Macro Marvel Projects Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2048/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4303 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 04-07-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASJ
• Assessee Lawyers: T BANUSEKARC A
• Keywords: Reopening of assessment; Gift; Principle of natural justice; Tangible material; Difference of opinion; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2048/MDS./2016 / ASSESSMENT YEAR : 2007-08 M/S.MACRO MARVEL PROJECTS LTD ., 813,GLENDEN PLACE, POONAMALEE HIGH ROAD, KILPAUK, CHENNAI 600 010. VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1), CHENNAI. PAN AACCM 8816 D ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.T.BANUSEKAR,C.A /RESPONDENT BY : MR.SHIVA SRINIVAS , JCIT,DR / DATE OF HEARING : 02 - 03 - 2017 / DATE OF PRONOUNCEMENT : 29 - 05 - 2017 , / O R D E R PER BENCH THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E SEPARATE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS)-8, ITA NO.2048/MDS./2016 :- 2 -: CHENNAI, DATED 31.03.2016 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS. 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW FACTS AND CIRCUMSTANCES OF THE CASE TO THE EXTENT PREJUDICIAL TO THE INTEREST OF THE APPELLANT AND AT ANY RATE IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUSTICE AND FA IR PLAY. 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE REASSESSMENT WAS BAD IN LAW. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT REOPENING WAS MADE BASED ON A MERE CHANGE OF OPINION. 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN STATING THAT THE APPELLANT IS NOT ELIGIBLE FOR THE DEDUCTIO N U/S. 801B(10). 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAS FULFILLED ALL TH E BASIC REQUISITE CONDITIONS U/S. 801B(10). 7. FOR THAT THE .APPELLANT IS A DEVELOPER ELIGIBLE TO CLAIM DEDUCTION U/S.801B(10) AND NOT A MERE CONTRACTOR. 8. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) HAVING ACCEPTED THAT THE APPELLANT HAS COMPLIED WITH ALL OTHER COND ITIONS EXCEPT FOR COMPLETION OF THE PROJECT WITHIN THE STIPULATED TIM E PERIOD, WHICH WAS DUE TO REASONS BEYOND THE CONTROL OF THE APPELLANT, OUGHT TO HAVE ALLOWED THE CLAIM OF DEDUCTION U/S.8OIB(10) 3. AS SEEN FROM THE ABOVE, THE FIRST GROUND IS WIT H REGARD TO REOPENING OF ASSESSMENT . 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE-COM PANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOP ING HOUSING PROJCT AND SATELLITE TOWNSHIPS AND FILED ITS RETUR N OF INCOME FOR ITA NO.2048/MDS./2016 :- 3 -: THE A.Y 2007-08 ON 31.10.2007 ADMITTING A LOSS OF ` 1,13,53,358/- . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 30.12.2009 DETERMINING NIL INCOME UNDER NORMAL PROVISIONS AND ` 1,17,0L,830/- U/S.1I5JB OF THE ACT. LATER THE ASSES SEE FILED A REVISED RETURN OF INCOME ON 31.03.2009 IN VIEW OF T HE FACT THAT: ITS PROJECT AT RVC PHASE 11 IN MANAPAKKAM HAD COME T O A HALT ON ACCOUNT OF THE GOVERNMENTS PROPOSAL TO ACQUIRE THE PROPERTY FOR AIRPORT EXPANSION, AND THEREFORE, TAKING A STAND TH AT THE INCOME ALREADY TAKEN INTO ACCOUNT ON THIS PROJECT WAS NO L ONGER ITS INCOME BUT A LIABILITY REPAYABLE TO PERSONS WHO HAD BOOKED PLOTS IN THE PROJECT. HOWEVER, THE ASSESSING OFFICER COMP LETED THE ASSESSMENT U/S. 143(3) OF THE ACT VIDE ORDER DATED 30.12.2009 ON THE BASIS OF THE ORIGINAL RETURN IGNORING THE REVIS ED RETURN FILED BY THE APPELLANT. IN COMPLETING THE ASSESSMENT, THE AS SESSING OFFICER DID NOT ACCEPT THE LOSS ADMITTED BY THE APP ELLANT COMPANY IN THE REVISED RETURN OF INCOME FOR THE REASON THAT THERE WAS NO DOCUMENTARY EVIDENCE TO SHOW THAT THE LAND WAS ACTU ALLY TAKEN OVER BY THE GOVERNMENT, AND THAT THERE WAS NO LOSS SUFFERED BY THE ASSESSEE COMPANY. THE ASSESSING OFFICER REOPENE D THE ASSESSMENT BY ISSUING NOTICE U/S. 148 ON 05.05.2011 AS HE WAS ITA NO.2048/MDS./2016 :- 4 -: OF THE OPINION THAT THE ASSESSEES CLAIM U/S. 80IB( 10) OF THE ACT, AND THEREFORE, INCOME OF THE ASSESSEE ESCAPED ASSE SSMENT. THE AO RECORDED THE REASONS FOR REOPENING THE ASSES SMENT AS FOLLOWS. THE ASSESSEE CLAIMED DEDUCTION U/S.801B(10) OF THE IT ACT. HOUSING SITE WAS CONVERTED INTO PLOTS AND SOLD TO T HE CUSTOMERS BY INDIVIDUAL SALE DEEDS. AS PER CONSTRUCTION AGREEMEN T BETWEEN THE ASSESSEE AND THE PURCHASERS CONSTRUCTION WORK WAS U NDERTAKEN BY THE ASSESSEE, CONSTRUCTION WORK DID NOT PROGRESS DU E TO ACQUISITION OF LAND PROPOSED BY THE GOVT. IN ONE OF THE PROJECT S. THE CONSTRUCTION IS NOT COMPLETED DUE TO ACQUISITION PR OCEEDINGS INITIATED BY GOVERNMENT. IT IS INFERRED THAT IT IS A WORK CONTRACT. UNDER THE ABOVE CIRCUMSTANCES THERE IS REASON TO BE LIEVE THAT DEDUCTION U/S.801B(10) HAS WRONGLY BEEN CLAIMED. TH US INCOME ESCAPED ASSESSMENT AS ENVISAGED U/S.147 OF THE IT ACT. ACCORDINGLY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) R. W. S 147 ON 29.12.2011 BY DETERMINING THE INCOME AT ` 1,46,43,771/- AFTER MAKING A DISALLOWANCE OF ` 2,59,97,129/- U/S 80-IB OF THE ACT. AGGRIEVED, THE ASSESSEE CARRIED THIS APPEAL TO THE LD.CIT(A). ON APPEAL, THE LD.CIT(A) ENDORSED T HE VIEW OF THE AO. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFOR E US. ITA NO.2048/MDS./2016 :- 5 -: 5. REGARDING REOPENING, THE LD.A.R SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 30.12.2009 AND THERE IS NO FRESH MATERIAL TO REOPEN THE ASSESSMENT AND THE AO CONSIDERED THE SAME MATERIAL S, WHICH WERE ALREADY ON RECORD TO REOPEN THE ASSESSMENT . AS SUCH, THE REOPENING OF ASSESSMENT IS BAD IN LAW. HE RELIED O N THE FOLLOWING CASE LAWS:- 1. IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. IN (2010)320 ITR 561(SC) 2. IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. IN (2002) 256 ITR 01(DEL)(FB) 3. IN THE CASE OF CIT V. ORIENT CRAFT LTD. IN (2 013) 354 ITR 5361(DEL) 4. IN THE CASE OF CIT V. AMITABH BACHCHAN. IN (20 12) 349 ITR 76(BOM) 6. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER O F LOWER AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING VARIOUS CASE LAW CITED BY THE PARTIES. THE MAIN CONTENTION OF LD.A.R IS THAT IN THIS CASE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. THE ASSESSEE HAS FURNISHED ALL DETAILS TO THE AO AT THE TIME OF FILING OF RETURN OF INCOME AND ACCORDING TO THE A.R, THERE WAS NO FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS ITA NO.2048/MDS./2016 :- 6 -: NECESSARY FOR THE PURPOSE OF ASSESSMENT. HE SUBMIT TED THAT THE REOPENING VIDE NOTICE U/S.148 OF THE ACT DATED 05.0 5.2011, IT IS ONLY A CHANGE OF OPINION. HE SUBMITTED THAT THE AO GOING THROUGH THE SAME DOCUMENTS, WHICH WERE ALREADY ON R ECORD, WANTED TO RE-OPEN THE ASSESSMENT, WHICH IS NOTHING BUT REVIEW OF THE EARLIER OPINION, WHICH IS NOT POSSIBLE U/S.147 OF THE ACT. IN THIS CASE, THE ASSESSMENT WAS REOPENED AFTER RECORDING T HE REASONS REPRODUCED IN PARA 4 OF THIS ORDER. 7.1 ADMITTEDLY IN THIS CASE, THERE WAS ORIGINAL A SSESSMENT U/S.143(3) OF THE ACT VIDE ORDER DATED 30.12.2009. IT IS A SETTLED LAW THAT ON THE BASIS OF MATERIAL, PRIMA FACIE, AVA ILABLE BEFORE THE ASSESSING OFFICER, OPINED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT CAN BE FORMED. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUST IFICATION. IN CASE THE ASSESSING OFFICER HAS A CAUSE OR JUSTIFICA TION TO KNOW OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT, ACTION U/S 148 CAN BE TAKEN. BUT OBVIOUSLY, THERE SHOULD BE RELEVA NT MATERIAL ON WHICH A REASONABLE MAN COULD HAVE FORMED A REQUISIT E BELIEF. WHETHER THIS MATERIAL(S) WOULD CONCLUSIVELY PROVE T HE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT THAT PAR TICULAR STAGE. SO WHAT IS REQUIRED IS THE SUBJECTIVE SATISFACTION OF THE ASSESSING ITA NO.2048/MDS./2016 :- 7 -: OFFICER BASED ON OBJECTIVE MATERIAL EVIDENCE. THE R EASON WAS RECORDED AS DISCUSSED ABOVE. THE ARGUMENT OF THE LD .AR IS THAT WHERE THERE WAS NO FRESH TANGIBLE MATERIAL TO REOPEN THE ASSESSMENT U/S 147, NO ACTION COULD BE TAKEN BY THE AO. 7.2 AS SEEN FROM THE ASSESSMENT ORDER, IT GIVES A CLEAR PICTURE THAT THE ASSESSING OFFICER HAS GOT MATERIAL EVIDENCE TO FORM HIS OPINION FOR TAKING RECOURSE TO SECTION 147 R.W.S 148 OF THE ACT. THERE CANNOT BE TWO OPINIONS. AT THE POINT OF TIME WHEN THE REASONS ARE RECORDED, FORMING OPINION OF ESCAPEMEN T OF INCOME IS ONLY RELEVANT. HENCE, THIS PLEA OF THE LD.AR IS NOT TENABLE IN THE EYES OF LAW. IT IS TRUE THAT U/S 147, THE ASSESSING OFFICER CAN EITHER ASSESS OR RE-ASSESS BUT FOR TAKING ACTION TH ERE UNDER, HE HAS TO RECORD REASONS THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT . IT IS ALSO MANDATED BY SECTION 148(2) TO RECORD REASONS IN WRITING. THE REASSESSMENT PROCEEDINGS U/ S 147 ARE FURTHER SUBJECT TO SECTIONS 148,149,150,151,152 AND 153. BUT IN THE PRESENT CASE, WE ARE REQUIRED TO DECIDE THE LIM ITED ISSUE REGARDING THE VALIDITY OF PROCEEDINGS UNDERTAKEN AF TER FOUR YEARS OF THE ASSESSMENT YEAR IN QUESTION. THE ASSESSING OFFICER IS REQUIRED TO SEE IF THE CONDITIONS LAID IN EXPLANATI ON 2(C) ARE ITA NO.2048/MDS./2016 :- 8 -: SATISFIED BECAUSE IN THIS CASE NO ASSESSMENT WAS CO MPLETED U/S 143(3) OF THE ACT. IN CASE, (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED; OR (II) SUCH INCOME HAS BEEN ASSESS ED AT TOO LOW RATE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJEC TIVE OF EXCESS RELIEF UNDER THIS ACT; OR (IV)EXCESSIVE LOSS OR DEP RECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED, THEN THE ASSESSING OFFICER WOULD HAVE VAL ID COGNIZANCE U/S 147 OF THE ACT. THE REASONS RECORDED BY THE ASSESSING OFFICER CLEARLY SPEAK FOR THE UNDER ASSES SMENT OF TAX HENCE, THE CONDITIONS LAID ABOVE STAND FULFILLED IN SO FAR AS RE- ASSESSMENT PROCEEDINGS ARE CONCERNED. IN SO FAR AS THE REASONS RECORDED, EXTRACTED IN THE EARLIER PORTION OF THIS ORDER, WE ARE SATISFIED THAT THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THIS FACT CONFERS JU RISDICTION ON HIM TO REOPEN THE ASSESSMENT. THE POWER TO RE-ASSES S POST 1ST APRIL, 1989 ARE MUCH WIDER THAN THESE USED TO BE BE FORE. BUT STILL THE SCHEMATIC INTERPRETATION OF THE WORDS REASON T O BELIEVE FAILING WHICH SECTION 147 WOULD GIVE ARBITRARILY POWERS TO THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT ON THE BASIS OF ME RE CHANGE OF OPINION, WHICH CANNOT BE, PER SE A REASON TO REOPE N THE CASE. THE ACT HAS NOT GIVEN POWER TO THE ASSESSING OFFICE R TO REVIEW ITA NO.2048/MDS./2016 :- 9 -: BUT HAS ONLY GIVEN POWER TO RE-ASSESS. THERE IS A C ONCEPTUAL DIFFERENCE BETWEEN THE TWO ASPECTS AS THE ASSESSING OFFICER HAS NO POWER AT ALL TO REVIEW THE ASSESSMENT. THE REASS ESSMENT, AS STATED ABOVE, HAS TO BE BASED ON FULFILLMENT OF CER TAIN PRE- CONDITIONS BUT THE CONCEPT CHANGE OF OPINION HAS TO BE TAKEN INTO CONSIDERATION OTHERWISE IT MAY GIVE UNBRIDLED POWER TO AN ASSESSING OFFICER TO REOPEN ANY AND EVERY ASSESSMEN T ORDER WHICH WOULD SIMPLY AMOUNT TO A REVIEW. THE CONCEPT CHANGE OF OPINION IS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER BY THE ASSESSING OFFICER. SO, NOW ONLY WHEN THE ASSESSING OFFICER HAS A TANGIBLE MATERIAL TO BASE HIS CONCLUSION THAT THERE IS AN ESCAPEMENT OF INCOME FROM ASSESSMENT AND THE REASON S RECORDED HAVE A LINK WITH THE FORMATION OF HIS BELI EF, HE HAS THE POWER U/S 147 OF THE ACT. 7.3 IN THE PRESENT CASE, THE ASSESSEE HAS NOT INF ORMED TO AO THAT CONSTRUCTION WORK DID NOT PROGRESS DUE TO A CQUISITION PROCEEDINGS INITIATED BY GOVERNMENT. AS PER EXPLAN ATION 2 OF SECTION147, IT IS VERY CLEAR THAT DUE TO NON-DISCLO SURE OF THIS BY THE ASSESSEE, THE INCOME CHARGEABLE TO TAX HAD ESCA PED ASSESSMENT. THE ASSESSEE HAS NOT PRODUCED ANYTHING BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) TO SHOW AS TO HOW THE ITA NO.2048/MDS./2016 :- 10 - : ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80-IB(10) OF THE ACT. HENCE, THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) AND THAT OF ASSESSING OFFICER IS FULLY COVERED BY THE PROVISIO NS OF EXPLANATION 1 TO SECTION 147 OF THE ACT IS NOT CORR ECT. THE SAID PROVISION READS AS UNDER: PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUN TS BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY TH E ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. IT IS POSSIBLE THAT WITH DUE DILIGENCE OF THE ASSES SING OFFICER WOULD HAVE ASCERTAINED THIS FACT AT THE TIME OF ASS ESSMENT, IF ANY ALSO, BUT IN VIEW OF THE EXPLANATION (1) IT DOES NO T MEAN THAT THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE. HENCE, REOPENING U/S.147 IS HELD TO BE VALID. THE ASSESSEE HAS TRIE D TO TAKE SHELTER UNDER THE EXCEPTION PROVIDED IN THAT SECTION. BUT AS STATED ABOVE, WHEN THE ASSESSEE HAS NOT DISCLOSED FULLY AN D TRULY THE FACTS NECESSARY FOR THE ASSESSMENT AND THERE IS NO ASSESSMENT U/S.143(3) OF THE ACT, THIS PROVISO WILL NOT COME T O ITS RESCUE. CONSEQUENTLY, WE HOLD THAT THE ENTIRE REASSESSMENT PROCEEDING IN THIS CASE IS VALID AND THEREFORE, THE ACTION OF THE ASSESSING OFFICER IS UPHELD. ITA NO.2048/MDS./2016 :- 11 - : 9. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE U/S.80- IB(10) OF THE ACT. 10. THE FACTS OF THE CASE ARE THAT THE ASSESSEE CL AIMED DEDUCTION U/S.801B(10) OF THE IT ACT. HOUSING SITE WAS CONVERTED INTO PLOTS AND SOLD TO THE CUSTOMERS BY INDIVIDUAL SALE DEEDS. AS PER CONSTRUCTION AGREEMENT BETWEEN THE ASSESSEE AND THE PURCHASERS CONSTRUCTION WORK WAS UNDERTAKEN BY THE ASSESSEE, CONSTRUCTION WORK DID NOT PROGRESS DUE TO ACQUISITI ON OF LAND PROPOSED BY THE GOVT. IN ONE OF THE PROJECTS. THE C ONSTRUCTION IS NOT COMPLETED DUE TO ACQUISITION PROCEEDINGS INITIA TED BY GOVERNMENT. IT IS INFERRED THAT IT IS A WORK CONTRA CT. UNDER THE ABOVE CIRCUMSTANCES, THE DEDUCTION U/S.801B(10) HAS WRONGLY BEEN CLAIMED. 10.1 ACCORDING TO ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION U/S. 801B ONLY IF T HE PROJECT IS UNDERTAKEN AS A DEVELOPER AND THE INVESTMENT RISK I S BORNE BY THE ASSESSEE. SECONDLY, THE WORK ON THE PROJECT ITS ELF, NAMELY, HOUSING PROJECT AT RIVER VIEW PHASE-IL, MANAPAKKANI , CHENNAI, WAS ADMITTEDLY WITHDRAWN BY THE ASSESSEE IN VIEW O F THE NOTIFICATION FOR ACQUISITION OF THE LAND BY THE GOV ERNMENT. SINCE THE PROJECT WAS NOT COMPLETED WITHIN THE STIPULATED TIME, WHICH IS ITA NO.2048/MDS./2016 :- 12 - : A PREREQUISITE FOR CLAIMING U/S. 801B (10), AND SIN CE THE APPELLANT WAS CONSIDERED AS A WORKS CONTRACTOR THE ASSESSING OFFICER DISALLOWED THE DEDUCTION OF RS.2,59,97,129/- CLAIME D BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE CARRIED THE APPE AL BEFORE THE LD.CIT(A). 10.2 ON APPEAL, LD.CIT(A) OBSERVED THAT IT IS AN ADMITTED FACT THAT DEDUCTION U/S. 801B WAS ALLOWED TO THE ASSESSE E IN THE PRECEDING YEARS CONSEQUENT TO THE ORDERS OF TRIBUNA L. AFTER CONSIDERING THE INTRODUCTION OF EXPLANATION W.R.E.F . FROM 01.04.2001 U/S. 801B(10), INSERTED BY THE FINANCE ( NO.2) ACT, 2009, THE ASSESSING OFFICER REOPENED THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD.CIT(A) OBSERVED THAT CONSIDERING THE EXPLANATION TO U/S.80-IB(10) OF THE ACT, THE ASSESSRNG OFFICER CONCLUDED THAT THE APPELLANT IS N OT AN ACTUAL DEVELOPER AID THAT ITS RISK RELATED TO THE PROJECT IS RESTRICTED TO CONTRACT RISK AND DOES NOT EXTEND TO INVESTMENT RIS K. THE LD.CIT(A) PLACED RELIANCE IN THE DECISION OF RADHE DEVELOPERS (341 ITR 403)(GUJ.). IN THE CASE OF RADHE DEVELOPER S THE ASSESSEE WAS ENGAGED IN BUSINESS OF DEVELOPING HOUS ING PROJECTS APPROVED BY THE LOCAL AUTHORITY. IT ENTERE D INTO A DEVELOPMENT AGREEMENT IN TERMS OF WHICH ASSESSEE HA D TO BUY ITA NO.2048/MDS./2016 :- 13 - : LAND FROM LAND OWNERS FOR DEVELOPMENT PURPOSE. AFTE R DEVELOPING THE LAND, THE ASSESSEE WAS TO SELL THAT PROPERTY AG AIN TO THE LAND OWNER AT A PREDETERMINED PRICE. THEREUPON, THE LAND OWNER AGREED TO SELL SAID DEVELOPED PROPERTY TO A THIRD P ARTY. THE ASSESSEE CLAIM FOR DEDUCTION UNDER SECTION 80-LB IN RESPECT OF AFORESAID PROJECT WAS REJECTED BY ASSESSING OFFICER HOLDING THAT THE ASSESSEE WAS NOT THE OWNER OF THE LAND. THE ASS ESSING OFFICER WAS ALSO OF THE OPINION THAT THE ASSESSEE H AD MERELY ACTED AS AN AGENT OR A CONTRACTOR FOR CONSTRUCTION OF RESIDENTIAL HOUSES. THE COMMISSIONER (APPEALS) UPHELD THE ORDE R OF THE ASSESSING OFFICER. ON SECOND APPEAL, THE TRIBUNAL W AS OF THE OPINION THAT FR DEDUCTION UNDER SECTION 8O-IB(10) I T IS NOT NECESSARY THAT THE ASSESSEE MUST BE THE OWNER OF TH E LAND. SECOND ASPECT OF THE TRIBUNALS JUDGMENT WAS THAT E VEN OTHERWISE LOOKING TO THE PROVISIONS CONTAINED IN SE CTION 2(47), READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY A CT, BY VIRTUE OF THE DEVELOPMENT AGREEMENT AND THE AGREEMENT TO SELL , THE ASSESSEE HAD, FOR THE PURPOSE OF INCOME-TAX, BECAME THE OWNER OF THE LAND. THE TRIBUNAL, ACCORDINGLY, ALLOWED THE ASSESSEES APPEAL DIRECTING THE ASSESSING OFFICER TO GRANT DED UCTION UNDER SECTION 80-IB(10). ITA NO.2048/MDS./2016 :- 14 - : 10.3 THE CONTROVERSY RELATED TO THE HOUSING PROJEC T OF THE APPELLANT, NAMELY, RIVER VIEW PHASE-LI, MANAPAKKAM, CHENNAI. THE APPELLANT ENTERED INTO AN AGREEMENT FOR SALE OF LAND IN THE YEAR 2004-05 FOR 8.21 ACRES OF LAND FROM THREE VEND ORS NAMELY SRI. J. VENKATESH, SM. A.R. GOMATHI AND SMT. V. ANN ALAKSHMI, REPRESENTED BY THE POWER OF ATTORNEY HOLDER, SRI. M . ARUMUGAIN. THE VENDORS POWER AGENT MR. M. ARUMUGAM SUBMITTED A PLAN FOR APPROVAL AND IN TERMS OF GRANTING OF APPROVAL CERTA IN PORTION OF THE PROPERTY GIFTED FOR ROADS AND PARKS TO COMMISSIONER , KUNDRATHUR PANCHAYAT UNION WHICH HAD BEEN GIFTED VIDE GIFT DEE D DATED 12.04.2006 REGISTERED AS DOCUMENT NO. 717 OF 2006 BEFORE SUB REGISTRAR OFFICES SAIDAPET, AND THE REMAINING PROPE RTY WAS MADE INTO PLOTS OF VARIOUS SIZES AND THE SAME WERE AVAI LABLE FOR DEVEPN Y THE APPELLANT. THE APPELLANT HAD RIGHTS TO DEVELOP THE PROPERTY AND CONSTRUCT HOUSING, INDEPENDENT HOUSES IN VIEW OF THE AGREEMENT FOR SALE WITH THE ORIGINAL VENDORS OF THE PROPERTY. LATER, THE ASSESSEE ENTERED INTO SEPARATE AGREEMEN TS WITH PURCHASERS OF THE PLOTS OF LAND FOR CONSTRUCTING IN DEPENDENT HOUSES, THE SAID PURCHASES WERE PROCESSED AND EFFEC TED BY THE APPELLANT IN CONSIDERATION OF THE PURCHASERS PAYING THE COST OF ITA NO.2048/MDS./2016 :- 15 - : SITE AND ALSO AGREEING TO HAVE INDEPENDENT HOUSES C ONSTRUCTED BY THE ASSESSEE . 10.4 IN THIS BACKGROUND, THE INITIAL RETURN OF I NCOME WAS FILED BY THE APPELLANT AFTER CONSIDERING THE INCOME FROM RIV ER VIEW PHASE-IL, MANAPAKKAM, CHENNAI. LATER THE ASSESSEE F ILED A REVISED RETURN OF INCOME ON 31.03.2009 SINCE ITS PR OJECT AT RVC PHASE II IN MANAPAKKARN HAD TO BE WITHDRAWN ON ACC OUNT OF THE GOVERNMENTS PROPOSAL TO ACQUIRE THE PROPERTY FOR A IRPORT EXPANSION. IN THE REVISED RETURN OF INCOME THE INCO ME ALREADY TAKEN INTO ACCOUNT BY THE APPELLANT ON THIS PROJECT WAS NOT ONLY WITHDRAWN BUT IN FACT A LIABILITY REPAYABLE TO PERS ONS WHO HAD BOOKED FLATS IN THE PROJECT WAS RECOGNISED. HOWEVER , THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143 (3) ON THE BASIS OF THE ORIGINAL RETURN IGNORING THE REVISED R ETURN FILED BY THE ASSESSEE. IN COMPLETING THE ASSESSMENT, THE ASSESS ING OFFICER DID NOT ACCEPT THE LOSS ADMITTED BY THE APPELLANT-C OMPANY IN THE REVISED RETURN OF INCOME FOR THE REASON THAT THERE WAS NO DOCUMENTARY EVIDENCE TO SHOW THAT THE LAND WAS ACTU ALLY TAKEN OVER BY THE GOVERNMENT, THAT APPELLANT HAD SOLD MOS T OF THE PROJECT, AND THAT THERE WAS NO LOSS SUFFER BY THE A PPELLANT COMPANY. THE APPELLANT FILED AN APPEAR IN MADRAS HI GH COURT ITA NO.2048/MDS./2016 :- 16 - : AGAINST THE NOTIFICATION ISSUED BY THE GOVERNMENT, BUT THE HONBLE HIGH COURT OF MADRAS UPHELD THE NOTIFICATION OF THE GOVERNMENT. HOWEVER, THE GOVERNMENT RESTORED BACK THE LAND TO T HE APPELLANT BY DE-NOTIFYING THE SAME IN EARLY 2014 SINCE IT WAS FOUND THAT THE LAND WAS NO LONGER REQUIRED FOR DEVELOPMENTAL PURPO SES. IN THE COURSE OF THE APPELLATE PROCEEDINGS THE PRESENT STA TUS OF THE PROJECT WAS FURNISHED BY THE ASSESSEE STATING THAT AS PER THE LIST FURNISHED BY THE ASSESSEE TWO-THIRDS OF THE CUSTOME RS I.E. 66 OF THE 88 CUSTOMERS, HAVE CHOSEN TO TAKE OVER THE PROP ERTY ON THEIR OWN. THE BALANCE 25% HAS NOT YET OPTED TO TAKE OV ER THE PROPERTY FROM THE ASSESSEE. ON APPEAL, LD.CIT(A) C ONFIRMED THE ACTION OF LD. ASSESSING OFFICER IN DENYING THE DEDU CTION U/S.80- IB(10) OF THE ACT. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. IN THIS CASE, ADMITTEDLY, THE PROJECT WA S NOT COMPLETED AND IT BROUGHT ON RECORD BY THE LOWER AUTHORITIES T HAT 66 CUSTOMERS OUT OF 88 CUSTOMERS HAVE CHOSEN TO TAKE O VER THE PROPERTY ON THEIR OWN FROM THE ASSESSEE. THE PROJE CT OF ASSESSEE NOT AT ALL COMPLETED WHEN THE PROJECT WAS NOT COMPLETED IT IS APPROPRIATE TO WITHDRAW THE DEDUCT ION ALREADY ITA NO.2048/MDS./2016 :- 17 - : GIVEN TO THE ASSESSEE U/S.80-IB(10) OF THE ACT. ON THIS ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CI T(A) AND THE SME IS CONFIRMED. HENCE, THIS GROUND OF ASSESSEES APP EAL IS REJECTED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 29 TH MAY, 2017, AT CHENNAI . SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 29 TH MAY, 2017. K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF