DCIT, CHENNAI V. M/s. Ramaniyam Castles P Ltd., CHENNAI

ITA 593/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57959 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: S SRIDHAR
• Keywords: Retrospective amendment; Valuation report
• Section: 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 593/MDS/2011 (ASSESSMENT YEAR : 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(3), CHENNAI - 600 034. (APPELLANT) V. M/S RAMANIYAM CASTLES P. LTD., 21 LAYA APARTMENTS, II MAIN ROAD, GANDHI NAGAR, ADYAR, CHENNAI - 600 020. PAN : AACCR8176K (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT-DR RESPONDENT BY : SHRI S. SRIDHAR , ADVOCATE DATE OF HEARING : 14.02.2012 DATE OF PRONOUNCEMENT : 17.02.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THIS IS AN APPEAL BY THE REVENUE AGAINST AN ORDER DATED 13.1.2011 OF COMMISSIONER OF INCOME TAX (APPEALS)-V , CHENNAI. GROUNDS NO.1 AND 3 ARE GENERAL IN NATURE. GROUND N O.2 IS REPRODUCED HEREUNDER:- I.T.A. NO. 593/MDS/11 2 2.1 THE LEARNED CIT(A) ERRED IN ALLOWING THE DEDUCT ION U/S 80IB OF THE INCOME-TAX ACT, 1961. 2.2 THE LEARNED CIT(A) ERRED IN REJECTING THE FACTU AL FINDINGS OF THE VALUATION OFFICER. WHERE THE VALUA TION OFFICER HAS HELD THAT FOUR OUT OF THE TOTAL NUMBER OF FLATS EXCEEDED 1500 SQ. FT. AND WHERE THERE IS A CONTRAVENTION OF THE STIPULATION ENSHRINED IN SEC. 80IB IT IS SUBMITTED THAT THE ASSESSMENT ON THIS ISSUE DESERVE S TO BE UPHELD. 2.3 IT IS SUBMITTED THAT AS PER THE NEWLY INSERTED EXPLANATION OF 80IB(10) FINANCE (NO.2) ACT 2009 INTRODUCED WITH RETROSPECTIVE EFFECT FROM 1.4.2001 PERSONS WHO ARE ENGAGED IN EXECUTION OF PROJECTS TH ROUGH WORDS CONTRACT ARE NOT ELIGIBLE TO CLAIM U/S 80IB(1 0). 2.4 HAVING REGARD TO AMENDMENT REFERRED IN PARA 2.3 ABOVE IT IS SUBMITTED THAT THE ASSESSEE IS ONLY A CONTRACTOR WHO EXECUTES CONTRACT WORK THROUGH CONSTRUCTION AGREEMENTS. WHERE THE ASSESSEE UNDERT AKES ONLY CONTRACT RISK WITH NO INVESTMENT RISK, IT IS P RAYED THAT THE PROVISIONS OF SEC 80IB(10) ARE NOT APPLICABLE T O THE ASSESSEES CASE. 2. AS IT IS CLEAR FROM GROUND NO.2, FIRST GRIEVANCE RAISED BY THE REVENUE IS THAT FOUR OUT OF TOTAL NUMBER OF FLATS, EXCEEDED 1500 SQ. FT. AND THERE WAS CONTRAVENTION OF THE AREA STIPULA TION IN SECTION 80- IB(10) OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT '). ITS SECOND GRIEVANCE IS THAT ASSESSEE HAD EXECUTED THE PROJECT S BY WAY OF WORKS CONTRACT AND IN VIEW OF THE EXPLANATION INSER TED TO SECTION 80- IB(10) OF THE ACT BY FINANCE (NO.2) ACT, 2009, ASSE SSEE WAS NOT ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80-IB OF THE ACT. I.T.A. NO. 593/MDS/11 3 3. WHEN THE MATTER CAME UP BEFORE US, LEARNED A.R. SUBMITTED THAT SIMILAR ISSUES HAD COME UP BEFORE THIS TRIBUNA L ON AN APPEAL FILED BY THE ASSESSEE AGAINST AN ORDER OF REVISION MADE BY LD. CIT UNDER SECTION 263 OF THE ACT, FOR ASSESSMENT YEAR 2 005-06 AND THIS TRIBUNAL IN ITS ORDER DATED 9 TH JULY, 2010 (128 ITD 130), HAD HELD IN FAVOUR OF ASSESSEE AND QUASHED THE REVISIONARY ORDE R OF LD. CIT. ACCORDING TO HIM, THE ISSUES RAISED IN THE PRESENT APPEAL BY THE REVENUE WERE SUBSTANTIALLY SIMILAR TO THE ISSUES RA ISED IN ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005-06 MENTIONED SUPRA. 4. LEARNED D.R., ON THE OTHER HAND, SUBMITTED THAT IN THE ORDER RELIED ON BY THE LEARNED A.R. IN ASSESSEES OWN CAS E FOR ASSESSMENT YEAR 2005-06 OF THIS TRIBUNAL, THE TRIBUNAL WAS CON CERNED ONLY WITH THE ISSUE WHETHER THE LD. CIT WAS JUSTIFIED IN INVO KING REVISIONARY POWER UNDER SECTION 263 OF THE ACT. THEREFORE, ACC ORDING TO HIM, IT COULD NOT BE CONSIDERED AS A PRECEDENT FOR DECIDING THIS APPEAL OF THE REVENUE. FURTHER, ACCORDING TO THE LEARNED D.R., A SSESSEE WAS ONLY A CONTRACTOR AND HENCE NOT ELIGIBLE FOR DEDUCTION U NDER SECTION 80- IB(10) OF THE ACT. I.T.A. NO. 593/MDS/11 4 5. IN REPLY TO THE SUBMISSIONS OF THE LEARNED D.R., RELIANCE WAS PLACED BY THE LEARNED A.R. ON THE DECISIONS OF THIS TRIBUNAL IN THE CASE OF SANGHVI AND DOSHI ENTERPRISE V. ITO (131 IT D 151) AND THAT OF ACIT V. SMT. C. RAJINI (2011) 9 ITR (TRIB) 487. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. FIRST ISSUE RAISED BY THE REVENUE IS THAT FOUR FLAT S OUT OF TOTAL NUMBER OF FLATS, EXCEEDED 1500 SQ. FT. AND THERE WAS CONTR AVENTION OF AREA RESTRICTION UNDER SECTION 80-IB(10) OF THE ACT. IF WE LOOK AT ASSESSMENT ORDER, IT WOULD SHOW THAT THE CONCERNED FLATS WERE 1A, 2A, 3A OF BLOCK A IN A PROJECT CALLED EDEN BLOCK AT VELACHERRY. AT PARA 7 OF ITS ORDER DATED 9 TH JULY, 2010 IN ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005-06, THIS TRIBUNAL HAD EXTRACT ED A LETTER DATED 31 ST DECEMBER, 2007 ADDRESSED TO THE DEPARTMENTAL VALUA TION OFFICER, WRITTEN BY THE ASSESSING OFFICER. THIS IS REPRODUCED HEREUNDER FOR BREVITY:- GOVERNMENT OF INDIA, OFFICE OF THE ASSTT. CIT, COMPANY CIRCLE V(3), CHENNAI-34 31 ST DEC., 2007 THE DVO, IT DEPARTMENT, VALUATION CELL, KANNAMMAI BUILDING, V FLOOR, 611, ANNA SALAI, CHENNAI 600006 (THROUGH THE CIT, CHENNAI-III, CHENNAI) I.T.A. NO. 593/MDS/11 5 SIR, SUB: MEASUREMENT OF BUILT-UP AREA IN THE CASE OF M /S RAMANIYAM CASTLES (P) LTD. CHENNAI UNDER S. 80-IB(10)-REG. REF: 1. F.NO. DVO/MAD/MISC/2001-08, DT. 5 TH OCT., 2007 LETTER IN 2. F.NO. DVO/MAD/MISC/2001-08, DT. 28 TH DEC., 2007 LETTER IN KINDLY REFER TO THE ABOVE. ON PERUSAL OF THE LETTER DT. 28 TH DEC., 2007 AS REFERRED ABOVE IT IS FOUND THAT YOU HAVE SHOWN THE FOLLOWING MEASUREMENT IN RE SPECT OF FLATS 1A, 2A, 3A OF BLOCK-A. THE RELEVANT PORTION OF THE LETTER IS REPRODUCED AS UNDER: AS DESIRED IN THE ABOVE REFERENCE, THE ABOVE PROPER TY WAS CHECKED BY LINEAR MEASUREMENTS AS PER THE GUIDELINES AND DETAILS OF B UA ARE AS GIVEN BELOW: STATEMENT SHOWING THE BUILT-UP AREA FLAT AREA IN SQ. MTRS. CAR PARKING AREA IN SQ. FT. REMARKS IN SQ. MTRS. IN SQ. FT. 1. A 1A 141.36 1,821.14 11.69 126.84 COVERED PARKING 2. A 3A 141.36 1,621.74 17.64 189.89 COVERED PARKING 3. A 5A 141.36 1,821.74 11,78 126.40 COVERED PARKING IN THIS RESPECT IT IS FURTHER SEEN THAT VIDE LETTER DT. 5 TH OCT., 2001 REFERRED ABOVE, THE MEASUREMENT OF THOSE FLATS HAD BEEN SHOW N AS 134.64 SQ. MTRS. THE RELEVANT PORTION OF THE LETTER IS ALSO REPRODUC ED HEREUNDER: AS DESIRED IN THE ABOVE REFERENCE, BUA OF THE ABOVE PROPERTY WAS CHECKED BY LINEAR MEASUREMENTS AS PER THE STANDARD GUIDE IN VOGUE. THE BUA OF THE FLAT NO.3A IS FOUND TO BE, 134.64 SQ. MTRS. (ONE HU NDRED AND THIRTY-FOUR POINT SIXTY-FOUR ONLY). AS FLATS 1A AND 2A ARE SIM ILAR TO FLAT 3A THE BUA OF FLAT 3A MAY BE, ADOPTED FOR FLATS 1A AND 3A. THE ABOVE REPORT OF THE DVO DT. 5 TH OCT., 2007 HAD BEEN RECEIVED ON 9 TH OCT., 2007 (TF.PAL NO. 461) I.T.A. NO. 593/MDS/11 6 IT COULD BE SEEN THAT NO REASONS/BASIS WHATSOEVER G IVEN IN THE LETTER FOR VARIATIONS IN THE MEASUREMENTS. THEREFORE IT IS RE QUESTED TO CLARIFY. 1. REASONS FOR VARIATIONS. 2. WHETHER FLAT AREA IS INCLUSIVE OF COMMON AREA? IF Y ES, THE EXTENT OF SUCH COMMON AREA INCLUDED. 3. WHAT ARE THE ACTUAL BUILT-UP AREA OF THOSE FLATS? 4. IN THIS RESPECT CLARIFICATION SHOULD BE GIVEN SPECI FICALLY ON THE BASIS OF BUILT-UP AREA AS EXPLAINED S.80IB(14) WHICH IS AS U NDER: BUILT-UP AREA MEANS THE INNER MEASUREMENT OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL INCLUDING THE PROJECTIONS AND BALCO NIES 48 INCREASED BY THE THICKNESS OF THE WALL BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS.' FURTHER THE ASSESSE HAD OBTAINED VALUATION REPORT F ROM REGISTERED VALUERS DR.A.KRISHNAMURTHY DT. 20 TH DEC. 2001 AND MR.PALANIVELU VISWANATHAN, ARCHITECT DT. 24 TH DEC., 2001. THE XEROX COPIES OF THESE REPORTS ALO NG WITH ENCLOSURES ARE SENT HEREWITH FOR YOUR KIND PER USALS. IN THOSE REPORTS BUILT-UP AREA OF THE ABOVE FLAT NOS.1A, 2A, 3A OF B LOCK A HAD BEEN SHOWN LESS THAN 1,500 SQ. FT AS PER PHYSICAL MEASUREMENT CARRIED ON BY THEM FURTHER ON 31 ST DEC. 2007 THE ASSESSE SUBMITTED ANOTHER CLARIFICAT ION DT. 29 TH DEC. 2007 OBTAINED FROM DR.A.KRISHNAMURTHY, APPROV ED VALUER OF THE DEPARTMENT. IN RESPECT OF THE DIFFERENCE IN QUANTI FICATION OF BUILT-UP AREA BETWEEN HIS CERTIFICATE AND VALUATION CELL CERTIFIC ATE WHEREIN HE CONFIRMED THAT THE BUILT-UP AREA OF THE ABOVE FLATS IS 1,431 SQ. FT. THE ASSESSE HAD ALSO OBTAINED SIMILAR REPORT FROM MR.PALANIVELU VIS WANATHAN, ARCHITECT. THESE TWO REPORTS ALONG WITH LAYOUT PLANS AND