Income Tax Appellate Tribunal - Ahmedabad
Dhara Developers(Abhishek), Baroda vs Department Of Income Tax on 6 March, 2012
1 ITA No.1097/AHD/2009
Assessment Year 2005-06.
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IN THE INCOME TAX APPELLATE TRIBUNAL " A "BENCH, AHMEDABAD
(BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI A.M.)
I.T.A. No. 1097/AHD/2009
(Assessment Year: 2005- 06 )
Income Tax Officer, Vs. M/s. Dhara Developers
Ward 2(4), (Abhishek)
Aayakar Bhavan, 1 Abhishek Society,
Near Race Course Circle, Gotri-IPCL Road,
Baroda. Baroda.
(Appellant) (Respondent)
PAN: AADFD 5444J
Appellant by : Shri Rahul Kumar, Sr. D.R.
Respondent by : Shri S.N. Soparkar, Sr. Advocate.
आदे श)/ORDER
(आदे Date of hearing : 6-3-2012 Date of Pronouncement : 30-3-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER.
This appeal is filed by the Revenue against the order of Ld. CIT (A)-II, Baroda dated 22-1-2009 for the assessment year 2005-06.
2. The grounds of appeal raised by the Revenue are as under:-
"1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in allowing the deduction u/s. 80IB(1) to the assessee, who was not granted approval by the local authority to carry on the business of an undertaking developing and building housing projects, in contravention 2 ITA No.1097/AHD/2009 Assessment Year 2005-06.
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of a plain reading of section 80IB(10) r.w.s. 80IB(1),Explanation to section 80IB(10) and rule 18BBB.
2. The Ld. CIT (A) failed to make a combined reading of section 80IB(1), which is substantive provision, and section 80IB(10), which is a machinery provision, postulating complete identity between the assessee as referred to in section 80IB(1),and the undertaking developing and building housing projects approved by the local authority as referred to in section 80IB(10), not permitting such splitting between the assessee and the person who is granted approval by the local authority for developing and building housing projects, as presumed by the CIT (A).
3. The Ld. CIT(A) failed to abide by the scheme of section 80IB based on complete identity between the assessee as referred to in section 80IB(1), on the one hand, and the entity fulfilling the conditions laid down in sections 80IB(3), 80IB(11) and 80IB(11AA), besides section 80IB(10),on the other.
4. The Ld. CIT (A) failed to appreciate that the land being integral part of any housing project, the assessee, without owning the land component, could not pass on full title over dwelling units to the customers so as to derive profits from developing and building housing projects and this integration is further fortified by the requirement of approval by the local authority as well as grant of completion certificate by the local authority under clause (ii) of the Explanation below section 80IB(10), both of which are granted to the landowner, thus treating him alone as running the undertaking from the beginning to the end.
5. The Ld. CIT (A) erred in dispensing with the ownership of land intrinsically linked with the approval by the local authority, also in disregard of section 80IB(10)(b) providing for the condition of minimum size of the plot of land, which can be fulfilled only by the landowner and the person getting approval from the local authority.
6. The Ld. CIT (A) erred in making assumption regarding passing on of the benefit of section 80IB(10) by the landowner getting approval from the local authority for developing and building of housing projects to the person with whom he enters into agreement for execution of such projects,without 3 ITA No.1097/AHD/2009 Assessment Year 2005-06.
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there being any provision in section 80IB for such passing on, as contained in section 80HHC(1A).
7. Without prejudice, the Ld. CIT (A) erred in allowing deduction u/s. 80IB(10) in respect of the proceeds attributable to the sale unutilized FSI and not to the dwelling units in the housing projects, which could not be termed as profits 'derived' from developing and building housing projects in terms of this provision.
8. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary.
3. The brief facts of the case are that the assessee is a firm engaged in the business of developing and building of housing projects. It filed its return of income on 24-10-2005 declaring total income at Rs. Nil after claiming deduction of Rs.14,45,924/- under section 80IB(10) of the Income Tax Act. The assessee submitted that it had derived income from construction/development activity of housing project and since it had satisfied all the conditions laid down under section 80IB of the Act, it was eligible for 100% deduction u/s. 80IB(10) of the I.T. Act. The assessee relied on the decision of the ITAT, Ahmedabad Bench in the case of M/s. Radhe Developers & Others vs. ITO. 113 TTJ (Ahd) 300.The A. O. disallowed the claim of the assessee as according to him the assessee had not complied with the basic conditions laid down in Section 80IB. According to the A.O. since the assessee was not the owner of the property, permission was not granted in the assessee's name, approval by Vadodara Municipal Corporation was granted in the name of original land owners and not in the name of assessee developer, therefore, it was not eligible for deduction u/s. 80IB. Alternatively he held that the assessee's claim u/s. 80IB (10) is to be restricted to the profits earned on construction of utilized FSI. He further held that the proportionate profit on sale 4 ITA No.1097/AHD/2009 Assessment Year 2005-06.
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of unutilized FSI be disallowed. He further stated that the decision in the case of Radhe Developers & Other (supra) relied by the assessee has not been accepted by the Revenue and appeal against the said order has been filed before the Hon'ble Gujarat Court. Accordingly, the A.O. disallowed the claim of deduction of assessee. The assessee being aggrieved by the order of A.O. carried the matter in appeal before the Ld. CIT (A). CIT (A) after considering the submissions of the assessee held that since the case of assessee was identical to that of Radhe Developers (supra), the assessee is eligible for deduction u/s. 80IB(10) and accordingly allowed the appeal of the assessee.
4. Against this order of the CIT (A), the Revenue is now in appeal before us.
5. Before us at the outset, the Ld. AR placed on record, the order of Tribunal in assessee's own case for A.Y. 2004-05 dated 29-2-2008 wherein the exactly similar issue was decided by the Tribunal in assessee's favour. He further contended that in view of the decision of co-ordinate Bench in the case of Radhe Developers & Others, it is no more controversial that notwithstanding the fact that assessee is not the owner of land and approval has not been granted in its name, claim of deduction u/s. 80IB(10) cannot be declined. He also placed on record the decision of the co-ordinate Bench in the case of ITO vs. Sun Developers (ITA No.1095/AHD/209) dated 10-8-2011, wherein on identical facts, the assessee has been granted deduction.
6. On the other hand, the Ld. D.R. fairly agreed that issue in the appeal is squarely covered by the order of the Tribunal in assessee's own case in addition to other cases placed on record by the A.R..
5 ITA No.1097/AHD/2009Assessment Year 2005-06.
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7. We have considered the rival contentions, gone through the orders of the authorities below. After going through the orders we find that similar issue came up before the Hon'ble ITAT, Ahmedabad in ITA No.2482/AHD/2006 in the case of Radhe Developers & Others for Assessment Year 2003-04 wherein it was held that for the purpose of claiming deduction u/s. 80IB (10) of the Act, it is not necessary for the assessee to own land.
8. As the facts and circumstances during the year under consideration, are in para-materia to that of Assessment Year 2003-04, respectfully following the decision of the Co-ordinate Bench of Tribunal, as quoted above, we confirm the order of the CIT (A).
9.. In the result, the appeal of the Revenue is dismissed.
Order pronounced in Open Court on 30 - 3 - 2012.
Sd/- Sd/-
(G.C.GUPTA) (ANIL CHATURVEDI)
VICE PRESIDENT ACCOUNTANT MEMBER
Ahmedabad.
S.A.Patki.
6 ITA No.1097/AHD/2009
Assessment Year 2005-06.
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Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals)-II, Baroda.
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad.
1.Date of dictation 6 - 3 -2012
2.Date on which the typed draft is placed before the Dictating 19 / 3 / 2012 Member................Other Member................
3.Date on which the approved draft comes to the Sr.P.S./P.S - -2012.
4.Date on which the fair order is placed before the Dictating Member for pronouncement - -2012
5.Date on which the fair order comes back to the Sr.P.S./P.S - -2012
6.Date on which the file goes to the Bench Clerk - -2012.
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order.................