The ITO, Ward-9(1), Ahmedabad V. M/s. Satyam Corporation, Ahmedabad

ITA 227/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60503 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-06-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 27-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: U S BHATI

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , ! '#, $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. ./ I.T.A. NO.227/AHD/2012 A.Y. 2004-05 2. ./ I.T.A. NO.228/AHD/2012 A.Y. 2005-06 3. ./ I.T.A. NO.487/AHD/2010 A.Y. 2006-07 ITO WARD-9(1) AHMEDABAD ! ! ! ! / VS. M/S.SATYAM CORPORATION SURAJ BUNGALOWS NR.NEEL SAGAR SOCIETY NARODA KATHWADA ROAD NAVA NARODA, AHMEDABAD ) $% ./*+ ./ PAN/GIR NO. : AAZFS 5147 D ( ), / // / APPELLANT ) .. ( -.), / RESPONDENT ) ), / $ / APPELLANT BY : SHRI B.L.YADAV, SR.D.R. -.), 0 / $ / RESPONDENT BY : SHRI U.S. BHATI, A.R. !1 0 % / / / / DATE OF HEARING : 05/06/12 234 0 % / DATE OF PRONOUNCEMENT : 15/6/12 $5 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THESE THREE APPEALS HAVE BEEN FILED BY THE REVENUE ARISING FROM THE ORDERS OF THE LEARNED CIT(APPEALS)-XV, AHMEDABA D DATED 23/11/2011 (FOR AYS 2004-05 & 2005-06) AND 3/12/200 9 (FOR AY 2006- 07). FOR ALL THESE THREE YEARS, REVENUE IS AGGRIEV ED BY THE DIRECTION OF LEARNED CIT(APPEALS) IN ALLOWING ASSESSEES CLAIM O F DEDUCTION U/S.80IB(10) OF THE I.T.ACT. FOR THE SAKE OF COMPL ETENESS, GROUND AS RAISED FROM A.Y. 2006-07 (LEAD ASSESSMENT YEAR) IS REPRODUCED BELOW:- ITA NOS.227,228 /AHD/2012 & 487/AHD/2010 ITO VS. M/S.SATYAM CORPORATION ASST.YEARS 2004-05,2005-06 & 2006-07 - 2 - 1) THE LD. COMMISSIONER OF INCOME-TAX(A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE DEDUCTION U/S.80IB(10) AMOUNTING TO RS.35,71,088/- (RS.8,62,620/- FOR AY 2004-05 & RS.44,61,177/- FOR AY 2005-06) CLAIMED BY THE ASSE SSEE. 2. THE ASSESSEE IS STATED TO BE ENGAGED IN THE CONSTRUCTION OF HOUSING PROJECT. FACTS AS REVEALED FROM THE ASSESSMENT REC ORDS FOR ASSESSMENT YEAR 2006-07 ARE THAT THE ASSESSEE HAS CREDITED CON STRUCTION INCOME AT RS.86,06,500/-. THE NET PROFIT SHOWN AS PER THE PR OFIT & LOSS ACCOUNT WAS AT RS.35,71,088/-. IT WAS NOTED BY THE ASSESSI NG OFFICER THAT THE LAND ON WHICH THE SAID HOUSING PROJECT WAS CONSTRUC TED WAS OWNED BY SURAJ BUNGALOWS CO-OP.HOUSING SOCIETY LIMITED. THU S, THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE LAND WAS NOT O WNED BY THE DEVELOPER. AN ANOTHER FEATURE HAS ALSO BEEN NOTED BY THE ASSESSING OFFICER THAT THE BUILT-UP AREA OF B TYPE UNIT WAS 1664 SQ.FT., THEREFORE EXISTED THE PRESCRIBED LIMIT OF 1500 SQ.FT. AS SPEC IFIED U/S.80IB(10) OF THE I.T.ACT. THE THIRD OBJECTION OF THE ASSESSING OFFI CER WAS THAT THE APPROVAL FROM THE LOCAL AUTHORITY OF THE SAID HOUSI NG PROJECT WAS NOT IN THE NAME OF THE ASSESSEE. THEN THE ASSESSING OFFIC ER HAS DISCUSSED THAT THE ASSESSEE WAS NOT WITHIN THE DEFINITION OF DEVE LOPER AND BUILDER. ACCORDING TO HIM, THE LAND BEING INTEGRAL PART OF A HOUSING PROJECT BUT DID NOT BELONG TO THE ASSESSEE, THEREFORE THE SAID HOUSING PROJECT DID NOT QUALIFY FOR DEDUCTION U/S.80IB(10) OF THE I.T.ACT. THE ASSESSING OFFICER HAS ALSO GIVEN A WORKING OF THE BUILT-UP AREA B T YPE UNIT AS FOLLOWS:- GROUND FLOOR : 330.12 FIRST FLOOR : 299.01 -------- TOTAL AREA : 629.13 (FOR 4 UNITS) = 629.13 / 4 = 157.282 BUILT UP AREA AS PER PLAN WORKS OUT AT 629.13 FOR 4 UNITS, INDIVIDUALLY IT COMES TO 157.282 SQ.MTR. CONVERSIO N OF 157.282 SQ.MTR., IN SQ.FT. IT COMES TO Q1692.35 SQ.FT. WHIC H EXCEEDS LIMIT SPECIFIED U/S.80IB I.E. 1500 SQ.FT. 2.1. IN THE RESULT, A DISALLOWANCE U/S.80IB(1) W AS MADE BY THE ASSESSING OFFICER. ITA NOS.227,228 /AHD/2012 & 487/AHD/2010 ITO VS. M/S.SATYAM CORPORATION ASST.YEARS 2004-05,2005-06 & 2006-07 - 3 - 3. WHEN THE MATTER WAS CARRIED BEFORE THE FI RST APPELLATE AUTHORITY, THE LEARNED CIT(APPEALS) HAS REFERRED M/S.SHAKTI CO RPORATION (ITA NO.1503/AHD/2008 ITAT A BENCH AHMEDABAD) AND HELD THAT THE ASSESSEE WAS IN DOMINANT CONTROL OVER THE PROJECT. THE POSITION OVER THE LAND WAS HANDED OVER TO THE ASSESSEE AND IT WAS THE RESPONSIBILITY OF THE ASSESSEE TO COMPLETE THE HOUSING PROJECT, THERE FORE THE ASSESSEE HAS FULFILLED THE CONDITION AS LAID DOWN FOR CLAIMING T HE DEDUCTION U/S.80IB(10) OF THE I.T.ACT. SINCE THE ASSESSING OFFICERS VIEW WAS REVERSED, HENCE THE REVENUE IS IN APPEAL. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR. B.L.YADAV HAS ARGUED THAT THE ASSESSEE APPEARED TO BE A CONTRACTOR TO COMPLETE THE HOUSING PROJECT AND NO T ACTED AS A DEVELOPER. THE ASSESSEE HAS NOT EXPLAINED THE RE ASON IN RESPECT OF THE UNITS SITUATED AT B TYPE UNIT AND, HENCE, SINCE T HE CONSTRUCTED AREA IS EXCEEDED 1500 SQ.FT., THEREFORE NOT ENTITLED FOR DE DUCTION U/S.80IB(10) OF THE I.T.ACT. 4. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LD.AR MR.U.S.BHATI APPEARED AND ARGUED THAT THE ASSESSEE WAS HAVING TH E DOMINANT CONTROL OVER THE PROPERTY AND THE ASSESSEE HAS ALSO PAID TH E COST OF LAND TO THE SOCIETY. THE ASSESSEE WAS ENTITLED TO RECEIVE PA YMENTS FROM THE MEMBERS OF THE SOCIETY. THE ASSESSEE HAS BEEN ASSI GNED WITH ALL THE RIGHTS AND LIABILITIES, HENCE THE ASSESSEE HAS UNDE RTAKEN THE RISK FOR THE DEVELOPMENT OF THE PROJECT. LD.AR HAS THEREFORE DR AWN OUR ATTENTION ON THE LIST OF ADVANCES FROM MEMBERS AND THE RELEVANT CLAUSES OF THE AGREEMENT. ITA NOS.227,228 /AHD/2012 & 487/AHD/2010 ITO VS. M/S.SATYAM CORPORATION ASST.YEARS 2004-05,2005-06 & 2006-07 - 4 - 5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SID ES, WE ARE OF THE VIEW THAT IN THE LIGHT OF THE FACTS OF THE CASE AS NARRA TED HEREINABOVE, NOW THIS ISSUE IS REQUIRED TO BE DECIDED AS PER THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT PRONOUNCED IN THE CASE OF CIT VS. RADHE DEVELOPERS 341 ITR 403 [2012] 341 ITR 403 (GUJ.). WE HAVE CAREFULLY PERUSED THIS CITATION IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND, THEREFORE, WE DEEM IT PROPER TO RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER. THE GUIDELINES GIVEN BY THE H ON'BLE HIGH COURT CAN BE SUMMARIZED AS FOLLOWS:- (A) THE RELEVANT TERMS OF DEVELOPMENT AGREEMENT A RE TO BE EXAMINED SO AS TO ASCERTAIN THE TERMS ON WHICH THE ASSESSEE WAS GRANTED RIGHT OF CONSTRUCTION OF A HOUSING PROJ ECT. (B) ON THE BASIS OF THE TERMS AND CONDITIONS, IT HA S TO BE ASCERTAINED WHETHER IT WAS A WORK CONTRACT OR A DEVELOPMENT CONTRACT. (C) ON THE BASIS OF THE TERMS AND CONDITIONS, IT HA S TO BE EXAMINED THAT WHICH OF THE PARTY HAD TAKEN FULL RESPONSIBILITY FOR EXECUTION OF THE SAID DEVELOPMEN T PROJECT. (D) WHETHER UNDER THE AGREEMENT THE ASSESSEE HAD BE EN GIVEN FULL AUTHORITY TO DEVELOP THE LAND AND TO CONSTRUCT RESIDENTIAL UNITS. THE AO HAS TO EXAMINE THE FACT IN RESPECT O F ENGAGEMENT OF PROFESSIONALS, SUCH AS, ARCHITECT FOR DESIGNING AND ARCHITECTURAL WORK. (E) THE AO HAS TO EXAMINE THE RESPONSIBILITY OF ENR OLMENT OF MEMBERS AND COLLECTION OF CHARGES REQUIRED TO BE MA DE FROM THE BUYERS OF THE RESIDENTIAL UNITS. (F) THE AO HAS TO EXAMINE ABOUT THE PROFIT OR L OSS ARISING FROM THE SAID PROJECT. ITA NOS.227,228 /AHD/2012 & 487/AHD/2010 ITO VS. M/S.SATYAM CORPORATION ASST.YEARS 2004-05,2005-06 & 2006-07 - 5 - (G) THOUGH THE OWNERSHIP OF LAND HAS BEEN HELD AS NOT THE ONLY CRITERIA FOR ALLOWING THE CLAIM U/S.80IB(10) BUT TH E DOMAIN OVER THE LAND AND THE CONTROL OVER THE PROJECT HAS TO BE EXAMINED BY THE AO. (H) WHETHER ON TRANSFER OF DOMAIN THE LAND OWNER S HAVE RECEIVED ANY CONSIDERATION AND WHETHER IT WAS A FIXED AMOUNT OR DEPEND UPON THE PROFITS OF THE PROJECT. LIKEWISE, T HE AO HAS TO ASCERTAIN THAT WHETHER THE ASSESSEE WAS GIVEN A FIXED PERCENTAGE AS REMUNERATION FOR THE SAID PROJECT IN LIEU OF GRANTING PERMISSION TO CONSTRUCT THE RESIDENTIAL UN ITS OR TO EARN PROFIT AS A PROJECT DEVELOPER. (I) THE AO HAS TO ASCERTAIN THE POSITION OF THE POS SESSION OVER THE LAND DURING THE CONSTRUCTION PERIOD. (J) FOR THE PURPOSE OF CONSTRUCTION THE AO HAS TO EXAMINE THE FINANCIAL ARRANGEMENTS. (K) THE AO HAS TO EXAMINE THE PROCEDURE FOR RAISING OF FUNDS EITHER BY PRIVATE PLACEMENT OR BY FINANCIAL INSTITU TIONS. (L) THE RISK ELEMENT CONNECTED WITH THE SAID HOUSIN G PROJECT HAS ALSO TO BE EXAMINED. (M) THE ASSESSING OFFICER HAS TO EXAMINE THE SIZE OF THE PLOT ON WHICH PROJECT IS CONSTRUCTED. (N) THE ASSESSING OFFICER HAS TO EXAMINE BUILT-UP A REA OF SANCTIONED UNIT WHETHER WILL IN THE PRESCRIBED LIMI T. 6. IN ADDITION TO THE ABOVE GUIDELINES, ONCE THE M ATTER IS GOING BACK FOR RECONSIDERATION, THEN THE AGREEMENTS CONNECTED TO THE LAND AND THE DETAILS OF THE APPROVAL GRANTED BY THE LOCAL AUTHOR ITY PERMITTING TO DEVELOP THE HOUSING PROJECT CAN ALSO BE EXAMINED I F DEEM FIT. SINCE THE ITA NOS.227,228 /AHD/2012 & 487/AHD/2010 ITO VS. M/S.SATYAM CORPORATION ASST.YEARS 2004-05,2005-06 & 2006-07 - 6 - HONBLE HIGH COURT HAS GIVEN THE VERDICT IN FAVOUR OF THE ASSESSEE AFTER DUE ASCERTAINMENT OF THESE BASIC FACTS, THEREFORE I T IS APPROPRIATE FIRST TO PLACE ON RECORD ALL THESE INFORMATION AND THEN IF F ACTS ARE IDENTICAL CONSEQUENTLY THEREUPON, THE CITED DECISION HAS TO B E FOLLOWED TO DISPOSE OF THE ISSUE. WITH THESE DIRECTIONS, WE HEREBY ALL OW THE GROUND OF THE REVENUE THAT TOO FOR STATISTICAL PURPOSES ONLY. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE REVENU E ARE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. SD/- SD/- ( ! '# ) ( ) $% ( ANIL CHATURVEDI ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15 / 6 /2012 6..!, .!../ T.C. NAIR, SR. PS $5 0 -7 8$74 $5 0 -7 8$74 $5 0 -7 8$74 $5 0 -7 8$74/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-XV, AHMEDABAD 5. 7<= -! , , / LEARNED DEPARTMENTAL REPRESENTATIVE, ITAT, AHMEDABAD 6. = >1 / GUARD FILE. $5! $5! $5! $5! / BY ORDER, .7 - //TRUE COPY// ? ?? ?/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD