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2016 (3) TMI 408 - ITAT AHMEDABAD

2016 (3) TMI 408 - ITAT AHMEDABAD - TMI - Inadmissibility of deduction u/s 80IB(10) - surrender made on account of undisclosed income (on money found during search proceedings) - Whether the assessee is a developer or a works contractor? - Held that:- As examined the financial statement of the assessee and find that in the audited balance sheet as on 31.3.2006 assessee has shown sundry debtor of ₹ 1,99,21,445/-, the list of which includes 42 parties including Shri Madhav Co-op. Housing Soc .....

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op. Housing Society Ltd. This fact has not been controverted by the revenue at any stage below and, therefore, looking to the terms and conditions of the development agreement and audited financial statement of the assessee, we are of the view that assessee comes under the category of developer and not of works contractor and, therefore, comes within the definition of developer as referred in the provisions of section 80IB(10) of the Act.

Relying on the above decision of the co-ordina .....

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ill assessee being a developer and fulfilling all the conditions embedded in the provisions of section 80IB(10) of the Act assessee is eligible for deduction under section 80IB(10) of the Act.

Respectfully applying the judgment of co-ordinate bench in the case of Madhav Corporation (2015 (7) TMI 992 - ITAT AHMEDABAD ), we are of the view that assessee is eligible to claim deduction u/s 80IB(10) of the Act for the undisclosed income surrendered during search/survey action in a situatio .....

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Shri Anil Kshatriya, AR For Respondent by Shri Jagdish, CIT/DR ORDER PER Manish Borad, Accountant Member. This is an appeal filed by the assessee against the order of CIT(A)-I, Ahmedabad dated 26.09.2014 in appeal No.CIT(A)- I/483/CC-1(4)/2013-14 for assessment year 2006-07. The assessment was framed u/s 143(3) r.w.s. 153A of the Income-tax Act, 1961 (in short the Act) by ACIT, CC-1(4), Ahmedabad on 31.01.2014. The grounds raised in this appeal are as under :- 1. In law, on the facts and in the .....

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e facts and in the circumstances of the case, the ld. CIT(A)-I, Ahmedabad, has grossly erred in confirming addition of ₹ 2,34,39,999/-, being additionally claimed u/s 80IB(10) on the basis of seized records. The same may kindly be directed to be allowed on such legitimate claim. 4. On the facts and in the circumstances of the case, the ld. CIT(A)-I, Ahmedabad, has grossly erred in confirming the charging interest u/s 234A, 234B, 234C & 234D of the Act. He may be directed to withdraw th .....

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und No.4 is consequential. 4. Ground No.5 is premature, which needs no adjudication. 5. Ground No.6 is general in nature which needs no adjudication. 6. Ground nos. 2 is related to inadmissibility of deduction u/s 80IB(10) of the Act at ₹ 1,32,19,672/-. 7. Ground no.3 is against disallowing of deduction u/s 80IB(10)of the Act for surrender made on account of undisclosed income (on money found during search proceedings) at ₹ 2,34,39,999/-. 8. Ground Nos. 2 & 3 are inter related so .....

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s 143(3) of the Act on 4.2.2008 and the income was assessed as per the income returned. 10. Thereafter a search action u/s 132 of the Act was carried out in the case of Galaxi group on 21.7.2011. The entire group consists of 4 sub-groups as mainly engaged in the business of construction and real estate. The case of the assessee belongs to Madhav Group. Search and seizure u/s 132 of the Act/survey u/s 133A of the Act were carried out at the residential as well as business premises of assessee as .....

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ncome has been derived. 11. Pursuant to search action u/s 132 of the Act proceedings u/s 153 were initiated by issuance of notice on 11.1.2012. In response to the notice assessee filed the return of income for Asst. Year 2006-07 on 9.2.1012 declaring total income of ₹ 29,277/- after claiming deduction u/s 80IB(10) of the Act at ₹ 3,66,59,672/-. The assessee claimed deduction u/s 80IB(10) of the Act for normal profits from business as developer at ₹ 1,32,19,672/- as shown in ori .....

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in assessment order:- 5.23 It is therefore held that the assessee is not eligible for deduction under section 80IB for the following reasons:- 1. The assessee is not both developer and builder as required by the provisions of section 80IB(10). Assessee is not a developer because the assessee did not conceptualise 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 way .....

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sessee was merely a contractor/agent of the society. 4. As per the amendment to section 80IB by the Finance Act 2009 a work contractor who executes the work awarded by any person is not eligible for the deduction u/s 80IB. Any person includes Shree Madhav Co-op. Housing Society Ltd., which is a legal entity. On account of above reasons Assessing Officer denied the deduction u/s 80IB(10) of the Act as claimed by the assessee in its original return of income at ₹ 1,32,19,672/- and also denie .....

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hrough the assessment order and submission of the A.R. of the appellant carefully. It is important to note here that the claim u/s 80IB of the I.T. Act, 1961 by another firm of the appellant s group (Madhav Group) i.e. Madhav Corporation for AYs. 2006-07, 2007-08 and 2008-09 has also been rejected by the Assessing Officer. In that firm in AY 2007-08 even during original assessment u/s 143(3) of the IT Act, 1961 the claim u/s 80IB of the IT Act, 1961 was rejected for detailed reasons proving that .....

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i Motibhai Revabhai Prajapati and Shri Kantibhai Revabhai Prajapati. The modus operandi and nature of work is also exactly the same. 6.2 The appellant filed his submission with exactly the same defence as was produced before the Assessing Officer. In his submission he relied on the decision of Gujarat High Court in the case of Radhe Developers and M/s Shakti Corporation In view of this and in absence of any additional material against the decision of CIT(A) except relying on the judgment by the .....

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hmedabad in the case of Madhav Corporation. Accordingly, to maintain consistency, subject to outcome of the decision of ITAT, Ahmedabad, in case of Madhav Corporation, AY 2007-08 on the exactly similar issue, the appeal is dismissed. Regarding ground no.3 8. I have gone through the assessment order and submission of the A.R. of the appellant carefully. This ground is against the disallowance of ₹ 2,34,39,999/-, the additional income shown by the appellant in the block return and claimed to .....

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80!B of the IT, Act, 1961 also. The provision of Section 80IA(7) reads as under: "(7) The deduction under nub-section (I) from profits, and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and she assessee furnishes, along with his return of income, the .....

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his income is added to the appellant's income only subsequent to the search. As the income is not part of the regular books as per prevision of section 801A(5) and 801A(7) of the I.T. Act, 1961 are applicable and claim u/s.80IB(10) of the I.T. Act, 1961 is not admissible on this additional income of the appellant. 8.2. The Assessing Officer has also rightly applied the provisions of section 80IA10) for the following reasons: i) The assessee firm is closely connected with the partners and clo .....

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assesses with the intention of claiming higher than due deduction u/s, 80lB(10) of the Act. Hence, in view of provisions of section 80IA (5) and 80IA (7) and also 80lA(10) of the I.T, Act. 1961, the additional income of the appellant cannot be treated as income eligible for the deduction u/s. 80lB (10) of the I T Act. 1961. 8.3 In view of above discussion, the disallowance of ₹ 2,34,39,999/- is confirmed, the appeal on this ground is dismissed. 14. Aggrieved assessee is now in appeal befor .....

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g project within the meaning of sec.80IB(10) of the Act, on land survey No.1943 F.P. No.64 situated at village Vastral, Ta.Dist. Ahmedabad. The total area of land was 38,365 sq.mtrs. The assessee firm built and developed the housing project namely Madhav Bunglows (Madhav Co-op. Housing Society Ltd.). For commencement of such project, permission (Rajachithi) was issued on 3/12/2004 by the local authority, as per copy of such documents furnished before the AO. As per the plan submitted by the firm .....

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43(3) of the Act, as per particulars below :- A.Y. Amount claimed u/s 8018(10) . (RS.) Amount allowed by the A.O. (Rs.) Sec. of assessment order Date of assessment order 2004-05 75,72,250/- 75,72,2507- 143(3) 28/0372006 2005-06 1,66,40,8187- 1,66,40,8187- 143(3) 06/0772007 2006-07 1,32,19,6727- 1,32,19,6727- 143(3) 04702/2008 From the above, it may be appreciated that the department having scrutinized the claim of the assessee and allowed as such in the aforesaid years, however, in absence of an .....

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fulfills the criteria of legitimate deductions u/s 8016(10) of the Act] to the tune of ₹ 2,34,39,999/- As per copy profit & loss account and balance-sheet placed on record, cumulatively the total claim of legitimate deduction u/s 80IB(10) on the basis of seized papers and regular books of accounts for the whole project worked out as under:- As per seized paper annexed Al/7: ₹ 2,34,39,999/- Add as per regular books of Accounts ₹ 1.32.19.672/- as claimed and allowed in origin .....

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e firm, is 38,365 sq.mts. which exceed area of 1 acre, the residential unit of the project did not exceed the prescribed limit of 1500 sq.feet of built up area. Thus, the basic conditions of claiming the legitimate deduction u/s 80IB(10) are duly-fulfilled. 15. As regards assessee's claim of deduction u/s 8OIB(10) on additional income referable to seized material ld. AR submitted that (i) The original claim of deduction u/s 80IB(10) of ₹ 1,32,19,672/- has been enhanced by the ₹ 2 .....

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CIT(A) has concluded that the additional income which is not shown in the regular books of accounts, cannot be considered for the purpose of deduction u/s 8016(10) of the Act and he has confirmed the disallowance of ₹ 2,34,39,999/-. (iii) As aforesaid, in the assessee's own case, the claim of the assessee made u/s 801B(10) of the Act, has been considered being in order and within the parameters of relevant provisions of the Act in the completed assessments in the past i.e. A.Y. 2004-0 .....

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artment to keep on changing its stands, in respect of the same nature of transaction, without just cause [Berger Paints India Ltd.266 ITR 99 (SC)]. It therefore, flows that if an income is exempt either u/s. 2(14), 10 or otherwise, due effect of the same has to be given while framing the assessment. (v) In the light of the facts as narrated above, it emerges from the records that the disclosed income attributable to 'on-money' has been duly offered for taxation in the form of enhanced pr .....

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e assessee's own case by virtue of order passed by the Hon'ble Guiarat High Court in the assessee's case for assessment year for A.Y. 2004-05 was framed u/s 143(3) of the Act on 28/03/2006. Subsequently, by notice dated 17/03/2011, the assessment was reopened by the department. The assessee challenged the notice before the Hon'ble Gujarat High Court in S.C.A. No.17304 of 2011. Thereby Hon'ble High Court vide its order dated 27/12/2011 has quashed the notice u/s 148 and also c .....

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) dated 10/02/2006, which had been replied to by the present petitioner stating therein that they are into the business of infrastructure, construction and doing business of construction of residential houses for the common man with further detail that firm had carried out the construction activity at the market value worth ₹ 3.36 crores (rounded off). It appears that in the final assessment order, which was passed on 28/03/2006, it was noted that the assessee's firm is in the business .....

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mentioned hereinabove, this identical issue already has been discussed and this question has been held in favour of the assessee and in the present case also the petitioner being the works contractor should be availed the benefit of deduction u/s 80IB(10) of the Act and notice of reopening requires to be quashed." Ld. AR further submitted that without prejudice to the about it is respectfully submitted that incidentally, recently Hon'ble ITAT Ahmedabad 'B' Bench, Ahmedabad had .....

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wing the legitimate exemption u/s. 54B to the extent of ₹ 39,38,100/-being the sale consideration received as per registered sale deed only. She has not allowed the legitimate deduction u/s.54B on the von money' received on sale of agriculture land. The same may kindly be directed to be allowed legitimate deduction of ₹ 92,47,100/- claimed u/s.54B on full sale consideration i.e. as per 'registered sale deed von money' received on sale of said agriculture land." The C .....

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y the Finance Act, 2002 with retrospective effect from 1st July, 1995 the assessee was entitled to claim deduction under sec. 80-1 or section 80-IA in block assessment of the block period. The Revenue has acknowledged the benefit of deduction with regard to undisclosed Income of the block period. 6.3 In the case before us the issue is with regards to the benefit of exemption under section 54B with regard to the on money. Both are beneficial provisions in their own spheres so drawing the same ana .....

