The ITO, Ward-3(2), Baroda V. M/s. Shyam Developers, Baroda

ITA 14/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72930 (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: 2007-2008
• 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. 14/AHD/2011 A.Y. 2007-08 INCOME TAX OFFICER WD-3(2), BARODA. VS M/S SHYAM DEVELOPERS 4-RAVIRAJ SOCIETY NEW SAMA ROAD, BARODA PAN: ABJFS2999A (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: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT/A- II, BARODA FOR ASSESSMENT YEAR 2007-08, DATED 06.09 .2010. 2. THE SOLE ISSUE INVOLVED IN THE APPEAL IS THAT TH E LD. CIT(A) ERRED IN DIRECTING ASSESSING OFFICER TO ALLOW DEDUCTION U /S 80IB(10) READ WITH SECTION 80IB(1) OF THE INCOME TAX ACT TO THE ASSESSEE IN VIEW OF THE DECISION OF THE HONBLE ITAT IN THE CAS E OF M/S RADHE DEVELOPERS IN ITA NO. 2482/AHD/2006 DATED 26.06.200 7 WITHOUT APPRECIATING THAT THE APPROVAL BY THE LOCAL AUTHORI TY AS WELL AS COMPLETION CERTIFICATE WAS NOT GRANTED TO THE ASSES SEE BUT TO THE ITA NOS.14/AHD/2011 M/S SHYAM DEVELOPERS VS ITO, WD-3(2), BARODA. FOR A.Y. 2007-08 - 2 - 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 THE YEAR UNDER CONSIDER ATION ARE THAT IN THE RETURN OF INCOME FILED THE ASSESSEE CLAIMED DEDUCTI ON U/S 80IB(10) OF RS 29,37,018/- IN THE ASSESSMENT YEAR 2007-08 WH ICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT THE ASSESSEE WAS NOT OWNER OF THE PROPERTY AND PERMISSI ON WAS NOT GRANTED IN THE ASSESSEES NAME AND THE APPROVAL BY VADODARA MUNICIPAL CORPORATION WAS IN THE NAME OF ORIGINAL L AND OWNER AND NOT IN THE NAME OF ASSESSEE DEVELOPERS AND THE ORIG INAL LAND OWNER HAS ASKED SERVICES OF ASSESSEE FIRM FOR DEVELOPMENT AND CONSTRUCTION OF THE PROJECT. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER OBSERVED THAT THE FUNDAMENTAL CONDITION THA T APPROVAL MUST BE ACCORDED IN ASSESSEES NAME WAS NOT SATISFIED AN D THEREFORE, HE DENIED THE CLAIM FOR DEDUCTION U/S 80IB(10) TO THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. 4. THE ASSESSEE BEFORE THE LD. CIT(A) CONTENDED AS UNDER: 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 ITA NOS.14/AHD/2011 M/S SHYAM DEVELOPERS VS ITO, WD-3(2), BARODA. FOR A.Y. 2007-08 - 3 - 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 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.' ITA NOS.14/AHD/2011 M/S SHYAM DEVELOPERS VS ITO, WD-3(2), BARODA. FOR A.Y. 2007-08 - 4 - 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 DECISI ON OF HON'BLE ITAT, AHMEDABAD, IN THE CASE OF M/S. RADHE DEVELOPE RS & OTHER VIDE ORDER IN ITA NO. 2482/AHD/2006 DATED 29. 06.2007. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON T HE GROUND OF OWNERSHIP OF LAND IS DELETED AS THE APPELLANT SA TISFIED THE CONDITION IN THAT RESPECT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE LD. DR VERY FAIRLY CONCEDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT I N THE CASE OF CIT VS. RADHE DEVELOPERS & OTHERS IN (2012) 341 ITR 403 (GUJ). IN ABSENCE OF ANY MATERIAL BROUGHT BEFORE US TO JUS TIFY ANY INTERFERENCE IN THE ORDER OF THE LD. CIT(A), THE OR DER OF LD. CIT(A) IS CONFIRMED. 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. .. .