The ITO, Ward-9(1), Ahmedabad V. M/s. Shivshakti Infrastructure, Ahmedabad

ITA 1305/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1691 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL BRAHMKSHATRIYA
• Keywords: Tax effect
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA. NOS. 1305 & 1306/AHD/2012 (ASSESSMENT YEARS:2007-08 & 2008-09) INCOME TAX OFFICER, WARD-9(1), AHMEDABAD AP PELLANT VS. M/S. SHIVSHAKTI INFRASTRUCTURE VRUNDAVAN BUNGLOWS, NR. KESHAVBAUG SOCIETY, NARODA-DEHGAM ROAD, AHMEDABAD - 382330 RESPONDENT PAN: ABGFS1802H / BY REVENUE : SHRI DILEEP KUMAR, SR. D.R. / BY ASSESSEE : SHRI ANIL BRAHMKSHATRIYA, A.R. /DATE OF HEARING : 12.05.2016 /DATE OF PRONOUNCEMENT : 16.05.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE TWO APPEALS ARE FILED BY REVENUE AGAINST THE SEPARATE ORDERS OF CIT(A)-XV, AHMEDABAD, DATED 02.0 4.2012 FOR A.YS. 2007-08 & 2008-09. ITA NOS. 1305 & 1306/AHD/12 A.Y. 07-08 & 08-09 (ITO VS. M/S. SHIVSHAKTI INFRAST RUCTURE) PAGE 2 2. FOR ASSESSMENT YEAR 2007-2008, THE REVENUE HAS T AKEN FOLLOWING GROUNDS OF APPEAL:- 1). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-X V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESS EES CLAIM FOR DEDUCTION OF RS.21,37,718/- U/S.80IB(10) OF THE I.T. ACT. 2). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV , AHMEDABAD HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S.80IB(10) EVEN WHEN THE LAND WAS IN THE NAME OF VRUNDAVAN (NARODA) CO.-OP. HOUSING SOCIETY LTD., WHICH IS A SEPERATE LEGAL ENTITY IN T HE EYE OF LAW AND THE ASSESSEE ENTERED INTO THE PROJEC T BY A DEVELOPMENT AGREEMENT WITH THE SOCIETY. THE ENTIRE RESPONSIBILITY TO EXECUTE THE HOUSING PROJEC T AND ABIDE BY THE TERMS AND CONDITIONS OF ITS APPROV AL RIGHT FROM THE INCEPTION OF THE PROJECT TILL ITS COMPLETION RESTS WITH THE SOCIETY. THE LOCAL AUTHOR ITY HAD GRANTED PERMISSION FOR DEVELOPMENT TO THE SOCIETY. ASSESSEE WAS JUST A CONTRACTOR OF THE LAND OWNERS CONSTRUCTING RESIDENTIAL UNITS AND NOT A DEVELOPER. 3. BEFORE US, AT THE OUTSET, LD. AUTHORIZED REPRESE NTATIVE SUBMITTED THAT THE PRESENT APPEAL OF THE REVENUE NE EDS TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF T HE CBDT CIRCULAR NO.21 OF 2015 DATED 10.12.2015. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED BY THE AFORESAID CBDT CIRCULAR. 4. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL ON RECORD. ON PERUSING THE GROUNDS OF APPEAL RAISED BY THE ITA NOS. 1305 & 1306/AHD/12 A.Y. 07-08 & 08-09 (ITO VS. M/S. SHIVSHAKTI INFRAST RUCTURE) PAGE 3 REVENUE, WE FIND THAT REVENUE IS AGGRIEVED BY ASSES SEES CLAIM FOR DEDUCTION OF RS.21,37,718/- ALLOWED BY CIT(A), THE TAX EFFECT OF WHICH IS BELOW RS.10 LACS. AS PER THE ANNOUNCEM ENT OF CENTRAL BOARD OF DIRECT TAXES (CBDT) DATED 10.12.20 15 (CIRCULAR NO. 21 OF 2015), NO DEPARTMENT APPEALS AR E TO BE FILED AGAINST RELIEF GIVEN BY LD. CIT(A) BEFORE THE INCOM E TAX TRIBUNAL UNLESS THE TAX EFFECT, EXCLUDING INTEREST EXCEEDS R S. 10 LACS AND IT FURTHER STATES THAT THE INSTRUCTIONS WILL APPLY RETROSPECTIVELY TO THE PENDING APPEALS. IN THE PRESENT CASE, SINCE IT IS AN UNDISPUTED FACT THAT ON THE ADDITIONS WHICH ARE IN DISPUTE, THE TAX EFFECT IS LESS THAN RS. 10 LACS AND IN THE ABSE NCE OF ANY MATERIAL ON RECORD BY THE REVENUE TO DEMONSTRATE TH AT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY EXEMPTION S SPECIFIED IN CLAUSE (8) OF THE AFORESAID CBDT CIRCULAR, WE AR E OF THE VIEW THAT THE MONETARY LIMIT PRESCRIBED BY THE INSTRUCTI ONS OF THE AFORESAID CBDT CIRCULAR WOULD BE APPLICABLE TO THE PRESENT APPEAL OF THE DEPARTMENT AND THEREFORE THE PRESENT APPEAL IS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT. IN S UCH CIRCUMSTANCES, WE DISMISS THE APPEAL OF REVENUE WIT HOUT EXPRESSING ANY OPINION ON MERITS OF THE CASE. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. 6. FOR ASSESSMENT YEAR 2008-2009, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-X V, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESS EES CLAIM FOR DEDUCTION OF RS.1,10,93,292/- U/S.80IB(10 ) OF THE I.T. ACT. ITA NOS. 1305 & 1306/AHD/12 A.Y. 07-08 & 08-09 (ITO VS. M/S. SHIVSHAKTI INFRAST RUCTURE) PAGE 4 2). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV , AHMEDABAD HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S.80IB(10) EVEN WHEN THE LAND WAS IN THE NAME OF VRUNDAVAN (NARODA) CO.-OP. HOUSING SOCIETY LTD., WHICH IS A SEPERATE LEGAL ENTITY IN T HE EYE OF LAW AND THE ASSESSEE ENTERED INTO THE PROJEC T BY A DEVELOPMENT AGREEMENT WITH THE SOCIETY. THE ENTIRE RESPONSIBILITY TO EXECUTE THE HOUSING PROJEC T AND ABIDE BY THE TERMS AND CONDITIONS OF ITS APPROV AL RIGHT FROM THE INCEPTION OF THE PROJECT TILL ITS COMPLETION RESTS WITH THE SOCIETY. THE LOCAL AUTHOR ITY HAD GRANTED PERMISSION FOR DEVELOPMENT TO THE SOCIETY. ASSESSEE WAS JUST A CONTRACTOR OF THE LAND OWNERS CONSTRUCTING RESIDENTIAL UNITS AND NOT A DEVELOPER. 7. ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPIN G AND CONSTRUCTING HOUSING PROJECT IN THE NAME OF VRUNDA VAN BUNGLOWS FOR VRUNDAVAN (NARODA) CO-OPERATIVE HOUSI NG SOCIETY LTD. THE TOTAL INCOME OF ASSESSEE WAS FINA LIZED AT RS.1,10,93,292/- U/S.143(3) OF THE ACT IN WHICH DIS ALLOWANCE OF DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT OF RS.1,1 0,93,292/- WAS MADE. 8. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, WHEREIN CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, CIT(A) GRANTED RELIEF TO THE ASSESSEE. 9. SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE INTER ALIA SUBMITTING THAT CIT(A) WAS NOT JUSTIFIED IN DIRECTI NG THE ASSESSING OFFICER TO ALLOW ASSESSEES CLAIM FOR DED UCTION U/S.80IB(10) OF THE ACT OF RS.1,10,93,292/-. ACCOR DINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE ITA NOS. 1305 & 1306/AHD/12 A.Y. 07-08 & 08-09 (ITO VS. M/S. SHIVSHAKTI INFRAST RUCTURE) PAGE 5 RESTORED. ON THE OTHER HAND, LD. A.R. SUPPORTED TH E ORDER OF CIT(A). 10. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT LAND BEARING SURVEY NO.593/2, HAVING TOTAL AREA OF 12444 SQ. MTRS., OUT OF IT 11609 SQ. MTRS. WAS PURCHASED BY THE VRUNDAVAN (NARODA) CO-OPERATIVE HO USING SOCIETY LTD. ON 16.10.2006 FOR CONSIDERATION OF RS. 48,59,400/-. AS PER THE APPLICATION AND PLAN FILED BY THE SOCIET Y, THE LOCAL AUTHORITY ACCORDED PERMISSION FOR DEVELOPMENT AND CONSTRUCTION OF THE PROJECT TO SHRI UDAY BHATT, POW ER OF ATTORNEY OF SHRI PRAMUKHBHAI CHINUBHAI & OTHERS I.E . ORIGINAL LAND OWNERS ON 25.05.2005. ASSESSING OFFICER EXAMIN ED THE DEVELOPMENT AGREEMENT AS ENTERED INTO B ASSESSEE WI TH RESPECTIVE SOCIETY AND AFTER TAKING ALL FACTS AND C IRCUMSTANCES INTO CONSIDERATION, DISALLOWED THE ASSESSEES CLAIM FOR FOLLOWING REASONS: I) THE ASSESSEE IS NOT BOTH DEVELOPER AND BUILDER A S REQUIRED BY THE PROVISIONS OF SECTION 80IB(10). ASSESSEE IS NOT A DEVELOPER BECAUSE THE ASSESSEE DID NOT CONCEPTUALIZ E AND OWN THE PROJECT IN AS MUCH AS THE ASSESSEE IS NOT THE O WNER OF THE LAND AND THE APPROVAL WAS NOT ISSUED TO IT BY THE L OCAL AUTHORITY. II) THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVE LOPMENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREEMENT AND HENCE THE ASSESSEE IS MERELY A CONTRACTOR FOR THE PURPOSES OF CONSTRUCTION OF THE PROJECT. ITA NOS. 1305 & 1306/AHD/12 A.Y. 07-08 & 08-09 (ITO VS. M/S. SHIVSHAKTI INFRAST RUCTURE) PAGE 6 III) THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURC HASER BUT THE SOCIETIES HAD EXECUTED THE SALE DEEDS AS A SELL ER. THIS ALSO PROVES THAT THE ASSESSEE WAS MERELY A CONTRACTOR/ A GENT OF THE SOCIETY. IV) AS PER THE AMENDMENT TO SECTION 80IB BY THE FIN ANCE ACT 2009, A WORKS CONTRACTOR WHO EXECUTES THE WORK AWAR DED BY ANY PERSON IS NOT ELIGIBLE FOR THE DEDUCTION U/S 80 IB. ANY PERSON INCLUDES THE SOCIETIES, WHICH IS A LEGAL ENT ITY. 10.1 BEFORE CIT(A), ASSESSEE CAREFULLY RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF CIT VS. RA DHE DEVELOPERS (2012) 341 ITR 483 (GUJ.). HONBLE HIGH COURT HELD THAT FOR DEDUCTION U/S.80IB(10) OF THE ACT IT IS NO T NECESSARY THAT THE ASSESSEE MUST BE THE OWNER OF THE LAND AND SECONDLY LOOKING TO THE PROVISIONS CONTAINED IN SETION 2(47) OF THE ACT R.W.S. 53A OF THE TRANSFER OF PROPERTY ACT, BY VIRT UE OF THE DEVELOPMENT AGREEMENT AND AGREEMENT TO SELL, ASSESS EE HAD FOR THE PURPOSE OF INCOME TAX BECOME THE OWNER OF THE L AND. CONSIDERING THE TERMS AND CONDITIONS OF THE DEVELOP MENT AGREEMENT AND OTHER DOCUMENTS ON RECORD, ASSESSEE H AD ACQUIRED DOMINION OVER THE LAND, WHICH HE HAD DEVEL OPED BY CONSTRUCTING HOUSING PROJECT INCURRING EXPENSES AND ALSO TAKINGS RISKS. THUS, ON THE POINT OF OWNERSHIP AND DOMINION OF THE PROPERTY AS A PROJECT, CIT(A) RIGHTLY GRANTED R ELIEF TO THE ASSESSEE. SAME NEEDS NO INTERFERENCE FROM OUR SIDE . WE UPHOLD THE SAME. ITA NOS. 1305 & 1306/AHD/12 A.Y. 07-08 & 08-09 (ITO VS. M/S. SHIVSHAKTI INFRAST RUCTURE) PAGE 7 10.2 IN THE RESULT, APPEAL FILED BY REVENUE FOR A.Y . 2008-09 IS DISMISSED. 11. IN THE RESULT, BOTH THE REVENUES APPEALS ARE D ISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 16 TH DAY OF MAY, 2016. SD/- SD/- (MANISH BORAD) (SHAILENDRA KUMAR YAD AV) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD: DATED 16/05/2016 TRUE COPY / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+2345 / GUARD FILE. BY ORDER / . // ./0