The ITO, Ward-5(4),, Surat v. M/s. Shreeji Developers, Surat

ITA 2407/AHD/2009 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 240720514 RSA 2009
Assessee PAN AAYFS4640L
Bench Ahmedabad
Appeal Number ITA 2407/AHD/2009
Duration Of Justice 2 year(s) 7 month(s) 12 day(s)
Appellant The ITO, Ward-5(4),, Surat
Respondent M/s. Shreeji Developers, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-03-2012
Date Of Final Hearing 29-02-2012
Next Hearing Date 29-02-2012
Assessment Year 2006-2007
Appeal Filed On 17-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD !' #$ # % BEFORE SHRI MUKUL KR.SHRAWAT JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ./ I.T.A. NO.2407/AHD/2009 ( ( ( ( ( / / / / ASSESSMENT YEAR : 2006-07) THE INCOME TAX OFFICER WARD-5(4) SURAT / VS. M/S.SHREEJI DEVELOPERS SHYAM VATIKA OPP.KARUNASAGAR SOCIETY MODEL TOWN ROAD DUMBHAL SURAT ) #$ ./*+ ./ PAN/GIR NO. : AAYFS 4640 L ( ) / // / APPELLANT ) .. ( -.) / RESPONDENT ) ) / # / APPELLANT BY : SHRI BHUVNESH KULSHRESTHA -.) 0 / # / RESPONDENT BY : SHRI HARDIK VORA 1 0 '$ / / / / DATE OF HEARING : 29/02/2012 23( 0 '$ / DATE OF PRONOUNCEMENT : 30/03/12 #4 / O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHI CH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-III SURAT D ATED 11/05/2009 PASSED FOR A.Y. 2006-07 AND THE ONLY GROUND REPRODU CED BELOW:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A)-III SURAT HAS ERRED IN ALLOWIN G THE CLAIM OF DEDUCTION U/S.80IB(10) OF RS.69 58 800/- R ELYING ITA NO.2407/AHD /2009 ITO VS. M/S.SHREEJI DEVELOPERS ASST.YEAR - 2006-07 - 2 - UPON THE ORDER OF THE ITAT AHMEDABAD IN THE CASE OF M/S.RADHE DEVELOPERS & OTHERS [113 TTJ 300]. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T.ACT DATED 26/12/2008 WERE THAT THE ASSESSEE- FIRM IS STATED TO BE ENGAGED IN THE BUSINESS OF CON STRUCTION OF HOUSING COMPLEX. THE ASSESSEE HAS SHOWN NET PROFIT OF RS .69 58 801/- AND CLAIMED THE AMOUNT AS DEDUCTION U/S.80IB(10) OF THE IT ACT. FACTS IN THIS REGARD WERE THAT THE ASSESSEE HAD CARRIED OUT A PROJECT NAMELY SHYAM VATIKA AT SURAT. IT WAS INFORMED THAT THE RE WERE ORIGINAL OWNERS OF THE LAND IDENTIFIED AS 2/A TP SCHEME NO. 33 AT DUMBHAL SURAT NAMELY SHRI RAMCHODBHAI PRABHUBHAI SHRI PR ABHUBHAI DHANABHAI SHRIMATI MANIBEN PRABHUBHAI & SHRI MAHES H RANCHODBHAI AND SHRI RAMESH RANCHODBHAI. ORIGINALLY THOSE O WNERS HAVE SOLD THE LAND TO M/S.ASHWIN CO-OPERATIVE HOUSING SOCIETY LT D. IN MAY-2000. THEREAFTER M/S.ASHIWN COOPERATIVE HOUSING SOCIETY LTD.HAVE SOLD THE LAND TO M/S.SHYAM SAROVAR CO-OP. HOUSING SOCIETY ON 11/4/2005. LATER ON M/S.SHYAM SAROVAR COOP. HOUSING SOCIETY LTD. HA VE EXECUTED A DEVELOPMENT AGREEMENT WITH M/S.SHREEJI DEVELOPERS D ATED 1 ST JUNE- 2004. IT WAS INFORMED THAT THE ASSESSEE HAD STARTE D CONSTRUCTION WORK IN OCTOBER-2004. AS PER THE SANCTIONED PLAN THREE BUILDINGS; A B & C WERE THE PART OF THE PROJECT FOR WHICH PERMISSION W AS GRANTED. HOWEVER IT HAS BEEN NOTED BY THE AO THAT THE SURAT MUNICIPA L CORPORATION (SMC) HAS NOT GRANTED THE PLAN APPROVED IN THE NAME OF TH E ASSESSEE. RATHER THE LAND OWNERS NAMELY PRABHUBHAI RANCHHODBHAI E TC. HAVE GOT THE PLAN APPROVED IN THEIR NAMES. IT HAS ALSO BEEN NO TED BY THE AO THAT THE ITA NO.2407/AHD /2009 ITO VS. M/S.SHREEJI DEVELOPERS ASST.YEAR - 2006-07 - 3 - PERMISSION AND BUC WAS ISSUED BY SMC IN THE NAMES O F THOSE LAND OWNERS. THE OBJECTION OF THE AO WAS THAT THE ASS ESSEE HAS ACTED MERELY AS A CONTRACTOR AND NOT AS A DEVELOPER. IN SUPPOR T OF THE CLAIM ASSESSEE HAS CITED RADHE DEVELOPERS & OTHERS 113 TTJ 300 (A HD.) BEFORE THE AO. THE AO WAS NOT CONVINCED AND ACCORDING TO HIM THE PLAN HAS NOT BEEN APPROVED BY THE LOCAL AUTHORITY IN THE NAME OF THE DEVELOPER BUT IN THE NAME OF THE LAND OWNERS. ACCORDING TO AO TH E ASSESSEE HAS SIMPLY FACILITATED THE CONSTRUCTION WORK AND COLLECTION OF MONEY FROM THE MEMBERS. HE WAS OF THE VIEW THAT NO BUSINESS MAN CAN CARRY ON THE BUSINESS1 OF DEVELOPING A PROPERTY AND CONSTRUCTION OF BUILDING NAMELY HOUSING PROJECT WITHOUT OWING THE LAND EXCEPT IN A SITUATION WHEN WORKING AS AN AGENT OR A CONTRACTOR OF THE LAND OWN ER. A CONTRACTOR WORKS AS AN AGENT AND REALIZES THE MONEY FROM THE E ND USER AND PASS ON TO THE LAND OWNERS. THE AO HAS THEREFORE CONCLUDE D THAT SINCE THE ASSESSEE HAS NOT OWNED THE LAND THEREFORE NOT ENTI TLED FOR CLAIM OF DEDUCTION U/S.80IB(10) AND THE SAME WAS TAXED ACCOR DINGLY. 3. BEFORE THE LD.CIT(A) FACTS HAVE BEEN REITERAT ED AND AFTER APPRECIATION OF THOSE FACTS IT WAS HELD AS UNDER: - I FIND THAT FACTS OF THE INSTANT CASE ARE ABSOLUTE LY IDENTICAL TO THE CASE OF RADHE DEVELOPERS V. ITO 113 TTJ 300 (AHD) AS IN THAT CASE ALSO THE APPELLANT CLAIMED DEDUCTION U/S.80IB( 10) OF THE ACT DESPITE NOT BEING THE LEGAL OWNER OF THE LAND & THE PERMISSION FOR CONSTRUCTION ACTIVITY WAS ALSO NOT IN THE NAME OF A SSESSEE. IT HAS BEEN CLEARLY OBSERVED BY HONOURABLE ITAT THAT OWNER SHIP OF LAND IS NOT AT ALL A PRECONDITION FOR CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT. IT IS CATEGORICALLY OBSERVED IN PARA 28 O F THE ORDER THAT ITA NO.2407/AHD /2009 ITO VS. M/S.SHREEJI DEVELOPERS ASST.YEAR - 2006-07 - 4 - THE CONTENTION OF REVENUE AUTHORITIES THAT TO CLAIM DEDUCTION U/S 80IB(10) THERE IS A CONDITION PRECEDENT THAT ASSESS EE MUST BE THE OWNER OF THE LAND ON WHICH HOUSING PROJECT IS CONST RUCTED HAS NO FORCE. IT IS ALSO CATEGORICALLY OBSERVED THAT U/S 80IB(10) THERE IS NO FURTHER CONDITION THAT DEVELOPMENT & BUILDING A HOUSING PROJECT SHOULD ALSO BE ON A LAND OWNED BY AN ASSESS EE UNDERTAKING. IT IS CLEARLY HELD THAT DEDUCTION WOU LD BE ELIGIBLE TO A PERSON WHO IS DEVELOPING & BUILDING HOUSING PROJE CT & NOT TO THE MERE OWNER THEREOF. THE HONOURABLE TRIBUNAL IN PARA NO.298 OF THE ORDER ALSO FURTHER OBSERVED THAT HAVING ENTE RED INTO AGREEMENT WITH LAND OWNERS FOR DEVELOPMENT & BUILDI NG THE HOUSING PROJECT WAS OBVIOUSLY A CONTRACT BUT IT DO ESNT DEROGATE THE ASSESSEE FOR BEING A DEVELOPER AS WELL & THAT T HE TERM CONTRACTOR IS NOT ESSENTIALLY CONTRADICTORY TO THE TERM DEVELOPER. THE ABOVE DECISION OF JURISDICTIONAL ITAT IS DIRECT LY APPLICABLE TO THE FACTS OF ASSESSEES CASE. BESIDES THIS THE CAREFUL PERUSAL OF HONOURABLE SUPR EME COURT DECISION ALSO INDICATES THAT A BUILDER CAN BE A PER SON WHO IS DIFFERENT FROM THE LAND OWNER. THIS FACT IS EVIDEN T ON PERUSAL OF OBSERVATIONS OF HONOURABLE APEX COURT REPRODUCED EA RLIER. IN VIEW OF THE ABOVE DECISIONS & FACTS OF THE CASE I AM OF THE VIEW THAT ASSESSEE IS ELIGIBLE TO GET DEDUCTION U/S.80IB (1) OF THE ACT AS THE ASSESSEE FIRM HAS ACTUALLY CARRIED OUT THE DEVE LOPMENT AND BUILDING WORK OF HOUSING PROJECT. HENCE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF ASSESSEE. 4. FROM THE SIDE OF THE REVENUE LD.DR MR.BHUVNESH KULSHRESTHA APPEARED AND SUPPORTED THE VIEW TAKEN BY THE AO. H OWEVER HE HAS STRONGLY PLEADED THAT EVEN AFTER THE DECISION OF TH E HONBLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS 17 TAXMAN.COM 156 THE CONDITIONS LAID DOWN IN THE SAID DECISION HAS TO BE FULFILLED BEFORE CLAIM OF DEDUCTION U/S.80IB(10) OF THE IT ACT. HE HAS A LSO REFERRED THE DECISION OF HONBLE ITAT AHMEDABAD A BENCH IN THE CASE OF ITO VS. ITA NO.2407/AHD /2009 ITO VS. M/S.SHREEJI DEVELOPERS ASST.YEAR - 2006-07 - 5 - SHAKTI CORPORATION [ ITA NO.1503/AHD/2008 A.Y. 20 05-06 ] FOR THE PROPOSITION THAT RADHE DEVELOPERS CANNOT BE APPLIED UNIVERSALLY WITHOUT LOOKING INTO THE DEVELOPMENT AGREEMENT AND WHETHER THE ASSESSEE HAS ACTUALLY DEVELOPED THE HOUSING PROJECT. 5. FROM THE SIDE OF THE RESPONDENT-ASSESSEE LD.AR MR. HARDIK VORA APPEARED AND CONTESTED THAT ONCE THE DECISION OF TH E TRIBUNAL ON WHICH THE CIT(A) HAS PLACED RELIANCE NOW STOOD CONFIRMED BY THE HONBLE HIGH COURT THEN THERE WAS NO SCOPE LEFT FOR THE RE VENUE TO AGITATE THIS ISSUE ANYMORE. 6. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES . THE MAIN REASON FOR REJECTING THE CLAIM OF DEDUCTION U/S.80-IB(10) OF T HE I.T.ACT WAS THAT THE ASSESSEE HAS NOT OWNED THE LAND ON WHICH THE SAID H OUSING PROJECT WAS DEVELOPED. THE ASSESSING OFFICER HAS ALSO IGNORED THE DECISIONS OF THE TRIBUNAL CITED NAMELY RADHE DEVELOPERS 113 TTJ 30 0 (AHD.). BUT AS FAR AS THE FACTS OF THE CASE ARE CONCERNED THERE W AS NO CONTRADICTORY FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS ACTUALLY DEVELOPED THE RESIDENTIAL COMPLEX. THE ASSESSING OFFICER HAS NOT DISPUTED THE TERMS AND CONDITIONS UNDER WHICH THE ASSESSEE HAS D EVELOPED THE PROJECT IN QUESTION. ON THE OTHER HAND FROM THE SIDE OF THE ASSESSEE AMPLE EVIDENCES WERE PLACED ON RECORD TO DEMONSTRATE THAT THE ASSESSEE HAD FULL AUTHORITY TO DEVELOP THE LAND NOT AS A CONTRACTOR BUT AS A DEVELOPER. ON ACCOUNT OF THE SAID REASON THE ASSESSEE WAS NOT ONLY ENTITLED FOR THE PROFIT BUT ALSO RESPONSIBLE FOR THE LOSS IF ANY O CCURRED IN THE ITA NO.2407/AHD /2009 ITO VS. M/S.SHREEJI DEVELOPERS ASST.YEAR - 2006-07 - 6 - DEVELOPMENT OF THE SAID PROJECT. IT HAS ALSO NOT B EEN DISPUTED THAT THE RESPONSIBILITY OF ENROLMENT OF MEMBERS AND COLLECTI ON OF CHARGES WAS ON THE ASSESSEE. CONSIDERING ALL THESE ASPECTS OF THE CASE LD.CIT(A) HAS RIGHTLY HELD THAT THE TRIBUNAL IN THE CITED DECISIO N HAS HELD THAT MERELY THE OWNERSHIP OF THE LAND IS NOT A PRE-CONDITION FO R ALLOWING THE DEDUCTION U/S.80IB(10) OF THE I.T.ACT. NOW BEFORE US THE RESPONDENT- ASSESSEE HAS PLACED THE DECISION OF HON'BLE GUJARAT HIGH COURT PRONOUNCED IN THE CASE OF RADHE DEVELOPERS DATED 13 .12.2011 (2012) 17 TAXMANN.COM 156 (GUJ.) WHEREIN THE DECISION OF THE TRIBUNAL HAS BEEN APPROVED. RATHER WE HAVE NOTED THAT IN THE SUBMIS SIONS FURNISHED FROM THE CITED OF THE REVENUE IT WAS STATED THAT THE DE VELOPER HAS AGREED TO INCUR THE COST AND EXPENSE OF CONSTRUCTION OF THE P ROPOSED BUILDING AND THAT ANY OTHER INCIDENTAL EXPENSES SUCH AS FEE FO R OBTAINING THE APPROVAL FEE FOR SANCTION OF THE PLAN WAS BORNE AN D UNDERTAKING BY THE ASSESSEE AND THE OWNERS OF THE LAND WERE NOT RESPON SIBLE IN ANY MANNER FOR SUCH EXPENDITURE. BEFORE US RELIANCE HAS ALSO BEEN PLACED ON SHAKTI CORPORATION 32 SOT 438 (AHD.). IN THE SAID DECISI ON THE RESPECTED CO- ORDINATE BENCH HAS EXPRESSED THAT IF THE ASSESSEE H AS ACQUIRED THE DOMAIN OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISK INVOLVED THEN ENT ITLED FOR THE CLAIM OF DEDUCTION U/S.80-IB(10) OF THE I.T.ACT. ONCE THE H ON'BLE JURISDICTIONAL HIGH COURT HAS APPROVED THE VIEW ALREADY TAKEN BY T HE RESPECTED CO- ORDINATE BENCH IN THE CASE OF RADHE DEVELOPERS TH EREFORE IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ISSUE OF CLAIM OF DEDUCTION U/S.80-IB(10) OF THE I.T.ACT STOOD COVERED AND TO BE DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESUL T WE HEREBY CONFIRM THE ITA NO.2407/AHD /2009 ITO VS. M/S.SHREEJI DEVELOPERS ASST.YEAR - 2006-07 - 7 - LEGAL AS ALSO FACTUAL FINDINGS OF THE LEARNED CIT(A PPEALS) AND DISMISS THE GROUND OF THE REVENUE. 8. IN THE RESULT REVENUES APPEAL IS DISMISSED. SD/- SD/- ( ANIL CHATURVEDI ) ( MUKUL KR . SHRAWAT ) ACCOUNTANT MEMBER JUDI CIAL MEMBER AHMEDABAD; DATED 30/ 03 /2012 5'.. .../ T.C. NAIR SR. PS #4 0 -6 7#6( #4 0 -6 7#6( #4 0 -6 7#6( #4 0 -6 7#6(/ COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT 2. -.) / THE RESPONDENT. 3. 8 / CONCERNED CIT 4. 8() / THE CIT(A)-III SURAT 5. 6;< - / DR ITAT AHMEDABAD 6. <= >1 / GUARD FILE. #4 #4 #4 #4 / BY ORDER .6 - //TRUE COPY// ? ?? ?/ // / * * * * ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD 1. DATE OF DICTATION..1.3.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1.3.12 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.S30.3.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.3.12 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