TaxTMI 
TaxTMI 
2016 (3) TMI 725
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....the AO as under: "3(a) Shri U.Chandraprakasam & Smt. U. Nagamalleswari wlo Sri U Chandraprakasam, have purchased the piece and parcel of vacant land of an extent of 44627 sq.ft comprised of Plot Ns.1-6, 19-24, 25-33 and 36 to 43 in Survey Nos 33/283 and 3/284 1 50 24 in ''AV Gardens" Mugalivakkam, Chennai-116 forming part of an approved layout, layout having been granted by the CMOA vide PPOILON0.41/2006 dated 12/04/2006 by an absolute deed of sale dated 8/2/2007. The original vendors of the plot had already executed a Gift deed on 30/3/2006 in favour of the Commissioner, Kundrathur Panchayat Union, in respect of part of the said lands namely 2935 sq.mtrs reserved for roads in the said layout. 3(b) Later Shri U.Chandraprakasam & Smt. U. Nagamalleswari wlo Sri U Chandraprakasam forms a Partnership firm named Malles Rajarajeswari vide partnership deed dated 28/3/2007. 3(c)Shri U.Chandraprakasam & Smt.U.Nagamalleswari, in individual capacity sells half the undivided share of a plot/ or entire plot in the already approved layout ranging from a minimum of 750 sq.ft. to 1590 sq.ft. and also undivided share in common area to the extent of 140 sq.ft. to 1....
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....ary building category with Ground Floor plus 1 for which completion certificate is not mandatory. 3(g) The intention of the assessee firm as per its own advertisement of the firm in the website is as under: "Experience the freedom of Independent Life" The benefits of an independent life start around your home. Your home at Malles A V gardens comes fitted with its own terrace and a small garden, all encased within one compound wall gate and independent water tank superbly serves you even in dry weather". The above amply gives clear picture of its activity". 2.1 According to the Assessing Officer, the partners of the assessee after purchase of land as well as after getting approval for housing project from the competent authority formed the partnership, which in turn entered into construction agreements with the purchasers of independent/twin houses forming part of the said housing project. According to the AO, the method of executing the housing project was not in accordance with the provisions of sec.80IB(10) of the Act. Further, he observed that the assessee has not submitted its completion certificate. Aggrieved, the assessee went in appeal ....
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....4.1 The ld. AR. also submitted that the partners of the assessee after purchase of the land as well as after getting the approval for developing a housing project from the competent authority formed the partnership which in turn entered into construction agreements with the purchasers of independent/ twin houses forming part of the said housing project. According to the Assessing Officer, the said method o! executing .the housing project was not in accordance with the provisions of section 80IB(10) of the Act. 4.2 It was submitted that there was no prescribed method of execution of a housing project inasmuch as the method adopted by the Appellant was not prohibited by law and the ultimate purpose was to develop a housing project on the cumulative consideration of the facts of the case. Therefore, the findings of the lower authorities may be rejected as not sustainable in law. 4.3 Further, according to the Revenue authorities, the approvals obtained separately for each of the houses comprised in the said housing project could not be construed as a project developed in one acre of land inasmuch as the authorities construed the each of the houses in view of the independent appro....
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....nly part of a whole." The ld. AR also relied on another decision of its Coordinate Bench in the case of Deputy CIT vs. S.Ravi in I.T.A.Nos, 1784 to 1786/MDS/MAD/2008 dated 19.1.2010. In view of this, the multiplicity of approvals should not be construed as a bar to make the said claim of deduction. 4.7 Further, the ld. AR submitted that the completion certificate was not mandatorily required/to be issued in view of the execution of the housing project as an ordinary building category with ground floor plus one. The housing project under consideration was executed in a different manner and the individual houses/twin houses were offered and sold to the various customers after obtaining individual approvals from the competent authority. According to the ld. AR, Development Regulations for Chennai Metropolitan would support the case of the assessee for non-furnishing of the completion certificate and accordingly the said condition for furnishing of the completion certificate be considered as complied with within the scope of section 80 IB (10) of the Act. 4.8 Regarding the violation of maximum built-up area by the said section in relation to some of the houses was taken into cons....
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....igh Court. Where the Jurisdictional High Court has dismissed the appeal against the order of the Tribunal holding that no substantial question of law arises, the said decision of the High court is a decision on merits confirming the findings arrived at by the Tribunal and it is not possible to argue that the High Court has not considered the merits of the issue decided by the Tribunal. An appeal always raises question arising out of the merits of an issue. Whether the High Court discusses a case in very many words or dismisses the appeal shortly stating that no question of law arises, the judicial result is the same that the High Court has upheld the reasonings and findings given by the Tribunal in its order. The judgment of the Calcutta High Court rendered in the case of CIT vs. Bengal Ambuja Housing Dev. Ltd. in IT Appeal No.4S8 of 2006, dt. 5th Jan., 2007 is a judgment directly on the issue upholding the view of the Calcutta 'C' Bench of the Tribunal that a proceedings rata deduction is permissible under s. 80-IB(10). As there is no direct decision of the Jurisdictional High Court still available on the subject, the judgment of the Calcutta High Court must be followed. T....
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....ers. The luxury amenities such as swimming pool, community hall etc, are common to the layout owned by M/s. Malees Rajarajeswari and other separate adjacent layout owned by another firm called M/s. A.V.Gardens. 6.1 The so called, luxury amenities such a swimming pool, community hall etc. are common to the layout owned by Malles Rajarajeswari and other separate adjacent layout called Av Gardens. The club house having facilities such as Gym, Indoor Games & Multipurpose hall is located in Plot No.1 in Malles Rajarajeswari. Where approval has been obtained as twin houses combined in one plot such as 1A & 1B which according to the assessee has the facilities such as Gym, Indoor Games & Multipurpose hall for both A.V.Gardens & Malles Rajarajeswari. 6.2 Further, as far as the swimming pool is concerned it is built on Plot Nos.23 & 24 in the other adjacent layout Malles AV Gardens. As per the assessee's own words, "We have just utilized the empty land which we have converted as a swimming pool. Since the area being controlled by Panchayat, no separate plan approval is required for swimming pool. 6.3 Later the assessee-firm M/s. Malles Rajarajeswari enters into a separate construct....
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....n construction agreement with prospective buyers to construct the houses as approved plan. Now, the question is whether any works contract is involved. The contention of the Revenue is that the prospective purchasers awarded the works to the assessee and as such, it is only works contract. We are unable to accept the contention of the Revenue. When the land was owned by the partners and the building permission was obtained in their name from the local body to construct the building and thereafter forming the partnership, the assessee has constructed the building as per the agreed terms of the construction as per the approved plan and handed over the physical possession of the property to the prospective buyers. The assessee has constructed buildings as per the approved plan and created infrastructure facilities like parking area, drainage facility, drinking water facility, fire extinguishment, lift swimming pool etc. These facilities cannot be provided by the individual purchaser of a villa or house. The assessee being the owner of the land, as there is no difference between the partners and the firm, it has developed the housing project and constructed the flats by creating all in....
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....ed the building as per the approved plan and provided various amenities common to all people. Therefore, looking into the entire transaction, as such, it is a development of housing project by the assessee itself and no one awarded any work to the assessee. Even if, there is an enabling clause in the partnership deed to do the works contract, that cannot be a reason to conclude that the assessee undertook works contract. Further, in similar circumstances, the Tribunal, in the case of Sanghvi & Doshi Enterprises v. ITO (131 ITD 151)(Chen) has taken a similar view, wherein it was held that where the assessee entered into a joint development agreement to build up a housing project on land owned by some other person and assumed all risks that are assumed by a developer, then the assessee was entitled to deduction under sec.80IB of the Act. The relevant portion is as follows : "16. The Hon'ble Madras High Court, in the case of CIT vs. Sanghvi & Doshi Enterprise reported in (2013) 50 (I) ITCL 303 (Mad-HC) held that where the assessee entered into a joint development agreement to build up a housing project on land owned by some other person and assumed all risks that are assu....
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....nt that what the assessee had undertaken is not a mere construction, but developing and constructing of a project, which qualifies for a deduction under section 80IB. As rightly pointed out by counsel appearing for the assessee, a bare reading of section 80-IB shows that the deduction contemplated therein is oriented towards the project and not with reference to an assessee. It is no doubt true that the project has to be done by the assessee, but then, when the deduction is specific enough as regards the particular activity, one fails to see how one should assume any significance in the matter of considering a deduction." 17. The Hon'ble Madras High Court, in the case of CIT vs. Subba Reddy (HUF) (2015) 121 DTR 115 (Mad.), held that for claiming deduction under sec. 80IB(10), it is not necessary that the assessee is engaged in the business of developing and construction of housing project should be the owner of the land. The relevant portion is reproduced hereinunder:- "13. In the absence of any specific definition for the term buildup area during the relevant period, the reasoning of the CIT(A) which was confirmed by the Tribunal is justified. Nevertheless, w....