The ITO, Ward-9(2), Ahmedabad V. M/s. Giriraj Corporation, Ahmedabad

ITA 1850/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85726 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: P M MEHTA

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.1850/AHD/2011 ( / ASSESSMENT YEAR : 2008-09) THE INCOME TAX OFFICER WARD-9(2) AHMEDABAD / VS. M/S.GIRIRAJ CORPORATION M.H. MILL COMPOUND KHOKHRA CIRCLE, MANINAGAR AHMEDABAD ./ ./ PAN/GIR NO. : AAEFG 2116 M ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI M.K. SINGH, SR.DR $% # '& / RESPONDENT BY : SHRI P.M. MEHTA, AR ()'* / DATE OF HEARING 13/02/2015 +,-.'* / DATE OF PRONOUNCEMENT 26/02/2015 / 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)-I, AHMEDABAD (CIT(A) IN SHORT) DATED 13/05/2011 PERTAINING TO ASSESSMENT Y EAR (AY) 2008-09. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- ITA NO.1850/AHD /2011 ITO VS. M/S.GIRIRAJ CORPORATION ASST.YEAR 2008-09 - 2 - 1) THE LD.COMMISSIONER OF INCOME-TAX(A)-I, AHMEDABAD H AS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM OR DEDUCTION OF RS.4,90,87,101/- U /S.80IB(10) OF THE ACT. 2) THE LD.COMMISSIONER OF INCOME-TAX(A)-I, AHMEDABAD H AS 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 THE NAME OF SOCIETY NAMELY NAVDEEP CO-OP.HOUSING SOCIET Y AND RADHE HOUSING & COMMERCIAL CO-OP.SOCIETY LTD., WHIC H ARE SEPARATE LEGAL ENTITIES IN THE EYE OF LAW AND THE A SSESSEE ENTERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WITH THEM. THE ENTIRE RESPONSIBILITY TO EXECUTE THE HOUSING PROJECT(S) AN D ABIDE BY THE TERMS AND CONDITIONS OF ITS APPROVAL RIGHT FROM THE INCEPTION OF THE PROJECT(S) TILL ITS COMPLETION RESTS WITH THE SOCIE TY. ASSESSEE WAS JUST A CONTRACTOR OF THE LAND CONSTRUCTING HOUSING PROJECTS AND NOT A DEVELOPER. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.COMMISSIONER OF INCOME-TAX(A)-I, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CO MMISSIONER OF INCOME-TAX(A)-I, AHMEDABAD MAY BE SET-ASIDE AND THA T OF THE ASSESSING OFFICER BE RESTORED. 2. THE ONLY EFFECTIVE GROUND OF REVENUES APPEAL I S AGAINST DELETION OF DISALLOWANCE OF DEDUCTION U/S.80IB(10) OF THE AC T AMOUNTING TO RS.4,90,87,101/-. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE 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) MADE DISALLOWANCE OF DEDUCTION AS CLAIMED BY THE ASSESSE E AMOUNTING TO ITA NO.1850/AHD /2011 ITO VS. M/S.GIRIRAJ CORPORATION ASST.YEAR 2008-09 - 3 - RS.4,90,87,101/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS AL LOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT (A), NOW THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO AND S UBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLO WANCE. HE POINTED OUT THAT IN THE ASSESSMENT YEARS 2005-06, 2006-07 & 200 7-08, THE REVENUE HAD FILED APPEALS AGAINST THE ORDER OF THE LD.CIT(A ) BEFORE THE HONBLE TRIBUNAL (ITAT C BENCH AHMEDABAD) BEARING ITA NOS .2704, 2705 & 2706/AHD/2009 FOR AYS 2005-06, 2006-07 & 2007-08 RE SPECTIVELY AND THE TRIBUNAL VIDE ITS ORDER DATED 13/04/2012 WAS PL EASED TO RESTORE THE ISSUE BACK TO THE FILE OF THE LD.CIT(A) FOR DECISIO N AFRESH. 5. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS A SPECIFIC FINDING BY THE LD.CIT(A) THAT T HE ASSESSEE HAS FULFILLED ALL THE CONDITIONS AS ENVISAGED U/S.80IB(10) OF THE ACT FOR ALLOWANCE OF THE DEDUCTION. HE SUBMITTED THAT THIS FINDING OF T HE LD.CIT(A) IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. HE FURTHER SUBMITTED THAT IN RESPECT OF THE EARLIER YEARS, ORDERS PASSED U/S.153A OF THE ACT, BUT IN THE PRESENT CASE, THE O RDER HAS BEEN PASSED U/S.143(3) OF THE ACT. HE SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND PRAYED FOR CONFIRMATION OF THE SAME. ITA NO.1850/AHD /2011 ITO VS. M/S.GIRIRAJ CORPORATION ASST.YEAR 2008-09 - 4 - 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E ISSUE INVOLVED IN THE PRESENT APPEAL IS IN RESPECT OF THE CLAIM OF DEDUCT ION U/S.80IB(10) OF THE ACT. IT IS ALSO NOT DISPUTED BY THE PARTIES THAT I N THE EARLIER YEARS, THE REVENUE HAD CHALLENGED ALLOWANCE OF THE DEDUCTION U /S.80IB(10) OF THE ACT BEFORE THIS TRIBUNAL AND THIS TRIBUNAL VIDE ITS ORDER DATED 13/04/2012 HAD RESTORED THE ISSUE BACK TO THE FILE OF LD.CIT(A ) FOR DECISION AFRESH. NEITHER THE AR OF THE ASSESSEE NOR THE DR OF THE RE VENUE COULD INFORM ABOUT THE OUTCOME OF THE APPEALS WHICH WERE RESTORE D BY THE TRIBUNAL TO THE FILE OF LD.CIT(A) IN ITA NOS.2704,2705 & 2706/A HD/2009 FOR AYS 2005-06, 2006-07 & 2007-08 RESPECTIVELY. THE FACTS OF THE CASE IN THE PRESENT APPEAL ARE IDENTICAL AND NO CHANGE INTO THE FACTS AND CIRCUMSTANCES HAVE BEEN POINTED OUT, THEREFORE WE D O NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW THAN TAKEN BY THE COORDINA TE BENCH IN ASSESSEES OWN CASE IN THE EARLIER ASSESSMENT YEARS PASSED IN ITA NOS.2704, 2705 AND 2706/AHD/2009(SUPRA). WE FIND THAT THE COORDIN ATE BENCH (ITAT C BENCH, AHMEDABAD) IN ITA NOS.2704, 2705 & 2706/ AHD/2009 IN PARA-9 OF ITS ORDER DATED 13/04/2012 HAD DECIDED TH E ISSUE BY OBSERVING AS UNDER:- 9. NOW, IN THE LIGHT OF THESE FACTS OF THAT CASE, WE EXAMINE THE DECISION OF LD. CIT(A) IN THE PRESENT CASE. WE FIND THAT LD. CIT(A) HAS DECIDED THE ISSUE BY OBSERVING THAT IT IS SEEN FROM THE AGR EEMENT FOR DEVELOPMENT AS WELL AS BANAKHAT FOR PURCHASE OF LAN D THAT RISK FOR DEVELOPMENT INCLUDING COST IS TO BE BORNE BY THE AS SESSEE BUT HE HAS NOT ITA NO.1850/AHD /2011 ITO VS. M/S.GIRIRAJ CORPORATION ASST.YEAR 2008-09 - 5 - GIVEN ANY BASIS REGARDING THIS FINDING. FROM THE AS SESSMENT ORDER, WE FIND THAT IT IS OBSERVED BY THE A.O. THAT FROM BOOK S OF ACCOUNT, THE ASSESSEE NEVER SHOWN ANY INCOME FROM SALE OF FLATS / BUNGALOWS / ROW HOUSES BUT HAS MERELY SHOWN WORK DONE SUBSEQUENTLY TRANSFERRED TO THE SOCIETY. THIS FINDING OF THE A.O. HAS NOT BEEN DISL ODGED BY LD. CIT(A) AND WITHOUT DOING SO AND WITHOUT DISLODGING THIS AR GUMENT OF THE A.O., IT CANNOT BE SAID THAT THE ASSESSEE HAD TOTAL AND C OMPLETE CONTROL OVER THE LAND IN QUESTION. MOREOVER, THERE IS ONE MORE O BJECTION OF THE A.O. THAT THE COMMERCIAL COMPLEX 19.52% OF THE TOTAL ARE A OF THE PROJECT WHICH IS MORE THAN THE PRESCRIBED LIMIT U/S 80-IB(1 0). FOR WORKING OUT THIS AREA OF COMMERCIAL COMPLEX, THE A.O. HAS CONSI DERED THE TOTAL AREA OF 56336.16 SQ. MTRS. AND COMMERCIAL BUILT-UP AREA OF 10977.04 SQ. MTRS. AS PER PLAN APPROVED BY AMC ON 25.06.2004. RE GARDING THIS OBJECTION OF THE A.O., LD. CIT(A) HAS SIMPLY STATED THAT THE ASSESSEE HAS CARRIED OUT DEVELOPMENT ACTIVITY ONLY FOR 13642 SQ. MTRS. IN CASE OF NAVDEEP & 6990 SQ. MTS. IN CASE OF RADHE AND HAS NO T CARRIED OUT ANY COMMERCIAL CONSTRUCTION ON THE LAND, WHICH IS ACQUI RED BY THE ASSESSEE WITH DOMINANT CONTROL. HE FURTHER OBSERVED THAT THE ASSESSEE HAS NO CONNECTION WITH COMMERCIAL ACTIVITIES CARRIED OUT B Y OTHER FIRM AT THE ADJOINING LAND. BUT HE HAS NOT GIVEN ANY BASIS OF T HESE OBSERVATIONS. THIS IS NOT COMING OUT AS TO WHO HAD CARRIED OUT TH E CONSTRUCTION OF COMMERCIAL BUILT UP AREA APPROVED BY AMC ON 25.06.2 004 AND WHETHER THERE IS SEPARATE APPROVAL OF AMC IN RESPECT OF 136 42 SQ. MTRS. AND 6990 SQ. MTRS., ON WHICH CONSTRUCTION HAD BEEN CARR IED OUT BY THE ASSESSEE. IF THE APPROVAL OF AMC IS COMMON AND ONE FOR THE ENTIRE AREA OF 56336.16 SQ. MTRS., WHICH HAS BEEN DIVIDED INTO FOUR DEVELOPERS THEN, HOW THE COMMERCIAL AREA OF THE ENTIRE PROJECT CAN B E DISREGARDED FOR WORKING OUT THE PERCENTAGE OF COMMERCIAL BUILT UP A REA IN THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE. ON THIS ASPECT ALSO, NO LIGHT HAS BEEN THROWN BY LD. CIT(A) AND HE HAS SIMPLY STATED THAT THE TRIBUNAL DECISION RENDERED IN THE CASE OF LOKIK DEVELOPERS V S DCIT RELIED UPON BY THE A.O. IS NOT APPLICABLE IN THE PRESENT CASE O N THIS BASIS THAT IN THE PRESENT CASE, THE ASSESSEE HAS NOT CARRIED OUT ANY COMMERCIAL ACTIVITY BUT WITHOUT EXAMINING THE APPROVAL OF AMC IN RESPEC T OF 13642 SQ. MTRS AND 6990 SQ. MTRS., IF ANY GRANTED, IT CANNOT BE SA ID THAT OUT OF ONLY ONE HOUSING PROJECT APPROVED BY AMC, IF HOUSING PORTION IS DEVELOPED/CONSTRUCTED BY ONE PERSON AND THE COMMERC IAL PORTION IS ITA NO.1850/AHD /2011 ITO VS. M/S.GIRIRAJ CORPORATION ASST.YEAR 2008-09 - 6 - CONSTRUCTED/DEVELOPED BY ANOTHER PERSON, THEN IN RE SPECT OF THIS PERSON WHO HAS CONSTRUCTED THE HOUSING PORTION, COMMERCIAL PORTION HAS TO BE DISREGARDED FOR THE PURPOSE OF WORKING OUT THE PERC ENTAGE OF COMMERCIAL BUILT UP AREA IN THE HOUSING PROJECT. IN THE CASE OF BRAHMA ASSOCIATES VS JCIT AS REPORTED IN 119 ITD 255 (SB) PUNE, THIS QUESTION WAS RAISED BEFORE THE SPECIAL BENCH OF THE TRIBUNAL THAT IF COMMERCIAL AREA IS MORE THAN THE PRESCRIBED AREAS OF COMMERCIA L SPACE IN A HOUSING PROJECT, THEN THE PROPORTIONATE DEDUCTION W OULD BE ALLOWED OR NOT AND IT WAS HELD BY THE SPECIAL BENCH OF THE TRI BUNAL THAT PROPORTIONATE DEDUCTION IS ALLOWABLE IF THE PERCENT AGE OF COMMERCIAL USE IS NOT MORE THAN 10%. BUT IF THE PROFIT OF RESI DENTIAL PORTION CAN BE WORKED OUT INDEPENDENTLY, THEN THE DEDUCTION COULD BE CONFINED ONLY TO THE PROFITS OF THE HOUSING PROJECT. AFTER THIS DECI SION OF SPECIAL BENCH OF THE TRIBUNAL, THERE IS JUDGMENT OF HON'BLE BOMBAY H IGH COURT IN THE SAME CASE IN INCOME TAX APPEAL NO. 1194/10 DATED 20 .02.2011 AS PER WHICH THIS DECISION OF SPECIAL BENCH OF THE TRIBUNA L WAS PARTLY REVERSED AND HENCE, THIS ISSUE SHOULD BE DECIDED AFTER CONSI DERING JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF B RAHMA ASSOCIATES (SUPRA) AND ALSO AFTER FINDING THAT WHETHER THERE I S DOMINANT CONTROL OR NOT AND WHETHER THERE IS SEPARATE APPROVAL OF AMC F OR THE PORTION OF THE HOUSING PROJECT UNDERTAKEN BY THIS ASSESSEE. I N VIEW OF THE ABOVE DISCUSSION, WE FEEL THAT THE ENTIRE MATTER SHOULD G O BACK TO THE FILE OF LD. CIT(A) FOR A FRESH DECISION AND HENCE, WE SET A SIDE THE ORDER OF LD. CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF L D. CIT(A) FOR A FRESH DECISION. HE SHOULD PASS NECESSARY ORDER AS PER LAW IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNI TY OF BEING HEARD TO BOTH THE SIDES. 7. IN VIEW OF THE AFORESAID DECISION OF THE TRIBUNA L, WE HEREBY SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE THIS M ATTER FOR THIS YEAR ALSO BACK TO THE FILE OF LD.CIT(A) FOR DECISION AFRESH. THE LD.CIT(A) WOULD DECIDE THE APPEAL IN THE LIGHT OF ABOVE OBSERVATION MADE BY THE TRIBUNAL IN ITA NOS.2704, 2705 & 2706/AHD/2009(SUPRA). ACCO RDINGLY, GROUNDS RAISED IN THE REVENUES APPEAL ARE ALLOWED FOR STAT ISTICAL PURPOSES. ITA NO.1850/AHD /2011 ITO VS. M/S.GIRIRAJ CORPORATION ASST.YEAR 2008-09 - 7 - 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 26 TH DAY OF FEBRUARY, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 26/ 02 /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)-I, 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 .. 20.2.15(DICTATION-PAD 7-PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..20.2.15 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.26.2.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.2.15 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