The ITO, Ward-9(2), Ahmedabad V. M/s. H. Patel & Complany, Ahmedabad

ITA 2523/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94887 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80IB; 148; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA NOS. 2522 & 2523/AHD/2012 / ASSESSMENT YEAR: 2003-04 & 2004-05 ITO, WARD 9 (2), AHMEDABAD .. APPELLANT VS M/S. H. PATEL & COMPANY, H.P. HOUSE, OPP. TOWN HALL ELLISBRIDGE, AHMEDABAD .. RESPONDENT PAN : AACFH 4344 L REVENUE BY MS. SAN YOGITA NAGPAL, SR DR ASSESSEE(S) BY NONE / DATE OF HEARING 30/11/2015 /DATE OF PRONOUNCEMENT 11/12/2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THESE TWO APPEALS FILED BY THE REVENUE ARE DIREC TED AGAINST RESPECTIVE ORDERS OF THE COMMISSIONER OF IN COME TAX (APPEALS)-XV, AHMEDABAD, BOTH DATED 14.08.2012 FOR ASSESSMENT YEARS 2003-04 & 2004-05. SINCE BOTH THES E APPEALS PERTAIN TO SAME ASSESSEE AND ALMOST IDENTIC AL ISSUES WERE RAISED IN THESE APPEALS; THEREFORE, THESE WERE HEARD ITA NOS. 2522 & 2523/AHD/2012 ITO VS. H PATEL & COMPANY AY 2003-04 & 2004-05 - 2 - TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 2522/AHD/2012 : AY 2003-04 2. IN THIS APPEAL, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1A). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) -XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTIN G THE ASSESSING OFFICER TO ALLOW THE ASSESSEE'S CLAIM FOR DEDUCTION OF RS.10,66,495/- U/S 80IB(10) OF THE IT ACT. 1B). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS )-XV, AHMEDABAD HAS DECIDED THE ISSUE NO.1 ON THE GROUND IN HOLDING THAT THE ASSESSEE FULFILLS THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S.80IB(10) EVEN WHEN THE L AND WAS IN THE NAME OF SUVIDHA PARK CO. OP. HOUSING SOC IETY LTD., WHICH IS A SEPARATE LEGAL ENTITY IN THE EYE O F LAW AND THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVELOPM ENT AGREEMENT WITH THE SOCIETY. THE ENTIRE RESPONSIBILI TY TO EXECUTE THE HOUSING PROJECT AND ABIDE BY THE TERMS AND CONDITIONS OF ITS APPROVAL RIGHT FROM THE INCEPTION OF THE PROJECT TILL ITS COMPLETION RESTS WITH THE SOCIETY. THE LOCAL AUTHORITY HAD GRANTED PERMISSION FOR DEVELOPMENT TO THE SOCIETY. ASSESSEE WAS JUST A CONTRACTOR OF THE LAND OWNERS CONSTRUCTING RESIDENTIAL UNITS AND NOT A DEVELOPER 2). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE L D. COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NOS. 2522 & 2523/AHD/2012 ITO VS. H PATEL & COMPANY AY 2003-04 & 2004-05 - 3 - 2.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED ITS RETURN OF INCOME ON 17.02.2004, SHOWING TOTAL INCOM E OF RS.1,45,340/- AFTER CLAIMING DEDUCTION U/S 80IB OF THE ACT OF RS.10,66,495/-. ORIGINAL ASSESSMENT WAS FINALIZED VIDE ORDER DATED 27.02.2006 PASSED U/S 143(3). HOWEVER, LATER ON, ON PERUSAL OF RECORDS, IT WAS NOTICED THAT THE ASSESSE E WAS MERELY A WORKS CONTRACTOR AND HAD NOT UNDER TAKEN ANY DEVE LOPING AND BUILDING OF HOUSING PROJECT APPROVED BY THE LOC AL AUTHORITY AND HENCE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(1 0) OF THE ACT. THEREFORE, AFTER THE VERIFICATION OF DETAILS AVAILABLE ON RECORDS AND THE REPLY FILED BY THE ASSESSEE, THE AS SESSING OFFICER FRAMED ASSESSMENT U/S 144 R.W.S. 148 WHEREB Y HE DISALLOWED RS.10,66,495/- ON THE GROUND THAT THE AS SESSEE WAS NOT A DEVELOPER AND BUILDER AS REQUIRED UNDER THE P ROVISIONS OF THE SECTION 80IB IN RESPECT OF THE SAID HOUSING PRO JECT. 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F THE ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) GRA NTED RELIEF TO THE ASSESSEE, MAINLY FOLLOWING THE DECISION OF H ONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RADHE DEV ELOPERS IN TAX APPEAL NO.546 OF 2008, REPORTED IN (2012) 341 ITR 0403. ITA NOS. 2522 & 2523/AHD/2012 ITO VS. H PATEL & COMPANY AY 2003-04 & 2004-05 - 4 - ON THE OTHER HAND, NONE APPEARED ON BEHALF OF THE A SSESSEE, SO THE MATTER IS BEING DECIDED ON THE BASIS OF ARGUMEN TS OF DEPARTMENTAL REPRESENTATIVE AND MATERIAL AVAILABLE ON RECORD. 4. AFTER GOING THROUGH THE ARGUMENTS AND MATERIAL O N RECORD, WE FIND THAT THE ISSUE BEFORE US REGARDING THE DISALLOWANCE OF CLAIM U/S 80IB(10) OF THE ACT AMOUN TING TO RS.10,66,495/- WAS ALLOWED IN THE ORIGINAL ASSESSME NT, WHICH WAS REJECTED BY THE ASSESSING OFFICER IN THE RE-OPE NING PROCEEDINGS. AS DISCUSSED ABOVE, THE DISALLOWANCE WITH REGARD TO 80IB(10) WAS MADE ON ACCOUNT OF THE FACT THAT TH E ASSESSEE WAS NOT THE OWNER OF THE LAND, BUT THE OWNER WAS SU VIDHA PARK CO. OP. HOUSING SOCIETY LTD. WHO WAS PERMITTED TO D EVELOP THE LAND BY WAY OF CONSTRUCTING THE HOUSING PROJECT. W E FIND THAT IN THE CASE OF CIT VS. RADHE DEVELOPERS IN TAX APPE AL NO.546 OF 2008, REPORTED IN (2012) 341 ITR 0403, THE HON BLE GUJARAT HIGH COURT HAS DECIDED A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE, WHEREIN IT HAS BEEN HELD THAT IT IS NOT N ECESSARY THAT THE ASSESSEE MUST BE THE OWNER OF THE LAND AND SECO NDLY LOOKING TO THE PROVISIONS CONTAINED IN SECTION 2(4) OF THE ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY A CT, BY VIRTUE OF THE DEVELOPMENT AGREEMENT AND THE AGREEMENT TO S ELL, THE ITA NOS. 2522 & 2523/AHD/2012 ITO VS. H PATEL & COMPANY AY 2003-04 & 2004-05 - 5 - ASSESSEE HAD, FOR THE PURPOSE OF INCOME TAX, BECOME THE OWNER OF THE LAND. A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITO VS. SHAKTI CORPORATION, REPORTED IN (2009) 32 S OT 0438 (AHD TRIB.) ALSO HELD THAT CONSIDERING THE TERMS AN D CONDITIONS OF DEVELOPMENT AGREEMENT AND OTHER DOCUMENTS ON REC ORD, THE ASSESSEE HAD ACQUIRED DOMINION OVER THE LAND WHICH HE HAD DEVELOPED BY CONSTRUCTING HOUSING PROJECT INCURRING EXPENSES AND ALSO TAKING RISKS. 4.1 THE ESSENCE OF SUB-SECTION (10) OF SECTION 80IB REQUIRES INVOLVEMENT OF AN UNDERTAKING IN DEVELOPING AND BUI LDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY. APPARENTLY, SUCH PROVISION WOULD BE AIMED AT GIVING ENCOURAGEME NT TO PROVIDING HOUSING UNITS IN THE URBAN AND SEMI-URBAN AREAS, WHERE THERE IS PERENNIAL AND ACUTE SHORTAGE OF HOUS ING, PARTICULARLY, FOR THE MIDDLE INCOME GROUP CITIZENS. TO ENSURE THAT THE BENEFIT REACHES THE PEOPLE, CERTAIN CONDIT IONS WERE PROVIDED IN SUB-SECTIONS (10) SUCH AS SPECIFYING DA TE BY WHICH THE UNDERTAKING MUST COMMENCE AND DEVELOPING THE CONSTRUCTION WORK AS ALSO PROVIDING FOR THE MINIMUM AREA OF PLOT OF LAND ON WHICH SUCH PROJECT WOULD BE PUT UP AS WELL AS MAXIMUM BUILT UP AREA OF EACH OF THE RESIDENTIAL UN ITS TO BE ITA NOS. 2522 & 2523/AHD/2012 ITO VS. H PATEL & COMPANY AY 2003-04 & 2004-05 - 6 - LOCATED THEREON. THE PROVISIONS NOWHERE REQUIRED T HAT ONLY THOSE DEVELOPERS WHO THEMSELVES OWN THE LAND WOULD RECEIVE THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. U NDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT CI T(A) HAS NOT COMMITTED ANY ERROR WHILE DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 80IB(10) AMOUNTING TO RS.10,66,495/- AS THE ASSESSEE FULFILLS THE CONDITI ONS LAID DOWN FOR CLAIMING DEDUCTION U/S 80IB(10). UNDER THESE F ACTS, THE CIT(A) WAS JUSTIFIED IN GRANTING RELIEF TO THE ASSE SSEE BY DELETING THE DISALLOWANCE OF RS.10,66,495/- MADE BY THE ASSE SSING OFFICER U/S 80IB(10) OF THE ACT. THIS REASONED FIN DING OF THE CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE WHICH IS CONFIRMED. 5. THIS APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 2523/AHD/2012 : AY 2004-05 6. SIMILAR ISSUE AROSE IN ITA NO. 2522/AHD/2012 FOR AY 2003-04. FACTS BEING SIMILAR, SO FOLLOWING SAME RE ASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDINGS OF CIT(A) IN THIS YEAR AS WELL WHEREIN CIT(A) HAS GRANTED THE SI MILAR RELIEF ON SIMILAR REASONING. WE UPHOLD THE ORDER OF CIT(A ) IN THIS YEAR AS WELL. ITA NOS. 2522 & 2523/AHD/2012 ITO VS. H PATEL & COMPANY AY 2003-04 & 2004-05 - 7 - 7. AS A RESULT, BOTH APPEALS FILED BY REVENUE ARE D ISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE COURT ON 11TH OF DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 11/12/2015 *BT / 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