The ITO, Ward-9(1), Ahmedabad V. M/s. Swastik Associates, Ahmedabad

ITA 2163/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67635 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 24-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JANGID
• Assessee Lawyers: V R CHOKSI
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO. 2163/AHD/2010) A.Y: 2007-08 INCOME TAX OFFICER, WARD 9(1), AHMEDABAD VS M/S. SWASTIK ASSOCIATES RAIPUR MILL COMPOUND, SARASPUR ROAD, AHMEDABAD. PAN: ABAFS 6575R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J.P. JANGID, SR. D.R. ASSESSEE(S) BY : SHRI V.R. CHOKSI, A.R. DATE OF HEARING : 03/09/ 2013 DATE OF PRONOUNCEMENT : 13/09/2013 O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CJT(A)-XV, AHMEDABAD AND THE SUBSTANTIVE GR OUNDS RAISED BEFORE US ARE REPRODUCED BELOW: 'THE LEARNED COMMISSIONER OF INCOME-TUX (A)-XV, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM FOR DEDUCTION OF RS. 28944616/- U/S.80IB(10). THE LEARNED COMMISSIONER OF INCOME TAX (A)-XV. AHME DABAD HAS ERRED IN HOLDING THAT THE ASSESSES FULFILLS THE CONDITIONS L AID DOWN FOR CLAIMING DEDUCTION U/S.80IB(I0) EVEN WHEN THE LAND WAS IN THE NAME OF SOCIETY AND THE ASSESSEE HAD MERELY EXECUTED A WORKS CONTRACT. 2. THE ONLY ISSUE IS IN RESPECT OF CLAIM OF DEDUCTI ON U/S. 80IB(10) OF IT ACT. WE HAVE NOTED THAT AS PER THE ASSESSMENT ORDER PASS ED U/S. 143(3) DATED 24.12.2009, THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S 801B(10) IN THE YEAR UNDER CONSIDERATION OF RS.2,89,44,616/- WHICH WAS I N RESPECT OF RAIPUR ITA NO.2163/AHD/2010 ITO, AHMEDABAD VS. M/S. SWASTIK ASSOCIATES A.Y. 2007-08 - 2 - (RAKHIAL) COMMERCIAL CO-OPERATIVE HOUSING SOCIETY L TD. THE FACTS OF THE CASE AS PER THE ASSESSMENT ORDER ARE AS UNDER: '2.1 DURING THE YEAR UNDER ASSESSMENT, THE ASSESSEE FIRM HAS CONSTRUCTED A HOUSING PROJECT AND SHOWN A NET PROFIT OF RS.2,89,4 4,616/- THERE FROM. THE ASSESSEE HAS CLAIMED A DEDUCTION OF RS.2,89,44,616/ - AT 100% OF ITS TOTAL PROFIT U/S 80IB(10) STATING THAT IT WAS ENTITLED TO A DEDU CTION U/S 80IB IN RESPECT OF ITS ENTIRE INCOME 2.2 DURING THE ASSESSMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE FOR DEDUCTION WAS EXAMINED AND THE ASSESSEE WAS ASKED TO SUBSTANT IATE ITS ELIGIBILITY FOR THE DEDUCTION WITH REFERENCE TO THE CONDITIONS PRESCRIB ED IN SECTION 80IB. THE ASSESSEE FILED ITS REPLY ALONG WITH COPY OF (I) APP ROVED PLAN (II) AUDIT REPORT IN FORM 10CCB (HI) PERMISSION FOR DEVELOPMENT/RAJA CHI TTI (IV) THE BU PERMISSION ISSUED BY THE LOCAL AUTHORITY AND (V) DE VELOPMENT AGREEMENT ENTERED BY IT WILL THE RAIPUR (RAKHIAL) COMMERCIAL CO. OP. HOUSING SOCIETY LTD. FOR THE CONSTRUCTION OF THE HOUSING PROJECT. 2.3 THE BRIEF FACTS OF THE CASE ARE THAT PORTION OF 'THE LAND BEARING SURVEY NO. 9, 12, 14, 5!4, 15/P/A & I6BI PART OF FINAL PLOT NO.43 IN T.P. SCHEME NO. 11 BAPUNAGUR, HAVING AN AREA OF 34095 SC/. METERS, WAS PURCHASED BY THE RAIPUR (RAKHIAL) COMMCRCIAL CO. OP HOUSING SOCIETY LTD. ON 02.12.2004. AS PER THE APPLICATION AND PLAN FILED BY THE SOCIETY, THE LOCA L AUTHORITY ACCORDED PERMISSION FOR DEVELOPMENT AND CONSTRUCTION ON THE PROJECT TO THE RAIPUR (RAKHIAL) COMMERCIAL CO. OP. HOUSING SOCIETY LTD. A HMEDABAD. ON 7TH DECEMBER, 2004, 15TH & 17 TH OCTOBER, 2005 & 25TH JULY. 2006. 2.4 ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT W ITH RAIPUR (RAKHIAL) COMMERCIAL CO. OP. HOUSING SOCIETY LTD. ON 28.02.20 05. AS PER THE TERMS OF THE AGREEMENT, (I) THE ASSESSEE WAS GIVEN POSSESSION OF THE LAND FOR CONSTRUCTION OF HOUSING UNITS AS PER THE PLAN, (II) THE ASSESSEE WA S ALLOWED TO ENROLL PROSPECTIVE BUYERS AS THE MEMBERS ON HEHALF OF THE SOCIETY. (II I) THE ASSESSEE WAS ALLOWED TO COLLECT THE CONSIDERATION FOR LAND AS WELL AS SUPER -STRUCTURE FROM THE BUYERS ON BEHALF OF THE SOCIETY, (IV) THE ASSESSEE WAS ALLOWE D TO RETAIN THE CONSIDERATION RECEIVED FOR CONSTRUCTION AND CHARGE THE LAND COST TO THE SOCIETY. IN OTHER WORDS THE SOCIETY WAS FORMED FOR GROUP HOUSING OF THE MEM BERS AND WAS SUPPOSED TO CONSTRUCT AND TRANSFER THE HOUSES TO THE MEMBERS, ( V) ACCORDING TO THE DEVELOPMENT AGREEMENT, SINCE THE SOCIETY HAD NO EXP ERIENCE OF CONSTRUCTION, THE ASSESSEE WAS ALLOWED TO CONSTRUCT THE HOUSES ON BEH ALF OF THE SOCIETY AS PER THE TERMS NARRATED IN THE AGREEMENT ACCORDING TO THE PL AN OF THE SOCIETY. ' 2.1 HOWEVER, THE AO WAS NOT CONVINCED AND HELD THAT THE SAID SOCIETY HAS PURCHASED THE LAND AS ALSO CONCEPTUALIZED THE H OUSING PROJECT, THEREFORE, THE ASSESSEE WAS SIMPLY ASSIGNED TO CONSTRUCT THE P ROJECT WHICH WAS NOTHING BUT A ''CONTRACT FOR CONSTRUCTION'. IT WAS CONCLUDE D THAT THE ASSESSEE WAS NOT ITA NO.2163/AHD/2010 ITO, AHMEDABAD VS. M/S. SWASTIK ASSOCIATES A.Y. 2007-08 - 3 - A DEVELOPER HUT ONLY A BUILDER, THEREFORE, NOT ENTI TLED FOR CLAIM OF DEDUCTION U/S. 80IB(10). 2.2 WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY. LEARNED CIT(A) HAS HELD THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION WERE IDENTICAL WITH THE FACTS OF THE ASSESSEES CAS E FOR A.Y. 2006-07. SINCE IN THE PAST A VIEW HAS BEEN TAKEN IN ASSESSEE'S FAV OUR, THEREFORE, FOLLOWING THAT DECISION THE ORDER OF THE AO WAS REVERSED IN T HE FOLLOWING MANNER; 'AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEEN T HAT THE FACTS OF THE CASE OF THE APPELLANT THIS YEAR ARE SAME AS WERE IN A. Y. 2006- 07 WHEN 8OIB(IO) DEDUCTION WAS DISALLOWED BY THE AO. THE APPELLANT HAS BEEN FO UND ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80IB(10) IN AY 2006-07 ITS PER THIS OFFICE ORDER DATED 15' MARCH, 2010. AS THE FACTS ARE SAME THIS YEAR PLACING RELIA NCE ON THE ORDER PASSED BY ME IN THE SAME CASE IN AY 2006-07 DATED 15.3.2010 THE AO IS DIRECTED TO ALLOW 80IB(10) TO THE APPELLANT IN THE PRESENT AY ALSO. F URTHER HON'BLE SUPREME COURT DECISIONS CITED BY THE AO THIS YEAR ARE NOT APPLICA BLE TO THE FACTS OF THE CASE AS THEY PERTAINS TO SALES TAX AND WERE CLEAR CUT WORKS CONTRACTS AS OBVIOUS FROM THE NARRATION GIVEN IN THE PRECEDING PARA. WHEREAS THE APPELLANT ACQUIRED DOMINANT CONTROL FOR THE DEVELOPMENT OF LAND, INCURRED COST AND RISK, MEETS THE CONDITIONS LAID DOWN IN SECTION 801B(10) AND FULFILLS THE TEST LAID DOWN BY HONBLE ITAT AHMEDABAD A BENCH DECISION IN THE CASE OF M/S. SHAK TI CORPORATION, IN ITA NO.1503/AHD/2008 THE AO IS THEREFORE DIRECTED TO AL LOW 801B(10) DEDUCTION THIS YEAR ALSO. ' 2.3 WITH THIS FACTUAL BACKGROUND, WE HAVE BEEN INFORMED , AT THE OUTSET, THAT FOR A.Y. 2006-07 IN ASSESSEES OWN CASE ITAT C BENCH, AHMEDABAD, VIDE AN ORDER DATED 28.7.2011 TITLED AS ITO WARD-9(1), AHMEDABAD VS. M/S. SWASTIK ASSOCIATES, ITA NO.1410/AHD/2010, HAS HELD AS UNDER: '2.1. THE CLAIM WAS DISALLOWED BY THE AO BY ASSIGNI NG CERTAIN REASONS, THAT THE LAND WAS PURCHASED BY A CO-OPERATIVE HOUSING SOCIET Y, VIZ. RAIPUR (RAKHIAL) CO-OPERATIVE HOUSING SOCIETY LTD. THAT, THE LAND WA S NOT PURCHASED BY THE ASSESSEE. THAT, THE ASSESSEE WAS NOT THE OWNER OF T HE LAND ON WHICH THE PROJECT WAS DEVELOPED. THAT, THE ASSESSES HAD NOT TAKEN THE APPROVAL FROM THE LOCAL AUTHORITY ABOUT THE SAID HOUSING PROJECT. THAT. THE ORIGINAL DEVELOPMENT PERMISSION WAS TAKEN BY THE SAID HOUSING SOCIETY TH AT, THE FIRM HAD ACTED ONLY AS AN AGENT. ITA NO.2163/AHD/2010 ITO, AHMEDABAD VS. M/S. SWASTIK ASSOCIATES A.Y. 2007-08 - 4 - 3. THE ID.CIT(A) HAS DISCUSSED THE ISSUE AT LENGTH AND, THEREAFTER, GIVEN CERTAIN FINDINGS WHICH CAN HE LISTED IN SHORT AS FOLLOWS: - 1. THAT, THE HOUSING PROJECT WAS COMPLETED WITHI N THE SPECIFIED TIME LIMITS AS PRESCRIBED U/S.801B(10)(A). 2. THAT, THE SECOND CONDITION AS STIPULATED IN SECT ION 80IB(10)(B) IN RESPECT OF SIZE OF THE PLOT HAS ALSO BEEN FULFILLED AND THE SI ZE OF THE PLOT HAS NOT BEEN DISPUTED. 3. THAT, THE CONDITION AS STIPULATED U/S. 80IB(10)( C) EACH RESIDENTIAL UNITS HAS A MAXIMUM BUILT-UP AREA OF 1500 SQ.FT. AND IT HAS NOT BEEN DISPUTED BY THE AO. 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE ALSO PERUSED AN ORDER OF ITAT BENCH 'D' AHMEDABAD PRONOUNCED IN THE BUNCH OF CASES, NAMELY M/S. SHREEJI DEVELOPERS AT SI.NO.1 BEARING /T.I NO.1650/ AHD/2010 FAR A Y 2007-08 ORDER DATED 06/08/2010 WHEREIN THE DECISIONS OF THI S VERY BENCH PRONOUNCED IN THE CASE OF SHAKTI CORPORATION (SUPRA) AND M/'S.RAD HE DEVELOPERS HAVE BEEN DISCUSSED AND FOLLOWED. IN ADDITION TO THE ABOVE LE GAL POSITION. ID. AR MR P.M. MEHTA HAS ALSO DRAWN OUR ATTENTION IN RESPECT OF SO ME OF THE BASIC FACTS OF THE CASE. HE HAS INFORMED THAT A PROJECT KNOWN AS 'SWAS TIK BUNGALOWS' WAS DEVELOPED BY THE ASSESSEE. THE LAND WAS PURCHASED B Y RAIPUR COMMERCIAL CO- OPERATIVE SOCIETY LTD ALL DEVELOPMENT RIGHTS AND TH E LAND WAS TRANSFERRED TO THE ASSESSEE. THE ASSESSEE HAD TO DEVELOP THE PROJECT A T ITS OWN COST AND RISK AS PER THE DEVELOPMENT AGREEMENT. LD. AR HAS ALSO DRAWN OU R ATTENTION ON THE YEAR- WISE DETAILS OF THE EXPENDITURE TOWARDS DEVELOPMENT OF THE PROJECT, SUCH AS BUILDING EXPENSES, LABOUR EXPENSES, BUILDING MATERI AL PURCHASED, ETC WHICH WERE CLAIMED TO HAVE BEEN REFLECTED IN THE BOOKS OF ACCO UNT OF THE ASSESSES AND NOTL IN THE BOOKS OF ACCOUNT OF THE SOCIETY. IT WAS ALSO DE MONSTRATED THAT THE SALE CONSIDERATION IN RESPECT OF SALE EACH UNIT WAS RECE IVED BY THE ASSESEE FROM THE CUSTOMERS. AS FAR AS THE SALES WERE CONCERNED, THE ASSESSEE WAS HANDLING THE SAME AND NOT ACTED AS A COMMISSION AGENT DEALING WI TH THE CUSTOMERS ON BEHALF OF THE LAND-OWNER. CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE AND THE FACTUAL FINDING GIVEN BY ID. CIT(A) WE ARE OF THE VIEW THAT THIS ASSESSEE HAD DOMINANT CONTROL OVER THE PROJECT AND IN A WAY PAID THE SUBSTANTIAL AMOUNT TO THE CO-OP. SOCIETY CLAIMED TO HE TOWARDS THE COST OF LA ND, THEREFORE, ALL THESE FACTS THUS INDICATE THAT THE AFORE CITED DECISIONS OF THE RESPECTED CO-ORDINATE BENCHES DO APPLY ON THE FACTS OF THIS APPEAL. THEREFORE, FO LLOWING THESE DECISIONS, WE FIND NO FORCE IN THE GROUND OF THE REVENUE AND DISMISSED THE SAME. ' 3. FURTHER WE HAVE BEEN INFORMED THAT FOR A. Y. 2009-10 AS WELL; THIS ISSUE HAS BEEN DECIDED IN ASSESSEES FAVOUR BY ITAT C BENCH AHMEDABAD IN ASSESSEES OWN CASE VIDE AN ORDER DATED 5/9/2013 TITLED AS ITO WARD-9- (1), AHMEDABAD VS. M/S. SWASTIK ASSOCIATES IN ITA N O.2525/AHD/2012 FOR A.Y. 2009-10, IN THE FOLLOWING MANNER: WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY AND HAS PERUSED THE ORDERS OF THE AO AND THE CIT(A), AND ALSO PERUSED THE ORDE R OF THE CO-ORDINATE ITA NO.2163/AHD/2010 ITO, AHMEDABAD VS. M/S. SWASTIK ASSOCIATES A.Y. 2007-08 - 5 - BENCH OF THE ITAT, AHMEDABAD IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR 2006-07 DATED 28.07.2011(SUPRA). WE FIND THAT THE ISSUE UNDER SECTION 80IB(10) OF THE ACT IS COVERED IN FAVOUR OF THE ASS ESSEE, WHO IS IN THE BUSINESS OF CONSTRUCTION OF HOUSING PROJECT WITH THE DECISIO N OF THE ITAT, AHMEDABAD BENCH IN ASSESSEES OWN CASE FOR EARLIER A.Y. 2006- 07 DATED 28.07.2011(SUPRA). THE CIT(A) HAS RECORDED A FINDIN G THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITION REQUIRED FOR CLAIM UNDE R SECTION 80IB(10) OF THE ACT FOR THE RELEVANT PERIOD. HE HAS FOLLOWED THE DECISI ON OF THE HONBLE GUJARAT HIGH COURT IN RADHE DEVELOPERS, 341 ITR 404, AND AL SO THE DECISION OF THE ITAT, AHMEDABAD IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR 2006- 07. IN THESE FACTS OF THE CASE, WE FIND THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE, WHICH IS ACCORDINGLY CONF IRMED AND THE GROUND OF THE REVENUE IS DISMISSED. 4. SINCE, THE ISSUE OF 80IB(10) NOW STOOD RESOLVED IN ASSESSEES FAVOUR CONSISTENTLY BY THE ORDERS OF THE RESPECTED CO-ORDI NATE BENCHES, THEREFORE, ON THE SAME LINES FOR THE YEAR UNDER CONSIDERATION WE HEREBY AFFIRM THE VIEW TAKEN BY LEARNED CIT(A) AND DISMISS THIS GROUN D OF THE REVENUE. RESULTANTLY, THIS APPEAL OF THE REVENUE IS DISMISSE D. SD/- SD/- (ANIL CHATURVEDI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13 /09/2013 PRABHAT KR. KESARWANI, SR.P.S. TRUE COPY COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A)-III, AHMEDABAD 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, (DY./ASSTT.REGISTRAR) ITAT, AHMEDABAD