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2016 (8) TMI 314 - ITAT AHMEDABAD

2016 (8) TMI 314 - ITAT AHMEDABAD - TMI - Eligibility of deduction u/s. 80IB(10) - denial of clam for the reason that assessee was not the owner of the land, the permission was not received by the assessee and according to AO assessee was mere a “Contractor” who had entered into a development agreement with the land owners for the construction of the housing project - Held that:- We find that the ld.CIT(A) after considering the development agreement and the decisions rendered in the case of Radh .....

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I.T.A. No.1178/Ahd/2012 - Dated:- 29-6-2016 - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER And SHRI KUL BHARAT, JUDICIAL 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 .....

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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. CIT(A)-XV/ITO/9(1)202/10-11). Aggrieved by the order of the ld.CIT(A), Revenue is in appeal before us and has raised the following grounds:- 1). The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has err .....

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tered into the project by a development agreement with the Society. The entire responsibility to execute the housing project and abide by the terms and 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 to the Society. Assessee was just a contractor of the land owners constructing residential units and not a developer. 3. Before us, it is submitted that the solitary issue is wit .....

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of the land and the approval of construction was not issued to him by the local authorities. He also noticed that assessee had entered into a Development Agreement with the land owners and the construction was done as per the agreement and thus the assessee was merely a Contractor for the purpose of construction of project. AO also noticed that assessee had not sold any Unit to the purchasers, but Society had executed the sale-deed as a seller and assessee had joined as a confirming party to th .....

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ed 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 .....

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(B) At Para 8.3 & 8.4., it considered Hon'ble ITAT Order dated 7.11.2008 in the case of M/s.Shakti Corporation wherein Hon'ble ITAT differently (different than M/s.Radhe Developers case) held that considering the terms and conditions of development agreement and other documents on record, the assessee had acquired dominion over the land, which he had developed by constructing housing project incurring expenses and also taking risks. It was held further by Hon'ble ITAT that deduct .....

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ibunal was right in law in allowing deduction u/s.80IB(10) r.w.s. 80IB(1) to the assessee when the approval by the local authority as well as completion certificate was not granted to the assessee but to the landowner and the rights and the obligations under the said approval were not transferable, and when the transfer of dwelling units in favour of the end-users was made by the landowner and not by the assessee?" (D) At para 25, Hon'ble High Court considered various provisions of the .....

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the Third Part have executed one Agreement of Sale on 18-05-2000 accordingly on that basis the rights of agreement of Sale dated 7-9-91 at the rate of ₹ 100/- per Sq.ft. Subject to other conditions written therein are decided to 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 th .....

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oping 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 other amounts and incidental expenses that the admitting members shall have to p .....

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ective member and also out of this land deducting the constructed land and deducting the land of margin and passage whatever excess land that shall remain then Developer cum Building Contractor shall have right to allot that land. Clause 11(13): As per this scheme Developer cum Building Contractor has given incidental lump sum estimate of price for the residential houses to be constructed but as per the step-stage wise development of the scheme and as per the changes Developer cum Building Contr .....

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truction is allowed then for such additional work other than total construction made, as per rules and regulations by getting passed the Plans from VMC. Vadodara to do the construction all the rights and Authorities shall be with Developer cum Building Contractor and thereafter also whatever F.S.I. Rights shall remain that also as per this agreement shall be with the party of the third part. (E) At para 27 Hon'ble High Court considered various provisions of development agreement in the case .....

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repare 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 Ag .....

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ment, you, the Party of the Second Part is bound to pay tax, land revenue, special cess etc. in the offices of the Vadodara Municipal Corporation, Government, Semi Government and whatever tax, land revenue, education cess, special cess, etc. are outstanding prior to be the date of this Agreement, the same are and shall be paid by us, the party of the First part as a land owner. (F) After considering the provisions of section 80IB(1) and 80IB(10) in respect of question of ownership of land being .....

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or the middle income group citizens. To ensure that the benefit reaches the people, certain conditions were provided in sub-Section(l0) such as specifying date by which the undertaking must commence the developing and construction work as also providing for the minimum area of plot of land on which such project would be put up as well as maximum built up area of each of the residential units to be located thereon. The provisions nowhere required that only those developers who themselves own the .....

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of the development projects. Under the agreements, the assessee had full authority to develop the land as per his discretion. The assessee could engage professional help for designing and architectural work. Assessee would enroll members and collect charges. Profit or loss which may result from execution of the project belonged entirely to the assessee. It can thus be seen that the assessee had developed the housing project. The fact that the assessee may not have owned the land would be of no c .....

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he 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 Architec .....

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, the member already admitted is deleted, the assessee would have the full right to include new member in place of outgoing member. He had to make necessary financial arrangements for which purpose he could raise funds from the financial institutions, banks etc. The land owners agreed to give necessary signatures, agreements, and even power of attorney to facilitate the work of the developer. In short, the assessee had undertaken the entire task of development, construction and sale of the housi .....

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ng off the land owner and the erstwhile proposed purchasers, the surplus amount would remain with the assessee. Such terms and conditions under which the assessee undertook the development project and took over the possession of the land from the original owner, leaves little doubt in our mind that the assessee had total and complete control over the land in question. The assessee could put the land to use as agreed between the parties. The assessee had full authority and also responsibility to .....

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g 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) .....

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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 Explanation to Section 80IB with retrospective effect of 1.4.2001 would have no material bearing in the cases on hand. We may recall that the said Explanation introduced by Finance (No.2)Act, 2009 provided as under:- [Explanation- For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall .....

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the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners. 46. We find that it is not even the case of the Revenue that other conditions of Section 80IB of the Act were not fulfilled. We, therefore, answer the question in favour of the assessee and against the Revenue and dispose of all appeals accordingly." 15. The facts of the appellant are identical with the cases dealt by H .....

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