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

ITA 1689/CHNY/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90447 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: DEVENDRA KUMAR BHANDARIFCA
• Keywords: Wholly owned subsidiary
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1623 & 1775/MDS/2012 ( )( / ASSESSMENT YEARS : 2009-10 & 2007-08 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), CHENNAI - 600 034. V. M/S ARIHANT FOUNDATIONS & HOUSING LTD., NO.271, POONAMALLEE HIGH ROAD, CHENNAI - 600 010. PAN : AAACA 7402 P (+,/ APPELLANT) (-.+,/ RESPONDENT) ./ ITA NO.1689/MDS/2012 ( )( / ASSESSMENT YEAR : 2007-08 M/S ARIHANT FOUNDATIONS & HOUSING LTD., NO.271, POONAMALLEE HIGH ROAD, CHENNAI - 600 010. V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) REVENUE BY : SH. PATHLAVATH PEERYA, CIT ASSESSEE BY : SH.DEVENDRA KUMAR BHANDARI,FCA 2 3 4% / DATE OF HEARING : 16.04.2015 5') 3 4% / DATE OF PRONOUNCEMENT : 29.05.2015 2 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH ASSESSEE AND REVENUE HAVE FILED APPEALS FOR ASSESSMENT YEAR 2007-08 AND THE REVENUE HAS ALSO FI LED APPEAL FOR ASSESSMENT YEAR 2009-10. SINCE COMMON ISSUE AR ISES FOR CONSIDERATION, WE HEARD ALL THE THREE APPEALS TOGET HER AND DISPOSING OF BY THIS COMMON ORDER. FIRST LETS TAKE THE ASSESSEES APPEAL IN I.T.A. NO.1689/MDS/2012 FOR ASSESSMENT YEAR 2007-08. 2. SHRI DEVENDRA KUMAR BHANDARI, THE LD. REPRESENTA TIVE FOR THE ASSESSEE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERATION IN THIS APPEAL IS WITH REGARD TO COMPUTATION OF DED UCTION UNDER SECTION 80-IB OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE H AS EXECUTED TWO PROJECTS, OF WHICH, ONE PROJECT IS ARIHANT ESCAPAD E AT THORAIPAKKAM. THE ASSESSEE HAS ALSO UNDERTAKEN ANO THER PROJECT KNOWN AS ARIHANT VAIKUNT. ACCORDING TO THE LD. R EPRESENTATIVE, THE ASSESSMENT YEAR UNDER CONSIDERATION IS THE FIRS T YEAR OF CLAIMING DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. THE ASSESSEE HAS FURNISHED PROJECT WISE PROFIT & LOSS ACCOUNT. THE ASSESSEE HAS 3 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 INCURRED ADMINISTRATIVE AND OVERHEAD EXPENSES IN AL L THE PROJECTS. THE ASSESSING OFFICER FOUND THAT THE ADMINISTRATIVE AND OVERHEAD EXPENSES WERE NOT APPORTIONED TO THE 80-IB PROJECTS AND RESULTANTLY, THE REAL PROFIT WAS NOT DISCLOSED. AC CORDING TO THE LD. REPRESENTATIVE, THE PROJECT ARIHANT VAIKUNT SUFFERE D A LOSS OF ` 3,51,66,244/-. THE ASSESSING OFFICER SET OFF THE L OSS SUFFERED IN ARIHANT VAIKUNT AGAINST THE PROFIT EARNED BY THE AS SESSEE IN ARIHANT ESCAPADE AT THORAIPAKKAM. THE LD. REPRESENTATIVE F URTHER SUBMITTED THAT THE ASSESSEE HAS ALREADY DEBITED THE ADMINISTRATIVE EXPENSES TO THE PROFIT & LOSS ACCOUNT. THEREFORE, NO FURTHER ALLOCATION OF EXPENSES REQUIRED AS HELD BY THIS TRI BUNAL IN B. NAGI REDDY V. ITO (2010) 2 ITR (TRIB) 730. THE FURTHER ALLOCATION OF ADMINISTRATIVE EXPENSES WERE MADE BETWEEN NON-80-IB PROJECTS AND 80-IB(10) PROJECTS. THEREFORE, THE EXISTING EX PENSES SHOULD BE ADDED TO THE COMMON POOL. ACCORDING TO THE LD. REP RESENTATIVE, THE INTEREST COST INCURRED IN PROJECT ELIGIBLE FOR 80-I B(10) WAS FUNDED BY PROJECT LOAN WHICH WAS ALREADY DEBITED TO THE PROFI T & LOSS ACCOUNT. THEREFORE, FURTHER INTEREST ALLOCATION FROM THE ADM INISTRATIVE INTEREST SHOULD NOT BE DONE ON 80-IB(10) PROJECTS. 3. ON THE CONTRARY, SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE HAS NOT 4 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 DISTRIBUTED THE COMMON EXPENSES BETWEEN 80-IB(10) P ROJECTS AND NON -80-IB PROJECTS. THE ASSESSING OFFICER, BY PLA CING RELIANCE ON THE DECISION OF THIS TRIBUNAL IN CARBORANDUM UNIVES AL IN I.T.A. NOS.1102 & 1103/MDS/2006, FOUND THAT DISTRIBUTION O F COMMON EXPENSES FOR 80-IB(10) PROJECTS AND NON 80-IB PROJ ECTS HAS TO BE MADE. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWE D THE CLAIM OF ` 1,86,26,664/- AND THE DEDUCTION CLAIMED BY THE ASSE SSEE UNDER SECTION 80-IB WAS REDUCED TO THAT EXTENT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSES SEE CLAIMED DEDUCTION OF ` 12,30,76,785/- UNDER SECTION 80-IB(10) OF THE ACT. SUBSEQUENTLY, BY WAY OF REVISED COMPUTATION, THE AS SESSEE ENHANCED THE CLAIM OF DEDUCTION TO THE EXTENT OF ` 15,82,43,029/- ON THE GROUND THAT THE LOSS OF PROJECT ARIHANT VAIKUNT TO THE EXTENT OF ` 3,51,66,244/- WAS WRONGLY SET OFF AGAINST THE PROFI T OF ARIHANT ESCAPADE AT THORAIPAKKAM. THE SECOND COMPUTATION O F DISALLOWANCE WAS FOR THE REDUCTION OF 80-IB DEDUCTI ON TO THE EXTENT OF ` 1,86,26,664/- BY ALLOCATING THE EXPENSES FOR BOTH T HE PROJECTS. IN RESPECT OF SET OFF OF THE LOSS, THE CIT(APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. HOWEVER, IN RESPEC T OF EXPENSES, THE CIT(APPEALS) FOUND THAT FINISHED WORK AND WORK- IN-PROGRESS 5 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 FORMED A SUBSTANTIAL PORTION OF THE ASSESSEES BUSI NESS AND THESE EXPENSES ARE DEBITED TO THE PROFIT & LOSS ACCOUNT. ACCORDINGLY, THE CIT(APPEALS) FOUND THAT WORK-IN-PROGRESS AND FINISH ED WORK TOGETHER WOULD BE MORE APPROPRIATE BASIS FOR ALLOCA TING THE EXPENSES BETWEEN 80-IB(10) AND NON-80-IB PROJECTS. ACCORDINGLY, THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO ALLOCATE ADMINISTRATIVE EXPENSES AND COMMON COSTS ON THE RAT IO BETWEEN THE 80-IB(10) AND NON-80-IB PROJECTS. WE HAVE CARE FULLY GONE THROUGH THE PROVISIONS OF SECTION 80-IB(10) OF THE ACT WHICH READS AS FOLLOWS:- (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDER TAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH, 2007 1031ST DAY OF MARCH, 2008 ] BY A LOCA L AUTHORITY SHALL BE HUNDRED PER CENT. OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION,- (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008 ; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004 13BUT NOT LATER THAN THE 31ST DAY OF MARCH, 2005, WITHIN FOUR YEARS FROM THE END OF THE 6 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPR OVED BY THE LOCAL AUTHORITY. (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF A PRIL, 2005, WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY TH E LOCAL AUTHORITY. EXPLANATION FOR THE PURPOSES OF THIS CLAUSE,- (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROV ED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUS ING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY ; (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 HOUSI NG PROJECT IS ISSUED BY THE LOCAL AUTHORITY ; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE : PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACC ORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMEN T OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREA S UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF ; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWEN TY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE ; [AND] (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED 13[THREE PER CENT.] OF THE AGGREGATE BUILT-UP AREA 7 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 OF THE HOUSING PROJECT OR 13 [FIVE THOUSAND SQUARE F EET, WHICHEVER IS HIGHER] ; (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUS ING PROJECT ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL ; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTH ER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTE D TO ANY OF THE FOLLOWING PERSONS, NAMELY :- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHIL DREN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDI VIDUAL IS THE KARTA, (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA; EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL AP PLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTR AL OR STATE GOVERNMENT). 5. FROM THE ABOVE, IT IS OBVIOUS THAT DEDUCTION UND ER SECTION 80-IB SHOULD BE ON THE PROFIT DERIVED FROM SUCH HOU SING PROJECT. THE PARLIAMENT HAS SPECIFICALLY SAID THAT SUCH HOU SING PROJECT. THEREFORE, WHEN THE ASSESSEE IS DEVELOPING TWO PROJ ECTS, I.E. ONE PROJECT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80- IB AND OTHER PROJECT IS NOT ELIGIBLE, THE PROFIT OF THE ELIGIBLE PROJECT ALONE IS TO BE TAKEN. THERE IS NO NEED FOR SETTING OFF THE LOSS O F NON-ELIGIBLE PROJECT AGAINST THE PROFIT OF THE ELIGIBLE PROJECT. THEREFORE, THE 8 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 CIT(APPEALS) IS NOT JUSTIFIED IN SETTING OFF THE LO SS OF NON-ELIGIBLE PROJECT AGAINST THE PROFIT OF THE ELIGIBLE PROJECT. 6. NOW WITH REGARD TO ALLOCATION OF ADMINISTRATIVE AND OVERHEAD EXPENSES, THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS ALLOCATED ONLY DIRECT EXPENSES TO 80-IB(10) PROJECTS. THE EN TIRE INDIRECT EXPENSES WERE ALLOCATED TO NON-80-IB PROJECTS. THE REFORE, THE METHOD ADOPTED BY THE ASSESSEE WOULD GIVE RISE TO A DISTORTED PICTURE OF THE PROFITS OF VARIOUS PROJECTS. THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED FO R DEDUCTION UNDER SECTION 80-IB(10) ONLY ON THE ACTUAL PROFIT EARNED BY IT ON THE ELIGIBLE PROJECT. THE ASSESSEE IS MAINTAINING SEPA RATE BOOKS OF ACCOUNT FOR EACH PROJECT AND PREPARING SEPARATE PRO FIT & LOSS ACCOUNT. THEREFORE, THERE IS NO NEED FOR ALLOCATIO N OF ADMINISTRATIVE AND COMMON EXPENSES BETWEEN THE TWO PROJECTS. IN O THER WORDS, THE ASSESSEE IS ACCOUNTING ALL THE EXPENDITURE SEPA RATELY IN THE BOOKS OF ACCOUNT. ACCORDINGLY, THE ORDERS OF THE L OWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED NOT TO ALLOCATE THE ADMINISTRATIVE AND COMMON EXPENSES OTHER THAN T HE ONE ACCOUNTED IN THE ACCOUNTS OF THE ELIGIBLE PROJECT. THE ASSESSING OFFICER IS ALSO DIRECTED NOT TO SET OFF THE LOSS OF NON-ELIGIBLE PROJECT AGAINST THE PROFIT OF THE ELIGIBLE PROJECT. 9 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 7. NOW COMING TO REVENUES APPEAL, THE FIRST GROUND OF APPEAL IS WITH REGARD TO ALLOCATION OF ADMINISTRATIVE EXPE NSES AND COMMON COST EXPENSES. 8. WHILE CONSIDERING THE ASSESSEES APPEAL, THIS TR IBUNAL FOUND THAT THE CIT(APPEALS) HAS RIGHTLY ALLOCATED THE ADM INISTRATIVE EXPENSES AND COMMON EXPENSES ON THE RATIO BETWEEN 8 0-IB(10) PROJECTS AND NON-80-IB PROJECTS. THEREFORE, IN VIE W OF THE DISCUSSION MADE IN THE EARLIER PART OF THIS ORDER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND THE SAME IS CONFIRMED. 9. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISA LLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A REA D WITH RULE 8D OF THE INCOME-TAX RULES, 1962. 10. SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THAT THE ASSESSEE HA S RECEIVED A SUM OF ` 14,72,445/- AS DIVIDEND INCOME DURING THE YEAR UNDE R CONSIDERATION AND CLAIMED AS EXEMPTED UNDER SECTION 10(34) OF THE ACT. ACCORDING TO THE LD. D.R., THE ASSESSEE HAS M ADE HUGE INVESTMENTS IN SHARE APPLICATION OF SISTER CONCERNS . AS ON 01.04.2006, THE ASSESSEE HAS MADE INVESTMENTS TO TH E EXTENT OF 10 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 ` 16,63,73,217/- AND AS ON 31.03.2007, THE ASSESSEE H AS MADE INVESTMENTS TO THE EXTENT OF ` 2,09,57,965/-. THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE FOR EARNING THE EXEMPTED IN COME OF ` 14,72,445/-. ACCORDING TO THE LD. D.R., THE ASSESS EE INCURRED ROUTINE EXPENDITURE TO MAINTAIN ESTABLISHMENT AND A DMINISTRATION. THE ASSESSEE HAS INCURRED MANAGERIAL EXPENSES. THE REFORE, A PORTION OF THE MANAGERIAL EXPENSES AND DIRECTORS R EMUNERATION SHOULD BE ATTRIBUTABLE TO INVESTMENTS MADE FOR THE PURPOSE OF EARNING THE EXEMPTED INCOME. 11. THE LD. D.R. FURTHER POINTED OUT THAT THE ASSES SEE INCURRED A SUM OF ` 7,34,58,812/- TOWARDS INTEREST ON THE BORROWED CAPI TAL IN THE YEAR UNDER CONSIDERATION. OUT OF THIS, A SUM O F ` 3,70,90,145/- HAS BEEN CLAIMED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ANOTHER SUM OF ` 1,70,470/- WAS CLAIMED TOWARDS INTEREST ON DELAYED REMITTANCE OF TDS. THE ASSESSEE ALSO DEBIT ED A SUM OF ` 2,07,00,352/- TO THE PROFIT & LOSS ACCOUNT. ACCORD ING TO THE LD. D.R., THE ASSESSEE COULD NOT ESTABLISH THAT THE PAY MENT OF INTEREST TO THE EXTENT OF ` 5,79,60,967/- WAS NOT ATTRIBUTABLE TO THE INVESTMEN T MADE IN THE SHARES. ACCORDING TO THE LD. D.R., THE FUNDS OF THE COMPANY WERE IN THE COMMON KITTY WHICH COMPRISED BO RROWED FUNDS, SHARE CAPITAL AND RESERVES AND SURPLUS. THE REFORE, IT MAY 11 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 NOT BE CORRECT TO SAY THAT NO PORTION OF THE INTERE ST PAID AND NO PART OF THE BORROWED FUNDS WERE INVESTED FOR EARNING EXE MPTED INCOME. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER HAS RIGHTLY ESTIMATED THE PROFIT IN EARNING EXEMPTED IN COME AS PROVIDED UNDER SECTION 14A(2) OF THE ACT. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOUND THAT THERE WAS SUFFICIENT INTERE ST-FREE FUNDS AVAILABLE WITH THE ASSESSEE FOR MAKING INVESTMENTS. ACCORDING TO THE LD. D.R., SINCE THE ENTIRE FUNDS OF THE ASSESSE E WERE IN COMMON KITTY, THE ASSESSING OFFICER HAS RIGHTLY DIS ALLOWED THE CLAIM OF THE ASSESSEE. 12. ON THE CONTRARY, SHRI DEVENDRA KUMAR BHANDARI, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE BY APP LYING THE PROVISIONS OF RULE 8D OF THE INCOME-TAX RULES, 1962 . AS ON 31.03.2007, THE TOTAL INVESTMENT WAS ` 2,09,57,965/-. THE ASSESSEE HAD ISSUED SHARES AND CONVERTIBLE WARRANTS TO THE E XTENT OF ` 40.02 CRORES, OUT OF WHICH, ` 18.09 CRORES WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION. THE FUNDS WHICH WERE NOT IMME DIATELY REQUIRED IN THE YEAR UNDER CONSIDERATION, WERE INVE STED IN CASH MANAGEMENT FUNDS. REFERRING TO JUDGMENT OF BOMBAY HIGH COURT IN GODREJ AND BOYCE MFG. CO. LTD VS. DY. CIT (328 ITR 81), THE LD. 12 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 REPRESENTATIVE SUBMITTED THAT RULE 8D WAS NOTIFIED WITH EFFECT FROM 24.03.2008. HENCE, IT IS APPLICABLE FOR ASSESSMENT YEAR 2008-09. THE YEAR UNDER CONSIDERATION IS 2007-08. THEREFORE , RULE 8D IS NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAD SHARE CAPITAL, RESERVES AND SURPLUS TO THE EXTENT OF ` 64,68,04,310/-. THE INVESTMENT MADE BY THE ASSESSEE AS ON 01.04.2006 WA S ` 16,63,73,217/- AND AS ON 31.03.2007 WAS ` 2,09,57,965/-. THEREFORE, THE ASSESSEE HAD SUFFICIENT FUNDS FOR MA KING INVESTMENTS. HENCE, THE ASSESSEE ESTABLISHED THAT SUFFICIENT FUNDS WERE AVAILABLE WITH IT FOR MAKING INVESTMENTS, THER EFORE, THERE IS NO QUESTION OF ANY DISALLOWANCE. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FACT THAT THE ASSESSEE RECEIVED A SUM OF ` 18.09 CRORES FROM SHARES AND CONVERTIBLE WARRANTS DURING THE YEAR UNDER CONSIDERATION, IS NO T DISPUTED. THE ASSESSEE ALSO HAD SHARE CAPITAL, RESERVES AND SURPL US TO THE EXTENT OF ` 64,68,04,310/-. OUT OF THIS AVAILABLE FREE FUNDS, WHAT WAS INVESTED AS ON 01.04.2006 WAS ` 16,63,73,217/- AND AS ON 31.03.2007, THE INVESTMENT WAS ONLY ` 2,09,57,965/-. THEREFORE, IT IS OBVIOUS THAT THE ENTIRE INVESTMENTS WERE MADE FROM THE INTEREST- 13 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 FREE FUNDS AVAILABLE WITH THE ASSESSEE. THEREFORE, THERE IS NO QUESTION OF ANY DISALLOWANCE. WHEN THE ASSESSEE MA DE INVESTMENTS FROM THE AVAILABLE INTEREST-FREE FUNDS, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPE ALS) AND THE SAME IS CONFIRMED. 14. NOW COMING TO REVENUES APPEAL FOR ASSESSMENT Y EAR 2009- 10, IN I.T.A. NO.1623/MDS/2012, THE FIRST ISSUE ARI SES FOR CONSIDERATION IS WITH REGARD TO DEDUCTION UNDER SEC TION 80-IB(10) OF THE ACT TO THE EXTENT OF ` 2.48 CRORES. 15. SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS CON STRUCTED A MULTISTORY BUILDING ARIHANT ESCAPADE, THORAIPAKKA M. THE PLANNING PERMISSION WAS OBTAINED FROM CHENNAI METRO POLITAN DEVELOPMENT AUTHORITY (CMDA). FOR THE PURPOSE OF C LAIMING DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT, THE A SSESSEE HAS TO PRODUCE COMPLETION CERTIFICATE. THE LD. D.R. SUBMI TTED THAT THE ASSESSEE HAS PRODUCED COMPLETION CERTIFICATE FROM C HENNAI CORPORATION AND NOT FROM CMDA. HOWEVER, THE ASSESS EE HAS ALSO PRODUCED A COMPLETION CERTIFICATE FROM CMDA BEFORE THE CIT(APPEALS). THE CIT(APPEALS), WITHOUT MAKING ANY REFERENCE TO 14 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 THE ASSESSING OFFICER, ALLOWED THE CLAIM OF THE ASS ESSEE UNDER SECTION 80-IB(10) OF THE ACT. ACCORDING TO THE LD. D.R., SINCE THE COMPLETION CERTIFICATE WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER, THE MATTER NEEDS TO BE RE-EXAMINED. 16. ON THE CONTRARY, SHRI DEVENDRA KUMAR BHANDARI, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT ADM ITTEDLY, THE ASSESSEE HAS PRODUCED COMPLETION CERTIFICATE FROM C HENNAI CORPORATION. REFERRING TO THE ORDER OF THIS TRIBUN AL IN I.T.A. NOS.1326 & 1327/MDS/2011 DATED 13.01.2012, THE LD. REPRESENTATIVE SUBMITTED THAT THE LOCAL AUTHORITY W AS ONLY CHENNAI CORPORATION AND NOT CMDA. THEREFORE, AS POINTED OU T BY THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2006-07 AND 2008-09, THE CIT(APPEALS) HAS RIGHTLY ALLOWED T HE CLAIM OF THE ASSESSEE. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE A LSO CAREFULLY GONE THROUGH THE ORDER OF THIS TRIBUNAL IN THE ASSE SSEE'S OWN CASE FOR ASSESSMENT YEARS 2006-07 AND 2008-09. THE ASSES SEE CLAIMED DEDUCTION UNDER SECTION 80-IB(10) ON PERCENTAGE COM PLETION METHOD. THE ASSESSING OFFICER DISALLOWED THE CLAIM ON THE GROUND 15 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 THAT THE PLANNING PERMISSION WAS OBTAINED FROM CMDA , THEREFORE, THE COMPLETION CERTIFICATE HAS TO BE OBTAINED ONLY FROM CMDA AND NOT FROM CHENNAI CORPORATION. THIS TRIBUNAL IN ITS ORDER DATED 13.01.2012 FOUND THAT LOCAL AUTHORITY WILL INCLUD E A MUNICIPAL COMMITTEE, PANCHAYAT AND CANTONMENT BOARD. THEREFO RE, THE COMPLETION CERTIFICATE ISSUED BY CHENNAI CORPORATIO N IS SUFFICIENT COMPLIANCE OF THE REQUIREMENT OF THE ACT. THIS TRI BUNAL HAS ALSO MADE A REFERENCE THAT CMDA ALONE WAS NOT THE AUTHOR ITY TO ISSUE BUILDING PERMITS AND COMPLETION CERTIFICATES AND RE FERRING TO OFFICIAL WEBSITE OF CHENNAI CORPORATION, THE TRIBUNAL HELD T HAT BUILDING PERMITS WERE ALSO ISSUED BY CHENNAI CORPORATION. 18. THE PROVISIONS OF TAMIL NADU TOWN & COUNTRY PLA NNING ACT, 1971 WAS NOT BROUGHT TO THE NOTICE OF THE EARLIER B ENCH OF THIS TRIBUNAL. UNDER THE PROVISIONS OF TAMIL NADU TOWN & COUNTRY PLANNING ACT, 1971, IN RESPECT OF PLANNING, THE CMD A ALONE HAS POWER AND JURISDICTION TO GRANT PLANNING PERMISSION . HOWEVER, BY EXERCISE OF STATUTORY POWER, THE CMDA DELEGATES ITS POWER TO LOCAL AUTHORITY INCLUDING CHENNAI CORPORATION AND OTHER M UNICIPAL CORPORATION, PANCHAYAT, ETC. TO GRANT PLANNING PERM ISSION IN RESPECT OF BUILDING WITH GROUND + ONE FLOOR. IF THE CONSTR UCTION EXCEEDS MORE THAN GROUND + ONE FLOOR, THE APPROVAL OF CMDA IS ESSENTIAL 16 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 WITHIN THE CITY OF CHENNAI. ADMITTEDLY, THE PROJEC T CONSTRUCTED WAS WITHIN THE CITY OF CHENNAI AND WHAT WAS CONSTRUCTED BY THE ASSESSEE WAS MULTISTORY BUILDING EXCEEDING THREE FL OORS. THEREFORE, THE PLANNING PERMISSION HAS TO BE OBTAINED ONLY FRO M THE CMDA AND NOT FROM CHENNAI CORPORATION. ONCE THE PLANNIN G PERMISSION IS TO BE OBTAINED ONLY FROM CMDA, THE AUTHORITY WHO GR ANTS THE APPROVAL / PLANNING PERMISSION HAS TO GIVE THE COMP LETION CERTIFICATE. THEREFORE, IT WOULD NOT BE CORRECT TO SAY THAT THE COMPLETION CERTIFICATE OBTAINED FROM CHENNAI CORPOR ATION ALSO IS SUFFICIENT COMPLIANCE OF THE ACT. IN THIS CASE, SU BSEQUENTLY THE ASSESSEE HAS OBTAINED COMPLETION CERTIFICATE FROM T HE CMDA ALSO. IN FACT, THAT CERTIFICATE WAS PRODUCED BEFORE THE C IT(APPEALS). THEREFORE, THE GENUINENESS OF THE CERTIFICATE NEEDS TO BE VERIFIED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF DEDUCTIO N UNDER SECTION 80-IB(10) IS REMITTED BACK TO THE FILE OF THE ASSES SING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE COMPLETION CERTIFICATE OBTAINED BY THE ASSESSEE FRO M THE CMDA AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 17 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 19. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DIS ALLOWANCE OF ` 10,27,530/- MADE UNDER SECTION 14A READ WITH RULE 8 D(2)(II) OF THE ACT. 20. SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED EXEMPTED INCOME OF ` 11,25,301/-. HOWEVER, NO EXPENDITURE WAS INCURRED TO EARN THE EXEMPTED INCOME. THE LD. D.R. FURTHER SUB MITTED THAT THE ASSESSEE INCURRED AN EXPENDITURE OF ` 6,21,43,767/- AS INTEREST ON THE BORROWED CAPITAL. WHEN THE ASSESSEE CLAIMED TH AT THE BORROWED FUNDS WERE NOT USED FOR MAKING INVESTMENTS FOR EARNING EXEMPTED INCOME, THE SAME COULD NOT BE ESTABLISHED BY THE ASSESSEE. ACCORDING TO THE LD. D.R., THE ENTIRE IN COME AND THE BORROWED FUNDS WERE KEPT IN COMMON KITTY. THEREFOR E, IT WOULD NOT BE CORRECT TO ARGUE THAT NO PORTION OF BORROWED FUN DS WAS USED FOR EARNING THE EXEMPTED INCOME. IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAS NOT INVESTED THE BORROWE D FUNDS, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE. HOWEVER, THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF ` 10,77,530/-. ACCORDING TO THE LD. D.R., IN THE ABS ENCE OF REQUIRED MATERIALS, THE CIT(APPEALS) OUGHT NOT TO HAVE ALLOW ED THE CLAIM OF THE ASSESSEE. 18 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 21. ON THE CONTRARY, SHRI DEVENDRA KUMAR BHANDARI, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAD HUGE INTEREST-FREE FUNDS IN THE FORM OF SHARE CAPIT AL, RESERVES, ETC. ACCORDING TO THE LD. REPRESENTATIVE, AS ON 31.03.20 09, THE SHARE CAPITAL AND RESERVES AVAILABLE WERE TO THE EXTENT O F ` 126.64 CRORES AND AS ON 31.03.2008, THE SHARE CAPITAL AND RESERVE S WERE TO THE EXTENT OF ` 106.59 CRORES. THE ASSESSEE HAD ALSO RECEIVED SHAR E PREMIUM AND SALE PROCEEDS TO THE EXTENT OF ` 22,14,10,000/- IN THE YEAR 2006-07. SUBSEQUENTLY, THE ASSESSEE HAD RECEI VED ` 17.09 LAKHS TOWARDS ALLOTMENT OF SHARES. NO FRESH INVEST MENT WAS MADE DURING THE YEAR UNDER CONSIDERATION. ACCORDING TO THE LD. REPRESENTATIVE, ALL INVESTMENTS WERE MADE DURING TH E ASSESSMENT YEAR 2006-07 AND THE SAME CONTINUED IN THE YEAR UND ER CONSIDERATION ALSO. ACCORDING TO THE LD. REPRESENT ATIVE, THE AMOUNT INVESTED WAS OUT OF THE SHARE AMOUNTS / SHARE WARRA NTS, HENCE THERE IS NO QUESTION OF ANY DISALLOWANCE ON THE BOR ROWED FUNDS. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD SHARE CAPITAL AND RESERVES AS ON 31.03 .2009 TO THE EXTENT OF ` 126.64 CRORES AND AS ON 31.03.2008 TO THE EXTENT OF 19 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 ` 106.59 CRORES. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE RECEIVED SHARE PREMIUM AND SALES PROCEEDS TO THE EXTENT OF ` 22,14,10,000/- IN THE ASSESSMENT YEAR 2006-07. SUBSEQUENTLY, THE ASSESSEE HAD RECEIVED ` 17.09 LAKHS TOWARDS ALLOTMENT OF SHARES. THE ENTIR E INVESTMENTS IN EQUITY SHARES FOR EARNING THE EXEMPT ED INCOME WAS MADE ONLY IN THE YEAR 2006-07 AND NO INVESTMENT WAS MADE DURING THE YEAR UNDER CONSIDERATION. THEREFORE, IT IS OBV IOUS THAT THE ENTIRE INVESTMENTS WERE MADE IN EQUITY SHARES FROM THE INT EREST-FREE FUNDS AVAILABLE WITH THE ASSESSEE. THEREFORE, THERE IS N O NEED FOR ANY DISALLOWANCE OF EXPENDITURE AS PROVIDED IN SECTION 14A(3) OF THE ACT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION TH AT WHEN THE ASSESSEE HAD SUFFICIENT INTEREST-FREE FUNDS, THERE IS NO QUESTION OF ANY DISALLOWANCE. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE DISALLOWANCE TO THE EXTENT OF ` 10,77,530/-. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND THE SAME IS CONFIRMED. 23. THE REVENUE HAS TAKEN ONE MORE GROUND WITH REGA RD TO DISALLOWANCE OF THE CLAIM UNDER SECTION 47(IV) OF T HE ACT. 24. SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS CLA IMED 20 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 EXEMPTION ON CAPITAL GAIN OF ` 10.80.73,230/-. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE SOLD AN IMMOVABLE P ROPERTY TO M/S VARENYA CONSTRUCTION LTD. FOR A TOTAL CONSIDERATION OF ` 10,80,73,230/-. AFTER REDUCING THE COST, THE ASSES SEE HAS DISCLOSED CAPITAL GAIN TO THE EXTENT OF ` 8,07,65,924/-. THE ASSESSEE CLAIMED THAT THE PROPERTY WAS TRANSFERRED TO WHOLLY OWNED SUBSIDIARY COMPANY. THEREFORE, IN VIEW OF SECTION 47(IV) OF THE ACT, IT CANNOT BE REGARDED AS TRANSFER. ACCORDING TO TH E LD. D.R., THE PROPERTY WAS PURCHASED BY M/S VARENYA CONSTRUCTION LTD. FROM SRI RAMAKRISHNA RAO, SRI S. GOVINDA RAO AND SMT. TARA K ESHAVA RAO. THE SALE DEED WAS EXECUTED IN FAVOUR OF M/S V ARENYA CONSTRUCTION LTD. BY A POWER OF ATTORNEY OF THE ABO VE PERSONS. THEREFORE, IT IS NOT A TRANSFER OF PROPERTY FROM TH E ASSESSEE TO THE SUBSIDIARY COMPANY. HENCE, THE ASSESSEE CANNOT CLA IM ANY EXEMPTION WITH REGARD TO TRANSFER OF PROPERTY. 25. ON THE CONTRARY, SHRI DEVENDRA KUMAR BHANDARI, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE PAID A SUM OF ` 2,00,15,000/- ON 29.09.2004 TO SRI RAMAKRISHNA RAO, SRI S. GOVINDA RAO AND SMT. TARA KESHAVA RAO. A POWER OF ATTORNEY WAS REGISTERED IN FAVOUR OF SRI VIMAL LUNAVATH AND TOOK POSSESSION OF THE PROPERTY. AS PER CLAUSE 8 OF THE AGREEMENT FOR SALE DATED 21 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 30.09.2004, THE ASSESSEE TOOK OVER THE VACANT POSSE SSION OF THE PROPERTY. REFERRING TO SECTION 2(47) OF THE ACT, M ORE PARTICULARLY, 2(47)(V) & (VI), THE LD. REPRESENTATIVE SUBMITTED T HAT WHEN THE ASSESSEE TOOK OVER POSSESSION OF THE PROPERTY IN PU RSUANCE OF AGREEMENT MADE ON PAYING ` 2,00,15,000/-, THERE WAS A TRANSFER OF PROPERTY IN FAVOUR OF THE ASSESSEE UNDER THE INCOME -TAX ACT. THE ASSESSEE ALSO APPLIED FOR APPROVAL OF PLAN TO CONST RUCT A BUILDING OVER THE LAND. THE WORK-IN-PROGRESS SHOWN BY THE A SSESSEE INCLUDED THE COST OF LAND AND EXPENSES MADE THEREON TILL MARCH, 2007. THEREFORE, ACCORDING TO THE LD. REPRESENTATI VE, THE ASSESSEE IS A BENEFICIAL OWNER OF THE PROPERTY AND HENCE, AS HELD BY THE APEX COURT IN CIT V. PODDAR CEMENT LTD. (1997) 226 ITR 6 25 AND IN MYSORE MINERALS LTD. V. CIT (1999) 239 ITR 775, THE ASSESSEE HAS TO BE DEEMED TO BE OWNER OF THE PROPERTY. EVEN OTH ERWISE, UNDER SECTION 2(47) OF THE ACT, THERE WAS A TRANSFER WITH IN THE MEANING OF INCOME-TAX ACT AND IT MAY NOT BE CORRECT TO SAY THA T THE SALE DEED WAS EXECUTED BY THE OWNER OF THE PROPERTY DIRECTLY IN FAVOUR OF THE SISTER CONCERN. THE CIT(APPEALS), AFTER VIEWING AL L THE MATERIALS INCLUDING THE PAYMENT MADE BY THE ASSESSEE THROUGH CHEQUE, FOUND THAT THE PROPERTY WAS TRANSFERRED BY THE ASSE SSEE TO THE 22 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 SUBSIDIARY COMPANY M/S VARENYA CONSTRUCTION LTD. T HEREFORE, IT IS NOT A TRANSFER WITHIN THE MEANING OF SECTION 47(IV) OF THE ACT. 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE-COMPANY PAID ` 2,00,15,000/- ON 29.09.2004 AND OBTAINED THE POWER OF ATTORNEY IN FAVOUR OF ITS DIRECTOR VIM AL LUNAVATH. AN AGREEMENT WAS ALSO EXECUTED ON 30.09.2004. AS PER CLAUSE 8 OF THIS AGREEMENT, THE ASSESSEE-COMPANY TOOK OVER THE PHYSICAL POSSESSION OF THE PROPERTY FROM THE ERSTWHILE LAND OWNER. WHEN THE ASSESSEE-COMPANY FUNDED ` 2,00,15,000/- FROM ITS ACCOUNT AND TOOK OVER THE PROPERTY THROUGH ITS DIRECTOR SHRI VIMAL L UNAVATH, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSEE BECAME THE OWNER OF THE PROPERTY IN VIEW OF THE PROVISIONS OF SECTION 2(47) OF THE ACT. UNDER THE COMMON LAW, THE TRANSFER TAKES PLACE ONLY ON EXECUTION OF THE REGISTERED SALE DEED. HOWEVER, TH E LEGISLATURE HAS PRESCRIBED DEFINITION FOR TRANSFER OF PROPERTY OT HER THAN THE ONE WHICH IS PRESCRIBED UNDER THE COMMON LAW. THEREFOR E, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF THE SP ECIAL PROVISION IN SECTION 2(47) OF THE ACT, IT HAS TO BE CONSIDERED T HAT THERE WAS A TRANSFER OF PROPERTY FROM SRI RAMAKRISHNA RAO, SRI S. GOVINDA RAO AND SMT. TARA KESHAVA RAO TO THE ASSESSEE-COMPANY. THEREFORE, 23 I.T.A. NO.1623/MDS/12 I.T.A. NO.1775/MDS/12 I.T.A. NO.1689/MDS/12 THE ASSESSEE-COMPANY BECAME OWNER OF THE PROPERTY U NDER THE INCOME-TAX ACT. IT IS NOT IN DISPUTE THAT THE SAID PROPERTY WAS TRANSFERRED BY THE ASSESSEE TO M/S VARENYA CONSTRUC TION LTD., WHICH IS A WHOLLY OWNED SUBSIDIARY COMPANY OF THE A SSESSEE. THEREFORE, IN VIEW OF SECTION 47(IV) OF THE ACT, TH ERE WAS NO TRANSFER AND HENCE IT CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND THE SAME IS CONFIRMED. 27. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AND THE APPEAL OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 29 TH MAY, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !'# ! ) ( . . . ) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 29 TH MAY, 2015. KRI. 3 -489 :9)4 /COPY TO: +, /APPELLANT/ -.+, /RESPONDENT/ 2 ;4() /CIT(A)-III, CHENNAI/ 2 ;4 /CIT, CHENNAI-I, CHENNAI/ 9< -4 /DR / =( > /GF.