The DCITGNR Circle, Gandhinagar V. Shri Vithalbhai M.Patel, Gandhinagar

ITA 1665/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1310 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 80IB; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER THE DCIT, GANDHINAGAR CIRCLE, BLOCK NO . 14, 4 TH FLOOR, UDHYOG BHAVAN, SECTOR - 11, GANDHINAGAR (APPELLANT) VS SHRI VITHALBHAI M. PATEL, PLOT NO . 588, SECTOR - 22, GANDHINAGAR - 382022 PAN: ACKPP7109B (RESPONDENT) REVE NUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 24 - 06 - 2 016 DATE OF PRONOUNCEMENT : 30 - 06 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2009 - 10 , AR IS ES FROM ORDER OF THE CIT(A), GANDHINAGAR DATED 09 - 05 - 2012 IN APPEAL NO. CIT(A)/GNR/103/2011 - 12 , DELETING SECTION 80IB(10) DISALLOWANCE OF I T A NO . 1665 / A HD/20 12 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 1665 /AHD/20 12 A.Y. 2009 - 10 PAGE NO DCIT VS. SHRI VITHALBHAI M. PATEL 2 RS. 93,05,808/ - , IN PROCEEDINGS UNDER SECTION 143( 3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. CASE CALLED TWICE. A PERUSAL OF THE CASE FILE REVEALS THAT THE ASSESSEE HAS NEVER COME PRESENT ON VARIOUS DATES OF HEARING. NONE APPEARS AT ITS BEHEST. IT IS ACCORDINGLY PROCEEDED EX - PARTE. 3. W E COME TO THE SOLITARY ISSUE OF SECTION 80IB DEDUCTION. THE ASSESSEE CLAIMED THIS RELIEF FOR ITS SHALIN PROJECT AT VILLAGE VAVOL, TEL AND DIST: GANDHINAGAR. THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 30 - 11 - 2011 DISALLOWED THE IMPUGNED RELIEF IN T ER ALIA ON THE GROUND THAT THE PROJECT LAND BELONGED TO FIVE CO - OWNERS INCLUDING THE ASSESSEE IN INDIVIDUAL CAPACITY , IT HAD NOT APPLIED FOR PROJECT APPROVAL IN ITS NAME NOR THE SAME CAME IN ITS NAME AND IT WAS ONLY A WORKS CONTRACTOR AND NOT OWNER OF THE LA ND. ALL THIS RESULTED IN THE IMPUGNED DISALLOWANCE OF RS. 93,05,808/ - IN QUESTION. 4. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) DELETES THE IMPUGNED DISALLOWANCE BY HOLDING AS FOLLOWS: 5.3 I HAVE GONE THROUGH THE FACTS OF THE CASE, THE COPY OF SUB MISSIONS MADE BEFORE THE AO BY THE APPELLANT, THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE ASSESSEE AND THE DECIDED LAW. THE FOLLOWING ARE THE IMPORTANT FACTS AND OBSERVATIONS OF THE UNDERSIGNED, CULLED OUT FROM THE ABOVE, ON THE ISSUE: A) 'SHALIN' PROJ ECT WAS DEVELOPED ON PLOT HAVING SURVEY NO - 838, 839, 855, OLD PLOT. NO - 226/1, FINAL PLOT NO - 226, VILLAGE - VAVOL, TA & DIST - GANDHINAGAR. I.T.A NO. 1665 /AHD/20 12 A.Y. 2009 - 10 PAGE NO DCIT VS. SHRI VITHALBHAI M. PATEL 3 B) ASSESSE E'S PROPRIETOR CONCERN M/S. SHAL IN BUILDERS HAS SHOWN THE RECEIPT, EXPENDITURE. & PROFIT {AND CLAIMED DEDUC TION U/S.80 - IB(10) OF RS.93,05,808/ - THEREON} IN ITS AUDIT REPORT/RETURN. C) THE LAND IN QUESTION BELONG TO 5 OWNERS INCLUDING THE ASSESSEE. D) THE ASSESSEE EXECUTED DEVELOPMENT AGREEMENT WITH ORIGINAL LAND OWNERS (INCLUDING HIMSELF) ON 29/12/2006 AN D THE POSSESSION OF THE LAND WAS TAKEN OVER BY THE ASSESSEE ON THE SAME DAY AS PER THE CLAUSE NO.2 OF THE SAID AGREEMENT. THE PAYMENTS WERE ALSO MADE TO THE OTHER CO - OWNERS. E) CLEARLY, THE LAND WAS TRANSFERRED TO THE ASSESSEE IN PART PERFORMANCE OF THE AGREEMENT TO SELL, AS HE WAS GIVEN POSSESSION AS PER THE WRITTEN AGREEMENT AND PAYMENT WAS ALSO MADE. AS PER SEC.2( 47)(V) RW SEC. 53A OF THE TRANSFER OF PROPERTY ACT; THE LAND IS DEEMED TRANSFERRED TO THE ASSESSEE. IN FACT, THE ORIGINAL OWNERS HAD BECOME LIABLE FOR TAXATION ON THE TRANSFER OF LAND ON THE DATE OF GIVING THE POSSESSION OF LAND I.E. 29/12/2006, ITSELF. F) ALL THE RIGHTS AND LIABILITIES PERTAINING TO THE DEVELOPMENT OF THE PROJECT; I.E. PAYMENT OF GUDA EXPENSES, INCURRING ALL THE EXPENSES OF CONSTRUCTION FROM ITS OWN SOURCES INCLUDING PURCHASING OF MATERIALS AND LABOUR PAYMENTS, POWER TO FIX THE RATE OF RESIDENTIAL UNITS, SELLING THE UNITS AND TAKING PAYMENTS AND ISSUING RECEIPTS THEREOF, HOLD THE VACANT FLATS AND UNITS; WERE ALL WITH THE ASSE SSEE. THE ORIGINAL LAND OWNERS WERE ENTITLED ONLY TO THE COST OF THE LAND AND WERE DUTY BOUND TO ASSIST THE ASSESSEE IN GETTING THE NECESSARY APPROVALS ETC., FOR THE PROJECT. G) THE APPLICATIONS FOR SEEKING DEVELOPMENT PERMISSION, THE SUBSEQUENT CORRESP ONDENCES BY THE AUTHORITIES AND THE APPROVALS WERE IN THE NAME OF THE ORIGINAL LAND OWNERS ONLY BECAUSE AS PER THE REVENUE RECORDS, THE LAND STILL EXISTED IN THE NAME OF THE ORIGINAL OWNERS. THE SAME APPLIES TO THE WORK COMPLETION CERTIFICATE ISSUED BY GUD A. THE LAND OWNERS WERE ONLY ACTING AS FACILITATORS ON BEHALF OF THE ASSESSEE AND EVEN THE NECESSARY PAYMENTS HAVE BEEN MADE BY THE ASSESSEE. I.T.A NO. 1665 /AHD/20 12 A.Y. 2009 - 10 PAGE NO DCIT VS. SHRI VITHALBHAI M. PATEL 4 IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES ENUMERATED ABOVE, INCLUDING THE TERMS AND CONDITIONS UNDER WHICH THE A SSESSEE UNDERTOOK THE DEVELOPMENT PROJECT AND TOOK OVER THE POSSESSION OF THE LAND FROM THE ORIGINAL OWNER, LEAVES LITTLE DOUBT THAT THE ASSESSEE HAD TOTAL AND COMPLETE CONTROL OVER THE LAND IN QUESTION. THE ASSESSEE COULD PUT THE LAND TO USE AS AGREED BE TWEEN THE PARTIES. THE ASSESSEE HAD FULL AUTHORITY AND ALSO RESPONSIBILITY TO DEVELOP THE HOUSING PROJECT BY NOT ONLY PUTTING UP THE CONSTRUCTION BUT BY CARRYING OUT VARIOUS OTHER ACTIVITIES INCLUDING ENROLLING MEMBERS, ACCEPTING MEMBERS, CARRYING OUT MODI FICATIONS ENGAGING PROFESSIONAL AGENCIES AND SO ON. MOST SIGNIFICANTLY, THE RISK ELEMENT WAS ENTIRELY THAT OF THE ASSESSEE. THE LAND OWNER AGREED TO ACCEPT ONLY A FIXED PRICE FOR THE LAND IN QUESTION. IN LIEU THEREOF HE HAD GRANTED DEVELOPMENT PERMISSION T O THE ASSESSEE. THEY HAD ALSO PARTED WITH THE POSSESSION OF THE LAND. THE DEVELOPMENT OF THE LAND WAS TO BE DONE ENTIRELY BY THE ASSESSEE BY CONSTRUCTING RESIDENTIAL UNITS THEREON AS PER THE PLANS APPROVED BY THE LOCAL AUTHORITY. THE ASSESSEE BROUGHT IN TE CHNICAL KNOWLEDGE AND SKILL REQUIRED FOR EXECUTION OF SUCH PROJECT. THE ASSESSEE WAS AUTHORIZED TO ADMIT THE PERSONS WILLING TO JOIN THE SCHEME AND FIXED THE PRICE. THE LAND OWNERS AGREED TO GIVE NECESSARY SIGNATURES, AGREEMENTS, AND EVEN POWER OF ATTORNEY TO FACILITATE THE WORK OF THE DEVELOPER. IN SHORT, THE ASSESSEE HAD UNDERTAKEN THE ENTIRE TASK OF DEVELOPMENT, CONSTRUCTION AND SALE OF THE HOUSING UNITS TO BE LOCATED ON THE LAND BELONGING TO THE ORIGINAL LAND OWNERS. THE ASSESSEE INVESTED ITS OWN FUNDS IN THE COST OF CONSTRUCTION AND ENGAGEMENT OF SEVERAL AGENCIES. LAND OWNERS ONLY RECEIVED A FIX PRE - DETERMINED AMOUNT TOWARDS THE PRICE OF LAND AND WAS THUS INSULATED AGAINST ANY RISK. BY NO STRETCH OF IMAGINATION CAN IT BE SAID THAT THE ASSESSEE ACTED ONL Y AS A WORKS CONTRACTOR. FOLLOWING THE JUDGMENT OF THE HONORABLE JURISDICTIONAL GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS , 341 ITR 403 , I HOLD THAT THE ASSESSEES WERE ENTITLED TO THE BENEFIT UNDER SECTION 80IB(10) OF THE ACT EVEN WHERE THE TITL E OF THE LANDS HAD NOT PASSED ON TO THE ASSESSEE AS PER THE REVENUE RECORDS (THOUGH RECOGNIZED AS TRANSFERRED BY THE IT ACT, AS PART PERFORMANCE UNDER SECTION 53 A OF THE TRANSFER OF PROPERTY ACT WAS COMPLETED) AND THE DEVELOPMENT PERMISSIONS HAVE ALSO BEE N OBTAINED IN THE NAME OF THE ORIGINAL LAND OWNERS (INC LUDING APPELLANT). SECTION 80 - IB (10) PROVIDES FOR DEDUCTION OF THE ENTIRE AMOUNT OF PROFITS OF AN UNDERTAKING DERIVED I.T.A NO. 1665 /AHD/20 12 A.Y. 2009 - 10 PAGE NO DCIT VS. SHRI VITHALBHAI M. PATEL 5 FROM THE BUSINESS OF DEVELOPING AND BUILDING HOUSING PROJECTS WHICH WERE APPROVED B Y THE LOCAL AUTHORITY BEFORE THE SPECIFIED DATE. ALL CONDITIONS, NAMELY, THAT SUCH UNDERTAKING HAS COMMENCED DEVELOPMENT AND CONSTRUCTION PRIOR TO A SPECIFIED DATE AND THAT THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WITH A MINIMUM AREA OF 1 ACRE AND THE RESIDENTIAL UNIT HAD MAXIMUM INBUILT AREA OF 1500 SQ. FEET, HAVE BEEN MET . THE ASSESSEE'S INCOME IS HELD TO BE DERIVED FROM UNDERTAKING FROM THE BUSINESS OF DEVELOPING AND BUILDING THE HOUSING PROJECT. THE FIRST THREE GROUNDS OF THE APPELLANT ARE ALLOWED. 5. WE HAVE HEARD THE REV ENUE. CASE FILE PERUSED. LD. DEPARTMENTAL R EPRESENTATIVE STRONGLY ARGUES IN F A VOUR OF THE IMPUGNED DISALLOWANCE. THE CIT(A) RECORDS A CRUCIAL FINDING OF FACT THAT THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH THE ORI GINAL LAND OWNER ON 29 - 12 - 2006, TOOK OVER POSSESSION, PAID MONEYS TO TRANSFERORS AND UNDERTOOK ALL RIGHTS AND LIABILITY PERTAINING TO PROJECT DEVELOPMENT AS RECORDED IN F PORTION OF THE ORDER. THE REVENUE FAILS IN REBUTTING THE SAME BY WAY OF PRODUCING ANY EVIDENCE ON RECORD. WE OBSERVE IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT THE ASSESSEE HAS BORNE ALL ENTREPRENEURIAL RISKS INVOLVED IN THE ABOVE STATED HOUSING PROJECT FORMING HALL MARK OF SECTION 80IB(10) DEDUCTION IN QUESTION. HON BLE JURISDIC TIONAL HIGH COURT IN RADHE DEVELOPERS CASE (SUPRA) HAS ALREADY SETTLED THE ISSUE THAT THE OWNERSHIP OF THE PROJECT IS NOT NECESSARY FOR THE PURPOSE OF CLAIMING THE IMPUGNED DEDUCTION. THE REVENUE FAILS TO POINT OUT ANY EXCEPTION THERETO. WE DO NOT FIND A NY REASONS TO INTERFERE IN THE CIT(A) S IN THESE FACTS AND CIRCUMSTANCES. I.T.A NO. 1665 /AHD/20 12 A.Y. 2009 - 10 PAGE NO DCIT VS. SHRI VITHALBHAI M. PATEL 6 6. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 30 - 06 - 201 6 SD/ - SD/ - ( MANISH BORAD ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 30 /06 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,