M/s. Megha Developers, Ahmedabad V. The Income tax Officer,Ward-9(4), Ahmedabad

ITA 1152/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89625 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-06-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 18-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: M K PATEL
• Section: 80IB

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA NO.1150, 1151, 1152, 1153/AHD/2011 (ASSTT YEAR: 2000-2001, 2001-2002, 2002-03, 2006-07) AND ITA NO., 2147, 2148/AHD/2011 (ASSTT.YEAR : 2003-04, 2004-05) M/S.MEGHA DEVELOPERS C/O. V.P. PATEL & CO., ADVO., A-102, AKSHARDHAM, SHAHIBAUG NR. UNVERBRIDGE, AHMEDABAD PAN : AAFFM 7541 M. VS ITO, WARD-9(4) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI M.K. PATEL REVENUE BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING : 17/06/2015 / DATE OF PRONOUNCEMENT: 19/06/2015 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THESE SIX APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE CIT (A)-XV, AHMEDABAD DATED 31.1.2011 AND 20.6.2011. SINCE ISSU E INVOLVED IN THESE APPEALS IS IDENTICAL IN ALL THESE ASSESSME NT YEARS UNDER APPEALS, WE PROCEED TO DISPOSE OF ALL THESE APPEALS BY THIS CONSOLIDATED ORDER. 2. IN THESE APPEALS, THE COMMON GROUND TAKEN BY THE ASSESSEE READS AS UNDER: M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 2 1. THE LD.CIT(A) ERRED ON FACTS IN DETERMINING THE LAND HAD NOT BEEN PRACTICALLY PURCHASED BY THE APPELLANT , WHERE THE APPELLANT HAD SUBMITTED THE LAND INVESTMENT DEE D AND NEXUS OF LAND PAYMENT WERE ARRANGED BY THE APPELLAN T. 2. THE LD.CIT(A) ERRED ON FACTS AND IN LAWS NITRAT ING THAT NO ANY EXPENSES WERE INCURRED TOWARDS CONSTRUCTION MATERIALS ETC. WHICH IS APPARENT PERVERSITY OF THE FACTS OF THE CASE. 3. THE LD.CIT(A) ERRED ON FACTS AND IN LAWS IN DIS ALLOW THE DEDUCTION ON THE GROUND THAT APPELLANT HAD CONSTRUC TED THE SHOP WHERE THE PROFIT FROM IT HAD BEEN OFFERED FOR TAX IN THE RETURN OF INCOME. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO DISALLOWE D CLAIM FOR DEDUCTION UNDER SECTION 80IB FOR THE ASSESSMENT YEAR S 2000-01, 2001-02, 2002-03 AND ASSTT.YEAR 2006-07 OF RS.11,24 ,990/- EACH AND FOR THE ASSTT.YEAR 2003-04 & 2004-05 OF RS.21,8 6,870/- EACH, ON THE GROUND THAT THE ASSESSEE HAS RECEIVED DEVELO PMENT CHARGES AT THE RATE OF 25% OF THE TOTAL RECEIPTS FR OM THE MEMBERS AND LABOUR CHARGES AT THE RATE OF RS.700/- PER SQ.Y ARD. ACCORDING TO THE AO, DEDUCTION UNDER SECTION 80IB IS ALLOWABLE TO THE ASSESSEE TO CARRY ON THE BUSINESS OF DEVELOPMENT AN D CONSTRUCTION OF HOUSE BUILDING. FURTHER, THE ASSES SEE HAS NOT INCURRED EXPENDITURE, SUCH AS PURCHASE OF CEMENT, P URCHASE OF STEEL, LABOUR EXPENSES ETC., AND THERE IS NO OPENIN G STOCK AS WELL AS WORK-IN-PROGRESS. THUS, THE ASSESSEE WAS NOT CA RRYING ON THE WORK OF DEVELOPMENT AND CONSTRUCTION OF HOUSE BUILD ING, BUT CARRYING ON AS A CONTRACTOR/AGENT. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO BY OBSERVING THAT THE SOCIETY, PUNIT (MOTERA) COOPERAT IVE HSG. SOCIETY LTD., AHMEDABAD WAS THE SOLE OWNER OF THE L AND AND THE M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 3 ASSESSEE HAS NOT INCURRED EXPENSES ON PURCHASES OF CEMENT, STEEL ETC. AND THAT THE ASSESSEE CONSTRUCTED AND SOLD SHO PS IN THE SCHEME, THE BUILT UP AREA OF WHICH EXCEEDS LIMIT OF 2000 SQ.FT PRESCRIBED IN CLAUSE (D) OF SECTION 80IB(10) WITH RE SPECT TO SHOPS CONSTRUCTED. 5. BEFORE US, THE AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THIS BENCH O F THE TRIBUNAL IN THE CASE OF SISTER CONCERN OF THE ASSESSEE, M/S. SKYLAND DEVELOPERS VS. ITO, IN ITA NO.1191, 1192 AND 1993/A HD/2011 DATED 9.6.2014, AS THE FACTS IN THAT CASE AND DEVEL OPMENT AGREEMENT ARE IDENTICAL IN THE CASE OF PRESENT ASSE SSEE ALSO. FURTHER, HE POINTED OUT FROM THE DEVELOPMENT AGREEM ENT PLACED AT PAGE NOS.29 TO 32 OF THE PAPER BOOK THAT CLAUSE (2) PROVIDES FOR GIVING ABSOLUTE POSSESSION AND RIGHT TO DEVELOP THE SCHEME ON THE SAID LAND SITUATED AT SURVEY NO.24/B, PAIKI T.P. SCHEME NO.21, FINAL PLOT NO.141/1 MOJE MOTERA, TAL. SUB-DI ST & DIST. GANDHINAGAR. FURTHER CLAUSE NO.(3) PROVIDES THAT T HE ASSESSEE WILL COLLECT THE LAND AMOUNT, CONSTRUCTION AMOUNT F ROM THE BOOKED MEMBERS AS FIXED BY THE ASSESSEE, AND ON RECEIPT OF FULL AMOUNT, POSSESSION OF CONSTRUCTED UNIT IS TO BE HANDED OVER TO THE MEMBERS BY THE ASSESSEE. WHERE THE AMOUNT OF LAND AND CONSTRUCTION WAS NOT RECEIVED, THE ASSESSEE HAD THE RIGHT TO HOLD THE POSSESSION OF THE PROPERTY AND CONSTRUCTION ON IT, AND THAT THE SOCIETY WILL NOT INTERFERE IN IT. FURTHER, IT ALS O PROVIDES THAT THE SOCIETY AFTER ENTERING INTO THE AGREEMENT WITH THE ASSESSEE, HAD NO RIGHT TO INTERFERE IN IT, AND TO ALLOW ANY OTHER PERSON TO ENTER THE SCHEME. THE CLAUSE (4) OF THE AGREEMENT ALLOWS THE ASSESSEE TO BOOK THE MEMBERS OF THE SCHEME AND COLLECT THE A MOUNT FOR IT. M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 4 THE ASSESSEE WAS ALLOWED TO MAKE THE AGREEMENT WITH THE MEMBERS OF THE SCHEME ON THE SAID PROPERTY, AND TO CARRY OUT THE WORK OF DEVELOPMENT AND CONSTRUCTION OF SCHEME OF P UNIT (MOTERA) CO-OP. SOCIETY LTD. THE RESIDENTIAL PLOTS AND SHOP S WERE TO BE CONSTRUCTED ON THE SAID LAND FOR MEMBERS, AND THEY HAVE TO PAY AMOUNT OF LAND AND CONSTRUCTION AS DECIDED BY THE A SSESSEE FROM TIME TO TIME. THE SOCIETY WAS TO GIVE ADDITIONAL A MOUNT TO THE ASSESSEE FOR OBTAINING ELECTRICITY CONNECTION FROM AEC, COST OF INSTALLATION OF LINE, LEGAL CHARGES ETC. FURTHER C LAUSE (6) OF THE AGREEMENT PROVIDES THAT THE ASSESSEE WAS TO APPOINT ENGINEER FOR THE SCHEME, AND ENTER INTO AGREEMENT WITH THE ENGIN EER. IT FURTHER PROVIDES THAT FOR THE PURCHASE OF LAND, ON WHICH THE CONSTRUCTION WAS TO BE DONE, THE AMOUNT WAS TO BE G IVEN BY THE ASSESSEE, AND DURING THE CONSTRUCTION PERIOD, IF AN Y FINANCE WAS REQUIRED, THE ASSESSEE WAS FREE TO OBTAIN LOAN FROM BANKS/FINANCIAL INSTITUTIONS. THE CLAUSE NO.(8) OF THE AGREEMENT PROVIDES THAT FOR CONSTRUCTION OF THE SCHEME, THE A SSESSEE WILL PURCHASE THE BUILDING MATERIAL, AND MAKE PAYMENT FO R IT, TO APPOINT CONTRACTOR AND TAKE NECESSARY DECISION IN T HIS REGARD. FURTHER, THE CLAUSE (10) PROVIDES THAT THE ASSESSEE SHALL HAVE RIGHT OF CONSTRUCTION, TOTAL SCHEME BOOK, DEVELOPME NT, ORGANIZATION OF THE SAID SCHEME, TO PLACE A REVISED PLAN OR TO REVISE THE PLAN FOR ADDITIONAL CONSTRUCTION TO BE M ADE IN FUTURE ON RECEIPT OF THE FSI. THE ASSESSEE WAS TO GIVE RECEI PTS FOR PAYMENT, TO GIVE ALLOTMENT LETTER AND TO GIVE POSSESSION TO MEMBERS, AND ALSO HAVE TO REMOVE DEFAULTING MEMBERS, AND CANCEL THEIR ALLOTMENT. FURTHER, CLAUSE (16) PROVIDES FOR PAYME NT OF DEVELOPMENT CHARGES TO THE ASSESSEE ON THE BASIS OF UNITS BOOKED AT THE RATE OF 25% OF THE TOTAL RECEIPTS FROM MEMBE RS AS WELL AS M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 5 RIGHT TO RECEIVE LABOR CHARGES AT RS.700/- PER SQUA RE FEET. ACCORDING TO THE AR, THIS CLAUSE ONLY PROVIDES FOR SHARE OF PROFITS FROM THE CONSTRUCTION OF THE SCHEME ON THE LAND. I T WAS, THEREFORE, PRAYER OF THE AR TO ALLOW CLAIM FOR DEDU CTION UNDER SECTION 80IB OF THE ACT TO THE ASSESSEE, AS CLAIMED IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL. 6. ON THE OTHER HAND, THE DR SUPPORTED THE ORDERS O F THE LOWER AUTHORITIES. 7 WE FIND THAT A SIMILAR ISSUE HAD COME UP BEFORE T HIS BENCH OF THE TRIBUNAL IN THE CASE OF M/S.SKYLAND DEVELOPE RS (SUPRA) WHEREIN THE TRIBUNAL HELD AS UNDER: 4. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE F ILED BEFORE US A COPY OF THE CONSOLIDATED ORDER OF THIS BENCH O F THE TRIBUNAL PASSED IN THE CASE OF THE ASSESSEE ITSELF IN ITA NO S. 1086 & 1087/AHD/2007 IN THE ASSESSMENT YEAR 2002-03 AND 20 03-04 DATED 11.03.2008 AND SUBMITTED THAT THE DISALLOWANC E OF DEDUCTION U/S. 80IB(10) TO THE ASSESSEE IN ASSESSME NT YEAR 2002-03 AND 2003-04 MADE BY THE ASSESSING OFFICER W AS DELETED BY THE COMMISSIONER OF INCOME TAX(APPEALS) ON APPEA L FILED BY THE ASSESSEE AND ON FURTHER APPEAL FILED BY THE REV ENUE, THE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) AND DISMISSED THE APPEAL OF THE REVENU E. HE FURTHER SUBMITTED THAT IN THE PRESENT YEARS UNDER C ONSIDERATION, THE PROJECT REMAINS THE SAME ON WHICH THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB(10). HE FURTHER SUBMITTED THAT THE REVENUE HAS NOT FILED ANY FURTHER APPEAL TO THE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2002-03 A ND 2003-04. THUS, THE ISSUE HAS ATTAINED FINALITY AND THEREFORE , FOLLOWING THE ORDER OF THE TRIBUNAL IN THE PRESENT YEARS OF THE A PPEAL ALSO, DEDUCTION U/S. 80IB(10) SHOULD BE ALLOWED TO THE AS SESSEE. 5. THE DEPARTMENTAL REPRESENTATIVE COULD NOT CONTRO VERT THE ABOVE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 6 6. WE FIND THAT THE TRIBUNAL IN ASSESSMENT YEAR 200 2-03 AND 2003-04 VIDE ORDER DATED 11.03.2008 HAS HELD AS UND ER: 6. THE CIT(A) CONSIDERING THESE FACTS IN 2002-03 ASSESSMENT YEAR TOOK SPECIFIC NOTE OF THE FACT THAT THE VIEW TAKEN IN 2000-01 ASSESSMENT YEAR IS THE LATEST IN P OINT OF TIME BY THE CIT(A) SINCE THE ORDER DATED 27.1.2006 WHEREAS THE ISSUE IN 2001-02 ASSESSMENT YEAR WAS DECIDED BY HIS PREDECESSOR ON 5.11.2004. ACCORDINGLY, TAKING INTO CONSIDERATION THESE FACTS HE WAS OF THE VIEW THAT T HE FACTS AND CIRCUMSTANCES AS TAKEN INTO CONSIDERATION BY HI S PREDECESSOR IN 2000-01 ASSESSMENT YEAR IN HIS ORDER DATED 27.1.2006 NEEDS TO BE FOLLOWED. BEING ALSO OF THE V IEW THAT THE DEDUCTION U/S 80IB(10) WHICH HAS BEEN CLAIMED I N CONTINUITY WITH THE EARLIER YEARS, THE FACTS AND CIRCUMSTANCES CONTINUED TO BE THE SAME, HE DIRECTED THE A.O. TO ALLOW THE DEDUCTION U/S 80IB FOR THE ASSESS MENT YEAR UNDER CONSIDERATION ALSO. FOR READY REFERENCE, WE REPRODUCE THE SPECIFIC FINDING ADDRESSING THE FACTS AND CIRCUMSTANCES TAKEN INTO CONSIDERATION BY THE CIT(A ) IN 2000-01 ASSESSMENT YEAR WHICH HAVE BEEN REPRODUCED IN PAGE 3 OF THE IMPUGNED ORDER AND CONSIDERED TO BE T HE .SAME IN THE YEAR UNDER CONSIDERATION ALSO:- 'THE RELEVANT PORTION OF THE APPELLATE ORDER OF MY LD. PREDECESSOR GIVEN IN APPEAL NO. CIT(A)-XV/ ITO. WD.9(L)/78/05-06 DATED 27/01/2006 IS REPRODUCED AS UNDER: 'I HAVE CONSIDERED THE SUBMISSIONS O F THE AUTHORISED REPRESENTATIVE CAREFULLY. THE APPEL LANT IS A SUPERVISION AND LABOUR CONTRACTOR. DURING TH E YEAR IN APPEAL THE APPELLANT HAS CARRIED OUT LAB OUR CONTRACT WORK AND SUPERVISION WORK FOR CONSTRUCTION OF FLATS FOR THE THREE CO. OP. HOUSING SOCIETIES I.E. PINK CITY (RANIP) CO. OP. HOUSING SOCIETY LTD., KAILASNATH (RANIP) CO. OP. HOUSING SOCIETY LTD. AND PRAKARSH (RANIP) CO. OP. HOUSING SOCIETY LTD. I FIND THAT THE APPELLANT HAS SATISFIE D ALL THE THREE CONDITIONS REQUIRED FOR DEDUCTION U/S. 80 IB OF THE I. T. ACT. THE APPELLANT HAS PROVIDED THE FU NDS TO THE SOCIETIES FOR ACQUIRING THE LAND IN THEIR NA MES AND THE SOCIETIES HAD PAID THE SALE CONSIDERATION T O ORIGINAL LAND OWNERS. THE APPELLANT GOT THE LAND CONVERTED BY N.A./NOC PROCEEDINGS. IN TURN, THE DEVELOPMENT RIGHT WAS GIVEN TO THE APPELLANT. THE DEVELOPMENT CHARGES OF MORE THAN RS. 25 LACS HAVE M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 7 BEEN PAID TO AUDA ON BEHALF OF THE SOCIETY AND THE APPELLANT HAS CARRIED OUT CONSTRUCTION WORK AS PER THE PLAN. AS PER THE CONDITIONS OF THE AGREEMENT, THE APPELLANT HAD PUT UP THE PLAN AND MADE PAYMENTS TO AUDA FOR THE DEVELOPMENT AND CONSTRUCTION OF THE SCHEME AS PER THE APPROVED PLAN. THE APPELLANT HAD ALSO GIVEN ADVERTISEMENT IN LOCAL NEWSPAPERS TO ATTRACT THE MEMBERS FOR BOOKING. THE APPELLANT HAD PREPARED GROUND WATER TANK, APPROACH ROAD AND CONSTRUCTION LIFT AT THE SITE OF HOUSING PROJECT. T HE APPELLANT HAD APPOINTED THE RCC CONTRACTORS AND OTHER LABOR CONTRACTOR AND EXPERTS TO CARRY OUT THE CONSTRUCTION AND DEVELOPMENT WORKS. THE APPELLANT HAD ALSO PURCHASED THE BUILDING MATERIALS AND MADE PAYMENTS TO THE RESPECTIVE PARTIES. IN VIEW OF THES E FACTS, I AGREE WITH THE AUTHORISED REPRESENTATIVE T HAT THE APPELLANT'S ROLE HAS BEEN THAT OF A FULL FLEDGE D CONTRACTOR/BUILDER IN HOUSING PROJECT. THE DEVELOPMENT CHARGES WERE FIXED @ 23% OF HOUSING PROJECT WHICH IS IN THE GUISE OF NET INCOME FROM TH E HOUSING SCHEME. THE APPELLANT IS INVOLVED FROM THE BEGINNING I.E. FROM THE TIME OF LAND PURCHASE TO TH E LAST STEP OF COMPLETION OF HOUSING PROJECT THESE FA CTS SHOW THAT THE APPELLANT HAS ACTUALLY CARRIED OUT TH E WORK OF CONSTRUCTION. I AGREE WITH THE CONTENTIONS OF THE AUTHORISED REPRESENTATIVE THAT IN A NORMAL COUR SE OF CONSTRUCTION BUSINESS, FOR ERECTING THE BUILDING AS PER PLAN, THE SOCIETY HAS TO ENTRUST SUCH VERY DIFF ICULT TASK TO EXPERIENCED CONTRACTOR/DEVELOPER, AS THE MEMBERS OF SOCIETY DO NOT HAVE ANY KNOWLEDGE OR EXPERTISE IN CONSTRUCTION AND DEVELOPMENT WORK AND FOR EFFECTIVE AND TIMELY COMPLETION OF SCHEME SUCH SOCIETY ENGAGED RELIABLE AND EXPERIENCED DEVELOPER/CONTRACTOR AND LABOUR CONTRACTOR; BY AN AGREEMENT BY STIPULATING CERTAIN CONDITIONS. THUS T HE SOCIETY IN THIS CASE HAS ENTRUSTED THE CONSTRUCTION AND LABOUR WORK TO THE APPELLANT FIRM AS PER THE TERMS AND CONDITIONS LAID DOWN IN THE DEVELOPMENT AND LABOUR AGREEMENT. IN A NORMAL COURSE OF CONSTRUCTION BUSINESS, THE SOCIETY HAS TO BEAR THE EXPENSES IN RESPECT OF ELECTRICITY CONNECTIONS, WIRE LINES AND LEGAL EXPENSE INCURRED FOR THE LAND ETC., AS THE A.B.C. CONNECTIONS ARE TO BE OBTAINED IN THE NAME OF THE SOCIETY. LAND IS ALSO PURCHASED BY THE SOCIETY. HEN CE FOR SUCH WORK, DEVELOPMENT CHARGES HAVE BEEN FIXED AT THE RATE OF 23% IN ADDITION TO RS. 700/- FOR LAB OUR CHARGES, WHICH HAS BEEN FIXED IN THE GUISE OF PROFI T M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 8 AND SUCH TYPE OF AGREEMENTS ARE COMMON IN THE CONSTRUCTION BUSINESS. FURTHER THE PROFIT DECLARED BY THE APPELLANT IS SUBSTANTIALLY HIGHER THAN THE PRESUMPTIVE PROFIT AS PER SECTION 44 AD OF THE INCOME-TAX ACT. IF MEMBERS COULD NOT BE BOOKED FOR THE VACANT PREMISES, THEN SUCH VACANT PREMISES ARE TO BE HELD BY THE APPELLANT AS PER CLAUSE NO.3 OF T HE DEVELOPMENT AGREEMENT. FOR THE CONSTRUCTION OF SCHEME, NECESSARY BUILDING MATERIALS HAVE B EEN PURCHASED AND PAYMENTS HAVE BEEN MADE AND THE LABOUR CONTRACTOR HAS BEEN APPOINTED FOR CONSTRUCTI ON WORK BY THE APPELLANT. THESE CLAUSES PROVE THAT THE OWNERSHIP AND THE RISK FACTOR IS THERE ON THE APPEL LANT FURTHER AS PER THE BROCHURE OF THE SCHEME, THE APPELLANT FIRM HAS BEEN SHOWN AS DEVELOPERS, WHICH INDICATES THE ROLE OF THE APPELLANT AS A DEVELOPER. ON A CONSIDERATION OF THE TOTALITY OF FACTS, I ARRIVE AT THE CONCLUSION THAT THE APPELLANT HAS ACTUALLY CARRIED OUT THE WORK OF DEVELOPMENT AND CONSTRUCTION, AS THERE WAS NO OTHER PERSON WHO HA S DONE THE WORK, AND THEREFORE, THE APPELLANT IS ENTI TLED TO DEDUCTION U/S. 801B OF THE I.T. ACT. FURTHER IT HAS BEEN HELD BY ITAT, MUMBAI IN THE CASE OF PATEL ENGINEERING LTD. VS. DCIT (2004) REPORTED IN 84 T TJ (MUM.) 646/94 ITD 411 THAT MERELY BECAUSE STATE GOVERNMENT PAID FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY CARRIED OUT BY THE ASSESSEE AS CONTRACTOR, IT CANNOT BE S AID THAT THE ASSESSEE HAD NO DEVELOPED INFRASTRUCTURE FACILITY AND FOR AVAILING DEDUCTION UNDER SECTION 80-IA, 'INFRASTRUCTURE FAC ILITY' SHOULD NOT NECESSARILY BE OWNED BY THE ASSESSEE. IT IS ALSO FOUND THAT THE WORDINGS OF SECTION 80IA(4) AND 80IB(10) ARE SIMILAR. RELYING ON THE RATIO LAID DOW N IN THE SAID CASE, THE APPELLANT IS HELD TO HAVE CARR IED OUT THE DEVELOPMENT WORK. ACCORDINGLY, T HE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/ S. 80IB(10) TO THE APPELLANT.' 7. IN THE LIGHT OF THE ABOVE FACTS BOTH THE PARTIES HAVE BEEN HEARD ALTHOUGH THE LD. D.R. PLACED RELIANCE ON THE ASSESSMENT ORDER, HOWEVER, CONFRONTED WITH THE ORDER OF THE TR IBUNAL IN THE CASE OF RADHE DEVELOPERS WHICH HAS CONSISTENTLY BEE N FOLLOWED BY THE AHMEDABAD BENCH IN THE CASE OF CONTRACTORS W HO HAVE BEEN HELD TO BE ENTITLED TO DEDUCTION U/S 80IB WHIC H HAS BEEN DENIED SOLELY ON THE GROUND THAT THE LAND WAS NOT O WNED BY THE DEVELOPER. THE ACTIVITY OF THE DEVELOPMENT HAS BEEN CARRIED ON BY THE CONTRACTOR-DEVELOPER AS PER THE AGREEMENT EN TERED INTO M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 9 WITH THE LAND OWNERS WHICH CARRIED ON THE DEVELOPME NTAL ACTIVITY IN TERMS OF THE AGREEMENT. SIMPLY BECAUSE THE LAND WAS NOT OWNED BY THE DEVELOPERS IT HAS CONSISTENTLY BEEN HE LD IS NOT A RELEVANT CRITERIA TO DISALLOW THE DEDUCTION CLAIMED NOT ONLY IN THE CASE OF RADHE DEVELOPERS BUT ALSO HAS BEEN CONSISTE NTLY FOLLOWED BY THE AHMEDABAD BENCHES. WE FIND NO MERIT IN THE DEPARTMENTAL APPEAL IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES AND POSITION OF LAW. THUS, SINCE THE FACTS AND CIRCUMSTANCES REMAIN IDENTICAL AND NO DISTINGUISHIN G FACT DESPITE SPECIFIC OPPORTUNITIES COULD BE POINTED OUT BY THE DEPARTMENT, RESPECTFULLY FOLLOWING THE ORDER OF THE AHMEDABAD B ENCH, WE DISMISS THE DEPARTMENTAL APPEAL. 8. IN THE RESULT, APPEAL IN ITA NO. 1086/ AHD / 2007 BY THE DEPARTMENT IS DISMISSED. 7. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE CASE, AS THE HOUSING PROJECT AND RELATED AGREEMENT IS THE SA ME WHICH WAS IN THE ASSESSMENT YEAR 2002-03 AND 2003-04 IN THE Y EARS INVOLVED IN THE PRESENT APPEAL AND THE FACT THAT TH E DECISION OF THE TRIBUNAL IN THE CASE OF RADHE DEVELOPERS WHICH WAS RELIED UPON BY THE TRIBUNAL IN THE ABOVE QUOTED ORDER HAS SINCE BEEN AFFIRMED BY THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. RADHE DEVELOPERS (2012) 341 ITR 403, WE SET ASIDE T HE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE CLAIM FOR DEDUC TION U/S. 80IB(10) TO THE ASSESSEE FOR RS 17,48,939/- IN ASS ESSMENT YEAR 2000-01, RS 35,53,660/- IN ASSESSMENT YEAR 2001-02 AND RS 9,56,170/- IN ASSESSMENT YEAR 2006-07. 8 WE, THUS, FIND THAT THE FACTS IN THE PRESENT APPE AL ARE SIMILAR AS WERE IN THE CASE OF M/S.SKYLAND DEVELOPERS (SUPR A) EXCEPT THAT IN THE INSTANT CASE, IT HAS ALSO BEEN ALLEGED BY TH E REVENUE THAT THE ASSESSEE HAS NOT DEBITED PURCHASE OF CEMENT, ST EEL ETC. IN THE PROFIT & LOSS ACCOUNT. THUS, WE FIND THAT IT IS NO T IN DISPUTE THAT THE ASSESSEE HAS ACTUALLY MADE PURCHASES OF CEMENT, STEEL ETC. ACTUALLY, THE AR OF THE ASSESSEE EXPLAINED THAT AS PER THE TERMS OF AGREEMENT, THE ASSESSEE WAS ENTITLED TO RECEIVE ALL THE EXPENDITURE INCURRED FOR MATERIALS AND 25% ABOVE TH AT AMOUNT, APART FROM LABOUR CHARGES AT RS.700/- PER SQUARE FE ET. THUS, THE AGREEMENT FOR DEVELOPMENT WAS COST-PLUS-METHOD. TH E ASSESSEE INSTEAD OF DEBITING THE COST OF MATERIAL IN THE PRO FIT & LOSS ACCOUNT M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 10 AND CREDITING THE PROFIT & ACCOUNT WITH COST, AND 2 5% THEREOF HAS CREDITED THE PROFIT & LOSS ACCOUNT WITH ONLY 25% OF THE COST OF MATERIAL AND SET OFF THE EXPENSES INCURRED FOR COST OF MATERIAL WITH CORRESPONDING RECEIPTS. IN OUR CONSIDERED VIEW, SI MPLY BECAUSE OF THE ABOVE PRESENTATION OF ACCOUNT, WHICH MAY NOT BE FULLY CORRECT, THE ASSESSEE CANNOT BE DENIED DEDUCTION UNDER SECTI ON 80IB, IF THE ASSESSEE IS OTHERWISE ELIGIBLE FOR THE SAME. A S WE FIND THAT APART FROM THE ABOVE, OTHER FACTS INVOLVED IN THE I NSTANT CASE IS SIMILAR TO THE FACTS IN THE CASE OF M/S.SKYLAND DEV ELOPERS (SUPRA), THE SAID DECISION IS SQUARELY APPLICABLE IN THE INS TANT CASE. 9. FURTHER, REGARDING THE AMENDMENT BROUGHT TO SECT ION 80IB(10) BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 1.4. 2005 BY INSERTING CLAUSE (D), WHICH PROVIDES THAT NO DEDUCT ION WAS ALLOWABLE TO THE ASSESSEE WHERE THE BUILT-UP AREA O F THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOU SING PROJECT EXCEEDS 5% OF THE AGGREGATE BUILT UP AREA OF THE HO USING PROJECT OR 2000 SQ.FEET, WHICHEVER IS HIGHER. THE ISSUE NO W STANDS DECIDED BY THE HONBLE GUJARAT HIGH COURT IN THE CA SE OF MANAN CORPORATION VS. ACIT, (2013) 356 ITR 44 (GUJ) WHERE IN IT WAS HELD AS UNDER: THE OBJECT OF SECTION 80-IB(10) OF THE INCOME-TAX A CT, 1961, WAS ESSENTIALLY TO PROVIDE INCENTIVE TO UNDERTAKING S IN DEVELOPING AND BUILDING HOUSING PROJECTS. SECTION 8 0-IB(10) ORIGINALLY INDICATED 100 PER CENT. DEDUCTION ON THE PROFITS DERIVED FROM HOUSING PROJECTS APPROVED BY A LOCAL A UTHORITY SUBJECT TO CERTAIN CONDITIONS SET OUT IN THE PROVIS ION. HOWEVER, THIS PROVISION WAS AMENDED BY THE FINANCE (NO. 2) ACT, 2004, WITH EFFECT FROM APRIL 1, 2005. BY VIRTUE OF THE AMENDMENT HAVING COME INTO EFFECT FROM APRIL 1, 200 5, DEDUCTION IS PERMISSIBLE TO HOUSING PROJECTS HAVING RESIDENTIAL UNITS WITH COMMERCIAL UNITS TO THE EXTE NT PERMITTED THEREIN. CLAUSE (D) HAS BEEN INTRODUCED, WHICH M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 11 PROVIDES THAT THE BUILT-UP AREA OF THE SHOPS AND OT HER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING P ROJECT SHOULD NOT EXCEED 3 PER CENT. (WITH EFFECT FROM APR IL 1, 2005) OF THE AGGREGATE BUILT UP AREA OF HOUSING PRO JECT OR 5,000 SQ. FT., WHICHEVER IS HIGHER OR 2000 SQ. FT., WHICHEVER IS LESS FROM APRIL 1, 2010. THE AMENDMENT COULD NOT BE HELD TO BE RETROSPECTIVE AS THERE WAS NO EXPLICIT AND SP ECIFIC WORDING EXPRESSING RETROSPECTIVITY AND EVEN IF IT I S ASSUMED FOR THE SAKE OF ARGUMENT THAT IT IS TO BE READ BY I MPLICATION THAT DOES NOT APPEAR TO BE REASONABLE. A TAXING STA TUTE GRANTING INCENTIVES FOR PROMOTING ECONOMIC GROWTH A ND DEVELOPMENT SHOULD BE LIBERALLY CONSTRUED TO FACILI TATE AND ADVANCE THE OBJECTIVES OF THE PROVISION. WHEN THERE ARE TWO POSSIBILITIES OF INTERPRETATION OF A TAXING STATUTE , THAT WHICH IS FAVOURABLE TO THE ASSESSEE SHOULD BE ALWAYS PREF ERRED. MOREOVER, THE GOVERNMENT OF INDIA, MINISTRY OF FINA NCE, DEPARTMENT OF REVENUE ISSUED INSTRUCTION NO. 4 OF 2 009 TO ALL CHIEF COMMISSIONERS OF INCOME-TAX AND ALL DIREC TORS- GENERAL OF INCOME-TAX TO THE EFFECT THAT THE DEDUCT ION IN RESPECT OF SECTION 80-IB(10) OF THE ACT WOULD BE AVA ILABLE ON YEAR TO YEAR BASIS WHERE THE ASSESSEE SHOWING PROFI TS ON PARTIAL COMPLETION OR ON THE YEAR OF COMPLETION OF THE PROJECT. FROM A READING OF THE INSTRUCTION, IT CAN BE ALSO SAID THAT THE GOVERNMENT BEING AWARE OF BOTH THE ACCOUNT ING METHODS HAS EXPECTED EITHER OF THEM TO BE FOLLOWED IN CASES OF INDIVIDUAL ASSESSEES. HOWEVER, IN THE POST-AMEND MENT PERIOD, STRICT ADHERENCE TO THE COMPLETION PERIOD O F FOUR YEARS IS INSISTED UPON WHERE THE PROJECT COMPLETION METHOD IS FOLLOWED. THIS LIMITATION OF PERIOD DID NOT EXIS T PRIOR TO THE AMENDMENT. THE AMENDMENT CANNOT DISCRIMINATE AGAINS T THOSE FOLLOWING THE PROJECT COMPLETION METHOD IF IN THE INTERREGNUM PERIOD, AMENDMENT IS BROUGHT IN THE STA TUTE. THERE WERE TWO PROJECTS OF THE ASSESSEE, NAMELY, KP AND PP, IN RESPECT OF OF THE PROFITS EARNED FROM WHICH THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80-IB(10) IN THE ASSESSMENT YEAR 2006-07 . THE WHOLE PROJECT WAS APP ROVED AND COMPLETED PRIOR TO THE INSERTION OF THE AMENDED PROVISION OF SECTION 80-IB(10) OF THE ACT WITH EFFEC T FROM APRIL 1, 2005. THE ASSESSING OFFICER DENIED THE DED UCTION ON TWO COUNTS, NAMELY, THAT THE ASSESSEE FAILED TO CAR RY OUT ITS OBLIGATION NECESSARY FOR CLAIMING SUCH DEDUCTION AN D THAT THE ASSESSEE VIOLATED THE CONDITION LAID DOWN UNDER THE PROVISION. THE PRINCIPAL OBJECTION WAS OF NON-FULFI LMENT OF THE M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 12 CONDITION OF LIMITATION OF BUILT UP AREA BEING MORE THAN 1,500 SQ. FT AND ITS RATIO TO COMMERCIAL SHOPS BEING MORE THAN 5 PER CENT. OF THE CREATED BUILT UP AREA OF HOUSING P ROJECT OR 2,000 SQ. FT, WHICH EVER IS LESS. THIS WAS UPHELD B Y THE TRIBUNAL. ON APPEAL TO THE HIGH COURT : HELD, THAT THERE WAS NO CRITERIA FOR MAKING COMMERC IAL CONSTRUCTION PRIOR TO THE AMENDMENT OF THE SECTION AND THE PLANS WERE APPROVED AS HOUSING PROJECTS BY THE LOCA L AUTHORITY FOR BOTH THE PROJECTS OF THE ASSESSEE. PE RMISSION FOR CONSTRUCTION OF SHOPS HAD BEEN ALLOWED BY THE L OCAL AUTHORITY IN ACCORDANCE WITH RULES AND REGULATIONS, KEEPING IN MIND PRESUMABLY THE REQUIREMENT OF LARGE TOWNSHI PS. HOWEVER, THE PROJECTS ESSENTIALLY REMAINED RESIDENT IAL HOUSING PROJECTS AND THAT WAS ALSO QUITE APPARENT F ROM THE CERTIFI-CATES ISSUED BY THE LOCAL AUTHORITY AND, TH EREFORE, NEITHER THE ABSENCE OF SUCH PROVISION OF COMMERCIAL SHOPS NOR ON ACCOUNT OF SUCH COMMERCIAL CONSTRUCTION HAVI NG EXCEEDED THE AREA CONTEMPLATED IN THE PROSPECTIVE AMENDMENT COULD THE DEDUCTION BE DENIED TO THE ASSE SSEE WHOSE PLANS WERE SANCTIONED ACCORDING TO THE PREVAL ENT RULES. THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 80-IB(10) . 10. IN THE INSTANT CASE, THE PROJECT WAS APPROVED B Y THE AHMEDABAD URBAN DEVELOPMENT AUTHORITY VIDE PERMISSIO N DATED 11.6.1999, WHICH WAS BEFORE THE DATE OF AMENDMENT T O SECTION 80IB(10) W.E.F. 1.4.2005. THEREFORE, THIS AMENDMENT IS NOT APPLICABLE TO THE PROJECT UNDER CONSIDERATION, IN V IEW OF THE ABOVE QUOTED DECISION OF THE HONBLE GUJARAT HIGH COURT. THEREFORE, WE HOLD THAT FOR THE ABOVE CITED REASONS, THE AO WAS N OT JUSTIFIED IN NOT ALLOWING DEDUCTION UNDER SECTION 80IB(10) TO THE ASSESSEE FOR THE ASSESSMENT YEARS 2000-01, 2001-02, 2002-03 AND ASSTT.YEAR 2006-07 OF RS.11,24,990/- EACH AND FOR THE ASSTT.YE AR 2003-04 & 2004-05 OF RS.21,86,870/- EACH. HENCE, WE SET ASID E THE ORDERS M/S.MEGHA DEVELOPERS VS. ACIT (6 APPEALS) 13 OF THE LOWER AUTHORITIES AND DIRECT THE AO TO ALLOW DEDUCTION TO THE ASSESSEE UNDER SECTION 80IB(10) OF THE ACT. 11. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 19 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED /06/2015