The ACIT, Circle-4, Baroda V. M/s. Pratham Realty Pvt.Ltd., Baroda

ITA 2453/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6002 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBL E SHRI A.K.GARODIA, A.M.) I.T.A. NO. 2453/AHD./2010 ASSESSMENT YEAR : 2006-2007 A.C.I.T., CIRCLE-4, BARODA VS- PRATHAM REALTY PVT. LTD., BARODA (PAN : AACCP 4084A) (APPELLANT) (RE SPONDENT) APPELLANT BY : SHRI B.L.YADAV, D.R. RESPONDENT BY : SHRI BHAVIN MARFATIA, A.R . O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 31-05-2010 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-III, BA RODA FOR THE ASSESSMENT YEAR 2006-07. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE IS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 8 0IB(10) AMOUNTING TO RS. 14,30,592/- IGNORING THE FACT THAT THE ASSESSEE WAS MERELY A CONTRACTOR WHO WAS NOT AN OWNER OF THE LAND AND WHO IS NOT GIVEN A PPROVAL FOR THE HOUSING PROJECT BY LOCAL AUTHORITY FOR CONSTRUCTION. COMPLE TELY IGNORING THE UNDERLYING FACT THAT THE PERSON TO WHOM THE APPROVAL IS GRANTE D FOR DEVELOPING AND BUILDING HOUSING PROJECT AND THE PERSONS ACTUALLY C ARRYING ON THE PROJECT ARE SO COMPLETELY INTEGRATED IN THE SCHEME THAT SECTION 80IB(10) R.W.S. 80IB(1) EXPLANATION BELOW SECTION 80IB(10) AND RULE 18BBB C ANNOT BE VIEWED TO ADMIT ANY SPLITTING UP OF THE FREE ENTITIES . 3. BRIEFLY STATED, THE FACTS ARE THAT IN THE ASSESS MENT ORDER, THE AO MENTIONED THAT THE ASSESSEE HAS MERELY ENTERED INTO DEVELOPMENT AG REEMENT WITH THE ACTUAL OWNER. THE PROJECT WAS APPROVED IN THE NAME OF THE ACTUAL OWNER OF THE LAND AND NOT IN THE NAME OF THE ASSESSEE. ON THIS BASIS, HE DISALLOWED THE DEDUCTION UNDER SECTION ITA NO.2453/AHD/2010 2 80IB(10) AMOUNTING TO RS.14,30,592/-. IN THE IMPUGN ED ORDER, THE LD. CIT(A) ALLOWED THE SAME. 4. AT THE TIME OF HEARING, ON BEHALF OF THE REVENUE , SHRI B.L.YADAV APPEARED AND POINTED OUT THAT WHILE PASSING THE IMPUGNED ORDER, THE LD. CIT(A) HAS STATED THAT HE HAS CONSIDERED THE JUDGMENT OF M/S. SHAKTI CORPORAT ION IN ITA NO.1503/AHD/2008 DATED 07.11.2008. HE POINTED OUT IN THIS REGARD THA T THE LD. CIT(A), WITHOUT CALLING THE REMAND REPORT, ACCEPTED THE CONTENTION OF THE ASSES SEE. THEREFORE, IN THE INTEREST OF JUSTICE, THIS ISSUE BE REMANDED TO THE FILE OF THE AO WITH THE DIRECTION THAT HE WILL CONSIDER THE JUDGEMENT OF M/S. SHAKTI CORPORATION, WHILE RE-ADJUDICATING THE ISSUE AFRESH. 5. ON THE OTHER HAND, SHRI BHAVIN MARFATIA, APPEARI NG ON BEHALF OF THE ASSESSEE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A) AN D POINTED OUT THAT THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE A O. 6. AFTER HEARING BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE CASE L AWS. WE FIND CONSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE LD. D.R. BECAUSE THE IS SUE INVOLVED IN THIS APPEAL NEEDS RE-VERIFICATION IN THE LIGHT OF THE JUDGEMENT OF TH E ITAT IN THE CASE OF SHAKTI CORPORATION ( SUPRA ). THE ITAT, IN THIS CASE, HELD 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 ACCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEE HAS ACQUIRED THE DOMINANT OVER THE LAND AN D HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND T AKING ALL THE RISKS INVOLVED THEREIN. WE MAY MENTION HERE THAT, IN OUR OPINION, THE DECISION IN THE CASE OF RADHE DEVELOPERS (SUPRA) WILL NOT APPLY IN A CASE W HERE THE ASSESSEE HAS ENTERED INTO THE AGREEMENT FOR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE HOUSING PROJECT ON BEHALF OF THE LANDOWNER. THE AGREEMENT ENTERED INTO IN THAT CASE WILL NOT ENTITL E 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 DEVELO PER WILL BE RESTRICTED ONLY FOR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RE NDERING 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 LOOKING INTO THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE DEVELOPER ALONG WITH THE LANDOW NER. IN THE CASE OF SHAKTI ITA NO.2453/AHD/2010 3 CORPORATION SINCE THE ASSESSEE HAS FILED COPY OF TH E DEVELOPMENT AGREEMENT AND CRUX OF THE AGREEMENT IS THAT THE ASSESSEE HAS PURCHASED THE LAND AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN, THEREFORE , WE ARE OF THE VIEW THAT THE ASSESSEE WILL BE ENTITLED FOR THE DEDUCTION U/S 80I B(10). THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF FAQIR CHAND GU LATI (SUPRA) WILL NOT ASSIST THE REVENUE, AS THE AGREEMENT IS NOT SHARING OF THE CONSTRUCTED AREA. IN OTHER CASES THE COPY OF AGREEMENT SINCE HAS NOT BEE N SUBMITTED BEFORE US, IF SUBMITTED, THE TERMS AND CONDITIONS OF THE AGREEMEN T WERE NOT SPECIFICALLY ARGUED BEFORE AND PLACED BEFORE US, WE THEREFORE, I N THE INTEREST 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 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 T HE LAND FOR A FIXED CONSIDERATION FROM THE LANDOWNER AND 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 BOUGHT BY THE DEVELOPER AND DEVEL OPER 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 DEVE LOPMENT OF THE HOUSING PROJECTS, THE ASSESSEE SHOULD NOT BE ALLOWED DEDUCT ION U/S 80IB(10) TO THE ASSESSEE. 6.1 IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION THAT HE WILL C ONSIDER THE DECISION OF THE ITAT IN THE CASE OF M/S. SHAKTI CORPORATION ( SUPRA ) AND WILL CALL REMAND REPORT FROM THE AO AND RE-ADJUDICATE THE CLAIM OF THE ASSESSEE AFRESH REGA RDING ALLOWING OF CLAIM OF DEDUCTION UNDER SECTION 80IB(10), IN ACCORDANCE WITH LAW, AFT ER GIVING OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE REVENUE IS TREATED AS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.07.2011 SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29/07/2011 ITA NO.2453/AHD/2010 4 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AH MEDABAD. TALUKDAR/ SR. P.S.