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2016 (5) TMI 1268 - MADRAS HIGH COURT

2016 (5) TMI 1268 - MADRAS HIGH COURT - TMI - Deduction under Section 80IB(10) denied - date of completion - selection of relevant date - ITAT held that the assessee should be deemed to have commenced the work of development and construction, from the time even when the preliminary works started - Held that:- From the finding recorded by the Tribunal it is clear that certain expenses incurred by the assessee in removing the hut dwellers, digging of bore well, getting electricity connection, putt .....

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nstruction was 15.10.1998. However, the Tribunal held that all pre-construction activities should be taken to be part of development, so as to pre-pone the date of development and construction. This, in our considered view, is not the correct interpretation to be offered to the composite expression "development and construction"of the housing project. - Decided in favour of assessee - Tax Case Appeal No.96 of 2008 - Dated:- 1-2-2016 - MR. V.RAMASUBRAMANIAN AND MR. N.KIRUBAKARAN, JJ. For The Appe .....

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ived therefrom? (2) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that the development and construction of the project has commenced prior to 01.10.1998 and consequently the claim under section 80 IB of the Act is not tenable? (3) Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal is right in law in coming to the aforesaid conclusion, without taking into account the various document .....

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the Income Tax Appellate Tribunal to the expression 'development and construction' contained in section 80 IB of the Income Tax Act is correct and whether the Tribunal is right in law in concluding that the development and construction has taken place before 01.10.1998?" 2. Heard Dr.Anita Sumanth, learned counsel for the appellant and Mr.T.Ravi Kumar, learned Standing Counsel for the Revenue. 3. The assessee filed a return of income for the assessment year 2001-02 on 30.10.2001 adm .....

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tered into for the purchase of the land at No.20, Inner Ring Road, Koyambedu, on 25.9.1993, for the purpose of development, the Assessing Officer thought that the main issue that he was called upon to determine was whether the assessee had commenced development and construction of the housing project on or after 01.10.1998. The case of the assessee was that the development and construction work commenced on 15.10.1998. 5. The Assessing Officer passed an order dated 31.3.2004 holding that even th .....

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lly commenced construction only on 15.10.1998. In paragraph 5.6 of his order, the CIT (Appeals) recorded the timeline of events as follows: "5.6. In the background of the above discussion, it is to be examined whether the appellant fulfills the conditions enumerated u/s.80IB(10) or not. For the sake of convenience the various events which have been taken place in chronological order are enumerated below:- (i) Signing of agreement for purchase of land with owners 25.09.1993 (ii) Digging of B .....

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es to reconsider their decision 17.12.1997 (ix) Submission of revised plan for construction of Ground +10 floors to statutory authorities for plan approval and payment of fees 24.12.1997 (x) Clearance from various statutory authorities - Police Department 10.02.1998 Airport Authority 12.03.1998 (xi) Approval received from CMDA for Ground +10 floors 04.08.1998 (xii) Commencement of construction at site 15.10.1998 (xiii) Final approval from Chennai Corporation 05.07.1999 Admittedly, the constructi .....

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the "development of the project" after 1.10.98, the appellant would be entitled for deduction u/s.80IB(10) since the appellant would then be fulfilling all the conditions. Therefore, essentially it boils down to finding out at what point of time, the appellant can be said to have commenced the "development of the project". As stated earlier, for "development" to take place, "the project" has to be in existence. Therefore, it is necessary to find out when & .....

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ntions, it is necessary to take note of the relevant part of Sub-section (10) of Section 80IB. It reads as follows: "(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2008 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project, if,- (a) such undertaking has commenced or commences development and construction of .....

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n the date of commencement of development and construction of the housing project. 10. From paragraph 5.6 of the order of the CIT (Appeals), which we have extracted above, it is seen that the Commissioner (Appeals) recorded a finding of fact to the effect that the commencement of construction at site was on 15.10.1998. The CIT (Appeals) went one step further in paragraph 5.6 of his order pointing out that the Assessing Officer had not disputed the said fact. What was disputed by the Assessing Of .....

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0). 12. But, what the Tribunal did, after holding in paragraph 11 of its decision that the expression "development and construction at site" should be given the ordinary meaning without any extraneous aid, was that it took into account the definition of the expression "development" appearing in Section 2(13) of the Tamil Nadu Town and Country Planning Act, 1971. In other words, the Tribunal held that the very fact that the development of the project had commenced, was suffici .....

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