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.585 of 2011 and 318 of 2012 The Commissioner of Income Tax Chennai. .. Appellant in T.C(A)No.585 of 2011 & Respondent in 318 of 2012 Vs. M/s.Mahalakshmi Housing No.560, 3H Century Plaza, Anna Salai, Teynampet, Chennai 600 018. .. Respondent in T.C(A)No.585 of 2011 ` & Appellant in 318 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.263/Mds/2010 on the file of the Income Tax Appellate Tribunal, 'A' Bench for the assessment years 2006-07. For Appellant in T.C(A)Nos.585 of 2011 & Respondent in 318 of 2012 : Mr.J.Naraynanaswamy Standing Counsel for Income Tax For Respondent in T.C(A)Nos.585 of 2011 & Appellant in 318 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 2006-07.
2. As far as Revenue's Appeals (T.C.(A)No.585 of 2011) is 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 exceeing 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).No. 318 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 developer or builder, is eligible for claiming benefit under Section 80(IB)(10), and assessee can be treated as developer or builder, eligible for claiming benefit under Section 80IB(10) of the Income Tax Act?
2. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee had complied with the condition of submission of completion certificate from local authority within the time limit as per the provisions of Section 80IB(10)(a) of the Income Tax Act?
3. Whether on the facts and in the circumstances of the case, the Tribunal was right in that the assessee is entitled for the deduction under Section 80IB(10) for the housing project with respect to residential flats with built up area not exceeding 1500 sq.ft. even though in the same housing project, the assesseee had constructed flats exceeding built up area of 1500 sq.ft.?
4. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Section 80IB(10) provide for partial deduction to the housing project with respect to residential flats with built up area of less than 1500 sq.ft. where the same project contains flats with built up area exceeding 1500 sq.ft.?"
5. It is seen from the facts narrated herein that the assessee entered into an agreement with Manju Jain and 5 others, wherein the parties had agreed for joint development of the property. The Assessing Officer viewed that the assessee not being owner of the property was not entitled to claim deduction under Section 80-IB(10) of the Act. Apart from that, the Assessing Officer pointed out that some of the flats built up area exceeded the conditions as prescribed under sub clause (c) of Sub Section (10) of Section 80-IB of the Act, in the sense, when built up area was taken along with open terrace area, the plinth area exceeded 1500 sq. ft. Consequently, the assessee was not eligible for deduction. However, on appeal before the Commissioner of Income Tax (Appeals), the assessee succeeded. Before the Tribunal, on the aspect of ownership, the assessee succeeded, however, on the inclusion of open terrace area into the built up area, the Tribunal answered the issue in favour of the Revenue in the appeal filed by the Revenue.
7. As far as the issue in respect of inclusion of open terrace area with the built up area is concerned, we had already held the said issue against the Revenue in 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 and accordingly, the order the Tribunal is set aside. The assessee's appeal viz., T.C.(A).No. 318 of 2012 stands allowed 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. No costs.
8. 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 into 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.
9. 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 appeal filed by the Revenue viz., T.C.(A).No. 585 of 2011 stands dismissed and this portion of the Tribunal's order stands confirmed. No costs.
To
1. The Commissioner of Income Tax, Chennai.
2. Income Tax Appellate Tribunal, 'A' Bench bg