TaxTMI 
TaxTMI 
2014 (1) TMI 1361
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....and thereby overlooked the mandatory provisions contained in the statute. 3. On the facts and in the circumstances of the case lei. CIT(A) err0ed in holding that the assessee is a developer and thereby allowing the claim of deduction u/s 8018 of the Income Tax-1961 without appreciating the facts hat the assessee was constructing the building in terms of contract entered into with the main developer and was to receive the specified percentage of sale proceeds." Later on, the Revenue, vide letter dated 6th January 2014, raised following as additional grounds of appeal:- "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is not justified in allowing the claim of deduction u/s 8018(10) of the I.T. Act, 1961 ignoring the fact that there is no material brought on record by the assessee to show that the construction of the project was started after 01.10.1998. 2. On facts and circumstances of the case and in law the Ld CIT(A) failed to consider the fact that the assessee is neither the land owner nor the developer and is a mere contractor building the housing project." 2. Facts in brief:- The assessee is a partnership firm, engaged in the busin....
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.... been fulfilled as the assessee could not brought anything on the record in support of its contention. Besides this, he also held that the deduction under section 80IB(10) is also not allowable to the assessee as the land is owned by Mr. Nipun Ishwardas Thakkar and he has given authority to a developer, Mr. Rajaram Mahapadi for the development of the said land to construct building thereon. The said developer has obtained various permissions and the property was later on developed by the assessee who has been referred to as sub-developer in the agreement. Out of the sale proceeds, 1½% belong to the developer and 3½% belong to the owner and the balance 95% would be that of the assessee. From this, he concluded that the assessee is neither a land owner nor the developer and in fact is merely a contractor for building the housing project. In view of the Explanation inserted in section 80IB(10) by the Finance Act, 2009 with retrospective effective from 1st April 2000, the benefit of section 80IB(10) shall not be given to a person who executed a contract entered into with the eligible enterprise. Accordingly, he disallowed the claim of the assessee. 4. Before the learne....
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....ring the year has been taken as closing work-in-progress. Otherwise also, he accepted the assessee's contention that, even where the project has been approved before 1st April 2004, the construction has to be completed before 31st March 2008 which has been done in this case. Accordingly, he held that the assessee has commenced the project after 1st April 1999, even though the project was approved prior to 1st October 1998 and, accordingly, rejected the Assessing Officer's reasoning for disallowance of the deduction. 7. Regarding Assessing Officer's objection that the assessee is only a contractor, he held that the assessee had the right to appropriate the sale proceeds against the work done by it, subject to payment of 1½% to the developer and 3½% to the owner. As per the agreement, the assessee has to discharge his obligation as the developer which has been done and in view of the provisions of section 80IB(10), the assessee is entitled for deduction as the assessee has retained 95% of the gross receipts. Accordingly, the claim for deduction under section 80IB(10) was fully allowed. 8. Before us, the learned Departmental Representative submitted that the learne....
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.... in Mrs. Prabhavati S. Shah v/s CIT, [1998] 231 ITR 001 (Bom.). He further submitted that the assessee has given the details of work-in-progress, right from the assessment year 1999-2000 till the assessment year 2007-08, from where it can be inferred that the construction of the project started only from the assessment year 2000-01. Insofar as the finding of the learned Commissioner (Appeals) that all the projects approval has been given prior to 1st April 2005 and it has been completed before 31st March 2008 is absolutely correct and the same should be upheld. He also drew our attention to the various Balance Sheets and Profit & Loss account filed in the paper book for the earlier assessment year. Regarding the second issue that the assessee is a contractor and not a developer as raised by the Department, he drew our attention towards various clauses of the agreement to show that the assessee had substantial right for developing the property and the agreement was on principal-to-principal basis. The assessee has acquired substantial right to develop the property along with the risk and responsibility upon the assessee. The entire sale proceeds belong to the assessee, therefore, th....
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....hat insofar as the learned Commissioner (Appeals)'s finding that the project had commenced after 1st October 1998 requires to be examined based on the additional evidences filed before the learned Commissioner (Appeals) by the Assessing Officer. Accordingly, we set aside the impugned order passed by the learned Commissioner (Appeals) and restore this matter back to the file of the Assessing Officer and direct him to examine the same in the light of the additional evidence filed before the learned Commissioner (Appeals). Thus, the ground no.1 and 2 raised by the Revenue in the original ground of appeal are treated as allowed for statistical purposes. Resultantly, ground no.1, as raised in additional grounds of appeal by the Revenue, is also treated as allowed for statistical purposes. 11. Insofar as ground no.3 in the original ground and ground no.2 in the additional ground are concerned i.e., the assessee is neither the land owner nor the developer but a contractor, we are of the considered opinion that the conclusion and the finding of the learned Commissioner (Appeals) in this regard is factually and legally correct. On a perusal of the agreement, it is seen that the assessee ....