The ITO, Ward-1, Anand V. M/s. Chitrakut Corporation, Anand

ITA 2728/AHD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0549 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 05-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Keywords: Capital asset
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 2728/AHD/2012 ASSESSMENT YEAR :2005-06 INCOME TAX OFFICER WARD - 1, ANAND V/S . M/S. CHITRAKUT CORPORATION 7/8, THAKKAR ARCADE, SARDARGUNJ, ANAND - 388001 PAN NO. A ACFC6983E (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI D.K.SINGH, SR. D.R. /BY RESPONDENT MS. URVASHI SHODHAN, A.R. /DATE OF HEARING 28.01.2013 /DATE OF PRONOUNCEMENT 15.03.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF CIT(A)-IV, BARODA, DATED 11.09.20 12 FOR ASSESSMENT YEAR 2005-06. THE SOLE GROUND OF APPEAL IS AGAINST ALLO WING THE DEDUCTION OF RS. 21,01,615/- U/S. 80IB(10) OF THE IT ACT. 2. IT WAS SUBMITTED BY THE APPELLANT BEFORE THE A.O . THAT THE ASSESSEE HAD CARRIED OUT CONSTRUCTION AND DEVELOPMENT ACTIVITY D URING THE YEAR UNDER ITA NO. 2728/AHD/2012 A.Y. 05-06 PAGE 2 CONSIDERATION. THE ASSESSEE FIRM CARRIED OUT CONST RUCTION AND DEVELOPMENT OF HOUSING PROJECT. THE TOTAL LAND AREA OF PLOT DEVEL OPED BY THE ASSESSEE FIRM WAS 5.98 ACRES. THE PERMISSION WAS GRANTED ON 09.0 8.2001. ALL THE UNITS ARE BUILT UP AREA LESS THAN 1500 SQ.FT. I.E. 139.5 SQ.M TRS. THUS, THE ASSESSEE FIRM HAD SATISFIED ALL THE CONDITIONS FOR ELIGIBILITY OF DEDUCTION U/S. 80IB OF THE IT ACT, 1961. DURING THE YEAR UNDER ASSESSMENT AND RI GHT FROM THE INCEPTION, THE WORK HAD BEEN CARRIED OUT AT THE SITE LOCATED AT OP POSITE AMIN AUTO, MOGRI ROAD, ANAND. THE A.O. OBSERVED THAT IN A.Y. 04-05, THE APPELLANT HAD ALSO CLAIMED 80IB DEDUCTION WHICH WAS DISALLOWED IN SCRU TINY ASSESSMENT AFTER DETAILED INVESTIGATION AT RS.21,01,615/-. THE INIT IAL YEAR FOR THE CLAIM U/S.80IB WAS A.Y. 03-04 AND AS SUCH, THE YEAR UNDER REVIEW I S THE THIRD YEAR. DURING THE COURSE OF ASSESSMENT FOR THE INITIAL YEAR, THE ASSESSEE CLAIMED U/S.80IB WAS EXAMINED AND AFTER DISCUSSION, THE SAME WAS REJ ECTED. THE A.O. OBSERVED THAT LAND WAS NOT OWNED BY THE APPELLANT. SIMILARLY, LOCAL AUTHORITY FURNISHED CERTIFICATE FOR THE ELIGIBILITY OF DEDUCT ION WAS IN THE NAME OF SHRI GUNVANTRAI RAMJIBHAI RAJA I.E. IN THE NAME OF THE L AND OF THE OWNER. THE ASSESSEE RELIED UPON THE VARIOUS DECISIONS BEFORE T HE A.O. THE ASSESSEE CLAIMED THAT FOLLOWING ACTIVITIES HAD BEEN PERFORME D BY IT: A) AGREEMENT TO SALE HAS BEEN MADE IN THE NAME OF APPELLANT FIRM. B) PERMISSIONS WERE OBTAINED FROM LOCAL AUTHORITY F OR CONSTRUCTION. C) ARCHITECTS WERE APPOINTED, PLANNING FOR CONSTRUC TION OF RESIDENTIAL AND DEVELOPMENT OF SITE WAS UNDERTAKEN. D) CONTRACTORS FOR EXECUTION OF WORK UNDER THE SUPE RVISION OF PARTNERS WERE MADE. ITA NO. 2728/AHD/2012 A.Y. 05-06 PAGE 3 E) THE PARTNERS MADE MARKETING STRATEGY FOR SELLING OF THE UNITS. F) LITERATURE FOR SPECIFICATION OF THE INDIVIDUAL U NITS AS WELL AS COMMON AMENITIES WAS LISTED OUT IN THE BROCHURES. G) THE PARTNERS MADE BOOKING OF THE UNITS AND COLLE CTION FROM THE MEMBERS. H) ALL REQUIRED MATERIALS WERE PURCHASED BY THE APP ELLANT FIRM. I) ALL INVENTORIES WERE CARRIED BY APPELLANT FIRM O F MATERIAL AND WORK IN PROCESS. J) ALL THE FINANCE WAS ARRANGED FOR MAKING PAYMENT FOR MATERIALS AND LABOUR CHARGES WHENEVER REQUIRED. K) SUPERVISION FOR CONSTRUCTION AND DEVELOPMENT OF THE PROJECT WAS UNDER THE DIRECT CONTROL OF ALL THE PARTNERS. THE A.O. HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IB(10) OF THE IT ACT. THEREFORE, HE REJECTED THE ASSESSEES CLAI M IN ADDITION OF RS.31,01,615/- WAS MADE IN THE INCOME OF THE ASSESS EE. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A), WHO HAS ALLOWED THE APPEA L IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER: 7. THE ORDER U/S 143(3) RWS 254 OF THE AO AS WELL AS ABOVE SUBMISSION OF THE APPELLANT'S AR HAVE BEEN CONSIDER ED. IN THE CASE OF APPELLANT, SIMILAR CLAIM OF DEDUCTION U/S 80IB W AS MADE FOR A.Y. 2003-04 ALSO BY THE APPELLANT AND SUCH CLAIM WAS DI SALLOWED BY THE AO IN THE ASSESSMENT ORDER U/S 143(3) RWS 254. ON APPEAL SUCH CLAIM OF THE APPELLANT WAS ALLOWED BY ME IN MY APPE AL ORDER NO. CAB/IV/A-216/2010-11 DATED 18-01-2011 IN VIEW OF TH E REASONS AS MENTIONED THERE IN SUCH APPEAL ORDER. THE DEPARTME NT HAD ITA NO. 2728/AHD/2012 A.Y. 05-06 PAGE 4 PREFERRED AN APPEAL TO THE ITAT, AHMEDABAD, AND THE HON'BLE ITAT, AHMEDABD HAS DECIDED THE ISSUE REGARDING CLAIM OF D EDUCTION OF RS. 28,57,757/- AS MADE BY THE APPELLANT U/S 80IB ( 10) OF THE ACT IN FAVOUR OF APPELLANT AND AGAINST THE DEPARTMENT. THE AR OF THE APPELLANT IN HIS ABOVE SUBMISSION DATED 13-07-2012 HAS STATED THAT THE ISSUE INVOLVED IN THE CASE OF APPELLANT FO R THE YEAR UNDER CONSIDERATION IS FULLY COVERED BY THE ORDERS OF CIT(A) AS WELL AS HON'BLE ITAT, AHMEDABAD AS PASSED AGAINST T HE ORDER U/S 143(3) RWS 254 FOR A.Y. 2003-04. THE AR HAS SUBMITTED COPY OF SALE AGREEMENT WITH POSSESSION AND HAS STATED THAT THE SAME IS ON STAMP PAPER OF RS. 100/-. AS PER THE AR IT IS PREV AILING PRACTICE TO ENTER ALL THE AGREEMENT TO SALE ON STAMP PAPER OF R S. 100/- AND THEREFORE THE OBSERVATION OF THE AO THAT THE APPELL ANT FIRM HAD NOT ENTERED INTO VALID DOCUMENTS IS NOT CORRECT. AS PER THE AR ON VERIFICATION THE SALE AGREEMENT IT WILL BE NOTICED THAT THE SAME WAS ENTERED WITH MR, CHETAN GUNVANT RAJA IN THE CAPACIT Y OF PARTNER OF APPELLANT FIRM AND NOT IN THE INDIVIDUAL CAPACITY. AS PER THE AR FURTHER HAD IT BEEN THE CASE OF A SIMPLE POWER OF A TTORNEY HOLDER, THE NEED FOR POSSESSION COULD NOT HAVE ARISED. THUS AS PER THE AR THE OBSERVATION OF THE AO IN THIS REGARD IS NOT CORRECT . AS PER THE AR THE IDENTICAL OBSERVATION WAS MADE BY THE AO IN THE ASS ESSMENT ORDER U/S 143(3) RWS 254 FOR A.Y. 2003-04. AS PER THE AR THE PROJECT ON THE SAME PLOT OF LAND WAS CARRIED OUT FROM ASSESSME NT YEAR 2003- 04, 2004-05 AND 2005-06 ALSO. AS PER THE AR THUS, DURING THE YEAR UNDER APPEAL IT IS THE CONTINUATION OF THE PROJECT ON THE SAME PLOT OF LAND AND THE CIT(A) AND HON'BLE ITAT HAVE HELD BASE D ON THE SUBMISSION MADE BY THE APPELLANT THAT THE ISSUE OF OWNERSHIP OF LAND IS COVERED BY THE DECISION OF HON'BLE ITAT IN THE CASE OF RADHE DEVELOPERS AND WHICH IS NOW UPHELD BY HON'BLE GUJAR AT HIGH COURT ALSO. THIS SUBMISSION OF THE AR OF THE APPELLANT IS FOUND TO BE ITA NO. 2728/AHD/2012 A.Y. 05-06 PAGE 5 ACCEPTABLE. AS IN THE CASE OF APPELLANT THE APPEAL RELATED TO CLAIM OF DEDUCTION U/S 80IB (10) OF THE ACT FOR A.Y. 2003 -04 HAS BEEN ALLOWED BY ME IN VIEW OF THE REASONS AS STATED THEI R IN SUCH APPEAL ORDER AND SIMILAR CLAIM OF DEDUCTION OF RS. 21,01,6 15/- AS MADE U/S 801B (10) BY THE APPELLANT FOR THE YEAR UNDER CONSI DERATION IS ALSO ALLOWED ON THE BASIS OF THE SAME REASONS AS DISCUSS ED IN MY APPEAL ORDER NO. CAB/IV/A-216/2010-11 DATED 18-01-2011 AS PASSED FOR A.Y. 2003-04. 4. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHE MENTLY RELIED UPON THE ORDER OF A.O. AT THE OUTSET, LD. COUNSEL FOR THE A PPELLANT CONTENDED THAT IN ITA NO. 3044/AHD/2011 FOR A.Y. 03-04, ITAT C BENC H, AHMADABAD, HAD ALLOWED THE DEDUCTION U/S.80IB(10). THE OPERATIVE PORTION OF THE ORDER IS AS UNDER: 7. WE HAVE PERUSED THE ASSESSMENT ORDER, ORDER OF THE ID. CIT(A) AND VERIFIED THE FACTS OF THE CASE AS WELL AS FACT OF THE CASE RELIED UPON BY THE LD. CIT(A) AND THE ID. AR OF THE ASSESS EE. IT IS FOUND THAT THE LAND WAS OWNED BY SHRI GUNVANT RAMJIBHAAI RAJA & OTHERS, WHEREAS THE DEVELOPMENT RIGHTS WERE WITH THE ASSESS EE BY ENTERING IN AN AGREEMENT WITH THE OWNER OF THE LAND. THE PER MISSION OF CONSTRUCTION OF BUILDING WAS GRANTED BY THE ANAND U RBAN DEVELOPMENT AUTHORITY IN THE NAME OF OWNER OF THE L AND. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RA DHI DEVELOPER (SUPRA) HAS CONSIDERED THIS ISSUE AND HAS HELD THAT LEGAL OWNERSHIP FOR CLAIMING OF DEDUCTION U/S. 80IB(10) IS NOT NECE SSARY. THE AGREEMENT MADE WITH THE LAND OWNER BY THE ASSESSEE HAS ALL RIGHT TO DEVELOP THE PROJECT AND RISK IS WITH THE ASSESSE E AND HE HAD NOT GOT FIXED RECEIPT FROM THE LAND OWNER BUT GETTING P ROFIT ON ITA NO. 2728/AHD/2012 A.Y. 05-06 PAGE 6 DEVELOPMENT. THIS IS TRANSFER OF OWNERSHIP OF LAND U/S.2(47)(V), WHICH IS REPRODUCED AS UNDER:- '(47) ['TRANSFER, IN RELATION TO A CAPITAL ASSET, I NCLUDES,- (I) ...... (II) ..... (III) ... .. (IV) ...... (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO I SECTION 53A OF THE TRANSFER OF PROPER TY ACT, 1882 (4 OF 1882): OR' IN THIS CASE, NOT ONLY POSSESSION OF THE LAND HAS B EEN GIVEN TO THE ASSESSEE BUT ALSO CONSIDERATION HAS ALSO BEEN PASSE D TO THE LAND OWNER AND ALL EXPENSES FOR DEVELOPMENT HAS BEEN DEB ITED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND SALE PR OCEED HAS BEEN CREDITED IN PROFIT AND LOSS ACCOUNT ALSO. KEEPING IN VIEW OF THE ABOVE DISCUSSION AND THE JUDGMENT OF HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF RADHI DEVELOPER (SUPRA) WE FIN D NO REASON TO INTERFERE WITH THE ORDER PASSED BY LD. CIT(A). THI S GROUND OF REVENUE IS DISMISSED. 5. WE HAVE CONSIDERED THE FACTS DURING THE YEAR UN DER CONSIDERATION, WHICH WAS PART OF THE SAME PROJECT AND ALLOWED IN A .Y. 03-04 BY THE CO- ORDINATE C BENCH. THUS, FOLLOWING THE RESPECTED C BENCH DECISION IN ASSESSEES OWN CASE, WE DISMISS THE REVENUES APPEA L FOR YEAR UNDER CONSIDERATION. ITA NO. 2728/AHD/2012 A.Y. 05-06 PAGE 7 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 15.03.2013 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;