Mahadev Developers, Ahmedabad V. The Income tax Officer,Ward-9(2), Ahmedabad

ITA 319/AHD/2010

• Counselvise Citation: 31920514 RSA 2010
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S V AGRAWAL AR SHRI B L YADAV
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.319 / AHD/2010 (ASSESSMENT YEAR 2006-07) M/S. MAHADEV DEVELOPERS, A-1, SHIV SHAKTI SHOPPING CENTRE, ISANPUR, AHMEDABAD VS. ITO, WARD 9(2), AHMEDABAD PAN/GIR NO. : AAKFM4081F (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S V AGRAWAL, AR SHRI B L YADAV, SR. DR RESPONDENT BY: DATE OF HEARING: 28.03.2012 DATE OF PRONOUNCEMENT: 20.04.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) XV AHMEDABAD DATED 134.12.2009 FOR THE ASSESSMENT Y EAR 2006-07. 2. THE GROUND RAISED BY THE ASSESSEE ARE AS UNDER: THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) IS BAD IN LAW AS WELL ON FACTS ON THE FOLLOWING GROUND S ; (1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING DISA LLOWANCE MADE BY A.O. OF CLAIM OF ASSESSEE OF RS. 59,47,889 U/S 8 0 IB(10) OF INCOME TAX ACT, 1961. (1.1) ASSESSEE HAS PRACTICALLY BOUGHT THE LAND (L AND OWNER IS HUF & KARTA AS INDIVIDUAL IS PARTNER IN FIRM) AND D EVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND T AKING ALL THE RISKS INVOLVED THEREIN. (1.2) SECTION 80 IB(10) DOES NOT PROVIDE FOR OWNING OF THE LAND. (1.3) ASSESSEE HAS NOT DONE WORKS CONTRACT. (1.4) ASSESSEE HAS FULFILLED ALL THE CONDITIONS PRO VIDED U/S 80IB(10). I.T.A.NO.319 /AHD/2010 2 (2) WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1, TH E LEARNED A.O. HAS ERRED IN TAXING CONSTRUCTION INCOME/RECEIPTS OF ASSESSEE ON ACCRUAL BASIS I.E. EVEN THOUGH IT IS NOT RECEIVED. IN AS MUCH, AS PER DEVELOPMENT AGREEMENT, THE RECEIPTS SHOULD BE TAXED ON ACTUAL RECEIPT BASIS & NOT ON ACCRUAL BASIS. (3) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING INTE REST CHARGED U/S 234B. (4) THE ASSESSEE CRAVES FOR LIBERTY TO AMEND, MODIF Y AND ADD ANY GROUNDS OF APPEAL OR ADDITIONAL EVIDENCES. 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN PARA 3 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) OF INCOME TAX ACT, 1961 OF RS.59,47,889/- AND IT IS SEEN THAT THE ASSESSEE IS NOT HAVING ANY LAND ON WHICH CONSTRUCTION ACTIVI TY COULD HAVE BEEN STARTED AND IT IS ALSO SEEN THAT THE ASSESSEE HAS N OT OBTAINED ANY PERMISSION FROM THE APPROPRIATE AUTHORITY AS REQUIR ED U/S 80-IB(10) OF THE INCOME TAX ACT, 1961. THE A.O. ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80- IB(10) SHOULD NOT BE REJECTED. IN REPLY, IT WAS SUBMITTED BY THE ASSESS EE BEFORE THE A.O. THAT THE LAND IS OWNED BY HARSH BHAI PATEL (HUF) AND DHA RAMSHIBHAI HARJIBHAI PATEL (HUF). THE ASSESSEE HAS ENTERED IN TO A DEVELOPMENT AND CONSTRUCTION AGREEMENT WITH SHRI JAYRAJBHAI MOHANBB HAI PATEL WHO IS THE CHAIRMAN OF YASH (GHODASAR) COOP. HOUSING SOCIETY L TD. THE A.O. REJECTED THE CLAIM OF THE ASSESSEE REGARDING DEDUCT ION U/S 80-IB(10) ON THE BASIS THAT THE ASSESSEE IS NOT THE OWNER OF THE LAND AND THE ASSESSEE HAS NOT OBTAINED PERMISSION OF THE APPROPRIATE AUTH ORITY. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT A SUBMITTED BY THE LD. A.R. BEFORE US THAT NO W, THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF R ADHE DEVELOPERS AS REPORTED IN 341 ITR 403, WHEREIN, IT WAS HELD THAT HAVING OWNERSHIP OF THE LAND IS NOT ESSENTIAL FOR THE PURPOSE OF GRANTI NG DEDUCTION U/S I.T.A.NO.319 /AHD/2010 3 80IB(10) AND IF IT IS FOUND THAT THE ASSESSEE HAS D OMINANT CONTROL OVER THE LAND AND THE ASSESSEE WAS BEARING THE RISK THEN DED UCTION IS ALLOWABLE TO THE ASSESSEE. HE FURTHER SUBMITTED THAT RELEVANT D EVELOPMENT AGREEMENT IS AVAILABLE IN THE PAPER BOOK ON PAGES 2-8 AND ITS ENGLISH TRANSLATION IS AVAILABLE ON PAGES 9-21 OF THE PAPER BOOK. IT WAS POINTED OUT BY HIM THAT SHRI HARISHBHAI DHARAMSHIBHAI PATEL, ONE OF THE OWN ERS OF THE LAND IS THE MANAGING PARTNER OF THE ASSESSEE FIRM. IT WAS SUBM ITTED THAT AS PER THE DEVELOPMENT AGREEMENT, THE ASSESSEE HAS TO INCUR AN D BEAR ALL THE EXPENSES FOR LEVELING OF THE SAID LAND, AND ALSO TO PREPARE THE LAY OUT OF THE PLOTS, TO DEVELOP IT TO PREPARE KACHHA MAIN ROA D, INITIALLY AND SUBSEQUENTLY PAKKA ROAD, MAIN INTERNAL WATER TANK F OR NECESSARY WATER FOR THE CONSTRUCTION AND TO TAKE PERMISSION FROM THE AM C. IT IS ALSO SUBMITTED THAT AS PER THIS DEVELOPMENT AGREEMENT, T HE ASSESSEE HAS PURCHASED ALL MATERIAL, INSTRUMENTS, IRON CEMENT, S ANITARY MATERIAL ETC. IT IS ALSO POINTED OUT THAT AS PER THIS AGREEMENT, ASS ESSEE HAS TO DECIDE FOR GIVING POSSESSION TO THE MEMBERS OF THE HOUSING PRO JECT AFTER DEVELOPMENT OF THE LAND AND UNTIL ITS POSSESSION IS GIVEN, POSSESSION OF THE SAID CONSTRUCTED PROPERTY SHALL BE OF THE ASSES SEE. IT IS SUBMITTED THAT UNDER THESE FACTS, THE ASSESSEE HAD FULL CONTROL OV ER THE LAND IN QUESTION AND ALL THE RISK WAS BORNE BY THE ASSESSEE AND, THE REFORE, THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT IS SQUARELY APPLICABLE I N THE PRESENT CASE. 5. AS AGAINST THIS, THE LD. D.R. SUPPORTED THE ORDE RS OF AUTHORITIES BELOW. 6. WE HAVE CONSIDERED HE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT CITE D BY THE LD. A.R. WE FIND THAT AS PER PARA 22 OF HIS ORDER, IT WAS HELD BY LD. CIT(A) THAT THE DISALLOWANCE MADE BY THE A.O. U/S 80-IB(10) IS CONF IRMED BECAUSE THE ASSESSEE FIRM DID NOT MAKE ANY INVESTMENT TOWARDS L AND AND HE HAS I.T.A.NO.319 /AHD/2010 4 PLACED RELIANCE ON THE TRIBUNAL DECISION RENDERED I N THE CASE OF SHAKTI CORPORATION AND MUMBAI BENCH TRIBUNAL DECISION IN T HE CASE OF B T PATIL AND BELGAM CONSTRUCTION PVT. LTD. THIS GOES TO SHO W THAT THE ONLY BASIS ON WHICH THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE AUTHORITIES BELOW IS THIS THAT THE ASSESSEE IS NOT THE OWNER OF THE L AND IN QUESTION. NOW, ON THIS ASPECT, THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT COVERS THE ISSUE IN FAVOUR OF THE ASSESSEE. NOTHING COULD BE SHOWN BY THE LD. D.R. THAT IN THE FACTS OF THE PRESENT CASE, THIS JUDGMEN T IS NOT APPLICABLE BY SHOWING THAT THE ASSESSEE DID NOT HAVE TOTAL AND CO MPLETE CONTROL OVER THE LAND IN QUESTION. IT WAS ALSO NOT SHOWN THAT THE R ISK ELEMENT WAS NOT ENTIRELY THAT OF THE ASSESSEE. HENCE, WE FEEL THA T IN THE FACTS OF THE PRESENT CASE, THE ISSUE INVOLVED IS SQUARELY COVERE D IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF RADHE DEVELOPERS AND RESPECTFULLY FO LLOWINGS THE SAME, WE ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 8 0-IB(10) AS CLAIMED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO.319 /AHD/2010 5 1. DATE OF DICTATION 13/4 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17/4.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 20/4 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.20/4 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20 /4/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .