Vaminee Promoters, Erode V. ITO, Erode

ITA 903/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90445 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 15-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR NISCHAL IRS
• Assessee Lawyers: G BASKAR
• Keywords: Capital asset
• Section: 80IB; 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.903/MDS/2013 ( / ASSESSMENT YEAR : 2009-2010) M/S. VAMINEE PROMOTERS, 118, S.K.S BUILDING, PERUNDURAI ROAD, ERODE 638 011. [PAN: AAEFV 3353K] ( %& /APPELLANT) VS THE INCOME TAX OFFICER, WARD I(4), ERODE ( !'%& /RESPONDENT) / APPELLANT BY : SHRI. G. BASKAR, ADVOCATE / RESPONDENT BY : DR. NISCHAL, IRS, JCIT. /DATE OF HEARING : 15.04.2015 ! /DATE OF PRONOUNCEMENT : 29.05.2015 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBAT ORE, DATED 06.02.2013 FOR THE ASSESSMENT YEAR 2009-2010. I.T.A.NO.903/MDS/2013. :- 2 -: 2. THE FIRST GROUND OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO DELETION OF ADDITION U/S.80IB(10) OF THE ACT. 2.1 THE FACTS RELATING TO THE ISSUE ARE THAT THE AS SESSEE HAD CLAIMED DEDUCTION U/S.80IB(10) OF THE ACT AT D10,20 ,122/- FOR ITS CONSTRUCTION WORKS DONE IN THE NAME OF AITHERIYA A VENUE-III AT VANJINATHANSALAI, THINDAL, ERODE. THE ASSESSING OFF ICER DURING THE COURSE OF ASSESSMENT ASKED THE ASSESSEE TO FURNISH THE COPY OF THE APPROVAL OF THE PROJECT ISSUED BY THE LOCAL AUTHORI TIES. THE ASSESSEES REPRESENTATION VIDE LETTER DATED 03.10.2 011 HAS STATED THAT THE APPROVAL HAS BEEN OBTAINED BY THE ASSESSEE FIRM FROM THE LOCAL AUTHORITIES NAMELY VIZ., THINDAL PANCHAYAT, E RODE. HOWEVER, THE ASSESSEE NOT FURNISHED THE COPY OF THE APPROVAL OF THE LOCAL AUTHORITIES. ONCE AGAIN, THE ASSESSING OFFICER VIDE LETTER DATED 23.12.2011 ISSUED SHOW CAUSE NOTICE STATING THAT TH E ASSESSEE HAS NOT FURNISHED THE COPY OF THE APPROVAL OF THE LOCAL AUTHORITIES AND ASSESSEE HAS ONLY FURNISHED COPY OF THE LETTERS OF THE PRESIDENT OF THINADAL PANCHAYAT DATED 10.02.2005 ONLY IN SUPPORT OF ITS CLAIM FOR THE APPROVAL OF PROJECTS. HOWEVER, ON PERUSING THESE LETTERS, IT IS SEEN THAT THESE LETTERS ARE ADDRESSED TO THE SUB -REGISTRAR, KARUNGALPALYAM WITH A REQUEST TO REGISTER THE LANDS . BEING SO, THE I.T.A.NO.903/MDS/2013. :- 3 -: ASSESSING OFFICER GAVE FINAL OPPORTUNITY TO ASSESSE E TO EXPLAIN THESE DISCREPANCIES. CONSEQUENT TO THIS, THE ASSES SEE FILED A LETTER DATED 26.12.2011 STATING THAT :- FOR THE CLAIM OF. DEDUCTION UNDER SECTION 80IB FOR HOUSING PROJECT IN RESPECT OF AITHREYA AVEENUE 3 PROJECT OF THE ASSESSEE FIRM WE SUBMIT THE FOLLOWING. A) HOUSING PROJECT' HAS NOT BEEN DEFINED IN THE ACT. B)THE BENEVOLENT SECTION 80IB HAS BEEN BROUGHT IN ONLY TO