Income Tax Appellate Tribunal - Ahmedabad
Meghal Developers, Bharuch vs Department Of Income Tax on 12 September, 2014
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ 'सी
सी',
सी , अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" C " BENCH, AHMEDABAD
सम¢ ौी एन.एस.सैनी, लेखा सदःय एवं ौी कुल भारत, Ûयाियक सदःय ।
BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER And
SHRI KUL BHARAT, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No.293/Ahd/2013
( िनधा[रण वष[ / Assessment Year : 2009-10)
The Income Tax Officer बनाम/ M/s.Meghal Developers
Ward-4, Vs. C/o.J.P. Shah & Co.,
Bharuch Chartered Accountants
7/8, Mridul Tower, 1 s t Floor
H.K.House Lane,
Ashram Road
Ahmedabad-380 009
ःथायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AAKFM 3612 Q
(अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent)
अपीलाथȸ ओर से / Appellant by : Shri M.K. Singh, Sr.DR
ू×यथȸ कȧ ओर से/Respondent by : Shri J.P. Shah, AR
सुनवाई कȧ तारȣख / Date of Hearing 27/08/2014
घोषणा कȧ तारȣख /Date of Pronouncement 12/09/2014
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)-VI, Baroda ('CIT(A)' in short) dated 19.11.2012 pertaining to Assessment Year (AY) 2009-10. The Revenue has raised the following grounds of appeal:-
1. On the facts and in the circumstances of the case and in law, The learned CIT(A) erred in law in allowing deduction of `48,18,878/- u/s.80IB(10) of the IT Act without appreciating that ITA No.293/Ahd/2013 ITO vs. M/s.Meghal Developers Asst.Year - 2009-10 -2- legal relationship between the assessee and the end user of units was that of "work contract".
2. The appellant craves to add to, amend or alter the above grounds as may be deemed necessary.
Relief claimed in appeal The order of the CIT(A) on the above issue 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 21.12.2011, thereby the Assessing Officer (AO in short) disallowed the claim of deduction u/s.80-IB(10) of the Act. The assessee carried the matter before the ld.CIT(A), who after considering the submissions and relying on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT vs. Radhe Developers reported at (2012)341 ITR 403 (Guj.), allowed the appeal of the assessee and directed the AO to delete the addition of Rs.48,18,878/- made in respect of disallowance claim of deduction u/s.80IB(10) of the Act.
3. The ld.Sr.DR Shri M.K.Singh vehemently argued that the ld.CIT(A) was not justified in deleting the addition and submitted that the AO has given a finding that the assessee's role in this case is merely a 'Contractor' who undertakes the "works contract" The ld.Sr.DR submitted that in the case in hand the assessee first sold the land to the persons and subsequently constructed the house thereon after the land was sold. He submitted that the ld.CIT(A) failed to appreciate the fact ITA No.293/Ahd/2013 ITO vs. M/s.Meghal Developers Asst.Year - 2009-10 -3- that the assessee entered into two separate agreements, one for selling of land and another for construction of house property thereon. He submitted that the facts of present case are distinguishable from the case of CIT vs. Radhe Developers(supra).
3.1. On the other hand, the ld.counsel for the assessee submitted that the assessee is a partnership firm engaged in the business of Housing Project Development. The assessee-firm had developed at housing project at Mangalmurti Park, Ankleshwar on a land at Revenue Survey No.715. It is submitted by the ld.counsel for the assessee that the assessee's case is squarely covered by the judgement of Hon'ble Gujarat High Court in the case of CIT vs. Radhe Developers in Tax Appeal Nos.546 of 2008 and Others :: (2012) 204 taxman 543 :: 17 taxmann.com 156(Guj.). He submitted that the issue is also squarely covered by the decision of this Tribunal rendered in the case of M/s.Satsang Developers vs. ACIT in ITA Nos.1011, 2498 & 1221/Ahd/2012, dated 12/11/2013. The ld.counsel for the assessee submitted that in the aforesaid decision, the Hon'ble Jurisdictional High Court decided the case in favour of assessee and against the Revenue. Further, the ld.counsel for the assessee submitted that assessee-firm had taken full responsibilities for execution of development of project and provided all common amenities like common-road, light, water facilities, etc. and all other conditions specified u/s.80IB(10) of the Act had fulfilled by the assessee-firm. He pointed out even, plan of housing project was approved in favour of the Assessee.
ITA No.293/Ahd/2013ITO vs. M/s.Meghal Developers Asst.Year - 2009-10 -4- 3.2. In rejoinder, the ld.Sr.DR submitted that the issue is squarely covered by the decision of Hon'ble Coordinate Bench (ITAT Indore Bench) in the case of Sky Builders & Developers vs. ITO reported at (2011) 14 Taxman.com 78 (Indore).
4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the AO treated the assessee as a work contractor relying on the decision of the Coordinate Bench of the Tribunal (Indore Bench) rendered in the case of Sky Builders & Developers vs. ITO (supra). On the contrary, ld.CIT(A) allowed the appeal on the basis that the facts are covered by the judgement of Hon'ble Jurisdictional High Court rendered in the case of CIT vs. Radhe Developers (supra). The undisputed facts in the present case are that the assessee-form sold the plots to various persons and after the sale is complete the assessee constructed residential tenements thereon. It is also not disputed that two separate agreements were executed by the assessee-firm. The case of the assessee is that it has developed the housing project and it has borne all risks and reward arising therefrom. Merely because the land was sold and the houses were constructed would not debar the assessee from claiming the deduction u/s.80IB(10) of the Act in view of the judgement of Hon'ble Jurisdictional High Court rendered in the case of CIT vs. Radhe Developers(supra). We find that under the similar facts the Coordinate Bench of this Tribunal in ITA Nos.1011, 2498 & 1221/Ahd/2012 (out of three appeals, two cross-appeals by the assessee) for AY 2008-09 in the ITA No.293/Ahd/2013 ITO vs. M/s.Meghal Developers Asst.Year - 2009-10 -5- case of M/s.Satsang Developers vs. ACIT in paras-7 & 7.1.vide order dated 12/11/2013 has held as under:-
"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 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 ITA No.293/Ahd/2013 ITO vs. M/s.Meghal Developers Asst.Year - 2009-10 -6- 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."
4.1. The ld.CIT(A after examining the material available on record has given a finding on fact that other conditions contemplated u/s.80IB(10) of the Act have been compiled. We also find that under the identical facts the Coordinate Bench of this Tribunal in ITA Nos.1011,2498 and 1221/Ahd/2012(supra) in paras-9.2 and 9.3 has held as under:-
"9.2. Now we take up the third and last objection of ld.CIT (A) that the assessee 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 assessee 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 assessee 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 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 ITA No.293/Ahd/2013 ITO vs. M/s.Meghal Developers Asst.Year - 2009-10 -7- 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) regarding allowability of deduction to the assessee u/s.80IB (10) of the Act. Hence, we direct the AO to grant the deduction to the assessee u/s.80-IB (10) of the Act."
5. The Revenue has not brought any contrary decision by the Hon'ble Jurisdictional High Court or Hon'ble Apex Court, therefore, in view of the above decision of the Hon'ble Coordinate Bench of this Tribunal, we find no infirmity in the order of the ld.CIT(A), same is hereby upheld. Thus, this ground of Revenue's appeal is rejected.
6. In the result, the appeal of the Revenue is dismissed.
Order pronounced in Court on the date mentioned hereinabove at caption page Sd/- Sd/-
(एन.एस.सैनी) (कुल भारत)
लेखा सदःय Ûयाियक सदःय
( N.S. SAINI ) ( KUL BHARAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 12 /09/2014
टȣ.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS
ITA No.293/Ahd/2013
ITO vs. M/s.Meghal Developers
Asst.Year - 2009-10
-8-
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)-VI, 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/सहायक पंजीकार (Dy./Asstt.Registrar) उप/ आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation .. 2.9.14(dictation-pad 8- pages attached at the end of this File)
2. Date on which the typed draft is placed before the Dictating Member ..4.9.14 Other Member...
3. Date on which the approved draft comes to the Sr.P.S./P.S.................
4. Date on which the fair order is placed before the Dictating Member for pronouncement......
5. Date on which the fair order comes back to the Sr.P.S./P.S....... 12.9.14
6. Date on which the file goes to the Bench Clerk.....................12.9.14
7. Date on which the file goes to the Head Clerk..........................................
8. The date on which the file goes to the Assistant Registrar for signature on the order..........................
9. Date of Despatch of the Order..................