M/s. Shree Developers, Baroda V. The Income tax Officer,Ward-2(5), Baroda

ITA 2534/AHD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50556 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 18-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD TANWANI
• Assessee Lawyers: SAKAR SHARMA
• Keywords: Opportunity of being heard; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.2534/AHD/2010 A. Y.: 2005-06 SHREE DEVELOPERS, 20, NALINI PARK SOCIETY, BEHIND SHREYAS SCHOOL, MANJALPUR, VADODARA VS INCOME TAX OFFICER, WARD 2 (5), BARODA PA NO. ABAFS 8622 D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SAKAR SHARMA, AR RESPONDENT BY SHRI VINOD TANWANI, DR DATE OF HEARING: 23-08-2011 DATE OF PRONOUNCEMENT: 23-08-2011 O R D E R PER BHAVNESH SAINI, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-V, BARODA DATE D 16-06-2010 FOR ASSESSMENT YEAR 2005-06, CHALLENGING THE ORDERS OF THE AUTHORITIES BELOW IN DENYING DEDUCTION CLAIMED U/S 80 IB (10) O F THE IT ACT AMOUNTING TO RS.3,38,840/-. 2. BRIEFLY, FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING NIL INCOME. ASSESSMENT WAS FINALIZ ED DENYING THE EXEMPTION U/S 80 IB (10) OF THE IT ACT. IT WAS NOTI CED BY THE AO FROM THE PROPOSED LAYOUT PLAN, DEVELOPMENT PERMISSION FR OM THE VADODARA MUNICIPAL CORPORATION AND THE DEVELOPMENT AGREEMENT, THE ASSESSEE WAS NOT THE ACTUAL OWNER OF THE LAND O N WHICH THE ITA NO. 2534/AHD/2010 SHREE DEVELOPERS VS ITO, W- 2 (5), BARODA 2 PROJECT WAS BUILT. THE APPROVAL OF THE PROJECT IS N OT GRANTED TO THE ASSESSEE FIRM BUT IT WAS IN THE NAME OF THE LAND OW NERS. IT WAS ALSO SEEN BY THE AO THAT THE APPROVED LAYOUT PLAN ALSO C OMPRISE APPROVAL OF CONSTRUCTION OF SHOPS MEASURING 212.22 SQ. MTRS. WHICH WAS IN EXCESS OF PRESCRIBED LIMIT U/S 80 IB (10) OF THE IT ACT. CLAIM OF THE ASSESSEE WAS ACCORDINGLY DISALLOWED. THE SUMMARIZED REASONS ARE INCORPORATED IN THE APPELLATE ORDER. IT WAS CONTEND ED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE IS ENGAGED IN DEVE LOPING HOUSING PROJECT ON THE LAND IN POSSESSION OF THE ASSESSEE F IRM AND THE ASSESSEE RELIED UPON THE ORDER OF ITAT AHMEDABAD BE NCH IN THE CASE OF M/S. RADHE DEVELOPERS. IT WAS ALSO SUBMITTE D THAT ISSUE OF UNUTILIZED FSI WAS ALSO DECIDED IN FAVOUR OF THE AS SESSEE IN THE CASE OF M/S. RADHE DEVELOPERS. IT WAS ALSO SUBMITTED THA T THE LAND OWNERS ARE ALSO PARTNERS IN THE ASSESSEE FIRM WHICH HAD DE VELOPED THE HOUSING PROJECT AND THAT THE ASSESSEE HAS CONSTRUCT ED ONLY RESIDENTIAL PART OF THE PROJECT AND OTHER COMMERCIA L AREA WAS ALSO DEVELOPED. THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATE WAS ALSO RELIED UPON. IT WAS SUBMITTED TH AT THE ASSESSEE HAD INCURRED ALL EXPENSES IN RESPECT OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT AND ALL PAYMENTS ARE MADE BY THE ASSESSEE AS ALL RISKS AND REWARDS VESTED IN IT. THE ASSESSEE ALSO R ELIED UPON THE DECISION IN THE CASE OF M/S. SHAKTI CORPORATION TO SHOW THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. THE LEARNED C IT(A) EXAMINED THE ASSESSMENT RECORD AND FOUND THAT THE MAIN ISSUE OF LAND OWNERSHIP FOR CLAIMING DEDUCTION U/S 80 IB (10) OF THE IT ACT AND EXCLUDING OF PROFIT FOR UNUTILIZED FSI WAS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JURISDICTIO N ITAT ITA NO. 2534/AHD/2010 SHREE DEVELOPERS VS ITO, W- 2 (5), BARODA 3 AHMEDABAD BENCH IN THE CASE OF M/S. SHAKTI DEVELOPE RS AND SAID DECISION WAS PARTLY MODIFIED IN ITS SUBSEQUENT DECI SION INN THE CASE OF M/S. SHAKTI CORPORATION IN WHICH IT WAS INDICATE D THAT BENEFIT U/S 80 IB (10) OF THE IT ACT WOULD BE AVAILABLE IF THE DEV ELOPER HAS DOMINANT CONTROL OVER THE PROJECT AND HAS DEVELOPED THE LAND AT ITS OWN COST AND RISK AND THE BENEFIT WOULD BE DENIED IF THE ASS ESSEE HAD ENTERED INTO AN AGREEMENT FOR A FIXED REMUNERATION AS A CON TRACTOR TO CONSTRUCT OR DEVELOP THE PROJECT ON BEHALF OF THE L AND OWNER. THE LEARNED CIT(A) ON GIVING SUCH FINDING FURTHER NOTED THAT IN THE CASE OF THE ASSESSEE APPROVAL OF THE PROJECT WAS FOR RESIDE NTIAL CUM COMMERCIAL COMPLEX AND IT IS NOT DENIED THAT THE CO MMERCIAL AREA IS MORE THAN 5% OF THE AGGREGATE BUILT-UP AREA. IT WAS ALSO OBSERVED THAT BY FINANCE ACT, 2004 WITH EFFECT FROM 01-04-20 05 I.E. ASSESSMENT YEAR 2005-06, HAD INTRODUCED CLAUSE (D) IN SECTION 80 IB (10) OF THE IT ACT TO STIPULATE THAT THE BUILT-UP A REA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS IN THE HOUSING PROJ ECT SHALL NOT EXCEED 5% OF THE AGGREGATE BUILT-UP AREA OR 2000 SQ . FT. WHICHEVER IS LESS. IT WAS NOTED THAT DEDUCTION IS ADMISSIBLE IF ALL THE CONDITIONS OF SECTION 80 IB (10) (A) TO (D) OF THE IT ACT ARE CUM ULATIVELY SATISFIED. THE LEARNED CIT(A), THEREFORE, NOTED THAT CLAIM OF THE ASSESSEE IS TO BE CONSIDERED IN VIEW OF THE CONTEXT OF PROVISIONS OF LAW RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE LEARNED CIT(A ) FURTHER NOTED THAT PROJECT CANNOT BE SUBDIVIDED IN MANY PARTS AND DEDUCTION HAS TO BE ALLOWED FOR THE ENTIRE PROJECT. IT WAS FURTHER N OTED THAT SINCE IN THE CASE OF THE ASSESSEE THE COMMERCIAL AREA IS MORE TH AN 5% IN THE ASSESSMENT YEAR UNDER APPEAL 2005-06, THEREFORE, TH E ASSESSEE ITA NO. 2534/AHD/2010 SHREE DEVELOPERS VS ITO, W- 2 (5), BARODA 4 WOULD NOT BE ENTITLED FOR DEDUCTION. THE LEARNED CI T(A) IN THE OPERATIVE PORTION OF THE ORDER IN PARA 5.3.2 HELD A S UNDER: 5.3.2 IN VIEW OF THE FOREGOING EVEN IF IT IS ADMI TTED THAT IN TERMS OF DECISIONS IN THE CASE OF RADHE DEVELOPERS AND SHAKTI CORPORATION, THE APPELLANT IS ENTITLED TO DEDUCTION U/S. 80IB(10) BUT DUE TO NON FULFILLMENT OF CONDITION IN 80 IB(10)(D), IN MY HUM BLE VIEW THE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S. 80I B(10). 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT ASSESSEES CLAIM WAS SUBSTANTIALLY ACCEPTED BY THE LEARNED CIT(A) BY FOLLOWING THE DECISIONS OF ITAT AHMEDABAD BENCH IN THE CASE OF M/S. RADHE DEVELOPERS AND M/S. SHAKTI CORPORATION. HOWEVER, THE LEARNED CIT(A) DENIED THE EXEMPTION U/S 80 IB(10) O F THE IT ACT BECAUSE OF NON-FULFILLMENT OF CONDITIONS PRESCRIBED IN SECTION 80 IB(10) (D) OF THE IT ACT. HE HAS SUBMITTED THAT RE VENUE HAS NOT PREFERRED ANY CROSS APPEAL. HE HAS RELIED UPON THE RECENT ORDER OF ITAT PUNE BENCH IN THE CASE OF OPEL SHELTERS PVT. L TD. VS ACIT REPORTED IN 2011-TIOL-439-ITAT-PUNE DATED 31-05-201 1. HE HAS SUBMITTED THAT IN THIS CASE ANOTHER DECISION OF ITA T BOMBAY BENCH IS RELIED UPON IN WHICH IT WAS HELD THAT AMENDED PROVI SIONS WOULD APPLY TO THE PROJECT STARTED AFTER 01-04-2005. HE HAS SU BMITTED THAT THE TRIBUNAL FOLLOWING THE SAID DECISION ALSO HELD THAT SINCE IN THE CASE OF THE ASSESSEE APPROVAL WAS GRANTED EARLIER AND THE P ROJECT STARTED PRIOR TO ASSESSMENT YEAR 2005-06, THEREFORE, DEDUCT ION U/S 80 IB (10) (D) OF THE IT ACT WOULD NOT BE THE BAR TO DENY EXEM PTION TO THE ASSESSEE. HE HAS HOWEVER, FAIRLY ADMITTED THAT THE ORDERS OF THE ITA NO. 2534/AHD/2010 SHREE DEVELOPERS VS ITO, W- 2 (5), BARODA 5 AUTHORITIES BELOW ARE SILENT AS TO WHEN THE PROJECT OF THE ASSESSEE WAS APPROVED AND WHEN THE CONSTRUCTION STARTED. THE REFORE, HE HAS PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE AO FOR RECONSIDERATION OF THE ISSUE IN THE LIGHT OF THE DE CISION OF ITAT PUNE BENCH IN THE CASE OF OPEL SHELTERS PVT. LTD. (SUPRA ). 4. ON THE OTHER HAND, THE LEARNED DR ALSO SUGGESTED THAT SINCE THE DECISION OF OPEL SHELTERS PVT. LTD. (SUPRA) IS PRONOUNCED SUBSEQUENT TO THE ORDER OF THE LEARNED CIT(A) AND F ACTUAL VERIFICATION IS REQUIRED, THEREFORE, MATTER MAY BE RESTORED TO T HE FILE OF THE AO. 5. ON CONSIDERATION OF THE ABOVE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES, I AM OF THE VIEW TH E MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. THE LEARNED CIT(A) SUBSTANTIALLY ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISIONS IN THE CASE OF M/S. RADHE DEVELOPERS AND M/S. SHAKTI CORPORATION (SUPRA). THE CLAIM OF THE ASSESSEE WAS DENIED BECAUSE THE ASSESSEE DID NOT FULFILL CONDITIONS OF SECTION 80 IB(10) (D) OF THE IT ACT BECAUSE THE COMMERCIAL AREA OF THE HOUSING PROJ ECT WAS MORE THAN 5% OF THE AGGREGATE BUILT-UP AREA. NO DEPARTME NTAL APPEAL IS PREFERRED AGAINST THE FINDING GIVEN BY THE LEARNED CIT(A) IN FAVOUR OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE RECENT DECISION OF ITAT PUNE BENCH IN THE CASE OF O PEL SHELTERS PVT. LTD. (SUPRA) IN WHICH THE MATTER WAS DECIDED IN FAV OUR OF THE ASSESSEE BY HOLDING THAT IF THE ASSESSEE HAD STARTE D ITS PROJECT PRIOR TO INCORPORATION OF PROVISION OF SECTION 80 IB (10) (D) OF THE IT ACT THEN THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION. THE SAID DECISION ITA NO. 2534/AHD/2010 SHREE DEVELOPERS VS ITO, W- 2 (5), BARODA 6 WAS PRONOUNCED AFTER PASSING OF THE IMPUGNED ORDER AND NO FACTS HAVE BEEN NOTED IN THE ASSESSMENT ORDERS AS TO WHEN THE PROJECT IS STARTED. THEREFORE, LEARNED REPRESENTATIVES OF BOTH THE PARTIES RIGHTLY CONTENDED THAT THE MATTER MAY BE RESTORED TO THE FI LE OF THE AO FOR RECONSIDERATION IN THE LIGHT OF THE ABOVE DECISION. I ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW TO THE EX TENT OF VERIFYING THE CONDITIONS OF SECTION 80 IB(10) (D) OF THE IT ACT A ND RESTORE THIS ISSUE TO THE FILE OF THE AO FOR RECONSIDERATION IN THE LI GHT OF THE DECISION OF ITAT PUNE BENCH IN THE CASE OF OPEN SHELTERS PVT. L TD. (PUNE). THE AO SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE ASSESSEE SHALL PLACE RELEVANT MATE RIAL BEFORE THE AO FOR RECONSIDERATION OF THE ISSUE. I MAKE IT CLEA R THAT WHATEVER RELIEF GRANTED BY THE LEARNED CIT(A) WOULD NOT BE S UBJECT MATTER FOR RECONSIDERATION BEFORE THE AO BECAUSE THE REVENUE H AS NOT PREFERRED ANY CROSS APPEAL IN THE MATTER AND THE FINDING OF T HE LEARNED CIT(A) TO THAT EXTENT HAVE REACHED FINALITY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- ITA NO. 2534/AHD/2010 SHREE DEVELOPERS VS ITO, W- 2 (5), BARODA 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A)- CONCERNED 5. THE DR, ITAT, CONCERNED 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD