9911796707
TMI Blog2012 (10) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... g project namely, construction of any building other than what is contemplated as an infrastructure facility u/s 80IA. In s. 80HHBA, the expression housing project is defined in a wider sense but there is no such decision that allow the interpretation of housing project in wider sense u/s 80IB(10) thereby restricting the scope of Housing project. Decision in the case of CCE VERSUS M/S HARI CHAND SHRI GOPAL [ 2010 (11) TMI 13 - SUPREME COURT] was relied upon. Revenue appeal dismissed. Seeking fresh claim / relief in the Revenue Appeal whereas no appeal was filed by the assessee against the decision of ITAT - Issue of chargeability of tax versus issue of grant of relief / deduction - HELD THAT:- The reliance of assessee in the case of Essar Shipping Ltd.'s case [ 2013 (12) TMI 443 - MADRAS HIGH COURT] is not valid. - The situation herein is a totally different one. The question is one of deduction and not of chargeability under the provisions of the Act. In the circumstances, we reject the assessee's case in this regard. The decision in the case of Essar Shipping Ltd.'s case [ 2013 (12) TMI 443 - MADRAS HIGH COURT] distinguished. - Tax Case (Appeal) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kanya Sundar 750 S. Rajaji 845 S. Rajaji 860 Sukanya Sundar + A.M.Sundar 925 S.Rajaji + Shyamala Rajaji 910 S.Rajaji + Shyamala Rajaji 925 Total 5,215 3. In the course of the statement recorded, it was further found that the Directors of the Company had also purchased flats. But after purchase, they had merged the flats to have a total built-up area of 1850 sq.ft. The Assessing Officer pointed out that after purchase, the purchasers had converted the flats into commercial establishments. They had merged the flats as commercial units. In Raagamalika Phase I and Phase II, there were no residential units, but three commercial units were built to an extent of 9790 sq.ft. Thus, the Officer held that the assessee had developed three projects Raagamalika I, II and III. Raagamalika Phase I was relevant to the assessment year 2003-04; In Raagamalika Pha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer in toto, hence, is not correct and the same, at best, could be restricted to the area exceeding the limit prescribed under Section 80IB(10)(c) of the Act and the relief on pro-rata basis to the built-up area be granted. 5. The first Appellate Authority pointed out that the assessee had undertaken construction of housing projects for middle class segments of the society. However, considering the introduction of Section 80-IB of the Act and that the benefit being with reference to construction of 100% residential units, deduction under Section 80-IB did not contemplate any flexibility till 2004-2005 for grant of relief to projects which are partly residential and partly commercial. In the circumstances, there could be no liberal construction of deduction provision even on pro-rata basis. Thus, the appeal filed by the assessee was rejected by the Commissioner of Income Tax (Appeals). Aggrieved by the same, the assessee went on appeal before the Income Tax Appellate Tribunal. 6. A reading of the order of the Tribunal shows that the project undertaken by the assessee was approved by CMDA and Medavakkam Panchayat and the plinth area of each apartment c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions as it stood during the relevant time could not be interpreted based on the subsequent amendment. Aggrieved by the same, the Revenue has come on appeal before this Court. 9. Learned standing counsel appearing for the Revenue contended that Section 80IB of the Act is clear enough to say that the deduction is only in respect of housing project and the conditions for grant of the deduction, viz., clauses (a), (b) and (c) to sub-clause (10) of Section 80IB of the Act have to be cumulatively satisfied for the purpose of grant of relief. Learned standing counsel pointed out that the intention in bringing the provisions under Section 80IB of the Act was only for the purpose of promoting the construction of houses to cater to middle income group. Going by the National Housing Policy, as a measure for encouraging housing projects construction for middle income group, the Legislature thought it fit to have the deduction provision under Section 80IB of the Act. Thus, when the law provided that the deduction is in respect of the housing project and the deduction is available subject to certain conditions, the meaning of the expression 'housing project', though not defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dential zone also contemplated commercial buildings too, he submitted that in interpreting Section 80IB, no assistance could be drawn from these Rules, as to what 'housing project' meant. He further pointed out that zone and project being different in their content and meaning, Development Control Rules are not relevant to understand the scope of the expression 'housing project'. The relief contemplated under the Section is for the 'housing project', meaning thereby, the project of residential unit alone and not for anything else. Hence, the question of granting even proportionate relief does not arise in this case. 13. Countering the claim of learned standing counsel appearing for the Revenue, learned senior counsel appearing for the assessee pointed out that there is no definition on the expression 'housing project' under Section 80IB of the Act. The only other Section wherein the definition of 'housing project' is available is the Explanation to Section 80HHBA of the Act. This deduction provision under Chapter VI-A is also one for housing project, but with a difference that it related to projects undertaken on global tender and ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aggregate built-up area of the housing project or 2000 sq.ft., whichever is less. 16. Referring to the Development Control Rules, learned senior counsel appearing for the assessee further referred to zones divided therein. Even in residential zone, the Development Rules contemplated construction of buildings, which may cater to the infrastructural needs of the residential zone. 17. Replying to the contention of the Revenue that the provisions should receive strict construction, he submitted that there is no quarrel over this proposition. The Section needs only strict construction. Going by this, in the absence of restrictive covenants as regards the project being of only residential character, the Revenue cannot read down the expression 'Housing Project' as referable to projects on construction of housing units only. He submitted that there is nothing in Section 80-IB of the Act to suggest that the housing project is restricted to residential project alone and residence is a matter of use and not of structure. 18. Learned senior counsel further pointed out to the various sub-clauses (a), (b) and (c) of Section 80-IB(10) of the Act as it st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee. 19. As far as the Revenue placing reliance on the National Housing Policy is concerned, he pointed out that a reading of the said policy shows that the policy is not with reference to construction of the houses alone, but it is more concerned on overall infrastructural development, which means, development of residential units as well as non-residential units, to go side by side, to go for an overall development in all spheres. In the light of the above, the submission of the learned senior counsel for the assessee is that no exception could be taken to the view of the Tribunal. 20. He further pointed out that the reliance placed by the Revenue on the decision of the Apex Court reported in Hari Chand Shri Gopal's case (supra) is not relevant to the case on hand, since the said decision related to the claim of exemption and not to the claim of deduction. In any event, the condition under Section 80IB does not call for cumulative satisfaction of all the conditions, in the sense, 'housing project' as referable to residential projects alone. 21. As regards the objection of the Revenue that the purchaser had converted the residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s commenced or commences development and construction of the housing project on or after the 1st day of October, 1998; (b) the project is on the size of a plot of land which has a minimum area of one acre; and (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place. 26. Section 80IB(10) of the Act after the amendment under Finance (No.2), 2005 with effect from 01.04.2005, reads as under: 80-IB(10) :- The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2007, by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if, - (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction; (i) in a case where a housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g paragraphs, the only other provision which deals with deduction on housing project is, Section 80HHBA of the Act. This Section deals with deduction in respect of projects executed on the basis of global tender and aided by World Bank. Explanation to said Section defines 'housing project', which reads as follows:- Deduction in respect of profits and gains from housing projects in certain cases. Section 80 HHBA (1) ...... (2), (3) and (4)** ** ** Explanation : For the purposes of this section, - (a) housing project means a project for - (i) the construction of any building, road, bridge or other structure in any part of India. (ii) the execution of such other work (of whatever nature) as may be prescribed. 29. Section 80 IA deals with deductions in respect of Profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. It defines 'infrastructure facility' in Explanation to Sub-Section (4), as follows: (4) This section applies to - ** ** ** Explanation - For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructural facility as defined in the Explanation, we hold that the housing project contemplated under Section 80-IB(10) refers construction of any building and widest possible meaning has to be given to the word building and cannot be restricted to and as referable to a housing project covering residential units only. As rightly pointed out by learned senior counsel appearing for the assessee placing reliance on the decision reported in Tata Engg. Locomotive Co. Ltd.'s case (supra), the word 'house' includes building which is used for business. We hold that the benefit of deduction under Section 80-IB(10) of the Act, with reference to housing project has to go in tune with the Explanation given in 80HHBA and building, as understood by the Apex Court in the decision reported in Tata Engg. Locomotive Co. Ltd.'s case (supra) 32. It is no doubt true that the said decision is related to the provisions of the Village Panchayats Act, 1937; yet, the observation therein are apposite to the understanding of the term building . The Apex Court pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the project on 1st October 1998 and that the area of the land satisfies the minimum required area of one acre. The one and only dispute herein is as to the built-up area, as regards the residential unit, later on converted as commercial unit. 36. It may be seen that the built-up area of 8.33%, as relatable to commercial area, has nothing to do with the dispute raised, since the assessee has not made any claim for deduction on this. However, as a matter of principle, considering the understanding that we place on the expression 'housing project', in a given case, we do not find such occupation of commercial area in a housing project would negate the claim of the assessee for 100% deduction of the profits and gains from the business of undertaking, development and construction of housing project subject to the assessee complying with the other conditions under Clauses (a), (b) and (c) of Section 80IB(10) of the Act. 37. Leaving that aspect aside, on a reading of the three clauses, it is clear that in a given case, when the housing project, a 100% residential unit, satisfies other clauses (a) and (b) and the built-up area as given under clause (c) of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 38. As far as the law as it stood during the relevant assessment year or even thereafter upto 2004-05 is concerned, the Section contains no condition that the housing project has to be out and out a residential one or is there a ceiling referable to commercial usage. For the first time in 2005, clause (d) was inserted under Finance (No.2) Act of 2004, which restricted the built-up area of the shops and other commercial establishments included in the housing project as not to exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less. 39. Thus, going by Section 80-IB(10) of the Act, as it stood during the assessment year, four things are clear, namely expression 'housing project' cannot receive a restricted meaning, as had been propounded by the Revenue. The meaning of the expression housing project , as given under Section 80HHBA of the Act, hence, would govern the case herein. Hence, the housing project would include commercial buildings also. Secondly, there is no restriction that the built-up area for the housing project cannot have any commercial units. Thirdly, the provision of law as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... built-up area under residential unit, pro-rata relief be given to the assessee. As far as this relief is concerned, in similar circumstances, in the decision reported in H.P.T.D.C. v. Union of India [1999] 238 ITR 38/104 Taxman 1, the Himachal Pradesh High Court considered the possibility of granting the proportionate relief on pro-rata basis to the extent of compliance of the provisions. It is no doubt true that the Section does not provide any such working. Yet, this being a deduction provision and there being no such indication that the conditions have to be cumulatively satisfied in the context of the meaning of a 'housing project' to include residential-cum-commercial complex, we feel, in fairness to the claim of the assessee, the proportionate relief has to be read into the provisions, so that deduction provisions are sustained. 42. In this connection, learned senior counsel appearing for the assessee referred to the decision of the Bombay High Court reported in Brahma Associates' case (supra) as well as CIT v. Vandana Properties [2012] 206 Taxman 584/19 taxmann.com 316. 43. The issue raised in the decision of the Bombay High Court is almost iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, merely because the project is approved as residential plus commercial. The Bombay High Court held that if the conditions specified under Section 80-IB are satisfied, then deduction is allowable on the entire project and there is no question of allowing deduction to a part of the project alone. Since the project was approved in accordance with Development Control Rules, the assessee would be entitled to 100% deduction on the entire project approved by the Local Authority. However, pointing out to the stand of the assessee that it had not filed any appeal as against the order of the Tribunal granting the relief to the 15 residential units alone on stand alone basis, the Bombay High Court held that the assessee was entitled to deduction on the properties, as had been granted by the Tribunal, solely on the ground that the assessee had not challenged the decision of the Tribunal. The restriction under Section 80-IB(10) regarding the size of the residential unit would in no way curtail the powers of the local authority to approve a project with commercial user to the extent permitted under the DC Rules/Regulations. 46. Referring to Section 80IB(10)(d) of the Act, the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80-IB(10) of the Act. Even though the provisions under sub-clauses (d), (e) and (f) of Section 80-IB(10) of the Act are prospective in nature, yet, for the purpose of understanding the scope of deduction under the provisions of the Act, we do not have any hesitation in drawing assistance from these provisions to decide on the scope of Section 80IB of the Act, as it stood at the material point of time. 48. In the course of the argument, learned senior counsel appearing for the assessee referred to the decision reported in State of T.N. v. Essar Shipping Ltd. [2012] 47 VST 209 only to submit that even though the assessee had not filed any appeal as against the order of the Tribunal on the proportionate relief granted, yet, this Court may consider the grant of full relief, if it fits within the reasoning of the provisions contemplated 100% relief on the housing project. 49. We do not think that the assessee would be well placed by placing reliance on the decision reported in Essar Shipping Ltd.'s case (supra) since the question involved therein related to chargeability of the provision. Even though in the decided case, the assessee had not filed any appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
