INCOME TAX OFFICER, WARD 7(1),, PUNE vs. M/S. SKYLINE DEVELOPERS,, PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

Assessee is a partnership firm stated to be engaged in the business of Real Estate Development. Assessee filed its original return of income for A.Y. 2010-11 on 15.10.2010 declaring total income at Rs. Nil after claiming deduction of Rs.24,16,16,000/- u/s 80IB(10) of the Act. Subsequently, the

assessee revised return of income on 29.03.2012 after modifying the claim

of deduction u/s 80IB(10) of the Act at Rs.49,47,079/-. The return was

initially processed u/s 143(1) of the Act. Thereafter, the case was re-

opened by issuing notice u/s 148 of the Act. Subsequently, assessment

was framed u/s 143(3) r.w.s 147 of the Act vide order dt.21.03.2014 and

the total income was determined at Rs.1,64,47,607/- inter-alia by denying

the claim of deduction u/s 80IB(10) of the Act. Aggrieved by the order of

AO, assessee carried the matter before Ld.CIT(A), who vide order

dt.28.04.2017 (in appeal No.PN/CIT(A)-5/ITO.Wd-4(5), Pune/382/2014-15)

granted substantial relief to the assessee. Aggrieved by the order of

Ld.CIT(A), Revenue is now before us and has raised the following grounds :

“1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that the assessee was eligible for claiming deduction u/ s.80IB(10) of the Act without appreciating that deduction u/s.80IB(10) was available to an undertaking engaged in developing and building housing project and the assessee had only provided the land to the joint venture formed i.e. Brahma Skyline JV. 2. Whether on the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that the assessee had carried out its obligation as builder and developer in development of 2,40,000 sq.ft. only and did not play any role as builder and developer in respect of construction of housing project on 4,63,103 sq.ft. of land on which deduction ix] s.80IB(10) was claimed and not allowed. 3. Whether on the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that the claim of deduction u/s.80IB(10) could only be considered in the hands of AOP and as no return of income had been filed .by the AOP, the same could not be considered and the revenue sharing arrangements at 32:68 was intended to compensate the two members of JV for their respective contribution and expenses incurred.”

Act on the income from Bramha-Skyline Joint Venture (JV). AO noted that

assessee is a member of Bramha-Skyline which is a JV between Bramha

Builders and Skyline Developers. He noted that the project was first

commenced from 03.03.2007 and completed on 04.11.2009. He also noted

that M/s. Skyline Developers had introduced land admeasuring 38200

sq.mtrs and M/.s Brahma Builders had agreed to construct on the land.

Accordingly Brahma Skyline JV was formed for developing the Skyline

Housing Project. AO noted that the members of the JV had decided to

share the gross sale proceeds received from the sale of the units and from

all saleable areas including parking, terrace, etc., in the ratio of 32:68.

The AO also noted that the JV had not filed any return since its formation

and according to him it was the JV which could have claimed the

deduction u/s 80IB(10) of the Act. He noted that since assessee had

merely introduced land and had not performed the role of Builder and

Developer of a housing project, it was not entitled to claim for deduction

u/s 80IB(10) of the Act. He accordingly denied the claim of deduction.

Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A),

who noted that in assessee’s own case, her Predecessor had decided the

issue in favour of the assessee in A.Y. 2009-10. She accordingly decided

the issue in favour of the assessee by observing as under :

“4.3 I have perused carefully toe material on record and toe contention of toe Appellant I find that, on the same issue regarding the claim of deduction u/s 80IB(10) and for the same project, toe CIT(A) in the Appellant’s own case for AY 2009-10 has decided in favour of the Appellant by holding at Para 3.5 as under:-

“The Assessing officer has rejected the claim of deduction u/s 80IB(10) on the plea that the Appellant merely introduced the land in the JV and did not perform the role of builder and developer which is prima facie not correct as the Appellant did construct the flats for the members of the society in terms of the development agreement and, thereafter, after getting the rights to develop the balance portion of the land entered into a JV with M/s. Bramha Builders. The fact 'thus brought on record clearly indicates the Appellant to have acted as a developer and builder and not merely introduced the land. It is relevant to point out that the development of the project was carried out by the Appellant firm firstly on its own with respect to the portion of the property to be constructed and handed over to the society and; secondly in JV with M/s. Bramha Builders with respect to the portion of the property which was to be sold to outsiders and the Appellant

in the JV worked with equal risk. Further, the Appellant also satisfied all other conditions as stipulated under the provisions of section 80IB(10) and therefore, it is very much eligible to claim deduction under the said section. However, it is very much eligible to claim deduction under the said section. However, the said claim has to be restricted to Rs. 1,05,72,657/- which is the net profit arrived as per the audited account statement that clearly indicates the total gross income at Rs. 9,67,83,200/- and the expenditure of Rs. 8,62,10,542/-. Thus, in view of the existing fact and circumstances of the case and the reasoning of the judicial authorities on the subject in my considered opinion, the Appellant is entitled to claim the deduction u/s 80IB(10) of the Act." Following judicial discipline, in view of the above order it is held that the Appellant is entitled to claim deduction u/s 80IB(10) of the I. T. Act, 1961. The AO is directed to allow the claim accordingly. Therefore, this Ground of Appeal is allowed.”

Aggrieved by the order of Ld.CIT(A), Revenue is now before us.

AO and Ld.CIT(A) and further submitted that against the order of Ld.CIT(A)

for A.Y. 2009-10, Revenue had preferred appeal before the Tribunal and the

Tribunal vide order dated 10.01.2018 in ITA No.1503/PUN/2014 had

dismissed the appeal of the Revenue. He also placed on record the copy of

the aforesaid decision. He therefore submitted that in view of the aforesaid

facts, no interference to the order of Ld.CIT(A) is called for.

record. The issue in the present ground is with respect to the denial of

claim of deduction u/s 80IB(10) of the Act. We find that Ld.CIT(A) while

deciding the issue in favour of the assessee had relied on her Predecessor’s

order in assessee’s own case for A.Y. 2009-10. We further find that

against the order of Ld.CIT(A) for A.Y. 2009-10, Revenue had preferred

appeal before the Tribunal and the Tribunal in ITA No.1503/PUN/2014

vide order dated 10.01.2018 had dismissed the appeal of the Revenue

meaning thereby that the order of Ld.CIT(A) for A.Y. 2009-10 has attained finality. Before us, Revenue has not placed any material on to demonstrate that the order of ITAT for A.Y. 2009-10 has been set aside by higher Judicial Forum. Further, Revenue has also not pointed out any fallacy in the findings of Ld.CIT(A). In such circumstances, we find no reason to interfere with the order of Ld.CIT(A). Thus, the grounds of the Revenue are dismissed.

Order pronounced on 12th day of September, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 12th September, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-5, Pune. 4. Pr. CIT-4, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.