The ITO, Ward-9(1), Ahmedabad V. Shree Shreyanshnath Developers, Ahmedabad

ITA 3254/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67527 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Opportunity of being heard; Rule of consistency

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .% %% % . .. .&'( &'( &'( &'(, , , , %) * %) * %) * %) * % ' % ' % ' % ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND A. K. GARODIA, ACCOUNTANT MEMBER) ITA NO.3254/AHD/2010 WITH CO NO.243/AHD/2011 [ASSTT.YEAR : 2007-2008] ITO, WARD-9(1) AHEMDABAD. /VS. SHREE SHREYANSHNATH DEVELOPERS C/O. KETAN H. SHAH, ADVOCATE 903, SAPPHIRE COMPLEX C.G. ROAD, NAVRANGPURA AHMEDABAD. PAN : AAXFS 3932 L ( (( (,- ,- ,- ,- / APPELLANT) ( (( (./,- ./,- ./,- ./,- / RESPONDENT) * 0 1 %/ REVENUE BY : SHRI P.L.KUREEL, SR.DR 34 0 1 %/ ASSESSEE BY : SHRI KETAN SHAH 5 0 46)/ DATE OF HEARING : 29 TH JULY, 2013 7&8 0 46)/ DATE OF PRONOUNCEMENT : 02-08-2013 %9 / O R D E R PER GARODIA, ACCOUNTANT MEMBER: THIS IS REVENUES APPEAL AND THE ASSESSEES CO DIRECTED AGAINST THE O RDER OF THE CIT(A)- XV, AHMEDABAD DATED 28.10.2010 FOR A.Y.2007-2008. 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER: 1) THE ID. COMMISSIONER OF INCOME-TAX (A)-XV, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW THE ASSESSEE'S CLAIM FOR DEDUCTION OF RS.1,65 ,62,789/- U/S.801B(10) OF THE ACT. ITA NO.3254/AHD/2010WITH CO NO.243/AHD/2011 -2- 2) THE ID. COMMISSIONER OF INCOME-TAX (A)-XV, AHMEDABA D HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CON DITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S.801B(10) EVEN WHEN THE LAND WAS IN THE NAME OF SOCIETY, WHICH IS A SEPARATE LEG AL ENTITY IN THE EYE OF LAW AND THE ASSESSEE ENTERED INTO THE PR OJECT 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 THE LAND OWNER I.E., THE SOCIETY. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. THE LEARNED DR SUPPORTED THE ASSESSMENT ORDER. HE SUBMITTED THAT MAIN OBJECTION OF THE AO WAS THIS THAT THE ASSESSEE IS NOT DEVELOPER OF THE PROJECT, BUT THE ASSESSEE IS A CONTRACTOR, AND THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) O F THE ACT. IN THIS REGARD, HE HAS DRAWN OUR ATTENTION TO PAGE NO.16 AN D 17 OF THE ASSESSMENT ORDER. HE ALSO DRAWN OUR ATTENTION TO COPY OF THE DEVELOPMENT AGREEMENT APPEARING AT PAGE NOS.67 TO 77 OF THE PAPER BOOK, A ND IN PARTICULAR, OUR ATTENTION WAS DRAWN TO PAGE NO.70 OF THE PAPER BOOK , WHEREIN, THERE IS A CLAUSE OF THE AGREEMENT THAT THE ASSESSEE HAD TO CO NSTRUCT TWIN BUNGALOWS OF THE SOCIETY ALONG WITH MATERIALS IN FIXED PRICE, AS PER THE SPECIFICATION AND PLAN PREPARED BY THE ENGINEER OF THE SOCIETY. HE SUBMITTED THAT WHEN THE ASSESSEE HAS TO GET FIXED PRICE FOR THE WORKING DONE BY THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE HAS COMPLIED WITH THE REQUIREMENT OF RISK AND REWARD AS PER THE JUDGMENT OF THE HONBLE GUJAR AT HIGH COURT RENDERED IN THE CASE OF CIT VS. RADHE DEVELOPERS, 3 41 ITR 403. HE ALSO SUBMITTED THAT THE ORDER OF THE CIT(A) IS SILE NT ON THIS ASPECT OF THE MATTER, AND THEREFORE, THE ORDER OF THE CIT(A) SHOU LD BE REVERSED, AND THAT OF THE AO SHOULD BE RESTORED. AS AGAINST THIS , THE LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). HE ALS O SUBMITTED THAT THIS ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE JUDGMENT ITA NO.3254/AHD/2010WITH CO NO.243/AHD/2011 -3- OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE C ASE OF CIT VS. RADHE DEVELOPERS (SUPRA), BECAUSE THE ONLY OBJECTION OF T HE AO WAS THAT THE ASSESSEE IS NOT OWNER OF THE LAND, AND ON THIS ASPE CT, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE JUDG MENT OF THE HONBLE GUJARAT HIGH COURT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, AND AL SO PERUSED THE MATERIAL ON RECORD, AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, AND THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. RADHE DEVELOPERS (SUPRA). AS PER PAGE N OS.16 AND 17 OF THE ASSESSMENT ORDER, WE FIND THAT THIS WAS ONE OF THE MAIN OBJECTIONS OF THE AO THAT, AS PER THE AMENDMENT TO SECTION 80IB(10) B Y OF THE FINANCE ACT, 2009, A WORK CONTRACTOR, WHO EXECUTES THE WORK AWA RDED BY ANY PERSON, IS NOT ELIGIBLE FOR THE DEDUCTION UNDER SECTION 80I B(10). HE WAS ALSO GIVEN A FINDING THAT THE ASSESSEE IS MAINLY A CONTR ACTOR FOR THE PURPOSE OF CONSTRUCTION OF PROJECT. IN THE LIGHT OF THIS OBJE CTION OF THE AO, WE FIND THAT THE ORDER OF THE CIT(A) IS SILENT ON THIS ASPE CT OF THE MATTER. FOR THE SAKE OF READY REFERENCE, WE REPRODUCE THE RELEVANT PARA OF THE ORDER OF THE CIT(A) I.E. PARA-7 OF HIS ORDER AS UNDER: 7. 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 LOCAL AUTHORITY, COMPLETION OF PROJE CT 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 T HAT 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.SHAKTI CORPORATION, BAR ODA IN ITA NO.1503/AHD/2008 IN AY 200506. BUT HERE THE APPELLA NT HAS BEEN FOUND FULFILLING THE CONDITIONS LAID DOWN IN SECTION 8016 (10) OF THE INCOME TAX ACT AND HAS ALSO BEEN FOUND MEETING THE TESTS L AID DOWN IN HON'BLE ITAT BENCH A AHMEDABAD DECISION IN THE CASE OF M/S. SHAKTI CORPORATION (PARA 16 OF THE DECISION) AND AS IT HAD PRACTICALLY ITA NO.3254/AHD/2010WITH CO NO.243/AHD/2011 -4- PURCHASED THE LAND AND IT BORE THE ENTIRE COST AND RISK OF DEVELOPING THE PROJECT THEREFORE IN MY VIEW IT IS ELIGIBLE FOR DED UCTION U/S.80IB(10) AND THE AO IS DIRECTED TO ALLOW THE SAME. FROM THE ABOVE PARA OF THE ORDER OF THE CIT(A), WE FIND THAT THERE IS NO WHISPER ABOUT THIS OBJECTION OF THE AO THAT THE ASS ESSEE IS ONLY