TaxTMI 
TaxTMI 
2013 (3) TMI 148
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....0) and assessee ought have produced Completion Certificate from Chennai Metropolitan Development Authority (CMDA) itself. Further, as per Revenue, the assessment for the impugned assessment year was completed on 30.12.2008 and the completion mentioned was never produced by the assessee much prior to that date. Revenue is also aggrieved that ld. CIT(Appeals) relied on decisions in assessee's own case for assessment years 2004-05 and 2005-06 for ruling in favour of assessee, when appeals stood preferred against such orders by the Department before this Tribunal and Hon'ble jurisdictional High Court. 5. Short facts apropos are that assessee, engaged in the business of real estate and construction, had for a housing project named 'Arihant Vaikunth' claimed deduction under Section 80-IB Rs. 2,92,85,827/-, in its return for the impugned assessment year. Separate P&L account was prepared for such project and income recognized therein on percentage completion method. Assessing Officer noted that plan permission for building was taken from CMDA on 14.11.2003 and therefore, the project had to be completed before 31.3.2008 by virtue of sub-clause (i) of clause(a) to Section 80-IB(10) of the ....
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....he assessee deduction under Section 80-IB(10) of the Act as claimed by it. 8. Now before us, learned D.R. strongly assailing the order of ld. CIT(Appeals), submitted that CMDA had given initial permit and therefore, such authority alone could give Completion Certificate. As per learned D.R., the Completion Certificate issued by Corporation of Chennai could not be considered as a Completion Certificate issued by local authority, as required under Explanation (ii) to clause (a) of sub-section (10) of Section 80-IB of the Act. Further, as per learned D.R., approval given by Corporation of Chennai could not be considered as the assessee had to obtain approval of plan from CMDA and then only it could be said that there was proper compliance of sub-section (10) of Section 80-IB of the Act. 9. Per contra, learned A.R. strongly supported the order of ld. CIT(Appeals) and submitted that sufficient records were produced by the assessee and the Revenue had taken no ground that there was any violation of Rule 46A of Income-tax Rules, 1962. 10. We have perused the orders and heard the rival contentions. We find that the A.O. had addressed a letter to CMDA with regard to completion of the pr....
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....t the Chennai Corporation was issuing building permits to all the buildings including CMDA's special buildings, multi-storey buildings and lay outs after taking over the land left over for road portion and the land reserved for open space, after the planning permits were issued by CMDA. In the case in hand, it would be foolhardy to presume that the CMDA was the only local authority for the purpose of giving permits for buildings and Corporation of Chennai could not be considered as a local authority at all. Further, in the earlier years, based on the similar facts, appellate authorities had allowed deduction under Section 80-IB(10) of the Act to the assessee. Learned D.R. was not able to produce any adverse order of any higher authority for such earlier years. We are, therefore, of the opinion that ld. CIT(Appeals) was justified in directing grant of deduction under Section 80-IB(10) of the Act. 11. Ground No.2 taken by the Revenue stands dismissed. 12. The next ground raised by the Revenue is regarding restriction of disallowance made under Section 14A of the Act to 5% dividend income. 13. Short facts apropos are that assessee had earned a dividend income of Rs. 2,13,201/- whic....
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....g Officer could for earlier years also make a disallowance for expenditure in relation to investments made for earning tax-free income, by application of Section 14 of the Act. He, therefore, was of the opinion that a disallowance of Rs. 50,000/- would be reasonable against the dividend income of Rs. 2,13,201/-. Thus, the disallowance was whittled down from Rs. 70,38,725/- to Rs. 50,000/-. 15. Now before us, learned D.R., assailing the order of ld. CIT(Appeals), submitted that ld. CIT(Appeals) had simply accepted the claim of the assessee that no expenditure was incurred for its investments in share application money. According to him, against the substantial amount of share application money invested by the assessee, expenses would have definitely been incurred for proper administration of such funds and watching the utilization thereof. The purpose of such investment was definitely to earn dividend income. Therefore, the disallowance calculated under Rule 8D was appropriate though the said investment might not have resulted in any substantial income in the impugned assessment year. 16. We have perused the orders and heard the rival contentions. The A.O. has clearly noted that....
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....acets to the arguments of the Revenue. First is that the assessee was only executing a works contract and hence, not eligible for deduction under Section 80-IB(10) of the Act. Second is that certificate given by Corporation of Chennai was not sufficient but, assessee ought have produced Completion Certificate from CMDA for claiming such deduction. 23. In so far as second facet of the argument is concerned, the issue has already been considered by us in Revenue's appeal for assessment year 2006-07. It has been held that Completion Certificate given by Corporation of Chennai was good enough to be considered as Completion Certificate given by a local authority as envisaged under Explanation (ii) to clause (a) of Section 80-IB(10) of the Act. This leaves us with only the first facet of the argument which is whether assessee was only a works contractor or was an undertaking developing and building housing projects. 24. Facts relating to the issue are that assessee had claimed deduction under Section 80-IB(10) of the Act for the impugned assessment year for two building projects named Arihant Escapade and Arihant Vaikunt. Assessee also had other projects on which there was no claim of ....
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....d incurred infrastructure cost including development cost, construction of the building and obtained all related permits and licences required for the construction. However, the Assessing Officer was not impressed. According to him, once assessee had sold the land along with other owners, the purchasers had become the owners of the undivided share of the land and by entering into a construction agreement with such purchasers, assessee was acting as contractor for construction of building. The A.O. also noted that assessee had claimed unreasonably high profits in respect of such projects. He, therefore, denied the claim of the assessee in so far it related to the project Arihant Escapade. 25. For Arihant Escapade project, the A.O. denied the claim of deduction under Section 80-IB(10) for a reason that the Completion Certificate of the construction for the said project was not by the local authority but by Corporation of Chennai. A.O. also noted that in respect of Arihant Vaikunt also, assessee had claimed disproportionate profits. 26. In its appeal before ld. CIT(Appeals), argument of the assessee was that the project Arihant Escapade was developed in the land owned by one M/s Cen....
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....ate issued by Corporation of Chennai could not be considered sufficient enough for allowing a deduction under Section 80-IB(10) of the Act. 29. Per contra, learned A.R. strongly supported the order of ld. CIT(Appeals) and again placed strong reliance on the decision of coordinate Bench of this Tribunal in the case of C. Subba Reddy (supra). 30. We have perused the orders and heard the rival contentions. Claim of the assessee for deduction under Section 80-IB(10) of the Act was not allowed by the A.O. for three reasons. First was that the projects on which the claim was preferred had disproportionate profits when compared to projects on which there was no such claim. Second was that assessee was only a works contractor and not the developer. Third was that the Completion Certificate issued was not of a local authority but only of Corporation of Chennai. The third issue has already been dealt with by us in appeal filed by the Revenue for assessment year 2006-07 at para ten above. We have held that Corporation of Chennai would suffice the requirement of Explanation (ii) to clause (a) of Section 80-IB(10) of the Act. 31. In so far as the issue of disproportionate profit is concerned....
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.... the assessee that absolute power was given to it through a Power of Attorney and possession was delivered to it for construction of the flats has not been disputed. It is also not disputed that assessee had moved the CMDA as well as Corporation of Chennai for approval of the plans. All the activities like selling and developing of the projects, including marketing and advertising, were done by the assessee only. Just because assessee had transferred the undivided share of land to prospective buyers of the flats for construction of flats separately, it cannot be concluded that assessee was only a works contractor. The totality of the facts would show that the assessee itself was developing the projects and incurring all expenditure in this regard. We are, therefore, of the opinion that ld. CIT(Appeals) was absolutely justified in relying on the decision of coordinate Bench of this Tribunal in the case of C. Subba Reddy (supra). Relevant paras of that order as reproduced by ld. CIT(Appeals), is once again reproduced hereunder for brevity:- "In income-tax, if the assessee takes possession of the land after paying full consideration, the definition of the term 'transfer', as defined ....