Madras High Court
Commissioner Of Income Tax vs M/S.Ceebros Property 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 T.C.(A). Nos.1366 of 2008 and 889 of 2009 Commissioner of Income Tax Chennai .. Appellant in both TC (Appeals) -vs- M/s.Ceebros Property Development (P) Ltd 19,III Cross Street Raja Annamalaipuram Chennai-600 028 .. Respondent in both TC (Appeals) Tax Case (Appeals) against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, dated 31st March 2008 in ITA.No.406/Mds/2007 and 28.04.2009 in ITA.No.1003/Mds/2008. For Appellant : Mr.T.Ravikumar Standing Counsel for I.T.Dept For Respondent : Mr.Jehangir D.J.Mistri Senior Counsel for M/s.A.S.Sriraman C O M M O N J U D G M E N T
(Judgment of the Court was made by CHITRA VENKATARAMAN ,J) The Revenue is on appeal as against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, dated 31st March 2008 in ITA.No.406/Mds/2007 and order dated 28.04.2009 in ITA.No.1003/Mds/2008 relating to the assessment year 2003-04 raising the following questions of law:-
"1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the Commissioner was not justified in revising the assessment order under Section 263 ?
2. Whether on the facts and circumstances of the case, the Tribunal was right in allowing the benefit of claim under Section 80IB(10) when the assessee is not a developer, but only a builder, when the eligibility to deduction u/s.80IB(10) is conferred for developing and building housing projects ? "
2. It is seen from the facts narrated therein that the assessee is engaged in the business of developing and construction of housing projects. It entered into sale agreement dated 11th December 2001 with four parties, who were all the partners of M/s.Ashok Industries. The agreement of sale empowered the assessee to deal with the property as it wanted. The property sold and covered under the agreement is a vacant area to an extent of 20.59 grounds approximately comprised in Survey Nos.185/2 and 187/2 in Velachery Village, Chennai.
3. Based on the agreement, the assessee devised a housing project for which it sought for planning permission applied through one of the power agents of the vendors. In the mean time, it also took charge for sale of undivided share in the property. It is stated that a power of attorney was entered into between the assessee and the vendors towards making the application for sanction and other statutory requirements.
4. The Assessing Officer agreed with the assessee on the claim for deduction under Section 80 IB of the Income Tax Act, 1961 (hereinafter called as the "Act"). In exercising its power under Section 263 of the Act, the Commissioner of Income Tax (Appeals) viewed that the order of the Assessing Officer granting deduction under Section 80 IB of the Act was erroneous and prejudicial to the interest of Revenue. Thus, the order of the Assessing Officer under Section 80 IB of the Act was sought to be revised on the ground that the planning permit was granted to V.K.Murthy, who happened to be one of the owners of the property. Thus, the assessee was not the owner of the property and the intention of the owners of the land was to develop the land and construct the building, and that the assessee was only acting as a builder, who assisted the land owner in the construction. In the circumstances, the assessee's claim was negatived and directions were issued to the Assessing Officer to revise the order of assessment accordingly.
5. Aggrieved by this, the assessee went on appeal before the Income Tax Appellate Tribunal, who held that when the Assessing Officer has taken one view based on the decision of the Ahmedabad Bench of Income Tax Appellate Tribunal, the possibility of yet another view would not empower the Commissioner of Income Tax (Appeals) under Section 263 of the Act to treat the order of the Assessing Officer as erroneous and prejudicial to the interest of Revenue. Thus, applying the decision in the case of CIT Vs. Max India Ltd reported in (2007) 295 ITR 282 (SC), the Income Tax Appellate Tribunal held that the order passed by the Commissioner of Income Tax (Appeals) is without jurisdiction.
6. Apart from that, even on merits, the Tribunal agreed with the assessee that for the purpose of claiming deduction under Section 80IB(10) of the Act, it is not necessary that the assessee should be the owner of the property. The Tribunal further held that since the assessee was an undertaking engaged in developing and building housing projects and the same being approved by the local authority, the assessee is entitled to relief under Section 80 IB(10) of the Act. Even though the approval was in the name of the individual, who being a party to the sale agreement, the same cannot be held against the assessee. In the light of the above, the assessee's appeal was allowed.
7. Aggrieved by this, the Revenue is on appeal in the above Tax Cases. We may point out herein that we had already considered similar issue on 01.11.2012 in T.C.Nos.581 and 582 of 2011 and 314 and 315 of 2012 (The Commissioner of Income Tax, Business Ward XV (3) Chennai Vs. M/s.Sanghvi and Doshi Enterprise, No.560, 3 H Century Plaza, Anna Salai, Teynampet, Chennai-18) in favour of the assessee. We have held that for the purpose of considering the deduction, it is not necessary that the assessee, engaged in developing and construction of housing project, should be the owner of the property.
8. The assessee engaged in developing and building the housing project is entitled to relief under Section 80 IB of the Act and on profits and gains earned in the housing projects. In the circumstances, we reject the Revenue's appeal in T.C(A).No.1366/2008, thereby, the order of the Income Tax Appellate Tribunal is confirmed.
9. Consequent on the order passed by the Commissioner, the Assessing Officer proceeded in giving effect to the order of the Commissioner of Income Tax (Appeals) under Section 263 of the Act and held that the assessee was not entitled to deduction under Section 80IB(10) of the Act. Aggrieved by that, the assessee went on appeal before the Commissioner of Income Tax (Appeals) and further appeal before the Income Tax Appellate Tribunal, which allowed the assessee's appeal based on the earlier order, which is the subject matter of consideration in T.C.(A).No.1366/2008.
10. In the light of the order passed in T.C.(A).1366/2008, it is not necessary for us to consider the same question again in T.C.(A).889/2009. In the circumstances, the question does not arise for consideration by us in T.C.889/2009. Accordingly, the same stands dismissed. No costs.
nvsri To
1. The Commissioner of Income Tax Chennai
2. The Commissioner of Income Tax, Central I, Chennai
3. The Income Tax Appellate Tribunal, Bench A, Chennai