ACIT, Trichy v. M/s. Vignesh Flat Housing Promoters, Srirangam

ITA 460/CHNY/2011 | 2005-2006
Pronouncement Date: 14-09-2011 | Result: Dismissed

Appeal Details

RSA Number 46021714 RSA 2011
Assessee PAN AACFV5502C
Bench Chennai
Appeal Number ITA 460/CHNY/2011
Duration Of Justice 6 month(s) 6 day(s)
Appellant ACIT, Trichy
Respondent M/s. Vignesh Flat Housing Promoters, Srirangam
Appeal Type Income Tax Appeal
Pronouncement Date 14-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 14-09-2011
Date Of Final Hearing 18-08-2011
Next Hearing Date 18-08-2011
Assessment Year 2005-2006
Appeal Filed On 08-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI [BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER] I.T.A NOS.458 TO 461/MDS/2011 (ASSESSMENT YEARS : 2004-05 2005-06 AND 2006- 07 ) THE ACIT CENTRAL CIRCLE I TIRUCHIRAPPALLI VS M/S VIGNESH FLAT HOUSING PROMOTERS NO.100-C GANDHI ROAD SRIRANGAM 620 006 [PAN - AACFV5502C ] (APPELLANT) (RESPONDENT) APPELLANT BY : DR.I.VIJAYAKUMAR CIT/DR RESPONDENT BY : SHRI S.SRIDHAR ADVOCATE DATE OF HEARING : 18-08-2011 DATE OF PRONOUNCEMENT : 14-09-2011 O R D E R PER HARI OM MARATHA JUDICIAL MEMBER: THESE ARE FOUR APPEALS OF THE REVENUE- TWO APPE ALS RELATE TO ASSESSMENT YEAR 2004-05 AND OTHER TWO RELATE TO ASS ESSMENT YEARS 2005-06 AND 2006-07. SINCE THE FACTS OF ALL THESE CASES ARE ENTWINED AND ALMOST IDENTICAL ISSUES ARE INVOLVED THEREIN F OR THE SAKE OF BREVITY AND CONVENIENCE WE PROCEED TO DECIDE THEM BY A COM MON ORDER. ITA 458 TO 461/11 :- 2 -: I.T.A.NO. 458/MDS/2011 A.Y 2004-05 2. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) TIRUCHIRAPALLI DATED 15.12.2010 PAS SED U/S 143(3) R.W.S 153A OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE-FIRM IS ENGAGED IN DEVELOPING AND CONSTRUCTING HOUSING P ROJECTS. IT FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 ON 1.1 1.2004 ADMITTING A TOTAL INCOME OF ` 31 14 102/- AFTER CLAIMING A DEDUCTION OF ` 5 95 97 288/- U/S 80IB(10) OF THE ACT. INITIALLY THE RETURN WAS PROCESSED U/S 143(1). LATER ON REGULAR ASSESSMENT U/S 143(3) WAS MADE. THE ASSESSEE-FIRM WAS DEVELOPING TWO TYPES O F HOUSING PROJECTS VIZ. VIGNESH MANTRALAYA AND VIGNESH EMPIRE WHIC H ARE CHRISTENED BY THE ASSESSEE AS MAJOR PROJECTS AND OTHER TWO PROJEC TS WHICH FALL UNDER THE MINOR CATEGORY ARE VIGNESH KEERTHANA AND VIG NESH ABINAYA FOR ASSESSMENT YEAR 2004-05. IN THE MAJOR PROJECTS TH E ASSESSEE FIRM HAS CLAIMED EXEMPTION OF ` 5 15 48 600/- U/S 80IB(10) IN 'VIGNESH MANTRALAYA' PROJECT AND ` 16 90 744/- IN 'VIGNESH EMPIRE' . THE ASSESSING OFFICER SCRUTINIZED THE REQUIRED CONDITIO NS OF SECTION 80IB(1) AND THEREAFTER WITH REGARD TO 'VIGNESH EMPIRE' IT W AS FOUND THAT THE PROJECT WAS CONCEIVED BY ONE PERSON NAMED SHRIVENKA TESAN MANAGING ITA 458 TO 461/11 :- 3 -: PARTNER OF RAMAKRISHNA MILLS TRICHY. HE OWNED THE LAND ALONGWITH HIS FAMILY MEMBERS AND ALSO OBTAINED THE APPROVAL FOR C ONSTRUCTING THREE BLOCKS OF RESIDENTIAL ACCOMMODATION OF T.S.NO.19/2 20/2 AND 21/2 WHERE THE PRESENT 'VIGNESH EMPIRE' IS LOCATED. SUB SEQUENTLY DUE TO CERTAIN CONSTRAINTS SHRI VENKATESAN GAVE THIS OPPO RTUNITY TO M/S RAMAKRISHNA BUILDERS (P) LTD. CHENNAI IN WHICH HE AND HIS WIFE ARE TWO DIRECTORS. THIS COMPANY TOOK UP THE PROJECT UNDER THE NAME SUDHARAMA WHICH CONSISTED OF THREE BLOCKS BY NAME RAKA RAMAA AND RAMYA WHICH ARE PRESENTLY CONSTRUCTED BY THIS ASSE SSEE MARKED AS BLOCKS A B AND C OF 'VIGNESH EMPIRE'. M/S RAMAKRI SHNA BUILDERS DEVELOPED THE LAND AND CONSTRUCTED THE SKELETON WOR K INCLUDING THE FOUNDATION AND COLUMNS AND BEAMS FOR ALL THE FLOORS OF THE TWO BLOCKS NAMELY RAKA AND RAMAA. THE CONSTRUCTED AREA MEASU RES 97000 PLUS SQ FT. THIS COMPANY ALSO COULD NOT CONTINUE TO EXE CUTE THIS PROJECT AND AT THIS STAGE A TRIPARTITE AGREEMENT WITH SHRI VEN KARESAN AND M/S RAMAKRISHNA BUILDERS (P) LTD. IN RELATION TO ASSES SEES CLAIM U/S 80IB(10) THE ASSESSING OFFICER SOUGHT EXPLANATION REGARDING THE FOLLOWING POINTS: 1. YOU DID NOT GET APPROVAL FROM THE LOCAL AUTHORITY AS REQUIRED BY THE SECTION . 2. YOU DID NOT DEVELOP THE LAND AND CONSTRUCTED THE PROJECT. 3. YOU HAVE JUST TAKEN OVER THE PROJECT MIDWAY AND CONCLUDED THE PROJECT. ITA 458 TO 461/11 :- 4 -: 4. THERE IS NO APPROVAL AND CONSTRUCTION PERMIT FRO M THE LOCAL AUTHORITY IN YOUR NAME. 4. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE THE ASSESSING OFFICER HAS SOUGHT TO DISALLOW THIS CLAIM OF THE ASSESSEE MAINLY ON THE GROUNDS THAT THE ASSESSEE HAD NOT OBT AINED APPROVAL FROM THE LOCAL AUTHORITY AND HAD NOT DEVELOPED AND CONSTRUCTED THE PROJECT FROM ITS VERY INCEPTION. THE CASE OF THE A SSESSEE IS THAT APPROVAL OF THE PROJECT IS NOT NECESSARILY TO BE OB TAINED BY THE ASSESSEE (HIMSELF OR ITSELF). BUT THE SECTION SPEAKS ABOUT THE DATE ON OR AFTER WHICH APPROVAL HAS TO BE OBTAINED. THE ASSESSEE F URTHER EXPLAINED THAT OWNERSHIP OF THE LAND IS NOT RELEVANT FOR CLAI MING THIS DEDUCTION. IT WAS FURTHER EXPLAINED THAT THE PRE-CONDITION FOR DE DUCTION U/S 80IB(10) IS PROJECT-CENTRIC AND NOT ASSESSEE-CENTRIC. R EGARDING TAKING OVER OF THE PROJECT MIDWAY AND NOT FROM ITS VERY INCEPTION IT WAS SUBMITTED THAT THIS PROVISION ALSO DOES NOT REQUIRE THAT THE PROJECT MUST BE DEVELOPED AND CONSTRUCTED BY THE ASSESSEE ON A CLEA R PLOT OF LAND BUT ONLY TALKS ABOUT THE EXTENT OF THE PLOT ON WHICH C ONSTRUCTION IS TO BE DONE SHOULD EXCEED 1 ACRE. SO AS PER THE ASSESSE E THERE IS NO EMBARGO ON THE TRANSFER OF THE PROJECT MIDWAY AS IT HAS HAPPENED IN THIS CASE. FINALLY IT WAS SUBMITTED THAT THE DEDU CTION UNDER THIS SECTION HAS BEEN ENVISAGED BY THE ACT TO PROMOTE INFRASTRUC TURE DEVELOPMENT ITA 458 TO 461/11 :- 5 -: AND IT HAS GOT A SOCIAL OBJECTIVE OF PROVIDING SHEL TER AND THEREFORE IN VIEW OF THE DECISION OF HON'BLE APEX COURT GIVEN IN THE CASE OF CIT VS BAJAJ TEMPO LTD 196 ITR 188 THIS SECTION HAS A SO CIAL RELEVANCE AND SUCH SECTIONS ARE TO BE INTERPRETED LIBERALLY TO CO NFER THE BENEFITS AND NOT TO FORFEIT THEM. IN VIEW OF THE ABOVE IT WAS PRAYED THAT THE DEDUCTION U/S 80IB MAY BE GRANTED AS HAS BEEN CLAIM ED. BUT THE ASSESSING OFFICER WAS OF THE OPINION THAT THIS DEDU CTION IS AVAILABLE TO AN UNDERTAKING WHO HAS DEVELOPED AND BUILD A HOUSIN G PROJECT. HE HAS OPINED THAT THE ASSESSEE IS REQUIRED TO OBTAIN THE NECESSARY APPROVAL FROM THE LOCAL AUTHORITY WITHIN THE TIME LIMIT PRES CRIBED BY THIS SECTION. IT WAS FURTHER EPILOGUED THAT THE EXPRESSION DEVE LOPMENT USED IN THIS SECTION INCLUDES LAND DEVELOPMENT LIKE - LEVELING LAYING OF FLATS ETC. BESIDES ACTUAL CONSTRUCTION. SO ACCORDING TO THE ASSESSING OFFICER THE EXPRESSION DEVELOPMENT USED IN THE SECTION INCLU DES AND MEANS TOTAL WORK STARTING FROM BHOOMIPUJAN TO THE HANDING OVER TO THE FLATS TO THE OWNERS. THEREFORE AFTER DISCUSSING VARIOUS OTHER ASPECTS HE HAS COME TO A CONCLUSION THAT THE ASSESSEE HAS NOT DEVELOPED THE PROJECT AT ALL AND SO HE HAS DENIED THIS DEDUCTION. AGGRIEVED TH E ASSESSEE WENT IN APPEAL AND PLEADED THAT THE ASSESSING OFFICER HAS W RONGLY INTERPRETED SECTION 80IB(10) AS NO CONDITION REGARDING DEVELOPM ENT AND CONSTRUCTION OF THE PROJECT FROM START TO FINISH HA S BEEN LAID DOWN ITA 458 TO 461/11 :- 6 -: THEREIN AND ALL THAT IS REQUIRED IS ONLY THE COMPLI ANCE OF THE CONDITIONS LAID DOWN IN THIS SECTION. TO SUPPORT THIS CONTENT ION IT WAS SUBMITTED THAT IN THE EVENT OF AN AMALGAMATION OR DEMERGER THIS DEDUCTION SHALL BE AVAILABLE TO THE RESULTING-COMPANY OR TH E AMALGAMATED COMPANY AS PER SUB-SECTION 12 OF SECTION 80IB AND HENCE THIS SUB- SECTION MAKES IT AMPLY CLEAR THAT THE PROVISIONS OF SECTION 80IB ADMITS AND ALSOPERMITS TRANSFER OF THE PROJECT MIDWAY. IT WAS ARGUED THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS LAID DOWN IN THIS SECTION. THE LD. CIT(A) HAS ALLOWED THE CLAIM BY HOLDING THAT THE A SSESSEE HAS FULFILLED ALL THE CONDITIONS LAID DOWN IN THIS SECTION AFTE R DISCUSSING THREADBARE THE PROVISIONS OF SECTION 80IB. THE LD. CIT(A) HA S ALSO DECIDED SIMILAR ISSUE RAISED IN ASSESSMENT YEAR 2005-06 BY THE SAME ORDER. THE REVENUE IS NOW AGGRIEVED AND HAS RAISED THE FOLLOWI NG GROUNDS: 1.A. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESS EE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) AMOUNTING TO ` 16 90 744. 1. B THE LEARNED CIT(A) HAS FAILED TO NOTE THAT A P LAIN READING OF SECTION 80IB(10) WITH 80IB(1) AND RULE 18BB( 4) STI PULATES THAT DEDUCTION U/S 80IB(10) CAN BE ALLOWED ONLY WHEN THE LAND IS OWNED BY THE DEVELOPER AND APPROVAL FROM LOCAL AUTH ORITY IS IN THE NAME OF THE DEVELOPER. 1.C THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE RATIO OF THE DECISIONS OF THE SUPREME COURT IN LIBERTY INDIA VS CIT 317 ITR 218 AND BAJAJ TEMPO LTD VS CIT 196 ITR 188 ARE NOT APPLICABLE IN THIS CASE AND THAT WHEN THE WORDINGS IN THE PROV ISION ARE CLEAR THE BENEFITS WHICH ARE NOT AVAILABLE UNDER T HE RELEVANT PROVISION CANNOT BE CONFERRED BY IGNORING OR MISINT ERPRETING THE ITA 458 TO 461/11 :- 7 -: WORDS IN THE PROVISION DEFEATING THE VERY OBJECT OF AN ENACTMENT. 1.D THE LEARNED CIT(A) HAS FAILED TO NOTE THAT IF T HE DEVELOPER DOES NOT POSSESS THE LAND IT CANNOT SELL THE 'DWEL LING UNIT' TO THE END USER AND ACCORDINGLY THE ACTIVITY OF DEVELOPING LANDS AND CONSTRUCTING BUILDING WITHOUT POSSESSION OF LAND OR APPROVAL IN THE NAME OF DEVELOPER HAS TO BE CONSIDERED ONLY AS A 'WORKS CONTRACT'. 1.E THE LEARNED CIT(A) HAS ERRED IN STATING THAT 'M /S RAMAKRISHNA BUILDERS P LTD HAD SOLD PRIMARILY ONLY THE LAND WITH MARGINAL CONSTRUCTIONS' SINCE NO SUCH TRANSFER OF LAND OR BUILDING HAS TAKEN PLACE AND THERE WAS ONLY A TRIPA RTITE AGREEMENT BY THE ASSESSEE WITH SRI.VENKATESAN AND M/S RAMAKRISHNA BUILDERS P LTD FOR THE LIMITED PURPOSE OF CARRYING OUT DEVELOPMENT AND CONSTRUCTION WORK. 1.F THE LEARNED CIT(A) HAS FAILED TO CONSIDER THE EXPLANATION TO SECTION 80IB(10)(F) INTRODUCED WITH RETROSPECTIV E EFFECT FROM 01-04-2001. 2 THE APPELLANT CRAVES LEAVE TO ADD TO AMEND OR ALTER THE ABOVE GROUNDS OF APPEAL AS MAY BE DEEMED NECESSARY . 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTICED THAT THE ASSESSEE IS A PROMOTER OF RESIDENTIAL FLATS. THE A SSESSING OFFICER HAS ACCEPTED THE ASSESSEE AS A DEVELOPER OF HOUSING P ROJECT AS IS EVIDENT FROM COLUMN NO.10 OF THE ASSESSMENT ORDER DATED 26. 12.2006. THE OPENING SENTENCE OF THE ASSESSMENT ORDER SAYS THE ASSESSEE-FIRM IS ENGAGED IN DEVELOPING OF HOUSING PROJECTS. THEREF ORE THERE IS NO DOUBT THAT THE ASSESSEE-FIRM IS NOT A DEVELOPER OF HOUSING PROJECTS. THIS FIRM WAS SEARCHED ON 29.8.2007 U/S 132 OF THE ACT AND CONSEQUENT ITA 458 TO 461/11 :- 8 -: UPON THIS ASSESSMENT ORDERS U/S 153A R.W.S 143(3) WERE COMPLETED FOR ASSESSMENT YEARS 2002-03 TO 2008-09. THE ASSESSEE FILED APPEAL IN I.T.A.NO. 542/2006-07 AGAINST THE ORDER PASSED U/S 143(3) FOR ASSESSMENT YEAR 2004-05 DATED 26.12.2006 AND ALSO F ILED APPEAL IN I.T.A.NO. 234/2009-10 AGAINST ASSESSMENT ORDER PASS ED U/S 153A DATED 30.12.2009 FOR THE SAME ASSESSMENT YEAR. THE ASSES SEE WAS AGGRIEVED BY THE ORDERS OF THE ASSESSING OFFICER PASSED FOR A SSESSMENT YEARS 2004-05 TO 2008-09 AND FILED APPEALS FOR ALL THESE YEARS. THE ISSUES INVOLVED IN ASSESSMENT YEARS 2004-05 AND 2005-06 AR E IDENTICAL WHICH IS REGARDING DISALLOWANCE OF DEDUCTION CLAIMED BY T HE ASSESSEE U/S 80IB(1) IN RESPECT OF PROFITS DERIVED FROM HOUSING PROJECT CALLED 'VIGNESH EMPIRE'. THERE IS NO DISPUTE REGARDING TH E FACTS STATED ABOVE IN THE EARLIER PORTION OF THIS ORDER. THERE IS ALS O NO DISPUTE ON THE SATISFACTION OF THE VARIOUS CONDITIONS PRESCRIBED U /S 80IB(10) REGARDING EXTENT OF LAND PLINTH AREA OF THE FLATS AND THE TI ME LIMIT FOR COMMENCING AND COMPLETION OF THE CONSTRUCTION. THE MAIN TICKL ISH ISSUE INVOLVED REVOLVES AROUND THE FACT FINDING BY THE ASSESSING O FFICER THAT THE APPROVAL FOR CONSTRUCTION OF THE FLATS HAS NOT BEE N OBTAINED BY THE ASSESSEE BUT IT HAS BEEN OBTAINED BY THE PREVIOUS OWNER AND THE ASSESSEE-FIRM DID NOT COMMENCE THE PROJECT. ON THI S VERY MAIN REASON ITA 458 TO 461/11 :- 9 -: HE HAS DENIED THIS DEDUCTION TO THE ASSESSEE. LET US EXAMINE THIS SECTION IN DETAIL. SECTION 80IB(10) OF THE ACT REA DS AS UNDER: [(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UN DERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31 ST DAY OF MARCH 2008 BY A LOCAL AUTHORITY SHALL BE H UNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RE LEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF - (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER 1998 AND COMPLETES SUCH CONSTRUCTION - (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1 ST DAY OF APRIL 2004 ON OR BEFORE THE 31 ST DAY OF MARCH 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN OR IS APPROVED BY THE LOCAL AUTHORITY ON OR BEFORE THE 1 ST DAY OF APRIL 2004 WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. [(III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL 2004 [BUT NOT LATER THAN THE 31 ST DAY OF MARCH 2005] WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY.] EXPLANATION.- FOR THE PURPOSE OF THIS CLAUSE - (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE: ITA 458 TO 461/11 :- 10 - : PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACC ORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMEN T OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM ARE AS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITH IN TWENTY- FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OT HER PLACE; AND (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED [THREE PER CENT OF THE AGGREGATE BUILT-UP AR EA OF THE HOUSING PROJECT OR [FIVE THOUSAND SQUARE FEET WHIC HEVER IS HIGHER];] (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS NAMELY;- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL. (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA.] EXPLANATION FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY T O ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTR AL OR STATE GOVERNMENT).] 6. FROM THE PERUSAL OF THE ABOVE PROVISION IT BECOMES CLEAR THAT THE OWNERSHIP OF LAND IS NOT SINE QUA NON FOR CLAIMING THE ITA 458 TO 461/11 :- 11 - : DEDUCTION. THE REQUISITE APPROVAL FROM THE LOCAL A UTHORITY IS TO BE OBTAINED FOR THE PROJECT AND THE SECTION DOES NOT M ANDATE THAT THE CONCERNED ASSESSEE WHO CLAIMS THE DEDUCTION MUST OB TAIN THE SAME. THE PROVISION TALKS ABOUT A SPECIFIC DATE FOR OBTAI NING THE APPROVAL AND AS TO WHO SHOULD OBTAIN THIS APPROVAL IS NOT RELEVA NT. IT IS UNDISPUTED FACT THAT THE TRANSFEROR COMPANY HAD CONSTRUCTION O NLY SKELETON. THE ASSESSING OFFICER HAS TRIED TO DRAW ANALOGY WITH SE CTION 80HHC(1) AND 80HHC(1A) OF THE ACT BUT THIS SORT OF ANALYSIS OF T HE ASSESSING OFFICER DOES NOT SEEM TO BE COMPATIBLE WITH THE PROVISIONS OF SECTION 80IB(12) VIS--VIS 80IB(10). SECTION 80IB(12) SPEAKS ABOUT THE EXTENSION OF THIS BENEFIT EVEN TO AMALGAMATED COMPANIES. IN THAT VIE W OF THE MATTER THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN T HE CASE OF BAJAJ TEMPO LTD (SUPRA) WOULD DEFINITELY APPLY. IN THE CASE OF ITO VS SHAKTI CORPORATION 32 SOT 438(AHD) IT HAS BEEN HELD BY T HE TRIBUNAL THAT OWNERSHIP OF THE LAND IS NOT THE CRITERION FOR DEDU CTION U/S 80IB(10) THE LD. CIT(A) HAS EXAMINED THE ANALYSIS GIVEN BY THE EDITORS OF CURRENT TAX REPORTER REGARDING CLAIM OF DEDUCTION U /S 80IB IN CONNECTION WITH DEVELOPING AND COMPLETING THE HOUSI NG PROJECTS IN WHICH IT HAS BEEN MENTIONED THAT SECTION 80IB PROVI DES FOR A DEDUCTION FROM THE GROSS TOTAL INCOME OF ASSESSEE WHERE THE G ROSS TOTAL INCOME INCLUDES PROFITS AND GAINS DERIVED FROM A BUSINESS REFERRED TO IN SUB- ITA 458 TO 461/11 :- 12 - : SECTIONS (3) TO (11A) OF SECTION 80IB. WHEREAS SEC TION 80IB(10) PROVIDES FOR DEDUCTION BEING AVAILABLE IN RESPECT O F THE PROFITS OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S APPROVED BEFORE 31.3.2007 PROVIDED THE FOLLOWING CONDITIONS ARE SAT ISFIED: 1. THE CONSTRUCTION SHOULD BE COMPLETED WITHIN F OUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE LOCAL AUTHORITY APPROVED THE PROJECT. IF MORE THAN ONE APPROVAL IS NEEDED THE REFERENCE POINT FOR THE ABOVE TIME LIMIT OF FOUR YEARS SHALL BE THE DATE OF FIRST APPROVAL BY THE LOCAL AUTHORITY. 2. THE PLOT SIZE SHOULD BE MINIMUM ONE ACRE. THIS CONDITION IS NOT APPLICABLE FOR PROJECTS CARRIED OU T IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL OR THE STATE GOVERNMENT FOR RECONSTRUCTION OF EXISTING BUILDINGS. 3. THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP AREA OF 1000 SQ FT IN CITIES OF DELHI OR MUMBAI OR WITHI N 25 KMS FROM THE MUNICIPAL LIMITS OF THESE CITIES AN D 1500 SQ FT FOR ANY OTHER PLACE. 4. THE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECTS SHALL NOT EXCEED 5 PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE PROJECT OR 2000 SQ F T WHICHEVER IS LESSER. BUILT-UP AREA MEANS THE INN ER MEASUREMENT OF THE RESIDENTIAL UNIT AT FLOOR LEVEL INCLUDING THE PROJECTIONS AND BALCONIES AS INCREASED BY THE THICKNESS OF THE WALL BUT DOES NO T INCLUDE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. 5. THE DEDUCTION THAT IS ALLOWED WILL BE 100 PERCENT OF THE PROFITS OF THE UNDERTAKING CARRYING ON THE HOUSING DEVELOPMENT ACTIVITY. ITA 458 TO 461/11 :- 13 - : 7. LET US EXAMINE AS TO WHAT CONDITIONS ARE REQUIRED T O BE FULFILLED FOR MAKING A CLAIM U/S 80IB(10). THIS SE CTION REQUIRES THAT HOUSING PROJECTS SHOULD BE CARRIED ON PLOT SIZE OF WHICH SHOULD BE EITHER 1 ACRE OR MORE. THE PLOT SIZE IN THE GIVEN CASE EX CEEDS 1 ACRE. REGARDING APPROVAL FROM THE LOCAL AUTHORITY IT HAS BEEN OBTAINED BEFORE 31.3.2007. THE SECTION DOES NOT SPEAK OF WHO SHOU LD TAKE THE APPROVAL. TO MOVE ONE STEP FURTHER THIS SECTION E VEN DOES NOT SPEAK THE ASSESSEE SHOULD BE OWNER OF THE LAND ON WHICH T HE HOUSING PROJECT IS BEING DEVELOPED. THUS ONE CAN INFER FROM THIS THAT EVEN IF THE ASSESSEE DOES NOT OWN THE LAND THE BENEFIT OF DEDU CTION TO THE EXTENT OF 100% OF THE PROFITS DERIVED FROM ACTIVITY OF DEV ELOPING A HOUSING PROJECT IS AVAILABLE TO IT. BUT IN THIS CASE THE ASSESSEE-FIRM IS THE REAL OWNER OF THE PROPERTY ALTHOUGH IT HAS NOT BEEN REGI STERED IN THE COURTS IN ITS NAME BECAUSE THE ASSESSEE HAS PAID THE ENTIR E AMOUNT FOR THE LAND ETC. AND TAKEN THE POSSESSION. THE TRANSFER A S ENVISAGED U/S 2(47) OF THE ACT IS COMPLETE. IN THIS REGARD THE FOLLOW ING DECISIONS OF HON'BLE SUPREME COURT ARE RELEVANT: CIT VS PODAR CEMENT(P) LTD 226 ITR 625 MYSORE MINERALS LTD VS CIT 239 ITR 775 DALMIA CEMENT (BHARAT) LTD VS CIT 247 ITR 267 8. UNDISPUTEDLY POSSESSION WAS HANDED OVER BY THE LAN D OWNER TO THIS FIRM AFTER RECEIVING FULL CONSIDERATION TH IS WILL AMOUNT TO TRANSFER ITA 458 TO 461/11 :- 14 - : U/S 2(47) OF THE ACT AND CAPITAL GAIN WOULD ARISE I N THE HANDS OF THE LAND OWNERS AT THAT TIME. UNDOUBTEDLY SECTION 80 IB GIVES AN INCENTIVE AS DISCUSSED ABOVE THEREFORE OWNERSHIP CANNOT BE A RELEVANT CONSIDERATION AS HAS BEEN ARGUED BY THE ASSESSING O FFICER. THE ACT PROVIDES FOR TWO TYPES OF TAX INCENTIVES NAMELY I NVESTMENT LINKED INCENTIVES AND PROFIT LINKED INCENTIVES. CHAPTER V IA PROVIDES FOR INCENTIVES IN THE FORM OF TAX DEDUCTIONS ESSENTIALL Y BELONG TO THE CATEGORY OF PROFIT LINKED INCENTIVES HENCE SECT ION 80IA/80IB REFER TO PROFITS DERIVED FROM ELIGIBLE BUSINESS. IT IS NOT THE OWNERSHIP OF THAT BUSINESS WHICH ATTRACTS THE INCENTIVES. WHAT IS RE LEVANT IS THE GENERATION OF PROFITS (OPERATIONAL PROFITS) HENCE OWNERSHIP OF THE LAND PER SE DOES NOT ATTRACT DEDUCTION U/S 80IB(10) AS T HE DEDUCTION IS LINKED TO PROFITS DERIVED FROM THE OPERATIONAL PRO FITS. THIS IS THE DIFFERENCE BETWEEN THE PROFIT LINKED TAX INCENTIVES AND INVESTMENT LINKED TAX INCENTIVES. EACH OF THE ELIGIBLE BUSINESS CONS TITUTE A STAND ALONE ITEM IN THE MATTER OF COMPUTATION OF PROFITS AND TH AT IS THE REASON WHY THE CONCEPT OF SEGMENT REPORTING STANDS INTRODUCE D IN THE INDIAN ACCOUNTING STANDARDS (IAS) BY THE INSTITUTE OF CHAR TERED ACCOUNTANTS OF INDIA. THUS A HOUSING PROJECT TO BE ELIGIBLE FOR DEDUCTION U/S 80IB(10) MUST BE DEVELOPED ON AN AREA OF LAND EXCEEDING 1 AC RE; AND MUST HAVE RESIDENTIAL UNITS EACH OF PLINTH AREA OF LESS THAN 1500 SQ FT SINCE IT IS ITA 458 TO 461/11 :- 15 - : DEVELOPED IN A CITY OTHER THAN DELHI OR MUMBAI. IT SHOULD BE COMPLETED BEFORE 31.3.2008 AS THE APPROVAL HAD BEEN OBTAINED BEFORE 31.3.2004 AND IT IS REQUIRED TO BE COMPLETED WITHIN FOUR YEAR S. ALL THE CONDITIONS ARE SATISFIED IN THIS CASE AND IT IS NOT THE CASE O F THE ASSESSING OFFICER THAT THERE HAS BEEN ANY DEVIATION OF THESE CONDITIO NS. SO AS LONG AS THE ASSESSEE GENERATES PROFIT FROM AN ACTIVITY IT I S ENTITLED TO THE DEDUCTION. THE ASSESSEE-FIRM HAS GENERATED PROFITS FROM THE HOUSING PROJECT AND HAS ALSO SATISFIED THE CONDITIONS OF EL IGIBILITY OF THE PROJECT AND THE EARLIER OWNER OF THE LAND HAS NOT CLAIMED A NY DEDUCTION U/S 80IB(10). THE CUMULATIVE EFFECT OF ALL THESE IS TH AT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB(10) IN THE PRESENT SCENARIO. WE HAVE ALSO FOUND THAT THE ASSESSEE-FIRM DID NOT BORROW FU NDS TO COMPLETE THE PROJECT AND APPLIED ITS OWN FUNDS IN THE PROJECT. THERE IS NO AGREEMENT WITH THE COMPANY FOR SALE OF FLATS EXCEPT GETTING A PPROVAL OF ALL WORK INCLUDING FINANCE WAS DONE/EXECUTED BY THE ASSESSEE . SO EFFECTIVELY THE ASSESSEE IS A DEVELOPER AND IT HAS DONE DEVELOP MENT WORK. THE LD.AR HAS TRIED TO DRAW SUPPORT FROM THE DECISION O F THIS VERY BENCH RENDERED IN THE CASE OF ACIT VS SMT. C.RAJINI IN I. T.A.NO. 1239/MDS/2009 AND 1666/MDS/2007 ORDER DATED 10.12 .2010. WE REPRODUCE HEREIN BELOW ITS PARAS 4 TO 11 FOR REFERE NCE: ITA 458 TO 461/11 :- 16 - : 4. BEFORE WE GO INTO THE CONTROVERSY AS TO WHE THER DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IS ADMISSIBLE TO THE ASSESSEE OR NOT LET US STATE THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS CONSTRUCTED THE BUILDING IN Q UESTION; THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT ENTIRE C ONSIDERATION OF THE LAND WAS HANDED OVER TO THE OWNER OF THE LAND A ND THE POSSESSION WAS TAKEN BY THE ASSESSEE THEREOF; THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT OTHER ACTIVITI ES CONNECTED WITH SELLING LIKE ADVERTISING MARKETING ETC. WERE DO NE BY HER. IT IS ALSO UNDENIABLE FACT THAT ALL THE ACTIVITIES CONNEC TED WITH DEVELOPMENT OF THE PROJECT WERE DONE BY THE ASSESSE E AND THE OWNER OF THE LAND HAS DONE NOTHING EXCEPT FOR SIGNI NG THE PURCHASE AGREEMENTS AND RECEIVING THE CONSIDERATION . I T IS ALSO AN UNDENIABLE FACT THAT THE LAND OWNER HAS NOT SHOW N THE INCOME FROM BOTH DEVELOPING AND CONSTRUCTION IN HIS HANDS. THE OWNER OF THE LAND HAS BEEN TAXED ONLY FOR CAPITAL GAINS AND THIS ASSESSEE HAS SHOWN INCOME FROM BUSINESS. HAVING STATED THE A BOVE UNDENIABLE AND UNDISPUTED FACTS WE NOW TRY TO ANAL YSE THE REQUISITE CONDITIONS TO AVAIL DEDUCTION UNDER SECTI ON 80-IB(10) OF THE ACT SPECIFICALLY WITH REFERENCE TO THE NEWLY AP PENDED EXPLANATION THERETO. SECTION 80-IB(1 0) READS AS UN DER:- [(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UN DERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31 ST DAY OF MARCH 2007 BY A LOCAL AUTHORITY SHALL BE HU NDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RE LEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF - (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER 1998 AND COMPLETES SUCH CONSTRUCTION - (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1 ST DAY OF APRIL 2004 ON OR BEFORE THE 31 ST DAY OF MARCH 2008; (IV) IN A CASE WHERE A HOUSING PROJECT HAS BEEN OR IS APPROVED BY THE LOCAL AUTHORITY ON OR BEFORE THE 1 ST DAY OF APRIL 2004 WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. [(III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL 2004 [BUT NOT LATER THAN THE 31 ST DAY OF MARCH 2005] WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY.] ITA 458 TO 461/11 :- 17 - : EXPLANATION.- FOR THE PURPOSE OF THIS CLAUSE - (III) IN A CASE WHERE THE APPROVAL IN RESPECT OF TH E HOUSING PROJECT IS OBTAINED MORE THAN ONCE SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. (IV) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. (G) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACC ORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMEN T OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM ARE AS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (H) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITH IN TWENTY- FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OT HER PLACE; AND (I) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED [THREE PER CENT OF THE AGGREGATE BUILT-UP AR EA OF THE HOUSING PROJECT OR [FIVE THOUSAND SQUARE FEET WHIC HEVER IS HIGHER];] (J) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND (K) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS NAMELY;- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL. (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. ITA 458 TO 461/11 :- 18 - : (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA.] EXPLANATION FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY T O ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTR AL OR STATE GOVERNMENT).] 5. THE READING OF THE ABOVE PROVISION EVINCES THA T FOR CLAIMING DEDUCTION WITH REGARD TO A HOUSING PROJECT THE FOL LOWING MAIN CONDITIONS HAVE TO BE FULFILLED: (1) THERE SHOULD BE AN UNDERTAKING FOR DEVELOPING AND BUILD I NG A HOUSE PROJECT ; (2 ) SUCH HOUSING PROJECT HAS TO BE APPROVED BY THE L OCAL AUTHOR I TY ; (3 ) THE DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJ ECT HAS TO BE COMMENCED ON OR BEFORE 1 ST DAY OF OCTOB ER 1 998 ; ( 4 ) THE HOUSING PROJ E CT SHOU L D BE MADE ON A PLO T S I Z E O F ON E ACRE MINIMUM I N AREA ; ( 5 ) THE R ES I DENTIAL UN I T DEVELOPED AND BU I LT HAS TO BE A BU ILT UP AREA OF 1000 SQ . FIT . IF IT IS SITUATED IN THE CITY OF DELH I AND MUMBAI OR DELHI OR W I TH I N 25 KMS FROM THE MUN I CIPAL LIMITS OF THESE CITIES AND 1500 SQ . FIT AT ANY OTHER PLACE . E X ECUTES THE HOUS I NG PRO J EC T AS A WORKS CON T RACT AWARDED BY A N Y PE R SON ( I NCLUD I NG THE CENT R A L OR STATE GOVER N MENT ) ' . OBV I O U S L Y I F A N Y HO U S I NG P R O J EC T HAS THE WORKS CONT R ACT SO AWA R DED B Y AN Y PERSON I NCLUDING CENTRAL OR STATE GOVE R NMENT THE SAME WOU L D N OT BE ELIGIBLE FOR THIS DEDUCTION . I N THE LIGHT OF T HE FACTS OF TH I S CASE STATED HEREIN AS ABOVE WE ARE OF THE CONSIDERED OPIN I ON THAT THE ASSESSEE HAS NOT BEEN AWARDED (EMPHASIS SUPPLIED ) ANY SUCH WORKS - CONTRACT BY ANY PERSON ( I NCLUDING CENTRAL OR S TAT E GOVERNMENT ) . THE TERMS ' WORKS CONTRACT AWARDED ' HAS VE R Y SP ECIFIC C ONNOTATION IN THIS EXPLANAT I ON. FI R ST LET US SEE THE ASSESSEE IN THIS CASE IS ONLY A CONSTRUCTO R / BUILDER A N D NOT A DEVELOPE R O R OTHE R W IS E . THE ASSESSEE HAS H I GHL I GHTED AND ADMITTED IN I TS PR O F IT AND L O SS ACCOUNT THE ENTIRE PURCHASE CONSIDERATION AND SALE CONS I DERATION ITA 458 TO 461/11 :- 19 - : RECE I VED ON ACCOUNT OF SALE OF LAND AS A SALE RECEIPT . AFTE R E X ECUT I O N O F POWE R OF ATTORNEY WHEN SHE HAD PAID IN FULL AND FINAL CONS I DERATION OF THE LAND TO THE LAND OWNER AND TOOK THE VACANT POSSESSION OF THE LAND AS PER THE SALE AGRE E MENT DATED 29 . 08.2003 AND THE POSSESSION OF ENTIRE PROPERTY OF 69 GROUNDS WAS HANDED OVER TO HE R AS PER THE I NCOME-TA X PROCEEDINGS THE ' TRANSFE R ' AS ENV I SAG E D IN SE C TI ON 2 ( 47 ) OF THE ACT STANDS COMPLETED EVEN I F IT WAS T H R O U GH A POWE R OF A T TORNEY AND THEREAFTER THE ASSESSEE HAD TO DEVELOP THE P R O J ECT EVE N THOUGH THE APPROVAL WAS TO BE T AKEN F OR M A L LY I N T H E NAME OF THE OWNER OF THE LAND SHRI K . L . CHOUDHURY . NOW L E T U S S EE WHETH E R FO R CLAIM I NG SUCH A DEDUCT I O N THE ASSESSEE I S REQU I R ED TO BE THE OWNER OF THE LAND OR NO T . IN THE BOOK OF SAMPATH IYENGAR ' LAW O F INCOME-TA X ' VOIA.1 0 EDITION AT PAGE 5784 IT HAS BEEN E X PLAIN E D - ' I T I S TR UE T H AT A N ENT R EP R ENEUR UNDERTAK I NG DEVELOPME NT AND CONSTRUCTION IN A HOUSING PROJECT MAY NOT HAVE ANY INTEREST IN LAND . BUT THE S U B - S E CT I O N DOES N O T REQU I RE THAT HE SHO UL D BE TH E OW NER OF THE LAND. A PR O MOTER SHOULD QUALIFY FOR DEDUCTI O N BE C AUS E H E R UNS AN U ND ER TAK I NG FO R DEVELOP I NG AND CONST R UCT I NG A HOUSING P R OJEC T SO T HAT T H E C ONDITIONS FO R RELIEF A R E SATISFIED . IF HE WERE N OT THE OWNE R PLA N APP R OVA L ALSO MAY NOT BE IN H I S OWN NAME S I NCE LOCAL G O VE R NMEN T U S UALL Y I NS I STS O N GRANTING SUCH APPROVAL ON L Y TO THE T I T L E H OLDE R . T H IS BY ITSELF DOES NOT GIVE RIGHT TO OWNER TO CLA I M DEDUCTION UNDER SECTION 80 - IB ( 10 ) N O R DOES I T F OR F E I T T HE R I GHT OF THE DEVE L OPER TO IT ' . AS P E R T H E O X FORD ADVANCE LEARNER ' S DICTIONARY A DEVELOPER I S A PERSON O R COM PANY THA T BUYS LAND O R BU I LD I NG I N O R DER TO B U I LD N EW HOU SE S SHO PS / STORES ETC . OR IMPROVES THE OLD ONES AND MAKES A PROFIT FROM DOING T H IS . AS PE R MOZLEY & WHITELEY ' S LAW D I CTIONARY ' DEVE L OP ME N T ' M EA N S ' WITH CERTAIN EXCEPTIONS THE CARRYING OUT OF BUILDING E N G I NEER IN G M I N I NG OR OTHER OPERATIONS I N ON OVER O R UNDER LAND O R THE MAKING OF ANY MATER I AL CHANGE I N THE USE O F ANY B UI LD INGS OR OTHER LAND ' . 7. FROM THE ABOVE DISCUSSION WHAT I S R EQU I RED IS TH A T IF THE ASSESSEE I S A BENEFI CI AL OWNE R O R TO PU T I T I N A L EG AL T ERM IF SHE I S A DE FACTO OWNE R OF THE LAND ANY DEVELOPE R BECOMES E LIGIBL E FO R THIS DEDUCTION . IT I S NOT AT ALL NECESSARY THAT THE DEVELOPER SHO UL D BE A DE JURE OWNER OF THE LAND. IT IS QUITE POSSIBLE TO DEVELOP THE P R OP ERTY WITH CONSENT OF THE OWNER . IT T R ANSPIRES FROM THE P E RU S A L OF THE R ECORDS THAT ASSESSEE WAS DE FACTO OWNE R O F THE P R OPERTY W HEN THE ENTIRE ALLO T MENT PROCEDURE WAS E X ECUTED BY HER ONLY . I T W A S THE ASSESSEE W H O IN CUR R ED ALL THE E X PENSES CONNE C TED W I TH THE DEVELOPMENTS OF THE PROPERTY R I GHT F R OM F I LING APPLICATIO N FO R P LANNING PERMISSION AND PAYING NECESSARY FEES FOR THE SAME. THE M AR KETING OF THE SITE WAS A L SO DONE BY THE ASSESSEE TH R OUGH ADVE R T I S EM E NT ETC. W E HAVE CA R EFU L LY PE R USED THE AGREEME N TS ITA 458 TO 461/11 :- 20 - : AN D O TH ER RELE V ANT DOCUMEN T S. WE A R E CONVINCED THAT TH I S I S N OT A T A LL A W ORKS CONTRACT . 8 . OUR ABOVE CO N CLUSION IS ALSO F ORT I F I ED BY TH E D E C I S I O N OF CHENNA I BE NC H RENDE R ED I N THE CASE OF ACIT V . M I S S ASHWATH CO N STRUCT I ONS PVT . LTD. IN I . T . A. NO . 1069 ( MDS ) / 200 8 F O R THE ASSESSMEN T YEA R 2005-06 DATED 25 TH FEBRUA R Y 2009 WHERE I N IT W AS HELD AS FOLLOWS: ' IN OU R OP I N I ON IT I S NO T S I N E QUA NON F O R A D EV E L OP ER TO B EC OM E TH E D E JURE OW N E R O F THE LAND . IT I S QUI T E P OSS IBLE TO DEVELOP THE P R OPER T Y W I TH TH E C ONSENT OF T HE OWNER . IT T R ANSP I RES FROM THE PERUSA L OF THE R ECORDS THA T T H E ASSESSEE WAS THE DE FACTO OWNER OF THE PROPERTY AS THE ENT IR E A LL OTMENT PROCEDU RE WAS EXECUTED BY TH E ASSESS E E COMPANY ONL Y . WE HA VE NOTED THAT THE ASSESSEE D I D INCUR ALL THE EX PENSES C ONNECTED W I TH THE DEVE L OPMENT OF THE P R OPE R TY . APP LI CAT I ON FO R P L AN NI N G PE R M I SS I ON WAS ALSO MADE BY THE ASSESSEE. NECESSARY FEE F O R TH E SAME WAS PA I D BY I T . ROAD FO R MATION WAS ALSO DON E BY TH E ASSESSEE . BES I DES FO R MARKET I NG THE FLATS T HE ASSESSE E D ID ADVERT I SE THE P R OPERTY ALSO . WE HAVE PERUSED THE R EASON I N G S A D DUCED BY THE COMM I SS I ONE R (APPEALS) I N THE I MPU G NED O R D ER . I N OU R OP I N I ON HE TOOK A CO R RECT V I EW I N TH E MATT E R A ND H I S O RDER CALL S FO R NO INTE R FE R EN C E ON TH I S C OUNT . A C CO R D I N G LY W E UPHO LD T HE SAM E . ' 9. IN AN ANOTHER CASE THE AHMEDABAD BENCH OF IT AT IN I.T.A.NO. 2482/2006 DATED 29.06.2007 IN THE CASE OF M/S RADHE DEVELOPERS VS ITO FOR THE ASSESSMENT YEAR 2002-03 D ECIDED THE CASE AS UNDER: ' AFT E R P ER US I NG THE AGREEMENT ENTERED I NTO BETWEEN TH E ASS E SS EE AND TH E L ANDOWNERS TH E T RI BUNA L NOT E D T H A T T HE AGRE EMEN T EFFECT I V E LY T R ANSF E RRED TO TH E ASSESS EE F IR M ALL THE RIG HTS OF D EVE L OPMENT AND CONST R UCT I ON AND TO DEA L W IT H TH E L A ND FO R A CONSIDE R AT I ON PAYABLE W I TH I N A ST I PULAT E D T I ME A ND T HE ASSESSEE HAD ALSO BEEN PUT I N POSSESS I ON OF THE L AND . T H E TRIBUNAL FURTHER NOTED THAT THE ASSESSEE F IR M WAS R EQU IRED T O OBTA I N NE C ESSARY APPROVALS FROM THE LOCAL AUTHO RI T IE S O N B E HA LF O F T H E L AND OWNE R S AND ALL THE E X PE N SES F OR SUCH PU R POSES WE R E TO B E I NCUR RE D BY T HE ASS E SSE E . IT WAS A L SO NOT ED T H AT T H E SIZE O F TH E P L O T ON WH I CH T HE PRO JE CT WAS DEV E LOP E D W A S ALSO IN ITA 458 TO 461/11 :- 21 - : EXCE SS OF O NE ACRE A ND THE S I ZE OF EA C H RE S I D EN T I A L HO USE WAS L ESS T H AN 155 SQ . F I T . REFE R R I NG TO T HE PROV I S I ONS OF S . 80 - IB(1O ) I N CLU D I N G IT S LE G I S L A T I VE H I STORY I T NOTED THAT I T WAS THE UNDERTAKING T HAT DEVELOP S O R BU I LDS THE HOUS I N G P R OJECT T H AT WAS ENT I TLED T O DEDU CTION IR R E SPE C T I VE OF T H E FACT W HETHE R I T W AS T HE O W N ER OR N O T OR W H ET H ER I T WAS TH E C ON TR A CT O R THE R EO F . T HE R E Q U I RE M ENT OF CL A I M I NG D E DUCT I ON WAS THAT SUCH AN UNDER T AK I N G M U S T DE V ELO P AND BU I LD HOUS I NG P R OJE C T BE I T ON THE I R OWN L AND O R ON THE L AN D O F OTHERS . IN THE PRESENT CASE THE TRIBUNAL NOTED THAT T HE L ANDOWNE RS HAD NO T MAD E ANY CONS CI OUS ATTEMPT TO DE V E L OP TH E PROP ER TY EXCE P T ENSUR I NG THEIR RI GHTS AS L ANDOWNER SO THAT THE SA L E VA L UE O F THE LAND COULD BE R EAL I ZED TO THEM AS PER THE TE R MS OF ' AGR E EM ENT TO SALE ' . IN VI EW OF THE FACTS AND C I RCUMSTANCES OF T HE CASE AS WE L L AS TH E L EGA L P R OPOS IT ION L A I D DOWN BY THE SUPREME COU R T I N T H E CASE O F MYSORE M I NERALS L T D . I T WAS HELD THAT THE ASSESSE E WAS ENTITLED FOR DEDUCT I ON U / S 80 - IB(1O) ON THE PROF IT DE RI V ED FROM C ONSTRU C T I ON AND DEVELOPMENT OF RESIDENT I A L HOUS I NG P R O JECT .' 10. FROM THE ABOVE DISCUSSION IT BECOMES EVIDE NTLY CLEAR THAT THE ASSESSEE IS NOT REQUIRED TO BE THE OWNER ON RECORD FOR CLAIMING SUCH A DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. IN SO FAR AS EXECUTION OF POWER OF ATTORNEY BY THE LAND OWNER AFTER THE RE CEIPT OF FULL CONSIDERATION AND WHEN THE ASSESSEE HAS TAKEN POSSE SSION OF THE LAND AND DEVELOPED THE SAME IS CONCERNED SHE FULFI LLS ALL THE CONDITIONS LAID DOWN IN SECTION 80-IB(10) OF THE AC T AND EXPLANATION APPENDED THERETO. 11 . THE SUBM I SSION OF LEARNED D . R . THAT THE AS S ESSEE IS SIMPLY A WORKS-CONTRACTO R I N THIS CASE IS NOT FOUND TO BE CORREC T F A C T AS PE R THE R E C O R D . WE ARE ALSO NO T I N AGREEMENT TO THE SUBM I SS ION THAT IN V I EW O F TH E E X P L A N AT I O N A PPE N DED T O THI S SEC TI O N W ITH E F FE CT FROM 1 . 4 . 2009 BY THE F I NANCE ( NO.2 ) A CT 2009 THE ASSESSEE I S N O T EN T I T LED TO THIS DEDUCT I ON . RELIANCE WAS PLACED ON THE DEC I SIO N O F C HENNAI B ENCH OF ITAT IN THE CASE OF ACIT V . M / S SASHWAT CONSTRU C T I O NS ( P ) LTD . FO R THE ASSESSMENT YEAR 2004 - 05 IN I . T . A . NO . 1 828 / MDS / 20 07. A CTUALLY THE BENCH WAS CONS I DE RI NG A D I F F ERENT ASPECT O F T HIS ISSUE FROM A D I FFE R ENT ANGLE. THE FINDING OF THE BENCH WAS T H AT F O R CLAIMING DEDUCTION UNDE R SECTION 80-I B ( 1 0) OF T HE ACT A PERSON HAS TO BE BOTH A DEVELOPER AS WELL AS A BUILDER. IT WAS HELD THAT I F THE A SS E SSEE IS ON L Y E I T H E R ONE OF THE TWO THEN IT I S VERY CLEA R T HAT I T I S NOT ELIGIBLE ITA 458 TO 461/11 :- 22 - : FO R DEDUCTIO N. I N T HA T C ASE THE ASSESSEE WAS ENGAGED BY TH E B U Y ERS OF THE LAND F O R DO I NG CONSTRUCTION WORK AS CONTRACTORS . IF WE GO THROUGH PAGE NOS . 5 AND 6 OF THAT ORDER DATED 2 I H FEBR U A R Y 200 9 IT BECOMES C L EA R THAT T HE F AC T S I N T HE P R ESENT CASE AND T H E FACTS O F T H E CASE IN M/S SASHWAT CONS TR UCT I ONS ( P ) LTD. ARE ENT IR E L Y D IF FE R EN T A ND NOT I DENT I CAL . FOR READY R EFE R ENCE WE EXTRACT THE ABOVE PO RTI O N HEREIN AS BE L OW :- ' FROM THE AFOREMENT I ONED ANALYS I S OF THE DOCUMEN T S AN D D I SCUSSIONS THEREON WHAT EMERGES IS LISTED AS BELOW : - 1. SASHWATH FOUNDATIONS DEVELOPS THE L AND . GETS T HE PROJECT APPROVED BY THE LOCAL AUTHOR I TY AND SE LL S TH E UND IVI DED SHARE OF THE PROPERTY TO THE BUYE R S . 2. THE ASSESSEE COMPANY SASHWATH CONSTRUCT I ONS PVT . L TD . ENTERS I NTO A BU I LDERS AGREEMENT W I TH T HE B UY ER WHICH I S MORE OR LESS AK I N TO BE I NG A CONTRACTOR F O R EXECUT I NG THE CONSTRUCT I ON WORK . HOWEVER AS PER THE PROVIS I ONS OF 80 - IB(1O ) A PERSON HAS TO BE BOTH A DEVELOPER AS WELL AS THE BU I IDER AS THE P R O VI S I ON S C L EAR L Y ST I PULATE THAT THERE SHOULD BE AN UNDERTAK I NG DEVELOP I N G AND BU I LDING HOUS I NG PROJECTS AND NOT DEVELOPING OR BU I LD I N G HOUS I NG PRO J ECTS AND THEN ONLY THE PROF I TS FROM THE UNDE R TAK I N G ARE ELIGIBLE FOR DEDUCT I ON . IF THE ASSESSEE I S ONLY E I THER ONE O F THE TWO THEN I T I S VERY CLEAR THAT I T I S NOT EL I G I BL E FO R T HE DEDUCT I ON . IN THE INSTANT CASE THE DEVELOPING ACT I V I TY HAS BEE N ENTIRELY UNDERTAKEN BY M / S SASHWATH FOUNDAT I ONS L I M I TED A ND THE BUYERS OF LAND HAVE MERE L Y ENGAGED THE ASSESSEE C OMPANY ON L Y FOR CONSTRUCTION WORK AS CONTRACTORS . AGAIN AS PER THE PROV I S I ONS OF SECT I ON 80-IB(10 ) THE I NCOME HAS TO BE DER I VED F R OM THE AC TI VITY OF DEVELOP I NG AND BUILDING OF A HOUSING PROJE C T . I T DOES NOT SPEAK OF THE I NCOME OF A CONTRACTOR WHO CONSTRU C TS THE HOUSES OR ANY OTHER AGENCY I NVOLVED I N THE CONSTRUCT I ON O F HOUSES I NTERIOR DESIGNERS CIVIL CONTRACTOR ARCHITECTS LANDSCAP E DESIGNERS VAASTU EXPERTS ETC . HENCE I T I S HELD THAT THE ASSESSE E I S NOT ELIGIBLE FOR DEDUCTION U/S 80 - IB(10) .' THE LD. CIT(A) HAS RELIED ON PARA 2.7 AT PAGE 14 OF THE ORDER IN WHICH IT HAS BEEN FOUND THAT THE ASSESSEE WAS NOT B OTH DEVELOPER AND BUILDER OF THE HOUSING PROJECT. THI S DIFFERENCE WILL BE HIGHLIGHTED BY THE GROUNDS TAKEN IN THAT CASE WH ICH ARE ITA 458 TO 461/11 :- 23 - : REPRODUCED IN PARA 2.5 AT PAGE 11 OF THE ORDER. W E ARE EXTRACTING THE SAME FOR READY REFERENCE: THE COMM I SS I ONE R OF INCOME TAX ( APPEA L S ) HAS FAILED TO N O T E THAT T HE ASSESSEE C OMPANY SHOU L D BE B O TH D EVELOPER AND B U I LDER . IN THE PRESENT C ASE T H E DEVE L OPM ENT A C T I V I T I ES WERE C A R R I ED OUT BY T H E L EGA L OWNE R O F T HE LAND M / S SASHWA T H FOUNDAT I ONS (FI RM) AND THE A SS E SS EE COMPANY ENTERED INTO AGREEMENT W I TH THE BUY E R OF TH E LAND TO CONSTRUCT A FLAT IN THE SA I D BU I LD I NG COMP L E X A S ' CONTRACTOR '. THE COST OF THE LAND WAS MET OUT B Y THE F I RM M/S SASHWATH FOUNDAT I ONS WHICH FURTHE R DEV E LOP ED THE LAND AND THE PLAN APPROVAL WAS IN THE NAME OF TH E FIR M ONLY AND NO T I N THE NAME OF THE ASSESSEE C OMPANY . THUS THERE A R E TWO D I FFE R ENT ENT I T I ES I . E . THE ASSESSEE C OMPANY THE BU IL DER AND THE FIRM M / S SASHWATH FOUNDATIONS TH E DEVELOPER . THE COMM I SS I ONER OF INCOME TA X (APPEA L S ) I S N O T C O RRECT IN HOLDING THAT SINCE THE ASSESSEE COMPANY IT S ELF IS UNDERTAKING CONSTRUCTION OF THE ENT I RE P R O J E C T IT C A N DEF I N I TELY BE HELD TO BE BOTH DEVELOPER AND BU IL DER . THE COMM I SSIONER OF INCOME TAX (APPEALS) FA IL ED TO NO TE THAT THE ASSESSEE COMPANY COLLECTS THE E NTI R E CONS I DERAT I ON FROM THE FLAT BUYERS THAT I S BOTH FO R THE LAND COST AND THE CONSTRUCT I ON COST AND PASSES ON TH E L AN D COST TO THE OWNER I . E . TO THE FIRM M / S SASHWATH FOUNDATIONS AND THUS THE ASSESSEE ACTS ONLY A S A C ON T RA C TO R O R BU I LDER AND I S NOT UNDERTAK I NG A P R O J E CT . THE ABOVE NOTED GROUNDS CLEARLY MAKE OUT THE DIFFER ENCE BETWEEN THE FACTS OF THESE TWO CASES. THEREFORE T HIS DECISION OF THE TRIBUNAL IN THE CASE OF M/S SASHWAT CONSTR UCTIONS(P) LTD DATED 27 TH FEBRUARY 2009 IS ENTIRELY ON DIFFERENT FACTS AND HENCE OF NO HELP TO THE REVENUE. THE LEARNED DR HAS FURT HER RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F M/S K.RAHEJA DEVELOPMENT CORPORAT I ON A COPY OF WHICH WAS F I LED ON RECORD . WE ARE A F RA ID THE C I RCUMSPECTION OF TH I S DECISION CLEARLY SHOWS THAT T HI S C A SE DOE S NOT SUPPORT THE CASE OF THE REVENUE AT ALL RATHER IT SUPPO R TS T H E CASE OF THE ASSESSEE . TH I S DECIS I ON WAS R ENDERED I N A DIFFEREN T CO N T E XT W HEN THE HON'BLE COURT WAS DEALING W I TH THE KARNATAKA OWN ER S HIP FLATS ( REGULATION OF ITA 458 TO 461/11 :- 24 - : PROMOTION OF CONSTRUCTION SALES MANAGEME NT AND TRANSFER ) ACT 1974 ; AND IN THAT CASE THE QUESTION FOR CONS I DE R A T I ON FOR THE I R LORDSHIPS WAS WHETHER THE APPELLANTS WERE DEALE R S AND WE RE LIABLE TO PAY TURNOVER TAX UNDER THE KARNATAKA SA L ES T A X A CT . OSTENS I BLY THIS DECISION CANNOT APPLY TO T HE FACTS O F TH E C ASE BECAUSE THE INCOME-TAX ACT I S A FISCAL LAW WHEREIN CERTA I N S E C TI O NS GIVE INCENTIVES TO CERTA I N CLASS OF ASSESSEE I N O R DE R T O EA RN MORE REVENUE AND SOMEWHERE THE DEFINITION AS IS TAKEN I N LEGA L PA R LA N CE IN THE SALE OF GOODS AND REGARDING TRANSFER IS NOT ADO PTED I N T H E S AM E MANNER AS IT IS DONE IN OTHER ENACTMENTS . IN INCOME - TAX IF THE ASSESSEE TAKES POSSESSION OF THE LAND AFTER PAYING FULL CONS I DE R AT ION THE DEFIN I TION OF THE TERM ' TRANSFER ' AS DEFINED IN SECTION 2 ( 4 7) OF THE ACT BECOMES COMPLETE. WITH THE HELP OF THIS DECISION LEARNED D . R . HAS TR I ED TO CONVINCE US THAT IN THIS CASE IT WAS WORKS - CONT R ACT AND NOT THAT OF ' DEVELOPERS ' . IN THE LAST PARA OF THE HIGH COURT ' S DECISION I T HAS BEEN HELD THAT THE TERM ' WORKS CONTRACT ' IN THAT ACT I S A N INCLUS I VE DEFINITION . IT DOES NOT INCLUDE MERELY A WORKS CONTRACT A S NORMALLY UNDERSTOOD . IT HAS A WIDE DEFINITION WHICH I NCLUDES ' AN Y AGREEMENT ' FOR CARRYING OUT BUILDING OR CONSTRUCT I ON ACTIV I TY FOR C A S H DEFERRED PAYMENT OR OTHER VALUABLE CONSIDERATION . THE DEF IN IT I O N AS GIVEN IN THAT ACT DOES NOT MAKE ANY DISTINCTION BASED ON AS T O WH O CARRIES ON THE CONSTRUCTION ACTIVITY . THUS UNDER THAT ACT EVE N THE OWNER OF THE LAND CAN BE TREATED AS CARRYING ON A WORKS CONTRAC T IF HE ENTERS INTO AN AGREEMENT TO CONSTRUCT FOR CASH DEFERRED PAYMEN T O R OTHER VALUABLE CONSIDERATION . THEREFORE THE RATIO OF THA T D ECISION CANNOT AT ALL BE APPLIED TO THE FACTS OF THE GIVEN CASE WHICH I S U N DE R INCOME-TAX ACT . RATHER THIS DECISION SUPPORTS THE CASE O F THE ASSESSEE IN WHICH THE DECISIONS OF THE HON'BLE SUPREME COU RT IN T HE CASES OF CIT V. PODAR CEMENT LTD. REPORTED IN ( 1992 ) 5 SCC 48 2 AND MYSORE MINERALS LTD . V . CIT REPORTED IN (1999) 7 SCC 106 HAVE BEEN DISCUSSED AND IN WHICH IT HAS BEEN HELD THAT I N THE CONTEXT OF INCOMETA X ACT IT HAS TO BE HELD THAT EVEN THOUGH THE R E I S NO F OR MAL CONVEYANCE THE CONCERNED PARTY COULD BE CONSIDERED TO BE THE BENEFICIAL OWNER . WE HAVE ALSO SEEN THE CONSTRUCTION AGREEMEN T PLACED BEFORE US FOR OUR PERUSAL . WE HAVE CAREFULLY CIRCUMSPECTED THE TRUE CHARACTER OF ALL THESE AGREEMENTS AND HAVE FOUND THAT T HE ASSESSEE IS NOT ONLY A BUILDER BUT IS ALSO DEVELOPE R OF THE P R OPER T Y IN QUESTION AND THUS SHE HAS FULFILLED ALL THE CONDITIONS L A I D DOW N IN SECTION 80-IB ( 1 0 ) OF THE ACT . THE DEFIN I TION OF ANY T E RM O R WO RD GIVEN I N OTHE R ENACTMENTS C ANNOT BE I MPORTED WHICH DEA LING W ITH INCOME TAX MATTERS. NO PARA L LE L S CAN BE DRAWN UN LESS IT I S S O SPEC IFICA L LY PROVIDED IN THE I.T . ACT ITSELF . THE ASSESSEE WAS NOT ' AWA RD ED ' ANY WORKS CONTRACT EITHER BY ANY PARTY OR STATE O R CENT R A L GOVE RNM E NT . THE TERM USED IN THE EXPLANAT I ON I S ' AWARDED ' WHICH HAS A E NTIRELY DIFFERENT CONNOTAT I ON . THEREFORE THE EXPLANATION APPENDED TO SECTION 80-IB ( 10 ) IS ALSO NOT ATTRACTED AT ALL . THE ITA 458 TO 461/11 :- 25 - : DEVELOPMENT DON E IN TH I S CASE IS NOT ON ACCOUNT OF A WORKS- CONTRACT . IN OU R CONSIDE R ED OP INI O N THE FINDING OF THE ID. CIT ( APPEALS ) DOES NOT DESERVE ANY IN TE RF E RENCE AT OUR END . THE DECISION OF CHENNAI BENCH AND AHMEDABAD BE NCH FUL L Y SUPPORT THE CASE OF THE ASSESSEE AS S I M I LA R Q U EST I ON S ARISING OUT OF I DENT I CAL FACTS ARE I NVOLVED THEREIN . THE OT H E R DE CI S I O N OF CHENNA I BENCH AND THAT OF SUPREME COURT ' S DECIS I O N IN TH E C A S E OF M / S K. RAHEJA DEVELOPMENT CORPORATION R EL I ED ON BY THE LEARNED D.R. ARE DEFINITELY RENDERED IN ENTIRELY DIFFERENT CONTEXT A ND FACTS A RE DISTINGUISHABLE. CONSEQUENTLY WE UPHOLD THE FINDI NG OF THE CIT(APPEALS) IN THIS REGARD AND DISMISS GROUNDS NO. 2.1 2.2 2.3 AND 2.4. 9. THE ABOVE FINDING OF THE SAME VERY BENCH FURTHER F ORTIFIES OUR ABOVE DECISION. CONSEQUENTLY WE CANNOT ALLOW THIS APPEAL OF THE REVENUE AND DISMISS THE SAME. 10. SAME IS THE FATE OF I.T.A.NO.459/MDS/2011 FOR ASSES SMENT YEAR 2004-05. HENCE THE SAME STANDS DISMISSED. 11. I.T.A.NO. 460/MDS/2011 FOR ASSESSMENT YEAR 2005- 06 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) DATED 15.12.2010. IN THIS YEAR THE SAME ISSUE REGARDING ALLOWABILITY OF DEDU CTION U/S 80IB(10) IS INVOLVED. WITH SIMILAR REASONING WE DECIDE THIS I SSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY WE CONFIRM THE APPELLATE ORDER AND DISMISS THE REVENUES APPEAL. ITA 458 TO 461/11 :- 26 - : 12. I.T.A.NO. 461/MDS/2011 FOR ASSESSMENT YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) DATED 15.12.2010. 13. IN THIS APPEAL THE ASSESSING OFFICER HAS DISALLOWE D DEDUCTION OF ` 1 58 07 434/- ['VIGNESH EMPIRE'] AND OF ` 37 74 353/- [VIGNESH PARADISE] U/S 80IB(10). ONE MORE ADDITION WAS MAD E OF ` 6.30 400/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTY AT THILLAINAGAR. THE DISALLOWANCE U/S 10IB(10) IN RESPECT OF 'VIGNESH E MPIRE' FLOWS FROM THE EARLIER TWO YEARS AS DISCUSSED ABOVE AND FACTS HAVE BEEN DISCUSSED BUT THE DISALLOWANCE OF DEDUCTION U/S 80IB(10) IN RESPE CT OF VIGNESH PARADISE HAS BEEN MADE FOR THE FIRST TIME IN THIS ASSESSMENT YEAR. THE FACTS LEADING TO THE SAID DISALLOWANCE WILL BE DISC USSED LATER. BEFORE THAT WE WOULD LIKE TO MENTION THAT THE FACTS EVID ENCE CIRCUMSTANCES AND ALL OTHER RELATED THINGS ARE EXACTLY IDENTICAL TO EARLIER ASSESSMENT YEARS THEREFORE WITH SIMILAR REASONINGS WE CONFI RM THE IMPUGNED DELETION MADE IN RESPECT OF 'VIGNESH EMPIRE' OF ` 1 58 07 434/-. 14. THE FACTS OF DISALLOWANCE OF ` 37 74 353/- IN CONNECTION WITH VIGNESH PARADISE ARE THAT THE ASSESSEE HAD DEVELO PED AN INTEGRATED HOUSING PROJECT ON A PLOT OF LAND MEASURING MORE TH AN 1 ACRE AT SRIRANGAM TRICHY. THIS PROJECT COMPRISED OF THREE PHASES- SIX BLOCKS ITA 458 TO 461/11 :- 27 - : OF FLATS ONE BLOCK OF DUPLEX HOUSES AND ONE BLOCK OF INDIVIDUAL HOUSES. ALL THESE PHASES/TYPES OF HOUSES HAD BEEN APPROVED UNDER A SINGLE BUILDING BY THE MUNICIPAL AUTHORITIES. THEY WERE SEPARATELY MARKED AND MENTIONED IN THE APPROVED PLANS. THE FLATS AND DUPLEX HOUSES MEASURED LESS THAN 1500 SQ FT PER UNIT WHEREAS THE INDIVIDUAL HOUSES MEASURE MORE THAN THE STIPULATED PLINTH AREA. THES E FACTS ARE NOT DISPUTED EITHER BY THE ASSESSING OFFICER OR BY THE ASSESSEE . THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10). WITH REGARD TO HOUSES HAVING MORE THAN 1500 SQ FT PER UNIT PLINTH AREA I T WAS EXPLAINED THAT EACH HOUSE HAD TWO FLOORS AND EACH FLOOR WAS LESS T HAN 1500 SQ FT PER AND WERE SOLD THROUGH TWO SEPARATE DEEDS TO DIFFERE NT PERSONS. IN THE ALTERNATIVE IT WAS PLEADED THAT DEDUCTION MAY BE D ENIED IN RESPECT OF THESE TWO INDEPENDENT HOUSES IF THE ASSESSING OFFIC ER IS NOT SATISFIED. THE ASSESSING OFFICER HOWEVER DISALLOWED THE CLAI M FOR PROPORTIONATE DEDUCTION. THE LD. CIT(A) HAS DIRECTED THE ASSESSI NG OFFICER TO ALLOW DEDUCTION IN RESPECT OF PROFITS AND GAINS RESULTIN G FROM THE DEVELOPMENT OF FLATS AND DUPLEX HOUSES BUT HAS REST RICTED THE DISALLOWANCE TO THE PROFITS GENERATED OUT OF SALES OF INDIVIDUAL HOUSES AS A BLOCK. IN OUR CONSIDERED OPINION WE DO NOT FIND ANY INFIRMITY IN THE APPELLATE ORDER IN THIS REGARD AND CONFIRM THE SAME . ITA 458 TO 461/11 :- 28 - : 15. THE LAST ISSUE OF THIS APPEAL IS IN RELATION TO TEL ESCOPING OF UNACCOUNTED CASH PAYMENT FOR PURCHASE OF LAND FOR THE PROJECT VIGNESH PLAZA AMOUNTING TO ` 6 30 400/- WITH THE SALE OF AGRICULTURAL LAND ON 7.4.2005. IT WAS EXPLAINED BY THE ASSESSE E THAT THE INVESTMENT CAME FROM INCOME EARNED OUT OF SALE OF L ANDS BY THE PARTNERS. THIS INVESTMENT WAS NOT ADMITTED IN THE RETURN ORIGINALLY FILED BUT WAS ADMITTED IN THE RETURN FILED U/S 153A OF TH E ACT. THIS INVESTMENT WAS SOUGHT TO BE TELESCOPED TO THE ADDIT IONAL INCOME OFFERED IN THAT YEAR WHICH HAS BEEN DENIED BY THE A SSESSING OFFICER. THE LD. CIT(A) HAS HOWEVER FOUND SUBSTANTIAL FORC E IN THIS CLAIM OF THE ASSESSEE ON THE REASONING THAT ADDITIONAL INCOME TH AT HAS BEEN OFFERED FOR ASSESSMENT AND A CLAIM HAS BEEN PLACED BY THE ASSESSEE THAT INVESTMENT FOUND DURING SEARCH WAS FUNDED BY SUCH A DDITIONAL INCOME OFFERED IN THE SAME YEAR AND THERE BEING NO PROOF T HAT THERE HAD BEEN OTHER INVESTMENTS AND/OR EXPENDITURE TO SAY THAT TH IS VERY MONEY WAS NOT AVAILABLE WITH THE ASSESSEE-FIRM. IN SUCH CIRC UMSTANCES TELESCOPING BENEFIT WAS GRANTED TO THE ASSESSEE. BEFORE US ALS O THE REVENUE COULD NOT BRING ANY SUCH EVIDENCE WHICH COULD CONTRADICT THE FINDING OF THE LD. CIT(A). IN OUR OPINION THE TELESCOPING GRANTE D BY THE LD. CIT(A) IS PROPER AND IN ORDER. CONSEQUENTLY THIS GROUND OF APPEAL STANDS DISMISSED. ITA 458 TO 461/11 :- 29 - : 16. TO SUMMARIZE THE RESULT ALL THE FOUR APPEALS OF TH E REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 14.09.2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 14 TH SEPTEMBER 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR