COMMISSIONER OF INCOME TAX, BIKANER vs. SEEMA FULFAGAR

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ITA/42/2019HC Rajasthan15 November 2021Author: VIJAY BISHNOI, ANOOP KUMAR DHAND6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT was justified in allowing the deduction under Section 80IB of the Income Tax Act, 1961. The Tribunal had found that the assessee was an integral part of the development and construction activities, not merely a landowner. The ITAT's reasoning was based on the assessee's active participation, evidenced by documents like the NOC for construction bearing her address and her involvement in obtaining clearances and making the land conducive for construction. The ITAT relied on the ratio of decisions in M/s Shravanee Construction and Mr. Abdul Khader, which held that assessees actively participating in joint development projects are entitled to deduction under Section 80IB. The High Court found no substantial question of law requiring adjudication and dismissed the appeal. The relief granted was the affirmation of the ITAT's order allowing the deduction.

What were the facts?

The assessee, Smt. Seema Fulfagar, entered into a joint venture with Prince Foundation Private Limited to develop residential flats on her land in Sriperumbudur, Chennai. As per the agreement, she was entitled to 20% of the super built area in lieu of her land and active participation. After project completion, she received Rs. 7,95,00,000/- after expenses. The assessee claimed a deduction of this amount under Section 80IB of the Income Tax Act, 1961. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) rejected this claim. The Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal. The Revenue has appealed this ITAT order to the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned ITAT was justified in allowing relief of Rs.7,95,00,000/- by holding a liberal interpretation of the provisions of Section 80IB of the IT Act, 1961? Assessee's Contention: The judgment does not explicitly record the assessee's arguments before the High Court, but it implies the assessee argued for eligibility for deduction under Section 80IB based on active participation in the project, as supported by the ITAT's findings and cited precedents. Revenue's Contention: The Revenue argued that the ITAT erred in allowing the deduction under Section 80IB as the assessee was not involved in the development and construction of the housing project, and that the AO and CIT(A) had rightly denied the deduction after examining the evidence.

Which sections of the Income-tax Act were involved?

Section 80IB,Section 260A,Section 143(3),Section 263

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 42/2019 Commissioner of Income Tax, Bikaner ----Appellant Versus Smt. Seema Fulfagar, D/o Shri Paras Mal Kothari, Pincha Street, Nokha, Dist :- Bikaner (Rajasthan) ----Respondent For Appellant(s) : Mr. K.K. Bissa, Mr. Gajendra Singh Chouhan HON'BLE MR. JUSTICE VIJAY BISHNOI HON'BLE MR. JUSTICE ANOOP KUMAR DHAND

Judgment / Order 15/11/2021 This appeal has been preferred by the appellant against the order dated 13.8.2018 passed by the Income Tax Appellate Tribunal, Jodhpur Bench Jodhpur (for short ‘the ITAT’).

Brief facts of the case are that the assessee, who was having land at Sriperumbudur, Chennai, entered in a joint venture with a company known as Prince Foundation Private Limited (for short ‘the company’) to develop (Uploaded on 16/11/2021 at 04:55:31 PM) (Downloaded on 28/10/2026 at 12:49:48 AM) (2 of 6) [ITA-42/2019] residential flats on the land belonging to her. According to the agreement entered in between the assessee and the company, the assessee was entitled to 20% of the super built area after completion of the project in lieu of the land offered by the assessee and her active participation in obtaining clearances, building approach road, making the land conducive for the construction, supervision and promotion of the project. After construction of the flats on the land, the assessee along with one Shri Jethmal Jain were allocated 84 flats. Thereafter, the assessee and Shri Jethmal Jain had executed conveyance deed in favour of the respective purchasers. After completion of the project, the joint venture accounts were settled and the assessee was given a sum of Rs.7,95,00,000/- after deducting expenses in lieu of her share of super built up area. While filing returns, the assessee claimed deduction in respect of Rs.7,95,00,000/- under Section 80IB of the IT Act, 1961 (for short ‘the Act of 1961’) in respect of the project jointly undertaken by her with the builder, however, the Assessing Officer had refused the assessee’s claim of deduction. The assessee has preferred an appeal before the Commissioner of Income Tax (Appeals), Bikaner (for short ‘the CIT(A)’), which came to be dismissed on (Uploaded on 16/11/2021 at 04:55:31 PM) (Downloaded on 28/10/2026 at 12:49:48 AM) (3 of 6) [ITA-42/2019] 3.1.2018. Being aggrieved with the same, the assessee preferred appeal before the ITAT, which came to be allowed by the order dated 13.8.2018, against which, the appellant has preferred the instant appeal. Learned counsel for the appellant has argued that the ITAT has grossly erred in allowing deduction under Section 80IB of the Act of 1961 to the assessee without taking into consideration the fact that she was not involved in development and construction of the housing project. It is submitted that the Assessing Officer as well as the CIT(A) after carefully gone through the evidence has rightly held that the assessee is not entitled for deduction under Section 80IB of the Act of 1961 as she was not at all involved in the project in any manner. Learned counsel for the appellant, thus, prayed that the impugned order passed by the ITAT may be set aside. The revenue has proposed the following substantial question of law in the matter :- “Whether on the facts and in the circumstances of the case, the learned ITAT was justified in allowing relief of Rs.7,95,00,000/-

by holding

liberal interpretation of the provisions of section 80IB of the IT Act, 1961?” Heard learned counsel for the appellant and gone through the material available on record. (Uploaded on 16/11/2021 at 04:55:31 PM) (Downloaded on 28/10/2026 at 12:49:48 AM) (4 of 6) [ITA-42/2019] The ITAT in its order dated 13.8.2018 has held as under :- “47. It is clear from the above findings and observation that the Id. AO and CIT(A) without examining all the documents, affirmations, in the true prospective as well as not coming to terms with the changing and evolving ground realities kept on harping that the assessee was merely a land owner and her role was to sign the documents. The Id. AO winked over the name of assessee only on the land patta, chitha, adangal which tantamount to conversion as discussed in detail in the preceding paras. Further the Id. AO also turned a blind eye to the address of the assessee being mentioned on the NOC for construction, which clearly signifies that the same was applied and obtained by the assessee. The NOC has given recognition to the status of company being bestowed with civil construction responsibility contained its name. If the company had obtained the NOC it would have borne the name of company itself.

48.

In view of the foregoing, we observe that the assessee is an integral part of the development and construction activities. The assessee is not merely the land owner who had agreed to part with the land. Normally, once the land is transferred to the developer, the developer does the entire activity, whereas in the instant case, the assessee as mentioned above, has also done additional activities, which are integral parts to develop the project. Therefore, it was held in the judgment of Sharvanee Construction that the assessee is entitled to the benefit of tax under the aforesaid provisions. The contention of the assessee is fortified by the following judicial pronouncements in the case of M/s Shravanee Construction is parimateria to that of the assessee. The ration of the decision is fully and squarely applicable on the instant case of the appellant. Like in the case of M/s Shravanee Construction the appellant also actively participated in the development work and eligible for deduction u/s 80IB of the IT Act. The case of (Uploaded on 16/11/2021 at 04:55:31 PM) (Downloaded on 28/10/2026 at 12:49:48 AM) (5 of 6) [ITA-42/2019] No.57/Bang/2011 in which it was held that it was also clear from the joint development agreement that the undertaking of developing and building housing project was jointly undertaken by the assessee and M/s Reddy Structures Pvt. Ltd., therefore, the assessee was entitled for the benefit of deduction u/s 80IB(10) of the Act. From the record we found that the assessee had purchased land at Sriperumudur along with Sh. Jethmal Sancheti on 17.07.2006. Both of them contributed land and were involved in development and construction of the project. All the documents which mention the name of the assessee in relation to the project work also contain the name of Sh. Jethmal Sancheti. He is assessed to tax at Silchar. The assessment in his case was completed under section 143(3) of the IT Act by granting the deduction under section 80IB(10) of the IT Act in relation to the income derived from the housing project. Later on the jurisdictional commissioner of income tax initiated the revisional proceeding under section 263 of the IT Act. After due examination, the hon’ble commissioner held the claim for deduction in order and did not disturb the finding of the AO. The case of the assessee is identical with that of Sh. Jethmal Sancheti. It is also not the case of Department that full deduction u/s.80IB (10) has been given to M/s. Prince Foundation Limited. The Prince Foundation Limited has claimed deduction only to the extent of profit attributable to its share of super built up area after completion of the project. 20% share of built up areas since belongings to the assessee as per the joint venture agreement, the assessee has claimed deduction only to this extent, therefore, there is no reason to decline assessee’s claim for deduction with respect to her share of super built up area which amounts to Rs. 7,95,50,498/-. Furthermore, the issue is squarely covered by the decision of Hon’ble Karnataka High Court in case of M/s Shravanee Construction. No contrary decision was placed on record by learned AR or by any of the lower (Uploaded on 16/11/2021 at 04:55:31 PM) (Downloaded on 28/10/2026 at 12:49:48 AM) (6 of 6) [ITA-42/2019] authorities so as to suggest that assessee is not entitled to deduction with respect to her share in built up area.” From the above findings of the ITAT, it is clear that the assessee has actively participated in completing the project and was not merely a land owner. The Karnataka High Court in its order dated 28.2.2012 passed in ITA No.421/09 - CIT Vs. M/s Shravanee Construction, while dealing with the similar circumstances, has held that the assessee is entitled for deduction under Section 80IB of the Act of 1961. In view of the categorical findings recorded by the ITAT and after carefully scrutinizing the material available on record, we do not find any case for interference in the impugned order passed by the ITAT and also do not find any substantial question of law requiring adjudication by this Court while exercising powers under Section 260A of the Act of 1961. Resultantly, this appeal being devoid of any force is hereby dismissed summarily. (ANOOP KUMAR DHAND),J (VIJAY BISHNOI),J 14 – ms rathore Powered by TCPDF (www.tcpdf.org) (Uploaded on 16/11/2021 at 04:55:31 PM) (Downloaded on 28/10/2026 at 12:49:48 AM)

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