TMI Blog2015 (7) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure and received the sale consideration. The assessee satisfied the requirements of provisions of section 80(IB)(10). Moreover once plan is approved by AUDA on papers submitted by assessee and others, it would be deemed approval of construction of housing units in favour of the assessee, more so, when assessee entered into agreements for developing the whole of the property. In view of the above, CIT(A) was justified in granting deduction because assessee has acquired right of developing housing project, incurring total expenditure and taking all risks thereof. There is no infirmity in the order of CIT(A). So we are inclined to uphold the same. - Decided against revenue. Disallowance u/s 40(a)(ia) - Non deduction of TDS on labour/transport charges - CIT(A) deleted the disallowance - Held that:- there is no infirmity order of CIT(A) who has allowed the disallowance by following the decision of the Tribunal in the case of Kanubhai Ramjibhai Makwana (2010 (12) TMI 172 - ITAT, AHMEDABAD) wherein it has been held that in case TDS has been deposited on or before due date of filing of return, the same is allowable. - Decided against revenue. - ITA No. 1744/Ahd/2013,ITA No.194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) XV, Ahmedabad may be set aside and that of the Assessing Officer be restored. 2. ITA No.1943/Ahd/2011 Asst. Year 2008-09 Revenue has raised following grounds in this appeal :- 1. The ld. CIT(A) XV, Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow the assessee s claim for deduction of ₹ 3,69,16,784/- u/s 80IB(10) of the Act. 2. The ld. CIT(A) XV, Ahmedabad has erred in holding that the assessee fulfills the conditions laid down for claiming deduction u/s 80IB(10) even when the land was in the name of Dhan Vihar Co-op. Housing Society Ltd., which is a separate legal entity in the eye of law and the assessee entered into the project by a development agreement with the society. The entire responsibility to execute the housing project and abide by the terms and conditions of its approval right from the inception of the project till its completion rests with the Society. Assessee was just a contractor And not a developer. 3. The ld. CIT(A) XV, Ahmedabad has erred in law and on facts in deleting the disallowance of ₹ 27,44,214/- made by the Assessing Officer u/s 40(a)(ia) of the Act. 4. On the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a housing project known as Dhan Vihar Co. Op. Housing Society Ltd. During the year under account, the assessee has shown total receipt of ₹ 2,47,50,000/-on which the assessee has declared net profit of ₹ 1,14,73,237/-which in terms of percentage works out 46.36%. (b) (i) During the year under assessment, the assessee has constructed a housing project and shown net profit at ₹ 1,14,75,237/- as having been derived from the housing project. The assessee has claimed a deduction of ₹ 1,14,75,237/- at 100% of its total profit u/s 80IB(10) stating that it was entitled to a deduction u/s 80IB in respect of its profit derived froth such activity of construction of housing project. (li) During the assessment proceedings, the claim of the assessee for deduction was examined and the assessee was asked to substantiate its eligibility for the deduction with reference to the conditions to be satisfied under the section 80IB vide notice dated 22/09/2009. The assessee filed its reply along with copy of (i) approved plan (ii) the audit report in Form 10CCB (iii) Permission for development/Raja Chitti (iv) the BU permission issued by the Local Authority and (v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the application and the permission was subject to various rules and bye laws of Gujarat Town Planning and Urban Development Rifles, Ahmedabad Urban Development Authority, General Development Control Regulation etc. (vii) From the above facts it is clear that the assessee did not own the land and the approval for the project was also not received in the name of the assessee. The documents clearly state that the local authority permitted the owner of the land viz the Dhan Vihar co. Op. Housing Society Ltd. to develop the housing scheme. The assessee came in to the project by the 'Development Agreement' entered by it with the land owner. Accordingly, one of the fundamental conditions, laid down in the provisions of section 80IB(10), relating to the approval of the project was not complied with by the assessee as much as it had not taken the approval from Local Authorities for the development and construction of the said project. Hence, it appeared that the assessee is not eligible for deduction1 u/s 801B(10), as claimed by4t. (c) In response to the show cause notice dt. 06/11/09 from A.O. the assessee gave the following reply. (3) As regard land owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present no land / no actual members/ no fund and all work on behalf of proposed society is to be handle only by land owner/ myself as developer. Therefore society has no authority. d) The agriculture land is to converted as N.A. only by the landowner, i.e. myself as developer Even plan also to be approved in my name as developer. e) The landowner shall get sale consideration only after sales of units to actual members from whom actual collection made by the me as developer, therefore during the construction period also the land consideration is unpaid Which I shall collect from members and not from the Society. f) All Financial / N.A./Plan / Material /Labour etc arrangement have been made by me as a developer and as per conditions of M.O.U. g) The society has no right / title in land / property. All liabilities which are composite in nature and to be discharged by me as a developer. h) The developer (myself) is authorized to registered the society for limited purpose of maintenance after completion of scheme only. i) All profit and losses are profit / losses of developer i. e. mine (Mayur Estate developer). The society has no any rights. j) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of putting 'and' between 'developing and building' is to indicate that for eligibility u/s.80IB(10) of the Act, the housing projects should not only be built but also to be developed by the assessee. This is a special condition that eligible enterprise must be not only a builder but also a developer. At para 3.13 to 3.14 of the impugned order the AO examined some of the submission made by the assessee including reliance placed on Hon'ble ITAT decisions in the case of Radhe Developers and in the case of Shakti Corporation. The AO emphasized that these decisions were not accepted by the department and pending at that time before the Hon'ble Gujarat High Court for adjudication. The assessee's claim of being developer was therefore rejected by the AO. To support such claim; the AO relied on the case of Larger bench of the ITAT Mumbai in the case of 1 M/s. B.T. Patil Sons Belgham construction Pvt. Ltd. in ITA Nos. 1408 1409/PN/2003. The AO considered the facts about issue/grant of permission related to development, occupation, approval of plan etc. in the name of respective society in para 3.16 of the asstt. order and held that the assessee beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause the assessee ;did not conceptualize and own the project in as much as the assessee ;is not the owner of the land and the approval was not issued to it by the Local authority. 2. The Assessee entered into the project by a Development Agreement with the Garvaketu co. op. Hsg. Society Ltd. and Bilwa co. op. Hsg. Society Ltd. and: construction was done as per the agreement and hence the assessee is merely a contractor for the purposes of construction of the project. 3. The assessee has not sold any unit to the purchaser but the Societies had executed the sale deeds as a seller. This also proves that the assessee was merely a contractor/ agent of the society. 4. As per the Amendment to section 80IB by the Finance Act 2009, a works contractor who executes the work awarded by any person is not eligible for the deduction u/s 80IB. Any person includes the Dhanvihar Co. Op. Hsg. Society Ltd. Which is a legal entity. 5. Apart from the above, the assessee's contention that the land is owned by himself and his family members since long is found to be baseless. No doubt the assessee and his family members held the land in the past. However, it is a fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication only on the issue of ownership of the land based on the development agreement and has unjustly allowed the claim of the assessee. The learned AO has stated various reasons for disallowing the claim u/s 80 IB of the Act as extracted herein above. For granting deduction u/s 80 IB (1) of the Act the Hon'ble Gujarat High Court in the case of Radhe Developers reported in 341ITR 403 (Guj.) has laid down the following guidelines to be adhered to in granting deduction u/s 80 IB (10) of the Act: : (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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer to allow the claim of deduction of ₹ 1,14,75,237/- under section 80IB(10). The ld. DR also submitted that CIT(A) erred in law and on facts that the Memorandum of Understanding/Development Agreement were executed before the registration of the Dhanvihar Co-op. Housing Society Ltd. The assessee is only a contractor and so not entitled for deduction u/s 80IB(10). On the other hand the ld. AR supported the order of CIT(A). 4.3 The issue before us is with regard to disallowance of ₹ 1,14,75,237/- u/s 80IB(10) in the year under consideration. The CIT(A) observed that Assessing Officer failed to consider and appreciate the detailed explanation given by the assessee during the course of assessment proceedings highlighting the facts that he fulfilled all the requisite conditions for eligibility of claim u/s 80IB(10) of the Act. The involvement of assessee s fund thereby risk undertaken by assessee for development of housing project were not disputed by the Assessing Officer. He simply raised two issues for disallowances i.e. the ownership of land and assessee was a work contractor. The Assessing Officer ignored assessee s submission based on facts as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property numbers are same as has been mentioned by AUDA and there is no objection from the side of the society. Therefore it was found that the building plans have been sanctioned in respect of the land developed by the assessee through the agreement to sell and the development agreements in question. The details on record supports the case of the assessee that the assessee has undertaken the entire development of the housing project for which the plans were approved and permission to use was obtained in respect of the same property in question. The assessee incurred all the expenditure for development of the housing project and received the entire sale consideration from the buyers. These facts prove that assessee made the payments of sale consideration of the property in question and the details of sale proceeds received from the buyers have been mentioned in the total sale proceeds in the books of accounts of the assessee. It establishes that assessee entered into development agreements and agreement to sell with the purchaser for consideration. All responsibilities for carrying out construction, permission and development of the project lie with the assessee. The real owner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue pleaded that CIT(A) erred in deleting the disallowance of ₹ 27,44,214/- made by the Assessing Officer u/s 40(a)(ia) of the Act. The Assessing Officer observed that TDS deducted on labour/transport charges totaling to ₹ 27,44,214/- paid to 18 different parties in January 2008 and February, 2008 was deposited in government account not by 31.3.2008 (which the statute requires) but 4.4.2008. Thus the AO added the amount u/s 40(a)(ia) of the Act. 6.1 On appeal before first appellate authority, the assessee vide written submission dated 6.6.2011 stated that copies of all a/cs and TDS return/challans also were submitted. ITAT Ahmedabad in the case of Kanubhai Ramjibhai Makwana vs. ITO reported in 135 TTJ 364 (Ahd) has decided that TDS deposited on or before due date of filing of return is also allowable expenses. In fact ITAT observed as under :- 13. In view of the above discussion following the case of Hon ble apex court and Hon ble High Courts cited above we are of the view that the provisions of section 40(a)(ia) as amended by the Finance Act 2010 w.e.f. 1.4.2010 which has newly been inserted by the Finance (No.2) Act 2004 with effect from 1st April, 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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