Income Tax Appellate Tribunal - Ahmedabad
Satsang Developers, Baroda vs Assessee on 23 August, 2013
आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद Ûयायपीठ 'डȣ डȣ', डȣ , अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, AHMEDABAD BEFORE SHRI MUKUL Kr.SHRAWAT, JUDICIAL MEMBER And SHRI A.K. GARODIA, ACCOUNTANT MEMBER Sl. ITA No(s) Assessment Appeal(s) by No(s) Year(s) Appellant vs. Respondent . Appellant (s) Respondent(s)
1. 1011/Ahd/2012 2008-09 M/s.Satsang ACIT Developers Circle-2(2) 17, Satsang Baroda Bungalows B/h Aims Oxygen Old Padra Road Baroda PAN ABCFS 2815C
2. 2498/Ahd/2012 2008-09 Assessee Revenue
3. 1221/Ahd/2012 2008-09 Revenue Assessee Assessee by : Shri Mukund Bakshi, AR Revenue by : Shri K.C.Mathews, Sr.DR सुनवाई कȧ तारȣख / Date of Hearing : 23/08/2013 घोषणा कȧ तारȣख /Date of Pronouncement : 12/11/2013 आदे श / O R D E R PER SHRI A.K.GARODIA ACCOUNTANT MEMBER:
Out of these three appeals, there are two cross-appeals by the assessee and the revenue arising out of the assessment order passed by the AO u/s.143(3) of the Act being ITA Nos.1011 & 1221/Ahd/2012 directed against the order of ld.CIT(A)-II, Baroda dated 05/03/2012. The remaining one appeal, i.e. ITA No.2498/Ahd/2012 is an assessee's appeal arising out of the penalty order passed u/s.271(1)(c) of the Act for the same assessment year and this appeal is arising out of a separate order of ld.CIT(A)-II Baroda passed by him u/s.271(1)(c) of the Act. For the sake of convenience, all the appeals are being disposed of by way of this common order.
ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09 -2-
2. First, we dispose of the cross-appeals in quantum proceedings. 2.1. Brief facts till the assessment stage are noted by the ld.CIT (A) in paragraph Nos.1 to 3.1.2 of his order and these paras are reproduced below for the sake of ready reference.
"INTRODUCTION:
This appeal has been filed against he order u/s.143(3) & 154 of the Income-tax Act, 1961 for the assessment year 2008-09 passed by the Asst. Commissioner of Income-tax, Circle-2(1), Baroda. In response to notice of hearing, Shri Pradip Goradia, CA Authorized Representative of the appellant attended and discussed the appeal.
2. BACKGROUND OF THE CASE:
The facts of the case are that the assessee is engaged in the business of construction. The return of Income was filed on 30.09.2008 declaring total income of Rs.38,95,700/-. The assessment u/s.143(3) was finalized on 30.12.2010 determining total income of Rs.3,21,64,520/- after rejecting the claim of deduction u/s.80IB(10) of the Income-tax Act.
3. GROUND NO.1 & 2:
The first and second grounds of appeal are that the learned Assessing Officer has erred on the facts and in the circumstances of the case and in law in disallowing the claim of deduction u/s.80IB(10) of Rs.2,82,68,816/- and not allowing the profit attributable to the sale of unutilized FSI of Rs.40,87,520/-. Since both the issues are interrelated they are considered together.
3.1. FINDINGS IN THE ASSESMSENT ORDER:
3.1.1. The assessee in its return of income has claimed deduction under section 80IB (10). The Assessing Officer arrived at the following findings upon verification of details and documents filed during assessment proceedings:-
ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09 -3-
i) "The assessee was not the owner of the land on which construction activities were carried out/project was built up.
ii) The assessee has not taken the approval of the housing project from the local authority. The same was taken by the other person who is entire separate entity in the eyes of law.
iii) The land owners have sold the pieces of land to unit holders directly and assessee had acted merely as a confirming party.
iv) Assessee firm has acted merely as a contractor as it has entered into construction agreement with the unit holders.
v) The assessee firm has never sold the house to the unit holders as there was no registered documents in respect thereof."
3.1.2. The deduction u/s.80IB(10 was disallowed by the Assessing Officer on the ground that the assessee was not the owner of the property and the development permission was not granted in the assessee's name. The approval by the Vadodara Municipal Corporation was in the name of the original land owners and not in the name of assessee. As per the Assessing Officer, the original land owner had merely obtained the services of assessee firm for development and construction of the project. In view of the Assessing Officer, the fundamental condition that the approval must be accorded in assessee's name was not satisfied and therefore the claim was denied. Without prejudice to the aforesaid argument it was observed by the Assessing Officer that the assessee had utilized FSI of 14,394 sq.mt. and left unutilized FSI of 27,371 sq.mt. and as the unutilized land was disposed by the assessee along with the tenements to prospective buyers, the profit booked from sale of 27,371 sq.mt. was stated to be outside the ambit of provisions of section 80IB (10) as it was not the profit derived from activities of development and construction. In essence deduction u/s.80IB (10) was denied on account of ownership not being in the name of the appellant, and ion the alternative the deduction was limited to sale of unutilized FSI of 14394 sq.mt."
ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09 -4-
3. Being aggrieved, the assessee carried the matter in appeal before the ld.CIT (A). The ld.CIT (A) has decided the issue in favour of assessee in respect of two objections raised by the AO, i.e. that the assessee has not purchased the land in its name and on the issue that there is sale of unutilized FSI. In para 3.2.3 of his order, it was held by the ld.CIT (A) that the disallowance of deduction u/s.80-IB (10) made by the AO on these two issues is not correct. He directed him that the disallowance is to be deleted on these two issues. Against this direction of the ld.CIT (A), the Revenue is in appeal before us.
4. After deleting the disallowance of deduction u/s.80-IB (10) of the Act on two issues referred to by the AO, it was noted by the ld.CIT (A) that in addition to these two issues, some other facts had come to light in the course of appellate proceedings which have bearing on the allowability of deduction u/s.80-IB (10) of the Act. The issues raised by the ld.CIT (A) are these that the commercial area under the two projects exceeds the specified limit and the project was not completed within due date. He has noted on page-5 of his order that two schemes undertaken by the assessee viz. Shreeji Bungalows and Shree Hari Darshan Bungalows were approved by the local authority on 24/06/2005 and 04/07/2005 respectively. He had further noted that accordingly, these should be completed before 31/03/2008. He has also noted that the commercial area should be 2000 sq.ft. or 5% of the aggregate built-up area of the projects, whichever is less, for each project. In this regard, he has further noted at page-9 of his order that Shree Hari Darshan Bungalows scheme was sanctioned with commercial area of 978.36 sq.meters which is 6.40% of aggregate built-up area of the scheme and therefore, the approved commercial area is more than the ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09 -5- specified limit, both in absolute terms (2000 sq.ft.) and in percentage terms (5% of aggregate built-up area). It was a submission of the assesse before the ld.CIT (A) that the assesse has not actually done any construction in respect of the approved commercial area and hence, the condition of section 80-IB (10) (d) is not violated but it was held by the ld.CIT (A) that this contention is not acceptable. His reasoning is this that the non-construction now cannot be taken to mean that the assessee had complied with clause (d). He has noted that the assessee can always construct the commercial area at a later date. He has given a finding that in fact, this also leads to non-compliance of the condition of clause (a) (iii) of section 80-IB (10) of the Act that the project should be completed before 31/03/2008. He has also noted that not only the commercial area but also the 25 residential apartments on 2nd/3d Floors of the two blocks above these shops are also not constructed by the assessee and therefore, the project is not complete and no completion certificate for the shops as well as residential flats have been obtained before 31/03/2008.
4.1. Regarding Shree Hari Darshan Bungalows scheme, it was noted by him that this scheme was sanctioned with shops of 1081.12 sq.meters, i.e.14.46% of the aggregate built-up area of the project and, therefore, there is violation of clause(d) of section 80-IB(10) of the Act. Thereafter, it was noted by the ld.CIT (A) that the claim of the assessee that they have sold off the land on which commercial construction was to be done is not acceptable. Reasoning given by him is this that the project was sanctioned with commercial area more than specified limits and, hence, the project violates clause (d) as well as violates the completion time clause.
ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09 -6- 4.2. In addition to above two objections, the ld.CIT (A) has raised one more objection that the assessee has sold the land to the Unit holders separately and has done the construction of units under separate agreement/contract and, therefore, the assessee is not eligible for deduction 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 is 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, the assessee is not eligible for deduction u/s.80-IB(10) of the Act. Against these objections of ld.CIT (A), the assesse is in appeal before us.
5. It was submitted by the ld.AR of the assessee before us that regarding objections of the AO which are decided by the ld.CIT (A) in favour of assessee, reliance is placed on the order of the ld.CIT (A) and on the judgement of Hon'ble Gujarat High Court rendered in the case of CIT vs. Radhe Developers reported at (2012) 341 ITR 403(Guj.).
5.1. Regarding various new objections raised by the ld.CIT (A), it was submitted by the AR of the assessee that these objections are not valid. Regarding the first objection that commercial area as per the project is more than the specified limit as per clause(d) of section 80-IB(10) of the Act, it was submitted that since no actual construction was done by the assessee of the commercial area and the concerned land was sold out, there is no violation of clause(d) of section 80-IB(10) of the Act because the profit of the assessee does ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09 -7- not include any profit in respect of any sale of commercial area of the project. Regarding the completion of the project within the specified time as per section 80-IB(10)(a)(iii) of the Act, it was submitted that in this regard, the objection of the ld.CIT(A) is on this basis that since the commercial area was not constructed by the assessee, the project was not completed. He submitted that when the concerned land area on which commercial place/shops were to be built have been sold out, there is no scope of completing or constructing the shops and flats thereupon and, therefore, it cannot be said that the project is not complete.
5.2. Regarding the 3rd objection that the assesse has sold land to the unit holders separately and has done the construction units under a project agreement/contract, it was submitted that it is a joint activity although the agreement and land sale-deed are executed separately, but for this reason alone, it cannot be said that the assessee 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. (2011)14 Taxman.com ITO 78 (Indore)
3. M/s.Vardhman Builders and ITA No.559/Ind/2010 Developers vs. ITO dated 09/05/2012
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 Builders & Developers (supra) also, the assessee had entered into a separate agreement for sale of land and separate agreement for construction of housing on such land and under ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09 -8- these facts, it was held by the Tribunal in that 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 satisfied.
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. In that case, the AO had noted that as per the sale-deed, the assessee- company has sold undivided share of land with super-structure of semi-finished built-up area for a certain consideration. The AO held that the semi-finished structure 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 agreement was also entered into with the transferee for further construction of the same flats by the builder company itself. He submitted that the facts in the present case are similar. He also pointed out that in that case, it was held by the Tribunal that the stand of the Revenue with regard to the semi- finished condition of the flats is devoid of any merit in as much as what is sought to be constructed and sold by the assessee is a residential units and what is sought to be purchased by the buyer is the ownership of the specified unit and registration of flat in semi-finished condition is only to facilitate the convenience of the parties and agreement for development and completion of balance work in relation to the flats is only an incidental formality and this cannot be viewed as fatal to the claim of the assessee for deduction u/s.80- IB(10) of the Act. It was also held by the Tribunal that the entire work from the stage of the commencement to the stage of making the residential unit habitable have been carried out by the assessee only and, therefore, assessee is eligible for deduction u/s.80-IB(10) of the Act.
ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09 -9-
6. As against this, ld.DR of the Revenue supported the assessment order with regard to the relief allowed by the ld.CIT (A) and supported the order of ld.CIT (A) with regard to new objections raised by ld.CIT (A). Regarding the reliance placed by the ld.AR of the assessee on the judgement of Hon'ble Jurisdictional High Court rendered in the case of CIT vs. Radhe Developers (supra), it was submitted by him that this judgement is not applicable in the facts of the present case. He submitted written submissions containing two pages which are reproduced below for the sake of ready reference:-
"OFFICE OF THE SENIOR DEPARTMENTAL REPRESENTATIVE, *D' BENCH, ITAT-I, 2ND FLOOR, NEPTUNE TOWER, OPP. NEHRU BRIDGE, __________ASHRAM ROAD, AHMEDABAD.__________________________ No. Sr. D.R./ITAT-I/SD/'D1 Bench/2013-14 Date: 08.08.2013 To The Hon'ble Members, 'D' Bench, ITAT, Ahmedabad.
Sirs, Sub: ITA No. 1221/Ahd/2012 in the case of M/s. Satsang Developers for A.Y. 2008-09 - reg.
Last Date of Hearing: 01.08.2013.
Next date of hearing: 13.08.2013 Kindly refer to the above.
2. The above appeal came up for hearing on 01.08.2013 as a Part Heard Matter. In view of the revised work allocation of Departmental Representative before ITAT as decided by the CBDT the case was assigned to me. Since, the case was received by me on the previous day I had implored your honour to grant me time for preparing the case and arguing the same. Your honours were kind enough to allow me to file the written submission in the case by08.08.2011
3. On going to the CIT(A)'s order it is seen that the CIT(A) has allowed the appeal filed by the assessee relying on the decision of the Hon'ble jurisdictional High Court given in the case of Radhe Developers reported in 341 ITR 403 (Guj.).
ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09
- 10 -
On going through the judgment delivered by the Hon'ble High Court it is seen that the Hon'ble High Court has recorded in para 31 of its order as under:
"31. Neither the provisions of Section 80IB nor any other provisions contained in other related statutes were brought to our notice to demonstrate that ownership of the land would be a condition precedent for developing the housing project. It was perhaps not even the case of the Revenue that under the other laws governing construction in urban and semi-urban areas, there was any such restriction."
The case records of the assessee who is being assessed in Baroda has been requisitioned. However, the A.O. on account of his preoccupation could not send the records as anticipated by this office. These records have just been received yesterday. Moreover, it has been informed that as per the General Development Regulations issued under the provisions of the Gujarat Town Planning and Urban Development Act, 1976, it is mandatory that the applicant who files and obtains the development permission from the regulator must be owner of the land. A copy of the Rules issued by Vadodara Municipal Corporation is being obtained for filing before your honour. Further, the A.O. has also informed that as directed by the CIT-I, Baroda additional grounds of appeal and additional evidence have been filed by him before the Hon'ble Tribunal vide letter No. BRD/Wd-2(3)/Appeal-ITAT/SD/2013-14 dated 06.08.2013 addressed to the Assistant Registrar, Income Tax Appellate Tribunal, Ahmedabad. A letter bearing No. 4(l)/misc/VOB/12-13 dated 20.03.2013 of the Valuation Officer, Income Tax Department, Baroda addressed to the Income tax Officer, Ward - 2(3), Baroda is also enclosed herewith for your kind perusal wherein it has been found by the valuation officer that the built-up area of the flats constructed by the assessee exceeds the maximum limit of 1500 sq. ft. fixed by the section 80IB.
Sr. No. Description Built up area
in Sq. ft
1 Type-A 1883.73
2 Type-B 1651.90
3 Type-C 1380.58
4. Under the circumstances, the desired submission cannot be submitted as per the stipulated date. Your honours are therefore requested to kindly grant further time up to 23.08.2013 for filing the required submission as lot of papers are required to be seen and relevant facts ascertained.
Thanking you an anticipation.
Yours faithfully, Sd/-
(K.C. MATHEWS) Senior Departmental Representative, 'D' Bench, ITAT-I, Ahmedabad"
ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09
- 11 -
7. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the judgments cited before us. First, we decide the appeal filed by the Revenue, i.e. ITA No.1221/Ahd/2012. As per this appeal, the Revenue's challenge is that the ld.CIT(A) was not justified in granting relief to the assessee by following the Tribunal decision rendered in the case of M/s.Shakti Corporation & Others in ITA No.1503/Ahd/2008 dated 07/11/2008. Now the judgement of Hon'ble Gujarat High Court is available on this issue, i.e. the judgement rendered in the case of CIT vs. Radhe Developers (supra). Regarding this judgment of Hon'bleJurisdictional High Court, it was submitted by the ld.DR of the Revenue that this judgment is not applicable because in that judgement of Hon'ble Gujarat High Court, it was observed vide paragraph No.31 of the judgement that no provision contained in other related statutes were brought to the notice of Hon'ble Gujarat High Court to demonstrate that ownership of the land would be a condition precedent for developing the housing project. He submitted that in the present case, the Revenue wants to bring this on record that as per "Gujarat Town Planning and Urban Development Act, 1976" and the Regulations framed thereunder, it is necessary that ownership of the land is a condition precedent for developing the housing project. In this regard, we find that in this very judgement of Hon'ble Gujarat High Court rendered in the case of CIT vs. Radhe Developers (supra), in para-19, it was noted by the Hon'ble Gujarat High Court that the ld. Counsel for the assesse submitted that under the "Gujarat Town Planning and Urban Development Act" as also the "General Development Act and Control Regulations" applicable to the City of Vadodara, there is no requirement that only the owner can develop a housing project on any land. This goes to show that this Act and Regulations on which our attention is drawn ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09
- 12 -
by ld.DR of the Revenue has been very much available before Hon'ble Gujarat High Court in the case of CIT vs. Radhe Developers (supra), and even after noting the same, it is observed by the Hon'ble Gujarat High Court in that case that no provision of any other related statues was brought to their notice to demonstrate that ownership of the land would be a condition precedent for developing the housing project. Therefore, the argument of the ld.DR before us by placing reliance on this Act and Regulation has no merit because the same were duly considered by Hon'ble Gujarat High Court in the case of Radhe Developers (supra). Therefore, this aspect of the matter as to whether the project was constructed on a land owned by the assessee or not is squarely covered in favour of the assessee by the judgement of Hon'ble Gujarat High Court rendered in the case of Radhe Developers (supra) and no interference is called for in the order of the ld.CIT (A) on this aspect of the matter.
7.1. Regarding second aspect, i.e. regarding sale of unutilized FSI, it is noted by the ld.CIT(A) that this aspect is covered in favour of the assessee by the Tribunal decision rendered in the case of ITO vs. Shakti Corporation Baroda in ITA No.1503/Ahd/2008 dated 07/11/2008. No difference in facts has been pointed out by the ld.DR of the Revenue in the present case and in the case of Shakti Corporation (supra). Therefore, we do not find any reason to take a contrary view than taken by the ld.CIT (A) in the present case on this aspect. Hence, both the aspects are decided in favour of the assessee and the grounds raised by the Revenue are rejected.
8. In the result, the appeal filed by the Revenue is dismissed.
ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09
- 13 -
9. Now, we take up the appeal filed by the assessee in quantum proceedings, i.e. ITA No.1011/Ahd/2012.
9.1. In this appeal, we have to examine the validity of various objections raised by the ld.CIT (A). The first objection is this as to whether the commercial area under the two projects exceeds the specified limit and the second issue is this as to whether the projects were completed or not within the due date. In this regard, we find that it was submitted by the assesse before the ld.CIT (A) that the assesse has not constructed the shops and the relevant land on which the shops were to be constructed in both the projects were sold out. No defect has been pointed out by the ld.CIT (A) in these contentions of the assessee. He has rejected the contentions on this basis that the project was sanctioned which commercial area of more than specified limits and, therefore, there is violation of the conditions of clause (d) of section 80IB (10) and in consequence, there is violation of the conditions in the case (a) (iii) of section 80IB (10) of the Act because the project is not completed within the due date. We do not find any merit in these objections of ld.CIT(A) because in our considered opinion, what is relevant is this as to whether the built-up area of commercial space actually constructed by the assessee exceeds the prescribed limit or not because if the built-up area of the commercial space as per the approved project was less but the actual construction of commercial area is more than also, we have to go by the actual construction done by the assessee and not by the commercial area approved in the project. In our considered opinion, we have to go by actual construction done by the assessee of commercial area. In the present case, this is an undisputed fact that no shops were, in fact, constructed by the assessee and there is no scope for construction ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09
- 14 -
of such shops in future also because the land on which the shops were to be constructed had been sold by the assessee. Therefore, this objection of ld.CIT (A) is devoid of any merit. Regarding second objection, i.e. completion of project within the time also, we do not find any merit in the order of the ld.CIT (A) because whatever area was left with the assessee after sale of land in respect of shops, construction was completed by the assessee as per the approved project latest by 04.03.2008 as per copy of various completion certificates for both the projects available on pages 54 to 58 of the paper book and therefore, it is evident that the project has been completed before the due date i.e. 31.03.2008 and hence, this objection is also devoid of any merit.
9.2. Now we take up the third and last objection of ld.CIT (A) that the assesse had sold the land separately and undertook the construction work as per a separate agreement and, therefore the assessee is not a builder or a developer but a land dealer and contractor. In this regard, in our considered opinion, the issue involved is squarely covered in favour of assessee by the decision of ITAT Indore Bench rendered in the case of M/s.Vardhman Builders and Developers vs. ITO (supra). It is noted by the Tribunal in that case that the assesse had entered into an agreement for a sale of land and a separate agreement for construction of the house on the land and, therefore, the facts are similar. Under these facts, it was held by the Tribunal in that case that the claim of the assesse for deduction u/s.80-IB (10) of the Act cannot be declined if other conditions are being satisfied. Similarly, in the case of DCIT vs. SMR Builders (P.) Ltd. (supra) also, the assesse sold the land along with semi-finished structure to the buyers and as per separate agreement, agreed for construction for completion of balance work. Hence, the facts of this case are also similar because in that case ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09
- 15 -
also, the land was sold separately along with partial and unfinished construction of flats and, thereafter, construction agreement was entered into to carry out the balance construction work and under these facts, it was held by the Tribunal in that case that such agreement for construction to complete the balance 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 the case of Raghava Estates vs. Dy.CIT (supra) on which reliance was placed by the ld.AR of the assessee, the facts are similar. In that case also, the assessee had sold the plots separately and thereafter, constructed the houses and under these facts, the Revenue held that the assessee has to be considered as a mere contractor and, therefore, the assessee is not eligible for deduction u/s.80-IB (10) of the Act. This goes to show that the facts in that case were identical. In that case, it was noted by the Tribunal that the assessee had chosen to register the plot in the name of the buyer on payment of specified amount in order to achieve cost saving and to ensure reliability and thereafter, the assessee had proceeded to construct the house as per building plan obtained in the name of the plot-owners on payment of subsequent installments. It is also noted that the assessee had also developed various public amenities within the project. Thereafter, it was held by the Tribunal that on a totality of a fact, the Tribunal is of the view that the assessee has undertaken developing and building housing projects as per the scheme provided in section 80-IB (10) of the Act.
9.3. Since the facts in the present case are similar to the facts in above noted three Tribunal decisions, we do not find any defect in the construction in the present case and hence respectfully following these decisions, we decide the issue in favour of the assessee. There is no other objection of the ld.CIT (A) ITA Nos.1011,2498(By Assessee) & 1221/Ahd/12 (By Revenue) M/s.Satsang Developers vs.ACIT Asst.Year - 2008-09
- 16 -
regarding allowability of deduction to the assesse u/s.80IB (10) of the Act. Hence, we direct the AO to grant the deduction to the assesse u/s.80-IB (10) of the Act.
10. In the result, assessee's appeal (ITA No.1011/Ahd/2012 stands allowed.
11. Lastly, we take up the assessee's appeal arising out of proceedings u/s.271 (1) (c) of the Act, i.e. ITA No.2498/Ahd/2012.
11.1 In view of our decision with regard to the quantum appeals as per which, it is held by us that the assessee is eligible for deduction u/s.80-IB (10) of the Act, the penalty imposed by ld.CIT (A) u/s.80-IB (10) of the Act has no leg to stand. Therefore, we delete the penalty. In the result, this appeal of the assessee is allowed.
12. In the combined result, the appeal of the Revenue is dismissed, whereas both the appeals of Assessee are allowed.
Order Pronounced on the mentioned on the caption page.
Sd/- Sd/-
(MUKUL KUMAR SHRAWAT) (A. K. GARODIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 12/11/2013 Order pronounced on 12.11.13
Sd/- Sd/-
JM AM
(MKS) (AC)
टȣ.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. ू×यथȸ / The Respondent.
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ(अपील) / The CIT(A)-II, Baroda
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाईल / Guard file.
/ आदे शानुसार BY ORDER, स×याǒपत ूित //True Copy// उप/ उप/सहायक पंजीकार ( Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad