M/s. Pushpak Developers, Baroda v. The Dy.CIT.,Circle-2(2),, Baroda

ITA 532/AHD/2013 | 2006-2007
Pronouncement Date: 30-04-2015 | Result: Allowed

Appeal Details

RSA Number 53220514 RSA 2013
Assessee PAN AAGFP0099L
Bench Ahmedabad
Appeal Number ITA 532/AHD/2013
Duration Of Justice 2 year(s) 2 month(s)
Appellant M/s. Pushpak Developers, Baroda
Respondent The Dy.CIT.,Circle-2(2),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-04-2015
Date Of Final Hearing 28-04-2015
Next Hearing Date 28-04-2015
Assessment Year 2006-2007
Appeal Filed On 28-02-2013
Judgment Text
ITA NO.532/AHD/2013 ASSESSMENT YEAR: 2006-07 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S.S. GODARA JM] ITA NO.532/AHD/2013 ASSESSMENT YEAR: 2006-07 M/S. PUSHPAK DEVELOPERS ...............APPEL LANT 4 TH FLOOR CORNER POINT JETALPUR VADODARA. [PAN: AAGFP 0099 L] VS. DY. COMMISSIONER OF INCOME TAX ................ .RESPONDENT CIRCLE 2(2) BARODA. APPEARANCES BY: MILIN MEHTA FOR THE APPELLANT DINESH SINGH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : APRIL 28 2015 DATE OF PRONOUNCING THE ORDER : APRIL 30 2015 O R D E R PER PRAMOD KUMAR AM: BY WAY OF THIS APPEAL THE ASSESSEE APPELLANT HAS C ALLED INTO QUESTION CORRECTNESS OF THE LD. CIT(A)S ORDER DATED 15 TH NOVEMBER 2012 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON THE FOLLOWING GROUNDS :- 1. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN DISALLOWING THE DEDUCTION U/S. 80IB AMOUNTING TO RS.4 71 720/-. ITA NO.532/AHD/2013 ASSESSMENT YEAR: 2006-07 PAGE 2 OF 5 2. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN C ONFIRMING THE ACTION OF AO IN DISALLOWING THE DEDUCTION U/S. 80IB ON TOTALLY IRRELEVANT GROUNDS DESPITE OF THE FACT THAT THE APP ELLANT HAD FULFILLED ALL THE CONDITIONS MENTIONED IN SECTION 80IB OF THE INCOME TAX ACT 1961. 3. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN T REATING THE ACTIVITIES CARRIED ON BY THE APPELLANT AS WORKS CON TRACT RATHER THAN DEVELOPMENT ACTIVITIES AS CLAIMED BY APPELLANT. 2. TO ADJUDICATE ON THIS ISSUE ONLY A FEW MATERIAL FACTS NEEDS TO BE TAKEN NOTE OF. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT BUT THE ASSESSEE DID NOT OWN LAND. IT WAS NOTED TH AT THE ASSESSEE HAS ENTERED INTO DEVELOPMENT AGREEMENT AND THAT LAND HAS BEEN S OLD SEPARATELY TO THE END BUYER AND THE CONSTRUCTION SHOWN TO HAVE BEEN DONE ON CONTRACT BASIS FOR THE END BUYER. IT WAS INTER ALIA FOR THIS REASON THE A.O. DISALLOWED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUC CESS. LD. CIT(A) UPHELD THE STAND OF THE ASSESSING OFFICER AND JUSTIFIED THE SA ME AS FOLLOWS:- 4. I HAVE CONSIDERED THE FACTS OF THE CASE AND APP ELLANTS SUBMISSIONS. THE GROUNDS RELATING TO OWNERSHIP OF LAND AND TRANSFER OF LAND TO UNIT HOLDERS BY THE LAND OWNERS AS WELL AS THE APPROVAL FOR THE PROJECT BEING NOT IN THE NAME OF THE APPELLANT ON WHICH THE AO HAS DISALLOWED THE DEDUCTION U/S. 80IB(10) ARE COVE RED IN FAVOUR OF THE APPELLANT BY THE DECISION OF ITAT C BENCH AH MEDABAD IN ITA NO.3711/AHD/2008 IN APPELLANTS OWN CASE RELYING UPO N THE DECISION IN THE CASE OF M/S. SHAKTI CORPORATION (SUPRA). BU T SO FAR AS THE FACT THAT APPELLANT IS WORKING AS CONTRACTOR OF THE PERS ONS WHO HAVE PURCHASED THE PLOTS FROM THE LAND OWNERS IS CONCERN ED THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) ON THIS ACCOUNT. THE APPELLANT HAS ENTERED INTO THE FOLLOWING TWO AGREEM ENTS WITH EACH ULTIMATE BUYER OF THE UNITS:- ITA NO.532/AHD/2013 ASSESSMENT YEAR: 2006-07 PAGE 3 OF 5 1) SAALE DEED FOR SALE OF LAND. 2) CONSTRUCTION CONTRACT FOR CONSTRUCTING THE UNI T 4.1 THE SALE DEED FOR SALE LF LAND HAS THE FOLLOW ING FEATURES AS NOTICED FROM THE COPY OF A SAALE DEED PROVIDED BY THE AUTHORISED REPRESENTATIVE :- I) IT IS A TRIPARTITE AGREEMENT FOR THE SALE OF LAN D BY THE LANDOWNER TO THE PURCHASER WITH THE APPELLANT ACTI NG AS A CONFIRMING PARTY. II) SALE CONSIDERATION FOR THE PLOT OF LAND IS SPEC IFIED. III) PLOT NO. LOCATION AND AREA OF THE LAND IS SPE CIFIED. IV) THE PURCHASER HAS BECOME THE INDEPENDENT EXCLU SIVE OWNER AND OCCUPIER OF THE SAID PROPERTY AND ENTITLED TO T RANSFER THE SAID PROPERTY BY WAY OF SALE MORTGAGE GIFT OR OTHERWIS E AND THE VENDORS AND THE CONFORMING PARTY HAVE RELEASED AND RELINQUI SHED ALL THEIR RIGHT TITLE AND INTEREST IN THE SAID PROPERTY IN FAVOUR OF THE PURCHASER. 4.1.1 THE CONSTRUCTION AGREEMENT FOR UNITS HAS TH E FOLLOWING FEATURES I) IT STATES THAT THE OWNER OF THE PLOT IS CONSTRU CTING A RESIDENTIAL BUILDING IN THE PLOT AS PER THE PLAN AND SPECIFICAT ION AS PER THE DRAWING APPROVED BY VADODARA URBAN DEVELOPMENT AUTH ORITY. THE APPELLANT WHO HAS BEEN TERMED AS CONTRACTOR HAS AG REED TO EXECUTE SUCH CONSTRUCTION FOR A JUMP SUM AMOUNT. II) IT IS A BI-PARTITE AGREEMENT BETWEEN THE LAND OWNER (ULTIMATE PURCHASER OF THE UNITS) AND THE APPELLANT FOR THE CONSTRUCTION OF EACH UNIT INDIVIDUALLY. 4.1.2 FROM THE TERMS OF SALE DEED OF LAND IT BECOM ES CLEAR THAT THE PURCHASER BECOMES THE ABSOLUTE OWNER OF THE LAND AN D HAS THE RIGHT TO DEAL WITH IT IN ANY MANNER WHATSOEVER INCLUDING SA LE CONSTRUCTION ETC. ALL RISKS AND COSTS RELATING TO THE LAND GOT TRANSFERRED TO THE PURCHASER FROM THE DATE OF SALE. FROM THE TERMS OF CONSTRUCTION AGREEMENT IT BECOMES CLEAR THAT THE APPELLANT IS D OING CONSTRUCTION AS PER TERMS OF THE CONTRACT. THUS IT IS ONLY REN DERING A SERVICE AS A CONTRACTOR. 4.2 THE APPELLANTS SUBMISSION THAT THE METHOD OF T RANSFERRING THE UNIT TO THE ULTIMATE HOLDER SHOULD NOT BE VIEWED IN ISOLATION AND SHOULD NOT BE GIVEN UNDUE WEIGHTAGE IS ALSO NOT ACC EPTABLE ON ACCOUNT ITA NO.532/AHD/2013 ASSESSMENT YEAR: 2006-07 PAGE 4 OF 5 OF THE FACT THAT DUE TO THIS MODUS OPERANDI NO STA MP DUTY IS BEING PAID TO THE GOVERNMENT ON ACCOUNT OF SUCH SALE TO T HE ULTIMATE HOLDER. IF IT IS A CASE OF CONSTRUCTION OF HOUSE BY THE APP ELLANT ON THE PLOT OF LAND OWNED BY THE ULTIMATE HOLDER OF THE UNIT DUE T O WHICH NO STAMP DUTY IS BEING PAID. UNDER SUCH CIRCUMSTANCES THE APPELLANT IS ACTING AS A CONTRACTOR FOR THE OWNER OF THE PLOTS OF LAND AND HENCE IT IS NOT ENTITLED FOR DEDUCTION U/S 80IB(1) AS CLAIMED IN TH E RETURN OF INCOME. 3. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS PURSUED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE A PPLICABLE LEGAL POSITION. LEARNED COUNSEL INVITING OUR ATTENTION TO THE DECISION OF T HE CO-ORDINATE BENCH IN THE CASE OF NARAYAN REALTY LTD. VS. DCIT VICE-VERSA (I TA NOS.2293/AHD/2012 2095/AHD/2013 2944/AHD/2011 & 2563/AHD/2012 ORDER DATED 02.05.2014) WHEREIN ON MATERIALLY IDENTICAL FACTS THE TRIBUNAL HAS UPHELD THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE A CT. WHILE DOING SO THE CO- ORDINATE BENCH HAS OBSERVED AS FOLLOWS :- 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IN THE PRESENT CASE ASSESSEE WAS DENIE D THE DEDUCTION BY THE AO U/S 80IB(10) FOR THE REASON THAT THE ASSESSE E WAS NOT THE OWNER OF LAND AND HAD ACTED AS A CONTRACTOR. CIT(A ) WHILE DELETING THE DENIAL OF DEDUCTION AND RELYING ON THE DECISION OF RADHE DEVELOPERS (SUPRA) HAS NOTED THAT OWNERSHIP OF LAND IS NOT A NECESSARY CONDITION FOR CLAIMING THE DEDUCTION U/S 80IB(10). HE HAS FURTHER NOTED THAT ASSESSEE HAS ACQUIRED DOMINANT CONTROL O VER THE LAND ASSESSEE IS RESPONSIBLE FOR INCURRING ALL THE EXPEN SES AND TAKING ALL THE RISKS INVOLVED THEREIN. FURTHER HE HAS GIVEN A FIN DING OF FACT THAT ASSESSEE IS NOT A CONTRACTOR. BEFORE US REVENUE CO ULD NOT CONTROVERT THE FINDINGS OF CIT(A) NOR HAS BROUGHT ANY CONTRARY BINDING DECISION IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GR OUND OF REVENUE IS DISMISSED. ITA NO.532/AHD/2013 ASSESSMENT YEAR: 2006-07 PAGE 5 OF 5 5. LD. DEPARTMENTAL REPRESENTATIVE DID NOT DISPUTE THE FACTS THAT THE ISSUE IN APPEAL IS COVERED BY THE AFORESAID DECISION BUT HE NEVERTHELESS VEHEMENTLY RELIED UPON THE STAND OF THE AUTHORITIES BELOW. 6. WE SEE NO REASON TO TAKE ANY OTHER VIEW THAN THE VIEW TAKEN BY THE CO- ORDINATE BENCH IN THE CASE OF NARAYAN REALTY LTD. V S. DCIT AND OTHER CASES RELIED UPON IN THE SAID DECISION. IN THE PRESENT C ASE ALSO IT IS UNDISPUTED FACT THAT THE ASSESSEE WAS RESPONSIBLE FOR INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED IN THIS VENTURE. THE MERE FACT T HAT THE ASSESSEE DID NOT OWN THE LAND AND THE MERE FACT THAT THE SALE DEED EXECU TED IN FAVOUR OF THE END BUYER WAS A TRIPARTITE AGREEMENT SHOWING SALE BY THE LAND OWNER AND CONSTRUCTION HAVING BEEN DONE BY THE ASSESSEE DOES NOT NEGATE TH E FACT THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS ENTREPRENEUR RATHER THAN A CONTRACTOR SIMPLICITER. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH WE HOLD THAT THE ASSESSEE WAS ENTITLED TO DE DUCTION UNDER SECTION 80IB(10) AMOUNTING TO RS.4 71 720/-. WE ACCORDINGL Y DIRECT THE ASSESSING OFFICER TO GRANT THE SAME. THE ASSESSEE GETS THE R ELIEF ACCORDINGLY. 7. IN THE RESULT APPEAL IS ALLOWED. PRONOUNCED I N THE OPEN COURT TODAY ON THE 30 TH DAY OF APRIL 2015. SD/- SD/- S. S. GODARA PRAMOD KUM AR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD THE 30 TH DAY OF APRIL 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT/DEPUTY REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD