M/s. Voora Property Developers Pvt.Ltd., CHENNAI v. ACIT, CHENNAI

ITA 92/CHNY/2014 | 2007-2008
Pronouncement Date: 31-07-2014 | Result: Allowed

Appeal Details

RSA Number 9221714 RSA 2014
Assessee PAN AAACV5747J
Bench Chennai
Appeal Number ITA 92/CHNY/2014
Duration Of Justice 6 month(s) 21 day(s)
Appellant M/s. Voora Property Developers Pvt.Ltd., CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 31-07-2014
Date Of Final Hearing 19-06-2014
Next Hearing Date 19-06-2014
Assessment Year 2007-2008
Appeal Filed On 10-01-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI . . . ! ' #$ % &# ' BEFORE DR. O.K.NARAYANAN VICE-PRESIDENTAND SHRI VIKAS AWASTHY JUDICIAL MEMBER ./ ITA NO. 92/MDS/2014 % ( )( / ASSESSMENT YEAR : 2007-08 M/S VOORA PROPERTY DEVELOPERS PVT. LTD. NO.28 BAZULLAH ROAD T. NAGAR CHENNAI - 600 017. PAN : AAACV 5747 J V. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE III(4) CHENNAI - 600 034. ($+/ APPELLANT) (-.$+/ RESPONDENT) $+ / / APPELLANT BY : SHRI D. ANAND ADVOCATE -.$+ / / RESPONDENT BY : SHRI N. MADHAVAN JCIT 0 / 12 / DATE OF HEARING : 19 TH JUNE 2014. 34) / 12 / DATE OF PRONOUNCEMENT : 31 ST JULY 2014 / O R D E R PER VIKAS AWASTHY JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III CH ENNAI DATED 30.09.2013 RELEVANT TO THE ASSESSMENT YEAR 2007-08 . THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS DISALLOWANC E OF DEDUCTION UNDER SECTION 80-IB(10) ON THE GROUND THAT THE ASS ESSEE HAS 2 I.T.A. NO. 92/MDS/14 OBTAINED 6 PLANNING PERMITS FOR CONSTRUCTION OF 6 B LOCKS (TREATED AS 6 PROJECTS BY REVENUE) ON A LAND MEASURING LITTLE O VER ONE ACRE. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF CONSTRUCTION AND SALE OF RESIDENTIAL FLATS. FOR AS SESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.2007 ADMITTING NIL INCOME. WHILE COMPUTING T OTAL INCOME THE ASSESSEE CLAIMED A SUM OF ` 2 40 76 271/- AS DEDUCTION UNDER SECTION 80-IB(10). THE CASE OF THE ASSESSEE WAS SE LECTED FOR SCRUTINY UNDER CASS AND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 12.09.2008. SCRUTINY ASSESSMENT UNDER SECTION 1 43(3) WAS COMPLETED ON 31.12.2009. DURING SCRUTINY ASSESSMEN T THE ASSESSEE WAS HELD TO BE INELIGIBLE FOR CLAIMING DED UCTION UNDER SECTION 80-IB(10). THE FACTS AS EMANATING FROM RECORDS ARE AS UNDER: - THE ASSESSEE OWNS A LAND MEASURING 1.065 ACRES AT KAMARAJ SALAI KOTTIVAKKAM IN CHENNAI. THE ASSESSE E DEVELOPED A RESIDENTIAL PROJECT ON THE SAID LAND UNDER THE NAME VOORA PRITHVI. WITHIN THE PROJECT THE ASSESSEE HAD CONSTRUCTED SI X HOUSING TOWERS NAMED AS AVISHI AVINI DHATRI PUDUMI URVI AND KS HITI. THE HOUSING TOWERS WERE APPROVED BY CMDA BY 6 SEPARATE PERMITS. THE COMMISSIONER OF INCOME TAX IN REVISION PROCEEDI NGS HELD THAT 3 I.T.A. NO. 92/MDS/14 THESE ARE SEPARATE PROJECTS FOR WHICH SEPARATE APPR OVALS HAVE BEEN GRANTED BY THE CMDA. THE CIT OBSERVED THAT THE ASS ESSEE IN THE ABOVE SAID 6 PROJECTS DID NOT COMPLY WITH THE PROV ISIONS OF SECTION 80-IB(10) AND REMITTED THE MATTER BACK TO A.O. THE ASSESSING OFFICER VIDE ORDER DATED 20.12.2012 PASSED UNDER S ECTION 143(3) R/W SECTION 263 OF THE INCOME-TAX ACT 1961 HELD T HAT THE ASSESSEE HAD DEVELOPED 6 SEPARATE PROJECTS IN ONE SINGLE PIE CE OF LAND MEASURING 1.065 ACRES. THE ASSESSEE DID NOT FULFIL THE ESSENTIAL CONDITION OF MINIMUM AREA OF ONE ACRE FOR A SINGLE PROJECT AS LAID DOWN UNDER SECTION 80-IB(10) OF THE ACT. THE A.O. ACCORDINGLY DISALLOWED THE DEDUCTION EARLIER GRANTED TO THE ASS ESSEE. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS ) UPHELD THE FINDINGS OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE VIDE IMPUGNED ORDER. 3. NOW THE ASSESSEE HAS COME IN SECOND APPEAL BEFO RE THE TRIBUNAL ASSAILING THE FINDINGS OF THE AUTHORITIES BELOW. SHRI D. ANAND ADVOCATE APPEARING ON BEHALF OF THE ASSESSE E SUBMITTED THAT THE ASSESSEE PURCHASED LAND MEASURING MORE THA N ONE ACRE ON 03.05.2006. THE ASSESSEE HAD DEVELOPED A HOUSIN G PROJECT ON THE SAID LAND. THERE WERE 6 BLOCKS WITH DIFFERENT NAMES IN THE 4 I.T.A. NO. 92/MDS/14 HOUSING SCHEME. ALL THE BLOCKS ARE UNDER THE PROJE CT VOORA PRITHVI. THE CMDA HAD GRANTED PLANNING PERMITS FO R THE DIFFERENT BLOCKS SEPARATELY. HOWEVER THE PERMITS WERE GIVEN ON THE SAME DATE I.E. 02.03.2006. ALL THE TOWERS IN THE PROJE CT WERE CONSTRUCTED SIMULTANEOUSLY. IN TOTAL THERE ARE 48 RESIDENTIAL UNITS I.E. 8 UNITS IN EACH TOWER. ALLOTTEES OF THE SAID RESIDENTIAL UNIT S HAVE BEEN ALLOTTED UNDIVIDED SHARE IN TOTAL LAND MEASURING 1.065 ACRES . THUS EACH ALLOTTEE WAS GIVEN APPROXIMATELY 1022 SQ.FT. OF UND IVIDED SHARE OF LAND. IN ORDER TO SUBSTANTIATE HIS SUBMISSIONS TH E LD. COUNSEL PLACED ON RECORD A COPY OF SALE DEED IN RESPECT OF ONE OF THE ALLOTTEES OF THE RESIDENTIAL UNIT IN THE PROJECT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CIT V. VANDANA PROPERTIES (353 ITR 36) (BOM). 4. ON THE OTHER HAND SHRI N. MADHAVAN JCIT REPRE SENTING THE DEPARTMENT STRONGLY OPPOSED THE ARGUMENT MADE BY T HE LD. COUNSEL FOR THE ASSESSEE. THE LD. D.R. SUPPORTING THE FINDINGS OF THE CIT(APPEALS) CONTENDED THAT THE ASSESSEE HAD D EVELOPED 6 DIFFERENT PROJECTS ON LAND MEASURING LITTLE OVER ON E ACRE. THIS FACT IS EVIDENT FROM SEPARATE PERMITS GRANTED BY THE CMDA F OR DEVELOPMENT OF EACH PROJECT. THE LD. D.R. FURTHER CONTENDED THAT THE DECISION RENDERED BY THE HON'BLE BOMBAY HIGH CO URT IN THE 5 I.T.A. NO. 92/MDS/14 CASE OF VANDANA PROPERTIES (SUPRA) IS DISTINGUISHAB LE. UNLIKE THE SCARCITY OF LAND IN MUMBAI LAND IS FAIRLY AVAILABL E IN CHENNAI. THE HONBLE HIGH COURT RENDERED ITS JUDGMENT IN DIFFERE NT FACTS AND CIRCUMSTANCES. THE LD. D.R. PRAYED FOR DISMISSAL O F THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO EXAMINED THE J UDGMENT OF HON'BLE BOMBAY HIGH COURT ON WHICH THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE. THE BENEFIT OF SECTI ON 80-IB(10) HAS BEEN DENIED TO THE ASSESSEE ONLY ON THE GROUND THAT THE ASSESSEE HAS BEEN GRANTED SEPARATE PERMITS FOR CONSTRUCTION OF DIFFERENT BLOCKS IN THE PROJECT. IT HAS NOT BEEN DISPUTED BY THE REVENUE THAT THE ASSESSEE IS HAVING LAND MORE THAN ONE ACRE AS E NVISAGED UNDER SECTION 80-IB(10). AS IT IS EVIDENT FROM THE RECORDS THE ASSESSEE HAS RAISED CONSTRUCTION OF 6 DIFFERENT BLO CKS GIVING THEM DIFFERENT NAMES FOR THE PURPOSE OF CONVENIENCE AND IDENTIFICATION. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ON RECO RD A COPY OF THE SALE DEED IN RESPECT OF ONE OF THE ALLOTTEES TO SH OW THAT ALL THE ALLOTTEES HAVE BEEN GIVEN UNDIVIDED SHARE IN LAND F ROM THE TOTAL AREA OF 1.065 ACRES. THE SALE DEED IS AT PAGES 51 TO 63 OF THE PAPER-BOOK. AT PAGE 61 IN SCHEDULE A THE DETAIL S OF THE ENTIRE 6 I.T.A. NO. 92/MDS/14 PROPERTY ARE GIVEN. A PERUSAL OF SCHEDULE A SHOW S THAT THE LAND IS SITUATED AT NO.141 KOTTIVAKKAM VILLAGE SAIDAPET T ALUK CHINGELPET DISTRICT WITHIN THE REGISTRATION DISTRICT OF MADRAS . THE TOTAL EXTENT OF LAND IS 1ACRE AND 6.5 CENTS I.E. 46392 SQ.FT. EAC H ALOTTEE GETS 1022 SQ.FT. UNDIVIDED SHARE OF LAND AS STATED IN SCHEDUL E A. THERE ARE 8 RESIDENTIAL UNITS IN EACH BLOCK AND IN TOTAL THER E ARE 48 ALLOTTEES. THUS IT IS CLEARLY EVIDENT THAT ALL THE ALLOTTEES HAVE BEEN GIVEN UNDIVIDED SHARE IN TOTAL LAND MEASURING 1.065 ACRES . WE FIND FORCE IN THE SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE THAT ALL THE 6 BLOCKS ARE PART OF THE SAME HOUSING PROJECT. A FURTHER PERUSAL OF THE RECORDS SHOW THAT PERMITS HAVE BEEN GRANTED FOR EACH BLOCK ON THE SAME DAY WHICH FURTHER FORTIFIES THE CLAIM O F THE ASSESSEE THAT THE PROJECTS ARE PART OF THE COMPOSITE HOUSING SCHEME. 6. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF VAN DANA PROPERTIES (SUPRA) WHILE DEALING WITH SIMILAR CONT ROVERSY HAS HELD THAT ALL THE APPROVED HOUSING PROJECTS ON THE SAME LAND ARE ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80-IB(10) IF OTHERWISE THEY FULFILL THE CONDITIONS SET OUT UNDER SECTION 80-IB( 10). IN THE SAID CASE 5 BLOCKS WERE CONSTRUCTED ON A PLOT MEASURING 2.36 ACRES. THE REVENUE DECLINED TO GRANT BENEFIT OF SECTION 80 -IB(10) TO THE ASSESSEE ON THE GROUND THAT EACH BLOCK IS CONSTRUCT ED IN LESS THAN 1 ACRE. THE HON'BLE HIGH COURT OBSERVED AS UNDER:- 7 I.T.A. NO. 92/MDS/14 25. THE QUESTION THEREFORE TO BE CONSIDERED IS WHETHER THE REVENUE IS JUSTIFIED IN READING THE EXP RESSION 'PLOT OF LAND' IN SECTION 80IB (10)(B) AS 'VACANT PLOT OF LAND'? 26. THE OBJECT OF SECTION 80IB (10) IN GRANTING DEDUCTION EQUAL TO ONE HUNDRED PER CENT OF THE PROF ITS OF AN UNDERTAKING ARISING FROM DEVELOPING AND CONSTRUC TING A HOUSING PROJECT IS WITH A VIEW TO BOOST THE STOCK O F HOUSES FOR LOWER AND MIDDLE INCOME GROUPS SUBJECT TO FULFI LLING THE SPECIFIED CONDITIONS. THE FACT THAT THE MAXIMUM SIZ E OF THE RESIDENTIAL UNIT IN A HOUSING PROJECT SITUATED WITH IN THE CITY OF MUMBAI AND DELHI IS RESTRICTED TO 1000 SQUARE FE ET CLEARLY SHOWS THAT THE INTENTION OF THE LEGISLATURE IS TO MAKE AVAILABLE LARGE NUMBER OF MEDIUM SIZE RESIDENTIAL U NITS FOR THE BENEFIT OF THE COMMON MAN. HOWEVER IN THE ABSE NCE OF DEFINING THE EXPRESSION 'HOUSING PROJECT' AND IN THE ABSENCE OF SPECIFYING THE SIZE OR THE NUMBER OF HOU SING PROJECTS REQUIRED TO BE CONSTRUCTED ON A PLOT OF LA ND HAVING MINIMUM AREA OF ONE ACRE EVEN ONE HOUSING PROJECT CONTAINING MULTIPLE RESIDENTIAL UNITS OF A SIZE NOT EXCEEDING 1000 SQUARE FEET CONSTRUCTED ON A PLOT OF LAND HAVI NG MINIMUM AREA OF ONE ACRE WOULD BE ELIGIBLE FOR SECT ION 80IB (10) DEDUCTION. IF THE CONSTRUCTION OF SECTION 80IB (10) PUT FORTH BY THE REVENUE IS ACCEPTED IT WOULD MEAN THAT IF ON A VACANT PLOT OF LAND ONE HOUSING PROJE CT FULFILLING ALL CONDITIONS IS UNDERTAKEN THEN DEDUCTION WOULD BE AVAILABLE TO THAT HOUSING PROJECT AND IF THEREAFTER SEVERAL OTHER HOUSING PROJECTS ARE UNDERTAKEN ON THE VERY S AME PLOT OF LAND THE DEDUCTION WOULD NOT BE AVAILABLE TO THOSE HOUSING PROJECTS AS THE PLOT CEASES TO BE A VACANT PLOT 8 I.T.A. NO. 92/MDS/14 AFTER THE CONSTRUCTION OF THE FIRST HOUSING PROJECT . SUCH A CONSTRUCTION IF ACCEPTED WOULD DEFEAT THE OBJECT WI TH WHICH SECTION 80IB (10) WAS ENACTED. 27. MOREOVER PLAIN READING OF SECTION 80IB (10) D OES NOT EVEN REMOTELY SUGGEST THAT THE PLOT OF LAND HAV ING MINIMUM AREA OF ONE ACRE MUST BE VACANT. THE SAID SECTION ALLOWS DEDUCTION TO A HOUSING PROJECT (SUBJ ECT TO FULFILLING ALL OTHER CONDITIONS) CONSTRUCTED ON A P LOT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND IT IS IMMATERIA L AS TO WHETHER ANY OTHER HOUSING PROJECTS ARE EXISTING ON THE SAID PLOT OF LAND OR NOT. IN THESE CIRCUMSTANCES CONSTR UING THE PROVISIONS OF SECTION 80IB (10) BY ADDING WORDS TO THE STATUTE IS WHOLLY UNWARRANTED AND SUCH A CONSTRUCTI ON WHICH DEFEATS THE OBJECT WITH WHICH THE SECTION WAS ENACTED MUST BE REJECTED. 28. APART FROM THE ABOVE THE CENTRAL BOARD OF DI RECT TAXES (CBDT) BY ITS LETTER DATED 4TH MAY 2001 ADDRE SSED TO THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY HAS STATED THUS: 'THE UNDERSIGNED IS DIRECTED TO REFER TO YOUR LETTE R NO.MCHI:RSA:M:388/19799/3 DATED JANUARY 2001 AND TO STATE THAT THE ADDITIONAL HOUSING PROJECT ON EXISTI NG HOUSING PROJECT SITE CAN QUALIFY AS INFRASTRUCTURE FACILITY UNDER SECTION 10(23G) AND 80IB (10) PROVIDED IT IS TAKEN UP BY A SEPARATE UNDERTAKING HAVING SEPARATE BOOKS OF ACCOUNTS SO AS TO ENSURE THAT CORRECT PROFITS CAN BE ASCERTAINED FOR THE PURPOSE OF SECTION 80IB AND ALS O TO IDENTIFY RECEIPTS AND REPAYMENTS OF LONG TERM FINAN CES UNDER THE PROVISIONS OF SECTION 10(23G) SEPARATELY FINANCING ARRANGEMENTS AND ALSO IF IT SEPARATELY F ULFILLS ALL OTHER STATUTORY CONDITIONS LISTED IN SECTIONS 10(23 G) AND 80(B(10). WITH REGARD TO YOUR QUERY REGARDING THE DEFINITION OF HOUSING PROJECT IT IS CLARIFIED THAT ANY PROJECT WHICH HAS BEEN APPROVED BY A LOCAL AUTHORITY AS A H OUSING 9 I.T.A. NO. 92/MDS/14 PROJECT SHOULD BE CONSIDERED ADEQUATE FOR THE PURPO SE OF SECTION 10(23G) AND 80IB (10)' 29. FROM THE AFORESAID LETTER OF CBDT IT IS CLEAR THAT FOR THE PURPOSES OF SECTION 80IB (10) IT IS NOT THE MAN DATE OF THE SECTION THAT THE HOUSING PROJECT MUST BE ON A V ACANT PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND TH AT WHERE A NEW HOUSING PROJECT IS CONSTRUCTED ON A PLO T OF LAND HAVING MINIMUM AREA OF ONE ACRE BUT WITH EXIST ING HOUSING PROJECTS WOULD QUALIFY FOR SECTION 80IB (10 ) DEDUCTION. EVEN OTHERWISE THE ARGUMENT OF THE REVE NUE DOES NOT STAND TO REASON BECAUSE IN THE CITY OF MU MBAI WHERE THERE IS ACUTE SPACE CRUNCH IT IS DIFFICULT TO FIND A VACANT PLOT HAVING MINIMUM AREA OF ONE ACRE AND EVE N IF FEW SUCH PLOTS ARE EXISTING IT CANNOT BE SAID THAT SECTION 80IB (10) DEDUCTION WAS INTENDED TO GIVE BENEFIT ON LY TO THE UNDERTAKINGS WHO CONSTRUCT HOUSING PROJECTS ON THOSE FEW PLOTS. THEREFORE IT IS CLEAR THAT ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE THERE CAN BE ANY NUMBER O F HOUSING PROJECTS AND SO LONG AS THOSE HOUSING PROJE CTS ARE APPROVED BY THE LOCAL AUTHORITY AND FULFILL THE CON DITIONS SET OUT UNDER SECTION 80IB (10) THE DEDUCTION THEREUND ER CANNOT BE DENIED TO ALL THOSE HOUSING PROJECTS. SEC TION 80IB (10) WHILE SPECIFYING THE SIZE OF THE PLOT OF LAND DOES NOT SPECIFY THE SIZE OR THE NUMBER OF HOUSING PROJE CTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A PLOT HAVING MINI MUM AREA OF ONE ACRE. AS A RESULT SIGNIFICANCE OF THE SIZE OF THE PLOT OF LAND IS LOST AND THEREFORE THE ASSESSEE S UBJECT TO FULFILLING OTHER CONDITIONS BECOMES ENTITLED TO SEC TION 80IB (10) DEDUCTION ON CONSTRUCTION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE ACRE IRRESPECTIVE OF THE F ACT THAT THERE EXIST OTHER HOUSING PROJECTS OR NOT. IN THESE CIRCUMSTANCES THE DECISION OF THE TRIBUNAL IN REJE CTING THE 10 I.T.A. NO. 92/MDS/14 CONTENTION OF THE REVENUE REGARDING THE SIZE OF THE PLOT CANNOT BE FAULTED. 7. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE AND THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F VANDANA PROPERTIES (SUPRA) WE HOLD THAT THE ASSESSEE IS EL IGIBLE TO CLAIM DEDUCTION UNDER SECTION 80-IB(10) IN RESPECT OF ITS PROJECT VOORA PRITHVI SITUATED AT KAMARAJ SALAI KOTTIVAKKAM. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY THE 31 ST OF JULY 2014 AT CHENNAI. SD/- SD/- ( ... ) ( ' #$ ) (DR. O.K. NARAYANAN) (VIKAS AWASTHY) /VICE-PRESIDENT % &# /JUDICIAL MEMBER /CHENNAI G& /DATED THE 31 ST JULY 2014. KRI. &H / -%1I' J')1 /COPY TO: 1. $+ /APPELLANT 2. -.$+ /RESPONDENT 3. 0 K1 () /CIT(A)-III CHENNAI-34 4. 0 K1 /CIT CHENNAI-III CHENNAI-34 5. 'LM -%1% /DR 6. M( N /GF.