The ITO, Ward-2(4), Baroda V. M/s. Dhara Developers(Abhishek), Baroda

ITA 1097/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57355 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 09-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: S N SOPARKAR
• Section: 80IB

Judgement Text

ITA NO.1097/AHD/2009 ASSESSMENT YEAR 2005- 06. . 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI A.M.) I.T.A. NO. 10 97/AHD/2009 (ASSESSMENT YEAR: 2005- 06 ) INCOME TAX OFFICER, WARD 2(4), AAYAKAR BHAVAN, NEAR RACE COURSE CIRCLE, BARODA. (APPELLANT) VS. M/S. DHARA DEVELOPERS (ABHISHEK) 1 ABHISHEK SOCIETY, GOTRI-IPCL ROAD, BARODA. (RESPONDENT) PAN: AADFD 5444J APPELLANT BY : SHRI RAHUL KUMAR, SR. D.R. RESPONDENT BY : SHRI S.N. SOPARKAR, SR. ADVOCAT E. ( )/ ORDER DATE OF HEARING : 6-3-2012 DATE OF PRONOUNCEMENT : 30-3-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF LD. CIT (A)-II, BARODA DATED 22-1-2009 FOR THE ASSESSMENT YEAR 2005 -06. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) ERRED IN ALLOWING THE DEDUCTION U/S. 80IB(1 ) TO THE ASSESSEE, WHO WAS NOT GRANTED APPROVAL BY THE LOCAL AUTHORITY TO CARRY ON THE BUSINESS OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJ ECTS, IN CONTRAVENTION ITA NO.1097/AHD/2009 ASSESSMENT YEAR 2005- 06. . 2 OF A PLAIN READING OF SECTION 80IB(10) R.W.S. 80IB (1),EXPLANATION TO SECTION 80IB(10) AND RULE 18BBB. 2. THE LD. CIT (A) FAILED TO MAKE A COMBINED READIN G OF SECTION 80IB(1), WHICH IS SUBSTANTIVE PROVISION, AND SECTION 80IB(10 ), WHICH IS A MACHINERY PROVISION, POSTULATING COMPLETE IDENTITY BETWEEN TH E ASSESSEE AS REFERRED TO IN SECTION 80IB(1),AND THE UNDERTAKING DEVELOPING A ND BUILDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS REFERRE D TO IN SECTION 80IB(10), NOT PERMITTING SUCH SPLITTING BETWEEN THE ASSESSEE AND THE PERSON WHO IS GRANTED APPROVAL BY THE LOCAL AUTHORITY FOR DEVELO PING AND BUILDING HOUSING PROJECTS, AS PRESUMED BY THE CIT (A). 3. THE LD. CIT(A) FAILED TO ABIDE BY THE SCHEME OF SECTION 80IB BASED ON COMPLETE IDENTITY BETWEEN THE ASSESSEE AS REFERR ED TO IN SECTION 80IB(1), ON THE ONE HAND, AND THE ENTITY FULFILLING THE COND ITIONS LAID DOWN IN SECTIONS 80IB(3), 80IB(11) AND 80IB(11AA), BESIDES SECTION 8 0IB(10),ON THE OTHER. 4. THE LD. CIT (A) FAILED TO APPRECIATE THAT THE LA ND BEING INTEGRAL PART OF ANY HOUSING PROJECT, THE ASSESSEE, WITHOUT OWNIN G THE LAND COMPONENT, COULD NOT PASS ON FULL TITLE OVER DWELLING UNITS TO THE CUSTOMERS SO AS TO DERIVE PROFITS FROM DEVELOPING AND BUILDING HOUSING PROJECTS AND THIS INTEGRATION IS FURTHER FORTIFIED BY THE REQUIREMENT OF APPROVAL BY THE LOCAL AUTHORITY AS WELL AS GRANT OF COMPLETION CERTIFICAT E BY THE LOCAL AUTHORITY UNDER CLAUSE (II) OF THE EXPLANATION BELOW SECTION 80IB(10), BOTH OF WHICH ARE GRANTED TO THE LANDOWNER, THUS TREATING HIM ALO NE AS RUNNING THE UNDERTAKING FROM THE BEGINNING TO THE END. 5. THE LD. CIT (A) ERRED IN DISPENSING WITH THE OWN ERSHIP OF LAND INTRINSICALLY LINKED WITH THE APPROVAL BY THE LOCAL AUTHORITY, ALSO IN DISREGARD OF SECTION 80IB(10)(B) PROVIDING FOR THE CONDITION OF MINIMUM SIZE OF THE PLOT OF LAND, WHICH CAN BE FULFILLED ON LY BY THE LANDOWNER AND THE PERSON GETTING APPROVAL FROM THE LOCAL AUTHORITY. 6. THE LD. CIT (A) ERRED IN MAKING ASSUMPTION REGAR DING PASSING ON OF THE BENEFIT OF SECTION 80IB(10) BY THE LANDOWNER GE TTING APPROVAL FROM THE LOCAL AUTHORITY FOR DEVELOPING AND BUILDING OF HOUS ING PROJECTS TO THE PERSON WITH WHOM HE ENTERS INTO AGREEMENT FOR EXECUTION OF SUCH PROJECTS,WITHOUT ITA NO.1097/AHD/2009 ASSESSMENT YEAR 2005- 06. . 3 THERE BEING ANY PROVISION IN SECTION 80IB FOR SUCH PASSING ON, AS CONTAINED IN SECTION 80HHC(1A). 7. WITHOUT PREJUDICE, THE LD. CIT (A) ERRED IN ALLO WING DEDUCTION U/S. 80IB(10) IN RESPECT OF THE PROCEEDS ATTRIBUTABLE TO THE SALE UNUTILIZED FSI AND NOT TO THE DWELLING UNITS IN THE HOUSING PROJEC TS, WHICH COULD NOT BE TERMED AS PROFITS DERIVED FROM DEVELOPING AND BUI LDING HOUSING PROJECTS IN TERMS OF THIS PROVISION. 8. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR A LTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM ENGAGED IN THE BUSINESS OF DEVELOPING AND BUILDING OF HOUSING PROJ ECTS. IT FILED ITS RETURN OF INCOME ON 24-10-2005 DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING DEDUCTION OF RS.14,45,924/- UNDER SECTION 80IB(10) OF THE IN COME TAX ACT. THE ASSESSEE SUBMITTED THAT IT HAD DERIVED INCOME FROM CONSTRUCT ION/DEVELOPMENT ACTIVITY OF HOUSING PROJECT AND SINCE IT HAD SATISFIED ALL THE CONDITIONS LAID DOWN UNDER SECTION 80IB OF THE ACT, IT WAS ELIGIBLE FOR 100% DEDUCTION U/S. 80IB(10) OF THE I.T. ACT. THE ASSESSEE RELIED ON THE DECISION OF THE ITAT, AH MEDABAD BENCH IN THE CASE OF M/S. RADHE DEVELOPERS & OTHERS VS. ITO. 113 TTJ (AH D) 300.THE A. O. DISALLOWED THE CLAIM OF THE ASSESSEE AS ACCORDING TO HIM THE ASSESSEE HAD NOT COMPLIED WITH THE BASIC CONDITIONS LAID DOWN IN SEC TION 80IB. ACCORDING TO THE A.O. SINCE THE ASSESSEE WAS NOT THE OWNER OF THE PR OPERTY, PERMISSION WAS NOT GRANTED IN THE ASSESSEES NAME, APPROVAL BY VADODAR A MUNICIPAL CORPORATION WAS GRANTED IN THE NAME OF ORIGINAL LAND OWNERS AND NOT IN THE NAME OF ASSESSEE DEVELOPER, THEREFORE, IT WAS NOT ELIGIBLE FOR DEDUC TION U/S. 80IB. ALTERNATIVELY HE HELD THAT THE ASSESSEES CLAIM U/S. 80IB (10) IS TO BE RESTRICTED TO THE PROFITS EARNED ON CONSTRUCTION OF UTILIZED FSI. HE FURTHER HELD TH AT THE PROPORTIONATE PROFIT ON SALE ITA NO.1097/AHD/2009 ASSESSMENT YEAR 2005- 06. . 4 OF UNUTILIZED FSI BE DISALLOWED. HE FURTHER STATED THAT THE DECISION IN THE CASE OF RADHE DEVELOPERS & OTHER (SUPRA) RELIED BY THE ASSE SSEE HAS NOT BEEN ACCEPTED BY THE REVENUE AND APPEAL AGAINST THE SAID ORDER HAS B EEN FILED BEFORE THE HONBLE GUJARAT COURT. ACCORDINGLY, THE A.O. DISALLOWED THE CLAIM OF DEDUCTION OF ASSESSEE. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF A.O. CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT (A). CIT (A) AFTER CONSI DERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT SINCE THE CASE OF ASSESSEE WAS I DENTICAL TO THAT OF RADHE DEVELOPERS (SUPRA), THE ASSESSEE IS ELIGIBLE FOR D EDUCTION U/S. 80IB(10) AND ACCORDINGLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGAINST THIS ORDER OF THE CIT (A), THE REVENUE I S NOW IN APPEAL BEFORE US. 5. BEFORE US AT THE OUTSET, THE LD. AR PLACED ON RE CORD, THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 DATED 29-2-200 8 WHEREIN THE EXACTLY SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN ASSESSEES FAV OUR. HE FURTHER CONTENDED THAT IN VIEW OF THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF RADHE DEVELOPERS & OTHERS, IT IS NO MORE CONTROVERSIAL THAT NOTWITHSTA NDING THE FACT THAT ASSESSEE IS NOT THE OWNER OF LAND AND APPROVAL HAS NOT BEEN GRANTED IN ITS NAME, CLAIM OF DEDUCTION U/S. 80IB(10) CANNOT BE DECLINED. HE ALSO PLACED ON RECORD THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF ITO VS. SUN DEVELOPERS (ITA NO.1095/AHD/209) DATED 10-8-2011, WHEREIN ON IDENTI CAL FACTS, THE ASSESSEE HAS BEEN GRANTED DEDUCTION. 6. ON THE OTHER HAND, THE LD. D.R. FAIRLY AGREED TH AT ISSUE IN THE APPEAL IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN AS SESSEES OWN CASE IN ADDITION TO OTHER CASES PLACED ON RECORD BY THE A.R.. ITA NO.1097/AHD/2009 ASSESSMENT YEAR 2005- 06. . 5 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER GOING THROUGH THE ORDERS W E FIND THAT SIMILAR ISSUE CAME UP BEFORE THE HONBLE ITAT, AHMEDABAD IN ITA NO.248 2/AHD/2006 IN THE CASE OF RADHE DEVELOPERS & OTHERS FOR ASSESSMENT YEAR 20 03-04 WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF CLAIMING DEDUCTION U/S. 80I B (10) OF THE ACT, IT IS NOT NECESSARY FOR THE ASSESSEE TO OWN LAND. 8. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR U NDER CONSIDERATION, ARE IN PARA-MATERIA TO THAT OF ASSESSMENT YEAR 2003-04, RE SPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL, AS Q UOTED ABOVE, WE CONFIRM THE ORDER OF THE CIT (A). 9.. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 30 - 3 - 20 12. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. ITA NO.1097/AHD/2009 ASSESSMENT YEAR 2005- 06. . 6 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-II, BARODA. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 6 - 3 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 19 / 3 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..