M/s. Shikhar Developers, Bharuch V. The Dy.CIT.,Bharuch Circle, Bharuch

ITA 45/AHD/2013

• Counselvise Citation: 4520514 RSA 2013
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2013
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.45/AHD/2013 A.Y. 2008-09 M/S. SHIKHAR DEVELOPERS, BHARUCH. PAN: ABFFS6693D VS DCIT, BHARUCH CIRCLE, BHARUCH. (APPELLANT) (RESPONDENT) REVENUE BY : SH. O.P. BATHEJA, SR.D.R., ASSESSEE(S) BY : SH. HEMANT SUTHAR, AR / // / DATE OF HEARING : 02/12/2013 / DATE OF PRONOUNCEMENT : 13/12/2013 / O R D E R PER SHRI A. K. GARODIA, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-V, BARODA DATED 26.10.12 FOR AY 2008 -09. 2. THE GROUNDS OF ASSESSEES APPEAL ARE AS UNDER: 2. THE LD. CIT(A)-V, BARODA HAS ERRED IN LAW AND I N FACTS HOLDING THAT APPELLANT, THOUGH DEVELOPING AND BUILD ING RESIDENTIAL HOUSES CANNOT BE SAID TO HAVE FULFILLED THE CONDITIONS FOR THE CLAIM OF DEDUCTION U/S 80IB(10) AS IN SALE OF THE HOUSES, THE APPELLANT HAS EXECUTED THE SALE DEED OF THE INC OMPLETE HOUSE AND THAT THE EXECUTION OF CONSTRUCTION AGREEMENT FO R CONSTRUCTION OF THE INCOMPLETE HOUSE WOULD RENDER T HE APPELLANT INELIGIBLE FOR THE CLAIM OF DEDUCTION U/S 80IB(10) AND THAT SUCH ACT WOULD TANTAMOUNT TO UNDERTAKING THE BUSINESS AS A WORKS ITA NO.45/AHD/2013 MS. SHIKHAR DEVELOPRS VS. DCIT, CIRCLE-BHARUCH FOR A.Y. 2008-09 - 2 - CONTRACTOR AND THAT THE PROFIT FROM SUCH BUSINESS I S INELIGIBLE FOR THE CLAIM OF THE DEDUCTION U/S 80IB(10). 3. THE LD. CIT(A)-BARODA HAS ERRED IN LAW AND IN FA CTS IN DENYING TO THE APPELLANT THE CLAIM OF DEDUCTION U/S 80IB(10) AMOUNTING TO RS 31,61,003/- DESPITE THE APPELLANT H AVING FULFILLED ALL THE CONDITIONS FOR SUCH CLAIM INCLUDI NG THAT OF THE DEVELOPMENT AND BUILDING OF HOUSING PROJECTS. THE APPELLANT MAY PLEASE BE ALLOWED THE CLAIM AS MADE. 3. IT WAS POINTED OUT BY THE BENCH TO THE LEARNED A R OF THE ASSESSEE THAT PERHAPS IN THE ASSESSEES OWN CASE FOR AY 2007 -08, THERE IS TRIBUNALS ORDER AS PER WHICH THE ISSUE WAS SET ASI DE FOR A FRESH DECISION. HE WAS DIRECTED TO FURNISH A COPY OF THE DECISION. BOTH THE SIDES AGREED THAT IN THE PRESENT YEAR ALSO, THE ISSUE MAY BE DECIDED ON SIMILAR LINE. AFTER THE HEARING WAS OVE R, THE LEARNED AR OF THE ASSESSEE HAS FURNISHED A COPY OF THE TRIB UNALS ORDER IN ITA NO. 854/AHD/2010 DATED 31.05.12. 4. AS PER THE TRIBUNALS DECISION IN ASSESSEES OWN CASE FOR AY 2007- 08, THE MATTER WAS RESTORED BACK AS PER PARA 6 & 7 OF THE HONBLE TRIBUNALS ORDER, WHICH ARE REPRODUCED BELOW: 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE OF ADMISSIBILITY OF DEDUCTION PRESCRIBED U/S. 80IB(10) IS NOW TO BE DECIDED AS PE R THE OBSERVATIONS MADE BY HONBLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS IINDIA LTD. IN TAX APPEAL NO. 171 OF 1999 VIDE ORDER DATED 01.04.2009 [REPORTED AT (2010) 329 ITR 01 (GUJ.)]. THE HONBLE COURT HAS GIVEN FINDING IN TH AT CASE AFTER EXAMINATION OF CERTAIN FACTS TO SATISFY THE CONDITI ONS PRESCRIBED ITA NO.45/AHD/2013 MS. SHIKHAR DEVELOPRS VS. DCIT, CIRCLE-BHARUCH FOR A.Y. 2008-09 - 3 - U/S 80IB(10). ONLY AFTER GIVING A FINDING ON FACTS , THE HONBLE COURT HAS ALLOWED THE DEDUCTION U/S 80IB(10). THOSE REQUIREMENTS HAVE TO BE FULFILLED BY A DEVELOPER TO STAKE A CLAIM OF DEDUCTION. THE REQUISITE INFORMATION IS NOT AVA ILABLE ON RECORD. WE HAVE NOTICED THAT THE SAID REQUISITE IN FORMATION WAS NOT EVEN EXAMINED BY THE REVENUE AUTHORITIES IN THE LIGHT OF THE HIGH COURT DECISION. THE GUIDELINE GIVEN BY THE HO NBLE HIGH COURT CAN BE SUMMARIZED AS FOLLOWS: (A) THE RELEVANT TERMS OF DEVELOPMENT AGREEMENT ARE TO BE EXAMINED SO AS TO ASCERTAIN THE TERMS ON WHICH THE ASSESSEE WAS GRANTED RIGHT OF CONSTRUCTION OF A HOU SING PROJECT. (B) ON THE BASIS OF THE TERMS AND CONDITIONS, IT HA S TO BE ASCERTAINED WHETHER IT WAS A WORK CONTRACT OR A DEVELOPMENT CONTRACT. (C) ON THE BASIS OF THE TERMS AND CONDITIONS, IT HA S TO BE EXAMINED THAT WHICH OF THE PARTY HAD TAKEN FULL RESPONSIBILITY FOR EXECUTION OF THE SAID DEVELOPMEN T PROJECT. (D) WHETHER UNDER THE AGREEMENT THE ASSESSEE HAD BE EN GIVEN FULL AUTHORITY TO DEVELOP THE LAND AND TO CONSTRUCT RESIDENTIAL UNITS. THE AO HAS TO EXAMINE THE FACT IN RESPECT OF ENGAGEMENT OF PROFESSIONALS, SUCH AS, AR CHITECT FOR DESIGNING AND ARCHITECTURAL WORK. (E) THE AO HAS TO EXAMINE THE RESPONSIBILITY OF ENR OLMENT OF MEMBERS AND COLLECTION OF CHARGES REQUIRED TO BE MA DE FROM THE BUYERS OF THE RESIDENTIAL UNITS. (F) THE AO HAS TO EXAMINE ABOUT THE PROFIT OR LO SS ARISING FROM THE SAID PROJECT. ITA NO.45/AHD/2013 MS. SHIKHAR DEVELOPRS VS. DCIT, CIRCLE-BHARUCH FOR A.Y. 2008-09 - 4 - (G) THOUGH THE OWNERSHIP OF LAND HAS BEEN HELD AS N OT THE ONLY CRITERIA FOR ALLOWING THE CLAIM U/S 80IB(10) B UT THE DOMAIN OVER THE LAND AND THE CONTROL OVER THE PROJE CT HAS TO BE EXAMINED BY THE AO. (H) WHETHER ON TRANSFER OF DOMAIN THE LAND OWNERS H AVE RECEIVE ANY CONSIDERATIONS AND WHETHER IT WAS A FIX ED AMOUNT OR DEPEND UPON THE PROFITS OF THE PROJECT. LIKEWISE, THE AO HAS TO ASCERTAIN TAT WHETHER THE A SSESSEE WAS GIVEN A FIXED PERCENTAGE AS REMUNERATION FOR TH E SAID PROJECT IN LIEU OF GRANTING PERMISSION TO CONSTRUCT THE RESIDENTIAL UNITS OR TO EARN PROFITS AS A PROJECT D EVELOPER. (I) THE AO HAS TO ASCERTAIN THE POSITION OF THE POS SESSION OVER THE LAND DURING THE CONSTRUCTION PERIOD. (J) FOR THE PURPOSE OF CONSTRUCTION THE AO HAS TO E XAMINE THE FINANCIAL ARRANGEMENTS. (K) THE AO HAS TO EXAMINE THE PROCEDURE FOR RAISIN G OF FUNDS EITHER BY PRIVATE PLACEMENT OR BY FINANCIAL INSTITU TIONS. (L) THE RISK ELEMENT CONNECTED WITH THE SAID HOUSIN G PROJECT HAS ALSO TO BE EXAMINED. (M) THE ASSESSING OFFICER HAS TO EXAMINE THE SIZE O F THE PLOT ON WHICH PROJECT IS CONSTRUCTED. (N) THE ASSESSING OFFICER HAS TO EXAMINE BUILT-UP A REA OF SANCTIONED UNIT WHETHER WILL IN THE PRESCRIBED LIMI T. 7. IN ADDITION TO THE ABOVE GUIDELINES, ONCE THE MA TTER IS GOING BACK FOR RECONCILIATION, THEN THE AGREEMENTS CONNECTED TO THE LAND AND THE DETAILS OF THE APPROV AL GRANTED BY THE LOCAL AUTHORITY PERMITTING TO DEVELO P THE HOUSING PROJECT CAN ALSO BE EXAMINED IF DEEM FIT. SINCE THE HONBLE HIGH COURT HAS GIVEN THE VERDICT IN FAV OUR OF ITA NO.45/AHD/2013 MS. SHIKHAR DEVELOPRS VS. DCIT, CIRCLE-BHARUCH FOR A.Y. 2008-09 - 5 - THE ASSESSEE AFTER DUE ASCERTAINMENT OF THESE BASIC FACTS, THEREFORE IT IS APPROPRIATE FIRST TO PLACE ON RECOR D ALL THESE INFORMATION AND THEN IF FACTS ARE IDENTICAL CONSEQUENTLY THEREUPON, THE CITED DECISION HAS TO B E FOLLOWED TO DISPOSE OF THE ISSUE. WITH THESE DIREC TIONS, WE HEREBY ALLOW THE GROUND OF THE REVENUE THAT TOO FOR STATISTICAL PURPOSE ONLY. 5. IN THE PRESENT YEAR ALSO, WE DECIDE THE ISSUE ON SIMILAR LINES AND THE MATTER IS RESTORED BACK TO THE FILE OF THE AO W ITH SIMILAR DIRECTIONS. 6. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON THE DATE MENTIONED ON CAPTION PAGE. SD/- SD/- (D.K. TYAGI) JUDICIAL MEMBER ( A.K. GARODIA) ACCOUNTANT MEMBER AHMEDABAD; DATED 13/12/2013 GHANSHYAM MAURYA, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD