ACIT, CHENNAI V. Shri R.Ravendran, CHENNAI

ITA 653/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64232 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 29-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAJAGOPAL JT
• Assessee Lawyers: S SRIDHAR
• Keywords: Search and seizure
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI , ACCOUNTANT MEMBER AND SHRI V. DURGA RAO , JUDICIAL MEMBER ] I.T.A.NO. 653 /MDS/2012 ASSESSMENT YEAR : 2008 - 09 THE ACIT BUSINESS CIRCLE II CHENNAI VS SHRI R. RAVENDRAN 4 TH FLOOR, NEW NO.8 NORTH BOAG ROAD T. NAGAR, CHENNAI - 17 [PAN ADIPR 8916 R ] ( APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAJAGOPAL, JT. CIT RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE DATE OF HEARING : 29 - 08 - 2012 DATE OF PRONOUNCEMENT : 30 - 08 - 2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - VI, CHENNAI, DATED 13.12.2011. 2 . THE DR SUBMITTED THAT THE SOLE ISSUE INVOL VED IN THIS APPEAL WAS THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF CLAIM OF DEDUCTION OF ` 4,97,56,822/ - U/S 80IB(10) OF THE ACT TO THE ASSESSEE. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN MARINE PRODUCTS AND REAL ESTATE BUSINESS I.T.A.NO. 653/12 : - 2 - : UNDER THE NAME AND STYLE OF M/S AMBADI ESTATES . THE ASSESSEE DECLARED INCOME OF ` 67,27,750/ - DURING THE YEAR UNDER CONSIDERATION AFTER CLAIMING DEDUCTION OF ` 4,97,56,822/ - U/S 80IB(10) OF THE ACT RELATING TO A HOU SING PROJECT AT L&T NAGAR, MAIN ROAD, MANAPAKKAM, CHENNAI. THE ASSESSING OFFICER, IN AN ORDER PASSED U/S 143(3) ON 31.12.2010 , DISALLOWED THE CLAIM OF DEDUCTION TO THE ASSESSEE U/S 80IB(10) OF THE ACT . 4 . AGGRIEVED BY THE SAID ORDER OF THE ASSESSING OFFICE R, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE CIT(A) FOLLOWING THE DECISION OF THE CHENNAI A BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS SMT . C. RAJ I NI, 9 ITR (TRIB) 487 (CHENNAI), ALLOWED THE CLAIM OF DEDUCTION U/S 80IB ( 10) TO THE ASSESSEE. 5 . THE D.R SUBMITTED THAT THE REVENUE HAS TAKEN GROUND NO.2.3 OF THE APPEAL WHEREIN THE REVENUE HAS STATED THAT THE DECISION IN THE CASE OF ACIT VS SASHWAT CONSTRUCTIONS (P) LTD RELIED ON BY THE CIT(A) IN I.T.A.NO.1828/MDS/2007, DATED 27.2.2009, HAS NOT BECOM E FINAL AS FURTHER APPEAL IS PENDING BEFORE THE HON'BLE HIGH COURT. THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) TO THE ASSESSEE. 6 . THE A.R. OF THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE CIT(A). I.T.A.NO. 653/12 : - 3 - : 7 . WE H A VE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN REAL ESTATE BUSINESS AND FOR THE YEAR UNDER CONSIDERATION CLAIMED DEDUCTION OF ` 4,97, 56,822/ - ON A HOUSING PROJECT U/S 80IB(10) OF THE ACT WHICH WAS DISALLOWED BY THE ASSESSING OFFICER, BUT WAS ALLOWED BY THE CIT(A) IN AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE ASSESSING OFFICER. THE CIT(A), WHILE ALLOWING TH E CLAIM OF DEDUC TION U/S 80IB(10) TO THE ASSESSEE , HAS HELD AS UNDER: 4. THE APPELLANT PROMOTED A HOUSING PROJECT OF RESIDENTIAL APARTMENTS AT MANAPAKKAM NEAR PORUR AND CLAIMED DEDUCTION U/S 801B(10). THE AO CALLED FOR THE DETAILS DURING PROCEEDINGS U/S 143 AND AFTER PER USING THE COMPOSITE AGREEMENT ENTERED INTO WITH THE CUSTOMERS FOUND THAT THE HOUSING PROJECT UNDERTAKEN BY THE APPELLANT IS SPLIT INTO TWO COMPONENTS NAMELY I) SALE OF UNDIVIDED SHARE IN THE LAND TO THE BUYERS II) EXECUTION OF CONSTRUCTION CONTRAC T OF THE FLAT BY THE CONTRACTOR / PROMOTER 5. THE AO RELIED ON EXPLANATION TO SECTION 80IB(10)(B) INTRODUCED BY THE FINANCE ACT 2009 WHICH EXCLUDE PROFITS DERIVED FROM WORK CONTRACT IN EXECUTING HOUSE PROJECT AND TREATED THE INCOME DERIVED BY THE A PPELLANT FROM THE HOUSING PROJECT AS FALLING WITHIN THE EXPLANATION REFERRED SINCE THE PROMOTER IS UNDERTAKING ONLY PURE CONTRACT AND NO INVESTMENT RISK AND DISALLOWED THE DEDUCTION. THE AR FILED A DETAILED PAPER BOOK AND WRITTEN SUBMISSION RELYING ON DECISIONS ENCLOSED TO THE PAPER BOOK AND SUBMITTED THAT THE AR ERRED IN TREATING THE EXECUTION OF THE HOUSING PROJECT AS A WORK CONTRACT AS THE APPELLANT HAD TAKEN A FINANCIAL RISK IN EXECUTING THE ELIGIBLE PROJECT RIGHT FROM THE IDENTIFICATION OF LAND AND UPTO THE STAGE OF SELLING THE FLATS CONSTRUCTED BY HIM. THEREFORE HE PLEADED THAT THE APPELLANT HAS TAKEN COMMERCIAL AS WELL AS FINANCIAL RISK AND THE AO HAS NOT DISPUTED ON THE COMPLIANCE OF THE OTHER CONDITIONS PRESCRIBED IN THE SAID SECTION TO MAKE TH E SAID CLAIM. IN SUPPORT OF HIS CONTENTIONS HE FILED THE FOLLOWING: I) COPY OF AGREEMENT OF SALE II) POWER OF ATTORNEY WITH THE LAND OWNERS III) COPY OF PLANNING PERMIT IV) COPY OF PROCEEDINGS OF LOCAL AUTHORITY V) COPY OF PROJECT REPORT I.T.A.NO. 653/12 : - 4 - : VI) COPY OF BANK SANCTION LETTER VII) LETTER WITH ANNEXURES FILED BEFORE THE AO 6. THE AR ALSO RELIED ON THE JUDGEMENT OF THE HON'BLE ITAT CHENNAI 'A' BENCH IN THE CASE OF ACIT VS. SMT. C. RAJINI AND ALSO DEPUTY CIT VS. C. SUBBA REDDY REPORTED IN 9 ITR (TRIB.) 487, WHERE ON SIMILAR CIRCUMSTANCES THE HONBLE TRIBUNAL HAS HELD THAT THE DEVELOPER OF THE HOUSING PROJECT IS ELIGIBLE FOR DEDUCTION U/S 80IB( 10). THE RELEVANT EXTRACT O F THE DECISION CITIED BY THE AR IS REPRODUCED HEREUNDER: '6. THE R ELEVANT EXPLANATION WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2009 WITH EFFECT FROM 1 - 4 - 2009 TO SECTION 80 - IB{10) WHICH SAYS 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB - SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EX ECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT)'. OBVIOUSLY, IF ANY HOUSING PROJECT HAS THE WORKS CONTRACT SO AWARDED BY ANY PERSON, INCLUDING CENTRAL OR STATE GOVERNMENT, THE SAME WOULD NOT BE ELIGIBLE FOR THIS DEDUCTION. IN THE LIGHT OF THE FACTS OF THIS CASE STATED HEREIN AS ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS NOT BEEN AWARDED (EMPHASIS SUPPLIED) ANY SUCH WORKS - CONTRACT BY ANY PERSON (INCLUDING C ENTRAL OR STATE GO VERNMENT). THE TERMS 'WORKS CONTRACT AWARDED' HAS VERY SPECIFIC CONNOTATION IN THIS EXPLANATION. FIRST, LET US SEE THE ASSESSEE IN THIS CASE IS ONLY A C ONSTRUCTOR / BUILDER AND NOT A DEVELOPER OR OTHERWISE. THE ASSESSEE HAS HIGHLIGHTED AND ADMITTED IN ITS PR OFIT AND LOSS ACCOUNT THE ENTIRE PURCHASE CONSIDERATION AND SALE CONSIDERATION RECEIVED ON ACCOUNT OF SALE OF LAND AS A SALE RECEIPT. AFTER EXECUTION OF POWER OF ATTORNEY WHEN SHE HAD PAID IN FULL AND FINAL CONSIDERATION OF THE LAND TO THE LAND OWNER AND T OOK THE VACANT POSSESSION OF THE LAND AS PER THE SALE AGREEMENT DATED 29 - 8 - 2003, AND THE POSSESSION OF ENTIRE PROPERTY OF 69 GROUNDS WAS HANDED OVER TO HER, AS PER THE INCOME - TAX PROCEEDINGS, THE 'TRANSFER' AS ENVISAGED IN SECTION 2(47) OF THE ACT STANDS COMPLETED, EVEN IF, IT WAS THROUGH A POWER OF ATTORNEY AND, THEREAFTER, THE ASSESSEE HE : TO DEVELOP THE PROJECT EVEN THOUGH THE APPROVAL WAS TO BE TAKEN FORMALLY IN THE NAME OF THE OWNER OF THE LAND SHRI K. L. CHOUDHURY. NOW, LET US SEE WHETHER FOR CLAIM ING SUCH A DEDUCTION, THE ASSESSEE IS REQUIRED TO BE THE OWNER OF THE LAND OR NOT. IN THE BOOK OF SAMPATH IYENGAR 'LAW OF INCOME - TAX' VOL. 4.10 EDITION AT PAGE 5784 IT HAS BEEN EXPLAINED - 'IT IS TRUE THAT AN ENTREPRENEUR UNDERTAKING DEVELOPMENT AND CONSTR UCTION IN A HOUSING PROJECT, MAY NOT HAVE ANY INTEREST IN LAND. BUT THE SUB - SECTION DOES NOT REQUIRE THAT HE SHOULD BE THE OWNER OF THE LAND. A PROMOTER SHOULD QUALIFY FOR DEDUCTION BECAUSE HE RUNS AN UNDERTAKING FOR DEVELOPING AND CONSTRUCTING A HOUSING P ROJECT, SO THAT THE CONDITIONS FOR RELIEF ARE SATISFIED. IF HE WERE NOT THE OWNER, PLAN APPROVAL ALSO MAY NOT BE IN HIS OWN NAME, SINCE LOCAL GOVERNMENT USUALLY INSISTS ON GRANTING SUCH APPROVAL ONLY TO THE TITLE HOLDER. THIS B Y ITSELF DOES NOT GIVE RIGHT TO OWNER TO I.T.A.NO. 653/12 : - 5 - : CLAIM DEDUCTION UNDER SECTION 80 - IB(10) NOR DOES IT FORFEIT THE RIGHT OF THE DEVELOPER TO IT'. AS PER THE OXFORD ADVANCE LEARNER'S DICTION ARY , A DEVELOPER IS A PERSON OR COMPANY THAT BUYS LAND OR BUILDING IN ORDER TO BUILD NEW HOUSES, SHOPS/S TORES, ETC. OR IMPROVES THE OLD ONES AND MAKES A PROFIT FROM DOING THIS. AS PER MOZLEY & WHITELEY'S LAW DICTIONARY, 'DEVELOPMENT' MEANS 'WITH CERTAIN EXCEPTIONS, THE CARRYING OUT OF BUILDING, ENGINEERING, MINING OR OTHER OPERATIONS IN, ON, OVER OR UNDER LA ND, OR THE MAKING OF ANY MATERIAL CHANGE IN THE USE OF ANY BUILDINGS OR OTHER LAND. 7. FROM THE ABOVE DISCUSSION, WHAT IS REQUIRED IS THAT IF THE ASSESSEE IS A BENEFICIAL OWNER OR TO PUT IT IN A LEGAL TERM IF SHE IS A DE FACTO OWNER OF THE LAND, ANY D EVELOPER BECOMES ELIGIBLE FOR THIS DEDUCTION. IT IS NOT AT ALL NECESSARY THAT THE DEVELOPER SHOULD BE A DE JURE OWNER OF THE LAND. IT IS QUITE POSSIBLE TO DEVELOP THE PROPERTY WITH CONSENT OF THE OWNER. IT TRANSPIRES FROM THE PERUSAL OF THE RECORDS THAT A SSESSEE WAS DE FACTO OW NER OF THE PROPERTY WHEN THE ENTIRE ALLOTMENT PROCEDURE WAS EXECUTED BY HER ONLY. IT WAS THE ASSESSEE WHO INCURRED ALL THE EXPENSES. CONNECTED WITH THE DEVELOPMENTS OF THE PROPERTY RIGHT FROM FILING APPLICATION FOR PLANNING PERMISSI ON AND PAYING NECESSARY FEES FOR THE SAME. THE MARKETING OF THE SITE WAS ALSO DONE BY THE ASSESSEE THROUGH ADVERTISEMENT, ETC. WE HAVE CAREFULLY PERUSED THE AGREEMENTS AND OTHER RELEVANT DOCUMENTS. WE ARE CONVINCED THAT THIS IS NOT, AT ALL, A WORKS - CONTRA CT. 8 . OUR ABOVE CONCLUSION IS ALSO FORTIFIED BY THE DECISION OF CHENNAI BENCH RENDERED IN THE CASE OF ACIT V. SASHWATH CONSTRUCTIONS (P.) LTD. [IT APPEAL NO. 1069 (MDS.) OF 2008 FOR THE ASSESSMENT YEAR 2005 - 06, DATED 25 - 2 - 2009 ] , WHEREIN IT WAS HELD AS FOL LOWS : - 'IN OUR OPINION IT IS NOT SINCE QUA NON FOR A DEVELOPER TO BECOME THE DE JURE OWNER OF THE LAND. IT IS QUITE POSSIBLE TO DEVELOP THE PROPERTY WITH THE CONSENT OF THE OWNER. IT TRANSPIRES FROM THE PERUSAL OF THE RECORDS THAT THE ASSESSEE WAS THE D E FACTO OWNER OF THE PROPERTY, AS THE ENTIRE ALLOTMENT PROCEDURE WAS EXECUTED BY THE ASSESSEE COMPANY ONLY. WE HAVE NOTED THAT THE ASSESSEE DID INCUR ALL THE EXPENSES CONNECTED WITH THE DEVELOPMENT OF THE PROPERTY. APPLICATION FOR PLANNING PERMISSION WAS ALSO MADE BY THE ASSESSEE. NECESSARY FEE FOR THE SAME WAS PAID BY IT. ROAD FORMATION WAS ALSO DONE BY THE ASSESSEE. BESIDES, FOR MARKETING THE FLATS THE ASSESSEE DID ADVERTISE THE PROPERTY ALSO. WE HAVE PERUSED THE REASONINGS ADDUCED BY THE COMMISSION ER (APPEALS) IN THE IMPUGNED ORDER. IT: OUR OPINION HE TOOK A CORRECT VIEW IN THE MATTER AND HIS ORDER CALLS FOR NO INTERFERENCE ON THIS COUNT. ACCORDINGLY WE UPHOLD THE SAME. ' 9. IN AN ANOTHER CASE, THE AHMEDABAD BENCH OF ITAT IN THE CASE OF RADHE D EVELOPERS V. IT O [2008] 23 SOT 420 FOR THE ASSESSMENT YEAR 2003 - 04 DECIDED THE CASE AS UNDER : - I.T.A.NO. 653/12 : - 6 - : 'AFTER PERUSING THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE LANDOWNERS, THE TRIBUNAL NOTED THAT THE AGREEMEN T EFFECTIVELY TRANSFERRED TO THE AS SESSEE FIRM ALL THE RIGHTS 0 F DEVELOPMENT AND CONSTRUCTION AND TO DEAL WITH THE LAND FOR A CONSIDERATION PAYABLE WITHIN A STIPULATED TIME AND THE ASSESSEE HA D ALSO BEEN PUT IN POSSESSION OF THE LAND. THE TRIBUNAL FURTHER NOTE D THAT THE ASSESSEE FIRM WAS REQUIRED TO OBTAIN NECESSARY APPROVAL S FROM THE LOCAL AUTHORITIES ON BEHALF OF THE LAND OWNERS AND ALL THE EXPENSES FOR SUCH PURPOSES WERE TO BE INCURRED BY THE ASSESSEE. I T WAS ALSO NOTED THAT THE SIZE OF THE PLOT ON WHICH THE PROJECT WA S DEVELOPED WAS ALSO IN EXCESS OF ONE ACRE AND THE SIZE OF EAC H RESIDENTIAL HOUSE WAS LESS THAN 155 SQ. FT. ' REFERRING TO THE PROVISIONS OF SECTION 80 - IB(10) INCLUDING IT S LEGISLATIVE HISTORY IT NOTED THAT IT WAS THE UNDERTAKING THAT DEVELOP S OR BUILDS THE HOUS ING PROJECT THAT WAS ENTITLED TO DEDUCTIO N IRRESPECTIVE OF THE FACT WHETHER IT WAS THE OWNER OR NOT, OR WHETHER I T WAS THE CONTRACTOR THEREOF. THE REQUIREMENT OF CLAIMING DEDUCTIO N WAS THAT SUCH AN UNDERTAKING MUST DEVELOP AND BUILD HOUSING PROJEC T BE I T ON THEIR OWN LAND OR ON THE LAND OF OTHERS. IN THE PRESENT CASE, THE TRIBUNAL NOTED THAT THE LANDOWNERS HAD NO T MADE ANY CONSCIOUS ATTEMPT TO DEVELOP THE PROPERTY EXCEPT ENSURING THEIR RIGHTS AS LANDOWNER, SO THAT THE SALE VALUE OF THE LAND COULD B E REALIZED TO THEM AS PER THE TERMS OF 'AGREEMENT TO SALE'. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE LEGAL PROPOSITION LAID DOWN BY THE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD., IT WAS HELD THAT THE ASSESSEE WAS ENTITLED F OR DEDUCTION UNDER SECTION 80 - IB(10) ON THE PROFIT DERIVED FROM CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT. ' 10. FROM THE ABOVE DISCUSSION, IT BECOMES EVIDENTLY CLEAR THAT THE ASSESSEE IS NOT REQUIRED TO BE THE OWNER ON RECORD FOR CLAIM ING SUCH A DEDUCTION UNDER SECTION 80 - IB(10) OF THE ACT. IN SO FAR AS EXECUTION OF POWER OF ATTORNEY BY THE LAND OWNER AFTER THE RECEIPT OF FULL CONSIDERATION AND WHEN THE ASSESSEE HAS TAKEN POSSESSION OF THE LAND AND DEVELOPED THE SAME IS CONCERNED, SHE FULFILS ALL THE CONDITIONS LAID DOWN IN SECTION 80 - IB(10) OF THE ACT AND EXPLANATION APPENDED THERETO. 11. THE SUBMISSION OF LEARNED D. R. THAT THE ASSESSEE IS SIMPLY A WORKS - CONTRACTOR IN THIS CASE IS NOT FOUND TO BE CORRECT FACT AS PER THE RECORD. WE A RE ALSO NOT IN AGREEMENT TO THE SUBMISSION THAT IN VIEW OF THE EXPLANATION APPENDED TO THIS SECTION WITH EFFECT FROM 1 - 4 - 2009 BY THE FINANCE (N O . 2) ACT, 2009, THE ASSESSEE IS NOT ENTITLED TO THIS DEDUCTION. RELIANCE WAS PLACED ON THE DECISION OF CHENNAI B ENCH OF ITAT IN THE CASE OF ACIT V. SASHWAT CONSTRUCTIONS (P.) LTD. FOR THE ASSESSMENT YEAR 2004 - 05 IN IT APPEAL NO. 1828/MDS./2007. ACTUALLY THE BENCH WAS CONSIDERING A DIFFERENT ASPECT OF THIS ISSUE FROM A DIFFERENT ANGLE. THE FINDING OF THE BENCH WAS T HAT FOR CLAIMING DEDUCTION UNDER SECTION 80 - IB(10) OF THE ACT, A PERSON HAS TO BE BOTH A I.T.A.NO. 653/12 : - 7 - : DEVELOPER AS WELL AS A BUILDER. IT WAS HELD THAT IF THE ASSESSEE IS ONLY EITHER ONE OF THE TWO, THEN IT IS VERY CLEAR THAT IT IS NOT ELIGIBLE FOR DEDUCTION. IN THAT C ASE, THE ASSESSEE WAS E NGAGED BY THE BUYERS OF THE LAND FOR DOING CONSTRUCTION WORK AS CONTRACTORS. IF WE GO THROUGH PAGE NOS.5 AND 6 OF THAT ORDER DATED 27 - 2 - 2009, IT BECOMES CLEAR THAT THE FACTS IN THE PRESENT CASE AND THE FACTS OF THE CASE IN SASHWAT CO NSTRUCTIONS (P.) L TD., (SUPRA), ARE ENTIRELY DIFFERENT AND NOT IDENTICAL . FOR READY REFERENCE, WE EXTRACT THE ABOVE PORTION HEREIN AS BELOW : - 'FROM THE AFOREMENTIONED ANALYSIS OF THE DOCUMENTS AND DISCUSSIONS THEREON, WHAT EMERGES IS LISTED AS BELOW: - 1.SASHWATH FOUNDATIONS DEVELOPS THE LAND. GETS THE PROJECT APPROVED BY THE LOCAL AUTHORITY, AND SELLS THE UNDIVIDED SHARE OF THE PROPERTY TO THE BUYERS. 2. THE ASSESSEE COMPANY SASHWATH CONSTRUCTIONS PVT. LTD. ENTERS INTO A BUILDERS AGREEMENT WITH THE BUYER, WHICH IS MORE OR LESS AKIN TO BEING A CONTRACTOR, FOR EXECUTING THE CONSTRUCTION WORK. HOWEVER, AS PER THE PROVISIONS OF SECTION 80 - IB (10), A PERSON HAS TO BE BOTH A DEVELOPER AS WELL AS THE BUILDER, AS THE PROVISIONS CLEARLY STIPULATE THAT THERE S HOULD BE AN UNDERTAKING, DEVELOPING AND BUILDING HOUSING PROJECTS, AND NOT DEVELOPING OR BUILDING HOUSING PROJECTS, AND THEN ONLY THE, PROFITS FROM THE UNDERTAKING ARE ELIGIBLE FOR DEDUCTION. IF THE ASSESSEE IS ONLY EITHER ONE OF THE TWO, THEN IT IS VERY C LEAR THAT IT IS NOT ELIGIBLE FOR THE DEDUCTION. IN THE INSTANT CASE, THE DEVELOPING ACTIVITY HAS BEEN ENTIRELY UNDERTAKEN BY M/S. SASHWATH FOUNDATIONS LIMITED AND THE BUYERS OF LAND HAVE MERELY ENGAGED THE ASSESSEE COMPANY ONLY FOR CONSTRUCTION WORK AS CO NTRACTORS. AGAIN AS PER THE PROVISIONS OF SECTION 80 - IB (10), THE INCOME HAS TO BE DERIVED FROM THE ACTIVITY OF DEVELOPING AND BUILDING OF A HOUSING PROJECT. IT DOES NOT SPEAK OF THE INCOME OF A CONTRACTOR WHO CONSTRUCTS THE HOUSES OR ANY OTHER AGENCY INVO LVED IN THE CONSTRUCTION OF HOUSES, INTERIOR DESIGNERS, CIVIL CONTRACTOR, ARCHITECTS, LANDSCAPE DESIGNERS, VAASTU EXPERTS ETC. HENCE IT IS HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 - IB (10).' THE ID. CIT(APPEALS) HAS RELIED ON P ARA 2.7 AT PAGE 14 OF THE ORDER IN WHICH IT HAS BEEN FOUND THAT THE ASSESSEE WAS NOT BOTH DEVELOPER AND BUILDER OF THE HOUSING PROJECT. THIS DIFFERENCE WILL BE HIGHLIGHTED BY THE G ROUNDS TAKEN IN THAT CASE WHICH ARE REPRODUCED, IN PARA 2.5 AT PAGE 11 OF TH E ORDER. WE ARE EXTRACTING THE SAME FOR READY REFERENCE: - THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS FAILED TO NOTE THAT THE ASSESSEE COMPANY SHOULD BE BOTH DEVELOPER AND BUILDER. IN THE PRESENT CASE, THE DEVELOPMENT ACTIVITIES WERE CARRIED OUT BY THE LEGAL OWNER OF THE LAND, M/S . SASHWATH FOUNDATIONS (FIRM) AND THE ASSESSEE COMPANY ENTERED INTO AGREEMENT WITH THE BUYER OF THE LAND TO CONSTRUCT A FLAT IN THE I.T.A.NO. 653/12 : - 8 - : SAID BUILDING COMPLEX AS 'CONTRACTOR'. THE COST OF THE LAND WAS MET OUT BY THE FIRM T - T/S. SASH WATH FOUNDATIONS WHICH FURTHER DEVELOPED THE LAND AND THE PLAN APPROVAL WAS IN THE NAME OF THE FIRM ONLY AND NOT IN THE NAME OF THE ASSESSEE COMPANY. THUS THERE ARE TWO DIFFERENT ENTITIES I.E., THE ASSESSEE COMPANY, THE BUILDER AND THE FIRM M/S. SASHWATH FOUNDATIONS, THE DEVELOPER. THE COMMISSIONER OF INCOME - TAX (APPEALS) IS NOT CORRECT IN HOLDING THAT SINCE THE ASSESSEE COMPANY ITSELF IS UNDERTAKING CONSTRUCTION OF THE ENTIRE PROJECT IT CAN DEFINITELY BE HELD TO BE BOTH DEVELOPER AND BUILDER. THE C OMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO NOTE THAT THE ASSESSEE COMPANY COLLECTS THE ENTIRE CONSIDERATION FROM THE FLAT BUYERS THAT IS BOTH FOR THE LAND COST AND THE CONSTRUCTION COST AND PASSES ON THE LAND COST TO THE OWNER I.E., TO THE FIRM M/S SASH WATH FOUNDATIONS AND THUS THE ASSESSEE ACTS ONLY AS A CONTRACTOR OR BUILDER AND IS NOT UNDERTAKING A PROJECT. THE ABOVE NOTED GROUNDS CLEARLY MAKE OUT THE DIFFERENCE BETWEEN THE FACTS OF THESE TWO C A SE S. THEREFORE, THIS DECISION OF THE TRIBUNAL I N THE C ASE OF SASHWAT CONSTRUCTIONS (P.) LTD. (SUPRA) IS ENTIRELY ON DIFFERENT FACTS AND HENCE OF NO HELP TO THE REVENUE. THE LEARNED D. R. HAS FURTHER RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF K. RAHEJA DEVELOPMENT CORPORATION, A COPY OF WHI CH WAS FILED ON RECORD. WE ARE AFRAID, THE CIRCUMSPECTION OF THIS DECISION, CLEARLY SHOWS THAT THIS CASE DOES NOT SUPPORT THE CASE OF THE REVENUE AT ALL RATHER, IT SUPPORTS THE CASE OF THE ASSESSEE. THIS DECISION WAS RENDERED IN A DIFFERENT CONTEXT WHEN T HE HON'BLE COURT WAS DEALING WITH THE KARNATAKA OWNERSHIP FLATS (REGULATION OF PROMOTION OF CONSTRUCTION, SALES, MANAGEMENT AND TRANSFER) ACT, 1974; AND IN THAT CASE THE QUESTION FOR CONSIDERATION FOR THEIR LORDSHIPS WAS WHETHER THE APPELLANTS WE, L' DEA LERS AND WERE LIABLE TO PAY TURNOVER TAX UNDER THE KARNATAKA SALES TAX ACT. OSTENSIBLY, THIS DECISION CANNOT APPLY TO THE FACTS OF THE CASE BECAUSE THE INCOME - TAX ACT IS A FISCAL LAW WHEREIN CERTAIN SECTIONS GIVE INCENTIVES TO CERTAIN CLASS OF ASSESSEES IN ORDER TO EARN MORE REVENUE AND SOMEWHERE THE DEFINITION AS IS TAKEN IN LEGAL PARLANCE IN THE SALE OF GOODS AND REGARDING TRANSFER IS NOT ADOPTED IN THE SAME MANNER AS IT IS DONE IN OTHER ENACTMENTS. IN INCOME - TAX, IF THE ASSESSEE TAKES POSSESSION OF THE L AND AFTER PAYING FULL CONSIDERATION, THE DEFINITION OF THE TERM 'TRANSFER', AS DEFINED IN SECTION 2(47) OF THE ACT, BECOMES COMPLETE. WITH THE HELP OF THIS DECISION, LEARNED D.R. HAS TRIED TO CONVINCE US THAT IN THIS CASE IT WAS WORKS - CONTRACT AND NOT THA T OF 'DEVELOPERS'. IN THE LAST PARA OF THE HIGH COURT'S DECISION, IT HAS BEEN HELD THAT THE TERM 'WORKS CONTRACT' IN THAT ACT IS AN INCLUSIVE DEFINITION. IT DOES NOT INCLUDE MERELY A WORKS CONTRACT AS NORMALLY UNDERSTOOD. IT HAS A WID E DEFINITION WHICH INC LUDES 'ANY AGREEMENT' FOR CARRYING OUT BUILDING OR CONSTRUCTION ACTIVITY FOR CASH, DEFERRED PAYMENT OR OTHER VALUABLE CONSIDERATION. THE DEFINITION AS GIVEN IN THAT ACT DOES NOT MAKE ANY DISTINCTION I.T.A.NO. 653/12 : - 9 - : BASED ON AS TO WHO CARRIES ON THE CONSTRUCTION ACTIVITY. THUS UNDER THAT ACT, EVEN THE OWNER OF THE LAND CAN BE TREATED AS CARRYING ON A WORKS CONTRACT IF HE ENTERS INTO AN AGREEMENT TO CONSTRUCT FOR CASH, DEFERRED PAYMENT OR OTHER VALUABLE CONSIDERATION. THEREFORE, THE RATIO OF THAT DECISION CANNOT AT ALL BE A PPLIED TO THE FACTS OF THE GIVEN CASE WHICH IS UNDER INCOME - TAX ACT. RATHER THIS DECISION SUPPORTS THE CASE OF THE ASSESSEE IN WHICH THE DECISIONS OF THE HON 'BLE SUPREME COURT IN THE CASES OF CIT V. PODAR CEMENT (P.) LTD. [1992] 5 S CC 482 1 AND MYSORE MINE RALS LTD. V. CIT [1999] 7 SCC 106 2 HAVE BEEN DISCUSSED AND IN WHICH IT HAS BEEN HELD THAT IN THE CONTEXT OF INCOME - TAX ACT IT HAS TO BE HELD THAT EVEN THOUGH THERE IS NO FORMAL CONVEYANCE, THE CONCERNED PARTY COULD BE CONSIDERED TO BE THE BENEFICIAL OWNER. WE HAVE ALSO SEEN THE CONSTRUCTION AGREEMENT PLACED BEFORE US FOR OUR PERUSAL. WE HAVE CAREFULLY CIRCUMSPECTED THE TRUE CHARACTER OF ALL THESE AGREEMENTS AND HAVE FOUND THAT THE ASSESSEE IS NOT ONLY A BUILDER BUT IS ALSO DEVELOPER OF THE PROPERTY IN QUES TION AND THUS, SHE HAS FULFILLED ALL THE CONDITIONS LAID DOWN, IN SECTION 80 - IB(10) OF THE ACT. THE DEFINITION OF ANY TERM OR WORD GIVEN IN OTHER ENACTMENTS CANNOT BE IMPORTED WHICH DEALING WITH INCOME - TAX MATTERS. NO PARALLELS CAN BE DRAWN, UNLESS, IT IS SO SPECIFICALLY PROVIDED IN THE IT ACT ITSELF. THE ASSESSEE WAS NOT 'AWARDED' ANY WORKS CONTRACT EITHER BY ANY PARTY OR STATE OR CENTRAL GOVERNMENT. THE TERM USED IN THE EXPLANATION IS 'AWARDED' WHICH HAS A ENTIRELY DIFFERENT CONNOTATION. THEREFORE, THE E XPLANATION APPENDED TO SECTION 80 - IB(10) IS ALSO NOT ATTRACTED AT ALL. THE DEVELOPMENT DONE IN THIS CASE IS NOT ON ACCOUNT OF A WORKS - CONTRACT. IN OUR CONSIDERED OPINION THE FINDING OF THE ID. CIT (APPEALS) DOES NOT DESERVE ANY INTERFERENCE AT OUR END. THE DECISION OF CHENNAI BENCH AND AHMEDABAD BENCH FULLY SUPPORT THE CASE OF THE ASSESSEE, AS SIMILAR QUESTIONS ARISING OUT OF IDENTICAL FACTS ARE INVOLVED THEREIN. THE OTHE R DECISION OF CHENNAI BENCH AND THAT OF SUPREME COURT'S DECISION IN THE CASE OF K. RAH EJA DEVELOPMENT CORPORATION (SUPRA) RELIED ON BY THE LEARNED D.R. ARE DEFINITELY RENDERED IN ENTIRELY DIFFERENT CONTEXT AND FACTS ARE DISTINGUISHABLE. CONSEQUENTLY, WE UPHOLD THE FINDING OF THE C IT (APPEALS) IN THIS REGARD AND DISMISS GROUND NOS. 2.1, 2.2, 2.3 AND 2.4.' 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AR AND ALSO PERUSED THE DECISION CITIED BY THE AR. ON EXAMINATION OF THE FACTS OF THE CASE OF THE APPELLANT, I FIND THAT THE FACTS ARE SIMILAR TO THAT OF THE FACTS OF THE CASE WHOSE DE CISION THE AR HAS RELIED ON TO SUPPORT THE CLAIM OF DEDUCTION U/S 80IB(10). THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE TRIBUNAL I DIRECT THE AO TO ALLOW DEDUCTION U/S 80IB(10) TO THE ELIGIBLE PROFIT OF THE APPELLANT. I.T.A.NO. 653/12 : - 10 - : 9 . THE D.R COULD NO T POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A). HE ALSO COULD NOT POINT OUT ANY DISTINGUISHING FEATURES IN THE PRESENT APPEAL OF THE ASSESSEE TO NOT TO FOLLOW THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS SMT. C.RAJINI(SUPRA) WHICH WAS FOLLO WED BY THE CIT(A) IN ALLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) TO THE ASSESSEE. FURTHER, NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE D.R TO SHOW THAT EITHER IN THE CASE OF SASHWAT CONSTRUCTIONS (P) LTD (SUPRA) OR IN THE CASE OF SMT. C.RAJINI(SUPRA) T HE ORDER OF THE TRIBUNAL WAS VARIED IN APPEAL BY ANY HIGHER FORUM. HENCE, WE DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 10 . IN THE RESULT, T HE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 30 TH OF AUGUST , 2012 , AT CHENNAI . SD/ - SD/ - ( V. DURGA RAO ) JUDICIAL MEMBER ( N.S.SAINI ) ACCOUNTANT MEMBER DATED: 30 TH AUGUST , 2012 RD COPY TO: APPELLANT / RESPONDENT / CIT(A) /CIT/ DR