The ACIT, Circle-3, Surat V. M/s. R.P. Corporation, Surat

ITA 913/AHD/2010

• Counselvise Citation: 91320514 RSA 2010
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 29-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTAAR

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ./ I.T.A. NO.913/AHD/2010 ( & ' & ' & ' & ' / / / / ASSESSMENT YEAR : 2006-07) ITO WARD-3(1) SURAT & & & & / VS. M/S.R.P. CORPORATION TPS NO.5, UMRA NORTH FP NO.29, 30, ATHWALINES SURAT ( '# ./)* ./ PAN/GIR NO. : AAFFR 4379 G ( (+ / // / APPELLANT ) .. ( ,-(+/ RESPONDENT ) (+ . '/ APPELLANT BY : SHRI SHYAM PRASAD, SR.D.R. ,-(+ / . ' / RESPONDENT BY : SHRI P.M. MEHTA, A.R. &0 / #/ // / DATE OF HEARING : 24/05/2012 12' / # / DATE OF PRONOUNCEMENT : 15/6/12 '3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-II, SURAT DA TED 18/12/2009 PASSED FOR A.Y. 2006-07 AND THE SUBSTANTIVE GROU NDS RAISED BEFORE US READ AS FOLLOWS:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A)-II, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.6,74,712/- MADE BY WAY OF DISALLOWANCE OF DEDUCT ION CLAIMED U/S.80-IB(10) OF THE I.T. ACT, IGNORING THE FACT TH AT THE ASSESSEE IS NOT THE OWNER OF THE LAND ON WHICH THE PROJECT IS DEVELOPED AND IT HAS MERELY WORKED AS A COMMISSION AGENT FOR THE PRO JECT OWNER I.E. OF THE SOCIETY. ITA NO .913/AHD/2010 ACIT VS. M/S.R.P.CORPORATION,SURAT ASST.YEAR - 2006-07 - 2 - (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A)-II, SURAT HAS ERRED IN PLACING RELIA NCE ON THE DECISION GIVEN BY THE APEX COURT IN THE CASE OF MYSORE MINERALS LTD. (239 ITR 775) , IGNORING THE FACT THAT THE ISSUE REGARDING THE DOMINION OVER THE LAND IS UNTENABLE IN THE CONTEXT OF SECTION 80- IB(10) AND IT HAS TO BE UNDERSTOOD IN PERSPECTIVE A S SETTLED BY THE HON'BLE SUPREME COURT IN THE SUBSEQUENT DECISION GI VEN IN THE CASE OF TAMILNADU CIVIL SUPPLIES CORPORATION LTD. AS REPORTED IN 249 ITR 214. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 30/ 12/22008 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION. A NET PROFIT OF RS.6,89,806/- WAS RETURNED AND THE SAME WAS CLAIMED AS DEDUCTION U/S.80-IB(10) OF THE I.T.ACT ON THE GROUND THAT THE CONSTRUCTION WAS FOR DEVELOPING AND BUILDING A HOUSING PROJECT. THE ASSESSEE HAS ALSO EARNED COMMISSION INCOME OF RS.8,43,070/-. IT WAS CLAIMED THAT THE C OMMISSION INCOME WAS RECEIVED FROM GOVINDJI PARK CO-OPERATIVE HOUSIN G SOCIETY. IT WAS STATED THAT THE ASSESSEE WAS APPOINTED FOR ORGANIZI NG; CONSTRUCTING, BOOKING OF FLATS AND TO COLLECT THE MONEY FROM TH E MEMBERS OF THE SAID CO-OPERATIVE SOCIETY. IT WAS INFORMED THAT THE ASS ESSEE HAS RECEIVED COMMISSION @ RS.15/- PER EVERY RS.100/- COLLECTED F ROM THE MEMBERS. THERE WAS AN AGREEMENT BETWEEN R.P. CORPORATION, I. E. THE ASSESSEE AND M/S.GOVINDJI PARK CO-OP.HOUSING SOCIETY LTD. IT W AS STATED THAT THE CONSTRUCTION WORK WAS CARRIED OUT BY THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE CONSTRUCTION WA S CARRIED OUT BY THE ASSESSEE ON BEHALF OF THE CO-OP.HOUSING SOCIETY. I T WAS ALSO NOTICED BY THE ASSESSING OFFICER THAT THE LAND BELONGED TO THE SAID CO-OP.SOCIETY AND THE ASSESSEE HAD NOTHING TO DO WITH THE LAND. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE HAS NOT GOT THE PLAN APPROVED FROM THE LOCAL ITA NO .913/AHD/2010 ACIT VS. M/S.R.P.CORPORATION,SURAT ASST.YEAR - 2006-07 - 3 - AUTHORITY, I.E. SMC. ON THOSE REASONS, THE ASSESSI NG OFFICER HAS HELD THAT THE ASSESSEE HAS WRONGLY CLAIMED THE DEDUCTION U/S.80-IB OF THE I.T.ACT. AFTER A DETAILED DISCUSSION AND AFTER CON SIDERING THE TERMS OF THE AGREEMENT, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE HAS WRONGLY CLAIMED A DEDUCTION U/S.80-IB(10) OF THE I.T.ACT OF RS.6,74,712/- AND THE SAME WAS DISALLOWED. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3. LEARNED CIT(APPEALS) HAS OBSERVED THAT IN THE PA ST FOR AYS 2004- 05 AND 2005-06 VIDE ORDERS DATED 24/07/2007 & 31/3/ 2008 RESPECTIVELY THE CLAIM OF THE ASSESSEE WAS ALLOWED. HENCE, LEA RNED CIT(APPEALS) HAS HELD THAT SINCE THE FACTS HAVE REMAINED THE SAM E AS IN THE IMMEDIATELY PRECEDING YEAR, THEREFORE, ON THE SAME LINES FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE IS ELIGIBLE FOR CL AIM OF DEDUCTION U/S.80-IB(10) OF THE I.T.ACT. LEARNED CIT(APPEALS) HAS ALSO FOLLOWED THE THEN AVAILABLE ITAT DECISION PRONOUNCED IN THE CASE OF RADHE DEVELOPERS & ORS. BEING AGGRIEVED, NOW THE REVENUE IS BEFORE US. 4. FROM THE SIDE OF THE REVENUE LD.SR.DR MR.SHYAM P RASAD AND FROM THE SIDE OF THE ASSESSEE, LD.AR MR.P.M.MEHTA HAVE APPEARED AND RESPECTIVELY PLACED RELIANCE ON THE ORDERS OF THE A SSESSING OFFICER AND LEARNED CIT(APPEALS). THE LD.AR HAS ALSO PLACED BEFORE US A BRIEF SYNOPSIS OF HIS ARGUMENT AND THE ORDER OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR AYS 2004-05 & 2005-06 TITLED AS INCOME-TA X OFFICER VS. M/S.R.P.CORPORATION BEARING ITA NOS. 3686/AHD/2007 (A.Y. 2004-05) AND 2371/AHD/2008 (A.Y. 2005-06) DATED 01/02/2011, WHEREIN VIDE ITA NO .913/AHD/2010 ACIT VS. M/S.R.P.CORPORATION,SURAT ASST.YEAR - 2006-07 - 4 - PARAGRAPH NO.6.1, THE MATTER WAS RESTORED BACK TO T HE FILE OF THE ASSESSING OFFICER, FOR REFERENCE, REPRODUCED BELOW: - 6.1. SINCE BOTH THE PARTIES AGREED THAT THE MATTE R NEEDS TO BE RECONSIDERED IN THE LIGHT OF AFORESAID DECISION OF THE ITAT IN THE CASE OF M/S.SHAKTI CORPORATION & OTHERS IN ITA NO.1503/AHD/ 200, IN THE INTEREST OF JUSTICE, WE VACATE THE FINDINGS OF THE LD.CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION S TO ANALYSE THE RELEVANT DEVELOPMENT AGREEMENT ENTERED INTO BY THE UNDERTAKING OF THE ASSESSEE WITH THE (LAND OWNERS) IN THE LIGHT OF FAC TS OBTAINING IN THE BOOKS OF ACCOUNTS MAINTAINED FOR THE SAID UNDERTAKI NG BY THE ASSESSEE AND OTHER RELEVANT DOCUMENTS, KEEPING IN VIEW THE A FORESAID DECISIONS OF THE ITAT AS ALSO AFTER ALLOWING SUFFICIENT OPPOR TUNITY TO THE ASSESSEE AND THEREAFTER, DECIDE AS TO WHETHER THE UNDERTAKIN G OF THE ASSESSEE HAS INDEED PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM THE LANDOWNER AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN CO ST AND RISKS INVOLVED IN THE PROJECT. IN THE EVENT THE AO FINDS THAT TH E LAND HAD BEEN PURCHASED BY THE UNDERTAKING OF THE ASSESSEE AND HA S ALL THE DOMINANT CONTROL OVER THE PROJECT AND DEVELOPED THE LAND AT THEIR OWN COST AND RISKS, THE AO SHOULD ALLOW THE DEDUCTION U/S.80IB( 10) OF THE ACT, IN ACCORDANCE WITH LAW. IN CASE THE AO FINDS THAT TH E UNDERTAKING OF THE ASSESSEE HAS ACTED ON BEHALF OF THE LANDOWNER(S) AN D HAS GOT ONLY THE FIXED CONSIDERATION FROM THE LANDOWNER FOR THE DEVE LOPMENT OF THE HOUSING PROJECT, THE ASSESSEE WOULD NOT BE ENTITLED TO ANY DEDUCTION U/S.80IB(10) OF THE ACT. WITH THESE DIRECTIONS, GR OUND NOS. 1 & 2 IN THESE TWO APPEALS ARE DISPOSED OF AS INDICATED HERE INBEFORE. 5. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERU SED THE ORDERS OF THE AUTHORITIES BELOW. WE MAY LIKE TO PLACE ON REC ORD THAT NEITHER THE ASSESSEE NOR THE REVENUE HAVE PLACED ANY COMPILATIO N BEFORE US. DUE TO THIS REASON, WE ARE NOT IN A POSITION TO APPRECIATE THE EXACT TERMS AND CONDITIONS OF THE AGREEMENT, STATED TO BE A DEVELOP MENT AGREEMENT. IN ANY CASE, NOW THIS ISSUE HAS FINALLY BEEN SETTLED B Y THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S.RADHE DEVELOPERS REPORTED AT 341 ITR 403(GUJ.) DATED 13/12/2011, WHEREIN AFTE R CONSIDERING THE REQUIREMENT OF THE LAW THE SALIENT FEATURES FOR GRA NTING DEDUCTION ITA NO .913/AHD/2010 ACIT VS. M/S.R.P.CORPORATION,SURAT ASST.YEAR - 2006-07 - 5 - U/S.80IB(10) HAS BEEN ADJUDICATED UPON. TO STREAML INE THE SAME, WE HEREBY DIRECT THE ASSESSING OFFICER TO EXAMINE THE FOLLOWING ASPECTS:- (A) THE RELEVANT TERMS OF DEVELOPMENT AGREEMENT AR E TO BE EXAMINED SO AS TO ASCERTAIN THE TERMS ON WHICH THE ASSESSEE WAS GRANTED RIGHT OF CONSTRUCTION OF A HOUSING PROJ ECT. (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 O F ENGAGEMENT OF PROFESSIONALS, SUCH AS, ARCHITECT 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 L OSS ARISING FROM THE SAID PROJECT. (G) THOUGH THE OWNERSHIP OF LAND HAS BEEN HELD AS NOT THE ONLY CRITERIA FOR ALLOWING THE CLAIM U/S.80IB(10) BUT TH E DOMAIN OVER THE LAND AND THE CONTROL OVER THE PROJECT HAS TO BE EXAMINED BY THE AO. (H) WHETHER ON TRANSFER OF DOMAIN THE LAND OWNER S HAVE RECEIVED ANY CONSIDERATION AND WHETHER IT WAS A FIXED AMOUNT OR DEPEND UPON THE PROFITS OF THE PROJECT. LIKEWISE, T HE AO HAS TO ASCERTAIN THAT WHETHER THE ASSESSEE WAS GIVEN A FIXED PERCENTAGE AS REMUNERATION FOR THE SAID PROJECT IN LIEU OF ITA NO .913/AHD/2010 ACIT VS. M/S.R.P.CORPORATION,SURAT ASST.YEAR - 2006-07 - 6 - GRANTING PERMISSION TO CONSTRUCT THE RESIDENTIAL UN ITS OR TO EARN PROFIT AS A PROJECT DEVELOPER. (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 EXAMINE THE FINANCIAL ARRANGEMENTS. (K) THE AO HAS TO EXAMINE THE PROCEDURE FOR RAISING 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 OF 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. 5.1. SINCE THE MATTER HAS BEEN RESTORED BACK TO THE ASSESSING OFFICER, THIS GROUND OF THE REVENUE MAY BE TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. 6. IN THE RESULT, REVENUES APPEAL IS TREATED AS AL LOWED BUT FOR STATISTICAL PURPOSES. SD/- SD/- ( .. ) ( ) '# ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 15/ 6 /2012 ..&, .&../ T.C. NAIR, SR. PS ITA NO .913/AHD/2010 ACIT VS. M/S.R.P.CORPORATION,SURAT ASST.YEAR - 2006-07 - 7 - '3 / ,4 5'4' '3 / ,4 5'4' '3 / ,4 5'4' '3 / ,4 5'4'/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. 6 / CONCERNED CIT 4. 6() / THE CIT(A)-II, SURAT 5. 49: ,& , , / DR, ITAT, AHMEDABAD 6. :; <0 / GUARD FILE. '3& '3& '3& '3& / BY ORDER, -4 , //TRUE COPY// = == =/ // / ) ) ) ) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION5.6.12 (DICTATION-PAD PAGES 8 AT TACHED) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8.6.12 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 D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S15.6.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15.6.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER