The ITO, Ward-5(4), Surat V. M/s. Shreeji Developers, Surat

ITA 1402/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76710 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI P L KUREEL
• Assessee Lawyers: RASESH SHAH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO.1402/AHD/2011 (ASSESSMENT Y EAR: 2007-08) THE ITO, WARD 5(4), SURAT V/S M/S. SHREEJI DEVELOPERS SHYAM VATKA, OPP. KARUNASAGAR SOCIETY MODEL TOWN ROAD, DUMBHAL, SURAT (APPELLANT) (RESPONDENT) PAN: AAYFS4640L APPELLANT BY : SHRI SHRI P.L. KUREEL, SR. D.R. RESPONDENT BY : SHRI RASESH SHAH ( )/ ORDER DATE OF HEARING : 07-05-2014 DATE OF PRONOUNCEMENT : 16-05-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-IV, SURAT DATED 11.01.2011 FOR A.Y. 2007-08. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. THE ASSESSEE IS A FIRM STATED TO BE ENGAGED IN THE BUSINESS OF HOUSING BUILDING CONSTRUCTION. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2007- 08 ON 26.10.2007 DECLARING TOTAL INCOME OF RS. NIL AFTER CLAIMING THE ENTIRE PROFIT OF RS. 83,48,670/- AS DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND TH EREAFTER THE ASSESSMENT ITA NO 1402/AH D/2011 . A.Y. 2007-08 2 WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 31 .12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 83,48,670 AFTER DISALLOWING THE CLAIM OF DEDUCTION U/S. 80IB(10). AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 11.01.2011 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY TH E ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING EFFECTIVE GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT(A), SURAT HAS ERRED IN DELETING THE ADDITION OF RS. 83,48,670/- MADE ON AC COUNT OF DISALLOWANCE OF THE CLAIM OF U/S 80IB(10) OF THE I.T. ACT. AS THE ASSESSEE WAS NOT THE REAL OWNER OF THE LAND AND IT WAS MERELY A DEVELOPER AND NOT BUILDER AND DEVELOPER AS ENVISAGED IN THE SECTI ON. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAD CARRIED THE CONSTRUCTION OF PROJECT NAMELY SHYAM VATIKA AND SHOWN TO HAVE EARNED NET PROFIT OF RS. 83,48,670/- AND THE ENTIRE PROFITS SAME WAS CLAIME D AS DEDUCTION UNDER 80IB(10) OF THE ACT. A.O ALSO NOTICED THAT ASSESSE E HAD ENTERED INTO AGREEMENT WITH SHYAM VATIKA CO. OP. HOUSING SOCIET Y LTD. FOR CONSTRUCTION OF HOUSING PROJECT AS PER THE PLANNED APPROVED BY THE LOCAL AUTHORITY FOR THE SOCIETY, SHYAM VATIKA CO. OP. S OCIETY HAD PURCHASED THE LAND AND CONCEPTULISED THE HOUSING PROJECT, THE APPROVAL FOR CONSTRUCTION OF THE PROJECT WAS GRANTED TO THE LAND OWNERS. HE ALSO NOTICED THAT SOCIETY HAD GIVEN THE POSSESSION OF SI TE TO THE ASSESSEE ONLY FOR THE PURPOSE OF CONSTRUCTION. HE THEREFORE CONC LUDED THAT THE ASSESSEE WAS MERELY A CONTRACTOR OR BUILDER FOR CONSTRUCTION OF THE HOUSE AS PER THE APPROVAL OBTAINED BY THE SOCIETY FOR CONSTRUCTI ON ON THE LAND OWNED BY THE SOCIETY AND THEREFORE THE ASSESSEE WAS NOT A DEVELOPER OF THE PROJECT AND THEREFORE THE ASSESSEE DID NOT SATISFY THE PRIMARY REQUIREMENT OF THE SECTION 80IB(10) AND THEREFORE ACCORDING TO HIM THE ASSESSEE WAS ITA NO 1402/AH D/2011 . A.Y. 2007-08 3 NOT ELIGIBLE FOR DEDUCTION UNDER 80IB(10). HE ACCO RDINGLY DENIED THE CLAIM OF DEDUCTION UNDER 80IB(10) OF THE ACT. AGGRI EVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATER BEFORE CIT(A). CIT( A) VIDE ORDER DATED 11.01.2012 ALLOWED THE APPEAL OF THE ASSESSEE BY HO LDING AS UNDER:- 2.1. DURING THE COURSE OF APPEAL PROCEEDINGS, IT WAS SUBMITTED BY THE APPE