The ACIT, Circle-2(1), Baroda V. M/s. Dhara Develpoers, Baroda

ITA 2435/AHD/2008

• Counselvise Citation: 243520514 RSA 2008
• Duration Of Justice: 3 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-01-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 27-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Retrospective amendment
• Section: 80IB

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , . .!'#$, % & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ./ I.T.A. NO.2435/AHD/2008 ( ( ) ( ) ( ) ( ) / / / / ASSESSMENT YEAR : 2004-05) THE ACIT CIRCLE-2(1) BARODA ( ( ( ( / VS. M/S.DHARA DEVELOPERS GROUND FLOOR, NO.37-38 KALPVRUKSH COMPLEX OPP.MGVL, GOTRI ROAD BARODA * % ./+, ./ PAN/GIR NO. : AACFD 9667 Q ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 / APPELLANT BY : SHRI SAMIR TEKRIWAL, SR.D.R. ./*- 1 0 / RESPONDENT BY : SHRI P.M. MEHTA, C.A. (2 1 3% / / / / DATE OF HEARING : 30/1/2012 4') 1 3% / DATE OF PRONOUNCEMENT : 31/1/2012 5 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF THE CIT()A-II, BARODA DATED 15/04 /2008 AND THE SUBSTANTIVE GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S. 80IB(10) TO THE ASSESSEE, WHO WAS NOT GRANTED APPROVAL BY THE LOCAL AUTHORITY TO CARRY ON THE BUSINESS OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS, IN CONTRAVENTION OF A PLAIN READI NG OF SECTION ITA NO.2435/AHD /2008 THE ACIT VS. M/S.DHARA DEVELOPERS ASST.YEAR - 2004-05 - 2 - 80IB(1)) R.W.S. 80IB (1), EXPLANATION TO SECTION 80 IB (10) AND RULE 18BBB. 2. THE LD. CIT(A) FAILED TO MAKE A COMBINED READIN G OF SECTION 80IB(1), WHICH IS THE SUBSTANTIVE PROVISION, AND SE CTION 80IB(10), WHICH IS A MACHINERY PROVISION, POSTULATING COMPLET E IDENTITY BETWEEN THE ASSESSEE AS REFERRED TO IN SECTION 80IB (1), AND THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S APPROVED BY THE LOCAL AUTHORITY AS REFERRED TO IN SECTION 80IB( 10), NOT PERMITTING SUCH SPLITTING BETWEEN THE ASSESSEE AND THE PERSON WHO IS GRANTED APPROVAL BY THE LOCAL AUTHORITY FOR DEVE LOPING AND BUILDING HOUSING PROJECTS, AS PRESUMED BY THE CIT(A ). 3. THE LD CIT(A) FAILED TO ABIDE BY THE SCHEME OF S ECTION 80IB BASED ON COMPLETE IDENTITY BETWEEN THE ASSESSEE AS REFERRED TO IN SECTION 80IB(1), ON THE ONE HAND, AND THE ENTITY FU LFILLING THE CONDITIONS LAID DOWN IN SECTIONS 80IB(3), 80IB(9), 80IB(11) AND 80IB(11AA), BESIDES SECTION 80IB (10), ON THE OTHER . 4. THE LD CIT(A) FAILED TO APPRECIATE THAT THE LAND BEING INTEGRAL PART OF ANY HOUSING PROJECT, THE ASSESSEE, WITHOUT OWNING THE LAND COMPONENT, COULD NOT PASS ON FULL TITLE OV ER DWELLING UNITS TO THE CUSTOMERS SO AS TO DERIVE PROFITS FROM DEVEL OPING AND BUILDING HOUSING PROJECTS AND THIS INTEGRATION IS F URTHER FORTIFIED BY THE REQUIREMENT OF APPROVAL BY THE LOCAL AUTHORI TY AS WELL AS GRANT OF COMPLETION CERTIFICATE BY THE LOCAL AUTHOR ITY UNDER CLAUSE (II) OF THE EXPLANATION BELOW SECTION 80IB(10), BOT H OF WHICH ARE GRANTED TO THE LANDOWNER, THUS TREATING HIM ALONE A S RUNNING THE UNDERTAKING FROM THE BEGINNING TO THE END. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 27/12/2006 WERE THAT THE ASSESSEE-FIRM IS IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOUSING COLONY. THE FIRM HAD UNDERTAKEN A HOUSING PROJECT, I.E. PUSHPAM TENEMENTS, ITA NO.2435/AHD /2008 THE ACIT VS. M/S.DHARA DEVELOPERS ASST.YEAR - 2004-05 - 3 - VADODARA. THE LAND WAS STATED TO BE ACQUIRED BY TH E ASSESSEE-FIRM FROM AN ANOTHER CONCERN, NAMELY, M/S.GOPI DEVELOPERS AT A COST OF RS.97,33,350/-. IT HAS BEEN STATED THAT A DEVELOP MENT AGREEMENT DATED 15/09/2000 WAS ENTERED INTO AND THROUGH WHICH THE A SSESSEE HAD ACQUIRED DEVELOPMENT RIGHTS FROM THE SAID CONCERN, M/S.GOPI DEVELOPERS. IT HAS ALSO BEEN NOTED BY THE AO THAT IN TURN THE SAID CONCERN HAD ALSO ENTERED INTO A BANAKHAT AGREEMENT WITH THE ORIGINAL LAND OWNERS; NAMELY, SHRI RAMANBHAI AMBALAL PATEL. HOWEVER, THE ASSESSEE HAD OBTAINED THE DEVELOPMENT RIGHTS OVER T HE LAND ADMEASURING 16,444 SQ.METER FROM M/S.GOPI DEVELOPERS. AO HAS DISCUSSED AT LENGTH VARIOUS PROVISIONS OF SECTION 80-IB(10) AND THEREAF TER DENIED THE DEDUCTION ON TWO COUNTS; (I) THAT, THE ASSESSEE HAD ONLY ACTED AS AN AGENT AND NOT AS A DEVELOPER AND (II) THAT, EARNED FSI PR OFIT FOR WHICH DEDUCTION U/S.80IB(10) WAS NOT ADMISSIBLE. IN THE RESULT, T HE ASSESSEES CLAIM OF DEDUCTION OF RS.31,24,380/- U/S.80IB(10) WAS DENIED . THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LD.CIT(A) HAS REFERRED A CONSOLIDATED ORDER OF THE TRIBUNAL, WHEREIN ASSESSEE IS ALSO ONE OF THE PARTY AND THEN HELD AS UNDER:- 3.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD.C OUNSEL AND FACTS OF THE CASE AND THE RECENT DECISION OF HON'BLE ITAT , AHMEDABAD, IN THE CASE OF M/S.RADHE DEVELOPERS & OTHER (INCLUD ES THE CASE OF THE APPELLANT) VIDE ORDER IN ITA NO.2482/AHD/2006 D ATED 29.06.2007. THE FACTS AND CIRCUMSTANCES OF THE APP ELLANT ARE IDENTICAL TO THE CASES DECIDED BY HON'BLE ITAT, AHM EDABAD. ALSO ALL THE PLEAS RAISED BY THE ASSESSING OFFICER HAVE BEEN EFFECTIVELY DEALT WITH AND DISCUSSED IN THE SAID ORDER AND THER EAFTER HON'BLE ITAT HAS ALLOWED THE DEDUCTION UNDER SECTION 80IB(1 0). ITA NO.2435/AHD /2008 THE ACIT VS. M/S.DHARA DEVELOPERS ASST.YEAR - 2004-05 - 4 - RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT , THE DEDUCTION UNDER SECTION 80IB(10) IS DIRECTED TO BE ALLOWED. 3.3.1. CONSIDERING THE DISCUSSION ABOVE, THE OTHER GROUND OF APPEAL REGARDING DEDUCTION ON UNUTILIZED FSI HAS AL SO BEEN COVERED BY THE AFORESAID DECISION OF ITAT, AHMEDABA D, ADDITION MADE BY ASSESSING OFFICER IS, THEREFORE, DELETED. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES A ND ON DUE CONSIDERATION OF THE FACTS OF THE CASE, THE ISSUE STOOD COVERED BY A REPORTED DECISION AS RADHE DEVELOPERS & ORS. VS. IT O 113 TTJ 300(AHD) WHEREIN AT SL.NO.14, THE ASSESSEES NAME A PPEARS AS M/S.DHARA DEVELOPERS VS. A CIT IN ITA NO.2445/AHD/2006 FOR A .Y. 2003-04) ORDER DATED 29/06/2007. THAT ORDER OF THE RESPECT ED CO-ORDINATE BENCH WAS CHALLENGED BY THE REVENUE BEFORE THE HONBLE GU JARAT HIGH COURT AND IN A REPORTED DECISION OF CIT VS. RADHE DEVELOP ERS 17 TAXMAN.COM 156 (GUJ.) WHEREIN VIDE AN ORDER DATED 13/12/2011 T HE VIEW TAKEN BY THE TRIBUNAL WAS UPHELD. THE HONBLE JURISDICTIONAL HIGH COURT HAS OPINED THAT THE ASSESSEE HAD UNDERTAKEN THE DEVELOPMENT OF HOUSING PROJECT AT ITS OWN RISK AND COST, REFERRED PARA-38 OF THE JUDGEMEN T. THE LAND OWNER HAD ACCEPTED ONLY THE FULL PRICE OF THE LAND AND N OTHING FURTHER. THE ENTIRE RISK OF INVESTMENT AND EXPENDITURE WAS THAT OF THE ASSESSEE. RESULTANTLY, PROFIT & LOSS ALSO WOULD ACCRUE TO THE ASSESSEE ALONE. IN THAT VIEW OF THE MATTER, THE COURT HAS HELD THAT THE EXP LANATION TO SECTION 80IB WITH RETROSPECTIVE EFFECT OF 1/4/2001 WOULD HA VE NO MATERIAL BEARING. SINCE IN ASSESSEES OWN CASE, BEING ON E OF THE GROUP OF THE CASES; DECIDED BY THE HONBLE HIGH COURT, ASSESSEE S CLAIM OF DEDUCTION U/S.80IB(10) HAS BEEN APPROVED IN THE PAST, THEREFO RE, WE FIND NO REASON ITA NO.2435/AHD /2008 THE ACIT VS. M/S.DHARA DEVELOPERS ASST.YEAR - 2004-05 - 5 - TO TAKE ANY OTHER VIEW BUT TO AFFIRM THE FACTUAL AS ALSO LEGAL FINDING OF LD.CIT(A). IN THE RESULT, THIS GROUND OF THE REVE NUE IS HEREBY DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. SD/- SD/- ( . .!'#$ ) ( ) % ( A.K. GARODIA ) ( M UKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/ 01 /2012 63..(, .(../ T.C. NAIR, SR. PS 5 1 .7 8 7) 5 1 .7 8 7) 5 1 .7 8 7) 5 1 .7 8 7)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-II, BARODA 5. 7 >> >/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..30.1.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.1.12 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 D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 31.1.12. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.1.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER