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The ITO, Ward 4 (3) , Ahmedabad Versus Hindustan Homefina Ltd.

2016 (3) TMI 415 - ITAT AHMEDABAD

Eligibility for deduction u/s.80IB(10) - claim of deduction was denied by the A.O. mainly for the reason that assessee was not the owner of the land and according to him, the assessee was merely a contractor - Held that:- We find that ld. CIT(A) while deciding the issue in favour of assessee and after perusing the development agreement has given a finding that assessee had acquired land from the society at fixed cost and society was not entitled to any further benefits arising from development o .....

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of the assessee’s case were identical to the facts of the case in the case of Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT ], which was decided in assessee’s favour. Before us, Revenue has not brought on record any material to controvert the findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) - Decided against revenue - ITA No. 1997/Ahd/2012 - Dated:- 2-3-2016 - Shri Anil Chaturvedi, A. M. And Shri Kul Bharat, J. M. For .....

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ly filed its return of income for A.Y. 2009-10 on 30.09.2009 declaring total income at Rs. ITA No.1997/Ahd/12 A.Y. 2009-10 (ITO vs. Hindustan Homefina Ltd.) 2 14,39,930/- after claiming the deduction of ₹ 4,17,56,392/- u/s.80IB(10) of the Act. The case was selected for scrutiny and thereafter, assessment was framed u/s.143(3) of the Act vide order dated 20.12.2011 and the total income was determined at ₹ 4,31,52,822/- by disallowing the claim of deduction u/s.80IB(10) of the Act. Agg .....

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t that the Assessing Officer had made the addition on the ground that the assessee failed to fulfill the conditions laid down in this regard, such as the assessee is not developer because it did not conceptualize and own the project in as much as the assessee did not own the land and the approval of the project was not received in the name of assessee by the local authority. Assessee is merely a contractor for the purpose of construction of the project and as per the amendment to Section 80IB by .....

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essee, A.O. concluded that assessee was not eligible for deduction u/s.80IB(10) of the Act because assessee was not a developer, assessee did not conceptualise and own the project and that assessee was not the owner of the land and the approval was not issued to assessee by the local authorities. A.O. also noticed that assessee has entered into a project by entering into a development agreement with the land owners and the construction was done by the assessee as per the agreement and therefore .....

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rein above and even Assessing Officer has not disputed these facts. The appellant has entered into two development agreements with Society for development and construction of housing project in land area of 7485 Sq. Mtrs. And as per such agreements, appellant has acquired impugned land along with possession at agreed consideration of ₹ 1,19,50,197 which includes stamp charges being 1% of the land. As per the development agreements entered with Society, Society is entitled to value of land .....

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d to the developer and even till completion of entire housing project which also includes receipt of money from the buyers of the housing units, the possession of the land and its superstructure will be of appellant-developer which also substantiates the claim of the appellant that it has become owner of the land as per Section 2(47) of Income Tax Act, 1961, read with Section 53A of Transfer of Property Act. These facts of appellant are similar to the fact of the case before the Hon'ble Guja .....

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f claiming deduction under Section 80IB(10) of the Act. In view of the same, observation made by Assessing Officer regarding ownership of land cannot be accepted. 3.8. On careful consideration of various clauses of the development agreements, it is emanating that - (i) It was the responsibility of the appellant company to carry out development of the housing project at its own risk and rewards. (ii) Further, the plans prepared for the purpose of proposed construction of buildings were prepared b .....

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t, area of unit, location and situation of unit, appellant was entitled to decide different rates for different buyers. In fact entire sales consideration has been received by the appellant company and not by Society. (iv) The appellant was entitled to sell housing units as per its own convenience and all the rights of allotment or transfer of various units constructed in the project along with open and margin land was with appellant company. It has been agreed between both the parties that till .....

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impugned land from the society at fixed cost and Society was not entitled to any further benefits arising from development of the project. Further, all the development and construction of the project was carried out by appellant at its own risk and has borne all the expenditure like material cost, labour cost, architect's fees, AUDA charges, site expenses, administrative and other expenses. The appellant has shown closing work-in progress and closing unsold units in its Profit & Loss Acc .....

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d made necessary financial arrangements for the purpose of completion of housing project. Even though the development permission is in the name of Society, the same will not lead to any disallowance of deduction in view of observation made by the Hon'ble Gujarat High Court referred herein above at para 45 of its order that Assessee is entitled to deduction under Section 80IB(10) even when title of land has not passed to Assessee and development permission may be obtained in the name of origi .....

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the same, the entire risk of investment and expenditure were that of Assessee and Society for the purpose of development of housing project has not taken any risk but accepted only full price of land and nothing further. The profit and loss has accrued to Assessee hence explanation to Section 80IB with retrospective effect from 1st April, 2001 has no bearing on appellant. The facts of appellant's case are identical with the facts of case before the Hon'ble Gujarat High Court in case of R .....

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