Gujarat High Court
The Principal Commissioner Of Income ... vs Green Associates on 10 June, 2019
Author: J.B.Pardiwala
Bench: J.B.Pardiwala, A.C. Rao
C/TAXAP/8/2019 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 8 of 2019
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THE PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA 3
Versus
GREEN ASSOCIATES
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Appearance:
MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR.JUSTICE A.C. RAO
Date : 10/06/2019
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. The Revenue has filed this appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad 'B' Bench, Ahmedabad (for short, 'the Tribunal') dated 20.06.2018. The Revenue has proposed the following substantial questions of law in its memorandum of appeal.
"(a) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in allowing the assessee the deduction u/s.
80IB(10) of the Act after treating the assessee as a developer of the Housing Project even though the project as a whole was not primarily developed and built by the assessee itself and the assessee has sold merely the residential plots and rest of the work has been completed by it as a contractor of the plot purchasers, rendering it ineligible for deduction u/s Page 1 of 8 Downloaded on : Wed Jul 03 02:39:25 IST 2019 C/TAXAP/8/2019 ORDER 80IB(10) of the Act ?
(b) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in allowing the assessee the deduction u/s. 80IB(10) of the Act by ignoring the fact that 70% of the sale proceeds of the project were the work contract receipts and no entrepreneurial and investment risk was taken by the assessee in respect of the project and therefore it cannot be held that the project as a whole has been developed and built by the assessee so as to make it eligible for deduction under section 80IB(10) of the Act as developer of Housing Project ?
(c) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in deleting the addition in respect of disallowance of deduction u/s. 80IB of the Act without appreciating that the Assessing Officer's action of disallowing assessee's claim of deduction u/s. 80IB(10) of the Act, finds support from decision of (1) ITAT Chennai Bench "B" in the case of Prime Developers Vs. Income tax Officer Ward 1(4) Tirupur reported in (2015) 64 taxmann.com 48 (Chennai-Trib.) and (2) ITAT Chennai Bench "A" in the case of Arihant Heirloom vs. Income tax Officer, Non-Corporate-140(1) Chennai reported in (2017) 79 taxmann.com.19 (Chennai-Trib)?
(d) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in deleting the disallowance of deduction u/s. 80IB(10) of the Act by relying on its decision in the assessee's case for A.Y. 2009-10 & 2010-11, wherein it had relied on its decision in the case of Narayan Reality Ltd., without appreciating that the Department has not accepted the decision of learned I.T.A.T. In the case of Narayan Reality Ltd., and has filed appeal before Hon'ble Gujarat High Court, which has been admitted by the Hon'ble Gujarat High Court, vide Tax Appeal No.1340 of 2014 and 1339 of 2014 ?"
2. It appears from the materials on record that the respondent Assessee is engaged in the business of Page 2 of 8 Downloaded on : Wed Jul 03 02:39:25 IST 2019 C/TAXAP/8/2019 ORDER development of Housing Project. The short point involved in this appeal is with regard to the applicability of Section 80IB (10) of the Act. To put it in other words, whether the respondent - Assessee is entitled to claim deduction under Section 80IB(10) of the Act. The Assessing Officer made the above by denying the claim of deduction under Section 80IB (10) of the Act. The Assessee being dissatisfied preferred an appeal before the Commissioner of Income Tax (Appeals) under Section 143(3) of the Act. The Appeal preferred by the Assessee came to be allowed by the CIT holding as under:
"Apart from relying on Satsang Developers, Myatas Housing Pvt. Ltd. and on Narayani Reality Ltd. (all supra), the Ld. AR relied on ITAT decision and on my own decision in appellant's own case for A.Y. 2009-10 to emphasize that Ld. AO has erred in making the addition by rejecting the claim of the appellant u/s 80IB(10). It has been vehemently urged by the Ld. AR that the facts of the year under reference are in no way different or distinguishable from those for A.Y. 2010-11 to A.Y. 2012-13 and therefore, I should follow my own appellant orders for those assessment years and delete the erroneous addition made by the Ld. AO. The Ld. AR also enclosed the copy of my order in appeal no. CIT(A)- 12/ CC1/ Baroda/334B, 345B, 346B/ 14-15 dated 28/10/2015 and drew my attention on para 6 of the appellate order. Having considered the material on record and having minutely perused the assessment order and the written submissions filed by the appellant, I have noted that the AR is right that the facts for the year under reference are exactly identical to those involved in A.Yrs. 2010-11 to 2012-
13. It is therefore axiomatic that I follow my own order (supra). I would quote para 6 of the said appellate order:Page 3 of 8 Downloaded on : Wed Jul 03 02:39:25 IST 2019
C/TAXAP/8/2019 ORDER "6. I have given a very careful consideration to the controversy involved and the facts and evidences brought on record. The issue of claim of deduction u/s 80IB(10) has, on this very set of facts, been decided by the Hon'ble ITAT vide order dated 5/1/2015 in appellant's own case for AY 09-10, reproduced supra.
The fact that the appeal has been admitted by the HC against the decision relied upon by the ITAT in order for not following the said judgment. As such, I myself in Appellate order no. CIT(A)-12/CC-1/Baroda/343B/14- 15 dated 29-09-2015 in appeal against freshly made assessment u/s 143(3) r.w.s. 153C for very AY 09-10 have followed the ITAT decision in appellant's own case for AY 09-10. Thus, unless a jurisdictional authority's contrary decision is brought on record by the AO, the Hon'ble ITAT decision relied upon by the AR as also my own decision for AY 09-10 need and must be followed. Indeed there are no such decisions or facts brought to my notice by the Ld. AO or noticed by me in the Assessment Records so as to warrant a decision different for these three assessment years. In a nutshell, as observed by me at the beginning of this order, the controversy of "duality of agreements" and resultant denial of deduction u/s 80IB(10) is covered in favour of the appellant by Ahmedabad ITAT decision and my own decision in appellant's own case for AY 09-10. Thus and therefore, respectfully following the ITAT decision and my own decision in appellant's own case for AY 09-10, the AO's action of rejecting the claim of deduction u/s 80IB(10) is held unwarranted and unsustainable. The appellant is held eligible for deduction u/s 80IB(10). The related additions for the three Assessment Years under reference are deleted as under:
Sr. No. A.Y Relief granted
1 2010-11 Rs. 20,08,55,870/-
2 2011-12 Rs. 29,92,70,977/-
3 2012-13 Rs. 13,75,57,038/-
The related grounds for all the three Assessment Years, i.e. A.Ys. 2010-11, 2011-12 and 2012-13 are thus allowed".
Page 4 of 8 Downloaded on : Wed Jul 03 02:39:25 IST 2019C/TAXAP/8/2019 ORDER
4. In view of the above, I have no hesitation in holding that the Ld. AO has erred both on facts and in law in rejecting the claim of the appellant u/s 80IB(10). As such, the addition of Rs. 8,89,00,765/- made by the AO has no merit and is therefore, deleted. The appellant gets equivalent relief of Rs. 8,89,00,765/-.
3. The Revenue being dissatisfied with the order passed by the CIT (Appeals) preferred an appeal before the Income Tax Appellate Tribunal, Ahmedabad 'B' Bench. The Appellate Tribunal while dismissing the appeal filed by the Revenue observed as under:
"8. Ld. A.R. cited two orders of Co-ordinate Bench in assessee's own case in ITA No. 822/Ahd/2013. The issue before the ITAT was that id. CIT(a) has erred in law and on facts of the appellant's case in confirming the action of Learned A.O. of disallowing the claim of deduction u/s 80-IB(10) of the I.T. Act 1961 on various erroneous plea. And both the lower authorities have erred in law and on facts of the appellant's case in not appreciating the facts that the appellant is developing & building housing projects by fulfilling all the requirements for claiming the deduction u/s 80-IB(10) of the Act. And ITAT decided matter in favour of assessee by holding below:
8. We find that in the case of Narayan Reality Ltd. (supra) the Co-ordinate Bench of Tribunal, after placing reliance on the various decisions cited therein decided the issue in favour of Assessee. Before us, Revenue could not point out any distinguishing feature of the present case with that of Narayan Reality Ltd. (supra) nor has brought any contrary binding decision on record in its support. In view of the aforesaid facts, we respectfully following the decision of the coordinate bench of Tribunal in the case of Page 5 of 8 Downloaded on : Wed Jul 03 02:39:25 IST 2019 C/TAXAP/8/2019 ORDER Narayan Reality (supra) hold that the Assessee is eligible for deduction u/s. 80IB(10). Thus this ground of Assessee is allowed.
8. Apart from above said id. A.R. also cited an order of ITAT in assessee's own case for A.Ys. 2010-11 to 2012-
13. The issue before the Bench was that id.CIT(A) has erred in deleting the addition made by the A.O. in respect of disallowances of deduction u/s. 80IB(10) of Income Tax Act and in this case at Para no.5 ITAT held as follows:-
8. We find that in the case of Narayan Reality Ltd. (supra) the Co-ordinate Bench of Tribunal, after placing reliance on the various decision cited therein decided the issue in favour of Assessee.
Before us Revenue could not any distinguishing feature of the present case with that of Narayan Reality Ltd. (supra) nor has brought any contrary binding decision on record in its support. In view of the aforesaid facts, we respectfully following the decision of the coordinate bench of Tribunal in the case of Narayan Reality (supra) hold that the Assessee is eligible for deduction u/s 80IB(10). Thus this ground of Assessee is allowed."
4. Mr. Varun Patel, the learned Standing Counsel appearing for the department very fairly brought to the notice of this court the order passed by a coordinate bench dated 08.10.2018 in Tax Appeal No. 1199/2018. The order passed by the coordinate bench is in connection with the very same assessee and the issue was also with regard to deduction under Section 80IB(10) of the Act. We refer to and rely upon the observations made by the coordinate bench as under:
Page 6 of 8 Downloaded on : Wed Jul 03 02:39:25 IST 2019C/TAXAP/8/2019 ORDER "Counsel for the Revenue candidly pointed out that in case of this very assessee for the earlier assessment year, Tax Appeals No. 1154 and 11545 of 2018 raising similar questions came to be dismissed. Following observations may be noted from the order dated 17th September 2018, dismissing such appeals.
"3. The respondent is engaged in the business of housing development. For the assessment year 2010-11, the assessee had claimed deduction in respect to the income arising out of such activity under section 80IB(10) of the Income Tax Act. The Assessing Officer disallowed the claim mainly on the ground that the assessee was not the owner of the land and the approval of the project was not in the name of the assessee. The issue ultimately reached the Tribunal where the Revenue also contended that the assessee had not sold the residential spouse in the housing project but had sold the residential plots with construction upto plinth level. The assessee therefore cannot be considered as a developer of a housing project but was mere a contractor. The Tribunal followed its earlier judgment in case of similar assessee and confirmed the decision of CIT (A) allowing the claim.
4. Various issues arising out of the claim of different assesses under section 80IB(10) of the Act came to be thrashed out by a Division Bench judgment of this Court in case of Commissioner of Income Tax vs. Court took note of various development agreements executed by the assessee in favour of individuals claiming that they had been engaged in the activity of housing development. Revenue's contention, that the nature of activities carried on by the assessees would only qualify them to be the contractors executing works contract, was also considered. It was held that the assessee had undertaken Page 7 of 8 Downloaded on : Wed Jul 03 02:39:25 IST 2019 C/TAXAP/8/2019 ORDER the development of housing project at their own risk and cost. The owner of the land had accepted the full price of the land. He was therefore not concerned with the successor or failure of the housing project. In such background, reference was made to the definition of term "transfer" under section 2(47) of the Act and held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee's claim of deduction under section 80IB(10) of the Act."
5. The coordinate bench has also referred to a decision of this Court in the case of Commissioner of Income Tax vs. Radhe Developers reported in 341 ITR 403. The issues raised in the present appeal are squarely covered by the aforesaid decision of the coordinate bench.
6. In view of the aforesaid, this appeal fails and is hereby dismissed.
(J. B. PARDIWALA, J) (A. C. RAO, J) MAYA Page 8 of 8 Downloaded on : Wed Jul 03 02:39:25 IST 2019