The ITO, Ward-2(2), Baroda V. Shri Bharat Labhshankar Joshi, Baroda

ITA 3210/AHD/2010

• Counselvise Citation: 321020514 RSA 2010
• Duration Of Justice: 2 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 03-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 3210/AHD/2010 ASSESSMENT YEAR :2005-06 THE INCOME-TAX OFFICER, WARD 2 (2) 2 ND FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA. V/S . SHRI BHARAT LABHSHANKAR JOSHI PROP. OF VENUS CONSTRUCTION, 23, ALKAPURIA SHOPPING CENTRE, ALKAPURI, BARODA PAN NO. A BLPJ3879L (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI P. L. KUREEL, SR. D.R. /BY RESPONDENT NONE /DATE OF HEARING 20.08.2013 /DATE OF PRONOUNCEMENT 31.10.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF REVENUE WHICH HA S EMANATED FROM THE ORDER OF CIT(A)-II, BARODA, DATED 04.08.2010 FO R ASSESSMENT YEAR 2005- 06. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ID CIT (APPEALS) ERRED IN DIRECTING THE ASSESSI NG OFFICER TO ALLOW THE DEDUCTION TO THE ASSESSEE ON THE GROUND THAT TH E ASSESSEE HAS PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM T HE LANDOWNER AND HAS DEVELOPED THE HOUSE PROJECT AT ITS OWN COST AND RISKS INVOLVED, IN RESPECT OF ISSUE REGARDING DEDUCTION U /S. 80IB(10) R.W.S.80LB(1) CLAIMED BY THE ASSESSEE, WITHOUT APPR ECIATING THE FACT THAT THE APPROVAL BY THE LOCAL AUTHORITY AS WELL AS COMPLETION CERTIFICATE WAS NOT GRANTED TO THE ASSESSEE BUT TO THE LAND OWNER ITA NO. 3210/AHD/10 A.Y. 05-06 PAGE 2 AND THE RIGHTS AND OBLIGATION UNDER THE SAID APPROV AL WERE NOT TRANSFERABLE, AND THAT TRANSFER OF DWELLING UNITS I N FAVOR OF THE END- USERS WAS MADE BY THE LANDOWNER AND NOT BY THE ASSE SSEE. 2. WITH PREJUDICE, THE LD.CIT(APPEALS) ERRED IN AL LOWING DEDUCTION U/S. 80IB(10) IN RESPECT OF THE PROCEEDS ATTRIBUTABLE TO THE SALE OF UNUTILIZED FSI AND NOT TO THE DWELLING UNITS IN THE HOUSING PROJECTS, WHICH COULD NOT BE TERMED AS PROF ITS 'DERIVED FROM DEVELOPING AND BUILDING HOUSING PROJECTS IN TERMS O F THIS PROVISION. 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED I N THE BUSINESS OF CIVIL CONSTRUCTION AND DEVELOPMENT OF REAL ESTATE. DURIN G THE YEAR UNDER CONSIDERATION, THE ASSESSEE FIRM HAS CONSTRUCTED HO USING PROJECT AND SHOWN TOTAL NET PROFIT AT RS.7,21,611/- AS HAVING BEEN DE RIVED FROM THE DEVELOPMENT AND BUILDING OF THE HOUSING PROJECT. THE PROFIT OF BUSINESS HAD BEEN CLAIMED AS DEDUCTION AT 100% FROM THE TOTAL INCOME OF THE A SSESSEE FIRM U/S.80IB(10) OF THE ACT. IT WAS OBSERVED BY THE A.O. THAT PROJE CT WAS APPROVED BY VADODARA URBAN DEVELOPMENT AUTHORITY IN THE NAME OF SHRI NAVINBHAI P. PATEL AND OTHER AND SHRI RAJESHBHAI P. PATEL AND OT HERS. THE CONSTRUCTION PERMISSION WAS GIVEN IN THE NAME OF ABOVE TWO PERSO NS NOT IN THE NAME OF ASSESSEE. THE ASSESSEE WAS NOT THE OWNER OF THE LA ND ON WHICH CONSTRUCTION WAS DONE BY THE ASSESSEE. THE A.O. OBSERVED THAT F OR CLAIMING OF DEDUCTION, THE PERMISSION AS WELL AS OWNERSHIP OF LAND IS REQU IRED BY THE LAW IN THE NAME OF THE DEVELOPER. THE A.O. HAD MADE DETAILED DISCU SSION UNDER THE FOLLOWING HEADS: I. LAND AN INTEGRAL PART OF A HOUSING PROJECT. II. THE APPROVAL BY LOCAL AUTHORITY TO THE ASSESSEE MANDATORY. ITA NO. 3210/AHD/10 A.Y. 05-06 PAGE 3 III. LEGAL TRANSFER OF LAND IS A MUST. IV. AVOIDANCE OF STAMP DUTY, THE REAL RAISON DETRE OF THE CLAIM V. SECTION 53A OF THE TRANSFER OF PROPERTY ACT. VI. SECTION 2(47)(V) VII. BENEFICIAL OWNERSHIP. VIII. LIBERAL INTERPRETATION OF A BENEFICIAL PROVIS ION LIMITED CONNOTATION. IX. NO PROVISION FOR PASSING ON THE BENEFIT TO ANY OTHER PARTY. X. NO VIOLATION OF EQUITY. 3. FINALLY THE A.O. OBSERVED THAT THE ASSESSEE IS N OT ENTITLED TO DEDUCTION U/S.80IB(10) ON CONSTRUCTION CARRIED OUT AND ALLOWE D THE 80IB(10) IN FUTURE ON CONSTRUCTION WORK CARRIED OUT BY UTILIZING FSI ONLY . THE PROPORTIONATE PROFIT EARNED ON SALE OF UNUTILIZED FSI BUNCHED WITH HOUSI NG UNIT TO THE EXTENT OF RS.97,688/- IS DISALLOWED FOR THE REASONS DISCUSSED IN ASSESSMENT ORDER. 4. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAS ALLOWED THE APPEAL OF THE ASSESSEE ON THE BASIS OF ITAT ORDER IN ASSESSEES OWN CASE. 5. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHE MENTLY RELIED UPON THE ORDER OF THE A.O. AT THE OUTSET, THE APPELLANT FIL ED WRITTEN REPLY THAT IN EARLIER YEAR, HONBLE ITAT B BENCH IN A.Y. 04-05 HAS ALLO WED THE APPEAL IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF RADHE DEVELOPERS BY OBSERVING THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CAS E BEING SIMILAR, RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF TRIBU NAL, THEY UPHOLD THE ORDER OF THE CIT(A) IN ALLOWING CLAIM OF ASSESSEE IN BOTH CO UNTS. ITA NO. 3210/AHD/10 A.Y. 05-06 PAGE 4 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE IS IDENTICAL. THE ASSESSEE IS AN INDIVIDUAL AND IN CONSTRUCTION ACTIVITY AS A DEVELOPER. HE HAS EA RNED PROFIT FROM CONSTRUCTION ACTIVITY AND PROFIT ON UNUTILIZED FSI AND CLAIMED D EDUCTION U/S.80IB(10). CO- ORDINATE B BENCH IN ITA NO. 373/AHD/2008 FOR A.Y. 2004-05 HAS EXAMINED ALL THE FACTS IN DETAIL ON BOTH THE COUNTS AND DISM ISSED THE REVENUES APPEAL FOR A.Y. 04-05. THEREFORE, BEING IDENTICAL ISSUE U NDER THE YEAR CONSIDERATION, WE DO NOT HESITATE TO CONFIRM THE ORDER OF THE CIT( A). 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;