ACIT, CHENNAI V. M/s. Sri Lakshmi Brick Industries, CHENNAI

ITA 1646/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64577 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA IRS
• Assessee Lawyers: R SIVARAMAN
• Keywords: Capital asset; Revised return
• Section: 143(3); 80IB; 139(5); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NOS.1644 TO 1647(MDS)/2012 ASSESSMENT YEARS : 2006-07 TO 2009-10 THE ASSISTANT COMMISSIONER OF INCOME-TAX, BUSINESS CIRCLE XIV, CHENNAI. VS. M/S.SRI LAKSHMI BRICK INDUSTRIES, H-6, AMBATTUR INDUSTRIAL ESTATE, AMBATTUR, CHENNAI-600 058. PAN ABJF6851R. (APPELLANT) (RESPONDENT) AND ITA NOS.1662 TO 1665(MDS)/2012 ASSESSMENT YEARS : 2006-07 TO 2009-10 M/S.SRI LAKSHMI BRICK INDUSTRIES THE ASSISTA NT COMMISSION- H-6, AMBATTUR INDUSTRIAL VS. ER OF I NCOME-TAX, ESTATE, AMBATTUR, BU SINESS CIRCLE XIV, CHENNAI. CHENNAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.SIVARAMAN, ADV OCATE DEPARTMENT BY : DR.S.MOHARANA, IRS, CI T. DATE OF HEARING : 19 TH NOVEMBER, 2012 DATE OF PRONOUNCEMENT : 22 ND NOVEMBER, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE FIRST SET OF FOUR APPEALS, I.E. ITA NOS.1644 TO 1647(MDS)/2012, RELATING TO THE ASSESSMENT YEARS 20 06-07 TO - - ITA 1644 TO 1647 OF 2012, ETC. 2 2009-10, HAVE BEEN FILED BY THE REVENUE, IMPUGNING THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-XII, CHE NNAI, DATED 25-5-2012. THE ASSESSEE HAS ALSO ASSAILED THE SAME ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) BY THE SECO ND SET OF APPEALS IN ITA NOS.1662 TO 1665(MDS)/2012, RELATING TO THE SAME ASSESSMENT YEARS 2006-07 TO 2009-10 RESPECTIVE LY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSM ENT YEARS 2006-07 TO 2009-10, DECLARING ITS INCOME TO BE NIL AFTER CLAIMING 100% DEDUCTION UNDER THE PROVISIONS OF SECTION 80IB (10) OF THE INCOME-TAX ACT, 1961, (HEREINAFTER REFERRED TO AS THE ACT). THE ASSESSING OFFICER, WHILE COMPLETING THE ASSESSMENTS UNDER SECTION 143(3) OF THE ACT FOR THE ASSESSMENT YEARS 2007-08 AND 2009-10 AND THE ASSESSMENTS UNDER SECTION 143(3), R EAD WITH SECTION 147 OF THE ACT FOR THE ASSESSMENT YEARS 200 6-07 AND 2008-09, OBSERVED THAT THE ASSESSEE IS NOT ELIGIBLE FOR THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. IN OP INION OF THE ASSESSING OFFICER THE ASSESSEE IS NOT ENGAGED IN T HE ACTIVITY OF DEVELOPING OR BUILDING HOUSING PROJECTS. ACCORDI NGLY, THE - - ITA 1644 TO 1647 OF 2012, ETC. 3 ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE AND TAXED THE ENTIRE AMOUNT OF PROFIT. AGGRIEVED AGAIN ST THE ASSESSMENT ORDERS, THE ASSESSEE PREFERRED APPEALS F OR THE RESPECTIVE ASSESSMENT YEARS BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS). WITHOUT PREJUDICE TO ITS ORIG INAL CLAIM, THE ASSESSEE RAISED AN ALTERNATE PLEA BEFORE THE COMMIS SIONER OF INCOME-TAX(APPEALS) THAT IN CASE THE ASSESSEE IS NO T TREATED AS DEVELOPER OR BUILDER OF THE PROJECT FOR ALLOWING TH E BENEFIT UNDER THE PROVISIONS OF SECTION 80IB(10) OF THE ACT, THE LAND OF THE ASSESSEE MAY BE TREATED AS INVESTMENT, I.E. CAPITAL ASSET, AND THE GAINS ARISING FROM THE TRANSFER OF 58% SHARE IN THE UNDIVIDED LAND IN FAVOUR OF M/S.CITILIGHTS PTOPERTIES PVT. LT D. BE ASSESSED TO TAX UNDER THE HEAD CAPITAL GAINS. AS REGARDS THE REMAINING 42% SHARE, THE LONG-TERM CAPITAL GAINS ARISING OUT OF SALE OF FLATS BE TREATED IN THE YEAR OF REALIZATION OF SALE PROCE EDS OF FLATS. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS) DECIDED ALL THE FOUR APPEALS RELEVANT TO THE ASSESSMENT YEA RS 2006-07 TO 2009-10, VIDE A SINGLE ORDER DATED 25-5-2012, AS CO MMON ISSUES WAS INVOLVED. THE COMMISSIONER OF INCOME-TA X(APPEALS) - - ITA 1644 TO 1647 OF 2012, ETC. 4 ACCEPTED THE ALTERNATE PLEA OF THE ASSESSEE AND TRE ATED THE SALE PROCEEDS OF FLATS AS LONG-TERM CAPITAL GAINS. 4. AGGRIEVED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX(APPEALS), BOTH THE REVEN UE AND THE ASSESSEE HAVE COME IN APPEALS BEFORE THE TRIBUN AL ASSAILING THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS ). THE REVENUE HAS ASSAILED THE ORDER OF THE COMMISSIONER OF INCOME- TAX(APPEALS) ON THE GROUND THAT THE COMMISSIONER OF INCOME- TAX(APPEALS) HAS TREATED THE BENEFIT ARISING FROM T HE SALE OF LAND AND FLATS AS CAPITAL GAINS. ON THE OTHER HAND, THE ASSESSEE HAS ASSAILED THE ORDER OF THE COMMISSIONER OF INCOME-TA X(APPEALS) FOR NOT ALLOWING THE BENEFIT OF SECTION 80IB(10) OF THE ACT TO THE ASSESSEE. 5. SHRI R.SIVARAMAN, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN BRICK INDUSTRY SINCE THE YEAR 1981. THE ASSESSEE HAD PURCHASED LAND MEASURING 6.48 ACRES, W HICH WAS BEING USED BY THE ASSESSEE FOR MANUFACTURE AND SALE OF BRICKS - - ITA 1644 TO 1647 OF 2012, ETC. 5 FOR SEVERAL YEARS. SUBSEQUENTLY, THE ASSESSEE SHIF TED TO REAL ESTATE BUSINESS. THE ASSESSEE FILLED THE PIT CAUSE D DURING THE COURSE OF MANUFACTURING OF BRICKS WITH EARTH UPTO T EN FEET TO MAKE THE LAND SUITABLE FOR THE PURPOSE OF CONSTRUCT ION OF BUILDING THEREON. THE ASSESSEE HAD SPENT AN AMOUNT OF ` 1.75 CRORES TO MAKE THE LAND SUITABLE FOR CONSTRUCTION PURPOSES. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2005-06 THE ASSESSEE ENTERED INTO A JOINT VENTURE AGREEMENT WITH M/S.CIT ILIGHTS PROPERTIES PVT. LTD., MUMBAI FOR THE PURPOSE OF CON STRUCTION OF RESIDENTIAL FLATS. AS PER THE AGREEMENT THE ASSESSE E WOULD CONTRIBUTE ITS LAND TOWARDS THE PROJECT AND M/S.CIT ILIGHTS PROPERTIES PVT. LTD. WOULD PROVIDE CAPITAL FOR THE CONSTRUCTION OF FLATS THEREON. IN LIEU THEREOF, THE ASSESSEE WOULD GET 42% SHARE OF THE CONSTRUCTED FLATS. THE REMAINING 58% SHARE WILL BE RETAINED BY M/S.CITILIGHTS PROPERTIES PVT. LTD. AF TER THE CONSTRUCTION OF FLATS THE ASSESSEE WILL BE ENTITLED TO SELL ITS SHARE OF 42% OF FLATS TO THE PROSPECTIVE BUYERS. THE LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ACCORDANCE WITH THE AGREEMENT BETWEEN THE PARTIES, 159 FLATS CAME TO TH E SHARE OF THE ASSESSEE. THE AGREEMENTS WITH RESPECT TO THE S ALE OF FLATS - - ITA 1644 TO 1647 OF 2012, ETC. 6 FALLING INTO THE SHARE OF THE ASSESSEE WERE EXECUTE D BY THE ASSESSEE WITH THE PROSPECTIVE BUYERS OF FLATS. STA TUTORY PERMISSIONS WERE GRANTED IN THE NAME OF THE ASSESSE E, ALTHOUGH THE SAME WERE GOT ON BEHALF OF THE ASSESSEE THROUGH ITS AUTHORIZED POWER OF ATTORNEY. THE ASSESSEE WAS VER Y MUCH INVOLVED IN THE DEVELOPMENT OF THE LAND ON WHICH FL ATS WERE CONSTRUCTED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME-TAX(APPEALS) HAD ERRED IN CO MING TO THE CONCLUSION THAT THE ASSESSEE IS NOT A DEVELOPER AND IT IS A CASE OF TRANSFER OF LAND AS NO RISK WAS UNDERTAKEN BY THE ASSESSEE. THE LEARNED COUNSEL SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) ACCEPTED THE AL TERNATE PLEA OF THE ASSESSEE WITH REGARD TO THE TREATMENT OF THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE SALE OF ITS 58% S HARE IN THE UNDIVIDED LAND AND FLATS AS LONG-TERM CAPITAL GAINS IN THE ASSESSMENT YEARS 2008-09 AND 2009-10. THE LEARNED COUNSEL, IN SUPPORT OF HIS CONTENTIONS, REFERRED TO THE AGRE EMENT DATED - - ITA 1644 TO 1647 OF 2012, ETC. 7 20-7-2004 (AT PAGES 1 TO 19 OF THE PAPER-BOOK) BETW EEN THE ASSESSEE AND M/S.CITILIGHTS PROPERTIES PVT. LTD. TO SHOW THAT THE ASSESSEE WAS DESIROUS OF DEVELOPING THE LAND INTO A RESIDENTIAL APARTMENT COMPLEX TO GET BETTER RETURNS AND TO ACHI EVE THIS OBJECTIVE THE AGREEMENT WAS ENTERED INTO BETWEEN TH E ASSESSEE AND M/S.CITILIGHTS PROPERTIES PVT. LTD. IN ORDER T O SUPPORT HIS CONTENTIONS THE LEARNED COUNSEL RELIED ON THE JUDGM ENT OF THE HONBLE KARNATAKA HIGH COURT IN ITA NO.421 OF 2009 IN THE CASE OF CIT VS. M/S.SHRAVANEE CONSTRUCTIONS, DECIDED ON 28-2-2012. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO THE ORDER OF THE BANGALORE BENCH-B OF THE TRIBUNAL IN THE CAS E OF SHRI ABDUL KHADER VS. ACIT IN ITA NO.57/BANG/2011, DECID ED ON 30-4-2012 (AT PAGES 158 TO 171 OF THE PAPER-BOOK). 7. ON THE OTHER HAND, DR. S.MOHARANA, REPRESENTING THE DEPARTMENT, SUBMITTED THAT THE ASSESSEE IS NOT A DEVELOPER AND IT IS A CASE WHERE THE LAND HAS BEEN TRANSFERRE D BY THE ASSESSEE TO M/S.CITILIGHTS PROPERTIES PVT. LTD. FOR DEVELOPMENT AND CONSTRUCTION OF RESIDENTIAL FLATS. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD NOT UNDERTAKEN - - ITA 1644 TO 1647 OF 2012, ETC. 8 ANY RISK IN THE CONSTRUCTION AND DEVELOPMENT OF THE BUILDING PROJECT AND THE ASSESSEE HAS NOT TAKEN/OBTAINED THE NECESSARY APPROVALS FOR THE CONSTRUCTION OF THE HOUSING PROJE CT AS WELL AS APPROVAL OF BUILDING PLANS. THE LEARNED DEPARTMENT AL REPRESENTATIVE, REFERRING TO THE AGREEMENT BETWEEN THE PARTIES, POINTED OUT THAT AS PER CLAUSE 16 OF THE AGREEMENT, THE ASSESSEE HAD NO RIGHT TO CARRY ON ANY CONSTRUCTION OR ANY OT HER WORK INSIDE THE SCHEDULE-A PROPERTY, I.E. THE LAND ON WHICH THE HOUSING PROJECT WAS BUILT. THE LEARNED DEPARTMENTAL REPRES ENTATIVE FURTHER SUBMITTED THAT A SUM OF ` 2 CRORES WAS PAID TO THE ASSESSEE BY M/S.CITILIGHTS PROPERTIES PVT. LTD. IN THE GRAB OF INTEREST-FREE SECURITY DEPOSIT TOWARDS SECURING AS SESSEES RISK IN THE PROJECT. THE DEPARTMENTAL REPRESENTATIVE STRON GLY SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS ) ON THIS ISSUE. 7.1. THE LEARNED DEPARTMENTAL REPRESENTATIVE, DEFENDING THE APPEALS FILED BY THE REVENUE, ASSAIL ED THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THE G ROUND THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED I N ALLOWING - - ITA 1644 TO 1647 OF 2012, ETC. 9 THE ASSESSEE TO CLAIM CAPITAL GAINS ON THE INCOME G ENERATED ON TRANSFER OF LAND TO THE EXTENT OF 58% SHARE IN THE UNDIVIDED LAND. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUB MITTED THAT FOR CLAIMING ANY NEW DEDUCTION/CLAIM OF CAPITAL GAI NS ARISING FROM THE TRANSFER OF LAND THE ASSESSEE HAS TO FILE A REV ISED RETURN OF INCOME AND THE REVISED RETURN IS TO BE FILED WITHIN THE TIME LIMIT PRESCRIBED UNDER SECTION 139(5) OF THE ACT. THE LE ARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE ASSE SSEE HAS FAILED TO FILE THE REVISED RETURN WITHIN THE PRESCR IBED TIME LIMIT AND THUS THE REVISED RETURN FILED BY THE ASSESSEE CANNO T BE TAKEN INTO CONSIDERATION. THE LEARNED DEPARTMENTAL REPRE SENTATIVE CONTENDED THAT THE COMMISSIONER OF INCOME-TAX(APPEA LS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ADOPT T HE SALE CONSIDERATION OF THE FLATS SOLD AS PER THE ACTUAL RATES/CONSIDERATION AND NOT AT THE RATES AT WHICH T HE BROKER HAD PROPOSED TO ARRANGE THE BUYERS WITH WHOM THE ASSESS EE ENTERED INTO AGREEMENT ON 9-1-2008. THE COMMISSIONER OF IN COME- TAX(APPEALS) HAS FURTHER ERRED IN NOT BIFURCATING T HE SALE CONSIDERATION FOR SALE OF LAND AND SALE OF BUILDING SO THAT THE PROFIT ON SALE OF LAND COULD BE ASSESSED AS LONG-TE RM CAPITAL - - ITA 1644 TO 1647 OF 2012, ETC. 10 GAINS AND PROFIT ON ACCOUNT OF SALE OF BUILDING AS SHORT-TERM CAPITAL GAINS. THE LEARNED DEPARTMENTAL REPRESENTA TIVE FURTHER CONTENDED THAT THE COMMISSIONER OF INCOME-TAX(APPEA LS) HAS ERRED IN OBSERVING THAT THE CAPITAL GAIN IS ASSESSA BLE IN THE YEAR AS AND WHEN THE FLATS WERE SOLD AND THE LIABILITY I N RESPECT OF UNSOLD FLATS ARE POSTPONED TO THE YEAR OF SALE OF F LATS. IN FACT, THE ENTIRE SALE CONSIDERATION IS TO BE ASSESSED IN THE ASSESSMENT YEAR 2008-09 ITSELF WHEN ALL THE FLATS WERE HANDED OVER TO THE ASSESSEE. 8. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES. WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND HAVE ALSO EXAMINED THE JUDGMENT/ORDER AND THE DOCUMENTS REFERRED TO BY THE REPRESENTATIVES OF BOT H SIDES. IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS THE OWNER OF THE UNDIVIDED LAND MEASURING 6.48 ACRES, WHICH WAS BEIN G USED BY THE ASSESSEE FOR MANUFACTURE AND SALE OF BRICKS. S UBSEQUENTLY, WHEN THE ASSESSEE MIGRATED TO THE BUSINESS OF REAL ESTATE, THE ASSESSEE SPENT ` 1.75 CRORES TO DEVELOP THE LAND TO MAKE IT FIT FOR CONSTRUCTION OF BUILDING. IT IS ALSO AN ADMITT ED FACT THAT THE - - ITA 1644 TO 1647 OF 2012, ETC. 11 ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S.CITILIG HTS PROPERTIES PVT. LTD. FOR THE CONSTRUCTION OF RESIDE NTIAL FLATS ON THE LAND IN QUESTION. AS PER THE AGREEMENT THE ASSESSE E WAS TO CONTRIBUTE LAND TOWARDS THE PROJECT AND M/S.CITILIG HTS PROPERTIES PVT. LTD. WOULD INVEST THE CAPITAL AND USE ITS EXPE RTISE AND RESOURCES FOR THE CONSTRUCTION OF APARTMENTS. BOTH THE PARTIES, I.E. THE ASSESSEE AND M/S.CITILIGHTS PROPERTIES PVT . LTD., WOULD SHARE THE BENEFITS IN THE RATION OF 42% AND 58% RES PECTIVELY. FOR THE SAKE OF CONVENIENCE BOTH THE PARTIES DECIDE D TO DIVIDE THE TOTAL NUMBER OF FLATS TO BE CONSTRUCTED IN THE RATIO OF 42% AND 58% RESPECTIVELY, DEFINING THEIR ROLES FOR THE CONS TRUCTION AND DEVELOPMENT OF THE PROJECT, ETC. AS PER THE TERMS AND CONDITIONS OF THE AGREEMENT, BOTH THE PARTIES WERE ENTITLED TO DEAL WITH THEIR RESPECTIVE SHARES IN THE DEVELOPED PROPERTY. IT WA S THEIR SOLE AND ABSOLUTE DISCRETION TO NEGOTIATE THE TERMS AND CONDITIONS FOR THE SALE/LEASE, ETC. IN RESPECT OF THEIR RESPECTIVE CONSTRUCTED AREAS AND TO ENTER INTO AGREEMENTS OF SALE OR LEASE , ETC. WITH THE PROSPECTIVE BUYERS/LESSEES, ETC. AND TO COLLECT THE CONSIDERATION IN RESPECT THEREOF. - - ITA 1644 TO 1647 OF 2012, ETC. 12 9. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS HEL D THAT THE ASSESSEE IS NOT A DEVELOPER AND BUILDER OF THE PROJECT, AS THE ASSESSEE HAS NOT INVESTED MONEY IN THE PROJE CT AND HAD NOT SHARED RISKS AND RESPONSIBILITIES TO ACQUIRE TH E CHARACTER OF A BUILDER AND DEVELOPER. THE ASSESSEE HAS SOLD 58% S HARE IN THE UNDIVIDED LAND AND IN CONSIDERATION THEREOF HAS GOT 159 FLATS, I.E. 42% SHARE OF THE TOTAL FLATS CONSTRUCTED. THEREFOR E, THE ASSESSEE IS NOT ENTITLED TO CLAIM THE BENEFIT OF SE CTION 80IB(10). WE DO NOT AGREE WITH THE FINDING OF THE COMMISSIONE R OF INCOME- TAX(APPEALS) ON THE ISSUE. UNDISPUTEDLY, THE ASSES SEE HAS INITIALLY INVESTED A SUM OF ` 1.75 CRORES TO DEVELOP THE LAND TO MAKE IT FIT FOR THE CONSTRUCTION OF THE BUILDING. THEREAFTER, THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S.CITILIG HTS PROPERTIES PVT. LTD. FOR THE CONSTRUCTION AND DEVEL OPMENT OF RESIDENTIAL FLATS ON THE LAND. THE MODALITIES WERE FINALIZED AND A SERIES OF AGREEMENTS WERE EXECUTED BETWEEN THE PART IES FOR THE SMOOTH EXECUTION OF THE HOUSING PROJECT. IT CANNOT BE SAID THAT THE ASSESSEE DID NOT UNDERTAKE ANY RISK OR CONTRIBU TED CAPITAL FOR THE CONSTRUCTION OF THE BUILDING PROJECT. THE ASSE SSEE CONTRIBUTED THE DEVELOPED LAND TOWARDS THE HOUSING PROJECT. - - ITA 1644 TO 1647 OF 2012, ETC. 13 THEREAFTER, THE ASSESSEE POSTPONED THE BENEFITS ARI SING FROM THE SALE OF LAND IN THE FORM OF FLATS TO BE CONSTRUCTED THEREON. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD INCURRED CERTAI N EXPENSES FOR THE SALE OF FLATS FALLING INTO ITS SHARE. A PE RUSAL OF CLAUSE 29 OF THE AGREEMENT DATED 20 TH JULY, 2004, WHICH IS AT PAGES 1 TO19 OF THE PAPERBOOK, SHOWS THAT BOTH THE PARTIES WERE ENTITLED TO THEIR RESPECTIVE SHARES IN THE DEVELOPED PROPERTY A ND SHALL HAVE ABSOLUTE DISCRETION IN NEGOTIATING THE TERMS AND CO NDITIONS FOR THE SALE, LEASE, ETC. IN RESPECT OF THEIR RESPECTIV E CONSTRUCTED AREAS AND ENTER INTO AGREEMENTS OF SALE, LEASE, ETC . WITH PROSPECTIVE PURCHASERS/LESSEES, ETC. AND TO COLLECT THE CONSIDERATION IN RESPECT THEREOF. THE RESPECTIVE P ARTIES SHALL BE ENTITLED/LIABLE TO ALL PROFITS, GAINS, CAPITAL APPR ECIATION AND BENEFITS AS WELL AS COSTS, CHARGES, LEVIES, CESSES, TAXES, ETC. ARISING OR FLOWING FROM OR IN RELATION TO THE SALE OF THEIR UNDIVIDED SHARES, RIGHTS AND INTERESTS IN LAND AND THEIR SHAR E OF CONSTRUCTED AREAS. AS FAR AS THE CLAUSES REFERRED TO BY THE LE ARNED DEPARTMENTAL REPRESENTATIVE IS CONCERNED, IT SEEMS THAT THE SAID CLAUSES HAVE BEEN INCORPORATED IN THE AGREEMENT FOR THE SAKE OF CONVENIENCE AND TO AVOID ANY DISPUTES BETWEEN THE P ARTIES AT - - ITA 1644 TO 1647 OF 2012, ETC. 14 THE TIME OF EXECUTION OF THE PROJECT. TO INTERPRET MERELY FROM THREE OR FOUR CLAUSES OF THE AGREEMENT THAT THE ASS ESSEE IS NOT A BUILDER OR DEVELOPER, TO OUR MIND, IS NOT PROPER. ONE HAS TO GO BEYOND SUCH INTERPRETATION AND HAS TO APPRECIATE TH E THE FACTS AND CIRCUMSTANCES OF THE CASE IN TOTALITY. A PERUS AL OF THE AGREEMENT BETWEEN THE PARTIES SHOW THAT THERE WAS CONSENSUS AD IDEM BETWEEN THE ASSESSEE AND M/S.CITILIGHTS PROPERTIES PVT. LTD. TO DEVELOP A HOUSING PROJECT. WITHOUT TH E AVAILABILITY OF LAND M/S.CITILIGHTS PROPERTIES PVT. LTD. MAY NOT HA VE BEEN ABLE TO EXECUTE THE HOUSING PROJECT. SIMILARLY, WITHOUT CA PITAL AND EXPERTISE, THE ASSESSEE MAY NOT HAVE BEEN ABLE TO F ULFILL ITS DESIRE TO DEVELOP THE LAND INTO A RESIDENTIAL APART MENT COMPLEX. THESE DAYS IT IS NOT UNCOMMON TO HAVE SUCH PROJECTS WHERE THE LAND IS POOLED IN BY ONE PARTY AND CAPITAL AND NECE SSARY EXPERTISE IS CONTRIBUTED BY ANOTHER. IN SOME OF TH E CASES MORE THAN TWO PARTIES JOIN HANDS TOGETHER TO EXECUTE SUC H CAPITAL INTENSIVE PROJECTS. MOREOVER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MADE A STATEMENT AT BAR THAT THE CO-VE NTURER OF THE ASSESSEE, I.E. M/S.CITILIGHTS PROPERTIES PVT. L TD., HAS CLAIMED BENEFIT UNDER SECTION 80IB QUA ITS SHARE ONLY. THE LEARNED - - ITA 1644 TO 1647 OF 2012, ETC. 15 DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT TH E STATEMENT OF THE COUNSEL FOR THE ASSESSEE. IN OUR CONSIDER ED OPINION, THE ASSESSEE CAN BE TREATED AS A BUILDER AND DEVELOPER AND THUS, WOULD BE ENTITLED TO CLAIM BENEFIT UNDER SECTION 80 IB. 10. OUR VIEW IS FURTHER FORTIFIED BY THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S.SHRAVANEE CONSTRUCTIONS, CITED SUPRA. THE HON BLE HIGH COURT, WHILE ADJUDICATING SIMILAR ISSUE, HELD THERE IN THAT KEEPING IN MIND THE OBJECT WITH WHICH THE PROVISION OF SECT ION 80IB(10) IS INTRODUCED WHEN ALL PERSONS WHO HAVE MADE INVESTMEN TS IN THAT HOUSING PROJECT WHICH IS FOR THE BENEFIT OF MIDDLE AND LOWER CLASS PEOPLE AND WHEN THEY HAVE COMPLIED WITH ALL THE CON DITIONS PRESCRIBED UNDER THE AFORESAID PROVISION, BOTH OF T HEM ARE ENTITLED TO HUNDRED PER CENT BENEFIT OF TAX DEDUCTI ON AS PROVIDED UNDER THE SAID PROVISION. THE CONTENTION OF THE RE VENUE THAT THE ASSESSEE DID NOT UNDERTAKE ANY DEVELOPMENTAL OR BUI LDING ACTIVITY AND THEREFORE IT CANNOT INDIVIDUALLY CLAIM THE BENEFIT HAS NO SUBSTANCE. THAT IS NOT THE REQUIREMENT OF LAW. THE HONBLE HIGH COURT HAS OBSERVED AS UNDER AT PARA 8 OF THE J UDGMENT:- - - ITA 1644 TO 1647 OF 2012, ETC. 16 8. IN TERMS OF THE AGREEMENT, WHICH ARE NOT IN DISPUTE, THE ASSESSEE NOT ONLY UNDERTOOK THE AFORESAID DEVELOPMENT ACTIVITIES ON THE LAND IN QUESTION, BUT IN FACT, HE ENTERED INTO AN AGREEMENT OF SALE WITH THE OWNERS OF THE LAND, PAID THE ENTIR E CONSIDERATION BUT HE DID NOT TAKE A REGISTERED SALE DEED IN HIS NAME. ON THE CONTRARY, THE PROCEDURE ADOPTED IS HE IN TURN ENTERED INTO A JOINT DEVELOPMENT AGREEMENT WITH THE BUILDER AND THE OWNER OF THE LAND WAS MADE A PARTY TO THE SAID PROCEEDINGS. THUS, THE ASSESSEE CONTRIBUTED THE LAND, UNDERTOOK THE AFORESAID DEVELOPMENTAL ACTIVITIES IN THE SAID LAND AND THUS COMPLIED WITH ALL OTHER CONDITIONS, WHICH HAVE TO BE FULFILLED BEFORE CLAIMING BENEFIT UNDER SECTION 80IB(10) OF THE ACT. THE BUILDER HAS INVESTED MONEY IN THE CONSTRUCTION. IT IS AFTER COMPLETION OF THE BUILDING IN TERMS OF THE AGREEMENT, THE ASSESSEE WAS GIVEN 22% SHARE OF THE BUILDING AREA. IT IS AFTER SALE OF THE BUILT A REA, IN - - ITA 1644 TO 1647 OF 2012, ETC. 17 TERMS OF SECTION 80IB(10), THE ASSESSEE IS CLAIMING DEDUCTION. AS IS CLEAR FROM THE JOINT DEVELOPMENT AGREEMENT, THE UNDERTAKING OF DEVELOPING AND BUILDING HOUSING PROJECT WAS JOINTLY UNDERTAKEN BY THE ASSESSEE AND THE BUILDER. THEREFORE, IN RESPEC T OF THE RESIDENTIAL UNITS NUMBERING 211 IN ALL, THE PERSONS WHO UNDERTOOK THIS UNDERTAKING ARE ENTITLED TO THE BENEFIT OF SECTION 80IB(10) OF THE ACT IN PROPORTION TO THE SHARE TO WHICH THEY ARE ENTITLED TO IN THE BUILT UP AREA. 11. A SIMILAR VIEW WAS TAKEN BY THE BANGALORE BENC H-B OF THE TRIBUNAL IN THE CASE OF SHRI ABDUL KHADER, C ITED SUPRA. 12. IN VIEW OF OUR ABOVE FINDINGS AND THE LAW LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT, ALL THE FOUR A PPEALS FILED BY THE ASSESSEE RELEVANT TO THE ASSESSMENT YEARS 2006- 07 TO 2009- 10 ARE ALLOWED. - - ITA 1644 TO 1647 OF 2012, ETC. 18 13. SINCE THE APPEALS OF THE ASSESSEE HAVE BEEN ALLOWED AND THE ASSESSEE HAS BEEN HELD TO BE ELIGIB LE TO CLAIM THE BENEFIT OF DEDUCTION UNDER SECTION 80IB(10), TH E APPEALS OF THE REVENUE HAVE BECOME INFRUCTUOUS. THEREFORE, AL L THE FOUR APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 22 ND DAY OF NOVEMBER, 2012 AT CHENNAI. SD/- SD/- (DR. O.K.NARAYANAN) (VIKAS AWASTHY) VICE-PRESIDENT JUDICIAL MEMBER CHENNAI, DATED, THE 22 ND NOVEMBER, 2012. V.A.P. COPY TO: 1. ASSESSEE 2. DEPARTMENT 3. CIT 4. CIT(A) 5. DR 6. GF.