The ITO, Ward-5(1),, Baroda v. M/s. Maha Developers, Baroda

ITSSA 616/AHD/2012 | 2003-2004
Pronouncement Date: 20-10-2016 | Result: Dismissed

Appeal Details

RSA Number 61620516 RSA 2012
Assessee PAN AADFM9004D
Bench Ahmedabad
Appeal Number ITSSA 616/AHD/2012
Duration Of Justice 3 year(s) 9 month(s) 23 day(s)
Appellant The ITO, Ward-5(1),, Baroda
Respondent M/s. Maha Developers, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 20-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 20-10-2016
Date Of Final Hearing 17-10-2016
Next Hearing Date 17-10-2016
Assessment Year 2003-2004
Appeal Filed On 28-12-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER & SHRI S. S. GODARA JUDICIAL MEMBER) IT(SS)A. NO: 616/AHD/2012 (ASSESSMENT YEAR: 2003-04) INCOME TAX OFFICER WARD- 5 (1) BARODA V/S M/S. MAHA DEVELOPERS KRISHNA COMPOUND NEW KHANDERAO MARKET PRATAPNAGAR BARODA- 390004 (APPELLANT) (RESPONDENT) PAN: AADFM9004D APPELLANT BY : SHRI JAGDISH CIT/DR RESPONDENT BY : SHRI M.K. PATEL A.R. ( )/ ORDER DATE OF HEARING : 17 -10-201 6 DATE OF PRONOUNCEMENT : 20 -10-2016 PER N.K. BILLAIYA ACCOUNTANT MEMBER: 1. WITH THIS APPEAL THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A)-V BARODA DATED 30.10.2012 PERTAI NING TO A.Y. 2003-04. IT(SS)A NO. 616/AHD/2012 . A.Y. 2003- 04 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN ALLOWING DEDUCTION OF RS. 42 89 819/- U/S. 80IB(10). 3. A PERUSAL OF THE ORDER OF THE AUTHORITIES BELOW SHO WS THAT THIS IS THE SECOND ROUND OF LITIGATION. IN THE FIRST ROUND THE ASSESSMENT ORDER WAS MADE U/S. 143(3) OF THE ACT VIDE ORDER DATED 31.12. 2007 BY WHICH RETURNED INCOME OF RS. 95 120/- WAS ASSESSED AT RS. 43 97 66 3/-. THE LITIGATION TRAVELLED UP TO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 24.02.2011 IN ITA NOS. 2377 2378 & 2379/AHD/2009 HAS SET ASIDE T HE ISSUE OF DEDUCTION U/S. 80IB(10) AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH THE FOLLOWING DIRECTIONS:- 'SINCE BOTH THE PARTIES AGREED THAT THE MATTER NEED S TO BE RECONSIDERED IN THE LIGHT OF AFORESAID DECISION OF THE ITAT IN THE CASE OF M/S. SHAKTI CORPORATION & OTHERS IN ITA NO. 1503/AHD/2008 WHILE COPY OF DEVEL OPMENT AGREEMENT IN THE INSTANCE CASE IS NOT BEFORE US IN THE INTEREST OF FAIR PLAY & JUSTICE WE VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE MATTER T O THE FILE OF THE AO WITH THE DIRECTIONS TO ANALYZE THE RELEVANT DEVELOPMENT AGRE EMENT ENTERED INTO BY THE UNDERTAKING OF THE ASSESSEE WITH THE LANDOWNER(S) I N THE LIGHT OF FACTS OBTAINING IN THE BOOKS OF ACCOUNTS MAINTAINED FOR THE SAID UNDER TAKING BY THE ASSESSEE AND OTHER RELEVANT DOCUMENTS KEEPING IN VIEW THE AFORE SAID DECISION OF THE ITAT AS ALSO AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE A SSESSEE AND THEREAFTER DECIDE AS TO WHETHER THE UNDERTAKING OF THE ASSESSEE HAD INDE ED PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM THE LANDOWNER AND HAS DEVE LOPED THE HOUSING PROJECT AT ITS OWN COST AND RISKS INVOLVED IN THE PROJECT. IN THE EVENT THE AO FINDS THAT THE LAND HAS BEEN PURCHASED BY THE UNDERTAKING OF THE A SSESSEE AND HAS ALL THE DOMINANT CONTROL OVER THE PROJECT AND DEVELOPED THE LAND AT(THEIR OWN COST AND RISKS THE AO SHOULD ALLOW THE DEDUCTION (U/S. 801B (10) OF THE ACT IN ACCORDANCE WITH LAW. IN CASE THE AO FINDS THAT THE UNDERTAKING OF THE ASSESSEE HAS ACTED ON BEHALF OF THE LANDOWNERS) AND HAS GOT ONLY THE FIXE D CONSIDERATION FROM IT(SS)A NO. 616/AHD/2012 . A.Y. 2003- 04 3 THE/LANDOWNER FOR THE DEVELOPMENT OF THE HOUSING PR OJECT THE ASSESSEE WOULD NOT BE ENTITLED TO ANY DEDUCTION U/S. 80IB(10) OF THE A CT. WITH THESE DIRECTIONS GROUND NO. 1 IN THESE THREE APPEALS IS DISPOSED OF AS INDICATED HEREIN ABOVE.' 4. IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL (SUP RA) THE A.O. ASKED THE ASSESSEE TO FURNISH NECESSARY DETAILS. THE ASSESSEE FILED ALL THE REQUISITE DETAILS IN JUSTIFICATION OF ITS CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT. AFTER CONSIDERING THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE THE A.O. HELD AS UNDER:- TO CONCLUDE THE DEDUCTION U/S 80IB(10) READ WITH SECTION 80IB(1) AND RULE 18BBB IS ADMISSIBLE ONLY TO SUCH ASSESSEE AS IS DER IVING PROFITS FROM AN UNDERTAKING OF BUILDING AND HOUSING PROJECT APPROVE D BY THE LOCAL AUTHORITY AND FOR SUCH APPROVAL THE ASSESSEE MUST LEGALLY OWN TH E LAND WHICH IS AN INALIENABLE CONSTITUENT OF ANY HOUSING PROJECT. THE PERSON DOIN G ONLY THE WORK OF DEVELOPING AND CONSTRUCTING THE BUILDING STRUCTURE ON THE AUTH ORITY OF THE APPROVAL GRANTED TO THE LANDOWNER CAN NOT BE IN THE BUSINESS OF AN U NDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS NOT ONLY ON ACCOUNT OF N OT BEING THE OWNER OF THE LAND A NECESSARY CONSTITUENT OF THE HOUSING PROJECT BUT ALSO ON ACCOUNT OF NOT HAVING BEEN GRANTED THE APPROVAL TO EXECUTE THE PROJECT IN THE OWN RIGHT BECAUSE THAT INVOLVES OBLIGATIONS THAT CAN BE DISCHARGED ONLY BY THE PERSON TO WHOM THE APPROVAL IS GRANTED. IN THE INSTANT CASE THE ASSESS EE HAS NOT PURCHASED AND NOT REGISTERED THE SALE DEED IN HIS NAME SINCE THE ASS ESSEE HAS NOT MADE FULL PAYMENT OF CONSIDERATION FOR THE LAND TO THE LAND OWNER PER SON AND THAT IS HOW THE SAID LAND IS NOT OWNED BY THE ASSESSEE. IT IS ALSO EVIDE NT FROM THE RAJA CHHITI OF VADODARA MUNICIPAL CORPORATION THAT THE PERMISSION HAS BEEN GRANTED TO THE ORIGINAL LAND OWNER BUT NOT TO THE ASSESSEE. AS THE ASSESSEE HAS NOT MADE FULL AND FINAL PAYMENT TO THE LAND OWNER IN RESPECT OF THE S AID LAND HENCE THE RISK AND REWARD IS NOT BORNE BY THE ASSESSEE AND IN VIEW OF THIS FACT IT IS CLEAR THAT THE ASSESSEE HAS NO DOMINANT CONTROL OVER THE PROJECT. IT(SS)A NO. 616/AHD/2012 . A.Y. 2003- 04 4 IN THIS SCHEME OF THINGS THEREFORE THE ASSESSEE FI RM IS REDUCED TO A MERE CIVIL CONTRACTOR HELPING THE CAUSE OF DEVELOPMENT AND CON STRUCTION OF THE PROPERTY OF A HOUSING PROJECT BY VIRTUE OF WHICH HE DERIVES PROFI T AFTER RECOUPING HIS COSTS. CONVERSELY STATED THE CIVIL CONTRACTOR THEREFORE U NLESS HE IS THE OWNER OF THE LAND CANNOT STAKE A CLAIM TO THE STATUS OF AN UNDER TAKING INVOLVED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT. IN MY CONSIDERED OPINION THE PROVISION OF SECTION 80IB(10) IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AND HENCE NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE AS CLAIMED BY HIM. THE PLAIN READING OF SECTION 80IB(10) MAKES IT CLEA R THAT PROFIT IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT AFTER GETTING APPROVAL FROM A LOCAL AUTHORITY SHALL BE ALLOWED DEDUCTION AT 100 % OF PROFIT DERIVED FROM SUCH HOUSING PROJECT IF THE CONDITIONS AS LAID DOWN IN SUBSECTION 10 OF SECTION 80IB ARE FULFILLED. HOWEVER IN THIS CASE AS DISCUSSED A BOVE THE FIRM HAS NOT FULFILLED THE BASIC CONDITION FOR CLAIMING DEDUCTION I.E. OW NERSHIP OF LAND ON WHICH HOUSING PROJECT IS CONSTRUCTED AND THE APPROVAL OF LOCAL AUTHORITY IS NOT IN THE NAME OF THE ASSESSEE FIRM. THE CONTENTION OF THE AS SESSEE THAT BY ENTERING INTO DEVELOPMENT CONTRACT IT HAS ACQUIRED OWNERSHIP RIGH T OF THE LAND HAS BEEN SQUARELY DEALT WITH IN THE ABOVE DISCUSSION AND THE REFORE NOT ACCEPTABLE. IT IS EVIDENT FROM THE ABOVE THE LAND HAS NOT BEEN PURCHA SED BY THE UNDERTAKING OF THE ASSESSEE AND THE ASSESSEE DID NOT HAVE DOMINANT CON TROL OVER THE PROJECT AND THE ASSESSEE DID NOT DEVELOPED THE PROJECT AT IT'S OWN COST AND RISK. IN VIEW OF THE ABOVE DISCUSSION DEDUCTION U/S.80IB(10) OF RS. 42 8 9 819/- IS HEREBY DISALLOWED FOR THE PROFIT EARNED FROM VRAJ VIHAR PROJECT AND A DDED BACK TO THE ASSESSE'S TOTAL INCOME. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) AND REITERATED ITS CLAIM OF DEDUCTION U/S. 80IB(10). AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS THE LD. CIT(A) HELD AS UNDER:- 5.2 I HAVE GIVEN MY CAREFUL CONSIDERATION TO THE FA CTS OF THE CASE AS WELL AS THE OBSERVATION OF THE AO AND THE ARGUMENTS PUT FORTH B Y THE APPELLANT. FROM THE IT(SS)A NO. 616/AHD/2012 . A.Y. 2003- 04 5 SUBMISSION OF THE APPELLANT REPRODUCED IN THE ASSES SMENT ORDER AND THE COPY OF DEVELOPMENT AGREEMENT FILED BY THE APPELLANT IT IS SEEN THAT THE OWNERS OF THE LAND WERE ENTITLED TO A FIXED CONSIDERATION OF RS.50 PER SQUARE FEET AND THE HOUSING PROJECT WAS TO BE DEVELOPED TO BY THE APPELLANT DEV ELOPER AT HIS OWN COST AND RISKS. THE DEVELOPER HAD FULL CONTROL OVER DEVELOPM ENT OF LAND AND SALE OF THE TENEMENTS. UNDER THESE CIRCUMSTANCES I AM OF THE O PINION THAT RATIO OF DECISION IN THE CASE OF M/S SHAKTI CORPORATION AND OTHERS IS FULLY APPLICABLE TO THE FACTS OF THE CASE. IN VIEW OF THE SPECIFIC DIRECTIONS OF HON OURABLE IT AT IN THIS CASE DEDUCTION U/S 80 IB (10) AMOUNTING TO RS.42 89 819/ - IS HEREBY ALLOWED TO THE APPELLANT. THIS GROUND OF APPEAL IS ALLOWED. 6. AGGRIEVED BY THIS THE REVENUE IS BEFORE US. THE L D. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. PER CONTRA THE LD. COUNSE L FOR THE ASSESSEE HEAVILY RELIED UPON THE FINDINGS OF THE FIRST APPELLATE AUT HORITY. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. A PERUSAL OF THE AGREEMENT CLEARLY SHOWS THAT THERE WAS A TACIT CONTRACT BETWEEN THE ASSESSEE AND THE LAND OWNER BY WHICH THE ASSESSEE W AS TO PAY RS. 50 PER SQ. FT. AND THE ASSESSEE WAS SOLELY RESPONSIBLE FOR THE DEVELOPMENT AND THE SALE OF HOUSING PROJECT. THERE IS NO DENYING TH AT THE ASSESSEE HAD ACQUIRED THE DOMINANT CONTROL OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND T AKING ALL THE RISKS INVOLVED THEREIN. THE FACTS CLEARLY SHOW THAT THE A SSESSEE WAS NOT ENGAGED AS A CONTRACTOR. ON IDENTICAL FACTS THE CO-ORDINA TE BENCH IN THE CASE OF SHAKTI CORPORATION AND ORS. IN ITA NO. 1503/AHD/200 8 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REV ENUE. CONSIDERING THE IT(SS)A NO. 616/AHD/2012 . A.Y. 2003- 04 6 FACTS IN TOTALITY WE DO NOT FIND ANY REASON TO INT ERFERE WITH THE FINDINGS OF THE LD. CIT(A). APPEAL FILED BY THE REVENUE IS ACCO RDINGLY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20 - 10- 2016 . SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHME DABAD