Rajasthan High Court - Jodhpur

Commissioner Of Income Tax, ... vs Seema Fulfagar on 15 November, 2021

Bench: Vijay Bishnoi, Anoop Kumar Dhand

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

D.B. Income Tax Appeal No. 42/2019

Commissioner of Income Tax, Bikaner

----Appellant Versus

Smt. Seema Fulfagar, D/o Shri Paras Mal Kothari, Pincha Street,

Nokha, Dist :- Bikaner (Rajasthan)

----Respondent

For Appellant(s) : Mr. K.K. Bissa, Mr. Gajendra Singh Chouhan

HON'BLE MR. JUSTICE VIJAY BISHNOI HON'BLE MR. JUSTICE ANOOP KUMAR DHAND

Judgment / Order

15/11/2021

This appeal has been preferred by the appellant

against the order dated 13.8.2018 passed by the Income

Tax Appellate Tribunal, Jodhpur Bench Jodhpur (for short

'the ITAT').

Brief facts of the case are that the assessee, who

was having land at Sriperumbudur, Chennai, entered in a

joint venture with a company known as Prince Foundation

Private Limited (for short 'the company') to develop

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residential flats on the land belonging to her. According to

the agreement entered in between the assessee and the

company, the assessee was entitled to 20% of the super

built area after completion of the project in lieu of the

land offered by the assessee and her active participation

in obtaining clearances, building approach road, making

the land conducive for the construction, supervision and

promotion of the project. After construction of the flats

on the land, the assessee along with one Shri Jethmal

Jain were allocated 84 flats. Thereafter, the assessee and

Shri Jethmal Jain had executed conveyance deed in

favour of the respective purchasers. After completion of

the project, the joint venture accounts were settled and

the assessee was given a sum of Rs.7,95,00,000/- after

deducting expenses in lieu of her share of super built up

area. While filing returns, the assessee claimed deduction

in respect of Rs.7,95,00,000/- under Section 80IB of the

IT Act, 1961 (for short 'the Act of 1961') in respect of the

project jointly undertaken by her with the builder,

however, the Assessing Officer had refused the assessee's

claim of deduction.

The assessee has preferred an appeal before the

Commissioner of Income Tax (Appeals), Bikaner (for

short 'the CIT(A)'), which came to be dismissed on

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3.1.2018. Being aggrieved with the same, the assessee

preferred appeal before the ITAT, which came to be

allowed by the order dated 13.8.2018, against which, the

appellant has preferred the instant appeal.

Learned counsel for the appellant has argued that

the ITAT has grossly erred in allowing deduction under

Section 80IB of the Act of 1961 to the assessee without

taking into consideration the fact that she was not

involved in development and construction of the housing

project. It is submitted that the Assessing Officer as well

as the CIT(A) after carefully gone through the evidence

has rightly held that the assessee is not entitled for

deduction under Section 80IB of the Act of 1961 as she

was not at all involved in the project in any manner.

Learned counsel for the appellant, thus, prayed that the

impugned order passed by the ITAT may be set aside.

The revenue has proposed the following substantial

question of law in the matter :-

"Whether on the facts and in the circumstances of the case, the learned ITAT was justified in allowing relief of Rs.7,95,00,000/- by holding liberal interpretation of the provisions of section 80IB of the IT Act, 1961?"

Heard learned counsel for the appellant and gone

through the material available on record.

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The ITAT in its order dated 13.8.2018 has held as

under :-

"47. It is clear from the above findings and observation that the Id. AO and CIT(A) without examining all the documents, affirmations, in the true prospective as well as not coming to terms with the changing and evolving ground realities kept on harping that the assessee was merely a land owner and her role was to sign the documents. The Id. AO winked over the name of assessee only on the land patta, chitha, adangal which tantamount to conversion as discussed in detail in the preceding paras. Further the Id. AO also turned a blind eye to the address of the assessee being mentioned on the NOC for construction, which clearly signifies that the same was applied and obtained by the assessee. The NOC has given recognition to the status of company being bestowed with civil construction responsibility contained its name. If the company had obtained the NOC it would have borne the name of company itself.

48. In view of the foregoing, we observe that the assessee is an integral part of the development and construction activities. The assessee is not merely the land owner who had agreed to part with the land. Normally, once the land is transferred to the developer, the developer does the entire activity, whereas in the instant case, the assessee as mentioned above, has also done additional activities, which are integral parts to develop the project. Therefore, it was held in the judgment of Sharvanee Construction that the assessee is entitled to the benefit of tax under the aforesaid provisions. The contention of the assessee is fortified by the following judicial pronouncements in the case of M/s Shravanee Construction is parimateria to that of the assessee. The ration of the decision is fully and squarely applicable on the instant case of the appellant. Like in the case of M/s Shravanee Construction the appellant also actively participated in the development work and eligible for deduction u/s 80IB of the IT Act. The case of

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the assessee is also covered by the ratio of decision pronounced in the case of Mr. Abdul Khader, Bangalore vs ACIT on 13 April, 2012 ITA No.57/Bang/2011 in which it was held that it was also clear from the joint development agreement that the undertaking of developing and building housing project was jointly undertaken by the assessee and M/s Reddy Structures Pvt. Ltd., therefore, the assessee was entitled for the benefit of deduction u/s 80IB(10) of the Act. From the record we found that the assessee had purchased land at Sriperumudur along with Sh. Jethmal Sancheti on 17.07.2006. Both of them contributed land and were involved in development and construction of the project. All the documents which mention the name of the assessee in relation to the project work also contain the name of Sh. Jethmal Sancheti. He is assessed to tax at Silchar. The assessment in his case was completed under section 143(3) of the IT Act by granting the deduction under section 80IB(10) of the IT Act in relation to the income derived from the housing project. Later on the jurisdictional commissioner of income tax initiated the revisional proceeding under section 263 of the IT Act. After due examination, the hon'ble commissioner held the claim for deduction in order and did not disturb the finding of the AO. The case of the assessee is identical with that of Sh. Jethmal Sancheti. It is also not the case of Department that full deduction u/s.80IB (10) has been given to M/s. Prince Foundation Limited. The Prince Foundation Limited has claimed deduction only to the extent of profit attributable to its share of super built up area after completion of the project. 20% share of built up areas since belongings to the assessee as per the joint venture agreement, the assessee has claimed deduction only to this extent, therefore, there is no reason to decline assessee's claim for deduction with respect to her share of super built up area which amounts to Rs. 7,95,50,498/-. Furthermore, the issue is squarely covered by the decision of Hon'ble Karnataka High Court in case of M/s Shravanee Construction. No contrary decision was placed on record by learned AR or by any of the lower

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authorities so as to suggest that assessee is not entitled to deduction with respect to her share in built up area."

From the above findings of the ITAT, it is clear that

the assessee has actively participated in completing the

project and was not merely a land owner. The Karnataka

High Court in its order dated 28.2.2012 passed in ITA

No.421/09 - CIT Vs. M/s Shravanee Construction,

while dealing with the similar circumstances, has held

that the assessee is entitled for deduction under Section

80IB of the Act of 1961.

In view of the categorical findings recorded by the

ITAT and after carefully scrutinizing the material available