TMI Blog2016 (1) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. The Revenue has challenged the findings of Commissioner of Income Tax (Appeals) in its appeal by raising the following grounds: 1) The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance u/s. 80IB(10) of the Act of ₹ 6,18,71,636/-. 2) The learned Commissioner of Income-tax (Appeals) erred in not considering that the Explanation to section 80IB(10) inserted by the Finance Act 2009 w.e.f 01.04.2001 clearly stipulates that nothing contained in the sub section shall apply to any undertaking which executes the housing project as a work contract awarded by any person including the Central or State Government and in this case the Slum Rehabilitation Authority (SRA) and Pimpri Chinchwad Municipal Corporation ( PCMC) had given the contract work of construction of buildings to rehabilitate the slum dwellers to the assessee by floating tenders. 3) The learned Commissioner of Income-tax (Appeals) erred in not appreciating the fact that the legislative intent was not to allow any deductions to the eligible undertaking if it was given by way of contract and in this case a contractual agreement i.e. Articles of Agreement was signed between the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings the Assessing Officer after examining the documents furnished by the assessee came to the conclusion that the assessee is not a developer but a contractor, therefore, the assessee is not eligible to claim deduction u/s. 80IB(10) of the Act. The Assessing Officer observed that the assessee has not undertaken any business risk in respect of the project awarded by the SRA. The agreement between SRA and the assessee has all the ingredients of the works contract. The assessee is not the owner of the land. The Assessing Officer disallowed the assessee s claim of deduction u/s. 80IB(10) of the Act. Aggrieved by the assessment order dated 23-12-2011, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) after considering the facts of the case and various decisions on which the assessee had placed reliance as well as CBDT Circular dated 05-01-2011 reversed the findings of the Assessing Officer and accepted the appeal of the assessee. Now, the Revenue is in appeal before the Tribunal assailing the findings of the Commissioner of Income Tax (Appeals). 4. Smt. Divya Bajpayee representing the Department submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Vs. Radhe Developers reported as 17 taxmann.com 156 (Guj.): 341 ITR 403 (Guj.). 5.1 The ld. AR submitted that the assessee has made huge investment in the project and had undertaken the risk. There were several clauses in the agreement, which if enforced would have resulted in termination of contract and forfeiture of the amount. The assessee is a entrepreneur. The contractor never makes investment in any project. For completing the work, the contractor receives the payment at regular interval from the contractee. Whereas, in the present case the assessee has not received any payment in between starting of project and completion of project. The assessee made investment from March, 2007 to July, 2008 with no return at all. Thus, the assessee had taken investment risk. The ld. AR placing reliance on the CBDT Circular No. 5 of 2010 submitted that according to the Circular the objective of tax concession is to provide tax benefit to the person undertaking the investment risk i.e. the actual developer. The Circular further clarifies that any person undertaking contract risk is not entitled to tax benefits. In the present case the assessee had undertaking the investment risk. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wning a land to be classified as developer, we do not find any merit in this objection. It is now a well settled proposition that the developer need not own a land. The Hon'ble Gujarat High Court in the case of CIT Vs. Radhe Developers (supra) has observed that, . there is nothing under section 80IB(10) of the Act requiring that ownership of the land must vest in the developer to be able to qualify for such deduction. 8. The second contention of the ld. DR is that the assessee has not undertaken any risk. Controverting the assertions made on behalf of the Department, the ld. AR has submitted that the assessee has undertaken business risk and entrepreneur risk. The assessee had made investment of about ₹ 6 crores. The assessee has taken all the risks in taking approvals, administration clearances, making transit accommodation for slum dwellers and finally realization of TDRs. The firm has provided further facilities such as electrical lights, fans etc. which were not part of the agreement. In support of his submission, the ld. AR has placed reliance on the decision of B.T. Patil Sons Belgaum Constructions (P.) Ltd. Vs. ACIT (supra). After analyzing document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the receipts of TDR and sale of the TDR as in the same year and immediately after receiving from the MMDRA. Therefore, there is no element of any appreciation in the value in the sale consideration. In view of the above facts and circumstances of the case, we do not find any reason to interfere with the order of the ld CIT(A) for both the AYs. 10. We find that the case of the assessee in the present appeal is on a better footing, as there is no issue of sale of TDR by the assessee. Thus, we can safely conclude that the assessee executing the project under SRA scheme is a developer and not a contractor. 11. The assessee has placed reliance on the CBDT notification dated 05-01-2011 to substantiate its claim that the assessee is eligible to claim deduction u/s. 80IB(10). The relevant extract of the notification dated 05-01-2011 reads as under: MINISTY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NOTIFICATION (INCOME TAX) New Delhi, the 5th January, 2011. S.O. (E.)- In exercise of the powers conferred by clauses (a) and (b) of subsection (10) of section 80IB of the Income Tax Act, 1961 (43 of 1961), the Board hereby notifies, the Scheme f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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