Income Tax Appellate Tribunal - Chennai
Dcit, Chennai vs Pace Builders (Madras) (P) Limited, ... on 16 March, 2018
आयकर अपील
य अ धकरण, 'ए' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL , 'A' BENCH, CHENNAI
ी ए. मोहन अलंकामणी, लेखा सद य एवं ी ध!ु वु" आर.एल रे #डी, या%यक सद य के सम&
BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER
AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER
आयकर अपील सं./I.T. A. No.270/CHNY/2017
( नधा रण वष / Assessment Year: 2012-13)
M/s. Pace Builders (Madras) Pvt. Vs The Deputy Commissioner of
Ltd., Income Tax,
B-58, Anna Nagar East, Non Corporate Circle - 5(1),
Chennai - 600 102. Chennai - 34.
PAN: AABCP0675N
(अपीलाथ /Appellant) ( यथ /Respondent)
&
आयकर अपील सं./I.T. A. No.280/CHNY/2017
( नधा रण वष / Assessm ent Year: 2012-13)
The Deputy Commissioner of Vs M/s. Pace Builders (Madras) Pvt.
Income Tax, Ltd.,
Non Corporate Circle - 5(1), B-58, Anna Nagar East,
Chennai - 34. Chennai - 600 102.
PAN: AABCP0675N
(अपीलाथ /Appellant) ( यथ /Respondent)
नधा रती क ओर से /Assessee by : Shri D. Anand, Advocate
राज की ओर से /Revenue by : Shri D. Prabhu Mukunth Arun
Kumar, Jr.Standing Counsel
सन
ु वाईक तार ख/Da t e of h e ar in g : 04.01.2018
घोषणाक तार ख /D at e of Pr on o unc em en t : 16.03.2018
आदे श / O R D E R
Per A. Mohan Alankamony, AM:-
Both the Assessee and the Revenue has filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals)- 2 ITA Nos.270 & 280/CHNY/2017 3, Chennai dated 30.09.2016 in ITA No.32/2015-16/CIT(A)-3 for the assessment year 2012-13 passed U/s.250(6) r.w.s. 143(3) of the Act.
2. Assessee's Appeal:
The assessee has raised several grounds in its appeal however the crux of the issue is that, the Ld.CIT(A) has erred by not granting deduction U/s.80IB(10) of the Act for the entire project consisting of 4 blocks and 372 dwelling units as per its additional claim made for the first time, instead has granted deduction only with respect to 2 blocks out of the total project, thereby granting partial relief to the assessee, as against the order of the Ld.AO who had denied the benefit of deduction U/s.80IB of the Act.
3. Revenue's Appeal:
The Revenue has raised several grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in granting deduction U/s.80IB of the Act for the two blocks.
4. The brief facts of the case are that the assessee is a private limited company engaged in the business of construction and development of residential properties, filed its return of income for the assessment year 2012-13 on 27.09.2012 declaring total income of 3 ITA Nos.270 & 280/CHNY/2017 Rs.26,04,89,191/-. Initially the return was processed U/s.143(1) of the Act on 17.05.2013. Subsequently the case was selected for scrutiny and finally assessment was completed U/s.143(3) of the Act on 27.03.2015 wherein the Ld.AO disallowed the claim of deduction U/s.80IB(10) of the Act amounting to Rs.10,63,63,214/-.
5. The assessee had undertaken to construct 372 residential apartments consisting of 5 blocks in Selaiyur Village, Chennai. The project is on a land which extends to 3.46 acres and the block No.1 & 2 is developed on a land extending to 1.65 acres. The first planning permit for the project viz., phase Adarsa project was issued by CMDA on 20.03.2007 vide permit No.2965 consisting of 64 dwelling units in one block. The second planning permit for the project was issued on 23.09.2008 vide permit No.4809 consisting of 195 dwelling units in 4 blocks. The third planning permit was issued on 12.08.2010 vide permit No.5911 consisting of 372 dwelling units in 5 blocks.
6. Thereafter partial completion certificate was issued on 20.04.2011 with respect to 116 dwelling units in two blocks based on the application dated 13.09.2010. Thereafter final completion certificate consisting of 372 dwelling units in 5 floors were issued on 14.05.2012 on the basis of application dated 23.02.2012. 4 ITA Nos.270 & 280/CHNY/2017
7. Before the Ld.AO, the assessee had claimed deduction U/s.80IB of the Act with respect to 2 blocks based on the completion certificated dated 20.04.2011. However the Ld.AO rejected the claim of the assessee because of the following reasons:-
i. No evidence was produced to establish that the project was developed in an area more than 1 acre of land.
ii. There were some instance where built up area was exceeding 1500 sq.ft. viz., Flat No.12, 5th Floor of Block 1, built up area of about 1570 sq.ft. approx., sold to Mr. Sivaramakrishnan.
8. Aggrieved by the order of the Ld.AO, the assessee preferred appeal before the Ld.CIT(A). In the appeal the assessee had claimed an additional ground by claiming deduction U/s.80IB(10) of the Act for the entire project consisting of 372 dwelling units in 5 blocks. The assessee's claim was based on the submission that the entire project was completed on 31.03.2012 based on the planning permit No.5911 dated 12.08.2010, and the final completion application dated 23.03.2012, against which the completion certificate was issued on 14.05.2012.
9. The Ld.CIT(A) relying in the decision of the Hon'ble Apex Court in the case Goetze (India) Ltd., Vs. CIT reported in 157 taxmann 1, 5 ITA Nos.270 & 280/CHNY/2017 held that he has no power to entertain fresh claim U/s.254 of the Act. Therefore the Ld.CIT(A) rejected the additional ground raised by the assessee. However with respect to the original claim of the assessee regarding deduction U/s.80IB(10) of the Act on the 2 blocks, the Ld.CIT(A) held the issue in favour of the assessee by observing as follows:
"In the appellant's case, the housing project was approved by the CMDA on 20.03.2007. However, the appellant was given completion certificate only for 2 blocks during the F.Y. relevant to the A.Y. even though application was made for all the blocks. It is further stated that the project has been launched on a land admeasuring 3.46 acres. It is vehemently argued that appellant has fulfilled all the conditions laid down u/s 80IB(10). Therefore, deduction as claimed by the appellant should have been allowed.
On consideration of facts and in law, I am inclined to agree with the Ld. AR. There is no such provision to prevent the appellant to claim deduction u/s 80IB(10) depending on completion of the project. In the appellant's case, it has completed 2 blocks and obtained completion certificate on the basis of which the appellant has claimed deduction u/s 80IB(10). In my considered opinion, the appellant has fulfilled the conditions laid down is u/s 80IB(10) and eligible for deduction u/s 801B(10).
(b) The next ground considered by the AO for disallowance with regard to details of size of the land, AO has stated that appellant has not filed details with regard to the size of the land. In this regard, the AO has submitted a remand report in which no comment has been made on this issue.
Before me, the Id. AR has submitted that the project was launched on a land admeasuring 3.46 acres on which 5 blocks are stated to have been constructed. In my considered opinion, the AO's stand is not tenable in view of the facts brought out by the Id. AR. It is a huge 6 ITA Nos.270 & 280/CHNY/2017 project containing 5 blocks. Moreover, appellant company was also surveyed u/s 133A which fact has already been mentioned by the AO in the assessment order. In the light 'of the above, I hold that details with regard to the size of the land must have been looked into by the AO, therefore, the AO's stand is not justifiable.
(c) The third ground for disallowance made by the AO is that appellant has constructed certain flats exceeding the maximum built- up area of 1500 sqft. AO has also given one example in the case of Mr. Sivaramakrishnan Natarajan.
Before me, ld. AR has argued that in few flats, appellant has constructed residential units having saleable area of 1570 sqft. which includes common areas. He has also stated that section clearly mentions that maximum built-up area of 1500 sqft. Further, the built- up area has been defined as inner measurement of the residential units at the floor level including projections and balconies as increased by thickness of the walls but does not include common areas shared with other residential units. He says that this is nothing but carpet area. In this regard, he has placed reliance on decision of the jurisdictional High Court in the case of CIT Vs. Subba Reddy (HUF) 373 ITR 103.
I have considered the submissions of the Id. AR and the findings of the AO. In my opinion, appellant's arguments have the substance. I have also perused the jurisdictional High Court's decision which says as under:
"Held, dismissing the appeal, (i) the assessee was entitled to the benefit of the claim under section 80-IB(10) even though the assessee was not a developer but only a builder,
(ii) That in the absence of any specific definition for the term "built-up area" during the relevant period, the reasoning of the Commissioner (Appeals), which was confirmed by the Tribunal was justified.
Nevertheless, section 80-IB(10) speaks about the residential unit having a maximum built-up area of 1500 sq .ft. to claim deduction. Even in the definition under section 80-IB(14)(a), which came into effect from april 1, 2005, "built-up area" was defined as inner measurements of the residential unit at the floor level, including the 7 ITA Nos.270 & 280/CHNY/2017 projections and balconies, as increased by the thickness of the walls, meaning thereby, the actual residential portion of the property. It clearly states that it will not include common areas shared with other residential units. Thus, there was no justification in including the car park in the definition of the built-up area of the residential unit for the purpose of determining the maximum built-up area. In this regard, Id. AR has filed sale-cum-construction agreement for verification. Clause (2) of the said agreement says as under:
5. The Purchaser(s) has requested the Builders to construct for the Purchaser(s} a Flat for an area of about 979 sq.ft. approximately in the proposed building to be put up in the SCHEDULE "A" property, the said flat being more clearly described in SCHEDULE "D"
hereunder and have entered into a work contract for constructing the above structure for a value of Rs.29,96,300/ - (Rupees Twenty Nine Lacs Ninety Six. Thousand Three Hundred Only).
The agreement clearly shows that the area of flat constructed does not talk about the carpet area or built-up area, etc. In view of the fact, it cannot be ruled out that appellant's contention that constructed area includes common areas. Moreover, in the appellant's case, Survey u/s 133A was conducted. If any discrepancy was noticed during the survey, it should have been brought on record by the AO which appears to have not done. In the circumstances, I hold that the appellant company has not violated the provisions of Sec.80IB(10) and is found eligible to claim deduction for 2 blocks."
10. Before us the Ld.DR relied in the order of the Ld.AO regarding the disallowance of the claim of deduction U/s.80IB(10) of the Act while as the Ld.AR argued in support of the Order of the Ld.CIT(A).
11. We have heard the rival submission and carefully perused the materials available on record. From the order of the Ld.CIT(A) it is 8 ITA Nos.270 & 280/CHNY/2017 apparent that after analyzing the issue he has held that there is no provision in the Act to prevent the appellant for claiming deduction U/s.80IB(10) of the Act depending on the partial completion of the project. Therefore the Ld.CIT(A) has granted deduction of 80IB(10) of the Act for the 2 completed blocks of constructed dwelling units because the assessee had complied with the other provisions of the Act. We do not find any infirmity in the order of the Ld.CIT(A) because we are also of the view that as stated by the Ld.CIT(A) there is no prohibition in the Act to claim deduction depending on the completion of the project when all other conditions are fulfilled. Therefore on this regard we uphold the decision of the Ld.CIT(A). 11.1 Further on the issue regarding the size of the land, the Ld.CIT(A) after examining the matter has accepted the contention of the Ld.AR, that the extent of land is 3.46 acres on which 5 blocks are constructed. Moreover considering the total number of residential units and various survey numbers cited in the approval it is obvious that the size of the land is more than 1 acre with respect to the two blocks thereby complying with one of the provisions of Section 80IB(10) of the Act. Hence we do not find it necessary to interfere with the order of the Ld.CIT(A) on this issue.
9 ITA Nos.270 & 280/CHNY/201711.2 Regarding the built-up area of the flats, the Ld.CIT(A) has held that in the case of the assessee the built-up area includes certain common area which is required to be excluded while considering the compliance of provision of 80IB(10)(c) of the Act. Thereafter on examining the materials on record the Ld.CIT(A) has arrived at the conclusion that in the case of the assessee all the residential units are within the permissible limit of 1500 per sq.ft., after excluding the common area and therefore eligible for deduction U/s.80IB(10) of the Act. Since the assessee had complied with all the conditions stipulated U/s.80IB(10) of the Act, the Ld.CIT(A) granted deduction for the 2 blocks of the constructed residential units. In this situation, we do not find it necessary to interfere with the order of the Ld.CIT(A) who has arrived at such decision after examining the materials produced before him.
11.3 Accordingly we hereby sustain the order of the Ld.CIT(A) for granting deduction U/s.80IB(10) of the Act to the assessee with respect to the 2 blocks of constructed residential units. Hence the Revenue's appeal is devoid of merits.
12. With respect to the issue of additional ground raised by the assessee which was rejected by the Ld.CIT(A), the Ld.AR argued 10 ITA Nos.270 & 280/CHNY/2017 before us stating that the decision in the case of Goetze (India) Ltd., is only with reference to the power of the Assessing Officer and does not restrict the power of the Tribunal to admit additional ground because while concluding the Hon'ble Apex Court has observed that "we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Tribunal U/s.254 of the IT Act, 1961." We find merit in the submission of the Ld.AR. As held by the Hon'ble Apex Court, the Tribunal is vested with powers to admit any fresh legal ground raised by any of the party in the appeal for the first time. Before us, the assessee has raised the additional ground that it is eligible for claiming deduction U/s.80IB(10) of the Act for the entire project because the entire project was completed before the financial year ending 31.03.2012. On perusing the materials on record we find that the assessee has a valid legal ground, hence we are of the considered view that even though the assessee has raised this legal ground before us for the first time, in the interest of justice, it is required to be admitted for adjudication in accordance with the provisions of the Act and the decisions rendered by various judicial authorities. Accordingly we hereby admit this legal ground raised by the assessee and remit the matter to the file of Ld.AO for de-nova consideration. Further we hereby direct the Ld.AO to treat the date of completion of the entire project as 23.02.2012 even though the final completion certificate is 11 ITA Nos.270 & 280/CHNY/2017 dated 14.05.2012 because the application for the final completion certificate was made on 23.02.2012. Reliance is placed in the decision of the Hon'ble High Court of Mumbai in the case CIT vs. HINDUSTAN SAMUH AWAS LTD., reported in 377 ITR 150 wherein upholding the order of the Tribunal it was held that when the assessee had filed application for granting final completion certificate before the appropriate Authority, the subsequent delay by the appropriate Authority in issuing the completion certificate cannot be attributed to the assessee.
13. In the result the assessee's appeal is allowed for statistical purposes as indicated herein above and the Revenue's appeal is dismissed.
Order pronounced on the 16th March, 2018 at Chennai.
Sd/- Sd/-
ु आर.एल रे #डी)
(ध!ु व" (ए. मोहन अलंकामणी)
( Duvvuru RL Reddy ) ( A. Mohan Alankamony )
#या यक सद%य /Judicial Member लेखा सद%य / Accountant Member
चे#नई/Chennai,
'दनांक/Dated 16th March, 2018
RSR
आदे श क त)ल*प अ+े*षत/Copy to:
1. नधा रती/Assessee 2. राज%व /Revenue 3. आयकर आय/
ु त (अपील)/CIT(A)
4. आयकर आय/
ु त/CIT 5. *वभागीय त न2ध/DR 6. गाड फाईल/GF