TaxTMI 
TaxTMI 
2014 (4) TMI 518
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.... appeal of the Assessee. Aggrieved by the aforesaid order of CIT(A), the Revenue is now in appeal before us and has raised the following effective ground:- 1. The ld. CIT(A) erred in law in allowing deduction of Rs. 38,76,416/- u/s. 80IB(10) of the I.T. Act without appreciating that legal relationship between the assessee and the end user of units was that of "work contract" 4. During the course of assessment proceedings, on verification of the details, A.O. noticed that Assessee had purchased land from various parties and obtained permission to develop a housing project on this land in the name of Shri Vindheshwari Enterprises. He further noticed that after obtaining permission for developing the housing project from the local authority instead of developing the project, it sold the land by cutting it to pieces of plot of various sizes to different parties. He also noticed that Assessee had shown "construction income" of Rs. 1,69,64,600/- for the construction of developing units on the different plots sold by it on contract basis. He also noticed that Assessee had entered into a separate construction agreement with the plot owners. The Assessee was therefore asked to justify....
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....sp; It can be seen from the above table that the chronology followed is first the residential units are booked and invariably on the same day appellant enters into construction agreement, the registration deed is registered and lastly possession of the units is handed over. This pattern is followed in respect of majority of cases. So it is clear that construction agreement always proceeds date of registration. Meaning thereby that the appellant has sold residential units along with the land.He has not sold the land before entering into the construction agreement as has been held by the AO. Apparently, appellant has followed this route to save on Stamp duty. This practice is being followed invariably by the builders and developers who are constructing and selling bungalows or apartments. By doing so they save on the Stamp duty. If constructed bungalow is sold then the Stamp duty would have been levied on the cost of construction along with the land prices. This modus operendi is well known to the State Registration Authorities. Even if they are not aware then the AO should have brought these facts to the notice of the Registration Authority. As far as Income-tax is concerned appe....
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.... investment and expenditure was that of the appellant. Resultantly profit and loss would also accrue to the appellant alone. In this view of the matter deduction claimed by the appellant does not deserve to be disallowed. Regarding the size of the plot, minimum area of 01 acre is prescribed. Apparently this refers to the area of the project and not the area of individual residential unit. The total area on which the construction project is completed is around 52,702 Sqr. mtr which is more than one acre. Hence, this condition is also compiled with by the appellant. Looking to the totality of facts and the ratio of the cite judgment, disallowance of the deduction u/s 80IB(10) amounting to Rs.38.76,410/- is directed to be deleted. 5. Aggrieved by the aforesaid order of CIT(A), the Revenue is now in appeal before us. Before us, the ld. D.R. pointed to various findings of A.O. made in the assessment order and submitted that the Assessee is not entitled to deduction under 80IB(10), for the reason that the Assessee had sold the plots and thereafter acted as a contractor to construct the house. Since the Assessee is not a developer of the housing project, The Assessee is not entitled....
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....ll responsibility for execution of the said development project. (d) Whether under the agreement the assessee had been given full authority to develop the land and to construct residential units. The AO has to examine the fact in respect of engagement of professionals, such as, architect for designing and architectural work. (e) The AO has to examine the responsibility of enrolment of members and collection of charges required to be made from the buyers of the residential units. (f) The AO has to examine about the "profit" or "loss" arising from the said project. (g) Though the ownership of land has been held as not the only criteria for allowing the claim u/s 80IB(10) but the domain over the land and the control over the project has to be examined by the A.O. (h) Whether on transfer of domain the land owners have received any consideration and whether it was a fixed amount or depend upon the profits of the project. Likewise, the AO has to ascertain that whether the assessee was given a fixed percentage as remuneration for the said project in lieu of granting permission to construct the residential units or to earn profits as a project developer. (i) The AO has to....