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

ITA 3175/AHD/2009

• Counselvise Citation: 317520514 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 26-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority; Condonation of delay
• Section: 80IB

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI D K TYAGI - JM AND SHRI A MOHAN ALANKAMONY - AM ITA NO.3175/AHD/2009 WITH C O NO.188/AHD/2011 (ASSESSMENT YEAR:-2005-06) THE INCOME-TAX OFFICER, WARD-5(1), 5 TH FLOOR, AAYAKAR BHAVAN, BARODA V/S M/S KEVAL CONSTRUCTION, SHREE VALLABH DUPLEX, WAGHODIA ROAD, BARODA PAN: AIDPP 2875 R [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI VINOD TANWANI, SR. DR ASSESSEE BY:- SHRI BHAVIN MARFATIA, AR DATE OF HEARING:- 11-01-2012 DATE OF PRONOUNCEMENT:- 13-01-2012 O R D E R PER D K TYAGI (JM) :- THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE ARISING O UT OF THE ORDER OF THE LEARNED CIT(A) DATED 25-09-2009 FOR ASSESSME NT YEAR 2005-06. 2 AT THE OUTSET, IT IS PERTINENT TO NOTE THAT THE C ROSS OBJECTION HAD BEEN FILED LATE BY THE ASSESSEE. AN APPLICATION FOR CONDONATION OF DELAY IS FILED BEFORE US AND PLACED ON RECORD. AFTER HEARING BOTH THE PARTIES, WE CONDONE THE DELA Y AND PROCEED TO DECIDE THE SAME ALONG WITH THE REVENUES APPEAL AS UNDER. 2 3 WE ARE CONSIDERING FIRST THE REVENUES APPEAL, WH EREIN THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS A S UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) ERRED IN ALLOWING DEDUCTION OF RS.26,35,686/ - UNDER SECTION 80IB(10) OF THE INCOME-TAX ACT DESPITE THE ASSESSEE S UNDERTAKING NOT BEING APPROVED BY THE LOCAL AUTHORITY. THE LEARNED CIT(A) RELIED ON THE ITATS DECISION IN THE CASE OF M/S SHAKTI DEVEL OPERS. THE SAID DECISION HAVE NOT BEEN ACCEPTED BY THE DEPARTMENT A ND AN APPEAL TO THE HIGH COURT HAS BEEN FILED. 4 THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND & CONSTRUCTION OF RESIDENTIAL BUILDING. THE RETURN OF INCOME WAS FILED ON 31-10-2005 DECLARING TOTAL INCOME AT NIL. THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT OF RS.26, 35,686/-. THE AO DISALLOWED THE CLAIM ON THE FOLLOWING GROUNDS:- (I) THE LAND IS NOT IN THE NAME OF THE FIRM. OWNERS HIP OF LAND IS AN ESSENTIAL ELEMENT WHICH CARRIES WITH IT THE RIGHT T O DEVELOP THE LAND AND BUILD HOUSING PROJECTS THEREON. AO SAYS TH AT THE DEVELOPER FIRST SHOULD PURCHASE THE LAND AND THEN T AKE NECESSARY PERMISSION TO CONSTRUCT. (II) APPELLANT IN THE INSTANT CASE HAS ACTED MERELY AS AN AGENT FOR COLLECTION OF THE LAND CONSIDERATION ON BEHALF OF T HE LAND OWNER AND A CONTRACTOR FOR THE CONSTRUCTION OF THE HOUSE ON BEHALF OF THE UNIT HOLDERS. (III) THE APPROVAL FOR THE PROJECT IS GRANTED BY TH E COMPETENT AUTHORITY IN THE NAME OF THE LAND OWNER ONLY. (IV) THE APPELLANT IS NOT A BUILDER OR DEVELOPER BU T A CONTRACTOR AND THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S 80I B. 5 AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(A) DIRECTED TH E AO TO VERIFY 3 THE AGREEMENT AND OTHER DETAILS IN THE LIGHT OF THE DECISION OF THE ITAT IN THE CASE OF M/S SHAKTI DEVELOPERS. THE RELE VANT PARAGRAPHS OF THE ORDER OF THE LEARNED CIT(A) ARE A S UNDER:- 4.2 IN APPEAL, IT IS CONTENDED THAT THE ASSESSEE I S ENGAGED IN DEVELOPING HOUSING PROJECT ON THE LAND IN POSSESSIO N OF THE FIRM IN THE NAME OF SHRI BHIKABHAI PATEL, SHRI VIPINBHAI RAMANB HAI PATEL AND OTHERS. IT IS ALSO MENTIONED THAT THE APPROVAL OF T HE PROJECT WAS ALSO OBTAINED IN THE NAMES OF THE AFORESAID PERSONS AND THAT ALL THE OTHER CONDITIONS REGARDING AREA ETC., AS LAID DOWN U/S, 8 0IB(10) ARE ALSO SATISFIED. RELIANCE IS PLACED ON THE DECISION OF TH E HON'BLE ITAT IN THE CASE OF M/S. RADHE DEVELOPERS. IT IS ALSO SUBMITTED THAT ON IDENTICAL ISSUE FOR A.Y. 2004-05 CIT(A) HAS ALLOWED THE DEDUC TION U/S. 80IB(10). THE APPELLANT CONTENDS THAT THERE WAS A T YPOGRAPHICAL ERROR IN THE COMPUTATION SHEET AND THE ACTUAL PROFIT WAS RS.26,35,686/- AND INADVERTENTLY THE SAME WAS MENTIONED AS RS.23,35,68 6/-. IT IS IMPRESSED THAT THE BOOKS OF ACCOUNTS ARE AUDITED AN D NO WHERE IT IS MENTIONED THAT THERE WAS UNDISCLOSED RECEIPTS. 4.3 I HAVE CAREFULLY EXAMINED THE FACTS OF THE CASE , SUBMISSIONS OF THE APPELLANT AND PERUSED THE ARGUMENTS OF THE ASSE SSING OFFICER. IT IS NOTICED THAT THE BOOKS OF ACCOUNTS ARE AUDITED AND THE NET PROFIT WAS SHOWN AS RS.26,35,686/- AND THE CONTENTION THAT THE RE WAS A TYPOGRAPHICAL ERROR IN THE COMPUTATION OF TOTAL INC OME APPEARS TO BE CORRECT. ON THE MAIN ISSUE OF DEDUCTION U/S. 80IB (10), IT IS SEEN THAT ALTHOUGH, THE ISSUE WAS DECIDED IN FAVOR OF THE APP ELLANT AND AGAINST REVENUE BY THE ORDER OF THE JURISDICTIONAL ITAT, IN THE CASE OF RADHE DEVELOPERS VS. ITO WARD 3(2) BARODA NO 2482/AHD/200 6 A BENCH AHTNEDABAD, HOWEVER THE DECISION WAS PARTLY MODIFIE D BY THE SUBSEQUENT DECISION IN THE CASE OF ITO VS. M/S, SHA KTI CORPORATION ITA NO. 1503/AHD/2008 DATED 07/11/2008 WHEREIN, THE HON'BLE ITAT HAS INDICATED THAT THE BENEFIT UNDER 80IB(10) WOULD BE AVAILABLE IF THE DEVELOPER HAS DOMINANT CONTROL OVER THE PROJ ECT AND HAS DEVELOPED THE LAND AT ITS OWN COST AND RISK AND THE BENEFIT WOULD BE DENIED IF THE ASSESSEE HAD ENTERED INTO AN AGREEMEN T FOR A FIXED REMUNERATION AS A CONTRACTOR TO CONSTRUCT OR DEVELO P THE PROJECT ON BEHALF OF THE LAND OWNER. THE AO IS ACCORDINGLY, DI RECTED TO VERIFY THE AGREEMENT AND OTHER DETAILS IN THE LIGHT OF THE DEC ISION OF THE TRIBUNAL IN THE CASE OF M/S. SHAKTI DEVELOPERS, THE GROUND I S ALLOWED SUBJECT TO VERIFICATION. 4 6 SINCE THE LEARNED CIT(A) HAS RESTORED THE MATTER BACK TO THE FILE OF THE AO DIRECTING THE AO TO VERIFY THE AGREE MENT AND OTHER DETAILS IN THE LIGHT OF THE DECISION OF THE TRIBUNA L IN THE CASE OF M/S SHAKTI DEVELOPERS (SUORA), WE FEEL NO NEED TO I NTERFERE WITH THE ORDER OF THE LEARNED CIT(A) AND THE SAME IS UPH ELD. THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7 IN THE CROSS OBJECTION, THE GROUND RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT AL LOWING DEDUCTION U/S 80IB(10) ON THE DISALLOWANCE MADE INV OKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 8 DURING THE ASSESSMENT PROCEEDINGS, A SUM OF RS.10 ,93,134/- U/S 40(A)(IA) WAS DISALLOWED. BEFORE LEARNED CIT(A) , THE ASSESSEE REITERATED THE ARGUMENTS ADVANCED BY HIM BEFORE THE AO THAT THE TDS WAS NOT DEDUCTED ON TRANSPORT EXPENSES OF RS.10 ,93,134/- INADVERTENTLY AS THIS WAS THE FIRST YEAR OF APPLICA BILITY OF SECTION 40(A)(IA) OF THE ACT. IT WAS FURTHER SUBMITTED THAT IF THE EXPENSES ARE DISALLOWED, THIS SHOULD BE ASSESSED AS PROFIT A ND BE ALLOWED AS DEDUCTION U/S 80IB(10) OF THE ACT. THE LEARNED C IT(A) CONFIRMED THE DISALLOWANCE MADE BY THE AO BUT DID N OT ALLOW DEDUCTION U/S 80IB(10) OF THE ACT ON THIS DISALLOWA NCE. 9 AFTER HEARING BOTH THE PARTIES AND PERUSING THE R ECORD, WE FIND THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB(10) OF THE ACT ON THE DISALLOWANCE OF RS.10,93,134/- MADE BY T HE AO AND SUSTAINED BY THE LEARNED CIT(A) BY INVOKING THE PRO VISIONS OF 5 SECTION 40(A)(IA) OF THE ACT. THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 10 IN THE RESULT, THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES CROSS OBJECTION IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 13-01-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 13-01-2012 COPY OF THE ORDER FORWARDED TO: 1. M/S KEVAL CONSTRUCTION, SHREE VALLABH DUPLEX, WAGHODIA ROAD, BARODA 2. THE INCOME-TAX OFFICER, WARD-5(1), 5 TH FLOOR, AAYAKAR BHAVAN, BARODA 3. CIT CONCERNED 4. CIT(A)-V, BARODA 5. DR, ITAT, AHMEDABAD BENCH-C, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD