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2016 (4) TMI 670 - ITAT AHMEDABAD

2016 (4) TMI 670 - ITAT AHMEDABAD - TMI - Deduction under section 80IB(10) declined - land ownership and approval by local authority are not in the name of the assessee - Held that:- The issue in appeal before us is squarely covered by the decision in the case of Shri Umeya Corporation vs. Income Tax Officer [2015 (9) TMI 108 - ITAT AHMEDABAD ] wherein held all that is material is whether assessee is taking the entrepreneurship risk in execution of such project. When profits or losses, as a resu .....

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alled into question correctness of the order dated 24th April, 2012, passed by the ld. CIT(A), in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 ( the Act hereinafter) for the Assessment Year 2003-04. 2. Grievances raised by the Assessing Officer are as follows :- 1). The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow the Assessee's claim for deduction of ₹ 55,94,649/ .....

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nd conditions of its approval right from the inception of the project till its completion rests with the Society. The local Authority had granted permission for development and construction of the project to the Society, Assessee was just a contractor of the land owners constructing residential units and not a developer. 3). On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad ought to have upheld the order of the Assessing Officer. 4). It .....

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0/-. It was also noted that as per the application and plan filed by the society, the local authority accorded the permission for development and construction of the project to the POA of Somabhai Narsinhbhai Patel & Others on 19.07.2010. The land was sold to Manohar Co-op. Housing Society Limited, Ahmedabad by the land owner by sale deed dated 29.12.2000. Assessing Officer further noted that the assessee was entered into a Development Agreement with Manohar Co-op Housing Society Limited, Ah .....

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transfer the land cost to the Society. The Assessing Officer noted that the society was formed for group housing of the members and was supposed to construct and transfer the houses to the members and according to the development agreement as the society was not experienced in construction, the assessee was appointed as a contractor to construct the houses on behalf of the society as per the terms and the approved plan of the Society. It was in this backdrop the assessee was required to show cau .....

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s :- To sum up, the Society is a legal entity and it acquired the land and has to be recognized as the owner of the land. The Manohar Co. Op. Housing Society Ltd., Ahmedabad got the plan for the housing project approved from the local authority as an owner of the land on which the project was to come up. It is immaterial whether the assessee approached the Society or the Society approached the assessee for construction. The fact remains that the Society is the principal and the assessee is a con .....

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ry requirement of the section that the assessee must develop and build a housing project. Therefore, the assessee is not eligible for the deduction under section 80IB(10). In the instant case as per the agreement, the assessee had purchased the material and built the housing units as per the plan, but he had no ownership on the houses, as the land was owned by the society and the assessee had only constructed the dwelling units as per the agreement entered into with the Society. Looking at the f .....

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regard on Supreme Court in the case of HAL Ltd. Vs. State of Orissa [55 STC 327 ]and Tamil Nadu Vs. Anandam Vishwanathan [(1989) 1 SCC 613., The assessee can not transfer the ownership of the housing unit constructed to the prospective buyer. The housing unit has to be transferred by the land owner only, in this case the Manohar Co. Op. Housing. Society Ltd., Ahmedabad. This is also clear from the Conveyance deeds executed for the sale of units in the housing project. The Society has transferred .....

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y the Finance Act 2009 w.e.f. 1.4.2001 which is reproduced below. 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 by any person (including the Central or State Government). In view of the above factual and legal position, it is held that the assessee is not a developer and builder as required under the provisions of the section 80 IB in respect of .....

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cer noted that the investment in land was, in fact, made by the assessee. He was also of the view that the assessee was owner of the land by virtue of development agreement and the agreement itself. He then discussed the judgement of Hon ble Gujarat High Court in the case of CIT vs. Radhe Developers [(2012) 341 ITR 403 (Guj)] and held that the fact of the assessee s case being identical with the case dealt by the Hon ble Gujarat High Court, the assessee deserves deduction under section 80IB(10) .....

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proval by local authority are not in the name of the assessee. In the light of these facts, we find that the issue in appeal before us is squarely covered by the decision dated 7th July, 2015 of a co-ordinate bench in the case of Shri Umeya Corporation vs. Income Tax Officer - ITA No.211/Ahd/2010, wherein the co-ordinate bench, inter alia, has observed as follows :- 6. We find that, in the case of CIT Vs Radhe Developers [(2012) 341 ITR 403 (Guj)], Hon ble jurisdictional High Court had an occasi .....

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ng such deductions. 33. It is well settled that while interpreting the statute, particularly, the taxing statute, nothing can be read into the provisions which has not been provided by the legislature. The condition which is not made part of s. 80-IB(10) of the Act, namely that of owning the land, which the assessee develops, cannot be supplied by any purported legislative intent. 34. We have reproduced relevant terms of development agreements in both the sets of cases. It can be seen from the t .....

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ing project. The fact that the assessee may not have owned the land would be of no consequence. (Emphasis, by underlining, supplied by us) 7. In our humble understanding, therefore, in order to answer the question as to whether the condition precedent for deduction under section 80IB has been satisfied inasmuch as whether or not the assessee is engaged in developing and building housing projects , all that is material is whether assessee is taking the entrepreneurship risk in execution of such p .....

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thereon could probably be the simplest business models in this line of activity, but merely because there is an improvisation in the business model or because the assessee has adopted some other business models for the purpose of developing and building housing project does not vitiate fundamental character of the business activity as long as the risks and rewards of developing the housing project, in substance, remain with the assessee. It is difficult, if not altogether impossible, to visualiz .....

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el that an entrepreneur adopts in the course of developing and constructing housing project. 8. As regards learned CIT(A) s reliance on the decision of a larger bench of this Tribunal, in the case of B T Patil & Sons (Belgaum) Constructions Pvt Ltd vs ACIT [(2010) 1 ITR (Tribunal) 703 (Mum)], what has been referred to by her is the view of the three member bench resolving the point of difference between the members of the division bench. However, this view was stillborn, and its relevance is .....

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