M/s. Golden Developers, Ahmedabad V. The Income tax Officer,Ward-9(2), Ahmedabad

ITA 2150/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9682 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: ANIL BRAHMAKSHARIYA
• Keywords: Rule of consistency
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I RAJPAL YADAV , JUDICIAL MEMBER M/S. GOLDEN DEVELOPERS LUV KUSH BUNGLOWS, NR. ADISHWAR BUS STAND, NR. SAINT MARY SCHOOL, NARODA, AHMEDABAD - 380025 (APPELLANT) VS THE INCOME TAX OFFICER, WARD - 9(2), AHMEDABAD (RESPONDENT) ASSESSEE BY: S H RI ANIL BRAHMAKSHARIYA , A.R. REVENUE BY: S MT. SONIA KUMAR , SR. D.R. DATE OF HEARING : 24 - 06 - 2 015 DATE OF PRONOUNCEMENT : 17 - 07 - 2 015 / ORDER P E R : RAJPAL YADAV , JUDICIAL MEMBER : - THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 7 TH JULY, 2011 PASSED FOR ASSESSMENT YEAR 2008 - 09. THOUGH THE ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL, BU T ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE WHEREBY I T A NO . 2150 / A HD/20 11 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 2150 /AHD/20 11 A.Y. 2008 - 09 PAGE NO M/S. GOLDEN DEVELOPERS VS. ITO 2 DEDUCTION CLAIMED U/S. 80IB(10) OF THE INCOME TAX ACT AMOUNTING TO RS. 27,32,492/ - HAS BEEN DECLINED. 2. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT ISSUE IN DISPUTE IS SQU ARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT RENDERED IN ITA NO. 496/AHD/2011 PASSED IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2007 - 08. HE PLACED ON RECORD THE COPY OF THE ORDER DATED 13 TH NOVEMBER, 2014. HE FURTHER CONTENDED THAT LD. F IRST APPELLATE AUTHORITY HAS NOT INDEPENDENTLY EXAMINED THIS ISSUE RATHER SIMPLY RELIED UPON HER ORDER PASSED IN ASSESSMENT YEAR 2007 - 08. TO BUTTRESS HIS CONTENTION, HE TOOK US THROUGH PARA 4 OF THE COMMISSIONER OF INCOME TAX (APPEALS) S ORDER . ON THE OT HER HAND, LD. DEPARTMENTAL REPRESENTATIVE WAS UNABLE TO CONTROVERT THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE APPELLANT. 3. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. FROM PERUSAL OF THE ASSESSMENT ORDER, I T EMERGES OUT THAT ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECTS. IT HAS FILED RETURN OF INCOME ON 19 TH JULY, 2008 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION OF RS. 27,32,492/ - U/S. 80IB(10). THE CASE O F THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE U/S. 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE HAS SHOWN SALES OF RS. 1,23,65,245/ - ON WHICH A NET PROFIT OF RS. 27,32,492/ - WAS SHOWN , WHICH IN TERMS OF PERCENTAGE COMES OUT TO 22.10% OF THE TOTAL SALES. AS FAR AS THE FACTS AND CIRCUMSTANCES BETWEEN ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 ARE CONCERNED, THERE IS NO DISPUTE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER. THE ASSESSING OFFICER ON AN ANALYSIS OF THE CONSTRUCTIO N AGREEMENT ARRIVED AT A CONCLUSION THAT I.T.A NO. 2150 /AHD/20 11 A.Y. 2008 - 09 PAGE NO M/S. GOLDEN DEVELOPERS VS. ITO 3 ASSESSEE ACTED AS BOOKING AGENT AND CONSTRUCTION CONTRACTOR FOR THE SOCIETY. THUS, IT CANNOT BE CONSTRUED AS A DEVELOPER WITHIN THE MEANING OF SECTION 80IB(10) OF THE INCOME TAX ACT. AT THIS STAGE, WE DEEM IT APPR OPRIATE TO NOTE THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDER. IT READ S AS UNDER: - 4. GROUND NO.2 PERTAINS TO DISALLOWANCE OF DEDUCTION U/S. 80IB(10) OF RS.27,32,492. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE DISALLOW ANCE WAS MADE ON THE SAME LOGIC ON THE BASIS OF WHICH DISALLOWANCE WAS MADE IN AY 2007 - 08 VIDE ORDER PASSED U/S. 143(3) ON 23.12.2009. THROUGH WRITTEN SUBMISSION SUBMITTED DURING THE PRESENT APPELLATE PROCEEDINGS ONCE AGAIN THE DISALLOWANCE WAS ARGUED TO B E DELETED. VIDE PARA 3 OF THE WRITTEN SUBMISSION IT WAS STATED AS UNDER: 'AS THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE SUBMISSION/INFORMATION PROVIDED/DETAILS & DOCUMENTS SUBMITTED DURING THE COURSE OF HEARING OF APPELLATE PROCEEDIN GS FOR THE AY 2007 - 08 MAY KINDLY BE CONSIDERED AS PART OF THE WRITTEN SUBMISSIONS FOR AY 2008 - 09. A COPY OF APPELLATE ORDER FOR AY 2007 - 08 IS ENCLOSED HEREWITH. THE INFORMATION ASKED FOR THE YEAR UNDER CONSIDERATION HAS ALREADY BEEN GIVEN IN EARLIER YEAR I .E. 2007 - 08. THERE IS NO CHANGE IN IT.' IT IS SEEN THAT THE DISALLOWANCE U/S. 80LB(10) WAS CONFIRMED VIDE THIS OFFICE APPELLATE ORDER DATED 31.12.2010 PASSED FOR AY 2007 - 08. AS THE PRESENT CASE THAT IS AY 2008 - 09 IS SAME WITH IDENTICAL FACTS AS WERE IN AY 2007 - 08 RELYING ON THE APPELLATE ORDER OF AY 2007 - 08 DATED 31.12.2010 THE DISALLOWANCE OF DEDUCTION U/S. 80IB(10) IS UPHELD IN AY 2008 - 09 ALSO. 4. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS VERY BRIEF RUNNING INTO ONE AND A HALF PAGE. THE FINDING EXTRACTED (SUPRA) IS THE ONLY FINDING ON THIS ISSUE. IT EMERGES OUT FROM THE ABOVE FINDING THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS PUT HER RELIANCE ON THE FINDING RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN ASSESSMENT YEA R 2007 - 08. THAT FINDING WAS NOT UPHELD BY THE ITAT. THE ITAT HAS I.T.A NO. 2150 /AHD/20 11 A.Y. 2008 - 09 PAGE NO M/S. GOLDEN DEVELOPERS VS. ITO 4 ALLOWED THE CLAIM OF ASSESSEE. THE FINDING RECORDED BY THE ITAT ON THIS ISS UE IN ASSESSMENT YEAR 2007 - 08 READ S AS UNDER: - 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAIL ABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO HAS SUMMARIZED THE REASON FOR DISALLOWING THE CLAIM OF THE ASSESSEE IN PARA - 3.27 AS UNDER: - 3.27 IT IS, THEREFORE, HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECT ION 80IB FOR THE FOLLOWING REASONS. 1. THE ASSESSEE IS NOT BOTH DEVELOPER AND BUILDER AS REQUIRED BY THE PROVISIONS OF SECTION 80IB(10). ASSESSEE IS NOT A DEVELOPER BECAUSE THE ASSESSEE DID NOT CONCEPTUALIZE AND OWN THE PROJECT IN AS MUCH AS THE ASSESSEE IS NOT THE OWNER OF THE LAND AND THE APPROVAL WAS NOT ISSUED TO IT BY THE LOCAL AUTHORITY. 2. THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREEMENT AND HENCE THE ASSESSEE IS MERELY A CONTRACTOR FOR THE PURPOSES OF CONSTRUCTION OF THE PROJECT. 3. THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURCHASER BUT THE SOCIETY HAS EXECUTED THE AGREEMENT FOR ALLOTMENT OF UNITS AS A SELLER AND THE ASSESSEE HAS CARRIED OUT THE CONSTRUCTION AS PER THE AGRE EMENT ENTERED INTO BY IT WITH THE MEMBERS. THIS ALSO PROVES THAT THE ASSESSEE WAS MERELY A CONTRACTOR/AGENT OF THE SOCIETY. 4. AS PER THE AMENDMENT TO SECTION 80IB BY THE FINANCE ACT, 2009, A WORKS CONTRACTOR WHO EXECUTES THE WORK AWARDED BY ANY PERSON IS NO T ELIGIBLE FOR THE DEDUCTION U/S 80IB. ANY PERSON INCLUDES THE LUVKUSH BUNGLOWS (NARODA) CO - OP. HSG. SOCIETY LTD, WHICH IS A LEGAL ENTITY. 4.1. WE ALSO FIND THAT THE LD.CIT(A) HAS CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDER: - 17. THE ABOVE DI SCUSSION SHOWS THAT THE APPELLANT VIOLATES THE CONDITION STIPULATED IN CLAUSE (A) OF SECTION 80IB(10) AS IT FAILED TO FURNISH THE APPROVED PLANS ISSUED BY THE LOCAL AUTHORITY ALONG WITH DEVELOPMENT PERMISSIONS AND BU PERMISSIONS. THE PLAN ISSUED BY THE LO CAL AUTHORITY ALONG WITH BU PERMISSION IS ALSO KNOWN AS COMPLETION PLAN AND WITHOUT THE COMPLETION PLANS IN THIS CASE IT IS NOT POSSIBLE TO UNDERSTAND THE VERY FUNDAMENTALS OF THE CASE LIKE THE LAND AREA, SURVEY NUMBERS INVOLVED, BUILT - UP AREA OF THE CONST RUCTED UNITS, NUMBER OF CONSTRUCTED UNITS AND WHETHER I.T.A NO. 2150 /AHD/20 11 A.Y. 2008 - 09 PAGE NO M/S. GOLDEN DEVELOPERS VS. ITO 5 ANY TERRACES OR EXTRA SPACE HAS BEEN GIVEN TO THE UNIT HOLDERS WHICH DOES NOT FIND MENTION IN BU PERMISSION. THE APPROVED PLAN IS THE SPINAL CORD OF ANY PROJECT AND THE APPELLANT FAILED TO FURNISH IT DE SPITE OPPORTUNITIES GIVEN. IN ITS ABSENCE OF OTHER CONDITIONS MENTIONED FROM CLAUSE (B) TO CLAUSE (D) CANNOT BE COMMENTED UPON BY THIS OFFICE. THE APPELLANT ALSO FAILS THE TEST LAID DOWN BY HON BLE ITAT BENCH A AHMEDABAD IN THEIR DECISION IN THE CASE OF SHAKTI CORPORATION AS THE APPELLANT HAS NOT BEEN FOUND TO HAVE PRACTICALLY PURCHASED THE LAND. SO WHERE IS THE INVESTMENT RISK? THE SOCIETY SOLD THE SUB - PLOTS OF THE LAND TO THE INDIVIDUAL BUYERS. AND APPOINTED THE APPELLANT FOR CONSTRUCTION, ARCHITECTS AND ENGINEERS FOR PLANS ETC. THE APPELLANT WAS PAID A FIXED COST OF CONSTRUCTION BY THE BUYER OF THE RESIDENTIAL UNIT WHICH WAS MENTIONED IN THE CONSTRUCTION AGREEMENT. THE APPELLANT COMES UNDER THE CATEGORY OF A WORKS CONTRACTOR AS CLEAR FROM THE CLAUSE S OF THE APPOINTMENT OF BUILDER - FIRM AGREEMENT AND 80 CONSTRUCTION AGREEMENTS. IT CONSTRUCTED THE UNITS AS PER THE PLAN PREPARED BY THE ARCHITECT MADE ANNEXURE OF EACH CONSTRUCTION AGREEMENT. FOR ITS SERVICES THE APPELLANT HAD TO DEPOSIT SERVICE TAX AS PER CLAUSE OF THE CONSTRUCTION AGREEMENT TO THE CENTRAL GOVERNMENT. AS PER EXPLANATION INSERTED BELOW SECTION 80IB(10) W.R.E.F 01.04.2001 AN UNDERTAKING EXECUTING A WORKS CONTRACT AWARDED BY ANYBODY IS NOT ENTITLED TO THE DEDUCTION. THE APPELLANT EXECUTED WOR KS CONTRACT. THE DISALLOWANCE MADE BY THE AO OF RS.48,49,520 IS THUS UPHELD. 4.2. THE CONTENTION OF THE ASSESSEE IS THAT IN EARLIER YEARS CLAIM OF THE ASSESSEE WAS ALLOWED BY THE DEPARTMENT IN SCRUTINY ASSESSMENT. THE LD.COUNSEL FOR THE ASSESSEE HAS D RAWN OUR ATTENTION TOWARDS PAGE - 7 OF THE PAPER - BOOK, WHEREIN THE ASSESSMENT ORDER PERTAINING TO THE AY 2005 - 06 IS ENCLOSED. THE AO HAS ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80 - IB(10) OF THE ACT. AT PAGE NO.10 OF THE PAPER - BOOK IS ENCLOSED T HE ASSESSMENT PERTAINING TO THE AY 2006 - 07, WHEREIN ALSO THE AO ALSO ALLOWED THE CLAIM OF THE ASSESSEE OF DEDUCTION U/S.80IB(10) OF THE ACT. FACTS ARE IDENTICAL AND PROJECT IS ALSO SAME AND THE REVENUE HAS NOT POINTED OUT AS TO HOW THE CLAIM THAT WAS ALLO WED IN EARLIER YEARS AND UNDER THE SAME FACTS AND CIRCUMSTANCES WOULD BE DISALLOWABLE IN THE YEAR UNDER CONSIDERATION. IT IS SETTLED POSITION OF LAW THAT EVERY YEAR IS AN INDEPENDENT YEAR, HOWEVER, THE RULE OF CONSISTENCY IS TO BE ADOPTED BY THE REVENUE A UTHORITY WHILE FRAMING THE ASSESSMENT. IN THE PRESENT CASE, THE REVENUE HAS NOT BROUGHT OUT ANY NEW MATERIAL ON THE BASIS OF WHICH A DIFFERENT VIEW HAS BEEN TAKEN FOR THE YEAR UNDER CONSIDERATION. IF THE ASSESSEE WAS DEVELOPER IN THE EARLIER YEARS, IT WOULD REMAIN SO IN THE FOLLOWING YEARS UNLESS A NEW MATERIAL COMES TO NOTICE OF AO OR OTHERWISE I.T.A NO. 2150 /AHD/20 11 A.Y. 2008 - 09 PAGE NO M/S. GOLDEN DEVELOPERS VS. ITO 6 WHICH WAS AVAILABLE ON RECORD BUT WAS NOT CONSIDERED IN EARLIER YEARS. NOWHERE IN THE ORDERS OF THE AUTHORITIES BELOW THIS FACT HAS BEEN RECORDED. THEREFORE, IN OUR CONSIDERED VIEW, THE REVENUE WAS NOT JUSTIFIED IN REJECTING THE CLAIM FOR DEDUCTION U/S.80IB(10) OF THE ACT IN THIS YEAR. IT IS ALSO NOTEWORTHY THAT THE AUTHORITIES BELOW HAVE NOT RECORDED ANY FINDING AS TO WHAT WAS THE REMUNERATION FIXED BY THE C ONTRACT AND HOW THE SUBMISSION OF THE ASSESSEE THAT IT WAS BEARING ALL RISKS AND CONSEQUENCES ARISING FROM THE CONTRACT WERE NOT CORRECT. IN FACT, THE AO HAS STATED THESE STIPULATIONS ARE ONLY INTENDED TO MAKE THE SOCIETY TOOTHLESS BUT THEY CANNOT CONVERT BY ANY STRETCH OF IMAGINATION AN AGREEMENT FOR CONSTRUCTION INTO A CONVEYANCE DEED IN THE EYES OF THE LAW. IT IS NOT DISPUTED THAT SUCH TERMS AND CONDITIONS WERE IN THE AGREEMENT IN THE EARLIER YEARS ALSO. ON THE BASIS OF SUCH TERMS THE ASSESSEE WAS FOUN D TO HAVE FULFILLED THE CONDITIONS AS ENVISAGED U/S.80IB(10) OF THE ACT. IN OUR CONSIDERED VIEW, THE CONSTRUCTION OF ANY AGREEMENT CANNOT BE DIFFERENT IN TWO DIFFERENT ASSESSMENT YEARS, THEREFORE THE ORDERS OF THE AUTHORITIES BELOW REJECTING THE CLAIM OF DEDUCTION U/S.80 - IB(10) OF THE ACT CANNOT BE CONFIRMED, MORE PARTICULARLY IN THE LIGHT OF THE JUDGEMENT OF THE HON BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. RADHE DEVELOPERS REPORTED AT (2012) 341 ITR 403 (GUJ.) AND FOLLOWED SUBSEQUENTLY IN A SERIES OF DECISIONS OF THIS TRIBUNAL. THUS, THIS SOLE GROUND OF THE ASSESSEE S APPEAL IS ALLOWED AND THE DISALLOWANCE MADE BY THE AO IS HEREBY DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. THERE IS NO DISPARITY ON FACTS, WE DO NOT SEE ANY REA SON TO DIF FE R WITH THE VIEW TAKEN BY THE CO - ORDINATE BENCH, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF ITAT IN ASSESSMENT YEAR 2007 - 08, WE ALLOW THE GROUND OF APPEAL RAISED BY THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCT ION U/S. 80IB(10) TO THE ASSESSEE IN THIS YEAR ALSO. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 17 - 07 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( RAJPAL YADAV ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD : DATED 17 /07 /2015 AK I.T.A NO. 2150 /AHD/20 11 A.Y. 2008 - 09 PAGE NO M/S. GOLDEN DEVELOPERS VS. ITO 7 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,