TMI Blog2011 (7) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the AO has not examined assessee s claim of deduction u/s 80IB(10) with reference to applicability of explanation inserted by the Finance Act, 2009, w.e.f. 1.4.2001. The CIT further observed that land was in the name of Parshwanath Grah Nirman Sahakari Sanstha Maryadit and assessee was not the owner. In other project i.e. Nipania project, the assessee claimed the deduction u/s 80IB on the profits which was worked out on the basis of expenses incurred on construction work, not equitable with the profits derived from eligible business. On the basis of these factual details, a show cause notice u/s 263 of the Income-tax Act, 1961, was issued and assessee was asked to file submissions. 3. In reply to the CIT s notice u/s 263, the assessee submitted as under :- Assessee had entered into a joint development agreement with above sanstha which was executed on 25.11.2002 accordingly constructed residential units got 75 % share in the constructed residential flats which were sold by the assessee as developer executed the sale deeds in favour of ultimate purchasers. Simlarly Parshwanath Grah Nirman Sahakari Sanstha had also sold flats received in their share which they got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntage of completion method . Section 145 of the Act requires that profit gain from business or profession should be computed in accordance with either cash or mercantile system regularly employed by the assessee, however, where the accounting standards of the institute are followed the accounts are not rejectable by the audit party. With regard to your honour s query regarding the actual developer owner of the project it is submitted that assessee had purchased the land and his name is entered into Bhu-Adhikar * Rin Pustika in the financial year 2004-05 ( copy enclosed). Further assessee has obtained all requisite approvals permission from Town Country Planning with regard to development construction of residential units on Khasra No. 14/1 14/2 Khasra No. 17 gram Nipania Distt. Indore. Copy of approval letter of Town Country Planning dated 18.10.2005 in the name of assessee alongwith copy of lay out plan is enclosed herewith for your honour s ready reference. This fact also emerged from plain reading of our construction account where in investment in land at Nipania is shown as expenditure during the year. Further assessee has obtained the necessary approval for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for de novo consideration vis- -vis the claim of the assessee after appraisal of all the facts and the material to be produced by the assessee. Thus the order is set aside u/s 263 of the Income-tax Act. 8. Aggrieved by the above order, the assessee is in further appeal before us. 9. Shri P. D. Nagar, C. A. appeared on behalf of the assessee and contended that the AO had considered the books of account, audit report and report submitted in form no.10 CCB while considering the claim of the assessee. From the documents produced, it was proved beyond doubt that the assessee was developer and not contractor hence deduction u/s 80IB of the Income-tax Act, was allowed. He further submitted that on the similar facts it has been held that a developer is allowed to claim deduction u/s 80IB of the Act, in the case of (i) Radhe Developers vs. ITO, (2008) 113 TTJ 300 (Ahd),(ii) Mudit Madanlal Gupta vs. ACIT, (2011) 51 DTR 217 (Mumbai) (iii) ACIT vs. Fortune Builders, (2010) 14 ITJ 667 (Indore.) 10. Regarding project at Sukhliya, Indore, in respect of Royal Bungalows City, Shri P. D. Nagar submitted that the project was commenced in the assessment year 2005-06. Land owned by M/s. Maha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 15. Regarding project C , the contention of Mr. Nagar was that the ld. CIT considered profit estimated on construction cost method is not at par with the profit derived from eligible business for claiming deduction u/s 80IB of the Act. In fact, Institute of Chartered Accountants of India has approved such method of accounting in construction contracts as per AS-7. By adopting such method overall profitability of the project is not effected in any manner. Such method is being followed consistently year after year and on accrual basis, if any, profit is accounted for in the books, such profit is eligible for deduction u/s 80IB provided all other conditions complied with as held in the case of B.K. Patel Enterprises vs. DCIT, (2009) 125 TTJ 974 (Pune). 16. On the other hand, it was contended by the ld. CIT DR, Shri Keshave Saxena, that the AO has not at all dealt with the issue of assessee s claim of deduction u/s 80IB while framing the assessment u/s 143(3). He invited our attention to the order of the AO dated 3rd November, 2008, wherein there was no whisper about the assessee s claim of deduction u/s 80IB. According to the ld. CIT DR, the AO has not applied his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was not owning the land and the project was not approved in the name of the assessee, therefore, claim of deduction u/s 80IB is not eligible. In this regard, as per our considered view, this controversy has been settled by the decision of the Coordinate Bench in the case of Fortune Builders, 14 ITJ 667, wherein it was held that deduction u/s 80IB(10) is allowable even if the assessee is not the owner of the land. Even provisions of Section 80IB(10) do not prohibit nor confine a deduction only to the person, who is owner of the land and in whose name the plan is approved. Provisions of sub Section (10) of Section 80IB simply provides that the deduction will be allowed to an undertaking who is engaged in developing and building a housing project approved before a specified date by a local authorities. Thus, there is a condition for getting the plan approved for which deduction is claimed by the assessee, however, there is no restriction that the plan should be approved in the name of the assessee nor the Act any where provides that the assessee should be the owner of the land on which he is going to develop a housing project. In the instant case, the ld. CIT has restored ..... X X X X Extracts X X X X X X X X Extracts X X X X
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