Shri Uma Developers, Baroda V. The Income tax Officer,Ward-3(2), Baroda

ITA 1244/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5869 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-08-2008
• Assessment Year: 2004-2005
• Appeal Filed On: 08-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SJRO P R GHOSH
• Keywords: Set aside
• Section: 234B; 80IB

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER SHRI UMA DEVELOPERS, A-6, RAJLAXMI SOCIETY, NEW SAMA ROAD, BARODA. VS. INCOME-TAX OFFICER, WARD 3(2), VADODARA. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- NONE REVENUE BY:- SJRO P. R. GHOSH, DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS:- 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ACTION OF AO IN DISALLOWING THE CLAIM FOR DEDUC TION OF RS.3,34,360/- U/S 801B (10) OF THE INCOME TAX ACT, 1961, 2 . THE LEARNED CIT(A) AND ASSESSING OFFICER, BOTH LOWE R AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN NOT A PPRECIATING THE FACT THAT THE APPELLANT IS A DEVELOPER AND BUILDERS ONLY FOR HOUSING PROJECTS BY FULFILLING THE REQUIREMENTS AS REQUIRED FOR CLAIMING DEDUCTION U/S 80IB (10) OF THE AC. THOUGH THE PERMISSION BY THE LOCAL AUTHORITY WAS, GRANTED AS RESIDENTIAL-CUM-COMMERCIAL PROJECT, BUT THE APPELLA NT HAD AGREEMENT WITH THE LAND OWNER TO DEVELOP RESIDENTIA L PORTION OF THE PROPERTY ONLY AND THE APPELLANT HAS RIGHTFULLY CLAI MED DEDUCTION U/S 80IB(10) OF THE ACT. ITA NO.1244/AHD/2008 ASST. YEAR :2004-05 2 3. THE LEARNED CIT(A) BARODA HAS ALSO NOT CONSIDERE D THE JUDGEMENT OF THE HON. TRIBUNAL IN CASE OF RADHE DEV ELOPERS AND OTHERS VIDE ORDER DT. 29/06/2007. 4. THE LEARNED CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN CONFIRMING THE LEVY OF INTEREST U/S 234B & 234D OF THE ACT. INITIATION OF PENALTY U/S 271 (1) (C) OF THE ACT IS NOT JUSTIFIED, 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL IS WHETHE R THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) TREATI NG IT AS DEVELOPER. THE AO HAD DISALLOWED THE CLAIM ON THE GROUND THAT ASSE SSEE IS ONLY A CONTRACTOR AND NOT THE LAND OWNER. THE LD. CIT(A) E XAMINED THE PROVISIONS OF SECTION 80IB(10) AND FOUND THAT DEDUC TION 80IB(10) WOULD BE AVAILABLE IF FOLLOWING FIVE CONDITIONS ARE FULFI LLED:- (1) UNDERTAKING SHOULD DEVELOP AND BUILD HOUSING PROJEC TS. (2) SUCH HOUSING PROJECT SHOULD BE APPROVED BEFORE 31 ST MARCH 2005. (3) THE UNDERTAKING HAS COMMENCED DEVELOPMENT AND CONST RUCTION OF SUCH HOUSING PROJECT AFTER 1 ST OCTOBER, 1998. (4) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WITH M INIMUM ONE ACRE AREA. (5) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP AREA OF 1500 SQ. FT. IN CITIES OTHER THAN DELHI AND MUMBAI. HE HELD THAT ALL THE FIVE CONDITIONS ARE REQUIRED T O BE CUMULATIVELY SATISFIED FOR GRANTING DEDUCTION UNDER SECTION 80IB (10). THE CONDITIONS NO.1 TO 5 ARE NOT SATISFIED IN THE CASE OF THE ASSE SSEE. THE LD. CIT(A) CARRIED OUT DETAILED DISCUSSION. ACCORDING TO HIM O UT OF ALL THE POINTS IF TWO CONDITIONS ARE NOT SATISFIED THEN ASSESSEE WILL NOT GET DEDUCTION UNDER SECTION 80IB(10). HE ALSO DID NOT ALLOW PROPORTIONA TE DEDUCTION CLAIMED BY THE ASSESSEE ON THE PART OF THE PROJECTS COMPLET ED. FINALLY FOLLOWING THE DECISION OF ITAT MUMBAI BENCH IN LAUKIK DEVELOP ERS VS. DCIT 105 ITD 567, LD. CIT(A) HELD THAT PROJECT APPROVED BY L OCAL AUTHORITY AS 3 UNDERTAKEN BY THE ASSESSEE WAS RESIDENTIAL-CUM-COMM ERCIAL PROJECT AND, THEREFORE, IS NOT ELIGIBLE FOR DEDUCTION UNDER SECT ION 80IB(10). 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. 4. I HAVE HEARD THE LD. DR AND CAREFULLY PERUSED TH E MATERIAL ON RECORD. THE DECISION IN THE CASE OF LAUKIK DEVELOPE RS (SUPRA) HAS BEEN OVERRULED BY ITAT, PUNE (SPECIAL BENCH) IN BRAHMA A SSOCIATES VS. JT.CIT (OSD) (2009) 119 ITD255 (PUNE) (SB). THEREFO RE, THAT CASE WOULD NOT BE APPLICABLE. HOWEVER, IT HAS TO BE DECI DED FOR THE PURPOSES OF ALLOWABILITY UNDER SECTION 80IB(10) WHETHER ASSE SSEE IS A CONTRACTOR OR A DEVELOPER. IF ASSESSEE HAS OWNING A LAND AND CARR YING OUT DEVELOPMENT THEN IT WOULD BE A CASE OF DEVELOPER WHEREAS IF ASS ESSEE IS MERELY CARRYING OUT CONSTRUCTION THEN HE WOULD NOT BE CALL ED A DEVELOPER AND, THEREFORE, THE PROVISIONS OF SECTION 80IB(10) WOULD NOT BE APPLICABLE. THE TRIBUNAL IN THE CASE OF ITO VS. SHAKTI CORPORAT ION IN ITA NO.1503/AHDN/2008 ASST. YEAR 2005-06 AND OTHERS, HA S HELD AS UNDER :- 16 THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS IN THE CASE OF RADHE DEVELOPERS (SUPRA) AND A CCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEE HAS ACQUIRED THE DOMI NANT OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED THEREIN. WE MAY M ENTION HERE THAT, IN OUR OPINION, THE DECISION IN THE CASE OF RADHE DEVE LOPERS (SUPRA) WILL NOT APPLY IN A CASE WHERE THE ASSESSEE HAS ENTERED INTO THE AGREEMENT FOR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE HOUSING PROJECT ON BEHALF OF THE LANDOWNER. THE AGREEMENT ENTERED INTO IN THAT CASE WILL NOT ENTITLE THE DEVELOPER TO HAVE THE DOMINANT CONTROL OVER THE PROJECT AND ALL THE RISKS INVOLVED THEREIN WILL VEST WITH THE LANDOWNER ONLY. THE INTEREST OF THE DEVELOPER W ILL BE RESTRICTED ONLY FOR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RENDERING THE SERVICES. THE DECISION IN THE CASE OF RADHE DEVELOP ERS (SUPRA) HAS NOT DEALT WITH SUCH SITUATION. THE PROPOSITION OF LAW L AID DOWN 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 CORPORATI ON SINCE THE ASSESSEE HAS FILED COPY OF THE DEVELOPMENT AGREEMEN T AND CRUX OF THE 4 AGREEMENT IS THAT THE ASSESSEE HAS PURCHASED THE LA ND AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN, THEREFORE , WE ARE OF THE VIEW THAT THE ASSESSEE WILL BE ENTITLED FOR THE DEDUCTIO N U/S 80IB(10). THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F FAQIR CHAND GULATI (SUPRA) WILL NOT ASSIST THE REVENUE, AS THE AGREEMENT IS NOT SHARING OF THE CONSTRUCTED AREA. IN OTHER CASES THE COPY OF AGREEMENT SINCE HAS NOT BEEN SUBMITTED BEFORE US, IF SUBMITTE D , THE TERMS AND CONDITIONS OF THE AGREEMENT WERE NOT SPECIFICALLY A RGUED 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 RESTORE ALL OTHER APPEALS TO THE FILE OF THE AO WITH THE DIRECT ION THAT THE AO SHALL LOOK INTO THE AGREEMENT ENTERED INTO BY EACH OF THE ASSESSEES WITH THE LANDOWNER AND DECIDE WHETHER THE ASSESSEE HAS IN FA CT PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM THE LANDOWNER A ND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN COST AND RISKS INVOL VED IN THE PROJECT. IN CASE THE AO FINDS THAT PRACTICALLY THE LAND HAS BEE N BOUGHT BY THE DEVELOPER AND DEVELOPER HAS ALL DOMINANT CONTROL OV ER THE PROJECT AND HAS DEVELOPED THE LAND AT HIS OWN COST AND RISKS, T HE AO SHOULD ALLOW THE DEDUCTION TO THE ASSESSEE U/S 80IB(10). IN CASE THE AO FINDS THAT THE DEVELOPER HAS ACTED ON BEHALF OF THE LANDOWNER AND HAS GOT THE FIXED CONSIDERATION FROM THE LANDOWNER FOR THE DEVE LOPMENT OF THE HOUSING PROJECTS, THE ASSESSEE SHOULD NOT BE ALLOWE D DEDUCTION U/S 80IB(10) TO THE ASSESSEE. IN THE LIGHT OF ABOVE, I AM OF THE CONSIDERED VIEW THAT THE ISSUE IS COVERED BY THE ABOVE DECISION IN THE CASE OF SHAKTI CORPORA TION (SUPRA). ACCORDINGLY I RESTORE THE MATTER TO THE FILE OF AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF DECISION IN THE CASE OF SHAK TI CORPORATION (SUPRA). THE APPEAL IS ALLOWED BUT FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 8/7/2010 SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER AHMEDABAD, DATED : 8/7/2010 5 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD