The ITO, Ward-3(1), Baroda V. M/s. D.D.Construction, Baroda

ITA 2291/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8904 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 24-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV AGARWAL
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI R.V.EASWAR, VICE PRESIDENT AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 24/09/09 DRAFTED ON: 29 /09/09 ITA NO.2291/AHD/2009 ASSESSMENT YEAR : 2006-07 ITO WARD-3(1) BARODA VS. M/S.D.D. CONSTRUCTION TALJA MANGALS KHADKI NR. PANDHARI MATA TEMPLE PADRA (DIST: BARODA) PAN/GIR NO. : AADFD 5422 C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI RAJEEV AGARWAL, DR RESPONDENT BY: -NONE- O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II, BARODA DATED 11/05/2 009 PASSED FOR ASSESSMENT YEAR 2006-07. 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). ITA NO .2291/AHD/2009 ITO VS. M/S. D.D. CONSTRUCTION ASST.YEAR 2006-07 - 2 - 3. NONE APPEARED ON BEHALF OF RESPONDENT-ASSESSEE N OR ANY ADJOURNMENT APPLICATION HAS BEEN FILED. UNDER THE SE CIRCUMSTANCES, WE PROCEED TO DECIDE THE REVENUES APPEAL AFTER HEARIN G THE LD.DR WHO HAS SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE HEARD THE LD.DR AND PERUSED THE ORDERS 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), ALLOWE D 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 CORPORATION, IN ITA NO.1503/AHD./2008, 1361/AHD./2006 AND 1769/AHD./200 8 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 ITA NO .2291/AHD/2009 ITO VS. M/S. D.D. CONSTRUCTION ASST.YEAR 2006-07 - 3 - FIND THAT THE TRIBUNAL IN THE CASE OF SHAKTI CORPOR ATION (SUPRA), VIDE ITS ORDER DATED 7.11.2008, HAS DECIDED THE APPEALS BY O BSERVING AS UNDER:- 16. THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS IN THE CASE OF RADHE DEVELOPER S (SUPRA) AND ACCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSE E HAS ACQUIRED THE DOMINANT OVER THE LAND AND HAS DEVELOP ED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND T AKING ALL THE RISKS INVOLVED ;HEREIN. WE MAY MENTION HERE THA T, IN OUR OPINION, THE DECISION N THE CASE OF RADHE DEVELOPER S (SUPRA) WILL NOT APPLY IN A CASE HERE THE ASSESSEE HAS ENT ERED INTO THE AGREEMENT FOR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE LOUSING PROJ ECT ON BEHALF OF THE LANDOWNER. THE AGREEMENT ENTERED INTO IN THAT CASE WILL NOT ENTITLE THE DEVELOPER TO HAVE THE DOM INANT CONTROL OVER THE PROJECT AND ALL THE RISKS INVOLVED HEREIN WILL VEST WITH THE LANDOWNER ONLY. THE INTEREST OF THE DEVELOPER WILL BE RESTRICTED ONLY FOR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RENDERING THE SERVICES. THE DECISION IN TH E CASE OF RADHE DEVELOPERS (SUPRA) HAS NOT DEALT WITH SUCH SI TUATION. THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF RAD HE DEVELOPERS CANNOT BE APPLIED UNIVERSALLY WITHOUT LO OKING 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 ITA NO .2291/AHD/2009 ITO VS. M/S. D.D. CONSTRUCTION ASST.YEAR 2006-07 - 4 - ASSESSEE HAS PURCHASED THE LAND AND HAS DEVELOPED T HE HOUSING PROJECT AT ITS OWN, THEREFORE, WE ARC OF TH E VIEW THAT THE ASSESSEE WILL BE ENTITLED FOR THE DEDUCTION U/S 80IB(10). THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF FAKIR CHAND GULATI (SUPRA) WILL NOT ASSIST THE REVE NUE, AS THE AGREEMENT IS NOT SHARING OF THE CONSTRUCTED ARE A. IN OTHER CASES THE COPY OF AGREEMENT SINCE HAS NOT BEEN SUBM ITTED BEFORE US, IF SUBMITTED THE TERMS AND CONDITIONS OF THE AGREEMENT WERE NOT SPECIFICALLY ARGUED BEFORE AND P LACED 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 WIT H THE DIRECTION THAT THE AO SHALL LOOK INTO THE AGREEMENT ENTERED INTO BY EACH OF THE ASSESSEES WITH THE LANDOWNER AN D DECIDE WHETHER THE ASSESSEE HAS IN FACT PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM THE LANDOWNER AND HAS DEVE LOPED THE HOUSING PROJECT AT ITS OWN COST AND RISKS INVOL VED 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 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 DEVELOPMENT OF THE HOUSING PROJECTS, THE ASSESSEE S HOULD NOT BE ALLOWED DEDUCTION U/S 80IB(10) TO THE ASSESSEE. ITA NO .2291/AHD/2009 ITO VS. M/S. D.D. CONSTRUCTION ASST.YEAR 2006-07 - 5 - 5. IT CAN BE OBSERVED THAT THE DISTINCTION BETWEEN THE CONTRACTOR AND THE DEVELOPER AS LAID DOWN IN THE AFORESAID DECISIONS W ERE 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 FACTS O F 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 MATTER BA CK TO THE FILE OF A.O FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION QUO TED ABOVE AS PER LAW AND AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STAT ISTICAL PURPOSES. 6. IN THE RESULT, REVENUES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30/09/2009. SD/- SD/- ( R.V. EASWAR ) ( D.C. AGRAWAL ) VICE PRESIDENT ACC OUNTANT MEMBER AHMEDABAD; DATED 30/09/2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT.2. THE RESPONDENT 3. THE CIT CONCERNED.4. THE LD. CIT(APPEALS)-II, BA RODA 5. THE DR, AHMEDABAD BENCH.6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD