Case Law Details
Ashok G Patel Vs DCIT (ITAT Surat)
Form no. 10CCB clearly states that the undertaking is partly owned. Sale proceeds are also deposited equally in individual account. Deduction u/s 80IB(10) allowed
Facts-
The assessee undertook a development of housing project and claimed deduction u/s. 80IB(10). The assessee developed housing project in the name of “Hampton Park” alongwith his mother. The assessee and his mother were having 50% shareholding in housing project. The assessee in his computation of income claimed deduction u/s. 80IB(10) of Rs.59,80,995/-. During the assessment, Assessing Officer issued show cause notice that the assessee has not shown development activities in his books of account. Assessee explained that the project development work was undertaken by in the individual name and accordingly deduction u/s. 80IB(10) of the Act claimed in the individual capacity. The books of account of assessee as well as other commission-owner (mother) are separate for housing project which are duly audited under section 44AB and 80IB of the Act. AO held that ROI is not filed by Association of Person (AOP) and that income of housing project “Hampton Park” earned by AOP and not in the status of co-ownership. Accordingly, the Assessing Officer disallowed the entire deduction under section 80IB(10).
Conclusion-
Form no. 10CCB clearly states that the undertaking is partly owned hence the contention of AO that the status is not mentioned as individual does not disentitle assessee from claiming deduction u/s 80IB(10). Further, proceeds relating to sale of plots have been deposited in a separate bank account and the same has been deposited in a separate bank account. This fact further manifest that there was nonexistence of AOP.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by assessee is directed against the order of ld. Commissioner of Income tax (Appeals)-2, Surat dated 19.01.2018for assessment year (AY) 2013-14.The assessee has raised the following grounds of appeal:-
“1. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in confirming the action of assessing officer in holding that income from housing project in the name of “Hampton Park” belongs to AOP and not in the individual capacity as co-owner.
2. On the facts and in the circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in confirming the action of assessing officer in disallowing deduction of Rs.59,80,995/- claimed by assessee u/s 80IB(10) of the IT Act, 1961.
2. Brief facts of the case are that assessee is an individual and engaged in the business of travel agent under the name & style of proprietary concern “M/s Govindji Patel & Co.” and also in development & building of housing project. The assessee filed his return of income for AY 2013-14 declaring total income of Rs,.6,75,629/-. During the year, the assessee undertook a development of housing project and claimed deduction under section 80IB(10) of the Income Tax Act 1961, (‘the Act’ for short). The assessee developed housing project in the name of “Hampton Park” alongwith his mother. The assessee and his mother were having 50% shareholding in housing project. The assessee in his computation of income claimed deduction under section 80IB(10) of Rs.59,80,995/-. During the assessment, Assessing Officer issued show cause notice that the assessee has not shown development activities in his books of account. In response to show cause notice, the assessee contended that he has undertook to development of housing project alongwith his mother in the name of “Hampton Park”. It was further explained that the project development work was undertaken by in the individual name and accordingly deduction under section 80IB(10) of the Act claimed in the individual capacity. The books of account of assessee as well as other commission-owner (mother) are separate for housing project which are duly audited under section 44AB and 80IB of the Act. The Assessing Officer did not accept the contention of assessee. The Assessing Officer held that return of income is not filed by Association of Person (AOP) and that income of housing project “Hampton Park” earned by AOP and not in the status of co-ownership. Accordingly, the Assessing Officer disallowed the entire deduction under section 80IB(10).
3. On appeal before the Ld. (CIT(A) assessee filed detailed written statement and contended that similar disallowance was claimed other co-owner of the housing project (mother of assessee Jayaben G Patel) the similar disallowance was disallowed by assessing officer and on first appeal the order was maintained. However, on further appeal before Tribunal the disallowance was allowed to his co-owner in ITA No.2476/Ahd/2014 dated 24.10.2019 in Smt. Jayaben Govindji Patel vs. Income Tax Officer. The Ld. CIT(A) recorded the relevant part of order of Tribunal in para-6.1.2. However, the Ld. CIT(A) concurred with the decision of Assessing Officer. Further aggrieved the assessee is in appeal before the Tribunal.
3. We have heard the submission of the Ld. Authorized Representative (AR) of the assessee and Ld. Sr. Departmental Representative represent for the Revenue (DR) and have gone through the order of authorities below. The Ld.AR of the assessee submits that the ground of appeal raised by assessee is squarely covered by the decision of Tribunal in assessee’s co-owner (mother of assessee in ITA No.2476/Ahd/2014 dated 24.10.2019), wherein the lower authorities disallowed the similar deduction, by raising objection that project was developed by AOP. The Tribunal after considering the similar objection allowed deduction in favour of co-owner (mother of assessee) The Ld. AR of the assessee further submits that by following the decision of co-owner’s case in assessment year2011-12 for similar deduction was allowed to the co-owner in assessment year 2012-13 and again in assessment year 2013-14 in ITA No.238/Ahd/2017 dated 23.09.2020 and ITA No.148/Srt/2017 for assessment year 2012-13 and 2013-14 respectively. The Ld. AR of the assessee placed on record copy of decisions of Tribunal.
5. On the other hand, Ld. Sr.DR for the Revenue relied upon the order of authorities below.
6. We have considered the rival submission of both the parties and have gone through the order of authorities below. We have also deliberated on the decision of Tribunal (authored by the same combination) in assessee’s co-owner’s case (mother of assessee), wherein on identical set of fact in assessment year 2013-14 the Tribunal passed the following order:-
“4. We have considered the contention of both the parties and perused the order of Lower Authorities carefully. We have noted that the Id.CIT(A) in para 6.1.2 confirmed the disallowance under section 80IB of the Act by following his predecessor’s decision on identical facts for AY 2011-12 i 2012-13. We have further noted that the assessee filed appeal against the order of Id.CIT(A) for A.Y. 2011-12 and assessee was allowed deduction under section 80IB of the Act in order dated 24.10.2019 in ITA No.2476/AHD/2014. Further, while following the order of the Tribunal for A.Y. 2011-12, the assessee was further allowed similar relief in A.Y. 2012-13 in ITA No.238/AHD/2017 dated 23.09.2020. For completeness the order, the relevant part of order passed by the Tribunal for A.Y. 2012-13 is reproduced below:
“5. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have also deliberated on the decision of co-ordinate bench of Tribunal in assessee’s own case for AY.2011-12 on identical grounds of appeal. We have n. ted that on identical grounds of appeal the co-ordinate bench of Tribunal while considering the identical claim of assessee for earlier assessment year passed the following order:
“11. We have heard both submissions and perused the material available record. We find that on death of assessee’s husband, the impugned land was inherited to Smt. Jayaben Govindbha: Patel (Assessee), Shri Ashok Govindbhai Patel (Son of : ie assessee) other son and two daughters who later assigned their rights in favour of the assessee and her one son Thus, the assessee and her son Ashok Govindbhai Patel are the co-owners of the inherited impugned land on which housing project in the name of “Hampton Park” has been developed. The documentary evidences such as copies of approved plan submitted and signed by Co-owners, development permission letter bearing the names of both the Co-owners, copy of sale deed executed, by Co-owners, copy of current account held jointly in both their names, receipt of booking amount from the-flat holders; audit report u/s.44AB and 80IB(10) in respect of “Hampton Park”, joint books of account-in the name of “Hampton Park” etc., were submitted by the assessee to the Assessing Officer to show that the project was being carried out under the status of Co-ownership”. It was justified also stating that for the sake of; convenience and to comply with the accounting procedure, they have maintained Co-owners project account known as “Hampton Park” with joint books of account and said books reflect; all purchase of construction material, receiving the booking money, making payment towards purchase of construction raw material and also :other administrative expenses etc., In the year end, proof it derived from the said project has been apportioned between Co-owners in their 50:50 ratio and same has been shown in the income tax returns individually. The application for development of the housing project was filed jointly and by assessee and her son and approval of housing project has been granted accordingly. Thus, the assessee and her son are the co-owners of the land and the subsequent development of housing project in the name of “Hampton Park” on the impugned land is also in the status of co-ownership of the assessee and her son. The assessee has developed the housing project and claimed deduction u/s.80IB of the Act in respect of this housing project as co-owner. We Further, notice that the assessee has filed report in Form No. 10 CCB in support of claim of deduction u/s. 801B(10) of the Act. This report requires the assessee to state ownership status of the undertaking/ enterprise in SL No. 4 of the Form. This Form specifically requires assessee to state as to whether the undertaking (enterprise is fully owned by the assessee or partly owned by the assessee and also the percentage on ownership. Thus, even Form No. 1OCCB very well recognize the fact that undertaking can be held in co-ownership, otherwise the Form would not specifically require assesses to state as to whether the undertaking his fully owned or partly owned by the assessee in S.No.4 of this Form the assessee has clearly stated, that undertaking is partly owned by or her share of ownership is 50%, hence the Contention of the Assessing Officer that the status Is not mentioned an individual does not disentitle assessee from claiming deduction u/s 80IB(10), of the Act pertaining to her share of profit eligible of deed under section 80IB of the Act. The proceeds relating to sale of plots have been deposited in a separate bank amount of the assessee and her son and the same has been shared equally. This, fact further manifest that there was nonexistence of AOP, otherwise proceeds on sale of plots would not have been deposited in a separate bank account. The assessee also filed development permission letter bearing the name of co-owners in their individual capacity. It was further pointed out that the assessee as well as Ashok Govindbhai Patel has obtained separate registration under the Service Tax act in the individual capacity and the Service Tax Return filed along with deposit of service tax in the individual capacity were also furnished. It was contended that this is not the case where two or more independent persons have joined together for acquiring land and construction housing project by pooling their joint resources. The, assessee with her son cannot be at all be said to be voluntarily, because the land has been received by them jointly by way of inheritance. In such cases, the association of two or more persons is a forced association of the joint legatees and therefore, the status can only be regarded as co-ownership. In support of this contention the assessee; has placed reliance on the decision of Hon’ble Allahabad High Court in the; case of CIT Vs. Laxmi P Da Sons 316 ITR 330 (All) wherein it was held that’ an AOP is a voluntary association of two or more persons who join together; for a particular purpose and that the forced AOP because of inheriting joint property by way of will or such other circumstances not being voluntary; would not constitute such legatees as AOP. The ratio of above decision is directly applicable to the facts of the case and therefore the interpretation made by the assessee is correct as they cannot be regarded as AOP. We are of the view that the assessee was a builder and developer. It carried out the project for developing the land held by assessee. Assessee received his share of profit from the same and claimed deduction of the her share of profit as per provision of section 80IB (10). The AO declined the benefit of deduction to the assessee on the premise that deduction u/s. 80IB(10) was available only to an undertaking engaged in developing and building house project subject to fulfilment of conditions laid down in subsection (10) of section 80IB. It is settled law that owner of the land as well as developer of the land both were eligible for claiming deduction under section 80IB(10) in respect of housing project where the owner contributes the land as well as resources to develops the housing project. Thus, assessee was also eligible for claiming deduction under section 80IB(10) as it full fills all the conditions laid down under section 80IB.The learned counsel for the assessee has relied in the case of Sudhir Nagpal and Others Vs. ITO 349 ITR 636 (P & H) wherein agricultural land was inherited by the co-owners from their forefather and general power of Attorney was executed by all the co- owners in favour of the “S” appointing him to construct plinth on their joint agricultural land in the name of all the owners and to further lease out such open plinth to any party on their behalf In this case, the issue came up whether the appellants are to be assessed as AOP or as individual. It was held that the co-owners had inherited the property from their ancestors and there was nothing to show that they had acted as AOP. It was also held that in order to asses individual to be forming AOP, the individual co-owners should have joined their resources and thereafter acquired their property in the name of AOP. The ratio of this decision is again directly applicable to the facts of share of profit eligible of deed under section 80IB of the Act. The proceeds relating to sale of plots have been deposited in a separate bank, amount of the assessee and her son and the same has been shared equally. This, fact further manifest that there was nonexistence of AOP, otherwise proceeds on sale of plots would not have been deposited in a separate bank account. The assessee also filed development permission letter bearing the name of co-owners in their individual capacity. It was further pointed out that the assessee as well as Ashok Govindbhai Patel has obtained separate registration under the Service Tax act in the individual capacity and the Service Tax Return filed along with deposit of service tax in the individual capacity were also furnished. It was contended that this is not the case where two or more independent persons have joined together for acquiring land and construction housing project by pooling their joint resources. The, assessee with her son cannot be at all be said to be -voluntarily, because the land has been received by them jointly by way of; inheritance. In such cases, the association of two or more persons is a forced association of the joint legatees and therefore, the status can only be regarded as co-ownership. In support of this contention the assessee; has placed reliance on the decision of Hon’ble Allahabad High Court in the; case of CIT Vs. Laxmi P Da Sons 316 ITR 330 (All) wherein it was held that an AOP is a voluntary association of two or more persons who join together; for a particular purpose and that the forced AOP because of inheriting joint property by way of will or such other circumstances not being voluntary; would not constitute such legatees as AOP. The ratio of above decision is directly applicable to the facts of the case and therefore the interpretation made by the assessee is correct as they cannot be regarded as AOP. We are of the view that the assessee was a builder and developer. It carried out the project for developing the land held by assessee. Assessee received his share of profit from the same and claimed deduction of her share of profit as per provision of section 80IB (10). The AO declined the benefit of deduction to the assessee on the premise that deduction u/s. 80IB(10) was available only to an undertaking engaged in developing and building house project subject to fulfilment of conditions laid down in subsection (10) of section 80IB. It is settled law that owner of the land as well as developer of the land both were eligible for claiming deduction under section 80IB(10) in respect of housing project where the owner contributes the land as well as resources to develops the housing project. Thus, assessee was also eligible for claiming deduction under section 8OIB(10) as it fulfils all the conditions laid down under section 80IB.The learned counsel for the assessee has relied in the case of Sudhir Nagpal and Others Vs. ITO 349 ITR 636 P & H) wherein agricultural land was inherited by the cc-owners from their forefather and general power of Attorney was executed by all the co-owners in favour of the “S” appointing him to construct plinth on their joint agricultural land in the name of alt the owners and to further lease out such open plinth to any party on their behalf. In this case, the issue came up whether the appellants are to be assessed as AOP or as individual. It was held that the co-owners had inherited the property from their ancestors and there was nothing to show that they had acted as AOP. It was also held that in order to asses individual to be forming AOP, the individual co-owners should have joined their resources and thereafter acquired their property in the name of AOP. The ratio of this decision is again directly applicable to the facts of instant case, hence the contention of the Assessing Officer in para 4.6 of the order that eligible business activity has been carried out by the AOP / BOI is invalid. The contention of the AO that benefit of section 80IB(10) can only be granted to an AOP and not to the assessee. If that is the case of the Revenue, then it cannot tax the income which does not belongs to her in her individual capacity and therefore, the same can be taxed in the hands of the AOP. But this is not the case of the AO. The A.O. merely denied the claim that return of income was not filed in the status of AOP, in such situation provision of 292B comes to the rescue of the assessee and defects in return of income can be removed. We do hot find his son had agreed to share receipts in the ratio of 50%. It is further relevant to note that all the expenditure for the execution of project was incurred by the, assessee and his son. furrier, the following case laws CIT Vs. Laxmi PD. & Sons 316 ITR 330, Sudhir Nagpal and Others us. ITO 349 ITR 636 (P & H), Baryyopd Estate Vs. State of Tamil Nadu 215 ITR 0520 (Mad), Brahma; Associates Vs. JCIT 119 ITD 255 (Pune) (SB), Hansa Dalakoti Vs. ACIT in ITA N6.3352/Del/201f (Del) and ITO Vs. S. Venkataiah in ITA No. 52 SOT 434 (Hyd) are supports the case of the assessee.”
12. Our view is Further, fortified from the decision of Hon’ble Karnataka High Court in the case of CIT v. Shrayanee Constructions [2012] 22 com 250 (Kar.) wherein it was has held that it is not merely building housing project, which attracts provisions of section 80IB(10), it is developing and building housing project, which attracts said provisions for allowing deduction under section 80IB of the Act. The Hon’ble High Court observed as follows:
“8. In terms of the agreement, which are not in dispute, the assessee not only undertook the aforesaid development activities on the land in question, but in fact, he entered into an agreement of sale with the owners of the land, paid the entire consideration but he did not take a registered sale creed in his name. On the contrary, the procedure adopted is he in turn entered into a joint development agreement with the builder and the owner of the land made a party to the said proceedings. Thus, the assessee contributed the land, undertook the aforesaid developmental activities in the said land and thus, complied with all other conditions, which have to be fulfilled before chiming benefit under Section 80IB(10) of the Act The builder has invested the. The money in the construction, it is after completion of building in terms of the agreement, the assessee was given. 2.2% share of the building area, it is after safe of he built area, in terms of Section 80IB (10), the assessee is chiming deduction. As is clear from the development agreement the undertaking of developing building housing project was jointly undertaken by the assessee and the builder. Therefore; in respect of the residential units numbering the persons who undertook this undertaking are entitled to the benefit of Section 80IB(10) of the Act in proportion of the share to which they are entitled to in the built up area.
9. In that view of the matter, the contention of the revenue that the assesses did not undertake any developmental, or building activity and therefore, he cannot individually claim the benefit has no substance. That is hot the requirement of law. Keeping in mind, the object with which his provision is introduced when all persons who have made investments in this housing project which is for the benefit of middle and lower class people and, when they have complied with all the conditions prescribed under fire aforesaid provision, both of them are entitled to Hundred percent benefit of tax deduction as provided under the said provision. In that view of the matter, we do not see any merit in these appeals. The substantial question of law is answered in favour of the assessee and against the revenue. Accordingly, the appeals are dismissed.”
13. Therefore, respectfully following the above ratio we allow the appeal of the assessee. We also note that following the ratio laid down in the case of CIT v. Shravanee Constructions (supra), the Co-ordinate Bench of Pune Tribunal in the case of ITO V. Skyline Developers ITA. No. 1503/PUH/2014 A.Y. 2009-10 dated 10.01.2018] has allowed the benefit to individual; assessee. The Co-ordinate Bench of Pune Tribunal has also relied on following case laws ie. Income Tax Vs. Mahalakshmi Housing. 41 taxmann.com 146 (Madras); Income Tax Officer Vs. Shalom Sankalp Ventures in ITA No. 1696/Bang/2 013 for assessment year 2008-09decided on 03-11-2016: Assistant Commissioner of Income Tax Vs. M/ s Sri Lakshmi Brick industries in ITA Nos. 1644 to 1647/Mds 2112 for assessment years2006- 07 to 2009-10 decided on 22-11-2012; Deputy Commissioner of Income Tax Vs. M/s. AKS Housing Development Co. P. Ltd, in ITA No. 1766/Mds/2012 for assessment year, 2009-10 decided on 30-11-2012. Therefore, respectfully following the ratio laid down in above decisions and facts of the case as discussed above, we allow the benefit of deduction u/s. 80IB(10) to the assessee. In the light of above. facts and circumstances, the appeal of the assessee is allowed.
14. In the result, the appeal of the assessee stands allowed.’
6. Considering the aforesaid decision of Tribunal on identical set of fact, wherein no variation in facts in brought to our notice for the year under consideration, nor any contrary law is shown to us to take other view, therefore, respectfully following the decision of coordinate bench, the appeal of assessee is allowed with similar observation.”
5. Considering the decision of the Tribunal on identical set of facts for AY 2011-12, which was further followed in AY 2012-13, wherein no variation in facts is brought to our notice nor any contrary law shown to us, therefore following the decisions of Coordinate Bench decision, the appeal of the assessee is allowed with similar observation.
6. In the result, appeal of the assessee is allowed.”
7. Considering the decision of Tribunal on similar set of fact in assessee’s co-owner’s case and wherein no variation, in fact, is brought to our notice nor any contrary view is brought to our notice, therefore respectfully following the same, the appeal of the assessee is allowed.
8. In the result, the appeal of the assessee is allowed.
Order announced at the time of hearing of appeal on 4thAugust, 2021 in the Virtual Court hearing.
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