The ITO, Ward-5(2), Baroda V. M/s. Sai Developers, Baroda

ITA 3433/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50660 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Competent authority
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI G. D. AGARWAL, VP AND SHRI BHAVNESH SA INI, JM) ITA NO.3433/AHD/2009 A. Y.: 2006-07 THE INCOME TAX OFFICER, WARD -5 (2), 5 TH FLOOR, AAYAKAR BHAVAN, R. C. CIRCLE, BARODA VS M/S. SAI DEVELOPERS, SAI DEEP NAGAR, VIP ROAD, KARELIBAUG, BARODA PA NO. AARFS 8516 Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VINOD TANWANI, SR. DR RESPONDENT BY NONE DATE OF HEARING: 07-09-2011 DATE OF PRONOUNCEMENT: 09-09-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-V, BARODA DATED 26 TH OCTOBER, 2009 FOR THE ASSESSMENT YEAR 2006-07, CHA LLENGING THE ORDER OF THE LEARNED CIT(A) IN ALLOWING DEDUCTION U /S 80IB (10) OF THE IT ACT. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. ITA NO. 3433/AHD/2009 THE ITO, WARD 5(2), BARODA VS M/S. SAI DEVELOPERS 2 3. THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS IN THE BUSINESS OF CIVIL CONSTRUCTION. THE RETURN OF INCOME WAS FIL ED ON 15-12-2006 DECLARING THEREIN THE TOTAL INCOME OF RS. NIL AFTER DEDUCTION U/S 80IB (10) OF THE IT ACT OF RS.26,51,700/. THE ASSESSMENT U/S 143(3) OF THE IT ACT WAS FINALIZED ON 26-12-2008 DETERMINING THE TOTAL INCOME AT RS.33,51,700/-. THE MAIN ARGUMENTS OF THE AO RELATI NG TO NON- ALLOWANCE OF CLAIM OF THE ASSESSEE U/S 80 IB (10) O F THE IT ACT ARE THAT - (I) THE LAND IS NOT IN THE NAME OF THE ASSESSEE FI RM AND THAT OWNERSHIP OF LAND IS AN ESSENTIAL ELEMENT WHICH CAR RIES WITH IT THE RIGHT TO DEVELOP THE LAND AND BUILD HOU SING PROJECTS THEREON. THE AO SAYS THAT THE DEVELOPER FI RST SHOULD PURCHASE THE LAND AND THEN TAKE NECESSARY PERMISSION TO CONSTRUCT. (II) THE ASSESSEE IN THE INSTANT CASE HAS ACTED MER ELY AS AN AGENT FOR COLLECTION OF THE LAND CONSIDERATION ON B EHALF OF THE LAND OWNER AND A CONTACTOR FOR THE CONSTRUCTION OF THE HOUSE ON BEHALF OF THE UNIT HOLDERS. (III) THE APPROVAL FOR THE PROJECT IS GRANTED BY TH E COMPETENT AUTHORITY IN THE NAME OF THE LAND OWNER ONLY. (IV) THE ASSESSEE IS NOT A BUILDER OR DEVELOPER BUT A CONTRACTOR AND THE ASSESSEE IS NOT ELIGIBLE FOR DED UCTION U/S 80 IB. ITA NO. 3433/AHD/2009 THE ITO, WARD 5(2), BARODA VS M/S. SAI DEVELOPERS 3 IN APPEAL, IT WAS CONTENDED THAT THE ASSESSEE IS EN GAGED IN DEVELOPING HOUSING PROJECT ON THE LAND IN POSSESSIO N OF THE FIRM IN THE NAME OF SHRI BABUBHAI PATEL, SMT. SHANTABEN, SH RI BIPINBHAI AND SHRI DEVANGBHAI DESAI. IT WAS ALSO SUBMITTED THAT T HE APPROVAL OF THE PROJECT FROM MUNICIPAL CORPORATION WAS ALSO OBTAINE D IN THE NAME OF THE AFORESAID PERSONS AND THAT ALL OTHER CONDITIONS REGARDING AREA ETC., AS LAID DOWN U/S 80 IB(10) OF THE IT ACT ARE ALSO SATISFIED. RELIANCE WAS ALSO PLACED ON THE DECISION OF ITAT IN THE CASE OF M/S. RADHE DEVELOPERS. 4. THE LEARNED CIT(A) CONSIDERING THE EXPLANAT ION OF THE ASSESSEE AND FOLLOWING THE ORDER OF THE TRIBUNAL DIRECTED TH E AO TO VERIFY THE DETAILS IN THE LIGHT OF THE DECISION OF THE TRIBUNA L IN THE CASE OF M/S. SHAKTI DEVELOPERS. THE APPEAL WAS ACCORDINGLY ALLOW ED. HIS FINDINGS IN PARA 4.3 AND 5 OF THE IMPUGNED ORDER ARE REPRO DUCED AS UNDER: 4.3 I HAVE CAREFULLY EXAMINED THE FACTS OF THE CAS E AND PERUSED THE ARGUMENTS OF THE ASSESSING OFFICER. THE ISSUE OF DEDUCTION U/S. 80 IB (10) WAS DECIDED IN F AVOUR OF THE APPELLANT AND AGAINST REVENUE BY THE ORDER OF T HE JURISDICTIONAL ITAT, IN THE CASE OF RADHE DEVELOPER S VS ITO WARD 3(2) BARODA NO.2482/AHD/2006 A BENCH AHMEDABAD, HOWEVER THE DECISION WAS PARTLY MODIFIED BY THE SUBSEQUENT DECISION IN THE CASE OF ITO VS M/S. SHAKTI CORPORATION ITA NO.1503/AHD/2008 DATED 07/11/2008 WHEREIN, THE HONBLE ITAT HAS INDICATED THAT THE BE NEFIT UNDER 80 IB(10) WOULD BE AVAILABLE IF THE DEVELOPER HAS DOMINANT CONTROL OVER THE PROJECT AND HAS DEVELOPED THE LAND AT ITS OWN COST AND RISK AND THE BENEFIT WOULD BE DENIED IF THE ASSESSEE HAD ENTERED INTO AN AGREEMEN T FOR A FIXED REMUNERATION AS A CONTRACTOR TO CONSTRUCT O R DEVELOP THE PROJECT ON BEHALF OF THE LAND OWNER. TH E AO IS ACCORDINGLY, DIRECTED TO VERIFY THE AGREEMENT AN D OTHER ITA NO. 3433/AHD/2009 THE ITO, WARD 5(2), BARODA VS M/S. SAI DEVELOPERS 4 DETAILS IN THE LIGHT OF THE DECISION OF THE TRIBUNA L IN THE CASE OF M/S. SHAKTI DEVELOPERS. THE GROUND IS ALLOW ED SUBJECT TO VERIFICATION. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 5. THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT AFTER AMENDMENT IN SECTION 251 OF THE IT ACT, THE COMMISSIONER (APPEALS) HAS NO POWER TO SET ASIDE ANY ASSESSMENT, THEREFORE, THOUGH THE MATTER IS RESTORED TO THE FILE OF THE AO , FRESH DIRECTION IS REQUIRED IN THE MATTER. 6. CONSIDERING THE ABOVE FACTS WE ARE OF THE VIEW T HE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. TH E ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ISSUE IS IN ITS FAVOUR BY THE JUDGMENT OF THE TRIBUNAL IN THE CASE OF M/S. RA DHE DEVELOPERS WHICH WAS SUBSEQUENTLY MODIFIED BY THE DECISION IN THE CASE OF M/S. SHAKTI CORPORATION. THE LEARNED CIT(A) FOLLOWING TH ESE DECISIONS SET ASIDE THE ORDER AND RESTORED THE MATTER TO THE FILE OF THE AO WITH DIRECTION TO RE-DECIDE THE ISSUE IN THE LIGHT OF TH E DECISION IN THE CASE OF M/S. SHAKTI DEVELOPERS AND OTHERS. THE DIRECTION OF THE LEARNED CIT(A) IS LEGALLY NOT SUSTAINABLE BECAUSE THE LEARN ED CIT(A) HAS NO POWER TO SET ASIDE THE ASSESSMENT AND TO DIRECT THE AO TO PASS THE ORDER AFRESH. HOWEVER, THE FACTS REMAIN THAT THE MA TTER REQUIRES RECONSIDERATION AS IS DIRECTED BY THE LEARNED CIT(A ). THEREFORE, SUBJECT TO ABOVE FINDING THAT THE LEARNED CIT(A) HA S NO POWER TO SET ASIDE THE ASSESSMENT TO THE FILE OF THE AO, WE SET ASIDE THE IMPUGNED ORDERS AND RESTORED THE SAME ISSUE TO THE FILE OF THE AO WITH DIRECTION TO RE-DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISIONS ITA NO. 3433/AHD/2009 THE ITO, WARD 5(2), BARODA VS M/S. SAI DEVELOPERS 5 IN THE CASE OF M/S. RADHE DEVELOPERS AND M/S. SHAKT I DEVELOPERS. (SUPRA). IN TERMS OF ABOVE, THE DEPARTMENTAL APPEAL STANDS DISPOSED OF. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD