DCIT 8(1), MUMBAI V. BENHOOR REGENCY ESTATES P.LTD, MUMBAI

ITA 4085/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4032 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIMAP PUNAMIYA
• Keywords: Competent authority

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NOS.4085 & 4086/MUM/2012 ASSESSMENT YEARS:2008-09 & 2009-10 ACIT, RANGE-8(1), ROOM NO.260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S BENHOOR REGENCY ESTATES P. LTD. C-5, RAJ NAGAR CO-OP. HOUSING SOCIETY LTD. S.V. ROAD, JOGESHWARI (W), MUMBAI-400096 ( / REVENUE ) ( !' # /ASSESSEE) PAN. NO . AABCB8406H / REVENUE BY SHRI MAURYA PRATAP-DR !' # / ASSESSEE BY SHRI VIMAP PUNAMIYA $ % & # ' / DATE OF HEARING : 20/04/2016 & # ' / DATE OF ORDER: 20/04/2016 ITA NOS.4085 & 4086/MUM/2012 M/S BENHORR REGENCY ESTATES PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) BOTH THESE APPEALS ARE BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 15/03/2012 OF THE FIRST APPELL ATE AUTHORITY, MUMBAI, ON THE GROUND THAT THE COMMISSIO NER OF INCOME TAX (APPEAL) ERRED IN HOLDING THAT THE ASSES SEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE INCOME T AX ACT, 1961 (HEREINAFTER THE ACT), AMOUNTING TO RS.2,05,64 ,463/- (A.Y. 2008-09) AND RS.2,92,59,341/- (A.Y. 2009-10), WITHOUT APPRECIATING THAT THE CONDITIONS STIPULATED IN THE SECTION ARE NOT FULFILLED BY THE ASSESSEE. 2. DURING HEARING OF THESE APPEALS, SHRI VIMAL PUNA MIYA, LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, CLAIME D THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL DATED 22/03/2016 FOR ASSESSME NT YEAR 2007-08 (ITA NO.8260/MUM/2011). THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY SHRI MAURYA PRATAP, LD. DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE ITA NOS.4085 & 4086/MUM/2012 M/S BENHORR REGENCY ESTATES PVT. LTD. 3 ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER DATED 22/03/2016 FOR READY REFERENCE AND ANALYSIS:- CHALLENGING THE ORDER OF CIT (A)-16, MUMBAI, DATED 12/09/2011, THE ASSESSING OFFICER (AO) HAS FILED TH E PRESENT APPEAL. THE EFFECTIVE GROUND OF APPEAL IS ABOUT 80 IB(10) OF THE ACT. ASSESSEE-COMPANY, ENGAGED IN THE BUSINESS OF B UILDERS AND DEVELOPERS, FILED ITS RETURN OF INCOME ON 31/10/201 0 DECLARING TOTAL INCOME OF RS.25.89 LAKHS. THE AO COMPLETED TH E ASSESSMENT U/S.143 (3) OF THE ACT, ON 24/12/2009 DETERMINING T HE INCOME OF THE ASSESSEE AT RS.7.82 CRORES. 2.DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND T HAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS. 7.56 CRORES U /S.80 IB (10) OF THE ACT,, THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH THE OWNER OF A PLOT OF LAND, THAT THE OWNERS HAD OB TAINED PERMISSION FOR REDEVELOPMENT, SALE AND TRANSFER FRO M THE COMPETENT AUTHORITY, THAT THE OWNER SAID ENGAGED TH E ASSESSEE FOR DEVELOPING THE PLOT, THAT AS PER THE AGREEMENT THE POSSESSION OF THE PROPERTY HAD TO REMAIN WITH THE OWNERS. THE AO HELD THAT THE ASSESSEE HAD MERELY CONSTRUCTED THE BUILDING AN D HAD SOLD ITA NOS.4085 & 4086/MUM/2012 M/S BENHORR REGENCY ESTATES PVT. LTD. 4 THE SAME, THAT FOR AVAILING DEDUCTION U/S.80 IB(10) IT WAS ESSENTIAL THAT PLOT ON WHICH HOUSING PROJECT WAS CO NSTRUCTED SHOULD BE OWNED BY THE DEVELOPER, THAT THE ASSESSEE WAS NOT OWNER OF THE PLOT, THAT THE CLAIM MADE BY IT IN RES PECT OF THE PROFITS DERIVED FROM DEVELOPING AND BUILDING HOUSIN G PROJECT WAS NOT ALLOWABLE. 3.AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM IT WAS ARGUED THAT DEDUCTION U/S.80 IB (10) WAS NOT DE PENDENT ON OWNERSHIP, THAT DEDUCTION WAS ALLOWABLE IF THE PROF ITS WERE DERIVED FROM THE BUSINESS OF DEVELOPING AND CONSTRU CTION OF RESIDENTIAL UNIT, THAT THERE WAS NO REQUIREMENT IN THE PROVISION THAT THE ASSESSEE CARRYING ON THE SAID BUSINESS SHO ULD ALSO ON THE PLOT OF LAND. AFTER CONSIDERING THE SUBMISSION OF T HE ASSESSEE AND THE ASSESSMENT ORDER, THE FAA REFERRED TO THE PROVI SIONS OF SECTION 80 IB(10) OF THE ACT AS WELL AS THE MEMO CO NTAINED IN FINANCE BILL 1999. HE ANALYSED THE VARIOUS CLAUSES OF THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE OWNERS OF THE PLOT OF LAND AND HELD THAT THE STATUS OF THE AS SESSEE WAS OF A DEVELOPER AND NOT OF A CONTRACT AS OBSERVED BY THE AO, THAT THE HONOUR SHARE WAS IN VIEW OF TRANSFERRING THE PLOT O F LAND TO THE ITA NOS.4085 & 4086/MUM/2012 M/S BENHORR REGENCY ESTATES PVT. LTD. 5 ASSESSEE COMPANY FOR DEVELOPING THE SAME, THAT AS P ER THE AGREEMENT 22.5% OF THE GROSS SALES RECEIPT IN RESPE CT OF SALE OF FLATS AND OTHER PREMISES CONSTRUCTED BY UTILISATION OF FSI WERE TO BE RECEIVED BY THE OWNERS AND BALANCE BELONGED TO T HE ASSESSEE COMPANY, THAT ALL THE EFFORTS TO DEVELOP THE PLOT O F LAND WERE MADE BY THE ASSESSEE AND NOT BY THE OWNER OF THE LA ND, THAT IT HAD INCURRED ALL THE EXPENSES TOWARDS DEVELOPMENT OF LA ND AND CONSTRUCTION OF MULTISTORYED BUILDING. RELYING UPON THE CASE OF RADHE DEVELOPERS (23 SOT420),HE DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE. 4.DURING THE COURSE OF HEARING BEFORE US, THE DEPAR TMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE AO. TH E AUTHORISED REPRESENTATIVE(AR) CONTENDED THAT THE IS SUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT O F THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS( 341 ITR 403), THAT THE SLP FILED BY THE DEPARTMENT BEFORE T HE HONBLE SUPREME COURT IN THE CASE OF RADHE DEVELOPERS HAS B EEN DISMISSED, THAT THE HONBLE GUJARAT HIGH COURT HAS DECIDED THAT FOR AVAILING DEDUCTION U/S.80 IB (10) OF THE ACT OW NERSHIP OF THE PLOT OF LAND WAS NOT NECESSARY. ITA NOS.4085 & 4086/MUM/2012 M/S BENHORR REGENCY ESTATES PVT. LTD. 6 5.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL BEFORE US. WE FIND THAT THE HONBLE GUJARAT HIGH CO URT IN THE CASE OF RADHE DEVELOPERS (ITR) HAS HELD AS UNDER: SECTION 80-IB(10) OF THE INCOME-TAX ACT, 1961, REQ UIRES INVOLVEMENT OF AN UNDERTAKING IN DEVELOPING AND BUI LDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY. C ERTAIN CONDITIONS ARE PRESCRIBED IN SUB-SECTION (10) SUCH AS THE DATE BY WHICH THE UNDERTAKING MUST COMMENCE THE DEVELOPING AND CONSTRUCTION WORK AND THE MINIMUM AREA OF PLOT OF L AND ON WHICH SUCH PROJECT WOULD BE PUT UP AS WELL AS THE MAXIMUM BUILT UP AREA OF EACH OF THE RESIDENTIAL UNITS TO BE LOCATED THEREON. THE PROVISIONS NOWHERE REQUIRE THAT ONLY THOSE DEVELOPE RS WHO THEMSELVES OWN THE LAND WOULD RECEIVE THE DEDUCTION U/S.80- IB(10) OF THE ACT. NEITHER THE PROVISIONS OF SECTIO N 80-IB NOR ANY OTHER PROVISIONS CONTAINED IN OTHER RELATED STATUTE S DEMONSTRATE THAT OWNERSHIP OF THE LAND WOULD BE A CONDITION PRE CEDENT FOR DEVELOPING THE HOUSING PROJECT. SUCH REQUIREMENT CA NNOT BE READ INTO THE STATUTE BECAUSE THERE IS NOTHING IN SECTIO N 80-IB(10) OF THE ACT REQUIRING THAT OWNERSHIP OF THE LAND MUST V EST IN THE DEVELOPER FOR HIM TO BE ABLE TO QUALIFY FOR SUCH DE DUCTION. MOREOVER, THE TERM DEVELOPER HAS BEEN UNDERSTOOD IN COMMON PARLANCE AS WELL AS IN THE LEGAL SENSE AS CARRYING A MUCH WIDER CONNOTATION. IT IS WELL SETTLED THAT WHILE INTERPRE TING A STATUTE, PARTICULARLY, A TAXING STATUTE, NOTHING CAN BE READ INTO THE PROVISIONS WHICH HAS NOT BEEN PROVIDED BY THE LEGIS LATURE. A CONDITION WHICH IS NOT MADE PART OF SECTION 80-IB(1 0) OF THE ACT, ITA NOS.4085 & 4086/MUM/2012 M/S BENHORR REGENCY ESTATES PVT. LTD. 7 NAMELY, THAT OF OWNING THE LAND WHICH THE ASSESSEE DEVELOPS, CANNOT BE SUPPLIED BY ANY PURPORTED LEGISLATIVE INT ENT. RESPECTFULLY FOLLOWING THE ABOVE, WE DECIDE THE EFF ECTIVE GROUND OF APPEAL AGAINST THE AO. 2.2. IN THE APPEALS BEFORE US, THE ONLY DISPUTE IS WITH REGARD TO CLAIMING THE DEDUCTION U/S 80IB(10) OF TH E ACT, ON A PLOT/HOUSING PROJECT, WHETHER IT SHOULD BE OWNED BY THE DEVELOPER, WE FIND THAT WHILE DENYING THE DEDUCTION , THE LD. ASSESSING OFFICER PLACE RELIANCE UPON THE DECISION IN SHREE LAXMI DEVELOPERS VS ITO (AHMEDABAD TRIBUNAL) BY HOL DING THAT THE CLAIMED DEDUCTION CAN BE GIVEN ONLY IF THE ASSESSEE HAS PURCHASED THE LAND AND DEVELOPED THE HOUSING PR OJECT AT ITS OWN. WE FIND THAT THE TRIBUNAL IN AFORESAID ORD ER DATED 22/03/2016, FOLLOWING THE DECISION FROM HONBLE GUJ ARAT HIGH COURT IN RADHE DEVELOPERS (341 ITR 403) AND SL P FILED BY THE DEPARTMENT WAS DISMISSED BY HONBLE APEX COU RT HOLDING THAT OWNERSHIP OF THE PLOT IS NOT NECESSARY FOR AVAILING THE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT. THUS, RESPECTFULLY FOLLOWING THE AFORESAID DECISION FROM HONBLE GUJARAT HIGH COURT AND THE DECISION OF THE TRIBUNAL , THAT TOO ITA NOS.4085 & 4086/MUM/2012 M/S BENHORR REGENCY ESTATES PVT. LTD. 8 IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2007-08 , WE FIND NO INFIRMITY IN THE CONCLUSION OF THE COMMISSIONER OF INCOME TAX (APPEAL), THUS, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 20/04/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ( DATED :20/04/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 $ 1# / CIT(A)- , MUMBAI 5. 23 .# , 0 *+' * 4 , $ % / DR, ITAT, MUMBAI 6. 5! 6% / GUARD FILE. / BY ORDER, /2+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI