INCOME TAX OFFICER, WARD-2(3)(4), SURAT, SURAT vs. SHYAM CORPORATION, SURAT

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ITA 1374/SRT/2025Status: DisposedITAT Surat18 June 2026AY 2013-147 pages
AI SummaryRemanded

What did the Tribunal hold?

The CIT(A) allowed the deduction by following a previous ITAT decision for the assessee's own case for AY 2012-13. The Revenue appealed this decision.

What were the facts?

The assessee, a civil construction firm, claimed a deduction under Section 80IB(10) for AY 2013-14. The Assessing Officer denied this deduction, citing issues with the Business Use Certificate and the project's approval date being after the eligibility cut-off.

What were the issues?

Whether the assessee is eligible for deduction under Section 80IB(10) when the project approval date is after the stipulated eligibility date, and if a previous ITAT decision for an earlier year is applicable.

Which sections of the Income-tax Act were involved?

Section 80IB(10),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH” DB”, SURAT

Before: Shri T.R. Sentil Kumar & Shri Ratnesh Nandan Sahay

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH” DB”, SURAT (PHYSICAL HEARING) Before: Shri T.R. Sentil Kumar, Judicial Member And Shri Ratnesh Nandan Sahay, Accountant Member ITA No. 1374/SRT/2025 Assessment Year: 2013-14

The ITO Shyam Corporation Ward-2(3)(4), 8/1,Swaminarayan Nagar, Surat Vs Varachha Road, Near Kalakunj, Surat Surat-395006 PAN: ABIFS0262M (Appellant) (Respondent) Assessee Represented: Shri P.M. Jagasheth, CA Revenue Represented: Shri Mukesh Jain, CIT-DR Date of hearing : 06-05-2026 Date of pronouncement : 18-06-2026 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-

This appeal is filed by the Revenue as against the appellate order dated 01.10.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2013-14. 2. Brief facts of the cases, the assessee is a firm engaged in the business of civil construction as organizer and developer. For the

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assessment year 2013-14 the assessee firm filed its return of income on 10.09.2012 declaring total income of Rs.98,780/- after claiming deduction of Rs.4,68,81,016/- under section 80IB(10) of the Act. The return was taken for scrutiny assessment, the Assessing Officer also found that Business Use Certificate (BUC) letter issued by the Surat Municipal Corporation dated 26.03.2012 in the name of Shri Bhailalbhai Nanubhai Sheladiya administrator of M/s Shyam Corporation and the contention of the assessee that revised plan has reference of old plan and date is not correct, thereby denied the claim of deduction under section 80IB(10) of the Act and demanded tax thereon. Aggrieved against the assessment order, the assessee filed 3. appeal before Ld. CIT(A), Ld. CIT(A) has followed the assessee’s own case decision rendered by ITAT in ITA No. 123/Ahd/2016 dated 31.08.2018 for the earlier assessment year 2012-13, thereby allowed the claim of deduction in favour of the assessee. 4. Aggrieved against the same, the Revenue is in appeal before us arising on the following Grounds of Appeal:-

(i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.4,68,81,016/ made on account of disallowance of deduction claimed u/s 80IB of the Act even though the date of approval of the competent authority for development of housing project is 03.07.2010, which is after the due date of eligibility for claiming deduction i.e. 31.03.2008 as per the provisions of section 80IB of the I.T. Act. (ii) It is therefore prayed that the order of Ld. CIT(A) may kindly be set aside that of the Assessing Officer be restored. (iii) The appellant craves leave to add, alter, amend and/or withdraw any ground of appeal either before or during the course of hearing of the appeal.

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5.

Except the ground of appeal, Ld. DR could not place on record the earlier order passed by the Tribunal in assessee’s own case in ITA No. 123/Ahd/2016 and how is not applicable for the present assessment year, wherein detailed order is reads as follows:- “7. We have heard the rival submissions and perused the relevant material on record. We find that the assessee has entered in to an agreement to sale dated 11.07.2006, with owners of land and has obtained possession of land for construction and development. This agreement to sale was registered with Sub Registrar, Surat. In the most common mode of development of real estate by the developers, the owners of land do not desire to develop the land and they sell the land to a developer. It is the obligation of the developer to develop the land, and if necessary, to get agricultural land converted into non-agricultural land by the change of user, appoint the architects to prepare the building plans, get them approved with the local authority and to construct the houses in the form of tenements and flats. The developer would carry out the construction on his own, namely, carry out all necessary statutory formalities for construction, buy material for construction, employ labour or an agency, which would supply labourers and thereupon complete the construction. The developer would then sell the houses/ flats to the prospective buyers. The developer would buy land and get it transferred in his name even before the plans are placed. In the present case, the assessee has entered in to agreement to sale of land situated at Mojegam, Taluka Chorayasi district Surat. The development of plan of construction has to be approved by SUDA. The by-laws of SUDA clearly says that anyone, who develops the land on his own account or for the benefit of any other person or as a joint trustee, guardian, manager, etc., is to be treated as an owner. The permission for development could be granted to whoever has applied for the permission not necessarily only the owner. In the present case, the assessee has applied for development permission and received approval on 29.08.2006 from SUDA Surat, for developing of low-rise housing project as per layout plan submitted. However, the permission was granted in the name of Shri Ashokbhai Vallabhai Dobaria, the original owner of land, as the title of ownership of land was not passed on to the assessee by that time, hence, this permission was given as per land revenue records as name of original owner was appearing whereas the possession of land in question was already taken over by the assessee as per agreement to sale dtd. 11.07.2006. As per clause 9 of said development permission, it was effective for 12 months from date of permission and further approval of construction work should be taken by taking renewal permission from time to time as per rules. Thus, this permission, so taken was effective as per by laws for one year and would lapse if no construction Works started. We observe that the assessee has started construction work on or before 25.01.2007 as could be seen from the intimation letter dtd. 25.01.2007 (PB-36) submitted to AEN of SMC wherein the assessee has intimated the commencement of construction work. Since, some part of land was sold out by the assessee; hence, a revised plan was moved on 18.01.2010 for revised approval, which was granted on 03.07.2010. Thus, we find that the original

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approval granted on 29.08.2006 was in subsistence as the assessee has started construction work within 12 months of approval and the revised application for approval was in continuation of original development approval, which was approved on 03.07.2010. For better appreciation of law, it would be relevant to reproduce the Explanation with section 80IB(10) of the Act as under: “(10) The amount of deduction in the case of an undertaking developing and building housing projectsapproved before the 31st day of March, [2008] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,— (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,— (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 5[but not later than the 31st day of March, 2005], within four years from the end of the financial year in which the housing project is approved by the local authority; 6[(iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority.] Explanation.—For the purposes of this clause,— (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) (ii) the 7date of completion of construction of the housing project shall7 be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority;” 8. Thus, the clause (i) of Explanation to section 80IB(10) provides that where approval for housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority on 29.08.2006, hence, as per this Explanation to section 80IB(10) of the Act, the housing project would be deemed to have been approved from first housing project was approved by the Local Authority on 29.08.2006 and not from second approval dated 03.07.2010 as claimed by the Revenue. 9. So far, the contention of the Revenue that first approval was not in the name of the assesses is concerned and second approval is in the name of partner of the assessee and there is no reference of first approval. We find that this

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contention is not tenable in law. As there is no provision which says that Local Authority should mention the reference of first Approval. Further, the approval dated 03.07.2010 makes reference as revised plan, which means it was in continuation to original approval. As the developer of land are required to take permission for development. In this case, the land was taken in possession by the assessee vide agreement to sale on 11.07.2006, registered with Sub Registrar, but it was not executed as sale deed and therefore, the name of the assessee did not figure in Revenue records. Therefore, the development permission was given in the name of original landowner Shri Ashokbhai Vallabhai Sheladiya. Since the permission was taken for the same piece of land for same original plan hence, original approval even though not in the name of the assessee would be deemed to be valid approval which is apparent from Explanation to section 80IB(10) as reproduced above. This view is further supported by decision of Hon`ble Jurisdictional High Court of Gujarat in the case of CIT vs. Radhe Developers [2012] 341 ITR 403 (Guj) wherein it was held as ‘45. Under the circumstances, we are of the opinion that the Tribunal committed no error in holding that the assessees were entitled to the benefit under Section 80IB (10) of the Act even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners.” 10. In view of above, ratio laid down by Hon`ble jurisdictional High Court of Gujarat where the original approval was taken in the name of original owner and subsequent approval in the name of the assessee it does not make any difference so long approval plan and lay out are same. The ld. A.R. has drawn our attention to layout plan placed at Page No. 37 and revised layout Plan at Page No. 47 of Paper Book which are same i.e. for approval of low rise type residential building. The ld. A.R. also referred clause 3.2.5 of Development Control Rules, which prescribed the procedure for securing development permission placed at Page No. 66 of Paper Book, according to which development permission would expiry if work is not commenced within one year, provided that the Competent authority may on application made to it before the expiry of one year period may extend such further period of one year by charge fee of Rs. 300 for renewal of development permission. Thus, we find that the assessee has taken renewal further renewal permission on 03.07.2010., which was in continuation of original permission dated 29.08.2006. Hence, we observe that the assessee has taken permission for development of housing project before 31.03.2008. In view of this matter, the assessee is eligible for deduction u/s. 80IB (10) of the Act. We may mention that decision relied by the Ld. CIT (A) in the case of K. G. Developers v. DCIT [ I.T.A.No. 1414/Ahd/2014 dtd. 13.06.2017 ] is not applicable in the present case as in said case original development permission dated 19.07.2006 was taken for construction of row houses whereas fresh second approval 16.03.2009 was taken for housing project towards high rise building, hence, the second approval was treated as fresh approval by Tribunal being approval of altogether for different project and benefit of section 80IB(10) was denied. However, in the present case, the original approval dtd. 29.08.2006 and revised approval dtd. 03.07.2010 are for same housing project, same lay out plan for construction of low-rise type building. Hence, second approval cannot

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be treated as fresh approval as it was necessitated due to sale of some part of land and was therefore, in continuation of original approval. Therefore, the development permission obtained before the cut-off date of 31.03.2008. Hence, the assessee is entitled to deduction u/s. 80IB (10) of the Act. In view of these facts and circumstances, we direct the AO to allow the deduction under section 80IB (10) of the Act as claimed by the assessee. Accordingly, this ground of appeal of the assessee is allowed.”

6.

Further, Ld. DR could not place on record, the above order passed by the Coordinate Bench of this Tribunal is reversed/modified by the Hon’ble Higher Judicial Forum. In absence of the same, we have no hesitation in upholding the order passed by the Ld. CIT(A). Learned counsel for the assessee relied upon the Hon’ble Jurisdictional High Court in the case of CIT Vs. Radhe Developers reported in (2012) 17 Taxmann.com 156 (Gujarat H.C.) and CIT Vs. Prathama Developers reported in (2013) 32 Taxmann.com 336 (Gujarat H.C.) which are infavour of the assessee, on the very same claim of deduction under section 80IB(10) of the Act. Thus, ground raised by the Revenue is devoid on merit and are liable to be dismissed. 7. In the result, the appeal of the Revenue is hereby dismissed. Order is pronounced under the provisions of Rule 34(4) of IT(AT) Rules, 1963 on 18/06/2026.

Sd/- Sd/- (RATNESH NANDAN SAHAY) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat : Dated 18/06/2026 *Santosh आदेश क� �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A)

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5.

DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत

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