TaxTMI 
TaxTMI 
2014 (1) TMI 1299
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....ayakhedi Indore and undertaken in the joint ventureship with co-developers Shraddha Buildcon Pvt. Ltd. and Omaxe Construction Limited. During the year under consideration, the assessee had shown his share of profit from the sale of developed plots only and had claimed deduction u/s 80IB(10) thereon. The claim was rejected by the Assessing Officer on the ground that deduction was available in respect of housing projects on fulfilment of various criterion (including the maximum built up area of each unit) as provided in the said Section ; and that construction of residential units were essential. The Assessing Officer was of the firm view that the exemption u/s 80IB(10) was not available if the project was limited to development and selling of plots only without construction of residential units thereon. 4. In an appeal filed before the CIT(A), the CIT(A) considered the submission made by the assessee in the context of judicial pronouncements cited before him and concluded as under :- "(i) During the assessment year 2008-09, to which this appeal relates to, assessee had claimed deduction u/s 80IB(10) on sale of developed plots only. The quantum of deduc....
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..... The claim thereon would relate to assessment years 2010-11 & 2011-12 and need to be looked into in those years. The assessee has not claimed any deduction on the sale of "Villas" as the built up area of each of those units exceeded 1500 sq.ft. There is no dispute in that account. The rest of the claim, which is the major claim' relates to the sale of plots. In my considered view the deduction u/s 80IB(10) is available for housing projects. The construction of residential Units is must. This is an incentive provision and has been brought with a view to solve the housing problems for the people [middle & lower income group]. It is for this reason that a condition on maximum built-up area has been provided. If the project is limited to the development of plots and the developed plots are sold as such without construction of any residential unit thereon, then the deduction u/s 80IB(10) is not at all available. There is no other opinion on the issue. There is no case law [decided by High Court or Supreme Court] so far for allowing the deduction on sale of plots [ of course after due process of development work]. The claim made by the assessee in respect of sale of plot is not in accor....
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....n Pvt. Ltd. and Shanti Creations in respect of commercial area, copy of contract awarded by Omaxe Buildwell Pvt. Ltd. for construction of commercial area and copy of completion certificate of G+2 units and EWS units alongwith copy of completion certificate of the development works of the project as an additional evidence u/r 46A. It was submitted that these documents could not be produced before the Assessing Officer since they are of later date. The application of the assessee was forwarded to the Assessing Officer for his comments. The Assessing Officer objected to the admission of additional evidence. After having considered the facts and the issue involved, I do admit these documents as additional evidence. However, these additional evidences do not help the case of the assessee in view of the basic fact that the project undertaken by the assessee has not been a "housing project". It has been noted that the Directorate of Town and Country Planning had accorded the approval for development of "residential colony". By that itself, it cannot be conferred the status of carrying out a "housing project". In the case of residential colony, the activities could be limited to the develo....
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....ent. It is quite likely that they would have also claimed deduction thereon u/s 80IB(10). The Assessing Officer is therefore directed to ascertain from the concerned Assessing Officers having jurisdiction over those companies as to whether the similar claim had already been disallowed in those cases. If not then those Assessing Officers should be advised to take remedial action for withdrawing the claim of their deduction. A copy of this appellate order should also be sent to those Assessing Officers to enable them to take a considered view.' 5. Against this order of CIT(A), the assessee is in further appeal before us. Shri Ashwini Kumar, C. A. and Mrs. Anupam Goel, C.A. appeared on behalf of assessee and contended that the assessee undertook the development and construction of the housing project in collaboration with M/s. Omaxe Limited (Omaxe) and M/s. Shradha Buildcon Private Limited (SBPL). The broad terms of the collaboration were defined vide agreement dated 5th May, 2006. The housing project was on an area of 36.074 hectares i.e. 89.14 acres. First approval for carrying out the housing project at an area of 36.074 hectares was obtained by the assessee on 27-5-2006. The el....
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....ich assessee was eligible for deduction u/s 80IB(10). 7. On the other hand, the ld. Senior DR invited our attention to various findings recorded by the Assessing Officer and CIT(A) to the effect that the assessee has not undertaken development of residential house so as to enable the assessee benefit of Section 80IB(10). Further reliance was placed on the orders of the lower authorities. 8. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that the assessee has got approval for development of housing project. However, during the year under consideration, the assessee has just undertaken development of plots and their sales, no construction activity was undertaken in respect of residential units proposed on such plots. Deduction u/s 80IB(10) specifically provides for deduction in respect of profit earned on development and construction of housing projects on or after 1st day of October, 1998. Sub-Section (10) reads as under :- "(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2008, by a loca....
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....; (d) the built-up area of tire shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less." 9. It is crystal clear from the plain reading of sub-Section (1) of Section 80IB that deduction is subject to condition of undertaking, development and building of housing project. Thus, the construction and development of housing projects is sine qua non for claim of deduction u/s 80IB(10) subject to fulfilment of other conditions. In the instant case, it is not in dispute that the assessee has just developed the plots and sold them. No construction activity was undertaken during the year. Thus, the assessee is not eligible for claim of deduction in respect of profit earned on sale of developed plot insofar as there was no profit on sale of residential units. The ld. Authorized Representative has relied on the observations made in the following decisions :- 1. Laukik Developers v. Dy. CIT [2007] 11 SOT 728 (Mum.) 2. ITO v. Vishnu Developers [I.T.A. No. 2999/Hyd/08, dated....