ACIT, CHENNAI V. M/s. Doshi Housing Ltd., CHENNAI

ITA 1571/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0839 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-02-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 09-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Earning of tax free income; Proportionate interest
• Section: 14A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NO.1571/MDS/2012 ASSESSMENT YEAR : 2009-10 THE ACIT COMPANY CIRCLE I(4) CHENNAI VS M/S DOSHI HOUSING LTD 3H 560, CENTURY PLAZA ANNA SALAI CHENNAI 600 018 [PAN AAACD 1187G] (APPELLANT) (RESPONDENT) C.O.NO.154/MDS/2012 ASSESSMENT YEAR : 2009-10 M/S DOSHI HOUSING LTD 3H 560, CENTURY PLAZA ANNA SALAI CHENNAI 600 018 VS THE ACIT COMPANY CIRCLE I(4) CHENNAI (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI SHAJI P. JACOB, ADDL. CIT ASSESSEE BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 04-02-2013 DATE OF PRONOUNCEMENT : 12-02-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND THE CR OSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-III, CHENNAI, DATED 28.5.2012. I.T.A.NO. 1571/12 C.O.154/12 :- 2 -: 2. GROUND NO.1 & 4 OF THE APPEAL OF THE REVENUE ARE GE NERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION BY US. 3. IN GROUND NO.2 IN GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO EXCLUDE THE INVESTMENT MADE Y THE ASSESSEE-COMPANY IN THE PARTN ERSHIP FIRM WHILE QUANTIFYING THE DISALLOWANCE UNDER RULE 8D(2)(II) O F I.T.RULES. 4. THE BRIEF FACTS OF THE CASE ARE THE ASSESSING OFFIC ER FOUND THAT THE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF ` 9,84,310/- WHICH WAS CLAIMED EXEMPT U/S 10(34) OF THE ACT. THE A SSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT INVESTMENTS IN MU TUAL FUNDS WERE OUT OF ITS OWN FUNDS BEARING NO INTEREST AND HENCE, NO EXPENDITURE WAS INCURRED FOR THE INVESTMENTS MADE IN MUTUAL FUNDS. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSES SEE AND OBSERVED THAT SOME AMOUNT OF EXPENSES IN THE NATURE OF HIDDE N COST LIKE SALARY, OFFICE ESTABLISHMENT COSTS, OPPORTUNITY COST OF THE TIME SPENT BY DIRECTORS IN TAKING INVESTMENT DECISIONS WERE ATTRI BUTABLE TO THE DIVIDEND INCOME EARNED BY THE ASSESSEE. THE ASSES SING OFFICER OBSERVED THAT AS REGARDS THE CLAIM THAT NO DIRECT N EXUS BETWEEN THE INTEREST BEARING FUNDS AND INVESTMENTS, THE SAME WA S CONSIDERED AND NO DISALLOWANCE HAS BEEN MADE UNDER RULE 8D(2)(I) A ND ONLY PROVISIONS OF RULE 8D(2)(II) WAS INVOKED. ACCORDIN GLY, THE ASSESSING I.T.A.NO. 1571/12 C.O.154/12 :- 3 -: OFFICER MADE DISALLOWANCE OF ` 31,98,438/- UNDER RULE 8D(2)(II) AND UNDER 8D(2)(III). 5. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE ARGUED T HAT NO SPECIFIC EXPENDITURE WAS INCURRED TOWARDS THE INVES TMENTS IN MUTUAL FUNDS. IT WAS ALSO SUBMITTED THAT THE ASSESSING OF FICER WAS ERRED IN CALCULATING THE AMOUNT OF ` 6,29,782/- AS DISALLOWANCE UNDER RULE 8D(2) ON ACCOUNT OF INVESTMENTS MADE BY THE ASSESS EE IN M/S DOSHI CONSTRUCTIONS, A PARTNERSHIP FIRM IN WHICH THE ASS ESSEE WAS A PARTNER. THE ASSESSEE RELIED ON THE DECISION OF HON'BLE P&H HIGH COURT IN THE CASE OF CIT VS HERO CYCLES, 323 ITR 518. 6. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE, OBSERVED THAT THE ASSESSEE HAD NOT FURNI SHED EVEN THE PRIMARY DETAILS REGARDING THE CLAIM THAT NO EXPENDI TURE WAS INCURRED IN RELATION TO THE EXEMPT INCOME. THE ASSESSING OFFIC ER HAS RIGHTLY INVOKED THE PROVISIONS OF RULE 8D AND UPHELD THE AC TION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE U/S 14A R .W. RULE 8D. HOWEVER, HE DIRECTED THE ASSESSING OFFICER TO EXCLU DE THE INVESTMENT MADE BY THE ASSESSEE IN THE PARTNERSHIP FIRM WHILE QUANTIFYING THE DISALLOWANCE UNDER RULE 8D(2)(III). I.T.A.NO. 1571/12 C.O.154/12 :- 4 -: 7. BEING AGGRIEVED AGAINST THE DIRECTION OF THE CIT(A) TO THE ASSESSING OFFICER TO EXCLUDE INVESTMENT MADE BY THE ASSESSEE IN THE PARTNERSHIP FIRM WHILE QUANTIFYING THE DISALLOWANCE UNDER RULE 8D(2), THE REVENUE IS IN APPEAL BEFORE US. 8. THE DR RELIED ON THE DECISION OF THE AHMEDABAD SPEC IAL BENCH IN THE CASE OF VISHNU ANANT MAJAHAN VS ACIT, 16 ITR (TRIB) 621 WHERE IT WAS HELD THAT THE SHARE OF PROFIT FROM THE FIRM WAS EXCLUDED FROM THE ASSESSEES TOTAL INCOME BY DINT OF PROVIS IONS OF SECTION 10(2A)OF THE ACT , THE PROVISIONS OF SECTION 14A RE GARDING EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDED IN TOTA L INCOME WERE APPLICABLE. HE ALSO RELIED ON THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS POPULAR VEHICLES & SERV ICES LTD. [2010] 325 ITR 523 WHEREIN IT WAS HELD THAT SHARE INCOME OF AS SESSEE-COMPANY FROM A FIRM IN WHICH IT WAS PARTNER DID CONSTITUTE INCOME OF THE ASSESSEE UNDER SECTION 10(2A) AND THEREFORE, THE DI SALLOWANCE OF PROPORTIONATE INTEREST ON BORROWED FUNDS DIVERTED A S INTEREST FREE LOANS TO FIRMS ON WHICH THE ASSESSEE WAS A PARTNER WAS RIGHTLY MADE BY THE ASSESSING OFFICER. 9. ON THE OTHER HAND, THE A.R OF THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). I.T.A.NO. 1571/12 C.O.154/12 :- 5 -: 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER MADE DISALLOWAN CE U/S 14A OF THE ACT BY OBSERVING AS UNDER: 6. APPLICABILITY OF SECTION 14A IT IS SEEN FROM THE SCHEDULE OF OTHER INCOME THAT T HE ASSESSEE HAD RECEIVED A SUM . OF RS . 9,84,310/- ON ACCOUNT OF DIVIDEND (CLAIMED EXEMPT U/S . 10(34)) FROM INVESTMENT MADE IN VARIOUS SCHEMES OF MUTUAL FUNDS . THE ASSESSEE WAS QUESTIONED WITH REGARD TO THE APPLICABILITY OF SECTION 14A . IN RESPONSE THE ASSESSEE CONTENDED THAT THE INVESTMENTS IN MUTUAL F UNDS WERE OUT OF ITS NON INTEREST BEARING FUNDS AND NO SPECIF IC EXPENDITURE WAS INCURRED FOR THEIR MUTUAL FUND INVESTMENTS. 6.1 ALTHOUGH THERE WAS NO EXPENDITURE CLAIMED TO HA VE BEEN DIRECTLY INCURRED BY THE ASSESSEE FOR EARNING THE E XEMPT INCOME , HOWEVER, CERTAIN AMOUNT OF EXPENSES IN THE NATURE O F HIDDEN COST LIKE STAFF SALARY, OFFICE ESTABLISHMENT COSTS , OPPORTUNITY COST OF THE TIME SPENT BY DIRECTORS IN TAKING INVESTMENT DECISIONS ETC . ARE DEFINITELY ATTRIBUTABLE TO THE DIVIDEND INCOME EARNED BY THE ASSESSEE ON ITS INVESTMENTS . REGARDING THE ASSESSEE'S CONTENTION THAT NON-INTEREST BEARING FUNDS WERE USE D FOR INVESTMENT AND THAT THERE IS NO DIRECT NEXUS BETWEE N THE AMOUNT BORROWED AND THE INVESTMENTS MADE AND THUS, THERE I S NO INTEREST EXPENDITURE INCURRED WHICH CALLS FOR DISAL LOWANCE U/S . 14A IT IS NOT DISPUTED THAT THERE IS NO DIRECT NEXU S AS IN CASE OF DIRECT NEXUS , THE FIRST LIMB OF RULE 8D WOULD HAVE BEEN INVOKED DISALLOWING THE ENTIRE INTEREST EXPENDITURE AS A DI RECT EXPENDITURE . ONLY BECAUSE OF THE REASON THAT THERE IS NO DIRECT NEXUS, THE FIRST LIMB OF RULE 8D IS NOT INVOKED AND THE AVERAGE METHOD IS APPLIED IN TERMS OF SECOND LIMB OF RULE 8 D . IT ALSO CANNOT BE DENIED THAT THERE IS AN OPPORTUNITY COST INVOLVED HERE AS THE AMOUNT SPENT TOWARDS TAX FREE INVESTMENT, IF AVAILABLE WITH THE ASSESSEE WOULD HAVE CERTAINLY REDUCED THE LOAN LIABILITY AND THE CONSEQUENT INTEREST LIABILITY AS THE ASSESS EE COULD HAVE USED THE FUNDS DEPLOYED FOR INVESTMENTS FOR THE PUR POSE OF OTHER NEEDS FOR WHICH IT HAD TO BORROW . 6.2 HENCE, APPLYING RULE 8D , THE DISALLOWANCE IS WORKED OUT AS PER THE SECOND AND THIRD LIMB OF RULE 8D(2) AS U NDER : I.T.A.NO. 1571/12 C.O.154/12 :- 6 -: AMOUNT OF EXPENDITURE DIRECTLY RELATING TO DIVIDEND INCOME NIL INTEREST EXPENDITURE WHICH IS NOT DIRECTLY ATTRIBUT ABLE TO THE 2568656 EARNING OF DIVIDEND ONE-HALF PER CENT OF THE AVERAGE OF THE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART O F THE TOTAL INCOME , AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE , 629782 ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS Y EAR . (2 , 55 , 09 , 500X0.5% ) AGGREGATE OF THE ABOVE THREE 3198438 ACCORDINGLY AN AMOUNT OF RS.3198438/- IS DISALLOWE D U/S 14A . 11. FROM THE ABOVE QUOTED ORDER OF THE ASSESSING OFFICE R, WE FIND THAT THE ASSESSING OFFICER HAS GIVEN ABSOLUTEL Y NO REASON FOR MAKING THE DISALLOWANCE U/S 14A IN TERMS OF RULE 8 D BY INCLUDING THE INVESTMENTS MADE IN THE PARTNERSHIP FIRM, M/S DOSHI CONSTRUCTIONS WHILE MAKING THE DISALLOWANCE IN RESPECT OF DIVIDEN D INCOME EARNED ON INVESTMENT IN MUTUAL FUNDS. SUCH A NON-SPEAKING OR DER IS NOT SUSTAINABLE IN LAW. HENCE, WE DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) WH ICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 12. GROUND NO.3 OF THE APPEAL IS DIRECTED AGAINST THE O RDER OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO AL LOW RELIEF TO THE ASSESSEE U/S 80IB IN RESPECT OF VENGAIVASAL PROJEC T. I.T.A.NO. 1571/12 C.O.154/12 :- 7 -: 13. THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER DISA LLOWED DEDUCTION U/S 80IB OF ` 2,02,13,957/- IN RESPECT OF VENGAIVASAL PROJECT BY OBSERVING AS UNDER: . THE PERMISSION FOR THIS PROJECT HAS BEEN TAKEN ONLY BY SRI HARSHAD V DOSHI AND NOT THE ASSESSEE-COMPANY. THE UNDIVIDED SHARE HAS ALSO BEEN TRANSFERRED ONLY BY S RI HARSHAD V DOSHI AT DIFFERENT POINT OF TIME TO VARIOUS PERSONS. ONLY FOR THE CONSTRUCTION PURPOSE THE ASSESSEE HAS ENTERED I NTO AGREEMENT WITH DIFFERENT BUYERS. THUS, THE ASSESSEE IS CLEARLY HIT BY THE EXPLANATION TO SEC. 80-IB(10) IN SERTED BY THE FINANCE ACT, 2009, WHICH RENDERS THE ASSESSEE INELI GIBLE FOR THE DEDUCTION U/S 80-IB(10) IN RESPECT OF VENGAIVASAL PROJECT, AS THE HOUSING PROJECT HAS BEEN EXECUTED AS A WORKS CONTRACT WITH THE FLAT BUYERS. THE OBJECTIVE OF THE CONCESSION GIVEN U/LS 80-IB(10) IS TO PROVIDE TAX B ENEFIT TO THE PERSON UNDERTAKING THE INVESTMENT RISK, I.E., THE A CTUAL DEVELOPER. HOWEVER, ANY PERSON UNDERTAKING PURE CON TRACT RISK IS NOT ENTITLED TO TAX BENEFITS UNDER THIS SUB SECTION. THE ASSESSEE'S CASE IS NOT ONE OF A DEVELOPER WHO HAS UNDERTAKEN THE INVESTMENT RISK BY INVESTING IN THE LAND AND CONSTRUCTION COST OF THE PROJECT AND SELLING THE FLAT AS A COMPOSITE UNIT TO THE BUYERS.' 14. ON APPEAL, THE CIT(A) ALLOWED THE CLAIM OF THE ASS ESSEE BY OBSERVING AS UNDER: 5.4 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF THE ID. AR. I HAVE ALSO GONE THROUGH THE DECISIONS RELIED ON BY THE AO AND ID.AR AS WELL AS PROVISIONS OF SEC 80-IB(10). I HAVE ALSO GONE THROUGH THE DETA ILS FURNISHED BY THE APPELLANT INCLUDING THE APPROVAL A ND COMPLETION CERTIFICATES ISSUED BY CMDA ON 29.11.200 6 AND 16.7.2009 RESPECTIVELY, SALE & CONSTRUCTION AGREEME NTS, DETAILS OF FUNDS TRANSFERRED FROM THE APPELLANT COM PANY TO SHRI HARSHAD V. DOSHI FOR PURCHASE OF LAND, AGREEMENT BE TWEEN SHRI DOSHI AND THE APPELLANT FOR PROMOTION OF PROPE RTY, POWER OF ATTORNEY EXECUTED BY SHRI DOSHI DATED 4.5.2006, COPY OF SALE AGREEMENT FOR TRANSFER OF UNDIVIDED SHARE OF L AND BETWEEN SHRI DOSHI AND ONE OF THE ALLOTTEES OF THE PROJECT, PROMOTERS AGREEMENT BETWEEN THE APPELLANT AND ONE O F THE I.T.A.NO. 1571/12 C.O.154/12 :- 8 -: ALLOTTEES, AREA & ALLOTTEE DETAILS OF THE FLATS OF THE PROJECT, BALANCE SHEET AND PROFIT & LOSS ACCOUNT ETC. THE APPELLANT HAD ALSO FURNISHED ALL THESE DETAILS BEFORE THE AO. DED UCTION U/S 80-IB IS ALLOWED IF THE FOLLOWING CONDITIONS ARE FU LFILLED (I) THERE SHOULD BE AN UNDERTAKING FOR DEVELOPING A ND BUILDING A HOUSING PROJECT. (II) SUCH HOUSING PROJECT SHOULD BE APPROVED BY A L OCAL AUTHORITY BEFORE 31.3.2008. (III) THE ASSESSEE COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1.10.1998 AND COMPLETES SUCH CONSTRUCTION WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE PROJECT IS APPROVED BY THE LOCAL AUTHORITY. THE COMPLETION PERIOD IS FIVE YEARS IF THE APPROVAL IS TAKEN AFTER 1.4.2005. (IV) THE HOUSING PROJECT SHOULD BE ON A PLOT SIZE O F MORE THAN 1 ACRE. (V) THE BUILT-UP AREA SHOULD NOT EXCEED 1000 SQ.FT IF IT IS SITUATED IN THE CITY / WITHIN 25 KILOMETRES FROM TH E MUNICIPAL LIMIT OF MUMBAI AND DELHI AND 1500 SQ.FT AT ANY OTHER PLACE. IN RESPECT OF VENGAIVASAL PROJECT UNDER CONSIDERATI ON, THE APPELLANT HAS ACQUIRED A PLOT WHICH IS OF THE SIZE OF MORE THAN 1 ACRE (PLOT SIZE 1.08 ACRES). BUILDING PLANNING PERM ITS WERE GRANTED FOR THE HOUSING PROJECT BY CMDA AND VENGAIV ASAL MUNICIPALITY ON 29.11.2006 AND 7.2.2007 RESPECTIVEL Y. THE HOUSING PROJECT CONSIST OF 61 FLATS IN 3 BLOCKS. TH E BUILT UP AREA OF ALL THESE FLATS ARE BELOW 1500 SQ.FT. NO COMMERC IAL OR SHOPPING SPACE WAS CONSTRUCTED IN THIS PROJECT. THE BUILDING COMPLETION CERTIFICATE WAS ISSUED BY CMDA ON 16.07. 2009 WHICH WAS WITHIN THE TIME ALLOWED IN SEC 80-IB(10). FURTHER, AS. SUBMITTED BY THE APPELLANT, NO TWO ADJACENT FLA TS WERE SOLD TO AN ALLOTTEE. IN VIEW OF THE ABOVE, ALL THE CONDITIONS PRESCRIBED U/S 80-IB(10) OF TILE ACT ARE SATISFIED. 5.5 AS REGARDS THE ISSUE AS TO WHETHER THE ASSESSE E IS A DEVELOPER OR MERE WORKS CONTRACTOR, IT IS FOUND FRO M THE MATERIALS ON RECORD THAT THE APPELLANT HAS INVESTED MONEY ON ACQUIRING THE LAND AND EXECUTING THESE CONSTRUCTION S. THUS, THE APPELLANT WAS THE DEVELOPER AND SHRI HARSHAD V. DOSHI, MANAGING DIRECTOR WAS ONLY A FACILITATOR. THE APPEL LANT HAS INVESTED ITS OWN MONEY AND TAKEN THE RISK FROM THE STAGE OF I.T.A.NO. 1571/12 C.O.154/12 :- 9 -: ACQUISITION OF LAND TILL SALE OF THE FLATS TO THE P ROSPECTIVE BUYERS. IT HAS MADE THE PLANS FOR THE BUILDINGS, GO T APPROVAL FROM THE LOCAL AUTHORITY, APPOINTED CONTRACTORS FOR CONSTRUCTING THE BUILDING, ADVERTISED FOR THE PROJE CTS, NEGOTIATED WITH THE CUSTOMERS REGARDING THE FINAL P RICE OF THE FLAT, ENTERED INTO AGREEMENT OF SALE OF UDS AND CON STRUCTION WITH THE PURCHASERS OF FLATS, GOT THE COMPLETION CE RTIFICATE FROM THE LOCAL AUTHORITY ETC. THE INVESTMENT RISK W AS ALSO TAKEN BY THE APPELLANT. IF THE FLATS WERE NOT SOLD AND IF THERE WAS LOSS, THE SAME HAS TO BE BORNE BY THE APPELLANT . THESE ACTIVITIES CLEARLY REVEAL THAT THE APPELLANT WAS A DEVELOPER AND NOT A MERE 'WORKS CONTRACTOR'. HENCE, EXPLANATION TO SEC 80-IB(10) IS NOT ATTRACTED TO TH E FACTS OF THE INSTANT CASE. RELIANCE IS ALSO PLACED ON THE DE CISIONS OF HON'BLE CHENNAI ITAT IN THE CASE OF ACIT V. SMT. C. RAJNI IN ITA NO.1239/MDS/2008 DATED 10.12.2010, ACIT V. M/S SASHWATH CONSTRUCTIONS PVT.LTD IN ITA NO. 1069(MDS) /2008 DATED 25.2.2008 AND APPELLANT'S OWN CASE FOR AY.200 6-07 IN ITA NO.1367/MDS/2009. RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. M/S SHRAVANEE CONSTRUCTIONS (ITA NO.421 AND 422/2009 DATED 28.02.2012) AND THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. RADHE DEVELOPERS(SUPRA). THE FACTS IN RADHE DEVELOPERS(SU PRA) ARE SIMILAR TO THAT OF THE APPELLANT. THE AO IN THE ABOVE CASE REJECTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/ S 80-IB(10) BECAUSE THE ASSESSEE FIRM WAS NOT THE OWNER OF THE LAND. APPROVAL BY THE LOCAL AUTHORITY AS WELL AS PERMISSION TO DEVELOP THE PROJECT AND THE PERMISSIO N TO COMMENCE CONSTRUCTION WERE NOT IN THE NAME OF THE ASSESSEE FIRM. THE AO IN THAT CASE HELD THAT THE AS SESSEE HAD CLEARLY ACTED AS AN AGENT OR A CONTRACTOR FOR C ONSTRUCTION OF RESIDENTIAL HOUSES. THE CIT(A) ALSO REJECTED ASS ESSEE'S APPEAL. ON FURTHER APPEAL, THE TRIBUNAL ALLOWED ASS ESSEE'S APPEAL AND REVERSED THE ORDERS PASSED BY THE REVENU E AUTHORITIES. ON FURTHER APPEAL, THE HON'BLE HIGH CO URT HELD THAT THE PROVISIONS OF SUB-SEC (10) OF SEC 80-IB NO WHERE REQUIRED THAT ON Y THOSE DEVELOPERS WHO THEMSELVES OWN THE LAND WOULD RECEIVED THE DEDUCTION U/S 80-IB(10) . THE OWNERSHIP OF LAND IS NOT A CONDITION PRECEDENT FOR DEVELOPING AND BUILDING HOUSING PROJECT U/S 80-IB(10). IT FURT HER HELD THAT THE ASSESSEE HAD UNDERTAKEN THE ENTIRE TASK OF DEVE LOPMENT, CONSTRUCTION AND SALE OF THE HOUSING UNITS TO BE LO CATED ON THE LAND BELONGING TO THE ORIGINAL LAND OWNERS. FUR THER, THE RISK ELEMENT WAS ENTIRELY THAT OF THE ASSESSEE FIRM . THE ASSESSEE TOOK THE FULL RISK OF EXECUTING THE HOUSIN G PROJECTS AND THEREBY MAKING PROFIT OR LOSS, AS THE CASE MAY BE. THE ASSESSEE INVESTED ITS OWN FUND IN THE COST OF CONST RUCTION I.T.A.NO. 1571/12 C.O.154/12 :- 10 -: AND ENGAGEMENT OF VARIOUS AGENCIES. HENCE, APPEAL O F REVENUE WAS DISMISSED. IN THE PRESENT CASE ALSO, TH E APPELLANT HAD UNDERTAKEN THE DEVELOPMENT OF THE HOU SING PROJECT AT ITS OWN RISK AND COST. THE ENTIRE RISK O F INVESTMENT AND EXPENDITURE WAS THAT OF THE APPELLANT. RESULTAN TLY, THE PROFIT OR LOSS WOULD ALSO ACCRUE TO THE APPELLANT ALONE. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE PRECEDE NTS, I AM OF THE CONSIDERED OPINION THAT EXPLANATION TO 80-IB (10) WOULD HAVE NO BEARING TO THE CASE IN HAND. ACCORDINGLY, T HE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80-IB(10). THE AO IS, THEREFORE, DIRECTED TO ALLOW DEDUCTION U/S 80-IB(10 ) IN RESPECT OF VENGAIVASAL PROJECT. THE GROUND IS ALLOWED. 15. AT THE TIME OF HEARING, BOTH THE PARTIES BEFORE US AGREED THAT THIS ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2008-09 AND THE TRIBUNAL VI DE ITS ORDER DATED 4.11.2011 IN I.T.A.NO. 1389/MDS/2011, HAS RESTORED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATING THE ISSUE AFRESH AND THEREFORE, IN THE PRESENT YEAR OF APPEAL ALSO, THE ISSUE SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATING THE ISSUE. 16. WE FIND THAT THE TRIBUNAL IN ASSESSMENT YEAR 2008-0 9 HAS HELD AS UNDER: 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS A VAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE CLAIMED D EDUCTION U/S.80-IB(10) IN RESPECT OF PROFIT DERIVED FROM THE VENGALVASAL PROJECT. ACCORDING TO THE ASSESSING OFFICER, THE RE LEVANT LAND WAS OWNED BY SHRI HARSHAD V. JOSHI WHO IS ALSO A DI RECTOR IN THE ASSESSEE COMPANY. THE SAID SHRI HARSHAD V. JOSHI SOLD UNDIVIDED RIGHTS IN THE LAND TO VARIOUS PERSONS AND THE ASSESSEE UNDERTOOK CONSTRUCTION OF HOUSING PROJECT AS THE I.T.A.NO. 1571/12 C.O.154/12 :- 11 -: CONTRACTOR ON BEHALF OF THOSE VARIOUS PERSONS. THER EFORE, THE ASSESSING OFFICER DISALLOWED CLAIM OF DEDUCTION U/S.80- IB OF THE ACT . 19. ON APPEAL, THE LD. CIT(A) DELETED THE ABOVE DISALLOWANCE AND OBSERVED THAT THE ASSESSEE WAS NOT A MERE BUILDER BUT WAS THE DEVELOPER OF THE SAID PROJ ECT . WE FIND THAT IT IS NOT IN DISPUTE THAT A PERSON WHO IS MERELY A CONTRACTOR IS NOT ENTITLED FOR DEDUCTION U/S.80- IB (10) OF THE ACT. 20. DEDUCTION UNDER THAT SECTION CAN BE ALLOWED O NLY TO A PERSON WHO UNDERTAKES THE INVESTMENT RISK. 21. WE FIND THAT BOTH THE LOWER AUTHORITIES HAVE TA KEN TWO CONTRADICTORY VIEWS WITHOUT BRINGING ANY RELEVANT M ATERIAL ON RECORD. FROM THE RECORDS AVAILABLE BEFORE US, IT IS NOT CLEAR AS TO WHEN THE UNDIVIDED RIGHTS IN THE LAND W AS SOLD BY SHRI HARSHAD V. JOSHI TO VARIOUS PERSONS. FURTHER, IT IS ALSO NOT CLEAR FROM THE RECORDS AS TO WHEN THE VENGALVAS AL PROJECT WAS COMMENCED AND WHO TOOK PERMISSION FROM THE AUTHORITIES TO UNDERTAKE THE DEVELOPMENT OF THE PRO JECT . FURTHER, IT IS ALSO NOT CLEAR WHEN THE ASSESSEE ENT ERED INTO AGREEMENTS WITH THE VARIOUS PERSONS AND WHAT WERE T HE TERMS AND CONDITIONS OF THE AGREEMENTS. BOTH THE PA RTIES BEFORE US HAVE ALSO NOT BROUGHT ANY MATERIAL BEFORE US ON THE BASIS OF WHICH IT CAN BE DETERMINED THAT WHETHE R THE ASSESSEE WAS ONLY A CONTRACTOR OR THE ASSESSEE WAS A DEVELOPER WHO UNDERTOOK THE INVESTMENT RISK OF THE HOUSING PROJECT UNDER CONSIDERATION. 22. IN THE ABOVE CIRCUMSTANCES, WE ARE NOT IN A POSITION TO ADJUDICATE THE ISSUE COMPLETELY AND THEREFORE, IN OUR CONSIDERED OPINION, IT SHALL BE IN THE INTEREST OF THE JUSTICE TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR MAKING NECESSARY VERIFICATION IN THE LIGHT OF THE O BSERVATIONS MADE HEREINABOVE AND THEREAFTER ADJUDICATE THE ISSU E AFRESH BY PASSING A SPEAKING ORDER AS PER LAW AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASESSEE . HENCE, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STAT ISTICAL PURPOSES. I.T.A.NO. 1571/12 C.O.154/12 :- 12 -: 17. HENCE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORI TIES AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATING THE ISSUE AFRESH IN THE LIGHT OF THE D IRECTION AS GIVEN IN ASSESSMENT YEAR 2008-09 QUOTED ABOVE. THUS, THE GR OUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 18. THE CROSS OBJECTION FILED BY THE ASSESSEE IS SIMPLY IN SUPPORT OF THE ORDER OF THE CIT(A). THUS, THERE BEING NO G RIEVANCE OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), THE CROSS OBJECTION FILED IS INFRUCTUOUS AND HENCE, DISMISSED. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES WHEREAS THE CROSS OBJECTIO N FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 12 TH OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 12 TH FEBRUARY, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR