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The Asst. CIT (OSD) , Ciurcle-9, Ahmedabad Versus Shri Sunil Dhirubhai Patel

2016 (7) TMI 381 - ITAT AHMEDABAD

Deduction u/s.80IB(10) - denial of the claim of deduction u/s.80IB(10) by the AO mainly for the reason that the assessee was not the owner of the land and the permission for the construction was not obtained by the assessee and the risk and reward of the project was not of the assessee - Held that:- We find that the ld.CIT(A) after considering the submissions of the assessee and after perusing the Development Agreement has given a finding that the assessee has practically purchased the land and .....

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nor could controvert the findings of the ld.CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of the ld.CIT(A). Thus, this ground of Revenue is dismissed. - Decided in favour of assessee - ITA No. 279/Ahd/2010 & CO No.66/Ahd/2010 - Dated:- 3-6-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER And SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Revenue : Smt. Smiti Samant, Sr. DR. For The Assessee : Shri Parin Shah, AR ORDER PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER .....

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u/s.80IB of the Act. Thereafter, assessee filed revised return of income on 02/01/2007 declaring total income of ₹ 50,86,470/-. The case was selected for scrutiny and thereafter assessment was framed u/s.143(3) of the I.T.Act, 1961 vide order dated 29/12/2008 and the total income was determined at ₹ 1,48,25,286/- by disallowing the claim of deduction u/s.80IB(10) of the Act. Aggrieved by the order of Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who vide .....

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owing ground:- 1. The Learned Commissioner of Income Tax (Appeals) -XV, Ahmedabad after going through the details and submissions of the respondent found that the Respondent has fulfilled the conditions laid down for claiming deduction u/s.80IB(1) and has invested in cost of land and acquired dominant control over the land for the development of the project. The facts of Respondent s case is fully covered by the decision of Hon ble ITAT Ahmedabad, Bench A delivered in the case of M/s.Shakti Corp .....

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and on which construction activities was carried out was not owned by the assessee and the necessary permission from the appropriate authorities was also not obtained by the assessee but the approval of the local authorities was granted to S/Shri Ambalal T.Patel and Gordhanbhai Nathabhai Patel, land owners. AO was therefore of the view that the assessee was not a Developer but was a mere Contractor and therefore was not eligible for deduction u/s.80IB(10) of the Act. He accordingly, denied the c .....

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r 1.10.1998 and completes the project before 31.3.2008 if it has been approved by the local authority before 1.4.2004. In the case of appellant Development Permissions were given by Auda dated 24.102003 & 21.11.2003 to the attorney holder of the land owners who sold the land to the NTC (Karnavati Ghodasar Owners Association) vide conveyance deed dated 8.7.2004. It was explained that in this line of business negotiations for land start much earlier than registration of the conveyance deeds an .....

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of 1 acre: AO has not doubted this condition and this one sands fulfilled as total area of the land is about 17223.97 sq.mtr. which is above one acre. c) The residential unit has a maximum built up area of 1500 square feet. This condition is not under dispute. d) The built up area of the shops and other commercial establishments included in the housing project does not exceed 5% of the aggregate built up area or 2000 sq.ft. whichever is less: Thus the conditions specified in section 80IB(10) me .....

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reproduced below: The facts involved in the case of the assessee are similar to the facts in the case of Radhe Developers (supra) and accordingly we are of the view that the assessee has acquired the dominant control over the land and has developed the housing project by incurring all the expenses and taking all the risks involved therein. We may mention here that, in our opinion, the decision in the case of Radhe Developers (supra)will not apply in a case where the assessee has entered into the .....

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has not dealt with such situation. The proposition of law laid down in the case of Radhe Developers cannot be applied universally without looking into the development agreement entered into by the Developer along with the land owner. In the case of Shakti Corporation since the assessee has filed copy of the development agreement and crux of the agreement is that the assessee has purchased the land and has developed the housing project at its own, therefore, we are of the view that the assessee w .....

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er of the CIT(A) ad restore all other appeals to the file of the AO with the direction that the AO shall look into the agreement entered into by each of the assessees with the land owner and decide whether the assessee has in fact purchased the land for a fixed consideration from the land owner and has developed the housing project at its own cost and risks involved in the project. In case the AO finds that practically the land has been brought by the Developer and Developer has all dominant con .....

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ellant should have acquired dominant control over the project and should have developed the housing project at its own cost and risks. To ascertain which Hon ble ITAT directed the Development Agreement to be looked into. In this case the appellant practically purchased the land and bore the entire cost and risk of developing the project. This is proved by going through the Development Agreement specially following clauses: 2.2. (to develop the housing project Narnarayan tenements) 5.3. (entire d .....

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7.1. (the Developer shall arrange the entire finance for the project in addition to the amounts that may be received from the prospective members) 9.1 (which says that the profit or loss that may arise out of the project will belong to the Developer). 10.3. (all residential units till they are disposed of shall remain under the possession of the Developer) As the appellant fulfills the conditions laid down for claiming deduction u/s.80IB(10) and has invested in cost of land and acquired dominan .....

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d of the project should be of the assessee, which in the present case is not of the assessee. She therefore submitted that in such a situation, AO was fully justified in denying the claim of deduction u/s.80IB(10) of the Act. Ld.AR, on the other hand, reiterated the submissions made before the AO and ld.CIT(A) and further submitted that the ld.CIT(A) after considering the decision in the case of M/s.Shakti Corporation, Baroda in ITA No.1503/Ahd/2008 in AY 2005-06 had decided the issue in favour .....

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