The ITO, Ward-5(2), Baroda V. M/s. Shivam Enterprise, Baroda

ITA 326/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8586 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 326/AHD/2014 (ASSESSMENT YEAR: 2010-11) THE INCOME TAX OFFICER, WARD-5(2), BARODA, ROOM NO. 507, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA, PIN 390 001 APPELL ANT VS. SHIVAM ENTERPRISES, NR. SIDHARTH NAGAR, NEW VIP ROAD, KARELIBAUG, BARODA 390018 RESPONDENT PAN: ABJFS0632C /BY REVENUE : SHRI PRASOON KABRA, SR. D.R. /BY ASSESSEE : NONE /DATE OF HEARING : 06.09.2017 /DATE OF PRONOUNCEMENT : 14.09.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 A RISES AGAINST THE CIT(A)-V, BARODAS ORDER DATED 22.11.2013 IN CASE N O. CAB/(A)V-78/12-13, REVERSING ASSESSING OFFICERS ACTION DISALLOWING AS SESSEES CLAIM OF SECTION 80IB(10) AMOUNTING TO RS.1,40,80,542/- ON THE GROUN D THAT IT WAS MERELY A WORKS CONTRACTOR AND NOT A DEVELOPER, IN PROCEEDING S U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 326/AHD/14 [ITO VS. SHIVAM ENTERPRISES] A.Y. 2010-11 - 2 - CASE CALLED TWICE. NONE APPEARS AT ASSESSEES BEHE ST. THE REGISTRY HAS SENT AN RPAD NOTICE DATED 31.05.2017. THE SAME STANDS RECEIVED BACK UNSERVED. WE THEREFORE PROCEED EX PARTE AGAINST TH E ASSESSEE. 2. WE NOW ADVERT TO REVENUES SOLE SUBSTANTIVE GROU ND SEEKING TO REVIVE THE IMPUGNED DISALLOWANCE PERTAINING TO THE HOUSING PROJECT IN QUESTION SIDDHARTH PARK , VILL. SAYAJIPURA, BARODA. THERE IS NO DISPUTE THAT THIS ASSESSEE IS NOT THE ACTUAL OWNER OF THE LAND IN QUE STION. IT CLAIMED TO HAVE ENTERED INTO A DEVELOPMENT AGREEMENT DATED 05.11.20 06 REGARDING THE AREA IN QUESTION MEASURING 22257.5 SQ.MTRS. IT THEREAFTER RAISED THE DEDUCTION CLAIM IN QUESTION U/S.80IB(10) OF THE ACT. THE CIT(A) DE CLINED THE SAME IN ASSESSMENT ORDER DATED 01.03.2013 INTER ALIA HOLDIN G THEREIN THAT THE ASSESSEE WAS NOT IN DOMINANT CONTROL OF THE PROJECT AS ON 31 .03.2008, THE PROJECT APPROVAL HAD COME IN ACTUAL OWNERS NAME, THE ASSES SEE HAD STARTED DEVELOPMENT ACTIVITIES ONLY AFTER 01.04.2008. THE PLAN IN QUESTION STOOD APPROVED ONLY ON 19.01.2009, THE COMPLETION CERTIFI CATE WAS IN LAND OWNERS NAME AND THAT THE ASSESSEES ROLE THEREIN WAS THAT OF A MERE CONTRACTOR GETTING FIXED REMUNERATION. ALL THIS REASONING RESULTED IN THE IMPUGNED DISALLOWANCE OF RS.1,40,80,542/- BEING MADE IN ASSESSEES CASE. 3. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) REVER SES ASSESSING OFFICERS FINDINGS DISALLOWING ASSESSEES CLAIM AS UNDER: 5.2 I HAVE GIVEN MY CAREFUL CONSIDERATION TO THE FACTS OF THE CASE AS ALSO THE OBSERVATION OF THE AO AND THE ARGUMENTS PUT FORTH B Y THE AR. IT HAS BEEN POINTED OUT BY THE AR OF THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS THAT THE PROJECT UNDER CONSIDERATION IS THE SAME PROJECT, IN RESPECT OF WHICH DEDUCTION U/S 80IB(10) OF THE IT ACT WAS CLAIMED BY THE APPELLANT AND WHICH WAS ALLOWED BY THE UNDERSIGNED VIDE ORDER NO.CAB(A)-V-281/11-12 DATED 27.11.2012. HOWEVER, IT IS SEEN THAT SOME NEW ISSUES HAVE BEEN RAISED BY THE A O IN THE DISALLOWANCE MADE FOR THIS YEAR. THESE ISSUES ARE SUMMARIZED HEREUNDE R: 1) DEDUCTION U/S 80 IB (10) OF THE IT ACT IS ALLOWA BLE ONLY IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT APPROVED BEFORE THE 31ST ITA NO. 326/AHD/14 [ITO VS. SHIVAM ENTERPRISES] A.Y. 2010-11 - 3 - MARCH, 2008 BY THE LOCAL AUTHORITY. THE POSSESSION OF THE PLOT, ON WHICH THE HOUSING PROJECT WAS CONSTRUCTED, WAS TAKEN OVER BY THE APPELLANT ON 01.04.2008 WHICH WAS AFTER 31ST MARCH 2008 AND THUS, THE APPEL LANT HAD NO DOMINANT CONTROL OVER THE PROJECT TILL 31 ST MARCH 2008. 2) APPROVAL GRANTED IN RESPECT OF THE PROJECT WA S IN THE NAME OF THE LAND OWNERS AND NOT IN THE NAME OF THE APPELLANT. 3) DEVELOPMENT ACTIVITIES WERE STARTED ONLY AFT ER 01.04.2008. 4) PLAN IN ACCORDANCE WITH THE PROJECT WAS FINALLY DEVELOPED HAS BEEN APPROVED ONLY ON 19.01.2009. IN THIS REGARDS, FACTS AS RECORDED BY THE AO IN THE ASSESSMENT ORDER ARE AS UNDER: 'ON PERUSAL OF THE CONSTRUCTION PERMISSION LETTERS, IT WAS NOTICED THAT THE LAND OWNERS WERE HAVING TOTAL LAND AREA OF 66672 SQ. MET RE, OUT OF WHICH AREA ADMEASURING 22257.5 SQ. METRE WAS HANDED OVER TO TH E ASSESSEE FOR DEVELOPMENT ON 01.04.2008. THE LAND OWNERS HAVE TAKEN THE FIRST CONSTRUCTION PERMISSION FROM THE LOCAL AUTHORITY ON 28 .01.2006 I.E. PRIOR TO THE DATE OF DEVELOPMENT AGREEMENT WITH THE ASSESSEE. IN THE SAI D PERMISSION THE LAND OWNERS HAVE OBTAINED PERMISSION TO CONSTRUCT 338 RESIDENTI AL UNITS ON THEIR ENTIRE PLOT OF LAND EXCEPT LAND AREA ADMEASURING 11162 SQ. METRE W HICH IS SHOWN AS OWNER'S PLOT. SUBSEQUENTLY, THE SAID PERMISSION WAS REVISED VIDE PERMISSION DATED 03.11.2006 FOR CONSTRUCTION OF 301 RESIDENTIAL UNI TS AND THE AREA ADMEASURING 9161 SQ. METRE IS SHOWN AS AREA FOR FURTHER PLANNIN G. FURTHER, THE SECOND PERMISSION WAS ALSO REVISED BY CONSTRUCTION PERMISS ION DATED 26.02.2008 IN WHICH PERMISSION TO CONSTRUCT 155 AND 74 RESIDENTIAL UNIT S (TOTAL 229 RESIDENTIAL UNITS) ON THE ENTIRE LARD ADMEASURING 66672 SQ. METRE WAS OBT AINED. THEREAFTER, THE SAID PERMISSION WAS REVISED VIDE CONSTRUCTION PERMISSION DATED 19.01.2009 IN WHICH PERMISSION TO CONSTRUCT 155 AND 112 RESIDENTIAL UNI TS (TOTAL 267 RESIDENTIAL UNITS) ON THE ENTIRE LAND ADMEASURING 66672 SQ. METERS WAS OBTAINED. FROM THE ABOVE, IT CAN BE SEEN THAT THE APPROVAL FOR CONSTRUCTION OF T HE HOUSING PROJECT 'SHIVAM PARK' OBTAINED VIDE CONSTRUCTION PERMISSION DATED 2 6.02.2008 WAS FOR 74 RESIDENTIAL UNITS BUT THE APPROVAL FOR THE HOUSING PROJECT OBTAINED VIDE CONSTRUCTION PERMISSION DATED 19.01.2009 IS FOR 112 RESIDENTIAL UNITS. THEREFORE, IT IS CRYSTAL CLEAR THAT THE APPROVAL FOR CONSTRUCT ION OF 112 RESIDENTIAL UNITS OBTAINED FROM THE LOCAL AUTHORITY VIDE CONSTRUCT ION PERMISSION DATED 19.01.2009 IN THE NAME OF SHIVAM PARK PROJECT IS TH E FIRST APPROVAL AND NOT REVISED APPROVAL AS CLAIMED BY THE ASSESSEE SINCE I N THE PREVIOUS APPROVAL THERE WAS NO SUCH APPROVAL FOR 112 RESIDENTIAL UNITS IN T HE NAME OF THE SHIVAM PARK . IN VIEW OF THE ABOVE, THE APPROVAL FOR THE CONSTRUC TION OF THE HOUSING PROJECT OBTAINED VIDE CONSTRUCTION PERMISSION DATED 19.01.2 009 FOR 112 RESIDENTIAL UNITS CANNOT BE SAID TO BE REVISED APPROVAL FOR THE CONST RUCTION OF THE PROJECT OBTAINED VIDE CONSTRUCTION PERMISSION DATED 26.02.2008 FOR 7 4 RESIDENTIAL UNITS AND ACCORDINGLY THE SAME DOES NOT FALL WITHIN T HE MEANING OF EXPLANATION TO SECTOR 80IB(10) OF THE IT ACT'. THE AGREEMENT FOR DEVELOPMENT OF THE LAND ADMEASURI NG 22257.5 SQ.METERS (WHICH WAS PART OF TOTAL LAND AREA OF 66672 SQ. METERS BEL ONG TO THE LAND OWNERS) WAS ITA NO. 326/AHD/14 [ITO VS. SHIVAM ENTERPRISES] A.Y. 2010-11 - 4 - ENTERED INTO BETWEEN THE LAND OWNERS AND THE APPELL ANT ON 05.11.2006. THUS, THERE WAS AN EXISTING APPROVE PLAN FOR DEVELOPMENT OF THE PLOT WHICH WAS APPROVED ON 28.01.2006 AND SUBSEQUENTLY REVISED ON 03.11.2006. AFTER THE APPELLANT OBTAINED THE DEVELOPMENT RIGHTS OVER THE PLOT OF LAND ADMEAS URING 22257.5 SQ. METERS, A NEW PLAN WAS GOT APPROVED IN RESPECT OF THE TOTAL L AND AREA OF 66672 SQ. METERS ON 26.02.2008 AND THIS PLAN WAS SUBSEQUENTLY MODIFIED AND FINAL PLAN WAS GOT APPROVED ON 19.01.2009. THUS, EVEN IF WE TAKE INTO ACCOUNT THE PLANS APPROVED IN RESPECT OF THE LAND DEVELOPED BY THE APPELLANT AFTE R THE APPELLANT OBTAINED DEVELOPMENT RIGHTS OVER THE LAND , THERE IS A PLAN WHICH WAS DULY APPROVED ON 26.02.2008 AND WHICH IS BEFORE THE LAST PRESCRIBED DATE OF APPROVAL I.E. 31 ST MARCH 2008. THE EXPLANATION (I) TO SUB-SECTION (10) OF SECTION 80IB CLEARLY PROVIDES THAT WHEN A HOUSING PROJECT IS APPROVED MORE THAN ONCE, IT SH ALL DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN SUC H HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. THUS, EVEN IF FINA L PERMISSION FOR THE PROJECT HAS BEEN OBTAINED ON 19.01.2009, THE PROJECT IS DEEMED TO HAVE BEEN APPROVED EITHER ON 26.02.2008 (WHEN FIRST PERMISSION WAS OBTAINED B Y THE APPELLANT AFTER OBTAINING DEVELOPMENT RIGHTS) OR ON 20.04.2006 WHEN THE FIRST PERMISSION WAS OBTAINED BY THE LAND OWNERS. BOTH THE DATES FALL BE FORE 31ST MARCH 2008. THUS, IN THE OPINION OF THE UNDERSIGNED THE PROJECT IS DULY APPROVED BEFORE 31ST MARCH 2008. AS FAR AS ARGUMENT OF THE AO THAT APPROVAL FOR 112 RESIDENTIAL UNITS WAS OF OBTAINED FOR THE FIRST TIME ON 19.01.2009 AND THERE FORE EARLIER APPROVAL FOR DEVELOPMENT OF 74 RESIDENTIAL UNITS CANNOT BE ACCEP TED AS A FIRST APPROVAL OF THE PROJECT, IS CONCERNED IF THIS ARGUMENT IS ACCEPTED THEN THE EXPLANATION (I) TO SUB- SECTION (10) OF SECTION 80IB WILL BE RENDERED MEANI NGLESS. THIS IS SO BECAUSE EVERY NEW APPROVAL OR MODIFICATION OF PLAN WILL HAVE SOME THING NEW IN IT, WHICH WOULD BE APPROVED FOR THE FIRST TIME AND THUS AS PER THE INTERPRETATION OF THE AO, EVERY PLAN WILL BE A NEW PLAN. THEREFORE, I'M UNABLE TO A CCEPT THE ARGUMENT OF THE AO IN THIS REGARD. SO FAR AS NOT HAVING POSSESSION OF THE PLOT IS CONC ERNED, THERE IS NO REQUIREMENT UNDER ANY PROVISIONS OF 80IB (10) THAT THE POSSESSI ON OF THE LAND BEING DEVELOPED SHOULD BE TAKEN BEFORE A CERTAIN DATE OR THAT THE W ORK ON THE PROJECT SHOULD BE COMMENCED BEFORE A CERTAIN DATE. THE ONLY REQUIREME NT IN THIS REGARD IS THAT THE PROJECT IS REQUIRED TO BE COMPLETED WITHIN 5 YEARS FROM THE DATE OF APPROVAL. THIS CONDITION IS ALSO SATISFIED IN THE CASE OF APPELLAN T EVEN IF THE DATE OF APPROVAL IS TAKEN AS 20.04.2006. ALL OTHER ISSUES RAISED BY THE AO ARE COVERED BY DE CISION OF THE UNDERSIGNED VIDE ORDER NO.CAB(A)-V-281/LL-12 DATED 27.11.2012, WHICH HAD ALLOWED THE DEDUCTION UNDER SECTION 80 IB (10) OF THE IT ACT TO THE APPEL LANT IN RESPECT OF THIS PROJECT. ACCORDINGLY, IT IS HELD THAT THE APPELLANT IS ENTIT LED TO FOR DEDUCTION UNDER SECTION 80 IB (10) OF THE IT ACT AND THE AO IS DIRECTED TO ALLOW THE DEDUCTION CLAIMED BY THE APPELLANT. ITA NO. 326/AHD/14 [ITO VS. SHIVAM ENTERPRISES] A.Y. 2010-11 - 5 - 4. WE HAVE GIVEN A SERIOUS THOUGH TO REVENUES ARGU MENT. CASE FILE INDICATES THAT THE ASSESSEE HAS SUCCEEDED ON THE VE RY ISSUE REGARDING THE SAME PROJECT IN PRECEDING ASSESSMENT YEAR AS WELL BEFORE THE CIT(A) WHEREIN IT STANDS TREATED AS DEVELOPER OF THE PROJECT IN QUEST ION M/S. SIDDHARTH PARK. WE AFFORDED AMPLE OPPORTUNITY TO LEARNED DEPARTMENT AL REPRESENTATIVE TO REBUT THE SAID CLINCHING FINDING. HE FAILS TO INDI CATE ANY DISTINCTION ON FACTS HEREIN VIS--VIS THOSE IN THE PRECEDING ASSESSMENT YEAR. NOR DOES HE HIGHLIGHT FINAL STATUS OF REVENUES APPEAL PENDING OR DECIDED BEFORE THIS TRIBUNAL; IF ANY. WE THEREFORE CONCLUDE THAT THE I NSTANT ISSUE HAS ATTAINED FINALITY IN ABOVESTATED PRECEDING ASSESSMENT YEAR. WE ACCORDINGLY SEE NO REASON TO ACCEPT REVENUES VEHEMENT CONTENTION SEEK ING TO REVIVE SECTION 80IB(10) DEDUCTION IN QUESTION. 4. THIS REVENUES APPEAL IS ACCORDINGLY DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 14 TH DAY OF SEPTEMBER, 2017.] SD/- SD/- ( AMARJIT SINGH ) ( S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL M EMBER AHMEDABAD: DATED 14/09/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0