CONFER BENEFIT OF TAX EXEMPTION TO AN UNDERTAKI NG WHICH UNDERTAKES DEVELOPING AND CONSTRUCTING HOUSING PROJ ECTS CONSTRUCTION OF WHICH COMMENCES ON OR AFTER 1 ST OCTOBER, 1998. THERE ARE ALSO OTHER CONDITIONS AS TO DATES O F APPROVAL, COMMENCEMENT AND COMPLETION OF CONSTRUCTI ON. C) IN OUR STATE THE STATE GOVERNMENT HAS FORMULATE D THAT ALL BIGGER HOUSING PROJECTS SHALL BE SUBJECT TO APP ROVAL BY THE DIRECTOR OF TOWN PLANNING, CHENNAI. IN CASE OF SMALLER HOUSING PROJECTS SITUATE IN VILLAGE PANCHAYATS AND TOWN PANCHAYATS, THE POWER OF APPROVAL IS GIVEN TO THE RESPECTIVE PANCHAYATS. THE APPROVAL ORIGINATES EVEN FROM THE REGISTRATION OF THE HOSING PLOTS. WITHOUT THE P RIOR APPROVAL OF THE JURISDICTIONAL PANCHAYATS EVEN' THE SUB REGISTRAR SHALL NOT REGISTER THE TRANSFER OF PLOTS. THAT IS THE REASON WHY IN THE APPELLANT'S CASE THE APPROVAL WAS GIVEN BY THE THINDAL' PANCHAYAT WHICH BY ITS LETTER ADDRE SSED THE LETTER OF APPROVAL TO THE SUB REGISTRAR ERODE TO RE GISTER TRANSFER OF LAND. D) THE SECOND STAGE IS WITH REGARD TO THE APPROV AL OF THE HOSING PLANS. EVERY PLAN OF EVERYONE OF THE HOUSES IN THE HOUSING PROJECT OF THE ASSESSEE HAS BEEN APPROVED B Y THE SAID THINDAL PANCHAYAT, ERODE BEING THE JURISDICTIO NAL LOCAL AUTHORITY. E) THE PROJECT IS ON AN OVER ALL AREA OF 47,425.37 SQUARE FEET WHICH IS IN EXCESS OF THE REQUIRED MINIMUM ARE A OF 1 ACRE (43,600 SQUARE FEET) CONTEMPLATED UNDER SECTIO N 80IB. F) THE AREA OF CONSTRUCTION OF EVERYONE OF THE H OUSES I.T.A.NO.903/MDS/2013. :- 4 -: CARRIED OUT BY THE ASSESSEE IS LESS THAN 1500 SQUAR E FEET BEING THE PERMITTED MAXIMUM AREA UNDER SECTION 80IB . G) THE PROJECT CONSISTS OF NUMBER OF HOUSES AS STAT ED IN THE LAYOUT PLAN SUBMITTED. THE PACKAGE OF FACILITIE S PROVIDED TO ALL THE BENEFICIARIES IN THE HOUSING PR OJECT INCLUDED COMMON TAR TOPPED ROAD, STREET LIGHTS, COM MON BORE WELL, ELECTRIC MOTOR, STREET PIPES FOR EVERY 5 HOUSES IN THE PROJECT, DRAINAGE, COMMON COMPOUND WALL FOR THE ENTIRE AITHREYA AVENUE PROJECT 3, COMMON AREA FOR T HE HOUSING PROJECT ALONG WITH AN OFFICE ROOM BUILT THE REIN AND HANDED OVER FOR THE BENEFIT OF THE RESIDENTS OF THE AITHREYA AVNUE PROJECT 3 AND CHILDREN'S PLAY AREA FOR THE HO USING PROJECT. H) THE ROAD IN THE HOUSING PROJECT WAS SETTLED IN F AVOUR OF THE LOCAL AUTHORITY AS A PRE CONDITION FOR APPROVAL . I) THE APPROVAL BY THE THINDAL PANCHAYAT BY A LETT ER TO THE SUB REGISTRAR, ERODE COMMUNICATING NO OBJECTION TO REGISTER THE PLOTS, ACCEPTANCE BY THE LOCAL AUTHORI TY OF THE ROAD SETTLED IN ITS FAVOUR FOR MAINTENANCE UPON COM PLETION OF THE PROJECT, THE GRANT OF APPROVAL OF THE HOUSE PLANS OF ALL THE HOUSES IN THE HOUSING PROJECTS BY THE LOCAL AUTHORITY, LEVY OF TAX ON THE HOUSES AFTER COMPLETI ON OF CONSTRUCTION BY THE LOCAL AUTHORITY, PROVISION OF T HE STREET LIGHTS IN THE HOUSING PROJECT MAINTENANCE OF DRAINA GE TOGETHER GO ONLY TO ESTABLISH THAT APPROVAL OF HOUS ING PROJECT BY THE LOCAL AUTHORITY AND ACCORDED AS CONTEMPLATED IN SECTION 80IB. 2.2 ACCORDING TO ASSESSEE THE APPROVAL BY THE THI NDAL PANCHAYAT BY A LETTER TO THE SUB-REGISTRAR, ERODE COMMUNICATI NG NO OBJECTION TO REGISTER THE PLOTS, THE GRANT OF APP ROVAL OF THE HOUSE PLANS OF ALL THE HOUSES IN THE HOUSING PROJEC TS BY THE LOCAL AUTHORITY, LEVY OF TAX ON THE HOUSES AFTER COMPLETI ON OF CONSTRUCTION BY THE LOCAL AUTHORITY, PROVISION OF E LECTRIC SUPPLY TO I.T.A.NO.903/MDS/2013. :- 5 -: THE STREET LIGHTS IN THE HOUSING PROJECT, MAINTENAN CE OF DRAINAGE TOGETHER GO ONLY TO ESTABLISH THAT APPROVAL OF HOUS ING PROJECT BY THE LOCAL AUTHORITY WAS ACCORDED AS CONTEMPLATED IN SECTION 80IB. 3. ACCORDING TO THE ASSESSING OFFICER, THE ABOV E CONTENTION OF THE ASSESSEE IS NOT PLACING AS A PROOF FOR APPROVAL OF PROJECT- WHICH WAS NOTHING BUT NO-OBJECTION CERTIFICATE ISSU ED BY THE PRESIDENT, THINDAL PANCHAYAT, ERODE FOR REGISTERING THE LANDS IN SITE NOS.18 TO 37. IN THIS CERTIFICATES THE NAME OF THE ASSESSEE FIRM IS NOT AT ALL APPEARED ANYWHERE, TO CONSIDER THE CONTE NTION OF THE ASSESSEE. IN OTHER WORDS, THERE WAS NO NEXUS BETWEE N THESE CERTIFICATES AND THE SO-CALLED THE APPROVAL OF THE PROJECT AS STATED BY THE ASSESSEE. THE CERTIFICATES WHICH THE ASSESSE E HAS RELIED UPON FOR CLAIMING DEDUCTION U/S.80IB CANNOT BE STRE TCHED TO TREAT OR CONSTRUED AS APPROVAL OF THE PROJECTS OF THE ASS ESSEE. IN VIEW OF THESE FACTS, THE ABOVE CONTENTION OF THE ASSESSEE T HAT IT HAS GOT APPROVAL FROM THE LOCAL AUTHORITY AS STIPULATED IN THE PROVISIONS OF SECTION 80IB OF THE INCOME TAX ACT WAS INCORRECT, I NADMISSIBLE AND NOT MAINTAINABLE, SINCE THE LOCAL AUTHORITY HAS NOT GIVEN ANY APPROVAL TO THE ASSESSEE-FROM. IN OTHER WORDS, TH E ASSESSEE HAS FAILED TO DISCHARGE THE ONUS OF PROVING THAT ITS PR OJECT GOT APPROVAL I.T.A.NO.903/MDS/2013. :- 6 -: OF LOCAL AUTHORITY AS STATUTORY PRECONDITION FOR CL AIMING THE DEDUCTION U/S.80IB OF THE ACT. HENCE, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE U/S.80IB OF THE ACT. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) OBSERVED THAT THE ASSESSEE WAS NOT THE OWNER OF T HE LAND. THE LAND OWNER DID THE LAYOUT AND SOLD THE PLOTS TO DIF FERENT PEOPLE. THE APPROVAL FOR HOUSING PLANS WAS DONE BY THINDAL PANCHAYAT, ERODE. AS SEEN FROM THE DETAILS, THE HOUSING PLANS WERE SUBMITTED BY THE INDIVIDUAL PLOT OWNERS TO THINDAL PANCHAYAT FOR APPROVAL. THE ASSESSEE WAS NOT INVOLVED IN THE APPROVAL OF TH E HOUSING PLANS OF THE PROJECT. THE PERSONS WHO PURCHASED TH E INDIVIDUAL PLOTS HAVE APPLIED SEPARATELY IN THEIR INDIVIDUAL S TATUS TO THE SAID PANCHAYAT FOR APPROVAL OF THE HOUSING PLAN. THE ASS ESSEE WAS INVOLVED AT THIS STAGE OF THE PROJECT AND WAS EXECU TING THE CONSTRUCTION PART OF THE INDIVIDUAL HOUSES OF THE P LOT OWNERS. AS SEEN FROM THE AGREEMENT IT WAS VERY CLEAR THAT THE INDIVIDUAL PERSONS/PLOT OWNERS ENTERED INTO A CONSTRUCTION CON TRACT AGREEMENT WITH THE ASSESSEE FOR CONSTRUCTION OF THE IR HOUSES. THE ASSESSEE WAS A MERE CONTRACTOR AND WAS DOING CONSTR UCTION OF THE I.T.A.NO.903/MDS/2013. :- 7 -: HOUSES. THE ASSESSING OFFICER IN HIS ORDER AT PAGE 5 STATED THAT 'THINDAL PANCHAYAT HAS ONLY ISSUED A NO-OBJECTION C ERTIFICATE FOR CONSTRUCTION OF THEIR HOUSES AND NOT A APPROVAL OF THE PLAN OF THE HOUSES. AS SEEN FROM THE CERTIFICATES THE NAME OF T HE ASSESSEE FIRM DOES NOT APPEAR, WHICH CLEARLY PROVES THAT THE ASSESSEE FIRM IS NOT INVOLVED IN THE APPROVAL OF THE PROJECT. THE ASSESSING OFFICER ELABORATELY DISCUSSED ABOUT THE AUDIT REPORT IN FOR M NO.10CCB. AS SEEN FORM THE PROVISIONS OF SECTION 80LB(10) THE AP PROVAL OF THE PLAN BY THE LOCAL AUTHORITY FOR A HOUSE PROPERTY IS VERY CRUCIAL, BECAUSE THE SECTION SPECIFIES THE TIME OF THE COMPL ETION OF THE PROJECT, AFTER THE APPROVAL TO CLAIM THE DEDUCTION U/S.80IB(10). THE DATE OF THE COMPLETION OF THE HOUSING PROJECT W ILL BE TAKEN AS THE DATE ON WHICH THE COMPLETION CERTIFICATES WERE ISSUED BY THE LOCAL AUTHORITY. THE ASSESSEE FAILED TO SATISFY THI S CONDITION. IN THE CASE OF THE ASSESSEE, THE INDIVIDUAL PLOT OWNERS SU BMITTED THE HOUSING PLAN FOR APPROVAL WHICH CLEARLY SHOWS THAT THE PROJECT IS NOT DEVELOPED BY THE ASSESSEE FIRM. THE ASSESSING O FFICER HAS CLEARLY BROUGHT OUT IN HIS ORDER REGARDING THE VIOL ATION MADE BY THE APPELLANT FIRM IN FULFILLING THE CONDITIONS FOR CLA IMING DEDUCTION U/S.80IB(10). HENCE, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN DI SALLOWING THE I.T.A.NO.903/MDS/2013. :- 8 -: DEDUCTION U/S80IB(10). AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSEE HAD DEVELOPED 'AITHREYA AVENUE PROJECT III'. THE A SSESSEE ORGANIZED THE PURCHASE OF THE LAND FROM THE ORIGINA L OWNER, LAID THEM INTO PLOTS, GOT THE PLOTS REGISTERED IN THE NA ME OF THE BUYERS, GOT THE HOUSING PLANS APPROVED, DEVELOPED THE HOUSI NG PROJECT, PROVIDED THE NECESSARY INFRASTRUCTURE, OBTAINED HOU SING LOANS FOR THE BUYERS. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTED THAT THE STATE GOVERNMENT HAS FORMULATED THAT ALL BIGGER PROJECTS SHALL BE SUBJECT TO APPROVAL BY DIRECTOR O F TOWN PLANNING, CHENNAI. IN CASE OF SMALLER HOUSING PROJECTS SITUAT E IN VILLAGE PANCHAYATS THE POWER OF APPROVAL IS GIVEN TO THE RE SPECTIVE PANCHAYATS. THE APPROVAL ORIGINATES EVEN FROM THE S TAGE OF REGISTRATION OF THE HOUSING PLOTS BY THE JURISDICTI ONAL SUB REGISTRARS. WITHOUT THE PRIOR APPROVAL OF THE JURISDICTIONAL PA NCHAYATS EVEN THE SUB REGISTRAR SHALL NOT REGISTER THE TRANSFER OF PL OTS. THIS IS THE REASON WHY THE APPROVAL FOR REGISTRATION OF PLOTS W AS GIVEN BY THE THINDAL PANCHAYAT, THE JURISDICTIONAL LOCAL AUTHORI TY FOR HOUSING PROJECT. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE FURTHER SUBMITTED THAT EVERYONE OF THE HOUSING PLANS IN THE HOUSING PROJECT I.T.A.NO.903/MDS/2013. :- 9 -: WAS APPROVED BY THE LOCAL AUTHORITY AND TAX WAS LEV IED ON ONLY ON COMPLETION OF THE HOUSING PROJECT. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTED THAT THE PROJECT IS ON AN AREA OF 47,425.37 SQUARE FEET BEING IN EXCESS OF THE PR ESCRIBED MINIMUM AREA OF 1 ACRE. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTED THAT THE AREA OF EVERYONE OF THE HOUSES IN THE HOUSING PROJECT IS LESS THAN 1500 SQUARE FEET. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTED THAT THE LEARNED ASSESSING OFFICER FAILED TO CONSIDER THAT THE HOUSING PROJECT ENVISAGES NOT ONLY THE CONSTRUCTION OF HOUSES. IT ENCOMPASSES A P ACKAGE OF FACILITIES PROVIDED TO ALL THE BENEFICIARIES IN THE HOUSING PROJECT INCLUDING PROVISION OF COMMON TAR TOPPED ROAD, PROV ISION OF STREET LIGHTS, COMMON BORE WELL, ELECTRIC MOTOR, STREET PI PES FOR EVERY 5 HOUSES IN THE HOUSING PROJECT, DRAINAGE, COMMON COM POUND WALL FOR THE ENTIRE HOUSING PROJECT ALONG WITH THE OFFIC E ROOM BUILT AND HANDED OVER FOR THE BENEFIT OF THE RESIDENTS OF THE AITHREYA AVENUE PROJECT III AND CHILDREN'S PLAY AREA FOR THE HOUSIN G PROJECTS. THE LEARNED ASSESSING OFFICER ERRED IN CONSIDERING THAT THE LETTER BY THE LOCAL AUTHORITY TO THE JURISDICTIONAL SUB REGIS TRAR CONVEYING NO OBJECTION FOR REGISTRATION OF LAND, ACCEPTANCE O F THE ROAD WITHIN THE HOUSING PROJECT SETTLED IN ITS FAVOUR BY THE LAND I.T.A.NO.903/MDS/2013. :- 10 -: OWNER, APPROVAL OF INDIVIDUAL HOUSE PLANS, CONSTITU TE APPROVAL OF THE HOUSING PROJECT. THE LEARNED ASSESSING OFFIC ER ERRED IN CONTENDING THAT THE APPLICATION FOR APPROVAL SHOULD HAVE BEEN MADE IN ASSESSEE FIRM, THE APPROVAL SHOULD HAVE BEE N IN ASSESSEE NAME, THE LAND SHOULD HAVE BEEN OWNED BY T HE ASSESSEE, THE ROAD WITHIN THE HOUSING PROJECT SHOUL D HAVE BEEN OWNED BY AND SETTLED IN FAVOUR OF THE LOCAL AUTHORI TY BY THE ASSESSEE. THE ASSESSING OFFICER ERRED IN CONTENDIN G THAT THE SIZE OF THE VARIOUS PLOTS OF LAND IN THE HOUSING PR OJECT SHOULD HAVE BEEN UNIFORM TO BE ELIGIBLE FOR AVAILING OF TH E BENEFIT OF DEDUCTION UNDER SECTION 80IB(10). IT IS SUBMITTED THAT OTHER HOUSING ACTIVITY BY NAME 'AITHREYA NAGAR' WAS NOT M ENTIONED SINCE THE ASSESSEE FIRM HAS NOT CLAIMED DEDUCTION U NDER SECTION 80IB(10) FOR THE 'AITHREYA NAGAR' PROJECT. WHILE A GREEING WITH THE CONTENTION OF THE LEARNED ASSESSING OFFICER THA T THE 'BUILT UP AREA' IS INNER MEASUREMENT OF THE HOUSE AS INCREASE D BY WALL THICKNESS, PROJECTIONS AND BALCONIES, NOT INCLUDING THE COMMON AREA WITHIN THE MEANING OF SECTION 80IB(10), IT WAS CONTENDED THAT THE AREA AS STATED IN THE PLAN IS EXACTLY THE SAME WITHIN THE MEANING OF BUILT UP AREA UNDER SECTION 80IB(10). TH E LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTED TH AT I.T.A.NO.903/MDS/2013. :- 11 -: DEDUCTION UNDER SECTION 80LB COULD BE CLAIMED ONLY ON COMPLETION OF THE PROJECT AND NOT EVERY YEAR DURING THE COURSE OF CONSTRUCTION BASED ON PERCENTAGE COMPLETION METH OD. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTE D THAT D EDUCTION UNDER SECTION 80LB IS ALLOWABLE FOR DEVELO PING AND BUILDING HOUSING PROJECT. THE SECTION DOES NOT CONT EMPLATE OWNING OF THE LAND PRIOR TO CONSTRUCTION OF LAND BY THE AS SESSEE AS HELD BY RADHE DEVELOPERS & OTHERS VS. INCOME TAX OFFICER AND OTHERS (43(I)ITCL 232 GUJARAT HIGH COURT) WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE ENTERED INTO AGREEMENT WITH THE LAND O WNERS FOR DEVELOPMENT OF HOUSING PROJECT ON THE SAID LAND BY UTILISING ITS KNOWLEDGE AND CAPITAL, THEN THE DEDUCTION UNDER SEC TION 80IB(10) CANNOT BE DENIED TO THE ASSESSEE BY TREATING IT AS A MERE WORKS CONTRACTOR. FURTHER IT WAS HELD THAT IT IS THE ENTR EPRENEURIAL ACTIVITY IN DEVELOPMENT WHICH MEETS THE OBJECTIVE OF PROMOTI NG HOUSING. THE DEVELOPER IS ELIGIBLE FOR DEDUCTION EVEN IN THE CONTEXT OF A NARROWER INTERPRETATION. 5.1 THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE CONTENDE D THAT COMMENCEMENT CERTIFICATE AND COMPLETION CERTIF ICATE ARE REQUIRED ONLY FOR THE PURPOSE OF ASCERTAINING AND R ECKONING THE I.T.A.NO.903/MDS/2013. :- 12 -: PERIOD OF COMMENCEMENT AND COMPLETION AND THAT THEY ARE NOT THE FACTORS FOR DETERMINING THE ELIGIBILITY OF DEDUCTIO N UNDER SECTION 80IB IN VIEW OF THE FACT THAT THERE ARE NO PRESCRI BED FORMAT FOR COMMENCEMENT AND COMPLETION CERTIFICATES . 5.2 ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE T HE ASSESSING OFFICER ERRED IN CONTENDING THAT ONLY PERCENTAGE COMPLETION METHOD SHOULD HAVE BEEN FOLLOWED BY THE ASSESSEE. WE SUBMIT THAT THE ASSESSEE IS UNDER NO SUCH OBLIGATIO N TO FOLLOW ONLY PERCENTAGE COMPLETION METHOD. SECTION 145 DOES NOT NECESSITATE THAT SINCE PERCENTAGE COMPLETION METHOD HAS NOT YET BEEN NOTIFIED. ONLY NOW THE CBDT HAS CALLED FOR ASSESSEE'S RESPONS E FOR THE PROPOSED TAX ACCOUNTING STANDARDS WHICH WOULD CALL UPON THE ASSESSEE TO FOLLOW PERCENTAGE COMPLETION METHOD FRO M THE DATE TO BE NOTIFIED. 5.3 THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTED THAT SECTION 80LB IS A BENEVOLENT SECTION AND HENCE IT IS TO BE CONSTRUED LIBERALLY. IN THE FOLLOWING CASES THE HON OURABLE INCOME TAX APPELLATE TRIBUNALS HAVE HELD THAT EVEN IF THE BUILT UP AREA OF SOME OF THE RESIDENTIAL UNITS ARE IN EXCESS OF THE PRESCRIBED LIMITS, PROPORTIONATE DEDUCTION SHALL BE ALLOWED TO THE ASS ESSEE UNDER I.T.A.NO.903/MDS/2013. :- 13 -: SECTION 801B. THE BUILT UP ARE OF ONE OR MORE OF TH E RESIDENTIAL UNITS IN THE HOUSING PROJECT IN EXCESS OF THE LIMIT S WILL NOT MAKE THE CLAIM OF DEDUCTION UNDER SECTION 801B INELIGIBLE. ITO VS AIR DEVELOPERS (2009) 30 (II) 3191TR (AT) 167 (NAGPUR); CLT VS. BRIGADE ENTERPRISES PRIVATE LIMITED (BANG TRIB. ITA NO.1198/BANG 2007 DATED 29.08.2 008 (25 (II) ITCL 300; ASST.CLT VS. SHETH DEVELOPERS P LTD 31 (II) ITCL 397 (MUMBAI TRIBUNAL) 33 S0T 277; BENGAL AMBUJA HOUSING DEVELOPMENT LTD VS DEPUTY CLT ITA NO.1595/KOL/2005 AND CLT VS EKTA HOUSING P LTD 471 (II) ITCL 404 MUMBAI 'J' TRIBUNAL) SIR BUILDERS VS. ASSISTANT CLT (2010) 35 (1/) ITCL 176 (BANGALORE 'A' TRIBUNAL) 3 ITRS 569. 5.4 ACCORDING THE LD AUTHORISED REPRESENTATIVE FOR ASSESSEE T HE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE T HAT THE ASSESSEE WAS A DEVELOPER AND BUILDER AND NOT A MERE WORKS CO NTRACTOR. THIS IS FORTIFIED BY THE VARIOUS EVIDENCES LIKE PROVISIO N OF INFRA STRUCTURE AND FACILITIES PROVIDED TO THE RESIDENTS OF THE HOU SING PROJECT. 5.5 THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE FURTHER SUBMITTED THAT THE CONTENTION OF THE LEARNED ASSESS ING OFFICER THAT THE SIZE OF THE PLOTS AND THE BUILT UP ARE OF THE R ESIDENTIAL UNITS SHOULD BE UNIFORM SO AS TO CLAIM THE BENEFITS OF DE DUCTION UNDER I.T.A.NO.903/MDS/2013. :- 14 -: SECTION 80IB IS CONTRARY TO THE PROVISION OF SECTION 80IB. FURT HER, THE CONTENTION OF THE LEARNED ASSESSING OFFICER THA T THE AREA OF PARK IN EXCESS OF THE PRESCRIBED LIMIT OF 2000 SQUA RE FEET IS IN VIOLATION OF SECTION 80IB IS CONTRARY TO THE PROVIS IONS OF SECTION 80IB. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIE D ON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE CONTENTION OF THE ASSESSEES COUNSEL IS THAT THE ASSESSEE REGISTERED THE PURCHASE OF THE LAND FROM T HE ORIGINAL OWNER, LAID THEM INTO PLOTS, GOT THE PLOTS REGISTER ED IN THE NAME OF THE BUYERS, GOT THE HOUSING PLAN APPROVED, DEVELOPE D THE HOUSING PROJECT, PROVIDING THE NECESSARY INFRASTRUCTURE, PR OVIDING HOUSING LOANS FOR THE BUYERS, HIS INVOLVEMENT FROM THE COMM ENCEMENT OF THE PROJECT TO THE COMPLETION OF THE PROJECT UNDER TAKEN BY THE ASSESSEE HIMSELF AND IN VIEW OF THE ORDER OF THE C O-ORDINATE BENCH IN THE CASE OF SANGHVI & DOSHI ENTERPRISE VS. ITO (2011) 131 ITD 151 (CHEN) , THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(1 0) OF THE ACT. ADMITTEDLY, AS HELD BY THE CO-ORDINATE BE NCH IN THE CASE I.T.A.NO.903/MDS/2013. :- 15 -: OF SANGHVI & DOSHI ENTERPRISE CONFIRMED BY MADRAS HIGH COURT, THE ASSESSEE NEED NOT BE A OWNER OF THE LAND AND AS SESSEE IS ENTITLED FOR DEDUCTION U/S.80IB (10). THE ASSESSEE UNDERTAKES ALL THE RISK INVOLVED FROM THE COMMENCEMENT OF THE PROJ ECT TO THE COMPLETION OF THE PROJECT. IN OTHER WORDS, THE ASSE SSEE UNDERTOOK DEVELOPMENT OF THE PROJECT IN TERMS OF SECTION 80IB (10) OF THE ACT. THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. IN OUR VIEW TO GIVE A FINDING WHETHER THE ASSESSEE IS ACTUALLY A DEVELOPER OR CONTRACTOR, ONE HAS TO SEE THE AGREEM ENT THE ASSESSEE ENTERED WITH THE PROSPECTIVE BUYER. THOUG H THERE IS AN ELABORATE DISCUSSION IN THE ASSESSMENT ORDER, THE CONTENTS OF THE AGREEMENT THE ASSESSEE ENTERED WITH THE PROSPECTIVE BUYER WERE NOT DISCUSSED. IN OUR OPINION, IT IS APPROPRIATE T O GO THROUGH THE AGREEMENT ENTERED WITH THE PROSPECTIVE BUYER AND DE CIDE THE ISSUE IN THE LIGHT OF THE JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF SANGHVI & DOSHI ENTERPRISE [2013] 29 TAXMANN.COM 386 (MADRAS ). ACCORDINGLY, WE REMIT THE ENTIRE ISSUE TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO EXAMINE WHETHER THE ASSES SEE MADE INVESTMENT BY HIMSELF AND EXECUTED DEVELOPMENT WORK AND CARRIED OUT CIVIL WORKS, DEPLOYMENT OF TECHNICAL PERSONAL, PLANT AND MACHINERY, TECHNICAL KNOWHOW, EXPERTISE AND FINANC IAL RESOURCES I.T.A.NO.903/MDS/2013. :- 16 -: BEFORE HANDING OVER THE COMPLETED PROJECT. IF IT I S SO, THEN THE ASSESSEE HAS TO BE TREATED AS DEVELOPER RATHER TH AN CONTRACTOR. IN OTHER WORDS, THE ASSESSEE WOULD NOT BE DENIED DE DUCTION U/S.80IB(10) IF THE CONTRACT INVOLVES DESIGN, DEVEL OPMENT, FINANCIAL INVOLVEMENT AND TECHNICAL KNOWHOW FROM ASSESSEES S IDE ITSELF. 7. ACCORDINGLY, WE REMIT THE ENTIRE ISSUE TO THE F ILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.903/MDS/2013 IS PARTLY ALLOWED FOR STATISTICAL P URPOSES. ORDER PRONOUNCED ON FRIDAY, THE 29 TH DAY OF MAY, 2015, AT CHENNAI. SD/- SD/- ( ! ) (CHALLA NAGENDRA PRASAD) ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER '# /CHENNAI. $% /DATED:29.05.2015. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF. I.T.A.NO.903/MDS/2013. :- 17 -: