THE ACIT, 3(1), Bhopal V. M/S. PARAS HOUSING PVT. LTD., Bhopal

ITA 214/IND/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0395 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA

Judgement Text

M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 214/IND/2015 A.Y.2010-11 ACIT 3(1) BHOPAL ::: APPELLANT VS M/S PARAS HOUSING PVT. LTD. BHOPAL ::: RESPONDENT APPELLANT BY SHRI R.A. VERMA RESPONDENT BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA DATE OF HEARING 14.7.2015 DATE OF PRONOUNCEMENT 3 0 .7.2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE LEARNED CIT(A), BHOPAL-2, DATED 16.1. 2015. M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 2 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF BUILDERS AND REAL ESTATE DEVELOPERS. T HE RETURN OF INCOME WAS FILED DECLARING INCOME AT RS. 14,50,860/-. THE ASSESSMENT WAS FINALIZED AT RS. 94,86,810/- BY NOT ALLOWING DEDUCTION U/S 80IB(10) O F THE ACT OF RS. 71,98,168/- IN RESPECT OF THE PROJECT P ARAS HERMITAGE SITUATED AT PHASE-I, HOSHANGABAD ROAD, BHOPAL. THE LEARNED CIT(A) GRANTED RELIEF BY RELYING U PON THE DECISION OF THE ITAT, INDORE BENCH, IN THE ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 DATED 22.4. 2013 IN ITA NO. 598/IND/2012. THE RELEVANT PARA OF THE ORD ER OF THE ITAT FOR THE ASSESSMENT YEAR 2009-10 HAS BEEN INCORPORATED IN THE ORDER OF THE LEARNED CIT(A) WHICH IS REPRODUCED HEREUNDER :- 4.2 APPELLANTS SUBMISSIONS ALONG WITH ASSESSMENT ORDER AND RECORDS HAVE BEEN CONSIDERED CAREFULLY. BY RELYING ON VARIOUS TERMS AND CONDITIONS OF SALE M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 3 DEEDS, AGREEMENTS TO SALE, AMOUNT MENTIONED IN UNREGISTERED AGREEMENTS VIS A VIS SALE DEEDS, A.O. HAS HELD THAT THE APPELLANT HAS NOT BUILT AND SOLD COMPLETED RESIDENTIAL UNITS IN PRESCRIBED TIME AND HAS MERELY ACTED AS CONTRACTOR THEREBY MAKING IT INELIGIBLE FOR DEDUCTION CLAIMED U/S 80IB(10). A.O. HAS ALSO RELIED ON THE FACT THAT THE SIMILAR DEDUCT ION CLAIMED FOR THE SAME PROJECT FOR EARLIER YEARS BY T HE APPELLANT HAS ALSO BEEN WITHDRAWN BY RESPECTIVE ORDERS PASSED BY THE A.O. FOR A.Y. 2009-10 THE SAID DISALLOWANCE MADE BY THE A.O. IN CASE OF THE APPELLANT HAS ALSO BEEN CONFIRMED BY CIT(A)-I, BHOPAL VIDE ORDER DTD. 15.10.2012. ASSESSMENT ORDER AS WELL AS APPEAL ORDER OF A.Y. 2009-10 HAVE ALSO BEEN PERUSED DURING APPEAL PROCEEDINGS. IN FACT, THE IMPUGNED ORDER UNDER APPEAL FOR A.Y. 2010 - 11 HAS BEEN FRAMED ON IDENTICAL LINES AS MENTIONED M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 4 BY CIT(A)I, BHOPAL FOR A.Y. 2009-10. HOWEVER, ON PERUSAL OF RECORDS, IT IS SEEN THAT HON'BLE ITAT, INDORE VIDE ORDER DTD. 22.04.2013 PASSED IN APPEAL NO. ITA NO. 598/IND/2012 FOR A.Y. 2009-10 HAS ALLOWED THE CLAIMED DEDUCTION OF RS.88,17,665/- U/S 80IB(10) IN RESPECT OF THE SAME PROJECT BY HOLDING AS UNDER :- 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECT. DURING THE YEAR UNDER CONSIDERATION, DEDUCTION WAS CLAIMED U/S 80IB(10) OF THE ACT IN RESPECT OF PARAS HERITAGE PHASE-I, ALLEGED TO BE SOLD DURING THE YEAR. WE FOUND THAT DUE PERMISSION FOR HOUSING PROJECT WAS TAKEN FROM THE COMPETENT M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 5 AUTHORITY AND THE ENTIRE PROJECT WAS ALSO COMPLETED BEFORE 31/03/2008. AS PER THE COMPLETION CERTIFICATE DATED 25/03/2008 ISSUED BY MUNICIPAL CORPORATION, BHOPAL WHEREIN IT WAS CERTIFIED THAT WITH RESPECT TO APPROVAL GRANTED VIDE LETTER NO. 1792 DATED 01/01/04 AND 1110 DATED 08/11/2007 HAVE BEEN COMPLETED. THE ONLY OBJECTION OF THE ASSESSING OFFICER WAS THAT TOTAL CONSTRUCTION OF THE PLOT WAS MUCH HIGHER THAN THE AMOUNT MENTIONED IN THE REGISTERED SALE DEED. THE ASSESSING OFFICER ALSO OBSERVED THAT THE REGISTERED SALE DEED MENTIONS THAT THE PLOTS HAVE BEEN SOLD AT STRUCTURE LEVEL. THUS, THE DIFFERENCE OF AGREED SALE PRICE AND THE SALE-DEED PRICE IS THE CONTRACT RECEIPTS. ACCORDINGLY, HE HEL D THAT THE ASSESSEE IS A CONTRACTOR AND NOT A DEVELOPER. WE HAVE CAREFULLY GONE THROUGH THE M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 6 AGREEMENT EXECUTED BY THE ASSESSEE WITH THE BUYERS WHEREIN STRUCTURE WAS SOLD JUST TO ENABLE THE BUYERS TO TAKE LOAN AGAINST IT. HOWEVER, POSSESSION WAS TO REMAIN WITH THE ASSESSEE WHO 5 ALLEGED TO CARRY OUT THE COMPLETE CONSTRUCTION OF THE BUILDING THEREON AS PER THE APPROVED PLAN. THE RELEVANT CLAUSE 17 OF THE AGREEMENT READS AS UNDER: BUT IN THAT CASE FOR ALL PRACTICAL PURPOSES THE ACTUAL AND PHYSICAL POSSESSION OF THE SAID APARTMENT SHALL CONTINUE TO REMAIN WITH THE BUILDERS ONLY AND THE BUILDERS SHALL HAVE A LIEN OVER THE SAID APARTMENT UNTIL THE ENTIRE BALANCE PAYMENT IS MADE TO THE BUILDERS EITHER BY THE PURCHASER OR BY HIS / HER FINANCER. THEREFORE, IT IS CLEARLY UNDERSTOOD AND M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 7 AGREED BY THE PURCHASER THAT SUCH SALE-DEED WILL BE EXECUTED BY THE BUILDERS ONLY TO FACILITATE THE PURCHASER TO GET THE HOUSING LOAN OR AS THE CASE MAY BE, BUT THE SAME SHALL CERTAINLY NOT AFFECT THE TERMS OF SALE ENTERED INTO BETWEEN THE PARTIES UNDER THIS AGREEMENT. SUCH AGREEMENTS WERE ENTERED INTO SO THAT THE PURCHASERS COULD OBTAIN LOAN FROM THE BANKS. 7. AS PER THE PREVAILING PRACTICE IN THE MARKET NORMALLY ALL THE PROSPECTIVE BUYERS PURCHASE FLAT/BUNGALOW, ARE INTERESTED TO AVAIL HOUSING LOAN FACILITY FROM DIFFERENT FINANCIAL INSTITUTIONS/BANKS. THE FINANCIAL INSTITUTIONS/ BANKS INSIST FOR THE EXECUTION OF THE SALE DEED BEFORE COMPLETION OF THE UNITS TO SAFEGUARD THEIR INTEREST. THESE AGREEMENTS HAVE BEEN EXECUTED BY M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 8 THE ASSESSEE BEFORE EXECUTION OF SALE DEED AND IN THE AGREEMENT FOR SALE, THE TOTAL COST OF FLAT IS MENTIONED AND NOWHERE THE BIFURCATION OF AMOUNT OF PLOT AND AMOUNT OF FINISHED WORK HAS BEEN MENTIONED. WE ALSO FOUND THAT BUILDERS ARE ASKING THE BUYERS TO PAY THE TOTAL AMOUNT OF FLAT AT DIFFERENT STAGES BASED ON THE PROGRESS OF THE PROJECT. IT IS EVIDENT FROM THE AGREEMENTS SUBMITTED BEFORE THE ASSESSING OFFICER THAT ENTIRE COST OF FLAT AND OTHER CHARGES WERE DEMANDED FROM THE BUYERS WITHIN A PERIOD OF TWO MONTHS WHICH FURTHER INDICATE THAT THE FLATS WERE ALREADY COMPLETED AND THE POSSESSION WAS HANDED OVER TO THE BUYERS IMMEDIATELY AFTER RECEIVING THE ENTIRE AMOUNT. THE 6 CONTENTION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS ACTING AS A CONTRACTOR IS MERELY ON THE BASIS OF EXECUTION OF SALE DEED AT M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 9 A LOWER PRICE THAN THE AGREED PRICE. THERE IS NO MERIT IN ASSESSING OFFICERS CONTENTION IN SO FAR A S THE BUYERS HAVING INCURRED ANY EXPENDITURE ON CONSTRUCTION OF SAID FLATS DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE IS A DEVELOPER AND BUILDER SINCE INCEPTION, WHICH HAS NOT ONLY BEEN ACCEPTED BY THE DEPARTMENT BUT ALSO BY THE TRIBUNAL IN ITS ORDER DATED 19/12/2006. 8. IN VIEW OF THE ABOVE, THE ORDERS PASSED BY LOWER AUTHORITIES ARE DE VOID OF ANY MERITS. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. M/S PARAS HOUSING PRIVATE LIMITED ITA NO. 214/IND/2 015 10 3. SINCE THERE IS NO VARIATION IN THE FACTS OF THE CASE , THE CLAIM UNDER SECTION 80IB(1) OF THE ACT FOR THIS YEAR WAS ALSO WITH REGARD TO THE SAME PROJECT OF THE ASSESSEE, THERE FORE, THE FACTS BEING SIMILAR, WE DISMISS THIS APPEAL OF THE REVENUE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON 30 TH JULY, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 30 TH JULY, 2015 DN/-