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M/s. Eagleton Property Holdings Versus Asst. Commissioner of Income-tax, Circle -4 (1) , Bangalore

Revision u/s 263 - since for A. Y. 2010-11 the claim of deduction u/s.80IB(10) was denied, as per the CIT for the impugned assessment year also such claim could not be allowed, project being the very same - According to CIT(A) DVO who carried out the inspection in the presence of the accountant of the assessee had given a clear finding that a number of residential units were having built-up area in excess of 1500 sft. Therefore according to him, assessee was not eligible for the deduction u/s.80 .....

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uildtek P. Ltd and the buyers were actually buying the plots from them. Agreements entered by such buyers with the assessee for construction of residential units were separate. These aspects have not been looked into by the AO. These were very relevant in deciding whether the assessee was a developer or only a contractor. When the AO does not make the enquiries that is lawfully expected of him and which any prudent man would have done, if placed in similar circumstances, it would definitely rend .....

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rests of Revenue. But an enquiry which by itself is only a farce and does not do justice to the duty cast on a statutory authority would be equivalent to non-enquiry. No error in the order of CIT in considering the order of AO erroneous and prejudicial to the interests of Revenue. CIT had while setting aside the assessment only directed a fresh assessment after giving opportunity to the assessee. Thus assessee would have an opportunity to place the judicial precedence that he wants to rely on wh .....

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ssed u/s.263 of the Income-tax Act, 1961 ( the Act in short). 02. Facts apropos are that assessee had filed return of income declaring income of ₹ 65,77,573/-. Assessee had claimed deduction of ₹ 5,09,35,824/-, u/s.80IB(10) of the Act, for one of its housing projects called County- 1, in such return of income. During the course of assessment proceedings, AO had vide letter dt.16.06.2011, required the assessee to file the GPA executed in its favour by M/s. Chamundeswari Build Tech P. .....

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. Thereafter assessment was completed on 23.09.2011 u/s.143(3) of the Act and in such assessment an addition of ₹ 9,96,500/- was made for excess expenditure on non-80IB projects. 03. On 25.09.2013, CIT issued a notice u/s.263 of the Act, to the assessee. As per this notice, during the course of assessment proceedings for succeeding assessment year 2010-11, AO concerned had referred the assessee s claim with regard to deduction u/s.80IB(10) of the Act to the District Valuation Officer ( DVO .....

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ed, as per the CIT for the impugned assessment year also such claim could not be allowed, project being the very same. Assessee in reply to the above mentioned notice stated that it had two residential projects namely County-1 and County-II. According to it claim for which deduction u/s.80IB(10) of the Act was restricted to County-I. As per the assessee in respect of five units which were found by the DVO as having builtup area in excess of 1,500 sq.ft, he was not clear as to whether it were a p .....

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d the owner was a confirming party. As per the assessee it had shown the cost of purchase of land and full sale proceeds when the developed units were sold, in its books of account. Land ownership, as per the assessee was not a pre-requisite for preferring a claim u/s.80IB(10) of the Act. Assessee also contended that even if some units were having area in excess of 1500sft, claim of deduction u/s.80IB(1) of the Act could not be denied. For this, it placed reliance on the case of DCIT v. Brigade .....

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he deduction u/s.80IB(10) of the Act. CIT (A) also noted that Hon ble Apex Court had on a similar issue admitted the appeal of the Revenue, wherein it assailed the directions of the Tribunal to give pro-rata deduction u/s.80IB(10) of the Act. Vis-a-vis the ownership of the property on which development was being done, CIT was of the opinion that the land belonged to Chamundeswari Builtdtek P. Ltd., and they had sold the sites directly to different purchasers. It was such purchasers of land who h .....

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d u/s.80IB(10) could not be denied. Reliance was placed on a coordinate bench decision in the case of DCIT v. Brigade Enterprises (P) Ltd [(2008) 14 DTR 037]. Vis-a-vis requirement of legal ownership over the land, Ld. AR relying on the judgments of Hon ble Gujarat High Court in the cases of CIT v. Radhe Developers [341 ITR 403] and CIT v. Shree Ram Construction [TA.430 of 2013, dt.10.12.2012], submitted that such ownership over the land was not an essential criteria. As per the Ld. AR, owner of .....

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ugh an SLP filed on the very same issue by the Revenue before the Apex Court stood dismissed. Further according to him during the course of assessment proceedings, AO had enquired about the aspect of ownership and was satisfied with the replies given by the assessee. Thus according to him, order of the AO was neither erroneous nor prejudicial to the interests of the Revenue. 06. Per contra, Ld. DR strongly supporting the order of CIT and submitted that that assessee was only a contractor and not .....

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ested persons and there was no inter-se arrangement. Placing reliance on GPA placed at paper book page 53, Ld. DR submitted that Managing Director of Chamundeswari Buildtek P. Ltd, who was the owner of the property, was M. Ashok Kumar. Beneficiary of the GPA was the assessee, who was a partnership firm and the managing partner of the said firm was also the very same Ashok Kumar. According to him, the GPA executed by the very same person in his own favour could not be given much sanctity. It was .....

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of the case and had never applied his mind. 07. We have perused the orders and heard the rival contentions. Query placed by the AO during the course of assessment proceedings with regard to the claim u/s.80IB(10) of the Act is reproduced here under Your authorised representative has filed a copy of GPA from M/s. Chamundeshwari Builders Pvt. Ltd. On which your firm has been given only power to construct and sell on behalf of them, which means that your firm is acting as an agent for the company, .....

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sessee s reply to this, if any, is not available on the records. However, in the original assessment order dt.23.09.2011 there is a mention regarding the claim made by the assessee u/s.80IB(10) of the Act, and this read as under 2. The assessee firm having two projects one is covered by 80IB and another one is non 80IB. On comparison of cost of project per sq.ft., the cost of project in respect of 80IB case (county I) comes to ₹ 2.981/- per sq.ft. and cost of non 80IB project (county II) c .....

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ject is less that is why the cost per sq.ft. is more and requested to accept the same. Considering the assessee's A.R's explanation, the cost of excess expenditure on the non 80IB project is estimated at ₹ 250/- per sq.ft. on the constructed area of 3986 sq.ft. which comes to ₹ 9,96,500/- and disallowed on excess expenditure debited. Accordingly, the same is brought to tax for which the assessee's AR has agreed. 09. Above narration in the assessment order does show that a .....

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e argument of the assessee that even if some of the units had built-up area in excess of 1,500 sft, pro-rata deduction u/s.80IB(10) of the Act, should be given to it, might be acceptable in view of the judgment of Hon ble Gujarat High Court in the case of Radhe Developers (supra). But nevertheless as noted by the CIT it is clear from the sale deed entered by Chamundeswari Buildtek P. Ltd, with various buyers, one copy of which is available at paper book page 73 to 80, that the vendor was Chamund .....

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