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Income Tax Officer, Ward-9 (2) , Ahmedabad Versus M/s. Kamal Corporation

2016 (3) TMI 1058 - ITAT AHMEDABAD

Disallowance of deduction u/s.80IB(10) - claim of the assessee was disallowed mainly for the reason that assessee did not own the land on which the project was constructed and the assessee was a works contractor and that the approval for construction of residential units was given by the local authority to the land owners and not to the assessee - CIT(A) allowed the claim - Held that:- CIT(A) after considering the submissions of the assessee and remand report from the Assessing Officer has given .....

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ng decision. In view of the aforesaid facts, we find no reason to interfere in the order of ld.CIT(A) - Decided against revenue - ITA No: 3151/AHD/2011 - Dated:- 12-2-2016 - SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Appellant by : Shri Deepak Sutaria, Sr. D.R. For The Respondent by : Shri A. C. Brahmakshatriya, A.R. ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER This appeal filed by Revenue is against the order of CIT(A)-XV, Ahmedabad, dated 2 .....

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ssessment was framed u/s.143(3) of the Act vide order dated 23.11.2010 and total income was determined at ₹ 1,22,73,851/- by disallowing the claim of deduction u/s.80IB(10) of the Act. Aggrieved by the order of Assessing Officer, assessee carried the matter before the CIT(A) who vide order dated 20th October, 2011 deleted the addition. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us and has raised following grounds: 1). The Ld. Commissioner of Income-tax (Appeals)- .....

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f the Act. Assessing Officer on analyzing the details furnished by assessee concluded that assessee was a mere builder who had entered into the agreement with the landowner for construction of housing project as per the approvals obtained by the landowner for construction on the land owned by the landowner and therefore assessee did not satisfy the conditions stipulated in Section 80IB(10) of developing and building the housing project & therefore assessee was not eligible for deduction u/s. .....

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llant was a 'works contractor' and executed the work awarded by Gangotri Tenament(Nikol) Cooperative Housing Society, through the development agreement entered by it with the society. According to the AO the assessee is not a developer primarily because it did not own the land on which the project was constructed and it constructed the project as per work contract awarded by the society and was thus hit by the Explanation introduced vide Finance Act 2009 according to which a person who e .....

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t disputed any of the conditions stipulated from clause (a) to clause (d) of section 80IB(10) with respect to time limit of permissions, time limit of completion, area of land, built-up area limit prescribed for the residential units, and percentage of commercial construction which can be undertaken. His objection is that the appellant is not a developer because it is not the owner of the land on which the residential units were constructed. According to him the appellant is a works contractor e .....

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f the AO has to be seen in the light of the tests laid down by Hon'ble ITAT Bench 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 wherein Hon'ble ITAT has held that where the appellant is found having practically purchased the land and has borne the risk of development deduction should be allowed. 7. The submission of the appellant dated 2.5.2011 in which it was stated that the funds to the Cooperative Housing Socie .....

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he copy of the bank account of the appellant maintained in The Ahmedabad District Cooperative Bank Ltd is enclosed as Annexure-1 of this order shows four cheques totaling to ₹ 3,49,445 but debited on other dates of September 2004 have been issued. After going through rival submissions following points emerge: a. The AO has not disputed the land funding argument of the appellant in the remand report which was made even during the assessment proceedings as clear from the submission of the ap .....

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, set forth in Hon'ble ITAT decision in the case of Shakti Corporation. 9. Further in the remand report the AO has reiterated the arguments made in the assessment order that the appellant is not the owner of the land because the land owner has applied for housing plan approval and got the permission to develop in their names. To examine these arguments the Development Agreement has to be referred to as stated by Hon'ble ITAT 'A' bench Ahmedabad in the case of Shakti Corporation w .....

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e appellant, for instance page 2 of the Development Agreement states: "The Second Party (i.e. the appellant) have Surveyed area of Nikol, Ahmedabad and found that the Housing Project for the middle class people is necessary in the area and it has taken initiatives, designed and conceived Housing Project at Nikol, Ahmedabad. Thus, it had decided to purchase a piece of N.A. land for the purpose. The partners of Second Party had made negotiation with the owner of the land at Survey No. 472/1 & .....

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epared a lay-out plan, filed the plan before the local authority, made follow ups and got it approved." Clauses of the Development Agreement which show dominant control are mentioned below: "Clause (12) The Developer shall obtain the sale consideration from the members of the society against the work of development and building the house by giving the 'receipt'. After obtaining such agreed consideration and fulfillment of other conditions, the members shall be allotted the hous .....

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all have Contractual Lien' on the land owned to the Society alias the Second Party shall have absolute possession on the land and that clear consent is given by the First Party." 11. As the appellant has not been found violating any of the conditions stipulated from clause (a) to clause (d) of section 8016(10) and is found fulfilling the tests laid down by Hon'ble ITAT of having practically purchased the land and possessing dominant control over the project, in my view there is no j .....

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