The ITO, Ward-9(1), Ahmedabad V. M/s. Shreenathji Corporation, Ahmedabad

ITA 1870/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9726 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGHSR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.1870/AHD/2011 ( / ASSESSMENT YEAR : 2008-09) THE ITO WARD-9(1) AHMEDABAD / VS. M/S.SHREENATHJI CORPORATION 175/2-3, PARIMAL PARK NR.BOMBAY CONDUCTORS, GIDC ROAD, GHODASAR AHMEDABAD ' ./ ./ PAN/GIR NO. : ABAFS 9813 N ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( / APPELLANT BY : SHRI DINESH SINGH, SR.AR &''% ) ( / RESPONDENT BY : SHRI P.M. MEHTA WITH SHRI G.M. THAKOR, ARS * ) / DATE OF HEARING 28/12/2015 +,-. ) / DATE OF PRONOUNCEMENT 20/01/2016 / 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 AP PEAL:- ITA NO.1870 /AH D/2011 ITO VS. M/S.SHREENATHJI CORPORATION ASST.YEAR 2008-09 - 2 - 1) THE LD.COMMISSIONER OF INCOME-TAX(A)-I, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM FOR DEDUCTION OF RS.1,38,55,701/- U/S.80-IB(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 PARIMAL (GHODASAR) CO-OP.HOU SING SOCIETY, WHICH ARE SEPARATE LEGAL ENTITY IN THE EYE OF LAW AND THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WITH THE SOCIETY. THE ENTIRE RESPONSIBILITY TO EXECUTE THE HOUSING PROJECT(S) AND ABIDE BY THE TERMS AND CONDITIONS OF ITS APPROVAL RIGHT FROM THE INCEPTION OF THE PROJECT(S) TILL ITS COMPLETION RESTS WITH THE SOCIETY. ASSESSEE WAS JUST A CONTRACTOR O F 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. 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) DISALLOWED THE CLAIM OF THE ASSESSEE MADE U/S.80-IB (10) OF THE ACT AND ADDED THE DEDUCTION CLAIMED TO THE ASSESSEE. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT ORDER, PREFERRED AN APP EAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL, THEREBY DIRECTING THE AO TO AL LOW THE DEDUCTION ITA NO.1870 /AH D/2011 ITO VS. M/S.SHREENATHJI CORPORATION ASST.YEAR 2008-09 - 3 - U/S.80-IB(10) OF THE ACT IN VIEW OF THE DECISION OF THE COORDINATE BENCH (ITAT A BENCH AHMEDABAD) IN THE CASE OF RADHE DEV ELOPERS VS. ITO IN ITA NO.2482/AHD/2006 AND OF ITO VS. M/S.SHAKTI C ORPORATION IN ITA NO.1503/AHD/2008 DATED 07/11/2008. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE REVENUE IS IN APPEAL BEFORE US. 3. GROUND NO.1 & 2 ARE INTER-CONNECTED AND, THEREFO RE, THE SAME ARE DECIDED TOGETHER. THE LD.SR.DR VEHEMENTLY ARGUED T HAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. HE SUB MITTED THAT THE ASSESSEE IS NOT ENTITLED FOR THE DEDUCTION CLAIMED U/S.80-IB (10) OF THE ACT. HE SUPPORTED THE ORDER OF THE AO. 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE ISSUE IS SQUAR ELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF RADHE DEVELOPERS VS. ITO(SUPRA). HE ALSO PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH (ITAT A BENCH AHMEDABAD) IN THE CASE OF ITO VS. M/S.VASUDEV DEVELOPERS IN ITA NO.1868/AHD/2011 FOR AY 2008-09, DATED 08/05/2015. 3.2. IN REJOINDER, THE LD.SR.DR SUBMITTED THAT EVEN OTHERWISE ALSO, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION AS THE COMPL ETION OF PROJECT WAS NOT MADE WITHIN THE PRESCRIBED TIME. THE LD.COUNSEL FO R THE ASSESSEE DREW ITA NO.1870 /AH D/2011 ITO VS. M/S.SHREENATHJI CORPORATION ASST.YEAR 2008-09 - 4 - OUR ATTENTION TOWARDS PAPER-BOOK TO BUTTRESS THIS C ONTENTION THAT THE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE IS FA CTUALLY INCORRECT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE-LAWS RELIED UPON BY THE LD.COUN SEL FOR THE ASSESSEE. IT IS NOT DISPUTED BY THE REVENUE THAT FOR THE AYS 200 4-05 TO 2007-08, THE LD.CIT(A) HAD DECIDED THE MATTER IN FAVOUR OF THE A SSESSEE. THE LD.CIT(A) HAS GIVEN FINDINGS ON FACT IN PARAS-4.3 TO 4.5 OF HIS ORDER, WHICH READ AS UNDER:- 4.3. IT IS ALSO SUBMITTED THAT FOR AY 2004-05 TO 2 007-08, THE CIT(APPEALS)-I DECIDED THE MATTER IN FAVOUR OF THE APPELLANT. 4.4. I HAVE CAREFULLY EXAMINED THE FACTS OF THE CAS E, SUBMISSIONS OF THE APPELLANT AND PERUSED THE ARGUMENTS OF THE ASSE SSING OFFICER. THE AOS ARGUMENTS ARE MAINLY 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 C ARRIED OUT BY THEM. EVEN THE COST FOR OBTAINING PERMISSION WAS BORNE BY THE APPELLANT. THE APPELLANT HAD ENTERED INTO BOTH THE AGREEMENTS FOR DEVELOPMENT AS ALSO BANAKHAT FOR PURCHASE OF LAND WITH THE SOCIETY AND AS PER THE AGREEMENT THEY HAVE CARRIED OUT THE DEVELOPMENT WORK. THUS, APPELLANT IN 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 IRRESPECTIVE OF THE FACT WHETHER IT IS ABLE TO SELL THE UNITS. POSSESSION OF THE LAND WAS ALSO GIVEN TO AP PELLANT DEVELOPER AND RISKS ASSOCIATED WITH HOUSING PROJECT WERE BORNE BY APPELLANT. IT IS ADDED THAT THE APPELLANT HAS NOT EARNED REMUNERATIO N AT FIXED RATE. ON THE MAIN ISSUE OF OWNERSHIP OF LAND AND APPROVAL BE ING IN THE NAME OF LANDOWNER FOR CLAIM OF DEDUCTION U/S.80IB(10) IT IS SEEN THAT ALTHOUGH, ITA NO.1870 /AH D/2011 ITO VS. M/S.SHREENATHJI CORPORATION ASST.YEAR 2008-09 - 5 - THE ISSUE WAS DECIDED IN FAVOUR OF THE APPELLANT AN D AGAINST REVENUE BY THE ORDER OF THE JURISDICTIONAL ITAT, IN THE CASE O F RADHE DEVELOPERS VS ITO WARD 3(2) BARODA NO.2482/AHD/2006 A BENCH AHMED ABAD, HOWEVER THE DECISION WAS PARTLY MODIFIED BY THE SUB SEQUENT DECISION IN THE CASE OF ITO VS. SHAKTI CORPORATION ITA NO.1503 /AHD/2008 DATED 07/11/2008 WHEREIN, THE HONBLE ITAT HAS INDICATED THAT THE BENEFIT UNDER 80IB(10) WOULD BE AVAILABLE IF THE DEVELOPER HAS DOMINANT CONTROL OVER THE PROJECT AND HAS DEVELOPED THE LAND AS ITS OWN COST AND RISK AND THE BENEFIT WOULD BE DENIED IF THE ASSESSE E HAD ENTERED INTO AN AGREEMENT FOR A FIXED REMUNERATION AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE PROJECT ON BEHALF OF THE LAND OWNER. F URTHER, HONBLE APEX COURT IN THE CASE OF FAQUIR CHAND GULATI VS UPAL AG ENCIES PVT.LTD. & ANR. (CIVIL APPEAL NO.3302 OF 2005) DATED 10/07/200 8 HAS HELD THAT- I) A DEVELOPMENT AGREEMENT IS ONE WHERE THE LAND H OLDER PROVES THE LAND. THE BUILDER PUTS UP A BUILDING. THEREAFTER, THE LAND OWNER AND BUILDER SHARE THE CONSTRUCTED ARE. THE BUILDER DEL IVERS THE OWNERS SHARE TO THE LAND HOLDER AND RETAINS THE BUILDERS SHARE. THE LAND HOLDER SELLS/TRANSFERS UNDIVIDED SHARE/S IN THE LA ND CORRESPONDING TO THE BUILDERS SHARE OF THE BUILDING TO THE BUILDER OR HIS NOMINEES. THE LAND HOLDER WILL HAVE NO SAY OR CONTROL IN THE CONS TRUCTION OF HAVE ANY SAY AS TO WHOM AND AT WHAT COST THE BUILDERS SHARE OF APARTMENTS ARE TO BE DEALT WITH OR DISPOSED OF. SUCH AN AGREEMENT IS NOT A JOINT VENTURE IN THE LEGAL SENSE. IT IS A CONTRACT FOR SERVICES. (II) ON THE OTHER HAND, AN AGREEMENT BETWEEN THE OWNER OF A LAND AND A BUILDER, FOR CONSTRUCTION OF APARTMENTS AND SALE OF THOSE APARTMENTS SO AS TO SHARE THE PROFITS IN A PARTICULAR RATIO MA Y BE A JOINT VENTURE, IF THE AGREEMENT DISCLOSES AN INTENT THAT BOTH PARTIES SHALL EXERCISE JOINT CONTROL OVER THE CONSTRUCTION/DEVELOPMENT AND THE A CCOUNTABLE 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 FOR FIXED REM UNERATION AS A CONTRACTOR. IN THE INSTANT CASE, THE APPELLANT HAS PURCHASED THE LAND FOR FIXED CONSIDERATION AND HAS DEVELOPED THE HOUSING P ROJECT ON ITS OWN COST AND THERE IS NO JOINT VENTURE WITH THE LAND OW NER AND THUS IN TERMS ITA NO.1870 /AH D/2011 ITO VS. M/S.SHREENATHJI CORPORATION ASST.YEAR 2008-09 - 6 - OF DECISION IN THE CASE OF M/S.SHAKTI CORPORATION A ND THE RATIO OF THE DECISION OF ITAT, AHMEDABAD IN THE CASE OF RADHE DE VELOPERS THE AO IS DIRECTED TO ALLOW DEDUCTION U/S.80IB(10) TO THE APPELLANT. 5. THE ABOVE FINDINGS OF THE LD.CIT(A) ARE SUPPORTE D BY THE DEVELOPMENT AGREEMENT ENTERED BETWEEN THE SOCIETY A ND THE DEVELOPER, I.E. PRESENT ASSESSEE. THE REVENUE HAS NOT PLACED ANY CONTRARY MATERIAL ON RECORD REBUTTING THE FINDING OF THE LD.CIT(A) TH AT THE RISK IS BORNE BY THE DEVELOPER AND ALSO THERE IS NO FIX REMUNERATION PAID BY THE SOCIETY TO THE ASSESSEE. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS , GROUND NOS.1 & 2 OF REVENUES APPEAL ARE DEVOID OF ANY MERIT, THE SA ME ARE DISMISSED. 6. GROUND NOS.3 & 4 ARE GENERAL IN NATURE WHICH REQ UIRE NO INDEPENDENT ADJUDICATION. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 20 TH DAY OF JANUARY, 2016 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/ 01 /2016 2.., .../ T.C. NAIR, SR. PS ITA NO.1870 /AH D/2011 ITO VS. M/S.SHREENATHJI CORPORATION ASST.YEAR 2008-09 - 7 - !'#$%&%# / 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, C //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 12.1.16(DICTATION-PAD 8-- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.1.16 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. 20.1.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.1.16 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