ITO, CHENNAI V. M/s. Vinoth & Ramesh Builders, CHENNAI

ITA 1811/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0797 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2013
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 21-02-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Court: TRIBUNAL
• Assessee Lawyers: B RAMAKRISHNAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENNAI BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO.1811/MDS/2012 ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, BUSINESS WARD-XIV(3), CHENNAI. V. M/S. VINOTH & RAMESH BUILDERS,NEW NO. 17/1 (OLD NO. 18/1), F. BLOCK, 2 ND STREET, ANNA NAGAR EAST, CHENNAI-600 102. (PAN : AAAAV4422C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GURU BASHYAM, SR.DR RESPONDENT BY : SHRI B. RAMAKRISHNAN, CA DATE OF HEARING : 21.0 2.2013 DATE OF PRONOUNCEMENT : 27.02.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT(APPEALS)-XII, CHENNAI DATED 25-06-2012 FOR THE ASSESSMENT YEAR 2009-10. 2. GROUND NO. 1 IN THE APPEAL IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. ITA NO.1811/MDS /2012 : 2 : 3. GROUNDS 2.1 TO 3.2 RELATE TO DEDUCTION UNDER SE CTION 80-IB OF THE INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT). 4. BRIEF FACTS ARE THAT THE ASSESSEE IS AN ASSOCIAT ION OF PERSONS FORMED ON 22-08-2005 WITH TWO MEMBERS, NAMELY M/S. ILB RAMESH HOMES P. LTD. AND M/S. VINODH PROPERTIES . M/S. IL B RAMESH HOMES P. LTD. ENTERED INTO A JOINT VENTURE AGREEMEN T WITH M/S. VINODH PROPERTIES TO FORM AN AOP AND COMMENCE THE H OUSING PROJECT VIDE JOINT VENTURE AGREEMENT DATED 22-08-20 05. M/S. ILB RAMESH HOMES P. LTD. OWNED A PIECE OF LAND. AS PAR T OF THE JOINT VENTURE AGREEMENT, M/S. ILB RAMESH HOMES CONTRIBUTE D THIS LAND TO THE PRESENT ASSESSEE, M/S. VINOTH AND RAMESH BUI LDERS, AS ITS CAPITAL CONTRIBUTION. THE OTHER MEMBER OF THE AOP, M/S. VINOTH PROPERTIES, AGREED TO CONTRIBUTE THE NECESSARY CAPI TAL (FUNDS) FOR THE PURPOSE OF DEVELOPING THE HOUSING PROJECT. THE REAFTER, THE ASSESSEE AOP CONTINUED THE DEVELOPMENT OF THE HOUSI NG PROJECT AND CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT. THE ASSESSEE FILED A RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ADMITTING TOTAL INCOME OFRS 3,10,591/- AFTER CLAIMING DEDUCTION U/ S 80-IB(10) AT ` 5,80,66,076/-. THE ASSESSING OFFICER DENIED THE CL AIM OF DEDUCTION U/S 80-IB(10) OF THE ACT ON THE GROUND THAT THE ASS ESSEE IS NOT INVOLVED IN THE ACTIVITY OF DEVELOPING OR BUILDING HOUSING PROJECT, THE ASSESSEE IS NOT THE OWNER OF THE LAND, THE ASSESSEE IS ONLY A WORKS CONTRACTOR COVERED BY THE EXPLANATION TO SECTION 80 -IB(10) AND FOUR ITA NO.1811/MDS /2012 : 3 : FLATS IN THE RESIDENTIAL UNIT HAVE EXCEEDED THE BAS IC THRESHOLD LIMIT OF 1500 SQ.FT. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A PPEALS) AND SUBMITTED THAT OWNERSHIP IS NOT THE CRITERIA FOR TH E PURPOSE OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. THE ASSESSEE-AOP HAS CONCEIVED THE HOUSING PROJECT, OBTAINED ALL THE PERMITS, INVESTED THE NECESSARY FUNDS FOR THE CONSTRUCTION A CTIVITY BEARING ALL RISKS AND ENJOYED THE SALE CONSIDERATION OF THE FLA TS AND HENCE THE ASSESSEE IS THE REAL DEVELOPER AND BUILDER OF THE H OUSING PROJECT. THE CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD AS UNDER : .THE ASSESSEE HAS INVESTED ITS OWN MONEY AND CONSTRUCTED THE PROJECT WITH ALL RISKS AND RESPONSI BILITIES AND HENCE BECOMES THE OWNER AND DEVELOPER OF THE PROJEC T FOR THE PURPOSE OF SEC. 80-IB OF THE ACT. THEREFORE THE AS SESSEE IS THE DEVELOPER AND BUILDER OF THE HOUSING PROJECT AN D ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. THE CIT(APPEALS) BY FOLLOWING THE DECISION OF THE T RIBUNAL IN THE CASE OF ACIT V. INDWELL LININGS (P) LTD. (122 TTJ (CHENNAI) 137) ALLOWED THE APPEAL OF THE ASSESSEE. 6. ON BEING AGGRIEVED, THE REVENUE HAS CARRIED THE MATTER BEFORE THE TRIBUNAL. AT THE TIME OF HEARING, THE L EARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN T HIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT V, M/S. SANGHVI AND DOSHI ENTERPRISE IN ITA NO.1811/MDS /2012 : 4 : TAX CASE (APPEAL) NOS. 581 & 582 OF 2011 AND 314 & 315 OF 2012 AND M.P. NO. 1 OF 2011 DATED 01-11-2012, (2012 T IOL-956-HC- MAD-IT. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, THESE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 7. GROUNDS 4.1 TO 4.5 RELATE TO BUILT UP AREA OF TH E FLAT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE FOUR FLATS IN THE PROJECT HAD EXC EEDED THE BASIC THRESHOLD LIMIT OF 1500 SQ.FT. FOR THIS PURPOSE AS SESSING OFFICER APPARENTLY RELIED ON THE ADVERTISEMENT BROCHURE WHE REIN IT WAS MENTIONED THAT THE AREA OF FOUR FLATS, DF-1, DS-1, DT-1 AND DFR-1 WERE HAVING A BUILT UP AREA OF 1520 SQ.FT. THIS IS THE SUPER BUILT UP AREA OR THE TOTAL AREA OF THE FLATS FOR THE PURPOSE OF DETERMINING THE COST OF THE FLAT. IT INCLUDES BALCONY, COMMON UTIL ITY AREAS LIKE CORRIDORS, LIFT, FIRE FIGHTING AREAS ETC. THE CASE OF THE ASSESSEE IS THAT FOR THE PURPOSE OF SEC. 80-IB(10), ONLY THE AC TUAL BUILT UP AREA OF THE FLAT ALONE HAS TO BE CONSIDERED TO SEE THE T HRESHOLD LIMIT OF 1500 SQ.FT. COMMON AREAS WHICH ARE SHARED BY OTHER FLATS SHOULD NOT BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF DETERMINING THE BUILT UP AREA OF THE FLATS. THE CIT(APPEALS) IN HI S ORDER OBSERVED THAT AS PER THE PROVISIONS OF SEC. 80-IB(14)(A) IT IS CLEAR THAT ONLY THE ACTUAL BUILT UP AREA OF THE FLATS (RESIDENTIAL UNITS) ALONE IS TO BE CONSIDERED FOR THE PURPOSE OF SEEING THE THRESHOLD LIMIT OF 1500 SQ.FT. NORMALLY IN ANY HOUSING PROJECTS THE COMMON AREAS CONSTITUTE ITA NO.1811/MDS /2012 : 5 : ABOUT 15 TO 30% OF THE SUPER BUILT AREAS WHICH ARE SHOWN AS THE SALEABLE AREA. IN THE INSTANT CASE THE ASSESSEE CL AIMED THAT THE COMMON AREAS CONSTITUTE 274 SQ.FT FOR EACH OF THE A BOVE FOUR FLATS (OF SUPER BUILT AREA OF 1520 SQ.FT.). THUS IF THE COMMON AREAS ARE EXCLUDED, THE ACTUAL BUILT UP AREA, AS DEFINED IN S ECTION 80-IB(14)(A) OF THE ACT IS HARDLY 1245 SQ.FT. (1520 SQ.FT. 274 SQ.FT.), WHICH IS FAR WITHIN THE THRESHOLD LIMIT OF 1500 SQ.FT. HENCE TH ERE ARE NO VIOLATIONS AS FAR AS THE REQUIREMENT OF BUILT UP AR EA OF NOT EXCEEDING 1500 SQ.FT. OF THE RESIDENTIAL UNITS OF T HE PROJECT IS CONCERNED. ACCORDINGLY, HE ALLOWED THE CLAIM OF THE ASSESSEE. 8. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND NO INFIRMITY IN THE ORDER PASSED BY THE CIT(APPEALS). THEREFORE, T HESE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 27 TH OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (DR. O. K. NARAYANAN) (V.DURGA RAO) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 27 TH FEBRUARY, 2013. H. COPY TO: ASSESSEE/AO/CIT(A)/CIT/D.R./GUARD FILE