 70,38,725/- HAD TO BE DISALLOWED UNDER SECTION 14A OF THE ACT. SUCH DISA LLOWANCE WAS WORKED OUT APPLYING RULE 8D. 14. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT RULE 8D COULD NOT BE CONSTRUED RETROSPECTI VELY AND DECISION OF SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGE MENT PVT. LTD. (SUPRA) STOOD REVERSED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF I.T.A. NOS. 1326 & 1327/MDS/11 11 GODREJ & BOYCE MFG. CO. LTD. V. DCIT (328 ITR 81). RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. (313 ITR 340). FURTHER CONTENTION OF THE ASSESSEE WAS THAT IF THERE WAS IN TEREST FREE FUNDS AVAILABLE WITH ASSESSEE TO MAINTAIN ITS INVESTMENTS , JUST BECAUSE ASSESSEE HAD RAISED CERTAIN LOANS IT COULD NOT BE P RESUMED THAT INVESTMENTS WERE MADE FROM SUCH LOAN FUNDS. LD. CI T(APPEALS) WAS OF THE OPINION THAT HON'BLE BOMBAY HIGH COURT VIDE ITS DECISION IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA) HAD RE VERSED THE DECISION OF SPECIAL BENCH IN THE CASE OF DAGA CAPIT AL MANAGEMENT PVT. LTD. (SUPRA) IN SO FAR AS IT RELATED TO APPLIC ABILITY OF RULE 8D RETROSPECTIVELY. HENCE, ACCORDING TO HIM, FOR THE IMPUGNED ASSESSMENT YEAR, RULE 8D COULD NOT BE APPLIED. NEV ERTHELESS, HE NOTED THAT IN THE SAME DECISION HON'BLE BOMBAY HIGH COURT HAD HELD THAT AN ASSESSING OFFICER COULD FOR EARLIER YEARS A LSO MAKE A DISALLOWANCE FOR EXPENDITURE IN RELATION TO INVESTM ENTS MADE FOR EARNING TAX-FREE INCOME, BY APPLICATION OF SECTION 14 OF THE ACT. HE, THEREFORE, WAS OF THE OPINION THAT A DISALLOWANCE O F ` 50,000/- WOULD I.T.A. NOS. 1326 & 1327/MDS/11 12 BE REASONABLE AGAINST THE DIVIDEND INCOME OF ` 2,13,201/-. THUS, THE DISALLOWANCE WAS WHITTLED DOWN FROM ` 70,38,725/- TO ` 50,000/-. 15. NOW BEFORE US, LEARNED D.R., ASSAILING THE ORDE R OF LD. CIT(APPEALS), SUBMITTED THAT LD. CIT(APPEALS) HAD S IMPLY ACCEPTED THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE WAS I NCURRED FOR ITS INVESTMENTS IN SHARE APPLICATION MONEY. ACCORDING TO HIM, AGAINST THE SUBSTANTIAL AMOUNT OF SHARE APPLICATION MONEY I NVESTED BY THE ASSESSEE, EXPENSES WOULD HAVE DEFINITELY BEEN INCUR RED FOR PROPER ADMINISTRATION OF SUCH FUNDS AND WATCHING THE UTILI ZATION THEREOF. THE PURPOSE OF SUCH INVESTMENT WAS DEFINITELY TO EARN D IVIDEND INCOME. THEREFORE, THE DISALLOWANCE CALCULATED UNDER RULE 8 D WAS APPROPRIATE THOUGH THE SAID INVESTMENT MIGHT NOT HA VE RESULTED IN ANY SUBSTANTIAL INCOME IN THE IMPUGNED ASSESSMENT Y EAR. 16. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THE A.O. HAS CLEARLY NOTED THAT THE ASSESSEE HAD MA DE HUGE INVESTMENT WHICH WAS IN THE NATURE OF SHARE APPLICA TION MONEY OF ` 16,63,73,217/-. SO, IT REMAINS AN ACCEPTED POSITIO N THAT THE INVESTMENTS WERE IN SHARE APPLICATION MONEY. SHARE APPLICATION I.T.A. NOS. 1326 & 1327/MDS/11 13 MONEY BY ITSELF CANNOT YIELD ANY DIVIDEND, UNLESS S HARES WERE ALLOTTED AGAINST SUCH MONEY. FURTHER, AS NOTED BY LD. CIT(A PPEALS), RULE 8D COULD NOT BE APPLIED FOR THE IMPUGNED ASSESSMENT YE AR BY VIRTUE OF THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF GO DREJ & BOYCE MFG. CO. LTD. (SUPRA). HENCE, THE CALCULATION ADOP TED BY THE A.O. BY APPLYING RULE 8D FOR MAKING THE DISALLOWANCE WAS CO RRECTLY STRUCK DOWN BY LD. CIT(APPEALS). THE QUESTION THAT REMAIN S IS WHETHER ANY DISALLOWANCE COULD BE MADE FOR THE IMPUGNED ASSESSM ENT YEAR. HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD. (SUPRA) HAS CLEARLY HELD THAT THOUGH RULE 8D W AS NOT APPLICABLE FOR ANY ASSESSMENT YEAR PRIOR TO ASSESSMENT YEAR 20 08-09, ASSESSING OFFICER WAS DUTY BOUND TO COMPUTE DISALLO WANCE UNDER SECTION 14A HAVING REGARD TO FACTS AND CIRCUMSTANCE S OF THE CASE. THE A.O. HIMSELF NOTED IN THE ASSESSMENT ORDER THAT FUNDS OF THE ASSESSEE-COMPANY INCLUDED SHARE CAPITAL, SHAREHOLDE R EARNINGS AND BORROWED FUNDS. THE INVESTMENTS MADE BY THE ASSESS EE COULD VERY WELL HAVE BEEN OUT OF SUCH FUNDS. THERE WAS NO DIR ECT NEXUS ESTABLISHED BETWEEN THE BORROWED FUNDS AND INVESTME NTS MADE BY THE IN THE IMPUGNED ASSESSMENT YEAR. IN THE CASE O F I.T.A. NOS. 1326 & 1327/MDS/11 14 RELIANCE UTILITIES AND POWER LTD. (SUPRA), HON'BLE BOMBAY HIGH COURT HELD THAT WHERE THERE WAS SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH AN ASSESSEE, THERE IS A PRESUMPTION THAT INVESTMENT S IN SISTER CONCERN WERE MADE OUT OF SUCH INTEREST FREE FUNDS. THEREFORE, IN SUCH CIRCUMSTANCES, IF THE CIT(APPEALS) DEEMED IT F IT TO CURTAIL THE DISALLOWANCE TO ` 50,000/-, IT CANNOT BE HELD TO BE UNREASONABLE. W E DO NOT FIND ANY REASON TO INTERFERE WITH THE DIRECT ION OF LD. CIT(APPEALS). 17. GROUND NO.3 IS DISMISSED. 18. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2006-07 IS DISMISSED. 19. NOW, WE TAKE APPEAL FOR 2008-09. 20. FOUR GROUNDS HAVE BEEN RAISED BY THE REVENUE OF WHICH, GROUND NOS.1 AND 4 ARE GENERAL NEEDING NO ADJUDICAT ION. 21. VIDE ITS GROUND NOS.2 AND 3, REVENUE ATTACKS TH E DECISION OF LD. CIT(APPEALS) IN GRANTING THE ASSESSEE DEDUCTION CLAIMED BY IT UNDER SECTION 80-IB(10) OF THE ACT. I.T.A. NOS. 1326 & 1327/MDS/11 15 22. THERE ARE TWO FACETS TO THE ARGUMENTS OF THE RE VENUE. FIRST IS THAT THE ASSESSEE WAS ONLY EXECUTING A WORKS CONTRA CT AND HENCE, NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. SECOND IS THAT CERTIFICATE GIVEN BY CORPORATION OF CHENNAI WAS NOT SUFFICIENT BUT, ASSESSEE OUGHT HAVE PRODUCED COMPLETION CERTIF ICATE FROM CMDA FOR CLAIMING SUCH DEDUCTION. 23. IN SO FAR AS SECOND FACET OF THE ARGUMENT IS CO NCERNED, THE ISSUE HAS ALREADY BEEN CONSIDERED BY US IN REVENUE S APPEAL FOR ASSESSMENT YEAR 2006-07. IT HAS BEEN HELD THAT COM PLETION CERTIFICATE GIVEN BY CORPORATION OF CHENNAI WAS GOO D ENOUGH TO BE CONSIDERED AS COMPLETION CERTIFICATE GIVEN BY A LOC AL AUTHORITY AS ENVISAGED UNDER EXPLANATION (II) TO CLAUSE (A) OF S ECTION 80-IB(10) OF THE ACT. THIS LEAVES US WITH ONLY THE FIRST FACET OF THE ARGUMENT WHICH IS WHETHER ASSESSEE WAS ONLY A WORKS CONTRACTOR OR WAS AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S. 24. FACTS RELATING TO THE ISSUE ARE THAT ASSESSEE H AD CLAIMED DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT FOR TH E IMPUGNED ASSESSMENT YEAR FOR TWO BUILDING PROJECTS NAMED ARI HANT ESCAPADE I.T.A. NOS. 1326 & 1327/MDS/11 16 AND ARIHANT VAIKUNT. ASSESSEE ALSO HAD OTHER PROJE CTS ON WHICH THERE WAS NO CLAIM OF DEDUCTION UNDER SECTION 80-IB (10) OF THE ACT. THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDING S, NOTICED THAT THE PROFIT RETURNED BY THE ASSESSEE IN RESPECT OF T HE PROJECTS, ON WHICH CLAIM FOR DEDUCTION UNDER SECTION 80-IB(10) W AS PREFERRED, WAS SUBSTANTIALLY HIGHER THAN THAT OF THOSE PROJECTS ON WHICH SUCH DEDUCTION WAS NOT CLAIMED. FURTHER, IN RESPECT OF THE PROJECT CALLED ARIHANT ESCAPADE, A.O. EXAMINED THREE AGREEMENTS WI TH PURCHASERS OF THE FLATS THEREON. AS PER THE A.O., ASSESSEE AL ONG WITH THREE OTHER PERSONS WERE THE OWNERS OF THE LAND ON WHICH THE TW O BLOCKS NAMED AS BLOCK E-ETERNIA AND BLOCK B-BROOK OF ARIHANT ESCAPADE, WAS CONSTRUCTED AND THIS WAS CLEAR FROM SUCH AGREEMENTS . AGAIN, AS PER THE A.O., ASSESSEE HAD ALONG WITH SUCH OTHER LAND O WNERS ENTERED INTO AGREEMENTS WITH PROSPECTIVE PURCHASERS OF FLAT S, FOR SALE OF UNDIVIDED SHARE OF LAND HELD BY THEM. THEREAFTER, TRIPARTITE AGREEMENTS WERE ENTERED INTO BY THE ASSESSEE, THE O THER CO-OWNERS OF THE LAND AND PURCHASERS OF THE UNDIVIDED SHARE O F LAND, AND PURSUANT TO SUCH AGREEMENTS, ASSESSEE WAS TO CONSTR UCT RESIDENTIAL BUILDINGS THEREIN. THUS, HE CAME TO A CONCLUSION T HAT ASSESSEE HAD I.T.A. NOS. 1326 & 1327/MDS/11 17 TWO DIFFERENT AGREEMENTS ENTERED WITH THE PROSPECTI VE BUYERS OF THE FLATS. FIRST WAS FOR SALE OF THE UNDIVIDED OWNERSH IP IN THE LAND TO THE BUYERS OF THE PROPOSED FLATS AND THE SECOND WAS FOR EXECUTION OF CONSTRUCTION OF THE FLATS IN SUCH LAND. RELYING ON THE EXPLANATION TO SECTION 80-IB(10) INTRODUCED BY FINANCE ACT, 2009, WITH EFFECT FROM 1.4.2001, THE A.O. WAS OF THE OPINION THAT ASSESSEE BEING ONLY A WORKS CONTRACTOR, WOULD NOT BE ELIGIBLE FOR CLAIMIN G OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. ASSESSEE WAS P UT ON NOTICE IN THIS REGARD, WHEREUPON, ASSESSEE REPLIED THAT IT HA D ACQUIRED THE LAND ON OWNERSHIP BASIS AND IT WAS NOT A MERE CONTR ACTOR. ACCORDING TO ASSESSEE, ENTIRE DEVELOPMENT OF THE LAND WAS DON E BY THE ASSESSEE AND THE RISK OF THE PROJECT WAS WITH THE A SSESSEE. THE EXECUTION OF TWO AGREEMENTS, ONE FOR TRANSFER OF UN DIVIDED SHARE OF LAND AND THE OTHER FOR CONSTRUCTION WAS ONLY FOR TH E PURPOSE OF SETTING OUT CLEARLY THE TERMS AND CONDITIONS RELATING TO TH E PROJECT. AS PER THE ASSESSEE, THE PROJECT WAS SINGLE AND INDIVISIBLE AN D THE PERMISSION FOR DEVELOPMENT OF THE LAND AND CONSTRUCTION OF ENT IRE STRUCTURE WAS OBTAINED BY THE ASSESSEE. ASSESSEE ALSO BROUGHT TO THE NOTICE OF A.O. THAT IT HAD INCURRED INFRASTRUCTURE COST INCLU DING DEVELOPMENT I.T.A. NOS. 1326 & 1327/MDS/11 18 COST, CONSTRUCTION OF THE BUILDING AND OBTAINED ALL RELATED PERMITS AND LICENCES REQUIRED FOR THE CONSTRUCTION. HOWEVER, T HE ASSESSING OFFICER WAS NOT IMPRESSED. ACCORDING TO HIM, ONCE ASSESSEE HAD SOLD THE LAND ALONG WITH OTHER OWNERS, THE PURCHASE RS HAD BECOME THE OWNERS OF THE UNDIVIDED SHARE OF THE LAND AND B Y ENTERING INTO A CONSTRUCTION AGREEMENT WITH SUCH PURCHASERS, ASSESS EE WAS ACTING AS CONTRACTOR FOR CONSTRUCTION OF BUILDING. THE A. O. ALSO NOTED THAT ASSESSEE HAD CLAIMED UNREASONABLY HIGH PROFITS IN R ESPECT OF SUCH PROJECTS. HE, THEREFORE, DENIED THE CLAIM OF THE A SSESSEE IN SO FAR IT RELATED TO THE PROJECT ARIHANT ESCAPADE. 25. FOR ARIHANT ESCAPADE PROJECT, THE A.O. DENIED T HE CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) FOR A REASON THAT THE COMPLETION CERTIFICATE OF THE CONSTRUCTION FOR THE SAID PROJEC T WAS NOT BY THE LOCAL AUTHORITY BUT BY CORPORATION OF CHENNAI. A.O. ALSO NOTED THAT IN RESPECT OF ARIHANT VAIKUNT ALSO, ASSESSEE HAD CLAIM ED DISPROPORTIONATE PROFITS. 26. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT THE PROJECT ARIHANT ESCAPADE WAS DEVELOPED IN THE LAND I.T.A. NOS. 1326 & 1327/MDS/11 19 OWNED BY ONE M/S CENTWIN REAL ESTATE. AS PER THE A SSESSEE, THE SAID LAND WAS SOLD TO THE APPELLANT AND M/S CENTWIN REAL ESTATE HAD ISSUED A POWER OF ATTORNEY AFTER RECEIVING FULL CON SIDERATION. RELYING ON THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUN AL IN THE CASE OF ACIT V. M/S SASHWAT CONSTRUCTIONS (P) LTD. IN I.T.A . NO. 1069/MDS/2008, ASSESSEE SUBMITTED THAT IT WAS NOT A SINE QUA NON FOR A DEVELOPER TO BECOME DEJURE OWNER OF THE LAND FOR CLAIMING DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. 27. LD. CIT(APPEALS) WAS APPRECIATIVE OF THIS CONTE NTION. ACCORDING TO HIM, IT WAS A USUAL PRACTICE FOR A DEV ELOPER TO OBTAIN LAND THROUGH A POWER OF ATTORNEY AFTER PAYING CONSI DERATION TO THE LAND OWNERS. THERE WAS AN ABSOLUTE POWER OF ATTORN EY EXECUTED BY THE EARLIER OWNER IN FAVOUR OF ASSESSEE IN RESPECT OF ARIHANT ESCAPADE PROJECT AT THORAIPAKKAM. ASSESSEE HAD DON E ALL THE ACTIVITIES CONNECTED TO THE HOUSING PROJECT INCLUDI NG OBTAINING APPROVAL, LAY OUT, SUBMISSION OF PLAN. JUST BECAUS E THE APPROVAL WAS ISSUED IN THE NAME OF ONE OF THE DIRECTORS, IT CANN OT BE DENIED DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. RELY ING ON THE DECISION DATED 10.12.2010 OF A CO-ORDINATE BENCH OF THIS TRIBUNAL IN I.T.A. NOS. 1326 & 1327/MDS/11 20 THE CASE OF DCIT V. C. SUBBA REDDY (HUF) IN I.T.A. NO. 1907/MDS/2008, LD. CIT(APPEALS) HELD THAT ASSESSEE HAVING DEVELOPED THE PROJECT ARIHANT ESCAPADE, IT COULD NO T BE DENIED DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. IN S O FAR AS ARIHANT VAIKUNT PROJECT WAS CONCERNED, LD. CIT(APPEALS) NOT ED THAT THE COMPLETION CERTIFICATE GIVEN BY EXECUTIVE ENGINEER OF CORPORATION OF CHENNAI WAS INDEED A CERTIFICATE ISSUED BY THE LOCA L AUTHORITY AND SUCH CERTIFICATE COULD NOT BE BRUSHED ASIDE FOR DEN YING CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. THUS , HE ALLOWED THE CLAIM OF THE ASSESSEE FOR BOTH ARIHANT ESCAPADE AND ARIHANT VAIKUNT PROJECTS. 28. BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE DECISION OF CO-ORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF C. SUBBA REDDY (SUPRA) HAD NOT BEEN ACCEPTED AND THE REVENUE HAD MOVED IN APPEAL BEFORE HON'BLE JURISDICTIONAL HIGH COURT. FURTHER, ACCORDING TO H IM, LD. CIT(APPEALS) DID NOT CONSIDER DISPROPORTIONATE INCOME MADE BY TH E ASSESSEE FROM THESE TWO PROJECTS AS COMPARED TO OTHER PROJECTS WH ERE THERE WAS NO CLAIM OF DEDUCTION UNDER SECTION 80-IB OF THE ACT. HE ALSO ARGUED I.T.A. NOS. 1326 & 1327/MDS/11 21 THAT THE COMPLETION CERTIFICATE ISSUED BY CORPORATI ON OF CHENNAI COULD NOT BE CONSIDERED SUFFICIENT ENOUGH FOR ALLOW ING A DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. 29. PER CONTRA, LEARNED A.R. STRONGLY SUPPORTED THE ORDER OF LD. CIT(APPEALS) AND AGAIN PLACED STRONG RELIANCE ON TH E DECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF C. S UBBA REDDY (SUPRA). 30. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 8 0-IB(10) OF THE ACT WAS NOT ALLOWED BY THE A.O. FOR THREE REASONS. FIRST WAS THAT THE PROJECTS ON WHICH THE CLAIM WAS PREFERRED HAD DISPR OPORTIONATE PROFITS WHEN COMPARED TO PROJECTS ON WHICH THERE WAS NO SUC H CLAIM. SECOND WAS THAT ASSESSEE WAS ONLY A WORKS CONTRACTO R AND NOT THE DEVELOPER. THIRD WAS THAT THE COMPLETION CERTIFICA TE ISSUED WAS NOT OF A LOCAL AUTHORITY BUT ONLY OF CORPORATION OF CHE NNAI. THE THIRD ISSUE HAS ALREADY BEEN DEALT WITH BY US IN APPEAL F ILED BY THE REVENUE FOR ASSESSMENT YEAR 2006-07 AT PARA TEN ABO VE. WE HAVE I.T.A. NOS. 1326 & 1327/MDS/11 22 HELD THAT CORPORATION OF CHENNAI WOULD SUFFICE THE REQUIREMENT OF EXPLANATION (II) TO CLAUSE (A) OF SECTION 80-IB(10) OF THE ACT. 31. IN SO FAR AS THE ISSUE OF DISPROPORTIONATE PROF IT IS CONCERNED, NO DOUBT, THE AVERAGE PROFIT RATE IN THE CASE OF PROJE CTS ON WHICH NO DEDUCTION WAS CLAIMED WAS ONLY 27.13%, WHEREAS, IN THE CASE OF ARIHANT ESCAPADE IT WAS 62.89% AND IN THE CASE OF A RIHANT VAIKUNT, IT WAS 52.37% AS IT COMES OUT OF THE ASSESSMENT ORDER. THESE FIGURES WERE NOT DISPUTED BY THE ASSESSEE. NEVERTHELESS, T HE A.O. HAD NOT FOUND ANY DEFECTS IN THE BOOKS OF THE ASSESSEE NOR REJECTED BOOKS OF ACCOUNTS, WHEREBY THE PROFITS FOR EACH OF THE PROJE CT WAS ARRIVED AT. IT WAS ALL ALONG STATED BY THE ASSESSEE THAT PROFITS F OR EACH PROJECT COULD BE SEPARATELY COMPUTED FROM THE BOOKS OF ACCO UNTS. SO, IN OUR OPINION, THE A.O. OUGHT NOT HAVE COME TO A GENERAL CONCLUSION THAT THE PROFIT RATE FOR ALL PROJECT SHOULD HAVE BEEN TH E SAME OR SIMILAR UNLESS AND UNTIL SOME LACUNAE WAS FOUND IN THE BOOK S PRODUCED. NO DOUBT, DISPROPORTIONATE PROFIT CAN AROUSE SUSPICION IN THE MIND OF ASSESSING OFFICER. BUT, THIS OUGHT HAVE BEEN REINF ORCED BY POINTING OUT THE DEFECT IF ANY APPORTIONING THE EXPENSES. T HERE IS NO CASE FOR THE REVENUE THAT ANY OF THE EXPENSES WAS NOT PROPER LY ALLOCATED TO I.T.A. NOS. 1326 & 1327/MDS/11 23 THE PROJECTS NOR THAT SOME OF THE EXPENSES WERE EXC LUSIVELY INCURRED ON THE PROJECTS FOR WHICH THERE WAS A CLAIM OF DEDU CTION UNDER SECTION 80-IB(10) OF THE ACT. THEREFORE, A FINDING THAT THE PROJECTS ON WHICH CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT WAS PREFERRED HAD HIGHER MARGIN OF PROFIT, WOULD NOT BE SUFFICIENT ENOUGH REASON TO REJECT SUCH A CLAIM. 32. NOW COMING TO THE THIRD ASPECT OF THE ARGUMENT OF THE REVENUE THAT THE ASSESSEE-COMPANY WAS ONLY A WORKS CONTRACT OR AND NOT A DEVELOPER. SUB-SECTION OF SECTION 80-IB OF THE ACT MENTION THAT A DEDUCTION THEREUNDER IS AVAILABLE TO AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY A LOCAL AUTHO RITY. SO, THE REQUIREMENT IS THAT THE UNDERTAKING SHOULD BE DEVEL OPING AND BUILDING HOUSING PROJECTS. FOR ANSWERING THE QUESTION IT IS NOT RELEVANT WHETHER AGREEMENTS ENTERED INTO BY THE ASSESSEE WIT H ULTIMATE PURCHASERS OF THE FLATS WERE SEPARATE, I.E. ONE FOR SALE OF UNDIVIDED SHARE OF LAND AND THE OTHER FOR EXECUTION OF THE CO NSTRUCTION OR A CONSOLIDATED ONE. WHAT HAS TO BE ANSWERED IS WHETH ER THE ASSESSEE WAS DEVELOPING AND BUILDING HOUSING PROJECTS. HERE , UNDISPUTEDLY, ASSESSEE HAD RECEIVED A POWER OF ATTORNEY FROM THE ORIGINAL OWNERS I.T.A. NOS. 1326 & 1327/MDS/11 24 OF THE LAND AND HAD ALSO PAID TOTAL CONSIDERATION F OR SUCH LAND. THE SUBMISSION OF THE ASSESSEE THAT ABSOLUTE POWER WAS GIVEN TO IT THROUGH A POWER OF ATTORNEY AND POSSESSION WAS DELI VERED TO IT FOR CONSTRUCTION OF THE FLATS HAS NOT BEEN DISPUTED. I T IS ALSO NOT DISPUTED THAT ASSESSEE HAD MOVED THE CMDA AS WELL AS CORPORA TION OF CHENNAI FOR APPROVAL OF THE PLANS. ALL THE ACTIVIT IES LIKE SELLING AND DEVELOPING OF THE PROJECTS, INCLUDING MARKETING AND ADVERTISING, WERE DONE BY THE ASSESSEE ONLY. JUST BECAUSE ASSESSEE H AD TRANSFERRED THE UNDIVIDED SHARE OF LAND TO PROSPECTIVE BUYERS O F THE FLATS FOR CONSTRUCTION OF FLATS SEPARATELY, IT CANNOT BE CONC LUDED THAT ASSESSEE WAS ONLY A WORKS CONTRACTOR. THE TOTALITY OF THE F ACTS WOULD SHOW THAT THE ASSESSEE ITSELF WAS DEVELOPING THE PROJECTS AND INCURRING ALL EXPENDITURE IN THIS REGARD. WE ARE, THEREFORE, OF THE OPINION THAT LD. CIT(APPEALS) WAS ABSOLUTELY JUSTIFIED IN RELYING ON THE DECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF C. S UBBA REDDY (SUPRA). RELEVANT PARAS OF THAT ORDER AS REPRODUCE D BY LD. CIT(APPEALS), IS ONCE AGAIN REPRODUCED HEREUNDER FO R BREVITY:- IN INCOME-TAX, IF THE ASSESSEE TAKES POSSESSION OF THE LAND AFTER PAYING FULL CONSIDERATION, THE DEFINITION OF THE TERM TRANSFER, AS DEFINED IN SECTION 2(47) OF THE ACT, BECOMES I.T.A. NOS. 1326 & 1327/MDS/11 25 COMPLETE. WITH THE HELP OF THIS DECISION, LEARNED D .R. HAS TRIED TO CONVINCE US THAT IN THIS CASE IT WAS WORKS-CONTR ACT AND NOT THAT OF DEVELOPERS. IN THE LAST PARA OF THE HIGH COURTS DECISION, IT HAS BEEN HELD THAT THE TERM WORKS CONTRACT IN THAT ACT IS AN INCLUSIVE DEFINITION. IT DOES NOT INCLUDE MERELY A WORKS CONTRACT AS NORMALLY UNDERSTOOD. IT HAS A WIDE DEFINITION WH ICH INCLUDES ANY AGREEMENT FOR CARRYING OUT BUILDING OR CONSTR UCTION ACTIVITY FOR CASH, DEFERRED PAYMENT OR OTHER VALUABLE CONSID ERATION. THE DEFINITION AS GIVEN IN THAT ACT DOES NOT MAKE ANY D ISTINCTION BASED ON AS TO WHO CARRIES ON THE CONSTRUCTION ACTI VITY. THUS UNDER THAT ACT, EVEN THE OWNER OF THE LAND CAN BE T REATED AS CARRYING ON A WORKS CONTRACT IF HE ENTERS INTO AN A GREEMENT TO CONSTRUCT FOR CASH, DEFERRED PAYMENT OR OTHER VALUA BLE CONSIDERATION. THEREFORE, THE RATIO OF THAT DECISIO N CANNOT AT ALL BE APPLIED TO THE FACTS OF THE GIVEN CASE WHICH IS UNDER INCOME- TAX ACT. RATHER THIS DECISION SUPPORTS THE CASE OF THE ASSESSEE IN WHICH THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASES OF CIT V. PODAR CEMENT LTD. REPORTED IN (1992) 5 SC C 482 AND MYSORE MINERALS LTD. V. CIT REPORTED IN (1999) 7 SC C 106, HAVE BEEN DISCUSSED AND IN WHICH IT HAS BEEN HELD THAT I N THE CONTEXT OF INCOMETAX ACT IT HAS TO BE HELD THAT EVEN THOUGH THERE IS NO FORMAL CONVEYANCE, THE CONCERNED PARTY COULD BE CON SIDERED TO BE THE BENEFICIAL OWNER. WE HAVE ALSO SEEN THE CONS TRUCTION AGREEMENT PLACED BEFORE US FOR OUR PERUSAL. WE HAVE CAREFULLY CIRCUMSPECTED THE TRUE CHARACTER OF ALL THESE AGREE MENTS AND HAVE FOUND THAT THE ASSESSEE IS NOT ONLY A BUILDER BUT IS ALSO DEVELOPER OF THE PROPERTY IN QUESTION AND THUS, SHE HAS FULFILLED ALL THE CONDITIONS LAID DOWN IN SECTION 80-IB(10) O F THE ACT. THE DEFINITION OF ANY TERM OR WORD GIVEN IN OTHER ENACT MENTS CANNOT BE IMPORTED WHICH DEALING WITH INCOME TAX MATTERS. NO PARALLELS CAN BE DRAWN, UNLESS, IT IS SO SPECIFICALLY PROVIDE D IN THE I.T. ACT ITSELF. THE ASSESSEE WAS NOT AWARDED ANY WORKS CO NTRACT EITHER BY ANY PARTY OR STATE OR CENTRAL GOVERNMENT. THE T ERM USED IN THE EXPLANATION IS AWARDED WHICH HAS A ENTIRELY D IFFERENT CONNOTATION. THEREFORE, THE EXPLANATION APPENDED TO SECTION 80- IB(10) IS ALSO NOT ATTRACTED AT ALL. THE DEVELOPMEN T DONE IN THIS I.T.A. NOS. 1326 & 1327/MDS/11 26 CASE IS NOT ON ACCOUNT OF A WORKS-CONTRACT. IN OUR CONSIDERED OPINION THE FINDING OF THE LD. CIT(APPEALS) DOES NO T DESERVE ANY INTERFERENCE AT OUR END. THE DECISION OF CHENNAI BE NCH AND AHMEDABAD BENCH FULLY SUPPORT THE CASE OF THE ASSES SEE, AS SIMILAR QUESTIONS ARISING OUT OF IDENTICAL FACTS AR E INVOLVED THEREIN. THE OTHER DECISION OF CHENNAI BENCH AND TH AT OF SUPREME COURTS DECISION IN THE CASE OF M/S K. RAHE JA DEVELOPMENT CORPORATION RELIED ON BY THE LEARNED D. R. ARE DEFINITELY RENDERED IN ENTIRELY DIFFERENT CONTEXT A ND FACTS ARE DISTINGUISHABLE. CONSEQUENTLY, WE UPHOLD THE FINDIN G OF THE CIT(APPEALS) IN THIS REGARD AND DISMISS GROUNDS NO. 2.1, 2.2, 2.3 AND 2.4. 33. NO DOUBT, FINANCE (NO.2) ACT OF 2009 WITH RETRO SPECTIVE FROM 1.4.2001 HAD ADDED AN EXPLANATION TO SECTION 80-IB( 10) WHEREBY IT HAS BEEN DECLARED THAT DEDUCTION UNDER SECTION 80-I B(10) COULD NOT BE GIVEN TO AN UNDERTAKING WHICH EXECUTES A HOUSING PROJECT AS WORKS CONTRACTOR. BUT, AS ALREADY HELD BY US, HERE THE ASSESSEE COULD NOT BE CONSIDERED AS A MERE WORKS CONTRACTOR, IT HAVING BEEN CONCERNED WITH ACQUISITION OF LAND, PROMOTION OF TH E PROJECT, CONSTRUCTION AND SELLING OF THE FLATS. UNDUE RELIA NCE WAS PLACED BY THE A.O. ON THE AGREEMENTS ENTERED BY THE ASSESSEE WITH PROSPECTIVE BUYERS IN THIS REGARD. WE ARE OF THE O PINION THAT LD. CIT(APPEALS) WAS JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE HOLDING THAT ASSESSEE WAS AN UNDERTAKING DEVELOPING AND BUILDING I.T.A. NOS. 1326 & 1327/MDS/11 27 HOUSING PROJECTS. THUS, GROUNDS 2 AND 3 OF THE REV ENUE ARE DISMISSED. EFFECTIVELY APPEAL OF THE REVENUE FOR A SSESSMENT YEAR 2008-09 STANDS DISMISSED. 34. TO SUMMARISE, REVENUES APPEALS FOR BOTH THE AS SESSMENT YEARS ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 13 TH JANUARY, 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 13 TH JANUARY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-III, CHENNAI (4) CIT, CHENNAI-I, CHENNAI (5) D.R. (6) GUARD FILE