Commissioner of Income TaxChennai v. M/s.Ceebros PropertyDevelopment (P) Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 02.11.2012CoramThe Honourable Mrs.Justice CHITRA VENKATARAMANandThe Honourable Mr.Justice K.RAVICHANDRABAABUT.C.(A). Nos.1366 of 2008 and 889 of 2009Commissioner of Income TaxChennai... Appellant in bothTC(Appeals)-vs-M/s.Ceebros PropertyDevelopment (P) Ltd19,III Cross StreetRaja AnnamalaipuramChennai-600 028... Respondent in both TC (Appeals)Tax Case (Appeals) under section 260A of Income Tax Act againstthe order of the Income Tax Appellate Tribunal, Madras 'A' Bench,dated 31st March 2008 in ITA.No.406/Mds/2007 and 28.04.2009 inITA.No.1003/Mds/2008 against the order of the Commissioner of IncomeTax, Central 1, Chennai-34 dated 15/12/2006 in C.No.1523/2/C-I/06-07.Against the order of the Commissioner of Income Tax (Appeals)VIII, Chennai 600 034 in ITA.No.107/07-08 dated 14/2/2008Against the Assessment order of the Deputy Commissioner ofIncome Tax Central Circle IV 3, for the Assessment year 2003-2004dated 26/12/2005 in P.A.No./G.T.No./AAAC CO 30524/3C and theAssessment order of the Assistant Commissioner of Income Tax, CompanyCircle I(3), Chennai-34 for the Assessment year 2003-2004 dated22/10/07 in G.T.No./PA.No.AAACC 3052-H respectively. https://hcservices.ecourts.gov.in/hcservices/ For Appellant:Mr.T.Ravikumar Standing Counsel for I.T.DeptFor Respondent:Mr.Jehangir D.J.MistriSenior Counselfor M/s.A.S.SriramanC O M M O N J U D G M E N T(Judgment of the Court was made by CHITRA VENKATARAMAN ,J)The Revenue is on appeal as against the order of the Income TaxAppellate Tribunal, Madras 'A' Bench, dated 31st March 2008 inITA.No.406/Mds/2007 and order dated 28.04.2009 inITA.No.1003/Mds/2008 relating to the assessment year 2003-04 raisingthe following questions of law:-"1. Whether in the facts and circumstances of thecase, the Tribunal was right in holding that theCommissioner was not justified in revising the assessmentorder under Section 263 ?2. Whether on the facts and circumstances of thecase, the Tribunal was right in allowing the benefit ofclaim under Section 80IB(10) when the assessee is not adeveloper, but only a builder, when the eligibility todeduction u/s.80IB(10) is conferred for developing andbuilding housing projects ? "2. It is seen from the facts narrated therein that the assesseeis engaged in the business of developing and construction of housingprojects. It entered into sale agreement dated 11th December 2001with four parties, who were all the partners of M/s.Ashok Industries.The agreement of sale empowered the assessee to deal with theproperty as it wanted. The property sold and covered under theagreement is a vacant area to an extent of 20.59 groundsapproximately comprised in Survey Nos.185/2 and 187/2 in VelacheryVillage, Chennai. https://hcservices.ecourts.gov.in/hcservices/

3. Based on the agreement, the assessee devised a housingproject for which it sought for planning permission applied throughone of the power agents of the vendors. In the mean time, it alsotook charge for sale of undivided share in the property. It isstated that a power of attorney was entered into between the assesseeand the vendors towards making the application for sanction and otherstatutory requirements. 4. The Assessing Officer agreed with the assessee on the claimfor deduction under Section 80 IB of the Income Tax Act, 1961(hereinafter called as the "Act"). In exercising its power underSection 263 of the Act, the Commissioner of Income Tax (Appeals)viewed that the order of the Assessing Officer granting deductionunder Section 80 IB of the Act was erroneous and prejudicial to theinterest of Revenue. Thus, the order of the Assessing Officer underSection 80 IB of the Act was sought to be revised on the ground thatthe planning permit was granted to V.K.Murthy, who happened to be oneof the owners of the property. Thus, the assessee was not the ownerof the property and the intention of the owners of the land was todevelop the land and construct the building, and that the assesseewas only acting as a builder, who assisted the land owner in theconstruction. In the circumstances, the assessee's claim wasnegatived and directions were issued to the Assessing Officer torevise the order of assessment accordingly. 5. Aggrieved by this, the assessee went on appeal before theIncome Tax Appellate Tribunal, who held that when the AssessingOfficer has taken one view based on the decision of the AhmedabadBench of Income Tax Appellate Tribunal, the possibility of yetanother view would not empower the Commissioner of Income Tax(Appeals) under Section 263 of the Act to treat the order of theAssessing Officer as erroneous and prejudicial to the interest ofRevenue. Thus, applying the decision in the case of CIT Vs. MaxIndia Ltd reported in (2007) 295 ITR 282 (SC), the Income TaxAppellate Tribunal held that the order passed by the Commissioner ofIncome Tax (Appeals) is without jurisdiction. 6. Apart from that, even on merits, the Tribunal agreed with theassessee that for the purpose of claiming deduction under Section80IB(10) of the Act, it is not necessary that the assessee should bethe owner of the property. The Tribunal further held that since theassessee was an undertaking engaged in developing and buildinghousing projects and the same being approved by the local authority, https://hcservices.ecourts.gov.in/hcservices/ the assessee is entitled to relief under Section 80 IB(10) of theAct. Even though the approval was in the name of the individual, whobeing a party to the sale agreement, the same cannot be held againstthe assessee. In the light of the above, the assessee's appeal wasallowed. 7. Aggrieved by this, the Revenue is on appeal in the above TaxCases. We may point out herein that we had already consideredsimilar issue on 01.11.2012 in T.C.Nos.581 and 582 of 2011 and 314and 315 of 2012 (The Commissioner of Income Tax, Business Ward XV (3)Chennai Vs. M/s.Sanghvi and Doshi Enterprise, No.560, 3 H CenturyPlaza, Anna Salai, Teynampet, Chennai-18) in favour of the assessee.We have held that for the purpose of considering the deduction, it isnot necessary that the assessee, engaged in developing andconstruction of housing project, should be the owner of the property.8. The assessee engaged in developing and building the housingproject is entitled to relief under Section 80 IB of the Act and onprofits and gains earned in the housing projects. In thecircumstances, we reject the Revenue's appeal in T.C(A).No.1366/2008,thereby, the order of the Income Tax Appellate Tribunal is confirmed.9. Consequent on the order passed by the Commissioner, theAssessing Officer proceeded in giving effect to the order of theCommissioner of Income Tax (Appeals) under Section 263 of the Act andheld that the assessee was not entitled to deduction under Section80IB(10) of the Act. Aggrieved by that, the assessee went on appealbefore the Commissioner of Income Tax (Appeals) and further appealbefore the Income Tax Appellate Tribunal, which allowed theassessee's appeal based on the earlier order, which is the subjectmatter of consideration in T.C.(A).No.1366/2008.10. In the light of the order passed in T.C.(A).1366/2008, it isnot necessary for us to consider the same question again in T.C.(A).889/2009. In the circumstances, the question does not arise forconsideration by us in T.C.889/2009. Accordingly, the same standsdismissed. No costs.Sd/-Assistant Registrar/TRUE COPY/Sub Assistant Registrarnvsri https://hcservices.ecourts.gov.in/hcservices/ To1. The Commissioner of Income Tax Chennai2.The Commissioner of Income Tax, Central I, Chennai3.The Assistant Registrar,The Income Tax Appellate Tribunal, Bench A, Chennai4. The Additional Commissioner of Income Tax,Central Range IV, Chennai.5. The Deputy Commissioner of Income Tax,Central Circle IV 3, Chennai.+2CCs to Mr.A.S.Sriraman, Advocate SR.67537+2CCs to Mr.T.Ravikumar, Senior Income Tax Department, StandingCounsel/Standing counsel Accountant General SR.67470, 67472T.C.(A).Nos.1366 of 2008and 889 of 2009LA(CO)KSA(19/12/2012)