The ITO, Ward- 1(1), RAJKOT-GUJARAT V. M/s. Gunjan Stapatya, RAJKOT-GUJARAT

ITA 351/RJT/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9517 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 14-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBULAL, RAJKOT BENCH: RAJKOT .., ! ' #, $ % BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER &./ I.T.A. NO.351/RJT/2011 ( / ASSESSMENT YEAR : 2008-09) THE ITO WARD-1(1) RAJKOT / VS. GUNJAN STAPATYA, PLOT NO.4, LOHA NAGAR MAVDI, RAJKOT ( & ./ ) & ./ PAN/GIR NO. : AAGFG 3104 R ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY : SHRI AVINASH KUMAR, SR.DR. +,(* . - / RESPONDENT BY : SHRI M.J. RANPURA, C.A. ! / 0 . # / DATE OF HEARING 17/02/2015 12 . # / DATE OF PRONOUNCEMENT 18/02/2015 3 / O R D E R PER BENCH : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, RAJKOT (CIT(A) IN SHORT) DATED 29/06/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2008-09. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) THE LEARNED CIT(A)-I, RAJKOT HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF CLAIM OF DEDUCTION 80IB(10) OF THE IT ACT, 1961. 2) ON LEGAL AND FACTUAL STATUS OF THE CASE, THE LEARNED CIT(A), OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3) IT IS, THEREFORE, PRAYED THAT THE FINDING GIVEN IN THE ORDER FO THE LD.CIT(A) MAY BE DISMISSED/DELETED AND THAT OF THE ASSESSING OF FICER BE RESTORED. ITA NO.351/RJT/2011 ITO VS. GUNJAN STAPATYA ASST.YEAR 2008-09 - 2 - 2. THE ONLY EFFECTIVE GROUND IN THE REVENUES APPEAL IS AGAINST DELETION OF ADDITION OF RS.2,45,05,329/- MADE ON AC COUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 21/12/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) OF T HE ACT OF RS.2,45,05,239/-. 4. THE LD.COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS AS WERE MADE IN THE WRITTEN SYNOPSIS AND SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF R AMKRISHNA STHAPATYA VS. ITO IN SPECIAL CIVIL APPLICATION NOS.17056, 170 57 AND 17059 OF 2011, DATED 11/01/2012. HE DREW OUR ATTENTION TOWA RDS PARA-5 OF THE SAID JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT. 4.1. ON THE CONTRARY, THE LD.SR.DR SUPPORTED THE OR DER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN D ELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIME D U/S.80IB(10) OF THE ACT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW ITA NO.351/RJT/2011 ITO VS. GUNJAN STAPATYA ASST.YEAR 2008-09 - 3 - AS WELL AS THE JUDGEMENT RELIED UPON BY THE LD.COUN SEL FOR THE ASSESSEE. WE FIND THAT THE LD.CIT(A) HAS DELETED THE ADDITION BY GIVING A FINDING ON FACT AS UNDER:- 3.2. I HAVE CAREFULLY CONSIDERED THE FINDING GIVE N BY THE ASSESSING OFFICER AND THE SUBMISSION OF THE AR OF T HE APPELLANT. IT IS FOUND THAT THE ASSESSING OFFICER IN PARA-3 OF TH E ASSESSMENT ORDER HAS MENTIONED THAT THE APPELLANT FIRM IS ENGA GED IN THE BUSINESS OF BUILDER AND DEVELOPER. THE ASSESSING O FFICER VIDE PARAS-4 AND 5 OF THE ASSESSMENT ORDER OBSERVED THAT THE APPELLANT HAD DEVELOPED AND CONSTRUCTED 11 DIFFERENT PROJECTS WHICH ARE NOT FULFILLED CONDITIONS LAID DOWN U/S.80IB(10) OF THE ACT SINCE IT HAS OBTAINED DIFFERENT APPROVALS ON DIFFERENT DATES FRO M LOCAL AUTHORITY CONNOTES DIFFERENT PROJECTS. THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A PARTNERSHIP FIRM DULY CONSTITUTED ON 05-08-2005, CONSISTING THE 8 PARTNERS. AS THE AGRICULTURAL LAN D COULD NOT BE PURCHASED IN NAME OF PARTNERSHIP FIRM, BEFORE ENTER ING INTO LEGAL WRITTEN PARTNERSHIP DEED, THE ABOVE PARTNERS ORALLY DECIDED TO PURCHASE SUCH LAND IN THEIR JOINT NAMES, FOR THE PU RPOSE OF CARRYING OUT THE BUSINESS OF DEVELOPING AND CONSTRU CTION HOUSING PROJECTS. THEY HAVE PURCHASED 2 ACRES AGRICULTURAL LAND ADMEASURING 6052.18 SQ.MTR AT SURVEY NO.55 OF RAIYA VILLAGE, TALUKA RAJKOT, DIST.RAJKOT ON 11.05.2004 SPECIFYING THEIR SHARES. SUBSEQUENTLY, THE SAID AGRICULTURAL LAND WAS CONVER TED INTO NON AGRICULTURAL LAND, FOR RESIDENTIAL PURPOSE VIDE RAJ KOT COLLECTORS ORDER NO.NA/LRCL/B5 CASE NO.355/04-05, DATED 02.07. 2005 AND LAYOUT PLAN OF 55 PLOTS HAVE BEEN APPROVED. THEREA FTER, APPLICATION WAS MADE TO LOCAL AUTHORITY FOR APPROVA L OF THE PROJECT ON 11.07.2005, FOR DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ON DIFFERENT PLOTS HAVING DIFFERENT SQ.MTRS IN THE NAME OF SHRI SANJEEV CHANIYARA AND OTHERS, AND SUBSEQUENTLY , THE ABOVE PARTNERS OF THE FIRM WERE ENTERED INTO PARTNERSHIP FIRM ON 5.08.2005 IN THE NAME AND STYLE GUNJAN STHAPTYATO PUT THEIR ORAL PARTNERSHIP INTO WRITTEN DOCUMENTS BY CLEARLY INDICATING THAT SUCH DEED WAS DRAFTED IN ORDER TO PUT THEIR ORAL UN DERSTANDING REGARDING BUSINESS OF DEVELOPING AND BUILDING HOUSI NG PROJECTS INTO LEGAL TERMINOLOGY, AND THAT ALL PARTNERS WOULD BE BRINGING LAND AS THEIR CAPITAL CONTRIBUTION. FURTHER, FROM THE DETAILS ITA NO.351/RJT/2011 ITO VS. GUNJAN STAPATYA ASST.YEAR 2008-09 - 4 - SUBMITTED, IT IS CLEAR THAT A HOUSING PROJECT IS ON THE SIZE OF A PLOT OF LAND, WHICH HAS 1.1278 ACRE AREA OF LAND. THUS, THE APPELLANTS UNDERTAKING MEET THE REQUIREMENT OF SECTION 80-IB(1 0)(B) OF THE ACT AS TO REQUIREMENT OF MINIMUM 1 ACRE LAND, AND T HE PROJECT WAS COMPLETED WITHIN THE TIME STIPULATED UNDER SECTION 80- IB(10)(A)(III) OF THE ACT. FURTHER, IT IS FOUND TH AT ALL UNITS CONSTRUCTED AS PER APPROVED LAYOUT PLAN. MERELY BE CAUSE FOR ONE SUCH HOUSING PROJECT, APPROVAL WAS TAKEN FROM LOCAL AUTHORITY MORE THAN ONCE, IT COULD NOT BE SAID THAT THE APPEL LANT HAS DEVELOPED AND CONSTRUCTED 11 DIFFERENT HOUSING PROJ ECTS. THE APPELLANT HAS CONSTRUCTED, DEVELOPED AND BUILD ONLY ONE HOUSING PROJECT ON THE SIZE OF A PLOT OF LAND WHICH HAS ARE A OF 2 ACRES. IT IS ALSO FOUND THAT THE APPELLANT FIRM IS FILING ITS RE TURNS OF INCOME FROM THE ASSESSMENT YEAR 2007-08 ONWARDS. SECTION 80-IB(10) OF THE ACT PROVIDES 100% TAX BENEFIT TO HOUSING PROJE CTS. FURTHER, CLAUSE (B) OF SECTION 80-IB(10) REQUIRES THAT THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. HOWEVER, THERE IS NO PROVISION THAT TWO OR MORE PLO TS OF LAND SHOULD NOT BE JOINED FOR DEVELOPING HOUSING PROJECT S. THE SECTION NOWHERE REQUIRES THAT PROJECT HAS TO BE ON A SINGLE PLOT OF LAND HAVING PRESCRIBED AREA MORE THAN ONE ACRE. THE HON BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. VS. CIT 196 I TR 188, HELD THAT PROVISION IN A TAXING STATUE GRANTING INCENT IVES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUE D LIBERALLY, AND SINCE A PROVISION FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, THE RESTRICTION ON IT TOO HA S TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND , NOT TO FRUSTRATE IT. SECTION 80-IB(10) IS AIMED TO PROMOTE CONSTRUC TION HOUSING PROJECTS. FURTHER IN VIEW OF THE DECISION OF BRAHM A ASSOCIATES VS. JCIT (ITAT PUNE SPECIAL BENCH) 122 TTJ (PUNE) (SB) 433 ALSO THE DEDUCTION U/S.80IB IS AVAILABLE TO THE APPELLANT. THEREFORE, THE DEDUCTION U/S.80IB(10) OF THE ACT IS AVAILABLE TO A N UNDERTAKING AND FIRM IS AN UNDERTAKING, HENCE ELIGIBLE FOR DEDU CTION. THEREFORE, AS HELD BY THE HONBLE ITAT CHENNAI AB ENCH IN THE CASE OF JCIT VS. SMT. C. RAJINI (2011) 9 ITR (TRIB) 487 (CHENNAI), THE APPELLANT FIRM IS ENTITLE TO CLAIM DEDUCTION U/ S.80IB OF THE I.T.ACT, 1961, AND THEREFORE, THE DISALLOWANCE OF R S.24505240/- ITA NO.351/RJT/2011 ITO VS. GUNJAN STAPATYA ASST.YEAR 2008-09 - 5 - MADE BY THE ASSESSING OFFICER U/S.80IB OF THE I.T.A CT, 1961 IS HEREBY ORDERED TO BE DELETED. THIS GROUND OF APPEA L IS ALLOWED. 5.1. THE ABOVE FINDING OF THE LD.CIT(A) IS NOT CONT ROVERTED BY THE LD.SR.DR BY PLACING ANY CONTRARY MATERIAL ON RECORD . MOREOVER, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEME NT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF R AMKRISHNA STHAPATYA VS. ITO(SUPRA), WHEREIN THE JURISDICTIONAL HIGH COU RT HAS HELD AS UNDER:- 5. HAVING THUS HEARD LEARNED COUNSEL FOR THE PART IES, WE MAY NOTICE AT THE OUTSET THAT FOR ASSESSMENT YEAR 2005- 02006, WHICH WAS THE FIRST YEAR OF DEDUCTION CLAIMED BY THE ASSE SSEE UNDER SECTION 80IB(10) OF THE ACT, THE ASSESSING OFFICER AFTER SCRUTINY AND EXAMINATION OF RECORDS HAD GRANTED THE RELIEF. SUCH ASSESSMENT IS SOUGHT TO BE REOPENED BEYOND THE PERI OD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. FR OM THE RECORD, WE DO NOT EVEN FIND THAT THERE IS ANY ALLEGATION TH AT THE ASSESSING OFFICER BELIEVED THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THE REASON OF ASSESSEE FAILING TO DI SCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. ON THIS SHORT GROUND ALONE, WE WOULD BE JUSTIFIED IN QUASHING REO PENING OF ASSESSMENT YEAR 2005-2006. HOWEVER, THERE ARE ADDI TIONAL REASONS WHY WE WOULD BE PROMPTED TO DO SO. FIRSTLY THE ENTIRE ASSESSMENT WAS TAKEN FOR SCRUTINY. CLAIM OF THE AS SESSEE WAS EXAMINED BY THE ASSESSING OFFICER DURING THE ORIGIN AL ASSESSMENT. FURTHER, REASONS RECORDED TO OUR MIND ARE NOT GERMA NE. THE DEVELOPMENT PERMISSION AS WELL AS PERMISSION TO COM MENCE CONSTRUCTION GRANTED BY THE LOCAL AUTHORITY OF-COUR SE ARE IN THE NAME M/S.SURESH KUMAR AND OTHERS. FROM THE MAPS AT TACHED TO SUCH PERMISSIONS, WHICH WERE ALSO CERTIFIED BY THE LOCAL AUTHORITY, IT CLEARLY EMERGES THAT OTHERS INCLUDED TWO REMAINI NG PARTNERS OF THE FIRM. ASSESSEE HAD THROUGH OBJECTIONS POINTED OUT THAT LAND WAS INITIALLY PURCHASED BY THE PARTNERS INDIVIDUALL Y AND THE PARTNERSHIP WAS THEREAFTER, FORMED AFTER CONVERTING THE LAND N TO NON-AGRICULTURAL USE. LAND WAS ALSO BROUGHT WITHIN THE FOLD OF PARTNERSHIP PROPERTY AND PARTNERSHIP FIRM HAD START ED THE BUSINESS ITA NO.351/RJT/2011 ITO VS. GUNJAN STAPATYA ASST.YEAR 2008-09 - 6 - OF DEVELOPING HOUSING PROJECT IN THE SAID LAND. ME RELY BECAUSE THE NAME OF PARTNERS ARE INDICATED IN DEVELOPMENT PERMI SSION GRANTED BY THE LOCAL AUTHORITY, ONE CANNOT JUMP TO THE CONC LUSION THAT PARTNERSHIP FIRM WAS NOT ENGAGED IN BUSINESS OF DEV ELOPING HOUSING PROJECT. SUCH A VIEW, IN OUR OPINION, WOUL D BE TOO RIGID AND TECHNICAL, PARTICULARLY, WHEN THE DEVELOPMENT P ERMISSION IS GRANTED IN THE NAME OF ALL THREE PARTNERS OF FIRM A ND THERE ARE NO OTHER PARTNERS OTHER THAN THOSE IN WHOSE FAVOUR SUC H PERMISSION WAS GRANTED. MERELY BECAUSE DEVELOPMENT PERMISSION RECORDED NAME OF PARTNERS AND NOT FIRM, WOULD HARDLY BE AN I SSUE ON WHICH DEDUCTION UNDER SECTION 80IB(10) OF THE ACT COULD B E DENIED PARTICULARLY, IF THE FIRM WAS FOUND TO HAVE DEVELOP ED THE HOUSING PROJECT AND FULFILLED ALL OTHER CONDITIONS FOR CLAI MING SUCH DEDUCTION. MERELY BECAUSE PERMISSION IS ISSUED IN THE NAME OF ALL PARTNERS OF THE FIRM WOULD NOT BE CONCLUSIVE EVIDEN CE TO SHOW THAT PARTNERSHIP HAD NOT ENGAGED ITSELF IN THE BUSINESS OF DEVELOPING HOUSING PROJECTS. 6.2. RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF RAMKRISHNA STHAPATYA VS. ITO(S URPA), WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CI T(A), SAME IS HEREBY UPHELD. THUS, GROUND RAISED IN THE APPEAL OF THE R EVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 18 TH DAY OF FEBRUARY, 2015 AT RAJKOT. SD/- SD/- ( .. ) ( ! ' #) $ ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT; DATED 18/ 02 /2015 .. , /.$../ T.C. NAIR, SR. PS ITA NO.351/RJT/2011 ITO VS. GUNJAN STAPATYA ASST.YEAR 2008-09 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. &6& # ! 7# / CONCERNED CIT 4. ! 7# ( ) / THE CIT(A)-I, RAJKOT 5. 9/' : +$#$ , , /DR,ITAT, RAJKOT 6. : EF G 0 / GUARD FILE. / BY ORDER, , 9# +$# //TRUE COPY// !/ '# $% ( DY./ASSTT.REGISTRAR) # %&# ' , / ITAT, RAJKOT 1. DATE OF DICTATION .. 17.2.15(DICTATION-PAD 4 -PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17.2.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S.18.2.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18.2.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK.. . 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER