TMI Blog2014 (5) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Member: Out of these three appeals, there are two cross-appeals by the assessee and the revenue arising out of the assessment order passed by the AO u/s.143(3) of the Act being ITA Nos.1011 1221/Ahd/2012 directed against the order of ld.CIT(A)-II, Baroda dated 05/03/2012. The remaining one appeal, i.e. ITA No.2498/Ahd/2012 is an assessee s appeal arising out of the penalty order passed u/s.271(1)(c) of the Act for the same assessment year and this appeal is arising out of a separate order of ld.CIT(A)-II Baroda passed by him u/s.271(1)(c) of the Act. For the sake of convenience, all the appeals are being disposed of by way of this common order. 2. First, we dispose of the cross-appeals in quantum proceedings. 2.1. Brief facts till the assessment stage are noted by the ld.CIT (A) in paragraph Nos.1 to 3.1.2 of his order and these paras are reproduced below for the sake of ready reference. INTRODUCTION: This appeal has been filed against he order u/s.143(3) 154 of the Income-tax Act, 1961 for the assessment year 2008-09 passed by the Asst. Commissioner of Income-tax, Circle-2(1), Baroda. In response to notice of hearing, Shri Pradip Goradia, CA Authorized Repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee s name was not satisfied and therefore the claim was denied. Without prejudice to the aforesaid argument it was observed by the Assessing Officer that the assessee had utilized FSI of 14,394 sq.mt. and left unutilized FSI of 27,371 sq.mt. and as the unutilized land was disposed by the assessee along with the tenements to prospective buyers, the profit booked from sale of 27,371 sq.mt. was stated to be outside the ambit of provisions of section 80IB (10) as it was not the profit derived from activities of development and construction. In essence deduction u/s.80IB (10) was denied on account of ownership not being in the name of the appellant, and ion the alternative the deduction was limited to sale of unutilized FSI of 14394 sq.mt. 3. Being aggrieved, the assessee carried the matter in appeal before the ld.CIT (A). The ld.CIT (A) has decided the issue in favour of assessee in respect of two objections raised by the AO, i.e. that the assessee has not purchased the land in its name and on the issue that there is sale of unutilized FSI. In para 3.2.3 of his order, it was held by the ld.CIT (A) that the disallowance of deduction u/s.80-IB (10) made by the AO on these two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the assessee and therefore, the project is not complete and no completion certificate for the shops as well as residential flats have been obtained before 31/03/2008. 4.1. Regarding Shree Hari Darshan Bungalows scheme, it was noted by him that this scheme was sanctioned with shops of 1081.12 sq.meters, i.e.14.46% of the aggregate built-up area of the project and, therefore, there is violation of clause(d) of section 80-IB(10) of the Act. Thereafter, it was noted by the ld.CIT (A) that the claim of the assessee that they have sold off the land on which commercial construction was to be done is not acceptable. Reasoning given by him is this that the project was sanctioned with commercial area more than specified limits and, hence, the project violates clause (d) as well as violates the completion time clause. 4.2. In addition to above two objections, the ld.CIT (A) has raised one more objection that the assessee has sold the land to the Unit holders separately and has done the construction of units under separate agreement/contract and, therefore, the assessee is not eligible for deduction u/s.80-IB(10) of the Act because as per ld.CIT(A), profit earned by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following Tribunal decisions:- Sl.No(s) Decision in the case of Reported in 1. DCIT vs. SMR Builders (P.)Ltd. (2012)24 Taxman.com 194 (Hyd.) 2. Sky Builders Developers vs. ITO (2011)14 Taxman.com 78 (Indore) 3. M/s.Vardhman Builders and Developers vs. ITO ITA No.559/Ind/2010 dated 09/05/2012 4. Raghava Estates Vs. Dy.CIT ITA Nos.248 49/Vizag/2009 dated 04/08/2011 5.2. He submitted that in the case of Vardhman Builders Developers (supra) also, the assessee had entered into a separate agreement for sale of land and separate agreement for construction of housing on such land and under these facts, it was held by the Tribunal in that case that merely because of two separate agreements, the claim of the assessee for deduction u/s.80-IB (10) of the Act cannot be declined if other conditions are being satisfied. 5.3. He further submitted that in the case of DCIT vs. SMR Builders (P) Ltd. (supra) also, the facts were that the assessee had sold flats in a semi-finished stage. In that case, the AO had noted that as per the sale-deed, the assesseecompany has sold undivided share of land with super-structure of semi-finished built-up area for a certain consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Next date of hearing: 13.08.2013 Kindly refer to the above. 2. The above appeal came up for hearing on 01.08.2013 as a Part Heard Matter. In view of the revised work allocation of Departmental Representative before ITAT as decided by the CBDT the case was assigned to me. Since, the case was received by me on the previous day I had implored your honour to grant me time for preparing the case and arguing the same. Your honours were kind enough to allow me to file the written submission in the case by08.08.2011 3. On going to the CIT(A)'s order it is seen that the CIT(A) has allowed the appeal filed by the assessee relying on the decision of the Hon'ble jurisdictional High Court given in the case of Radhe Developers reported in 341 ITR 403 (Guj.). On going through the judgment delivered by the Hon'ble High Court it is seen that the Hon'ble High Court has recorded in para 31 of its order as under: 31. Neither the provisions of Section 80IB nor any other provisions contained in other related statutes were brought to our notice to demonstrate that ownership of the land would be a condition precedent for developing the housing project. It was perhaps no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) was not justified in granting relief to the assessee by following the Tribunal decision rendered in the case of M/s.Shakti Corporation Others in ITA No.1503/Ahd/2008 dated 07/11/2008. Now the judgement of Hon ble Gujarat High Court is available on this issue, i.e. the judgement rendered in the case of CIT vs. Radhe Developers (supra). Regarding this judgment of Hon bleJurisdictional High Court, it was submitted by the ld.DR of the Revenue that this judgment is not applicable because in that judgement of Hon ble Gujarat High Court, it was observed vide paragraph No.31 of the judgement that no provision contained in other related statutes were brought to the notice of Hon ble Gujarat High Court to demonstrate that ownership of the land would be a condition precedent for developing the housing project. He submitted that in the present case, the Revenue wants to bring this on record that as per Gujarat Town Planning and Urban Development Act, 1976 and the Regulations framed thereunder, it is necessary that ownership of the land is a condition precedent for developing the housing project. In this regard, we find that in this very judgement of Hon ble Gujarat High Court rendered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A). The first objection is this as to whether the commercial area under the two projects exceeds the specified limit and the second issue is this as to whether the projects were completed or not within the due date. In this regard, we find that it was submitted by the assesse before the ld.CIT (A) that the assesse has not constructed the shops and the relevant land on which the shops were to be constructed in both the projects were sold out. No defect has been pointed out by the ld.CIT (A) in these contentions of the assessee. He has rejected the contentions on this basis that the project was sanctioned which commercial area of more than specified limits and, therefore, there is violation of the conditions of clause (d) of section 80IB (10) and in consequence, there is violation of the conditions in the case (a) (iii) of section 80IB (10) of the Act because the project is not completed within the due date. We do not find any merit in these objections of ld.CIT(A) because in our considered opinion, what is relevant is this as to whether the built-up area of commercial space actually constructed by the assessee exceeds the prescribed limit or not because if the built-up area of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case are also similar because in that case also, the land was sold separately along with partial and unfinished construction of flats and, thereafter, construction agreement was entered into to carry out the balance construction work and under these facts, it was held by the Tribunal in that case that such agreement for construction to complete the balance work is only an incidental facilitation to protect interest of the parties and therefore, the assessee is eligible for deduction u/s.80-IB(10) of the Act. Similarly, in the case of Raghava Estates vs. Dy.CIT (supra) on which reliance was placed by the ld.AR of the assessee, the facts are similar. In that case also, the assessee had sold the plots separately and thereafter, constructed the houses and under these facts, the Revenue held that the assessee has to be considered as a mere contractor and, therefore, the assessee is not eligible for deduction u/s.80-IB (10) of the Act. This goes to show that the facts in that case were identical. In that case, it was noted by the Tribunal that the assessee had chosen to register the plot in the name of the buyer on payment of specified amount in order to achieve cost saving and to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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