ITO, CHENNAI V. Arihant Heirloom, CHENNAI

ITA 385/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73687 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: DEVENDRA KUM AR BHANDARI
• Section: 80IB

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. . , . !' !' !' !' , # # # # $ $ $ $ BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A.NO.385/MDS/2013 # ' %' / ASSESSMENT YEAR:2009-10 THE INCOME TAX OFFICER, BUSINESS WARD XIII(1), ROOM NO. 607, NEW BLOCK, AAYAKAR BHAVAN, NO. 121, M.G. ROAD, CHENNAI 600 034. VS. M/S. ARIHANT HEIRLOOM, NO. 271, POONAMALLEE HIGH ROAD, KILPAUK, CHENNAI 600 010. [PAN : AANFA7010K] ( &' &' &' &' / APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) &' * + / APPELLANT BY : SHRI N. MADHAVAN, JCIT ()&' * + / RESPONDENT BY : SHRI DEVENDRA KUMAR BHANDARI, CA * , / DATE OF HEARING : 18.02.2014 -% * , /DATE OF PRONOUNCEMENT : 26.02.2014 . . . . / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XII, CHENNAI, DATED 22.11.2012 RELEVANT TO THE ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A FIRM, FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ADMITTING NIL INCOME AFTER I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.385 385385 385/M/ /M/ /M/ /M/13 1313 13 2 CLAIMING DEDUCTION OF ` .1,89,94,652/- UNDER SECTION 80IB(10) OF THE INCOME TAX ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE FIRM HAS NEV ER ACQUIRED ANY LEGALLY VESTED OWNERSHIP RIGHTS IN THE LAND ON WHICH THE RE SIDENTIAL APARTMENTS WERE CONSTRUCTED. THE UNDIVIDED SHARES WERE SOLD BY THE INDIVIDUAL OWNERS AND THE CONSTRUCTION PART WAS UNDERTAKEN BY THE ASSESSE E AS PER ALL THE SALE AGREEMENTS WITH THE PURCHASERS OF THE FLAT. THEREFO RE, THE ASSESSEE FIRM IS ONLY A CONSTRUCTOR UNDERTAKING THE CONSTRUCTION WOR K ENTRUSTED BY THE FLAT PURCHASERS AS PER THE SPECIFICATIONS REQUIRED. THER EFORE, IT CANNOT BE SAID THAT THE ASSESSEE FIRM HAS DEVELOPED AND CONSTRUCTE D THE SAID HOUSING PROJECT. THE ASSESSEE MUST BE A DEVELOPER AND BUILD ER. A MERE CONTRACTOR OR BUILDER WITHOUT A VESTED INTEREST IN THE LAND IS NOT ENTITLED TO A DEDUCTION UNDER SECTION 80IB. HE ALSO OBSERVED THAT FROM THE PERUSAL OF THE SALE AGREEMENT AND SALE DEED EXECUTED IN FAVOUR OF FLAT PURCHASERS, IT APPEARS THAT ALMOST 50% OF THE FLATS ARE OF BUILT UP AREA E XCEEDING 1500 SQ.FT. AND THEREFORE, THE CONDITION STIPULATED UNDER SECTION 8 0IB IS VIOLATED AND THE CLAIM OF THE ASSESSEE WAS DENIED. 3. THE ASSESSEE CARRIED THE MATTER IN FIRST APPEAL AND IT WAS SUBMITTED BEFORE THE LD. CIT(APPEALS) THAT THE ASSESSEE IS DE VELOPER AND OWNERSHIP ON THE LAND FOR THE PURPOSE OF SECTION 80IB(10) OF THE ACT IS NOT THE RELEVANT CRITERIA. THE LD. CIT(APPEALS), AFTER CONSIDERING T HE EXPLANATION OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.385 385385 385/M/ /M/ /M/ /M/13 1313 13 3 ASSESSEE, HAS OBSERVED THAT THE ASSESSEE HAS INVES TED ITS OWN MONEY AND CONSTRUCTED THE PROJECT WITH ALL RISKS AND RESPONSI BILITIES AND HENCE BECOMES THE OWNER AND DEVELOPER OF THE PROJECT FOR THE PURP OSE OF SECTION 80IB OF THE ACT. THEREFORE, THE LD. CIT(APPEALS) HAS HELD THAT THE ASSESSEE IS THE DEVELOPER AND BUILDER OF THE HOUSING PROJECT AND EL IGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 4. SO FAR AS EXCEEDING THE THRESHOLD LIMIT OF 1500 SQ.FT. IS CONCERNED, THE LD. CIT(APPEALS) HAS OBSERVED THAT FROM THE PROVISI ONS OF SECTION 80IB(14)(A), IT IS CLEAR THAT ONLY THE ACTUAL BUIL T UP AREA OF THE FLAT (RESIDENTIAL UNITS) ALONE IS TO BE CONSIDERED FOR T HE PURPOSE O SEEING THE THRESHOLD LIMIT OF 1500 SQ.FT. NORMALLY, IN ANY HOU SING PROJECTS, THE COMMON AREA CONSTITUTES ABOUT 15 TO 30% SUPER BUILT AREAS WHICH ARE SHOWN AS THE SELLABLE AREA. IN THE INSTANT CASE, THE ASSESSEE CL AIMED THAT THE COMMON AREAS CONSTITUTED FROM 120 TO 184 SQ.FT. PER FLAT ( OF SUPER BUILT AREA), AS UNDER: SUPER BUILT (SELLABLE) AREA (SQ.FT.) COMMON AREA (SQ.FT.) ACTUAL BUILT UP AREA (SQ.FT.) 1047 (SMALLEST) 120 927 1070 123 947 1463 168 1295 1510 174 1336 1530 176 1354 1600 (LARGEST FLAT) 184 1416 5. THUS, IF THE COMMON AREAS ARE EXCLUDED THE ACTU AL BUILT-UP AREA, AS DEFINED AT THE SECTION 80IB(14)(A) OF THE ACT, OF T HE LARGEST FLATS IS HARDLY I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.385 385385 385/M/ /M/ /M/ /M/13 1313 13 4 1416 SQ.FT. (1600 SQ.FT. 844 SQ.FT.), WHICH IS F AR WITHIN THE THRESHOLD LIMITS OF 1500 SQ.FT. HENCE, THERE ARE NO VIOLATIONS AS FAR A S THE REQUIREMENT OF BUILT UP AREA OF NOT EXCEEDING 1500 SQ.FT. OF THE RESIDEN TIAL UNITS OF THE PROJECT AND DIRECTED THE ASSESSING OFFICER TO GRANT THE BEN EFIT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. DR HAS STRONGLY SUPPORTED THE ORDER PAS SED BY THE ASSESSING OFFICER. 8. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE RELIED ON THE ORDER OF THE LD. CIT(APPEALS). 9. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ONLY I SSUE INVOLVED IN THIS APPEAL IS WHETHER THE ASSESSEE IS ENTITLED TO DEDUC TION UNDER SECTION 80IB(10) OF THE ACT OR NOT. THE ASSESSING OFFICER H AS DENIED THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(10) ON THE GROUND THAT THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY AND ANOTHER GROUND ON WHICH T HE ASSESSEES CLAIM WAS REJECTED IS THAT THE BUILT UP AREA IS MORE THAN 1500 SQ.FT. THE SAME VERY ISSUE ON WHICH THE ASSESSING OFFICER DENIED THE CLA IM OF THE ASSESSEE CAME BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SANGHVI AND DOSHI ENTERPRISES AND OTHERS V. ITO 255 CTR (MAD) 1 56 RELATING TO ASSESSMENT YEARS 2005-06 AND 2006-07, WHEREIN THE H ONBLE COURT HAS OBSERVED THAT THE PROVISIONS NOWHERE REQUIRED THAT DEVELOPER WHO ARE THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.385 385385 385/M/ /M/ /M/ /M/13 1313 13 5 OWNER OF THE LAND ALONE WOULD BE ENTITLED TO GRANT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. SO FAR AS BUILT UP AREA IS CON CERNED, AS PER SECTION 80IB(10)(14)(A) OF THE ACT, WHICH IS VERY CLEAR THA T THE COMMON AREAS SHOWED THAT THE RESIDENTIAL UNITS ALONE DOES NOT IN CLUDE BUILT UP AREA. IN THIS CASE, IT IS VERY CLEAR THAT THE BUILT UP AREA ALONE HAS TO BE CONSIDERED TO SEE THE THRESHOLD LIMIT OF 1500 SQ.FT. AS OBSERVED BY T HE LD. CIT(APPEALS). 10. KEEPING IN VIEW OF THE HONBLE JURISDICTIONAL HIGH COURTS DECISION AND ALSO PROVISIONS OF SECTION 80IB(14)(A) AND BY CONSI DERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIR MITY IN THE ORDER PASSED BY THE LD. CIT(APPEALS) AND THE GROUNDS RAISED BY T HE REVENUE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 26 TH OF FEBRUARY, 2014 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 26.02.2014 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.