The ITO, Ward-4, Gandhinagar V. M/s. Vraj Construction, Ahmedabad

ITA 2494/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1337 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SN SOPARKAR WITH SHRI PM MEHTA
• Section: 80IB

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NO. 2494/AHD/2011 / ASSESSMENT YEAR: 2008-09 INCOME-TAX OFFICER, WARD 4, GANDHINAGAR VS M/S. VRAJ CONSTRUCTION, 314, MANSAROVAR IOC ROAD, CHANDKHEDA, AHMEDABAD DIST : GANDHINAGAR PAN : AADFV 4650 Q ./ ././ ./ ITA NO. 2495/AHD/2011 / ASSESSMENT YEAR: 2008-09 INCOME-TAX OFFICER, WARD 4, GANDHINAGAR VS M/S. VRAJ CONTRACTOR, 314, MANSAROVAR IOC ROAD, CHANDKHEDA, AHMEDABAD DIST : GANDHINAGAR PAN : AACFV 9461 E / // / (APPELLANT) / // / (RESPONDENT) REVENUE BY : SHRI PRASOON KABRA, SR DR ASSESSEE(S) BY : SHRI SN SOPARKAR WITH SHRI PM MEHTA, AR / // / DATE OF HEARING : 29/06/2016 / // / DATE OF PRONOUNCEMENT: 01/07/2016 / // / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER:- THESE ARE THE APPEALS FILED BY TWO DIFFERENT ASSESS EES AGAINST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX ( APPEALS), GANDHINAGAR, AHMEDABAD DATED 20.07.2011 & 22.07.201 1 FOR ASSESSMENT YEAR 2008-09. SINCE FACTS AND GROUNDS A RE IDENTICAL, BOTH THESE APPEALS WERE TAKEN UP TOGETHER FOR HEARING AN D ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.2494 & 2495/AHD/2011 ITO VS. M/S. VRAJ CONSTRUCTION & VRAJ CONTRACTOR AY : 2008-09 2 2. THE SOLITARY GROUND RAISED BY THE REVENUE IN ITS RESPECTIVE APPEAL READS AS UNDER:- ITA NO. 2494/AHD/2011: AY 2008-09 BY ASSESSEE: M/S. VRAJ CONSTRUCTION THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE DISALLOWANCE MADE U/S 80IB(10) OF RS.1,52,44,321/-. ITA NO. 2495/AHD/2011: AY 2008-09 BY ASSESSEE: M/S. VRAJ CONTRACTOR THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE DISALLOWANCE MADE U/S 80IB(10) OF RS.86,48,338 AND A LSO DIRECTING TO ALLOW DEDUCTION U/S 80IB(10) ON DISALLOWANCE OUT OF VEHICLE AND TELEPHONE EXPENSES OF RS.1,26,323/-. 3. FIRST, WE TAKE UP THE APPEAL IN THE CASE OF M/S. VRAJ CONSTRUCTION VIDE ITA NO. 2494/AHD/2011 PERTAINING TO ASSESSMENT YEAR 2008-09. 4. THE ONLY ISSUE TO BE DECIDED WHETHER THE ASSESSE E IS ENTITLED FOR DEDUCTION U/S 80IB(10) OR NOT. 5. THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE SOLD FLATS TO ITS PARTN ERS IN VIOLATION OF CONDITIONS OF SECTION 80IB(10) OF THE ACT AND HE AR GUED THAT THE FINDINGS OF THE ASSESSING OFFICER BE RESTORED. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LD. CIT(A) AND SUPPORTED THE ORDER OF TH E LD. CIT(A). HE SUBMITTED THAT THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS SOLD FLATS TO ITS PARTNERS DURING THE YEAR UNDE R CONSIDERATION IS FACTUALLY INCORRECT AND EVEN IF THE SALES OF THE FL ATS ARE CONSIDERED, ITS EFFECTIVE SALE WOULD BE IN NEXT YEAR AND NOT IN THE YEAR UNDER APPEAL. ITA NOS.2494 & 2495/AHD/2011 ITO VS. M/S. VRAJ CONSTRUCTION & VRAJ CONTRACTOR AY : 2008-09 3 HE ALSO SUBMITTED THAT THE ISSUE IN QUESTION IS SQU ARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE G UJARAT HIGH COURT IN THE CASE OF CIT VS. RADHE DEVELOPERS (2012) 341 ITR 403. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A) HAS DECIDED TH E ISSUE BY OBSERVING AS UNDER:- 6.5 NOW COMING TO THE ELIGIBILITY OF APPELLANT FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT, A PLAIN READING OF SECTION 80IB(10) REVEALS THAT THIS DEDUCTION IS AVAILABLE TO AN UNDERTAKING WHICH IS DEVELOPING AND BUILDING HOUSING PROJECT AS APPROVED BY A LOCAL AUT HORITY. IT DOES NOT LAY DOWN ANY FURTHER CONDITION THAT SUCH DEVELOPMEN T OF HOUSING PROJECT SHOULD ALSO BE ON THE LAND OWNED BY THE ASS ESSES UNDERTAKING OR THE PERMISSION TO DEVELOP THE SAME SHOULD BE IN THE NAME OF THE ASSESSEE UNDERTAKING. EVEN THIS POSITION IS NOW CLEAR IN THE JUDGMENTS OF HONBLE JURISDICTIONAL TRIBUNAL IN CASE OF RADHE DEV ELOPERS AND SHAKTI CORPORATION (SUPRA). HENCE DEDUCTION U/S 80IB(10) CAN CERTAINLY NOT BE DENIED ON THIS GROUNDS. EVEN OTHERWISE, IN THE P RESENT CASE, IT IS AN UNDISPUTED FACT THAT THE APPELLANT FIRM HAS PAID LA ND COST TO OWNER I.E. PRASHANT T. PATEL HUF AND THE LAND WAS HANDED OVER TO THE APPELLANT FIRM FOR , DEVELOPMENT OF PROJECT. IN ANY CASE, AS DISCUSSED ABOVE LEGAL OWNERSHIP OVER THE LAND HAS NEVER BEEN ANY RELEVANT CRITERIA. WHAT IS NECESSARY IS THAT THE ASSESSEE CLAIMING DEDUCTION S HOULD HAVE COMPLETE CONTROL AND DOMINANCE OVER THE PROJECT. IN THE PRES ENT CASE, THE APPELLANT FIRM HAS PAID ACQUIRED POSSESSION AND DOM INANT CONTROL OVER THE LAND AND HAS ALSO BORNE THE ENTIRE RISK AND RES PONSIBILITY OF THE PROJECT. EVEN THE AO HAS NOT DISPUTED THE FACT THE TOTAL CONSIDERATION FORM SALE OF UNITS TO MEMBERS HAS BEEN RECEIVED BY THE APPELLANT FIRM AND IT HAS BORNE THE ENTIRE EXPENDITURE INCLUDING L AND COST OF THE PROJECT. FURTHER, A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS NOT DISPUTED FULFILLMENT OF OTHER CONDITIONS LA ID DOWN IN SUB CLAUSE (A) TO (D) OF SECTION 80IB(10) EXCEPT FOR THE OBSERVAT ION THAT THE APPELLANT HAS CARRIED ON THE DEVELOPMENT IN THE CAP ACITY OF THE CONTRACTOR. HOWEVER, AS DISCUSSED ABOVE, THE APPELL ANT FIRM HAS NOT WORKED IN THE CAPACITY OF A CONTRACTOR BUT HAS ACQU IRED DOMINANT CONTROL OVER THE LAND AND HAS ALSO BORNE THE ENTIRE RISK AND ITA NOS.2494 & 2495/AHD/2011 ITO VS. M/S. VRAJ CONSTRUCTION & VRAJ CONTRACTOR AY : 2008-09 4 RESPONSIBILITY OF THE PROJECT, AND HENCE THE APPELL ANT HAS FULFILLED ALL THE TESTS LAID DOWN BY HONBLE ITAT AHMEDABAD IN CASE O F M/S. SHAKTI CORPORATION(SUPRA). WITH REGARDS TO THE TRANSFER OF 48 UNITS TO PARTNER S, THE AO IS OF THE OPINION THAT THE SAID TRANSFER IS IN VIOLATION OF P ROVISIONS OF CLAUSE (E) AND (F) TO SECTION 80IB(10) OF THE ACT. HOWEVER, AS HAS BEEN RIGHTLY POINTED BY THE LEARNED COUNSEL FOR THE APPELLANT TH E SAID PROVISIONS HAS BEEN BROUGHT INTO STATUTE BY FINANCE (NO.2) ACT, 200 9 W.E.F. 1-4-2010. SINCE THE PRESENT YEAR UNDER APPEAL IS A.Y 2008-09, THE PROVISIONS WERE CLEARLY NOT APPLICABLE TO THE PRESENT YEAR AND HENCE APPELLANT CANNOT BE DISALLOWED DEDUCTION U/S 80IB(10) ON ACCO UNT OF SUCH GROUND. FURTHER, I HAVE OBSERVED THAT THE CONSTRUCT ED AREA OF EACH RESIDENTIAL UNIT IS MUCH SMALLER THAN THE THRESHOLD LIMIT OF 1500 SQ. FEET AND THE LIMIT WOULD BE CROSSED ONLY IF UNITS ARE SO LD AFTER COMBINING STRUCTURALLY 4-5 UNITS TOGETHER AS ONE UNIT; WHICH IS DEFINITELY NOT THE CASE OF THE A.O. CONSIDERING THE ENTIRETY OF FACTS, THE AO IS DIRECTED TO ALLOW DEDUCTION U/S 80IB(10) CLAIMED BY THE APPELLAN T IN RETURN OF INCOME. THE RELEVANT GROUND OF APPEAL IS THUS ALLOW ED. 7. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPING OF INFRASTRUCTURE HOUSI NG PROJECTS. THE UNDISPUTED FACTS OF THE CASE ARE THAT DURING THE YE AR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME SHOWING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80IB(10) FOR RS.1,52,4 4,321/-. THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROU ND THAT THE ASSESSEE IS ONLY A WORK CONTRACTOR AND NOT A DEVELO PER. ON APPEAL, THE CIT(A) ALLOWED THE CLAIM FOR DEDUCTION U/S. 80I B(10) TO THE ASSESSEE, FOLLOWING THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF M/S. SHAKTI CORPORATION, BARODA, REPORTED IN 32 SOT 438, HOLDING THAT THE ASSESSEE-FIRM HAS NOT WORKED IN THE CAPACI TY OF A CONTRACTOR BUT HAS ACQUIRED DOMINANT CONTROL OVER THE LAND AND HAS ALSO BORNE THE ENTIRE RISK AND RESPONSIBILITY OF THE PROJECT. ITA NOS.2494 & 2495/AHD/2011 ITO VS. M/S. VRAJ CONSTRUCTION & VRAJ CONTRACTOR AY : 2008-09 5 8. WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF CIT VS. RADHE DEVELOPERS (SUPRA) HAS HELD THAT THE PROV ISIONS NOWHERE REQUIRED THAT ONLY THOSE DEVELOPERS WHO THEMSELVES OWN THE LAND WOULD RECEIVE THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. NEITHER THE PROVISIONS OF SECTION 80IB NOR ANY OTHER PROVIS IONS CONTAINED IN OTHER RELATED STATUTES DEMONSTRATE THAT OWNERSHIP O F THE LAND WOULD BE A CONDITION PRECEDENT FOR DEVELOPING THE HOUSING PROJECT. SUCH REQUIREMENT CANNOT BE READ INTO THE STATUTE BECAUSE THERE IS NOTHING UNDER SECTION 80IB(10) OF THE ACT REQUIRING THAT OW NERSHIP OF THE LAND MUST VEST IN THE DEVELOPER TO BE ABLE TO QUALIFY FO R SUCH DEDUCTION. WE, THEREFORE, FIND THAT THE ORDER OF THE CIT(A) IS SUPPORTED BY THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT. HE NCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHICH IS H EREBY CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSED ACCORDIN GLY. ITA NO. 2495/AHD/2011 : AY 2008-09 : ASSESSEE- M/S. VRAJ CONTRACTOR 9. IN THIS APPEAL BY THE REVENUE, IDENTICAL GROUND IS RAISED. THEREFORE, FOR THE DETAILED DISCUSSION MADE ABOVE I N THE CASE M/S. VRAJ CONSTRUCTION IN ITA NO.2484/AHD/2011, THIS APP EAL OF THE REVENUE IS ALSO DISMISSED. 10. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST JULY, 2016 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (KUL BHARAT) JUDICIAL MEMBER AHMEDABAD; DATED 01/07/2016 *BIJU T. ITA NOS.2494 & 2495/AHD/2011 ITO VS. M/S. VRAJ CONSTRUCTION & VRAJ CONTRACTOR AY : 2008-09 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, TRUE COPY / // / ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD