2015 (7) TMI 199 - AT - Income Tax

Tribunal Upholds Deduction Claim for Developer under Income Tax Act

ITO, Ward-9 (1), Ahmedabad Versus M/s. Safal Associates

The Tribunal upheld the Commissioner of Income Tax (Appeals)' decision, allowing the assessee's deduction claim under Section 80IB(10) of the Income Tax ... Deduction u/s 80IB(10) - Held that:- Issue is now fully covered in favour of the assessee for grant of deduction u/s 80IB(10) of the IT Act because the assessee has acquired dominant right over the land and has developed the housing project by incurring all the expenses and taking all risks involved thereof. The crux of the matter would be that assessee has acquired the land in question and has developed the housing project at its own cost as per the requirement of section 80IB (10) of the IT Act. Therefore, we are of the view the assessee would be entitled for deduction u/s 80IB (10) of the IT Act As regards alternate contention of the assessee with regard to pro rata deduction, the issue is already decided in favour of the assessee in the case of M/s. Amaltas Associates (2011 (1) TMI 934 - ITAT, AHMEDABAD) by following the decision of ITAT Nagpur Bench in the case of AIR Developers (2008 (5) TMI 333 - ITAT NAGPUR), therefore, the authorities below should not have rejected the claim of the assessee at least on alternate contention that the assessee would be entitled for deduction u/s 80IB (10) of the IT Act on pro rata basis. However, we have held that the extension of the 4 units is not done by the assessee and that open area is not part of balcony/verandah, therefore, according to the submission of the assessee, the built up area of the assessee was within the prescribed limit, therefore, there is no need to give further finding with regard to alternate claim of the assessee. Considering the facts of the case in the light of the above decisions, we are of the view the issue is fully covered in favour of the assessee. We are of the view that assessee fulfilled the conditions and requirements of section 80IB (10) therefore, the claim of the assessee for deduction should not have been denied by the authorities below. We direct the AO to grant deduction to the assessee u/s 80IB (10) of the IT Act as claimed by the assessee. - Decided in favour of assessee. Issues Involved:1. Deduction under Section 80IB(10) of the Income Tax Act.2. Ownership and development rights over the land.3. Compliance with conditions laid down for claiming deduction.4. Pro rata deduction eligibility.Detailed Analysis:1. Deduction under Section 80IB(10) of the Income Tax Act:The primary issue revolves around the assessee's claim for deduction of Rs. 32,72,64,595/- under Section 80IB(10). The Assessing Officer had disallowed this claim, but the Commissioner of Income Tax (Appeals) [CIT(A)] reversed this decision. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had satisfied all requirements of Section 80IB(10) as per the precedent set in the previous assessment year (2007-08). The Tribunal emphasized that the assessee had undertaken the entire development of the housing project, incurred all related expenses, and received the entire sale consideration, thereby fulfilling the conditions for the deduction.2. Ownership and Development Rights Over the Land:The Revenue contended that the land was owned by Sherin Coop. Housing Society Part-I and II, and Jay Vaishno Devi Coop. Housing Society, Part-VI, and that the assessee was merely a contractor. However, the Tribunal found that the assessee had purchased substantive development rights from these societies, which included all other rights for consideration. The development agreements indicated that the assessee was responsible for planning, sanctioning building plans, constructing, and developing the housing projects, thus acting as a developer and not merely a contractor.3. Compliance with Conditions Laid Down for Claiming Deduction:The Tribunal noted that the assessee had complied with all conditions stipulated under Section 80IB(10). The development agreements and the agreement to sell the land provided the assessee with dominant control over the land, enabling it to undertake the housing project at its own cost. The Tribunal also addressed the issue of four residential units exceeding the built-up area of 1500 sq. ft., concluding that any additional construction was carried out by the occupants post-sale and not by the assessee. Furthermore, the Tribunal rejected the inclusion of open terrace areas in the built-up area calculation, aligning with the precedent set in M/s. Amaltas Associates.4. Pro Rata Deduction Eligibility:The Tribunal acknowledged the alternate contention regarding pro rata deduction but deemed it unnecessary to address in detail, as it had already concluded that the assessee's built-up area was within the prescribed limit. The Tribunal reiterated that the assessee met all requirements for the full deduction under Section 80IB(10) and thus upheld the CIT(A)'s decision to grant the deduction.Conclusion:The Tribunal dismissed the Revenue's appeal, affirming that the assessee was entitled to the deduction under Section 80IB(10). The decision was based on the assessee's compliance with all statutory requirements, the dominant control over the land, and the fulfillment of all conditions necessary for claiming the deduction. The Tribunal's judgment was consistent with the previous year's ruling in the assessee's favor.