Shri Kalpesh Kantilal Patel, Ahmedabad V. The Income Tax Officer, Ward 9(2), Ahmedabad

ITA 1569/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0599 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-09-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 29-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL
• Keywords: Principle of natural justice
• Section: 143(3); 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI S.S. GODARA, JM, & SHRI MANISH BORAD , AM. ITA NO.1569/AHD/2013 ASST. YEAR: 2003-04 SHRI KALPESH KANTILAL PATEL, 30, AMBICA SOCIETY, USMANPURA, AHMEDABAD. VS. ITO, WD-9(2), AHMEDABAD. APPELLANT RESPONDENT PAN AAWPP 5054D APPELLANT BY SHRI HEM CHHAJED, AR RESPONDENT BY SHRI S. L. CHANDEL, SR.DR DATE OF HEARING: 8/9/2016 DATE OF PRONOUNCEMENT: 21/9/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-XV, AHMEDABAD, DATED 1 ST MARCH, 2013 IN APPEAL NO.CIT(A)- XV/ITO9(2)/405/2010-11, PASSED AGAINST ORDER U/S 14 3(3) R.W.S. 254 OF THE IT ACT, 2916 (IN SHORT THE ACT) FRAMED ON 31 /12/2010 BY ITO WD-9(2), AHMEDABAD. ASSESSEE HAS RAISED FOLLOWING G ROUNDS OF APPEAL :- 1. THE ORDER OF ASSESSMENT PASSED U/S 143(3) R.W.S 254 OF THE I.T. ACT IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE LAW, EQUIT Y AND NATURAL JUSTICE. ITA NO. 1569/AHD/2013 ASST. YEAR 2003-04 2 2. THE LD. CIT(A). HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ORDER OF THE LD. A.O. OF DISALLOWANCE OF CLAIM MADE U/S 80IB OF IT. ACT, 1961 FOR RS. 36,08,678/-. 3. THAT THE CONSTRUCTION OF THE RESIDENTIAL UNITS I N THE HOUSING PROJECT FULFILLS THE CONDITION LAID DOWN IN SECTION 80IB(10) OF THE ACT & REJECTION OF CLAIM ON THE GROUNDS THAT APPELLANT WAS NOT THE OWNER OF THE LAND, APPROVAL FOR CARRYING OUT THE DEVELOPMENT WAS NOT IN THE NAME OF THE APPELLANT, TREATING THE APPELLANT FIRM AS MERE 'WORKS CONTRACT ORS' ATE NOT TENABLE IN LAW AND IN FACT. WHEREAS THE FUNCTION, RIGHTS. RESP ONSIBILITIES ETC. AS AGREED WITH THE LAND OWNERS PUTS THE APPELLANT FIRM AS 'DE FACTO' DEEMED OWNER OF THE LAND. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FURNISHED AND THE EVIDENC ES PRODUCED BY THE APPELLANT. 5. THE OBSERVATIONS MADE AND CONCLUSION REACHED BY LD. CIT{A) FOR THE PURPOSE OF MAKING THE AFORESAID DISALLOWANCES WITH REGARDS TO THE PROVISION OF SECTION 801B(10) ARE WHOLLY UNWARRANTE D AND UNJUSTIFIED IN FACTS AND IN LAW. 6. THE OBSERVATIONS MADE AND CONCLUSION REACHED BY LD.CIT(A) WITH REGARD TO DISALLOWANCE MADE U/S 80IB(10) OF THE ACT IN SO FAR AS THE SAME ARE PREJUDICIAL TO THE INTEREST OF THE APPELLANT ARE WH OLLY UNJUSTIFIED AND SHOULD BE CONDEMNED, UNLESS EXPRESSLY ADMITTED BY THE APPE LLANT. 7. THE APPELLANT CRAVES LIBERTY TO ADD, AMEND, ALTE R OR MODIFY ALL OR ANY GROUNDS OF APPEAL BEFORE FINAL APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF DEVELOPMENT O F BUILDING HOUSING PROJECTS UNDER SOLE PROPRIETARY CONCERN M/S SHREEJI DEVELOPERS. RETURN OF INCOME WAS FILED ON 23/10/200 3 DECLARING TOTAL INCOME AT RS.3,94,680/- AFTER CLAIMING DEDUCTION U/ S 80IB(10) OF THE ACT OF RS.36,08,678/- IN RESPECT OF PROFITS DERIVED FROM DEVELOPMENT OF BUILDING HOUSING PROJECTS. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 27.01.2006 DETERMINING INCOME OF RS.453675/-. ITA NO. 1569/AHD/2013 ASST. YEAR 2003-04 3 3. SUBSEQUENTLY AN ORDER U/S 263 OF THE ACT WAS PAS SED ON 14.2.2007 SETTING ASIDE THE ASSESSMENT U/S 143(3) O F THE ACT DATED 27.1.2006 WITH THE DIRECTION TO EXAMINE THE CLAIM O F DEDUCTION U/S 80IB(10) OF THE ACT. ASSESSMENT U/S 143(3) R.W.S. 2 63 OF THE ACT WAS FINALIZED ON 18.5.2007 AFTER DISALLOWING THE DEDUCT ION U/S 80IB(10) OF THE ACT AT RS.36,08,678/-. ON APPEAL LD. CIT(A) ALL OWED THE CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT FOLLOWING THE DEC ISION FOR ASST. YEAR 2004-05 IN ASSESSEES OWN CASE. AGGRIEVED, REVENUE CAME UP BEFORE THE TRIBUNAL AND VIDE ITS ORDER DATED 18.03. 2009 IN ITA NO.1441/AHD/2008 THE CO-ORDINATE BENCH SET ASIDE TH E ORDER OF LD. CIT(A) AND RESTORED THE ISSUE BACK TO THE FILE OF A SSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE IN THE LIGHT OF THE DECISION OF THE TRIBUNAL GIVEN IN THE CASE OF SHAKTI CORPORATION RE NDERED BY THE TRIBUNAL IN ITA NO.1503/AHD/2008 AND M/S RADHE DEVE LOPERS & OTHERS IN ITA NO.2482/AHD/2006. 4. FOLLOWING THE DIRECTIONS OF THE TRIBUNAL, LD. AS SESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 143(3) R.W.S. 2 54 OF THE ACT AND AGAIN DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB(10 ) OF THE ACT AT RS.36,08,678/- AND ASSESSED THE INCOME AT RS.40,63, 350/-. APPEAL BEFORE LD. CIT(A) AGAINST THE ORDER U/S 143(3) R.W. S. 254 OF THE ACT DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE US I N SECOND ROUND. ITA NO. 1569/AHD/2013 ASST. YEAR 2003-04 4 6. AT THE OUTSET THE LD. AR SUBMITTED THAT THE ISSU E IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASST. YEAR 2004-05 WHEREIN IT HAS BEEN HELD THAT THE COMMISSIO NER OF INCOME- TAX WAS NOT CORRECT IN INVOKING POWERS U/S 263 OF T HE ACT AS THE ASSESSMENT WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE TRIBUNAL ALSO HELD THAT EVEN ON MERITS THE ISSUE IS NOW COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TH E TRIBUNAL IN THE CASE OF RADHE DEVELOPERS (SUPRA). 7. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THROUGH THIS APPEAL ASSESSEE HAS CHALLENGED THE LEGALITY OF THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 254 OF THE ACT, SECONDLY AGAINST THE ORDER OF LD. CIT(A) UPHOL DING THE ORDER OF ASSESSING OFFICER PASSED U/S 143(3) R.W.S. 254 OF T HE ACT WHEREIN DISALLOWANCE OF CLAIM U/S 80IB(10) OF THE ACT FOR R S.36,08,678/- HAS BEEN MADE. WE OBSERVE THAT LD. AR HAS REFERRED AND RELIED ON THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASST. YEAR 2004-05 WHEREIN REFERENCE HAS BEEN GIVEN TO TH E ORDER OF CO- ORDINATE BENCH IN THE CASE OF RADHE DEVELOPERS. WE ALSO OBSERVE THAT IN THE FIRST ROUND WHEN THE MATTER CAME UP BEF ORE THE CO- ORDINATE BENCH COMPLETE ISSUE WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTIONS TO DECIDE THE ISSUE IN THE LIGHT OF THE DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF SH AKTI CORPORATION AND ALSO IN THE CASE OF RADHE DEVELOPERS (SUPRA). W E FIND THAT IN ITA ITA NO. 1569/AHD/2013 ASST. YEAR 2003-04 5 NO.2145/AHD/2007 FOR ASST. YEAR 2004-05 IN ASSESSEE S OWN CASE SIMILAR ISSUE TOWARDS CLAIM OF DEDUCTION U/S 80IB(1 0) OF THE ACT WAS THERE BEFORE THE CO-ORDINATE BENCH ALONG WITH THE L EGALITY OF THE ORDER U/S 263 OF THE ACT. THE CO-ORDINATE BENCH DEC IDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER :- 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED RECO RD. WE FIND THAT AO IN HIS ORDER HAS TAKEN CORRECT POSITION OF LAW O N THE ADMISSIBILITY OF DEDUCTION U/S 80IB(10), THIS BEING SO, WE ARE UNABL E TO SUBSCRIBE TO FINDINGS OF THE CIT THAT THE ORDER OF AO IS ERRONEO US AND PREJUDICIAL TO THE INTEREST OF REVENUE. EVEN ON MERIT ALSO, WE FIN D THAT IMPUGNED ISSUE IS COVERED BY THE DECISION OF THE AHMEDABAD B ENCH OF THE TRIBUNAL, IN THE CASE OF RADHE DEVELOPERS (SUPRA) I N FAVOUR OF THE ASSESSEE. THEREFORE, AOS ORDER BEING LEGALLY CORRE CT, IT CANNOT BE CALLED ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE NECESSITATING INVOCATION POWER OF CIT U/S 263, ACCO RDINGLY, CITS ORDER IS SET ASIDE AND THAT OF AO UPHELD. AO IS DIRECTED TO GIVE NECESSARY RELIEF TO THE ASSESSEE AS PER THE DECISION OF THIS TRIBUNAL IN THE ABOVE CASE, IN ACCORDANCE WITH LAW. 9. WE FURTHER OBSERVE THAT IN THE CASE OF RADHE DEV ELOPERS IN ITA NO.2482/AHD/2006 & OTHERS DATED 29.6.2007, THE TRIBUNAL HAS SETTLED THE ISSUE OF DEDUCTION U/S 80IB(10) OF THE ACT AND RELEVANT OBSERVATION FROM THIS ORDER IS AS UNDER :- '44. AS DISCUSSED ABOVE AND IN VIEW OF THE CASE LAW OF THE SUPREME COURT IN THE CASE OF MYSORE MINERALS LT (SUPRA) WHEREIN IT HAS BEEN C ATEGORICALLY OBSERVED AS REGARDS TO OWNERSHIP THAT ANYONE IN POSSESSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH ITA NO. 1569/AHD/2013 ASST. YEAR 2003-04 6 DOMINION OVER THE PROPERTY AS WOULD ENABLE OTHERS B EING EXCLUDED THERE FROM AND HAVING THE RIGHT TO USE AND OCCUPY THE PROPERTY AND /OR TO ENJOY RIGHT WOULD BE OWNER OF THE BUILDING THOUGH A FORMAL DEED OF TITLE MIGHT NOT HAVE BEEN EXECUTED AND REGISTERED AS CONTEMPLATED BY THE TRANSFER OF PROPE RTY ACT, THE REGISTRATION ACT ETC. IN THE PRESENT CASE BEFORE US, BY VIRTUE OF 'AGREEM ENT TO SALE' AND 'DEVELOPMENT AGREEMENT', THE ASSESSEE HAS ACQUIRED DOMINION OVER THE LAND TO THE EXCLUSION OF OTHERS AND HE HAS COMPLETED THE PROJECT IN TERMS AN D CONDITIONS LAID DOWN U/S. 80IB(10) OF THE ACT, TO CLAIM DEDUCTION ON THE PROF IT DERIVED FROM CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT. THERE I S NO EXPLICIT CONDITION ENUMERATED IN SECTION 80IB(10) OF THE ACT AS REGARDS TO REQUIR EMENT OF OWNERSHIP FOR THE CLAIM OF DEDUCTION. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LEGAL PROPOSITION LAID DOWN BY THE SUPREME COURT IN THE C ASE OF MYSORE MINERALS LTD. (SUPRA) WE HOLD THAT THE ASSESSEE IS ENTITLED FOR C LAIM OF DEDUCTION ON THE PROFIT DERIVED FROM CONSTRUCTION AND DEVELOPMENT OF RESIDE NTIAL HOUSING PROJECT. 10. WE ALSO FIND THAT HON. JURISDICTIONAL HIGH COUR T HAS ALSO DECIDED THE ISSUE IN THE CASE OF RADHE DEVELOPERS A ND OTHERS IN TAX APPEAL NO.546 OF 2008 VIDE THEIR JUDGMENT DATED 9.3 .20012 IN FAVOUR OF ASSESSEE. WE FIND THAT THE FACTS OF THE ASSESSEE ARE SIMILAR TO THE FACTS DEALT IN THE CASE OF RADHE DEVELOPERS & OTHER S (SUPRA) AND THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF H ON. JURISDICTIONAL HIGH COURT AND THE DECISION OF THE CO-ORDINATE BEN CH IN THE CASE OF ASSESSEE FOR ASST. YEAR 2004-05, WE OBSERVE THAT TH E ASSESSEE SHOULD BE ALLOWED DEDUCTION U/S 80IB(10) OF THE ACT FOR RS.36,08,678/-, EVEN WHEN THE ASSESSEE IS NOT THE O WNER OF THE LAND BUT OWNS RIGHTS AND RESPONSIBILITIES WITH THE LAND OWNER PUTS THE ASSESSEE AS DE FACTO OWNER OF THE LAND AND DEVELOPM ENT OF THE PROJECT IS NOT MERELY OF WORKS CONTRACTORS. WE ALLO W THIS GROUND. ITA NO. 1569/AHD/2013 ASST. YEAR 2003-04 7 11. ALL OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 21/9/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 1569/AHD/2013 ASST. YEAR 2003-04 8 1. DATE OF DICTATION: 19/09/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 21/09/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 21/9/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: