The Commissioner Of Income Taxchennai v. M/S.voora Property Developers Pvt. Ltd

In the High Court of Judicature at Madras Dated: 09.03.2015 Coram The Honourable Mr.JUSTICE R.SUDHAKARandThe Honourable Mr.JUSTICE R.KARUPPIAH Tax Case (Appeal) No.56 of 2015 The Commissioner of Income TaxChennai. Vs. .... Appellant /Respondent M/s.Voora Property Developers Pvt. Ltd.,No.28, Bazullah RoadT.Nagar, Chennai - 600 017. .... Respondent/Appellant Appeal under Section 260A of the Income Tax Act against theorder dated 31.07.2014 made in I.T.A.No.92/Mds/2014 on the file ofthe Income Tax Appellate Tribunal Madras 'C' Bench for the assessmentyear 2007-08. against the Order of the Commissioner of Income Tax(Appeals) III,Chennai dated 30.9.2013 and made in ITA No.1682/2013-14 for theAssessment Year 2007-08 against the Assessment Order of theAssistant Commissioner of Income Tax Company Circle III(4) Chennai-34 dated 20.12.2012 and made in GIR.No./PAN/AAACV 5747 J/531V forthe Assessment Year 2007-08 and the order of the Commissioner ofIncome Tax, Chennai -34 dated 23.1.2012 and made in C.No.218(10) CIT-1/263/2011-12 for the Assessment Year 2007-08 and against theAssessment Order the Deputy Commissioner of Income Tax Company CircleIII(4), Chennai dated 31.12.2009 and made in GIR No./PAN 531-V/AAACV57475 for the Assessment Year 2007-08. (Delivered by R.SUDHAKAR,J.) This Tax Case (Appeal) is filed by the Revenue as against theorder dated dated 31.07.2014 made in I.T.A.No.92/Mds/2014 on the fileof the Income Tax Appellate Tribunal Madras 'C' Bench for the https://hcservices.ecourts.gov.in/hcservices/ assessment year 2007-08 raising the following substantial questionsof law: “i) Whether on the facts and circumstances of thecase, the Tribunal was justified in holding that theassessee firm was eligible to claim deduction underSection 80IB(10) especially when the assessee hadfailed to fulfill the primary condition in relationto the size of area of 1 acre plot for each housingplot as laid down in the statute? ii) Is not the finding of the Tribunal badespecially when the entire land on which six projectswere constructed was only 1.06 acres of land andtherefore the conditions stipulated under Section80IB(10) in relation to development of size of eachplot being 1 acre was not satisfied?" 2. The brief facts of the case in a nutshell are as follows:The assessee is a company engaged in the business ofconstruction and sale of residential flats. The assessee owns a landmeasuring 1.065 acres at Kamaraj Salai, Kottivakkam in Chennai. Theassessee developed a residential project on the said land and withinthe project the assessee constructed six housing towers, which wereapproved by the CMDA by six separate permits. For the assessment yearunder consideration, the assessee filed its return of income on31.10.2007 admitting nil income. While computing the total income,the assessee claimed a sum of Rs.2,40,76,271/- as deduction underSection 80IB(10). The case of the assessee was selected under CASSand notice under Section 143(2) was issued on 12.09.2008. Scrutinyassessment under Section 143(3) was completed on 31.12.2009. TheAssessing Officer allowed the claim of the assessee under Section80IB(10) for the assessment year under consideration. 3. Finding that the order of the Assessing Officer isprejudicial to the interest of the Revenue, the Commissioner ofIncome Tax (Appeals) passed an order under Section 263 of the IncomeTax Act holding that the assessee did not comply with the provisionsof Section 80IB(10) and remitted the matter to the Assessing Officerto examine the claim of deduction under Section 80IB(10) afresh.Accordingly, the Assessing Officer passed an order under Section 143(3) read with Section 263 of the Income Tax Act holding that theassessee had developed six separate projects in one single piece ofland measuring 1.065 acres and the assessee did not fulfill theessential condition of minimum area of one acre for a single projectas laid down under Section 80IB(10) of the Income Tax Act.Consequently, the Assessing Officer disallowed the deduction grantedearlier to the assessee. 4. As against the said order of the Assessing Officer, theassessee filed an appeal before the Commissioner of Income Tax(Appeals), who upheld the findings of the Assessing Officer, therebydismissed the appeal. 5. Aggrieved by the same, the assessee filed an appeal beforethe Tribunal. 6. Before the Tribunal, the assessee contended that there weresix blocks with different names in the housing scheme and the CMDAhad granted planning permits for the different blocks separately,however, on a same date. The assessee also contended that theallottees were given approximately 1022 sq.ft of undivided share ofland and that was supported by sale deeds executed by each of theindividual. In support of their contention, the assessee relied uponthe decision of the Bombay High Court in the case of CIT v. VandanaProperties reported in 353 ITR 36 (Bom). 7. The Tribunal, on hearing both sides, came to hold that theassessee had developed a project in a land measuring 1 acre and 6.5cents and allotted 1022 sq.ft. of undivided share of land to each ofthe 48 allottees and hence, the assessee is entitled to the benefitof Section 80IB(10) of the Income Tax Act as a composite scheme. Forbetter clarity, the findings of the Tribunal reads as follows: " 5.We have heard the submissions made by therepresentatives of both sides and have perused the ordersof the authorities below. We have also examined thejudgment of Hon'ble Bombay High Court on which the ld.counsel for the assessee has placed reliance. The benefitof Section 80IB(10) has been denied to the assessee only onthe ground that the assessee has been granted separatepermits for construction of different blocks in theproject. It has not been disputed by the Revenue that theassessee is having land more than one acre as envisagedunder Section 80IB(10). As it is evident from the records,the assessee has raised construction of 6 different blocksgiving them different names for the purpose of convenienceand identification. The ld. counsel for the assessee hasplaced on record a copy of the sale deed in respect of oneof the allottees, to show that all the allottees have beengiven undivided share in land from the total area of 1.065acres. The sale deed is at pages 51 to 63 of the paper-book. At page 61 in Schedule "A" , the details of theentire property are given. A perusal of Schedule " A"shows that the land is situated at No.141, KottivakkamVillage, Saidapet Taluk, Chingelpet District within theRegistration District of Madras. The total extent of landis 1 acre and 6.5 cents, i.e. 46392 sq.ft. Each allottee gets 1022 sq.ft. undivided share of land as stated inSchedule "A". There are 8 residential units in each blockand in total there are 48 allottees. Thus, it is clearlyevident that all the allottees have been given undividedshare in total land measuring 1.065 acres. We find forcein the submissions made by the ld. counsel for the assesseethat all the 6 blocks are part of the same housing project.A further perusal of the records show that permits havebeen granted for each block on the same day which furtherfortifies the claim of the assessee that the projects arepart of the composite housing scheme." 8. The Tribunal taking note of the facts in the case of CIT v.Vandana Properties reported in 353 ITR 36 (Bom), which followed theCBDT Circular dated 4th May 2001 came to hold that the assessee iseligible to claim deduction under Section 80IB(10) of the Income TaxAct in respect of the project "Voora Prithvi" situated at KamarajSalai, Kottivakkam. 9. Aggrieved by the order of the Tribunal, the Revenue is beforethis Court raising the above mentioned questions of law. 10. Heard learned Standing Counsel appearing for the Revenue andperused the materials placed before this Court. 11. We find, on facts, there appears to be no dispute orconfusion, except the plea of the Department that the assessee didnot fulfill the requirements prescribed under Section 80IB(10) of theIncome Tax Act . On facts, we find that there is no dispute in theapproval granted by the CMDA in respect of the composite housingscheme. When the Legislature introduced 100% deduction under theIncome Tax Act, it was known that the local authorities could approvea housing project to the extent permitted under the DevelopmentControl Rules. When the project fulfils the criteria for beingapproved as a housing project, then, deductions cannot be deniedunder Section 80IB(10) of the Act, merely because the assessee hadobtained separate plan permits for the six blocks. If the conditionsspecified under Section 80-IB are satisfied, then deduction isallowable on the entire project. Since the project was approved inaccordance with Development Control Rules, the assessee would beentitled to 100% deduction on the entire project approved by theLocal Authority. 12. The above-said view was fortified by this Court in anidentical circumstance in the decision reported in (2012) 83 CCH 267ChenHC (Commissioner of Income Tax V. Shantiniketan PropertyFoundation (P) Limited, wherein, this Court referring to the decisionin the case of CIT V. Vandana Properties reported in (2012) 206Taxman 584 and following the decision of this Court dated 2.11.2012 in the case of Viswas Promoters Private Limited V. The AssistantCommissioner of Income Tax in T.C.Nos.1014 of 2009, 857 of 2010 and190 to 192 of 2012 and W.A.No.471 of 2010 held as follows: 12. The above-said view was fortified by this Court in anidentical circumstance in the decision reported in (2012) 83 CCH 267ChenHC (Commissioner of Income Tax V. Shantiniketan PropertyFoundation (P) Limited, wherein, this Court referring to the decisionin the case of CIT V. Vandana Properties reported in (2012) 206Taxman 584 and following the decision of this Court dated 2.11.2012 in the case of Viswas Promoters Private Limited V. The AssistantCommissioner of Income Tax in T.C.Nos.1014 of 2009, 857 of 2010 and190 to 192 of 2012 and W.A.No.471 of 2010 held as follows: "3. As rightly pointed out by the learned counselfor the assessee, applying the decision of the BombayHigh Court reported in (2012) 206 TAXMAN 584 CIT VVANDANA PROPERTIES, this Court had already consideredsimilar issue in T.C.Nos.1014 of 2009, 857 of 2010 and190 to 192 of 2012 and W.A.No.471 of 2010 VISWASPROMOTERS PRIVATE LIMITED V. THE ASSISTANT COMMISSIONEROF INCOME TAX dated 2.11.2012 and allowed the assessee'sappeal. We may point out her that the present assessee'sstand is on a better footing than that of the decision ofthe Bombay High Court. The facts in the decision of theBombay High Court related to the case of the assesseeputting up extra blocks in the land, where there werealready five buildings. As far as the order passed by usin T.C.Nos.1014 of 2009, 857 of 2010 and 190 to 192 of2012 and W.A.No.471 of 2010 VISWAS PROMOTERS PRIVATELIMITED V. THE ASSISTANT COMMISSIONER OF INCOME TAX dated2.11.2012, is concerned, as in the present case, severalblocks were put up in a larger area which admittedlyexceed the required area specified in Clause (a) subsection 10 of Section 80-IB viz., one acre. Thus,applying the decision of this Court rendered inT.C.Nos.1014 of 2009, 857 of 2010 and 190 to 192 of 2012and W.A.No.471 of 2010 VISWAS PROMOTERS PRIVATE LIMITEDV. THE ASSISTANT COMMISSIONER OF INCOME TAX dated2.11.2012, we have no hesitation in rejecting theRevenue's appeal, thereby confirm the order of theTribunal. 13. The above-said decision of this Court squarely applies tothe facts of the present case. In the present case also, theassessee constructed six blocks in a land measuring one acre and 6.5cents which admittedly exceed the required area specified in Clause(a) sub section 10 of Section 80-IB viz., one acre. Accordingly,following the above-said decision of this Court, this Tax Case(Appeal) stands dismissed. No costs. sl To 1. The Income Tax Appellate Tribunal Madras 'C' Bench2. The Commissioner of Income Tax (Appeals)-III, Chennai.3. The Asst.Commissioner of Income-tax, Company Circle-III(4), Chennai. 4.The Deputy Commissioner of Income TaxCompany Circle III(4), Chennai -34 5.The Commissioner of Income Tax, Chennai. 1 cc to Mr.T.Ravikumar ,Advocate, SR.No.12882 Tax Case (Appeal) No.56 of 2015 jsv(co)pmk.18.3.2015