PLINT H AREA CALCULATION AS SUBMITTED BY THE DEPARTMENTAL VALUER AND THE ARCHIT ECT OF THE ASSESSE ARE BEING ENCLOSED HEREWITH FOR YOUR KIND PERUSAL. IN THIS RESPECT YOU ARE REQUESTED TO GO THROUGH THE ABOVE REPORTS/CLARIFICA TION AND KINDLY SPECIFY, THE DIFFERENCES; WITH REASONS BETWEEN THE REPORT OF THE DVO DT. 28 TH DEC. 2007 AS SENT EARLIER AND THEIR REPORT. KINDLY TREAT THE MATTER MOST IMPORTANT. YOURS FAITHFULLY (PIJUSH MUKHERJEE) ASSTT. CIT, COMPANY CIRCLE V(3), CHENNAI I.T.A. NO. 593/MDS/11 7 IT IS CLEAR FROM THE ABOVE LETTER THAT ORIGINALLY T HE DEPARTMENT VALUATION OFFICER CONSIDERED THE AREA TO BE LESS TH AN 1500 SQ. FT. THOUGH THE SAME DVO HAD OPINED IN HIS LETTER DATED 28 TH DECEMBER, 2007 THAT THESE FOUR FLATS HAD AREAS EXCEEDING 1500 SQ. FT., NOTHING HAS BEEN MENTIONED AS TO HOW THE VARIATION HAD OCCU RRED. LD. CIT(APPEALS) HAS GIVEN A CLEAR FINDING THAT THE BUI LT-UP AREA WOULD INCLUDE ONLY THOSE PROJECTIONS WHICH ARE ACCESSIBLE FROM INSIDE OF THE FLATS AND NOT THOSE PROJECTIONS WHICH ARE PART OF C OMMON AREA OR WHICH ARE NOT ACCESSIBLE FROM INSIDE OF THE FLATS. NOTHING HAS BEEN BROUGHT ON RECORD BY THE LEARNED D.R. TO TAKE A DIF FERENT VIEW IN THIS MATTER. DEFINITION OF BUILT-UP AREA HAS BEEN GIV EN IN SECTION 80- IB(14) WILL CLEARLY SHOW THAT INNER MEASUREMENTS IN CLUDE PROJECTIONS AND BALCONIES BUT SUCH PROJECTIONS AND BALCONIES HA VE TO BE ACCESSIBLE FROM INSIDE OF THE FLATS. 7. INSOFAR AS SECOND GRIEVANCE RAISED BY THE REVENU E THAT ASSESSEE WAS ONLY A CONTRACTOR, NO SUCH FINDING IS THERE IN THE ASSESSMENT ORDER. THE A.O. HAD DENIED CLAIM OF THE ASSESSEE UNDER SECTION 80-IB(10) ONE FOR A REASON THAT COMPLETION CERTIFICATE FOR PROJECT APPROVAL AUTHORITY WAS NOT PRODUCED BY THE ASSESSEE AND SECONDLY FOR A REASON THAT THREE OF THE FLATS HAD E XCEEDED 1500 SQ. I.T.A. NO. 593/MDS/11 8 FT. IN BUILT-UP AREA. OBVIOUSLY, THE ISSUE AS TO W HETHER THE ASSESSEE WAS ONLY A CONTRACTOR OR HAD UNDERTAKEN THE WORK AS A PROJECT DEVELOPER WAS NOT BEFORE THE CIT(APPEALS) ALSO. T HE REVENUE IS ONLY TRYING TO IMPROVE THE ORDER OF A.O. BY RAISING THIS GROUND. IN ANY CASE, THIRD MEMBER ORDER OF THIS TRIBUNAL IN THE CA SE OF SANGHVI AND DOSHI ENTERPRISE (SUPRA) HAS CLEARLY HELD THAT EVEN IF THE ROLE OF THE ASSESSEE WAS ONLY AS A DEVELOPER, IT WAS ENTITLED T O DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT SUBJECT TO FULFILLMENT OF OTHER CONDITIONS MENTIONED THEREIN. WE ARE THEREFORE OF THE OPINION THAT THERE IS NO MERIT WHATSOEVER IN THIS APPEAL FILED BY THE REVENU E. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 17 TH FEBRUARY, 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH FEBRUARY, 2012. KRI. COPY TO: APPELLANT /RESPONDENT /CIT(A)-V, CHENNAI- 34/ CIT, CHENNAI-III, CHENNAI/D.R./GUARD FILE