The ITO, Ward-3(2), Baroda V. M/s. Parshwanath Developers, Baroda

ITA 2257/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9632 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-10-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI
• Assessee Lawyers: P M MEHTA
• Keywords: Set aside

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM AND D.C.AGRAWAL, AM INCOME-TAX OFFICER, WD- 3(2), BARODA. VS. M/S PARSHWANATH DEVELOPERS, B/302, VITRAG RESIDENCY, NR. PRANAVPURI TOWER, NATUBHAI CIRCLE, BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI A. K. TIWARI, DR RESPONDENT BY:- SHRI P. M. MEHTA, AR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOL LOWING GROUND:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE DEDUC TION TO THE ASSESSEE IN RESPECT OF ISSUE REGARDING DEDUCTION U/ S 80IB(10) R.W.S. 80IB(1) CLAIMED BY THE ASSESSEE, WITHOUT APPRECIATI NG THE FACT THAT THE APPROVAL BY THE LOCAL AUTHORITY AS WELL AS COMP LETION CERTIFICATE WAS NOT GRANTED TO THE ASSESSEE BUT TO THE LAND OWN ER AND THE RIGHTS AND OBLIGATION UNDER THE SAID APPROVAL WERE NOT TRA NSFERABLE AND THAT TRANSFER OF DWELLING UNITS IN FAVOUR OF THE EN D-USERS WAS MADE BY THE LANDOWNER AND NOT BY THE ASSESSEE. AGAINST THE ORDER OF LD. CIT(A) WHERE LD. CIT(A) HA S ALLOWED THE CLAIM OF THE ASSESSEE U/S 80IB(10) FOLLOWING THE DECISION OF THE TRIBUNAL IN RADHE DEVELOPERS AND OTHERS VIDE ORDER IN ITA NO.2482/AHD /2006 DATED ITA NO.2257/AHD/2010 ASST. YEAR :2007-08 ITA NO.2257/AHD/2010 ASST. YEAR 2007-08 2 29.06.2007 AND ITO & OTHERS VS. M/S SHAKTI CORPORAT ION IN ITA NO.1503/AHD/2008 DATED 07.11.2008. 2. THE AO DISALLOWED THE CLAIM HOLDING THAT ASSESSE E HAS NOT BECOME FULL OWNER OF THE LAND AS DOCUMENTS WERE NOT FINALL Y REGISTERED IN HIS NAME AND PORTION OF THE LAND WAS TRANSFERRED DIRECT LY TO THE PURCHASER OF THE CONSTRUCTED SITE. 3. WE HAVE HEARD THE PARTIES AND CAREFULLY CONSIDER ED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). THE REASONS ARE THAT THE LD. C IT(A) HAS FOLLOWED THE DECISIONS OF THE TRIBUNAL IN ITO & OTHERS VS. M/S S HAKTI CORPORATION (SUPRA) AND M/S RADHE DEVELOPERS & OTHER AND HELD T HAT ASSESSEE IS A DEVELOPER AND, THEREFORE, IT IS ENTITLED FOR DEDUCT ION UNDER SECTION 80IB(10). NO INFIRMITY IS POINTED OUT. FURTHER THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(10) WAS ALLOWED IN ASSESSEES OW N CASE FOR ASST. YEAR 2005-06 IN ITA NO.265/AHD/2009, VIDE ORDER DATED 26 .3.2009. IN THAT CASE THE TRIBUNAL HAS OBSERVED 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 A CCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEE HAS ACQUIRED THE DOMINAN T OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED THEREIN. WE MAY MENTI ON HERE THAT IN OUR OPINION THE DECISION IN THE CASE OF RADHE DEVELOPER S (SUPRA) WILL NOT APPLY IN A CASE WHERE THE ASSESSEE HAS ENTERED INTO THE AGREEMENT FOR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTR UCT OR DEVELOP THE HOUSING PROJECT ON BEHALF OF THE LANDOWNER. THE AGR EEMENT ENTERED INTO IN THAT CASE WILL NOT ENTITLE THE DEVELOPER TO HAVE THE DOMINANT CONTROL OVER THE PROJECT AND ALL THE RISKS INVOLVED THEREIN WILL VEST WITH THE LANDOWNER ONLY. THE INTEREST OF THE DEVELOPER WILL BE RESTRICTED ONLY FOR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RENDER ING THE SERVICES. THE DECISION IN THE CASE OF RADHE DEVELOPERS (SUPRA) HA S NOT DEALT WITH SUCH SITUATION. THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF RADHE DEVELOPERS CANNOT BE APPLIED UNIVERSALLY WITHOUT LO OKING INTO THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE DEVELOPER ALONG WITH THE ITA NO.2257/AHD/2010 ASST. YEAR 2007-08 3 LANDOWNER. IN THE CASE OF SHAKTI CORPORATION SINCE THE ASSESSEE HAS FILED COPY OF THE DEVELOPMENT AGREEMENT AND CRUX OF THE A GREEMENT IS THAT THE ASSESSEE HAS PURCHASED THE LAND AND HAS DEVELOPED T HE HOUSING PROJECT AT ITS OWN THEREFORE, WE ARE OF THE VIEW THAT THE ASSE SSEE WILL BE ENTITLED FOR THE DEDUCTION U/S 80IB(10). THE DECISION OF THE HON . SUPREME COURT IN THE CASE OF FAQIR CHAND GULATI (SUPRA) WILL NOT ASS IST THE REVENUE, AS THE AGREEMENT IS NOT SHARING OF THE CONSTRUCTED AREA. I N OTHER CASES THE COPY OF AGREEMENT SINCE HAS NOT BEEN SUBMITTED BEFORE US , IF SUBMITTED, THE TERMS AND CONDITIONS OF THE AGREEMENT WERE NOT SPEC IFICALLY ARGUED BEFORE AND PLACED BEFORE US, WE THEREFORE, IN THE I NTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THE ORDER O F THE CIT(A) AND RESTORE ALL OTHER APPEALS TO THE FILE OF THE AO WITH THE DI RECTION THAT THE AO SHALL LOOK INTO THE AGREEMENT ENTERED INTO BY EACH OF THE ASSESSEES WITH THE LANDOWNER AND DECIDE WHETHER THE ASSESSEE HAS IN FA CT 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 BOU GHT BY THE DEVELOPER AND DEVELOPER HAS ALL DOMINANT CONTROL OVER THE PRO JECT AND HAS DEVELOPED THE LAND AT HIS OWN COST AND RISKS, THE A O SHOULD ALLOW THE DEDUCTION TO THE ASSESSEE U/S 80IB(10). IN CASE THE AO FINDS THAT THE DEVELOPER HAS ACTED ON BEHALF OF THE LANDOWNER AND HAS GOT THE FIXED CONSIDERATION FROM THE LANDOWNER FOR THE DEVELOPMEN T OF THE HOUSING PROJECTS, THE ASSESSEE SHOULD NOT BE ALLOWED DEDUCT ION U/S 80IB(10) TO THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 15/10/10. SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD, DATED : 15/10/10. MAHATA/- ITA NO.2257/AHD/2010 ASST. YEAR 2007-08 4 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 1/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 11/10/2010 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S . 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..