The ITO, Ward-4(1), Gandhinagar V. M/s. Gayatri Infrastructure Limited, Ahmedabad

ITA 518/AHD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50585 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-08-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 21-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Section: 80IB

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI D.K. TYAGI, JM AND R. C. SHARMA, A.M . ITO, WARD 4(1), AHMEDABAD. GAYATRI INFRASTRUCTURE LTD., ASHOK PLAZA, S.G. HIGH WAY, MOTERA, AHMEDABAD. PAN :AABCG7450Q APPELLANT VS. RESPONDENT APPELLANT BY :- SHRI S. K. MEENA, SR.DR RESPONDENT BY:- SHRI BANDISH SOPARKAR, AR O R D E R DATE OF HEARING 05.08.2011 DATE OF PRONOUNCEMENT - 16/9/2011. PER D.K. TYAGI, JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 21.12.2010 FOR THE ASST. YEAR 2001-01. 2. THE REVENUE IS AGGRIEVED FOR FOLLOWING ASSESSS CLAIM FOR DEDUCTION U/S 80IB(10) OF THE INCOME-TAX ACT, 1961. 3. AT THE OUTSET, THE LD. AR PLACED ON RECORD THE O RDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASST. YEAR 2002- 03 AND 2003-04 ORDER DATED 9.8.2007, WHEREIN GROUND RAISED IN THE PRESEN T APPEAL IS ALREADY ITA NO.518/AHD/2011 ASST. YEAR 2001-02 ITA NO.518/AHD/2011 ASST. YEAR 2001-02 2 DECIDED BY THE TRIBUNAL IN ASSESSEES FAVOUR BY REL YING ON THE DECISION IN THE CASE OF M/S RADHE DEVELOPERS AND OTHERS DATED 2 9.6.2007. 4. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL I N ASSESSEES OWN CASE AND FOUND THAT ISSUE IN QUESTION IS SQUARELY C OVERED BY THE ORDER OF THE CO-ORDINATE BENCH IN ITA NO.2482/AHD/2006 IN TH E CASE OF M/S RADHE DEVELOPERS AND OTHERS CO-ORDINATE BENCH. PREC ISE OBSERVATION OF THE BENCH WAS AS UNDER :- 28. THE CONTENTION OF THE REVENUE AUTHORITIES THAT TO CLAIM DEDUCTION UNDER SECTION 80-IB(10), THERE IS A CONDI TION PRECEDENT THAT THE ASSESSEE MUST BE OWNER OF THE LAND ON WHIC H HOUSING PROJECT IS CONSTRUCTED HAS NO FORCE. WE DO NOT FIND ANY SUCH CONDITION AS APPEARING IN THE PROVISIONS OF THE SEC TION EXTRACTED ABOVE. A PLAIN READING OF SUB-SECTION (10) OF SECTI ON 80-IB REVEALS AND MAKES IT EVIDENT THAT THERE MUST BE AN UNDERTAK ING DEVELOPING AND BUILDING A HOUSING PROJECT AS APPROVED BY A LOC AL AUTHORITY. IT DOES NOT HAVE ANY FURTHER CONDITION THAT SUCH DEVEL OPMENT AND BUILDING OF THE HOUSING PROJECT SHOULD ALSO BE ON A LAND OWNED BY AN ASSESSEE UNDERTAKING. IT MIGHT BE TRUE THAT THE LAND BELONGS TO THE PERSON WHO HAS ENTERED INTO AN AGREEMENT WITH T HE ASSESSEE TO DEVELOP AND BUILD HOUSING PROJECT BUT ON A PERUSAL OF THE AGREEMENT AS NARRATED ABOVE, IT IS EVIDENT THAT THE DEVELOPMENT AND BUILDING WORK HAS BEEN CARRIED OUT BY THE ASSES SEE IN PURSUANCE OF A TRIPARTITE AGREEMENT AND IT IS NOT B Y THE LAND- OWNERS. THEREFORE, THE MERE FACT THAT THE LANDOWNER AND THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT , ARE TWO DIFFERENT ENTITIES WOULD NOT MAKE ANY DIFFERENCE. T HE DEDUCTION WOULD BE ELIGIBLE TO THE PERSON WHO IS DEVELOPING A ND BUILDING HOUSING PROJECT AND NOT TO THE MERE OWNER THEREOF. 29. IT IS ALSO THE CASE OF THE REVENUE THAT THE ASS ESSEE WAS A MERE CONTRACTOR DEVELOPING AND BUILDING HOUSING PROJECT AND, THEREFORE, IT COULD NOT BE A DEVELOPER. WE FAIL TO UNDERSTAND AS TO HOW SUCH A SITUATION COULD EMERGE. A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON IS NO DOUBT A CONTRACTOR. HAVING ENT ERED INTO AGREEMENTS WITH LANDOWNERS FOR DEVELOPMENT AND BUIL DING THE ITA NO.518/AHD/2011 ASST. YEAR 2001-02 3 HOUSING PROJECT, ASSESSEE WAS OBVIOUSLY A CONTRACTO R BUT IT DOES NOT DEROGATE THE ASSESSEE FOR BEING A DEVELOPER, AS WELL. THE TERM CONTRACTOR IS NOT ESSENTIALLY CONTRADICTORY TO TH E TERM DEVELOPER. AS STATED ABOVE, IT IS THE UNDERTAKING THAT DEVELOP S OR BUILDS THE HOUSING PROJECT THAT IS ENTITLED TO DEDUCTION IRRES PECTIVE OF THE FACT WHETHER THAT IT IS THE OWNER OR NOT OR WHETHER IT I S THE CONTRACTOR THEREOF. THE REQUIREMENT FOR CLAIMING DEDUCTION IS THAT SUCH AN UNDERTAKING MUST DEVELOP AND BUILD HOUSING PROJECT, BE IT ON THEIR OWN LAND OR ON THE LAND OF OTHERS AND FOR WHICH A T RIPARTITE AGREEMENT HAS BEEN ENTERED INTO FOR DEVELOPMENT AND BUILDING HOUSING PROJECT; OR BE THE ASSESSEE A CONTRACTOR FO R DEVELOPING AND BUILDING HOUSING PROJECT OR AN OWNER OF THE LAND. 45. THEREFORE, LOOK AT FROM ANY ANGLE, WE ARE OF T HE CONSIDERED OPINION, THAT TO CLAIM DEDUCTION FOR DEVELOPING AND BUILDING HOUSING PROJECT, IT IS NOT NECESSARY THAT ASSESSEE MUST BE AN OWNER OF THE LAND AND IT WOULD BE SUFFICIENT IF HE WAS AN UNDERTAKING DEVELOPS AND BUILD HOUSING PROJECT. THE ASSESSEE IS ALSO THE OWNER OF THE PROJECT, THOUGH THE TITLE DOES NOT VEST IN I T. 5. FURTHER, IN RESPECT OF UN-UTILIZED FSI, THE HON. ITAT AHMEDABAD, HAS OBSERVED AS FOLLOWS :- 63. A QUESTION HAS ALSO BEEN RAISED BY THE REVENUE THAT THE PROFIT EARNED BY THE ASSESSEE ARE NOT FOR DEVELOPIN G AND BUILDING HOUSING PROJECT ALONE BUT FOR THE SALE OF EXTRA FSI , WHICH HAS NOT BEEN UTILIZED FOR DEVELOPING AND BUILDING HOUSING P ROJECT. ON A PERUSAL OF THE PROVISIONS OF SEC.80IB(10), WE FIND THAT IT IS NOT MANDATORY REQUIREMENT TO FULLY UTILIZE PERMISSIBLE FSI; THERE IS NO CONDITION AS TO FSI UNDER THE SCHEME OF THE PROVISI ONS OF SECTION 80IB(10) OF THE ACT; THERE IS NO QUESTION OF SELLIN G UNUSED FSI TO THE INDIVIDUAL BUYER FOR EACH PROJECT AND ALSO THER E IS NO QUESTION OF CALCULATING THE PROFITABILITY ON FSI AS THE SAME HAS NOT BEEN CONTEMPLATED U/S 80IB(10) OF THE ACT. ON VERIFICATI ON OF THE SALE DEED EXECUTED IN FAVOUR OF BUYERS OF THE RESIDENTIA L HOUSES, IT IS CLEAR THAT THE ASSESSEE HAD MADE THIS SALE DEED FOR SALE OF PLOT OF LAND. FURTHER, ON VERIFICATION OF DEVELOPMENT AGREE MENT WITH THE LAND OWNER, WE FIND THAT HERE ALSO THE REFERENCE IS WITH RESPECT TO LAND AREA ONLY. IN BOTH THE DOCUMENTS ASSESSEE HAD NOT ACQUIRED RIGHTS AND HAS NOT RELINQUISHED RIGHTS WITH REFEREN CE TO FSI. FURTHER, ON VERIFICATION OF APPROVED MAP FOR EACH U NIT IS WITH ITA NO.518/AHD/2011 ASST. YEAR 2001-02 4 REFERENCE TO BUILT UP AREA ONLY. UNDER THE CIRCUMST ANCES, THE ASSESSEE HAS NEVER DEALT WITH FSI, BOTH IN TERMS OF ACQUIRING RIGHTS IN THE LAND AND FOR RELINQUISHMENT OF SUCH RIGHTS I N THE LAND. THE CALCULATION GIVEN IN APPROVED PLAN IS OF MAXIMUM PE RMISSIBLE FSI AND BY GIVING SUCH CALCULATION IT IS NOT MADE MANDA TORY BY ANY PROVISIONS OF ANY ACT TO MAKE CONSTRUCTION TO THE F ULLEST EXTENT OF MAXIMUM PERMISSIBLE FSI. THE UTILIZATION OF FSI BY THE BUILDER DEVELOPER DEPENDS ON MANY FACTORS LIKE SITUATION OF PLOT, THE TYPE OF LOCALITY, AND THE TYPE OF BUYERS AFFORDABILITY. IT IS THE MARKET FORCE, WHICH DETERMINES THE AVERAGE SIZE OF THE RES IDENTIAL UNIT- A COMMERCIAL DECISION, WHICH PREVAILS FOR THE PURPOSE OF CARRYING OUT THE BUSINESS AND FOR MAKING RESIDENTIAL UNITS A ND NOT PERMISSIBLE MAXIMUM FSI. IT WOULD ALSO BE IMPOSSIBL E TO CONSTRUCT ANY HOUSING UNIT AS PER THE PROVISIONS OF SEC.80IB( 10) BY UTILIZING THE MAXIMUM FSI. 6. HONBLE ITAT IN THE CASE OF ITO AND OTHERS VS. S HAKTI CORPORATION, BARODA IN ITA NO.1503/AHD/2008 DATED 7 .11.2008 WHEREIN FOLLOWING THE DECISION OF THE SUPREME COURT IN THE CASE OF FAQIR CHAND GULATI VS. UPPAL AGENCIES (P) LTD. AND ANOTHER (CI VIL) APPEAL NO.3302 OF 2005 DATED 10.7.2008 HELD THAT : 16. THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS IN THE CASE OF RADHE DEVELOPERS (SUPRA) A ND ACCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEE HAS ACQUIRED T HE DOMINANT OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED THEREIN. WE MAY MENTION HERE THAT, IN OUR OPINION, THE DECISION IN THE CASE OF RADHE DEVELOPERS (SUPRA) WILL NOT APPLY IN A CASE WHERE T HE ASSESSEE HAS ENTERED INTO THE AGREEMENT FOR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE HOUSING PROJ ECT ON BEHALF OF THE LANDOWNER. THE AGREEMENT ENTERED INTO IN THAT C ASE WILL NOT ENTITLE THE DEVELOPER TO HAVE THE DOMINANT CONTROL OVER THE PROJECT AND ALL THE RISKS INVOLVED THEREIN WILL VEST WITH T HE LANDOWNER ONLY. THE INTEREST OF THE DEVELOPER WILL BE RESTRICTED ON LY FOR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RENDERING THE SE RVICES. THE DECISION IN THE CASE OF RADHE DEVELOPERS (SUPRA) HA S NOT DEALT WITH SUCH SITUATION. THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF RADHE DEVELOPERS CANNOT BE APPLIED UNIVERSALLY WITH OUT LOOKING ITA NO.518/AHD/2011 ASST. YEAR 2001-02 5 INTO THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE DEVELOPER ALONG WITH THE LANDOWNER. IN THE CASE OF SHAKTI COR PORATION SINCE THE ASSESSEE HAS FILED COPY OF THE DEVELOPMENT AGRE EMENT AND CRUX OF THE AGREEMENT IS THAT THE ASSESSEE HAS PURCHASED THE LAND AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN, THERE FORE, WE ARE OF THE VIEW THAT THE ASSESSEE WILL BE ENTITLED FOR THE DEDUCTION U/S. 80IB(10). THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF FAQIR CHAND GULATI (SUPRA) WILL NOT ASSIST THE REVE NUE, AS THE AGREEMENT IS NOT SHARING OF THE CONSTRUCTED AREA. I N OTHER CASES THE COPY OF AGREEMENT SINCE HAS NOT BEEN SUBMITTED BEFO RE US, IF SUBMITTED, THE TERMS AND CONDITIONS OF THE AGREEMEN T WERE NOT SPECIFICALLY ARGUED BEFORE AND PLACED BEFORE US, WE THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE P ARTIES SET ASIDE THE ORDER OF THE CIT (A) AND RESTORE ALL OTHER APPEALS TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSES SING OFFICER SHALL LOOK INTO THE AGREEMENT ENTERED INTO BY EACH OF THE ASSESSEE WITH THE LANDOWNER AND DECIDE WHETHER THE ASSESSEE HAS I N FACT PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM T HE LANDOWNER AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN CO ST AND RISKS INVOLVED IN THE PROJECT. IN CASE THE ASSESSING OFFI CER FINDS THAT PRACTICALLY THE LAND HAS BEEN BOUGHT BY THE DEVELOP ER AND DEVELOPER HAS ALL DOMINANT CONTROL OVER THE PROJECT AND HAS DEVELOPED THE LAND AT HIS OWN COST AND RISKS, THE A SSESSING OFFICER SHOULD ALLOW THE DEDUCTION TO THE ASSESSEE U/S. 80I B(10). IN CASE THE ASSESSING OFFICER FIND THAT THE DEVELOPER HAS A CTED ON BEHALF OF THE LANDOWNER AND HAS GOT THE FIXED CONSIDERATION F ROM THE LANDOWNER FOR THE DEVELOPMENT OF THE HOUSING PROJEC T, THE ASSESSEE SHOULD NOT BE ALLOWED DEDUCTION U/S. 80IB (10). THE CASE OF M/S. RADHE DEVELOPERS & OTHER (INCLUDES THE CASE OF THE APPELLANT) VIDE ORDER IN ITA NO.2482/AHD/2006 DATED 29-06-2007 . THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE ARE IDENTICAL TO THE CASES DECIDED BY HONBLE ITAT, AHMEDABAD. ALSO ALL THE PL EAS RAISED BY THE ASSESSING OFFICER HAVE BEEN EFFECTIVELY DEALT W ITH AND DISCUSSED IN THE SAID ORDER AND THEREAFTER HONBLE ITAT HAS A LLOWED THE DEDUCTION UNDER SECTION 80IB (10). RESPECTFULLY FOL LOWING THE DECISION OF HONBLE ITAT, THE DEDUCTION UNDER SECTI ON 80 IB(10) WAS RIGHTLY ALLOWED BY CIT (A). 7. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE DECISION OF TH E TRIBUNAL IN ASSESSEES OWN CASE, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO.518/AHD/2011 ASST. YEAR 2001-02 6 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 16 TH SEPT. 2011. SD/- SD/- (R. C. SHARMA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 16/9/2011. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 23/8/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER /8/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..