The ITO, Ward-5(4), Baroda V. M/s. Shubham Enterprise, Baroda

ITA 3016/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8155 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 14-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .. , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.3016/AHD/2014 ( / ASSESSMENT YEAR : 2010-11) THE INCOME TAX OFFICER WARD-5(4) BARODA 390 007 / VS. M/S.SHUBHAM ENTERPRISE B-41, SWETAPARK SOCIETY HARNI-WARASIA RING ROAD BARODA, PIN 390 002 & ./ ./ PAN/GIR NO. : AAMFM 3539 L ( &) / APPELLANT ) .. ( *+&) / RESPONDENT ) &), / APPELLANT BY : SHRI V.K. SINGH, SR.DR *+&)-, / RESPONDENT BY : SHRI SAKAR SHARMA, AR .-/ / DATE OF HEARING 24/04/2018 0123-/ / DATE OF PRONOUNCEMENT 06/06/2018 / O R D E R PER MS. MADHUMITA ROY JM: THE APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-V, BAROD A [CIT(A) IN SHORT] DATED 08.08.2014 PASSED FOR THE ASSESSMENT YEAR (AY) 2010- 11. ITA NO.3016/AHD /2014 ITO VS. M/S.SHUBHAM ENTERPRISE ASST.YEAR 2010-11 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE RE AD AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 80,47,093/- MADE U/S.80IB(10) OF THE ACT. 2. THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FAC T THAT THE UNIT HOLDERS, I.E. PURCHASERS HAVE OCCUPIED THE PLOT OF LAND DIRECTLY FROM THE ORIGINAL LAND OWNER BY VIRTUE OF INDEPENDE NT PURCHASE DEED, AND THE ASSESSEE BEING CONTRACTOR ELIGIBLE FO R FIX REMUNERATION IN LIEU OF RENDERING SERVICES. 3. THE LD.CIT(A) FAILED IN NOT APPLYING THE DECISI ON OF ITAT, AHMEDABADS ORDER IN THE CASE OF M/S.SHAKTI CORPORA TION [ITA NO.1503/AHD/2008] BEING RATIO DECIDENDI RENDERING T HE ASSESSEE INELIGIBLE FOR CLAIM OF DEDUCTION U/S.80IB(10) OF T HE ACT. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL BUT EFFECTIVE GRIEVANCE OF THE ASSESSEE IS IN REGARD TO THE NON-G RANT OF DEDUCTION OF RS.80,47,093/- CLAIMED U/S.80IB(10) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). 3. THE RELEVANT FACTS OF THE INSTANT CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGING IN DEVELOPING HOUSING PRO JECTS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING I NCOME OF RS.5,750/- WAS FURNISHED ON 28.06.2010 CLAIMING DEDUCTION U/S. 80IB OF THE ACT TO THE TUNE OF RS.80,47,093/-. THE ASSESSMENT WAS MAD E U/S.143(3) OF THE ACT BY THE ASSESSING OFFICER (AO) ON 25.3.2013. DU RING THE COURSE OF ITA NO.3016/AHD /2014 ITO VS. M/S.SHUBHAM ENTERPRISE ASST.YEAR 2010-11 - 3 - ASSESSMENT PROCEEDINGS UPON VERIFICATION OF THE PR OPOSED LAY OUT PLAN, DEVELOPMENT PERMISSION FROM VADODARA MUNICIPAL CORP ORATION (VMC) AND THE DEVELOPMENT AGREEMENT, IT APPEARS THAT THE ASSESSEE IS NOT THE ACTUAL OWNER OF THE LAND ON WHICH THE PROJECT CALLE D SAHAJANAND TOWNSHIP SOCIETY WAS CONSTRUCTED. THE APPROVAL OF THE PROJECT IS NOT GRANTED TO THE ASSESSEE-FIRM M/S.SHUBHAM ENTERPRIS E TO CLAIM DEDUCTION AND THE SAME WAS GRANTED BY THE VMC ON THE APPLICA TION MADE BY THE APPLICANT SMT.KUSUMBEN CHIMANBHAI PATEL AND OTHERS. BUT IN FACT THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80IB OF THE ACT OF RS.80,47,093/-. 4. THE AO DISALLOWED THE CLAIM OF SUCH DEDUCTION ON THE SOLE GROUND THAT THE ASSESSEE WAS NOT THE OWNER OF THE LAND. A CCORDING TO THE AO, THE ASSESSEE WAS NOT A DEVELOPER WITHIN THE MEANING OF SECTION 80IB(10) OF THE ACT BUT WAS MERELY A CIVIL CONTRACTOR. AGAINST THE SAID ORDER PASSED BY THE AO, APPEAL HAS BEEN PREFERRED BY THE ASSESSE E BEFORE THE CIT(A). THE LD.CIT(A) ALLOWED THE DEDUCTION OF RS.80,52,84 3/- U/S.80IB(10) OF THE ACT ON THE BASIS OF THE ORDER PASSED IN THE IDE NTICAL ISSUE IN RESPECT OF THE SAME ASSESSEE FOR AY 2007-2008 ON 08.08.2014. 5. AGAINST THE SAID ORDER, THE INSTANT APPEAL HAS C OME UP BEFORE US. 6. WE HAVE HEARD THE ARGUMENTS ADVANCED BY BOTH THE PA RTIES AND HAVE PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. ITA NO.3016/AHD /2014 ITO VS. M/S.SHUBHAM ENTERPRISE ASST.YEAR 2010-11 - 4 - THE LD.DR FOR THE REVENUE RELIED UPON THE ORDER OF THE AO. THE LD.AR HAS REFERRED THE SUBMISSIONS MADE BY TH E ASSESSEE WHICH ARE AS FOLLOWS :- 3.3. IN RESPONSE TO THE ABOVE NOTICE, THE ASSES SEE FILED ITS SUBMISSIONS, WHICH IS SUMMARIZED AS BELOW : I) THE APPELLANT IS A PARTNERSHIP FIRM CONS TITUTED ON 10.12.2003 AND FURTHER AMENDED ON 01.04.04. THE PARTNERSHIP DEED CONTAINS SPECIFIC CLAUSE NO. 11 ON PAGE NO. 5 & 9 ABOUT THE PURCHASE OF LAND FOR THE DEVELO PMENT OF THE SAME. II) THE LAND SURVEY NO. 466, 470/1, 464/1, 469, 464 /2, 463 AT VILLAGE BAPOD. TA. & DIST : BARODA IS PURCHASED FROM LAND OWNERS THROUGH DEVELOPMENT AGREEMENTS EXECUTED BY THE LAND OWNER AND BY ALL THE PARTNERS ON BEHALF OF THE APPELLANT FIRM. THE LAND OWNERS GAVES ALL THEIR RIGHT OVER THE LAND AND GAVES FULL AUTHORITY TO THE APPELLANT FIRM TO DEVELOP THE LAND AND ENJOY THE LA ND IN THE MANNER OF HIS CHOICE. III) THE TOTAL LAND PURCHASED WAS ABOUT 22.5 02 SQ. MTRS. WHICH IS MORE THAN ONE ACRE STIPULATED U/S 80IB(10)(B) OF THE INCOME TAX A CT, 1961. IV) AS PER THE DEVELOPMENT AGREEMENT THE ENT IRE EXPENDITURE FOR OBTAINING PERMISSION FROM VARIOUS GOVERNMENT AND SEMI GOVT. D EPARTMENTS WAS TO BE BORNE BY THE ASSESSEE FIRM. THE ENGLISH TRANSLATION OF THE D EVELOPMENT AGREEMENT WHICH ARE RELEVANT ARE REPRODUCED HEREUNDER:- 'THE NECESSARY PERMISSION FOR CONVERTING THE LAND F ROM JUINI SHARAT TO NEW SHARAT AND FOR CONSTRUCTION TO BE OBTAINED FROM GOVT. AND SEMI GOVT. DEPARTMENTS SHALL BE OBTAINED BY THE DEVELOPER AND THE COST OF THE SAME SHALL HAVE TO BORNE BY THE DEVELOPER.' 'THE DEVELOPER CAN CARRY THE WORK OF LEVELLING ON T HE LAND, TO CARRY SURVEY WORK, TO APPOINT ARCHITECT, TO APPOINT CONTRACTORS AND SUB-CONTRACTORS ETC ....' ITA NO.3016/AHD /2014 ITO VS. M/S.SHUBHAM ENTERPRISE ASST.YEAR 2010-11 - 5 - 'THE DEVELOPER CAN ADVERTISE THE SCHEME, TO COLLECT THE AMOUNT FROM CUSTOMERS, TO ISSUE THE RECEIPTS IN THE NAME OF DEV ELOPER, TO COMPLETE CONSTRUCTION WORK AS PER PERMISSION FROM VADODARA M UNICIPAL CORPORATION ....' V) THE APPELLANT FIRM HAD APPLIED FOR PERMI SSION OF CONSTRUCTION AND OBTAINED PERMISSION FROM VADODARA MUNICIPAL CORPORATION ON 1 9.03.2004 AND STARTED CONSTRUCTION WORK. VI) THE APPELLANT FIRM HAS PARTLY COMPLETED THE CONSTRUCTION AND GOT APPLIED FOR COMPETITIONS BEFORE THE 31.03.2008. VII) THE APPELLANT FIRM HAS CLAIMED EXEMPTION OF ENTIRE PROFIT U/S 80IB(10) OF THE INCOME-TAX ACT, 1961. 7. WE HAVE CONSIDERED THE JUDGMENT BY THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RADHE DEVELOPERS( SUPRA) RELIED UPON BY THE LD.AR, WHEREIN THE HONBLE HIGH COURT HAS HE LD AS UNDER:- SECTION 80IB(10) ALLOWS DEDUCTION TO AN UNDERTAKIN G ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTING HOUSING PRO JECTS. THERE IS NO REQUIREMENT THAT THE LAND MUST BE OWNED BY THE ASSE SSEE SEEKING THE DEDUCTION. UNDER THE DEVELOPMENT AGREEMENT, THE ASSESSEE HAD U NDERTAKEN THE DEVELOPMENT OF HOUSING PROJECT AT ITS OWN RISK AND COST. THE LAND OWNER HAD ACCEPTED THE FULL PRICE OF THE LAND AND HAD NO RESPONSIBILITY. THE ENTIRE RISK OF INVESTMENT AND EXPENDITURE WAS THAT OF THE ASSESSEE. RESULTANTLY, PROFIT AND LOSS ALSO ACCRUED TO THE ASSESSEE ALONE. THE ASSESSEE HAD TOTAL AND COMPLETE CONTROL OVER THE LAND AND COULD PUT THE LA ND TO THE AGREED USE. IT HAD FULL AUTHORITY AND RESPONSIBILITY TO DEVELOP THE HOUSING PROJECT BY NO T ONLY PUTTING UP THE CONSTRUCTION BUT BY CARRYING OU T VARIOUS OTHER ACTIVITIES INCLUDING ENROLLING MEMBERS, ACCEPTING M EMBERS, CARRYING OUT MODIFICATIONS ENGAGING PROFESSIONAL AGENCIES AND SO ON. THE RISK ELEMENT WAS ENTIRELY THAT OF THE ASSESSEE. THE ASSESSEE WAS A 'DEVELOPER' IN COMMON PARLANCE AS WELL AS LEGAL PAR LANCE AND COULD NOT BE REGARDED AS ONLY A 'WORKS CONTRACTOR'. THE EXPLA NATION TO SECTION ITA NO.3016/AHD /2014 ITO VS. M/S.SHUBHAM ENTERPRISE ASST.YEAR 2010-11 - 6 - 801B INSERTED W.R.E.F 1.4.2001 HAS NO APPLICATION A S THE PROJECT IS NOT A 'WORKS CONTRACT'. FURTHER, AS THE ASSESSEE WAS, IN PART PERFORMANCE OF THE AGREEMENT TO SELL THE LAND, GIVEN POSSESSION AND HA D ALSO CARRIED OUT THE CONSTRUCTION WORK FOR DEVELOPMENT OF THE HOUSING PR OJECT, IT HAD TO BE DEEMED TO BE THE 'OWNER' U/S 2(47)(V) R.W.S. 53A OF THE TOP ACT EVEN THOUGH FORMAL TITLE HAD NOT PASSED (FAQIR CHAND GUL ATI VS. UPPAL AGENCIES (2008) 10 SCC 345 DISTINGUISHED). THE JURISDICTIONAL TRIBUNAL HAS ALLOWED THE DEDUCTI ON U/S.80IB(10) OF THE ACT ON SIMILAR SET OF FACTS IN THE CASE OF M /S.SATSANG DEVELOPERS IN ITA NO.1101 &2498/AHD/2012 BY AND UNDER ORDER DATED 12.11.2013 AS ALSO IN THE MATTERS OF M/S.SAGAR ASSOCIATES AND M/S .SAGAR BUILDERS IN ITA NO.460 & 461/AHD/2013 BY COMMON ORDER DATED 26. 11.2013. IT ALSO APPEARS THAT THE ASSESSEE HAS BEEN ALLOWE D DEDUCTION FOR AY 2007-08 BY THE CIT(A)-V, BARODA. THE COORDINAT E BENCH HAS ALSO ALLOWED DEDUCTIONS IN ASSESSEES OWN CASE IN ITA N O.960/AHD/2013 FOR AY 2009-10 ON 20/03/2017. THE ISSUE IS IDENTICAL IN THE INSTANT CASE. TAKING INTO CONSIDERATION OF THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE A ND RESPECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS. RADHE DEVELOPERS(SUPRA), WE UPHOLD THE O RDER PASSED BY THE LD.CIT(A) AND DISALLOW THE INSTANT APPEAL FILED BY THE REVENUE. ITA NO.3016/AHD /2014 ITO VS. M/S.SHUBHAM ENTERPRISE ASST.YEAR 2010-11 - 7 - 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 06 / 0 6 /201 8 SD/- SD/- ( .. ) ( ) ( N.K. BILLAIYA ) (MS.MAD HUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED / 05 /2018 PRONOUNCED ON 6/6/18 SD/- SD/- (AS) (MR) AM JM 5/..,. ../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. 6 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-V, BARODA 5. :;<* 6 , /63 , / DR, ITAT, AHMEDABAD 6. <>?@. / GUARD FILE. / BY ORDER, +:* //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..26.4.18 (DICTATION-PAD 8-PAG ES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.4.18/2.5.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.6.6.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6.6.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATC H OF THE ORDER