Arihant Foundations & Housing Ltd., CHENNAI V. DCIT, CHENNAI

MA 179/CHNY/2015

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4010 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 11-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: D K BHANDARI

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI ... , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER M.P. NO.179/MDS/2012 (IN I.T.A. NO.1689/MDS/2012) ' (' / ASSESSMENT YEAR : 2007-08 & M.P. NO.180/MDS/2012 (IN I.T.A. NO. 1623/MDS/2012) ' (' / ASSESSMENT YEAR : 2009-10 M/S ARIHANT FOUNDATIONS & HOUSING LTD., NO.271, POONAMALLE HIGH ROAD, CHENNAI - 600 010. PAN : AAACA 7402 P V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), CHENNAI - 600 034. (*+' /PETITIONER) (*,+-/ RESPONDENT) *+' / 0 /PETITIONER BY : SH. D.K. BHANDARI, FCA *,+- / 0 / RESPONDENT BY : SH. P. RADHAKRISHNAN, JCIT 1 / 2% / DATE OF HEARING : 04.03.2016 3'( / 2% / DATE OF PRONOUNCEMENT : 18.03.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT MISCELLANEOUS PETITIONS ON THE GROUND THERE IS AN ERROR IN THE ORDER OF THI S TRIBUNAL DATED 29.05.2015. 2 M.P. NOS.179 & 180/MDS/15 2. SHRI D.K. BHANDARI, THE LD. REPRESENTATIVE FOR T HE ASSESSEE, SUBMITTED THAT AT PAGE 8, PARA 6 OF THE ORDER OF TH IS TRIBUNAL IN ASSESSEES APPEAL IN I.T.A. NO.1689/MDS/2012, THIS TRIBUNAL FOUND THAT THERE IS NO NEED FOR ALLOCATION OF ADMINISTRAT IVE AND COMMON EXPENSES BETWEEN NON-ELIGIBLE AND ELIGIBLE PROJECTS . HOWEVER, AT PAGE 9, PARA 8, THIS TRIBUNAL OBSERVED THAT THE CIT (APPEALS) HAS RIGHTLY ALLOCATED THE ADMINISTRATIVE EXPENSES AND C OMMON EXPENSES BETWEEN ELIGIBLE AND NON-ELIGIBLE PROJECTS . ACCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS CONFIRMED. IN VIE W OF THE FINDING AT PARA 6, ACCORDING TO THE LD. REPRESENTATIVE, IN PAR A 8 THE OBSERVATION MADE BY THIS TRIBUNAL NEEDS TO BE RECTI FIED. 3. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT IN THE SAME ORDER, WHILE DISPOSING THE REVENUES APPEAL IN I.T. A. NO.1623/MDS/2012, AT PAGE 13, PARA 15, THE TRIBUNA L OBSERVED THAT THE ASSESSEE HAS PRODUCED COMPLETION CERTIFICATE FR OM CHENNAI CORPORATION. IN FACT, THE COMPLETION CERTIFICATE W AS PRODUCED FROM THORAIPAKKAM PANCHAYAT AND NOT FROM CHENNAI CORPORA TION. THE SUBJECT LAND IS SITUATED AT THORAIPAKKAM PANCHAYAT. AT THE RELEVANT POINT OF TIME, THE JURISDICTION OF THE CORPORATION OF CHENNAI WAS NOT EXTENDED. THEREFORE, WHEREVER THE CHENNAI CORPORA TION IS 3 M.P. NOS.179 & 180/MDS/15 REFERRED IN THIS ORDER, THAT NEEDS TO BE MODIFIED A ND REFERRED AS THORAIPAKKAM PANCHAYAT. 4. THE LD. REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT THIS TRIBUNAL AT PAGE 15, PARA 18 OF THE ORDER FOUND THAT UNDER THE PROVISIONS OF TAMIL NADU TOWN & COUNTRY PLANNIN G ACT, 1971, IN RESPECT OF PLANNING, THE CMDA ALONE HAS POWER AND J URISDICTION TO GRANT PLANNING PERMISSION. REFERRING TO DIRECTORAT E OF TOWN & COUNTRY PLANNING, GOVERNMENT OF TAMIL NADU NOTIFICA TION, WHICH WAS SAID TO BE DOWNLOADED FROM THE WEBSITE, THE LD. REPRESENTATIVE SUBMITTED THAT THE CMDA DOES NOT ENTERTAIN DIRECTLY FROM THE PUBLIC AND APPLICATIONS SHALL BE ENTERTAINED ONLY THROUGH LOCAL AUTHORITIES, NAMELY, LOCAL BODIES, VILLAGE PANCHAYAT, PANCHAYAT UNION, ETC. THEREFORE, THE ASSESSEE HAS TO NECESSARILY APPROACH CMDA ONLY THROUGH PANCHAYAT AND NOT DIRECTLY. REFERRING TO T HE JUDGMENT OF MADRAS HIGH COURT IN CIT V. SANGHVI AND DOSHI ENTER PRISE IN TAX CASE (APPEAL) NOS.581 & 582 OF 2011 DATED 01.11.201 2, A COPY OF WHICH IS FILED BY THE ASSESSEE, THE LD. REPRESENTAT IVE SUBMITTED THAT THE MADRAS HIGH COURT, AFTER REFERRING TO TOWN AND COUNTRY PLANNING ACT, FOUND THAT THE APPROPRIATE AUTHORITY FOR GRANTING APPROVAL FOR CONSTRUCTION OF BUILDING IS LOCAL AUTH ORITY. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE COMPLETION CERTIFICATE 4 M.P. NOS.179 & 180/MDS/15 GRANTED BY THE LOCAL AUTHORITY IS SUFFICIENT ENOUGH FOR GRANTING OF DEDUCTION UNDER SECTION 80-IB OF THE INCOME-TAX ACT , 1961 (IN SHORT 'THE ACT'). IN VIEW OF THE ABOVE, ACCORDING TO THE LD. REPRESENTATIVE, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL WHI CH NEEDS TO BE RECTIFIED. 5. WE HAVE HEARD SH. P. RADHAKRISHNAN, THE LD. DEPA RTMENTAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., TH E FIRST ERROR POINTED OUT BY THE LD. REPRESENTATIVE FOR THE ASSES SEE AT PARA 8, PAGE 9 OF THE ORDER NEEDS TO BE RECTIFIED. SIMILAR LY, SINCE THE ASSESSEE CLAIMS THAT THE LAND IN QUESTION FALLS WIT HIN THE JURISDICTION OF THORAIPAKKAM PANCHAYAT, WHEREVER CHENNAI CORPOR ATION HAS BEEN REFERRED, IT HAS TO BE REFERRED AS THORAIPAKK AM PANCHAYAT. THE ORDER OF THE TRIBUNAL IS RECTIFIED ACCORDINGLY. 6. COMING TO PARA 18, PAGE 15 OF THE ORDER, THE LD. D.R. SUBMITTED THAT THIS TRIBUNAL, AFTER CONSIDERING THE RELEVANT PROVISIONS OF TAMIL NADU TOWN & COUNTRY PLANNING AC T, 1971 AND DELEGATION OF POWER BY THE CMDA TO ALL LOCAL AUTHOR ITIES, SPECIFICALLY FOUND THAT THE POWER TO GRANT PLANNING PERMISSION W ITH RESPECT TO GROUND + ONE FLOOR IS DELEGATED TO MUNICIPAL AUTHOR ITIES AND PANCHAYATS. IN CASE THE CONSTRUCTION EXCEEDS MORE THAN GROUND + ONE FLOOR, THE APPROVAL HAS TO BE GRANTED BY THE CM DA. IN THE CASE 5 M.P. NOS.179 & 180/MDS/15 BEFORE US, ACCORDING TO THE LD. D.R., THE ASSESSEE CONSTRUCTED MULTISTORIED BUILDING EXCEEDING 3 FLOORS, THEN WITH OUT THE PERMISSION OF CMDA, THE ASSESSEE COULD NOT HAVE CONSTRUCTED TH E BUILDING. THEREFORE, FOR THE ASSESSEE, THE AUTHORITY TO GRANT THE APPROVAL IS CMDA AND NOT THE LOCAL PANCHAYAT. THEREFORE, THERE IS NO ERROR MUCH LESS PRIMA FACIE ERROR IN THE ORDER OF THIS TRIBUNAL. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. REPRESENTATIVE FOR THE ASSESSE E, AT PAGE 8, PARA 6 OF THE ORDER, THIS TRIBUNAL SPECIFICALLY FOU ND THAT THERE IS NO NEED FOR ALLOCATION OF ADMINISTRATIVE AND COMMON EX PENSES BETWEEN THE ELIGIBLE AND NON-ELIGIBLE PROJECTS. TH EREFORE, THE OBSERVATION MADE BY THIS TRIBUNAL AT PAGE 9, PARA 8 OF THE ORDER IS TOTALLY CONTRARY TO WHAT WAS FOUND AT PARA 6 AND TH US THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL, WHICH NEEDS TO BE RECTIFIED. ACCORDINGLY, THE SAME IS RECTIFIED AS FOLLOWS:- AT PAGE 9, PARA 8 THE FOLLOWING SHALL BE DELETED:- THAT THE CIT(APPEALS) HAS RIGHTLY ALLOCATED THE ADMINISTRATIVE EXPENSES AND COMMON EXPENSES ON THE RATIO BETWEEN 80-IB(10) PROJECTS AND NON-80-IB PROJECTS. THEREFORE, IN VIEW OF THE DISCUSSION MADE IN THE EARLIER PART OF THIS ORDER, WE DO NOT FIND ANY 6 M.P. NOS.179 & 180/MDS/15 INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND THE SAME IS CONFIRMED. FOLLOWING SHALL BE INSERTED AS PARA 8:- 8. WHILE CONSIDERING THE ASSESSEES APPEAL, THIS TRIBUNAL FOUND THAT THERE IS NO NEED FOR ALLOCATION OF ADMINISTRATIVE AND COMMON EXPENSES BETWEEN THE TWO PROJECTS. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOCATING THE COMMON EXPENSES AND ADMINISTRATIVE EXPENSES BETWEEN 80-IB(10) PROJECTS AND NON-80-IB(10) PROJECTS. IN VIEW OF THE FINDING OF THIS TRIBUNAL IN THE ASSESSEES APPEAL, THIS TRIBUN AL IS UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE. THE ASSESSING OFFICER I S DIRECTED NOT TO ALLOCATE ADMINISTRATIVE AND COMMON EXPENSES OTHER THAN THAT ALLOCATED IN THE BOOKS OF ACCOUNT OF THE ELIGIBLE PROJECTS. 8. SIMILARLY, AT PARA 15 AND OTHER PLACES, THIS TRI BUNAL REFERRED THAT THE COMPLETION CERTIFICATE AND APPROVAL WAS GR ANTED BY CHENNAI CORPORATION. NOW THE ASSESSEE SUBMITS THAT THE COMPLETION CERTIFICATE WAS GIVEN BY THORAIPAKKAM PA NCHAYAT SINCE THE LAND IS SITUATED WITHIN THE TERRITORIAL JURISDI CTION OF THORAIPAKKAM PANCHAYAT. THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT REFERENCE TO CHENNAI CORPORATION IN THE ORDER OF THIS TRIBUNA L IS AN ERROR WHICH NEEDS TO BE RECTIFIED. ACCORDINGLY, IT IS CLARIFIE D THAT WHEREVER 7 M.P. NOS.179 & 180/MDS/15 CHENNAI CORPORATION IS REFERRED IN THE ORDER OF THI S TRIBUNAL, IT SHALL BE READ AS THORAIPAKKAM PANCHAYAT. ACCORDINGLY, THE ORDER OF THIS TRIBUNAL IS RECTIFIED. 9. NOW COMING TO THE THIRD ERROR POINTED OUT BY THE LD. REPRESENTATIVE FOR THE ASSESSEE, SINCE THE LOCAL AU THORITY HAS GRANTED APPROVAL, ACCORDING TO THE LD. COUNSEL, THE COMPLETION CERTIFICATE GIVEN BY THE LOCAL AUTHORITY HAS TO BE TAKEN FOR GRANT OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. WE H AVE CAREFULLY GONE THROUGH THE JUDGMENT OF MADRAS HIGH COURT IN S ANGHVI AND DOSHI ENTERPRISE (SUPRA). IN THE CASE BEFORE THE M ADRAS HIGH COURT, THE HIGH COURT UPHELD THE OBSERVATION MADE B Y THIS TRIBUNAL THAT WHEN IT IS NOT DISPUTED THAT THE CORPORATION I S THE LOCAL AUTHORITY, THE CERTIFICATE ISSUED BY IT CANNOT BE D ISREGARDED. IN THE CASE BEFORE US, THIS TRIBUNAL AFTER GOING THROUGH T HE PROVISIONS OF TAMIL NADU TOWN & COUNTRY PLANNING ACT, 1971 AND PO WER DELEGATED TO THE LOCAL AUTHORITIES, FOUND THAT WHAT WAS DELEGATED TO THE LOCAL AUTHORITIES IS WITH REGARD TO PLANNING PE RMISSION IN RESPECT OF THE BUILDING WITH GROUND + ONE FLOOR. IF THE CO NSTRUCTION EXCEEDS MORE THAN GROUND + ONE FLOOR, THE APPROVAL OF CMDA IS ESSENTIAL. ADMITTEDLY, THE PROJECT CONSTRUCTED BY THE ASSESSEE FALLS WITHIN THE TERRITORIAL LIMIT OF CMDA AND WHAT WAS CONSTRUCTED BY THE ASSESSEE 8 M.P. NOS.179 & 180/MDS/15 IS A MULTISTORIED BUILDING EXCEEDING THREE FLOORS. THEREFORE, THE PLANNING PERMISSION NEEDS TO BE OBTAINED ONLY FROM CMDA. THE POWER DELEGATED TO THE LOCAL PANCHAYATS IS ONLY IN RESPECT OF GROUND + ONE FLOOR. THIS POWER DELETED TO THE LOCAL AUTHO RITIES BY THE CMDA WAS NOT BROUGHT TO THE NOTICE OF EARLIER BENCH AND HENCE THE BENCH PROCEEDED AS IF THERE WAS NO DISPUTE THAT THE LOCAL AUTHORITY ONLY HAS TO APPROVE THE BUILDING PLAN AS PER THE BU ILDING RULES AND REGULATIONS. THE FACT THAT THE POWER DELEGATED TO THE LOCAL AUTHORITIES BY CMDA IN EXERCISE OF ITS STATUTORY PO WER UNDER TAMIL NADU TOWN & COUNTRY PLANNING ACT, 1971, WAS NOT BRO UGHT TO THE NOTICE OF THE MADRAS HIGH COURT AND THE EARLIER BEN CH OF THIS TRIBUNAL WHICH HEARD THE CASE. MOREOVER, WE HAVE TO EXAMINE WHETHER THE DEVELOPMENT CONTROL RULES FRAMED UNDER TAMIL NADU TOWN & COUNTRY PLANNING ACT WILL OVERRIDE THE BUILD ING RULES FRAMED UNDER TAMIL NADU PANCHAYAT ACT? THEREFORE, AT THIS STAGE, THIS TRIBUNAL CANNOT GO INTO THE QUESTION ONCE AGAIN. T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE POWER CONFERRED ON THE TRIBUNAL UNDER SECTION 254(2) OF THE ACT IS TO RECTIFY ANY M ISTAKE WHICH IS APPARENT ON THE FACE OF THE RECORD. IN THE GUISE O F RECTIFICATION UNDER SECTION 254(2) OF THE ACT, THIS TRIBUNAL CANN OT REVIEW ITS EARLIER ORDER. IN THOSE CIRCUMSTANCES, THIS TRIBUN AL DO NOT FIND ANY ERROR MUCH LESS PRIMA FACIE ERROR IN THE ORDER OF THIS TRIBUNAL. 9 M.P. NOS.179 & 180/MDS/15 9. IN THE RESULT, BOTH THE MISCELLANEOUS PETITIONS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( ... ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 18 TH MARCH, 2016. KRI. / *267 87(2 /COPY TO: 1. *+' / PETITIONER 2. *,+- /RESPONDENT 3. 1 92 () /CIT(A) 4. 1 92 /CIT 5. 7: *2 /DR 6. ;' < /GF.