The DCIT, Circle-2(2), Baroda V. Shri Ramanbhai C.Prajapati, Baroda

ITA 2277/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0305 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 23-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M MATHIVANAN
• Keywords: Set aside

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, A-BENCH, AHMEDABAD. BEFORE: SHRI R. V. EASWAR, VICE PRESIDENT, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER. ITA NO.2277/AHD/2009 (ASSESSMENT YEAR 2006-2007) THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), 4 TH FLOOR, AYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA. VERSUS SHRI RAMANBHAI C. PRAJAPATI, SATYANARAYAN BHAVAN, REFINERY ROAD, BARODA. (APPELLANT) (RESPONDENT) PAN: ACSPP 2113 M FOR THE APPELLANT: SHRI M MATHI VANAN, DR FOR THE RESPONDENT NONE ORDER PER D C AGRAWAL (ACCOUNTANT MEMBER) : THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOLLOWING GROUNDS. 1. THE LD. CIT(A) ERRED IN ALLOWING DEDUCTION U/S 80IB(10) IN RESPECT OF THE PROCEEDS ATTRIBUTABLE TO THE SALE OF UNUTILIZED FSI AND NOT TO THE DWELLING UNITS IN THE HOUSING PROJEC TS, WHICH COULD NOT BE TERMED AS PROFITS DERIVED FROM DEVELOPING AND BUILDING HOUSING PROJECTS IN TERMS OF THIS PROVISION. 2. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR A LTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. 2. THE MAIN ISSUE INVOLVED IN THIS REVENUES APPEA L IS AGAINST ALLOWING DEDUCTION U/S.80-IB (10) OF THE I.T. ACT, 1961 BY THE LEARNED CIT(APPEALS). 3. NONE APPEARED ON BEHALF OF RESPONDENT-ASSESSEE N OR ANY ADJOURNMENT APPLICATION HAS BEEN FILED. UNDER THE SE CIRCUMSTANCES, WE 2 ITA NO.2277/AHD/2009 (ASSESSMENT YEAR 2006-2007) PROCEED TO DECIDE THE REVENUES APPEAL AFTER HEARIN G THE LEARNED DR WHO HAS SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE HEARD THE LEARNED DR AND PERUSED THE OR DERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN APPEAL, THE LD. CIT(A), FOLLOWING THE DECISION OF THE AHMEDABAD BEN CH OF THE TRIBUNAL IN THE CASE OF RADHE DEVELOPERS & ORS. (SUPRA), ALL OWED THE CLAIM FOR DEDUCTION TO THE ASSESSEE U/S 80IB(10) OF THE ACT. DURING THE COURSE OF HEARING, IT WAS POINTED OUT BY THE BENCH THAT A SIM ILAR ISSUE HAS BEEN HEARD BY THE TRIBUNAL IN THE CASE OF SHAKTI CORPORA TION, IN ITA NO.1503/AHD/2008, 1361/AHD./2006 AND 1769/AHD./2008 THAT, RECENTLY, THE HON'BLE SUPREME COURT IN THE CASE OF FAKIRCHAND GULATI VS UPPAL AGENCY PVT. LTD., VIDE ORDER DATED 7.8.2008, IN CIV IL APPEAL NO.3302/2005, HAS LAID DOWN THE DEFINITION OF A DEV ELOPER, CONTRACTOR AND JOINT VENTURE AND TO FOLLOW WHATEVER DECISION THE T RIBUNAL TAKES IN THAT CASE AFTER CONSIDERING THE DECISION OF THE SUPREME COURT IN THIS APPEAL. WE FIND THAT THE TRIBUNAL IN THE CASE OF SHAKTI COR PORATION (SUPRA), VIDE ITS ORDER DATED 7.11.2008, HAS DECIDED THE APPEALS BY OBSERVING AS UNDER:- 16. THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS IN THE CASE OF RADHE DEVELOPERS (SUPRA) A ND ACCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEE HAS ACQUIRED T HE DOMINANT OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED ;HEREIN. WE MAY MENTION HERE THAT, IN OUR OPINION, THE DECISION N T HE CASE OF RADHE DEVELOPERS (SUPRA) WILL NOT APPLY IN A CASE HERE TH E ASSESSEE HAS ENTERED INTO THE AGREEMENT FOR A FIXED REMUNERATIO N MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE LOUSING PROJ ECT ON BEHALF OF THE LANDOWNER. THE AGREEMENT ENTERED INTO IN THAT C ASE WILL NOT ENTITLE THE DEVELOPER TO HAVE THE DOMINANT CONTROL OVER THE PROJECT 3 ITA NO.2277/AHD/2009 (ASSESSMENT YEAR 2006-2007) AND ALL THE RISKS INVOLVED HEREIN WILL VEST WITH T HE LANDOWNER ONLY. THE INTEREST OF THE DEVELOPER WILL BE RESTRI CTED ONLY FOR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RENDERING THE SERVICES. THE DECISION IN THE CASE OF RADHE DEVELOPERS (SUPRA ) HAS NOT DEALT WITH SUCH SITUATION. THE PROPOSITION OF LAW LAID DO WN IN THE CASE OF RADHE DEVELOPERS CANNOT BE APPLIED UNIVERSALLY W ITHOUT LOOKING INTO THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE DEVELOPER ALONG WITH THE LANDOWNER. IN THE CASE OF SHAKTI CORPORATION SINCE THE ASSESSEE HAS FILED COPY OF TH E DEVELOPMENT AGREEMENT AND CRUX OF THE AGREEMENT IS THAT THE ASS ESSEE HAS PURCHASED THE LAND AND HAS DEVELOPED THE HOUSING PR OJECT AT ITS OWN, THEREFORE, WE ARC OF THE VIEW THAT THE ASSESSE E WILL BE ENTITLED FOR THE DEDUCTION U/S 80IB(10). THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF FAKIR CHAND GULATI (SU PRA) WILL NOT ASSIST THE REVENUE, AS THE AGREEMENT IS NOT SHARING OF THE CONSTRUCTED AREA. IN OTHER CASES THE COPY OF AGREEM ENT SINCE HAS NOT BEEN SUBMITTED BEFORE US, IF SUBMITTED THE TERM S AND CONDITIONS OF THE AGREEMENT WERE NOT SPECIFICALLY ARGUED BEFOR E AND PLACED BEFORE US, WE THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE ALL OTHER APPEALS TO THE FILE OF THE AO WITH THE DIRECT ION 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 FACT PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM T HE LANDOWNER AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN CO ST 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 DED UCTION TO THE 4 ITA NO.2277/AHD/2009 (ASSESSMENT YEAR 2006-2007) 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 FI XED CONSIDERATION FROM THE LANDOWNER FOR THE DEVELOPMEN T OF THE HOUSING PROJECTS, THE ASSESSEE SHOULD NOT BE ALLOWE D DEDUCTION U/S 80IB(10) TO THE ASSESSEE. 5. IT CAN BE OBSERVED THAT THE DISTINCTION BETWEEN THE CONTRACTOR AND THE DEVELOPER AS LAID DOWN IN THE AFORESAID DECISIO NS WERE NOT TAKEN INTO CONSIDERATION BY EITHER OF THE LOWER AUTHORITIES FO R ARRIVING AT THE CONCLUSIONS. IN THE CIRCUMSTANCES, IN OUR OPINION, IT SHALL BE JUST AND FAIR TO ALLOW THE A.O AN OPPORTUNITY TO EXAMINE THE FACT S OF THE CASE IN THE LIGHT OF THE AFORESAID DECISION. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND RESTORE THE MAT TER BACK TO THE FILE OF A.O FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECI SION QUOTED ABOVE AS PER LAW AND AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HE ARING TO THE ASSESSEE. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, REVENUES APPEAL STANDS ALLOWED F OR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 16 TH OCTOBER, 2009. SD/- SD/- (R. V. EASWAR) (D.C. AGRAWAL) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; DATED: 16/10/2009 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 5 ITA NO.2277/AHD/2009 (ASSESSMENT YEAR 2006-2007) 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.