ACIT, CHENNAI V. M/s. Shiyam Foundation & Housing (P) Ltd., CHENNAI

ITA 1739/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1097 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 17-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G STANLY
• Section: 133A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NO.1739/MDS/2012 ASSESSMENT YEAR : 2009-10 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE VI(2) CHENNAI VS M/S SHIYAM FOUNDATION & HOUSING (P) LTD NO.30, DR. AMBEDKAR ROAD KODAMBAKKA CHENNAI 600 024 [PAN AADCS 9923 Q] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI G.STANLY, ADVOCATE DATE OF HEARING : 05-03-2013 DATE OF PRONOUNCEMENT : 08-03-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF THE CIT(A)-V, CHENNAI, DATED 29.06.2012. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LD. CIT(A) ERRED IN DELETING THE DISALLO WANCE MADE BY THE ASSESSING OFFICER U/S 80LB OF RS. 10,46,15,481/-. I.T.A.NO. 1739/12 :- 2 -: 2.2 THE LD. CIT(A) FAILED TO NOTE THAT THE CMDA APPROVAL IS IN THE NAME OF M/S IAEC INDUSTRIES MADRAS LTD WHO WERE THE ORIGINAL LANDLORDS AND NOT IN THE NAME OF THE ASSES SEE. 2.3 THE LD. CIT(A) OUGHT TO HAVE SEEN THAT NO CO MPLETION CERTIFICATE WAS PRODUCED EVEN BY 31.12.2010 EVEN TH OUGH COL. 23(B) OF FORM 10CCB MANDATES PRODUCTION OF COMPLETI ON CERTIFICATE ON OR BEFORE 09.05.2009. 2.4 AS REGARDS THE OWNERSHIP, THE LD. CIT(A) OUG HT TO HAVE SEEN M/S IAEC INDUSTRIES MADRAS LTD IS THE OWNER OF THE LAND WHO AGREED TO SELL THE ASSESSEE OR THEIR NOMINEE 65 % UDS AND THE CONSIDERATION FOR SUCH TRANSFER SHALL BE CONSTR UCTION AND DELIVERY OF BUILT UP AREA OF 35%IN THE FORM OF RESI DENTIAL AND COMMERCIAL AREA IN THE PROPOSED BUILDING. BUT THE O WNER HAS NOT SOLD THE LAND TO THE ASSESSEE AND IT WAS ONLY THE O WNER WHO HAS ACTUALLY SOLD THE UDS OF LAND DIRECTLY TO THE CUSTO MERS, THE ASSESSEE BEING ONLY THE POWER OF ATTORNEY IN THE TR ANSACTION. 2.5 IT IS SUBMITTED THAT THE DECISION IN THE CAS E OF RADHA DEVELOPERS & OTHERS VS. ITO 113 TT J (AHD) 308 ARE NOT APPLICABLE TO THE FACTS OF THIS CASE. 2.6 IT IS ALSO SUBMITTED THAT THE DECISION RELIE D UPON BY THE CIT(A) IN THE ASSESSEE'S OWN CASE FOR THE A.Y. 2008 -09 IN ITA NO. 391/2010-11 DT. 11-4-2011 HAVE NOT BECOME FINAL AND APPEALS TO ITAT HAS BEEN PREFERRED 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE COMM ISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF T HE ASSESSING OFFICER RESTORED. 3. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF THE REVEN UE IS THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 80IB OF ` 10,46,15,481/-. I.T.A.NO. 1739/12 :- 3 -: 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER WAS OF THE VIEW THAT DEDUCTION U/S 80IB(10) WAS NOT ALL OWABLE TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS EXECU TED THE HOUSING PROJECT AS WORKS CONTRACT ONLY. HENCE, IN VIEW OF EXPLANATION TO SECTION 80IB(10), THE ASSESSEE WAS NOT ELIGIBLE FO R THE SAID DEDUCTION. BEFORE THE ASSESSING OFFICER, THE ASSESSEE CONTEND ED THAT THE CLAIM OF DEDUCTION 80IB(10) WAS ALLOWED BY THE CIT(A) IN THE IMMEDIATELY PREVIOUS ASSESSMENT YEAR 2008-09, THE SAME SHOULD B E ALLOWED IN THIS YEAR ALSO. THE ASSESSING OFFICER, OBSERVING THAT T HE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF THE CIT(A) AND HAS PREFE RRED A FURTHER APPEAL THEREAGAINST, THEREFORE, THE CONTENTION OF T HE ASSESSEE THAT THE ISSUE OF DEDUCTION U/S 80IB(10) WAS ALLOWED BY THE CIT(A) AND SHOULD BE ALLOWED FOR THIS YEAR ALSO WAS NOT ACCEPT ABLE. THE ASSESSING OFFICER FURTHER OBSERVED THAT IN VIEW OF THE AGREEMENT OF CONSTRUCTION, THE SWORN STATEMENT GIVEN BY SHRI S.S UNDARARAMAN, IN THE COURSE OF SURVEY U/S 133A R.W. S 131 ON OATH, EXPLANATION TO SECTION 80IB(10), EXPLANATORY NOTES AND THE JUDICIA L PRONOUNCEMENTS IN THIS REGARD, IT WAS CLEAR THAT THE ASSESSEE HAS EXECUTED ONLY A WORKS CONTRACT. HENCE, THE ASSESSEE WAS NOT ELIGI BLE FOR DEDUCTION U/S 80IB(10). ACCORDINGLY, HE DISALLOWED DEDUCTION U/S 80IB(10) OF ` 10,13,96,988/- TO THE ASSESSEE. I.T.A.NO. 1739/12 :- 4 -: 5. ON APPEAL, THE CIT(A) ALLOWED THE CLAIM OF THE ASS ESSEE AND WHILE DOING SO, HELD AS UNDER: 4.2.1 I HAVE GONE THROUGH THE ORDER OF MY LEARNED PREDECESSOR IN APPELLANTS OWN CASE FOR THE IMMEDIA TELY PRECEDING ASSESSMENT YEAR 2008-09 IN I.T.A.NO. 391/ 2000- 11 DATED 11.04.201. MY LEARNED PREDECESSOR IN THE AFORESAID ORDER HAS HELD THE CLAIM OF THE APPELLANT UNDER SECTION 80IB(10) ON ALL COUNTS ON WHICH THE CLAIM O F THE APPELLANT HAS BEEN DENIED IN THE YEAR UNDER CONSIDE RATION ALSO. RESPECTFULLY FOLLOWING THE DECISION OF MY PREDECESS OR IN APPELLANTS OWN CASE IN THE AFORESAID I.T.A, I ALSO HOLD THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80IB(10) AND DIRECT THE AO TO ALLOW THE CLAIM OF THE APPELL ANT. THIS GROUND OF APPEAL, THEREFORE, IS ALLOWED. 6. THE DR VERY FAIRLY CONCEDED THAT IN THE EARLIER A SSESSMENT YEAR 2008-09 THE CLAIM FOR DEDUCTION U/S 80IB(10) WAS DISALLOWED BY THE ASSESSING OFFICER BUT WAS ALLOWED BY THE CIT(A) . HE FURTHER SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN TH E CASE OF CIT VS M/S SANGHVI AND DOSHI ENTERPRISE, TAX CASE APPEAL N OS.581 & 582 OF 2011 AND 314 & 315 OF 2012 AND M.P NO.1 OF 2011, OR DER DATED 1.11.2012, REPORTED IN AIT-2012-347-HC. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND TH AT THE DR HAS NOT DISPUTED THAT THE FACTS IN THE CASE OF THE PRESENT ASSESSEE BEFORE US ARE IDENTICAL TO THE FACTS OF THE CASE IN M/S SANGHVI AND I.T.A.NO. 1739/12 :- 5 -: DOSHI ENTERPRISE(SUPRA). WE FIND THAT THE HON'BLE MADRAS HIGH COURT, IN THE ABOVE QUOTED CASE, HAS UNDER AS UNDER: 29. WE HAD ALREADY SEEN THE VARIOUS CLAUSES IN THE AGREEMENT BETWEEN THE ASSESSEE AND THE OWNER DATED 28.4.2003. A READING OF THE VARIOUS CLAUSES THEREIN CLEAR LY POINTS OUT THE ROLE OF THE ASSESSEE, WHICH IS NOT J UST AS THAT OF A BUILDER TO PUT UP CONSTRUCTION AS PER THE DIRE CTIONS OF THE OWNER; ON THE OTHER HAND, AS RIGHTLY POINTED OU T BY THE TRIBUNAL, THE RISK ELEMENT THAT IS INVOLVED IN THE PROJECT UNDERTAKEN BY THE ASSESSEE IS MORE THAN OF A NORMAL BUILDER, UNDERTAKING MERE CONSTRUCTION. IT IS SEEN FROM THE DATA FURNISHED BEFORE THE ASSESSING OFFICER THAT WHILE F LATS IN THE 6TH FLOOR AND 11TH FLOOR WERE SOLD EVEN AS EARLY AS 2003, FLATS IN FIRST FLOOR WITH NOS.104 AND 103 WERE SOLD IN THE YEAR 2009. SO TOO, SOME OF THE FLATS IN SECOND FLOOR AND TH IRD FLOOR WERE SOLD IN THE YEAR 2007, 2006 AND 2005. THE FLAT IN 12TH FLOOR WAS SOLD ON 15.10.2003 AND IN THE 9TH FLOOR ON 5.11.2003. THE FLATS IN THE FIRST FLOOR WITH NOS.101 AN D 102 WERE SOLD ON 17.6.2009. APART FROM THIS, WE FIND THAT T HERE WERE STILL SOME FLATS LEFT UNSOLD. 30. IN THE BACKGROUND OF THESE FACTS, THE RISK FACTOR S, AS PROJECTED BY THE ASSESSEE ACCEPTED BY THE TRIBUNAL , NEEDS TO BE SEEN. UNDER CLAUSE 4 OF THE AGREEMENT, THE AS SESSEE WAS TO COLLECT A SUM OF RS.600/- PER SQ.FT. ON SUPER B UILT-UP AREA FOR THE SALE OF UNDIVIDED SHARE OF LAND TRANSF ERRED TO THE BUYER. THE SAID CLAUSE ALSO FIXES THE CEILING A S TO THE CONSIDERATION, WHICH WOULD BE PAID TO THE OWNER, NA MELY, AT RS.11,51,94,000/-. THE CLAUSE IN THE AGREEMENT FURTHER POINTED OUT THAT THE BUILDER HAS TO ENTER INTO A BU ILDER AGREEMENT WITH THE PROPOSED PURCHASER AND IT IS OPE N TO THE BUILDER TO FIX SUCH RATE PER SQUARE FOOT FOR CONSTR UCTION OF THE AREA AS IT DEEMS FIT, OVER WHICH THE OWNER HAS NO CLAIM AT ALL. THE BUILDER HAS TO PAY THE SPECIFIED COST OF THE LAND ON THE UNDIVIDED SHARE OF SALE IN FAVOUR OF THE PURCHA SER TO THE OWNER, PRO-RATA TO THE BUILT-UP AREA. A READING OF THE AGREEMENT OF SALE WITH THE PURCHASERS FURTHER POINT S OUT I.T.A.NO. 1739/12 :- 6 -: THAT THE BUILDER'S AGREEMENT WAS ENTERED ON THE VER Y SAME DAY WITH THE ASSESSEE. THUS, SEEN IN THE BACKGROUN D OF THE DATA AVAILABLE AS REGARDS THE DATE OF SALE, THE CLA USE IN THE AGREEMENT BETWEEN THE OWNER OF THE LAND AND THE ASS ESSEE AND THE SALE AGREEMENT WITH THE PROSPECTIVE PURCHAS ERS, IT IS EVIDENT THAT WHAT THE ASSESSEE HAD UNDERTAKEN IS NO T A MERE CONSTRUCTION, BUT DEVELOPING AND CONSTRUCTING OF A PROJECT, WHICH QUALIFIES FOR A DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT. AS RIGHTLY POINTED OUT BY LEARNED S ENIOR COUNSEL APPEARING FOR THE ASSESSEE, A BARE READING OF SECTION 80IB OF THE INCOME TAX ACT SHOWS THAT THE DEDUCTION CONTEMPLATED THEREIN IS ORIENTED TOWARDS THE PROJEC T AND NOT WITH REFERENCE TO AN ASSESSEE. IT IS NO DOUBT TRUE THAT THE PROJECT HAS TO BE DONE BY THE ASSESSEE, BUT THEN, W HEN THE DEDUCTION IS SPECIFIC ENOUGH AS REGARDS THE PARTICU LAR ACTIVITY, WE FAIL TO SEE HOW ONE SHOULD ASSUME ANY SIGNIFICANCE IN THE MATTER OF CONSIDERING A DEDUCTI ON. 31. AS RIGHTLY POINTED OUT BY LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, IN THE DECISION REPORTE D IN (2012) 341 ITR 403 (COMMISSIONER OF INCOME-TAX V. RADHE DEVELOPERS), THE GUJARAT HIGH COURT CONSIDERED THE QUESTION ON OWNERSHIP AS A CONDITION FOR GRANT OF DEDUCTION UNDER SECTION 80IB(10) IN DEPTH AND ACCEPTED THE CASE OF AN ASSESSEE SIMILARLY PLACED. IT HELD THAT THE PROVISI ONS NO WHERE REQUIRE THAT DEVELOPERS WHO ARE THE OWNER OF THE LAND ALONE WOULD BE ENTITLED FOR GRANT OF DEDUCTION UNDE R SECTION 80IB(10). GOING THROUGH THE DECISION OF THE GUJARAT HIG H COURT, WE HAVE NO HESITATION IN HOLDING THAT WE ARE IN RESPECTFUL AGREEMENT WITH THE LAW DECLARED BY THE G UJARAT HIGH COURT. 8. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISION OF THE HON'BLE MADRAS HIGH COURT, WE DISMISS THE GR OUNDS OF APPEAL OF THE REVENUE. I.T.A.NO. 1739/12 :- 7 -: 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 08 TH OF MARCH, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED:08 TH MARCH, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR