Madras High Court
The Commissioner Of Income Tax vs M/S.Mahalakshmi Housing on 2 November, 2012
Bench: Chitra Venkataraman, K.Ravichandrabaabu
In the High Court of Judicature at Madras Dated: 02.11.2012 Coram The Honourable Mrs.JUSTICE CHITRA VENKATARAMAN and The Honourable Mr.JUSTICE K.RAVICHANDRABAABU Tax Case (Appeal) Nos.583 & 584 of 2011 and 316 &317 of 2012 The Commissioner of Income Tax Chennai. .. Appellant in T.C(A)Nos.583 and 584 of 2011 & Respondent in 316 & 317 of 2012 Vs. M/s.Mahalakshmi Housing No.560, 3H Century Plaza, Anna Salai, Teynampet, Chennai 600 018. .. Respondent in T.C(A)Nos.583 and 584 of 2011 & Appellant in 316 & 317 of 2012 APPEALs under Section 260-A of the Income Tax Act against the order dated 17.6.2011 made in I.T.A.Nos.261 & 262/Mds/2010 on the file of the Income Tax Appellate Tribunal, 'A' Bench for the assessment years 2005-06 and 2006-07. For Appellant in T.C(A)Nos.583 and 584 of 2011 & Respondent in 316 & 317 of 2012 : Mr.J.Naraynanaswamy Standing Counsel for Income Tax For Respondent in T.C(A)Nos.583 and 584 of 2011 & Appellant in 316 & 317 of 2012 : Mr.R.Sivaraman --------- C O M M O N J U D G M E N T
Both the assessee as well as the Revenue have filed appeals as against the common order of the Income Tax Appellate Tribunal relating to the assessment years 2005-06 and 2006-07.
2. As far as Revenue's Appeals (T.C.(A)Nos.583 and 584 of 2011) are concerned, at the time of admission, following substantial questions of law were admitted by this Court for consideration:
"1.Whether on the facts and circumstances of the case, the tribunal was right in deciding the eligibility of deduction without considering the mandatory conditions stipulated u/s.80IB and 80IB(10) of the I.T.Act?
2.Whether on the facts and circumstances of the case, the Tribunal was right in not giving any finding about the difference between developers, builders and construction contracts to claim deduction u/s.80IB(10) of the Act?
3.Whether on the facts and circumstances of the case, the Tribunal was right in deciding that there need not be any cap of 10% for flats having built up area exceeding 1500 sq.ft. with regard to claim for deduction u/s.80IB of the Act?"
3. As regards assessee's appeal viz., T.C.(A).Nos. 316 and 317 of 2012, following question of law is raised for consideration:-
"Whether on the facts and circumstances of the case, the Appellate Tribunal is right in law in holding that the private terrace area should be included in the built up area of the flats for the purpose of making out statutory extent of built up area as per Clause (a) Section 80IB(14) of the Income Tax Act. ?"
4. In the course of the hearing before this Court, the Revenue, however, presented a petition for reframing the questions of law, since the questions admitted did not fully project the issue in question. On a perusal of the questions now raised before this Court, after hearing the learned senior counsel appearing for the assessee, who had no serious objection for re-framing the questions, the following substantial questions of law are admitted:
"1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee had satisfied the conditions laid down under the Section 80IB(10) and is eligible for deduction said under Section 80IB(10)?
2. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that assessee cannot be treated only as a contractor as per the terms of the agreement between the owner of the land and the assessee for the purpose of claiming benefit u/s 80IB?
3. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that assessee need not own the land and then develop cum build the housing project of the purpose of claiming deduction under section 80IB(10)?
4. Whether on the facts and in the circumstances of the case, the Tribunal was right in remanding the case for reverification and remeasuring the built up area residential / commercial flats measuring more than 1500 sq.ft. / 2000 sq.ft. and directing the assessing officer to pass orders again when the assessing officer and the CIT(A) had rightly arrived at the conclusion that the flats were in excess of 1500 sq.ft./2000 sq.ft. after considering the dimensions of measurement and consequently held assessee is not entitled for deduction u/s 80IB(10)?
5. Whether on the facts and in the circumstances of the case the Tribunal was right in that th eassessee is entitled for the deduction under section 80IB(10) for the housing project with respect to flats with built up area not exceeding 1500 sq.ft./2000 sq.ft., even though in the same housing project, the assessee had constructed flats exceeding built up area of 1500 sq.ft. residential flat / 2000 sq.ft. commercial flat.
5. It is seen from the facts narrated herein that the assessee is engaged in the business of construction. The assessee entered into an agreement of sale with one Ashok Kumar for joint development of the property. The assessee's claim for deduction under Section 80IB(10) of the Income Tax Act is rejected on the ground that the assessee was not the owner of the land. Aggrieved by the same, the assessee went on appeal before the Commissioner of Income Tax (Appeals), who dismissed the appeal. Aggrieved by the same, the assessee went on further appeal before the Income Tax Appellate Tribunal.
6. The Tribunal considered the assessee's appeal along with two other assessees' appeals involving similar questions of law and passed a common order. One such assessee's case came up for consideration in T.C.Nos.581, 1186 of 2008 and 136 of 2009 in the case of Ceebros Hotels Pvt. Ltd. Vs. Deputy Commissioner of Income Tax. By judgment dated 19.10.2012, this Court allowed the assessee's appeal, holding that the open terrace area cannot form part of the built up area; in the result, the assessee would be entitled to deduction under Section 80-IB(10) of the Act and that the assessee would be entitled to proportionate relief as regards the units having built up area not more than 1500 sq.ft.
7. Even though learned standing counsel for the Revenue raised additional grounds regarding the principle of proportionality for grant of relief, yet, we find by reason of exclusion of open terrace area from the built up area, application of proportionality theory does not arise. In the circumstances, we find no justifiable ground to accept the plea of the Revenue on this aspect.
8. As far as the Revenue's contention that for the purpose of Section 80-IB(10) deduction, the assessee should have owned the property is concerned, the same is liable to be rejected by reason of our decision rendered in T.C.Nos. 581, 1186 of 2008 and 136 of 2009 CEEBROS HOTELS PVT LTD v. DEPUTY COMMISSIONER OF INCOME TAX dated 19.10.2012. Hence, the appeals filed by the Revenue viz., T.C.(A).Nos. 583 and 584 of 2011 stands dismissed and this portion of the Tribunal's order stands confirmed. The assessee's appeals in T.C.Nos.316 and 317 of 2012 stand allowed, holding that the terrace area cannot form part of the built up area. No costs.
To
1. The Commissioner of Income Tax, Chennai.
2. Income Tax Appellate Tribunal, 'A' Bench bg