Income Tax Appellate Tribunal - Ahmedabad
Shreenathji Corporation, Ahmedabad vs Department Of Income Tax on 20 January, 2016
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'ए', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" A " BENCH, AHMEDABAD
ी अ नल चतुव द , लेखा सद य एवं ी कुल भारत, या यक सद य के सम ।
BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER And
SHRI KUL BHARAT, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No.1870/Ahd/2011
( नधा रण वष / Assessment Year : 2008-09)
The ITO बनाम/ M/s.Shreenathji Corporation
Ward-9(1) Vs. 175/2-3, Parimal Park
Ahmedabad Nr.Bombay Conductors,
GIDC Road, Ghodasar
Ahmedabad
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : ABAFS 9813 N
(अपीलाथ% /Appellant) .. (&'यथ% / Respondent)
अपीलाथ% ओर से / Appellant by : Shri Dinesh Singh, Sr.AR
&'यथ% क) ओर से/Respondent by : Shri P.M. Mehta with
Shri G.M. Thakor, ARs
ु वाई क) तार ख /
सन Date of Hearing 28/12/2015
घोषणा क) तार ख /Date of Pronounce ment 20/01/2016
आदे श / O R D E R
PER SHRI KUL BHARAT, JUDICIAL MEMBER :
This appeal by the Revenue is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-I, Ahmedabad ['CIT(A)' in short] dated 13/05/2011 pertaining to Assessment Year (AY) 2008-09. The Revenue has raised the following grounds of appeal:-
ITA No.1870 /Ahd/2011ITO vs. M/s.Shreenathji Corporation Asst.Year - 2008-09 -2-
1) The Ld.Commissioner of Income-tax(A)-I, Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow the assessee's claim for deduction of Rs.1,38,55,701/- u/s.80-IB(10) of the Act.
2) The Ld.Commissioner of Income-tax(A)-I, Ahmedabad has erred in holding that the assessee fulfills the conditions laid down for claiming deduction u/s.80IB(10) even when the land was in the name of Society namely Parimal (Ghodasar) Co-op.Housing Society, which are separate legal entity in the eye of law and the assessee entered into the project by a development agreement with the Society. The entire responsibility to execute the housing project(s) and abide by the terms and conditions of its approval right from the inception of the project(s) till its completion rests with the Society. Assessee was just a contractor of the land constructing housing projects AND not a developer.
3) On the facts and in the circumstances of the case, the Ld.Commissioner of Income-tax(A)-I, Ahmedabad ought to have upheld the order of the Assessing Officer.
4) It is therefore, prayed that the order of the Ld.Commissioner of Income-tax(A)-I, Ahmedabad may be set-aside and that of the Assessing Officer be restored.
2. 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 16/12/2010, thereby the Assessing Officer (AO in short) disallowed the claim of the assessee made u/s.80-IB(10) of the Act and added the deduction claimed to the assessee. The assessee being aggrieved by the assessment order, preferred an appeal before the ld.CIT(A), who after considering the submissions of the assessee partly allowed the appeal, thereby directing the AO to allow the deduction ITA No.1870 /Ahd/2011 ITO vs. M/s.Shreenathji Corporation Asst.Year - 2008-09 -3- u/s.80-IB(10) of the Act in view of the decision of the Coordinate Bench (ITAT 'A' Bench Ahmedabad) in the case of Radhe Developers vs. ITO in ITA No.2482/Ahd/2006 and of ITO vs. M/s.Shakti Corporation in ITA No.1503/Ahd/2008 dated 07/11/2008. Aggrieved by the order of the ld.CIT(A), now the Revenue is in appeal before us.
3. Ground No.1 & 2 are inter-connected and, therefore, the same are decided together. The ld.Sr.DR vehemently argued that the ld.CIT(A) was not justified in deleting the addition. He submitted that the assessee is not entitled for the deduction claimed u/s.80-IB(10) of the Act. He supported the order of the AO.
3.1. On the contrary, ld.counsel for the assessee supported the order of the ld.CIT(A) and submitted that the issue is squarely covered in favour of assessee by the decision of the Coordinate Bench in the case of Radhe Developers vs. ITO(supra). He also placed reliance on the decision of the Coordinate Bench (ITAT 'A" Bench Ahmedabad) in the case of ITO vs. M/s.Vasudev Developers in ITA No.1868/Ahd/2011 for AY 2008-09, dated 08/05/2015.
3.2. In rejoinder, the ld.Sr.DR submitted that even otherwise also, the assessee is not entitled for deduction as the completion of project was not made within the prescribed time. The ld.counsel for the assessee drew ITA No.1870 /Ahd/2011 ITO vs. M/s.Shreenathji Corporation Asst.Year - 2008-09 -4- our attention towards paper-book to buttress this contention that the submission of the ld.counsel for the assessee is factually incorrect.
4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the case-laws relied upon by the ld.counsel for the assessee. It is not disputed by the Revenue that for the AYs 2004-05 to 2007-08, the ld.CIT(A) had decided the matter in favour of the assessee. The ld.CIT(A) has given findings on fact in paras-4.3 to 4.5 of his order, which read as under:-
"4.3. It is also submitted that for AY 2004-05 to 2007-08, the CIT(Appeals)-I decided the matter in favour of the appellant.
4.4. I have carefully examined the facts of the case, submissions of the appellant and perused the arguments of the Assessing officer. The AO's arguments are mainly based on two grounds i.e. the land was registered in the name of the society and that the permission for development was in the name of Society. As against this, the appellant has clarified and proved that the development was carried out by them. Even the cost for obtaining permission was borne by the appellant. The appellant had entered into both the agreements for development as also banakhat for purchase of land with the society and as per the agreement they have carried out the development work. Thus, appellant in present case has acquired dominant control over the land and as per banakhat agreement entered with society; developer was bound to pay amount for acquiring the land irrespective of the fact whether it is able to sell the units. Possession of the land was also given to appellant developer and risks associated with housing project were borne by appellant. It is added that the appellant has not earned remuneration at fixed rate. On the main issue of ownership of land and approval being in the name of landowner for claim of deduction u/s.80IB(10) it is seen that although, ITA No.1870 /Ahd/2011 ITO vs. M/s.Shreenathji Corporation Asst.Year - 2008-09 -5- the issue was decided in favour of the appellant and against revenue by the order of the Jurisdictional ITAT, in the case of Radhe Developers vs ITO ward 3(2) Baroda No.2482/Ahd/2006 A bench Ahmedabad, however the decision was partly modified by the subsequent decision in the case of ITO vs. Shakti Corporation ITA No.1503/Ahd/2008 dated 07/11/2008 wherein, the Hon'ble ITAT has indicated that the benefit under 80IB(10) would be available if the developer has dominant control over the project and has developed the land as its own cost and risk and the benefit would be denied if the assessee had entered into an agreement for a fixed remuneration as a contractor to construct or develop the project on behalf of the land owner. Further, Hon'ble Apex Court in the case of Faquir Chand Gulati vs Upal Agencies Pvt.Ltd. & Anr. (Civil Appeal No.3302 of 2005) dated 10/07/2008 has held that-
i) A development agreement is one where the land holder proves the land. The Builder puts up a building. Thereafter, the land owner and builder share the constructed are. The builder delivers the owner's share to the land holder and retains the builder's share. The land holder sells/transfers undivided share'/s in the land corresponding to the builder's share of the building to the builder or his nominees. The land holder will have no say or control in the construction of have any say as to whom and at what cost the builder's share of apartments are to be dealt with or disposed of. Such an agreement is not a "joint venture" in the legal sense. It is a contract for services."
(ii) On the other hand, an agreement between the owner of a land and a builder, for construction of apartments and sale of those apartments so as to share the profits in a particular ratio may be a joint venture, if the agreement discloses an intent that both parties shall exercise joint control over the construction/development and the accountable to each other for their respective acts with reference to the project.
4.5. It is seen that the entire risk is of the appellant who is developing the project and there is no agreement for fixed remuneration as a contractor. In the instant case, the appellant has purchased the land for fixed consideration and has developed the housing project on its own cost and there is no joint venture with the land owner and thus in terms ITA No.1870 /Ahd/2011 ITO vs. M/s.Shreenathji Corporation Asst.Year - 2008-09 -6- of decision in the case of M/s.Shakti Corporation and the ratio of the decision of ITAT, Ahmedabad in the case of Radhe Developers the AO is directed to allow deduction u/s.80IB(10) to the appellant."
5. The above findings of the ld.CIT(A) are supported by the development agreement entered between the Society and the Developer, i.e. present assessee. The Revenue has not placed any contrary material on record rebutting the finding of the ld.CIT(A) that the risk is borne by the Developer and also there is no fix remuneration paid by the Society to the assessee. Therefore, we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. Thus, ground Nos.1 & 2 of Revenue's appeal are devoid of any merit, the same are dismissed.
6. Ground Nos.3 & 4 are general in nature which require no independent adjudication.
7. In the result, Revenue's appeal stands dismissed.
Order pronounced in the Court on Wednesday, the 20th day of January, 2016 at Ahmedabad.
Sd/- Sd/-
(अ नल चतव
ु द ) (कुल भारत)
लेखा सद य या यक सद य
( ANIL CHATURVEDI ) ( KUL BHARAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 20/ 01 /2016
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS
ITA No.1870 /Ahd/2011
ITO vs. M/s.Shreenathji Corporation
Asst.Year - 2008-09
-7-
आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :
1. अपीलाथ% / The Appellant
2. &'यथ% / The Respondent.
3. संबं4धत आयकर आयु6त / Concerned CIT
4. आयकर आय6 ु त(अपील) / The CIT(A)-I, Ahmedabad
5. 7वभागीय & त न4ध, आयकर अपील य अ4धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड; फाईल / Guard file.
आदे शानुसार/ BY ORDER, c //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation .. 12.1.16(dictation-pad 8-- pages attached at the end of this File)
2. Date on which the typed draft is placed before the Dictating Member ...13.1.16
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S....... 20.1.16
7. Date on which the file goes to the Bench Clerk..................... 20.1.16
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................