The ITO, Ward-9(1), Ahmedabad V. M/s. Vasudev Developers, Ahmedabad

ITA 1868/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89314 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Keywords: Competent authority
• Section: 143(3); 80IB

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO.1868/AHD/2011 / ASSESSMENT YEAR: 2008-2009 ITO, WARD-9(1) AHMEDABAD. VS M/S.VASUDEV DEVELOPERS M.H. MILLS COMPOUND KHOKHRA GAM, ROHIT MILL CIRCLE AHMEDABAD. PAN : AAFFV 0789 A ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI D.C. MISHRA, SR.DR ASSESSEE(S) BY : NONE / DATE OF HEARING : 08/05/2015 / DATE OF PRONOUNCEMENT: 08/05/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A )-I, AHMEDABAD DATED 13.5.2011. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE I S THAT THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE ASSES SEES CLAIM FOR DEDUCTION OF RS.3,61,25,632/- UNDER SECTION 80IB(10) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTION OF HOUS ING PROJECT APPROVED BY THE AHMEDABAD MUNICIPAL CORPORATION. I N THE RETURN ITA NO.1868/AHD/2011 2 FILED ON 27.9.2008 FOR THE ASSTT.YEAR 2008-09, THE ASSESSEE HAD SHOWN TOTAL INCOME OF RS.10,100/- AFTER CLAIMING DE DUCTION UNDER SECTION 80IB(10) OF THE ACT FOR RS.3,61,25,632/-. I N THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT O N 16.12.2010, THE AO DISALLOWED THE CLAIM OF DEDUCTIO N UNDER SECTION 80IB(10) TO THE ASSESSEE FOR THE FOLLOWING R EASONS: I) THE LAND IS NOT IN THE NAME OF THE FIRM. OWNER SHIP OF LAND IS AN ESSENTIAL ELEMENT WHICH CARRIES WITH IT THE RIGHT TO DEVELOP THE LAND AND BUILD HOUSING PROJECTS THEREON . AO SAYS THAT THE DEVELOPER FIRST SHOULD PURCHASE THE LAND A ND THEN TAKE NECESSARY PERMISSION TO CONSTRUCT. (II) APPELLANT IN THE INSTANT CASE HAS ACTED MERELY AS AN AGENT FOR COLLECTION OF THE LAND CONSIDERATION ON B EHALF OF THE LAND OWNER AND A CONTRACTOR FOR THE CONSTRUCTION OF THE HOUSE ON BEHALF OF THE UNIT HOLDERS. (III) THE APPROVAL FOR THE PROJECT IS GRANTED BY TH E COMPETENT AUTHORITY IN THE NAME OF THE LAND OWNER ONLY. (IV) THE APPELLANT IS NOT A BUILDER OR DEVELOPER BU T A CONTRACTOR AND IS ACTING FOR AND ON BEHALF OF THE C O-OP. SOCIETY AND THE APPELLANT IS NOT ELIGIBLE FOR DEDUC TION UNDER SECTION 80IB. 4. ON APPEAL, THE CIT(A) ALLOWED THE DEDUCTION UNDE R SECTION 80IB(10) OF THE ACT TO THE ASSESSEE BY OBSERVING AS UNDER: 4.4 I HAVE CAREFULLY EXAMINED THE FACTS OF THE CAS E, SUBMISSIONS OF THE APPELLANT AND PERUSED THE ARGUME NTS OF THE ASSESSING OFFICER. THE AO'S ARGUMENTS ARE MAINL Y BASED ON TWO GROUNDS I.E. THE LAND WAS REGISTERED IN THE NAME OF THE SOCIETY AND THAT THE PERMISSION FOR DEVELOPMENT WAS IN THE NAME OF SOCIETY. AS AGAINST THIS, THE APPELLANT HAS CLARIFIED AND PROVED THAT THE DEVELOPMENT WAS CARRI ED OUT BY THEM. EVEN THE COST FOR OBTAINING PERMISSION WAS BO RNE BY THE APPELLANT. THE APPELLANT HAD ENTERED INTO BOTH THE AGREEMENTS FOR DEVELOPMENT AS ALSO BANAKHAT FOR PUR CHASE ITA NO.1868/AHD/2011 3 OF LAND WITH THE SOCIETY AND AS PER THE AGREEMENT T HEY HAVE CARRIED OUT THE DEVELOPMENT WORK. THUS, APPELLANT I N PRESENT CASE HAS ACQUIRED DOMINANT CONTROL OVER THE LAND AN D 'AS PER BANAKHAT AGREEMENT ENTERED WITH SOCIETY; DEVELOPER WAS BOUND TO PAY AMOUNT FOR ACQUIRING THE LAND IRRESPEC TIVE OF THE FACT WHETHER IT IS ABLE TO SELL THE UNITS. POSS ESSION OF THE LAND WAS ALSO GIVEN TO APPELLANT DEVELOPER AND RISK S ASSOCIATED WITH HOUSING' PROJECT WERE BORNE BY APPE LLANT. IT IS ADDED THAT THE APPELLANT HAS NOT EARNED REMUNERA TION AT FIXED RATE. ON THE MAIN ISSUE OF OWNERSHIP OF LAND AND APPROVAL BEING IN THE NAME OF LANDOWNER FOR CLAIM O F DEDUCTION U/S. 80IB (10), IT IS SEEN THAT ALTHOUGH, THE ISSUE WAS DECIDED IN FAVOR OF THE APPELLANT AND AGAINST R EVENUE BY THE ORDER OF THE JURISDICTIONAL IN THE CASE OF RAD HE DEVELOPERS VS ITO WARD 3(2) BARODA NO 2482/AHD/2006 A BENCH AHMEDABAD, HOWEVER THE DECISION WAS PARTLY MO DIFIED BY THE SUBSEQUENT DECISION IN THE CASE OF ITO VS M/ S. SHAKTI CORPORATION ITA NO. 1503/AHD/2008 DATED 07/11/2008 WHEREIN, THE HON'BLE ITAT HAS INDICATED THAT THE BE NEFIT UNDER 80IB(10) WOULD BE AVAILABLE IF THE DEVELOPER H AS DOMINANT CONTROL OVER THE PROJECT AND HAS DEVELOPED THE LAND AT ITS OWN COST AND RISK AND THE BENEFIT WOULD BE DENIED IF THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR A FIXED REMUNERATION AS A CONTRACTOR TO CONSTRUCT OR DEVELO P THE PROJECT ON BEHALF OF THE LAND OWNER. FURTHER, HON'B LE APEX COURT IN THE CASE OF FAQIR CHAND GULATI VS UPPAL AG ENCIES PVT. LTD. & ANR. (CIVIL APPEAL NO. 3302 OF 2005) DA TED 10/07/2008 HAS HELD THAT- I) A DEVELOPMENT AGREEMENT IS ONE WHERE THE LAND HOLDER PROVIDES THE LAND. THE BUILDER PUTS UP A BUILDING. THEREAFTER, THE LAND OWNER AND BUILDER SHARE THE CONSTRUCTED AREA. THE BUILDER DELIVERS THE OWNER'S SHARE TO THE LAND HOLDER AND RETAINS THE BUILDER'S SHARE. THE LAND HOLDER SELLS/TRANSFERS UNDIVIDED SHARE'/S IN THE LAND CORRESPONDING TO THE BUILDER'S SHARE OF THE BU ILDING TO THE BUILDER OR HIS NOMINEES. THE LAND HOLDER WIL L HAVE NO SAY OR CONTROL IN THE CONSTRUCTION OF HAVE ANY SAY AS TO WHOM AND AT WHAT COST THE BUILDER'S SHARE OF APARTMENTS ARE TO BE DEALT WITH OR DISPOSED OF. SUC H AN AGREEMENT IS NOT A 'JOINT VENTURE' IN THE LEGAL SEN SE. IT IS A CONTRACT FOR SERVICES.' ITA NO.1868/AHD/2011 4 II) ON THE OTHER HAND, AN AGREEMENT BETWEEN THE OWNER OF A LAND AND A BUILDER, FOR CONSTRUCTION OF APARTM ENTS AND SALE OF THOSE APARTMENTS SO AS TO SHARE THE PRO FITS IN A PARTICULAR RATIO MAY BE A JOINT VENTURE, IF TH E AGREEMENT DISCLOSES AN INTENT THAT BOTH PARTIES SHA LL EXERCISE JOINT CONTROL OVER THE CONSTRUCTION/DEVELOPMENT AND BE ACCOUNTABLE TO EACH OTHER FOR THEIR RESPECTIVE ACTS WITH REFERENCE TO T HE PROJECT. 4.5. IT IS SEEN THAT THE ENTIRE RISK IS OF THE APPE LLANT WHO IS DEVELOPING THE PROJECT AND THERE IS NO AGREEMENT FO R FIXED REMUNERATION AS A CONTRACTOR. IN THE INSTANT CA SE, THE APPELLANT HAS PURCHASED THE LAND FOR FIXED CONSIDER ATION AND HAS DEVELOPED THE HOUSING PROJECT ON ITS OWN COST A ND THERE IS NO JOINT VENTURE WITH THE LAND OWNER AND THUS IN TERMS OF DECISION IN THE CASE OF M/S. SHAKTI CORPORATION AND THE RATIO OF THE DECISION OF ITAT, AHMEDABAD IN THE CASE OF RADHE DEVELOPERS THE AO IS DIRECTED TO ALLOW DEDUCTION U/S.80IB(10) TO THE APPELLANT. 5. THE DR RELIED ON THE ORDER OF THE AO. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE, NEITHER ANY ADJOURNMENT PETITION WAS FILED. THEREFORE, THE APP EAL OF THE REVENUE IS DISPOSED OF EX PARTE QUA THE ASSESSEE-RESPONDENT, AFTER CONSIDERING THE SUBMISSIONS OF THE DR AND THE MATERIAL AVAILABLE ON RECORD. 7. WE FIND THAT THE CIT(A) AFTER ANALYZING THE DEVE LOPMENT AGREEMENT, AND THEREAFTER FOLLOWING THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF SHAK TI CORPORATION (SUPRA) AND RADHE DEVELOPERS (SUPRA) HA S ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) TO THE ASSESSEE. WE FIND THAT THE CIT(A) HAS GIVEN A FINDING THAT TH E ENTIRE RISK FOR DEVELOPMENT OF THE PROJECT WAS TAKEN BY THE ASSESSE E AND THE ASSESSEE WAS NOT PAID REMUNERATION AS CONTRACTOR. THE ASSESSEE ITA NO.1868/AHD/2011 5 PURCHASED THE LAND FOR FIXED CONSIDERATION AND DEVE LOPED THE HOUSING PROJECT ON ITS OWN COST, AND THERE WAS NO J OINT VENTURE WITH THE LAND OWNER. THIS FINDING OF THE CIT(A) HA S NOT BEEN CONTROVERTED BY THE DR BY BRINGING ANY POSITIVE MAT ERIAL ON RECORD. FURTHER, NO MATERIAL WAS ALSO BROUGHT ON R ECORD TO SHOW WHY THE DECISION OF THE TRIBUNAL IN THE CASE OF SHA KTI CORPORATION (SUPRA) AND THE RADHE DEVELOPERS (SUPRA) SHOULD NOT HAVE BEEN FOLLOWED BY THE CIT(A). IN THE ABSENCE OF THE SAME , WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT( A), WHICH IS CONFIRMED AND THE GROUND OF THE APPEAL OF THE REVEN UE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 8 TH MAY, 2015 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 08/05/2015