TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal grants deduction claim under Section 80IB(10) for A.Y. 2007-08 and 2008-09</h1> <h3>Jayvantsinh N. Vaghela, Prop of Yuvraj Developers & M/s. Kailash Developers Versus Income Tax Officer</h3> Jayvantsinh N. Vaghela, Prop of Yuvraj Developers & M/s. Kailash Developers Versus Income Tax Officer - TMI Issues Involved:1. Addition of income based on estimated profit percentage.2. Disallowance of deduction under Section 80IB(10) of the Income Tax Act.Issue-wise Detailed Analysis:1. Addition of Income Based on Estimated Profit Percentage:The Assessee, a proprietor of Yograj Developers and Kailash Developers, filed returns for A.Y. 2007-08 and A.Y. 2008-09. The Assessing Officer (A.O.) noticed discrepancies in the net profit percentages of two projects: Yuvraj Park and Kailash Developers. The A.O. observed that the net profit for Yuvraj Park was 48.32% while for Kailash Developers it was only 5.5%. The A.O. suspected that expenses were diverted from Yuvraj Park to Kailash Developers to reduce taxable profits and proposed an estimated profit of 25% for Kailash Developers, leading to an addition of Rs. 32,36,911/-.The CIT(A) partially upheld the A.O.'s decision but reduced the estimated profit to 12%, resulting in a confirmed addition of Rs. 16,83,194/-. The Tribunal agreed with the CIT(A), noting that the Assessee failed to produce books of accounts or vouchers for expenses and could not justify the land leveling expenses. The Tribunal concluded that the average net profit should be 12%, aligning closely with the average profit of 12.79% excluding the disputed year.2. Disallowance of Deduction Under Section 80IB(10):The A.O. denied the Assessee's claim for deduction under Section 80IB(10) for Rs. 8,67,417/- on the grounds that the Assessee was not the owner of the land and had merely acted as a contractor. The CIT(A) upheld this decision, emphasizing that the Assessee did not have the necessary Building Use (BU) permission from local authorities, which is a requirement under Section 80IB(10).On appeal, the Tribunal referred to the Hon'ble Gujarat High Court's decision in CIT v. Radhe Developers, which clarified that ownership of land is not a prerequisite for claiming deduction under Section 80IB(10). The Tribunal noted that the Assessee had control over the project and bore the risk, qualifying as a 'developer' rather than a 'contractor.' Additionally, the Tribunal found that the original project approval date was 28.03.2003, predating the statutory requirement for BU permission introduced on 01.04.2005. Citing the Gujarat High Court's decision in ITO vs. Saket Corporation, the Tribunal allowed the Assessee's claim for deduction under Section 80IB(10).Conclusion:- For A.Y. 2007-08: The Tribunal upheld the CIT(A)'s decision to estimate the net profit at 12% and allowed the Assessee's claim for deduction under Section 80IB(10).- For A.Y. 2008-09: The Tribunal allowed the Assessee's claim for deduction under Section 80IB(10), consistent with its findings for A.Y. 2007-08.Final Order:The appeal for A.Y. 2007-08 was partly allowed, and the appeal for A.Y. 2008-09 was fully allowed. The Tribunal's decision was pronounced in Open Court on 29-02-2016.
TaxTMI 