TMI Blog2015 (9) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... art from labour charges at ₹ 700/- per square feet. Thus, the agreement for development was cost-plus-method. The assessee instead of debiting the cost of material in the profit & loss account and crediting the profit & account with cost, and 25% thereof has credited the profit & loss account with only 25% of the cost of material and set off the expenses incurred for cost of material with corresponding receipts. In our considered view, simply because of the above presentation of account, which may not be fully correct, the assessee cannot be denied deduction under section 80IB, if the assessee is otherwise eligible for the same. As we find that apart from the above, other facts involved in the instant case is similar to the facts in the case of M/s.Skyland Developers (supra), the said decision is squarely applicable in the instant case. In the instant case, the project was approved by the Ahmedabad Urban Development Authority vide permission dated 11.6.1999, which was before the date of amendment to section 80IB(10) w.e.f. 1.4.2005. Therefore, this amendment is not applicable to the project under consideration, in view of the above quoted decision of the Hon'ble Gujarat Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as work-in-progress. Thus, the assessee was not carrying on the work of development and construction of house building, but carrying on as a contractor/agent. 4. On appeal, the CIT(A) confirmed the action of the AO by observing that the society, Punit (Motera) Cooperative Hsg. Society Ltd., Ahmedabad was the sole owner of the land and the assessee has not incurred expenses on purchases of cement, steel etc. and that the assessee constructed and sold shops in the scheme, the built up area of which exceeds limit of 2000 sq.ft prescribed in clause (d) of section 80IB(10) with respect to shops constructed. 5. Before us, the AR of the assessee submitted that the issue was squarely covered by the decision of this Bench of the Tribunal in the case of sister concern of the assessee, M/s. Skyland Developers Vs. ITO, in ITA No.1191, 1192 and 1993/Ahd/2011 dated 9.6.2014, as the facts in that case and development agreement are identical in the case of present assessee also. Further, he pointed out from the development agreement placed at page nos.29 to 32 of the paper book that clause (2) provides for giving absolute possession and right to develop the scheme on the said land situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and to give possession to members, and also have to remove defaulting members, and cancel their allotment. Further, clause (16) provides for payment of development charges to the assessee on the basis of units booked at the rate of 25% of the total receipts from members as well as right to receive labor charges at ₹ 700/- per square feet. According to the AR, this clause only provides for share of profits from the construction of the scheme on the land. It was, therefore, prayer of the AR to allow claim for deduction under section 80IB of the Act to the assessee, as claimed in the return of income for the assessment year under appeal. 6. On the other hand, the DR supported the orders of the lower authorities. 7 We find that a similar issue had come up before this Bench of the Tribunal in the case of M/s.Skyland Developers (supra) wherein the Tribunal held as under: 4. The Authorized Representative of the assessee filed before us a copy of the consolidated order of this Bench of the Tribunal passed in the case of the assessee itself in ITA Nos. 1086 1087/Ahd/2007 in the Assessment Year 2002-03 and 2003-04 dated 11.03.2008 and submitted that the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve considered the submissions of the Authorised Representative carefully. The appellant is a supervision and labour contractor. During the year in appeal the appellant has carried out labour contract work and supervision work for construction of flats for the three Co. Op. Housing societies i.e. Pink City (Ranip) Co. Op. Housing Society Ltd., Kailasnath (Ranip) Co. Op. Housing Society Ltd. and Prakarsh (Ranip) Co. Op. Housing Society Ltd. I find that the appellant has satisfied all the three conditions required for deduction u/s. 80IB of the I. T. Act. The appellant has provided the funds to the societies for acquiring the land in their names and the societies had paid the sale consideration to original land owners. The appellant got the land converted by N.A./NOC proceedings. In turn, the development right was given to the appellant. The development charges of more than ₹ 25 lacs have been paid to AUDA on behalf of the society and the appellant has carried out construction work as per the plan. As per the conditions of the agreement, the appellant had put up the plan and made payments to AUDA for the development and construction of the scheme as per the approved plan. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such vacant premises are to be held by the appellant as per Clause No.3 of the development agreement. For the construction of scheme, necessary building materials have been purchased and payments have been made and the labour contractor has been appointed for construction work by the appellant. These clauses prove that the ownership and the risk factor is there on the appellant Further as per the brochure of the scheme, the appellant firm has been shown as developers, which indicates the role of the appellant as a developer. On a consideration of the totality of facts, I arrive at the conclusion that the appellant has actually carried out the work of development and construction, as there was no other person who has done the work, and therefore, the appellant is entitled to deduction u/s. 801B of the I.T. Act. Further it has been held by ITAT, Mumbai in the case of Patel Engineering Ltd. vs. DCIT (2004) reported in 84 TTJ (Mum.) 646/94 ITD 411 that merely because State Government paid for development of infrastructure facility carried out by the assessee as contractor, it cannot be said that the assessee had no developed infrastructure facility and for availing deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, ₹ 35,53,660/- in Assessment Year 2001-02 and ₹ 9,56,170/- in Assessment Year 2006-07. 8 We, thus, find that the facts in the present appeal are similar as were in the case of M/s.Skyland Developers (supra) except that in the instant case, it has also been alleged by the Revenue that the assessee has not debited purchase of cement, steel etc. in the profit loss account. Thus, we find that it is not in dispute that the assessee has actually made purchases of cement, steel etc. Actually, the AR of the assessee explained that as per the terms of agreement, the assessee was entitled to receive all the expenditure incurred for materials and 25% above that amount, apart from labour charges at ₹ 700/- per square feet. Thus, the agreement for development was cost-plus-method. The assessee instead of debiting the cost of material in the profit loss account and crediting the profit account with cost, and 25% thereof has credited the profit loss account with only 25% of the cost of material and set off the expenses incurred for cost of material with corresponding receipts. In our considered view, simply because of the above presentation of account, which may n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of a taxing statute, that which is favourable to the assessee should be always preferred. Moreover, the Government of India, Ministry of Finance, Department of Revenue issued Instruction No. 4 of 2009 to all Chief Commissioners of Income-tax and all Directors- General of Income-tax to the effect that the deduction in respect of section 80-IB(10) of the Act would be available on year to year basis where the assessee showing profits on partial completion or on the year of completion of the project. From a reading of the instruction, it can be also said that the Government being aware of both the accounting methods has expected either of them to be followed in cases of individual assessees. However, in the post-amendment period, strict adherence to the completion period of four years is insisted upon where the project completion method is followed. This limitation of period did not exist prior to the amendment. The amendment cannot discriminate against those following the project completion method if in the interregnum period, amendment is brought in the statute. There were two projects of the assessee, namely, KP and PP, in respect of of the profits earned from which the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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