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2016 (8) TMI 316 - ITAT AHMEDABAD

2016 (8) TMI 316 - ITAT AHMEDABAD - TMI - Eligibility of deduction under Section 80IB(10) - necessity of ownership of the land - Held that:- We find that the Hon’ble Gujarat High Court in the case of CIT vs. Radhe Developers (2011 (12) TMI 248 - GUJARAT HIGH COURT ) has held that the provisions nowhere required that only those developers who themselves own the land would receive the deduction under Section 80IB(10) of the Act. Neither the provisions of Section 80IB nor any other provisions conta .....

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ity in the order of the CIT(A) which is hereby confirmed and the grounds of appeal of the Revenue are dismissed. - Decided in favour of assessee - ITA Nos. 1028 & 1781/Ahd/2012 - Dated:- 29-6-2016 - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER For The Revenue : Shri Rajdeep Singh, Sr DR For The Assessee(s) : Shri Bharat S. Shah, AR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER:- These two appeals by the Revenue are directed against the separate orders of the Commissi .....

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ding that the assessee fulfills the conditions laid down for claiming deduction u/80IB(10) even when the land was in the names of (1) Shukan Villas for Sakal Co-operative Hsg. Society Ltd., Vibhag-19 (New Name : Shukan Vilas Co-op Hsg Society Ltd) and (2) Sulay Raw House for Sakal Cooperative Hsg Society Ltd, Vibhag-13 (New Name : Sulay Co-op Hsg Society Ltd.) which are separate legal entities in the eye of law and the assessee entered into the project by a development agreement with the Societi .....

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the Assessee s claim for deduction of ₹ 15,93,76,433/- u/s 80IB(10) of the I.T. Act. 2. The Ld. Commissioner of Income-tax (Appeals)-XV, Ahmedabad has erred in holding that the assessee fulfills the conditions laid down for claiming deduction u/80IB(10) even when the land was in the names of (1) Shukan Villas for Sakal Co-operative Hsg. Society Ltd., Vibhag-19 (New Name : Shukan Vilas Co-op Hsg Society Ltd) and (2) Suprabh Apartment for Sakal Cooperative Hsg Society Ltd, Vibhag-4 and (3) S .....

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development agreement with the Societies. 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 societies. The local Authority had granted permission for development to the Societies. Assessee was just a contractor of the land owners and not a developer. 3. Ld. Counsel for the assessee, at the outset, contended that the issue in question is squarely covered in favo .....

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ord. On perusing the order of CIT(A), it is seen that CIT(A) has held that the issue relating to disallowance of deduction u/s 80IB(10) of the Act on the ground that Assessee is not the owner of the land and the approval of the project not being in the name of the Assessee is covered in favour of Assessee by the decision of his predecessor in assessees own case for AY 2008-09. We further find that CIT(A) had disallowed the claim of the Assessee on the ground that Assessee had entered into two ag .....

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two objections, the Id.CIT (A) has raised one more objection that the assessee has sold the land to the Unit holders separately and has done the construction of units under separate agreement/contract and, therefore, the assessee is not eligible for deduction u/s.80-IB(10) of the Act because as per ld.CIT(A), profit earned by the assessee in respect of sale of land is not eligible for deduction u/s.80-IB(10) of the Act and similarly, the profit earned by the assessee for construction activities .....

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t it is a joint activity although the agreement and land sale-deed are executed separately, but for this reason alone, it cannot be said that the assessee is not a builder or a developer. He placed reliance on the following Tribunal decisions:- Sl. No(s) Decision in the case of. ... Reported in.... 1. DCIT vs. SMR Builders (P.)Ltd. (2012)24 Taxman.com 194 (Hyd.) 2. Sky Builders & Developers vs. ITO (2011)14 Taxman.com 78 (Indore) 3. M/s.Vardhman Builders and Developers vs. ITO ITA No.559/Ind .....

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cannot be declined if other conditions are being satisfied. 5.3. He further submitted that in the case of DCIT vs. SMR Builders (P) Ltd. (supra) also, the facts were that the assessee had sold flats in a semi-finished stage. In that case, the AO had noted that as per the sale-deed, the assessee-company has sold undivided share of land with super-structure of semi-finished built-up area for a certain consideration. The AO held that the semi-finished structure has never been considered as a reside .....

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hat is sought to be constructed and sold by the assessee is a residential units and what is sought to be purchased by the buyer is the ownership of the specified unit and registration of flat in semi-finished condition is only to facilitate the convenience of the parties and agreement for development and completion of balance work in relation to the flats is only an incidental formality and this cannot be viewed as fatal to the claim of the assessee for deduction u/s.80-IB(10) of the Act. It was .....

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d dealer and contractor. In this regard, in our considered opinion, the issue involved is squarely covered in favour of assessee by the decision of ITAT Indore Bench rendered in the case of M/s.Vardhman Builders and Developers vs. ITO (supra). It is noted by the Tribunal in that case that the assessee had entered into an agreement for a sale of land and a separate agreement for construction of the house on the land and, therefore, the facts are similar. Under these facts, it was held by the Trib .....

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rtial and unfinished construction of flats and, thereafter, construction agreement was entered into to carry out the balance construction work and under these facts, it was held by the Tribunal in that case that such agreement for construction to complete the balance work is only an incidental facilitation to protect interest of the parties and therefore, the assessee is eligible for deduction u/s.80-IB(10) of the Act. Similarly, in the case of Raghava Estates vs. Dy.CIT (supra) on which relianc .....

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he plot in the name of the buyer on payment of specified amount in order to achieve cost saving and to ensure reliability and thereafter, the assessee had proceeded to construct the house as per building plan obtained in the name of the plot-owners on payment of subsequent installments. It is also noted that the assessee had also developed various public amenities within the project. Thereafter, it was held by the Tribunal that on a totality of a fact, the Tribunal is of the view that the assess .....

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) of the Act. Hence, we direct the A.O to grant the deduction to the assessee u/s. 80IB(10) of the Act. 9. Before us, the Revenue could did not place any contrary decision on record nor could distinguish the facts of the case which was relied by the Assessee. In view of the aforesaid facts, we respectfully following the aforesaid decision of the co-ordinate Bench of the Tribunal, in the case of Satsang Developers (supra) hold that Assessee is eligible for deduction u/s 80IB(10). Thus this ground .....

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