Nikhil Associates, Ahmedabad V. The ACIT.,(OSD)Circle-9, Ahmedabad

ITA 85/AHD/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68086 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2011
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: P M MEHTA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.85/AHD/2011 A.Y. 2007-08 M/S NIKHIL ASSOCIATES, AHMEDABAD. PAN: AAFFFN1315C VS ACIT(OSD) CIRCLE-9 AHMEDABAD (APPELLANT) (RESPONDENT) REVENUE BY : SH. R.K. DHANESTA, SR.D.R. ASSESSEE(S) BY : SH. P.M. MEHTA, AR / // / DATE OF HEARING : 30/12/2013 / DATE OF PRONOUNCEMENT : 31/12/2013 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-XV, AHMEDABAD DATED 28.10.2010. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S 80I B(10) OF RS 2,23,96,386/- TO THE ASSESSEE. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E A.O. FOUND THAT ONE NAYANKUNJ COOPERATIVE SOCIETY LTD. PURCHAS ED LAND BEARING SURVEY NO. 1193, FINAL PLOT NO. 145, HAVING AN AREA OF 7236 SQ. METRES WHICH WAS GIVEN TO THE ASSESSEE FOR DEVE LOPMENT OF HOUSING PROJECT. THE ASSESSEE HAS CLAIMED DEDUCTIO N U/S 80IB(10) ON THE GROUND THAT THE ASSESSEE IS A DEVELOPER AND IT HAS DEVELOPED ITA NO.85/AHD/2011 M/S NIKHIL ASSOCIATES. VS. ACIT(OSD), CIR-9, AHD FOR A.Y. 2007-08 - 2 - HOUSING PROJECT OF THE SPECIFIED AREA, FULFILLING T HE CONDITIONS LAID DOWN IN THAT SECTION. THE A.O., HOWEVER, WAS OF TH E VIEW THAT THE ASSESSEE IS NOT ENTITLED TO SUCH DEDUCTION BECAUSE, 1. THE ASSESSEE IS NOT BOTH DEVELOPER AND BUILDER AS REQUIRED BY THE PROVISIONS OF SECTION 80IB(10). ASSESSEE IS NOT A DEVELOPER BECAUSE THE ASSESSEE DID NOT CONCEPTUALIS E AND OWN THE PROJECT IN AS MUCH AS THE ASSESSEE IS NOT T HE OWNER OF THE LAND AND THE APPROVAL WAS NOT ISSUED TO IT B Y THE LOCAL AUTHORITY. 2. THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVEL OPMENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREEMENT AND HENCE THE ASSESSEE IS MERE LY A CONTRACTOR FOR THE PURPOSES OF CONSTRUCTION OF THE PROJECT. 3. AS PER THE AMENDMENT TO SECTION 80IB BY THE FINA NCE ACT 2009, A WORKS CONTRACTOR WHO EXECUTES THE WORK AWAR DED BY ANY PERSON IS NOT ELIGIBLE FOR THE DEDUCTION U/S 80 IB. ANY PERSON INCLUDES THE..SOCIETY, WHICH IS A LEGAL EN TITY. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E A.O. BY FOLLOWING HIS ORDER FOR AY 2006-07 IN THE CASE OF T HE ASSESSEE WHEREIN THE DISALLOWANCE MADE BY THE A.O. WAS CONFI RMED BY HIM. 5. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AS SESSEE FILED APPEAL AGAINST THE ORDER OF THE LD. CIT(A) IN AY 2006-07 W HICH WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE, ALLOWING DEDUCTION CLAIMED U/S 80IB(10) OF THE ACT. THEREFO RE, IT WAS HIS ITA NO.85/AHD/2011 M/S NIKHIL ASSOCIATES. VS. ACIT(OSD), CIR-9, AHD FOR A.Y. 2007-08 - 3 - PRAYER THAT FOLLOWING THE ORDER OF THE ASSESSEE FOR AY 2006-07, THE APPEAL FOR THE PRESENT YEAR BE ALLOWED AS THE PROJE CT AND THE FACTS REMAIN THE SAME DURING THE YEAR UNDER CONSIDERATION FROM WHICH DEDUCTION U/S 80IB(10) HAS BEEN CLAIMED BY THE ASSE SSEE. 6. THE LD. DR RELIED ON THE ORDER OF THE CIT(A). 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, PERUSIN G THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL ON RECORD, WE FI ND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT FOR RS 2,23,96,386/- IN RESPECT OF DEVELOPMENT OF HOUSING PROJECT OF LAND BEARING SURVEY NO. 1193, FINAL PLOT NO. 145, HAVING AN AREA OF 7236 SQ. METRES OWNED BY NAYANKUNJ COOPERATIVE SOCIETY L TD FOR WHICH PERMISSION FOR DEVELOPMENT AND CONSTRUCTION O F THE PROJECT WAS GRANTED TO THE NAYANKUNJ COOPERATIVE SOCIETY LT D., VEJALPUR, AHMEDABAD ON 10.03.2005 AND 04.01.2006. THE A.O. H AS DENIED THE CLAIM OF DEDUCTION TO THE ASSESSEE FOR THE REAS ONS QUOTED ABOVE IN THIS ORDER. 8. THE LD. CIT(A) HAS DISMISSED THE CLAIM FOR DEDUC TION U/S 80IB(10) TO THE ASSESSEE FOR THE VERY SAME REASONS FOR WHICH THE APPEAL OF THE ASSESSEE WAS DISMISSED BY HIM IN AY 2 006-07. IN APPEAL FILED BY THE ASSESSEE FOR AY 2006-07 AGAINST THE ORDER OF THE CIT(A, THE TRIBUNAL HAD ALLOWED THE CLAIM OF DE DUCTION U/S 80IB(10) TO THE ASSESSEE VIDE ITS ORDER DATED 25.03 .2011 PASSED IN ITA NO. 328/AHD/2010, WHEREIN THE TRIBUNAL HELD THA T THE ASSESSEE WAS IN FULL AND COMPLETE CONTROL OVER THE PROJECT, ITS DEVELOPMENT AND SALE OF THE FLATS. IT HAD ENJOYED THE PROFITS ARISING FROM THE ITA NO.85/AHD/2011 M/S NIKHIL ASSOCIATES. VS. ACIT(OSD), CIR-9, AHD FOR A.Y. 2007-08 - 4 - SALE OF THE FLATS. IF THE SOCIETY WOULD HAVE BEEN A CONTRACTEE IN THE REAL TERM, MEANING THEREBY THAT THE ASSESSEE WAS CO NTRACTOR CARRYING OUT ANY WORK CONTRACT, THE SOCIETY SHOULD HAVE SHOWN SALE PROCEEDS AS ITS OWN AND SHOWN THE PROFITS FROM SUCH SALE PROCEEDS BY DEBITING THE PAYMENTS MADE TO THE CONTR ACTOR AGAINST THE SALE PROCEEDS OF THE FLATS. NO SUCH EVIDENCE H AS BEEN PRODUCED BY THE REVENUE. IT IS ALSO NOT SHOWN THAT THE SOCI ETY HAD FILED ANY RETURN OF INCOME SHOWING ANY PROFIT OR LOSS FROM TH E PROJECT. AT LEAST, IT IS NOT ASCERTAINED THAT ANY NOTICE U/S 14 8(1) HAS BEEN ISSUED TO THE SOCIETY, ASKING IT TO FILE RETURN OF INCOME TO DECLARE THE PROFIT EARNED BY IT ON THIS PROJECT. IF ENTIRE FINANCIAL ARRANGEMENT FROM PURCHASE OF LAND TILL DISPOSAL OF THE FLATS REMAINED UNDER THE CONTROL OF THE ASSESSEE AND NO P ART OF THE SALE PROCEEDS OF THE FLATS ACCRUED TO THE SOCIETY AS PRO FIT, OR AT LEAST NO EVIDENCE HAS BEEN PUT UP IN SUPPORT OF SUCH CLAIM, WE ARE, THEREFORE, UNABLE TO HOLD THAT THE ASSESSEE ONLY AC TED AS A WORK CONTRACTOR. IN A CASE OF WORK CONTRACTOR, THERE HA S TO BE SOME PROFIT OR LOSS TO THE CONTRACTEE BECAUSE ULTIMATELY THE FLATS HAVE BEEN SOLD ALONGWITH THE RIGHTS OVER THE LAND. 8. THIS FINDING OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE GUJARAT HIGH COURT IN THE APPEAL FILED BY THE REVEN UE AGAINST THE SAID ORDER OF THE TRIBUNAL IN ITA NO. 1155/AHD/2011 DATED 12.09.2012. IN VIEW OF THE ABOVE FACTS AND CIRCUMS TANCES OF THE CASE, WHEN IT IS ADMITTED BY BOTH THE PARTIES THAT THERE IS NO CHANGE IN FACT AND THE PROJECT IS THE SAME AS THE ONE IN A Y 2006-07, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE GUJARAT HIGH COURT, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ITA NO.85/AHD/2011 M/S NIKHIL ASSOCIATES. VS. ACIT(OSD), CIR-9, AHD FOR A.Y. 2007-08 - 5 - AND DIRECT THE A.O. TO ALLOW THE CLAIM FOR DEDUCTIO N U/S 80IB(10) OF RS 2,23,96,386/-. HENCE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON TUESDAY, THE 31 ST OF DECEMBER, 2013 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 31/12/2013 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