TMI Blog2014 (4) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER Per Shri Anil Chaturvedi, A. M. 1. This appeal is filed by the Revenue against the order of CIT(A)- VI, Baroda dated 30.11.2012 for A.Y. 2009-10. 2. The facts as culled out from the material on record are as under. 3. Assessee is a firm engaged in the business of construction activity. Assessee filed its return of income for A.Y. 2009-10 on 10.09.2009 declaring total income of Rs. 11,24,370/- after claiming deduction under section 80IB(10) of Rs. 38,76,416/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) of the Act vide order dated 21.12.2011 and the total income was determined at Rs. 50,28,400/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) vide order dated 30.11.2012 allowed the appeal of the Assessee. Aggrieved by the aforesaid order of CIT(A), the Revenue is now in appeal before us and has raised the following effective ground:- 1. The ld. CIT(A) erred in law in allowing deduction of Rs. 38,76,416/- u/s. 80IB(10) of the I.T. Act without appreciating that legal relationship between the assessee and the end user of units was that of "work contract" 4. During the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d constructed units as per the directions given by the owners. Therefore, appellant has constructed residential units in the capacity of an agent or works contractor rather than a developer. Secondly the bigger plot has been divided into various smaller plots having area of less than 01 acre and, therefore, violated the condition of minimum area required to claim deduction u/s 801B (10). During the course of appellant proceedings, the appellant has submitted details of the residential units giving particulars of bookings, registration, construction agreement, and possession dates alongwith the land and construction prices. Just to understand the chronology of the events, details of randomly selected 10 residential units are here in below:- F.Y. 2006-07, 2007-08, 2008-09 It can be seen from the above table that the chronology followed is first the residential units are booked and invariably on the same day appellant enters into construction agreement, the registration deed is registered and lastly possession of the units is handed over. This pattern is followed in respect of majority of cases. So it is clear that construction agreement always proceeds date of registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of the project. Since this case was decided after the assessment order was passed hence the benefit of the same was not available to the AO. The said decision has duly considered various reasons stated by the AO for disallowing deduction u/s 80IB(10). The decision in the case of K Raheja Development Corporation which has been relied upon by the AO, has no relevance to the claim of deduction u/s 80IB(10) of the Income Tax, since the same was pertaining to Sales Tax Law. This is not a case where appellant is acted on behalf of land owner and has got fixed consideration for developing the housing project. The land was belonging to appellant and he has undertaken the construction and development of housing project at his own risk and cost. The entire risk of investment and expenditure was that of the appellant. Resultantly profit and loss would also accrue to the appellant alone. In this view of the matter deduction claimed by the appellant does not deserve to be disallowed. Regarding the size of the plot, minimum area of 01 acre is prescribed. Apparently this refers to the area of the project and not the area of individual residential unit. The total area on which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requirements have to be fulfilled by a developer to stake a claim of deduction. The requisite information is not available on record. We have noticed that the said requisite information was not even examined by the Revenue Authorities in the light of the- High Court decision. The guidelines given by the Hon'ble High Court can be summarized as follows:- (a) The relevant terms of development agreement are to be examined so as to ascertain the terms on which the assessee was granted right of construction of a housing project. (b) On the basis of the terms and conditions, it has to be ascertained whether it was a "work contract" or a "Development Contract". (c) On the basis of the terms and conditions, it has to be examined that which of the party had taken full responsibility for execution of the said development project. (d) Whether under the agreement the assessee had been given full authority to develop the land and to construct residential units. The AO has to examine the fact in respect of engagement of professionals, such as, architect for designing and architectural work. (e) The AO has to examine the responsibility of enrolment of members and collection of charges ..... X X X X Extracts X X X X X X X X Extracts X X X X
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