The ITO, Ward-9(2), Ahmedabad V. M/s. Gajanan Builders, Ahmedabad

ITA 1372/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1483 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL
• Assessee Lawyers: ANIL BRAHMKSHRTRIYA
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER THE ITO, WD. 9(2), AHMEDABAD (APPELLANT) VS M/S. GAJANAN BUILDERS, GAJANAN RESIDENCY BHARGAV (KATHWADA) SOCIETY, SINGRAVA, KATHWADA, AHMEDABAD - 382430 PAN: AAHFG0069J (RESPONDENT) REVENUE BY : S H RI S.L. CHANDE L , SR. D . R. ASSESSEE BY: S H RI ANIL BRAHMKSHRTRIYA , A.R. DATE OF HEARING : 10 - 03 - 2 016 DATE OF PRONOUNCEMENT : 31 - 05 - 2 016 / ORDER P ER : S. S. GODARA , JU DICIAL MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2009 - 10 , AR ISES FROM ORDER OF THE CIT(A) - XV, AHMEDABAD DATED 30 - 04 - 2012 IN APPEAL NO. CIT(A) - XV/ITO / (OSD)II/RANGE - 9/289/11 - 12 , DIRECTING THE ASSESSING OFFICER I T A NO . 1372 / A HD/20 12 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 1372 /AHD/20 12 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. GAJANAN BUILDERS 2 TO DELETE 80IB(10) DEDUCTION DISALLOWANCE OF R S. 58,92,292/ - MADE BY THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 25 - 11 - 2011, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. FACTS OF THE CASE ARE IN BRIEF COMPASS. THE ASSESSEE RAISED THE IMPUGNED SECTION 8 0IB(10) DEDUCTION CLAIM QUA ITS PROJECT GAJANAND RESIDENCY . ITS FIRST YEAR OF BUSINESS OPERATION WAS A SSESSMENT YEAR 2007 - 08. M/S. BH ARGAV (KATHAWAD) COOPERATIVE SOCIETY LTD. OWNED THE PROJECT LAND AT SINGARWA - KATHWADA ROAD AHMEDABAD . THE ASSESSEE ENT ERED INTO A DEVELOPMENT AGREEMENT DATED 21 - 02 - 2007 WITH THIS SOCIETY. IT THEREAFTER CARRIED OUT THE DEVELOPMENT IN QUESTION AND RAISED THE IMPUGNED 80IB(10) DEDUCTION . THE ASSESSING OFFICER IN HIS ORDER DATED 25 - 11 - 2011 INTER ALIA DISALLOWED THE SAME ON THE GROUND THAT THE ASSESSEE NEITHER CONCEPTUALIZED NOR OWNED THE PROJECT, IT WAS MERELY A CONTRACTOR FOR CARRYING OUT CONSTRUCTION , IT DID NOT ACT AS VENDOR IN ANY SALE DEED, TH E ABOVE STATED SOCIETY WAS NOT ELIGIBLE FOR THE IMPUGNED DEDUCTION AND THE PRO JECT IN QUESTION EXCEEDED COMMERCIAL AREA LIMIT OF 5%. THIS RESULTED IN THE IMPUGNED DISALLOWANCE OF RS. 58,92,294/ - . 3. THE AS SESSEE PREFERRED APPEAL. THE CI T(A) ACCEPTS ITS DEDUCTION CLAIM AS UNDER: - 6. I HAVE PERUSED THE CONTENTION OF THE A.O. A S DISCUSSED IN THE ASSTT. ORDER. I HAVE PERUSED THE SUBMISSION MADE BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AS CONSIDERED BY A.O. AND ALSO I.T.A NO. 1372 /AHD/20 12 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. GAJANAN BUILDERS 3 SUBMISSION MADE BY THE APPELLANT WITH STATEMENT OF FACTS AND THEREAFTER DURING THE COURSE OF APPELLATE PRO CEEDINGS. I HAVE PERUSED VARIOUS FACTS IN THE TAX AUDIT REPORT, AUDITED P&L ACCOUNT AND BALANCE SHEET FOR THE PREVIOUS YEAR, AND VERIFICATION IN THE FORM 10CCB FOR THE CLAIM. I HAVE PERUSED THE FACTS, SUBMISSION, DETAILS, EXPLANATION AND EVIDENCES AS SUBMI TTED BY THE APPELLANT AND DULY CONSIDERED BY ME IN THE APPELLATE PROCEEDINGS RELATED TO A.Y. 2007 - 08 IN THE CASE OF APPELLANT. AFTER CAREFUL CONSIDERATION OF FACTS AND SUBMISSION, I AM FULLY AGREE WITH THE APPELLANT THAT FACTS OF THE CASE IN THE PRESENT YE AR UNDER CONSIDERATION ARE RELATED TO ONE AND SAME HOUSING PROJECT AND SQUARELY APPLICABLE. FURTHER, CONSIDERING ALL SUCH EXPLANATION AND EVIDENCES, I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPELLANT THAT IT IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. VARIOUS DETAILS, CONTENTIONS HAD ALREADY BEEN DISCUSSED AND INCLUDED IN MY APPELLATE ORDER IN THE CASE OF THE APPELLANT FOR A.Y. 2007 - 08 AND FOR THE SAKE OF BREVITY THE SAME ARE NOT REPEATED HERE. THIS INCLUDE THE CONTENTION OF A.O. THAT THE APPE LLANT IS NOT THE OWNER OF THE LAND AND ACTED AS CONTRACTOR INSTEAD OF DEVELOPER AND ALSO THE HOUSING PROJECT HAS SHOPS/COMMERCIAL AREA EXCEEDING THE MAXIMUM LIMIT PRESCRIBED U/S.80IB(10) OF THE ACT. 7. IN THE APPELLATE ORDER DATED 30 TH APRIL 2012 IN THE CASE OF THE APPELLANT FOR A.Y. 2007 - 08 IN THE APPEAL NO. CIT(A) - XV/ITO/9(2)/347/09 - 10 AT PARA 21 TO 22.6 AFTER DETAILED REASONING AND FOLLOWING THE RATIO OF VARIOUS CASE LAWS INCLUDING THE RECENT JUDGEMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS VS.LTO & ORS. 341 ITR 403 (GUJ.) AND HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES, IT WAS HELD THAT APPELLANT IS ENTITLED FOR DEDUCTION U/S. 80IB (10) OF THE ACT AND DISALLOWANCES MADE BY THE A.O. IN THIS REGARD ARE NOT JU STIFIED. IT IS THEREFORE FOLLOWING THE RATIO OF CASE LAWS AS DISCUSSED IN THE APPELLATE ORDER RELATED TO APPELLANT FOR A.Y. 2007 - 08 AND AS DECIDED BY ME IN THAT ORDER, THE GROUNDS OF APPEAL ARE DISPOSED OFF AS FOLLOWS: (A) FIRST GROUND IS GENERAL AND IN T HE ABSENCE OF ANY EXPLANATION AND EVIDENCES, GROUND IS REJECTED. (B) SECOND GROUND IN RESPECT OF CLAIM U/S. 80 1B(10) OF THE ACT OF RS.58,92,294 IS ALLOWED. I.T.A NO. 1372 /AHD/20 12 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. GAJANAN BUILDERS 4 (C) THIRD GROUND IN RESPECT OF INITIATION OF PENALTY U/S. 271(1)(C) OF THE ACT IS PRE - MATURE AND THEREFORE REJECTED. (D) FOURTH GROUND IN RESPECT OF CHARGING OF INTEREST U/S.234A/B/C IS CONSEQUENTIAL IN NATURE, A.O. IS DIRECTED TO VERIFY AFTER GIVING APPEAL EFFECT, IF REQUIRED THEN CHARGE THE INTEREST ACCORDINGLY. 4. WE HAVE HEARD BOTH THE PARTIES . THE REVENUE STRONGLY SEEKS TO RESTORE THE IMPUGNED SECTION 80IB (10) DEDUCTION DISALLOWANCE OF RS. 58,92,294/ - MADE BY THE ASSESSING OFFICER BY TERMING THE ASSESSEE AS A MERE CONTRACTOR HAVING CARRIED OUT BUILDING CONSTRUCTION . WE DEEM IT APPROPRIATE AT THIS STAGE THAT IT IS ONLY THE DEVELOPMENT AGREEMENT WHICH CAN THROW LIGHT ON THE ASSESSEE S ROLE THEREIN. THE SAME FORMS PART OF THE PAPER BOOK. WE NOTICE THAT THE ASSESSEE HAS FUNDED FOR LAND PURCHASE. PARA 6 THEREOF CLARIFIES THAT THE ABOVE STATED SOCIETY CONFERRED ALL RIGHTS OF BUILDING AND DEVELOPMENT IN ASSESSEE S FAVOUR AS WELL AS THAT OF SALE DEED MONEY RECEIPT. PARA 13 OF THIS AGREEMENT IS MOST CRUCIAL IN OUR VIEW. IT CONTEMPLATES THAT THE ASSESSEE SHALL BEAR THE RISK OF T HE PROJECT. WE ARE OF THE OPINION IN THESE FACTS AND CIR CU M ST ANCES THAT THIS ASSESSEE HAS UNDERTAKEN THE ENTREPRENEURIAL RISK IN DEVELOPMENT OF THE PROJECT. A CO - ORDINATE BENCH OF THE TRIBUNAL IN SHRI UMEYA CORPORATION VS. ITO ITA NO. 211/AHD/2010 DECIDED ON 07 - 07 - 2015 HOL DS THAT IT IS THIS RISK FACTOR DECISIVE FOR ADJUDICATION OF THE IMPUGNED SECTION 80IB(10) DEDU CTION. WE ALSO FIND THAT THE CI T(A) HAS FOLLOWED HIS ORDER IN ASSESSMENT YEAR 2007 - 08 IN ASSESSEE S OWN CASE. HON BLE JURISDICTIONAL HIGH COURT IN CIT VS. RADHE DEVELOPERS (2012) 341 ITR I.T.A NO. 1372 /AHD/20 12 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. GAJANAN BUILDERS 5 403 (GUJ) HOLDS THAT OWNERSHIP OF LAND DOES NOT FORM A VALID CRITERIA FOR NOT ALLOWING THIS DEDUCTION. IT IS FURTHER EVIDENT THAT THE CIT(A) HAS ALREADY ADJUDICATED COMMERCIAL AREA ISSUE IN ASSESSEE S FAVOUR. WE TAKE INTO ACCOU NT ALL THESE FACTS AND HOLD THAT THE CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO DELETE THE IMPUGNED DISALLOWANCE OF SECTION 80IB(10) DEDUCTION. 5. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 31 - 05 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 31 /05 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,