The ITO, Ward-9(1), Ahmedabad V. M/s. Vishal Developers, Ahmedabad

ITA 2570/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4394 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 27-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND SHRI T. R. MEENA, AM) ITA NO.2570/AHD/2010 (AY: 2007-08) THE INCOME TAX OFFICER, WARD- 9 (1), A BLOCK, INCOME-TAX OFFICE, OPP. POLYTECHNIC, AMBAWADI, AHMEDABAD VS M/S. VISHAL DEVELOPERS, BASEMENT, URMI DUPLEX, ELLISBRIDGE, ASHRAM ROAD, AHMEDABAD, P. A. NO. AAFFV 0972 R (APPELLANT) (RESPONDENT) C. O. NO.311/AHD/2010 (IN ITA NO.2570/AHD/2010 FOR AY: 2007-08) M/S. VISHAL DEVELOPERS, BASEMENT, URMI DUPLEX, ELLISBRIDGE, ASHRAM ROAD, AHMEDABAD, P. A. NO. AAFFV 0972 R VS THE INCOME TAX OFFICER, WARD- 9 (1), A BLOCK, INCOME-TAX OFFICE, OPP. POLYTECHNIC, AMBAWADI, AHMEDABAD (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY SHRI P. L. KUREEL, SR. DR ASSESSEE BY SHRI DHIREN SHAH, AR DATE OF HEARING: 08-07-2013 DATE OF PRONOUNCEMENT: 06-09-2013 ORDER PER T. R. MEENA : THIS IS REVENUES APPEAL EMANATING FROM THE ORDER OF THE LEARNED CIT(A)-XV, AHMEDABAD DATED 25-06-2010, FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS ALSO FILED THE CROSS OBJE CTION AGAINST THE SAID ORDER OF THE LEARNED CIT(A). 2. THE REVENUE IN THEIR APPEAL HAS RAISED THE FOLLO WING TWO EFFECTIVE GROUNDS:- IT A NO.2570/AHD/2010 (AY: 2007-08) ITO, W-9(1) AHMEDABAD VS M/S. VISHAL DEVELOPERS CO NO.311/AHD/2001 M/S.VISHAL DEVELOPERS VS ITO, W-9(1), AHMEDABAD 2 1). THE LD. COMMISSIONER OF INCOME-TAX (A)- XV, AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE DEDUCTION U/S. 80 IB (10) OF THE ACT AMOUNTING TO RS.4,62,69,270/- WHICH WAS DISALLO WED BY THE ASSESSING OFFICER. 2). THE LD. COMMISSIONER OF INCOME-TAX (A)- XV, AHM EDABAD HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CONDITION S LAID DOWN FOR CLAIMING DEDUCTION U/S. 80IB (10) EVEN WHEN THE LAN D WAS IN THE NAME OF SOCIETY AND THE ASSESSEE HAD MERELY EXECUTE D A WORK OF CONTACTOR. 3. THE ASSESSEE IN ITS CROSS OBJECTION HAS RAISED T HE FOLLOWING SOLE EFFECTIVE GROUND:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS XV, AHMEDABAD AFTER GOING THROUGH THE DETAILS AND SUBMI SSIONS OF THE RESPONDENT FOUND THAT THE RESPONDENT HAS FUL FILLED THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S. 80 IB(10) AND HAS INVESTED IN COST OF LAND AND ACQUIRED DOMIN ANT CONTROL OVER T HE LAND FOR THE DEVELOPMENT OF THE P ROJECT AND RESPONDENT MEETS ALL THE TESTS LAID DOWN BY HONBLE ITAT AHMEDABAD, BENCH A IN THE DECISION DELIVERED IN T HE CASE OF M/S. SHAKTI CORPORATION AND ACCORDINGLY THE LD. CIT (A) HAS RIGHTLY ALLOWED THE DEDUCTION U/S. 80 IB(10) OF THE ACT OF RS.4,62,69,270/- IN FAVOUR OF THE RESPONDENT. 4. FIRST WE TAKE UP THE REVENUES APPEAL WHEREIN BO TH THE GROUNDS OF APPEAL ARE INTERLINKED RELATING TO DEDUCTION U/S 80 IB (10 ) OF THE ACT AND CONDITIONS PRECEDENT FOR IT. THE AO OBSERVED THAT DURING THE Y EAR UNDER CONSIDERATION THE ASSESSEE FIRM HAD CONSTRUCTED A HOUSING PROJECT AND HAD SHOWN NET PROFIT OF RS.4,62,13,330/-. AFTER DISALLOWING RS.57,111/- U/S 40(A) AND EXCLUDING DIVIDEND INCOME OF RS.1,171/- IN THE COMPUTATION, THE ASSESS EE HAD CLAIMED DEDUCTION OF RS.4,65,69,270/- AT 100% OF ITS PROFIT U/S 80IB (10 ) OF THE ACT STATING THAT IT WAS ENTITLED TO DEDUCTION U/S 80 IB (10) OF THE ACT IN RESPECT OF ITS ENTIRE INCOME. THE BRIEF FACTS OF THE CASE ARE THAT LAND BEARING VARIO US SURVEY NUMBERS AND BLOCK NUMBERS HAVING TOTAL AREA OF 50,800 SQ. MTRS. WAS P URCHASED BY THE SATELLITE AMBLI CO-OPERATIVE HOUSING SOCIETY LTD. ON 13-12-20 04 FOR CONSIDERATION OF RS.47,32,000/-. AS PER THE APPLICATION AND PLAN FIL ED BY THE SOCIETY, THE LOCAL AUTHORITY ACCORDED PERMISSION FOR DEVELOPMENT AND C ONSTRUCTION OF THE PROJECT TO IT A NO.2570/AHD/2010 (AY: 2007-08) ITO, W-9(1) AHMEDABAD VS M/S. VISHAL DEVELOPERS CO NO.311/AHD/2001 M/S.VISHAL DEVELOPERS VS ITO, W-9(1), AHMEDABAD 3 THE SATELLITE AMBLI CO-OPERATIVE HOUSING SOCIETY LT D. AND SAMPNA AMBLI CO- OPERATIVE HOUSING SOCIETY LTD. ON 27-04-2005 AND 04 -01-2006. THE ASSESSEE ENTERED INTO DEVELOPMENT AGREEMENTS WITH SATELLITE AMBLI CO-OPERATIVE HOUSING SOCIETY LTD. AND SAMPNA AMBLI CO-OPERATIVE HOUSING SOCIETY LTD. ON 17-02-2005. AS PER THE TERMS OF AGREEMENT THE ASSES SEE WAS GIVEN POSSESSION OF THE LAND FOR CONSTRUCTION OF HOUSING UNIT AS PER THE PLAN. THE ASSESSEE WAS ALLOWED TO ENROLL PERSPECTIVE BUYERS AS MEMBERS ON BEHALF OF THE SOCIETY. THE ASSESSEE WAS ALSO ALLOWED TO COLLECT THE CONSIDERAT ION FOR LAND AS WELL AS SUPER STRUCTURES FROM THE BUYERS ON BEHALF OF THE SOCIETY AND TO RETAIN THE CONSIDERATION RECEIVED FOR CONSIDERATION AND CHARGE THE LAND COST TO THE SOCIETY. IT WAS HELD BY THE AO THAT THE SOCIETY WAS FORMED FOR GROUP HOUSIN G OF THE MEMBERS AND WAS SUPPOSED TO CONSTRUCT AND TRANSFER THE HOUSING UNIT S TO THE MEMBERS. ACCORDING TO THE DEVELOPMENT AGREEMENT SINCE THE SOCIETY HAD NO EXPERIENCE OF CONSTRUCTION, THE ASSESSEE WAS ALLOWED TO CONSTRUCT THE HOUSING UNITS ON BEHALF OF THE ASSESSEE AS PER THE TERMS NARRATED IN THE AG REEMENT ACCORDING TO APPROVED PLAN OF THE SOCIETY. IT WAS FOUND BY THE A O THAT THE ASSESSEE WAS NOT OWNER OF THE LAND BUT THE LAND WAS IN THE NAME OF T HE SOCIETY FOR CONSTRUCTION OF HOUSING UNITS. THE AO GAVE REASONABLE OPPORTUNITY O F BEING HEARD TO THE ASSESSEE ON THIS ISSUE WHICH WAS REPLIED BY THE ASS ESSEE VIDE LETTER DATED 24-12-2009 WHICH WAS CONSIDERED BY THE AO. FINALLY, THE AO CONCLUDED AS UNDER: 1. THE ASSESSEE IS NOT BOTH DEVELOPER AND BUILDER AS REQUIRED BY THE PROVISIONS OF SECTION 80 IB (10). ASSESSEE I S NOT A DEVELOPER BECAUSE THE ASSESSEE DID NOT CONCEPTUALIZ E AND OWN THE PROJECT IN AS MUCH AS THE ASSESSEE IS NOT T HE OWNER OF THE LAND AND THE APPROVAL WAS NOT ISSUED TO IT B Y THE LOCAL AUTHORITY. 2. THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVEL OPMENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREMENT AND HENCE THE ASSESSEE IS MERELY A CONTRACTOR FOR THE PURPOSES OF CONSTRUCTION OF THE PROJECT. IT A NO.2570/AHD/2010 (AY: 2007-08) ITO, W-9(1) AHMEDABAD VS M/S. VISHAL DEVELOPERS CO NO.311/AHD/2001 M/S.VISHAL DEVELOPERS VS ITO, W-9(1), AHMEDABAD 4 3. THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURCHA SER BUT THE SOCIETY HAS EXECUTED THE SALE DEEDS AS A SELLER AND THE ASSESSEE JOINED ONLY AS A CONFIRMING PARTY TO THE T RANSACTION. THIS ALSO PROVES THAT THE ASSESSEE WAS MERELY A CONTRACTOR/AGENT OF THE SOCIETY. 4. AS PER THE AMENDMENT TO SECTION 80 IB BY THE FIN ANCE ACT 2009 A WORKS CONTACTOR WHO EXECUTES THE WORK AWARDE D BY ANY PERSON IS NOT ELIGIBLE FOR THE DEDUCTION U/S 80 IB. ANY PERSON INCLUDES THE SATELLITE AMBLI CO-OPERATIVE HO USING SOCIETY LTD. AND SAPNA AMBLI CO-OPERATIVE HOUSING S OCIETY LTD., WHICH ARE SEPARATE LEGAL ENTITIES. AS THE ASSESSEE DID NOT FULFILL THE CONDITIONS LAID DOWN UNDER SECTION 80 IB (10) OF THE ACT, THE AO DISALLOWED THE CLAIM OF DEDUCTION U /S 80 IB (10) OF THE ACT. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARR IED THE MATTER BEFORE THE CIT(A) WHO HAS ALLOWED THE CLAIM OF THE ASSESSEE AF TER CONSIDERING THE TERMS AND CONDITIONS OF THE AGREEMENT BETWEEN THE SOCIETI ES AND THE ASSESSEE. NOW, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DR VEHEMENTLY RELIED UPON THE ORDER OF THE AO. HE HAS ALSO RELIED ON THE DECISION OF ITAT AHMEDABAD A BENCH IN THE CASE OF ACIT CIR-2 BARODA VS M/S. SHIKHAR DEVELOPERS IN ITA NO.854/AHD /2010 FOR THE ASSESSMENT YEAR 2007-08 DATED 31-05-2012 WHEREIN ALSO THE TRIB UNAL HAS DECIDED IDENTICAL ISSUE BY SETTING ASIDE THE MATTER TO THE AO FOR VER IFYING THE TERMS & CONDITIONS AS PER THE DIRECTION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS 329 ITR 01 (GUJ.). ON THE OTHER HAND, TH E ASSESSEE RELIED UPON THE ORDER OF THE CIT(A) AND ALSO FILED WRITTEN REPLY AN D CLAIMED THAT THE DOMINANT CONTROL OVER THE PROJECT WAS WITH THE ASSESSEE AND THE COST, REWARD AND RISK ARE WITH THE ASSESSEE. THE ASSESSEE IS A DEVELOPER AND BUILDER. THE ASSESSEE HAD MADE PAYMENTS FOR THE LAND TO THE SOCIETIES, BOOKED THE UNITS TO THE MEMBERS FOR PURCHASE OF RESIDENTIAL UNITS, COLLECTED THE CO NSIDERATION FROM THEM. THE AGREEMENT FOR SALE WAS CONFIRMED BY THE ASSESSEE WI TH THE SOCIETIES AND THE PURCHASERS. THE ASSESSEE HAD TAKEN FULL RESPONSIBIL ITY OF EXECUTION AND DEVELOPMENT OF THE SAID PROJECT. HE HAS ALSO DRAWN OUR ATTENTION TO THE IT A NO.2570/AHD/2010 (AY: 2007-08) ITO, W-9(1) AHMEDABAD VS M/S. VISHAL DEVELOPERS CO NO.311/AHD/2001 M/S.VISHAL DEVELOPERS VS ITO, W-9(1), AHMEDABAD 5 DEVELOPMENT AGREEMENT DATED 17-02-2005. THE HOUSING PROJECT WAS UNDER FULL CONTROL AND MANAGEMENT OF THE DEVELOPER ONLY AND AL L THE DECISIONS WERE TAKEN BY THE ASSESSEE RELATING TO DEVELOPMENT ACTIVITIES AND ALL THE COST AND EXPENSES FOR DEVELOPMENT WERE BORNE BY THE ASSESSEE FOR LABO URERS, MATERIALS, ERECTION AND INSTALLATION OF THE CONSTRUCTION OF INFRASTRUCT URE, COMMON AMENITIES AND SERVICES. APPROVAL OR SANCTION TO LAY OUT PLAN, CON STRUCTION PLAN AND REVISED PLAN ETC. WERE ALSO TAKEN BY THE ASSESSEE FROM AHMEDABAD URBAN DEVELOPMENT AGENCY. THUS, THE ASSESSEE IS FULLY ENTITLED FOR DE DUCTION U/S 80 IB (10) OF THE ACT. HE FURTHER RELIED UPON THE DECISION OF THE HON BLE SUPREME COURT RENDERED IN THE CASE OF ACIT (OSD) WARD 5 (2), AHMEDABAD VS SOMESHWAR DEVELOPERS IN CC NO.13871/2012 IN TAX APPEAL NO.1300 OF 2008 WHER EIN IDENTICAL ISSUE HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND CAREFULLY CONSIDERED THE PAPER BOOK FURNI SHED BY THE ASSESSEE AND THE CASE LAWS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE CIT(A) HAS VERIFIED THE TERMS & CONDITIONS OF THE DEVELOPMENT AGREEMENTS AND ACCORDINGLY ALLOWED THE APPEAL. AS PER THE DEVELOPMENT AGREEMEN T AND FACTS OF THE CASE, THE ASSESSEE HAD TAKEN FULL RESPONSIBILITY FOR EXECUTIO N OF THE SAID DEVELOPMENT PROJECT. THE ASSESSEE HAS BEEN GIVEN FULL AUTHORITY FOR EXECUTION OF THE SAID DEVELOPMENT PROJECT INCLUDING DEVELOPMENT OF THE LA ND AND CONSTRUCTION OF RESIDENTIAL UNITS. THE ASSESSEE HAD ENGAGED PROFES SIONALS SUCH AS ARCHITECT FOR DESIGNING ARCHITECTURAL WORK. THE ASSESSEE HAD ALSO ENROLLED THE MEMBERS AND COLLECTED THE CONSIDERATION FROM THE BUYERS OF THE RESIDENTIAL UNITS. THE ASSESSEE HAD ALSO PAID COST OF THE LAND TO THE SOCIETIES INC LUDING STAMP DUTY AND HAD TAKEN POSSESSION OF THE LAND FOR CONSTRUCTION OF TH E PROJECT. AS PER THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RA DHE DEVELOPERS, SUPRA, THE LEGAL TITLE IS NOT REQUIRED FOR GETTING BENEFITS U/ S 80 IB (10) OF THE ACT. THE ASSESSEE WAS DEEMED OWNER OF THE LAND U/S 2 (47) OF THE ACT. THE ASSESSEE HAD BORNE ALL THE COST OF CONSTRUCTION INCLUDING MATERI ALS AND THE RECEIPT WAS NOT FIXED FOR THE CONTRACTOR. THE ASSESSEE IS A DEVELOPER AND BUILDER OF HOUSING PROJECT. IT A NO.2570/AHD/2010 (AY: 2007-08) ITO, W-9(1) AHMEDABAD VS M/S. VISHAL DEVELOPERS CO NO.311/AHD/2001 M/S.VISHAL DEVELOPERS VS ITO, W-9(1), AHMEDABAD 6 THEREFORE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A ). ACCORDINGLY, REVENUES APPEAL STANDS DISMISSED. 7. FROM THE GROUND RAISED BY THE ASSESSEE IT BECOM ES EVIDENT THAT THE CROSS OBJECTION PREFERRED BY THE ASSESSEE IS IN SUP PORT OF THE ORDER OF THE CIT(A). SINCE, WE HAVE UPHELD THE ORDER OF THE CIT(A) WHILE DECIDING THE APPEAL OF THE REVENUE, ASSESSEES CROSS OBJECTION HAS BECOME REDU NDANT AND THE SAME IS DISMISSED AS SUCH. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06-09-2013 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (T. R. MEENA) ACCOUNTANT MEMBER LAKSHMIKANT LAKSHMIKANT LAKSHMIKANT LAKSHMIKANTA AA A DEKA/ DEKA/ DEKA/ DEKA/- -- - 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, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 22--08-13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 26-08-13/ 04-09-13 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: