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Income Tax Appellate Tribunal, BENCH “B”, KOLKATA
Before: Shri Mahavir Singh, JM & Shri M.Balaganesh, AM]
ORDER Per Shri M.Balaganesh, AM 1. These appeals of the revenue arise out of the order of the Learned CITA in Appeal No.381/CIT(A)-XII/10(1)/2011-12 dated 30.04.2012 for the Asst Year 2009- 10 arising out of the orders of the Learned Assessing officer framed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). As the issues involved are identical in nature in both the appeals, they are disposed off together by way of a common order for the sake of convenience.
The only issue to be decided in these appeals is as to whether the Learned CITA is correct in directing the Learned AO to grant deduction u/s 80IB (10) of the Act to the tune of Rs. 99,51,920/- in the facts and circumstances of the case.
The brief facts of this issue is that the assessee with other land owners had developed and constructed the building with one developer M/s Avani Griha Nirman
M/s. Keshavanandan Investment & Traders Pvt. Ltd.. A.Yr.2009-10 P Ltd pursuant to a joint development agreement entered into between them for developing the land measuring 3 bighas 12 cottahs and 12 chittacks which is more than one acre at No.1, Dr. Radha Gobinda Nath Sarani, Kolkata – 700033. The building plan was sanctioned by the local authority on 29.8.2005 in the name of the following six owners:- Baghi Estates & Traders Ltd Keshavanandan Investment & Traders Pvt Ltd Arens Estate Pvt Ltd Duars Commercial Company Ltd Sahaya Properties & Investments Pvt Ltd Associated Pigments P Ltd 3.1. The housing project was completed vide completion certificate dated 22.9.2007 which is within the four years from the date of approval of the local authority. The assessee being one of the land owners and being an undertaking engaged in the housing project with the aid of a developer claimed u/s 80IB(10) of the Act in respect of its respective share of allocations. This claim was rejected by the Learned AO and on first appeal, the Learned CITA granted the same. Aggrieved, the revenue is in appeal before us.
3.2. Shri. Amitabh Choudhuri, the Learned DR argued on behalf of the revenue and Shri.M.Satnaliwala, FCA, the Learned AR argued on behalf of the assessee.
3.3. The Learned DR vehemently supported the order of the Learned AO. In response to this, the Learned AR argued that the provisions of section 80IB(10) of the Act uses the word undertaking engaged in housing projects and accordingly the assessee along with other co-owners of land had jointly entered into a development agreement with M/s Avani Griha Nirman P Ltd and had jointly undertaken the housing project and hence each party is entitled for deduction u/s 80IB(10) of the Act in respect of their respective share of allocations. He argued that the disallowance made by the Learned AO on the ground that the area of land in the hands of each land
M/s. Keshavanandan Investment & Traders Pvt. Ltd.. A.Yr.2009-10 owner did not exceed one acre and the building was not developed by the assessee himself is misplaced.
3.4. We have heard the rival submissions and perused the materials available on record. It is seen from the development agreement dated 18.10.2004 that owners have contributed their land towards the development of the housing project on the said premises and had appointed the Developer as the licensee, for implementation of the project as per the agreed terms and conditions and the promoters and developer will be entitled to the benefit of section 80IB deduction in respect of their respective allocations. 3.5. It is pertinent to understand the provisions of section 80IB(10) of the Act in the context of this case in the following table:-
Name of the Developer Avani Griha Nirman Pvt Ltd 2. Date of entering into Development agreement 18.10.2004 3. Date of seeking building permission from The Calcutta Municipal Corporation – Building Department 29.8.2005 (valid for 5 years)
Date of completion of project Notice of completion dt 29.8.2007 5. Date of obtaining completion certificate from The Kolkata Municipal Corporation – Building Department 22.9.2007
List of owners of land Baghi Estates & Traders Ltd Keshavanandan Investment & Traders Pvt Ltd Arens Estate Pvt Ltd Duars Commercial Company Ltd Sahaya Properties & Investments Pvt Ltd Associated Pigments P Ltd 7. Extent of land held by all owners put together 3 bighas 12 cottahs and 12 chittacks which is more than one acre
M/s. Keshavanandan Investment & Traders Pvt. Ltd.. A.Yr.2009-10 8. Whether the area of each flat Exceeded 1500 sq.ft No 9. Extent of commercial establishments, if any, in the said Housing project and if so, Percentage of aggregate Built up area No commercial establishment
Whether more than one Residential unit is allotted to a person or to any person who is interested with him No 3.6. It is observed that the building plan was sanctioned by the local authority on 29.8.2005 in the name of all the six owners. This fact is evident from the approval letter itself wherein it is clearly mentioned as M/s Associated Pigments P Ltd and five Others (emphasis supplied). Similarly the completion certificate for the housing project was obtained from the local authority on 22.9.2007 in the name of M/s Associated Pigments P Ltd and others (emphasis supplied). Hence it can safely be concluded that the assessee herein i.e Keshavanandan Investment & Traders Pvt ltd and Arens Estate Pvt Ltd are also parties which had obtained the approval from the local authority for the plan permission as well as the completion certificate for the housing project within 4 years from the date of approval of the local authority. It is seen that the provisions of section 80IB(10) of the Act prohibits grant of deduction thereon only where the undertaking executes the housing project as a works contract. In the instant case, the assessee along with others has not been awarded any works contract. They in the capacity of land owners had jointly decided to develop the housing project with the aid of a developer and claimed deduction u/s 80IB(10) in respect of their respective share of allocations.
3.7. We hold that the provisions of section 80IB(10) is undertaking specific. Pursuant to the entering of development agreement by the land owners with M/s Avani Griha Nirman P Ltd, an undertaking had come into existence consisting of six
M/s. Keshavanandan Investment & Traders Pvt. Ltd.. A.Yr.2009-10 land owners and one developer. It is seen that the said undertaking developed and constructed a residential complex and the profit of the undertaking was divided between the six owners and the developer as per the agreement. It is also seen that as per the agreement, developer had agreed to contribute the cost to be incurred towards construction of the building and developer got 50% share and the balance 50% was shared between six owners as per their share of ownership of land. In other words, the owners had contributed the land and the developer had contributed the cost of construction and as such the housing project was constructed and developed by the undertaking. It is pertinent to note that M/s Avani Griha Nirman P Ltd is not a contractor. If it were a contractor, then deduction u/s 80IB(10) of the Act is not available in view of the fact that the owners have to pay consideration for construction of the building carried out by Avani Griha Nirman P Ltd. Hence it can safely be concluded that M/s Avani Griha Nirman P Ltd is a joint developer along with the owners of land and accordingly the said undertaking which came into existence pursuant to the development agreement had duly undertaken the housing project within the stipulated time of approval granted by the local authority.
3.8. It is seen that the revenue in one of the land owners case namely Duars Commercial Company Ltd for the Asst Year 2010-11 had accepted the claim of deduction u/s 80IB(10) for the same housing project u/s 143(3) proceedings dated 29.1.2013.
3.9. The facts of the case are also covered by the decision of the Mumbai Tribunal in the case of ACIT vs Bombay Real Estate Development Company (P) Ltd reported in (2011) 64 DTR 137 vide order dated 3.6.2011 , wherein it was held that : “Section 80IB(10) of the Act confers deduction to an undertaking “developing and building housing projects”. Though the word “develop” appearing in the sub-section has not been defined in the Act, it should mean, the activities which a person undertakes in order to prepare the land, both factually and legally, for putting up housing projects thereon. Assessee having entered into an agreement with another company for jointly developing a housing project on its land, undertaking the responsibility of obtaining all statutory clearances, permissions, etc for putting up the housing project on the land as well as the responsibility to remove all structures and unauthorized occupants of the land, and agreeing to share the gross sale proceeds of the housing project with the other company in an agreed ratio, the activities undertaken by the assessee are M/s. Keshavanandan Investment & Traders Pvt. Ltd.. A.Yr.2009-10 activities relating to development of the housing project and , therefore, it is to be treated as a developer entitled to deduction u/s 80IB(10) of the Act.” 3.10. We hold that all the conditions stipulated in section 80IB(10) of the Act have been duly complied with by the assessee herein and in view of the fact that the revenue had also granted deduction u/s 80IB(10) of the Act in respect of the same housing project in the case of another land owner i.e Duars Commercial Company Ltd and in view of the judicial precedent relied upon hereinabove, we are not inclined to interfere with the order of the Learned CITA on this ground. 3.11. In the result, the appeals of the revenue in / Kol / 2012 and 1082 / Kol / 2012 are dismissed. Order pronounced in the court on 16.09.2015.
Sd/- Sd/- [Mahavir Singh] [M.Balaganesh] Judicial Member Accountant Member Date: 16.09.2015. R.G.(.P.S.) Copy of the order forwarded to:
1. 1. M/s. Keshavanandan Investment & Traders Pvt. Ltd., 4th Floor, E-Block, R.No.1347, 9/12, Lal Bazar Street, Kolkata-700001. M/s. Arens Estate Pvt.Ltd., Vasundhara, 4th Floor, 2/7, Sarat Bose Road, Kolkata-700020. 2 The I.T.O., Ward-10(1), Kolkata.
3. The CIT-IV, Kolkata, 4. The CIT(A)-XII, Kolkata.