A Comprehensive Page -> 2 Page -> 3 Page -> 4 Update On Realty Scenario In And Around APPCC Realty Industrial & Logistics TAX PLANNING Data Sectors Outlook Rental from unsold Chennai continues to attract Industrial & Logistics sectors commercial properties leading developers to come and will make up the bulk of is house-property income, Realty News invest in commercial projects demand, says a survey rules ITAT Vol.1, Issue 4, April 2021 FOR PRIVATE CIRCULATION ONLY

OVERVIEW Defying the odds against second wave of Covid pandemic impacting normalcy, end users are active in the housing market to avail multiple benefits like multi-decade low of sub 7% interest rate, correction in prices and increased household savings, reports V Nagarajan Residential Mart Sales Up in Q1, 2021 he residential market is gradually pick- , and , says H ing up across , thanks to a pleth- Balasubramanian of APPCC. ora of opportunities across metros for A significant development is the spurt in sales homebuyers. Housing sales have im- of layouts in the area range of 600-800 sqft in proved and new project launched the price region of Rs 15-20 lakh. Here again, it uppedT by 38 per cent year on year. Despite the is said, that end users are active who wish to go second wave impacting the return of normalcy, for construction of villa etc. property developers are unperturbed in that On the commercial front, despite the increasing they are bullish about the long-term growth the spread of COVID-19 due to the onset of the sec- housing sector. ond wave, Chennai saw a sustained leasing ac- According to Anarock first quarter survey, mid- tivity during Q1 2021. The majority of the leasing segment housing saw the maximum new launch- was concentrated in the small- to -medium sized es in the quarter with a 43% overall share, with deals reported along OMR Zone I & II, the affordable housing segment accounting for and Mount Road. In addition, the 30%. The supply of luxury housing (priced >INR occupiers were also interested in taking up 1.5 crore) also rose by 31% in Q1 2021 against space in flexible workplace options across the the corresponding period in 2020. CBD and Off CBD locations. In Chennai, approximately. 2,850 units were The city did not witness any office supply com- sold - an increase of 30% over Q1 2020. The city pletions during Q1 2021. The quoted rental val- added approximately 4,620 units in Q1 2021, a ues across the major micro-markets largely re- Y-o-Y increase of 25% over Q1 2020, according mained same as compared to the previous quar- to Anarock Q1 report. ter, according to CBRE sources. According to Knight Frank India survey, On the industrial and logistics front, electronics Chennai housing sales witnessed 36% growth to & hardware, pharmaceuticals & medical equip- 4,058 units. The rise in sales is attributed to hardly a few takers, according to leading realtors ers with regard to resale residential units in the ment, textiles, and auto industries will drive de- multi-decade lows of sub 7% interest rate in- monitoring land transactions in the city. unit price range of Rs 45 lakh – Rs crore plus. All mand for manufacturing facilities. In logistics, crease in household savings and correction in Secondary market transactions are becoming time low home loan lending rates, price stability E-commerce, third party logistics groups (3PLs) apartment prices. limited due to supply crunch as hardly a few new and increasing construction material and labour and cold storage operators will make up the bulk Land prices have dipped in CBD and off CBD areas projects have been launched across select micro costs have convinced to plunge into investment. of demand, says a recent survey by Colliers by 20 per cent and above and even then there are markets in city areas. End users are prime mov- Resale market is active particularly in areas like International. How to Spot Potential Investment Locations?

tend to commit in their quest to get cal approach as it in the mindset. By A good indicator of a the best bargain is to go with the nature, a human being tends to opt particular area’s crowd. If absence of having access for a locality that is going for an ex- to the flow of information is one tension rather than go with an area vibrancy comes from problem, then a bigger one is the ap- that appears unexplored. A good parent ignorance of the prevailing indicator, which also substantiates the information flow, trends. this point of view, is the way cities says Sumanth Reddy In the given circumstances it will be and towns have spread into what a healthy option if one does the sur- developmental activities in and Bolstered by the potential that ex- were once deemed as outskirts. vey individually. Rather than go with around the projected area. ists, they actually set up their out- Take a look at any town that has he compulsions of the market popular choices which may have This helps in saving a lot of later lets. It is almost like they are emulat- graduated to the status of a city or a are such that it is always advis- touched saturation point, it will be in day troubles. For instance, getting ing the street-smart kirana mer- city that is fast emerging as the me- Table that one makes a full- the fitness of things if there is steak to know about the likely develop- chant who opens a shop even as ten tropolis and one will understand that fledged survey of the neighbouring of being an early bird. This approach ments from the government side will houses come in a new locality. opting for an emerging area is not a areas before finalising a deal. has its own advantages, at least go a long way in bringing about a A good indicator of a particular ar- gamble. It is a sign of maturity and Several factors have to be taken into they outscore the negative points lively acceptance to a specific area. ea’s vibrancy comes from the infor- one which proves that early birds account if one has to close the deal that may perhaps be lurking some- A residential colony will be poised mation flow, which points out at the have the last laugh. on mutually satisfactory terms. where in the corner. for a boom if there is a full-fledged possible coming in of retailers and The most important aspect is to A close observation of the turn of People associated with the indus- connectivity, and aspects like road malls. An investment in such areas understand the ground-realities and events of the past few years makes try tend to make a complete survey and infrastructure facilities like pow- has immense potentialities and the developmental activities that are one to realise that there are certain of the roads that lead to the targeted er and sanitation are in the pipeline. there is an over-riding win-win situ- coming its way. practices that are almost mechani- zone. A realtor, builder, investor and It has been noticed that often big ation for all the parties concerned. cal by nature. even the end buyer will try to play it time retail outlets make a viable and The generally perceived ignorance Mr Sumanth Reddy is immediate One of the biggest mistakes people safe by taking random notes of the fool-proof pre-launch survey. is actually not so much in the physi- Past President, NAR India. APPCC 2 Realty News April 2021 Realty Data MAJOR LEASE DEALS IN CHENNAI COMMERCIAL MARKET - 2020 COMMERCIAL OFFICE SPACE RENTAL Client Building Name Area in Location Lease / TRENDS IN CHENNAI sqft Sale Location Grade Grade Grade B BNY Embassy block 3 6,25,000 Lease A+ A & Below CTS DLF Cybercity 4,72,000 Lease 90 70 40 KLA Tencor RMZ Millenia 50,300 / OMR Lease Mount Road 90 70 55 NPCI K Raheja Commer Zone 43,000 Porur Lease 75 65 45 Omega Health Care Chennai One 41000 Kandanchavadi Lease 75 60 40 Ninestars Information Habeeb Tower 24,142 Mount Road Lease Anna Nagar 75 65 50 OMR Pre Toll 90 60 35 MAJOR DEALS IN CHENNAI RETAIL MARKET – 2020 OMR Post Toll upto 65 55 30 Property Tenant Location Area in Lease / Shollinganallur sqft Sale OMR Beyond 60 45 30 Independent Citroen Mount Road 4,000 Lease Shollinganallur Independent Anna Nagar Cycles Alwarpet 2,600 Lease Guindy 95 60 40 Independent Duroflex Adyar 2,400 Lease 50 30 20 Independent Kirtilal Diamonds Anna Nagar 1,700 Lease Porur - DLF Stretch 75 50 25 Independent Duroflex Nungambakkam 1,500 Lease Source: APPCC Independent Chai Galli 1,500 ease RESIDENTIAL PROPERTY CHENNAI – INDUSTRIAL AND WAREHOUSING TRENDS RENTALS IN CITY AREAS Submarkets Land rates in Rs/ Industrial Rents Warehousing Location Rent- Location Rent- acre (Rs/sqft/month) Rents (Rs per al per al per sqft/month) month / month / per sq ft per sq ft Redhills 2 crore – 3.5 crore 18 – 25 18 – 25 Alwarpet 60 KK Nagar 30 1.5 crore – 3 crore 20 – 25 20 – 25 Besant Nagar 35 Ashok Nagar 30 1.5 crore – 2.5 crore 23 – 28 23 – 28 35 30 Vallam 1.5 crore – 2.5 crore 24 – 28 24 – 28 RA Puram 45 Porur 20 Gummidipoondi 1 crore – 1.75 crore 16 – 19 16 – 19 Boat Club road 75 Perungudi 25 Thiruvallur 80 lakh – 2 crore 14 – 20 14 – 20 Nungambakkam 45 Shollinganallur 20 Sricity 85 lakh – 90 lakh 22 – 23 22 – 23 Kilpauk 40 Chrompet 15 (Only leasehold land) Anna Nagar 45 15 MAJOR DEALS IN CHENNAI’S INDUSTRIAL AND Velachery 30 15 WAREHOUSING MARKET – 2020 T Nagar 40 20 Property Location Tenant Area in Lease/ sqft Sale Indospace Oragadam Vikram Solar 1,85,000 Lease Sakthi Industrial Park Sriperumbudur Wheels India 1,00,000 Lease Independent Sea Shelter 72,000 Lease Independent Sriperumbudur Jonas Woodand & 60,000 Lease Sons (India) Ltd. San Landmark, Oragadam Oragadam Aptiv 60,000 Lease Independent Sriperumbudur VodafoneIdea 37,600 Lease Independent Sriperumbudur RRB Energy 25,000 Lease IndoSpace Oragadam Oragadam Saddles India Pvt 24,000 Lease Ltd. Source: CIRIL APPCC 3 Realty News April 2021 TRENDS SNAPSHOTS Industrial and NAR India Convention Held Logistics Sectors – in New Delhi recently Outlook for 2021 lectronics & hardware, ramping up their production capabili- tures with local developers to set up pharmaceuticals & medical ties in India. Similarly, many textile, and buy industrial parks and fulfil- equipment, textiles, and pharmaceutical and medical equip- ment centres in Tier I and II loca- auto industries will drive ment manufacturers are preparing to tions. We expect demand for core demand for manufacturing expand their production capabilities assets located in strategic locations Efacilities. In logistics, E-commerce, in India. Leveraging its key position in like the Chakan-Talegaon cluster in third party logistics groups (3PLs) and India’s pharmaceutical sector, Pune, Nelamangala – Doddaballapur cold storage operators will make up Hyderabad has been able to attract in Bengaluru, and in clusters along APPCC office bearers with President, NAR India, Mr.Tarun Bhatia, the bulk of demand, says a survey by further investments in biotech, ge- NH 16 in Chennai, NH 48 in Gurugram, Immediate Past and Mr. Sumanth Reddy, President. Colliers International. neric-drug and medical devices man- and NH 19 in Kolkata that enjoy easy ufacturing in the past few months. connectivity to ports, national high- Industrial leasing to become more The Indian automobile industry is ways and airports to remain strong. robust COVID-19 influenced and the also optimistic as demand for per- Logistics to gain even more traction China/United States trade war exac- sonal vehicles, especially electric ve- Warehousing deal activity continued erbated the challenges and uncer- hicles, is seeing a return to pre-COV- to grow in 2020 supported by strong tainty experienced by global manu- ID-19 levels. demand from e-commerce players, facturing firms and logistics players in With a just-in-time (JIT) production consumer electronics, pharmaceuti- 2020 prompting many global corpo- model and linear supply chains caus- cal sector and 3PL providers. We are seeing healthy growth from 3PLs and local transportation busi- nesses serving the population base in Tier II and Tier III cities.

Development activity continued to expand in Tier I and II cities with sev- eral large developers and institutional players announcing new projects and The Hybrid NAR-INDIA 12thAnnual Urban Affairs, Dr. Niranjan acquiring land to develop logistics Convention held in New Delhi re- Hiranandani, President NAREDCO parks. Heading into 2021, we expect cently saw realisation as realtors and Shri Parveen Jain, Vice the following key trends to shape the and those associated with the real Chairman NAREDCO. logistics market: estate industry came together again Extensive discussions were held l Demand for advanced ware- to celebrate the role of realtors. through the various panel discus- houses that cater to regulatory com- Around 400 people personally at- sions involving virtual participation pliance, security and quality checks tended the occasion while 2,200 from international participants as will gain traction as shoppers contin- people made their virtual presence well, speaker sessions, and very di- ue to embrace grocery e-commerce. from all over the country. The World verse and exciting breakaway ses- l Many occupiers are looking for realtors day was also celebrated on sions. short-term leases and on-demand March 21. The Hybrid NAR-INDIA 12thAnnual warehousing. This should augment The inaugural ceremony was graced Convention has created a new demand for co-warehousing/flexible virtually by Shri Hardeep Singh Puri, benchmark of how the future will warehousing space, resulting in in- Minister of State (Independent connect and collaborate and organ- creased utilization in existing ware- Charge) Ministry of Housing and ise such large conventions. houses. Landlords can take this op- portunity to sublease unutilized space. IBC prevails over SARFAESI l To ensure cost optimization and The Tribunal recently gave out its judgment, in favour of RCM. It said that Section 238 increase competitiveness in the in- of the IBC, says: “The provisions of this Code shall have effect, notwithstanding any- dustry, warehouse operators are in- thing inconsistent therewith contained in any other law for the time being in force.” The creasingly adopting IT-driven solu- Tribunal cited its own judgment in an earlier case of Encore Asset Reconstruction tions including Internet of Things Company Vs Charu Sandeep Desai, where it had said that Section 238 shall prevail over (IoT) and Warehouse Management any provisions of the SARFAESI, if there was any inconsistency between IBC and Systems (WMS) to track inventory SARFAESI. and adopt an analytical approach to forecasting demand to avoid deple- tion of stock. l As efficient in-city distribution rations to diversify their production ing significant disruption to the sup- increases, demand for modern Grade base across countries. Indian govern- ply chain, firms are switching to mul- A warehousing continues to grow in ment initiatives like Make in India, tisourcing and overhauling their exist- urban cores. Landlords should rede- Atmanirbhar Bharat (Self-reliant ing warehouses and order manage- velop or upgrade their existing facili- India), production linked incentive ment systems. This should increase ties, incorporating multi-level racking (PLI) scheme, 100% FDI allowance demand for resilient supply chains and sustainable solutions. for manufacturing firms and corpo- offering more visibility and automa- l As competition in e-commerce rate tax reforms have attracted many tion across the entire supply chain. increases, sellers want logistics ser- electronics and hardware manufac- Bolstered by increased demand vice providers to deploy predictive APPCC 4th Annual Day celebrations turing firms to set up a base in India. from e-commerce players and third- analytics to create visibility in sea- held in Yelagiri Home-grown device makers like party logistics (3PL) providers, sev- sonal demand-supply fluctuations The fourth APPCC annual day celebrations were held in Yelagiri along with quar- Dixon Technologies and global con- eral institutional players such as and solve the reverse logistics prob- terly meeting. APPCC members were able to enjoy the tranquillity and conducive tract manufacturers such as Foxconn Blackstone, Logos, GIC, and lem while improving inventory man- environment to break away from the din and bustle of metro life. and Pegatron are in the process of CapitaLand have formed joint ven- agement. APPCC 4 Realty News April 2021

Hon’ble Delhi High Court. The Hon’ble Delhi TAXATION High Court in its judgment dated 18.02.203, reported in 356 ITR 159, in ITA No. 1089/2011 and ITA No. 1090/2011, has directed to treat the rental income earned by the assessee from commercial properties as income under the head ‘House Property’ instead of Income from business or profession. The learned CIT (A) has extracted the decision of the Hon’ble Delhi High Court in the impugned order in paras 4.5.6, which is reproduced as under: “2. The appeals are by the Revenue. ITA Nos. 1089/2011 and 1090/2011 relate to the same assessee i.e. Discovery Estates Pvt. Ltd. and ITA N0.1097/2011 relates to another company of the same group by name Discovery Holdings Pvt. Ltd. On 13.02.2012, the following substan- tial questions of law were framed by this Court Rental from unsold in all the three appeals: commercial properties ” (i) Whether the Income Tax Appellate is house-property Tribunal was right in holding that the rental in- come should be assessed under the head “in- income, rules ITAT assessment year 20 13-14 raising the following was completed after treating the rental income come from business” and not under the head grounds: under the head ‘Income from House Property’ “income from house property”? In the case of Discovery Estates Pvt. Ltd. Vs instead of income under the head “Profit and (ii) Whether the Income Tax Appellate Tribunal ACIT (ITAT Delhi), the issue in dispute is re- Ground No. 1: The Ld. Commissioner of Gains of Business or Profession’ offered by the was right in holding that the sale consideration garding the head under which rental income is Income Tax (Appeals)-32, New Delhi [hereinaf- assessee in the return of income. disclosed by the assessee on sale of shops to be taxed. The assessee is earning rental in- ter referred to as ‘CIT(A) ’] has erred on facts 2.1 In further appeal, the learned CIT (A) fol- should be accepted? come from commercial malls and offered the and in law in passing the order dated lowing the finding of the Hon’ble Delhi High (iii) Whether the findings recorded by the same under the head ‘Profit and Gains of 31.08.2017 under section 250 of the Income Court in the case of assessee itself passed in Income Tax Appellate Tribunal in respect of the Business or Profession’. The rental income has Tax Act, 1961 (hereinafter referred to as ‘the earlier years, upheld the finding of the question number (ii) are perverse?” 3. It is been generated from commercial units which Act’) Assessing Officer. Aggrieved, the assessee is common ground that the first substantial remained unsold and were held as stock in in appeal before the Tribunal raising the question of law is to be answered in the nega- trade in desire of acceptable sale price. The Ground no. 2: The Ld. CIT(A) erred on facts grounds as reproduced above. tive, in favour of the Revenue and against the Assessing Officer has taxed the said rental/ and in law in holding that the Assessing Officer 3. Before us, none represented on behalf of assessee in view of the judgment of this Court lease income under the head “income from is correct in treating the rental income earned the assessee despite informing the date of the in CIT Vs. M/s Ansal Housing Finance and house property”. of by the appellant from commercial properties hearing in the open court on 16.03.2021. No Leasing Co. Ltd. & Ors. decided on 31.10.02012 The Hon’ble Delhi High Court in its judgment as income under the head ‘House Property’ in- adjournment application was also filed, in view in ITA 18/1999.” dated 18.02.203, reported in 356 ITR 159, in stead of Income from Business Income. of the fact, the case was heard ex-parte qua 4.2 As the learned CIT (A) has followed the ITA No. 1089/2011 and ITA No. 1090/2011, has the assessee after hearing the learned DR. binding precedent in the case of the assessee directed to treat the rental income earned by Ground No. 3: The appellant prays that he 4. We have heard the learned DR and perused itself, we do not find any error in the order of the assessee from commercial properties as may be allowed to add, amend, alter or forego the relevant material on record. In the case, the learned CIT (A) on the issue in dispute and income under the head ‘House Property’ in- any of the above grounds of appeal as the cir- the issue in dispute is regarding the head un- accordingly uphold the same. The grounds of stead of Income from business or profession. cumstances may warrant. der which rental income is to be taxed. The as- the appeals are dismissed. As the learned CIT (A) has followed the binding sessee is earning rental income from commer- 5. In result, the appeal of the assessee is dis- precedent in the case of the assessee itself, we Ground 4: The above grounds are without cial malls and offered the same under the head missed. do not find any error in the order of the learned prejudice to each other. ‘Profit and Gains of Business or Profession’. Source: www.taxguru.in CIT (A) on the issue in dispute and accordingly 2. The facts in brief of the case are that the as- The rental income has been generated from uphold the same. The grounds of the appeals sessee was engaged in the business of con- commercial units which remained unsold and are dismissed. struction of the commercial complex and also were held as stock in trade in desire of accept- earning rental income. The return of income able sale price. The Assessing Officer has Published by the Association of FULL TEXT OF THE ITAT JUDGEMENT was filed by the assessee for the year under taxed the said rental/lease income under the Professional Property Consultants of Chennai. This appeal is directed against the order dated consideration on 13.09.2014, declaring income head “income from house property”. All communications should be addressed 31st August, 2017 passed by the learned or Rs.2,67,02,200. The case was selected for 4.1 Identical issue was raised by the Assessing to APPCC through Commissioner of Income-tax (Appeals)-43, scrutiny and assessment under Section 143(3) Officer in Assessment years 2006-07 and email id: [email protected]. New Delhi [in short “the learned CIT(A)’] for of the Income-tax Act, 1961 (in short ‘the Act’) 2007-08. The issue further travelled up to the Editor: V Nagarajan

Home interiors which conform to the ture styles. precepts of good Feng Shui in terms of l Lights brings a vital source of energy shape, colour and positioning generally REVITALISING SPACE and is the key element to setting the feel much nicer than those which do not. mood of any space. Depending on what verse, so that you get the positive en- Feng Shui has been used in the home to you are trying to achieve, lights can help ergies of the universe flowing through improve such things as wealth and ca- highlight or tone down certain areas of the entire spaces in your house. reers, find new partners, start families, the room. Fluorescent lighting helps A home or business has interior factors help children to study, improve family flood the room with an ambient feel. and exterior factors that influence you harmony and later in life to support and l Avoid barriers in front of the door and your mood. Shape of the house, improve our health so that we can enjoy such as light partitions where you have floor plan, positions of bedrooms, the wealth which we have accumulated to navigate around them to move to kitchens, bathrooms, desks, have an over the years. In short, Feng Shui at the next space. By ‘opening up’ the unseen psychological effect on you. home can be used to influence just space, this technique immediately ex- well-being. Each day you practice it, it History of the house, electro-magnetic about every aspect of our lives. pands your front door sector many FENG SHUI & VAASTU helps you to become a good human energies emitted by electrical connec- By relating to the spiritual dimension times over. being and contributes towards making tions and cable, telephone, satellite Feng Shui becomes more relevant to It does not take much to revitalise the the world a better place to live. dishes can have either positive or neg- Through materials, texture our modern day life. With our demand- energy of your home with good Feng A Feng Shui house is a house where all ative effects on you depending upon ing, high-pressure lifestyles today, we shui with a little bit of inspiration and a the objects are in perfect harmony to the sort of person you are. Similarly and colours, we can change need ways with which we can enhance touch of sensitivity. Through materials, each other whether we talk about the beams, lights, plants, water and influ- and bring in some much needed bal- texture and colours, we can change the energy of any space to Feng Shui elements contained in them ences of people surrounding you also ance to our lives. the energy of any space to one that ex- or the particular colors that have been have some role to play. one that exuberates Spiritual practices are nothing but uberates vibrancy and inspiration. used to enhance the space and in turn l Living areas require a bit of life and good deeds that are essential for the create the serene feel of spirituality. light, so keep within the colour spec- vibrancy and inspiration, practice of good Feng Shui. Each as- Mr Surendran is an accredited mas- The Feng Shui is about balancing ener- trum of yellow or beige tones. Yellows pect of it can be used as a subtle tool ter Feng Shui consultant and tradition- says S BS Surendran gies, of animate with inanimate and and light browns offer a sense of earth that shapes and enhances your life and al Vaastu. that of the soul with that of the uni- tones, which usually match most furni-