A CONTRACTOR. WE ALSO FIND THAT AS PER PAGE NO.70 OF THE PAPER BOOK I.E. PAGE NO.4 OF THE DEVELOPMENT AGREEMENT, THE ASSESSE E WAS REQUIRED TO CONSTRUCT BUNGALOWS OF THE SOCIETY ALONG WITH MATER IAL AT FIXED PRICE. THE CIT(A) HAS NOT DECIDED THE ISSUE IN DISPUTE IN THE LIGHT OF THIS PARA IN THE DEVELOPMENT AGREEMENT. AS PER THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. RADHE DE VELOPERS(SUPRA), IT IS ONE OF THE ESSENTIAL REQUIREMENT THAT THE ASSESS EE MUST HAVE A DOMINANT CONTROL OVER THE PROPERTY IN QUESTION, AND THE ASSE SSEE SHOULD BEAR THE ENTIRE RISK AND SHOULD BE ELIGIBLE FOR ENTIRE REWAR D. WE FAIL TO UNDERSTAND THAT WHEN THE ASSESSEE WAS WORKING FOR FIXED PRICE, HOW IT CAN BE SAID THAT THE ASSESSEE WAS UNDERTAKING ENTIRE RISK AND W AS ENTITLED TO ENTIRE REWARD. THE LEARNED AR OF THE ASSESSEE HAS ALSO FI LED A SUPPLEMENTARY PAPER BOOK OF 263 PAGES ON 30.7.2013 AS PER LEAVE A LLOWED BY THE BENCH, BUT FROM THE SAME ALSO, IT IS NOT COMING OUT THAT T HE ASSESSEE IS NOT WORKING FOR A FIXED PRICE. HENCE, IN OUR CONSIDERE D OPINION, THE ORDER OF THE LEARNED CIT(A) IS NOT SUSTAINABLE AS PER OUR AB OVE DISCUSSION, BUT STILL WE FEEL THAT IN THE INTEREST OF JUSTICE, THIS MATTE R SHOULD GO BACK TO THE FILE OF THE LEARNED CIT(A) FOR FRESH DECISION ON THIS IS SUE, AND HENCE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THIS MATT ER BACK TO HIS FILE FOR FRESH DECISION. HE SHOULD PASS A SPEAKING ORDER AF TER EXAMINING THE COMPLETE FACTS AND SHOULD GIVE A CLEAR FINDING AS T O WHETHER THE ASSESSEE WAS TAKING ENTIRE RISK AND WAS ELIGIBLE FOR ENTIRE REWARD IN THE FACTS OF THE PRESENT CASE, AS HAS BEEN HELD BY THE HONBLE GUJAR AT HIGH COURT IN THE CASE OF CIT VS. RADHE DEVELOPERS (SUPRA). HE SHOUL D EXAMINE THE FACTS ITA NO.3254/AHD/2010WITH CO NO.243/AHD/2011 -5- OF THE PRESENT CASE IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT, AND THEN PASS NECESSARY ORDERS AS PER LAW IN THE LIGHT OF THE ABOVE DISCUSSION, AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. 6. NOW, WE TAKE UP THE CO FILED BY THE ASSESSEE. T HE GROUNDS RAISED IN THE CO BY THE ASSESSEE ARE AS UNDER: 1. IN NOT APPRECIATING THE FACTS THAT AS PER THE W RITTEN SUBMISSION DATED 22.02.2010 FILED IN TAPAL/REGISTRY, IT WAS CO NTENDED IN REFERENCE TO GROUND NO.2 THAT SINCE THE ASSESSEE HAS BEEN ALLOWE D THE CLAIM UNDER SEC.80IB(10) IN REFERENCE TO THE SAME PROJECT FOR T HE ASSTT.YEAR 2005-06, 2006-07 AND 2007-08, THERE IS NO JUSTIFICATION IN NOT ALLOWING IDENTICAL CLAIM UNDER SEC.80-IB(10) SUBSEQUENT YEAR AS PER TH E DECISION OF MICRO INSTRUMENTS VS. ITO 12 DTR 501(CHD)(TRIB) (AT PAP ER BOOK PAGE 78 TO 84 BEFORE ITAT) AS WELL AS THE DECISION OF DY.CI T VS. JINDAL PHOTO FILMS REPORTED IN 113 ITD 624 (DELHI)(TM) IN REFERE NCE TO SEC.80I (PAPER BOOK PAGE 86 TO 116) AND ALSO AS PER THE DEC ISION OF GUJARAT COURT IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL S REPORTED IN 123 ITR 669 IN REFERENCE TO SEC.80J OF THE ACT. THUS, I N VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS PRAYED THAT THE CI T(APPEALS) OUGHT TO HAVE ALLOWED THE CLAIM UNDER SEC.801B WHICH HAS BEE N ALLOWED IN THE INITIAL YEARS AND THERE ERE IS NO CHANGE IN FACTS A ND CIRCUMSTANCES OF THE CASE IN REFERENCE TO THE PROJECT CARRIED OUT BY THE ASSESSEE. 7. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESS EE THAT DEDUCTION WAS ALLOWED BY THE AO UNDER SECTION 80IB(10) IN RES PECT OF SAME PROJECTS FOR EARLIER ASSESSMENT YEARS I.E. A.Y.2005 -06, 2006-07 AND 2007- 2008, AND HENCE, THERE IS NO JUSTIFICATION OF DISAL LOWING THE DEDUCTION FOR THE SAME PROJECT IN THE PRESENT YEAR. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE ARE OF THE CONSIDERED OPINION THAT THE CLAIM OF THE ASSESSEE CANNOT BE AL LOWED ON THIS BASIS THAT ITA NO.3254/AHD/2010WITH CO NO.243/AHD/2011 -6- SIMILAR DEDUCTION WAS ALLOWED IN EARLIER YEARS. TH IS IS, BY NOW, SETTLED POSITION OF THE LAW THAT IF A MISTAKE IS COMMITTED IN EARLIER YEARS, THERE IS NO HEROISM IN PERPETUATING THE MISTAKE. IN OUR CON SIDERED OPINION, ON THE BASIS OF PRINCIPLE OF CONSISTENCY, A POSSIBLE VIEW TAKEN BY THE AUTHORITIES IN EARLIER YEARS, CANNOT BE CHANGED, BUT IF A VIEW TAKEN BY THE AO IN EARLIER YEAR IS NOT A POSSIBLE VIEW, THEN IT CANNOT BE APPROVED IN THE PRESENT YEAR, ON THE BASIS OF CONSISTENCY. IN THE LIGHT OF THIS FINDING OF THE AO, IN THE PRESENT YEAR, THAT THE ASSESSEE WAS MERELY A CONTRACTOR, AND IN LIGHT OF THIS CLAUSE OF THE AGREEMENT THAT THE A SSESSEE HAS TO WORK ONLY FOR A FIXED PRICE, IT CANNOT BE SAID THAT VIEW TAKE N BY THE AO IS A POSSIBLE VIEW, UNLESS THIS OBJECTION OF THE AO IN THE PRESEN T YEAR IS SUCCESSFULLY REBUTTED BY THE ASSESSEE BY BRINGING SOME COGENT MA TERIAL ON RECORD. FOR THIS PURPOSE, WE HAVE ALREADY RESTORED THE MATTER T O THE FILE OF THE LEARNED CIT(A) FOR FRESH DECISION. HENCE, THIS OBJECTION R AISED BY THE ASSESSEE IN THE CO HAS NO MERIT, AND HENCE, REJECTED. WE WOUL D ALSO LIKE TO OBSERVE THAT IT IS STATED BY THE ASSESSEE IN THE GROUNDS RA ISED IN THE CO THAT THIS DEDUCTION WAS ALLOWED BY THE AO IN EARLIER YEARS IN CLUDING A.Y.2007- 2008, BUT THIS IS NOT FACTUALLY CORRECT, BECAUSE A. Y.2007-2008 IS BEFORE US, AND IN THIS YEAR, DEDUCTION IS NOT ALLOWED BY T HE AO. 9. IN THE RESULT, CO FILED BY THE ASSESSEE IS DISMI SSED. 10. IN COMBINED RESULT, THE APPEAL OF THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSE, WHEREAS THE CO FILED BY THE AS SESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT ( # ## #. .. .% %% % . .. .&'( &'( &'( &'( /A.K. GARODIA) %) * /ACCOUNTANT MEMBER