M/s. Golden Developers, Ahmedabad v. The Income tax Officer,(OSD)Range-9,, Ahmedabad

ITA 496/AHD/2011 | 2007-2008
Pronouncement Date: 13-11-2014 | Result: Allowed

Appeal Details

RSA Number 49620514 RSA 2011
Assessee PAN AAGFG1468G
Bench Ahmedabad
Appeal Number ITA 496/AHD/2011
Duration Of Justice 3 year(s) 8 month(s) 25 day(s)
Appellant M/s. Golden Developers, Ahmedabad
Respondent The Income tax Officer,(OSD)Range-9,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 13-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 13-11-2014
Date Of Final Hearing 26-09-2014
Next Hearing Date 26-09-2014
Assessment Year 2007-2008
Appeal Filed On 18-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER ./ I.T.A. NO.496/AHD/2011 ( / ASSESSMENT YEAR : 2007-08) M/S.GOLDEN DEVELOPERS 1 LUV KUSH BUNGLOWS NR.ADISHWAR BUS STAND NR.SAINT MARY SCHOOL NARODA AHMEDABAD / VS. THE INCOME TAX OFFICER (OSD) RANGE-9 AHMEDABAD ' ./ ./ PAN/GIR NO. : AAGFG 1468 G ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '%( / APPELLANT BY : SHRI ANIL BRAHMAKSHATRIYA AR &''%)( / RESPONDENT BY : SHRI ROOP CHAND SR.DR *) / DATE OF HEARING 26/09/2014 + -.) / DATE OF PRONOUNCEMENT 13/11/2014 / O R D E R PER SHRI KUL BHARAT JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XV AHMEDABA D (CIT(A) IN SHORT) DATED 25/01/2010 PERTAINING TO ASSESSMEN T YEAR (AY) 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(APPEALS)-XV AHMEDABAD ERRED IN DISMISSING T HE APPEAL BY NOT PROPERLY APPRECIATING THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT FIRM DURING THE C OURSE OF APPELLATE PROCEEDINGS. ITA NO.496 /AHD /2011 M/S.GOLDEN DEVELOPERS VS. ITO (OSD) ASST.YEAR 2007-08 - 2 - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(APPEALS) HAS GROSSLY ERRED IN CONSIDERING TH E APPELLANT AS CONTRACTOR AND NOT DEVELOPER. THE AO MAY BE DIRECT ED TO CONSIDER THE APPELLANT AS DEVELOPER OF THE HOUSING PROJECT A ND ALLOW THE LEGITIMATE CLAIM OF DEDUCTION U/S.80IB(10) OF THE A CT TO THE TUNE OF RS.48 49 520/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(APPEALS)-XV HAS GROSSLY ERRED IN NOT CONSIDE RING THE TOTAL INVESTMENT MADE IN THE DEVELOPMENT OF THE HOUSING P ROJECT BY THE APPELLANT IN VIEW OF THE CIRCULAR NO.5/2010. THE A O MAY BE DIRECTED TO CONSIDER THE APPELLANT AS DEVELOPER IN VIEW OF INVESTMENT RISK TAKE BY THE APPELLANT AS PER CIRCUL AR NO.5/2010 DATED 34D JUNE 2010 ISSUED BY THE BOARD. 4. THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND OR WITHDRAW ANY GROUNDS OF APPEAL ON OR BEFORE HEARING OF THE APPEA L. 2. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAI NST THE DISALLOWANCE OF CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IB(10 ) OF THE IT ACT. 2.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 23/12/2009 THEREBY THE ASSESSING OFFICER (AO IN SHORT) DISALLOWED THE CLAIM OF THE ASSESSEE MADE U/S.80IB( 10) OF THE ACT. AGAINST THIS THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS AND THE FACTS ON RECORD DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING THE CLAIM OF THE AS SESSEE AND PLACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH C OURT RENDERED IN THE CASE OF CIT VS. RADHE DEVELOPERS REPORTED AT (2012 ) 341 ITR 403 ITA NO.496 /AHD /2011 M/S.GOLDEN DEVELOPERS VS. ITO (OSD) ASST.YEAR 2007-08 - 3 - (GUJ.) :: TAX APPEAL NO.546 OF 2008. THE LD.COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE CLAIM OF THE ASSESSEE FOR DEDUCT ION U/S.80-IB(10) OF THE ACT WAS ALLOWED BY THE AO IN THE AY 2005-06 AND THE AY 06-07 UNDER THE SCRUTINY ASSESSMENT. HE SUBMITTED THAT T HE CASE HAS NOT BEEN RE-OPENED PERTAINING TO THOSE ASSESSMENT YEARS. HE SUBMITTED THAT THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT DEVELO PMENT PERMISSION ARE ISSUED BY THE CONCERNED AUTHORITY FOR EACH BLOCK OF UNIT AND NOT AS A WHOLE OF THE PROJECT. HE SUBMITTED THAT THE LD.CIT (A) ALSO FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE-FIRM HAD INVE STED SUBSTANTIAL AMOUNT I.E.MORE THAN 75%. HE SUBMITTED THAT THE ASSESSEE- FIRM PERCEIVED THE PROJECT AND HAVE DOMINANT CONTROL OVER THE PROJECT. HE ALSO SUBMITTED THAT ALL RISKS AND REWARDS ARE BORNE BY THE ASSESSE E. 3.1. ON THE CONTRARY LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT EVERY YEAR IS AN INDEPENDE NT YEAR AND DISTINCT PROCEEDINGS AS FAR AS THE INCOME-TAX MATTER IS CONC ERNED. HE SUBMITTED THAT THE ASSESSEE IS REQUIRED TO DEMONSTRATE THAT H E HAS FULFILLED ALL THE CONDITIONS TO BECOME ELIGIBLE FOR CLAIMING THE DEDU CTION U/S.80-IB(10) OF THE ACT. HE SUBMITTED THAT THE AUTHORITIES BELOW H AVE FOUND UNDER THE FACTS OF THE PRESENT CASE THAT THE ASSESSEE IS NOT A DEVELOPER BUT MERELY A WORK CONTRACTOR AND HAD CARRIED OUT THE CONTRAC T OF CONSTRUCTION AS PER DIRECTION AND INSTRUCTIONS OF THE LANDOWNER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.496 /AHD /2011 M/S.GOLDEN DEVELOPERS VS. ITO (OSD) ASST.YEAR 2007-08 - 4 - THE AO HAS SUMMARIZED THE REASON FOR DISALLOWING TH E CLAIM OF THE ASSESSEE IN PARA-3.27 AS UNDER:- 3.27 IT IS THEREFORE HELD THAT THE ASSESSEE IS NO T ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB FOR THE FOLLOWING REASONS. 1. THE ASSESSEE IS NOT BOTH DEVELOPER AND BUILDER AS R EQUIRED BY THE PROVISIONS OF SECTION 80IB(10). ASSESSEE IS NOT A D EVELOPER BECAUSE THE ASSESSEE DID NOT CONCEPTUALIZE AND OWN THE PROJ ECT IN AS MUCH AS THE ASSESSEE IS NOT THE OWNER OF THE LAND AND THE A PPROVAL WAS NOT ISSUED TO IT BY THE LOCAL AUTHORITY. 2. THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVELOPM ENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PE R THE AGREEMENT AND HENCE THE ASSESSEE IS MERELY A CONTRACTOR FOR T HE PURPOSES OF CONSTRUCTION OF THE PROJECT. 3. THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURCHASER BUT THE SOCIETY HAS EXECUTED THE AGREEMENT FOR ALLOTMENT OF UNITS A S A SELLER AND THE ASSESSEE HAS CARRIED OUT THE CONSTRUCTION AS PER TH E AGREEMENT ENTERED INTO BY IT WITH THE MEMBERS. THIS ALSO PROV ES THAT THE ASSESSEE WAS MERELY A CONTRACTOR/AGENT OF THE SOCIE TY. 4. AS PER THE AMENDMENT TO SECTION 80IB BY THE FINANCE ACT 2009 A WORKS CONTRACTOR WHO EXECUTES THE WORK AWARDED BY A NY PERSON IS NOT ELIGIBLE FOR THE DEDUCTION U/S 80IB. ANY PERSON INCLUDES THE LUVKUSH BUNGLOWS (NARODA) CO-OP. HSG. SOCIETY LTD WHICH IS A LEGAL ENTITY. 4.1. WE ALSO FIND THAT THE LD.CIT(A) HAS CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDER:- 17. THE ABOVE DISCUSSION SHOWS THAT THE APPELLANT VIOLATES THE CONDITION STIPULATED IN CLAUSE (A) OF SECTION 80IB( 10) AS IT FAILED TO FURNISH THE APPROVED PLANS ISSUED BY THE LOCAL AUTH ORITY ALONG WITH DEVELOPMENT PERMISSIONS AND BU PERMISSIONS. THE PLAN ISSUED BY THE LOCAL AUTHORITY ALONG WITH B U PERMISSION IS ALSO KNOWN AS COMPLETION PLAN AND WITHOUT THE COMPLETION PLANS IN THIS CASE IT IS NOT POSSIBLE TO UNDERSTAND THE VERY FUNDAMENT ALS OF THE CASE LIKE THE LAND AREA SURVEY NUMBERS INVOLVED BUILT-UP AR EA OF THE CONSTRUCTED ITA NO.496 /AHD /2011 M/S.GOLDEN DEVELOPERS VS. ITO (OSD) ASST.YEAR 2007-08 - 5 - UNITS NUMBER OF CONSTRUCTED UNITS AND WHETHER ANY TERRACES OR EXTRA SPACE HAS BEEN GIVEN TO THE UNIT HOLDERS WHICH DOES NOT FIND MENTION IN BU PERMISSION. THE APPROVED PLAN IS THE SPINAL CORD OF ANY PROJECT AND THE APPELLANT FAILED TO FURNISH IT DESPITE OPPORTUN ITIES GIVEN. IN ITS ABSENCE OF OTHER CONDITIONS MENTIONED FROM CLAUSE ( B) TO CLAUSE (D) CANNOT BE COMMENTED UPON BY THIS OFFICE. THE APPELLANT ALSO FAILS THE TEST LAID DOWN BY HON BLE ITAT BENCH A AHMEDABAD IN THEIR DECISION IN THE CASE OF SHAKTI C ORPORATION AS THE APPELLANT HAS NOT BEEN FOUND TO HAVE PRACTICALLY P URCHASED THE LAND. SO WHERE IS THE INVESTMENT RISK? THE SOCIETY SOLD T HE SUB-PLOTS OF THE LAND TO THE INDIVIDUAL BUYERS. AND APPOINTED THE AP PELLANT FOR CONSTRUCTION ARCHITECTS AND ENGINEERS FOR PLANS ET C. THE APPELLANT WAS PAID A FIXED COST OF CONSTRUCTION BY THE BUYER OF T HE RESIDENTIAL UNIT WHICH WAS MENTIONED IN THE CONSTRUCTION AGREEMENT. THE APPELLANT COMES UNDER THE CATEGORY OF A WORKS CONTRACTOR AS CLEAR FROM THE CLAUSES OF THE APPOINTMENT OF BUILDER-FIRM AGREEMEN T AND 80 CONSTRUCTION AGREEMENTS. IT CONSTRUCTED THE UNITS A S PER THE PLAN PREPARED BY THE ARCHITECT MADE ANNEXURE OF EACH CON STRUCTION AGREEMENT. FOR ITS SERVICES THE APPELLANT HAD TO DE POSIT SERVICE TAX AS PER CLAUSE OF THE CONSTRUCTION AGREEMENT TO THE CEN TRAL GOVERNMENT. AS PER EXPLANATION INSERTED BELOW SECTION 80IB(10) W.R .E.F 01.04.2001 AN UNDERTAKING EXECUTING A WORKS CONTRACT AWARDED BY A NYBODY IS NOT ENTITLED TO THE DEDUCTION. THE APPELLANT EXECUTED W ORKS CONTRACT. THE DISALLOWANCE MADE BY THE AO OF RS.48 49 520 IS THUS UPHELD. 4.2. THE CONTENTION OF THE ASSESSEE IS THAT IN EARL IER YEARS CLAIM OF THE ASSESSEE WAS ALLOWED BY THE DEPARTMENT IN SCRUTINY ASSESSMENT. THE LD.COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS PAGE-7 OF THE PAPER-BOOK WHEREIN THE ASSESSMENT ORDER PERTAINING TO THE AY 2005-06 IS ENCLOSED. THE AO HAS ALLOWED THE CLAIM OF THE A SSESSEE FOR DEDUCTION U/S.80-IB(10) OF THE ACT. AT PAGE NO.10 OF THE PAP ER-BOOK IS ENCLOSED THE ASSESSMENT PERTAINING TO THE AY 2006-07 WHEREI N ALSO THE AO ALSO ALLOWED THE CLAIM OF THE ASSESSEE OF DEDUCTION U/S. 80IB(10) OF THE ACT. FACTS ARE IDENTICAL AND PROJECT IS ALSO SAME AND TH E REVENUE HAS NOT POINTED OUT AS TO HOW THE CLAIM THAT WAS ALLOWED IN EARLIER YEARS AND ITA NO.496 /AHD /2011 M/S.GOLDEN DEVELOPERS VS. ITO (OSD) ASST.YEAR 2007-08 - 6 - UNDER THE SAME FACTS AND CIRCUMSTANCES WOULD BE DI SALLOWABLE IN THE YEAR UNDER CONSIDERATION. IT IS SETTLED POSITION O F LAW THAT EVERY YEAR IS AN INDEPENDENT YEAR HOWEVER THE RULE OF CONSISTEN CY IS TO BE ADOPTED BY THE REVENUE AUTHORITY WHILE FRAMING THE ASSESSMENT. IN THE PRESENT CASE THE REVENUE HAS NOT BROUGHT OUT ANY NEW MATERIAL ON THE BASIS OF WHICH A DIFFERENT VIEW HAS BEEN TAKEN FOR THE YEAR UNDER CONSIDERATION. IF THE ASSESSEE WAS DEVELOPER IN THE EARLIER YEARS IT WOULD REMAIN SO IN THE FOLLOWING YEARS UNLESS A NEW MATERIAL COMES TO NOTI CE OF AO OR OTHERWISE WHICH WAS AVAILABLE ON RECORD BUT WAS NOT CONSIDERED IN EARLIER YEARS. NOWHERE IN THE ORDERS OF THE AUTHOR ITIES BELOW THIS FACT HAS BEEN RECORDED. THEREFORE IN OUR CONSIDERED VIEW THE REVENUE WAS NOT JUSTIFIED IN REJECTING THE CLAIM FOR DEDUCTION U/S. 80IB(10) OF THE ACT IN THIS YEAR. IT IS ALSO NOTEWORTHY THAT THE AUTHORIT IES BELOW HAVE NOT RECORDED ANY FINDING AS TO WHAT WAS THE REMUNERATIO N FIXED BY THE CONTRACT AND HOW THE SUBMISSION OF THE ASSESSEE THA T IT WAS BEARING ALL RISKS AND CONSEQUENCES ARISING FROM THE CONTRACT WERE NOT CORRECT. IN FACT THE AO HAS STATED THESE STIPULATIONS ARE ONLY INTENDED TO MAKE THE SOCIETY TOOTHLESS BUT THEY CANNOT CONVERT BY ANY ST RETCH OF IMAGINATION AN AGREEMENT FOR CONSTRUCTION INTO A CONVEYANCE DEE D IN THE EYES OF THE LAW. IT IS NOT DISPUTED THAT SUCH TERMS AND CONDIT IONS WERE IN THE AGREEMENT IN THE EARLIER YEARS ALSO. ON THE BASIS O F SUCH TERMS THE ASSESSEE WAS FOUND TO HAVE FULFILLED THE CONDITIONS AS ENVISAGED U/S.80IB(10) OF THE ACT. IN OUR CONSIDERED VIEW T HE CONSTRUCTION OF ANY AGREEMENT CANNOT BE DIFFERENT IN TWO DIFFERENT ASSE SSMENT YEARS THEREFORE THE ORDERS OF THE AUTHORITIES BELOW REJEC TING THE CLAIM OF DEDUCTION U/S.80-IB(10) OF THE ACT CANNOT BE CONFIR MED MORE ITA NO.496 /AHD /2011 M/S.GOLDEN DEVELOPERS VS. ITO (OSD) ASST.YEAR 2007-08 - 7 - PARTICULARLY IN THE LIGHT OF THE JUDGEMENT OF THE H ONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. RADHE DEVELOP ERS REPORTED AT (2012) 341 ITR 403 (GUJ.) AND FOLLOWED SUBSEQUENTL Y IN A SERIES OF DECISIONS OF THIS TRIBUNAL. THUS THIS SOLE GROUND OF THE ASSESSEES APPEAL IS ALLOWED AND THE DISALLOWANCE MADE BY THE AO IS HEREBY DELETED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/11/2014 2.. .../ T.C. NAIR SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-XV AHMEDABAD 5. 78& 45 45. 3 / DR ITAT AHMEDABAD 6. 8:;<* / GUARD FILE. ! / BY ORDER '7 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD