TMI Blog2016 (8) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... CIAL MEMBER For The Appellant : Shri Rajdeep Singh, Sr.DR For The Respondent : Shri Anil Brahmkshatriya, AR ORDER PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : This appeal by the Revenue is directed against the order of the Commissioner of Income Tax(Appeals)-XV, Ahmedabad dated 29/03/2012 for the Assessment Year 2008-09. 2. The relevant facts as culled out from the materials on record are as under:- 2.2. Assessee is a partnership-firm stated to be engaged in the business of construction. Assessee electronically filed its return of income for AY 2008-09 on 05/07/2008 declaring total income at Rs.NIL after claiming deduction of ₹ 88,72,527/- u/s.80IB(10) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). The case was selected for scrutiny and thereafter assessment was framed u/s.143(3) of the Act vide order dated 02/11/2010 and the total income was determined at ₹ 88,72,527/- by denying the claim of deduction u/s.80IB(10) of the Act. Aggrieved by the order of the Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who decided the appeal in favour of assessee vide order dated 29/03/2012 (in Appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly denied the claim of deduction u/s.80IB(10) of the Act. Aggrieved by the order of the ld.CIT(A), assessee carried the matter before the ld.CIT(A), who decided the appeal in favour of the assessee by observing as under:- 13. I have considered the facts and contentions of both A.O. as well as of appellant and I have perused various details so submitted by the appellant to support the contention. Considering the facts and reliance by the appellant on the judgement of Hon ble Gujarat High Court in the case of CIT vs. Radhe Developers, I am inclined to accept the contentions of the appellant. 14. (A) Hon'ble Gujarat High Court in its landmark judgement dated 13.12.2011 in the case of Radhe Developers, Shakti Corporation and Others vs. CIT at Para 4 and Para 5 illustrate the basic facts of the case of M/s. Radhe Developers. At para 7, Hon'ble ITAT's order dated 29.6.2007 was summarized wherein it was held that firstly for deduction u/s.80IB(10) of the Act it is not necessary that the assessee must be the owner of the land and secondly looking to the provisions contained in Section 2(47) of the Act read with Section 53A of the Transfer of Property Act, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be purchased by the Party of the Third Part. Clause-6. In fact in The Party of the First and Second Part confirming party have no necessary technical knowledge and skill pass through the said scheme to arrange for constructing residential houses having area less than 1500 sq.ft. for the middle class society and also have no finance to invest as per the size of scheme and to register the members for that required alertness and skill being absent they themselves are not in a position to place a project or scheme on the land mentioned in schedule in such circumstances to The Party of the Third part over and above the right to purchase the rights of Agreement of Sale on dt. 18-05-2000 they have also decided to give all rights along with constructing and developing on the said land mentioned in schedule by this Agreement dt. 18-05-2000. Clause 11(3) : The said Developer cum Building Contractor is authorized to admit the persons who are willing to join in the scheme to get the houses of fixed area and in this manner to admit the respective member in the scheme or at the time of admission of such member as per the scheme the fixed amount of contribution of construction and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or passing plans, Title Clearance, etc. for making the construction and erect an apartment in the same, can organize shops, offices, flats and tenement society and can engage architect if required, can prepare plans and obtain the occupation Certificate, Completion Certificate, can get the revised maps prepared and for which the complete powers are given to the party of the Second Part. Clause-4: The party of the Second Part Developers can register the members for the new construction that may be made over the said land/property, can issue receipt to the members, can issue allotment letter to the members, can execute the Agreement to sale, can hand over the possession, can execute Tripartite Agreement, but the entire responsibility for the same shall be that of the party of the Second Part. Cluase-7: That for the houses, shops flats, etc. that are to be constructed over the said land for which the party of the Second Part is to register them as members and can upon executing Agreement to Sale etc. accept the money and issue receipts to the members. Same way, you can remove all obstructions that may come during the period of making the develop it. Clause-10: From t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seen that the assessee had developed the housing project. The fact that the assessee may not have owned the land would be of no consequence. (H) At para 36, the Hon'ble High Court examined the effect of Explanation of Section 80IB(10) introduced with retrospective effect from 1.4.2001 and held that- 36. We have noted at some length, the relevant terms and conditions of the development agreements between the assessees and the land owners in case of Radhe Developers. We also noted the terms of the agreement of sale entered into between the parties. Such conditions would immediately reveal that the owner of the land had received part of sale consideration. In lieu thereof he had granted development permission to the assessee. He had also parted with the possession of the land. The development of the land was to be done entirely by the assessee by constructing residential units thereon as per the plans approved by the local authority. It was specified that the assessee would bring in technical knowledge and skill required for execution of such project. The assessee had to pay the fees to the Architects and Engineers. Additionally, assessee was also authorized to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale consideration of the housing units for his benefit. In short, assessee took the full risk of executing the housing project and thereby making profit or loss as the case may be. The assessee invested its own funds in the cost of construction and engagement of several agencies. Land owner would receive a fix predetermined amount towards the price of land and was thus insulated against any risk. (I) After considering the Hon'ble Bombay High Court judgement in the case of CIT vs. Glenmark Pharmaceutical Ltd. (2010) 324 ITR 199 under the head Contract of work or a contract of sale and Hon'ble Supreme Court judgement in the case of State of Andhra Pradesh vs. M/s. Kone Elevators (l)Ltd. AIR 2005 SC 1581, the Hon'ble Gujarat High Court at para 38 held that- 38. In the present case, as already held the assessee had undertaken the development of housing project at its own risk and cost. The land owner had accepted only the full price of the land and nothing further. The entire risk of investment and expenditure was that of the assessee. Resultantly, profit and loss also would accrue to the assessee alone. In that view of the matter, the addition of the Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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