M/s Raghava Estates Ltd., Vijayawada V. The DCIT, Circle-2(1), Vijayawada

ITA 248/VIZ/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56770 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Assessee Lawyers: C SUBRAMANYAM
• Keywords: Business income; Competent authority
• Section: 133A; 263

Judgement Text

ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 1 OF 13 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NOS.248 & 249/VIZAG/2009 ASSESSMENT YEARS:2004-05 & 2005-06 RAGHAVA ESTATES LIMITED, VIJAYAWADA VS. DY.COMMISSIONER OF INCOME TAX, CIRCLE-2(1) VIJAYAWADA (APPELLANT) PAN NO: AABCR 0476 M (RESPONDENT) ITA NO.887/HYD/2009 ASSESSMENT YEAR:2006-07 DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-7 HYDERABAD VS. RAGHAVA ESTATES LTD., VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO: AABCR 0476 M ASSESSEE BY: SHRI C. SUBRAMANYAM, CA DEPARTMENT BY: SHRI TH. LUCAS PETER, CIT (DR) ORDER PER BENCH: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 15.5.2009 PASSED BY LEARNED CIT(A), VIJAYAWADA AND IT RELATES TO THE ASSESSMENT YEAR 2006 -07. THE OTHER TWO APPEALS OF THE ASSESSEE ARE AGAINST THE REVISION ORDER PASSED BY LEARNED CIT, V IJAYAWADA UNDER SECTION 263 OF THE ACT FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. SINCE THE ISSUES URGED IN ALL THESE APPEALS ARE BASED ON COMM ON SET OF FACTS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER. 2. WE SHALL FIRST TAKE UP THE APPEAL OF THE REVENUE . IN THIS APPEAL, THE REVENUE IS CHALLENGING THE DECISION OF LEARNED CIT( A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB(10) OF THE ACT TO THE ASSESSEE IN RESPECT OF THE HOUSING PROJECT DEVE LOPED BY IT. ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 2 OF 13 3. THE FACTS RELATING TO THE SAID ISSUE ARE SET OUT IN BRIEF. THE ASSESSEE COMPANY IS IN THE REAL ESTATE BUSINESS. IT DEVELOP ED A HOUSING PROJECT BY NAME NARAYANAPURAM HOUSING COLONY ON A LAND HAVIN G AN EXTENT OF ACRES 19.12. THE LAY OUT WAS APPROVED BY COMPETENT AUTHORITY IN TWO PHASES ON 14.10.2002 AND 22.8.2003. THE ASSESSEE CO NSTRUCTED 256 HOUSES ON THE ABOVE SAID AREA DURING THE YEARS RELEVANT TO THE ASSESSMENT YEARS 2003-04 TO 2007-08 AND CLAIMED DEDUCTION UNDER SECT ION 80IB(10) ON THE PROFITS EARNED ON THE SAID PROJECT. FOR THE YEAR U NDER CONSIDERATION, THE ASSESSEE CLAIMED A DEDUCTION OF RS.75,92,639/- UNDE R SECTION 80IB(10) OF THE ACT. THE ASSESSING OFFICER CONDUCTED A SURVEY OPERATION UNDER SECTION 133A OF THE ACT ON 23/10/2008 IN ORDER TO VERIFY TH E COMPLIANCE OF CONDITIONS PRESCRIBED UNDER SECTION 80IB(10) OF THE ACT. AFTER SEEKING EXPLANATIONS FROM THE ASSESSEE, THE ASSESSING OFFIC ER FINALLY CONCLUDED THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SE CTION 80IB(10) OF THE ACT, SINCE THE ASSESSING OFFICER FELT THAT THE ASSESSEE DID NOT DERIVE PROFIT FROM DEVELOPMENT AND CONSTRUCTION OF APPROVED HOUSING P ROJECT. THE REASONS CITED BY THE ASSESSING OFFICER IN THIS REGARD HAVE BEEN NARRATED BY LEARNED CIT(A) IN PARA 3.4 OF HIS ORDER AS UNDER: 3.4 THE ASSESSING OFFICER HAS FINALLY HELD ON THE BASIS OF FOLLOWING OBSERVATIONS THAT THE PROFIT DERIVED FROM NARAYANAPURAM COLONY PROJECT CANNOT BE CONSIDERED T O HAVE BEEN DERIVED FROM DEVELOPMENT AND CONSTRUCTION OF APPROVED HOUSING PROJECT WITHIN THE MEANING OF SE C.80IB (10): A) THE NARAYANAPURAM COLONY PROJECT DOES NOT HAVE THE CHARACTERISTICS OF A HOUSING PROJECT FOR THE FOLLOWING REASONS: (I) THE PROJECT DID NOT INVOLVE CONSTRUCTION AND SALE OF A GROUP OF HOUSES. (II) THE PROJECT INVOLVED SALE OF PLOTS OF LAND ONLY AND SUBSEQUENT CONSTRUCTION OF THE HOUSES ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 3 OF 13 THEREON AS PER CONSTRUCTION CONTRACTS AWARDED BY THE BUYERS OF THE PLOTS. (III) THERE WAS REGISTRATION OF SALE OF PLOTS OF LAND ONLY. THERE WAS NO REGISTRATION OF SALE OF HOUSE IN FAVOUR OF THE BUYERS. THE HOUSES WERE CONSTRUCTED AS PER THE CONTRACTS AWARDED BY THE BUYERS OF THE PLOTS AND WERE MERELY HANDED OVER TO THEM ON COMPLETION OF CONSTRUCTION. (IV) THE BUSINESS RECEIPTS OF THE ASSESSEE FROM THIS PROJECT DID NOT INCLUDE ANY RECEIPTS FROM SALE OF CONSTRUCTED HOUSES. THE RECEIPTS OF THE ASSESSEE COMPRISED RECEIPTS FROM SALE OF PLOTS AND CONTRACT WORK RECEIPTS FROM THE BUYERS OF THE PLOTS TOWARDS CONSTRUCTION. (V) THE HOUSES CONSTRUCTED IN THE PROJECT DID NOT CONFORM TO ONE OR MORE STANDARDIZED BUILDING PLANS AND USE OF STANDARDIZED BUILDING MATERIALS. THE HOUSES WERE CONSTRUCTED AS PER THE SEPARATE BUILDING PLANS FINALIZED BY EACH BUYER HAVING DIFFERENT DESIGN AS WELL AS EXTENT OF BUILT-UP AREA. THE BUILDING MATERIALS USED FOR CONSTRUCTION VARIED AS PER THE PREFERENCES AND CHOICE OF THE BUYERS. (VI) THERE WAS NO UNIFIED AND INTEGRATED ACTIVITY OF CONSTRUCTION AND SALE OF HOUSES . THE CONSTRUCTION OF HOUSES WAS NOT TAKEN UP SIMULTANEOUSLY OR IN PRE-DETERMINED PHASES. THE CONSTRUCTION OF HOUSES WAS TAKEN UP AT DIFFERENT POINTS OF TIME DEPENDING ON THE SALE OF THE PLOT AND AS PER THE CONSTRUCTION CONTRACT (WORK ORDER) AWARDED BY THE BUYER. (VII) EVEN IF THE FORM OF THE TRANSACTIONS INVOLVED IN THE PROJECT IS IGNORED, THE NARAYANAPURAM COLONY PROJECT CANNOT BE TREATED AS A HOUSING PROJECT GOING BY THE SUBSTANCE ALSO. AT THE TIME OF BOOKING THE UNIT IN THE COLONY ITSELF, IT WAS INTIMATED TO THE BUYER VERY CLEARLY IN THE ALLOTMENT LETTER THAT THE PLOT WILL BE REGISTERED IN HIS NAME AND CONSTRUCTION WILL BE TAKEN UP AS PER THE ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 4 OF 13 CONSTRUCTION AGREEMENT TO BE ENTERED INTO. FURTHER, FULL FREEDOM WAS ALLOWED TO THE BUYERS TO FINALIZE THE BUILDING PLANS, THE EXTENT OF BUILT-UP AREA AND THE TYPE OF BUILDING MATERIAL TO BE USED IN CONSTRUCTION. THE BUYERS WERE ALSO GIVEN THE FREEDOM TO PROVIDE THEIR OWN BUILDING MATERIAL AND THE COST OF CONSTRUCTION TO BE PAID TO THE ASSESSEE WAS ACCORDINGLY MODIFIED. THUS, IT IS SEEN THAT IN SUBSTANCE ALSO, THE ASSESSEE HAD ONLY CARRIED OUT CONTRACT FOR CONSTRUCTION OF THE HOUSES AS PER THE REQUIREMENTS OF THE BUYERS. B) THE NARAYANAPURAM COLONY PROJECT CANNOT BE CONSIDERED AS AN APPROVED HOUSING PROJECT FOR THE FOLLOWING REASONS: I) THERE WAS NO APPROVAL FROM A LOCAL AUTHORITY FOR THE PROJECT AS A WHOLE I.E. FOR DEVELOPMENT OF RESIDENTIAL PLOTS AND CONSTRUCTION OF HOUSES THEREON. II) THE APPROVAL OBTAINED BY THE ASSESSEE COMPANY FROM THE LOCAL AUTHORITY (VGTM-UDA) PERTAINS ONLY TO DEVELOPMENT OF THE LAND INTO RESIDENTIAL PLOTS. NO APPROVAL HAS BEEN OBTAINED BY THE ASSESSEE FOR THE BUILDING PLANS OF THE HOUSES TO BE CONSTRUCTED ON THE SAID RESIDENTIAL PLOTS FROM THE PORANKI GRAM PANCHAYAT, WHICH WAS THE APPROPRIATE LOCAL AUTHORITY FOR APPROVING THE BUILDING PLANS FOR BUILDINGS NOT HAVING MORE THAN GROUND PLUS 2 UPPER FLOORS. III) THE BUILDING PLAN APPROVALS WERE OBTAINED FROM THE LOCAL AUTHORITY BY THE BUYERS OF THE PLOTS IN THEIR NAMES. C) THE PROJECT CANNOT BE CONSIDERED TO HAVE BEEN COMPLETED BY THE SPECIFIED DATE OF 31-03-2008 FOR BEING ELIGIBLE TO CLAIM THE DEDUCTION UNDER SECTION 80IB(10) FOR THE FOLLOWING REASONS: 1) AS PER THE EXPLANATION TO SECTION 80- IB(10)(A), THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 5 OF 13 SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. IN THIS CASE, THE BUILDING PLAN APPROVALS WERE GIVEN BY THE PORANKI GRAM PANCHAYAT AND NO COMPLETION CERTIFICATE FROM THE SAID PANCHAYAT HAS BEEN OBTAINED EITHER BY THE ASSESSEE OR BY THE INDIVIDUAL PLOT OWNERS. IN ABSENCE OF SUCH COMPLETION CERTIFICATES, IT HAS TO BE CONSIDERED THAT THE PROJECT WAS NOT COMPLETED BY 31-03-2008 SINCE IT IS DEEMED THAT THE DATE OF ISSUE OF COMPLETION CERTIFICATE IS THE DATE OF COMPLETION OF THE PROJECT. 2) THE CERTIFICATE DATED 09-08-2008 FROM THE VGTM-UDA FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS CANNOT BE CONSTRUED AS A COMPLETION CERTIFICATE. THE SAID CERTIFICATE HAS CERTIFIED THE COMPLETION OF THE INFRASTRUCTURE DEVELOPMENT WORK IN THE APPROVED LAY OUT AND NOT THE COMPLETION OF THE CONSTRUCTION OF THE HOUSES IN THE LAYOUT. HOWEVER, THE LEARNED CIT(A) WAS CONVINCED WITH THE CLAIM OF THE ASSESSEE AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO A LLOW THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. AGGRIEVED BY HIS ORDE R, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBM ITTED THAT THE ASSESSEE HAS INITIALLY SOLD THE PLOTS AND THERE AFT ER UNDERTAKEN CONSTRUCTION OF THE HOUSES IN THOSE PLOTS AFTER OBTAINING BUILDI NG PLAN APPROVAL IN THE NAME OF INDIVIDUAL PLOT OWNERS. THUS, THE ASSESSEE HAS SOLD THE PLOTS SEPARATELY AND CONSTRUCTED HOUSES ALSO SEPARATELY, IN WHICH CASE THE ASSESSEE HAS ACTED ONLY AS A CONTRACTOR. THE LEARNE D D.R ACCORDINGLY SUBMITTED THAT THE ABOVE SAID ACTIVITIES CLEARLY SH OW THAT THE