Madras High Court
The Commissioner Of Income-Tax-I vs M/S.Sreevatsa Real Estates Pvt. Ltd on 2 November, 2012
Author: Chitra Venkataraman
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.1184 and 1185 of 2010 The Commissioner of Income-tax-I Coimbatore. .. Appellant in both T.Cs. versus M/s.Sreevatsa Real Estates Pvt. Ltd. 8/2, Mettupalayam Road Coimbatore-641 043. .. Respondent in both T.Cs. ----- PRAYER: Tax Case Appeal Nos.1184 and 1185 of 2010 are filed under Section 260A of the Income Tax Act as against the order of the Income Tax Appellate Tribunal 'D' Bench, Chennai, dated 23.04.2010, passed in I.T.A.Nos.2505/Mds/2006 and 2505/Mds/2006 respectively. ----- For appellant in both T.Cs. : Mr.N.V.Balaji Standing Counsel for Income Tax For respondent in both T.Cs. : Mr.R.Janakiraman ----- JUDGMENT
(Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) The Revenue has preferred these appeals as against the order of the Tribunal relating to the assessment years 2003-04 and 2004-05, raising the following substantial question of law:
" Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee was eligible for deduction under Section 80IB(10) in pro-rata basis for housing unit having less than 1500 sq.ft., even though it would defeat the intention behind enacting the said provision, which was only for providing housing facilities for middle income group? "
2. It is seen from the facts herein that the assessee is a company engaged in property development and promotion. In respect of the assessment year 2003-04, the assessee claimed deduction in respect of 13 houses out of 22 houses, which are row houses, under Section 80IB of the Income Tax Act (hereinafter referred to as "the Act"), they being less than 1500 sq.ft of built-up area. For the assessment years 2004-05, the claim was made for 6 houses out of 19 houses, which are less than 1500 sq.ft.
3. The claim was rejected by the Assessing Officer on the ground that violation of the condition under Section 80IB(10) in respect of any one of the Units would result in denial of the relief under Section 80IB of the Act and the assessee should fulfil the criteria for the entire project as a whole for claiming deduction under Section 80IB(10). It further pointed out that, in the project stated to have been approved by the Kuniamuthur Town Panchayat, the approval granted in respect of building construction was Unit-wise. The assessee sold the individual sites, though separate agreements were there for constructing houses. It further pointed out that the Village Administrative Officer was not the authority for issuing approval for the housing project.
4. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) held that the provision under Section 80IB(10) nowhere permits an assessee to claim deduction on a proportionate basis and the entire project must contain houses of a built-up area less than 1500 sq.ft. Thus the Commissioner of Income Tax (Appeals) rejected the assessee's claim for proportionate relief. He further pointed out that the assessee had purchased house sites as well as others had also purchased sites. The assessee had merely constructed individual house buildings. Hence, the assessee could not be held as having developed and constructed a project. Further, the assessee had produced the building approval only for individual houses and had not developed and built the project with the approval of the local authority. Hence, the Commissioner of Income Tax (Appeals) confirmed the order of assessment.
5. Aggrieved by this, the assessee went on further appeal before the Income Tax Appellate Tribunal. On a perusal of the approval granted on 16.02.1987 by the Deputy Director, Town Planning of Kovai-Periyar-Nilagiri District, the Tribunal pointed out that the approval from the local authority, as per the requirement, was rightly obtained. It further held that the entire project had the approval of the local authority and each individual houses were only part of a whole, they being row houses. The total housing units as per the approved layout was 100. Of this, 53 units were less than 1500 sq.ft and only 47 units were above 1500 sq.ft. The total project area was 6.47 acres and the total area of houses less than 1500 sq.ft. came to 1,54,050 sq.ft., working out to 3.54 acres. Thus, it satisfied the area requirement. The Tribunal referred to the approval dated 16.02.1987 given by the Deputy Director (Town Planning) of Kovai-Periyar-Nilgiri District. The Tribunal further pointed out that as per the directions of the Deputy Director, the assessee had also obtained the approval from the local authority, which is the panchayat. The assessee had produced the certificate dated 02.02.2005 from the Village Administrative Officer. Thus, the Tribunal also referred to the decision of the Chennai Bench of the Income Tax Appellate Tribunal as well as to the Kolkata Bench in the case of Bengal Ambuja Housing Developments Ltd. Vs. CIT Cir.X., Kolkata in ITA No.1595/Kol/2005 dated 24.03.2006 in the case of the assessee for pro-rata deduction.
6. Thus, on the claim for deduction, the Tribunal held that the assessee was entitled to pro-rata deduction in respect of Units which have built-up area less than 1500 sq.ft. Thus, there could be no disallowance of the entire claim. Aggrieved by this, the Revenue has preferred these appeals before this Court.
7. As is evident from the substantial questions of law raised herein relating to the grant of relief on pro-rata basis in respect of housing units having less than 1500 sq.ft., in the decision that we have rendered in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012, we had considered the question on proportionality in the matter of grant of deduction under Section 80IB of the Income Tax Act in respect of Units which satisfy the requirement under Section Section 80IB(10)(c) of the Income Tax Act. Following the said decision, we confirm the order of the Tribunal, thereby rejecting the Revenue's appeals.
In the result, the Tax Case Appeals stand dismissed. No costs.
Index: Yes / No (C.V.,J.) (K.R.C.B.,J.) Internet: Yes / No 02.11.2012 ksv To 1. The Income Tax Appellate Tribunal 'D' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals)-I, Coimbatore. 3. The Income Tax Officer, Company Ward I, Coimbatore. CHITRA VENKATARAMAN,J. and K.RAVICHANDRABAABU,J. ksv Tax Case Appeal Nos.1184 and 1185 of 2010 Dated: 02.11.2012