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Income Tax Appellate Tribunal, “ D ” BENCH, AHMEDABAD
Before: SHRI N.K. BILLAIYA&
PER Ms. MADHUMITA ROY – JM: The appeal preferred by the Revenue is directed against the order of the Commissioner of Income Tax(Appeals)-V, Baroda [CIT(A) in short] dated 08.08.2014 passed for the Assessment Year (AY) 2010- 11.
ITA No.3016/Ahd/2014 ITO vs. M/s.Shubham Enterprise Asst.Year – 2010-11 - 2 -
The grounds of appeal raised by the Revenue read as under:- 1. On the facts and circumstances of the case and in law, Ld.CIT(A) erred in deleting the disallowance of Rs.80,47,093/- made u/s.80IB(10) of the Act.
The Ld.CIT(A) erred in not appreciating the fact that the unit holders, i.e. purchasers have occupied the plot of land directly from the original land owner by virtue of independent purchase deed, and the assessee being contractor eligible for fix remuneration in lieu of rendering services.
The Ld.CIT(A) failed in not applying the decision of ITAT, Ahmedabad’s order in the case of M/s.Shakti Corporation [ITA No.1503/Ahd/2008] being ratio decidendi rendering the assessee ineligible for claim of deduction u/s.80IB(10) of the Act.
Though the assessee has raised several grounds of appeal but effective grievance of the assessee is in regard to the non-grant of deduction of Rs.80,47,093/- claimed u/s.80IB(10) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").
The relevant facts of the instant case are that the assessee is a partnership firm engaging in developing housing projects. The return of income for the year under consideration declaring income of Rs.5,750/- was furnished on 28.06.2010 claiming deduction u/s.80IB of the Act to the tune of Rs.80,47,093/-. The assessment was made u/s.143(3) of the Act by the Assessing Officer (AO) on 25.3.2013. During the course of
ITA No.3016/Ahd/2014 ITO vs. M/s.Shubham Enterprise Asst.Year – 2010-11 - 3 - assessment proceedings upon verification of the proposed lay out plan, development permission from Vadodara Municipal Corporation (VMC) and the development agreement, it appears that the assessee is not the actual owner of the land on which the project called “Sahajanand Township Society” was constructed. The approval of the project is not granted to the assessee-firm M/s.Shubham Enterprise to claim deduction and the same was granted by the VMC on the application made by the applicant Smt.Kusumben Chimanbhai Patel and others. But in fact the assessee has claimed deduction u/s.80IB of the Act of Rs.80,47,093/-.
The AO disallowed the claim of such deduction on the sole ground that the assessee was not the owner of the land. According to the AO, the assessee was not a developer within the meaning of section 80IB(10) of the Act but was merely a civil contractor. Against the said order passed by the AO, appeal has been preferred by the assessee before the CIT(A). The ld.CIT(A) allowed the deduction of Rs.80,52,843/- u/s.80IB(10) of the Act on the basis of the order passed in the identical issue in respect of the same assessee for AY 2007-2008 on 08.08.2014.
Against the said order, the instant appeal has come up before us.
We have heard the arguments advanced by both the parties and 6. have perused the relevant material available on record.
ITA No.3016/Ahd/2014 ITO vs. M/s.Shubham Enterprise Asst.Year – 2010-11 - 4 -
The Ld.DR for the revenue relied upon the order of the AO.
The Ld.AR has referred the submissions made by the assessee which are as follows :-
“3.3. In response to the above notice, the assessee filed its submissions, which is summarized as below :
i) The appellant is a partnership firm constituted on 10.12.2003 and further amended on 01.04.04. The partnership deed contains specific clause No. 11 on page No. 5 & 9 about the purchase of land for the development of the same. ii) The land survey No. 466, 470/1, 464/1, 469, 464/2, 463 at village Bapod. Ta. & Dist : Baroda is purchased from land owners through development agreements executed by the land owner and by all the partners on behalf of the appellant firm. The land owners gaves all their right over the land and gaves full authority to the appellant firm to develop the land and enjoy the land in the manner of his choice. iii) The total land purchased was about 22.502 sq. mtrs. which is more than one acre stipulated u/s 80IB(10)(b) of the Income Tax Act, 1961. iv) As per the development agreement the entire expenditure for obtaining permission from various government and semi Govt. departments was to be borne by the assessee firm. The English translation of the development agreement which are relevant are reproduced hereunder:-
"the necessary permission for converting the land from Juini Sharat to New Sharat and for construction to be obtained from Govt. and Semi Govt. departments shall be obtained by the developer and the cost of the same shall have to borne by the developer." "the developer can carry the work of levelling on the land, to carry survey work, to appoint architect, to appoint contractors and sub-contractors etc ...."
ITA No.3016/Ahd/2014 ITO vs. M/s.Shubham Enterprise Asst.Year – 2010-11 - 5 - "the developer can advertise the scheme, to collect the amount from customers, to issue the receipts in the name of developer, to complete construction work as per permission from Vadodara Municipal Corporation ...." v) The appellant firm had applied for permission of construction and obtained permission from Vadodara Municipal Corporation on 19.03.2004 and started construction work. vi) The appellant firm has partly completed the construction and got applied for competitions before the 31.03.2008.
vii) The appellant firm has claimed exemption of entire profit u/s 80IB(10) of the Income-tax Act, 1961.”
We have considered the judgment by the Hon’ble Jurisdictional High Court in the case of CIT vs. Radhe Developers(supra) relied upon by the Ld.AR, wherein the Hon’ble High Court has held as under:-
“Section 80IB(10) allows deduction to an undertaking engaged in the business of developing and constructing housing projects. There is no requirement that the land must be owned by the assessee seeking the deduction. Under the development agreement, the assessee had undertaken the development of housing project at its own risk and cost. The land owner had accepted the full price of the land and had no responsibility. The entire risk of investment and expenditure was that of the assessee. Resultantly, profit and loss also accrued to the assessee alone. The assessee had total and complete control over the land and could put the land to the agreed use. It had full authority and responsibility to develop the housing project by not only putting up the construction but by carrying out various other activities including enrolling members, accepting members, carrying out modifications engaging professional agencies and so on. The risk element was entirely that of the assessee. The assessee was a "developer" in common parlance as well as legal parlance and could not be regarded as only a "works contractor". The Explanation to Section
ITA No.3016/Ahd/2014 ITO vs. M/s.Shubham Enterprise Asst.Year – 2010-11 - 6 - 801B inserted w.r.e.f 1.4.2001 has no application as the project is not a "works contract". Further, as the assessee was, in part performance of the agreement to sell the land, given possession and had also carried out the construction work for development of the housing project, it had to be deemed to be the "owner" u/s 2(47)(v) r.w.s. 53A of the TOP Act even though formal title had not passed (Faqir Chand Gulati vs. Uppal Agencies (2008) 10 SCC 345 distinguished).”
The Jurisdictional Tribunal has allowed the deduction u/s.80IB(10) of the Act on similar set of facts in the case of M/s.Satsang Developers in ITA No.1101 &2498/Ahd/2012 by and under order dated 12.11.2013 as also in the matters of M/s.Sagar Associates and M/s.Sagar Builders in ITA No.460 & 461/Ahd/2013 by common order dated 26.11.2013.
It also appears that the assessee has been allowed deduction for AY 2007-08 by the CIT(A)-V, Baroda. The Coordinate Bench has also allowed deductions in assessee’s own case in ITA No.960/Ahd/2013 for AY 2009-10 on 20/03/2017.
The issue is identical in the instant case. Taking into consideration of the entire facts and circumstances of the case and respectfully following the judgement of Hon’ble Jurisdictional High Court in the case of CIT vs. Radhe Developers(supra), we uphold the order passed by the Ld.CIT(A) and disallow the instant appeal filed by the Revenue.
ITA No.3016/Ahd/2014 ITO vs. M/s.Shubham Enterprise Asst.Year – 2010-11 - 7 -
In the result, Revenue’s appeal stands dismissed. This Order pronounced in Open Court on 06/06/2018
Sd/- Sd/- (एल.के.�ब�लैया) (सु�ी मधु�मता रॉय) लेखा सद�य �या�यक सद�य (Ms.MADHUMITA ROY ) ( N.K. BILLAIYA ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated / 05 /2018 Pronounced on 6/6/18 Sd/- Sd/- (AS) (MR) AM JM ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-V, Baroda �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation ..26.4.18 (dictation-pad 8-pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …26.4.18/2.5.18 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….6.6.18 7. Date on which the file goes to the Bench Clerk…………………6.6.18 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature 10. Date of Despatch of the Order……………… on the order……………………..