ASSESSEE DID ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 6 OF 13 NOT CARRY OUT INTEGRATED HOUSING SCHEME AS INTENDED IN SEC. 80IB(10) OF THE ACT. ACCORDINGLY HE SUBMITTED THAT THE ACTIVITY CA RRIED ON BY THE ASSESSEE CANNOT BE TERMED AS DEVELOPING AND BUILDING OF HO USING PROJECTS AS MENTIONED UNDER SECTION 80IB(10) OF THE ACT. 5. ON THE OTHER HAND, THE LEARNED A.R SUBMITTED THAT THE ASSESSEE HAS FULLY COMPLIED WITH THE VARIOUS CONDITIONS PRESCRIB ED UNDER SECTION 80IB(10) OF THE ACT. THE ASSESSEE OBTAINED APPROVAL OF THE P ROJECT FROM THE VGTM- UDA, I.E. FROM THE COMPETENT AUTHORITY IN 2 PHASES, VIDES APPROVALS DATED 14-10-2004 AND 22-8-2003. THE PROJECT WAS NAMED AS NARAYANAPURAM COLONY. THE ASSESSEE PUBLISHED ADVERTISEMENT CALL ING FOR APPLICATIONS FROM THE PROSPECTIVE BUYERS ONLY FOR PURCHASE OF HO USES AND NOT PLOTS AS ASSUMED BY THE ASSESSING OFFICER. THE TOTAL CONSID ERATION QUOTED BY THE ASSESSEE CONSISTED OF BOTH COST OF LAND AND THE COS T OF BUILDING. THE PROSPECTIVE BUYERS WERE ALLOWED TO PAY THE TOTAL CO NSIDERATION IN INSTALMENTS. ON PAYMENT OF SPECIFIED PERCENTAGE OF THE TOTAL CONSIDERATION, THE ASSESSEE REGISTERED THE PLOT IN THE NAME OF THE BUYER. ON PAYMENT OF SUBSEQUENT INSTALMENTS, THE ASSESSEE COMPLETED CONS TRUCTIONS ACCORDING TO THE BUILDING PLAN OBTAINED IN THE NAME OF THE PLOT OWNER. THE ABOVE SAID METHODOLOGY FOLLOWED BY THE ASSESSEE IS ONLY TO ENS URE RELIABILITY UPON THE EXECUTION OF PROJECT AND FURTHER TO MAKE SAVINGS IN THE STAMP DUTY FOR THE BENEFIT OF THE CUSTOMERS. ACCORDINGLY THE LEARNED A UTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS UNDERTAKEN THE IMPU GNED HOUSING PROJECT BOTH AS DEVELOPER AND BUILDER. THE LEARNED AUTHORIS ED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE PREFERRED TO OB TAIN THE BUILDING PLAN IN THE NAME OF INDIVIDUAL PLOT OWNERS SINCE IT HAS SOL D INDIVIDUAL HOUSES TO THEM. THE SAID ACTION OF THE ASSESSEE WOULD NOT DEP RIVE IT FROM AVAILING DEDUCTION UNDER SECTION 80-IB(10) AS HELD BY HON'BLE ITAT AHMEDABAD IN THE CASE OF RADHE DEVELOPERS PRIVATE LTD., VS. ITO (23 SOT 420). ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 7 OF 13 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. THE ISSUE BEFORE US IS WHETHER OR NOT THE A SSESSEE HAS UNDERTAKEN DEVELOPING AND BUILDING OF HOUSING PROJECTS AS AN I NTEGRATED ACTIVITY. ACCORDING TO THE DEPARTMENT, THE ASSESSEE HAS SOLD THE PLOTS SEPARATELY AND THEREAFTER CONSTRUCTED THE HOUSES AND HENCE THE ASSESSEE SHOULD BE TERMED AS MERE CONTRACTOR NOT ELIGIBLE FOR DEDUCTIO N UNDER SECTION 80- IB(10) OF THE ACT. HOWEVER, ACCORDING TO THE ASSESSE E IT HAS CARRIED OUT THE IMPUGNED HOUSING PROJECT BOTH AS DEVELOPER AND BUIL DER, I.E. AS AN INTEGRATED ACTIVITY. 7. DURING THE COURSE OF HEARING, THE ASSESSEE SUBMI TTED A COPY OF NARAYANAPURAM HOUSE APPLICATION FORM SUPPLIED BY THE ASSESSEE TO THE PROSPECTIVE BUYERS. THE CLAUSE 5 OF TERMS AND CONDI TIONS IS PERTINENT IN THE CONTEXT AND WE EXTRACT THE SAME BELOW: 5. HOUSE COST INCLUDING SITE IS RS.6,77,000/-. A) THERE IS EXTRA AMOUNT IF IT IS EAST FACING OR C ORNER PLOT. B) PAY RS.75,000/- AT THE TIME OF PLOT BOOKING. C) WITHIN ONE MONTH OF PLOT BOOKING TO PAY RS.1,50 ,000/- D) WITHIN TWO MONTHS OF PLOT BOOKING TO PAY RS.1,50,000/- E) PLOT SHALL BE REGISTERED IF RS.3,75,000/- IS PAI D AND AFTER ENTERING INTO CONSTRUCTION AGREEMENT. F) MEMBERS HAVE TO BEAR THE AMOUNT OF REGISTRATION CHARGES G) REMAINING AMOUNT OF RS.3,02,000/- SHALL HAVE TO BE PAID IN FIVE INSTALMENTS GIVEN BELOW: 1) BEFORE STARTING CONSTRUCTION WORK FOR RS.75,000/- 2) CONSTRUCTION UP TO PLINTH RS.75,000/- 3) WHEN SLAB WORK GOING ON RS.75,000/- 4) FIXING WINDOWS, DOORS AND CONSTRUCTION OF PARTITION WALLS FOR RS.70,000/- 5) WHEN HOUSE IS HANDED OVER RS.7,000/- ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 8 OF 13 ANOTHER BROCHURE ISSUED BY THE ASSESSEE IN RESPECT OF THE IMPUGNED HOUSING PROJECT GIVES THE DETAILS OF THE HOUSING PR OJECT AND ALSO THE TERMS OF PAYMENT. FOR THE SAKE OF CONVENIENCE, WE EXTRACT THE SAME BELOW: NARAYANAPURAM COLONY, PORANKI 1) THIS COLONY IS SITUATED 3 KMS FROM BANDAR ROAD A ND 1 KM FROM ELURU ROAD IN PORANKI GRAMA PANCHAYAT. 8 KMS FROM BENJI CIRCLE AND 10 KMS FROM RAILWAY STATION. 2) THIS LAYOUT WAY APPROVED BY VGTM VUDA. 3) THERE IS CITY BUS FACILITY 4) COLONY IS VERY NEARER TO EDUCATION & MEDICAL FA CILITIES 5) COLONY AREA IS 15 ACRES 6) TOTAL PLOTS NUMBERING TO 200 7) INDEPENDENT HOUSE: PLOT AREA 160 SQ. YARDS BUILDING PLINTH AREA 575 SQ. FEET 8) GROUP HOUSING: BUILDING PLINTH AREA 600 SQ. F EET. OTHER FACILITIES A) TEMPLE B) TANKER FOR WATER SUPPLY C) OMNI BUS FACILITY PROVIDED BY RAGHAVA ESTATES. D) B.T. ROAD E) THERE IS ALARM FOR EACH INDIVIDUAL HOUSE AND COMPOUND WALL AROUND COLONY. F) COVERED DRAINAGE G) FULL DEVELOPED PARK H) TREES BESIDES ROAD I) SHOPPING COMPLEX J) FREE CLUB MEMBERSHIP FOR INDORE BADMINTON, TABLE TENNIS, RESTAURANT LIBRARY AND JIM ETC. PAYMENT CONDITIONS INDEPENDENT HOUSE(RS.) GROUP HOUSING (RS.) AT THE TIME OF PLOT BOOKING 75,000 50,000 WITHIN ONE MONTH OF PLOT BOOKING 1,50,000 1,00,000 WITHIN TWO MONTHS OF PLOT BOOKING 1,50,000 1,00,000 PAYMENT AT THE TIME OF BEGINNING OF HOUSE CONSTRUCTION 75,000 55,000 PAYMENT WHEN CONSTRUCTION IS UP TO PLINTH 75,000 55,000 PAYMENT AFTER SLAB CONCRETE 75,000 55,000 PAYMENT AFTER CONSTRUCTING OF PARTITION WALLS 70,000 55,000 ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 9 OF 13 PAYMENT AT THE TIME OF HANDING OVER THE HOUSE 7,000 5,000 TOTAL 6,77,000 4,75,000 1) PLEASE VISIT TO OUR OFFICE IF ANY OTHER INFORMAT ION AND FOR PERSONAL DISCUSSIONS. SUNDAY ALSO IS WORKING DA Y. 2) THERE IS A TRANSPORT FACILITY FOR VISITING FROM OFFICE TO COLONY. 3) THERE IS A CREDIT FACILITY FOR QUALIFIED MEMBER S. 8. A CLOSE SCRUTINY OF BOTH THE APPLICATION FOR M AND THE BROCHURE CITED ABOVE WOULD SHOW THAT THE ASSESSEE HEREIN HAS LAUNC HED THE IMPUGNED NARAYANAPURAM HOUSING COLONY PROJECT AS AN INTEGR ATED HOUSING PROJECT ONLY. THE TOTAL CONSIDERATION QUOTED BY THE ASSES SEE CONSISTED OF BOTH THE COST OF PLOT AND COST OF BUILDING. AS STATED BY TH E LEARNED A.R, THE ASSESSEE HAS CHOSEN TO REGISTER THE PLOT IN THE NAM E OF THE BUYER ON PAYMENT OF SPECIFIED AMOUNT IN ORDER TO ACHIEVE COS T SAVING AND TO ENSURE RELIABILITY. THERE AFTER THE ASSESSEE HAS PROCEEDE D TO CONSTRUCT THE HOUSE AS PER THE BUILDING PLAN OBTAINED IN THE NAME OF TH E PLOT OWNERS, ON PAYMENT OF SUBSEQUENT INSTALMENTS. THE ASSESSEE HA S ALSO DEVELOPED VARIOUS PUBLIC AMENITIES WITHIN THE PROJECT. IN OUR VIEW, ALL THESE FACTS SHOULD BE CONSIDERED CUMULATIVELY IN ORDER TO ASCER TAIN THE TRUE NATURE OF THE PROJECT. ON A TOTALLY OF THE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS UNDERTAKEN DEVELOPING AND BUILDING HOUSING PROJ ECTS AS PER THE SCHEME PROVIDED IN SEC. 80IB(10) OF THE ACT. 9. THE LEARNED CIT(A) HAS ADDRESSED OTHER DEFECTS POINTED OUT BY THE ASSESSING OFFICER IN THE FOLLOWING LINES. VIII) THIS SECTION DOES NOT DEFINE THE HOUSING PR OJECT. THE HOUSING PROJECT. DOES NOT MEAN THE DWELLING UNIT S SHOULD BE UNIFORM AND HOMOGENEOUS. THE ASSESSING OFFICER C ANNOT INTERPRET THIS SECTION IN A DIFFERENT WAY WHICH WAS NOT THE INTENTION OF THE LEGISLATURE. THE INTENTION OF THE LEGISLATURE WAS TO PROMOTE HOUSING SECTOR BY GIVING BENEFITS TO THE DEVELOPERS. THUS, THE DEFINITION OF HOUSING PROJEC T ADOPTED BY THE ASSESSING OFFICER IS NOT IN CONFORMITY WITH THE SPIRIT OF THE SECTION. ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 10 OF 13 IX) THE ASSESSING OFFICER HAS DENIED DEDUCTION UNDE R SECTION 80-IB(10) ON THE GROUND THAT A CERTIFICATE DT: 9/8/2 008 FROM VGTM-UDA CANNOT BE CONSTRUED AS COMPLETION CERTIFIC ATE. DURING ASSESSMENT PROCEEDINGS, THE APPELLANT HAS CO NTENDED THAT THE HOUSE COMPLETION CERTIFICATE WAS NOT IN VA GUE IN AND AROUND VIJAYAWADA. HOWEVER, THE MOMENT LOCAL TAX IS LEVIED, IT IS DEEMED THE HOUSE IS COMPLETED. THE HOUSE TAX WAS LEVIED ON ALL HOUSES OF NARAYANAPURAM COLONY BEFORE 31/3/2007 WHICH IS A FULL COMPLIANCE OF EXPLANATION OF SUB SECTION 10 OF SEC.80-IB OF INCOME TAX ACT, 1961. DURI NG APPELLATE PROCEEDINGS, APPELLANT HAS FURNISHED A LE TTER DT: 12/2/2008 ISSUED BY PANCHAYAT SECRETARY, GRAM SACHIVALAYAM, PORANKI STATING THAT THERE IS NO PROC EDURE FOR ISSUING A SEPARATE CERTIFICATE FOR COMPLETION OF TH E HOUSE. PANCHAYAT SECRETARY HAS FURTHER STATED THAT THE MON TH IN WHICH THE HOUSE TAX IS LEVIED SHALL BE FINALLY REGA RDED AS THE MONTH IN WHICH A HOUSE IS COMPLETED. APPELLANT HAS ALSO FURNISHED A CERTIFIED SCHEDULE OF HOUSE TAX LEVIED BY GRAM PANCHAYAT, PORANKI IN RESPECT OF 256 HOUSES BUILT B Y THE ASSESSEE CONTAINING NAME OF THE HOUSE OWNERS, DATE OF PLAN APPROVAL, MONTH OF HOUSE TAX LEVIED AND DOOR NUMBER OF THESE HOUSES. THIS SCHEDULE HAS BEEN DULY CERTIFIED BY THE PANCHAYAT SECRETARY, GRAM PANCHAYAT, PORANKI AND IT REVEALS THAT HOUSE TAX IN RESPECT OF 256 HOUSES HAS BEEN LE VIED ON OR BEFORE MARCH 2007. THE GRAM PANCHAYAT PORANKI DOES NOT HAVE PROCEDURE TO ISSUE CERTIFICATE FOR COMPLETION OF HOUSES AS AND WHEN IT IS COMPLETED. HOWEVER, IT LEVIES HOU SE TAX FOR EVERY HALF YEAR ON COMPLETION BASIS. THE PANCHAYAT SECRETARY IN HIS LETTER DT: 12/2/2008 ADDRESSED TO APPELLANT HAS CLARIFIED THAT THERE IS NO PROCEDURE FOR ISSUING A CERTIFICAT E FOR THE COMPLETION OF A HOUSE, HOWEVER, HOUSE TAX IS LEVIED AS AND WHEN THE HOUSE IS COMPLETED. X) THE INTENTION OF THE LEGISLATURE IS TO ALLOW DED UCTION UNDER SECTION 80-IB IN RESPECT OF HOUSING PROJECT COMPLE TED WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. THE EX PLANATION TO THIS SECTION IS A REQUIREMENT FOR ENSURING THE COMP LETION OF THE HOUSING PROJECT. IN THIS CASE, THE PANCHAYAT S ECRETARY, GRAM PANCHAYAT, PORANKI HAS CERTIFIED THAT THESE 25 6 HOUSES WERE COMPLETED BEFORE 31/3/2007. THUS, THE ASSESSEE HAS FULFILLED THE REQUIREMENTS OF SECTION 80-IB (10). IN VIEW OF THE ABOVE DISCUSSIONS, IT IS A HOUSING PR OJECT AND IT WAS COMPLETED BEFORE THE DUE DATE. HENCE, THE ASSES SING ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 11 OF 13 OFFICER IS DIRECTED TO ALLOW DEDUCTION UNDER SECTIO N 80-IB (10). ON A CAREFUL CONSIDERATION OF THE DECISION OF LEARN ED CIT(A), WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS DULY ADDRESSED TH E VARIOUS DEFECTS POINTED OUT BY THE ASSESSING OFFICER AFTER APPRECIATING THE RELEVANT FACTS AND HENCE WE DO NOT FIND ANY INFIRMITY IN HIS DECISION ON THE SE ISSUES. 10. IN VIEW OF THE FOREGOING DISCUSSIONS, WE APPRO VE THE ORDER OF LEARNED CIT(A) IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON THE PROFITS DERIVED FROM THE IMPUGNED HOUSING PROJECT. 11. NOW WE SHALL TAKE UP THE APPEALS FILED BY T HE ASSESSEE. AS NOTICED IN THE PRECEDING PARAGRAPHS, THE ASSESSING OFFICER DENIED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT TO THE ASSESSEE IN THE A SSESSMENT YEAR 2006-07 FOR THE REASONS STATED IN THE ASSESSING OFFICER, WH ICH WERE EXTRACTED IN PARAGRAPH 3 (SUPRA). AFTER THE DATE OF THE SAID A SSESSMENT ORDER, THE LEARNED CIT INITIATED THE REVISION PROCEEDING UNDER SECTION 263 OF THE ACT IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 AND FOR THE IDENTICAL REASONS SET ASIDE THE ORDER O F THE ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSING OFFICER TO DISALL OW THE DEDUCTION ALLOWED UNDER SECTION 80IB(10) OF THE ACT. AGGRIEVED BY TH E SAID ORDERS OF LEARNED CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 12. WE HAVE HEARD THE PARTIES ON THESE TWO APPE ALS. THE SCOPE OF REVISION PROCEEDINGS HAS BEEN WELL EXPLAINED BY HON 'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY (2000)(243 I TR 83) IN THE FOLLOWING LINES. 'A BARE READING OF THIS PROVISION MAKES IT CLEAR TH AT THE PRE-REQUISITE TO EXERCISE OF JURISDICTION BY THE CO MMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME- TAX OFFICER ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 12 OF 13 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TW IN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSE NT-IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PRE- JUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS B UT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD T O SECTION 263(1) OF THE ACT. THE PRO-VISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED B Y THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRO NEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPT ION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE `PREJUDICIA L TO THE INTERESTS OF THE REVENUE' IS NOT AN EXPRESSION OF A RT AND IS NOT CONFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEA NING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WI TH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFIC ER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. THE PHRASE `PREJUDICIAL TO THE INTERESTS OF THE REVENUE ' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSE QUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME- TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE LAW AND IT HAS RESULTED IN LOSS OF REVENUE ; OR WHERE TWO VIEW S ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VI EW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFF ICER IS UNSUSTAINABLE IN LAW.' FROM THE DISCUSSIONS MADE IN THE APPEAL FILED BY TH E REVENUE FOR THE ASSESSMENT YEAR 2006-07 IN THE PRECEDING PARAGRAPHS , IT IS CLEAR THAT THE ISSUE OF ALLOWING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF NARAYANAPURAM HOUSING COLONY IN THE HANDS OF THE ASSESSEE IS A DEBATABLE ISSUE ON WHICH TWO VIEWS ARE POSSIBLE. T HERE CANNOT BE ANY DOUBT THAT THE ASSESSING OFFICER HAS TAKEN ONE OF T HE POSSIBLE VIEWS IN THE ITA NOS 248 249 AND 887 OF 2009 RAGHAVA ESTATES LT D VIJAYAWADA PAGE 13 OF 13 IMPUGNED TWO YEARS, IN WHICH CASE THE ASSESSMENT OR DER CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF TH E REVENUE. IN THAT CASE, THE LEARNED CIT COULD NOT HAVE JURISDICTION TO INIT IATE REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT IN RESPECT OF THE SAID ISSUE. ACCORDINGLY, WE SET ASIDE BOTH THE IMPUGNED ORDERS OF LEARNED CIT. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 4 TH AUGUST, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:04-08-2011 COPY TO 1 M/S RAGHAVA ESTATES LTD., DOOR NO. 64-9-2 SBH COM PLEX, PATAMATA LANKA, VIJAYAWADA 520 010 2 THE DY.COMMISSIONER OF INCOME TAX CIRCLE-2(1) VIJA YAWADA 3 THE DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 7, HYDERABAD 4 5 THE CIT CENTRAL, HYDERABAD THE CIT, VIJAYAWADA 6 THE DR, ITAT, VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM