The ITO, Ward-3(1), Baroda V. M/s. Amar Corporation, Baroda

ITA 12/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72929 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 27-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-01-2011
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO. 12/AHD/2011 A.Y. 2006-07 ITA NO. 13/AHD/2011 A.Y. 2007-08 INCOME TAX OFFICER WD-3(1), BARODA. VS M/S AMAR CORPORATION 3/B, RUKSHMANI NAGAR OPP. JAI JYOT APARTMENTS NEW SAMA ROAD, BARODA PAN: AAKFA8894N (APPELLANT) (RESPONDENT) REVENUE BY : SH. O.P. BATHEJA, SR.D.R. ASSESSEE(S) BY : NONE / // / DATE OF HEARING : 27/01/2014 !'# / DATE OF PRONOUNCEMENT : 29/01/2014 $% $% $% $%/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF CIT/A-II, BARODA FOR ASSESSMENT YEARS 2006-07 AND 2007-08, BOTH DATED 27.09.2010. 2. THE SOLE ISSUE INVOLVED IN BOTH THE APPEALS IS T HAT THE LD. CIT(A) ERRED IN DIRECTING ASSESSING OFFICER TO ALLO W DEDUCTION U/S 80IB(10) READ WITH SECTION 80IB(1) OF THE INCOME TAX ACT TO THE ASSESSEE IN VIEW OF THE DECIS ION OF THE ITA NOS.12 & 13/AHD/2011 M/S AMAR CORPORATION VS ITO, WD-3(1), BARODA. FOR A.Y. 2006-07 & 2007-08 - 2 - HONBLE ITAT IN THE CASE OF M/S RADHE DEVELOPERS IN ITA NO. 2482/AHD/2006 DATED 26.06.2007 WITHOUT APPRECIA TING THAT THE APPROVAL BY THE LOCAL AUTHORITY AS WELL AS COMPLETION CERTIFICATE WAS NOT GRANTED TO THE ASSESSEE BUT TO THE LAND OWNER AND THE RIGHTS AND OBLIGATIONS UNDER THE SAID APPROVAL WERE NOT TRANSFERABLE, AND THAT TRANSFER OF DWELLIN G UNITS IN FAVOUR OF THE END-USERS WAS MADE BY LAND OWNER AND NOT BY THE ASSESSEE. 3. THE FACTS OF THE CASE IN BOTH THE YEARS UNDER CO NSIDERATION ARE THAT IN THE RETURN OF INCOME FILED THE ASSESSEE CLA IMED DEDUCTION U/S 80IB(10) OF RS 29,37,018/- IN THE ASS ESSMENT YEAR 2007-08 WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE WAS NOT OWNER OF TH E PROPERTY AND PERMISSION WAS NOT GRANTED IN THE ASSESSEES NA ME AND THE APPROVAL BY VADODARA MUNICIPAL CORPORATION WAS IN T HE NAME OF ORIGINAL LAND OWNER AND NOT IN THE NAME OF ASSES SEE DEVELOPERS AND THE ORIGINAL LAND OWNER HAS ASKED SE RVICES OF ASSESSEE FIRM FOR DEVELOPMENT AND CONSTRUCTION OF T HE PROJECT. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER OBSERVE D THAT THE FUNDAMENTAL CONDITION THAT APPROVAL MUST BE ACCORDE D IN ASSESSEES NAME WAS NOT SATISFIED AND THEREFORE, HE DENIED THE CLAIM FOR DEDUCTION U/S 80IB(10) TO THE ASSESSEE IN BOTH THE YEARS UNDER CONSIDERATION. 4. THE ASSESSEE BEFORE THE LD. CIT(A) CONTENDED AS UNDER: ITA NOS.12 & 13/AHD/2011 M/S AMAR CORPORATION VS ITO, WD-3(1), BARODA. FOR A.Y. 2006-07 & 2007-08 - 3 - 2.2. IT IS CONTENDED BY THE COUNSEL THAT SIMILAR IS SUE CAME UP BEFORE THE HON'BLE ITAT, AHMEDABAD, IN ITA NO.2482/AHD./20 06 IN THE CASE OF M/S. RADHE DEVELOPERS & OTHERS. THE ITAT, AHMEDA BAD HELD THAT FOR THE PURPOSE OF CLAIMING DEDUCTION U/S. 80IB(1Q) OF THE ACT, IT IS NOT NECESSARY FOR THE ASSESSEE TO OWN THE LAND. SINCE S UCH CONDITION IS NOT MENTIONED IN THE SECTION IT WOULD NOT BE CORREC T TO DENY DEDUCTION ON THIS GROUND. THE COUNSEL HAS REQUESTED TO DELETE THE ADDITIONS MADE AND ALLOW DEDUCTIONS U/S. 80IB(10). THE APPELL ANT REFERRED RELEVANT PARAS OF THE ORDER OF ITAT. '28. THE CONTENTION OF REVENUE AUTHORITY THAT TO CL AIM DEDUCTION U/S 80IB(10), THERE IS A CONDITION PRECED ENT THAT THE ASSESSEE MUST BE OWNER OF THE LAND ON WHICH HOUSING PROJECT IS CONSTRUCTED HAS NO FORCE WE DO NOT FIND ANY SUCH CO NDITION AS APPEARING IN THE PROVISION OF THE SECTION EXTRACTED ABOVE. A PLAIN READING OF SUBSECTION (10) OF SEC.80IB REVEAL S AND MAKES IT EVIDENT THAT THERE MUST BE AN UNDERTAKING DEVELO PING AND BUILDING A HOUSING PROJECT AS APPROVED BY A LOCAL A UTHORITY. IT DOES NOT HAVE ANY FURTHER CONDITION THAT SUCH DEVEL OPMENT AND BUILDING OF THE HOUSING PROJECT SHOULD ALSO BE ON A LAND OWNED BY AN ASSESSEE UNDERTAKING. IT MIGHT BE TRUE THAT T HE LAND BELONGS TO THE PERSONS WHO HAS ENTERED INTO AN AGRE EMENT WIT THE ASSESSEE TO DEVELOP AND BUILD HOUSING PROJECT B UT ON A PERUSAL OF THE AGREEMENT AS NARRATED ABOVE, IT IS E VIDENT THAT THE DEVELOPMENT AND BUILDING WORK HAS BEEN CARRIED OUT BY THE ASSESSEE IN PURSUANCE OF A TRIPARTITE AGREEMENT AND IT IS NOT BY THE LAND OWNERS. THEREFORE, THE MERE FACT THAT THE LAND-OWNER AND THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT, ARE TWO DIFFERENT ENTITIES WOULD NOT MAKE ANY DIFFE RENCE. THE DEDUCTION WOULD BE ELIGIBLE TO THE PERSON WHO IS DE VELOPING AND BUILDING HOUSING PROJECT AND NOT TO THE MERE OWNER THEREOF. 29. IT IS ALSO THE CASE OF THE REVENUE THAT THE ASS ESSEE WAS A MERE CONTRACTOR DEVELOPING AND BUILDING HOUSING P ROJECT AND THEREFORE, IT COULD NOT BE A DEVELOPER. WE FAIL TO UNDERSTAND AS TO HOW SUCH A SITUATION COULD EMERGE. A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON IS NO DOUBT A CONTRA CTOR. HAVING ENTERED INTO AGREEMENTS WITH LANDOWNERS FOR DEVELOP MENT AND BUILDING THE HOUSING PROJECT, WAS OBVIOUSLY A CONTR ACTOR BUT IT DOES NOT DEROGATE THE ASSESSEE FOR BEING A DEVELOPE R, AS WELL. THE TERM CONTRACTOR IS NOT ESSENTIALLY CONTRADICTOR Y TO THE TERM DEVELOPER. AS STATED ABOVE IT IS THE UNDERTAKING TH AT DEVELOPS OR BUILDS THE HOUSING PROJECT THAT IS ENTITLED TO D EDUCTION ITA NOS.12 & 13/AHD/2011 M/S AMAR CORPORATION VS ITO, WD-3(1), BARODA. FOR A.Y. 2006-07 & 2007-08 - 4 - IRRESPECTIVE OF THE FACT WHETHER THAT IT IS THE OWN ER OR NOT OR WHETHER IT IS THE CONTRACTOR THEREOF THE REQUIREMEN T FOR CLAIMING DEDUCTION IS THAT SUCH AN UNDERTAKING MUST DEVELOP AND BUILD HOUSING PROJECT, BE IT ON THEIR OWN LAND OR ON THE LAND OF OTHERS AND FOR WHICH A TRIPARTITE AGREEMENT HAS BEEN ENTER ED INTO FOR DEVELOPMENT AND BUILDING HOUSING PROJECT; OR BE THE ASSESSEE A CONTRACTOR FOR DEVELOPING AND BUILDING HOUSING PROJ ECT OR AN OWNER OF THE LAND. '45. THEREFORE, LOOK AT FROM ANY ANGLE, WE ARE OF T HE CONSIDERED OPINION, THAT TO CLAIM DEDUCTION FOR DEV ELOPING AND BUILDING HOUSING PROJECT, IT IS NOT NECESSARY THAT ASSESSEE MUST BE AN OWNER OF THE LAND AND IT WOULD BE SUFFICIENT IF HE WAS AN UNDERTAKING DEVELOPS AND BUILD HOUSING PROJECT. THE ASSESSEE IS ALSO THE OWNER OF THE PROJECT, THOUGH THE TITLE DOES NOT VEST IN IT.' THE LEARNED AUTHORIZED REPRESENTATIVE VIPUL SHAH, A DVOCATE ALSO BROUGHT TO MY NOTICE THE DECISION OF THE HON'BLE IT AT IN THE CASE OF ITO AND OTRS. VS. SHAKTI CORPORATION BARODA IN ITA NO. 1503/AHD/2008 DATED 07.11.2008 WHEREIN FOLLOWING TH E DECISION OF THE SUPREME COURT IN THE CASE OF FAQUIR CHAND GULALTI V S. UPPAL AGENCIES PVT. LTD. & ANR. (CIVIL APPEAL NO. 3302 OF 2005) DATED 10.07.2008 HELD THAT '16. THE FACTS INVOLVED IN THE CASE OF THE ASSESSES ARE SIMILAR TO THE FACTS IN THE CASE OF RADHE DEVELOPERS (SUPRA) A ND ACCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEE HA S ACQUIRED THE DOMINANT OVER THE LAND AND HAS DEVELOPED THE HO USING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING AL L THE RISKS INVOLVED THEREIN. WE MAY MENTION HERE THAT, IN OUR OPINION, THE DECISION IN THE CASE OF RADHE DEVELOPERS (SUPRA) WI LL NOT APPLY IN A CASE WHERE THE ASSESSEE HAS ENTERED INTO THE A GREEMENT FOR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE HOUSING PROJECT ON BEHALF OF THE LANDOW NER. THE AGREEMENT ENTERED INTO IN THAT CASE WILL NOT ENTITL E THE DEVELOPER TO HAVE THE DOMINANT CONTROL OVER THE PRO JECT AND ALL THE RISKS INVOLVED THEREIN WILL VEST WITH THE LANDO WNER ONLY. THE INTEREST OF THE DEVELOPER WILL BE RESTRICTED ONLY F OR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RENDERING THE SE RVICES. THE DECISION IN THE CASE OF RADHE DEVELOPERS (SUPRA) HA S NOT DEALT WITH SUCH SITUATION. THE PROPOSITION OF LAW LAID DO WN IN THE CASE OF RADHE DEVELOPERS CANNOT BE APPLIED UNIVERSALLY W ITHOUT LOOKING INTO THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE DEVELOPER ALONG WITH THE LANDOWNER. IN THE CASE OF SHAKTI CORPORATION SINCE THE ASSESSEE HAS FILED COPY OF TH E ITA NOS.12 & 13/AHD/2011 M/S AMAR CORPORATION VS ITO, WD-3(1), BARODA. FOR A.Y. 2006-07 & 2007-08 - 5 - DEVELOPMENT AGREEMENT AND CRUX OF THE AGREEMENT IS THAT THE ASSESSEE HAS PURCHASED THE LAND AND HAS DEVELOPED T HE HOUSING PROJECT AT ITS OWN, THEREFORE, WE ARE OF TH E VIEW THAT THE ASSESSEE WILL BE ENTITLED FOR THE DEDUCTION U/S. 80 IB(10). THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F FAQIR CHAND GULATI (SUPRA) WILL NOT ASSIST THE REVENUE, A S THE AGREEMENT IS NOT SHARING OF THE CONSTRUCTED AREA. I N OTHER CASES THE COPY OF AGREEMENT SINCE HAS NOT BEEN SUBMITTED BEFORE US, IF SUBMITTED, THE TERMS AND CONDITIONS OF THE AGREE MENT WERE NOT SPECIFICALLY ARGUED BEFORE AND PLACED BEFORE US , WE THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THE ORDER OF THE CIT(A) AND RESTO RE ALL OTHER APPEALS TO THE FILE OF THE ASSESSING OFFICER WITH T HE DIRECTION THAT THE ASSESSING OFFICER SHALL LOOK INTO THE AGREEMENT ENTERED INTO BY EACH OF THE ASSESSEE WITH THE LANDOWNER AND DECI DE WHETHER THE ASSESSEE HAS IN FACT PURCHASED THE LAND FOR A F IXED CONSIDERATION FROM THE LANDOWNER AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN COST AND RISKS INVOLVED IN THE PROJECT. IN CASE THE ASSESSING OFFICER FINDS THAT PRACTICALL Y THE LAND HAS BEEN BOUGHT BY THE DEVELOPER AND DEVELOPER HAS ALL DOMINANT CONTROL OVER THE PROJECT AND HAS DEVELOPED THE LAND AT HIS OWN COST AND RISKS, THE ASSESSING OFFICER SHOULD ALLOW THE DEDUCTION TO THE ASSESSEE U/S. 80IB(10). IN CASE THE ASSESSIN G OFFICER FINDS THAT THE DEVELOPER HAS ACTED ON BEHALF OF THE LANDOWNER AND HAS GOT THE FIXED CONSIDERATION FROM THE LANDOW NER FOR THE DEVELOPMENT OF THE HOUSING PROJECTS, THE ASSESSEE S HOULD NOT BE ALLOWED DEDUCTION U/S. 80IB(10).' 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, VACATED THE DISALLOWANCE BY OBSERVING AS UNDER: 2.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL AND FACTS OF THE CASE AND THE RECENT DECISION OF HON'BL E ITAT, AHMEDABAD, IN THE CASE OF M/S. RADHE DEVELOPERS & OTHER VIDE O RDER IN ITA NO. 2482/AHD/2006 DATED 29.06.2007. THE ASSESSING OFFIC ER VIDE HIS LETTER DATED 10.09.2010 HAS INFORMED THAT THE APPELLANT HA S FULFILLED ALL THE CONDITIONS AS STIPULATED IN THE ABOVE DECISIONS. 3. IN THE RESULT, THE APPEAL IS ALLOWED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON REC ORD. THE ITA NOS.12 & 13/AHD/2011 M/S AMAR CORPORATION VS ITO, WD-3(1), BARODA. FOR A.Y. 2006-07 & 2007-08 - 6 - LD. DR ADMITTED THAT THE ORDER OF LD. CIT(A) IS IN CONFORMITY OF THE ORDER OF THE ASSESSING OFFICER AND THAT THE DEPARTMENT HAS NO GRIEVANCE AGAINST THE ORDER OF THE LD. CIT(A ) AND FAIRLY CONCEDED THAT THIS APPEAL OUGHT NOT TO HAVE BEEN FI LED BEFORE THE TRIBUNAL. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A ) WHICH IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 7 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 29 TH JANUARY, 2014 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 29/01/2014 GHANSHYAM MAURYA GHANSHYAM MAURYA GHANSHYAM MAURYA GHANSHYAM MAURYA, SR. P , SR. P , SR. P , SR. P. .. .S SS S. .. .