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

ITA 2145/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9260 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 05-06-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: N O N E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABA D (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON' BLE SHRI A.N. PAHUJA, A.M. ) I.T.A. NO. 2145/AHD./2008 ASSESSMENT YEAR : 2005-2006 INCOME TAX OFFICER, WARD-9(1), AHMEDABAD VS.- M/S .SKYLAND DEVELOPERS, AHMEDABAD (PAN :AAMFS 7459 M) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT MEHRA, D.R. RESPONDENT BY : N O N E O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 08.04.2008 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDABAD ASSESSMENT YEAR 2005-06. 2. THE ONLY GROUND RAISED IN THIS APPEAL IS AS UNDE R :- THE LD. COMMISSIONER OF INCOME TAX (A)-XV, AHMEDA BAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION 80IB(10) OF THE ACT AMOUNTING TO RS.18,07,624/- WHICH WAS ALLOWED BY THE ASSESSING OFFICER. 3. IN THIS CASE, NOTICE OF HEARING SEND THROUGH REG ISTERED POST FIXING THE DATE OF HEARING FOR 29.11.2010. NEITHER ANYBODY APPEARED NOR AN APPLICA TION FOR ADJOURNMENT RECEIVED. THE RECORD OF THE ASSESSEE INDICATE THAT EARLIER THIS APPEAL W AS FIXED FOR HEARING ON 7-8-2008. THE COUNSEL OF THE ASSESSEE SHRI V.P. PATEL, ADVOCATE VIDE LETTER DATED 7-8-2008 REQUESTED THAT HE NEED TWO WEEKS TIME TO PREPARE THE PAPER BOOK. ON THIS BASIS THE CASE WAS ADJOURNED SINE-DIE. UNDER THESE CIRCUMSTANCES WE PROCEED TO DECIDE THIS APPEA L OF THE REVENUE ON THE BASIS OF SUBMISSIONS MADE BY LD. D.R. AND THE MATERIAL AVAILABLE ON RECO RD. 4. BRIEFLY STATED THE FACTS ARE THAT FOR THE ASSES SMENT YEAR UNDER APPEAL THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.36,89 0/- AFTER DENYING DEDUCTION U/S. 80IB(10) AMOUNTING TO RS.18,07,624/-. IN THE ASSESSMENT ORDE R FRAMED UNDER SECTION 143(3), THE ASSESSING OFFICER OBSERVED THAT ASSESSEE IS DOING S UPERVISION AND LABOUR WORK AS PER THE -2- ITA 2145/AHD/2008 AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE SOCIETY AND THE ROLE OF THE ASSESSEE CAN BE DEFINED AS THAT OF SUPERVISORY CONTRACTOR OR LABOUR CONTRACTOR. 5. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS), DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE RELYING ON THE TRIBUNAL DECISION. AGGRIEVED WITH THE THE SAME REVENUE IS IN APPEAL. 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF R EVENUE SHRI ROHIT MEHRA, D.R. APPEARED AND SUBMITTED THAT THE RATIO LAID DOWN IN THE CASE OF RADHE DEVELOPERS AND OTHERS IS NOT APPLICABLE TO THE FACTS OF THE IMPUGNED CASE. THE SALIENT FEA TURES OF THE FACT AS EXISTED IN THE CASE OF RADHE DEVELOPERSS DECISIONS ARE AS UNDER:- 1. THERE WAS AN AGREEMENT TO SALE IN FAVOUR OF ASSE SSEE DEVELOPER AND POSSESSION WAS GIVEN BY THE LAND OWNER. SALE CONSIDERATION WAS ALS O PAID. 2. ALL APPROVALS / PERMISSIONS WERE OBTAINED BY POW ER OF ATTORNEY OF LAND OWNER I.E. ASSESSEE. 3. RIGHT TO TAKE / PERUSE ALL GOVT. / QUASI GOVT. P ROCEEDINGS RESTED WITH THE ASSESSEE DEVELOPER BY AN AGREEMENT. 