The ITO, Ward-9(1), Ahmedabad V. M/s. Shree Ram Construction, Ahmedabad

ITA 32/AHD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51090 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWIJIT RAKSHIT
• Assessee Lawyers: S N DIVATIA

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , .. !', #$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI B.P.JAIN, ACCOUNTANT MEMBER ./ I.T.A. NO.32/AHD/2011 ( ' ' ' ' ' ' ' ' / / / / ASSESSMENT YEAR : 2007-08) THE ITO WARD-9(1) AHMEDABAD ' ' ' ' / VS. SHREE RAM CONSTRUCTION NIRMAN SQUARE TENEMENTS OPP.VIKRAM PLAZA CHANDLODIA AHMEDABAD ( #$ ./ ) ./ PAN/GIR NO. : AAYFS 8101 N ( (* / // / APPELLANT ) .. ( +,(*/ RESPONDENT ) (* - #/ APPELLANT BY : SHRI AWIJIT RAKSHIT, SR.D.R. +,(* . - # / RESPONDENT BY : SHRI S.N. DIVATIA, A.R. '/ . 0$/ // / DATE OF HEARING : 30/12/2011 12' . 0$ / DATE OF PRONOUNCEMENT : 30/12/2011 #3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XV, AHMEDABA D DATED 24/11/2010 PASSED FOR ASSESSMENT YEAR 2007-08 AND T HE SUBSTANTIVE GROUNDS ARE REPRODUCED BELOW:- 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW THE ASSESSEES CLAIM FOR DEDUCTION OF RS.33,9 9,602/-. ITA NO .32/AHD/2011 ITO VS. SHREE RAM CONSTRUCTION ASST.YEAR 2007-08 - 2 - 2) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHM EDABAD HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CON DITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S.80IB(10) EVEN WHEN THE LAND WAS IN THE NAME OF PRASHANT JAYANTILAL SHAH & OTHER S. THE LAND OWNERS ARE A SEPARATE LEGAL ENTITY IN THE EYE OF LA W AND THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WITH THE LAND OWNERS. THE ENTIRE RESPONSIBILITY TO EXECUTE THE HOUSING PROJECT AND ABIDE BY THE TERMS AND CONDITIO NS OF ITS APPROVAL RIGHT FROM THE INCEPTION OF THE PROJECT TI LL ITS COMPLETION RESTS WITH THE LAND OWNERS. ASSESSEE WAS JUST A CO NTRACTOR OF THE LAND OWNERS CONSTRUCTING 46 RESIDENTIAL UNITS (TENE MENTS) AND NOT A DEVELOPER. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 24 .12.2009 WERE THAT THE ASSESSEE-FIRM IS STATED TO BE IN THE BUSINESS OF C ONSTRUCTION OF HOUSING PROJECT. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS CLAIMED A DEDUCTION U/S.80IB(10) OF RS.33,99,602/-. FURTHER, IT WAS NOTED THAT A LAND BEARING SURVEY NO.271 & 272 ADMEASURING 1018 S Q.MTRS. WAS PURCHASED BY SHRI PRASHANT JAYANTILAL SHAH AND OTHE RS. THREE SALE DEEDS WERE EXECUTED ON 23.09.2003, 13.10.2003 & 06.02.200 4. TOTAL CONSIDERATION WAS SATED TO BE RS.44,76,033/-. AS P ER THOSE SALES DEEDS THE LAND WAS SOLD BY ONE SMT. VIMLABEN GOVINDBHAI & OTHERS IN FAVOUR OF SHRI PRASHANT JAYANTILAL SHAH. THE LOCAL AUTHOR ITIES HAVE ACCORDED PERMISSION FOR DEVELOPMENT AND CONSTRUCTION EARLIER IN THE NAME OF THE PREVIOUS OWNER, I.E. SMT. VIMLABEN AND THEREAFTER A REVISED PERMISSION WAS ACCORDED IN THE NAME OF SHRI PRASHANT J.SHAH DA TED 13/05/2005. AS FAR AS THE BASIS OF CLAIM OF DEDUCTION IN THE PRES ENT APPEAL IS CONCERNED, THE REQUISITE CONDITIONS WERE STATED TO BE FULFILLE D. THAT, THE ASSESSEE- FIRM HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH SHRI PRASHANT J.SHAH. THAT, THE ADMITTED FACTUAL POSITION AS STA TED BY THE ASSESSING ITA NO .32/AHD/2011 ITO VS. SHREE RAM CONSTRUCTION ASST.YEAR 2007-08 - 3 - OFFICER ARE THAT THE ASSESSEE-FIRM WAS GIVEN POSSES SION OF THE LAND FOR CONSTRUCTION OF HOUSING UNITS AS PER THE SAID PLAN. THAT, THE ASSESSEE WAS ALLOWED TO ENROLL PROSPECTIVE BUYERS AS THE MEM BERS. THAT, THE ASSESSEE WAS ALLOWED TO COLLECT THE CONSIDERATION F OR LAND AS WELL AS SUPER-STRUCTURE FROM THE BUYERS. THAT, THE ASSESSE E WAS ALLOWED TO RETAIN THE CONSIDERATION RECEIVED FOR CONSTRUCTION, ETC. THAT, THE ASSESSEE WAS TO CONSTRUCT AND TRANSFER THE HOUSES TO THE MEMBERS. IT HAS ALSO BEEN INFORMED THAT SINCE THE LAND OWNERS HAD NO EXPERIEN CE OF CONSTRUCTION, THEREFORE THEY HAVE ENTERED INTO THE SAID DEVELOPM ENT AGREEMENT WITH THE ASSESSEE-FIRM AND IT WAS ALLOWED TO CONSTRUCT T HE HOUSES ON BEHALF OF THE LAND OWNERS AS PER THE TERMS NARRATED IN THE SA ID AGREEMENT. THE ASSESSING OFFICER HAS EXPRESSED THAT AS PER THE LAN D DOCUMENTS, IT WAS CLEAR THAT THE ASSESSEE WAS NOT THE OWNER OF THE LA ND. THE NAME OF THE ASSESSEE-FIRM EVEN DID NOT APPEAR ON THE PERMISSION LETTER GIVEN BY THE LOCAL AUTHORITY FOR THE SAID HOUSING PROJECT. ON T HE BASIS OF THOSE FACTS, A SHOW-CAUSE NOTICE WAS ISSUED AND THE PROVISIONS OF SECTION 80IB(10) WERE DISCUSSED. AFTER DETAILED DISCUSSION, THE ASS ESSING OFFICER HAS DISALLOWED THE SAID CLAIM AND THE ASSESSMENT WAS MA DE ON THE INCOME OF RS.33,99,602/-. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LD.CIT(A) HAS DISCUSSED THE FACTS OF THE CAS E AND THEREAFTER NOTED THAT THE ISSUE STOOD COVERED BY A DECISION OF ITAT A BENCH AHMEDABAD IN THE CASE OF SHKTI CORPORATION IN ITA N O.1503/AHD/2008 FOR A.Y. 2005-06, DATED 07.11.2008. THE FIRST OBSE RVATION OF THE LEARNED CIT(APPEALS) WAS THAT THE INVESTMENT RISK WAS BORNE BY THE ASSESSEE. THE LEARNED CIT(APPEALS) HAS REPRODUCED SOME OF THE CLAUSES OF THE ITA NO .32/AHD/2011 ITO VS. SHREE RAM CONSTRUCTION ASST.YEAR 2007-08 - 4 - DEVELOPMENT AGREEMENT. ON THAT BASIS, IT WAS HELD THAT SINCE THE ASSESSEE HAD DOMINANT CONTROL OVER THE PROJECT AND RISK HAD BEEN UNDERTAKEN BY THE ASSESSEE FOR THE DEVELOPMENT OF T HE SAID HOUSING PROJECT, THEREFORE IN THE LIGHT OF THE PRECEDENT CI TED ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE I.T.ACT. NOW THE REVENUE IS IN APPEAL. 4. ON THE DATE OF HEARING, FROM THE SIDE OF THE REV ENUE, LD.DR MR.AWIJIT RAKSHIT AND FROM THE SIDE OF THE RESPONDE NT-ASSESSEE LD.AR MR. S.N.DIVATIA HAVE APPEARED AND RESPECTIVELY PLAC ED RELIANCE ON THE ORDERS OF ASSESSING OFFICER AND LEARNED CIT(APPEALS ). 5. WE HAVE HEARD BOTH THE SIDES AND ALSO PERUSED TH E ORDERS OF THE AUTHORITIES BELOW. UNDISPUTEDLY, THIS VERY ISSUE H AS BEEN ADJUDICATED UPON BY THE RESPECTED CO-ORDINATE BENCH ITAT AHMEDA BAD IN THE CASES OF RADHE DEVELOPERS & ORS. VS ITO, REPORTED AS 113 TTJ 300 (AHD.), [ IN ITA NO. 2482/AHD/2006] AND ITO VS. SHAKTI CORP ORATION IN ITA NO.1503/AHD/2008 FOR A.Y. 2005-06, DATED 07/11/2008 . ON THE BASIS OF THOSE DECISIONS, NOW THE RESPECTED CO-ORDINATE BENC HES ARE ALLOWING THE CLAIM OF THE ASSESSEE AS IT WAS PRONOUNCED BY THE I TAT AHMEDABAD D BENCH IN THE GROUP OF CASES TITLED AS ITO VS. M/S. SHREEJI DEVELOPERS, ITO VS PARTH DEVELOPERS, ITO VS. M/S.MAITREE DEVELO PERS, ITO VS. M/S.SUN DEVELOPERS, ITO VS. M/S.RUDRAKASH DEVELOPER S, ITO VS. M/S.SHREENATH, ITO VS. M/S.DELIGHT DEVELOPERS, ITO VS. DESAI DEVELOPERS, ITO VS. M/S.SATSANG ENTERPRISE AND ITO VS. M/S.SATSANG DEVELOPERS IN ITA NOS. 1650/AHD/2010 & 1651/AHD/2 010 (A.YS. 2007-08 & 2006-07 RESPECTIVELY) & OTHERS ORDER DAT ED 06/08/2010, WHEREIN VIDE PARAGRAPH NO.7, IT WAS HELD AS UNDER:- ITA NO .32/AHD/2011 ITO VS. SHREE RAM CONSTRUCTION ASST.YEAR 2007-08 - 5 - 7. WE FIND THAT THE LD. CIT(A), FOLLOWING THE AFOR ESAID DECISIONS IN THE CASE OF M/S.SHAKTI CORPORATION (SU PRA) & M/S. RADHE DEVELOPERS(SUPRA). IN THE CASES BEFORE US CO NCLUDED THAT THE RESPECTIVE ASSESSEE HAD DOMINANT CONTROL OVER T HE PROJECTS AND DEVELOPED THE LAND AT THEIR OWN RISK AND COSTS AND THEREFORE, WERE ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT. IN THE CASE OF M/S.SUN DEVELOPERS, A SIMILAR CLAIM HAS BEEN ALLOWE D BY THE ITAT IN THE AY 2005-06 WHILE IN THE CASE OF M/S.SHREEJI DEVELOPERS, THE AO HIMSELF ALLOWED THE CLAIM IN THE ORDER PASSED I N CONSEQUENCE OF DIRECTIONS OF THE ITAT IN THE AY 2004-05. THE R EVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL CONTROVERTING THE FIN DINGS OF THE LD. CIT(A). IN THESE CASES NOR BROUGHT TO OUR NOTICE A NY CONTRARY DECISION. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE LD. CIT(A) MERELY FOLLOWED THE DECISIONS OF THE ITAT IN THE CA SE OF M/S.SHAKTI CORPORATION (SUPRA) & M/S.RADHE DEVELOPERS (SUPRA) WHILE THERE IS NO MATERIAL BEFORE US TO TAKE A DIFFERENCE VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUNDS RAISED BY THE REVENUE IN THESE APPEALS ARE DISMISSED. 6. IN RESPECT OF THE CLAIM OF DEDUCTION U/S.80IB(10 ) OF THE I.T.ACT, AFTER ANALYZING THE FACTS OF EACH CASE THAT THE CO NDITIONS PRESCRIBED ARE FULFILLED, THE RESPECTED CO-ORDINATE BENCHES ARE A LLOWING THE CLAIM, HENCE RESPECTFULLY FOLLOWING THE SAID VIEW, WE FIND NO FORCE IN THE GROUND OF THE REVENUE AND DISMISS THE SAME. DULY P RONOUNCED AT THE CONCLUSION OF THE HEARING. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. #3 $# 4 ' 5 ! THIS ORDER IS PRONOUNCED IN OPEN COURT ON 30/ 12 /2011 SD/- SD/- ( .. !' ) ( ) #$ ( B.P. JAIN ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER 60..', .'../ T.C. NAIR, SR. PS ITA NO .32/AHD/2011 ITO VS. SHREE RAM CONSTRUCTION ASST.YEAR 2007-08 - 6 - #3 . +7 8#7' #3 . +7 8#7' #3 . +7 8#7' #3 . +7 8#7'/ COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-XV, AHMEDABAD 5. 7<5 +' , , / DR, ITAT, AHMEDABAD 6. 5= >/ / GUARD FILE. #3' #3' #3' #3' / BY ORDER, ,7 + //TRUE COPY// ? ?? ?/ // / ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 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 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 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