GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
What's New Case Laws Highlights Articles News Forum Short Notes Statutory TMI SMS More ...
Extracts
Home List
← Previous Next →

2016 (3) TMI 725 - ITAT CHENNAI

2016 (3) TMI 725 - ITAT CHENNAI - TMI - Entitlement to deduction under sec.80IB - Held that:- The assessee entered into construction agreement with the prospective buyers, who has no choice of giving the construction to another builder and thereafter, the assessee constructed the building as per the approved plan and provided various amenities common to all people. Therefore, looking into the entire transaction, as such, it is a development of housing project by the assessee itself and no one aw .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ther person and assumed all risks that are assumed by a developer, then the assessee was entitled to deduction under sec.80IB of the Act. - Decided in favour of assessee. - ITA Nos. 1109 & 1113/Mds/2014 - Dated:- 5-2-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER For The Appellant : Shri A.S.Sriraman, Advocate For The Respondent : Shri A.V.Sreekanth, JCIT PER CHANDRA POOJARI, ACCOUNTANT MEMBER These appeals by different assessees are directed against diff .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

from the business, which is denied by the AO as under: "3(a) Shri U.Chandraprakasam & Smt. U. Nagamalleswari wlo Sri U Chandraprakasam, have purchased the piece and parcel of vacant land of an extent of 44627 sq.ft comprised of Plot Ns.1-6, 19-24, 25-33 and 36 to 43 in Survey Nos 33/283 and 3/284 1 50 24 in ''AV Gardens" Mugalivakkam, Chennai-116 forming part of an approved layout, layout having been granted by the CMOA vide PPOILON0.41/2006 dated 12/04/2006 by an absolute .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

individual capacity sells half the undivided share of a plot/ or entire plot in the already approved layout ranging from a minimum of 750 sq.ft. to 1590 sq.ft. and also undivided share in common area to the extent of 140 sq.ft. to 161 sq.ft. together with share of luxury amenities to the extent of 50 sq.ft. to number of buyers. The luxury amenities such as swimming pool, community hall etc, are common to the layout owned by M/s. Malees Rajarajeswari and other separate adjacent layout owned by a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h as Gym, Indoor Games & Multipurpose hall for both A.V.Gardens & Malles Rajarajeswari. Further, as far as the swimming pool is concerned it is built on Plot Nos.23 & 24 in the other adjacent layout Malles AV Gardens. As per the assessee s own words, We have just utilized the empty land which we have converted as a swimming pool. Since the area being controlled by Panchayat, no separate plan approval is required for swimming pool. 3(e) Later the firm M/s. Malles Rajarajeswari enters .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

independent house instead of semi independent duplex house. In those cases the built up area exceeds 1500 sq.ft. 3 (f) The assessee was requested to file a copy of approval granted by the concerned authority for the project and completion certificate of the project. In response the assessee filed a copy of approval obtained for a residential house in a plot No.26 /5.No3/2B3 & 3/284. The same was obtained on 07/3/2007. The assessee further informed that he has obtained as much building plan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

own terrace and a small garden, all encased within one compound wall gate and independent water tank superbly serves you even in dry weather . The above amply gives clear picture of its activity . 2.1 According to the Assessing Officer, the partners of the assessee after purchase of land as well as after getting approval for housing project from the competent authority formed the partnership, which in turn entered into construction agreements with the purchasers of independent/twin houses formin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ied by the assessee, cannot be considered as integrated housing project. As the project involved sale of plots of land only and construction of the houses thereon as per the construction agreements signed by the buyers of the plots. There was registration of sale of plots of land only. There was no registration of sale of house in favour of the buyers. The houses were constructed as per the construction agreements signed by the buyers of the plots and were merely handed over to them on completio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

houses. The CIT(Appeals), also observed that the assessee failed to demonstrate that the activity carried out by it comes under developing and building of housing projects and the financial risk. Thus, he opined that the activity carried out by the assessee will be that of a works contract and thereby confirmed the finding of the A.O. Against this, the assessee is in appeal before us. 4. The ld. AR submitted that the assessee is a partnership firm engaged in the business of property 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

r, the ld. AR submitted that the Assessing Officer wrongly concluded that the assessee had not developed a housing project as understood in the provisions granting the relief under the Act. 4.1 The ld. AR. also submitted that the partners of the assessee after purchase of the land as well as after getting the approval for developing a housing project from the competent authority formed the partnership which in turn entered into construction agreements with the purchasers of independent/ twin hou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e findings of the lower authorities may be rejected as not sustainable in law. 4.3 Further, according to the Revenue authorities, the approvals obtained separately for each of the houses comprised in the said housing project could not be construed as a project developed in one acre of land inasmuch as the authorities construed the each of the houses in view of the independent approvals obtained in relation thereto as separate and not a cumulative and a single project. The said approach of the au .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ultiplicity of approvals for the various houses comprised in the housing project under consideration is not a bar to claim such deduction in the computation of taxable total income. The Tribunal in the case of Asst. v. C. Rajini(Smt.) reported in 9 ITR 808 (Trib), wherein the Bench had rejected the approach of the authorities. In the present case in considering multiple approvals obtained for various houses comprised in the housing project is not bar to claim such deduction in the computation of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2005 from the VAO, but he rejected it on the reasoning that VAO was not an authority for issuing a certificate of approval. In any case paras reproduced above, from the letter of Dy. Director, Town Planning would show that such approval was for construction in the plots. 4.6 It is also submitted that applicant got sanction for building from local panchayat. Pursuant to this, the individual owners to whom plots were given had obtained sanction for constructing the units, and constructions carried .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vals should not be construed as a bar to make the said claim of deduction. 4.7 Further, the ld. AR submitted that the completion certificate was not mandatorily required/to be issued in view of the execution of the housing project as an ordinary building category with ground floor plus one. The housing project under consideration was executed in a different manner and the individual houses/twin houses were offered and sold to the various customers after obtaining individual approvals from the 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

ccordingly, the claim of deduction was restricted to the profits earned from the houses constructed and sold complying with the conditions prescribed in section 80 IB (10) of the Act which formed part of the eligible housing project while excluding the profits relatable to those houses having exceeded the maximum built-up area of 1500 sq.ft. in the revised return of income. However, the Assessing Officer in view of the violation of the said condition in some of the houses comprised in the eligib .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ier decisions on the subject were considered by the Chennai Bench of the Tribunal in the case of Viswas Promoters (P) Ltd. is not a correct statement of fact. It is also correct to argue that the said order of the Tribunal Chennai Bench in the case of Viswas Promoters (P) Ltd. has been confirmed by the Madras High Court. The Madras High Court in its writ order has dealt with only the writ application filed by the assessee against the order of the Tribunal dismissing the Miscellaneous Petition fi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r not. The Court clarified that it was still open for the assessee to appeal against the finding of the Tribunal on merits of the issue in appeal before the High Court permitted under s. 260A. Therefore, it is premature to hold that the order of the Tribunal, Chennai Bench in the case of Asstt. CIT vs. Viswas Promotors (P) Ltd. has been upheld by the Jurisdictional High Court. Where the Jurisdictional High Court has dismissed the appeal against the order of the Tribunal holding that no substanti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e High Court has upheld the reasonings and findings given by the Tribunal in its order. The judgment of the Calcutta High Court rendered in the case of CIT vs. Bengal Ambuja Housing Dev. Ltd. in IT Appeal No.4S8 of 2006, dt. 5th Jan., 2007 is a judgment directly on the issue upholding the view of the Calcutta 'C' Bench of the Tribunal that a proceedings rata deduction is permissible under s. 80-IB(10). As there is no direct decision of the Jurisdictional High Court still available on the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the project was in fact executed as a works contract and not as a developer on the strength of the retrospectively inserted explanation below the section 80 I B (10) of the Act. Further, the ld. AR submitted that the developer is totally different from the works contractor inasmuch as the distinguishing features ought to have been noticed before applying the said explanation to the facts of the case. The developer having taken a financial risk in executing a housing project should not be compare .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dertaken the works contract and developed the housing project. According to ld. DR, the land is not owned by the assessee-firm. It is seen from the facts that Shri U. Chandraprakasam & Smt. U. Nagamalleswari formed partnership on 28.3.2007 under the name and style of M/s. Malles Rajarajaeswari . Before the formation of this firm, the above two partners purchased the vacant land measuring 44627 sq.ft. on 28.2.2007 situated at Plot Nos.1-6, 19/24, 25-33 and 36 to 43 in Survey Nos.33/283 and 3/ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as swimming pool, community hall etc, are common to the layout owned by M/s. Malees Rajarajeswari and other separate adjacent layout owned by another firm called M/s. A.V.Gardens. 6.1 The so called, luxury amenities such a swimming pool, community hall etc. are common to the layout owned by Malles Rajarajeswari and other separate adjacent layout called Av Gardens. The club house having facilities such as Gym, Indoor Games & Multipurpose hall is located in Plot No.1 in Malles Rajarajeswari. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

area being controlled by Panchayat, no separate plan approval is required for swimming pool. 6.3 Later the assessee-firm M/s. Malles Rajarajeswari enters into a separate construction agreement with the persons who have already arranged for buying the plot of land in the layout- AV GARDENS (Phase I) from the owners of plots Shri U.Chandraprakasam & Smt.U.Nagamalleswari. The construction agreement is for semi Independent Duplex House comprised of Ground floor with super built up area which va .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al obtained for a residential house in a plot No.26 /5.No3/2B3 & 3/284. The same was obtained on 07/3/2007. The assessee further informed that it has obtained as much building plan approvals as the number of plots sold. As far as the completion certificate, the assessee informed that the project is ordinary building category with Ground Floor plus 1 for which completion certificate is not mandatory. 6.5 As the project involved sale of plots of land and subsequent construction of the houses t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. 6.6 On perusal of the copies of sale deeds of the plots of land and the construction agreements signed by the buyers of the plots of land, it is seen that the partners of the firm sold the plots separately and thereafter, the assessee firm undertaken construction of the houses in those plots after obtaining building plan approved in the name of individual plot owners. 6.7 Thus, the landed property, in this case is owned by the partners of M/s. Malles Rajarajeswari, and there was duly approved .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed in their name from the local body to construct the building and thereafter forming the partnership, the assessee has constructed the building as per the agreed terms of the construction as per the approved plan and handed over the physical possession of the property to the prospective buyers. The assessee has constructed buildings as per the approved plan and created infrastructure facilities like parking area, drainage facility, drinking water facility, fire extinguishment, lift swimming poo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se only from the construction made by the assessee. When the purchasers have no choice of selecting the builders for construction on a project being developed by the assessee, we are of the opinion that the purchaser cannot award any work to the assessee. Therefore, the contention of the ld. DR has no merit. It is appropriate to mention the judgment of the Kerala High Court in the case of Kerala Builders Forum v. State of Kerala (2009) (4) KLT 658, wherein it was held that it is the responsibili .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tive purchasers. The prospective purchasers has to enter into an agreement for purchase of undivided share of land and simultaneously has to enter into construction of flat also. The contention of the State Government was that when the builders sold the fully constructed flats then stamp duty has to be paid for the land as well as the flat. And to avoid stamp duty on the value of the building, the individuals, who purchased the flat entered into an agreement of sale of undivided share of land an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essee entered into construction agreement with the prospective buyers, who has no choice of giving the construction to another builder and thereafter, the assessee constructed the building as per the approved plan and provided various amenities common to all people. Therefore, looking into the entire transaction, as such, it is a development of housing project by the assessee itself and no one awarded any work to the assessee. Even if, there is an enabling clause in the partnership deed to do th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der sec.80IB of the Act. The relevant portion is as follows : 16. The Hon'ble Madras High Court, in the case of CIT vs. Sanghvi & Doshi Enterprise reported in (2013) 50 (I) ITCL 303 (Mad-HC) held that where the assessee entered into a joint development agreement to build up a housing project on land owned by some other person and assumed all risks that are assumed by a developer, then the assessee was entitled to deduction under sec. 80IB(10) of the Act in respect of profits derived from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hed before the AO that while flats in the 6th floor and 11th floor were sold even as early as 2003, flats in first floor with Nos. 104 and 103 were sold in the year 2009. So too, some of the flats in second floor and third floor were sold in the years 2007, 2006 and 2005. The flat in 12th floor was sold on 15-10-2063 valid in the 9th floor on 5-11-2003. The flats in the first floor with Nos. 101 and 102 were sold on 17-6-2009. Apart from this, there were still some flats left unsold. [Para 29] 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

lder has to enter into a builder agreement with the proposed purchaser and it is open to the builder to fix such rate per square foot for construction of the area as it deems fit, over which the owner has no claim at all. The builder has to pay the specified cost of the land on the undivided share of sale in favour of the purchaser to the owner, pro rata to the built-up area. A reading of the agreement of sale with the purchasers further points out that the builder's agreement was entered on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing of section 80-IB shows that the deduction contemplated therein is oriented towards the project and not with reference to an assessee. It is no doubt true that the project has to be done by the assessee, but then, when the deduction is specific enough as regards the particular activity, one fails to see how one should assume any significance in the matter of considering a deduction. 17. The Hon'ble Madras High Court, in the case of CIT vs. Subba Reddy (HUF) (2015) 121 DTR 115 (Mad.), held .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ential unit having a maximum built-up area of 1,500 sq.ft. to claim deduction. Even in the definition under s. 80IB(14)(a), which came into effect from 1st April, 2005, built-up area was defined as inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls, meaning thereby the actual residential portion of the property. It, however, clearly states that it will not include common area shared with other residen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Latest Notifications:

    Dated      Category

20-7-2017 Cus (NT)

18-7-2017 IT

18-7-2017 CE (NT)

18-7-2017 CE

18-7-2017 GST CESS Rate

15-7-2017 Kerala SGST

14-7-2017 Andhra Pradesh SGST

14-7-2017 Cus (NT)

14-7-2017 Cus

13-7-2017 Co. Law

13-7-2017 Co. Law

13-7-2017 ADD

13-7-2017 ADD

12-7-2017 Jammu & Kashmir SGST

12-7-2017 Gujarat SGST

12-7-2017 Gujarat SGST

12-7-2017 CGST Rate

12-7-2017 UTGST Rate

12-7-2017 UTGST Rate

12-7-2017 IGST Rate

More Notifications


Latest Circulars:

19-7-2017 Income Tax

18-7-2017 Customs

17-7-2017 Customs

14-7-2017 Income Tax

13-7-2017 Central Excise

13-7-2017 Customs

13-7-2017 Central Excise

13-7-2017 Customs

7-7-2017 Income Tax

7-7-2017 Goods and Services Tax

More Circulars



|| 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