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TMI Blog2022 (7) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... tice u/s.143(2) which the ld AR during the course of hearing withdrew as the ld DR shared a copy of the notice served. This ground therefore is dismissed. 3. Brief facts are that the assessee is a limited company carrying on the business of real-estate development, especially building and developing of residential apartments. For the AY 2007-08, the assessee filed return of income on 26.10.2007 declaring a total income of Rs.44,83,661 after claiming deduction u/s.80IA(10). U/s. 80IB(10) of the Act, an undertaking engaged in the business of developing and building housing projects is eligible for a deduction. The section reads as follows:- "[(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2007 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment 2007-08. The assessee also offered certain other income in the declaration pertaining to loan to directors and civil construction business, etc. The assessee's case was selected for scrutiny and notice was issued on 09/09/2008 and the assessment was completed u/s.143(3) by order dated 30/10/2009, making various additions to the tune of Rs. 1,63,02,272 including the addition towards 80IB(10). This assessment order became final as the assessee did not file any appeal against it. 5. Another survey was conducted in the premises of the assessee on 14.12.2012 and the case was re-opened u/s.147 for both the assessment years. In response to notice u/s.148 dated 11/02/2014, the assessee filed a letter to treat the original return as a return filed in response to notice u/s.148. In the course of assessment proceedings u/s. 148, the AO observed that the assessee has paid a consideration of Rs.6,01,50,875 towards 28 flats earmarked for the land owners, out of which 22 flats were sold for an amount of Rs.5,63,80,183 resulting in a profit of Rs.91,19,417. The AO was of the view that the assessee is not eligible for deduction u/s. 80IB(10) of the Act on the aforesaid transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share of developers alone (e) Thus, there can be no question of any piecemeal consideration of the so-called profits on the sale of these flats and the same forms part of the profits from the business of development of the housing project, which is eligible for deduction u/s. 80IB(10) of the Act. (f) The aforesaid transaction cannot be regarded as a separate transaction entered into by the assessee to deny the eligible claim of deduction u/s. 80IB(10) of the Act. 9. The ld. DR on the other hand submitted that the disallowance made by the AO in the 143(3) proceedings during the course of regular assessment was not relating only to the project 'Mahavir Springs' and that the AO made the disallowance of deduction u/s. 80IB(10) based on material found in the course of survey conducted in 14/12/2012 pertaining to the amount to the amount paid by the assessee to the land owners. Hence the ld DR submitted that the reopening of assessment is valid. On merits he submitted that the assessee has claimed the deduction u/s. 80IB on the second sale of the flats where the flats are purchased from landowners and sold to the ultimate buyers which is not in accordance with law and hence the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. The CIT(Appeals) has also failed to bring on record as to the project under which the assessee has derived profits from the sale of earmarked flats to the landowners to deny the deduction u/s. 80IB(10) of the Act. 12. In view of the above, we adjudicate the issue only on whether the assessee is entitled to deduction u/s.80IB(10) with respect to the profits on sale of flats which was earmarked the land owners and which was sold on their behalf at their request by the assessee? 13. The assessee has entered into agreements whereby the land owners wanted the assessee to sell the flats that were to be allotted to them as per the terms mentioned therein the consideration is paid towards the land, the super built up area which is the land owner's out of 37% of the undivided right as per the original agreement entered into with the assessee. Thus the argument of the ld AR that the consideration paid by the assessee to the landowners is nothing but due amounts paid for purchase of the land which forms part of the overall cost of the project developed by the assessee has merits. Further as per the provisions of section 80IB(10), the profit derived from 'such housing project' is eligibl ..... 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