The DCIT, Central Circle-1, Baroda V. M/s. Narayan Land & Estate Co., Bharuch

ITA 3027/AHD/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5958 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: ABHIMANYU SINGH BHATI
• Keywords: Tangible material; Competent authority
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL CH ATURVEDI, A.M.) I.T. A. NO. 3027/AHD/2010 (ASSESSMENT YEAR: 2008-09) D.C.I.T, CENTRAL CIRCLE-1, BARODA V/S M/S NARAYAN LAND & ESTATE, NARAYAN CHAMBERS, STATION ROAD, BHARUCH (APPELLANT) (RESPONDENT) PAN: AACFN0406B APPELLANT BY : SHRI K.C. MATHEWS, SR. D.R . RESPONDENT BY : SHRI ABHIMANYU SINGH BHATI A. R. ( )/ ORDER DATE OF HEARING : 23-04-2014 DATE OF PRONOUNCEMENT : 29-04-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A),IV, AHMEDABAD DATED 26.08.2010 FOR A.Y. 2008-09. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF VARIOUS HOUSING PRO JECTS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 08-09 ON 24.09. 2008 DECLARING TOTAL INCOME OF RS. 7,91,750/-. THE CASE WAS SELECTED FOR SCRUTINY AND ITA NO 3027 /AHD/2010 . A.Y. 2008- 09 2 THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VID E ORDER DATED 22.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT R S. 1,17,81,740/-. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 26.08.2010 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFEC TIVE GROUND:- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G ADDITION OF RS. 1,09,89,994/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DED UCTION U/S. 80IB(10) OF THE I.T. ACT . THE ONLY EFFECTIVE GROUND IS WITH RESPECT TO DISALL OWANCE OF DEDUCTION UNDER 80IB(10). 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT OUT OF THE TOTAL NET PROFIT OF RS. 1,17,86,543/-, ASSESSEE HA D CLAIMED DEDUCTION OF RS. 1,09,89,994/- U/S. 80IB(10) OF THE ACT. A.O. WA S OF THE VIEW THAT ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER 80IB(1 0) FOR THE REASON THAT THE ASSESSEE WAS NOT THE OWNER OF THE LAND AND APPR OVAL OF THE LOCAL AUTHORITY WAS NOT IN THE NAME OF THE ASSESSEE BUT I N THE NAME OF LAND OWNERS. HE ACCORDINGLY DENIED THE CLAIM OF DEDUCTI ON UNDER SECTION 80IB(10). AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AND HELD TH AT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER 80IB(10) BY HOLDING AS UNDER:- 3.6 THOUGH, THE AFORESAID DECISION OF SHAKTI CORPOR ATION WAS CONSIDERED WHILE DECIDING THE APPELLANT'S CASE FOR THE A.Y. 2007-08, THE RELEVANT DOCUMENTS WERE AGAIN GONE THROUGH. ON CONSIDERATION OF THE FACT OF THE CASE, I CAME TO TH E CONCLUSION THAT THE APPELLANT HAD ACQUIRED THE DOMINANCE OVER THE LAND AND THE LAND IS UNDER THE P OSSESSION OF THE APPELLANT FIRM. THE APPELLANT FIRM WAS THE DE-FACTO LAND OWNER FOR ALL PRACTICAL PURPO SES AND HAD DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED THEREIN. THE LAND OWNERS WERE ELIGIBLE TO GET ONLY PRICE OF LAND FIXED BY THE DEVELOPMENT AGR EEMENTS AND NOT TO GET ANY SHARE IN THE DEVELOPMENT PROFITS OF THE PROJECT. THE EXPLANATION AS REFERRED TO ABOVE IS THUS NOT APPLICABLE IN THE CASE OF THE APPELLANT AS THE APPELLANT HAD NOT EXECUTED THE WOR K OF HOUSING PROJECT FOR THE LAND OWNERS BUT ITA NO 3027 /AHD/2010 . A.Y. 2008- 09 3 DEVELOPED THE HOUSING PROJECT ON ITS OWN. THE APPEL LANT'S CASE IS SQUARELY COVERED BY THE AFORESAID DECISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF SHAKTI CORPORATION (SUPRA). THE APPELLANT HAD THUS FULFILLED ALL THE CONDITIONS LAID DOWN IN SEC. 80IB(10) OF THE ACT AND ELIGIBLE FOR DEDUCTION U/S 80- IB(10) OF THE ACT. 3.7 IN VIEW OF THE ABOVE DISCUSSION .IN PARA-3.2 TO PARA-3.6 AND RESPECTFULLY FOLLOWING THE DECISION O F THE HON'BLE AHMEDABAD TRIBUNAL IN THE CASE OF M/S R ADHE DEVELOPERS & ORS. VS. I.T.O. & ORS. (SUPRA) AND ALSO THE SUBSEQUENT DECISION IN THE CAS E OF SHAKTI CORPORATION (SUPRA), I AM OF THE OPINIO N THAT THE APPELLANT FIRM HAD FULFILLED ALL THE CONDI TIONS LAID DOWN IN SEC. 80IB(10) OF THE ACT AND WAS ENTITLED JO THE DEDUCTION U/S 80IB(10) OF THE ACT. THE EXPLANATION INSERTED BELOW SEC. 80-16(10) OF TH E ACT BY THE FINANCE (NO.2) ACT, 2009 IS NOT APPLICAB LE IN THE INSTANT CASE OF THE APPELLANT. THE ASSESSING OFFICER WAS THUS NOT JUSTIFIED IN DENYING THE DEDUCTION U/S 80IB(10) OF THE ACT TO THE APPELLANT FIRM. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO ALLOW THE DEDUCTION U/S 80IB(10) OF TH E ACT TO THE APPELLANT FIRM. THE ADDITION MADE FOR RS . 1,09,89.994/- IS HEREBY DELETED. THE THIRD GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NO W IN APPEAL BEFORE US. 6. BEFORE US, THE LD. D.R. TOOK US THROUGH THE VARIOUS FINDINGS OF A.O. AND SUPPORTED HIS ORDER. THE LD. A.R. ON THE OTHER HAN D SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 07-08. HE FURTHER SUBMITTED THAT THERE ARE NO CHANGE IN THE FACTS OF THE YEAR U NDER APPEAL WITH THAT OF EARLIER YEARS. HE ALSO PLACED ON RECORD THE COPY O F THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IT(SS)A NOS. 172 TO 176 /AHD/2010 ORDER DATED 21.09.2012. HE THUS SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US THE LD. A.R. HAS SUBMITTED THAT THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF EARLIER YEARS AND THERE ARE NO CHANGE IN THE FACTS AS COMPARED TO THAT OF EARLIER YEARS W HICH COULD NOT BE CONTROVERTED BY REVENUE. WE FIND THAT THE CO-ORDINA TE BENCH OF TRIBUNAL IN THE ASSESSEES OWN CASE FOR EARLIER YEARS I.E. A .YS. 2002-03 TO 2006- ITA NO 3027 /AHD/2010 . A.Y. 2008- 09 4 07 BY CONSOLIDATED ORDER DECIDED THE ISSUE OF DEDUC TION U/S. 80IB(10) IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER:- 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND AT THE AO HAS DISALLOWED THE CLAIM O F THE ASSESSEE FOR DEDUCTION U/S 80 IB (10) OF THE AC T ONLY ON THE BASIS THAT THE ASSESSEE FIRM WAS NOT THE OWNER OF THE LAND WHICH WAS DEVELOPED BY IT AND THE NECESSARY APPROVAL WAS NOT IN ITS NAME AS THE SAME WAS OBTAINED BY THE LAND OWNERS. THE LEARNED C IT(A) AFTER GOING THROUGH THE COPIES OF THE MEMORANDUM OF ARRANGEMENT, DEVELOPMENT AGREEMENT, A PPROVAL OF THE COMPETENT AUTHORITY FOR THE PROJECT/PLAN AND OTHER RELATED DOCUMENTS HAS GIVEN HIS FINDING THAT THE ASSESSEE FIRM WAS NOT A CONTRACTOR BUT A DEVELOPER IN ITS TRUE SENSE AND, THEREFORE, WAS ELIGIBLE TO SHARE NOT ONLY THE PROFI TS OF THE FIRM BUT TO BEAR THE LOSSES ALSO. AS A DEVELOPE R, THE ASSESSEE FIRM EXERCISED SUFFICIENT DOMINANCE OVER THE PROJECT AND THEY WERE NOT TO GET ANY FIXED REMUNERATION ON THE BASIS OF ANY ARRANGEMENT. THE LAND OWNERS WERE TO GET ONLY THE PRICE OF THEIR LAN D AND NOT TO GET ANY SHARE IN THE PROFIT OF THE DEVELOPMENT PROJECT HE ALSO FOUND THAT AS PER THE M EMORANDUM OF ARRANGEMENT, THE ASSESSEE FIRM WAS TO GET NOT ONLY THE PROFITS OF THE DEVELOPMENT PROJECT BUT WAS ALSO RESPONSIBLE WITH THE RISK ASSOCIATED WITH THE DEVELOPMENT PROJECT. THEREFORE, THE LEARNED CIT(A) RELYING ON THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF M/S. RADHE DEVE LOPERS AND ORS. (SUPRA) AND ALSO THE SUBSEQUENT DECISION IN THE CASE OF SHAKTI CORPORATI ON (SUPRA) WAS OF THE VIEW THAT THE ASSESSEE HAD FULFILLED ALL THE CONDITIONS AS LAID DOWN U/S 80 IB (10) OF THE ACT AND, THEREFORE, THE ASSESSEE WAS ENTITLED TO THE DEDUCTION UNDER THAT SECTION. 6.1 WE FURTHER FIND THAT DURING THE REGULAR ASSESSM ENT FOR ASSESSMENT YEAR 2003-04, ON THE SAME BASIS DISALLOWANCE U/S 80IB(10) OF THE ACT WAS MADE BY THE AO IN ASSESSEE' S OWN CASE. HOWEVER, THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB (10) OF THE ACT WAS ALLOWED BY ITAT AHMEDABAD IN THE DECISION OF M/S. RADHE DEVELOPERS & ORS. (SUPRA) WHERE THE A SSESSEE FIRM WAS ALSO A PARTY. THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. RADHE DEVELOPERS & ORS . (SUPRA) HAS BEEN UPHELD BY THE HON'BLE GUJARAT HIGH COURT REPORTED IN 341 ITR 403 (GUJ). 6.2 THE AO HAD AGAIN DISALLOWED DEDUCTION U/S 80 IB (10) OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 153C OF THE ACT AS ON 31-05-2006 A SEARCH W AS CARRIED OUT AT THE BUSINESS PREMISES OF,THE ASSESSEE. THERE IS NO DISPUTE ABOUT THE FACT THAT D URING THE SEARCH NO MATERIAL OR ANY OTHER EVIDENCE IN RESPECT OF THE ASSESSMENT YEARS INVOLVED IN THESE A PPEALS WAS SEIZED. MOREOVER, NO OTHER DISALLOWANCE/ADDITION WAS MADE EXCEPT DISALLOWING . THE CLAIM OF DEDUCTION U/S 80IB (10) OF THE ACT IN THE ASSESSMENT ORDERS PASSED U/S 153C OF THE ASSESS MENT YEAR 2002-03 TO ASSESSMENT YEAR 2007-08. 6.4 SINCE THE LEARNED CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE PLACING RELIANCE ON THE DECISION OF TH E TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2003-04 IN REGULAR ASSESSMENT PROCEEDINGS WHICH HAS BEEN CONFIRMED BY THE HON'BLE JURISDICTIONAL HI GH COURT (SUPRA), WE HEREBY UPHOLD THE ORDERS PASSED BY THE LEARNED CIT(A). ITA NO 3027 /AHD/2010 . A.Y. 2008- 09 5 8. BEFORE US, THE LD. D.R. COULD NOT CONTROVERT THE SU BMISSIONS OF THE LD. A.R NOR HAS BROUGHT ANY TANGIBLE MATERIAL ON RECORD IN ITS SUPPORT. FURTHER, NO BINDING CONTRARY DECISION HAS BEEN PLAC ED BY REVENUE IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACTS AND RESPECT FULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL IN TH E ASSESSEES OWN CASE FOR EARLIER YEARS, WE FIND NO REASON TO INTERFERE W ITH THE ORDER OF CIT(A) AND THUS DISMISS THIS GROUND OF REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 04 - 2014. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD