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2016 (10) TMI 923 - ITAT AHMEDABAD

2016 (10) TMI 923 - ITAT AHMEDABAD - TMI - Eligibility of deduction under section 80IB(10) - requirement of ownership of the land to qualify for deduction u/s 80IB(10) - Held that:- As decided in in the case of CIT Vs. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT ] for developing housing project, it is not necessary that the assessee to be owner of the land. Similarly, it was not necessary that approval should be in the name of assessee. If assessee has borne risk and reward of the c .....

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(10) of the Act. We allow appeal of the assessee, and direct the AO to grant deduction under section 80IB(10) of the Act. - Decided in favour of assessee - ITA.No.2496/Ahd/2013 - Dated:- 7-10-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Assessee : Shri G.C. Pipara, AR For The Revenue : Shri James Kurian, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER Present appeal is directed at the instance of the assessee against the order of the ld.CIT(A)-XV, Ahme .....

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aljibhai Ranpariya, a partner of the assessee-firm. In the affidavit it has been deposed that the assessee firm was engaged in the business of organizer and developer for development and construction of residential housing project. It has filed its return of income on 31.10.2007 declaring NIL income after claiming deduction under section 80IB(10) of the Income Tax Act at ₹ 1,03,17,545/-. The ld.AO has passed an assessment order under section 143(3) on 21.12.2009. He declined claim of deduc .....

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of these notices are being annexed in the paper book filed by the assessee. The deponent further deposed that after receipt of this notice, he immediately approached his Chartered Accountant who was conducting proceeding before the ld.CIT(A). It came to the notice of the deponent that the CA had received copy of the CIT(A) s order and it was given to accountant of the firm viz. Shri Ashwinbhai Bhavsar, somewhere in the month of January, 2011. Shri Ashwinbhai Bhavsar has left job in the month of .....

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o appraise the assessee directly about the order of the ld.CIT(A). 4. In order to verify correctness of the claim made in the application as well as in the affidavit, we have directed the ld.DR to submit copy of acknowledgement exhibiting service of CIT(A) s order. Vide letter dated 3.8.2016, the Joint Commissioner of Income Tax who is Senior DR with B Bench has placed on record copy of the communication by the office of the CIT along with copy of acknowledgement. In this acknowledgement, it is .....

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ore, we passed the following order: 07.09.2016 Present: Assessee by - Shri G.C. Pipara, AR Revenue by - Shri James Kurian, Sr.DR Registry has pointed out that appeal of the assessee is time barred by 971 days. In order to explain the delay, the assessee has filed an application supported with affidavit of Shri Pareshbhai Laljibhai Ranpariya, who is partner in the assessee-firm. 2. In the affidavit, it has been deposed that ld.CIT(A) has decided the appeal of the assessee on 16.12.2010. This orde .....

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job in the month of February, 2011 and due to this reason, appeal could not be filed within time. 3. Whether Shri Ashwinbhai Bhavsar has ever worked with the assessee or not, there is no evidence in support of this pleading. Similarly, there is no material placed on record by the assessee to demonstrate that Shri Ashwinbhai Bhavsar has left job in February, 2011. During the course of hearing, when we faced with this situation, we direct the ld.counsel for the assessee to produce attendance regi .....

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e to the Tribunal s order, the assessee has filed paper containing copy of salary register for the month of April, 2005 to March, 2016. In these details, it has been pointed out that Shri Ashwinbhai Bhavsar was working as an accountant with the assessee-firm on a monthly salary of ₹ 6000/-. The assessee, thereafter, filed copies of income-tax return of Shri Ashwinbhai Bhavsar for the Asstt.Year 2007-08. In this return, Shri Ashwinbhai Bhavsar has shown salary income from the assessee. This .....

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as individuals. The assessee was one of them. Similarly, he has an income of ₹ 57,000/- in the Asstt.Year 2010-11 from writing the accounts. On the strength of these documents, it has been pleaded that Shri Ashwinbhai Bhavsar was working with the assessee as a regular employee, thereafter, he was working as a parttime employee on annual remuneration basis. He has been writing the accounts of the firm as well as some of the partners in their individual capacities. The ld.counsel for the ass .....

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Auto Centre Vs. State of Uttar Pradesh and Ohters, 278 ITR 291 (All.) v) M/s.Lahoti Overseas Ltd. Vs. DCIT, ITA No3786/Mum/2012. 6. The ld.DR, on the other hand, opposed the prayer of the assessee. He contended that it is humanly improbable that accountant would not inform the assessee about the decision of the ld.CIT(A). According to the ld.DR, it was a severe negligence at the end of the assessee in conducting its income-tax proceedings, and therefore, does not entitle for any sympathetic con .....

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at benefit reach to the people, certain conditions were provided in sub-section (10). The assessee has no taxable income, if deduction under section 80IB(10) was allowed to the assessee. The question is whether in this given situation, the assessee could afford to act negligently. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause f .....

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e Hon ble Supreme Court, then, Hon ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cau .....

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se of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical .....

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d by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founde .....

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uitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there .....

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e Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss. We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon ble Courts are unanimous i .....

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s part-time accountant, who has collected copy of the order from the tax consultant office. In the case of N.Balakrishnan Vs. M.Krishnamurthy (supra), the Hon ble Court has observed that every case of delay, there must be some negligence, but that negligence is to be viewed whether to make an appeal time barred was adopted by way of conscious decision as a dilatory strategy. In the present case, by making the appeal time barred, the assessee would not achieve anything. It is also to be seen that .....

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s punishment is disproportionate to the negligence. This also one of the reasons weighed in our mind for condoning the delay. Apart from this, we find that the issue on merit was interpreted by the AO against the assessee, because at that point of time, position of law was not clear on this aspect. This line of reasoning adopted by the AO did not get approval of the Hon ble jurisdictional High Court. We will be dealing with this issue on merit in the subsequent paragraph. But a subsequent develo .....

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ing survey nos.27 and 29 having an area of 14602 sq.meters was purchased by Nandi Villa Co-op. Housing Society Ltd. on 21.2.2003 for a consideration of ₹ 21,90,300/-. Similarly, land bearing survey nos.32/3, 32/3, 31/2 and 29 admeasuring an area of 12870 sq.meters was purchased by Nandi Vihar Co-op. Housing Society Ltd. This land was also purchased on 21.2.2003 for a consideration of ₹ 19,30,500/-. Both these societies took permission from local authority for development and construc .....

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n consideration received for construction and transfer the land cost to the society. During the course of assessment proceedings, the assessee has further submitted as under: a) Your good self have considered segmental clauses of the agreement and not the entire development agreement in totality. b) The required land location is found out bus. c) The negotiations with the landlord for purchase of the land its consideration is negotiate and determined by us. d) The society is promoted through us. .....

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managed by us. i) The entire land purchase consideration, finance is arranged by us making the payment to the society from the fund of the partnership fund. There is direct nexus between the money consideration and the fund. The land purchase consideration is moved from our firm to the original landlord through the society. j) The land document deed and its registration formalities were completed by us. The initial banakhat payment for land purchase is also paid by our firm. The society was not .....

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egards material, labour Manpower, electricity, architect, engineers, design, advertisement and other, requirement in connection with successful completion of the development of housing project and construction. The other conditions also amply proves that we have acted as only develops of housing project and construction work. We are not simply contractors. Thus, the requirement of provisions of section 80IB(10) stands fully satisfied. 10. The ld.AO was not satisfied with the contentions of the a .....

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ued to it by the Local authority. 2 The Assessee entered into the project by a Development Agreement with the land owner and construction was done as per the agreement and hence the assessee is merely a contractor for the purposes of construction of the project. 3 The assessee has not sold any unit to the purchaser but the Societies have executed the sale deeds as a seller and the assessee joined only as a confirming party to the transaction. This also proves that the assessee has merely a contr .....

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for which deduction u/s. 80IB(10) was being claimed, ties contention was not found true because BU permission of 14 shops was dated 23.3.2007 and was given along with BU permission of 158 residential units on which deduction had been claimed in this year by the appellant. Further Annexure 2 of this order which is the Annexure enclosed by the appellant with submission dated 2.12.2010 does not in any way prove that the receipts/ income from construction and sale of shops had been accounted for in .....

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it which includes 14 and 7 shops as well. This development permission runs into 2 pages because of the lengthy tables. Thus development permission for the entire project - Nandi Gram - was taken in one instance. Though asked to furnish BU permission of 7 shops the appellant did not and BU permission dated 23.3.2007 was furnished which is for 158 residential unit and well as for 14 shops. The learned AR could not inform anything though asked about the other 7 shops. In the case of the appellant t .....

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he built-up area of the shops and other commercial establishments included in the housing project should not exceed 5% of the aggregate built-up area of the housing project or 2000 sq.ft. whichever is less. The disallowance of section 80IB(10) is upheld on the ground that the appellant is found violating the condition stipulated in clause (d) of section 80IB(10). 12. With the assistance of the ld.representatives, we have gone through the record. A bare perusal of section 80IB would indicate that .....

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usal of the impugned order would indicate that neither the AO nor the ld.CIT(A) has raised any objection with regard to these conditions. Let us deal with this objection of the ld.CIT(A) first. The ld.CIT(A) has observed that flat size was higher and the assessee has constructed shops also. We find that the ld.CIT(A) has recorded factually incorrect finding. Deduction has been claimed with regard to the projects viz. Nandi Vihar Co-op. Housing Society Ltd. and Nandi Villa Co-op. Housing Society .....

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