ITO, CHENNAI V. M/s. Vasavi Builders, CHENNAI

ITA 1579/CHNY/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7426 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-03-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MO HARANA
• Assessee Lawyers: K BALASUBR AMANIAN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1579/MDS/2011 (ASSESSMENT YEAR : 2008-09) THE INCOME TAX OFFICER, BUSINESS WARD II(2), CHENNAI - 600 034. (APPELLANT) V. M/S VASAVI BUILDERS, NO.8-A, OLD NO.9, KANDASAMY STREET, R.A. PURAM, CHENNAI - 600 028. PAN : AADFV2091B (RESPONDENT) APPELLANT BY : SHRI S. MOHARANA, CIT-DR RESPONDENT BY : SHRI K. BALASUBRA MANIAN DATE OF HEARING : 28.03.2012 DATE OF PRONOUNCEMENT : 28.03.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANC E IS THAT CIT(APPEALS) ALLOWED THE ASSESSEES CLAIM FOR DEDUC TION UNDER SECTION 80-IB(10) OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WHICH WAS DENIED TO IT BY THE A.O. I.T.A. NO. 1579/MDS/11 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE FOR THE CO NSTRUCTION PROJECTS UNDERTAKEN BY IT HAD CLAIMED DEDUCTION UND ER SECTION 80- IB(10) OF THE ACT OF ` 2,26,67,317/-. ASSESSING OFFICER DENIED SUCH CLAIM SINCE ACCORDING TO HIM, EXPLANATION TO SECTIO N 80-IB(10) OF THE ACT CLEARLY STATED THAT THE SAID SUB-SECTION WOULD NOT APPLY TO ANY UNDERTAKING WHICH WAS EXECUTING A HOUSING PROJECT A S A WORKS CONTRACTOR. ACCORDING TO A.O., ASSESSEE WAS ONLY A WORKS CONTRACTOR AND THEREFORE, NOT ELIGIBLE FOR DEDUCTION UNDER SEC TION 80-IB(10) OF THE ACT. 3. ASSESSEE MOVED IN APPEAL BEFORE LD. CIT(APPEALS) . ARGUMENT OF THE ASSESSEE WAS THAT A CONTRACT TO BE WORKS CON TRACT, IT SHOULD BE AWARDED BY A PERSON. ACCORDING TO ASSESSEE, IT WAS ONLY A DEVELOPER OF RESIDENTIAL PROJECTS AND IT HAD NOT OB TAINED ANY WORKS CONTRACT TO CONSTRUCT THE HOUSES. THE PROJECT WAS EXECUTED BY IT IN WHOLE AND THERE WAS NO WORKS CONTRACT AWARDED BY AN Y PERSON. RELIANCE WAS PLACED ON THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SANGHVI AND DOSHI ENTERPRIS ES V. ITO (131 ITD 151). LD. CIT(APPEALS) WAS APPRECIATIVE OF THE SE CONTENTIONS. ACCORDING TO HIM, ASSESSEES CASE WAS FULLY COVERED BY THE DECISION OF THIS TRIBUNAL MENTIONED SUPRA. ASSESSING OFFICE R HAD DISALLOWED I.T.A. NO. 1579/MDS/11 3 CLAIM OF THE ASSESSEE BY INVOKING EXPLANATION TO SE CTION 80-IB(10) OF THE ACT AND AS PER LD. CIT(APPEALS), THE SAID EXPLA NATION DID NOT APPLY TO A PROJECT DEVELOPER. HE, THEREFORE, ALLOW ED THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT. 4. NOW BEFORE US, LEARNED D.R., ASSAILING THE ORDER OF LD. CIT(APPEALS), AGAIN RELIED ON EXPLANATION TO SECTIO N 80-IB(10) OF THE ACT. ACCORDING TO HIM, IT WAS CLEAR THAT A PERSON DOING A CONSTRUCTION WORK AS A MERE WORKS CONTRACTOR WAS NOT ELIGIBLE FO R A CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. 5. LEARNED A.R., ON THE OTHER HAND, SUPPORTED THE O RDER OF LD. CIT(APPEALS) BY RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. RADHE DEVELOPERS IN TCA NO.54 6 OF 2008 DATED 13.12.2011. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THE REASON WHY THE A.O. HAD DENIED DEDUCTION UNDER SECTION 80- IB(10) OF THE ACT TO THE ASSESSEE WAS THAT ASSESSEE WAS EXECUTING A WORKS CONTRACT AND WAS NOT A PROJECT DEVELOPER. H OWEVER, LD. CIT(APPEALS) HAS GIVEN A CLEAR FINDING THAT ASSESSE E HAD UNDERTAKEN THE HOUSING PROJECT NOT AS A WORKS CONTRACTOR BUT A S A PROMOTER. LD. I.T.A. NO. 1579/MDS/11 4 CIT(APPEALS) HAS ALSO GIVEN A FINDING THAT ASSESSEE HAD PURCHASED 18.5 GROUNDS FROM NINE PARTIES FOR A CONSIDERATION OF ` 3.3 CRORES AND THEREAFTER EXECUTED THE HOUSING PROJECT BY ITSELF. THE SELLERS HAD EXECUTED ON POWER OF ATTORNEY IN FAVOUR OF ASSESSEE ON 13.7.2005. PLAN FOR THE PROJECT WAS GOT SANCTIONED AND ALL OTH ER NECESSARY PERMITS OBTAINED BY THE ASSESSEE DIRECTLY AND NOT T HROUGH SOMEBODY ELSE. NONE OF THE ABOVE FINDINGS OF LD. CIT(APPEAL S) HAS BEEN REBUTTED BY THE REVENUE. IN SUCH A SITUATION, WE D O AGREE THAT ASSESSEE COULD NOT BE CONSIDERED AS A WORKS CONTRAC TOR BUT ONLY AS A DEVELOPER. IN THE CASE OF CIT V. RADHE DEVELOPERS (SUPRA), HONBLE GUJARAT HIGH COURT HELD AT PARAS 41 AND 42 AS UNDER :- 41. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAD, IN PART PERFORMANCE OF THE AGREEMENT TO SELL THE LAND IN QU ESTION, WAS GIVEN POSSESSION THEREOF AND HAD ALSO CARRIED OUT T HE CONSTRUCTION WORK FOR DEVELOPMENT OF THE HOUSING PR OJECT. COMBINED READING OF SECTION 2(47)(V) AND SECTION 53 A OF THE TRANSFER OF PROPERTY ACT WOULD LEAD TO A SITUATION WHERE THE LAND WOULD BE FOR THE PURPOSE OF INCOME-TAX ACT DEE MED TO HAVE BEEN TRANSFERRED TO THE ASSESSEE. IN THAT VIEW OF THE MATTER, FOR THE PURPOSE OF INCOME DERIVED FROM SUCH PROPERT Y, THE ASSESSEE WOULD BE THE OWNER OF THE LAND FOR THE PUR POSE OF THE SAID ACT. IT IS TRUE THAT THE TITLE IN THE LAND HA D NOT YET PASSED ON TO THE ASSESSEE. IT IS EQUALLY TRUE THAT SUCH T ITLE WOULD PASS ONLY UPON EXECUTION OF A DULY REGISTERED SALE DEED. HOWEVER, WE ARE, FOR THE LIMITED PURPOSE OF THESE PROCEEDINGS, NOT CONCERNED WITH THE QUESTION OF PASSING OF THE TITLE OF THE PR OPERTY, BUT ARE ONLY EXAMINING WHETHER FOR THE PURPOSE OF BENEFIT U NDER SECTION 80IB (10) OF THE ACT, THE ASSESSEE COULD BE CONSIDE RED AS THE OWNER OF THE LAND IN QUESTION. AS HELD BY THE APEX COURT IN THE I.T.A. NO. 1579/MDS/11 5 CASE OF MYSORE MINERALS LTD. VS. COMMISSIONER OF IN COME TAX (SUPRA), AND IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PODAR CEMENT PVT. LTD. AND OTHERS (SUPRA), THE OWNERSHIP HAS BEEN UNDERSTOOD DIFFERENTLY IN DIFFERENT CONTEXT. FOR T HE LIMITED PURPOSE OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, THE ASSESSEE HAD SATISFIED THE CONDITION OF OWNERSHIP A LSO, EVEN IF IT WAS NECESSARY. 42. IN THE CASE OF SHAKTI CORPORATION SIMILARLY THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH THE L AND OWNERS ON SIMILAR TERMS AND CONDITIONS. IT IS TRUE THAT T HERE WERE CERTAIN MINOR DIFFERENCES, HOWEVER, IN SO FAR AS AL L MATERIAL ASPECTS ARE CONCERNED, WE SEE NO SIGNIFICANT OR MAT ERIAL DIFFERENCE. HERE ALSO ASSESSEE WAS GIVEN FULL RIGH TS TO DEVELOP THE LAND BY PUTTING UP THE HOUSING PROJECT AT ITS O WN RISK AND COST. ENTIRE PROFIT FLOWING THEREFROM WAS TO BE RE CEIVED BY THE ASSESSEE. IT IS TRUE THAT THE AGREEMENT PROVIDED T HAT THE ASSESSEE WOULD RECEIVE REMUNERATION. HOWEVER, SUC H ONE WORD USED IN THE AGREEMENT CANNOT BE INTERPRETED IN ISOL ATION OUT OF CONTEXT. WHEN WE READ THE ENTIRE DOCUMENT, AND ALS O CONSIDER THAT IN FORM OF REMUNERATION THE ASSESSEE HAD TO BEAR THE LOSS OR AS THE CASE MAY BE TAKE HOME THE PROFITS, IT BEC OMES ABUNDANTLY CLEAR THAT THE PROJECT WAS BEING DEVELOP ED BY HIM AT HIS OWN RISK AND COST AND NOT THAT OF THE LAND OWNE RS. ASSESSEE THUS WAS NOT WORKING AS A WORKS CONTRACT. INTRODUC TION OF THE EXPLANATION TO SECTION 80IB(10) THEREFORE, IN THIS GROUP OF CASES ALSO WILL HAVE NO EFFECT. THE SAME VIEW, AS ABOVE, WAS TAKEN BY THIRD MEMBER DECISION OF THIS TRIBUNAL IN THE CASE OF SANGHVI AND DOSHI ENTE RPRISE (SUPRA). WE ARE, THEREFORE, OF THE OPINION THAT LD. CIT(APPE ALS) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO GIVE DEDUCTION C LAIMED BY THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(APPEA LS). I.T.A. NO. 1579/MDS/11 6 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 28 TH MARCH, 2012. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 28 TH MARCH, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-VI, CHENNAI (4) CIT-IV, CHENNAI (5) D.R. (6) GUARD FILE