4. FOR ALL THESE BUNDLES OF RIGHTS THE ASSESSEE DEV ELOPER HAD PAID CONSIDERATION TO LAND OWNER AND OBTAINED ALL RIGHTS INCLUDING OWNERSHIP R IGHTS FURTHER THE LD. DR DRAWN OUR ATTENTION TO THE FINDI NGS OF THE ITAT ORDER IN PARA-18, WHICH IS THE FOUNDATION OF THE DECISION AND WHICH READS AS UNDER :- . FROM THE CLAUSES OF THE DEVELOPMENT AND CONST RUCTION AGREEMENTS AS WELL A AGREEMENT FOR SALE, BOTH DATED 18.05.2000, EXTRACTE D ABOVE WE OBSERVE THAT THESE TWO AGREEMENTS EFFECTIVELY TRANSFER TO THE ASSESSEE-FIR M ALL THE RIGHTS OF DEVELOPMENT AND CONSTRUCTION AND TO DEAL WITH THE LAND FOR CONSIDER ATION PAYABLE WITHIN A STIPULATED TIME; THAT THE ASSESSEE HAD BEEN PUT IN POSSESSION OF THE LAND OF THE TERMS AND CONDITIONS AS MENTIONED IN THESE TWO AGREEMENTS; THAT THE ASSESSE E-FIRM HA ALSO PAID CONSIDERATION OF RS.56 LACS DURING THE TWO F.YRS. I.E. 2000-01 AN D 201-02; THAT THE ASSESSEE-FIRM HAS TO OBTAIN NECESSARY APPROVALS FROM THE LOCAL AUTHOR ITIES; I.E., BMC ON BEHALF OF THE LAND OWNERS AND ALL THE EXPENSES FOR SUCH PURPOSES ARE T O BE INCURRED BY THE ASSESSEE; THAT THE ASSESSEE-FIRM HAS ENGAGED THE FIRM OF ARCHITECT AND ALSO INCURRED EXPENSES TOWARDS THE CHARGES PAYABLE TO CORPORATION, ETC., FOR OBTAI NING THE APPROVALS; THAT EVEN FROM THE BOOKS OF ACCOUNT, IT IS NOTICED THAT FOR OBTAINING THE APPROVAL, THE ASSESSEE-FIRM HAS PAID THE DEVELOPMENT CHARGES TO VARIOUS REGULATING AGENC IES I.E. AUDA, BMC AND GEB(GUJARAT ELECTRICITY BOARD), ETC. AND THAT THESE EXPENSES ARE INCURRED BY THE -3- ITA 2145/AHD/2008 ASSESSEE-FIRM AND THE ASSESSING OFFICER HAS BROUGHT OUT THE COMPLETE DETAILS YEAR-WISE IN HIS ASSESSMENT ORDERS AT PAGE NO.5 READING AS UN DER:- .. THE LD. DR FURTHER STATED THAT THE BENCH WAS KIND-E NOUGH TO APPRECIATE THAT THE DECISION IMPARTED IN THE CASE OF RADHE DEVELOPERS IS BASED ON FACTS DISCUSSED IN THAT CASE. NEEDLES S TO SAY THAT THE APEX COURT TIME AND AGAIN HAD HELD THAT A RATIO BECOMES A BINDING PRECEDENT IN THE CONTEXT OF GIVEN FACTS, NOT IN ISOLATION OF ACT S. THE FACTS OF THE IMPUGNED APPEAL ARE NOT SIMILAR WITH THE FACTS OF THE SAID CASE DISCUSSED A S ABOVE. ON THE CONTRARY, IT LEADS ADVERSE INFERENCE AGAINST THE ASSESSEE AND DESERVES REJECTI ON OF ASSESSEES CLAIM U/S.80IB ON THE FACTS OF THE CASE OF RADHE DEVELOPERS ETC. THE LD. DR ALSO REFERRED TO THE PRINCIPALS L AID DOWN IN THE RECENT CASE OF HON'BLE APEX COURT IN THE CASE OF FAQIR CHAND GULATI V. UPPAL AGENCIES PVT. LTD. & ANR. (CIVIL APPEAL NO.3302 OF 2005) DATED 10-07-2008 AN D STATED THAT THE FOLLOWING ISSUES WERE RAISED:- I) A DEVELOPMENT AGREEMENT IS ONE WHERE THE LAND-HO LDER PROVIDES THE LAND. THE BUILDER PUTS UP A BUILDING. THEREAFTER, THE LAND OW NER AND BUILDER SHARE THE CONSTRUCTED AREA. THE BUILDER DELIVERS THE OWNERS SHARE TO T HE LAND-HOLDER AND RETAINS THE BUILDERS SHARE. THE LAND-HOLDER SELLS / TRANSFERS UNDIVIDED SHARE/S IN THE LAND 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 CONSTRUCTION OF HAVE ANY SAY AS TO WHOM AND AT WHAT COST THE BUILDERS SHARE OF APARTMENTS ARE TO BE DEALT W ITH OR DISPOSED OF. SUCH AN AGREEMENT IS NOT A JOINT VENTURE IN THE LEGAL SEN SE. IT IS A CONTRACT FOR SERVICES. II) ON THE OTHER HAND, AN AGREEMENT BETWEEN THE OWN ER OF A LAND AND A BUILDER, FOR CONSTRUCTION OF APARTMENTS AND SALE OF THOSE OF APA RTMENTS SO AS TO SHARE THE PROFITS IN A PARTICULAR RATIO MAY BE A JOINT VENTURE, IF THE AGR EEMENT DISCLOSES AN INTENT THAT BOTH PARTIES SHALL EXERCISE JOINT CONTROL OVER THE CONST RUCTION / DEVELOPMENT AND BE ACCOUNTABLE TO EACH OTHER FOR THEIR RESPECTIVE ACTS WITH REFERENCE TO THE PROJECT. III) THE TITLE OF THE DOCUMENTS IS NOT DETERMINATIV E OF THE NATURE AND CHARACTER OF THE DOCUMENT, THOUGH THE NAME MAY USUALLY GIVE SOME IND ICATION OF THE NATURE OF THE DOCUMENT. THE USE OF THE WORDS JOINT VENTURE OR COLLABORATION IN THE AGREEMENT WILL NOT MAKE THE TRANSACTION A JOINT VENTURE, IF THERE ARE NO PROVISIONS FOR SHARED CONTROL AND LOSSES. IN VIEW OF THESE ARGUMENTS, THE LD. DR STATED THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAS GONE INTO THE AGREEMENTS AND BUILDERS DEVELOPME NT AGREEMENT, FROM WHERE IT CAN BE INFERRED THAT THE ASSESSEE IS A DEVELOPER OR A CONT RACTOR. ACCORDINGLY, HE REQUESTED THE BENCH TO SET ASIDE THE ISSUE FOR VERIFICATION OF DIFFEREN T AGREEMENTS AND DOCUMENTS IN THE LIGHT OF THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF FAQIR CHAND GULATI (SUPRA). -4- ITA 2145/AHD/2008 7. AFTER HEARING THE LD. D.R. WE HAVE CAREFULLY GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN ASSESSEES OWN CASE, ITAT D-BENCH VIDE ORDER DATED 11-3-2008 IN ITA NO.1086 & 1087/AHD/2007 FOR THE ASSESSMENT YEAR 2002-03 AND 2003-04 HELD THAT ASSES SEE IS ENTITLED TO DEDUCTION U/S. 80IB(10) OF THE ACT. IN THIS DECISION TRIBUNAL HAS NOT CONSIDERED T HE RATIO OF JUDGMENT OF APEX COURT IN THE CASE OF FAQIR CHAND GULATI (SUPRA). WE HAVE PURSUED THE ORDER CASE LAW AND A LSO GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE LD. C. I.T.(A). IT IS PERTINENT TO NOTE THAT WHETHER THE ASSESSEE IS A DEVELOPER OR CONTRACTOR IS NOT PR OPERLY ASCERTAINED BY LD. C.I.T.(A). WE ARE THEREFORE OF THE VIEW THAT ISSUE NEEDS RE-VERIFICAT ION IN THE LIGHT OF HON'BLE APEX COURT JUDGMENT IN THE CASE OF FAQIR CHAND GULATI (SUPRA) . SIMILARLY, THE AHMEDABAD TRIBUNAL IN OTHER CASES HAS ALSO LAID DOWN CERTAIN PRINCIPLES IN THE LIGHT OF HON'BLE APEX COURT JUDGMENT IN THE CASE OF FAQIR CHAND GULATI (SUPRA) AND A.O IS ALSO REQUEST TO CONSIDER THE CA SE LAW OF THIS TRIBUNAL IN THE CASE OF ITO & OTRS. V.SHAKTI CORPORATION BARODA AND OTRS. IN ITA NO.1503/AHD/2008 DATED 07-11-2008. THE TRIBUNAL IN THESE CASES HAS H ELD AS UNDER:- 16. THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS IN THE CASE OF RADHE DEVELOPERS (SUPRA) AND ACCORDINGL Y WE ARE OF THE VIEW THAT THE ASSESSEE HAS ACQUIRED THE DOMINANT OVER TH E LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED THEREIN. WE MAY MENTION HERE THA T, IN OUR OPINION, THE DECISION IN THE CASE OF RADHE DEVELOPERS (SUPRA) WI LL NOT APPLY IN A CASE WHERE THE ASSESSEE HAS ENTERED INTO THE AGREEMENT F OR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE HOUSING PROJECT ON BEHALF OF THE LANDOWNER. THE AGREEMENT ENTERED INTO IN THA T CASE WILL NOT ENTITLE THE DEVELOPER TO HAVE THE DOMINANT CONTROL OVER THE PRO JECT AND ALL THE RISKS INVOLVED THEREIN WILL VEST WITH THE LANDOWNER ONLY. THE INTEREST OF THE DEVELOPER WILL BE RESTRICTED ONLY FOR THE FIXED REM UNERATION FOR WHICH HE WOULD BE RENDERING THE SERVICES. THE DECISION IN TH E CASE OF RADHE DEVELOPERS (SUPRA) HAS NOT DEALT WITH SUCH SITUATIO N. THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF RADHE DEVELOPERS CANNOT BE APPLIED UNIVERSALLY WITHOUT LOOKING INTO THE DEVELOPMENT AGREEMENT ENTE RED INTO BY THE DEVELOPER ALONG WITH THE LANDOWNER. IN THE CASE OF SHAKTI CORPORATION SINCE THE ASSESSEE HAS FILED COPY OF THE DEVELOPMENT AGRE EMENT AND CRUX OF THE AGREEMENT IS THAT THE ASSESSEE HAS PURCHASED THE LA ND AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN, THEREFORE, WE ARE O F THE VIEW THAT THE ASSESSEE WILL BE ENTITLED FOR THE DEDUCTION U/S 80I B(10). THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF FAQIR CHAND GU LATI (SUPRA) WILL NOT ASSIST THE REVENUE, AS THE AGREEMENT IS NOT SHARING OF THE CONSTRUCTED AREA. IN OTHER CASES THE COPY OF AGREEMENT SINCE HAS NOT BEEN SUBMITTED BEFORE US, IF SUBMITTED , THE TERMS AND CONDITIONS OF THE AGREEMENT WERE NOT -5- ITA 2145/AHD/2008 SPECIFICALLY ARGUED BEFORE AND PLACED BEFORE US, WE THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET AS IDE THE ORDER OF THE CIT(A) AND RESTORE ALL OTHER APPEALS TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL LOOK INTO THE AGREEMENT ENTERED INTO BY EA CH OF THE ASSESSEES WITH THE LANDOWNER AND DECIDE WHETHER THE ASSESSEE HAS I N FACT PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM THE LANDOWNER A ND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN COST AND RISKS INVOLVED IN THE PROJECT. IN CASE THE AO FINDS THAT PRACTICALLY THE LAND HAS BEEN BOUGHT BY THE DEVELOPER AND DEVELOPER HAS ALL DOMINANT CONTROL OVER THE PROJECT AND HAS DEVELOPED THE LAND AT HIS OWN COST AND RISKS, THE AO SHOULD ALLOW THE DEDUCTION TO THE ASSESSEE U/S 80IB(10). IN CASE THE AO FINDS THAT TH E DEVELOPER HAS ACTED ON BEHALF OF THE LANDOWNER AND HAS GOT THE FIXED CONSI DERATION FROM THE LANDOWNER FOR THE DEVELOPMENT OF THE HOUSING PROJEC TS, THE ASSESSEE SHOULD NOT BE ALLOWED DEDUCTION U/S 80IB(10) TO THE ASSESS EE. 8. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THIS APPEAL TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION THAT HE WILL CON SIDER THE PRINCIPLES LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF FAQIR CHAND GULATI (SUPRA) AS WELL AS THE CASE LAW OF THIS TRIBUNAL I N THE CASE OF SHAKTI CORPORATION BAROD (SUPRA) AND DECIDE THIS ISSUE IN THE LIGHTS OF FAC TS AND CIRCUMSTANCES OF THE CASE. 9. IN THE RESULT, FOR STATISTICAL PURPOSE THE APPEA L OF THE REVENUE IS ALLOWED. 10. THE ORDER SIGNED AND PRONOUNCED IN THE COURT O N 30 .11.2010 SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 / 11 / 2010 COPY OF THE ORDER IS FORWARDED TO : (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD.