ACIT, CHENNAI V. C.Subba Reddy (HUF), CHENNAI

ITA 936/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7739 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 12-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Section: 143(3); 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' # . $ , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO.936/MDS/2016 ( / ASSESSMENT YEAR:2010-11) THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-1(1) CHENNAI-34. VS M/S.C.SUBBA REDDY (HUF) SUKRITI, 19/1 THIRD CROSS STREET, R.A.PURAM, CHENNAI-600 028. PAN:AACHC2523G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SUPRIYO PAL, JCIT /RESPONDENT BY : MR. S.SRIDHAR, ADVOCATE /DATE OF HEARING : 1 ST DECEMBER, 2016 /DATE OF PRONOUNCEMENT : 29 TH DECEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)- 2, CHENNAI DATED 27.01.2016 IN ITA NO.72 /CIT(A)- 2/2013- 14 FOR THE ASSESSMENT YEAR 2010-11 PASSED UNDER SE CTION 143(3) R.W.S 250(6) OF THE ACT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL, HOWEVER, THE CRUX OF THE ISSUE IN ITS APPEAL IS AS FOLLOWS:- 2 ITA NO. 936/MDS/2016 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.5,06,47,254/- MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 80IB(10) OF THE ACT SINCE A PORTION OF THE TOTAL BUILT UP AREA OF THE PROJECT EXCEEDED 5000 SQ. FT,. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A HUF ENGAGED IN THE BUSINESS OF BUILDING PROMOTERS ETC. , FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 26.09.2010 DECLARING TOTAL INCOME OF RS.1,33,65,468 /-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SEC TION 143(2) WAS ISSUED TO THE ASSESSEE. SUBSEQUENTLY, TH E ASSESSMENT WAS COMPLETED BY THE LEARNED ASSESSING O FFICER UNDER SECTION 143(3) OF THE ACT ON 26.03.2013, WHER EIN THE LEARNED ASSESSING OFFICER AMONGST CERTAIN OTHER DISALLOWANCES, ALSO DISALLOWED THE DEDUCTION CLAIME D BY THE ASSESSEE UNDER SECTION 80IB (10) OF THE ACT SINCE A PORTION OF THE PROJECT CONSISTED OF A COMMERCIAL BUILDING EXCE EDING 5000 SQ.FT. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) FOLLOWING THE DECISION OF THE CHENNAI BEN CH OF THE 3 ITA NO. 936/MDS/2016 TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2009-10 ON THE IDENTICAL ISSUE AND WITH REGARD TO T HE SAME PROJECT IN ITA NO.1733/MDS/2013 DATED 18.12.2015 AL LOWED THE APPEAL OF THE ASSESSEE, AGAINST WHICH THE REVEN UE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE STRONGLY ARGUED IN SUPPORT OF THE ORDER OF THE LEAR NED ASSESSING OFFICER WHILE AS THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED IN SUPPORT OF THE ORDER OF TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS). THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER POINTED OUT THAT ON THE IDENTICAL FACTS AND ON THE SAME PROJECT, THE CHENN AI BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR 2009-10 IN ITA NO.1733/MDS/2013 DAT ED 18.12.2015 HAD DECIDED THE ISSUE IN FAVOUR OF THE A SSESSEE. THEREFORE, HE PLEADED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY BE CONFIRM ED. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT TO THE SUBMISSIONS OF THE LEARNED AUTHOR IZED REPRESENTATIVE. 4 ITA NO. 936/MDS/2016 6. AFTER HEARING BOTH SIDES, WE FIND MERIT IN THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIV E. THE SIMILAR ISSUE WITH RESPECT TO THE SAME PROJECT IT W AS DECIDED BY THE CHENNAI BENCH OF THE TRIBUNAL IN THE ASSESSE ES OWN CASE FOR THE EARLIER ASSESSMENT YEAR 2009-10 IN ITA NO.1733/MDS/2013 DATED 18.12.2015 IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER:- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE FIRST OBJECTION OF THE REVENUE IS THAT THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL CUM COMMERCIAL COMPLEX. ADMITTEDLY, IT IS A JOINT VENTURE PROJECT AND THE LAND BELONGS TO THE LAND OWNER M/S SHYAMALA PICTURES AND HOTELS PVT. LTD. AS PER THE JOINT DEVELOPMENT AGREEMENT, THE ASSESSEE WAS ALLOTTED THE RESIDENTIAL BLOCK. THE COST OF THE LAND IN WHICH THE RESIDENTIAL PROJECT WAS DEVELOPED BY THE ASSESSEE WAS MET BY CONSTRUCTING COMMERCIAL BUILDING TO THE OWNER IN THE OTHER BLOCK OF THE LAND. THIS IS OBVIOUS FROM JOINT DEVELOPMENT AGREEMENT. IN FACT, THE COMMERCIAL BUILDING WAS RETAINED BY THE LAND OWNER M/S SHYAMALA PICTURES AND HOTELS PVT. LTD. NO PART OF THE COMMERCIAL BUILDING WAS ALLOTTED TO THE ASSESSEE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT AS PER THE JOINT DEVELOPMENT AGREEMENT, WHEN THE ASSESSEE WAS GIVEN ONLY THE RESIDENTIAL AREA, AND THE ASSESSEE IS CLAIMING DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT ONLY IN RESPECT OF RESIDENTIAL AREA, THERE IS 5 ITA NO. 936/MDS/2016 NO REASON TO DISALLOW THE CLAIM OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY ON THIS ISSUE. 8. NOW COMING TO THE BUILT-UP AREA, WHICH EXCEEDS 1500 SQ.FT., ADMITTEDLY, THE ASSESSING OFFICER FOUND THAT THE COMMON AREA AND CAR PARK AREA HAVE TO BE INCLUDED IN THE BUILT-UP AREA. THI S WAS THE SUBJECT MATTER OF APPEAL BEFORE THE HIGH COURT IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2004-05. THE MADRAS HIGH COURT, AFTER REFERRING TO THE DEFINITION OF BUILT-UP AREA WHIC H CAME INTO EFFECT FROM 01.04.2005, FOUND THAT THERE IS NO JUSTIFICATION IN INCLUDING CAR PARK AREA IN T HE DEFINITION OF BUILT-UP AREA OF RESIDENTIAL UNIT F OR THE PURPOSE OF DETERMINING THE MAXIMUM BUILT-UP AREA. THE MADRAS HIGH COURT HAS ALSO FOUND THAT THE COMMON AREA SHARED WITH OTHER RESIDENTIAL UNIT CANNOT BE TREATED AS PART OF BUILT-UP AREA. I N VIEW OF THIS JUDGMENT OF MADRAS HIGH COURT IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2004- 05, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY FOLLOWED THE ORDER OF THIS TRIBUNAL.THEREFORE, THE ORDER OF THE CIT(APPEALS) IS CONFIRMED. 7. SINCE THE LD.CIT(A) HAS ONLY FOLLOWED THE ORDER OF THE TRIBUNAL OF THE EARLIER ASSESSMENT YEAR IN THE ASSE SSEES OWN CASE WITH RESPECT TO THE SAME PROJECT, WE DO NO T FIND IT NECESSARY TO INTERFERE WITH HIS ORDER ON THIS ISSUE . ACCORDINGLY, WE HEREBY CONFIRM THE ORDER OF THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS). 6 ITA NO. 936/MDS/2016 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH DECEMBER, 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 29 TH DECEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF