TMI Blog2013 (3) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... The facts and circumstances relating to this appeal have already been narrated in our orders of even date passed in the appeals filed by the Revenue against the assessee for the assessment years 2005-06 and 2007-08. Therefore, we are straightaway proceeding to the specific issues raised by the Revenue in this appeal. 3. The first issue raised by the Revenue is that the Commissioner of Income-tax (Appeals) has erred in deleting the disallowance/addition of ₹ 4,83,59,772/- made by the Assessing Officer under section 36(1)(ii) of the Income-tax Act, 1961. The said commission has been paid to the managing director of the assessee-company. 4. It is the case of the assessee that the commission has been paid to Shri S. Ravichandran, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent clauses provided in sub-section (1) of section 36. One of such expenditure entitled to be deducted in computing the business income of an assessee is any sum paid to an employee as bonus or commission for services rendered. But the deduction is not available in a case where such payment of bonus or commission would not have been payable to him as profits or dividend if such amount of bonus or commission was not paid. It means that if the employee is entitled for profits or dividend of the assessee, then the sums paid to such employee shall not be allowed as a deduction in the hands of the assessee. 6. In the light of the above law, the Commissioner of Income-tax (Appeals) observed that there are three limbs to section 36(1)(ii). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission has been paid on the basis of the turnover; but still the payment was in the nature of salary for services rendered by Shri Ravichandran. The Commissioner of Incometax (Appeals) also held that there is no force in the argument of the Assessing Officer that no marketing efforts are necessary to sell the flats constructed by the assessee, as the assesseecompany enjoys a very famous brand-name. The Commissioner of Income-tax (Appeals) concluded that this finding is without any basis. He observed that even famous companies having valuable brand-names have to incur huge expenditure for marketing and there is no reason to hold that the assessee would get business without any marketing efforts. 9. In the light of the above findings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve buyers entered into construction agreements with the assessee for constructing flats. According to the Revenue, this arrangement clearly shows that the prospective buyers are the real owners of the land and they are only entrusting the works contract of constructing flats to the assessee. It is the case of the Revenue that if the assessee is a developer, it should have first purchased the land required for the project, got approval from the necessary authorities, built the residential flats and then sold them to the prospective buyers. These ingredients are absent in the assessee s case and therefore the assessee is not entitled for the deduction under section 80-IB(10). 12. This issue has been considered by us in assessee s own case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax (Appeals) was justified in holding that the assessee is entitled for the benefit of section 80-IB(10) as a developer of housing projects. 13. Following the above finding rendered for the assessment year 2005-06, we hold that the assessee is entitled for the deduction available under section 80-IB(10) of the Act and the Commissioner of Income-tax (Appeals) is justified in his finding. 14. Another issue raised by the Revenue is that the approval as well as the completion certificate from the local authorithy have been obtained in the name of the director of the assessee company, Mrs. Kalaiarasi, not in a representative capacity of the assessee and as such it is not possible to hold that the assessee is a developer. This issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) has rightly observed that the assessee-company itself has apportioned interest and administrative expenses and depreciation on the basis of total expenses relatable to taxable activities and exempted 80-IB projects. If that apportionment is taken into consideration, the Commissioner of Incometax (Appeals) has rightly pointed out that the interest should have been adopted at ₹ 16.25 crores as against ₹ 20.56 crores adopted by the Assessing Officer. This mistake has been made good by the Commissioner of Income-tax (Appeals) by giving a relief of ₹ 19,30,683/-. The order of the Commissioner of Income-tax (Appeals) is a well speaking order, based on facts and figures available from the records of the case. Therefore, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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