Case Law Details

Case Name : Pr. CIT Vs Green Associates (Gujarat High Court)
Appeal Number : Tax Appeal No. 1199 of 2018
Date of Judgement/Order : 08/10/2018
Related Assessment Year :
Courts : All High Courts (5981) Gujarat High Court (597)

Pr. CIT Vs Green Associates (Gujarat High Court)

The sole surviving question relates to the assessee’s disclosure of unaccounted receipts during the survey operation. The Assessing Officer taxed such receipts with the aid of Section 68 of the Act. Before the higher authorities, assessee argued that this also been the assessee’s income from development of housing project, the same should have been allowed as a deduction under Section 80IB [10] of the Act. The CIT [A] and the Tribunal accepted such proposition, upon which the Revenue has filed this Appeal.

There is nothing on the record to suggest that the assessee had other businesses or that the undisclosed receipts were assessee’s profit out of any other activity other than development of housing project, The Tribunal came to the specific conclusion that the unrecorded consideration was also part of the assessee’s sale transaction of completed residential units and was therefore eligible under Section 80IB [10] of the Act. We do not find any error in such view.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad [“Tribunal” for short] dated 14th March 2018. The following questions are presented for our consideration:-

[A] “Whether on the facts and in circumstances of the case, the ITAT has erred in law and on facts in deleting the disallowance of deduction under Section 80IB [10] of the Act with respect to undisclosed income of Rs. 1,50,00,000/= assessed as unexplained cash credit under Section 68 of the Income-tax Act, 1961 ?”

[B] “Whether on the facts and in the circumstances of the case the ITAT has erred in law and on facts in allowing the assessee the deduction under Section 80IB [10] of the Act, after treating the assessee as a developer of the Housing Project even though the project as a whole was not primarily developed and built by the assessee itself and the assessee has merely acted as a contractor, rendering it ineligible for deduction under Section 80IB [10] of the Act ?”

[C] “Whether on the facts and in the circumstances of the case, the ITAT has erred ion law and on facts in allowing the assessee the deduction under Section 80IB [10] of the Act as a whole, in view of the fact that in assessee’s case there were two separate agreements for sale of plot and construction on the plot and there was no sale of constructed house and thus, assessee had merely acted as contractor of the unit holder in respect of construction of house, and therefore, not entitled to deduction under Section 80IB [10] of the Act because the subsection does not apply to a developer of a plotting scheme or a contractor ?”

Questions [A] and [B] pertain to the Revenue’s opposition to the assessee’s claim of deduction under Section 80IB [10] of the Income-tax Act, 1961 [“the Act” for short]. Counsel for the Revenue candidly pointed out that in case of this very assessee for the earlier assessment years, Tax Appeals No. 1154 and 1155 of 2018 raising similar questions came to be dismissed by an order dated 17th September 2018, making the following observations :

“3. The respondent is engaged in the business of housing development. For the assessment year 2010-11, the assessee had claimed deduction in respect to the income arising out of such activity under section 80IB (10) of the Income Tax Act. The Assessing Officer disallowed the claim mainly on the ground that the assessee was not the owner of the land and the approval of the project was not in the name of the assessee. The issue ultimately reached the Tribunal where the Revenue also contended that the assessee had not sold the residential spouse in the housing project but had sold the residential plots with construction upto plinth level. The assessee therefore cannot be considered as a developer of a housing project but was mere a contractor. The Tribunal followed its earlier judgment in case of similar assessee and confirmed the decision of CIT (A) allowing the claim.

4. Various issues arising out of the claim of different assesses under section 80IB (10) of the Act came to be thrashed out by a Division Bench judgment of this Court in case of Commissioner of Income Tax vs. Radhe Developers, reported in 341 ITR 403. The Court took note of various development agreements executed by the assessee in favour of individuals claiming that they had been engaged in the activity of housing development. Revenue’s contention, that the nature of activities carried on by the assessees would only qualify them to be the contractors executing works contract, was also considered. It was held that the assessee had undertaken the development of housing project at their own risk and cost. The owner of the land had accepted the full price of the land. He was therefore not concerned with the successor or failure of the housing project. In such background, reference was made to the definition of term “transfer” under section 2(47) of the Act and held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee’s claim of deduction under section 80IB(10) of the Act.”

Without recording separate reasons, these questions are not considered.

The sole surviving question relates to the assessee’s disclosure of unaccounted receipts during the survey operation. The Assessing Officer taxed such receipts with the aid of Section 68 of the Act. Before the higher authorities, assessee argued that this also been the assessee’s income from development of housing project, the same should have been allowed as a deduction under Section 80IB [10] of the Act. The CIT [A] and the Tribunal accepted such proposition, upon which the Revenue has filed this Appeal.

There is nothing on the record to suggest that the assessee had other businesses or that the undisclosed receipts were assessee’s profit out of any other activity other than development of housing project, The Tribunal came to the specific conclusion that the unrecorded consideration was also part of the assessee’s sale transaction of completed residential units and was therefore eligible under Section 80IB [10] of the Act. We do not find any error in such view.

In the result, Tax Appeal is dismissed.

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