SMT. JAYABEN GOVINDJI PATEL,,SURAT vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(3),, SURAT

O R D E R

PER PAWAN SINGH, JUDICIAL MEMBER:

ITA 238/AHD/2017/AY.2012-13 Jayaben Govindji Patel

Brief facts of the case as gathered from the order of lower 2. authorities are that the assessee is an individual, filed her return of income for relevant assessment year on 25th September 2012. The case was selected for the scrutiny. During the assessment, the assessing officer from the computation of total income noted that the assessee has claimed deduction under section 80IB (10). The assessee claimed that she is 50% shareholder / co-owner with her son in housing project namely 'Hampton Park'. The assessing officer after issuing show cause notice and considering the reply furnished by assessee took his view that the project was undertaken by AOP/BOI/Firm. It was further held that to claim the deduction the assessee has to furnish the return of income before specified date in the status of association of person (AOP). On appeal before learned Commissioner of income tax (Appeals), the action of assessing officer was confirmed. The while confirming the action of assessing officer, the learned Commissioner of income tax (Appeals) followed the decision of his predecessor for assessment year 2011- 12. Thus, further aggrieved the assessee has filed present appeal before this Tribunal.

raised in the present appeal are thus, squarely covered in favour of assessee by the order of Tribunal for AY 2011-12. The Id AR of the assessee also furnish the copy of decision of Tribunal.

4. On the other hand, the learned senior Departmental Representative (DR) for the Revenue supported the order of Commissioner of Income Tax (Appeals).

5. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have also deliberated on the decision of co-ordinate bench of Tribunal in assessee’s own case for AY.2011-12 on identical grounds of appeal. We have noted that on identical grounds of appeal the co-ordinate bench of Tribunal while ITA 238/AHD/2017/AY.2012-13 Jayaben Govindji Patel considering the identical claim of assessee for earlier assessment year passed the following order:

"11. We have heard both submissions and perused the material available record. We find that on death of assessee's husband, the impugned land was inherited to Smt. Jayaben Govindbhai Patel (Assessee), Shri Ashok Govindbhai Patel (Son of the assessee) other son and two daughters who later assigned their rights in favour of the assessee and her one son. Thus, the assessee and her son Ashok Govindbhai Patel are the co-owners of the inherited impugned land on which housing project in the name of "Hampton Park" has been developed. The documentary evidences such as copies of approved plan submitted and signed by Co-owners, development permission letter bearing the names of both the Co-owners, copy of sale deed executed , by Co- owners, copy of current account held jointly in both their names, receipt of booking amount from the-flat holders; audit report u/s.44A8 and 80IB(10) in respect of "Hampton Park", joint books of account-in the name of "Hampton Park" etc., were submitted by the assessee to the Assessing Officer to show that the project was being carried out under the status of Co-ownership". It was justified also stating that for the sake of ; convenience and to comply with the accounting procedure, they have maintained Co- owners project account known as "Hampton Park" with joint books of account and said books reflect; all purchase of construction material, receiving the booking money, making payment towards purchase of construction raw material and also :other administrative expenses etc., In the year end, prof it derived from the said project has been apportioned between Co- owners in their 50:50 ratio and same has been shown in the income tax returns individually. The application for development of the housing project was filed jointly and by assessee and her son and approval of housing project has been granted ITA 238/AHD/2017/AY.2012-13 Jayaben Govindji Patel accordingly. Thus, the assessee and her son are the co-owners of the land and the subsequent development of housing project in the name of "Hampton Park" on the impugned land is also in the status of co-ownership of the assessee and her son. The assessee has developed the housing project and claimed deduction u/s.80IB of the Act in respect of this housing project as co- owner. We Further, notice that the assessee has filed report in Form No. 10 CCB in support of claim of deduction u/s. 80IB(10) of the Act. This report requires the assessee to state ownership status of the undertaking/enterprise in Sl. No. 4 of the Form. This Form specifically requires assessee to state as to whether the undertaking (enterprise is fully owned by the assessee or partly owned by the assessee and also the percentage on ownership. Thus, even Form No. 10CCB very well recognize the fact that undertaking can be held in co-ownership, otherwise the Form would not specifically require assesses to state ;as to whether the undertaking his fully owned or partly owned by the assessee in S.No.4 of this Form the assessee has clearly stated that undertaking is partly owned by or her share of ownership is 50%, hence the Contention of the Assessing Officer that the status Is not mentioned an individual does not disentitle assessee from claiming deduction u/s 80IB(10), of the Act pertaining to her share of profit eligible of deed under section 80IB of the Act. The proceeds relating to sale of plots have been deposited in a separate bank amount of the assessee and her son .and. the same has been shared equally. This, fact further manifest that there was nonexistence of AOP, otherwise proceeds on sale of plots would not have been deposited in a separate bank account. The assessee also filed development permission letter bearing the name of co-owners in their individual capacity. It was further pointed out that the assessee as well as Ashok Govindbhai Patel has obtained separate registration under the Service Tax act in the individual capacity and the Service Tax Return filed along with deposit of service tax in the individual capacity were also 5 ITA 238/AHD/2017/AY.2012-13 Jayaben Govindji Patel furnished. It was contended that this is not the case where two or more independent persons have joined together for acquiring land and construction housing project by pooling their joint resources. The, assessee with her son cannot be at all be said to be voluntarily, because the land has been received by them jointly by way of inheritance. In such cases, the association of two or more persons is a forced association of the joint legatees and therefore, the status can only be regarded as co-ownership. In support of this contention the assessee; has placed reliance on the decision of Hon'ble Allahabad High Court in the; case of CIT Vs. Laxmi P Da Sons 316 ITR 330 (All) wherein it was held that' an AOP is a voluntary association of two or more persons who join together; for a particular purpose and that the forced AOP because of inheriting joint property by way of will or such other circumstances not being voluntary; would not constitute such legatees as AOP. The ratio of above decision is directly applicable to the facts of the case and therefore the interpretation made by the assessee is correct as they cannot be regarded as AOP. We are of the view that the assessee was a builder and developer. It carried out the project for developing the land held by assessee. Assessee received his share of profit from the same and claimed deduction of the her share of profit as per provision of section 80IB (10). The AO declined the benefit of deduction to the assessee on the premise that deduction u/s. 80IB(10) was available only to an undertaking engaged in developing and building house project subject to fulfillment of conditions laid down in sub-section (10) of section 80IB. It is settled law that owner of the land as well as developer of the land both were eligible for claiming deduction under section 80IB(10) in respect of housing project where the owner contributes the land as well as resources to develops the housing project. Thus, assessee was also eligible for claiming deduction under section 80IB(10) as it full fills all the conditions laid down under section 80IB.The learned counsel for the assessee has relied in the case 6 ITA 238/AHD/2017/AY.2012-13 Jayaben Govindji Patel of Sudhir Nagpal and Others Vs. ITO 349 ITR 636 (P & H) wherein agricultural land was inherited by the co-owners from their forefather and general power of Attorney was executed by all the co- owners in favour of the "S" appointing him to construct plinth on their joint agricultural land in the name of all the owners and to further lease out such open plinth to any party on their behalf. In this case, the issue came up whether the appellants are to be assessed as AOP or as individual. It was held that the co-owners had inherited the property from their ancestors and there was nothing to show that they had acted as AOP. It was also held that in order to asses individual to be forming AOP, the individual co-owners should have joined their resources and thereafter acquired their property in the name of AOP. The ratio of this decision is again directly applicable to the facts of share of profit eligible of deed under section 80IB of the Act. The proceeds relating to sale of plots have been deposited in a separate bank amount of the assessee and her son .and. the same has been shared equally. This, fact further manifest that there was nonexistence of AOP, otherwise proceeds on sale of plots would not have been deposited in a separate bank account. The assessee also filed development permission letter bearing the name of co-owners in their individual capacity. It was further pointed out that the assessee as well as Ashok Govindbhai Patel has obtained separate registration under the Service Tax act in the individual capacity and the Service Tax Return filed along with deposit of service tax in the individual capacity were also furnished. It was contended that this is not the case where two or more independent persons have joined together for acquiring land and construction housing project by pooling their joint resources. The, assessee with her son cannot be at all be said to be -voluntarily, because the land has been received by them jointly by way of; inheritance. In such cases, the association of two or more persons is a forced association of the joint legatees and therefore, the status can only be regarded as co-ownership. 7 ITA 238/AHD/2017/AY.2012-13 Jayaben Govindji Patel In support of this contention the assessee; has placed reliance on the decision of Hon'ble Allahabad High Court in the; case of CIT Vs. Laxmi P Da Sons 316 ITR 330 (All) wherein it was held that' an AOP is a voluntary association of two or more persons who join together; for a particular purpose and that the forced AOP because of inheriting joint property by way of will or such other circumstances not being voluntary; would not constitute such legatees as AOP. The ratio of above decision is directly applicable to the facts of the case and therefore the interpretation made by the assessee is correct as they cannot be regarded as AOP. We are of the view that the assessee was a builder and developer. It carried out the project for developing the land held by assessee. Assessee received his share of profit from the same and claimed deduction of her share of profit as per provision of section 80IB (10). The AO declined the benefit of deduction to the assessee on the premise that deduction u/s. 80IB(10) was available only to an undertaking engaged in developing and building house project subject to fulfillment of conditions laid down in sub-section (10) of section 80IB. It is settled law that owner of the land as well as developer of the land both were eligible for claiming deduction under section 80IB(10) in respect of housing project where the owner contributes the land as well as resources to develops the housing project. Thus, assessee was also eligible for claiming deduction under section 80IB(10) as it full fills all the conditions laid down under section 80IB. The learned counsel for the assessee has relied in the case of Sudhir Nagpal and Others Vs. ITO 349 ITR 636 (P & H) wherein agricultural land was inherited by the co-owners from their forefather and general power of Attorney was executed by all the co- owners in favour of the "S" appointing him to construct plinth on their joint agricultural land in the name of all the owners and to further lease out such open plinth to any party on their behalf. In this case, the issue came up whether the appellants are to be assessed as AOP or as individual. It was held that the co-owners 8 ITA 238/AHD/2017/AY.2012-13 Jayaben Govindji Patel had inherited the property from their ancestors and there was nothing to show that they had acted as AOP. It was also held that in order to asses individual to be forming AOP, the individual co- owners should have joined their resources and thereafter acquired their property in the name of AOP. The ratio of this decision is again directly applicable to the facts of instant case, hence the contention of the Assessing Officer in para 4.6 of the order that eligible business activity has been carried out by the AOP / BOI is invalid. The contention of the AO that benefit of section 80IB(10) can only be granted to an AOP and not to the assessee. If that is the case of the Revenue, then it cannot tax the income which does not belongs to her in her individual capacity and therefore, the same can be taxed in the hands of the AOP. But this is not the case of the AO. The A.O. merely denied the claim that return of income was not filed in the status of AOP, in such situation provision of 292B comes to the rescue of the assessee and defects in return of income can be removed. We do hot find his son had agreed to share receipts in the ratio of 50%. It is further relevant to note that all the expenditure for the execution of project was incurred by the, assessee and his son. furrier, the following case laws CIT Vs. Laxmi PD. & Sons 316 ITR 330, Sudhir Nagpal and Others vs. ITO 349 ITR 636 (P & H), Baryyopd Estate Vs. State of Tamil Nadu 215 ITR 0520 (Mad), Brahma; Associates Vs. JCIT 119 ITD 255 (Pune) (SB), Hansa Dalakoti Vs. ACIT in ITA N6.3352/Del/201f (Del) and ITO Vs. S. Venkataiah in SOT 434 (Hyd) are supports the case of the assessee.”

"8. In terms of the agreement, which are not in dispute, the assessee not only undertook the aforesaid development activities on the land in question, but in fact, he entered into an agreement of sale with the owners of the land, paid the entire consideration but he did not take a registered sale creed in his name. On the contrary, the procedure adopted is he in turn entered into a joint development agreement with the builder and the owner of the land made a party to the said proceedings. Thus, the assessee contributed the land, undertook the aforesaid developmental activities in the said land and thus, complied with all other conditions, which have to be fulfilled before chiming benefit under Section 80IB(10) of the Act The builder has invested the. The money in the construction, it is after completion of building in terms of the agreement, the assessee was given. 2.2% share of the building area, it is after safe of he built area, in terms of Section 80IB (10), the assessee is chiming deduction. As is clear from the development agreement the undertaking of developing building housing project was jointly undertaken by the assessee and the builder. Therefore; in respect of the residential units numbering the persons who undertook this undertaking are entitled to the benefit of Section 80IB(10) of the Act in proportion of the share to which they are entitled to in the built up area.

ITA 238/AHD/2017/AY.2012-13 Jayaben Govindji Patel 6. Considering the aforesaid decision of Tribunal on identical set of fact, wherein no variation in facts in brought to our notice for the year under consideration, nor any contrary law is shown to us to take other view, therefore, respectfully following the decision of coordinate bench, the appeal of assessee is allowed with similar observation.