M/s. Keval Construction, Baroda V. The Income tax Officer,Ward-5(1), Baroda

ITA 2909/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1674 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAURYA SHUKLA
• Section: 80IB

Judgement Text

ITA NO.2909/AHD/2012 A.Y. 2008-09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.2909/AHD/2012 ASSESSMENT YEAR: 2008-09 M/S. KEVAL CONSTRUCTION VS. INCOME TAX OFFICER, SHREE VALLABH DUPLEX, WARD 5(1), BARODA WAGHODIA DABHOI ROAD, BARODA 390 019. [PAN AAGFK 2379A] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BHAVIN MARFATIA, A.R. RESPONDENT BY : SHRI SHAURYA SHUKLA, SR. D.R . DATE OF HEARING : 05.05.2016 DATE OF PRONOUNCEMENT : 06.05.2016 O R D E R PER R.P. TOLANI, JUDICIAL MEMBER: THIS IS ASSESSEES APPEAL. THE SOLE GROUND IS AS U NDER :- THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CON FIRMING THE ACTION OF AO IN DISALLOWING THE DEDUCTION U/S.80IB AMOUNTING TO RS. 18,80,662/- ON TOTALLY IRRELEVANT GROUNDS DESPITE OF THE FACT THAT THE APP ELLANT HAD FULFILLED ALL THE CONDITIONS MENTIONED IN SECTION 80IB OF THE INCOME TAX ACT, 1961. 2. LD COUNSEL FOR THE ASSESSEE, AT THE OUTSET, CONT ENDS THAT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY IT AT JUDGEMENT IN THE CASE OF NARAYAN REALTY LIMITED VS. DCIT ITA NOS.2293/AHD/ 2012 & 2095/AHD/2013 VIDE ORDER DATED 02.05.2014, WHEREIN THE ISSUE ABOUT ELI GIBILITY OF DEDUCTION UNDER SECTION 80IB(10) IN FAVOUR OF THE ASSESSEE WHO IS NOT THE O WNER OF THE LAND WAS ALLOWED FOLLOWING THE ITAT JUDGEMENT IN THE CASE OF SATSANG DEVELOPERS IN ITA NO.1011, 2498 AND 1221/AHD/2012 BY FOLLOWING OBSERVATIONS:- ITA NO.2909/AHD/2012 A.Y. 2008-09 PAGE 2 OF 5 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. ON PERUSING THE ORDER OF CIT(A) , IT IS SEEN THAT CIT(A) HAS HELD THAT THE ISSUE RELATING TO DISALLOW ANCE OF DEDUCTION U/S 80IB(10) OF THE ACT ON THE GROUND THAT ASSESSEE IS NOT THE OWNER OF THE LAND AND THE APPROVAL OF THE PROJECT NOT BEING IN THE NAME OF THE ASSESSEE IS COVERED IN FAVOUR OF ASSESSEE BY THE DE CISION OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR AY 2008-09. W E FURTHER FIND THAT CIT(A) HAD DISALLOWED THE CLAIM OF THE ASSESSE E ON THE GROUND THAT ASSESSEE HAD ENTERED INTO TWO AGREEMENTS NAMEL Y 'SALE DEED' FOR THE SALE OF LAND AND 'CONSTRUCTION AGREEMENT' F OR THE CONSTRUCTION THE UNIT AND THEREFORE ACCORDING TO HIM, THE ASSESS EE WAS A CONTRACTOR AND THEREFORE NOT ELIGIBLE FOR DEDUCTION U/S 8018(10). WE ALSO FIND THAT ON IDENTICAL FACTS, THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SATSANG DEVELOPERS (ITA NO 1011, 249 8 AND 1221 OF 2012 ORDER DATED 12.11.2013 HAS ALLOWED THE DEDUCTI ON TO ASSESSEE BY HOLDING AS UNDER:- 4.2. IN ADDITION TO ABOVE TWO OBJECTIONS, THE ID.CI T (A) HAS RAISED ONE MORE OBJECTION THAT THE ASSESSEE HAS SOLD THE LAND TO THE UNIT HOLDERS SEPA RATELY AND HAS DONE THE CONSTRUCTION OF UNITS UNDER SEPARATE AGREEMENT/CONTRACT AND, THEREFORE, T HE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80-IB(10) OF THE ACT BECAUSE AS PER LD.CIT(A), PROFIT EARNED BY THE ASSESSEE IN RESPECT OF SALE OF LAND IS NOT ELIGIBLE FOR DEDUCTION U/S.80-IB(10) OF THE ACT AND SIMILARLY, THE PROFIT EARNED BY THE ASSESSEE FOR CONSTRUCTION ACTIVITIES IS NOT ELIGIBL E FOR DEDUCTION U/S.80-IB(10) BECAUSE THE ASSESSEE IS DOING THE CONSTRUCTION AS A CONTRACTOR FOR A WOR K AND NOT AS A BUILDER OR DEVELOPER AND, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTI ON U/S.80-IB(10) OF THE ACT. AGAINST THESE OBJECTIONS OF LD.CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 5.2 REGARDING THE 3 R OBJECTION THAT THE ASSESSE HAS SOLD LAND TO THE UN IT HOLDERS SEPARATELY AND HAS DONE THE CONSTRUCTION UNITS UNDER A PROJECT AGREEME NT/CONTRACT, IT WAS SUBMITTED THAT IT IS A JOINT ACTIVITY ALTHOUGH THE AGREEMENT AND LAND SALE-DEED ARE EXECUTED SEPARATELY, BUT FOR THIS REASON ALONE, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT A BUILDER OR A DEVELOPER. HE PLACED RELIANCE ON THE FOLLOWING TRIBUNAL DECISIONS:- SL.NO(S) DECISION IN THE CASE OF. ... REPORTED IN.... 1. DCIT VS. SMR BUILDERS (P.)LTD. (2012)24 TAXMAN.COM 194 (HYD.) 2. SKY BUILDERS & DEVELOPERS VS. ITO (2011)14 TAXMAN.COM 78 (INDORE) 3. M/S.VARDHMAN BUILDERS AND DEVELOPERS VS. ITO ITA NO.559/IND/2010 DATED 09/05/20 12 ITA NO.2909/AHD/2012 A.Y. 2008-09 PAGE 3 OF 5 4. RAGHAVA ESTATES VS. DY.CIT ITA NOS.248 & 49/VIZAG/2009 DATED 04/08/2011 5.2. HE SUBMITTED THAT IN THE CASE OF VARDHMAN BUIL DERS & DEVELOPERS (SUPRA) ALSO, THE ASSESSEE HAD ENTERED INTO A SEPARATE AGREEMENT FOR SALE OF L AND AND SEPARATE AGREEMENT FOR CONSTRUCTION OF HOUSING ON SUCH LAND AND UNDER THESE FACTS, IT W AS HELD BY THE TRIBUNAL IN THAT CASE THAT MERELY BECAUSE OF TWO SEPARATE AGREEMENTS, THE CLAIM OF TH E ASSESSEE FOR DEDUCTION U/S.80-IB (10) OF THE ACT CANNOT BE DECLINED IF OTHER CONDITIONS ARE BEIN G SATISFIED. 5.3. HE FURTHER SUBMITTED THAT IN THE CASE OF DCIT VS. SMR BUILDERS (P) LTD. (SUPRA) ALSO, THE FACTS WERE THAT THE ASSESSEE HAD SOLD FLATS IN A SEMI-FIN ISHED STAGE. IN THAT CASE, THE AO HAD NOTED THAT AS PER THE SALE-DEED, THE ASSESSEE-COMPANY HAS SOLD UNDIVIDED SHARE OF LAND WITH SUPER-STRUCTURE OF SEMI-FINISHED BUILT-UP AREA FOR A CERTAIN CONSID ERATION. THE AO HELD THAT THE SEMI-FINISHED STRUCTURE HAS NEVER BEEN CONSIDERED AS A RESIDENTIA L UNIT. IT WAS ALSO NOTED BY THE AO IN THAT CASE THAT ON THE SAME DATE WHEN THE SALE DEED WAS EXECUT ED, A CONSTRUCTION AGREEMENT WAS ALSO ENTERED INTO WITH THE TRANSFEREE FOR FURTHER CONSTR UCTION OF THE SAME FLATS BY THE BUILDER COMPANY ITSELF. HE SUBMITTED THAT THE FACTS IN THE PRESENT CASE ARE SIMILAR. HE ALSO POINTED OUT THAT IN THAT CASE, IT WAS HELD BY THE TRIBUNAL THAT THE STAND OF THE REVENUE WITH REGARD TO THE SEMIFINISHED CONDITION OF THE FLATS IS DEVOID OF ANY MERIT IN AS MUCH AS WHAT IS SOUGHT TO BE CONSTRUCTED AND SOLD BY THE ASSESSEE IS A RESIDENTIAL UNITS AND WHA T IS SOUGHT TO BE PURCHASED BY THE BUYER IS THE OWNERSHIP OF THE SPECIFIED UNIT AND REGISTRATION OF FLAT IN SEMI-FINISHED CONDITION IS ONLY TO FACILIT ATE THE CONVENIENCE OF THE PARTIES AND AGREEMENT FOR DE VELOPMENT AND COMPLETION OF BALANCE WORK IN RELATION TO THE FLATS IS ONLY AN INCIDENTAL FORMALI TY AND THIS CANNOT BE VIEWED AS FATAL TO THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IB(10) OF THE ACT. IT WAS ALSO HELD BY THE TRIBUNAL THAT THE ENTIRE WORK FROM THE STAGE OF THE COMMENCEMENT TO T HE STAGE OF MAKING THE RESIDENTIAL UNIT HABITABLE HAVE BEEN CARRIED OUT BY THE ASSESSEE ONL Y AND, THEREFORE, ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB(L 0) OF THE ACT. 9.2. NOW WE TAKE UP THE THIRD AND LAST OBJECTION OF ID.CIT (A) THAT THE ASSESSE HAD SOLD THE LAND SEPARATELY AND UNDERTOOK THE CONSTRUCTION WORK AS P ER A SEPARATE AGREEMENT AND, THEREFORE THE ASSESSEE IS NOT A BUILDER OR A DEVELOPER BUT A LAND DEALER AND CONTRACTOR. IN THIS REGARD, IN OUR CONSIDERED OPINION, THE ISSUE INVOLVED IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF ITAT INDORE BENCH RENDERED IN THE CASE OF M/S.VARDH MAN BUILDERS AND DEVELOPERS VS. ITO (SUPRA). IT IS NOTED BY THE TRIBUNAL IN THAT CASE THAT THE A SSESSEE HAD ENTERED INTO AN AGREEMENT FOR A SALE OF LAND AND A SEPARATE AGREEMENT FOR CONSTRUCTION O F THE HOUSE ON THE LAND AND, THEREFORE, THE FACTS ARE SIMILAR. UNDER THESE FACTS, IT WAS HELD B Y THE TRIBUNAL IN THAT CASE THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IB (10) OF THE ACT CA NNOT BE DECLINED IF OTHER CONDITIONS ARE BEING SATISFIED. SIMILARLY, IN THE CASE OF DCIT VS. SMR B UILDERS (P.) LTD. (SUPRA) ALSO, THE ASSESSEE SOLD T HE LAND ALONG WITH SEMI-FINISHED STRUCTURE TO THE BUYE RS AND AS PER SEPARATE AGREEMENT, AGREED FOR CONSTRUCTION FOR COMPLETION OF BALANCE WORK. HENCE, THE FACTS OF THIS CASE ARE ALSO SIMILAR BECAUSE IN THAT CASE ALSO, THE LAND WAS SOLD SEPARATELY ALO NG WITH PARTIAL AND UNFINISHED CONSTRUCTION OF FLATS AND, THEREAFTER, CONSTRUCTION AGREEMENT WAS E NTERED INTO TO CARRY OUT THE BALANCE CONSTRUCTION WORK AND UNDER THESE FACTS, IT WAS HEL D BY THE TRIBUNAL IN THAT CASE THAT SUCH AGREEMENT FOR CONSTRUCTION TO COMPLETE THE BALANCE WORK IS ONLY AN INCIDENTAL FACILITATION TO PROTECT INTEREST OF THE PARTIES AND THEREFORE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB(10) OF THE ACT. SIMILARLY, IN THE CASE OF RAGHAVA ESTATES VS. DY.CIT (SUPRA) ON WHICH RELIANCE WAS PLACED BY THE ID.AR OF THE ASSESSEE, THE FACTS ARE SIMILAR. I N THAT CASE ALSO, THE ASSESSEE HAD SOLD THE PLOTS SEPARATELY AND THEREAFTER, CONSTRUCTED THE HOUSES A ND UNDER THESE FACTS, THE REVENUE HELD THAT THE ASSESSEE HAS TO BE CONSIDERED AS A MERE CONTRAC TOR AND, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80-IB (10) OF THE ACT. THIS GOES TO SHOW THAT THE FACTS IN THAT CASE WERE IDENTICAL. ITA NO.2909/AHD/2012 A.Y. 2008-09 PAGE 4 OF 5 IN THAT CASE, IT WAS NOTED BY THE TRIBUNAL THAT THE ASSESSEE HAD CHOSEN TO REGISTER THE PLOT IN THE NAME OF THE BUYER ON PAYMENT OF SPECIFIED AMOUNT IN ORDER TO ACHIEVE COST SAVING AND TO ENSURE RELIABILITY AND THEREAFTER, THE ASSESSEE HAD PROCEE DED TO CONSTRUCT THE HOUSE AS PER BUILDING PLAN OBTAINED IN THE NAME OF THE PLOT-OWNERS ON PAYMENT OF SUBSEQUENT INSTALLMENTS. IT IS ALSO NOTED THAT THE ASSESSEE HAD ALSO DEVELOPED VARIOUS PUBLIC AMENITIES WITHIN THE PROJECT. THEREAFTER, IT WAS HELD BY THE TRIBUNAL THAT ON A TOTALITY OF A FACT, THE TRIBUNAL IS OF THE VIEW THAT THE ASSESSEE HAS UNDERTAKEN DEVELOPING AND BUILDING HOUSING PROJECTS AS PER THE SCHEME PROVIDED IN SECTION 80-IB (10) OF THE ACT. 9.3. SINCE THE FACTS IN THE PRESENT CASE ARE SIMILA R TO THE FACTS IN ABOVE NOTED THREE TRIBUNAL DECISIONS, WE DO NOT FIND ANY DEFECT IN THE CONSTRU CTION IN THE PRESENT CASE AND HENCE RESPECTFULLY FOLLOWING THESE DECISIONS, WE DECIDE THE ISSUE IN F AVOUR OF THE ASSESSEE. THERE IS NO OTHER OBJECTION OF THE LD. CIT(A) REGARDING ALLOWABILITY OF DEDUCTI ON TO THE ASSESSEE U/S. 80IB(10) OF THE ACT. HENCE, WE DIRECT THE A.O TO GRANT THE DEDUCTION TO THE ASSESSEE U/S. 80IB(10) OF THE ACT. 9. BEFORE US, THE REVENUE COULD DID NOT PLACE ANY C ONTRARY DECISION ON RECORD NOR COULD DISTINGUISH THE FACTS OF THE CASE WHICH WAS RELIED BY THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS, WE RE SPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, IN THE CASE OF SATSANG DEVELOPERS (SUPRA) HOLD THAT ASSES SEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10). THUS THIS GROUND OF ASSESSE E IS ALLOWED. 10. THIS THE APPEAL OF ASSESSEE IS ALLOWED. 3. LD. DEPARTMENTAL REPRESENTATIVE IS HEARD. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. RESPECTFULLY FOLLOWING THE ITAT JUDGEMENT I N THE CASE OF NARAYAN REALTY LIMITED AND SATSANG DEVELOPERS (SUPRA) THE ASSESSE ES GROUND OF APPEAL IS ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. (THIS ORDER PRONOUNCED IN THE OPEN COURT TODAY ON T HE 6 TH DAY OF MAY, 2016.) SD/- SD/- N.K. BILLAIYA R.P. TOLANI (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 6 TH DAY OF MAY, 2016 ITA NO.2909/AHD/2012 A.Y. 2008-09 PAGE 5 OF 5 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FIL E BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD