The ITO, Ward-9(2), Ahmedabad V. Mudra Builders, Ahmedabad

ITA 1700/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89490 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.1700/AHD/2011 ( / ASSESSMENT YEAR : 2008-09) INCOME TAX OFFICER WARD-9(2) AHMEDABAD / VS. M/S.MUDRA BUILDERS 10, KEVALKUNJ SOCIETY NR.K.K.NAGAR, GHATLODIYA,AHMEDABAD ./ ./ PAN/GIR NO. : AAHFM 4263 G ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI NIMESH YADAV, SR.DR $% #'& / RESPONDENT BY : MS.ARTI N.SHAH ()'* / DATE OF HEARING 16/04/2015 +,-.'* / DATE OF PRONOUNCEMENT 02/06/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XV, AHMEDABA D (CIT(A) IN SHORT) DATED 26/05/2011 PERTAINING TO ASSESSMEN T YEAR (AY) 2008-09. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- ITA NO.1700 /AH D/2011 ITO VS. M/S.MUDRA BUILDERS ASST.YEAR 2008-09 - 2 - 1). THE LD.COMMISSIONER OF INCOME-TAX(A)-XV, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE AMOUNTING TO RS.81,88,289/- MADE BY THE ASSESSING OFFICER U/S.80IB(10) OF THE A CT. 2). THE LD.COMMISSIONER OF INCOME-TAX(A)-XV, AHMED ABAD HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CONDITIONS L AID DOWN FOR CLAIMING DEDUCTION U/S.80IB(10) EVEN WHEN THE LAND WAS IN TH E NAME OF SURYALOK SABARMATI CO-OP.HOUSING SOCIETY LTD., WHICH IS A SE PARATE LEGAL ENTITY IN THE EYES OF LAW AND THE ASSESSEE ENTERED INTO THE P ROJECT BY A DEVELOPMENT AGREEMENT WITH THE SOCIETY. THE ENTIRE RESPONSIBIL ITY TO EXECUTE THE HOUSING PROJECT AND ABIDE BY THE TERMS AND CONDITIO NS OF ITS APPROVAL RIGHT FROM THE INCEPTION OF THE PROJECT TILL ITS CO MPLETION RESTS WITH THE SOCIETY. ASSESSEE WAS JUST A CONTRACTOR OF THE LAN D OWNERS CONSTRUCTING 32 RESIDENTIAL UNITS AND NOT A DEVELOPER. 3). ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD.CIT(A)-XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 4). IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.COMMISSIONER OF INCOME- TAX(A)-XV, AHMEDABAD MAY BE SET-ASIDE AND THAT OF T HE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 16/12/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) REJECTE D THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80IB(10 ) OF THE ACT. AGAINST THE SAID ASSESSMENT ORDER, THE ASSESSEE FILED AN AP PEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, A LLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80IB(10) OF THE ACT. NOW, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 3. GROUND NOS.1 & 2 INTER-CONNECTED AND, THEREFORE, THE SAME ARE DECIDED TOGETHER. THE LD.SR.DR SHRI NIMESH YADAV V EHEMENTLY ARGUED ITA NO.1700 /AH D/2011 ITO VS. M/S.MUDRA BUILDERS ASST.YEAR 2008-09 - 3 - THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN ALLOWING TH E CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80IB(10) OF THE ACT. HE SUBMITTE D THAT THE AO HAD DISALLOWED THE CLAIM BY OBSERVING THAT THE ASSESSEE DOES NOT FULFILL THE REQUISITE CONDITIONS. HE SUBMITTED THAT UNDER THE IDENTICAL FACTS, THE COORDINATE BENCH OF THIS TRIBUNAL (ITAT A BENCH A HMEDABAD) IN THE CASE OF ITO VS. M/S.KRISHNA DEVELOPERS IN ITA NO.24 /AHD/2011 FOR AY 2007-08, DATED 17/05/2013 WAS PLEASED TO RESTORE TH IS ISSUE TO THE FILE OF LD.CIT(A) FOR DECISION AFRESH. 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE LD.CIT(A) HAS GIVEN AN ELABORATE FINDING. HE SUBMITTED THAT THE AO HAS NOT GIVEN AN Y FINDING AS TO WHAT WERE THE CONDITIONS WHICH WERE NOT FULFILLED. HOWE VER, THE LD.CIT(A) CATEGORICALLY GIVEN A FINDING THAT THE ASSESSEE HAD INCURRED LAND COST AND BORNE THE ENTIRE RISK OF DEVELOPING THE PROJECT. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FINDING OF THE AO IS CO NTRARY TO THE RECORDS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT THE AO IN ASSESSMENT ORDER DECLINED THE DEDUCT ION U/S.80IB(10) OF THE ACT BY THE FOLLOWING REASONS:- 3.27. IT IS, THEREFORE, HELD THAT THE ASSESSEE I S NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB FOR THE FOLLOWING REAS ONS. ITA NO.1700 /AH D/2011 ITO VS. M/S.MUDRA BUILDERS ASST.YEAR 2008-09 - 4 - 1. THE ASSESSEE IS NOT BOTH DEVELOPER AND BUILDER AS REQUIRED BY THE PROVISIONS OF SECTION 80IB(10). ASSESSEE IS NOT A DEVELOPER BECAUSE THE ASSESSEE DID NOT CONCEPTUALIZE AND OWN THE PROJ ECT IN AS MUCH AS THE ASSESSEE IS NOT THE OWNER OF THE LAND AND THE A PPROVAL WAS NOT ISSUED TO IT BY THE LOCAL AUTHORITY. 2. THE ASSESSEE HAS NOT UNDERTAKEN ANY INVESTMENT RISK IN THE PROJECT. THE RISK TAKEN IS PRINCIPALLY BY THE SOCIETY. THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WITH TH E LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREEMENT AND HENCE THE ASSESSEE IS MERELY A CONTRACTOR FOR THE PURPOSES OF CONSTRUCTION OF THE PROJECT. 3. THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURCHASER BUT THE SOCIETY HAS EXECUTED THE SALE DEEDS AS A SELLER AND THE ASS ESSEE JOINED ONLY AS A CONFIRMING PARTY TO THE TRANSACTION. THIS ALS O PROVES THAT THE ASSESSEE WAS MERELY A CONTRACTOR/AGENT OF THE SOCIE TY. 4. AS PER THE AMENDMENT TO SECTION 80IB BY THE FINANCE ACT 2009, A WORKS CONTRACTOR WHO EXECUTES THE WORK AWARDED BY A NY PERSON IS NOT ELIGIBLE FOR THE DEDUCTION U/S.80IB. ANY PERSO N INCLUDES THE SURVALOK, SABARMATI CO-OP.HOUSING SOCIETY LTD., WHI CH IS A LEGAL ENTITY. 4.2. HOWEVER, THE LD.CIT(A) IN ITS ORDER DATED 26/0 5/2011 HAS COUNTERED THE FINDING OF THE AO BY OBSERVING AS UND ER:- 5. IT IS SEEN THAT THE AO HAS NOT DISPUTED THAT TH E APPELLANT DID NOT FULFILL ANY OF THE CONDITIONS SPECIFIED IN SECTION 80IB(10) FROM CLAUSE (A) TO (D) WITH RESPECT TO THE APPROVALS FROM THE LOCAL AUTHORITY, COMPLETION OF PROJECT WITHIN THE SPECIFIED TIME LIMITS, ONE AC RE OF LAND CONDITION, 1500 SQ.FT. BUILT UP AREA CONDITION OF EACH UNIT I THE PROJECT AND THAT OF PERCENTAGE OF CONSTRUCTION FOR COMMERCIAL USE. HIS OBJECTION IS THAT THE APPELLANT IS NOT THE OWNER OF THE LAND. THIS OBJ ECTION OF THE AO HAS TO BE SEEN IN THE LIGHT OF THE TESTS LAID DOWN BY HON BLE ITAT BENCH A AHMEDABAD DECISION IN THE CASE OF M/S.SHAKTI CORPOR ATION , BARODA IN ITA NO.1503/AHD/2008 IN AY 2005-06 WHEREIN HONBLE ITAT HAS HELD THAT WHERE THE APPELLANT IS FOUND HAVING PRACTICALL Y PURCHASED THE LAND ITA NO.1700 /AH D/2011 ITO VS. M/S.MUDRA BUILDERS ASST.YEAR 2008-09 - 5 - AND HAS BORNE THE RISK OF DEVELOPMENT DEDUCTION SHO ULD BE ALLOWED. HERE THE APPELLANT HAS BEEN FOUND FULFILLING THE CO NDITIONS LAID DOWN IN SECTION 80IB(10) OF THE INCOME TAX ACT AND HAS ALSO BEEN FOUND MEETING THE TESTS LAID DOWN IN HONBLE ITAT BENCH A AHMEDABAD DECISION IN THE CASE OF M/S.SHAKTI CORPORATION, BAR ODA IN ITA NO.1503/AHD/2008 IN AY 2005-06 AS IT HAD PRACTICALL Y PURCHASED THE LAND AS CLEAR FROM THE P&L ACCOUNT WHERE RS.58,67,1 63 HAS BEEN DEBITED AS LAND COST AND CHEQUE PAYMENTS MADE TO SU RYALOK SABARMATI COOPERATIVE HOUSING SOCIETY FROM ITS BANK ACCOUNT A ND IT HAD BORNE THE ENTIRE COST AND RISK OF DEVELOPING THE PROJECT AS C LEAR FROM CLAUSE 17 OF THE DEVELOPMENT AGREEMENT, WHICH CLEARLY STATES THA T THE PROFIT WAS TO BE OF THE APPELLANT, THEREFORE IN MY VIEW IT IS ELI GIBLE FOR DEDUCTION U/S.80IB(10) AND THE AO IS DIRECTED TO ALLOW THE SA ME. 4.3. DURING THE COURSE OF HEARING, A QUERY WAS RAIS ED TO THE LD.SR.DR AS TO HOW THE FINDING OF THE LD.CIT(A) IS INCORRECT OR CONTRARY TO THE RECORDS. NO SPECIFIC ERROR INTO THE ABOVE FINDING OF THE LD. CIT(A) IS POINTED OUT BY THE LD.SR.DR. WE FIND THAT THE LD.CIT(A) HAS GIV EN CATEGORICAL FINDING THAT THE ASSESSEE HAS MET THE TEST LAID BY THE COOR DINATE BENCH IN THE CASE OF SHAKTI CORPORATION(SUPRA) AND ALSO THE RISK AND CONSEQUENCES IN DEVELOPING THE PROJECT ARE BORNE BY THE ASSESSEE. RELIANCE IS ALSO PLACED ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT REND ERED IN THE CASE OF CIT VS. RADHE DEVELOPERS REPORTED AT (2012) 341 IT R 403 (GUJ.). THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WI TH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUND NO S.1 & 2 RAISED IN THE REVENUES APPEAL ARE DISMISSED. 5. GROUND NOS.3 & 4 ARE GENERAL IN NATURE WHICH REQ UIRE NO INDEPENDENT ADJUDICATION. ITA NO.1700 /AH D/2011 ITO VS. M/S.MUDRA BUILDERS ASST.YEAR 2008-09 - 6 - 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON TUESDAY, THE 2 ND DAY OF JUNE, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 02/ 06 /2015 2*..,(.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-XV, AHMEDABAD 5. 7(8$45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 05.05.15 (DICTATION-PAD 4+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..14.5.2015 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.2.6.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2.6.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER