The ITO, Ward-9(1), Ahmedabad V. Sahajanand Enterprise, Ahmedabad

ITA 3252/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67949 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Section: 143(3); 80IB

Judgement Text

ITA NOS.3251 & 3252/AHD/2010 . A.Y. 2006-07 & 07-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 3251 & 3252 /AHD/2010 (ASSESSMENT YEA R: 2006-07 & 2007-08) THE I.T.O. WARD- 9(1), AHMEDABAD (APPELLANT) VS. SAHAJANAND ENTERPRISE 18,PRATHNA BUNGLOWS BH. DHARA SABU, NIKOL GAM ROAD, THAKKARNAGAR, AHMEDABAD (RESPONDENT) PAN: ABEFS 0201 N APPELLANT BY : SHRI P.L. KUREEL, SR. D.R. RESPONDENT BY : SHRI S. N. SOPARKAR WITH URVA SHI SHO DHAN ( )/ ORDER DATE OF HEARING : 08-10-2013 DATE OF PRONOUNCEMENT : 22-11-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)- XV, AHMEDABAD DATED 27.10.2010 FOR A.YS. 2006-07 & 2007-08 RESPECTIVELY. 2. BEFORE US, BOTH THE PARTIES SUBMITTED THAT THE FACT S OF THE CASE IN BOTH THE YEARS ARE IDENTICAL EXCEPT THE AMOUNTS AND THEREFOR E THE SUBMISSIONS MADE BY THEM IN ONE YEAR WOULD BE EQUALLY APPLICABL E TO THE OTHER AND ITA NOS.3251 & 3252/AHD/2010 . A.Y. 2006-07 & 07-08 2 THEREFORE BOTH THE APPEALS CAN BE DECIDED TOGETHER. WE THEREFORE PROCEED TO DECIDE BOTH THE APPEALS TOGETHER FOR THE SAKE OF CONVENIENCE AND THUS PROCEED WITH THE FACTS FOR A.Y. 06-07. 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF CONST RUCTION OF HOUSING PROJECT. IT FILED ITS RETURN OF INCOME FOR A.Y. 200 6-07 ON 19.10.2006 DECLARING TOTAL INCOME OF RS. NIL AFTER CLAIMING DE DUCTION OF RS. 4,96,405/- UNDER SECTION 80IB(10) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U /S. 143(3) VIDE ORDER DATED 26.12.2008 AND THE TOTAL INCOME WAS DETERMINE D AT RS. 4,96,410/- AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 27.10.2010 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE REV ENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFEC TIVE GROUNDS. 1. THE ID. COMMISSIONER OF INCOME-TAX (A)-XV, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW T HE ASSESSEE'S CLAIM FOR DEDUCTION OF RS.4,96,410/~ U/S.80IB(10) OF THE ACT. 2. THE ID. COMMISSIONER OF INCOME-TAX (A)-XV, AHMEDABA D HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CONDITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S.801B(10) EVEN WHEN THE LAND WAS IN THE NAME OF SOCIETY, WHICH IS A SEPARATE LEGAL ENTITY IN THE EYE OF LAW AND THE ASSESSEE ENT ERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WITH THE OWNER OF LAND, THE P ERMISSION FOR CONSTRUCTION AS WELL AS BU PERMISSION WAS ISSUE IN THE NAME OF T HE LAND OWNER I.E., THE SOCIETY. BOTH THE GROUNDS ARE WITH RESPECT TO DEDUCTION U/ S. 80IB(10) AND ARE THEREFORE CONSIDERED TOGETHER. ITA NOS.3251 & 3252/AHD/2010 . A.Y. 2006-07 & 07-08 3 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O. N OTICED THAT THE LAND ON WHICH THE PROJECT WAS DEVELOPED WAS PURCHASED BY SHRI RAM NIKOL COOPERATIVE HOUSING SOCIETY AND THE ASSESSEE HAD NO T PURCHASED THE LAND AND THEREFORE ACCORDING TO A.O., THE ASSESSEE WAS NOT THE OWNER OF THE LAND ON WHICH THE PROJECT WAS DEVELOPED. HE FURTHE R NOTICED THAT THE PERMISSION OF DEVELOPMENT FROM AHMEDABAD URBAN DEVE LOPMENT AUTHORITY (AUDA) WAS TAKEN BY PATEL JETHALAL SHANKE RDAS AND OTHERS AND THE BU PERMISSION WAS IN THE NAME OF SHRI GHANS HYAMBHAI PATEL CHAIRMAN OF SHRI RAM (NIKOL) CO-OP HOUSING SOCIETY. A.O. WAS THEREFORE OF THE VIEW THAT THE ASSESSEE FIRM HAS AC TED MERELY AS AN AGENT AND THEREFORE CONCLUDED THAT THE ASSESSEE WAS NOT T HE OWNER OF THE LAND ON WHICH THE PROJECT WAS DEVELOPED AND FURTHER THE ASSESSEE HAD NOT ACQUIRED DOMINANT CONTROL OVER THE PROJECT AND THER EFORE THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(1 0) OF THE ACT. HE ACCORDINGLY DISALLOWED THE CLAIM OF DEDUCTION. AGG RIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER:- 6. AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEE N THAT THE AO HAS NOT DISPUTED THAT THE APPELLANT DID NOT FULFILL ANY OF THE CONDITIONS SPECIFIED IN SECTION 80IB(10) FROM CLAUSE (A) TO (D) WITH RESPECT TO APPROVALS FROM LO CAL AUTHORITY, COMPLETION OF PROJECT WITHIN THE SPECIFIED TIME LIMITS, ONE ACRE OF LAND CONDITION, 1500 SQ.FT. BUILT UP AREA CONDITION OF EACH UNIT IN THE PROJECT AND THAT OF P ERCENTAGE OF CONSTRUCTION FOR COMMERCIAL USE. HIS OBJECTION IS THAT THE APPELLANT IS NOT THE OWNER OF THE LAND. THIS OBJECTION OF THE AO HAS TO BE SEEN IN THE LIGHT OF THE TESTS LAID DOWN BY HON'BLE ITAT BENCH A AHMEDABAD DECISION IN THE CASE OF M/S.SHAKT I CORPORATION. BARODA IN ITA NO.1503/AHD/2008 IN AY 2005-06. BUT HERE THE APPELL ANT HAS BEEN FOUND FULFILLING THE CONDITIONS LAID DOWN IN SECTION 80IB (10) OF THE IN COME TAX ACT AND HAS ALSO BEEN FOUND MEETING THE TESTS LAID DOWN IN HON'BLE ITAT B ENCH A AHMEDABAD DECISION IN THE CASE OF M/S.SHAKTI CORPORATION, BARODA IN ITA N O. 1503/AND/2008 IN AY 2005-06 AND AS IT HAD PRACTICALLY PURCHASED THE LAND AND IT BORE THE ENTIRE COST AND RISK OF DEVELOPING THE PROJECT THAT IS WHY IN MY VIEW IT IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) AND THE AO IS DIRECTED TO ALLOW THE SAME. ITA NOS.3251 & 3252/AHD/2010 . A.Y. 2006-07 & 07-08 4 6. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), THE REV ENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, THE LD. D.R. SUPPORTED THE ORDER OF A.O. AND FURTHER POINTED OUT TO THE VARIOUS CLAUSES OF THE DEVELOPMENT AGREE MENT PLACED BY THE ASSESSEE ON PAGE 48 TO 54 OF THE PAPER BOOK AND THE REFORE SUBMITTED THAT THE ASSESSEE WAS NOT THE OWNER OF THE LAND AND FURT HER THE RISK AND DOMINANT CONTROL WAS NOT OF THE ASSESSEE. HE THERE FORE SUBMITTED THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTIO N 80IB(10). IN THE ALTERNATE, HE SUBMITTED THAT THE MATTER MAY BE REMI TTED TO THE FILE OF A.O. SO THAT THE COMPLIANCE OF CONDITIONS AS LAID DOWN B Y THE AHMEDABAD TRIBUNAL IN THE CASE OF SHIKAR DEVELOPERS IS CONSID ERED BEFORE THE ALLOWING DEDUCTION. 8. THE LD. A.R. ON THE OTHER HAND SUPPORTED THE ORDER OF CIT(A) AND SUBMITTED THAT CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF ASSESSEE AND THE DECISION IN THE CASE OF SHAKTI CORPORATION HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HE THUS SUPPORTED THE ORDE R OF CIT(A) . 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE DEDUCTION UNDER SECTION 80IB(10) W AS DENIED BY THE A.O. MAINLY FOR THE REASON THAT THE ASSESSEE WAS NO T THE OWNER OF THE LAND AND AS THE ASSESSEE HAD NOT ACQUIRED DOMINANT CONTROL OVER LAND AND THE ASSESSEE WAS ONLY CONSTRUCTION AGENT FOR THE LA ND HOLDERS. WE ALSO FIND THAT WHEN THE ASSESSMENT WAS FINALIZED BY A.O. , HE DID NOT HAVE THE BENEFIT OF DECISION IN THE CASE OF RADHE DEVELOPERS (2010) 329 ITR (GUJ.) AND THEREFORE THERE IS NO FINDING ON THE COM PLIANCE OF OTHER ITA NOS.3251 & 3252/AHD/2010 . A.Y. 2006-07 & 07-08 5 CONDITIONS AS LISTED IN THE AFORESAID ORDER OF HON. GUJARAT HIGH COURT. WE ALSO FIND THAT CIT(A) BY A VERY CRYPTIC ORDER DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THERE IS NO FINDING AS T O THE COMPLIANCE OF THE VARIOUS CLAUSES AS ENUMERATED IN THE CASE OF RADHE DEVELOLPERS 341 ITR 403 (SUPRA). WE FURTHER FIND THAT THE CO-ORDINATE B ENCH OF TRIBUNAL IN THE CASE OF SHIKHAR DEVELOPERS (ITA NO. 854/AHD/201 0) ON IDENTICAL FACTS AND AFTER RELYING ON THE DECISION OF HON. GUJ ARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS, HAD REMITTED THE ISSUE TO THE FILE OF A.O. FOR VERIFICATION OF THE VARIOUS CONDITIONS, BY OBSERVIN G AS UNDER:- 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE OF ADMISSIBILITY OF DEDUCTION PRESCRIBED U/S.80-IB(10) IS NOW TO BE DECIDED AS PER THE OBSERVATIONS MADE BY HON'BLE GUJARAT HIG H COURT IN THE CASE OF RADHE DEVELOPERS INDIA LTD. IN TAX APPEAL NO. 171 OF 1999 VIDE ORDER DATED 01/04/2009 [REPORTED AT (2010) 329 ITR 01 (GUJ.)]- THE HON'BLE COURT HAS GIVEN FINDING IN THAT CASE AFTER EXAMINATION OF CERTAIN FACTS TO SATISFY THE CONDITIONS PRESCRIBED U/S.80- IB(10). ONLY AFTER GIVING A FINDING ON FACTS, THE H ON'BLE COURT HAS ALLOWED THE DEDUCTION U/S.80-IB(10). THOSE REQUIREMENTS HAVE TO BE FULFILLED BY A DEVELOPER TO STAKE A CLAIM OF DEDUCTION. THE REQUISITE INFORMATI ON IS NOT AVAILABLE ON RECORD. WE HAVE NOTICED THAT THE SAID REQUISITE INFORMATION WA S NOT EVEN EXAMINED BY THE REVENUE AUTHORITIES IN THE LIGHT OF THE- HIGH COUR T DECISION. THE GUIDELINES GIVEN BY THE HON'BLE HIGH COURT CAN BE SUMMARIZED AS FOLLOWS :- (A) THE RELEVANT TERMS OF DEVELOPMENT AGREEMENT AR E TO BE EXAMINED SO AS TO ASCERTAIN THE TERMS ON WHICH THE ASSESSEE WAS GRANT ED RIGHT OF CONSTRUCTION OF A HOUSING PROJECT. (B) ON THE BASIS OF THE TERMS AND CONDITIONS, IT HA S TO BE ASCERTAINED WHETHER IT WAS A 'WORK CONTRACT' OR A 'DEVELOPMENT CONTRACT'. (C) ON THE BASIS OF THE TERMS AND CONDITIONS, IT HAS TO BE EXAMINED THAT WHICH OF THE PARTY HAD TAKEN FULL RESPONSIBILITY FOR EXECUTION O F THE SAID DEVELOPMENT PROJECT. (D) WHETHER UNDER THE AGREEMENT THE ASSESSEE HAD B EEN GIVEN FULL AUTHORITY TO DEVELOP THE LAND AND TO CONSTRUCT RESIDENTIAL UNITS . THE AO HAS TO EXAMINE THE FACT IN RESPECT OF ENGAGEMENT OF PROFESSIONALS, SUCH AS, AR CHITECT FOR DESIGNING AND ARCHITECTURAL WORK. (E) THE AO HAS TO EXAMINE THE