D.C.I.T. 8(1), MUMBAI V. BENHOOR REGENCY ESTATES PVT. LTD., MUMBAI

ITA 8260/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3477 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 08-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURLI
• Keywords: Competent authority

Judgement Text

, ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI- A,BENCH , , BEFORE S/SHJOGINDERSINGH,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER ./ITA/8260/MUM/2011 , / ASSESSMENT YEARS: 2007-08 DY. CIT-(OSD) RANGE-8(1) ROOM NO.260, 2 ND FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. VS. M/S. BENHOOR REGENCY ESTATES PVT. LTD. C-5, RAJ NAGAR,CO-OP.HSG. SOC. LTD. S.V. ROAD, JOGESHWARI (W) MUMBAI-400 102. PAN:AABCB 8406 H. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI M. MURLI ASSESSEE BY: SHRI VIMAL PUNMIYA / DATE OF HEARING: 22.03.2016 / DATE OF PRONOUNCEMENT: 22.03.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA A.M. - CHALLENGING THE ORDER OF CIT (A)-16, MUMBAI, DATED 12/09/2011, THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL. THE EFFECTIVE GROUND OF APPEAL IS ABOUT 80 IB(10) OF THE ACT. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF BUILDER S AND DEVELOPERS,FILED ITS RETURN OF INCOME ON 31/10/2010 DECLARING TOTAL INCOME OF RS.2 5.89 LAKHS.THE AO COMPLETED THE ASSESSMENT U/S.143 (3) OF THE ACT, ON 24/12/2009 DE TERMINING THE INCOME OF THE ASSESSEE AT RS.7.82 CRORES. 2. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THA T 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 H AD OBTAINED PERMISSION FOR REDEVELOPMENT, SALE AND TRANSFER FROM THE COMPETENT AUTHORITY, THA T THE OWNER SAID ENGAGED THE 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 M ERELY CONSTRUCTED THE BUILDING AND HAD SOLD THE SAME, THAT FOR AVAILING DEDUCTION U/S.80 I B(10) IT WAS ESSENTIAL THAT PLOT ON WHICH HOUSING PROJECT WAS CONSTRUCTED 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 HOUSING PROJECT WAS NOT ALLOWABLE. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM IT WAS ARGUED THAT DEDU CTION U/S.80 IB (10) WAS NOT DEPENDENT ON OWNERSHIP, THAT DEDUCTION WAS ALLOWABLE IF THE P ROFITS WERE DERIVED FROM THE BUSINESS OF DEVELOPING AND CONSTRUCTION OF RESIDENTIAL UNIT, TH AT 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 THE ASSESSEE AND THE ASSESSMENT ORDER, THE FAA REFERRED TO THE PROVISIONS OF SECTION 80 IB(10) OF THE ACT AS WELL AS THE MEMO CONTAINED IN FINANCE BILL 1999. HE ANALYSED THE VARIOUS CLAUSES OF THE AGREEMENT EN TERED INTO BETWEEN THE ASSESSEE AND THE OWNERS OF THE PLOT OF LAND AND HELD THAT THE STATUS OF THE ASSESSEE WAS OF A DEVELOPER AND NOT OF A CONTRACT AS OBSERVED BY THE AO, THAT THE HONOU R SHARE WAS IN VIEW OF TRANSFERRING THE PLOT OF LAND TO THE ASSESSEE COMPANY FOR DEVELOPING THE SAME, THAT AS PER THE AGREEMENT 22.5% OF THE GROSS SALES RECEIPT IN RESPECT OF SALE OF FLATS AND OTHER PREMISES CONSTRUCTED BY UTILISATION OF FSI WERE TO BE RECEIVED BY THE OWNERS AND BALANC E BELONGED TO THE ASSESSEE COMPANY,THAT 8260/M/11-07-08 2 ALL THE EFFORTS TO DEVELOP THE PLOT OF LAND WERE MA DE BY THE ASSESSEE AND NOT BY THE OWNER OF THE LAND,THAT IT HAD INCURRED ALL THE EXPENSES TOWA RDS DEVELOPMENT OF LAND AND CONSTRUCTION OF MULTISTORYED BUILDING.RELYING UPON THE CASE OF RADH E DEVELOPERS (23 SOT420),HE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 4. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE AO.THE AUTHORISED REPRESENTATIVE(AR) C ONTENDED THAT THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HO NBLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS(341 ITR 403), THAT THE SLP FILED B Y THE DEPARTMENT BEFORE THE 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 OWNERSHIP OF THE PLOT OF LAND WAS NOT NECESSARY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEV ELOPERS (ITR) HAS HELD AS UNDER: SECTION 80-IB(10) OF THE INCOME-TAX ACT, 1961, REQU IRES INVOLVEMENT OF AN UNDERTAKING IN DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY. CERTAIN CONDITIONS ARE PRESCRIBED IN SUB-SECTION (10) SUCH AS THE DATE BY WHICH THE UNDE RTAKING 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 RESIDEN TIAL UNITS TO BE LOCATED THEREON. THE PROVISIONS NOWHERE REQUIRE THAT ONLY THOSE DEVELOPERS WHO THEM SELVES OWN THE LAND WOULD RECEIVE THE DEDUCTION U/S.80-IB(10) OF THE ACT. NEITHER THE PROVISIONS OF SECTION 80-IB NOR ANY OTHER PROVISIONS CONTAINED I N OTHER RELATED STATUTES DEMONSTRATE THAT OWNERSHIP O F THE LAND WOULD BE A CONDITION PRECEDENT FOR DEVELOPING THE HOUSING PROJECT. SUCH REQUIREMENT CA NNOT BE READ INTO THE STATUTE BECAUSE THERE IS NOTHING IN SECTION 80-IB(10) OF THE ACT REQUIRING T HAT OWNERSHIP OF THE LAND MUST VEST IN THE DEVELOPE R FOR HIM TO BE ABLE TO QUALIFY FOR SUCH DEDUCTION. M OREOVER, 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 INTERPRETING A STATUT E, PARTICULARLY, A TAXING STATUTE, NOTHING CAN BE R EAD INTO THE PROVISIONS WHICH HAS NOT BEEN PROVIDED BY THE L EGISLATURE. A CONDITION WHICH IS NOT MADE PART OF SECTION 80-IB(10) OF THE ACT, NAMELY, THAT OF OWNIN G THE LAND WHICH THE ASSESSEE DEVELOPS, CANNOT BE SUPPLIED BY ANY PURPORTED LEGISLATIVE INTENT. RESPECTFULLY FOLLOWING THE ABOVE, WE DECIDE THE EFF ECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND ,MARCH, 2016. ! 22, '# 2016 SD/- SD/- /JOGINDER SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :22.03.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.