Income Tax Appellate Tribunal - Chennai
Ramaniyam Castles P Ltd., Chennai vs Department Of Income Tax on 14 February, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI GEORGE MATHAN, JUDICIAL MEMBER
I.T.A. No. 593/Mds/2011
(Assessment Year : 2006-07)
The Deputy Commissioner of M/s Ramaniyam Castles P. Ltd.,
Income Tax, 21 Laya Apartments,
Company Circle V(3), v. II Main Road, Gandhi Nagar,
Chennai - 600 034. Adyar, Chennai - 600 020.
PAN : AACCR8176K
(Appellant) (Respondent)
Appellant by : Shri Anirudh Rai, CIT-DR
Respondent by : Shri S. Sridhar, Advocate
Date of Hearing : 14.02.2012
Date of Pronouncement : 17.02.2012
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
This is an appeal by the Revenue against an order dated 13.1.2011 of Commissioner of Income Tax (Appeals)-V, Chennai. Grounds No.1 and 3 are general in nature. Ground No.2 is reproduced hereunder:-
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2.1 The learned CIT(A) erred in allowing the deduction u/s 80IB of the Income-tax Act, 1961.
2.2 The learned CIT(A) erred in rejecting the factual findings of the Valuation Officer. Where the Valuation Officer has held that four out of the total number of flats exceeded 1500 Sq. Ft. and where there is a contravention of the stipulation enshrined in sec. 80IB it is submitted that the assessment on this issue deserves to be upheld.
2.3 It is submitted that as per the newly inserted explanation of 80IB(10) Finance (no.2) Act 2009 introduced with retrospective effect from 1.4.2001 persons who are engaged in execution of projects through words contract are not eligible to claim u/s 80IB(10).
2.4 Having regard to amendment referred in para 2.3 above it is submitted that the assessee is only a contractor who executes contract work through construction agreements. Where the assessee undertakes only contract risk with no investment risk, it is prayed that the provisions of sec 80IB(10) are not applicable to the assessee's case.
2. As it is clear from ground no.2, first grievance raised by the Revenue is that four out of total number of flats, exceeded 1500 Sq.
Ft. and there was contravention of the area stipulation in Section 80- IB(10) of Income-tax Act, 1961 (in short 'the Act'). Its second grievance is that assessee had executed the projects by way of works contract and in view of the Explanation inserted to Section 80- IB(10) of the Act by Finance (No.2) Act, 2009, assessee was not eligible for claiming deduction under Section 80-IB of the Act. 3 I.T.A. No. 593/Mds/11
3. When the matter came up before us, learned A.R. submitted that similar issues had come up before this Tribunal on an appeal filed by the assessee against an order of revision made by ld. CIT under Section 263 of the Act, for assessment year 2005-06 and this Tribunal in its order dated 9th July, 2010 (128 ITD 130), had held in favour of assessee and quashed the revisionary order of ld. CIT. According to him, the issues raised in the present appeal by the Revenue were substantially similar to the issues raised in assessee's appeal for assessment year 2005-06 mentioned supra.
4. Learned D.R., on the other hand, submitted that in the order relied on by the learned A.R. in assessee's own case for assessment year 2005-06 of this Tribunal, the Tribunal was concerned only with the issue whether the ld. CIT was justified in invoking revisionary power under Section 263 of the Act. Therefore, according to him, it could not be considered as a precedent for deciding this appeal of the Revenue. Further, according to the learned D.R., assessee was only a contractor and hence not eligible for deduction under Section 80- IB(10) of the Act.
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5. In reply to the submissions of the learned D.R., reliance was placed by the learned A.R. on the decisions of this Tribunal in the case of Sanghvi And Doshi Enterprise v. ITO (131 ITD 151) and that of ACIT v. Smt. C. Rajini (2011) 9 ITR (Trib) 487.
6. We have perused the orders and heard the rival submissions. First issue raised by the Revenue is that four flats out of total number of flats, exceeded 1500 Sq. Ft. and there was contravention of area restriction under Section 80-IB(10) of the Act. If we look at assessment order, it would show that the concerned flats were 1A, 2A, 3A of Block A in a project called "Eden Block" at Velacherry. At para 7 of its order dated 9th July, 2010 in assessee's appeal for assessment year 2005-06, this Tribunal had extracted a letter dated 31st December, 2007 addressed to the Departmental Valuation Officer, written by the Assessing Officer. This is reproduced hereunder for brevity:-
Government of India, Office of the Asstt. CIT, Company Circle V(3), Chennai-34 31st Dec., 2007 The DVO, IT Department, Valuation Cell, Kannammai Building, V floor, 611, Anna Salai, Chennai - 600006 (Through the CIT, Chennai-III, Chennai) 5 I.T.A. No. 593/Mds/11 Sir, Sub: Measurement of built-up area in the case of M/s Ramaniyam Castles (P) Ltd. Chennai under s. 80-IB(10)-reg.
Ref: 1. F.No. DVO/Mad/Misc/2001-08, dt. 5th Oct., 2007 Letter in
2. F.No. DVO/Mad/Misc/2001-08, dt. 28th Dec., 2007 Letter in Kindly refer to the above.
On perusal of the letter dt. 28th Dec., 2007 as referred above it is found that you have shown the following measurement in respect of flats 1A, 2A, 3A of Block-A. The relevant portion of the letter is reproduced as under:
As desired in the above reference, the above property was checked by linear measurements as per the guidelines and details of BUA are as given below:
Statement showing the built-up area Flat area Car parking Remarks In sq. ft.
in sq. area In sq. mtrs.
mtrs. In sq. ft.
1. A 1A 141.36 1,821.14 11.69 126.84 Covered parking
2. A 3A 141.36 1,621.74 17.64 189.89 Covered parking
3. A 5A 141.36 1,821.74 11,78 126.40 Covered parking
In this respect it is further seen that vide letter dt. 5th Oct., 2001 referred above, the measurement of those flats had been shown as 134.64 sq. mtrs. The relevant portion of the letter is also reproduced hereunder:
As desired in the above reference, BUA of the above property was checked by linear measurements as per the standard guide in vogue. The BUA of the flat No.3A is found to be, 134.64 sq. mtrs. (one hundred and thirty-four point sixty-four only). As flats 1A and 2A are similar to flat 3A the BUA of flat 3A may be, adopted for flats 1A and 3A.
The above report of the DVO dt. 5th Oct., 2007 had been received on 9th oct., 2007 (TF.PAL No. 461) 6 I.T.A. No. 593/Mds/11 It could be seen that no reasons/basis whatsoever given in the letter for variations in the measurements. Therefore it is requested to clarify.
1. Reasons for variations.
2. Whether flat area is inclusive of common area? If yes, the extent of such common area included.
3. What are the actual 'built-up area' of those flats?
4. In this respect clarification should be given specifically on the basis of built-up area as explained s.80IB(14) which is as under:
"Built-up area" means the inner measurement of the residential unit at the floor level including the projections and balconies 48 increased by the thickness of the wall but does not include the common areas shared with other residential units."
Further the assesse had obtained valuation report from registered valuers Dr.A.Krishnamurthy dt. 20th Dec. 2001 and Mr.Palanivelu Viswanathan, architect dt. 24th Dec., 2001. The Xerox copies of these reports along with enclosures are sent herewith for your kind perusals. In those reports built-up area of the above flat Nos.1A, 2A, 3A of Block A had been shown less than 1,500 sq. ft as per physical measurement carried on by them further on 31st Dec. 2007 the assesse submitted another clarification dt. 29th Dec. 2007 obtained from Dr.A.Krishnamurthy, approved valuer of the Department. In respect of the difference in quantification of built-up area between his certificate and Valuation Cell certificate wherein he confirmed that the built-up area of the above flats is 1,431 sq. ft. The assesse had also obtained similar report from Mr.Palanivelu Viswanathan, architect. These two reports along with layout plans and plinth area calculation as submitted by the Departmental valuer and the architect of the assesse are being enclosed herewith for your kind perusal. In this respect you are requested to go through the above reports/clarification and kindly specify, the differences; with reasons between the report of the DVO dt. 28th Dec. 2007 as sent earlier and their report. Kindly treat the matter most important.
Yours faithfully (Pijush Mukherjee) Asstt. CIT, Company Circle V(3), Chennai 7 I.T.A. No. 593/Mds/11 It is clear from the above letter that originally the Department Valuation Officer considered the area to be less than 1500 Sq. Ft. Though the same DVO had opined in his letter dated 28th December, 2007 that these four flats had areas exceeding 1500 Sq. Ft., nothing has been mentioned as to how the variation had occurred. Ld. CIT(Appeals) has given a clear finding that the built-up area would include only those projections which are accessible from inside of the flats and not those projections which are part of common area or which are not accessible from inside of the flats. Nothing has been brought on record by the learned D.R. to take a different view in this matter. Definition of "Built-up area" has been given in Section 80- IB(14) will clearly show that inner measurements include projections and balconies but such projections and balconies have to be accessible from inside of the flats.
7. Insofar as second grievance raised by the Revenue that assessee was only a contractor, no such finding is there in the assessment order. The A.O. had denied claim of the assessee under Section 80-IB(10) one for a reason that completion certificate for project approval authority was not produced by the assessee and secondly for a reason that three of the flats had exceeded 1500 Sq. 8 I.T.A. No. 593/Mds/11 Ft. in built-up area. Obviously, the issue as to whether the assessee was only a contractor or had undertaken the work as a project developer was not before the CIT(Appeals) also. The Revenue is only trying to improve the order of A.O. by raising this ground. In any case, Third Member order of this Tribunal in the case of Sanghvi and Doshi Enterprise (Supra) has clearly held that even if the role of the assessee was only as a developer, it was entitled to deduction under Section 80-IB(10) of the Act subject to fulfillment of other conditions mentioned therein. We are therefore of the opinion that there is no merit whatsoever in this appeal filed by the Revenue.
8. In the result, appeal filed by the Revenue is dismissed. The order was pronounced in the Court on 17th February, 2012.
sd/- sd/-
(George Mathan) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 17th February, 2012.
Kri.
Copy to: Appellant /Respondent /CIT(A)-V, Chennai-34/ CIT, Chennai-III, Chennai/D.R./Guard file