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2016 (1) TMI 348 - ITAT AHMEDABAD

2016 (1) TMI 348 - ITAT AHMEDABAD - TMI - Eligibility of deduction u/s. 80IB(10) - CIT(A) deleted the disallowance - Held that:- CIT(A) has examined development agreement and observed that as per Clause 1, the possession of the property has been handed over the assessee. As per Clause 2, all materials required for carrying out development would be brought by the assessee. As per Clause 3, all the expenses would be borne by the assessee. Clause 10 authorizes the first authority to sell bungalow t .....

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he facts placed before us that all risk and consequences were borne by the assessee. Under these facts the Assessing Officer was not justified in treating the assessee as merely a contractor. Law is well settled now by the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT]., that even if the developer of a project is not owner of the land but he bears all risk and consequences he cannot be denied deduction u/s.80IB(10) o .....

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: Shri S N Divetia, AR ORDER Per Kul Bharat, Judicial Member This appeal filed by the Revenue is directed against the order of CIT(A)- XV, Ahmedabad, dated 14th December, 2010 pertaining to assessment years 2007-08. The revenue has raised following grounds of appeal: "1). The Id. Commissioner of Income-tax (A)-XV, Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow the assessee's claim for deduction of ₹ 1,18,97,366/- u/s. 80IB(10) of the Act. 2). .....

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project and abide by the terms and conditions of its approval right from the inception of the project till its completion rests with the land owner. Assessee was just a contractor of the land constructing housing scheme. 3). On the facts and in the circumstances of the case, the Ld. Commissioner of Income-tax (A)-XV, Ahmedabad ought to have upheld the order of the Assessing Officer. ' 4). it is therefore, prayed that the order of the Id. Commissioner of Incometax( A)-XV, Ahmedabad may be se .....

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The objection of the Assessing Officer was that the assessee is not a developer and builder as required by the provisions of Section 80IB(10) of the Act. The assessee entered into the project by a Development Agreement with the land owner and construction was carried out as per the said agreement and hence the assessee was merely a contractor for the purpose of construction of the project. Further, Assessing Officer observed that the assessee had not sold any unit to the purchaser but the land .....

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uction u/s.80IB(10) of ₹ 1,18,97,366/-. Ld. Sr. D.R. vehemently argued that the Assessing Officer has given categorical finding that the assessee is neither a land owner nor a developer he is merely a contractor who had executed the project of construction under a developer agreement. He submitted that as per agreement, the person who carries out the construction as a work contractor is not eligible for the deduction u/s.80IB(10) of the Act. He submitted that the ld. CIT(A) was not justifi .....

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rporation and the decision of Tribunal has been confirmed by the Hon'ble Gujarat High Court in case of CIT vs. Radhe Developer India Ltd. & Another (2012) 341 ITR 403 (Guj.). 4. We have heard the rival contentions and perused the material on record. The only issue is i.e. to be decided is with regard to the eligibility of deduction u/s.80IB(10). Assessee had claimed deduction u/s.80IB(10) amounting to ₹ 1,18,97,366/-. Assessing Officer had disallowed the claim of the assessee by ob .....

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a Development Agreement with the land owner 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 land owner has executed the sale deeds as a seller. This also proves that the assessee was merely a contractor/ agent of the land owner. 4. As per the Amendment to section 80IB by the Finance Act 2009, a works contractor who executes the work awarded .....

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accurate particulars of income." However, ld. CIT(A) allowed the claim of assessee by observing as under: "4. During the course of appellate proceedings vide submission dated 1.12.2010 it was stated that the appellant had paid entire land consideration to Mr.Laljibhai Haribhai Sudani who purchased the land from the original land owners from the funds given by the appellant. Laljibhai Sudani was paid through cheques drawn on Union Co-operative bank account of the appellant of ₹ 8, .....

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ch A Ahmedabad decision dated 7.11.2008 in the case of M/s.Shakti Corporation, Baroda in ITA No.1503/Ahd/2008 in AY 2005-06. As per para 16 of this decision if an. appellant is found having practically purchased the land and having acquired dominant control of the land and has developed the land at its own cost and risk then the deduction should be allowed. For this Hon'ble ITAT has directed the Development Agreement to be referred to. Perusal of the Development Agreement dated 7.5.2004 show .....

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e borne by the first party. Clause 10 states that the first party can sell the said bunglow to any person. After going through rival submissions I am of the view that the appellant should be allowed SOIB(10) deduction because it fulfills the tests laid down by Hon'ble ITAT decision in the case of Shakti Corporation. It has practically purchased the land and developed it at its own cost and risk. The deduction is also allowable because any of the specific conditions stipulated from clause (a) .....

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dani who had purchased the land from the original land owners from the funds given by the assessee. It is observed that Laljibhai Sudani was paid through cheques drawn on Union Co-operative Bank account of the assessee of ₹ 8,35,000/- and ₹ 1,45,000/-, subsequent to which Laljibhai Sudani paid two cheques of ₹ 4,90,000/- to the land owners through purchase deed dated 15.04.2004 which mentions the amount paid to the land owners. Ld. CIT(A) has examined development agreement and .....

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