RESPONSIBILITY OF EN ROLMENT OF MEMBERS AND COLLECTION OF CHARGES REQUIRED TO BE MADE FROM THE BUYERS OF T HE RESIDENTIAL UNITS. (F) THE AO HAS TO EXAMINE ABOUT THE 'PROFIT' OR 'L OSS' ARISING FROM THE SAID PROJECT. (G) THOUGH THE OWNERSHIP OF LAND HAS BEEN HELD AS N OT THE ONLY CRITERIA FOR ALLOWING THE CLAIM U/S 80IB(10) BUT THE DOMAIN OVER THE LAND AND THE CONTROL OVER THE PROJECT HAS TO BE EXAMINED BY THE A.O. (H) WHETHER ON TRANSFER OF DOMAIN THE LAND OWNERS HAVE RECEIVED ANY CONSIDERATION AND WHETHER IT WAS A FIXED AMOUNT OR DEPEND UPON TH E PROFITS OF THE PROJECT. LIKEWISE, ITA NOS.3251 & 3252/AHD/2010 . A.Y. 2006-07 & 07-08 6 THE AO HAS TO ASCERTAIN THAT WHETHER THE ASSESSEE W AS GIVEN A FIXED PERCENTAGE AS REMUNERATION FOR THE SAID PROJECT IN LIEU OF GRANTI NG PERMISSION TO CONSTRUCT THE RESIDENTIAL UNITS OR TO EARN PROFITS AS A PROJECT D EVELOPER. (I) THE AO HAS TO ASCERTAIN THE POSITION OF THE PO SSESSION OVER THE LAND DURING THE CONSTRUCTION PERIOD. (J) FOR THE PURPOSE OF CONSTRUCTION THE AO HAS TO E XAMINE THE FINANCIAL ARRANGEMENTS. (K) THE A.O. HAS TO EXAMINE THE PROCEDURE FOR RAISI NG OF FUNDS EITHER BY PRIVATE PLACEMENT OR BY FINANCIAL INSTITUTIONS. (L) THE RISK ELEMENT CONNECTED WITH THE SAID HOUSIN G PROJECT HAS ALSO TO BE EXAMINED. (M) THE ASSESSING OFFICER HAS TO EXAMINE THE SIZE O F THE PLOT ON WHICH PROJECT IS CONSTRUCTED. (N) THE A.O. HAS TO EXAMINE BUILT-UP AREA OF SANCT IONED UNIT WHETHER WILL IN THE PRESCRIBED LIMIT. 7. IN ADDITION TO THE ABOVE GUIDELINES, ONCE THE MATTER IS GOING BACK FOR RECONCILIATION, THEN THE AGREEMENTS CONNECTED TO TH E LAND AND THE DETAILS OF THE APPROVAL GRANTED BY THE LOCAL AUTHORITY PERMITTING TO DEVELOP THE HOUSING PROJECT CAN ALSO BE EXAMINED IF DEEM FIT. SINCE THE HON'BLE HIG H COURT HAS GIVEN THE VERDICT IN FAVOUR OF THE ASSESSEE AFTER DUE ASCERTAINMENT OF T HESE BASIC FACTS, THEREFORE IT IS APPROPRIATE FIRST TO PLACE ON RECORD ALL THESE INFO RMATION AND THEN IF FACTS ARE IDENTICAL CONSEQUENTLY THEREUPON, THE CITED DECISIO N HAS TO BE FOLLOWED TO DISPOSE OF THE ISSUE. WITH THESE DIRECTIONS, WE HEREBY ALLOW T HE GROUND OF THE REVENUE THAT TOO FOR STATISTICAL PURPOSES ONLY. 10. IN THE PRESENT CASE, THERE IS NO FINDING BY THE A. O. OF THE COMPLIANCE OF THE GUIDELINES STATED HEREINABOVE. WE THEREFORE FEE L THAT THE COMPLIANCE OF THE VARIOUS CONDITIONS LISTED HEREINABOVE NEEDS TO BE EXAMINED BY THE A.O. WE THEREFORE REMIT THE MATTER TO THE FILE OF A .O. WITH SIMILAR DIRECTIONS AS GIVEN IN THE CASE OF SHIKHAR DEVELOPE RS (SUPRA). THE A.O. IS ALSO DIRECTED TO GIVE A REASONABLE OPPORTUNITY OF H EARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO COOPERATE WITH THE A .O. BY FURNISHING ALL THE NECESSARY INFORMATION REQUIRED BY HIM TO DECIDE THE ISSUE. THUS THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOS ES. ITA NOS.3251 & 3252/AHD/2010 . A.Y. 2006-07 & 07-08 7 11. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 22 -11 - 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT 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, AHMEDABAD