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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) – 5, Chennai, dated 10.05.2013 and pertains to assessment year 2010-11. The assessee has also filed cross-objection to support the order of the CIT(Appeals). Therefore, we heard the appeal of the Revenue and cross-objection of the assessee together and disposing of the same by this common order.
Shri Shiva Srinivas, the Ld. Departmental Representative, submitted that the assessee-partnership firm developed and built a housing project known as “Chettinadd Green Ville” at Perumbakkam, Sholinganallur. In fact, the assessee acquired a land to the extent of 1.64 acres consisting of 32 plots at Perumbakkam Village in the outskirt of Chennai city. After acquisition, the assessee designed a housing project consisting of housing units in identical nature. In fact, the assessee obtained lay out approval of local authority for construction of identical housing units with same elevation, colour, material, etc. According to the Ld. D.R., the land was also sub-divided into 32 individual plots for the purpose of developing the housing project. After obtaining necessary approval of local authorities for construction of housing project, the assessee constructed residential units and sold to different individuals. In fact, the assessee developed basic infrastructure facilities like road, drainage, network, collection sump, public park, children’s park, etc. The Ld. D.R. submitted that the assessee, in fact, constructed 38 individual housing units. The Assessing Officer found that the building plan was obtained from Perumbakkam Panchayat for construction of individual villas and not for housing project as a whole. According to the Ld. D.R., In fact, building plan was obtained on various dates. Each plan has different proceeding. The Assessing Officer found that composite approval was not obtained by the assessee. According to the Ld. D.R., the completion certificate was obtained on different dates from Perumbakkam Panchayat. The Assessing Officer disallowed the claim of the assessee by observing that there was no composite development of housing project and it is only a construction of individual villas.
However, on appeal by the assessee, the Ld. D.R. submitted that the CIT(Appeals) found that the assessee conceived the project, developed the same, obtained approval of competent authority and executed the same. It is not in dispute that the project was developed in an area more than one acre of land. The CIT(Appeals) has also found that the assessee has constructed individual housing units, therefore, it cannot be said that the assessee has promoted only residential plots and not residential units. Therefore, he allowed the claim of the assessee. The Revenue’s contention before this Tribunal is that the building plan was obtained individually for each residential unit and not for the whole project in “Chettinadd Green Ville”. When the assessee obtained individual building approval for 38 villas separately, the whole project cannot be considered as housing project. According to the Ld. D.R., it is only promotion of lay out and not development of housing project. Hence, according to the Ld. D.R., the CIT(Appeals) ought not to have allowed the claim of the assessee.
On the contrary, Shri G. Baskar, the Ld.counsel for the assessee, submitted that the assessee admittedly acquired 1.64 acres of land for the purpose of developing a housing project. Since the area was more than one acre, the assessee is eligible for exemption under Section 80-IB of the Income-tax Act, 1961 (in short 'the Act'). Referring to Section 80-IB(10) of the Act, the Ld.counsel submitted that Section 80-IB(10) of the Act clearly says that the amount of deduction in the case of undertaking developing of building housing projects approved before 31.03.2008 by a local authority shall be 100% of the profits derived in the previous year.
According to the Ld. counsel, the word “housing project” is not defined in the Income-tax Act. The housing project shall be approved by the local authority. One of the requirements of Section 80-IB(10) of the Act is that the housing project shall be on the size of plot of land which has minimum area of one acre. The further condition is that the residential units shall have maximum built-up area of 1000 sq.ft. if it is in the city of Delhi or Mumbai and 1500 sq.ft. in other places. The next condition is that the built-up area of shops and other commercial establishments included in the housing project does not exceed 3% of the aggregate built-up area. The other condition for allowing deduction under Section 80-IB(10) of the Act is not more than one residential unit is to be allotted to any person not being an individual. Section 80-IB(10) of the Act does not require that the assessee should not develop any independent villa. The Assessing Officer was under the misconception that the assessee has to develop only multistory residential unit. The word “housing project” stands for a housing project which may be a multistory residential unit or it may be a group of individual houses.
In this case, according to the Ld. counsel, the assessee decided to construct 38 independent villas in a land of 1.64 acres. Therefore, it is a housing project within the meaning of Section 80-IB(10) of the Act. According to the Ld. counsel, so long as there is no restriction for construction of independent villas as housing project, the Assessing Officer cannot confine himself to believe that only construction of multistoried building.
5. Referring to the agreement said to be entered into between the assessee and the purchaser, the Ld.counsel for the assessee submitted that the plot of land was sold only to the individual who agreed to purchase the houses constructed in the land. The land was not sold independently to any individuals. According to the Ld. counsel, what was sold by the assessee is a land along with building. If anybody does not want to construct house and intends to purchase only land, the assessee would not sell the land to such individuals. In all cases, what was sold by the assessee is land along with independent villa constructed thereon. Therefore, according to the Ld. counsel, at any stretch of imagination, it cannot be said what was developed by the assessee is a lay out and not the housing project. Had the assessee sold the land alone to any individual, the matter would stand in different footing. In such case, the Revenue may claim what was developed by the assessee is land and not the housing project. In this case, the material available on record suggests that what was sold by the assessee is only housing project. Therefore, according to the Ld. counsel, the Assessing Officer is not justified in disallowing the claim of the assessee, hence, the CIT(Appeals) has rightly allowed the claim of the assessee under Section 80-IB(10) of the Act.
We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer disallowed the claim of the assessee under Section 80- IB(10) of the Act on the ground that what was developed by the assessee is a lay out and not the housing project. We have carefully gone through the agreement said to be entered by the assessee and buyer of the property and also copies of the sale deed available in the paper-book. A bare reading of the agreement and sale deed clearly show that the assessee acquired 1.64 acres of land and developed a composite housing project. The assessee conceived the idea of housing project, designed, developed and executed the project in a systematic manner. The assessee admittedly constructed 38 independent villas after obtaining necessary approval of Perumbakkam Panchayat. It is not in dispute that Perumbakkam Panchayat is the competent authority to grant approval for construction of independent villas. As rightly submitted by the Ld.counsel for the assessee, what is required to be developed is a housing project. The Assessing Officer misconstrued the term “housing project” to a multistory residential building. A housing project can be an independent villa or it may also be multistory residential unit. If the assessee developed independent villas in a land exceeding more than one acre, this Tribunal is of the considered opinion that the claim of the assessee cannot be rejected. When the assessee developed a composite project of laying out of land of more than one acre and constructed individual villas thereon, and sold the independent villas together with land, this Tribunal is of the considered opinion that the assessee complied with all the conditions required for claiming exemption under Section 80-IB(10) of the Act. Therefore, the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
The cross-objection of the assessee is only to support the order of the CIT(Appeals). Therefore, it becomes infructuous.
In the result, both, the appeal of the Revenue and the cross- objection of the assessee are dismissed.
Order pronounced on 28th October, 2016 at Chennai.