M/s. Gayatri Builders, Bhopal V. The ITO-1(1), Bhopal

ITA 330/IND/2013

• Counselvise Citation: 33022714 RSA 2013
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

PAGE 1 OF 10 A IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AACFG6051D I.T.A.NO. 330 /IND/201 3 A.Y. : 2006-07 M/S.GAYATRI BUILDERS, BHOPAL VS. ITO, 1(1), BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI ANIL KHABYA, C. A. RESPONDENT BY : SHRI BHEEM KUNWAR, SR. DR DATE OF HEARING : 28 . 1 0 .201 3 DATE OF PRONOUNCEMENT : 20 . 1 1 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A), DATED 11.03.2013 FOR THE ASSE SSMENT YEAR 2008-09 IN THE MATTER OF ORDER PASSED U/S 143( 3) OF THE INCOME-TAX ACT, 1961. GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 2 PAGE 2 OF 10 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IB(10) AMO UNTING TO RS. 2,42,165/-. 3. AT THE OUT-SET, THE LD. AUTHORIZED REPRESENTATIVE PLACED ON RECORD THE ORDER OF I.T.A.T. DATED 1 ST JUNE, 2012, IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08, WH EREIN ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) WAS RES TORED BY THE TRIBUNAL TO THE FILE OF ASSESSING OFFICER WITH CERTAIN DIRECTION. THE LD. AUTHORIZED REPRESENTATIVE FURTH ER PLACED ON RECORD THE ORDER OF ASSESSING OFFICER PASSED U/S 14 3(3)/254 DATED 10.12.2012 WHEREIN ASSESSEES CLAIM FOR DEDUC TION U/S 80IB(10) WAS ALLOWED. 4. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT IN THE ASSESSMENT YEAR 2007-08, THE ASSE SSEES APPEAL FOR CLAIM OF DEDUCTION U/S 80IB(10) WITH RES PECT TO THE VERY SAME PROJECT WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS. THE ORDER PASSED B Y THE TRIBUNAL DATED 1.6.2012 READS AS UNDER :- GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 3 PAGE 3 OF 10 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECT. THE ASSESSING OFFIC ER DECLINED ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) ON THE PLEA THAT THE ASSESSEE HAS SOLD PLOT OF LAND TO THE CUSTOMERS AND NO RESIDENTIAL UNIT WAS SOLD. AS PER THE ASSESSING OFFICER ONLY AFTER TRANSFERRING T HE PLOT, THE ASSESSEE HAS CONSTRUCTED THE BUILDING AS A CONTRACTOR. THE ASSESSING OFFICER ALSO OBSERVED THA T AS PER MAP OF THE PROJECT APPROVED BY THE LOCAL AUTHORITIES, THE ASSESSEE WAS ALLOWED TO CONSTRUCT COMMERCIAL PROJECT MEASURING 2630 SQ. FT. SINCE PROJECT ALLOWED A COMMERCIAL COMPLEX HAVING BUILT U P AREA EXCEEDING 2000 SQ.FT. THE PROJECT WAS NOT FULFILLING THE CONDITIONS LAID DOWN U/S 80IB(10). 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRME D DISALLOWANCE AGAINST WHICH THE ASSESSEE IS IN APPEA L BEFORE US. GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 4 PAGE 4 OF 10 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ASSESSEE IS A PARTNERSHI P FIRM ENGAGED IN THE BUSINESS OF DEVELOPMENT OF RESIDENTIAL HOUSING PROJECTS. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAS CONTINUED DEVELOPMENT OF A RESIDENTIAL PROJECT AT KOLAR ROAD, BHOPAL, NAMED AS VIJAY VILAS. THE RESIDENTIAL PROJECT WAS APPROVED BY GRAM PANCHAYAT NAYAPURA VIDE APPROVAL NO. 1793 DATED 18.10.2005. THE PROJECT BASICALLY CONSISTS OF CONSTRUCTION OF 31 DUPLEX HOUSES. THE APPROVAL ORDER AND APPROVED PROJECT MAP WAS SUBMITTED ON RECORD. THE ASSESSEE CLAIMED DEDUCTION OF SECTION 80IB(10) OF RS. 6,47,250/- ON THIS PROJECT. AT THE TIME OF ASSESSMENT, IT WAS EXPLAINED TO THE ASSESSING OFFICER THAT THE ASSESSEE HAD COMPLIED WITH ALL THE CONDITIONS OF SECTION 80IB(10) VIZ.(I) THE PROJECT HAS BEEN SANCTIONED BY THE LOCAL AUTHORITY (II) THE PROJECT CONSISTS OF RESIDENTIAL UNITS HAVING BUILT UP GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 5 PAGE 5 OF 10 AREA NOT EXCEEDING 1500 SQ.FT. AND (III) NO COMMERCIAL UNITS HAVE BEEN BUILT UP. 6. THE ASSESSING OFFICER HAS DECLINED THE CLAIM OF DEDUCTION ON THE PLEA THAT THE ASSESSEE IS A CONTRACTOR AND NOT A BUILDER. WE FOUND THAT AS PER APPROVAL LETTER DATED 18.10.2005, ISSUED BY GRAM PANCHAYAT, NAYAPURA VIDE APPROVAL NO.1793, THE ASSESSEE WAS TO UNDERTAKE RESIDENTIAL PROJECT FOR CONSTRUCTION OF 31 DUPLEX HOUSES. WE ALSO FOUND THAT AS PER CERTIFICATE ISSUED BY OFFICE OF SUB DIVISIONAL OFFICER, TAHSIL HUZUR, DISTRICT BHOPAL, DATED 31 ST OCTOBER, 2009, THE ASSESSEE AS A COLONIZER HAVE UNDERTAKEN AND COMPLETED WORK OF DRINKING WATER, SEWERAGE LINE, SEPTIC TANK, PARK, CEMENT ROAD AND OTHER CONNECTED WORK IN THE COLONY. IT HAS ALSO BEEN CERTIFIED THAT THE JOINT INSPECTIO N OF THE SPOT ALONGWITH THE PRESIDENT OF THE SAMITI WAS UNDERTAKEN ON 17.12.2001 ACCORDING TO WHICH ALL GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 6 PAGE 6 OF 10 THE INFRASTRUCTURE FACILITIES HAVE DULY BEEN DEVELOPED AT THE SCHEME VIJAY VILLAS. 7. MERELY BECAUSE THE ASSESSEE HAD ENTERED INTO AGREEMENT FOR SALE OF PLOT SO AS TO ENABLE THE CUSTOMER TO HAVE A LOAN FACILITY FROM BANK AND OTHE R FINANCIAL INSTITUTIONS WILL NOT GO TO PROVE THAT TH E ASSESSEE HAS NOT UNDERTAKEN ANY CONSTRUCTION. AS PER THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE CUSTOMERS, THE ASSESSEE WAS REQUIRED TO UNDERTAKE CONSTRUCTION OF THE RESIDENTIAL UNIT AS A WHOLE. IT APPEARS THAT THE ASSESSING OFFICER HAS MIS-INTERPRETED VARIOUS AGREEMENTS ENTERED BY THE ASSESSEE WITH ITS CUSTOMERS. NOT ONLY AS PER PROJEC T APPROVAL LETTER BUT ALSO AS PER THE CERTIFICATE DAT ED 31 ST OCTOBER, 2009, ISSUED BY THE OFFICE OF SUB DIVISIONAL OFFICER, THE ASSESSEE HAS NOT ONLY CONCEIVED THE ENTIRE HOUSING SCHEME BUT ALSO EXECUTED THE WORK AS PER APPROVED PLAN. THE ASSESSEE HAD ENTERED INTO COMPREHENSIVE SALE GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 7 PAGE 7 OF 10 AGREEMENT WITH THE CUSTOMERS FOR THE PURPOSE OF SALE OF COMPLETE RESIDENTIAL UNITS. IT IS A NORMAL TRADE PRACTICE TO RECEIVE PAYMENT IN INSTALMENTS AS PER THE PROGRESS OF THE PROJECT, AS MOST OF THE CUSTOMERS GOT HOUSES FINANCED FROM THE BANK AND THE BANK RELEASE THE FUNDS AS PER PROGRESS OF THE WORK. FACILITY OF REGISTRATION OF STRUCTURE WAS MAD E AVAILABLE TO THE CUSTOMERS ONLY WITH A VIEW TO PROVIDE THEM MORTGAGEABLE SECURITIES TO AVAIL BANK FINANCE. AS PER THE AGREEMENT, THE POSSESSION OF RESIDENTIAL UNIT REMAINED WITH THE ASSESSEE TILL