LLANT'S A.R. THAT THEY RELY ON THEIR WRITTEN SUBMISSIONS FILED IN RESPECT OF APPEA L PROCEEDINGS FOR IMMEDIATELY PRECEDING YEAR. IT WA S SUBMITTED THAT THE ISSUE RELATING TO DISALLOWANCE O F DEDUCTION U/S. 80IB(10) HAD ARISEN IN RESPECT OF THE SAME PROJECT IN THE IMMEDIATELY PRECEDING YEAR AND THE ISSUE WAS DECIDED IN FAVOUR OF THE APPELLANT VIDE APPEAL ORDER DATED 11.05.2009. IT WAS SUBMITTE D THAT THE DECISION IN THE CASE OF THE APPELLANT HIMSELF FOR PRECEDING YEAR WAS IN HIS FAVOUR WHEREI N IT WAS HELD THAT THE APPELLANT WAS DEVELOPER AND BUILDER AND NOT CONTRACTOR. IT WAS ALSO SUBMITTED T HAT FOR THIS REASON THE AMENDMENT MADE TO SECTION 80IB(10) BY FINANCE ACT 2009 WOULD NOT DISENTITLE T HE APPELLANT TO CLAIM DEDUCTION U/S. 80IB(10). 2.2. I HAVE GONE THROUGH THE FACTS OF THE CASE AND APPELLATE ORDER DATED 11.05.2009 IN RESPECT OF THE APPELLANT FOR A.Y. 2006-07.1 FIND THAT THE ISSUE IN BOTH THE YEARS IS IDENTICAL AND PERTAINS TO THE SA ME PROJECT. MY PREDECESSOR IN HIS ORDER DATED 11.05.20 09, AFTER CONSIDERING THE FACTUAL MATRIX OF THE CAS E, CONCLUDED THAT THE APPELLANT HAD CARRIED OUT THE DE VELOPMENT AND BUILDING WORK OF THE HOUSING PROJECT AND WAS ELIGIBLE FOR DEDUCTION U/S. 80IB(10). RESPE CTFULLY FOLLOWING THE ORDER OF MY PREDECESSOR IT IS HELD THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U /S. 80IB(10). THE A.O IS DIRECTED TO ALLOW THE CLA IM OF THE APPELLANT. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NO W IN APPEAL BEFORE US . 6. BEFORE US, THE LD. D.R. RELIED ON THE ORDER OF A.O. ON THE OTHER HAND THE LD. A.R. SUBMITTED THAT ON IDENTICAL FACTS FOR A.Y. 06-07 THE CLAIM OF DEDUCTION U/S. 80IB(10) WAS DISALLOWED BY A.O BUT H OWEVER CIT(A) DECIDED IN FAVOUR OF ASSESSEE. AGAINST THE ORDER OF CIT(A), REVENUE PREFERRED APPEAL BEFORE HONBLE ITAT. HONBLE TRIBU NAL IN ITA NO. 2407/A/09 ORDER DATED 30.03.2012 DECIDED THE APPEAL IN FAVOUR OF ASSESSEE BY UPHOLDING THE ORDER OF CIT(A) BY HOLDIN G AS UNDER:- 6 WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES. TH E MAIN REASON FOR REJECTING THE CLAIM OF DEDUCTION U/S.80-IB(10) OF THE I.T.ACT WAS THAT THE ASSESSEE HAS NOT OWNED THE LAND ON WHICH THE SAID HOUSING PROJECT WAS DEVELOPED. THE ASSESSING O FFICER HAS ALSO IGNORED THE DECISIONS OF THE TRIBUNAL CITED, NAMELY, RADHE DEVELOPERS 113 TTJ 30 0 (AHD.). BUT AS FAR AS THE FACTS OF THE CASE ARE CONCERNED, THERE WAS NO CONTRADICTORY FINDING O F THE ASSESSING OFFICER THAT THE ASSESSEE HAS ACTUALLY DEVELOPED THE RESIDENTIAL COMPLEX. THE ASS ESSING OFFICER HAS NOT DISPUTED THE TERMS AND CONDITIONS UNDER WHICH THE ASSESSEE HAS DEVELOPED T HE PROJECT IN QUESTION. ON THE OTHER HAND, FROM THE SIDE OF THE ASSESSEE, AMPLE EVIDENCES WERE PLACED ON RECORD TO DEMONSTRATE THAT THE ASSESSEE HAD FULL AUTHORITY TO DEVELOP THE LAND NOT AS A 'CONTRACTOR' BUT AS A 'DEVELOPER'. ON ACCOUNT OF THE SAID REASON, THE ASSESSEE WAS NOT ON LY ENTITLED FOR THE PROFIT BUT ALSO RESPONSIBLE FOR ITA NO 1402/AH D/2011 . A.Y. 2007-08 4 THE LOSS, IF ANY, OCCURRED IN THE DEVELOPMENT OF TH E SAID PROJECT. IT HAS ALSO NOT BEEN DISPUTED THAT THE RESPONSIBILITY OF ENROLMENT OF MEMBERS AND COLL ECTION OF CHARGES WAS ON THE ASSESSEE. CONSIDERING ALL THESE ASPECTS OF THE CASE, ID.CIT(A ) HAS RIGHTLY HELD THAT THE TRIBUNAL IN THE CITED DECISION HAS HELD THAT MERELY THE OWNERSHIP OF THE LAND IS NOT A PRE-CONDITION FOR ALLOWING THE DEDUCTION U/S.80IB(10) OF THE I.T.ACT. NOW BEFORE U S, THE RESPONDENT-ASSESSEE HAS PLACED THE DECISION OF HON'BLE GUJARAT HIGH COURT PRONOUNCED I N THE CASE OF RADHE DEVELOPERS DATED 13.12.2011 (2012) 17 TAXMANN.COM 156 (GUJ.), WHEREI N THE DECISION OF THE TRIBUNAL HAS BEEN APPROVED. RATHER, WE HAVE NOTED THAT IN THE SUBMISS IONS FURNISHED FROM THE CITED OF THE REVENUE, IT WAS STATED THAT THE DEVELOPER HAS AGREED TO INCU R THE COST AND EXPENSE OF CONSTRUCTION OF THE PROPOSED BUILDING AND THAT ANY OTHER INCIDENTAL EXP ENSES, SUCH AS, FEE FOR OBTAINING THE APPROVAL, FEE FOR SANCTION OF THE PLAN WAS BORNE AND UNDERTAK ING BY THE ASSESSEE AND THE OWNERS OF THE LAND WERE NOT RESPONSIBLE IN ANY MANNER FOR SUCH EXPENDI TURE. BEFORE US, RELIANCE HAS ALSO BEEN PLACED ON SHAKTI CORPORATION 32 SOT 438 (AHD.). IN THE SAI D DECISION, THE RESPECTED COORDINATE BENCH HAS EXPRESSED THAT IF THE ASSESSEE HAS ACQUIRED THE DOMAIN OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND T AKING ALL THE RISK INVOLVED, THEN ENTITLED FOR THE CLAIM OF DEDUCTION U/S.80-IB(10) OF THE I.T.ACT. ON CE THE HON'BLE JURISDICTIONAL HIGH COURT HAS APPROVED THE VIEW ALREADY TAKEN BY THE RESPECTED CO ORDINATE BENCH IN THE CASE OF RADHE DEVELOPERS, THEREFORE IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ISSUE OF CLAIM OF DEDUCTION U/S.80-IB(10) OF THE I. T.ACT STOOD COVERED AND TO BE DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, WE HEREBY CONFIRM T HE LEGAL AS ALSO FACTUAL FINDINGS OF THE LD. CIT(A) AND DISMISS THE GROUND OF THE REVENUE. 7. THE LD. A.R. FURTHER SUBMITTED THAT AGAINST THE ORD ER OF HONBLE TRIBUNAL, REVENUE HAD PREFERRED APPEAL BEFORE HONBLE HIGH CO URT. HONBLE HIGH COURT IN TAX APPEAL NO. 643/AHD/2012 ORDER DATED 30 .04.2013 DISMISSED THE APPEAL OF THE REVENUE BY FOLLOWING TH E DECISION IN THE CASE OF CIT VS. RADHE DEVELOPERS (2012) 341 ITR 403 (GUJ .). HE PLACED ON RECORD, THE COPY OF THE AFORESAID DECISIONS. HE THE REFORE SUBMITTED THAT SINCE THE ISSUE OF ASSESSEES CLAIM FOR DEDUCTION U /S. 80IB(10) HAS ATTAINED FINALITY AND SINCE THE FACTS OF THE CASE I N THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 06-07, THE MATTER HAS BEEN RIGHTLY BEEN DECIDED IN FAVOUR OF ASSESSEE AND THEREFORE THE AP PEAL OF THE REVENUE NEEDS TO BE DISMISSED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB(10). IT IS ALSO AN UNDISPUTED FACT THAT THE PR OJECT ON WHICH ASSESSEE HAD CLAIMED DEDUCTION WAS THE SAME PROJECT ON WHICH THE ASSESSEE HAD ITA NO 1402/AH D/2011 . A.Y. 2007-08 5 CLAIMED DEDUCTION U/S. 80IB(10) IN EARLIER YEARS AN D FOR EARLIER YEARS, THE ISSUE HAS ATTAINED FINALITY BY THE DECISION OF HON BLE GUJARAT HIGH COURT CITED HEREINABOVE. FROM THE ORDER OF CIT(A), IT IS SEEN THAT CIT(A) HAS NOTED THAT THE ISSUE IN THE YEAR UNDER APPEAL IS ID ENTICAL WITH THAT OF A.Y. 06-07 AND ALSO PERTAINS TO THE SAME PROJECT. THE CO -ORDINATE BENCH OF TRIBUNAL FOR A.Y. 06-07 FOLLOWING THE DECISION IN T HE CASE OF RADHE DEVELOPERS AND SHAKTI CORPORATION HAD DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE AND THE DECISION OF CO-ORDINATE BENCH OF T RIBUNAL WAS ALSO UPHELD BY HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO. 643/A/2012. IN VIEW OF THE AFORESAID FACTS AND RESPECTFULLY FOL LOWING THE ORDER OF CO- ORDINATE BENCH OF TRIBUNAL AND THE HIGH COURT, FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS DISMISS THIS GROUND OF REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 05 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD