The ITO, Ward-9(1), Ahmedabad V. M/s. Saubhagya Corporation, Ahmedabad

ITA 1369/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80394 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ITA NO . 1411 /AHD/20 1 0 & 1369/AHD/2011 A. Y S . 2006 - 0 7 & 2007 - 08 ITO, WARD 9(1), AHMEDABAD. VS M/S. SAUBHAGYA C ORPORATION SAUBHAGYA APARTMENTS, S.G. ROAD, THALTEJ, AHMEDABAD. PAN: AAWFS 8809H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI NIMESH YADAV SR.D. R . ASSESSEE(S) BY : SHRI PRITESH SHAH , AR / DATE OF HEARING : 22 / 0 9 /201 4 / DATE OF PRONOUNCEMENT: 1 / 10 /201 4 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER TH ESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE DEPARTMENT ARISING FROM THE ORDERS OF LEARNED CIT(A) - XV, AHMEDABAD FOR A.YS. 2006 - 07 AND 2007 - 08 RESPECTIVELY DATED 10 TH MARCH, 2010 AND 4 TH MARCH, 2011. FOR THESE BOTH YEARS, THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: A.Y. 2006 - 07 1. THE LD. COMMISSIONER OF INCOME - TAX (A) - XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESSEE'S CLAIM FOR DEDUCTION OF RS. 1,42,44,245 / - U/S 80IB(10). 2. THE LD. COMMISSIONER OF I N COME - TAX (A) - XV, AHMEDABAD ERRED IN HOLDING THAT THE ASSESSEE FU LFILLS THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S80IB(10) EVEN WHEN THE LAND WAS IN THE NAME OF SOCIETY AND THE ASSESSEE HAD MERELY EXECUTED A WORKS CONTRACT. A.Y. 2007 - 08 ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 2 1). THE LD. COMMISSIONER OF INCOME - TAX(A) - XV, AHMEDABAD HAS ERRED IN LAW AN D ON FACTS IN DELETING THE DISALLOWANCE AMOUNTING TO RS.48,44,450/ - MADE BY THE ASSESSING OFFICER U/S. 80IB(10) OF THE ACT. 2. FACTS OF THIS APPEAL ARE IDENTICAL FOR BOTH THE YEARS AS DISCUSSED BY THE AO VIDE ORDERS , RESPECTIVELY , DATED 26.12.2008 (A.Y. 2006 - 07) AND 24.12.2009 (A.Y. 2007 - 08) PASSED U/S.143(3) OF IT ACT. THE LEAD ASSESSMENT YEAR IS A.Y. 2006 - 07 AND THE FACTS WERE THAT THE ASSESSEE FIRM IS IN THE BUSINESS OF CONSTRUCTION. IT WAS NOTED THAT THE ASSESSEE HAD CLAIMED A DEDUCTION U/S.80IB(10) O F RS.1,42,44,245/ - FOR A.Y. 200 6 - 0 7 FOR THE HOUSING PROJECT . T HE 80IB(10) DEDUCTION OF RS.50,44,774/ - CLAIMED FOR A.Y.2007 - 08 . THE AO HAS ISSUED A SHOW CAUSE NOTICE IN THE FOLLOWING MANNER: - ON GOING THROUGH THE AGREEMENT FOR CONSTRUCTION WITH THE MEMBERS , IT IS SEEN THAT YOU HAVE FIXED CONSTRUCTION COST OF THE FLATS WITH THE MEMBERS, WHICH INCLUDES SUPERVISION CHARGES. IT IS ALSO MENTIONED THAT THE MATERIAL WILL BE PURCHASED IN THE NAME OF SWAMINARAYAN PARK HOUSING SOCIETY LIMITED. THUS, YOU HAVE NOT ACQU IRED THE DOMINANT OVER THE LAND AND HAVE NOT DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND NO RISK FACTOR IS INVOLVED THEREIN. 2.1 IN COMPLIANCE, THE ASSESSEE HAS SUBMITTED IS AS UNDER: DEDUCTION U/S. 80 IB OF THE ACT FOR RS.1 ,4 2 , 44 , 245 / - THE ASSESSEE HAS STARTED THE PROJECT IN EARLIER YEARS. THE ASSESSES HAS FULFILLED ALL THE CONDITIONS LAID DOWN U/S 80IB(10) OF THE ACT, WHI CH ARE AS UNDER. (I) T HE HOUSING PROJECT APPROVED BEFORE 31/3/07 BY LOCAL AUTHOR ITY (II) THE SIZE OF THE PLOT OF LAND A MINIMUM OF 1 ACRE. ( II I) THE MAXIMUM BUILT UP AREA 'NOT EXCEEDING 1500 SQ. FEET P ER UNITS' (2) THE P LAN APPROVED ON 26/4/2004, THEREFORE CONSTRUCTION SH ALL BE COMPLETED BEFORE 31/3/2008, ACCORDING COMPL E TED THE PROJECT THE YEAR WISE DEDUCTIONS U/S. 80 I B(10) ARE AS UNDER. A. Y. 2005 - 06 RS.84,96,955/ - A.Y. 2006 - 07 R S.1,42,44,245/ - (3) THE REAL UNDERTAKING WHO DEVELOPING AND BUILDING HOUSING PROJECT ARE THE ASSESSEE AND NOT LAND OWNER OR MEMBERS OF THE SCHEME OR SOCIETY. ALL COST PAID BY THE ASSESSEE AND ALL COLLECTIONS MADE B Y THE ASSESSEE THROUGH OWN BANK AC COUNT OR IN CASH AS PER BOOKS OF ACC OUN TS. THE ASSESSEE HAS RIGHT TO ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 3 EXECUTE SUPPLEMENTARY DEED OR TO MAKE NECESSARY ARRANGEMENTS FOR SMOOTHLY RUNNING THE PROJECT FIND ADMINISTRATION. THE MEMBERS OR SOCIETY HAS N E VER TAKEN ANY 'RISK FACTOR' AT ANY TI ME OR THERE WERE NO ANY EVIDENCES ON RECORD TO PROVE THAT THE 'RISK FA CTOR ' UNDER TAKEN BY EITHER 'MEMBE R '' OR 'SOCIETY'. THE ONLY AND ONE PERSON 'T H E ASSESSEE' HAS UNDERTAKEN THE 'RISK FACTOR' AND COMPLETED WHOLE PROJECT UNDER AUTHORITY OF DEVELOPMENT AGREEM ENT. NOW SO FAR AS YOUR SHOW CAUSE YOUR GOOD SELF HAS MENTIONED THAT 'THE ASSESSEE HAS FIXED CONSTRUCTION COST OF THE FLAT AND SUPERVISIONS CHARGES' THAT MEANS NO LAND COST INCLUDED. SIR, IF THERE WERE NO LE GAL POSSESSION OF THE LAND WITH THE ASSESSEE, O N WHAT BASIS THE ASS ESS EE ENTERED THE AGREEMENT WITH THE MEMBERS. IN FACT THE ASSESSEE HAS ACQUIRED THE RIGHTS / INTEREST / TITLES OF THE LAND BY EXECUTING DEVELOPMENT AGREEMENTS WITH T HE LAND OWNERS BY PAYING 1.68 C RO RE (RS.ONE CRORE SIXTY EIGHT LACS) AS LAND PURCHASE COST OUT OF ASSES S EE'S BOOKS OF ACCOUNTS. THEREFORE NO BODY CAN OVERLOOK THIS FACTS AND TO SAY THE 'THE ASSESSEE HAVE NOT ACQU I RED THE DOMINANT OVER THE LAND' AS WE LL 'HAVE NOT DEVELOPED THE HOUSING PROJECTS BY INCURRING THE ALL THE EXPENSES . SIR, YOUR SHOW CAUSE ARE ON PREDICTION BASIS AND NOT AN EVIDENCE / FINANCIAL TRANSACTIONS ETC BASIS . THE ASSESSEE HAS RIGHT TO PURCHASE MATERIALS FROM ANY PARTY / PERS ON. ACCORDINGLY THE ASSESSEE HAS PURCHASE THE MATERIALS FROM THE SOCIETY BY PAYING 'A/ C. PAYEES CHEQUES FROM ASSESSEE'S BANK A/C. THIS IS MANAGEMENT'S ARRANGEMENT. BUT IT HAS NO ANY IMPACT ON AVAILABILITY OF DEDUCTION U/S. 80IB(10) OF THE ACT IN CASE OF THE ASSESSEE. IN FACTS THE ASSESSEE HAS PURCHASED THE LAND BY PAYING RS.1 . 68 CROR E TO T HE LAND OWNER BY A/C. PAYEES CHEQUES (I.E. VALUABLE CONSIDERATIO N TO PURCHASE LAND) AND GOT THE POSSESSION OF THE LAND. THE ASSESSEE H AS FRAME THE SCHEME AND THROUGH MARKETING BOOKING WAS DONE. FOR BETTER AND EFFECTIVE MANAGEMENT AND TO HELP THE MEMBERS FOR GETTING FINANCIAL LOAN FROM BANKS AND TO EARN MORE PROFIT (WHICH IS BENEFICIAL TO THE REVENUE IN LONG RUN) THE ASSESSEE HAS MADE SUBSEQUENT ARRANGEMENT TO FULFILL THE PROMISES . 2.2 THE AO WAS NOT CONVINCED AND AFTER ASSIGNING THE FOLLOWING REASONS , D ISALLOWED THE CLAIM OF DEDUCTION, REPRODUCED BELOW: (I) THE TERM 'DEVELOPER AND BUI L DER' WOULD MEAN THAT THE PERSON W HO IS ELIGIBLE FOR THE TAX BENEFIT W OULD BE THE PERSON WHO IS INVOLVE D IN THE PROJECT FROM THE PURCHASE OF LAND TO THE SALE OF THE F IN AL PR ODUCT, I.E. HOUSES/FLATS. IN THIS CASE, LAND IS PURCHASE BY T HE INDIVIDUAL MEMBERS FROM THE LAND OWNERS. THE ASSESSEE HAS N OT INVESTED ANY AMOUNT FOR THE PURCHASE OF LAND ON WHICH THE PROJECT IS DEVELOPED . ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 4 (II) ON GOING THOUGH THE AGREEMENT FOR CONSTRUCTI ON WITH THE MEM B ERS IT IS SEEN THAT CONSTRUCTION COST OF THE FLAT IS FIXED WITH TH E MEMBERS, WHICH INCLUDES SUPERVISION CHARGES. (III) THE MATERIAL WILL BE PURCHASED IN THE NAME OF SWAMINARAYAN P A RK HOUSING SOCIETY LTD. (IV) THE LAND OWNER MADE THE SEPARA TE SALE DEED WITH MEMBERS WHE REI N SWAMINARAYAN CO . OP HOUSI N G SOCIETY LTD. THE CONFIRMING PART I ES. THERE IS NO ROLE OF THE ASSESSEE. THE LAND OWNER HAS DIRECTLY SO LD THE LAND TO THE MEMBERS. TH IS FACT CAN BE SEEN FROM THE SALE D E ED DATED 21.11.2005 MADE BY LAND OWNERS TO SHRI VIVEK BARNJ A RG BADHURE GOR (I.E. ONE OF THE M EMBER). THUS, THE ASSESSEE IS NOT THE OWNER OF LAND THEREFORE IT CA N NOT BE TERMED OWNER OF THE PROJECT. (V) NOT DEVELOPMENT AGREEMENT I S MADE WITH SOCIETY FOR WHOLE PROJECT. (VI) IT IS FUR THER NOTICED THAT THE ASSESSEE HAS NOT TAKEN THE APPRO V AL AND B.U PERMISSION OF THE HOUSING PROJECT FROM LOCAL AUTHOR IT Y. THE SAME IS TAKEN BY THE LAND OWNER WHO IS ENTIRELY SEPARATE ENT IT Y IN THE EYES OF LAW. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FI RST APPELLATE AUTHORITY, THE ASSESSEE HAS FURNISHED THE EVIDENCES IN SUPPORT OF THE SAID CLAIM, THEREFORE, LEARNED CIT(A) HAS ASKED FOR THE REPORT FROM THE REVENUE DEPARTMENT AND IN THIS REGARD REFERRED THE MATTER TO THE DVO AS WELL. LEARNED CIT(A) HAS STA TED THAT VIDE REPORT OF THE DVO RECEIVED ON 25.02.2010 NO SPECIFIC OBJECTION WAS RAISED AND INFORMED THAT THE MINIMUM LIMIT OF ONE ACRE OF THE AREA OF THE LAND AND THE OTHER CONDITION OF 1,500 SQ. FEET FOR EACH RESIDENTIAL UNIT WERE COMPLIED WITH BY THE AS SESSEE. THE ASSESSEE S EXPLANATION WAS THAT THE LAND WAS PURCHASED VIDE AN AGREEMENT AS WELL AS A SUPPLEMENTARY DEVELOPMENT AGREEMENT BY PAYING A CONSIDERATION OF RS.1,68,11,000/ - TO THE LAND OWNERS. THE TRANSACTION IN RESPECT OF THE PURCHASE OF LAND WAS D ULY RECORDED IN THE BOOKS OF ACCOUNT. IT WAS ALSO INFORMED THAT THE PAYMENTS TOWARDS PLAN APPROVAL, WATER CONNECTION, DEVELOPMENT OF BASIC AMENITIES, ETC. HAVE BEEN MADE BY THE ASSESSEE AND DULY RECORDED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS ALSO COLL ECTED THE BOOKING AMOUNT FROM THE MEMBERS OF ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 5 THE SCHEME. IT WAS ALSO INFORMED THAT THE PAYMENT FOR THE PURCHASE OF THE CONSTRUCTION MATERIAL WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS. HENCE, IT WAS PLEADED THAT THE ASSESSEE HAS ACTED AS A DEVELOPER AND NO T AS A WORK CONTRACTOR. IT WAS ALSO RECORDED THAT THE DEVELOPMENT PERMISSION WAS GIVEN BY THE ORDER ON 26 TH APRIL, 2004 AND BU PERMISSION WAS DATED 17.12.2005 WHICH WERE DULY PLACED BEFORE THE AO AND NO DISPUTE WAS IN THE RECORD OF THOSE PE RMISSION. 4. FR OM THE SIDE OF THE ASSESSEE, A DECISION OF M/S. SHAKTI CORPORATION, BARODA IN ITA NO.1503/AHD/2008 IN A.Y. 2005 - 06 HAS BEEN CITED. AFTER CONSIDERING ALL THOSE FACTS , LEARNED CIT(A) HAS HELD THAT THE ASSESSEE HAD ACQUIRED A DOMINANT CONTROL OVER THE PROJECT AND R EST OF THE CONDITIONS OF SECTION 80IB(10) WERE FULFILLED. HENCE, ALLOWED AFTER ASSIGNING FOLLOWING REASONS: 9. IT IS IMPORTANT TO MENTION HERE THAT IT WAS EXPLAINED BY THE ID. A R THAT THE DEVELOPMENT PERMISSIONS ETC. ARE TAKEN IN THIS LINE OF BUSINE SS IN THE NAME OF THE LA ND OWNERS - ARVINDBHAI N PATEL & OTHERS WHO SUBSEQUENTLY ENTER INTO DEVELOPMENT AGREEMENT WITH THE DEVELOPER, THAT IN THIS CASE IT WAS ENTERED ON 30.3.2004, AND A SUPPLEMENTARY DEED IN CONNECTION WITH THIS DE VELOPME NT AGREEMENT WAS EN TERED ON 22.7.2004, THROUGH WHICH THE LAND OWNERS WERE PAID RS.1,68,11,000 BY THE APPELLANT FIRM THROUGH ITS OWN BANK ACCOUNT. IT WAS EMPHASIZED THAT ALL THESE FACTS WERE BROUGHT INTO THE NOTICE OF THE AO ALSO AS THE REPLY OF THE APPELLANT HAS BEEN REPRODU CED IN THE ASSESSMENT ORDER ALSO. IT WAS ARGUED THAT THUS THE APPELLANT HAS PURCHASED THE LAND AS WELL. 10. AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEEN THAT IN THIS C ASE THE APPELLANT PRACTICALLY PURCHASED THE LAND, PAID THE LAND OWNERS FROM ITS BANK ACCOUNTS MAINTAINED WITH THE AHMEDABAD DISTRICT COOPERATIVE BANK LTD., THALTEJ BRANCH AND FROM ITS ACCO U NT MAINTAINED WITH VIJAYA COOPERATIVE BANK, GOTA BRANCH AND BORE THE ENTIRE COST AND RISK OF DEVELOPING THE PROJECT. FOLLOWING CLAUSES OF THE DEVELOPME NT AGREEMENT CLARIFY: CLAUSE 4: THE PHYSICAL POSSESSION OF THE .LAND HAS BEEN HANDED OVER TO THE APPELLANT BY THE LAND OWNERS. CLAUSE 6: TO BOOK MEMBERS COLLECT MONEY FROM THEM. CLAUSE 7: TO EXECUTE SALE DEED IN FAVOUR OF MEMBERS. CLAUSE 11: TO CONSTRU CT THE PROJECT WITH HU G E CAPITAL INVESTMENT. ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 6 AS THE APPELLANT FULFILLS THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S.80IB(10) AND HAS INVESTED IN COST OF LAND (THE LAND OWNERS WERE PAID FROM THE CURRENT ACCOUNTS OF THE APPELLANT FIRM) AND ACQUIRED D OMINANT CONTROL OVER THE LAND FOR THE DEVELOPMENT OF THE PROJECT IT MEETS ALL THE TESTS LAID DOWN BY HON BLE ITAT AHMEDABAD BENCH A IN THE DECISION DELIVERED IN THE CASE OF M/S. SHAKTI CORPORATION, THEREFORE, THE AO IS DIRECTED TO ALLOW 80IB(10) DEDUCTION TO THE APPELLANT. 5. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., MR. NIMESH YADAV APPEARED. HIS MAIN OBJECTION WAS THAT AS PER THE FIRST DEVELOPMENT AGREEMENT DATED 30 TH MARCH, 2004 THERE WAS NO REFERENCE OF ANY CONSIDERATION, THEREFORE, THE CONTROL O VER THE LAND WAS DOUBTED BY THE AO. ONLY AFTER ASSIGNING A SUPPLEMENTARY DEED DATED 22.07.2004 THE CONDITIONS FOR THE DEVELOPMENT WERE LAID DOWN AND LAND OWNERS WERE PAID THE CONSIDERATION AS SETTLED BETWEEN THE PARTIES. THAT SUPPLEMENTARY DEVELOPMENT AGRE EMENT WAS AN AFTERTHOUGHT BECAUSE THE ASSESSEE HAD ALREADY APPLIED FOR THE DEVELOPMENT PERMISSION WHICH WAS GRANTED BY AUDA ON 26 TH APRIL, 2004. IT IS DIFFICULT TO BELIEVE THAT WITHOUT PAYING THE CONSIDERATION THE LAND OWNERS HAVE GRANTED POSSESSION TO THE ASSESSEE AND THE ASSESSEE HAS OBTAINED CERTAIN PERMISSIONS . A CCORDING TO LEARNED DR , IT WAS NOTHING BUT A CONCOCTED STORY AND THE ASSESSEE HAD ACTED WHOLLY AS A CONTRACTOR AND NOT AS A BUILDER TO CONSTRUCT THE PROJECT. HE HAS FINALLY PLEADED TO AFFIRM THE ACTION OF THE AO. 6. FROM THE SIDE OF THE RESPONDENT - ASSESSEE, L EARNED AR, MR. PRITESH SHAH APPEARED AND PLACED STRONG RELIANCE ON THE PAPER BOOKS FURNISHED CONTAINING DEVELOPMENT AGREEMENT DATED 30 TH MARCH, 2004, SUPPLEMENTARY DEED DATED 22.07.2004, LAN D PURCHASE ACCOUNT, DETAILS OF PAYMENT OF CONSIDERATION, DETAILS OF CONSTRUCTION MATERIAL PURCHASED, PERMISSION OBTAINED, COLLECTION FROM MEMBERS SHOWN IN THE SALE ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 7 ACCOUNT , ARRANGEMENT OF FUNDS MADE BY THE ASSESSEE, ETC. IN SHORT, HE HAS PLEADED THAT THE ASSESSEE WAS HAVING CONTROL OVER THE LAND AND THEREAFTER STARTED THE PROJECT BY AVAILING LOAN FACILITY AND ALSO DEPLOYED HIS OWN RESOURCES; HENCE, UNDERTAKEN THE RISK OF LOSS AS WELL, THEREFORE, CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE SI NCE ALL THE CONDITION OF 80IB(10) HAVE BEEN COMPLIED WITH BY THE ASSESSEE; THEREFORE, THE RELIEF GRANTED BY LEARNED CIT(A) DESERVES TO BE AFFIRMED. HE HAS FURNISHED A SUMMARY OF HIS ARGUMENT, ONLY RELEVANT PORTION IS EXTRACTED BELOW: 1 THE ASSESSEE IS A PA RTNERSHIP FIRM DOING CONSTRUCTION ACTIVITY BUILDER CUM DEVELOPER. 2. 30.03.2004 DEVELOPMENT AGREEMENT TOOK PLACE BETWEEN SAUBHAGYA CORPORATION. LAND OWNERS & SWAMINARAYAN CO. OP. HOUSING SOCIETY. BY THIS DEVELOPMENT AGREEMENT THE ASSESSEE FIRM WAS APPOI NTED AS BUILDER, DEVELOPER, ORGANIZER, ETC. 3. 30.03.2004 COMPLETE & LEGAL POSSESSION WAS HANDED OVER TO THE ASSESSEE FIRM. PAGE NO.48 IN A.Y.2006/07 & P.38 IN A.Y.2007/08 SUBMISSION. 