FI NAL INSTALMENT IS PAID. THE CUSTOMER HAS NO AUTHORITY T O GET CONSTRUCTION WORK DONE BY ANY OTHER PERSON OTHER THAN THE ASSESSEE. IN VIEW OF THESE FACTS, WE DO NOT FIND ANY MERIT ON THE PART OF ASSESSING OFFICERS ACTION FOR TREATING THE ASSESSEE MERELY A S A CONTRACTOR RATHER THAN A DEVELOPER. THUS, THE ASSESSEE IS NOT HIT ADVERSELY BY THE EXPLANATION TO GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 8 PAGE 8 OF 10 SECTION 80IV(10), WHICH WAS MADE EFFECTIVE FROM 1 ST APRIL, 2001. 8. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE ASSESSEE HAS APPROVAL FOR CONSTRUCTING COMMERCIAL AREA MEASURING 2630 SQ.FT. THE ASSESSING OFFICER, THEREFORE, HELD THAT SINCE THE COMMERCIAL AREA ALLOWED WAS EXCEEDING 2000 SQ.FT., THE PROJECT WAS NOT FULFILLING THE CONDITIONS LAID DOWN U/S 80IB(10). IN THIS REGARD, WE FOUND THAT BEFORE THE CIT(A), THE ASSESSEE HAD PLACED EVIDENCE TO SUBSTANTIATE THAT ACTUALLY NO COMMERCIAL UNIT WA S CONSTRUCTED. FOLLOWING WAS THE PRECISE CONTENTION O F THE ASSESSEE BEFORE THE LD. CIT(A), WHICH FOUND PLACE IN THE PAPER BOOK. INITIALLY WHEN THE PROJECT WAS APPROVED ON 18- 10-05, PLOT NO.1 TO, 5 WERE APPROVED AS SHOP CUM RESIDENTIAL PLOT. THE SAME WERE MORTGAGED TO SDO AS PER RULES. WHEN THE SAME WERE RELEASED, PERMISSION WAS SOUGHT ONLY FOR RESIDENTIAL HOUSE ON THESE 5 PLOTS (KINDLY REFER GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 9 PAGE 9 OF 10 PERMISSION AT P. B. PG.37) THUS NO COMMERCIAL WAS MADE IN THE ENTIRE COLONY. 9. EVEN DURING THE COURSE OF HEARING BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE HAS PLACED ON RECORD THE COMPLETED BUILDING PLANT, WHEREIN NO COMMERCIAL UNIT WAS FOUND TO BE CONSTRUCTED BY THE ASSESSEE. BOTH THE LOWER AUTHORITIES HAVE BRUSHED ASIDE THIS CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE AN D THEY HAD MERELY RELIED ON THE PLAN WHICH WAS ORIGINAL APPROVED, WHEREAS THE ASSESSEE HAS NOT FINALLY CONSTRUCTED ANY COMMERCIAL UNIT. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ASPECT TO THE FILE OF THE ASSESSING OFFICER TO PHYSICALLY VERIFY THE PROJECT AND IF HE FINDS THAT NO COMMERCIAL UNIT IS CONSTRUCTED, HE SHOULD ALLOW THE CLAIM OF DEDUCTION U/S 80IB(10) IN SO FAR AS ALL THE OTHER CONDITIONS HAVE BEEN DULY COMPLIED WITH AS OBSERVED BY US HEREINABOVE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. GAYATRI BUILDERS, BHOPAL I.T.A.NO. 330/IND/2013 2006-07 10 PAGE 10 OF 10 10. FURTHER, WE FOUND THAT TO GIVE EFFECT TO THE ORDER OF TRIBUNAL, THE ASSESSING OFFICER HAS PASSED ORDER U/ S 143(3)/254 DATED 10.12.2012, WHEREIN AFTER FOLLOWIN G THE DIRECTION OF THE TRIBUNAL, THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) WAS ALLOWED. FACTS AND CIRCUMSTANCES D URING THE ASSESSMENT YEAR UNDER CONSIDERATION ARE EXACTLY SAM E, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF TRIB UNAL IN ASSESSEES OWN CASE VIS--VIS ORDER PASSED BY ASSES SING OFFICER TO GIVE EFFECT TO THE ORDER OF TRIBUNAL, WE DIRECT THE ASSESSING OFFICER TO ALLOW ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH NOVEMBER, 2013. CPU* 142011