DCIT, CHENNAI V. M/s. ABN Housing Development Co. P Ltd., CHENNAI

ITA 1766/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64549 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R SIVARAMAN
• Keywords: Competent authority
• Section: 80IB; 10

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 NO.1766/MDS/2012 (ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(1) , AAYAKAR BHAVAN CHENNAI-34. VS. M/S. AKS HOUSING DEVELOPMENT CO. P.LTD. 11, DR.B.N.NARASIMMAN ROAD, OLD NORTH BOAG ROAD, CHENNAI-17. PAN: AAFCA2142R (APPELLANT) (RESPONDENT) APPELLANT BY : MR. GURU BASHYAM, JCIT RESPONDENT BY : MR. R. SIVARAMAN, ADVOCATE DATE OF HEARING : 21 ST NOVEMBER, 2012 DATE OF PRONOUNCEMENT : 30 TH NOVEMBER, 2012 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN PREFERRED BY THE REVENUE IMPUGNING THE ORDER OF THE CIT(A)III, CHENNAI DATE D 29.06.2012. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY CARRYI NG ON BUSINESS OF DEVELOPING AND BUILDING OF HOUSING PROJ ECTS. FOR THE ASSESSMENT YEAR 2009-10, THE ASSESSEE FILED ITS RETURN OF INCOME ON 6.10.2009 ADMITTING AN INCOME OF ` 2,57,73,121/- BEFORE CLAIMING DEDUCTION UNDER SECTION 80IB(10). THE ITA NO.1766/MDS/2012 2 ASSESSEE CLAIMED DEDUCTION ON THE ENTIRE AMOUNT DEC LARED AS INCOME UNDER SECTION 80IB(10) IN RESPECT OF HOUSING PROJECT AT AYANAMBAKKAM. THE ASSESSING OFFICER, WHILE COMPL ETING THE ASSESSMENT, REJECTED THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(10) ON ACCOUNT OF NON-SUBMISSION OF FO LLOWING DOCUMENTS BY THE ASSESSEE:- I) PLANNING PERMIT FOR THE PROJECT IN FAVOUR OF THE ASSESSEE; II) BUILDING PERMIT FOR THE PROJECT IN FAVOUR OF TH E ASSESSEE. III) COMPLETION CERTIFICATE FOR THE PROJECT IN FAVO UR OF THE ASSESSEE. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 30.12.2011 RAISED A DEMAND OF ` 89,78,220/-. 3. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE CIT(A).THE CIT(A) VI DE ORDER DATED 29.6.2012 ALLOWED THE APPEAL OF THE ASSESSEE. NOW, THE REVENUE HAS COME IN SECOND APPEAL BEFORE THE TR IBUNAL ASSAILING THE ORDER OF THE CIT(A) ON THE GROUND THA T THE CIT(A) HAS ERRED IN ALLOWING THE RELIEF TO THE ASSESSEE UN DER SECTION ITA NO.1766/MDS/2012 3 80IB DESPITE THE FACT THAT VITAL DOCUMENTS AS POINT ED OUT BY THE ASSESSING OFFICER WERE NOT AVAILABLE IN FAVOUR OF THE ASSESSEE. 4. THE D.R. APPEARING ON BEHALF OF THE REVENUE SUBM ITTED THAT THE ASSESSEE IS NOT THE OWNER OF THE LAND AND THE ASSESSEE WAS NOT ABLE TO PRODUCE VITAL DOCUMENTS FO R CLAIMING DEDUCTION UNDER SECTION 80IB(10) AS POINTE D OUT BY THE ASSESSING OFFICER. THE DR FURTHER SUBMITTED TH AT, A PERUSAL OF SECTION 80IB(10) SHOWS THAT FOR CLAIMIN G DEDUCTION UNDER THE PROVISIONS OF THAT SECTION, IT IS A PRE-R EQUISITE TO PRODUCE DOCUMENTS RELATING TO HOUSING PROJECT VIZ., APPROVAL OF THE PROJECT FROM THE COMPETENT AUTHORITY, APPROV AL OF BUILDING PLAN FROM THE COMPETENT AUTHORITY AND COMP LETION CERTIFICATE FROM THE COMPETENT AUTHORITY. IN THE P RESENT CASE, NONE OF THE AFORESAID DOCUMENTS WERE PRODUCED BEFOR E THE ASSESSING OFFICER BY THE ASSESSEE IN ITS FAVOUR. TH E DR IN ORDER TO SUPPORT HIS CONTENTIONS RELIED ON THE ORDE R OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SKY B UILDERS AND DEVELOPERS VS. ITO DECIDED ON 17 TH AUGUST, 2011 (48 SOT 51 (INDORE).(URO). ITA NO.1766/MDS/2012 4 5. ON THE OTHER HAND, THE COUNSEL APPEARING ON BEH ALF OF THE ASSESSEE STRONGLY SUPPORTING THE ORDER OF THE C IT(A) SUBMITTED THAT, THE DOCUMENTS MENTIONED BY THE ASS ESSING OFFICER WERE PRODUCED BEFORE THE CIT(A). THE COUNSE L FURTHER SUBMITTED THAT THE PLANNING PERMIT AND COMPLETION C ERTIFICATE WERE DULY OBTAINED FROM THE COMPETENT AUTHORITY IN THE NAME OF THE LAND OWNERS. THE CIT(A) AFTER PERUSING ALL THE RELEVANT DOCUMENTS CAME TO THE CONCLUSION THAT THE ASSESSEE IS ENTITLED FOR RELIEF UNDER SECTION 80IB(10). THE CO UNSEL FOR THE ASSESSEE FURTHER CONTENED THAT THE ASSESSEE HAD INV ESTED MONEY IN THE PROJECT AND HAD UNDERTAKEN THE RISK FR OM THE STAGE OF ACQUISITION OF LAND TILL THE SALE OF FLATS TO THE PROSPECTIVE BUYERS. THE ASSESSEE HAD ENGAGED CONTR ACTORS FOR THE CONSTRUCTION OF THE BUILDING AND WAS RESPO NSIBLE FOR SALE OF THE COMPLETED FLATS. THUS, THE ASSESSEE WA S INVOLVED IN EACH AND EVERY STAGE OF THE HOUSING PROJECT RIGH T FROM INITIATION TO THE STAGE OF SALE OF COMPLETED FLATS. THEREFORE, BY NO STRETCH OF IMAGINATION, IT CAN BE SAID THAT THE ASSESSEE IS NOT A DEVELOPER OR BUILDER OF THE HOUSING PROJECT I N QUESTION. IN ORDER TO SUPPORT HIS CONTENTIONS, THE ASSESSEE R ELIED ON THE ITA NO.1766/MDS/2012 5 JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RADHE DEVELOPERS REPORTED AS 341 ITR 403. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES. WE HAVE ALSO PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND THE JUDGEMENTS/ORDERS REFERR ED TO BY THE RESPECTIVE PARTIES. FOR CLAIMING DEDUCTION UNDE R SECTION 80IB(10), THE ASSESSEE SHOULD SATISFY THE FOLLOWING CONDITIONS:- I) PROJECT SHOULD BE APPROVED BY LOCAL AUTHORITY BEFORE MARCH 31, 2008. II) THE SIZE OF THE PLOT SHOULD BE MINIMUM ONE ACR E. III) THE UNDERTAKING COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT AFTER 31.09.1998 AND IT SHOULD COMPLETE THE CONSTRUCTION WITHIN THE TIME LIMIT PRESCRIBED UNDER SUB-SECTION (10). IV) THE BUILT-UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENT INCLUDING HOUSING PROJECT SHALL NOT EXCEED 5% OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR 2000 SQ.FT WHICHEVER IS LESS. ITA NO.1766/MDS/2012 6 V) THE BUILT-UP AREA OF EACH RESIDENTIAL UNIT SHOUL D BE SUBJECT TO THE MAXIMUM LIMIT OF 1000 SQ.FT. OR 1500 SQ.FT AS THE CASE MAY BE (AS PRESCRIBED UNDER SUB-SECTION 10 OF SECTION 80IB). 7. A PERUSAL OF THE ABOVE CONDITIONS SHOWS THAT THE RE IS NO FURTHER CONDITION THAT SUCH CONSTRUCTION AND DEVELO PMENT OF THE HOUSING PROJECT SHOULD BE ON A LAND OWNED BY TH E ASSESSEE UNDERTAKING. AS FAR AS THE DOCUMENTS POINT ED OUT BY THE ASSESSING OFFICER IS CONCERNED, THE CIT(A) I N PARA 6 HAS CATEGORICALLY OBSERVED AS UNDER:- I HAVE ALSO GONE THROUGH THE DETAILS FURNISHED BY THE APPELLANT INCLUDING THE APPROVAL AND COMPLETION CERTIFICATES ISSUED BY CMDA, SALE AND CONSTRUCTION DEEDS, POWER OF ATTORNEY EXECUTED IN FAVOUR OF MR. RAJASEKAR, NEWSPAPER ADVERTISEMENT COPIES, PROMOTIONAL BROCHURE, BALANCE SHEET AND PROFIT & LOSS ACCOUNT ETC. THE APPELLANT HAD ALSO FURNISHED ALL THESE DETAILS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF DEDUCTION U/S.80IB ONLY ON THE GROUND THAT THE PLANNING PERMIT, BUILDING PERMIT AND COMPLETION CERTIFICATE OF THE HOUSING PROJECT WERE NOT IN THE NAME OF THE APPELLANT. ITA NO.1766/MDS/2012 7 THE CIT(A) FURTHER OBSERVED THAT: . THE APPELLANT HAS ACQUIRED A PLOT WHICH IS O F THE SIZE OF MORE THAN 1 ACRE (PLOT SIZE 1.87 ACRES PLUS 8565 SQ .FT.) BUILDING PLANNING PERMITS WERE GRANTED IN THE NAME OF ORIGINAL LAND OWNERS FOR THE HOUSING PROJECT BY CMD A ON 8.3.2004. THE BUILT-UP AREA OF ALL THESE FLATS ARE BELOW 1500 SQ.FT. NO COMMERCIAL OR SHOPPING SPACE WAS CONSTRUC TED IN THIS PROJECT. THE BUILDING COMPLETION CERTIFICATE WAS ISSUED BY CMDA ON 14.11.2008 WHICH WAS WITHIN TIME ALL OWED IN SECTION 80IB(10). THE OBSERVATIONS OF THE CIT(A) CLEARLY SHOW THAT TH E ASSESSEE HAD OBTAINED NECESSARY APPROVALS FOR AVAIL ING DEDUCTION UNDER SECTION 80-IB(10) FROM THE COMPETEN T AUTHORITY AND HAD ALSO SATISFIED OTHER CONDITIONS W ITH RESPECT TO BUILT UP AREA OF FLATS AND THE TOTAL AREA OF THE PROJECT. 8. AS REGARDS THE SUBMISSIONS OF THE D.R. THAT THE ASSESSEE IS NOT THE OWNER OF THE LAND, IT WOULD BE RELEVANT TO MENTION THAT OWNERSHIP OF THE LAND IS NOT A CONDITI ON UNDER SECTION 80IB(10). THESE DAYS, IT IS NOT UNCOMMON TO HAVE BUILDING PROJECT WHERE THE LAND IS OWNED BY ONE PAR TY AND THE CONSTRUCTION IS DONE BY SOME OTHER PARTY ON THE SAI D LAND. THE LAND OWNER MAY NOT HAVE EXPERTISE AND CAPITAL T O INVEST ITA NO.1766/MDS/2012 8 ON THE HOUSING PROJECT. ON THE OTHER HAND, THE OTHE R PARTY MAY BE HAVING EXPERTISE AND THE RESOURCES FOR CONST RUCTION OF BUILDING BUT NOT THE LAND AT IDEAL LOCATION FOR CON STRUCTION OF HOUSING PROJECT. IN SUCH LIKE SITUATION, BOTH THE PARTIES JOIN THEIR HANDS TOGETHER TO GIVE SHAPE TO THE PROJECT A S BOTH HAVE CONSENSUS AD IDEM TO BRING INTO EXISTENCE A HOUSING PROJECT. FOR THE SAKE OF SMOOTH EXECUTION OF THE P ROJECT THEY MAY INCORPORATE CERTAIN CLAUSES IN JOINT VENTURE AG REEMENT. IN THE PRESENT CASE, A PERUSAL OF THE ORDER OF THE CIT (A) SHOWS THAT THE ASSESSEE HAD INVESTED MONEY ON ACQUIRING L AND AND EXECUTING CONSTRUCTION. THE ASSESSEE HAD INVESTED I TS OWN MONEY AND HAD UNDERTAKEN RISK FROM THE STAGE OF ACQ UISITION OF LAND TILL SALE OF FLATS TO THE PROSPECTIVE BUYER S. IT HAD APPOINTED CONTRACTORS FOR CONSTRUCTING BUILDING, HA D INCURRED EXPENDITURE FOR SALE OF FLATS, HAD ENTERED INTO AGR EEMENT FOR SALE OF UNDIVIDED SHARE AND CONSTRUCTION WITH THE P URCHASER OF FLATS AND EVEN GOT THE COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY. THE HONBLE GUJARAT HIGH COURT IN THE CA SE OF RADHE DEVELOPERS (SUPRA) HAS HELD THAT NEITHER THE PROVISIONS OF SECTION 80IB NOR ANY PROVISIONS CONTA INED IN ITA NO.1766/MDS/2012 9 OTHER RELATED STATUTES DEMONSTRATE THAT THE OWNERSH IP OF THE LAND WOULD BE A CONDITION PRECEDENT FOR DEVELOPING HOUSING PROJECT. THE TERM DEVELOPER HAS BEEN UNDERSTOOD IN COMMON PARLANCE AS WELL AS LEGAL SENSE CARRYING A M UCH WIDER CONNOTATION. 9. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SHRAVANEE CONSTRUCTIONS IN TAX APPEAL NOS.421 & 422 OF 2009 DECIDED ON 28.02.2012 HAS HELD AS UNDER:- 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 ITA NO.1766/MDS/2012 10 CONSTRUCTION. IT IS AFTER COMPLETION OF THE BUILDI NG IN TERMS OF THE AGREEMENT, THE ASSESSEE WAS GIVEN 22% SHARE OF THE BUILDING AREA. IT IS AFTER SALE O F THE BUILT AREA, IN 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 RESPECT 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. A PERUSAL OF THE ABOVE CLEARLY SHOWS THAT THE OWNER OF THE LAND AS WELL AS THE PARTY THAT HAS UNDERTAKEN CONST RUCTION OF THE HOUSING PROJECT ARE TERMED AS DEVELOPER AND A RE THEREFORE ENTITLED FOR THE BENEFIT OF SECTION 80IB( 10) OF THE ACT. 10. THUS, FROM THE AFORESAID FACTS AND CIRCUMSTANC ES OF THE CASE AND THE JUDGEMENT OF THE HONBLE HIGH COURT, I T IS EVIDENT THAT THE ASSESSEE IS A DEVELOPER AND BUILDE R OF THE PROJECT. THE ASSESSEE HAD ALREADY PLACED ON RECORD THE NECESSARY DOCUMENTS FOR CLAIMING DEDUCTION UNDER SE CTION ITA NO.1766/MDS/2012 11 80IB(10). WE THEREFORE, UPHOLD THE ORDER OF THE CI T(A) AND DISMISS THE APPEAL OF THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 30 TH DAY OF NOVEMBER, 2012 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) (VIKAS AWASTHY) VICE-PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 30 TH NOVEMBER, 2012. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.