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2016 (10) TMI 359 - GUJARAT HIGH COURT

2016 (10) TMI 359 - GUJARAT HIGH COURT - TM - Deduction u/s. 80IB (10) eligibility - develpoer v/s contractor - whether some of the units exceeded the maximum permissible builtup area - whether the open space adjoining the top floor constructed area of the unit would also form part of the builtup area of the unit - Held that:- The Tribunal in the impugned judgment has referred to the terms and conditions between the assessee and the society, from which, the Tribunal culled out that entire planni .....

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e was a developer and not a contractor. The case of the assessee would in background of such findings of the Tribunal be covered by the judgment of this Court in case of Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] wherein held assessee as entitled to the benefit u/s 80IB(10) even where 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. - Section 80(14) of t .....

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ies. This would however, exclude the common areas shared with other residential units. This exclusion clause of the common areas shared by other units cannot be applied in the reverse. In other words, the moment a certain area is not shared but is exclusively assigned for the use of a particular residential unit holder, would not mean that such area would automatically be included in the builtup area. In order to be part of the builtup area, the same must be part of the inner measurements of a r .....

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stoop etc. In the context of residential or even commercial complexes, term 'balcony' has gained a definite common parlance meaning. It usually consists of a projection from a building covered by a parapet or railing and may or may not but usually is covered from the top. This term 'balcony' certainly would not include an open terrace adjoining a bedroom or any other constructed area of a penthouse. The terrace is not a projection. - Decided against revenue - TAX APPEAL NO. 1372 of 2011 - Dated: .....

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eturn of income of declaring income of ₹ 5,15,340/- after claiming deduction under section 80IB of the Income Tax Act, 1961 ('the Act' for short) on a sum of ₹ 4.33 crores (rounded off). Case of the assessee was that the assessee had developed a housing project, income from which would be exempt in terms of section 80IB(10) of the Act. The Assessing Officer as well as the Commissioner rejected such a claim primarily on two grounds; one that the assessee was not a developer of .....

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he assessee thus, had undertaken full risk. Regarding the Revenue's contention regarding excess builtup area, the Tribunal held that the open space attached to a penthouse, cannot be included in the term 'balcony'. The Tribunal was of the view that the case of the present assessee was same as the cases of Radhe Developers and Shakti Corporation, two sets of appeals, where the Tribunal had allowed the deduction under section 80IB(10) of the Act. 4. The decision of the Tribunal in case .....

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e 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 an .....

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the members for dues and execute such demands through legal procedure. In case, for some reason, 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, .....

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favour of the members enrolled would be appropriated towards the land price. Eventually after paying 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 lan .....

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pay off the land owner first before appropriating any part of the 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. 5. The judgment of the High Cour .....

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rmissible builtup area. In a penthouse, according to the counsel, the open space adjoining the top floor constructed area of the unit would also form part of the builtup area of the unit. 7. Neither of these contentions can be accepted. The Tribunal in the impugned judgment has referred to the terms and conditions between the assessee and the society, from which, the Tribunal culled out that entire planning, sanctioning of plan, work of construction, development of the property was done by the a .....

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findings of the Tribunal be covered by the judgment of this Court in case of Radhe Developers (supra). 8. Section 80(14) of the Act contains definitions for the purpose of the said section. Clause( a) thereof provides that builtup area means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls, but does not include the common areas shared with other residential units. Thus, the builtup area would i .....

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