TMI Blog2012 (12) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... PPEAL No. 2283 of 2010 - - - Dated:- 10-1-2012 - MR. AKIL KURESHI AND MS SONIA GOKANI JJ. Appearance: MRS MAUNA M BHATT for Appellant (s): 11 ORAL ORDER (Per : HONOURABLE MS JUSTICE SONIA GOKANI) 1. The appellant-Revenue, being aggrieved by the order of Income Tax Appellate Tribunal, Ahmedabad dated 10.07.2009 ( Tribunal for short) has preferred the present Appeal under section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) proposing the following questions of law for determination of this Court: [A]Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) in allowing the deduction under section 80IB of the I.T.Act amounting to Rs.39,57,652/-? [B] Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) in deleting the addition of Rs.6,90,678/- added by the ITO as payment received from Trilok Associates Goyal 2. Heard learned counsel Ms. Mauna Bhatt and examined the papers and materials with her assistance. It emerges from the record that in the Assessment Year 2001-2002, Assessing Officer had disallowed the assessee's claim of dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lop the land belonging to party of the Second Part on certain terms and conditions. We would refer to relevant terms and conditions at a later stage. 4. On the same day i.e. 18.5.2000, the land owners entered into an agreement to sell the land in question to the assessee. The assessee was described as purchaser and the original land owners i.e. the heirs of deceased Ambalal Motibhai Patel were described as party of the Second Part or the sellers. 5. The Assessing Officer, however, rejected the assessee's claim for deduction under Section 80IB(10) of the Act. The Assessing Officer was of the opinion that the assessee firm was not the owner of the land. Approval by the local authority as well as permission to develop the project and permission to commence construction were not in the name of the assessee firm. The Assessing Officer was also of the opinion that the assessee had merely acted as an agent or a contractor for construction of residential houses. 6. The assessee carried the matter in appeal. CIT(Appeals) vide order dated 19.9.2006 rejected the assessee's appeal. CIT(Appeals) put considerable stress on the requirement of ownership of the land to qualify for deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, he must show his ownership over the land in question. 8.3 The Tribunal, though did not accept the Revenue's stand; in view of the decision of the Apex Court in the case of Faqir Chand Gulati vs. Uppal Agencies Private Limited and another (supra), made a minor departure from its own decision in the case of M/s. Radhe Developers. The Tribunal confined its view in its judgment dated 7.11.2008 on the aspect of the ownership of the land. Considering the terms and conditions of development agreement and other documents on record, the Tribunal was of the opinion that the benefit of section 80IB(10) of the Act to the assessee could not be denied. 8.4 The Tribunal held that the assessee had acquired dominion over the land, which he had developed by constructing housing project incurring expenses and also taking risks. The Tribunal, however, observed that decision in the case of M/s. Radhe Developers would not apply in cases, where the assessee had entered into an agreement for a fixed remuneration and worked merely as contractor to construct the housing project on behalf of the land owners. In such a case, agreement between the assessee and the land owner would not permit the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees and the land owners in case of Radhe Developers. We also noted the terms of the agreement of sale entered into between the parties. Such conditions would immediately reveal that the owner of the land had received part of sale consideration. In lieu thereof he had granted development permission to the assessee. He had also parted with the possession of the land. The development of the land was to be done entirely by the assessee by constructing residential units thereon as per the plans approved by the local authority. It was specified that the assessee would bring in technical knowledge and skill required for execution of such project. The assessee had to pay the fees to the Architects and Engineers. Additionally, assessee was also authorized to appoint any other Architect or Engineer, legal adviser and other professionals. He would appoint Sub-contractor or labour contractor for execution of the work. The assessee was authorized to admit the persons willing to join the scheme. The assessee was authorised to receive the contributions and other deposits and also raise demands from the members for dues and execute such demands through legal procedure. In case, for some rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, we find that the assessee had, in part performance of the agreement to sell the land in question, was given possession thereof and had also carried out the construction work for development of the housing project. Combined reading of Section 2(47)(v) and Section 53A of the Transfer of Property Act would lead to a situation where the land would be for the purpose of Income Tax Act deemed to have been transferred to the assessee. In that view of the matter, for the purpose of income derived from such property, the assessee would be the owner of the land for the purpose of the said Act. It is true that the title in the land had not yet passed on to the assessee. It is equally true that such title would pass only upon execution of a duly registered sale deed. However, we are, for the limited purpose of these proceedings, not concerned with the question of passing of the title of the property, but are only examining whether for the purpose of benefit under Section 80IB (10) of the Act, the assessee could be considered as the owner of the land in question. As held by the Apex Court in the case of Mysore Minerals Ltd. vs. Commissioner of Income Tax (supra), and in the case of Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of context nor can the same be applied in the present case where we are concerned with the deduction under Section 80IB(10) of the Act. 44. In the case K. Raheja Development Corporation vs. State of Karnataka (supra), the Apex Court considered whether the builder, who was engaged in the development of property and for such purpose had entered into an agreement with the land owner, can be stated to have executed works contract. Such interpretation was rendered in the background of the term works contract defined in Section 2(1)(v-i) of the Karnataka Sales Tax Act, which reads as under:- 12. Section 2(1)(v-i) is relevant. It defines a works contract as follows: 2.(1)(v-i) 'works contract' includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property; It is thus to be seen that under the Karnataka Sales Tax Act the definition of the words works contract is very wide. It is not restricted to a works contract as commonly understood i.e. a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,25,000/- from M/s. Trilok Associates and M/s. Goyal Designs respectively. No evidence could be adduced by the assessee-respondent, when he was asked to reconcile the receipts, on the ground that the books of account were destroyed on account of fire, it could not. Therefore, Assessing Officer added the entire sum of Rs. 7,04,000/- to the income of the respondent after reducing the profit. 10. When challenged before the CIT(Appeals), it considered the amount spent on material and labour expenses. Net profit @ 8% was estimated by the CIT(Appeals) applying Section 44AD of the Act to the given facts and accordingly, the respondent- assessee was assessed. 11. In challenge before the Tribunal by the Revenue. it held thus : We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case, the undisputed facts are that the assessee received Rs.7,50,000/- for executing a contract work for supply of materials and man-power for earthquake work. As the assessee could not produce books of account for verification before the Assessing Officer on the ground on the ground that the books were lost in fire. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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