Karnataka High Court
The Commissioner Of Income Tax vs M/S Shravanee Constructions on 28 February, 2012
Bench: N.Kumar, Ravi Malimath
IN THE HIGH COURT OF KARNATm;<A_AT BAa§;.I;A.I_oRE"'~-.Tn'"
DATED THIS THE 2 T" "A'Y"~. F FE'°»RU».AP{'I.' 2'*5fI'°w
§RE%E'N]Q. Vi'
THEH N'BLI M . I-'EST:-¢.E'-»N.KuM"~:1.
O vF*~..5\|\?'|j A
THE HON'Bl1_!'=_AMl'I'\4-"'{'O'"} ..I§{I'AI,IMATH
;1TA.§NO,fi.2'2 QF~2oo9_§
BETWEEN:=:" V
1.
A "C.R.5»*E3'uil"dings,
*Que,en.sR_o'ad,
-Bat'n..g'a.!o"re;I- . I V
The,I«Comn1'ission,er o-f:I'n'com'e--..ta'$<
Central Circi.e,_oVC;R.BuIi«djng, H"
Queens 'Road,'
Bangalore,
The AddI4.'Cosmn1.'issi'on«é:r of Income-tax
Range-3, "
...APPELLANTS
(BAy..f'.VSri K..\'/:.éIréVIvind, Advocate)
AND:
I M,/.s_,Shr'avanee Constructions,
"'--V'_N.o.1"42/143, I Floor,
V_ G.R.'P|aza, Dr.DVG Road,
V' Bfiasavanagudi,
Bangalore -- 560 004. ...RESPO'l\l..EV_3E'l:\lT_
(By Smt.S.R.Anuradha, Advocate) A
***>l<>l<
This ITA filed under section:;26Q~-All
arising out of order dated 25..__03_.2009'--,p'a.ss.ed-, Vin':
ITA.No.16/BNG/2009, for the<Assessme_.nt yea.r"2'o0o3-2c;o4',
praying to formulate the subpstayntial rque.st"i_on's of law
stated therein, allow the appeal'«.and setaside the order
passed by the ITAT,VBangaylAo'rem_i'n ITA.No.16/l-3NG/2009
dated 25.03.2009 and '-confirm t_he"or:le'ri of the Appellate
Commissioner confirming;'the';'orderf'=,pa.ssed by the
Additional Commissioner'. _ 'of' -. A1%nc'o"me'*-- ?.V;Tax, Range-3,
Bangalore. '
IN ITA No:.422[2'o?09 '
BETWEEN: ' ..
1. The;Commissio..ne.r o4f._I'n.comje--tax
Central Circl.eV,=C:R§'Buil.di'n_g,
Queens Road}.
Bangalo"re.* V
'~ _2. 3I_fnco_me lax..,Qfficer
«._vlIar'd,}3_(1«)._, C.R.Buildings,
QL_Jee_n5,'Roa--d,
A ._ ngfato ...APPELLANTS
(By--Sri.-__K}'x/,4Aravind, Advocate)
..g.._.:_.--
AND: "
"M/s-.h'Shravanee Constructions,
l\io.142/143, I Floor,
-~~G.R.Plaza, Dr.DVG Road,
Basavanagudi,
Bangalore -- 560 004. ...RESPONDENT
ll/ _ 3 _ (By Smt.S.R.Anuradha, Advocate) >l<***>l< This ITA filed under section 260~A of...I,.T';Act,f1,9é1'"
arising out of order dated 2:5:0-3,20€_)9 M'pa.sse'd._j_in'., ITA.No.17/Bang/2009, for the _A,sse'ssr'n,ent"--..<.yearj 2004-2005, praying to formulate the sub'stantia'l .quest_i'onS~, of law stated therein, allow the appe_al'=and _set.a'side";th'e order passed by the--.,'~..,ITAT," . 'BVanga*l.o"r'e~~ in *1' ITA.No.17/Bang/2009 dated 25;o3.2oo9'amifconfirm the order passed by the,..Income--.Tax"--»..Qfficer,-.,W.a'rd-3(1), Bangalore. 5 ~ ~ These ITAs comi~nvgjfoVri-- this day, N.KUMAR J., del§v_ered l:_he,folloWing_j;~~;_ the assessment year 2003--04'gand_ pertains to the assessment year,-2.004--0'S._inresp-ect of very same assessee and in ~..,.,reqS'DeKct5..,'of very samewhousing project. Therefore, they are atalgen' u:pf.foVrV"r-consideration together and disposed off by this..__com~m_ojn order.
The revenue has preferred these appeals ,W.agai...nst the order of the Tribunal, which has granted ..,_benefit of Section 801B (10) of the Income Tax Act, 1961 We (for short hereinafter referred to as the Act) on that the assessee was an integral part of the coinst'_r'uict:ioir~..\,i activities.
3. The assessee firmly engaged of development and constructiiioiniof_resiidehtiial flats. It came into existence It purchased agricultural landAV_meaSLJ.riVi1_«;'.V for an amount of" ihixmruthahalli Village, Yelahanka Taluk. The sale deed was of Understanding was enteredii"«oiin'-- the land owners and the assessee tio"o.l< 'poss.esisi_oh~-"of the property. On 19.12.1997, joiint1_devyelopimen.t...agreement was entered into by the iassesseei'asv'fconsenting witness" with (i) the landlords as "ow'ners";'iaf_ndii(ii) M/s.Purvankara Projects Ltd., Mumbai . as "ipr.om..oters", to develop a residential apartment on the " "--._V"'abgove land. As per the agreement dated 19.12.1997, the 1" -..pr'om'oters were to pay a consideration of Rs.45,00,000/-- ..._aind to deliver 22% of the super built area to UV consenting witness, namely the assesseVe.{j». 'As' --..a 0' consequence of the agreement,'t'he"assessee.:VfirmV got the land converted into non--agricultu'ralf*l--and alndT.got«.the"wioi'kV commencement letter dated 11_.05.1999'VV':.,from§ the:
Byatarayanapura City M'u'i'n.i:ci'pal VCorAporati'o§n. On 30.03.2001 another:"jwoint_"AV'd'e§{el.op.rnent atjreement was made wherein the improved by retaining the':««sa'me::'._terms "<air:ldi_"~confdiitions. A further suppleméént'Ta'g:re'eVm.ent'j'.-w'a'5._ Vfii1néd;ev.--on 20.04.2001 in which the super built area were menVt'iprj'e'd.' 211 flats that were to be constructed aspertheiprojects, 40 flats in different blocks were allotted to the-assessee. The assessee sold some of f;§Aa:ts~Vi.and Vlclamtied the income on sale of the flats as '.-VdedAu'ction'-.iunder Section 80IB(10) of the Act. The "./.\ssesVsin-"g';_ 0'fficer on verification of the records found that th"e..a'"sses4see has not satisfied the conditions laid down in " VS-..ectio'n 80IB(10) of the Act. It was ascertained from "'..V'M/'s.Purvankara Projects Ltd., that they had not claimed 'T deduction in respect of flats allotted to the assessee. The 1 Assessing Officer further found required from the assessee]-to of the' assessee with regard__tO Wh.e.th:?Vl._ti'1v¢' ro.I'e'A%vf.,.the assessee firm's in the interpreted as development and__ the purpose of Section lihelllllassessee made an applicvati,oVn""to"the of Income Tax reque,stingAto""al'iofiw "under Section 8OIB(10). The Income Tax held that although th,e§A'a'ssessee"satisfied most of the conditions laid down in ,' 'Secltio"nsA.,8.QAIB,(10), however, since the assessee itself has built the housing project, he held that the deductilon under Section 8OIB(10) could not be made ffavailavble to the assessee. He further held that the '.pro'visions of Section 8OIB(10) provided for deduction of "profits from housing project from the total income, to an undertaking which had done the work of developing and building the approved housing project. Since the housing project was carried out by M/s.Purvankara Projects Ltd., by virtue of the agreements and the assessee has not li/ developed and built the project on its own-,n7the Commissioner of Income Tax (Appeals) assessee is not entitled for deduction. Aggrijfeftzedliibyp aforesaid two orders, the assessee p:reférred':4lan-
the Tribunal. The Tribunal .h'el.d.V thatA.th"e o.nly::t; obtained the permission/sanction: for the construction but also has done the useful for the apartment const_ruction..,..,:prov'il.din»g'""roaAci~.33J.."V'supervising the construction i__'act}i.
Halo ra Projects Ltd.
Therefore: 'integral part of the develobVprl1_Ve:An'§:fa;jdv_.v::'cVon.:%fru,ctior_iactivities. The assessee is not mer'e.l_yf the had agreed to part with the land... xNorn~..aAll'y',"'once: the land is transferred to the dqéveloiper," the developer does the entire activity, whereas in.;-the~.i,nstanAt~,c:ase, the assessee as mentioned above, has also don'e.,la'dditional activities, which are integral parts of dejvelzopiing the project. Therefore, it held that the 'V..asse'ssee is entitled to the benefit of tax under the V. ._..aforesaid provisions. Aggrieved by the said order, the revenue is in appeal.
6. In the instant case, all those conditions are fulfilled. However, the dispute is when the ass_ess'ee*..has not built the housing project, is he entitled to_.tlh"e"bet:-e_fit-,._d17_V the aforesaid provision.
7. As stated earlier, = housing project, which silt developing and buildirig.hou,si'ngA.naproject, vvhi'c"'n attracts the provision. In the gommissioner of Income Tax'.,(.i\.pp-eals)',V' and construction activities are listed. They are:
Vfij municipality;
" sanction for construction of the said property by the local aVuthovr_i.t.y«.' ~i.A_i_i)':v'4vA..All?l'al<ing the land usable for the purpose of atlV'é'.V--",j';__apartment construction by providing proper road and to give an approach to the site; it iv) Jointly supervising the construction of the V, apartments buildings;
_.10_.
v) Marking the apartments falling to the share of the assessee;
vi) Also undertaking the levelling removal of rocky surface in th'e~--sai.d and' made it usable for the p:uirpose_of.'c'on'st:ruc'ticn of the apartment c_omplexes V
8. In terms the..i'ag:re'em'e_nt, 'wh'i'ch*are not in dispute, the assesseeiwenot the aforesaid development cgguvestion, but in fact, he entered" sale with the owners of the land'; "en'tj;A,4f\eV'con's'ideration but he did not take a registered' name. On the contrary, the proceduVre».Vadopt-ed'._V.i's«:."-he in turn entered into a joint d.e_\i*i:elo__pmVVent agreement with the builder and the owner of ' made a party to the said proceedings. Thus, "th'el«assAe's'Sjee' contributed the land, undertook the aforesaid developmvental activities in the said land and thus, Agcllomplied with all other conditions, which have to be V'gfUlfi"€d before claiming benefit under Section 8OIB(10) of V, -12- who have made investments in this housing proj'eict:.fwVh'ich is for the benefit of middle and lower when they have complied with allthe..Conditioénsjpre's,¢_riVbe.duit under the aforesaid provision, both them~.a'i'e:"enVti:t_l*edaito hundred percent benefit o:f_"'--t.ax dediuctiolnjéig...._Vprowvided.tl' under the said provision. 'view.'of:th:e matter, we do not see any merit"-in.th.g5e' The substantial question of lawvis ansvvered in assessee and against t.h_e3-I _ the appeals are dismissed.
Sd/.., JUDGE Sd/..' JUDGE " " it Pm '