Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M/s Indra Housing Versus Assistant Commissioner of Income Tax

2016 (2) TMI 489 - ITAT CHENNAI

Claim of deduction u/s.80-IB (10) - Revenue has rejected the claim of the assessee under Section-80IB(10) of the Act only for the reason that, (a) the appellant was not the owner of the land, (b) the building plan approval and completion certificate were not in the name of the appellant, (c) M/s.Ishwaraylakshmi Properties Pvt. Ltd., on who's name the building plan approval & completion certificate obtained was a loss making company having carried forward losses and therefore would not be worthwh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

olved in the project and also executing the project. Further, it is evident that the entire project is jointly developed by both the parties ie., the owners of the land and the assessee firm on the land extending more than one acre(106 cents) as stipulated under the Act. No other associate concern of the assessee has claimed the benefit of Section-80IB (10) of the Act on the same project as the entire profit was declared in the hands of the assessee firm and deduction claimed accordingly.
.....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cer to grant deduction U/s.80IB (10) of the Act to the assessee. - Decided in favour of assessee - ITA No. 1133/Mds./2015 - Dated:- 18-12-2015 - A. Mohan Alankamony, AM And Challa Nagendra Prasad, JM For the Petitioner : Mr T Banusekar, CA For the Respondent : Mr Joe Sabastian, CIT-DR ORDER Per A Mohan Alankamony, Accountant Member This appeal is filed by the Assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-12, Chennai dated 16.03.2015 in old ITA No.1794/2013-14 (ITA .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for A.Y.2010- 11, admitting 'Nil' income after claiming exemption u/s.80-IB (10) of the Act. Subsequently the assessee filed revised return on 12.10.2010 declaring the income again as 'Nil'. The case was selected for scrutiny and the notice U/s.142(1) was issued to the assessee on 24.07.2012 and thereafter, assessment u/s.143(3) of the Act was completed on 30.03.2013 wherein the Ld. Assessing Officer denied the benefit of exemption U/s. 80-IB (10) of the Act. 3.2. The assessee is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to the extent of 106 cents for development of residential apartments. The fifth partner Shri V.G.Rajendran was to bring in necessary funds to develop the projects. The profit sharing ratio of all the partners of the firm were equal i.e. 20% of the profit each. The first four partners of the assessee firm who were the owners of the land gave general power of attorney in favour of M/s.Ishwaraylakshmi Properties Pvt. Ltd., represented by its Managing Director Shri D.L Madhusudhan, who is also one .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

first four partners of the assessee firm contributed the land to the project they were entitled for 50% of the constructed area. The project was approved by CMDA on 20/3/2007 and the approval letter was issued to M/s.Ishwaraylakshmi Properties Pvt. Ltd., for construction of the flats. The approval information downloaded from CMDA by the Ld. Assessing Officer is reproduced herein below for reference:- 1 6 9 M/s.Ishwaray Lakshmi Properties Pvt. Ltd Rep.by D.L.Madhu sudhan & 3 others S.No.97/1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s group of concerns in the similar business were declaring negligible profits. ii) From the joint venture agreement entered between the assessee firm and the owners of the land, it was revealed that the land to the extent of 106 cents was brought in for development of residential flats against which the first four partners were eligible for 50% of the constructed area along with the undivided share in land. Therefore the assessee has not complied with the provisions for developing the minimum re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

projects. All correspondences produced before the Department indicated that M/s.Ishwaraylakshmi Properties Pvt. Ltd., had developed the project. From the above the Ld. Assessing Officer came to a conclusion that the assessee firm had peaked its nose in order to get the exemption U/s.80IB(10) of the Act, though it was not eligible. Accordingly the Ld. Assessing Officer disallowed the claim of exemption U/s.80-IB of the Act to the assessee. 4. On appeal, the Ld. CIT (A) examined the accounts of M/ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

claim U/s. 80IB(10) of the Act is allowed. Thereafter taking a note of the observation made by the Ld. Assessing Officer that no books of accounts were produced to examine the veracity of the claim of the appellant for taking the full responsibility of the projects and the risk associated therein, confirmed the order of the Ld. Assessing Officer. 5. Before us, the Ld. A.R made the following submissions:- "1. The appellant is a partnership firm engaged in the business of development of resid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

kshmi, Shri.D.L.Madhusudhan, Smt.D.V.Kasturi and Shri.G.Damodharan. The said four land owners had given a general power of attorney to M/s. lswaryalaxmi Properties Pvt Ltd represented by its Managing Director Shri.D.L.Madhusudhan. 4. The 4 land owners through their power agent entered into a joint venture development agreement with the appellant on 21.12.2005 for developing the above said property. 5. The approval was obtained by M/s.lswaryalaxmi Properties Pvt Ltd since approval for building co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

u/s.80-IB(10) the appellant has to satisfy only the conditions laid down in the said section. In the instant case the appellant had satisfied all the conditions in section 80-IB(10). 8. The only condition with regard to land in section 80-IB(10) is that the project should be on the size of plot of land which has a minimum area of one acre which in the instant case is satisfied since the plot of land is admeasuring 1.06 acres. There is no condition in section 80-IB(10) to state that the land sho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ctional High Court in CIT v Sanghvi and Doshi Enterprise [2013] 255 CTR (Mad) 156 following the decision of the Hon'ble Gujarat High Court in Rad he Developers referred to supra held as follows: "31. As rightly pointed out by learned Senior Counsel appearing for the assessee, in the decision reported in (2012) 341 ITR 403 (Commissioner of Income-Tax V. Radhe Developers), the Gujarat High Court considered the question on ownership as a condition for grant of deduction under Section 801B( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

v Moon Star Developers [2014] 367 ITR 621 (Gui) where also the land on which the housing project was constructed was not owned by the assessee and the development permission by the local authority was given in the name of the landowners and not the assessees. The Hon'ble Gujarat High Court following its own decision in Radhe Developers referred to supra held that the assessee is eligible to claim deduction u/s.80-lB(10) even though the land was not owned by the assessee and the development .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

laxmi Properties Pvt Ltd entered into partnership with Shri.V.G.Rajendran and became partner of the appellant firm vide deed executed on 29.11.2007 thereby bringing in the land owned by them as capital contribution to the appellant firm and Shri.V.G.Rajendran brought in funds to meet the cost of construction of the project. 14. By bringing the land into the partnership firm as capital contribution on which the said project was developed, the landowners have agreed that the land belongs to the pa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

laxmi Properties Pvt Ltd and further CMDA vide letter dated 31.12.2008 issued the completion certificate certifying that M/s.lswaryalaxmi Properties Pvt Ltd represented by Thiru. D.L.Madhusudhanan & 3 others has constructed the residential building. 17. In this regard it is submitted that M/s.lswaryalaxmi Properties Pvt Ltd is only the power of attorney holder of the 4 landowners namely Smt. D.C. Lakshmi, Shri. D.L. Madhusudhan, Smt. D.V. Kasturi and Shri.G. Damodharan. The 4 landowners have .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wners, the project has been developed only by the appellant and the appellant is eligible to claim the deduction uls.80-IB(l0). 19. The Assessing Officer has denied the claim of deduction u/s.80-IB(10) for the reason that the appellant is not the owner of the land, the building plan approval and the completion certificate were not in the name of the appellant company. 20. The Commissioner of Income Tax (Appeals) has also concluded that since M/s.lswaryalaxmi Properties Pvt Ltd has shown losses i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

they have chosen the appellant firm for developing the property, since M/s.lswaryalaxmi Properties Pvt Ltd is a loss making entity. Even if M/s.lswaryalaxmi Properties Pvt Ltd makes profit the landowners are at will to choose any person to enter into a joint venture agreement. 22. lt is submitted that by showing the income in the hands of M/s.lswaryalaxmi Properties Pvt Ltd or in the hands of the appellant firm there is no loss to the revenue since both entities are eligible to claim deduction .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

0) for the reason that the appellant is not the developer then the income admitted and the expenses claimed will also not belong to the appellant. 24. In the light of the above submissions, it is therefore most humbly prayed that the Hon'ble ITAT may be pleased to allow the deduction u/s.80-IB(10) as claimed by the appellant." 6. The Ld. D.R reiterated the observations of the Ld. Assessing Officer and the Ld. CIT (A) before us and argued justifying their stand and prayed for confirming .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

val & completion certificate obtained was a loss making company having carried forward losses and therefore would not be worthwhile to claim the benefit of Section-80IB(10) of the Act, etc.. Further, the Ld. Assessing Officer though had made remarks in his order that the assessee had not produced bills and vouchers, books of accounts etc., to justify the veracity of its claim, has simply accepted the profit declared by the assessee. This shows that the Ld. Assessing Officer has not rejected .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the land and the assessee firm the following facts emerges:- Clause 1: The party of the second part (assessee firm) shall put up residential flats in the property mentioned in the schedule hereunder to the extent approved by the CMDA and the Corporation/Municipality of Chennai. The party of second part (assessee firm) shall conveniently divide/sub-divide the schedule mentioned properties as the case may be, but strictly in accordance with the rules. Clause 2: 50% of the constructed area is ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nture, ie., the project is to be jointly developed by both the parties undertaking all the risk involved amongst themselves. Clause 5: The possession of the land is given to the assessee firm in order to install advertisement board, clean and make the land ready for construction, for designing the project and executing the same etc., Clause 6: The assessee firm has to bear the entire cost of the project legal expenses architect fees CMDA security deposits and any other incidental expenses Clause .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

towards stamp duty, registration fees, any incidental expenses towards sale of undivided interest in land assigned to them or their nominees. Clause 11: The constructed area will be identified and divided between the assessee firm and the owners of the land in a reasonable manner. Clause 12: The assessee firm shall be entitled to all the original documents of the land in order to obtain NOC from the appropriate authorities. Clause 13: After completion of the entire project and sale of the entir .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version