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2010 (12) TMI 248 - AT - Income TaxDeduction u/s 80-IB(10) - CIT v. Podar Cement Ltd. reported in (1997 -TMI - 5598 - SUPREME Court) and Mysore Minerals Ltd. v. CIT reported in (1999 -TMI - 5760 - SUPREME Court), have been discussed and in which it has been held that in the context of Income-tax Act it has to be held that even though there is no formal conveyance, the concerned party could be considered to be the beneficial owner. The assessee is not only a builder but is also developer of the property in question and thus, she has fulfilled all the conditions laid down in section 80-IB(10) of the Act. The definition of any term or word given in other enactments cannot be imported which dealing with Income Tax matters. No parallels can be drawn, unless, it is so specifically provided in the IT Act itself. The assessee was not awarded any works contract either by any party or State or Central Government. The term used in the Explanation is awarded which has a entirely different connotation. Therefore, the explanation appended to section 80-IB(10) is also not attracted at all. The development done in this case is not on account of a works-contract. Assessee eligible for exemption u/s 80IAB(10) Addition u/s 2(22)(e) - deemed dividend - Held that Only a loan, which would include other payments mentioned in section 2(22)(e) can be deemed to be dividend and to that extent of the company has accumulated profits on the date of payment. - the assessee had current account with company and advancing monies to the company as and when required for the purpose of business of the company - this section can be invoked to curtail the misuse of the funds belonging to a private limited company by its shareholder but not when there is a business transaction between the two entities; and funds of the Director were also lying with the company. In this case, assessee s money ranging between 313.72 lakhs to 490.67 lakhs with the Ceebros Property Development Pvt. Ltd., the payment by the same company to Cdeebros Hotels Pvt. Ltd. of ₹ 20,00,000 cannot be treated as intended deemed dividend under section 2(22(e) of the Act. Exemption u/s 80-IB(10) - car parking area - the car parking area is allotted and belonged to buyers alone. It cannot be said to be a private area and has to be treated as common area and has to be excluded from the calculation of built-up residential units particularly keeping in view the agreements and the Tamil Nadu Apartments Ownership Act. - Exemption u/s 80IB allowed.
Issues Involved:
1. Eligibility for deduction under section 80-IB(10) of the Income-tax Act, 1961. 2. Treatment of payment to the Corpus Fund of the Flat Owners' Association. 3. Applicability of section 2(22)(e) of the Income-tax Act, 1961 regarding deemed dividend. 4. Inclusion of car parking area in the built-up area for the purpose of section 80-IB(10). Issue-wise Detailed Analysis: 1. Eligibility for Deduction under Section 80-IB(10): The primary issue was whether the assessee, who was not the legal owner of the land but developed the property, was eligible for deduction under section 80-IB(10). The Tribunal held that the assessee fulfilled all conditions laid down in section 80-IB(10), including developing and building the housing project, obtaining necessary approvals, and incurring all development-related expenses. The Tribunal emphasized that ownership of the land was not a prerequisite for claiming the deduction. The assessee was considered a "de facto" owner, having taken possession of the land and undertaken all development activities. The Tribunal relied on precedents, including the Chennai Bench decision in the case of ACIT v. M/s Sashwath Constructions Pvt. Ltd. and the Ahmedabad Bench decision in M/s Radhe Developers v. ITO, which supported the view that the developer need not be the legal owner of the land to claim the deduction. 2. Treatment of Payment to the Corpus Fund of the Flat Owners' Association: The second issue was whether the payment of Rs. 5,30,250 to the Corpus Fund of the Flat Owners' Association could be allowed as a deduction. The Tribunal found that the assessee had collected this amount from buyers and shown it as a liability until it was handed over to the Association. Since the amount was collected for a specific purpose and not retained by the assessee, it could not be taxed in the hands of the assessee. The Tribunal upheld the CIT(Appeals)'s decision allowing the deduction. 3. Applicability of Section 2(22)(e) Regarding Deemed Dividend: The third issue concerned the addition of Rs. 16,00,000 as deemed dividend under section 2(22)(e). The assessee, a director in CPDPL and CHPL, had arranged a payment from CPDPL to CHPL. The Tribunal noted that the assessee had a substantial credit balance with CPDPL and that the payment was a business transaction, not a loan or deposit. The Tribunal agreed with the CIT(Appeals) that section 2(22)(e) was not applicable, as the payment was part of a business transaction and the assessee had sufficient credit balance with CPDPL. 4. Inclusion of Car Parking Area in Built-up Area for Section 80-IB(10): The fourth issue was whether the car parking area should be included in the built-up area for the purpose of section 80-IB(10). The Tribunal held that the car parking area was a common amenity and not a living space. It was accessible to all and did not have boundary walls, thus it should not be included in the built-up area. The Tribunal upheld the CIT(Appeals)'s decision that the car parking area should be excluded from the calculation of the built-up area of residential units, in line with the Tamil Nadu Apartments Ownership Act. Conclusion: The Tribunal dismissed all three appeals filed by the Revenue, upholding the CIT(Appeals)'s decisions on all issues. The order was pronounced on 10th December, 2010.
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