The Dy. CIT, Circle-5, Baroda V. M/s. Narnarayan Corporation, Baroda

ITA 1598/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5919 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources
• Section: 80IB; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 1598/AHD/2014 (ASSESSMENT YEAR: 2008-09) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-5, BARODA V/S M/S. NARNARAYAN CORPORATION 122, CHANDRA GUPTA COMPLEX, OPP. RUPAM CINEMA, HARNI ROAD, BARODA (APPELLANT) (RESPONDENT) PAN: AAFFN 4942D APPELLANT BY : SHRI ALOK KUMAR, SR. D.R. RESPONDENT BY : SHRI M.K. PATEL, A.R. ( )/ ORDER DATE OF HEARING : 13 -03-201 8 DATE OF PRONOUNCEMENT : 14 -03-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-V, BARODA DATED 27.02.2014 PERTAINING TO A.Y. 2008-09. ITA NO. 1598 /AHD/2014 . A.Y. 2008-09 2 2. THE GRIEVANCE OF THE REVENUE READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE IT ACT, CLAIMED IN RESPECT OF INCOME DISCLOSED DURING THE SURVEY TO THE TUNE OF R S. 1,50,00,000/-, BY NOT CONSIDERING SAID INCOME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT WHICH DO NOT QUALIFY FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE IT ACT. ADDITIONAL GROUND : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, ASSESSEE WAS NOT ENTITLED FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE IT ACT AS A WHOLE, IN VIEW OF THE FACT THAT IN ASSESSEE'S CASE, THERE WERE TWO SEPARA TE AGREEMENTS FOR SALE OF PLOT AND CONSTRUCTION ON THE PLOT AND THERE WAS NO SALE OF C ONSTRUCTED HOUSE AND THUS, ASSESSEE HAD MERELY ACTED AS A CONTRACTOR OF THE UN IT HOLDER IN RESPECT OF CONSTRUCTION OF HOUSE AND THEREFORE, NOT ENTITLED T O DEDUCTION U/S 80IB(10) OF THE ACT BECAUSE THE SUB SECTION DOES NOT APPLY TO A DEVELOP ER OF A PLOTTING SCHEME OR A CONTRACTOR. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING AND BUILDING RESIDENTIAL HOU SING PROJECT ON ITS OWN LAND. A SEARCH OPERATION WAS CONDUCTED AT THE BUSINESS PR EMISES OF THE ASSESSEE ON 13.02.2008. IN THE STATEMENT RECORDED U/S. 131(1) O F THE ACT, SHRI NILESH RATANLAL SHETH AND SHRI GOPALBHAI KISHANLAL PARIKH, PARTNERS OF THE ASSESSMENT FIRM DECLARED UNACCOUNTED INCOME OF RS. 1.50 CRORES DECLARED AT THE TIME OF SURVEY. THE ASSESSEE CLAIMED DEDUCTION U/S. 80IB(10 ) OF THE ACT BUT THE A.O. DECLINED TO GIVE DEDUCTION OF RS. 1.50 CRORES TREAT ING IT AS NOT ELIGIBLE FOR THE DEDUCTION U/S. 80IB(10) OF THE ACT. 4. THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT (A) AND VEHEMENTLY CONTENDED THAT THE AMOUNT OF RS. 1.50 CRORES DECLAR ED BY THE ASSESSEE WAS TOWARDS CASH RECEIPTS RECORDED IN DIARIES/REGISTERS WHICH RELATED TO THE CASH COMPONENT OF THE SALE TRANSACTIONS RELATING TO THE HOUSING PROJECT. IT WAS ITA NO. 1598 /AHD/2014 . A.Y. 2008-09 3 EXPLAINED THAT THE ACTUAL CONSIDERATION AGREED FOR SALE OF TENEMENTS WAS RECORDED AND THE AMOUNTS RECEIVED AGAINST THAT CONS IDERATION IN CHEQUE WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS AND THE R ECEIPTS WERE NOT RECORDED IN THE REGULAR BOOKS. IT WAS FURTHER EXPLAINED THAT TH E DISCLOSURE WAS THE PART OF TOTAL SALES CONSIDERATION WHICH WAS RECEIVED IN CAS H AND NOT RECORDED IN THE BOOKS OF ACCOUNTS. IT WAS STATED THAT THE ADDITIONA L INCOME DISCLOSED WAS PART OF THE BUSINESS TRANSACTION AND THEREFORE ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. 5. THE LD. CIT(A) WAS CONVINCED WITH THE CONTENTIONS O F THE ASSESSEE AND DIRECTED THE A.O. TO ALLOW DEDUCTION U/S. 80IB(10) OF THE ACT ON THE DISCLOSED AMOUNT ALSO. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. THE LD . D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. PER CONTRA, THE LD. COUNSEL F OR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSEE WAS RE CORDING SALES TRANSACTION IN THE DIARIES/REGISTERS WHICH WERE FOUND AT THE TIME OF SURVEY. IT IS ALSO TRUE THAT THE AMOUNT RECEIVED THROUGH CHEQUE WERE DULY RECORD ED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. IT IS EQUALLY TRUE THA T THE CASH COMPONENT ARISING OUT OF THE SALE TRANSACTIONS WERE NEVER RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THERE IS NO DOUBT THAT THE CASH COMPONENT IS ALSO PART OF THE SALE CONSIDERATION RECEIVED ON THE SALES OF TENEMENTS. I N OUR CONSIDERED OPINION, WHEN THE RECORDED SALES TRANSACTIONS WERE ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT THEN THE UNRECORDED CONSID ERATION IS ALSO PART OF THE ITA NO. 1598 /AHD/2014 . A.Y. 2008-09 4 SALE TRANSACTION AND THEREFORE ELIGIBLE FOR THE CLA IM OF DEDUCTION U/S. 80IB(10) OF THE ACT. 8. CONSIDERING THE FACTS IN TOTALITY, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 1 IS ACCORDI NGLY DISMISSED. 9. INSOFAR AS THE GRIEVANCE RAISED VIDE GROUND NO. 2 I S CONCERNED, WE FIND THAT THE SAME HAS ARISEN DUE TO SOME OBSERVATIONS MADE BY TH E LD. CIT(A) AND THE SAME READ AS UNDER:- IT WAS NOTICED DURING THE COURSE OF APPELLATE PROC EEDINGS THAT THERE WERE TWO SEPARATE AGREEMENTS FOR SALE OF PLOT AND CONSTRUCTI ON ON THE PLOT AND THERE WAS NO SALE OF CONSTRUCTED HOUSE AND THUS, THE APPELLAN T HAD MERELY ACTED AS A CONTRACTOR OF THE UNIT HOLDER IN RESPECT OF CONSTRU CTION OF HOUSE. ON THESE ISSUES, DEDUCTION U/S 80IB(10) OF THE I. T. ACT WAS DISALLO WED BY THE UNDERSIGNED IN OTHER CASES FOR THE FOLLOWING REASONS:- 1) THE APPELLANT CANNOT BE ALLOWED TO BENEFIT FROM ITS DISHONEST CONDUCT OF PLEADING BEFORE THE REGISTRATION AUTHORITIES THAT O NLY PLOT WAS SOLD TO THE UNIT HOLDERS AND THAT THE HOUSE WAS CONSTRUCTED UND ER A SEPARATE CONSTRUCTION AGREEMENT WITH THE UNIT HOLDER AND AT THE SAME TIME PLEAD BEFORE THE DEPARTMENT THAT IT WAS ACTUALLY A SALE O F FULLY CONSTRUCTED HOUSE AND SUBSTANCE OF WHOLE TRANSACTION SHOULD BE CONSIDERED. 2) WHEN THERE ARE WRITTEN AGREEMENTS, AS PER THE DECIS ION OF HON'BLE SUPREME COURT THEREIN, THE FORM OF TRANSACTION HAS TO BE CONSIDERED RATHER THAN SUBSTANCE OF THE TRANSACTION. 3) WHEN FORM IS CONSIDERED IN THE CASE OF THE APPELLAN T, THE WORK EXECUTED BY THE APPELLANT AMOUNTS TO DEVELOPMENT AND SALE OF A PROJECT OF FULLY DEVELOPED PLOTS. 4) CONSTRUCTION OF THE HOUSE ON THE PLOT IS CARRIED OU T BY THE APPELLANT AS A CONTRACTOR OF THE PLOT HOLDER. 5) A DEVELOPER OF PLOTTING SCHEME WHO IS CONSTRUCTING HOUSE AS A CONTRACTOR OF THE PLOT HOLDER IS NOT ENTITLED TO DEDUCTION U/S 80IB (10) OF THE IT ACT ITA NO. 1598 /AHD/2014 . A.Y. 2008-09 5 BECAUSE THE SUB-SECTION DOES NOT APPLY TO A DEVELOP ER OF A PLOTTING SCHEME OR A CONTRACTOR. HOWEVER, THE JURISDICTIONAL TRIBUNAL HAS ALLOWED TH E DEDUCTION U/S 80IB (10) OF THE IT ACT ON SIMILAR SET OF FACTS IN THE C ASE OF M/S SATSANG DEVELOPERS IN ITA NO.1101 & 2498/AHD/2012 VIDE ORDE R DATED 12.11.2013 AND IN THE CASES OF M/S SAGAR ASSOCIATES AND M/S SA GAR BUILDERS IN ITA NOS.460 & 461/AHD/2013 VIDE COMMON ORDER DATED 26.1 1.2013. THEREFORE, DEDUCTION U/S 80IB(10) IS NOT DISALLOWED TO THE APPELLANT ON THIS GROUND. 10. IN OUR CONSIDERED OPINION, THE AFOREMENTIONED OBSER VATIONS OF THE LD. CIT(A) ARE UNCALLED FOR AND AGAINST THE FACTS OF THE CASE IN HAND. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING AND BUILDING RESIDENTIAL HOUSING PROJECT ON ITS OWN LAND AND THIS ISSUE WAS NEVER IN DISPUTE BEFORE THE A.O. WHO HAS HIMSELF ACCEPTED THAT THE ASSESSEE WAS THE OWNER OF THE LAND ON WHICH THE HOUSING PROJECT WAS DEVELOPED. THEREFORE, THE OBSER VATIONS OF THE LD. CIT(A) WHICH GAVE RISE TO THE GRIEVANCE VIDE GROUND NO. 2 IS AGAINST THE FACTS OF THE CASE IN HAND AND NEEDS NO SEPARATE ADJUDICATION. 11. APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 14 - 03- 2018 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 14 /03/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.