Prasad and Company, Tiruppur V. ITO, Tiruppur

ITA 767/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8957 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 02-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T BANUSEKAR
• Section: 143(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 767/MDS/2016 / ASSESSMENT YEAR : 20 1 0 - 11 PRASAD AND COMPANY, NO. 24, GANDHINAGAR, 3 RD STREET, TIRUPUR 641 603. [PAN: AAIFP9785H ] VS. THE INCOME TAX OFFICER , WARD I ( 4 ) , TIRUPUR 641 603 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR , C.A. / RESPONDENT BY : SHRI A.V. SREEKANTH , J CIT / DATE OF HEARING : 02 . 0 6 .201 6 / DATE OF P RONO UNCEMENT : 24 . 0 6 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 3 , C OIMBATORE , DATED 2 8 . 12 .20 1 5 RELEVANT TO THE ASSESSMEN T YEAR 20 1 0 - 11 . THE ONLY GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN DENYING THE DEDUCTION OF .17,90,287/ - UNDER SECTION 80IB(10) OF THE INCOME TAX ACT AS CLAIMED BY THE ASSESSEE. I.T.A. NO . 767 /M/ 16 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 20 1 0 - 11 ON 25 .0 9 .20 1 0 ADMITTING NIL INCOME CLAIMING DEDUCTION OF . 17,90,287/ - UNDER SECTION 80IB(10) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECT ION 143(2) OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE THERETO, THE ASSESSEE FILED ALL DETAILS INCLUDING FORM 3CD FILED UNDER SECTION 44AB OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT BY DISALLOWING THE CLAIM OF EXEMPTION UNDER SECTION 80IB(10) OF THE ACT. 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL AND THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IS NOW COVERED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 AND FILED COPY OF THE ORDER. 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO PERUSED COPY OF THE I.T.A. NO . 767 /M/ 16 3 ORDER OF THE COORDINATE BENCH OF THE T RIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 IN I.T.A. NO. 1353/MDS/2014 DATED 19.06.2015, WHEREIN THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED DEDUCTION U/S.80IB(10) OF THE A CT ON THE PROFIT EARNED AT .1,15,25,539/ - AND THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER ON THE REASON THAT THE ASSESSEE IS A CONTRACTOR AND NOT A DEVELOPER AFTER EXAMINING THE AGREEMENT ENTERED BY THE ASSESSEE WITH THE PURCHASER IN VIEW OF THE EXPLANATION INSE RTED W.R.E.F. 01.04.2001 BY THE FINANCE ACT 2009. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAINST THIS, THE ASS ESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTED THAT THE ASSESSEE IS A DEVELOPER WHO HAS UNDERTAKEN CONSTRUCTION OF FLATS WITH VARIOUS OWNERS THO UGH ASSESSEE IS NOT A OWNER OF THE LAND. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT IN VIEW OF THE FOLLOWING DECISIONS: - (I) CIT VS. RADHE DEVELOPERS (2012) 341 ITR 403 (GUJ). (II) CIT VS. SANGHVI AND DOSHI ENTERPRISE (2013) 214 TAXMAN 463 (MAD). (III) CIT VS. MAHALAKSHMI HOUSING 2012 - TIOL - 951 - HC - MAD IT. (IV) CIT VS. CEEBROS PROPERTY DEVELOPMENT (P) LTD. (2012) 83 CCH 98 (MADRAS HC) (V) CIT VS. MOON STAR DEVELOPERS 2014 (4) TMI 1042 - (GUJ H.C) 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT IN THE AGREEMENT, THE ASSESSEE WAS CALLED AS CONTRACTOR AND IT CANNOT BE CONSIDERED AS DEVELOPER AND ASSESSEE HAS NOT TAKEN ANY RISK OR MADE ANY INVESTMENT IN THE PROJECT AND THE COST OF CONSTRUCTION WAS INCURRED BY RESPECTIVE FLAT OWNERS AND AS SUCH DEDUCTION U/S.80IB(10) CANNOT BE GRANTED. I.T.A. NO . 767 /M/ 16 4 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERI AL ON RECORD. THE CONTENTION OF THE ASSESSEE S COUNSEL IS THAT THE ASSESSEE THOUGH IS NOT OWNER OF THE LAND, IT HAS DEVELOPED THE HOUSING PROJECT, PROVIDING THE NECESSARY INFRASTRUCTURE, PROVIDING HOUSING LOANS FOR THE BUYERS, IT HAS INVOLVED FROM THE COM MENCEMENT OF THE PROJECT TO THE COMPLETION OF THE PROJECT, AND IN VIEW OF THE ORDER OF THE CO - ORDINATE BENCH IN THE CASE OF SANGHVI & DOSHI ENTERPRISE VS. ITO (2011) 131 ITD 151 (CHEN), THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. ADMITT EDLY, AS HELD BY THE COORDINATE BENCH IN THE CASE OF SANGHVI & DOSHI ENTERPRISE CONFIRMED BY MADRAS HIGH COURT, THE ASSESSEE NEED NOT BE A OWNER OF THE LAND TO GRANT DEDUCTION U/S.80IB (10), IF THE ASSESSEE UNDERTAKES ALL THE RISK INVOLVED FROM THE COMMENC EMENT OF THE PROJECT TO THE COMPLETION OF THE PROJECT. IN OTHER WORDS, IF THE ASSESSEE UNDERTOOK DEVELOPMENT OF THE PROJECT IN TERMS OF SECTION 80IB(10) OF THE ACT, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. IN OUR VIEW, TO GIVE A FIND ING WHETHER THE ASSESSEE IS ACTUALLY A DEVELOPER OR CONTRACTOR, ONE HAS TO SEE THE AGREEMENT THE ASSESSEE ENTERED WITH THE PROSPECTIVE BUYER. THOUGH THERE IS AN ELABORATE DISCUSSION IN THE ASSESSMENT ORDER, THE CONTENTS OF ALL THE AGREEMENTS WHICH THE ASSE SSEE ENTERED WITH THE PROSPECTIVE BUYER WERE NOT DISCUSSED. IN OUR OPINION, IT IS APPROPRIATE TO GO THROUGH THE AGREEMENTS ENTERED WITH THE PROSPECTIVE BUYERS ALONGWITH FINANCIAL STATEMENTS TO SEE THE DETAILS OF INVESTMENT MADE BY ASSESSEE AND DECIDE THE ISSUE IN THE LIGHT OF THE JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF SANGHVI & DOSHI ENTERPRISE [2013] 29 TAXMANN.COM 386 (MADRAS ). ACCORDINGLY, WE REMIT THE ENTIRE ISSUE TO THE FILE OF ASSESS ING OFFICER WITH DIRECTION TO EXAMINE WHETHER THE ASSESSEE MADE INVESTMENT BY ITSELF, EXECUTED DEVELOPMENT WORK AND CARRIED OUT CIVIL WORKS, DEPLOYMENT OF TECHNICAL PERSONAL, PLANT AND MACHINERY, TECHNICAL KNOWHOW, EXPERTISE AND FINANCIAL RESOURCES BEFORE HANDING OVER THE COMPLETED PROJECT TO THE OWNER OF THE FLATS. IF IT IS SO, THEN THE ASSESSEE HAS TO BE TREATED AS DEVELOPER RATHER THAN CONTRACTOR. IN OTHER WORDS, THE ASSESSEE WOULD NOT BE DENIED DEDUCTION U/S.80IB(10) IF THE CONTRACT INVOLVES DESIGN, DEV ELOPMENT, FINANCIAL INVOLVEMENT AND TECHNICAL KNOWHOW FROM ASSESSEE S SIDE ITSELF. 8. ACCORDINGLY, WE REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1353/MDS/2 014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO . 767 /M/ 16 5 7. IN VIEW OF THE ABOVE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10, SINCE FACTS AND THE ISSUE RAISED BEFORE US ARE SIMILAR TO THAT OF EARLIER AS SESSMENT YEAR, FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ALSO, WE REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8 . IN THE RESULT , THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 24 TH JUNE , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 24 . 0 6 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.