4. DEVELOPMENT AGREEMENT SUMMARY CLAUSE 1 . ASSESSEE FIRM APPOI NTED AS DEVELOPER, ORGANIZER & BUILDER & PHYSICAL POSSESSION WAS HANDED OVER. CLAUSE 2 . CONSTRUCTION WORK TO BE DONE BY ASSESSEE FIRM. MATERIAL TO BE PURCHASED IN THE NAME OF SWAMINARAYAN SOCIETY BUT THE PAYMENT SHALL BE DONE BY ASSESSEE FIRM. THUS , EFFECTIVELY MATERIAL PURCHASED BY ASSESSEE FIRM. CLAUSE 3. ASSESSEE FIRM HAS RIGHT TO PUT SCHEME BOARD, TO BOOK MEMBERS, COLLECT MONEYS FROM MEMBERS, ISSUE ALLOTMENT LETTER, HANDING OVER POSSESSION TOGETHER WITH NECESSARY PAPERS & DOCUMENTS. ALL POWERS HAVE BEEN GIVEN TO THE ASSESSEE FIRM. CLAUSE 4. ASSESSEE FIRM HAS RIGHT TO FIX SALE PRICE, GIVE ADVERTISEMENT, PRINT PHAMPLET, TO PUT ADVERTISEMENT BOARD FOR BOOKING MEMBERS. CLAUSE 5. ASSESSEE FIRM TO COLLECT CONSTRUCTION CONTRIBUTION AND PAY EXPENSES. ASSESSEE FIRM HAS FULL RIGHT FOR WHOLE FINANCIAL TRANSACTION AND TO MAINTAIN ACCOUNTS AT OWN COST AND RISK AND SHALL RETAIN PROFIT ALSO. CLAUSE 6. ASSESSEE FIRM FULL AUTHORITY TO BOOK THE MEMBERSHIP, COLLECT MONEY AND TO HANDOVER POSSESSION. ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 8 CLAUSE 7. ASSESSEE FIRM HAS FULL AUTHORITY TO SIGN AND EXECUTE ALL PAPERS FOR ANY COURT MATTERS ETC, AT OWN COST. CLAUSE 8. ASSESSEE FIRM HAS AUTHORITY TO APPLY FOR REVISED SCHEME. 5 26.4.04 PROJECT APPROVED 6 LAND PURCHASE D B Y ASSESSEE FIRM A 22. 7. 04 SUPPLEMENTARY DEED IN CONNECTION WITH ORIGINAL DEVELOPMENT AGREEMENT WAS MADE LAND SOLD BY LAND OWNERS TO ASSESSEE FIRM FOR CONSIDERATION OF RS.1,68,11,000/ - TO BE PAID ON OR BEFORE 31.03.2006. B 17.11.03 TO 31.03. 06 PAYMENTS MADE THROUGH ACCOUNT PAYEE CHEQUES TO LAND OWNERS TOWARDS PURCHASE OF LAND. ON 31.03.2006 PAYMENT COMPLETED. DETAILS PAGE NO.54 TO 60 IN A.Y.2006/07 BUNCH AND 44 TO 50 IN A.Y.2007/08 BUNCH. C 31.03.06 LAND OWNER ISSUED RECEIPT TOWARDS RECEIPT OF SALE C ONSIDERATION OF LAND AND ACCEPTANCES OF ALL ACCOUNT PAYEE CHEQUES. D 17.12.05 B.U. PERMISSION GRANTED SINCE LAND WAS IN THE NAME OF OLD LAND OWNERS, THE BU PERMISSION CONTAINS THEIR NAMES. 7 TREATMENT IN ASSESSEE S BOOKS OF ACCOUNTS I) 01.04.05 TO 31.03.06 SALES BOOKED AS INCOME RS.7,21,94,906/ - CLOSING STOCK WORK IN PROGRESS RS.1,40,10,500/ - LAND PURCHASE SHOWN AS EXPENSE RS.1680589/ - PURCHASE OF MATERIALS USED FOR COSNTRUCTION RS.95,98,435/ - AMOUNTS RECEIVED FROM MEMBERS SHOWN AS A DVANCE FOR BOOKING RS.1,44,53,376/ - PAGE NOS.25 TO 28 IN A.Y.2006/07 BUNCH. II 01.04.06 TO 31.03.07 SALES BOOKED AS INCOME RS.1,94,50,634/ - WORK IN PROGRESS RS.1,40,10,500/ - (LAST YEAR S CLOSING STOCK CURRENT YEAR S EXP.) PAGE NO.23 TO 24 IN A.Y.2007 OF 2008 BUNCH. 29.11.07 AO PASSED AN ORDER U/S.143(3) IN WHICH HE HAS ALLOWED DEDUCTION UNDER SECTION 80IB(10) VIDE PARA NO.4 ON PAGE NO.2 OF ASSESSMENT ORDER. AO MENTIONED THAT ASSESSEE HAS FOLLOWED COMPLETED CONTRACT METHOD. 10 AHMEDABAD ITA T JANAK DEHYDRATION P. LTD. VS. ACIT 134 TTJ ALLOWABILITY OF DEDUCTION U/S.80IB(10) ARE TO BE EXAMINED IN INITIAL YEAR OF THE CLAIM AND IF THEY ARE FOUND TO BE SATISFIED, THE AO CAN NOT IGNORE THAT FINDING IN THE ASSESSMENT OF SUBSEQUENT YEAR AND TAK E A DIFFERENT VIEW PAGE NO.110 IN A.Y.2006 OF 2007 BUNCH. 11 CIT(A) REFERRED THE MATTER TO DVO, WHO HAS NOT OBJECTED ANY CLAUSE OF 80IB(10). ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 9 7. HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE THOROUGHLY EXAMINED THE FACTS OF THE CASE IN THE LIGHT OF THE COMPILATIONS FILED AND CASE LAWS RELIED UPON BY THE RESPONDENT - ASSESSEE. AT THE OUTSET, WE HAVE BEEN INFORMED THAT THE INITIAL YEAR FOR THIS PROJECT WAS A.Y.2005 - 06 AND FOR THAT YEAR THE AO HAD GRANTED THE DEDUCTION U/S.80IB(10) AFTER EXAMINING THE EVIDENC ES IN SUPPORT THE SAID ASSESSMENT ORDER OF A.Y. 2005 - 06 DATED 29.11.2007 PASSED U/S.143(3) HAS BEEN PLACED ON RECORD. IN THAT ASSESSMENT ORDER, THE AO HAS MENTIONED IN PARAGRAPHS 3 & 4 AS UNDER: 3. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF HOUSING DEVELOPMENT. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS ORGANIZED SCHEME NAMELY SAUBHAGYA APARTMENT . 4. ON VERIFICATION OF THE STATEMENT OF INCOME, IT IS NOTICE THAT THE ASSESSEE HAS SHOWN GROSS TOTAL INCOME OF RS.84,46,955/ - ON WHICH THE ASSE SSEE HAS CLAIM THE DEDUCTION U/S.80IB(10) OF THE IT ACT. THE ASSESSEE IS FOLLOWING COMPLETED CONTRACT METHOD . 8. SINCE, THE ASSESSEE HAS PLACED RELIANCE ON THIS ASSESSMENT ORDER ON THE GROUND THAT IF IN THE FIRST YEAR IN WHICH THE CLAIM OF DEDUCTION U/S. 80IB(10) HAD ALREADY BEEN GRANTED BY THE REVENUE DEPARTMENT THEN THE AO HAD NO OCCASION TO DISTURB THE CLAIM OF DEDUCTION IF IT PERTAINED TO THE SAME PROJECT IN THE SUBSEQUENT YEARS. THIS BENCH OF THE TRIBUNAL HAD THOUGHT IT PROPER TO ENQUIRE FROM THE REVE NUE DEPARTMENT THAT WHETHER THE SAID ASSESSMENT ORDER FOR A.Y.2005 - 06 WAS EVER SUBJECTED TO THE PROVISIONS OF SECTION 263 BY LEARNED COMMISSIONER OR WHETHER ANY REOPENING U/S.147 WAS INITIATED BY THE REVENUE DEPARTMENT IN RESPECT OF A.Y.2005 - 06, BUT NO SPE CIFIC REPLY WAS GIVEN BY THE REVENUE DEPARTMENT. RATHER PAPER BOOK IS SUBMITTED BY THE REVENUE DEPARTMENT THROUGH A COVERING LETTER WHICH IS DATED 30 TH OF JUNE, 2014 WHEREIN IT WAS COMMENTED THAT IF A DISALLOWANCE IS CONFIRMED IN A.Y.2006 - 07 OR A.Y.2007 - 08 THEN IN CONSEQUENCE THEREUPON THE SAME VIEW SHALL BE ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 10 TAKEN IN A.Y.2005 - 06 AS PER LAW. ONE OF THE SUBMISSION OF THE REVENUE DEPARTMENT WAS THAT THE LET OUT PLAN WAS APPROVED BY THE AHMEDABAD MUNICIPAL CORPORATION IN THE NAME OF THE LAND OWNERS AND RAJACHIT TI WAS ALSO IN THE NAME OF THE LAND OWNERS, THEREFORE, THE ASSESSEE SHOULD NOT BE ALLOWED THE IMPUGNED DEDUCTION. THE PAPER BOOK SUBMITTED BY THE REVENUE DEPARTMENT ONLY CONTAINS THE AGREEMENTS AND THE SALE DEEDS, ETC. WHICH HAVE ALSO BEEN FILED IN THE PAP ER BOOK SUBMITTED BY THE ASSESSEE. IN THIS SITUATION WHEN IN ONE OF THE INITIAL YEAR THE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF THIS VERY PROJECT HAS ALREADY BEEN GRANTED BY THE REVENUE DEPARTMENT THEN IN THE ABSENCE OF ANY CONTRARY MATERIAL OR INFO RMATION IN POSSESSION OF THE REVENUE DEPARTMENT, GENERALLY IT IS NOT PERMISSIBLE TO DISTURB THE CLAIM OF DEDUCTION IN ANY OF THE SUBSEQUENT YEARS. FOR THIS LEGAL PROPOSITION , THE ASSESSEE IS PLACING RELIANCE ON JANAK DEHYDRATION PVT. LTD., 134 TTJ 1 (AHD). BE THAT AS IT WAS, WE HAVE TO EXAMINE THE FACTS IN RESPECT OF THE CLAIM OF DEDUCTION IN THE LIGHT OF THE OBJECTIONS RAISED BY THE AO FOR A.Y.2006 - 07 SO AS TO ASCERTAIN THE CORRECTNESS OF DEDUCTION U/S.80IB(10) ON MERITS. FOR THIS PURPOSE, WE H AVE EXAMINED THE AGREEMENTS WHICH ARE PLACED ON RECORD AND THE ACCOUNTS OF THE ASSESSEE PERTAINING TO THE YEAR UNDER CONSIDERATION. THERE WAS A DEVELOPMENT AGREEMENT DATED 30 TH OF MARCH, 2004 . THIS IS ALSO MENTIONED THAT THE POSSESSION OVER THE LAND HAD ALSO BEEN HAND ED OVER TO THE ASSESSEE - FIRM. UNDISPUTEDLY , THERE WAS ANOTHER SUPPLEMENTARY DEED WHICH WAS DATED 22 ND OF JULY, 2004 WHICH HAS REAFFIRMED THE ORIGINAL DEVELOPMENT AGREEMENT AND THE SALE OF THE LAND BY THE LAND OWNERS TO THE ASSESSEE FIRM FOR A CONSIDERATION OF RS.1,68,11,000/ - REQUIRED TO BE PAID ON OR BEFORE 31 ST MARCH, 2006. BEFORE US IT IS DEMONSTRATED THAT THE PURCHASE OF LAND WAS THROUGH ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 11 ACCOUNT PAYEE CHEQUES AND DULY RECORDED IN THE BOOKS OF ACCOUNT. IT HAS ALSO BEEN DEMONSTRATED WITH THE HELP OF ACCOU NTS THAT THE EXPENDITURE TOWARDS THE CONSTRUCTION OF THE PROJECT WAS DULY RECORDED BY THE ASSESSEE. I T HAS ALSO BEEN MENTIONED THAT THE UNITS WERE SOLD TO THE MEMBERS OF THE SOCIETY AND THE RECEIPTS WERE DULY RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSE E - FIRM UNDER HEAD SALES . T HEREFORE , THE CONDITION SUCH AS CONTROL OVER THE LAND AND THE EXECUTION OF THE PROJECT AS WELL AS THE RISK FOR THE DEVELOPMENT OF THE PROJECT, ALL WERE WITHIN THE DOMAIN OF THE ASSESSEE. REST OF THE CONDITIONS SUCH AS THE APPROV ALS, AREA OF THE LAND DEVELOPED, SIZE OF THE UNITS CONSTRUCTED AND COMPLETION OF THE PROJECT WITHIN THE SPECIFIED TIME WERE NOT DISPUTED AS ALSO DEMONSTRATED FROM THE SEVERAL EVIDENCES ON RECORD. EVEN THE DVO OF THE REVENUE DEPARTMENT HAVE NOT RAISED ANY S ERIOUS OBJECTION WHEN A REPORT WAS CALLED BY THE LEARNED CIT(A). UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE SEVERAL CASE LAWS CITED FROM THE SIDE OF THE ASSESSEE SUCH AS RADHEY DEVELOPERS 204 TAXMANN.COM 543, SHAK TI CORPORATION, 32 SOT 438 , ETC., WE HEREBY AFFIRM THE FINDINGS OF LEARNED CIT(A) AND DISMISS GROUNDS OF THE REVENUE FOR BOTH THE YEARS. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE DEPARTMENT ARE DISMISSED. SD/ - SD/ - ( N.S. S AINI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 1 / 10 / 20 1 4 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : ITA NOS.1411/AHD/2010 & 1369/AHD/2010 ITO WARD 9(1), AHMEDABAD VS. M/S. SAUBHAGYA CORPORATION FOR A.YS. 2006 - 07 & 2007 - 08 - 12 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD