ITO, CHENNAI V. Chettinad Housing Constructions, CHENNAI

ITA 1670/CHNY/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8159 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: G BASKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1670/MDS/2013 & C.O. NO.159/MDS/2013 (IN I.T.A. NO.1670/MDS/2013) * +* / ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, BUSINESS WARD III(2), CHENNAI - 600 034. V. M/S CHETTINAD HOUSING CONSTRUCTIONS, 1 ST FLOOR, NO.8/2, KENNEDY 2 ND STREET, MYLAPORE, CHENNAI - 600 004. PAN : AAFFC 2827 A (-./ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) -. / 0 / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT 12-. / 0 / RESPONDENT BY : SHRI G. BASKAR, ADVOCATE ' / 3& / DATE OF HEARING : 29.09.2016 45+ / 3& / DATE OF PRONOUNCEMENT : 28.10.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 5, CHENN AI, DATED 10.05.2013 AND PERTAINS TO ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS ALSO FILED CROSS-OBJECTION TO SUPPORT THE ORDER OF THE 2 I.T.A. NO.1670/MDS/13 C.O. NO.159/MDS/13 CIT(APPEALS). THEREFORE, WE HEARD THE APPEAL OF TH E REVENUE AND CROSS-OBJECTION OF THE ASSESSEE TOGETHER AND DISPOS ING OF THE SAME BY THIS COMMON ORDER. 2. SHRI SHIVA SRINIVAS, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ASSESSEE-PARTNERSHIP FIRM DEVELO PED AND BUILT A HOUSING PROJECT KNOWN AS CHETTINADD GREEN VILLE A T PERUMBAKKAM, SHOLINGANALLUR. IN FACT, THE ASSESSEE ACQUIRED A LAND TO THE EXTENT OF 1.64 ACRES CONSISTING OF 32 P LOTS AT PERUMBAKKAM VILLAGE IN THE OUTSKIRT OF CHENNAI CITY . AFTER ACQUISITION, THE ASSESSEE DESIGNED A HOUSING PROJEC T CONSISTING OF HOUSING UNITS IN IDENTICAL NATURE. IN FACT, THE AS SESSEE OBTAINED LAY OUT APPROVAL OF LOCAL AUTHORITY FOR CONSTRUCTION OF IDENTICAL HOUSING UNITS WITH SAME ELEVATION, COLOUR, MATERIAL, ETC. ACCORDING TO THE LD. D.R., THE LAND WAS ALSO SUB-DIVIDED INTO 32 INDIVID UAL PLOTS FOR THE PURPOSE OF DEVELOPING THE HOUSING PROJECT. AFTER O BTAINING NECESSARY APPROVAL OF LOCAL AUTHORITIES FOR CONSTRU CTION OF HOUSING PROJECT, THE ASSESSEE CONSTRUCTED RESIDENTIAL UNITS AND SOLD TO DIFFERENT INDIVIDUALS. IN FACT, THE ASSESSEE DEVEL OPED BASIC INFRASTRUCTURE FACILITIES LIKE ROAD, DRAINAGE, NETW ORK, COLLECTION SUMP, PUBLIC PARK, CHILDRENS PARK, ETC. THE LD. D.R. SU BMITTED THAT THE 3 I.T.A. NO.1670/MDS/13 C.O. NO.159/MDS/13 ASSESSEE, IN FACT, CONSTRUCTED 38 INDIVIDUAL HOUSIN G UNITS. THE ASSESSING OFFICER FOUND THAT THE BUILDING PLAN WAS OBTAINED FROM PERUMBAKKAM PANCHAYAT FOR CONSTRUCTION OF INDIVIDUA L VILLAS AND NOT FOR HOUSING PROJECT AS A WHOLE. ACCORDING TO T HE LD. D.R., IN FACT, BUILDING PLAN WAS OBTAINED ON VARIOUS DATES. EACH PLAN HAS DIFFERENT PROCEEDING. THE ASSESSING OFFICER FOUND THAT COMPOSITE APPROVAL WAS NOT OBTAINED BY THE ASSESSEE. ACCORDI NG TO THE LD. D.R., THE COMPLETION CERTIFICATE WAS OBTAINED ON DI FFERENT DATES FROM PERUMBAKKAM PANCHAYAT. THE ASSESSING OFFICER DISAL LOWED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT THERE WAS N O COMPOSITE DEVELOPMENT OF HOUSING PROJECT AND IT IS ONLY A CON STRUCTION OF INDIVIDUAL VILLAS. 3. HOWEVER, ON APPEAL BY THE ASSESSEE, THE LD. D.R. SUBMITTED THAT THE CIT(APPEALS) FOUND THAT THE ASSESSEE CONCE IVED THE PROJECT, DEVELOPED THE SAME, OBTAINED APPROVAL OF C OMPETENT AUTHORITY AND EXECUTED THE SAME. IT IS NOT IN DISP UTE THAT THE PROJECT WAS DEVELOPED IN AN AREA MORE THAN ONE ACRE OF LAND . THE CIT(APPEALS) HAS ALSO FOUND THAT THE ASSESSEE HAS C ONSTRUCTED INDIVIDUAL HOUSING UNITS, THEREFORE, IT CANNOT BE S AID THAT THE ASSESSEE HAS PROMOTED ONLY RESIDENTIAL PLOTS AND NO T RESIDENTIAL 4 I.T.A. NO.1670/MDS/13 C.O. NO.159/MDS/13 UNITS. THEREFORE, HE ALLOWED THE CLAIM OF THE ASSE SSEE. THE REVENUES CONTENTION BEFORE THIS TRIBUNAL IS THAT T HE BUILDING PLAN WAS OBTAINED INDIVIDUALLY FOR EACH RESIDENTIAL UNIT AND NOT FOR THE WHOLE PROJECT IN CHETTINADD GREEN VILLE. WHEN TH E ASSESSEE OBTAINED INDIVIDUAL BUILDING APPROVAL FOR 38 VILLAS SEPARATELY, THE WHOLE PROJECT CANNOT BE CONSIDERED AS HOUSING PROJE CT. ACCORDING TO THE LD. D.R., IT IS ONLY PROMOTION OF LAY OUT AN D NOT DEVELOPMENT OF HOUSING PROJECT. HENCE, ACCORDING TO THE LD. D. R., THE CIT(APPEALS) OUGHT NOT TO HAVE ALLOWED THE CLAIM OF THE ASSESSEE. 4. ON THE CONTRARY, SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE ADMITTEDLY AC QUIRED 1.64 ACRES OF LAND FOR THE PURPOSE OF DEVELOPING A HOUSI NG PROJECT. SINCE THE AREA WAS MORE THAN ONE ACRE, THE ASSESSEE IS EL IGIBLE FOR EXEMPTION UNDER SECTION 80-IB OF THE INCOME-TAX ACT , 1961 (IN SHORT 'THE ACT'). REFERRING TO SECTION 80-IB(10) OF THE ACT, THE LD.COUNSEL SUBMITTED THAT SECTION 80-IB(10) OF THE ACT CLEARLY SAYS THAT THE AMOUNT OF DEDUCTION IN THE CASE OF UNDERTAKING DEVE LOPING OF BUILDING HOUSING PROJECTS APPROVED BEFORE 31.03.200 8 BY A LOCAL AUTHORITY SHALL BE 100% OF THE PROFITS DERIVED IN T HE PREVIOUS YEAR. ACCORDING TO THE LD. COUNSEL, THE WORD HOUSING PRO JECT IS NOT 5 I.T.A. NO.1670/MDS/13 C.O. NO.159/MDS/13 DEFINED IN THE INCOME-TAX ACT. THE HOUSING PROJECT SHALL BE APPROVED BY THE LOCAL AUTHORITY. ONE OF THE REQUIR EMENTS OF SECTION 80-IB(10) OF THE ACT IS THAT THE HOUSING PROJECT SH ALL BE ON THE SIZE OF PLOT OF LAND WHICH HAS MINIMUM AREA OF ONE ACRE. THE FURTHER CONDITION IS THAT THE RESIDENTIAL UNITS SHALL HAVE MAXIMUM BUILT-UP AREA OF 1000 SQ.FT. IF IT IS IN THE CITY OF DELHI O R MUMBAI AND 1500 SQ.FT. IN OTHER PLACES. THE NEXT CONDITION IS THAT THE BUILT-UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED 3% OF THE AGGREGATE BUILT-U P AREA. THE OTHER CONDITION FOR ALLOWING DEDUCTION UNDER SECTIO N 80-IB(10) OF THE ACT IS NOT MORE THAN ONE RESIDENTIAL UNIT IS TO BE ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL. SECTION 80-IB(10) OF THE ACT DOES NOT REQUIRE THAT THE ASSESSEE SHOULD NOT DEVELOP AN Y INDEPENDENT VILLA. THE ASSESSING OFFICER WAS UNDER THE MISCONC EPTION THAT THE ASSESSEE HAS TO DEVELOP ONLY MULTISTORY RESIDENTIAL UNIT. THE WORD HOUSING PROJECT STANDS FOR A HOUSING PROJECT WHIC H MAY BE A MULTISTORY RESIDENTIAL UNIT OR IT MAY BE A GROUP OF INDIVIDUAL HOUSES. IN THIS CASE, ACCORDING TO THE LD. COUNSEL, THE ASS ESSEE DECIDED TO CONSTRUCT 38 INDEPENDENT VILLAS IN A LAND OF 1.64 A CRES. THEREFORE, IT IS A HOUSING PROJECT WITHIN THE MEANING OF SECTION 80-IB(10) OF THE ACT. ACCORDING TO THE LD. COUNSEL, SO LONG AS THER E IS NO RESTRICTION 6 I.T.A. NO.1670/MDS/13 C.O. NO.159/MDS/13 FOR CONSTRUCTION OF INDEPENDENT VILLAS AS HOUSING P ROJECT, THE ASSESSING OFFICER CANNOT CONFINE HIMSELF TO BELIEVE THAT ONLY CONSTRUCTION OF MULTISTORIED BUILDING. 5. REFERRING TO THE AGREEMENT SAID TO BE ENTERED IN TO BETWEEN THE ASSESSEE AND THE PURCHASER, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PLOT OF LAND WAS SOLD ONLY TO TH E INDIVIDUAL WHO AGREED TO PURCHASE THE HOUSES CONSTRUCTED IN THE LA ND. THE LAND WAS NOT SOLD INDEPENDENTLY TO ANY INDIVIDUALS. ACC ORDING TO THE LD. COUNSEL, WHAT WAS SOLD BY THE ASSESSEE IS A LAND AL ONG WITH BUILDING. IF ANYBODY DOES NOT WANT TO CONSTRUCT HO USE AND INTENDS TO PURCHASE ONLY LAND, THE ASSESSEE WOULD NOT SELL THE LAND TO SUCH INDIVIDUALS. IN ALL CASES, WHAT WAS SOLD BY THE AS SESSEE IS LAND ALONG WITH INDEPENDENT VILLA CONSTRUCTED THEREON. THEREFORE, ACCORDING TO THE LD. COUNSEL, AT ANY STRETCH OF IMA GINATION, IT CANNOT BE SAID WHAT WAS DEVELOPED BY THE ASSESSEE IS A LAY OUT AND NOT THE HOUSING PROJECT. HAD THE ASSESSEE SOLD THE LAN D ALONE TO ANY INDIVIDUAL, THE MATTER WOULD STAND IN DIFFERENT FOO TING. IN SUCH CASE, THE REVENUE MAY CLAIM WHAT WAS DEVELOPED BY THE ASS ESSEE IS LAND AND NOT THE HOUSING PROJECT. IN THIS CASE, TH E MATERIAL AVAILABLE ON RECORD SUGGESTS THAT WHAT WAS SOLD BY THE ASSESS EE IS ONLY 7 I.T.A. NO.1670/MDS/13 C.O. NO.159/MDS/13 HOUSING PROJECT. THEREFORE, ACCORDING TO THE LD. C OUNSEL, THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING T HE CLAIM OF THE ASSESSEE, HENCE, THE CIT(APPEALS) HAS RIGHTLY ALLOW ED THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80- IB(10) OF THE ACT ON THE GROUND THAT WHAT WAS DEVEL OPED BY THE ASSESSEE IS A LAY OUT AND NOT THE HOUSING PROJECT. WE HAVE CAREFULLY GONE THROUGH THE AGREEMENT SAID TO BE ENT ERED BY THE ASSESSEE AND BUYER OF THE PROPERTY AND ALSO COPIES OF THE SALE DEED AVAILABLE IN THE PAPER-BOOK. A BARE READING O F THE AGREEMENT AND SALE DEED CLEARLY SHOW THAT THE ASSESSEE ACQUIR ED 1.64 ACRES OF LAND AND DEVELOPED A COMPOSITE HOUSING PROJECT. THE ASSESSEE CONCEIVED THE IDEA OF HOUSING PROJECT, DESIGNED, DE VELOPED AND EXECUTED THE PROJECT IN A SYSTEMATIC MANNER. THE A SSESSEE ADMITTEDLY CONSTRUCTED 38 INDEPENDENT VILLAS AFTER OBTAINING NECESSARY APPROVAL OF PERUMBAKKAM PANCHAYAT. IT IS NOT IN DISPUTE THAT PERUMBAKKAM PANCHAYAT IS THE COMPETENT AUTHORI TY TO GRANT APPROVAL FOR CONSTRUCTION OF INDEPENDENT VILLAS. A S RIGHTLY SUBMITTED 8 I.T.A. NO.1670/MDS/13 C.O. NO.159/MDS/13 BY THE LD.COUNSEL FOR THE ASSESSEE, WHAT IS REQUIRE D TO BE DEVELOPED IS A HOUSING PROJECT. THE ASSESSING OFFI CER MISCONSTRUED THE TERM HOUSING PROJECT TO A MULTIS TORY RESIDENTIAL BUILDING. A HOUSING PROJECT CAN BE AN INDEPENDENT VILLA OR IT MAY ALSO BE MULTISTORY RESIDENTIAL UNIT. IF THE ASSESS EE DEVELOPED INDEPENDENT VILLAS IN A LAND EXCEEDING MORE THAN ON E ACRE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CLAI M OF THE ASSESSEE CANNOT BE REJECTED. WHEN THE ASSESSEE DEVELOPED A COMPOSITE PROJECT OF LAYING OUT OF LAND OF MORE THAN ONE ACRE AND CONSTRUCTED INDIVIDUAL VILLAS THEREON, AND SOLD THE INDEPENDENT VILLAS TOGETHER WITH LAND, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE ASSESSEE COMPLIED WITH ALL THE CONDITIONS REQUIRED FOR CLAIMING EXEMPTION UNDER SECTION 80-IB(10) OF THE ACT. THER EFORE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE A SSESSEE. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 6. THE CROSS-OBJECTION OF THE ASSESSEE IS ONLY TO S UPPORT THE ORDER OF THE CIT(APPEALS). THEREFORE, IT BECOMES I NFRUCTUOUS. 7. IN THE RESULT, BOTH, THE APPEAL OF THE REVENUE A ND THE CROSS- OBJECTION OF THE ASSESSEE ARE DISMISSED. 9 I.T.A. NO.1670/MDS/13 C.O. NO.159/MDS/13 ORDER PRONOUNCED ON 28 TH OCTOBER, 2016 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 28 TH OCTOBER, 2016. KRI. / 13#8 98+3 /COPY TO: 1. -. /APPELLANT 2. 12-. /RESPONDENT 3. ' :3 () /CIT(A)-V, CHENNAI 4. ' :3 /CIT-X, CHENNAI-34 5. 8; 13 /DR 6. * < /GF.