Shubham Enterprise, Baroda V. The Dy.CIT.,Circle-5, Baroda

ITA 960/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8887 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 143(3); 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.960/AHD/2013 ( / ASSESSMENT YEAR :2009-10) SHUBHAM ENTERPRISE, B-41, SWETA PARK SOCIETY-I, HARNI WARASIYA RING ROAD, HARNI BARODA - 390022 # VS. DY. CIT, CIRCLE 5 BARODA. $ # % & # PAN/GIR NO. : AAMFM 3539 L ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI SAKAR SHARMA, AR ($'*) / RESPONDENT BY : SHRI ASHISH POPHARE, SR. DR + ,*-. / DATE OF HEARING 01/03/2017 /012*-. / DATE OF PRONOUNCEMENT 20/03/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/A PPELLANT IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX(APPEALS)- V, BARODA, DATED 03.01.2013 FOR THE ASSESSMENT YEAR (AY) 2009-10 AND ASSESSEE/APPELLANT HAS BEEN TAKEN FOLLOWING GROUNDS OF APPEAL: THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRM ING THE DISALLOWANCE UNDER SECTION 80IB(10) OF RS. 73,32,78 0/- BY THE AO. ITA NO.960/AHD/ 2013 SHUBHAM ENTERPRISE VS. CIT ASST.YEAR 2009-10 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- ASSESSEE/APPELLANT IS A PARTNERSHIP FIRM ENGAGED IN DEVELOPING HOUSING PROJECTS, RETURN OF INCOME FOR THE YEAR ENDED 31.03 .2009 WAS FILED 17.06.2009 DECLARING TOTAL INCOME AT RS. NIL. ASSES SMENT IS MADE UNDER SECTION 143(3) WAS COMPLETED ON 08.09.2011. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND AFTER VERIFYING THE PROPOSED LAY OUT PLAN, DEVELOPMENT PE RMISSION FROM VADODARA MUNICIPAL CORPORATION AND THE DEVELOPMENT AGREEMENT, IT WAS OBSERVED THAT, THE ASSESSEE IS NOT ACTUAL OWNER OF THE LAND ON WHICH THE PROJECT CALLED SAHAJANAND TOWNSHIP SOCIETY WAS CO NSTRUCTED. AS PER THE ENTITLEMENT FOR DEDUCTION UNDER SECTION 80IB(10 ), THE APPROVAL OF THE PROJECT IS NOT GRANTED TO THE ASSESSEE FIRM CALLED M/S. SHUBHAM ENTERPRISE. THE PERMISSION IS GRANTED BY THE VMC ON THE APPLICATION MADE BY APPLICANT SMT. KUSUMBEN CHIMANBHAI PATEL AN D OTHERS. 4. IT WAS OBSERVED THAT THE ASSESSEE CLAIMED DEDUCT ION UNDER SECTION 80IB OF I.T. ACT OF RS.72,32,777/- 5. SUBMISSION AND JUSTIFICATION OF DEDUCTION CLAIME D U/S.80IB(10) FILED BY THE ASSESSEE: I. THE APPELLANT IS A PARTNERSHIP FIRM CONSTITUTED ON 10.12.2003 AND FURTHER AMENDED ON 01.04.2004. THE ITA NO.960/AHD/ 2013 SHUBHAM ENTERPRISE VS. CIT ASST.YEAR 2009-10 - 3 - PARTNERSHIP DEED CONTAINS SPECIFIC CLAUSE NO.11 OF PAGE NO.5 & 9 ABOUT THE PURCHASE OF LAND FOR THE DEVELOP MENT OF THE SAME. II. THE LAND SURVEY NO. 466, 470/1, 464/1, 469, 464 /2, 463 AT VILLAGE BOPAD. TA. & DIST : BARODA WAS PURCHASED FR OM LAND OWNERS THROUGH DEVELOPMENT AGREEMENTS EXECUTED BY T HE LAND OWNER AND BY ALL THE PARTNERS ON BEHALF OF THE APPELLANT FIRM. THE LAND OWNERS GAVE ALL THEIR RIGHT OVER THE LAND AND GAVE FULL AUTHORITY TO THE APPELLANT FIRM TO DEVELO P THE LAND AND ENJOY THE LAND IN THE MANNER OF THEIR CHOICE. III. THE TOTAL LAND PURCHASED WAS ABOUT 22.502 SQ. MTRS. WHICH IS MORE THAN ONE ACRE STIPULATED U/S. 80IB(10)(B) O F THE INCOME TAX ACT, 1961. IV. AS PER THE DEVELOPMENT AGREEMENT THE ENTIRE EXP ENDITURE FOR OBTAINING PERMISSION FROM VARIOUS GOVERNMENT AND SE MI GOVERNMENT BY THE ASSESSEE FIRM. 6. IN THE REPLY OF THE NOTICE, ASSESSEE SUBMITTED T HAT SECTION 80IB STATE THAT THE AMOUNT OF DEDUCTION IN THE CASE OF A N UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31 ST DAY OF MARCH, 2008 BY THE LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO AN Y ASSESSMENT YEAR FROM SUCH HOUSING PROJECT, - (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR ITA NO.960/AHD/ 2013 SHUBHAM ENTERPRISE VS. CIT ASST.YEAR 2009-10 - 4 - AFTER THE 1 ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, - I. IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPRO VED BY THE LOCAL AUTHORITY BEFORE THE 1 ST DAY OF APRIL, 2004, ON OR BEFORE THE 31 ST DAY OF MARCH, 2008; II. IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR, IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2004 [BUT NOT LATER THAN THE 31 ST DAY OF APRIL, 2005], WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. III. IN A CASE WHERE HOUSING PROJECT HAS BEEN APPRO VED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2005, WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. 7. HE HAS IMPLIED WITH ON THE PROVISION OF SECTION 80IB(10) IN SUPPORT OF HIS CONTENTION, HE HAS CITED A JUDGMENT OF CIT VS. RADHE DEVELOPER: SECTION 80IB(10) ALLOWS DEDUCTION TO AN UNDERTAKING ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTING HOUSING PRO JECTS. THERE IS NO REQUIREMENT THAT THE LAND MUST BE OWNED BY THE ASSE SSEE SEEKING THE DEDUCTION . UNDER THE DEVELOPMENT AGREEMENT, THE ASSESSEE HAD UNDERTAKEN THE DEVELOPMENT OF HOUSING PROJECT AT IT S OWN RISK AND COST. THE LAND OWNER HAD ACCEPTED THE FULL PRICE OF THE L AND AND HAD NO RESPONSIBILITY. THE ENTIRE RISK OF INVESTMENT AND E XPENDITURE WAS THAT OF THE ASSESSEE. RESULTANTLY, PROFIT AND LOSS ALSO ACC RUED TO THE ASSESSEE ALONE. THE ASSESSEE HAD TOTAL AND COMPLETE CONTROL OVER TH E LAND AND COULD PUT THE LAND TO THE AGREED USE. IT HAD FULL A UTHORITY AND ITA NO.960/AHD/ 2013 SHUBHAM ENTERPRISE VS. CIT ASST.YEAR 2009-10 - 5 - RESPONSIBILITY TO DEVELOP THE HOUSING PROJECT BY NO T ONLY PUTTING UP THE CONSTRUCTION BUT BY CARRYING OUT VARIOUS OTHER ACTI VITIES INCLUDING ENROLLING MEMBERS, ACCEPTING MEMBERS, CARRYING OUT MODIFICATIONS ENGAGING PROFESSIONAL AGENCIES AND SO ON. THE RISK ELEMENT WAS ENTIRELY THAT OF THE ASSESSEE . THE ASSESSEE WAS A DEVELOPER IN COMMON PARLANCE AS WELL AS LEGAL PARLANCE AND COULD NOT BE REGARDED AS ONLY A WORKS CONTRACTOR. THE EXPLANATION TO SE CTION 80IB INSERTED W.R.E.F 1.4.2001 HAS NO APPLICATION AS THE PROJECT IS NOT A WORKS CONTRACT. FURTHER, AS THE ASSESSEE WAS, IN PART PE RFORMANCE OF THE AGREEMENT TO SELL THE LAND, GIVEN POSSESSION AND HA D ALSO CARRIED OUT THE CONSTRUCTION WORK FOR DEVELOPMENT OF THE HOUSIN G PROJECT, IT HAD TO BE DEEMED TO BE THE OWNER U/S 2(47)(V) R.W.S. 53A OF THE TOP ACT EVEN THOUGH FORMAL TITLE HAD NOT PASSED (FAQIR CHAN D GULATI VS. UPPAL AGENCIES (2008) 10 SCC 345 DISTINGUISHED) RESPECTFULLY, FOLLOWING THE CIT VS. RADHE DEVELOPER S, WE WILL ALLOW THE APPEAL FILED BY THE APPELLANT, IN THE RES ULT APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20 / 0 3 /201 7 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/03/2017 PRITI YADAV, SR. PS ITA NO.960/AHD/ 2013 SHUBHAM ENTERPRISE VS. CIT ASST.YEAR 2009-10 - 6 - !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)- 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & ' / BY ORDER, (9-- //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION .. (DICTATION-PAD PAGES ATT ACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DISPATCH OF THE ORDER