The ITO, Ward-1(4),, RAJKOT-GUJARAT v. M/s Ravi Enterprise,, RAJKOT-GUJARAT

ITA 1210/RJT/2010 | 2007-2008
Pronouncement Date: 25-11-2011 | Result: Allowed

Appeal Details

RSA Number 121024914 RSA 2010
Assessee PAN AAHFR4808G
Bench Rajkot
Appeal Number ITA 1210/RJT/2010
Duration Of Justice 1 year(s) 1 month(s) 17 day(s)
Appellant The ITO, Ward-1(4),, RAJKOT-GUJARAT
Respondent M/s Ravi Enterprise,, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 25-11-2011
Date Of Final Hearing 16-05-2011
Next Hearing Date 16-05-2011
Assessment Year 2007-2008
Appeal Filed On 08-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.1210/RJT/2010 (ASSESSMENT YEAR 2007-08) ITO WD.1(4) VS M/S RAVI ENTERPRISE RAJKOT 3 RD FLOOR SHIVAM COMPLEX DR. YAGNIK ROAD RAJKOT PAN : AAHFR4808G (APPELLANT) (RESPONDENT) DATE OF HEARING : 23-11-2011 DATE OF PRONOUNCEMENT : 25-11-2011 REVENUE BY : SHRI LD BHARTI ASSESSEE BY : SHRI SANJAY SHAH O R D E R PER T.K. SHARMA (JM) THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DA TED 19-07-2010 PASSED BY THE CIT(A)-I RAJKOT DELETING THE ADDITION OF RS . 4 11 02 560 MADE BY THE ASSESSING OFFICE ON ACCOUNT OF DISALLOWANCE OF DEDU CTION U/S 80IB(10) OF THE I.T. ACT FOR THE ASSESSMENT YEAR 2007-08. 2. THE BRIEF FACTS RELATING TO THE CONTROVERSY INVO LVED IN THIS APPEAL ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN BUSINESS OF CIVIL CONSTRUCTION AND REAL ESTATE DEVELOPER. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME ON 29-10-2007 DECLARING TOTAL INCOME AT NIL AFTER CLAI MING DEDUCTION U/S 80IB(10) AMOUNTING TO RS. 4 11 02 560. IN THE ASSESSMENT OR DER THE ASSESSING OFFICER DISALLOWED THE DEDUCTION CLAIMED U/S 80IB(10) ON TH E GROUND THAT THE ASSESSEE FAILED TO SATISFY THE PRIMARY CONDITION LAID DOWN I N SUB SECTION (10) OF SECTION 80IB OF THE ACT THAT FOR CLAIMING DEDUCTION UNDER S ECTION 80IB(10) THE HOUSING ITA NO.1210/RJT/2010 2 AND BUILDING PROJECT SHOULD HAVE BEEN APPROVED BY T HE LOCAL AUTHORITY WITHIN THE STIPULATED PERIOD. ON APPEAL IN THE IMPUGNED ORDE R DATED 19-07-2010 THE LD.CIT(A)-I RAJKOT DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION CLAIMED U/S 80IB(10) FOR THE DETAILED REASONS CONTAINED IN PARAGRAPH 3.3. WHICH READS AS BELOW: 3.3 I HAVE CAREFULLY CONSIDERED THE ISSUE AND I FI ND THAT THOUGH THE LAND WAS PURCHASED IN THE NAME OF PARTNERS BUT THE LAND WAS BROUGHT BY PARTNERS AS THEIR CAPITAL CONTRIBUTION I N THE FIRM AND ACCORDINGLY THE FIRM HAD BECOME THE REAL OWNER. IF THE PARTNERSHIP ACT IS SEEN SECTION 4 OF THE ACT SAYS THAT PARTNER SHIP IS RELATION BETWEEN PARTNERS WHO HAVE AGREE TO SHARE THE PROFIT S OF A BUSINESS CARRIED ON BY ALL OR ANY OF THEM. AS PER THE PARTN ERSHIP ACT AND GENERAL LAW THE FIRM HAS NO SEPARATE LEGAL ENTITY AND IT IS REPRESENTED BY THE PARTNERS. THEREFORE IF ANY APP ROVAL IS GRANTED IN THE NAME OF PARTNERS FOR THE BENEFITS OF THE FIR M THEN THE PERMISSION GRANTED BY LOCAL AUTHORITY IN THE NAME O F THE PARTNERS WILL BE CONSIDERED AS PERMISSION GRANTED TO THE FIR M BECAUSE IN THIS CASE THE ENTIRE LAND HAS BEEN TRANSFERRED AS CAPITA L CONTRIBUTION OF THE PARTNERS IN THE FIRM. APART FROM THAT SECTION 80IB(10) PROVIDES THAT THE PROJECT MUST BE APPROVED BY LOCAL AUTHORI TY AND IT DOES NOT SAY THAT SUCH APPROVAL SHOULD BE IN THE NAME OF THA T PARTICULAR PERSON ONLY. EVEN THAT PERSON MAY GET THE DEVELOPM ENT WORK THROUGH SOME OTHER AGENCY. IN THIS CASE THE LAND I S BROUGHT INTO PARTNERSHIP AS A CAPITAL BY THE PARTNERS AND THE BU ILDING PLAN HAS BEEN APPROVED BY DUE DATE AND THUS THE HOUSING PROJ ECT IS APPROVED IN THE NAME OF PARTNERS FOR AND ON BEHALF OF THE FIRM. THE ENTIRE EXPENDITURE HAS BEEN FUNDED BY THE FIRM AND DEVELOPMENT IS AT FIRMS OWN CAST AND RISK. THE HONBLE ITAT AHM EDABAD BENCH IN THE CASE OF RADHE DEVELOPERS AS WELL AS IN THE C ASE OF SHAKTI CORPORATION HAS CLEARLY HELD THAT OWNERSHIP OF THE LAND IS NOT NECESSARILY COMPULSORY AND EVEN CONSTRUCTIVE OWNERS HIP OF LAND WOULD SUFFICE. IN THIS CASE CONSTRUCTIVE OWNERSHI P OF THE LAND IS WITH THE FIRM IN TERMS OF DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF MYSORE MINERALS LTD REPORTED IN 156 CTR PAGE 1 AND THE FIRM BECOMES ITS REAL OWNER. THEREFORE THE RE AL IMPORT OF THE ACTION OF THE APPELLANT IS THAT PARTNERS OBTAINED T HE PERMISSION ETC. FOR THE FIRM ONLY AND SINCE ALL CONDITIONS MENTIONE D IN SECTION 80IB(10) ARE SATISFIED. THE APPELLANT IS ENTITLED TO DEDUCTION U/S 80IB(10) BECAUSE THE PROJECT HAS BEEN UNDERTAKEN BY THE FIRM AND MERELY BECAUSE THE PARTNERS SOUGHT PERMISSION ON BE HALF OF THE FIRM WOULD NOT MAKE THE APPELLANT DISENTITLED TO TH IS DEDUCTION. AO IS THEREFORE DIRECTED TO ALLOW DEDUCTION U/S 80IB (10) OF THE ACT. ITA NO.1210/RJT/2010 3 AGGRIEVED BY THE ORDER OF LD CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE OUITSET SHRI SANJAY SHAH WHO APPEARED O N BEHALF OF THE ASSESSEE POINTED OUT THAT IN THE ASSESSMENT YEAR 2008-09 TH E ADDITIONAL COMMISSIONER OF INCOME-TAX RANGE-I ISSUED DIRECTION U/S 144A ON 19 -12-2010. AFTER CONSIDERING THIS THE DIRECTION U/S 144A THE ASSESSING OFFICER FRAMED THE ASSESSMENT IN THE ASSESSMENT YEAR 2008-09 U/S 143(34) ON 31-12-2010 W HEREIN HE ALLOWED THE DEDUCTION U/S 80IB(10) AMOUNTING TO RS. 2 05 66 351 . ON THESE BASIS THE LD.COUNSEL OF THE ASSESSEE SUBMITTED THAT THE VIEW TAKEN BY THE LD.CIT(A) IN THE IMPUGNED ORDER DIRECTING THE ASSESSING OFFICER TO A LLOW DEDUCTION U/S 80IB(10) BE UPHELD. 4. AS AGAINST THIS THE LD.DR SHRI LD BHARTI APPE ARED FOR THE REVENUE AND POINTED OUT THAT WHETHER IN THE ASSESSMENT YEAR UND ER APPEAL THE ASSESSEE HAS FULFILLED VARIOUS CONDITIONS FOR CLAIMING DEDUCTION U/S 80IB(10) HAS TO BE VERIFIED AT THE END OF ASSESSING OFFICER. HE ACCORDINGLY SU GGESTED THAT THE IMPUGNED ORDER OF LD.CIT(A) BE SET ASIDE AND THE ASSESSING O FFICER BE DIRECTED TO EXAMINE WHETHER IN THE ASSESSMENT YEAR UNDER APPEAL THE ASS ESSEE HAS FULFILLED VARIOUS CONDITIONS LAID DOWN UNDER THE INCOME-TAX ACT FOR C LAIMING DEDUCTION U/S 80IB(10) OF THE ACT. 5. TO THIS THE LD.COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT HE HAS NO OBJECTION. 6. HAVING HEARD BOTH SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. PRIMA FACIE IT APPEARS THAT VA RIOUS DETAILS AND DOCUMENTS WHICH THE ASSESSEE FILED FOR THE ASSESSMENT YEAR 20 08-09 DURING THE COURSE OF ITA NO.1210/RJT/2010 4 ASSESSMENT PROCEEDINGS AS WELL AS BEFORE THE ADDL C OMMISSIONER OF INCOME-TAX RANGE-I IN THE PROCEEDINGS U/S 144A OF THE ACT WHER E NOT FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS FOR THE ASSESSMENT YEAR 2007-08. THESE WERE FILED BEFORE T HE LD.CIT(A). WE THEREFORE SET ASIDE THE ORDER OF LD.CIT(A) AND RESTORE THE IS SUE REGARDING ALLOWANCE OF DEDUCTION U/S 80IB(10) TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSEE SHOULD FURNISH ALL THE DETAILS AND DOC UMENTS WHICH WERE FIELD BEFORE THE LD.CIT(A) WHO WILL EXAMINE THE SAME AND CONSIDER THE ALLOWANCE OF DEDUCTION U/S 80IB(10) AFRESH IN ACCORDANCE WITH LA W. 7. IN THE RESULT FOR STATISTICAL PURPOSE THE APPE AL OF THE REVENUE IS TREATED AS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED ON THE DATE AS MENTI ONED ABOVE. SD/- SD/- (A.L. GEHLOT) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 25 TH NOVEMBER 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-I RAJKOT 4. THE CIT-I RAJKOT 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT