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2016 (10) TMI 328 - GUJARAT HIGH COURT

2016 (10) TMI 328 - GUJARAT HIGH COURT - TM - Reopening of assessment - Eligibility of deduction u/s 80IB(10) - Held that:- Assessing Officer had minutely examined the petitioner's claim for deduction u/s. 80IB(10) of the Act. The question that such deduction would be available for development of a housing project was very much in mind of the Assessing Officer. In this context, we may peruse the reasons recorded by the Assessing Officer for reopening the assessment more closely. He sought to rev .....

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cer examined the claim of deduction u/s. 80IB(10) of the Act in the original scrutiny assessment without there being anything further, it would not be open for him to contend that since a particular aspect of the deduction was not examined, he should be permitted to reopen the assessment. It is not even the case of the Revenue that during the scrutiny assessment, the assessee did not furnish true and full details in response to the queries raised by the Assessing Officer. If the element of the e .....

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on. In any case, the Assessing Officer has not even relied on such explanation in the reasons recorded.- Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 16102 of 2010 With SPECIAL CIVIL APPLICATION NO. 16307 of 2010 - Dated:- 4-10-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR TUSHAR P HEMANI with MS VAIBHAVI K PARIKH, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. These petitio .....

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eturn of income on 31.10.2005 showing total income of ₹ 52,910/- after claiming deduction of ₹ 45.73 lacs (rounded off) under section 80IB(10) of the Income Tax Act, 1961 ['the Act' for short]. Such return was taken in scrutiny by the Assessing Officer. During the course of such assessment, he examined the petitioner's claim of deduction under section 80IB(10). He passed the order of assessment on 24.10.2007 accepting claim of deduction without any modification. 4. To reo .....

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1961 on the ground that the assessee is not the constructive owner of the land and the permission from the AUDA is not obtained by the assessee. On a perusal of the development agreement entered into with the land owners, it is abundantly clear that the land owners have not given any right or dominion of the land to the assessee. It is for the reason elaborately discussed in the order of assessment, also held that the assessee is merely a contractor and not a developer and hence deduction u/s.80 .....

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ained by the assessee and hence, deduction u/s. 80IB(10) is not allowable to the assessee. In view of the above, I have every reason to believe that due to illegitimate claim of the deduction of ₹ 45,73,135/- made and allowed to the assessee u/s. 80IB(10) of the I.T.Act the income chargeable to tax has escaped assessment within the meaning of section 147 of the I.T.Act. 5. Upon being supplied with such reasons, the assessee objected to the notice of reopening under a letter dated 16.11.201 .....

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the assessment are not valid. The question whether the assessee owned the land or not was not germane. Further, the fact, that the permission from AUDA was not in the name of the petitioner was an erroneous reference since the proper authority was the Gram Panchayat and not AUDA which could have granted such a permission. 7. On the other hand, learned advocate Mr. Nitin Mehta for the department opposed the petition contending that the question whether the petitioner had acted as a developer or a .....

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the assessment year 2005-06. Naturally, therefore, the claim of deduction under section 80IB(10) of the Act was the main element of such return. In this context, we may notice how the Assessing Officer examined the claim. Under an undated notice under section 142(1) of the Act, the Assessing Officer asked the assessee to supply several details including the following: 1. Please give a brief narration of your business activity. 2. Details of work executed during the year with proof and receipt in .....

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an and layout thus approved and also copies of letters of approval. 7. Furnish the copy of project report with respect to the total cost of the project and the anticipated realizations, along with certificate of the architect on the present status of the project. 10. In support of your claim of deduction u/s. 80IB of the Act, you are requested to submit the following details:- Sr. no First date of approval of project Date of receipt of BU certificate Size of plot (in sq.mtrs) Built up area of bi .....

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in progress is reflected in the Profit & Loss Account and offered as income. As the project is not completed, we have not raised any bills to the customers. 3. This is the first assessment year and provision regarding the deduction of TDS is not applicable to us. 4. The Xerox copy of the bank statement for the whole year is enclosed herewith in the Annexure-I. 5. The copy of the approved plan and the copy of the concerned authority for construction is enclosed herewith in Annexure-2. 6. The .....

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. 10. It was after such scrutiny that the Assessing Officer passed the order of assessment dated 24.10.2007 in which, as noted, he allowed the deduction while making following observations: 3. The assessee is engaged in the business of building construction and developing the residence project. During the year under consideration, the assessee has undertaken the construction work of a housing project qualified for deduction u/s. 80IB(10) known as Devdarshan Tenament situated at Village Bopal, Ah .....

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from business or ₹ 46,39,963/- profession Interest income ₹ 10,399/- ₹ 46,50,362/- Less: ₹ 12,000/- Deduction u/s. 80-L Deduction u/s. 80D ₹ 2,475/- Deduction u/s. 80CCC ₹ 9,841/- Deduction u/s. 80IB(10) ₹ 45,73,135/- ₹ 45,97,451/- Total Income ₹ 52,911/- Rounded off ₹ 52,910/- 11. It can thus be seen that the Assessing Officer had minutely examined the petitioner's claim for deduction u/s. 80IB(10) of the Act. The question that su .....

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ord, the Assessing Officer was of the opinion that the assessee was merely a contractor and not a developer of a housing scheme. 12. First and foremost, only on the ground of change of opinion, the notice would be rendered invalid. Once the Assessing Officer examined the claim of deduction u/s. 80IB(10) of the Act in the original scrutiny assessment without there being anything further, it would not be open for him to contend that since a particular aspect of the deduction was not examined, he s .....

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can be supported on the strength of the reasons recorded by the Assessing Officer. It is even otherwise questionable whether with the aid of a statutory change made later on, assessment can be reopened, a question we need not finally decide in this petition. In any case, the Assessing Officer has not even relied on such explanation in the reasons recorded. 13. This Court has in case of Commissioner of Income Tax vs. Radhe Developers reported in 341 ITR 403 examined the requirement of ownership o .....

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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 au .....

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ee 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 housing units to be located on the land belonging to the .....

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