M/s. Nagma Developers, Baroda v. The Income tax Officer,Ward-2(5),, Baroda

ITA 2385/AHD/2012 | 2007-2008
Pronouncement Date: 29-04-2015 | Result: Allowed

Appeal Details

RSA Number 238520514 RSA 2012
Bench Ahmedabad
Appeal Number ITA 2385/AHD/2012
Duration Of Justice 2 year(s) 6 month(s) 4 day(s)
Appellant M/s. Nagma Developers, Baroda
Respondent The Income tax Officer,Ward-2(5),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 29-04-2015
Date Of Final Hearing 16-04-2015
Next Hearing Date 16-04-2015
Assessment Year 2007-2008
Appeal Filed On 25-10-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD 00 ! ' #$ % & BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER !./ ITA NO. 2385/AHD/2012 % ) *)/ ASSESSMENT YEAR: 2007-08 M/S.NAGMA DEVELOPERS F/20 NATIONAL PLAZA R.C. DUTT ROAD BARODA. VS ITO WARD - 2(5) BARODA. + / (APPELLANT) -. + / (RESPONDENT) ASSESSEE(S) BY : MS.URVASHI SHODHAN REVENUE BY : SHRI NIMESH YADAV SR.DR / DATE OF HEARING : 16/04/2015 / DATE OF PRONOUNCEMENT: 29 /04/2015 // O R D E R PER N.S. SAINI ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) III BARODA DATED 21.8.2012. 2. SOLE GROUND OF APPEAL TAKEN IN THIS APPEAL IS TH AT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO BY DISALLOWING T HE CLAIM UNDER SECTION 80IB(10) OF THE ACT. 3. IN THE INSTANT CASE THE CIT(A) HAS DISALLOWED T HE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS ACTING AS A CONTRACTOR FOR THE OWNER OF THE PLOTS OF LAND ON THE GROUND THAT THE SALE DEED FOR LAND WAS EXECUTED IN FAVOUR OF TH E PURCHASER OF THE PLOTS AND PURCHASER OF THE PLOTS HAVE ENTERED INTO CONSTRUCTION CONTRACT FOR CONSTRUCTION OF UNITS. ITA NO.2385/AHD/2012 2 4. THE AR OF THE ASSESSEE HAS RELIED ON THE DECISIO N OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF NARAYAN REALITY LTD. VS . DCIT IN ITA NO.2293/AHD/2012 AND 2095/AHD/2013 FOR THE ASSTT.YE AR 2009-10 AND 2010-11 VIDE ORDER DATED 2.5.2014 WHEREIN THE TRIBU NAL HAS HELD THAT NO DISALLOWANCE CAN BE MADE FOR DEDUCTION UNDER SEC TION 80IB(10) BY TREATING THE ASSESSEE AS A CONTRACTOR AND NOT DEVEL OPER. WE FIND THAT TRIBUNAL HAS HELD AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE ORDER OF CIT(A) IT IS SEEN THAT CIT(A) HAS HELD THAT THE ISSUE RELATING TO DIS ALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE ACT ON THE GROUND THA T ASSESSEE IS NOT THE OWNER OF THE LAND AND THE APPROVAL OF THE P ROJECT NOT BEING IN THE NAME OF THE ASSESSEE IS COVERED IN FAV OUR OF ASSESSEE BY THE DECISION OF HIS PREDECESSOR IN ASSE SSEES OWN CASE FOR AY 2008-09. WE FURTHER FIND THAT CIT(A) HAD DIS ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT ASSESSEE H AD ENTERED INTO TWO AGREEMENTS NAMELY 'SALE DEED' FOR THE SALE OF LAND AND 'CONSTRUCTION AGREEMENT' FOR THE CONSTRUCTION THE U NIT AND THEREFORE ACCORDING TO HIM THE ASSESSEE WAS A CONT RACTOR AND THEREFORE NOT ELIGIBLE FOR DEDUCTION U/S 801B(10). WE ALSO FIND THAT ON IDENTICAL FACTS THE CO-ORDINATE BENCH OF T HE TRIBUNAL IN THE CASE OF SATSANG DEVELOPERS (ITA NO 1011 2498 AND 1 221 OF 2012 ORDER DATED 12.11.2013 HAS ALLOWED THE DEDUCTION TO ASSESSEE BY HOLDING AS UNDER:- 4.2. IN ADDITION TO ABOVE TWO OBJECTIONS THE ID.CI T (A) HAS RAISED ONE MORE OBJECTION THAT THE ASSESSEE HAS SOL D THE LAND TO THE UNIT HOLDERS SEPARATELY AND HAS DONE TH E CONSTRUCTION OF UNITS UNDER SEPARATE AGREEMENT/CONT RACT AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR DE DUCTION U/S.80-IB(10) OF THE ACT BECAUSE AS PER LD.CIT(A) PROFIT EARNED BY THE ASSESSEE IN RESPECT OF SALE OF LAND I S NOT ELIGIBLE FOR DEDUCTION U/S.80-IB(10) OF THE ACT AND SIMILARLY THE PROFIT EARNED BY THE ASSESSEE FOR CONSTRUCTION ACTIVITIES IS NOT ELIGIBLE FOR DEDUCTION U/S.80-IB(10) BECAUSE THE ASSESSEE IS DOING THE CONSTRUCTION AS A CONTRACTOR FOR A WORK AND NOT AS A BUILDER OR DEVELOPER AND THEREFORE T HE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80-IB(10 ) OF THE ACT. AGAINST THESE OBJECTIONS OF LD.CIT (A) THE AS SESSEE IS IN APPEAL BEFORE US. ITA NO.2385/AHD/2012 3 5.2 REGARDING THE 3RD OBJECTION THAT THE ASSESSE HA S SOLD LAND TO THE UNIT HOLDERS SEPARATELY AND HAS DONE TH E CONSTRUCTION UNITS UNDER A PROJECT AGREEMENT/CONTRA CT IT WAS SUBMITTED THAT IT IS A JOINT ACTIVITY ALTHOUGH THE AGREEMENT AND LAND SALE-DEED ARE EXECUTED SEPARATEL Y BUT FOR THIS REASON ALONE IT CANNOT BE SAID THAT THE A SSESSEE IS NOT A BUILDER OR A DEVELOPER. HE PLACED RELIANCE ON THE FOLLOWING TRIBUNAL DECISIONS:- SL.NO(S) DECISION IN THE CASE OF. REPORTED IN.... 1. DCIT VS. SMR BUILDERS (P.)LTD. (2012) 24 TAXMAN .COM 194 (HYD.) 2. SKY BUILDERS & DEVELOPERS VS. ITO (2011)14 TAXMAN.COM 78 (INDORE) 3. M/S.VARDHMAN BUILDERS AND DEVELOPERS VS. ITO ITA NO.559/IND/2010 DATED 09/05/20 12 4. RAGHAVA ESTATES VS. DY.CIT ITA NOS.248 & 49/VIZAG/2009 DATED 04/08/2011 5.2. HE SUBMITTED THAT IN THE CASE OF VARDHMAN BUIL DERS & DEVELOPERS (SUPRA) ALSO THE ASSESSEE HAD ENTERED I NTO A SEPARATE AGREEMENT FOR SALE OF LAND AND SEPARATE AGREEMENT FOR CONSTRUCTION OF HOUSING ON SUCH LAND AND UNDER THESE FACTS IT WAS HELD BY THE TRIBUNAL IN T HAT CASE THAT MERELY BECAUSE OF TWO SEPARATE AGREEMENTS THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IB (10) OF THE ACT CANNOT BE DECLINED IF OTHER CONDITIONS ARE BEING SA TISFIED. 5.3. HE FURTHER SUBMITTED THAT IN THE CASE OF DCIT VS. SMR BUILDERS (P) LTD. (SUPRA) ALSO THE FACTS WERE THAT THE ASSESSEE HAD SOLD FLATS IN A SEMI-FINISHED STAGE. I N THAT CASE THE AO HAD NOTED THAT AS PER THE SALE-DEED T HE ASSESSEE-COMPANY HAS SOLD UNDIVIDED SHARE OF LAND W ITH SUPER-STRUCTURE OF SEMIFINISHED BUILT-UP AREA FOR A CERTAIN CONSIDERATION. THE AO HELD THAT THE SEMI-FINISHED S TRUCTURE HAS NEVER BEEN CONSIDERED AS A RESIDENTIAL UNIT. IT WAS ALSO NOTED BY THE AO IN THAT CASE THAT ON THE SAME DATE WHEN THE SALE DEED WAS EXECUTED A CONSTRUCTION AGREEMEN T WAS ALSO ENTERED INTO WITH THE TRANSFEREE FOR FURTHER C ONSTRUCTION OF THE SAME FLATS BY THE BUILDER COMPANY ITSELF. HE SUBMITTED THAT THE FACTS IN THE PRESENT CASE ARE SI MILAR. HE ALSO POINTED OUT THAT IN THAT CASE IT WAS HELD BY THE TRIBUNAL THAT THE STAND OF THE REVENUE WITH REGARD TO THE SEMIFINISHED CONDITION OF THE FLATS IS DEVOID OF AN Y MERIT IN AS MUCH AS WHAT IS SOUGHT TO BE CONSTRUCTED AND SOL D BY THE ASSESSEE IS A RESIDENTIAL UNITS AND WHAT IS SOU GHT TO BE ITA NO.2385/AHD/2012 4 PURCHASED BY THE BUYER IS THE OWNERSHIP OF THE SPEC IFIED UNIT AND REGISTRATION OF FLAT IN SEMI-FINISHED COND ITION IS ONLY TO FACILITATE THE CONVENIENCE OF THE PARTIES AND AG REEMENT FOR DEVELOPMENT AND COMPLETION OF BALANCE WORK IN R ELATION TO THE FLATS IS ONLY AN INCIDENTAL FORMALITY AND TH IS CANNOT BE VIEWED AS FATAL TO THE CLAIM OF THE ASSESSEE FOR DE DUCTION U/S.80-IB(10) OF THE ACT. IT WAS ALSO HELD BY THE T RIBUNAL THAT THE ENTIRE WORK FROM THE STAGE OF THE COMMENCE MENT TO THE STAGE OF MAKING THE RESIDENTIAL UNIT HABITAB LE HAVE BEEN CARRIED OUT BY THE ASSESSEE ONLY AND THEREFOR E ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB(L 0) O F THE ACT. 9.2. NOW WE TAKE UP THE THIRD AND LAST OBJECTION OF ID.CIT (A) THAT THE ASSESSEE HAD SOLD THE LAND SEPARATELY AND UNDERTOOK THE CONSTRUCTION WORK AS PER A SEPARATE AGREEMENT AND THEREFORE THE ASSESSEE IS NOT A BUIL DER OR A DEVELOPER BUT A LAND DEALER AND CONTRACTOR. IN THIS REGARD IN OUR CONSIDERED OPINION THE ISSUE INVOLVED IS SQ UARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF IT AT INDORE BENCH RENDERED IN THE CASE OF M/S.VARDHMAN BUILDERS AND DEVELOPERS VS. ITO (SUPRA). IT IS NOTED BY THE TRIB UNAL IN THAT CASE THAT THE ASSESSEE HAD ENTERED INTO AN AGR EEMENT FOR A SALE OF LAND AND A SEPARATE AGREEMENT FOR CON STRUCTION OF THE HOUSE ON THE LAND AND THEREFORE THE FACTS ARE SIMILAR. UNDER THESE FACTS IT WAS HELD BY THE TRIB UNAL IN THAT CASE THAT THE CLAIM OF THE ASSESSEE FOR DEDUCT ION U/S.80-IB (10) OF THE ACT CANNOT BE DECLINED IF OTH ER CONDITIONS ARE BEING SATISFIED. SIMILARLY IN THE C ASE OF DCIT VS. SMR BUILDERS (P.) LTD. (SUPRA) ALSO THE ASSESS EE SOLD THE LAND ALONG WITH SEMI-FINISHED STRUCTURE TO THE BUYERS AND AS PER SEPARATE AGREEMENT AGREED FOR CONSTRUCT ION FOR COMPLETION OF BALANCE WORK. HENCE THE FACTS OF THI S CASE ARE ALSO SIMILAR BECAUSE IN THAT CASE ALSO THE LAN D WAS SOLD SEPARATELY ALONG WITH PARTIAL AND UNFINISHED CONSTR UCTION OF FLATS AND THEREAFTER CONSTRUCTION AGREEMENT WAS E NTERED INTO TO CARRY OUT THE BALANCE CONSTRUCTION WORK AND UNDER THESE FACTS IT WAS HELD BY THE TRIBUNAL IN THAT CA SE THAT SUCH AGREEMENT FOR CONSTRUCTION TO COMPLETE THE BAL ANCE WORK IS ONLY AN INCIDENTAL FACILITATION TO PROTECT INTEREST OF THE PARTIES AND THEREFORE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB(10) OF THE ACT. SIMILARLY IN T HE CASE OF RAGHAVA ESTATES VS. DY.CIT (SUPRA) ON WHICH RELIANC E WAS PLACED BY THE ID.AR OF THE ASSESSEE THE FACTS ARE SIMILAR. IN THAT CASE ALSO THE ASSESSEE HAD SOLD THE PLOTS SEP ARATELY AND THEREAFTER CONSTRUCTED THE HOUSES AND UNDER TH ESE FACTS THE REVENUE HELD THAT THE ASSESSEE HAS TO BE CONSIDERED AS A MERE CONTRACTOR AND THEREFORE THE ITA NO.2385/AHD/2012 5 ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80-IB (1 0) OF THE ACT. THIS GOES TO SHOW THAT THE FACTS IN THAT CASE WERE IDENTICAL. IN THAT CASE IT WAS NOTED BY THE TRIBUN AL THAT THE ASSESSEE HAD CHOSEN TO REGISTER THE PLOT IN THE NAM E OF THE BUYER ON PAYMENT OF SPECIFIED AMOUNT IN ORDER TO AC HIEVE COST SAVING AND TO ENSURE RELIABILITY AND THEREAFTE R THE ASSESSEE HAD PROCEEDED TO CONSTRUCT THE HOUSE AS PE R BUILDING PLAN OBTAINED IN THE NAME OF THE PLOT-OWNE RS ON PAYMENT OF SUBSEQUENT INSTALLMENTS. IT IS ALSO NOTE D THAT THE ASSESSEE HAD ALSO DEVELOPED VARIOUS PUBLIC AMEN ITIES WITHIN THE PROJECT. THEREAFTER IT WAS HELD BY THE TRIBUNAL THAT ON A TOTALITY OF A FACT THE TRIBUNAL IS OF TH E VIEW THAT THE ASSESSEE HAS UNDERTAKEN DEVELOPING AND BUILDING HOUSING PROJECTS AS PER THE SCHEME PROVIDED IN SECT ION 80- IB (10) OF THE ACT. 9.3. SINCE THE FACTS IN THE PRESENT CASE ARE SIMILA R TO THE FACTS IN ABOVE NOTED THREE TRIBUNAL DECISIONS WE D O NOT FIND ANY DEFECT IN THE CONSTRUCTION IN THE PRESENT CASE AND HENCE RESPECTFULLY FOLLOWING THESE DECISIONS WE DECIDE T HE ISSUE IN FAVOUR OF THE ASSESSEE. THERE IS NO OTHER OBJECTION OF THE LD. CIT(A)REGARDING ALLOWABILITY OF DEDUCTION TO THE AS SESSEE U/S. 80IB(10) OF THE ACT. HENCE WE DIRECT THE A.O TO GRANT THE DEDUCTION TO THE ASSESSEE U/S. 80IB(10) OF THE ACT. 9. BEFORE US THE REVENUE COULD DID NOT PLACE ANY CONTRARY DECISION ON RECORD NOR COULD DISTINGUISH THE FACTS OF THE CASE WHICH WAS RELIED BY THE ASSESSEE. IN VIEW OF THE AF ORESAID FACTS WE RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SATSANG DEVEL OPERS (SUPRA) HOLD THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80 IB(10). THUS THIS GROUND OF ASSESSEE IS ALLOWED. 10. THIS THE APPEAL OF ASSESSEE IS ALLOWED. 5. DR SUPPORTED THE ORDER OF THE CIT(A). 6. WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE ABOVE CITED DECISION OF THE TRIBUNAL. THE DR COULD NOT POINT ANY GOOD REASON FOR WHICH THE ABOVE CITED DECISION OF THE TR IBUNAL SHOULD NOT BE FOLLOWED BY US. WE THEREFORE FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL SET ASIDE THE ORDER OF THE CIT(A) AND DEL ETE THE DISALLOWANCE ITA NO.2385/AHD/2012 6 OF CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THUS THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY THE 29 TH APRIL 2015 AT AHMEDABAD. SD/ SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER