ACIT, CHENNAI V. M/s. Shivanthi Agro Estates (P) Ltd., CHENNAI

ITA 1491/CHNY/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0869 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 22-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BASHYAM IRS
• Assessee Lawyers: V D GOPAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN,VICE-PRESID ENT AND SHRI VIKAS AWASTHY, JUDICIAL MEM BER ITA NOS.1491 & 1616/MDS/2009 (ASSESSMENT YEARS: 2005-06 & 2006-07) ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-VI(2) AAYAKAR BHAVAN, NEW BLOCK, 121, M.G.ROAD, CHENNAI-600 034. VS. M/S.SHIVANTHI AGRO ESTATES P.LTD., 92, SUNPARK APARTMENTS, 5, SOUTH WEST BOAG ROAD, T.NAGAR, CHENNAI-600 017. PAN:AABCS4881R (APPELLANT) (RESPONDENT) APPELLANT BY : MR. GURU BASHYAM, IRS, J CIT RESPONDENT BY : MR. V.D.GOPAL, ADVOCATE DATE OF HEARING : 6 TH FEBRUARY, 2013 DATE OF PRONOUNCEMENT : 22 ND FEBRUARY, 2013 O R D E R PER VIKAS AWASTHY, JM: THE PRESENT SET OF TWO APPEALS FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 HAVE BEEN FILED BY THE RE VENUE IMPUGNING THE ORDERS OF THE CIT(A)-V, CHENNAI DATED 2.9.2008 AND 27.02.2009 RESPECTIVELY. BOTH THE APPE ALS INVOLVE COMMON ISSUE I.E. DEDUCTION UNDER SECTION 8 0IB(10) ALLOWED BY THE CIT(A) TO THE ASSESSEE FOR ITS HOUS ING PROJECT. THE REVENUE HAS FILED BOTH THE APPEALS ASSAILING TH E ORDERS ITA NO.1491 & 1616/MDS/2009 2 OF THE CIT(A) ON THE GROUND THAT THE ASSESSEE IS A CONTRACTOR AND NOT A DEVELOPER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E CLAIMED DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF CONSTRUCTION OF 50 INDIVIDUAL HOUSES IN ITS HOUSING PROJECT UNDER THE NAME AND STYLE OF VISHNUPRIYA AVENUE AT 60, KAYAAMBEDU VILLAGE, KANCHEEPURAM. THE TOTAL AREA O F THE PROJECT IS SAID TO BE 4.98 ACRES. THE ASSESSEE HA D SOLD THE HOUSE SITES AND HOUSES WERE CONSTRUCTED BASED ON S ALE CUM CONSTRUCTION AGREEMENT ENTERED INTO WITH THE PROSPECTIVE BUYERS. THE ASSESSEE CLAIMED THAT SINC E THE ENTIRE PROJECT HAS BEEN CONCEIVED AND DEVELOPED BY THE ASSESSEE, THE ASSESSEE IS ENTITLED FOR DEDUCTION UN DER THE PROVISIONS OF SECTION 80IB. THE POSSESSION OF THE HOUSES ARE HANDED OVER TO THE PROSPECTIVE BUYERS ONLY AFTER T HE RECEIPT OF THE ENTIRE CONSIDERATION, TILL THE TIME THE OWNE RSHIP OF THE HOUSES REMAINS WITH THE ASSESSEE. THE ASSESSING OFF ICER REJECTED THE CONTENTIONS OF THE ASSESSEE AND HELD T HAT CONSTRUCTION OF THE HOUSES WERE DONE BY THE ASSESSE E AS A CONTRACTOR. THE RELATIONSHIP BETWEEN THE PARTIES IS THAT OF A ITA NO.1491 & 1616/MDS/2009 3 CONTRACTOR AND CONTRACTEE AND NOT AS A DEVELOPER/V ENDOR AND VENDEE. THE ASSESSING OFFICER VIDE ASSESSMENT ORDE RS DATED 20.11.2007 AND 24.12.2008 FOR THE ASSESSMENT YEARS 2005- 06 & 2006-07 RESPECTIVELY DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IB. AGGRIEVED AGAINST THE ASSESSMENT ORDERS, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) A FTER PERUSING THE DOCUMENTS ON RECORD AND CONSIDERING TH E FACTS OF THE CASE HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) AND REVERSED THE FINDINGS OF THE ASSESSING OFFICER. NOW, THE REVENUE HAS COME IN SEC OND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDERS OF THE CIT(A) FOR BOTH THE ASSESSMENT YEARS. 3. SHRI GURU BASHYAM APPEARING ON BEHALF OF THE REV ENUE SUBMITTED THAT THE ASSESSEE IS CONSTRUCTING HOUSES AS PER THE DIRECTIONS OF PROSPECTIVE BUYERS, THUS THE ASSESSEE IS NOT A DEVELOPER BUT IS A CONTRACTOR. THEREFORE, THE ASSES SEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). THE D.R. CONTENDED THAT APPROVAL AND BUILDING PLAN FROM THE LOCAL AUTHORITY WAS TAKEN IN THE NAME OF INDIVIDUALS AND NOT IN THE ITA NO.1491 & 1616/MDS/2009 4 NAME OF THE ASSESSEE. THE ASSESSEE HAD ONLY EXECUT ED WORKS CONTRACT OF CONSTRUCTING HOUSES ON BEHALF OF THE INDIVIDUAL BUYERS. THE DR POINTED OUT THAT FINANCE (NO.2) ACT, 2009 HAS AMENDED SECTION 80IB(10) WITH RETROSP ECTIVE EFFECT FROM 1.4.2002 TO THE EFFECT THAT DEDUCTION W ILL NOT BE AVAILABLE TO A WORKS CONTRACT AND THE AFOREMENTIONE D AMENDMENT HOLDS THE FIELD NOW IN THE PRESENT CASE A S WELL. THE DR STRONGLY SUPPORTED THE VIEW TAKEN BY THE ASS ESSING OFFICER. 4. ON THE OTHER HAND, SHRI V.D.GOPAL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ENTIRE PROJECT VISHNUPRIYA AVENUE HAS BEEN CONCEIVED AND DEVELOPED BY THE ASSESSEE. AN AGREEMENT BETWEEN THE ASSESSEE AND THE ULTIMATE BUYER IS A SINGLE COMPREHENSIVE AGREEMENT WHICH INCLUDES SALE OF LAND AS WELL AS BUILDING. THE PRIC E OF THE LAND WHICH IS THE PORTION OF THE SELLING PRICE HAS BEEN SEPARATELY SHOWN FOR REGISTRATION PURPOSES SO AS TO ENABLE THE BUYER TO SAVE MONEY ON STAMP DUTY. THE COMPLETION CERTIFICA TES WERE ISSUED IN THE NAME OF RESPECTIVE BUYERS BY THE CONC ERNED AUTHORITY AT THE REQUEST OF THE ASSESSEE FOR THE CO NVENIENCE ITA NO.1491 & 1616/MDS/2009 5 OF BUYERS OF THE HOUSES IN THE PROJECT DEVELOPED BY THE ASSESSEE. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONE OF THE SALE CUM CONSTRUCTION AGREEMENT WHICH IS AT PAGE 7 TO 10 OF THE PAPER BOOK CLEARLY SHOWS THAT THE AGREEME NT IS WITH RESPECT TO SALE OF PLOT ALONG WITH CONSTRUCTED INDI VIDUAL HOUSE WITHIN THE AREA DEVELOPED BY THE ASSESSEE UNDER TH E NAME AND STYLE OF VISHNUPRIYA AVENUE. THE SCHEDULES A LONG WITH SALE AGREEMENT CLEARLY SPECIFY THE LOCATION OF THE LAND, LOCATION OF THE ENTIRE PROJECT, PARTICULAR PLOT OF LAND AND THE TOTAL CONSTRUCTION TO BE CARRIED OUT IN A PARTICULA R PLOT ALONG WITH COVERED AREA THEREOF. THE COUNSEL FURTHER PO INTED OUT THAT THE CLEARANCE OF THE PROJECT WAS TAKEN BY THE ASSESSEE. THE PLANS OF THE HOUSES TO BE CONSTRUCTED WERE GOT APPROVED BY THE ASSESSEE THROUGH ITS MANAGING DIRECTOR SMT. P.SHAANTHI. THEREFORE, ALL THE APPROVALS RIGHT FROM THE BEGINNING TO END WERE OBTAINED BY THE ASSESSEE. ROA DS AND OTHER AMENITIES BEING PROVIDED IN VISHNUPRIYA AVEN UE WERE DEVELOPED BY THE ASSESSEE. ALL THESE FACTS WERE BRO UGHT TO THE NOTICE OF THE ASSESSING OFFICER, BUT THE ASSESS ING OFFICER FAILED TO TAKE ALL THE DOCUMENTS IN THE CONSIDERATI ON. IN VIEW ITA NO.1491 & 1616/MDS/2009 6 OF THE ABOVE STATED FACTS, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). THE COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDERS OF THE CIT(A ). 5. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES AND HAVE GONE THROUGH THE ORDERS PASSED BY THE AUTHORITIES BELOW AND THE DOCUMENTS REFERRED TO BY THE COUNSEL FOR THE ASSESSEE. AN UNDERTAKING ENGAGED IN THE DEVELOPING AND CONSTRUCTING HOUSING PROJECTS SHALL BE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IB(10), IF THE F OLLOWING CONDITIONS ARE SATISFIED:- I) THE PROJECT SHOULD BE APPROVED BY THE LOCAL AUTHORITY BEFORE 31.03.2008; II) THE SIZE OF THE PLOT OF LAND IS MINIMUM OF ONE ACRE; III) AN UNDERTAKING COMMENCES DEVELOPMENT AND CONSTRUCTION OF PROJECT ON OR AFTER 1.10.1998, IT SHOULD COMPLETE THE CONSTRUCTION ON OR BEFORE 31.3.2008. IV) THE BUILT UP AREA OF RESIDENTIAL UNIT OTHER THA N DELHI AND MUMBAI SHOULD NOT EXCEED 1500 SQ.FT ITA NO.1491 & 1616/MDS/2009 7 V) IF AN ALLOTTEE IS A PERSON BEING AN INDIVIDUAL NOT MORE THAN ONE RESIDENTIAL UNIT SHOULD BE ALLOTTED TO THE SAME ALLOTTEE. IF THESE CONDITIONS ARE SATISFIED, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IB(10). 6. NOW, THE FIRST ISSUE WHICH HAS TO BE DETERMINED IS WHETHER THE ASSESSEE IS A CONTRACTOR OR A DEVELOPER . THE COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD DOCU MENTS SHOWING THAT FOR THE APPROVAL/SANCTION OF PLAN, AMO UNT WAS DEPOSITED BY THE ASSESSEE, EVEN FOR APPROVAL OF THE BUILDING PLAN, THE AMOUNT WAS DEPOSITED BY THE ASSESSEE. TH E BUILDING PLAN WAS APPROVED IN THE NAME OF SMT. P.SH AANTHI, MANAGING DIRECTOR OF THE ASSESSEE COMPANY. THE AGRE EMENT AT PAGE NO.7 TO 10 OF THE PAPER BOOK SPECIFICALLY STATES WHEREAS THE PROMOTER OFFERED TO SELL PLOT NO.7 MEA SURING 1560 SQ.FT., MOREFULLY DESCRIBED IN THE SCHEDULE B MENTIONED PROPERTY, WHICH IS COMPRISED IN THE SCHEDULE A MEN TIONED PROPERTY, ALONG WITH A CONSTRUCTED INDIVIDUAL HOUS E OF A TOTAL AREA OF 600 SQ.FT. MOREFULLY DESCRIBED IN SCHEDULE C HEREIN FOR A TOTAL SALE CONSIDERATION OF ` 4,72,100/- FREE FROM ITA NO.1491 & 1616/MDS/2009 8 ENCUMBRANCES AND THE PURCHASER ACCEPTED FOR THE SAM E . THIS CLAUSE ITSELF CLARIFIES THAT THE AGREEMENT REL ATE TO THE SALE OF PLOT AS WELL AS CONSTRUCTED INDIVIDUAL HOUSE THE REON AND THE HOUSE IS BEING CONSTRUCTED BY THE PROMOTER I.E. THE ASSESSEE. THE ABOVE DOCUMENT FURTHER CLARIFIES THAT THE ASSESSEE IS A PROMOTER AND NOT A WORKS CONTRACTOR A S HAS BEEN HELD BY THE ASSESSING OFFICER. THE OTHER COVEN ANTS IN THE AGREEMENT RELATING TO THE SCHEDULE OF PAYMENT I S FOR THE SAKE OF CONVENIENCE OF BUYERS WHO AT TIMES ARE NOT IN A POSITION TO PAY THE ENTIRE AMOUNT IN A LUMP SUM. TH E PAYMENTS HAVE BEEN SCHEDULED TO ENABLE THE PROSPECT IVE BUYER TO MAKE THE PAYMENTS IN A PLANNED MANNER. A F URTHER PERUSAL OF CLAUSE 14 OF THE AGREEMENT WOULD SHOW T HAT THE HOUSE WILL REMAIN IN THE PHYSICAL POSSESSION OF THE PROMOTER TILL THE TIME BALANCE SALE CONSIDERATION IS PAID AN D THE PURCHASER CAN OCCUPY THE HOUSE ONLY AFTER OBTAINING POSSESSION LETTER FROM THE PROMOTER. THIS FURTHER F ORTIFIES THE STAND OF THE ASSESSEE THAT IT IS NOT THE CASE WHERE THE ASSESSEE IS CONSTRUCTING A BUILDING FOR THE PROSPEC TIVE BUYER ON CONTRACT BASIS. ITA NO.1491 & 1616/MDS/2009 9 THE CIT(A) HAS ALSO GIVEN A CATEGORIC FINDING THAT HOUSING PROJECT VISHNUPRIYA AVENUE IS CONCEIVED AND DEVE LOPED BY THE ASSESSEE COMPANY. NO OTHER BUILDER OR DEVELOPER WAS INVOLVED AT ANY TIME OF CONSTRUCTION OR EXECUTION O F PROJECT. IN VIEW OF THE ABOVE STATED FACTS AND DOCUMENTS ON REC ORD, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS A PROMOTER OF THE COLONY DEVELOPED UNDER THE NAME AND STYLE OF VISHNUPRIYA AVENUE. AS MENTIONED EARLIER, THE C ONDITIONS WHICH HAVE BEEN LAID DOWN FOR CLAIMING DEDUCTION UN DER SECTION 80IB(10), THE ASSESSEE HAS COMPLIED WITH TH E SAME, VIZ., I) THE ASSESSEE HAD ACQUIRED THE LAND, GOT APPROVED THE PLAN FOR PLOTS AS WELL AS BUILDINGS AND THEN DEVELOPED THE BUILT HOUSES AS PER PLAN AFTER 1.10.1998. II) THE SIZE OF PROJECT IS MORE THAN ONE ACRE; III) THE BUILT UP AREA OF EACH UNIT/HOUSE IS LESS THAN 1500 SQ.FT.; IV) APPROVALS WERE TAKEN WITHIN THE STIPULATED TIME AS MENTIONED THEREIN. ITA NO.1491 & 1616/MDS/2009 10 V) ALLEGED HOUSES WERE CONSTRUCTED WELL BEFORE THE TIME SPECIFIED UNDER THE SECTION. VI) THE PROJECT WAS COMPLETED IN THE YEAR 2006. THE PROJECT COMPLETION CERTIFICATE DATED 31.7.2006 WAS ISSUED BY THE LOCAL AUTHORITY IN THE NAME OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY. 7. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IB(10) AND WE SEE NO INFIRMITY IN THE ORDER OF THE CIT(A). WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS BOTH THE APPEALS OF THE REVE NUE BEING DEVOID OF MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 22 ND DAY OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) (VIKAS AWASTHY) VICE-PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 22 ND FEBRUARY, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.