Income Tax Appellate Tribunal - Chennai
Arihant Heirloom, Chennai vs Department Of Income Tax on 18 February, 2014
आयकर अपील य अ धकरण, सी'
सी यायपीठ,
धकरण 'सी यायपीठ चे नई ।
IN THE INCOME-TAX APPELLATE TRIBUNAL
'C' BENCH, CHENNAI.
ी ए. मोहन अलंकामणी,
ामणी लेखा सद य एवं ी वी.
वी दग
ु ा राव,
राव या यक सद य के सम ।
Before Shri A. Mohan Alankamony, Accountant Member &
Shri V. Durga Rao, Judicial Member
आयकर अपील सं./I.T.A.No.385/Mds/2013
नधारण वष/Assessment Year:2009-10
The Income Tax Officer, M/s. Arihant Heirloom,
Business Ward XIII(1), Room No. 607, Vs. No. 271, Poonamallee High Road,
New Block, Aayakar Bhavan, No. 121, Kilpauk, Chennai 600 010.
M.G. Road, Chennai 600 034.
[PAN : AANFA7010K]
अपीलाथ /Appellant)
(अपीलाथ ( यथ /Respondent)
अपीलाथ क ओर से / Appellant by : Shri N. Madhavan, JCIT
यथ क ओर से/Respondent by : Shri Devendra Kumar Bhandari, CA
सन
ु वाई क तार ख/ Date of hearing : 18.02.2014
घोषणा क तार ख /Date of Pronouncement : 26.02.2014
आदे श /O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) XII, Chennai, dated 22.11.2012 relevant to the assessment year 2009-10.
2. Brief facts of the case are that the assessee is a firm, filed its return of income for the year under consideration admitting "NIL" income after 2 I.T.A. No.385 No.385/M/ 385/M/13 /M/13 claiming deduction of `.1,89,94,652/- under section 80IB(10) of the Income Tax Act. During the course of assessment proceedings, the Assessing Officer has observed that the assessee firm has never acquired any legally vested ownership rights in the land on which the residential apartments were constructed. The undivided shares were sold by the individual owners and the construction part was undertaken by the assessee as per all the sale agreements with the purchasers of the flat. Therefore, the assessee firm is only a constructor undertaking the construction work entrusted by the flat purchasers as per the specifications required. Therefore, it cannot be said that the assessee firm has developed and constructed the said housing project. The assessee must be a developer and builder. A mere contractor or builder without a vested interest in the land is not entitled to a deduction under section 80IB. He also observed that from the perusal of the sale agreement and sale deed executed in favour of flat purchasers, it appears that almost 50% of the flats are of built up area exceeding 1500 sq.ft. and therefore, the condition stipulated under section 80IB is violated and the claim of the assessee was denied.
3. The assessee carried the matter in first appeal and it was submitted before the ld. CIT(Appeals) that the assessee is developer and ownership on the land for the purpose of section 80IB(10) of the Act is not the relevant criteria. The ld. CIT(Appeals), after considering the explanation of the 3 I.T.A. No.385 No.385/M/ 385/M/13 /M/13 assessee, has observed that "the assessee has invested its own money and constructed the project with all risks and responsibilities and hence becomes the owner and developer of the project for the purpose of section 80IB of the Act. Therefore, the ld. CIT(Appeals) has held that the assessee is the developer and builder of the housing project and eligible for deduction under section 80IB(10) of the Act.
4. So far as exceeding the threshold limit of 1500 sq.ft. is concerned, the ld. CIT(Appeals) has observed that from the provisions of section 80IB(14)(a), it is clear that only the actual "built up area" of the flat (residential units) alone is to be considered for the purpose o seeing the threshold limit of 1500 sq.ft. Normally, in any housing projects, the common area constitutes about 15 to 30% super built areas which are shown as the sellable area. In the instant case, the assessee claimed that the common areas constituted from 120 to 184 sq.ft. per flat (of super built area), as under:
Super built (sellable) Common Actual built up area (Sq.ft.) area (sq.ft.) area (Sq.ft.) 1047 (smallest) 120 927 1070 123 947 1463 168 1295 1510 174 1336 1530 176 1354 1600 (largest flat) 184 1416
5. Thus, if the common areas are excluded the actual "built-up area", as defined at the section 80IB(14)(a) of the Act, of the largest flats is hardly 4 I.T.A. No.385 No.385/M/ 385/M/13 /M/13 1416 sq.ft. (1600 sq.ft. - 844 sq.ft.), which is far within the threshold limits of 1500 sq.ft. Hence, there are no violations as far as the requirement of "built up area of not exceeding 1500 sq.ft. of the residential units of the project"
and directed the Assessing Officer to grant the benefit of deduction under section 80IB(10) of the Act.
6. Aggrieved, the Revenue is in appeal before the Tribunal.
7. The ld. DR has strongly supported the order passed by the Assessing Officer.
8. On the other hand, the ld. Counsel for the assessee relied on the order of the ld. CIT(Appeals).
9. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The only issue involved in this appeal is whether the assessee is entitled to deduction under section 80IB(10) of the Act or not. The Assessing officer has denied the claim of the assessee under section 80IB(10) on the ground that the assessee is not the owner of the property and another ground on which the assessee's claim was rejected is that the built up area is more than 1500 sq.ft. The same very issue on which the Assessing Officer denied the claim of the assessee came before the Hon'ble Jurisdictional High Court in the case of Sanghvi and Doshi Enterprises and others v. ITO 255 CTR (Mad) 156 relating to assessment years 2005-06 and 2006-07, wherein the Hon'ble Court has observed that the provisions nowhere required that developer who are the 5 I.T.A. No.385 No.385/M/ 385/M/13 /M/13 owner of the land alone would be entitled to grant of deduction under section 80IB(10) of the Act. So far as built up area is concerned, as per section 80IB(10)(14)(a) of the Act, which is very clear that the common areas showed that the residential units alone does not include built up area. In this case, it is very clear that the built up area alone has to be considered to see the threshold limit of 1500 sq.ft. as observed by the ld. CIT(Appeals).
10. Keeping in view of the Hon'ble Jurisdictional High Court's decision and also provisions of section 80IB(14)(a) and by considering the facts and circumstances of the case, we do not find any infirmity in the order passed by the ld. CIT(appeals) and the grounds raised by the Revenue are dismissed.
11. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on Wednesday, the 26th of February, 2014 at Chennai.
Sd/- Sd/- (A. MOHAN ALANKAMONY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, the 26.02.2014 Vm/- To: The assessee/A.O./CIT(A)/CIT/D.R.