TaxTMI 
TaxTMI 
2014 (5) TMI 184
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.... facts till the assessment stage are noted by the ld.CIT (A) in paragraph Nos.1 to 3.1.2 of his order and these paras are reproduced below for the sake of ready reference. "INTRODUCTION: This appeal has been filed against he order u/s.143(3) & 154 of the Income-tax Act, 1961 for the assessment year 2008-09 passed by the Asst. Commissioner of Income-tax, Circle-2(1), Baroda. In response to notice of hearing, Shri Pradip Goradia, CA Authorized Representative of the appellant attended and discussed the appeal. 2. BACKGROUND OF THE CASE: The facts of the case are that the assessee is engaged in the business of construction. The return of Income was filed on 30.09.2008 declaring total income of Rs.38,95,700/-. The assessment u/s.143(3) was finalized on 30.12.2010 determining total income of Rs.3,21,64,520/- after rejecting the claim of deduction u/s.80IB(10) of the Income-tax Act. 3. GROUND NO.1 & 2: The first and second grounds of appeal are that the learned Assessing Officer has erred on the facts and in the circumstances of the case and in law in disallowing the claim of deduction u/s.80IB(10) of Rs.2,82,68,816/- and not allowing the profit attributable to the sale ....
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....94 sq.mt." 3. Being aggrieved, the assessee carried the matter in appeal before the ld.CIT (A). The ld.CIT (A) has decided the issue in favour of assessee in respect of two objections raised by the AO, i.e. that the assessee has not purchased the land in its name and on the issue that there is sale of unutilized FSI. In para 3.2.3 of his order, it was held by the ld.CIT (A) that the disallowance of deduction u/s.80-IB (10) made by the AO on these two issues is not correct. He directed him that the disallowance is to be deleted on these two issues. Against this direction of the ld.CIT (A), the Revenue is in appeal before us. 4. After deleting the disallowance of deduction u/s.80-IB (10) of the Act on two issues referred to by the AO, it was noted by the ld.CIT (A) that in addition to these two issues, some other facts had come to light in the course of appellate proceedings which have bearing on the allowability of deduction u/s.80-IB (10) of the Act. The issues raised by the ld.CIT (A) are these that the commercial area under the two projects exceeds the specified limit and the project was not completed within due date. He has noted on page-5 of his order that two schemes und....
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....ence, the project violates clause (d) as well as violates the completion time clause. 4.2. In addition to above two objections, the ld.CIT (A) has raised one more objection that the assessee has sold the land to the Unit holders separately and has done the construction of units under separate agreement/contract and, therefore, the assessee is not eligible for deduction u/s.80-IB(10) of the Act because as per ld.CIT(A), profit earned by the assessee in respect of sale of land is not eligible for deduction u/s.80-IB(10) of the Act and similarly, the profit earned by the assessee for construction activities is not eligible for deduction u/s.80-IB(10) because the assessee is doing the construction as a contractor for a work and not as a builder or developer and, therefore, the assessee is not eligible for deduction u/s.80-IB(10) of the Act. Against these objections of ld.CIT (A), the assesse is in appeal before us. 5. It was submitted by the ld.AR of the assessee before us that regarding objections of the AO which are decided by the ld.CIT (A) in favour of assessee, reliance is placed on the order of the ld.CIT (A) and on the judgement of Hon'ble Gujarat High Court rendered in th....
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....for deduction u/s.80-IB (10) of the Act cannot be declined if other conditions are being satisfied. 5.3. He further submitted that in the case of DCIT vs. SMR Builders (P) Ltd. (supra) also, the facts were that the assessee had sold flats in a semi-finished stage. In that case, the AO had noted that as per the sale-deed, the assesseecompany has sold undivided share of land with super-structure of semi-finished built-up area for a certain consideration. The AO held that the semi-finished structure has never been considered as a residential unit. It was also noted by the AO in that case that on the same date when the sale deed was executed, a construction agreement was also entered into with the transferee for further construction of the same flats by the builder company itself. He submitted that the facts in the present case are similar. He also pointed out that in that case, it was held by the Tribunal that the stand of the Revenue with regard to the semifinished condition of the flats is devoid of any merit in as much as what is sought to be constructed and sold by the assessee is a residential units and what is sought to be purchased by the buyer is the ownership of the specif....
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.... reported in 341 ITR 403 (Guj.). On going through the judgment delivered by the Hon'ble High Court it is seen that the Hon'ble High Court has recorded in para 31 of its order as under: "31. Neither the provisions of Section 80IB nor any other provisions contained in other related statutes were brought to our notice to demonstrate that ownership of the land would be a condition precedent for developing the housing project. It was perhaps not even the case of the Revenue that under the other laws governing construction in urban and semi-urban areas, there was any such restriction." The case records of the assessee who is being assessed in Baroda has been requisitioned. However, the A.O. on account of his preoccupation could not send the records as anticipated by this office. These records have just been received yesterday. Moreover, it has been informed that as per the General Development Regulations issued under the provisions of the Gujarat Town Planning and Urban Development Act, 1976, it is mandatory that the applicant who files and obtains the development permission from the regulator must be owner of the land. A copy of the Rules issued by Vadodara Municipal Corpo....
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.... land would be a condition precedent for developing the housing project. He submitted that in the present case, the Revenue wants to bring this on record that as per "Gujarat Town Planning and Urban Development Act, 1976" and the Regulations framed thereunder, it is necessary that ownership of the land is a condition precedent for developing the housing project. In this regard, we find that in this very judgement of Hon'ble Gujarat High Court rendered in the case of CIT vs. Radhe Developers (supra), in para-19, it was noted by the Hon'ble Gujarat High Court that the ld. Counsel for the assesse submitted that under the "Gujarat Town Planning and Urban Development Act" as also the "General Development Act and Control Regulations" applicable to the City of Vadodara, there is no requirement that only the owner can develop a housing project on any land. This goes to show that this Act and Regulations on which our attention is drawn by ld.DR of the Revenue has been very much available before Hon'ble Gujarat High Court in the case of CIT vs. Radhe Developers (supra), and even after noting the same, it is observed by the Hon'ble Gujarat High Court in that case that no provision of any othe....
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....0IB (10) and in consequence, there is violation of the conditions in the case (a) (iii) of section 80IB (10) of the Act because the project is not completed within the due date. We do not find any merit in these objections of ld.CIT(A) because in our considered opinion, what is relevant is this as to whether the built-up area of commercial space actually constructed by the assessee exceeds the prescribed limit or not because if the built-up area of the commercial space as per the approved project was less but the actual construction of commercial area is more than also, we have to go by the actual construction done by the assessee and not by the commercial area approved in the project. In our considered opinion, we have to go by actual construction done by the assessee of commercial area. In the present case, this is an undisputed fact that no shops were, in fact, constructed by the assessee and there is no scope for construction of such shops in future also because the land on which the shops were to be constructed had been sold by the assessee. Therefore, this objection of ld.CIT (A) is devoid of any merit. Regarding second objection, i.e. completion of project within the time al....