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hus it was held that for block period assessee was entitled to claim deduction in its income under section 80IB," In view of above decision, we hold that the assessee is entitled in claiming exemption on total income including on money. The Assessing Officer is directed accordingly. Since, the issue involved in the case on hand, being the same and having bearing on the identical facts, by virtue of Hon'ble Tribunal's order (Supra) as well as by virtue of Hon'ble Gujarat High Cou .....

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ted 28/07/2015) The relevant ground of appeal raised in the referred case reads as under:- Ground No.4 "On facts and in the circumstances of the case, the Ld. CIT(A)-1, Ahmedabad, has grossly erred in confirming the addition of ₹ 2,75,00,000/- reflected in seized documents by considering it as not related to profit of the Housing project. Though the same is forming part of total profit of the Housing project and therefore, the same may kindly be considered as part of profit of the Hou .....

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same may kindly be allowed on such legitimate claim." The Co-ordinated Bench in the case of M/s Madhav Corporation (Supra) has allowed the assessee's ground raised as above holding that the assessee is eligible for deduction u/s 80IB(10) of the Act in respect of undisclosed income assessed by the A.O. in accordance with the return filed by the assessee u/s 153A of the Act, in response to notice u/s 153A of the Act issued by the department. The relevant portion of the order dated 28/07/2 .....

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e-9, Ahmedabad dated 13/11/2014, it was held that in case the applicant is entitled for claim of deduction u/s 80IB(10) in A.Y.2006-07 then the appellant is also eligible for the said in A.Ys. 2007- 08 & 2008-09. Following same reasoning, we hold that the assessee on this additional income of ₹ 85,66,22s/- for A.Y. 2008-09 is entitled for claiming deduction u/s 80IB(10) of the Act as discussed above. Assessing Officer is directed accordingly," In the case on hand, the claim u/s 80 .....

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is, contention copies of original* assessment orders passed u/s 143(3) for A.Ys. 2004-5, 2005-06 & 2006- 07 are enclosed. 17. The DR vehemently supported the orders of the lower authorities. 18. We have heard the rival contentions and perused the material on record and referred to various decisions relied upon. The issue in this appeal revolves round the admissibility of deduction u/s 80IB(10) of the Act for the claim made at the time of filing original return of income at ₹ 1,32,19,67 .....

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case of an undertaking developing and building housing projects approved before the 31st day of March, [2008] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by th .....

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April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority.] Explanation.-For the purposes of this clause,- (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) the date of completion of construction of the housing pr .....

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um areas under any law for the time being in force and such scheme is notified by the Board in this behalf; (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; [***] (d) the built-up area of the shops and other commercial establishments included in the ho .....

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al or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta.] [Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded b .....

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point (1) above; (3) Whether it is a pre-condition for claiming exemption u/s 80IB(10) of the Act that the developer owns the land on which the housing project has been constructed; (4) Whether the assessee is eligible to claim deduction u/s 80IB(10) of the Act for the undisclosed income surrendered during search/survey action in a situation when assessee has been assessed in previous years and has been allowed the deduction u/s 80IB(10) of the Act. 20. We will now analyze the above matters one .....

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eduction u/s 80IB(10) of the Act. During the course of hearing ld. AR has submitted that the assessee firm in the capacity as a developer has built and developed the housing project on land survey No.1043 F.P.64 situated at village Vastral, Ta. Dist. Ahmedabad. The total area of the land was 38,365 sq.meters and the housing project in the name of Madhav Bungalows was developed. Permission for commencement of this project was issued on 30.12.2004 to Madhav Co-op. Housing Society Ltd. as the land .....

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itted that assessee has been working in the capacity of a developer and not as a works contractor. 21. On the other hand, ld. DR referred to the decision of Hon ble Jurisdictional High Court dated 27.12.2011 in assessee s own case in Special Civil Application 17304 of 20011 wherein their Lordships Have observed as under :- 13. We also had occasion to deal with the similar question in Special Civil Application No. 15966 of 2011 in the case of Pravinkumar Bhogilal Shah vs. Income Tax Officer (OSD) .....

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ng the housing project and, therefore, it would not be feasible for any person to contemplate any such retrospective amendment and disclose in the return, which was otherwise not required. As can be seen from the assessment order as well as from the record that has been placed before the Court that the petitioner had disclosed all the material facts which were necessary for the purpose of assessment and as the notice under challenge is issued on expiry of the period of 4 years from the end of th .....

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n under Section 80IB(10) of the Act and notice of reopening requires to be quashed. As mentioned earlier since there was no time available for communication as the notice along with the interim order had been passed on 28.11.2011, and pursuant to the notice under challenge when the assessment order has been passed by the Assessing Officer on the very same day, when the very notice is not being found sustainable, there is a need to quash both the impugned notices dated 17.3.2011 18.11.2011 and al .....

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n 80IB(10) of the Act and the assessee should not be allowed the benefit of section 80IB(10) of the Act as the assessee is not a developer but works contractor. 23. By going through the decision of Hon. Jurisdictional High Court in assessee s own case we find that this Special Civil Application of assessee was filed by the assessee against the action of Assessing Officer for reopening of assessment by issuing an impugned notice u/s 148 for Asst. Year 2004-05 being undertaken beyond four years af .....

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ee is a developer or a works contractor and therefore there was no occasion to discuss this issue in the decision on the Special Civil Application filed before the Hon. Curt. Therefore, we are not convinced with the contention of ld. DR of treating the assessee as works contractor only on the basis of mentioning in a general parlance that the assessee is works contractor. Now going ahead we will examine this aspect in detail in the light of the facts of the case that whether the business activit .....

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ee is entitled to deduction under section 80-IB(10) of the Act. Now, we have to examine as to whether the assessee can be called as a developer within the meaning of section 80-IB(10) read with Explanation I herein above. The ld. AR submitted that the work carried on by the assessee made it a developer entitled for deduction under section 80-IB(10) of the Act. According to him, a developer is a person who develops the facility and such person may or may not be a contractor. On the other hand, a .....

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case of Hindustan Aeronautics Ltd. v. State of Orissa [1989] 55 STC 327 in which it has been observed that in a contract for work, the person producing has no property in the thing produced as a whole, even if part or whole of the material used by him may have been his property earlier. Further, in another judgment of the Supreme Court in the case of State of Tamil Nadu v. Anandam Viswanathan [1989] 1 SCC 613 in which it was held that the nature of contract can be found only when the intention o .....

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work of civil construction relating to the housing project, he stated that it is not eligible for deduction. 6.2 We find that the words developer and contractor have not been defined in or for the purposes of section 80-IB(10). The primary question which arises is that how to find out the meaning of a word or an expression which is not defined in the Act. It is a settled legal position that ordinarily the meaning or definition of a word used in one statute cannot per se be imported into another .....

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relevant statute but has been defined in the General Clauses Act, such definition throws ample light for guidance and adoption in the former enactment. According to s. 3 of the General Clauses Act the definitions given in this Act shall have applicability in all the Central Acts unless a contrary definition is provided of a particular word or expression. On scanning s. 3 of the General Clauses Act we observe that neither the word contractor nor developer has been defined therein. Thus, the Gener .....

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disregarded. 6.3 Coming back to our point of ascertaining the meaning of the words contractor as well as developer , which have neither been defined in the Act nor in the General Clauses Act, we fall upon Oxford Advanced Learner s Dictionary to find out their meaning. According to this dictionary developer is a person or company that designs and creates new products, whereas contractor is a person or a company that has a contract to do work or provides services or goods to another. The New Shor .....

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e contrary the contractor is the one who is assigned a particular job to be accomplished on the behalf of the developer. His duty is to translate such design into reality. There may, in certain circumstances, be overlapping in the work of developer and contractor, but the line of demarcation between the two is thick and unbreachable. When the person acting as developer, who designs the project, also executes the construction work, he works in the capacity of contractor too. But when he assigns t .....

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the development should be that of housing project as a whole and not a particular part of it, as has been contended by the ld. AR. It may be possible that some part of the housing project is assigned by the land lord to some contractor for doing it on his behalf. That will not put the doer of such work in the shoes of a developer. 24. The above referred decision of the Tribunal, Chennai Bench makes it crystal clear that a developer takes on the basic of housing project right from the beginning i .....

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lauses of development agreement dated 26.8.2003 between the assessee i.e Madhav Builders and Shree Madhav Co-op. Housing Society Ltd. copy of whch is placed in the paper book dated 3/11/2015 at pages 1 to 110. Some parts of development agreement are as under :- (3) The said organizer/building is carrying out all constructed related work. In this way, the main work and activity of the said builder is to development housing projects or to remain attached with the work of construction and to carry .....

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d necessary expertise and time by the office-bearers of the housing society for enrolling new members in the said housing society as and when required, they themselves are not in a position to organize a scheme on the said land and under such circumstances, the said housing society has till date taken help of the First Party Builder. And from now onwards, appointing the said builder as organizer/builder, the society is planning of entrusting the liability of organizing the said scheme to the sai .....

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pursuance to the said Development Agreement and the said organizer has accepted such responsibility. Moreover, the said organizer accepts the responsibility and liability of developing the land mentioned in the said agreement to sale as stated hereinabove by entering into this agreement. (6) The planning of the above stated scheme of the said housing society is to be done by the said organizer and the name of the said scheme has been given as Madhav Park Part-4 (Shri Madhav Co-op. Housing Socie .....

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and to decide their remuneration and fee, which is to be borne by the Second Party -Executant. (7.2) To enter into contract, sub-contract, labour contract, material contract etc. in order to complete by carrying out construction in the scheme of the said housing society as per the specification, as per the item or on lump sum price and to provide necessary basic materials etc. for completing the said housing society scheme and for that the organizer will provide all types of help and aid. (7.3) .....

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ormed after necessary changes and in the concerned tenement, open land and common amenities etc. But the final decision of the said organizer with regard to the allotment of the property to the members would be acceptable and binding to the said housing society and its members and proposed members. (7.10) The said housing housing society has entrusted all the rights and powers to the organizer for the purpose of completing and erecting the said scheme and all other related powers and therefore t .....

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and objection and moreover the accounts pertaining to the said scheme submitted by the said organizer is to be accepted by the housing society without any sort of criticism, remark, audit or doubt whatsoever and the said accounts are to be included in the records of the housing society and moreover an understanding has been arrived at between the parties that with regard to the audit of the said housing society, the accounts procured by the said organizer by the said housing society and the acc .....

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and as per the changes that may be made in the said scheme and whatever changes that may be made in the concerned circumstances, the said organizer would be authorised to revise the said estimated amount and the same would be acceptable and binding to the said housing society and its members and the new members getting enrolled in the said scheme. (7.13) If the first party is required to submit necessary applications, replies, statements and forms for and on behalf of the second party in any Go .....

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the assessee and the land owner Shree Madhav Co-op. Housing Society, it can be construed that the assessee is having much wider authority -rights and powers for accomplishing the plan of the housing project and certainly such type of powers and rights which are exercised along with collection of revenue from each unit of the housing project and successful completion of each part of the housing project very well justify to large extent that assessee was working as developer and not works contrac .....

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which it has spent for the housing project. This shows that assessee was not working only as a work contractor on behalf of Shree Madhav Co-op. Housing Society Ltd. else the assessee would have been showing the complete outstanding balance in the name of Shree Madhav Co-op. Housing Society Ltd. This fact has not been controverted by the revenue at any stage below and, therefore, looking to the terms and conditions of the development agreement and audited financial statement of the assessee, we a .....

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which are required to be adhered upon for claiming the deduction u/s 80IB(10). We find that assessee has been granted deduction u/s 80IB(10) at ₹ 75,72,250/- in Asst. Year 2004-05 which was assessed u/s 143(3) of the Act by ITO, Ward 9(2), Ahmedabad on 28.03.2006. Similarly, for Asst. Year 2005-06 assessee was allowed deduction u/s 80IB(10) at ₹ 1,66,40,818/- vide assessment order u/s 143(3) of the Act dated 6.7.2007 issued by ITO Wd-9(2), Ahmedabad and even for Asst. Year 2006-07 as .....

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d that Co-ordinate bench in the case of Golden Developer vs. ITO (OSD), Range-9, Ahmedabad, in ITA No.496/Ahd/2011 for Asst. Year 2007-08, vide its order dated 13.11.2014 has dealt with similar issue and has held as follows :- 4.2. The contention of the assessee is that in earlier years claim of the assessee was allowed by the Department in scrutiny assessment. The ld.counsel for the assessee has drawn our attention towards page-7 of the paper-book, wherein the assessment order pertaining to the .....

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r - 2007-08 - 6 - under the same facts and circumstances would be disallowable in the year under consideration. It is settled position of law that every year is an independent year, however, the rule of consistency is to be adopted by the Revenue authority while framing the assessment. In the present case, the Revenue has not brought out any new material on the basis of which a different view has been taken for the year under consideration. If the assessee was developer in the earlier years, it .....

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by the contract and how the submission of the assessee that it was bearing all risks and consequences arising from the contract were not correct. In fact, the AO has stated these stipulations are only intended to make the Society toothless but they cannot convert by any stretch of imagination an agreement for construction into a conveyance deed in the eyes of the law. It is not disputed that such terms and conditions were in the agreement in the earlier years also. On the basis of such terms the .....

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ed in the case of CIT vs. Radhe Developers reported at (2012) 341 ITR 403 (Guj.) and followed subsequently in a series of decisions of this Tribunal. Thus, this sole ground of the assessee s appeal is allowed and the disallowance made by the AO is hereby deleted. 27. Relying on the above decision of the co-ordinate bench in the case of Golden Developer vs. ITO (OSD), Range-9, Ahmedabad (supra) and looking to the facts of the case of assessee and applying the ratio of consistency, we find that as .....

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issions were granted to the land owner i.e. Shree Madhav Co-op. Housing Society Ltd. and not the assessee and approval of plan of construction issued by the local authority was in the name of land owner and not the assessee and the constructions were done in a tripartite agreement executed between the members, Shree Madhav Co-op. Housing Society Ltd. and the assessee and, therefore, Assessing Officer was of the view that assessee is merely a contractor for the purpose of construction of the proj .....

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n 80IB(10) of the Act even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners. Relevant extract of the decision is as under :- 39. We may now move on to the question of ownership of the land. 40. Relevant portion of Section 2(47) reads as under:- 2(47): transfer , in relation to a capital asset, includes,- (v) any transaction involving the allowing of the possession of .....

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erformance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being .....

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se, 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 fr .....

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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 Commissioner of Income-Tax vs. Podar Cement Pvt. Ltd. and others (supra), the ownership has been understood differently in different context. For the limited purpose of deduction under Section 80IB(10) of the Act, the assessee had satisfied the condition of ownership also; even if it was necessary. 42. In t .....

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true that the agreement provided that the assessee would receive remuneration. However, such one word used in the agreement cannot be interpreted in isolation out of context. When we read the entire document, and also consider that in form of remuneration the assessee had to bear the loss or as the case may be take home the profits, it becomes abundantly clear that the project was being developed by him at his own risk and cost and not that of the land owners. Assessee thus was not working as a .....

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g him to construct apartment building on the land in question. Part of the constructed area was to be retained by the owner of the land. In consideration of the land price remaining area was free for the builder to sell. When the land owner found series of defects in the construction, he approached the Consumer Protection Forum. It was in this background the Apex Court was considering whether the land owner can be stated to be a consumer and the builder a service provider. It was in this backgro .....

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ted 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, m .....

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able property . (emphasis supplied) The definition would therefore take within its ambit any type of agreement wherein construction of a building takes place either for cash or deferred payment, or valuable consideration. To be also noted that the definition does not lay down that the construction must be on behalf of an owner of the property or that the construction cannot be by the owner of the property. Thus even if an owner of property enters into an agreement to construct for cash, deferred .....

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n which includes any agreement for carrying out building or construction activity for cash, deferred payment or other valuable consideration. Thus the interpretation rendered by the Apex Court in the said decision was based on not the normal meaning of term works contract but on the special meaning assigned to it under the Act itself, which provided for a definition of the inclusive nature. 45. Under the circumstances, we are of the opinion that the Tribunal committed no error in holding that th .....

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, the relevant terms and conditions of the development agreements between the 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 entir .....

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k. 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 reason, the member already admitted is deleted, the assessee would have the full right to include new member in place of outgoing member. He had to make necessary financial arrangements for which purpose he could raise funds fr .....

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er, in future, rules be amended and additional FSI be available, the assessee would have the full right to use the same also. The sale proceeds of the units allotted by the assessee in favour of the members enrolled would be appropriated towards the land price. Eventually after paying off the land owner and the erstwhile proposed purchasers, the surplus amount would remain with the assessee. Such terms and conditions under which the assessee undertook the development project and took over the po .....

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s and so on. Most significantly, the risk element was entirely that of the assessee. The land owner agreed to accept only a fixed price for the land in question. The assessee agreed to pay off the land owner first before appropriating any part of the sale consideration of the housing units for his benefit. In short, assessee took the full risk of executing the housing project and thereby making profit or loss as the case may be. The assessee invested its own funds in the cost of construction and .....

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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 la .....

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d. vs Commissioner of Income Tax (supra), and in the case of Commissioner of IncomeTax vs. Podar Cement Pvt. Ltd. and others (supra), the ownership has been understood differently in different context. For the limited purpose of deduction under Section 80IB(10) of the Act, the assessee had satisfied the condition of ownership also; even if it was necessary. 42. In the case of Shakti Corporation similarly the assessee had entered into a development agreement with the land owners on similar terms .....

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be interpreted in isolation out of context. When we read the entire document, and also consider that in form of remuneration the assessee had to bear the loss or as the case may be take home the profits, it becomes abundantly clear that the project was being developed by him at his own risk and cost and not that of the land owners. Assessee thus was not working as a works contract. Introduction of the Explanation to Section 80IB(10) therefore in this group of cases also will have no effect. 43. .....

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land. In consideration of the land price remaining area was free for the builder to sell. When the land owner found series of defects in the construction, he approached the Consumer Protection Forum. It was in this background the Apex Court was considering whether the land owner can be stated to be a consumer and the builder a service provider. It was in this background that the Apex Court made certain observations. Such observations cannot be seen out of context nor can the same be applied in t .....

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n the present group of Tax Appeals also, such question is answered against the Revenue and in favour of the assessees . 31. Respectfully following the above decisions, we are of the considered view that even in the situation if the assessee is not the owner of the land, nor approval for construction received from the local authority is in its name but still assessee being a developer and fulfilling all the conditions embedded in the provisions of section 80IB(10) of the Act assessee is eligible .....

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ofits from the housing project namely Madhav Bunglows by showing it in the return filed pursuant to ntice u/s 153A of the Act. However, assessee simultaneously claimed deduction u/s 80IB(10) of the Act for its undisclosed income on the ground that assessee was not having any other business activities except the business activities carried on as a developer of housing project coming within the ambit of section 80IB(10) of the Act and nor there was any other charge on the assessee of earning this .....

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er :- 5. Next issue in A.Y 2008-09 is regarding additional claim of deduction u/s.80IB(10) of the Act. "Modification of the correct figure in original ground No.3 On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-I, Ahmedabad, has grossly erred in confirming addition of ₹ 85,66,228/- being additional claim of deduction u/s. 80IB(10) on the basis of seized records. The same may kindly be directed to be allowed on such legitimate claim," .....

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ssee, the income of the assessee was accepted and has been assessed in the hands of the assessee, the department has only disputed the factum that the project undertaken by the assessee firm is not eligible for housing project u/s. 80IB of the Act. Thus, viewing correct interpretation of the provision of the Act in the tune of the aforesaid judgments, the undisclosed income i.e. "on money" being part of business income only. The same forms part of book profit and it has no other source .....

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or deduction u/s. 80IB(10) of the Act. In view of the above and consequent to search u/s. 132 of the Act, document marked as Page No. 116 at Annex. A/19 was seized by the Department which contain noting of calculation of profit for the housing project executed by the assessee and such profit was inclusive of "On Money" component. In response to notice u/s. 153A of the Act, the returns of income u/s. 153A are filed which are the returns of income u/s. 139 of the Act. The Assessing Offic .....

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d additionally subsequent to the search proceeding u/s. 132 of the Act and disclosed in the return of income filed u/s. 153A of the Act. Even otherwise based on the rule of consistency if the eligible project undertaken remains the same and the conditions are satisfied and if deduction is allowable in the first assessment year (which is A.Y. 2006-07 IT(SS)A Nos. 380 to 382/Ahd/2014 Asst. Years 2006-07 to 2008-09 16 in the assessee's case) then the same has to be allowed in the subsequent ass .....

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