M/S. VAISHALI DEVELOPERS & BUILDERS, Bhopal V. THE ITO 1(2), Bhopal

ITA 156/IND/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0378 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESHPANDE

Judgement Text

VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 156/IND/2015 A.Y. 2010-11 M/S VAISHALI DEVELOPERS & BUILDERS BHOPAL PAN AACFV 7638P ::: APPELLANT VS INCOME TAX OFFICER 1(2) BHOPAL ::: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 16.7.2015 DATE OF PRONOUNCEMENT 3 0 . 7.2015 O R D E R PER BENCH THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 23.12 .2014. VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 2 2. AT THE OUTSET OF THE HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON THE SIMILAR ISSUE, HON' BLE ITAT WHILE DECIDING ITA NO. 497/IND/2012 FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 25.11.2014, HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFF ICER AND HE SUBMITTED A COPY OF THE SAID ORDER. HE PLEADED THAT TH E ISSUE IS THE SAME, THEREFORE, IT MAY ALSO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER. THE LD. DR HAS NO SER IOUS OBJECTION TO THIS PROPOSITION. 3. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE ITA T, INDORE BENCH, IN ITA NOS. 497/IND/2012 IN THE ASSESS EES OWN CASE VIDE ITS ORDER DATED 25.11.2014 HAS HELD AS UNDER :- WE HAVE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. AS FAR AS THE PRO JECT OF VIJAY NAGAR IS CONCERNED, FACTS OF THE CASE AR E YET TO BE FULLY BROUGHT ON RECORD THAT THE LAND WAS VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 3 OWNED BY THE ASSESSEE BY PLACING THE OWNERSHIP EVIDENCE OF THE LAND. THE ASSESSEE IS ALSO REQUIRED TO ESTABLISH THROUGH EVIDENCE THAT THE PERMISSION FOR THE DEVELOPMENT OF THE RESIDENTIAL PROJECT WAS IN T HE NAME OF THE ASSESSEE FIRM AND THAT THE COMPLETION CERTIFICATE WAS ISSUED BY THE CONCERNED UTHORITIES IN THE NAME OF THE ASSESSEE. OTHER CONNECTING EVIDENCES SUCH AS DETAILS OF DEVELOPMENT WORK ARE ALSO REQUIRED TO BE FURNISHED BY THE ASSESSEE. THE ASSESSEE IS ALSO REQUIRED TO PLACE ON RECORD THE YE AR IN WHICH THIS PROJECT WAS CONCEIVED AND THEREAFTER THE STAGE WISE DETAILS OF THE COMPLETION OF THE PROJECT. WE HAVE NOTED ALL THESE POINTS BECAUSE OF THE PRIMARY REASON THAT THE ORDER OF THE A.O. IS VE RY CRYPTIC AND DO NOT REVEAL WHETHER ALL SUCH INQUIRES HAVE BEEN CARRIED OUT BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE THE ORDER OF THE VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 4 A.O. IS VERY BRIEF AND CRYPTIC, THEREFORE, WE ARE UNABLE TO FULLY APPRECIATE CERTAIN FUNDAMENTAL FACT S WHICH ARE THE BASIC REQUIRE FOR GRANTING EXEMPTION U/S 80IB(10) OF IT ACT. 6.1 AS FAR AS THE PROJECT NAMELY VAISHALI NAGAR IS CONCERNED, THE REVENUE AUTHORITIES HAVE NOTED THAT THE LAND DID NOT BELONG TO THE ASSESSEE AND THEREFO RE THE PERMISSION FOR THE DEVELOPMENT OF THE SAID RESIDENTIAL PROJECT WAS ALSO NOT GRANTED IN THE NAM E OF THE ASSESSEE. SO IN A SITUATION WHEN THE PLOTS OF LAND WERE DIRECTLY TRANSFERRED IN THE NAMES OF THE CLIENTS AND THE ASSESSEE HAD UNDERTAKEN THE CONSTRUCTION OF SMALL UNITS OF RESIDENTIAL HOUSES T HEN THE ASSESSEE WAS ENTITLED FOR THE CLAIM OF DEDUCTIO N U/S 80IB(10). IN OUR CONSIDERED OPINION FOR BOTH TH E PROJECTS THE ASSESSEE IS DUTY BOUND TO ESTABLISH THROUGH HIS ACCOUNTS THAT HOW THE FUNDS WERE VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 5 INVOLVED AND IN WHAT MANNER THE INVESTMENT WAS MADE TOWARDS THE CONSTRUCTION/DEVELOPMENT OF THESE TWO PROJECTS. SO THE ASSESSEE HAS TO FURNISH THE AVAILABILITY OF THE FUNDS, UTILIZATION OF FUNDS AND THE RISK UNDERTAKEN FOR THESE TWO PROJECTS IN THE RECEN T PAST ITAT B BENCH AHMEDABAD HAS PRONOUNCED A JUDGMENT NAMELY ITO VS. M/S SHREEJI DEVELOPERS BEARING ITA NO. 2407/AHD/2009 DATED 29.02.2012 IN WHICH THE MANNER WAS REMITTED BACK TO THE FILE O F THE A.O. ESPECIALLY WHEN THE INQUIRIES MADE DURING THE ASSESSMENT PROCEEDINGS WERE INSUFFICIENT. DIRECTIONS GIVEN IN THE SAID ORDER WERE AS FOLLOWS :- THE RELEVANT TERMS OF DEVELOPMENT AGREEMENT ARE TO BE EXAMINED SO AS TO ASCERTAIN THE TERMS ON WHICH THE ASSESSEE WAS GRANTED RIGHT OF CONSTRUCTION. VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 6 (A) ON THE BASIS OF THE TERMS AND CONDITIONS IT HAS TO BE ASCERTAINED WHETHER IT WAS A WORK CONTRACT OR NOT. (B) ON THE BASIS OF THE TERMS AND CONDITIONS IT HAS TO BE EXAMINED THAT WHICH OF THE PARTY HAD TAKEN FULL RESPONSIBILITY FOR EXECUTION OF THE DEVELOPMENT PROJECT. (C) WHETHER UNDER THE AGREEMENT THE ASSESSEE HAD BEEN GIVEN FULL AUTHORITY TO DEVELOP THE LAND AND TO CONSTRUCT RESIDENTIAL UNITS. THE A.O. HAS TO EXAMINE THE FACT IN RESPECT OF ENGAGEMENT OF PROFESSIONALS, SUCH AS ARCHITECT FOR DESIGNING AND ARCHITECTURAL WORK. VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 7 (D) THE A.O. HAS TO EXAMINE THE RESPONSIBILITY OF ENROLMENT OF MEMBERS AND COLLECTION OF CHARGES REQUIRED TO BE MADE FROM THE BUYERS OF THE RESIDENTIAL UNITS (E) THE A.O. HAS TO EXAMINE ABOUT THE PROFIT OR LOSS ARISING FROM THE SAID PROJECT (F) THOUGH THE OWNERSHIP OF LAND HAS BEEN HELD AS NOT THE ONLY CRITERIA FOR ALLOWING THE CLAIM U/S 80IB(10) BUT THE DOMAIN OVER THE LAND AND THE DOMAIN OVER THE PROJECT HAS TO BE EXAMINED BY THE A.O. (G) WHETHER ON TRANSFER OF DOMAIN THE LAND OWNERS HAVE RECEIVED ANY CONSIDERATION AND WHETHER IT WAS A VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 8 FIXED AMOUNT OR DEPEND UPON THE PROFITS OF THE PROJECT. LIKEWISE, THE A.O. HAS TO ASCERTAIN WHETHER THE ASSESSEE WAS GIVEN A FIXED PERCENTAGE AS REMUNERATION FOR THE SAID PROJECT IN LIEU OF GRANTING PERMISSION TO CONSTRUCT THE RESIDENTIAL UNITS. (H) THE A.O. HAS TO ASCERTAIN THE POSITION OF THE POSSESSION OVER THE LAND DURING THE CONSTRUCTION PERIOD. (I) FOR THE PURPOSE OF CONSTRUCTION THE A.O. HAS TO EXAMINE HOW THE FINANCIAL ARRANGEMENTS WERE MADE BY THE ASSESSEE ? (J) THE A.O. HAS TO EXAMINE THE PROCEDURE FOR RAISING OF FUNDS EITHER VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 9 BY PRIVATE PLACEMENT OR BY FINANCIAL INSTITUTIONS. (K) THE RISK ELEMENT CONNECTED WITH THE SAID HOUSING PROJECT HAS ALSO TO BE EXAMINED. 7. IN THE RESULT, IN A SITUATION WHEN A ISSUE IS RESTORED BACK FOR DENOVO CONSIDERATION, AS PER THE DIRECTIONS, TO THE FILE OF THE A.O. THEREFORE ALL THE GROUNDS AS LISTED IN THE GROUNDS OF APPEAL ARE SET ASIDE TO THE FILE OF THE A.O.; HENCE TO BE TREATED AS ALLOWED ONLY FOR STATISTICAL PURPOSE. SINCE THE FACTS INVOLVED IN THIS ASSESSMENT YEAR ARE TH E IDENTICAL WITH THE FACTS INVOLVED IN THE ASSESSMENT YE AR 2007-08, FOLLOWING THE REASONINGS GIVEN IN THE ABOVE ORDER OF THE TRIBUNAL, WE RESTORE THIS APPEAL TO THE FILE O F THE ASSESSING OFFICER FOR FRAMING THE ASSESSMENT DE NOVO AFTER VAISHALI DEVELOPERS & BUILDERS ITA NO. 156/IND/2015 10 FOLLOWING THE DIRECTIONS AS GIVEN BY THE TRIBUNAL IN THE AFORESAID ORDER. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLO WED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON 30 TH JULY, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 30 TH JULY, 2015 DN/-