TMI Blog2014 (1) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... as there was no profit on sale of residential units – Decided against Assessee. - I.T.A.No. 547 /Ind/201 2 - - - Dated:- 30-7-2013 - JOGINDER SINGH AND SHRI R.C.SHARMA, JJ. For the Appellant : Ashwani Kumar and Ms. Anupam Goyal. For the Respondent : Smt. Mridula Bajpai. ORDER:- PER : R.C. Sharma This is an appeal filed by the assessee against the order passed by the CIT(A) dated 1st August, 2012, for the assessment year 2008-09 in the matter of order passed u/s 143(3) of the Income-tax Act, 1961. 2. The only grievance of assessee relates to disallowance of claim of deduction of Rs. 13,37,31,420/- u/s 80IB(10) of the Income-tax Act, 1961. 3. Rival contentions have been heard and records perused. The facts of the case are that the assessee is a Private Limited Company engaged in the business of real estate development. It had filed its return declaring nil income after claiming deduction of Rs. 13,37,31,420/- u/s 80IB(10). The Assessing Officer noted that the assessee had shown its income from the township project 'Omaxe City' situated at village Mayakhedi Indore and undertaken in the joint ventureship with co-developers Shraddha Buildcon Pvt. Ltd. and Oma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts for apprx. 4.1 acres - ref table D. (vi) Apart from 16 plots [of size 288 sq.m] on which G+2 floors were constructed and 143 plots [of two sizes - 108 sq.m. 135 sq.m.] on which Villas were constructed, the remaining ones [in all 645 plots of varying plot sizes ranging from 72 sq.m. to 700 sq.m.] were sold as such without construction of any ranging from 72 sq.m. to 700 sq.m.] were sold as such without construction of any residential units thereon. The total land area in respect of such developed plots works out to 1,50,089 sq.m. This accounts for 37.52 Acres.. - ref Table B. 4.3 Thus, it is observed that the assessee at the most could have claimed deduction in respect of construction of G + 2 floors on stand alone basis, as the total land area for that exceeded 1 acre [minimum required] and the built up area of each flat was less than 1500 sq. ft. provided other conditions satisfy. The claim thereon would relate to assessment years 2010-11 2011-12 and need to be looked into in those years. The assessee has not claimed any deduction on the sale of "Villas" as the built up area of each of those units exceeded 1500 sq.ft. There is no dispute in that account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not satisfied. In my view, there has been no need to examine the other conditions once the facts that the claim made by the assessee was on the sale of developed plots and not on residential units has come to the surface. In that case the primary condition itself was not satisfied and therefore there was no question for allowing deduction u/s 80IB(10) irrespective of whether other conditions were satisfied or not. Nevertheless on this issue, the assessee has further submitted that a large part of the commercial area had been ousted from the collaboration agreement dated 05-05-2006 by way of an amendment on 07-07-2011. Copy of "Amendment to Collaboration Agreement" has also been filed. A request was also made for admission of certain documents such as copy of amendment to agreement dated 07-07-2011, copy of registered sale deeds in the name of Shraddha Buildcon Pvt. Ltd. and Shanti Creations in respect of commercial area, copy of contract awarded by Omaxe Buildwell Pvt. Ltd. for construction of commercial area and copy of completion certificate of G+2 units and EWS units alongwith copy of completion certificate of the development works of the project as an additional evidence u/r 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deduction at the most could be considered in respect of the construction of residential units in the form of G+2 floors that too on stand alone basis provided that other conditions get satisfied. For the year under consideration, nevertheless the issue is limited to the deduction u/s 80IB(10) in respect of sale of developed plots only, which is not at all allowable. In that view of the matter, the disallowance made by the Assessing Officer (Rs. 13,37,31,420/-) is confirmed. 5. While deciding the issue, it is noted that the joint venture partners, namely, Shraddha Buildcon Pvt. Ltd. and Omaxe Limited had also received their share of profit on sale of the "developed plots". The share of profits between the assessee and the said joint venture partners had been 25 %, 25% and 50 % in respect of plot segment. It is quite likely that they would have also claimed deduction thereon u/s 80IB(10). The Assessing Officer is therefore directed to ascertain from the concerned Assessing Officers having jurisdiction over those companies as to whether the similar claim had already been disallowed in those cases. If not then those Assessing Officers should be advised to take remedial a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land as part of cost of project and the developer has attributed the expenses to be incurred on construction/marketing etc. as part of the cost. As per ld. Authorized Representative, the assessee was not getting fixed compensation/minimum guarantee for its land. In fact, the assessee was sharing the risk as well as the profits as per the agreement, according to which the assessee was to enjoy the profit or suffer loss in case project is not sold or sold at a low price. Our attention was also invited by the ld. Authorized Representative to the various permission/sanctions obtained from the concerned Government Authorities for development of the land. The ld. Authorized Representative further contended that the assessee has developed the land and also infrastructure necessarily required for housing project for which assessee was eligible for deduction u/s 80IB(10). 7. On the other hand, the ld. Senior DR invited our attention to various findings recorded by the Assessing Officer and CIT(A) to the effect that the assessee has not undertaken development of residential house so as to enable the assessee benefit of Section 80IB(10). Further reliance was placed on the orders of the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf: (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundreds square feet at any other place and (d) the built-up area of tire shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less." 9. It is crystal clear from the plain reading of sub-Section (1) of Section 80IB that deduction is subject to condition of undertaking, development and building of housing project. Thus, the construction and development of housing projects is sine qua non for claim of deduction u/s 80IB(10) subject to fulfilment of other conditions. In the instant case, it is not in dispute that the assessee has just developed the plots and sold them. No construction activity wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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