TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 293
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....of Radhe Developers as extracted by the Hon'ble ITAT. 1c) The ld. CIT(A)-XV, Ahmedabad has erred in law and on facts that all the expenses were borne by the Builder on behalf of the Dhanvihar Co-op. Housing Society Ltd. 1d) The ld. CIT(A)-XV, Ahmedabad has erred in law and on facts that the Memorandum of Understanding/Development Agreement have been executed before the registration of the Dhanvihar Coop. Housing Society Ltd. and even before the Sale deed of land. 1e) The ld. CIT(A)-XV Ahmedabad has erred in law and on facts that the Assessee himself argued before the CIT(A) that total control of the scheme is of the first part and third part of Development Agreement. First part consists of (i) Shri Ambalal Nandas Patel, (ii) Smt. Bhikhiben Ambalal Patel, (iii) Shri Dineshkumar Ambalal Patel and (iv) Shri Pankajkumar Ambalal Patel, whereas deduction u/s 80IB (10) of the Act, was claimed by only Shri Ambalal Nandas Patel. 1f) The ld. CIT(A)XV, Ahmedabad has erred in law and on facts that development agreement is silent on the point that who has given authority to fixing the price of land/unit as all the expenses were borne by the Builder on behalf of the Society. 2) On the facts....
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....ht from the inception of the project till its completion rests with the society. The local authority had granted permission for development to the society. Assessing was just a contractor of the land owners constructing residential units and not a developer. 2) On the facts and in the circumstances of the case, the ld. CIT(A) XV, Ahmedabad ought to have upheld the order of the Assessing Officer. 3) It is therefore prayed that the order of the ld. CIT(A) XV, Ahmedabad may be set aside and that of the Assessing Officer be restored. 4. First we take up ITA No.1744/Ahd/2013 Asst. Year 2007- 08.. The Assessing Officer made disallowance of Rs. 1,14,73237/- u/s 80IB(10). The assessee carried the matter in appeal before the first appellate authority. 4.1 On appeal the CIT(A) gathered the facts from the assessment order as well as written submission which are as under :- (a) "Shri K. C Patel from J. M. Patel & Brothers, C.A., A.R. of the assessee attended from time to time and furnished the details/evidences as called for which are perused and placed on record. The case was discussed with A.R. from time to time. The assessee carries on the business of development and construction....
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....nsideration received for construction and transfer the land cost to the Society. In other words the Society was formed for group housing of the members and was supposed to construct and transfer the houses to the members. According to the Development Agreement as the society was not experienced in construction, the assessee was appointed as a contractor to construct the houses on behalf of the society as per the terms and the approved plan of the Society." (v) "Significantly, verification of the land documents reveal that the assessee was not the owner of the said land, but the owners were the Dhan Vihar Co. Op. Housing Society Ltd. who were permitted to develop the land by way of constructing the housing project. The name of the assessee appears neither in the application nor on the permission given by the Local Authority for the housing project." (vi) "On perusal of the documents filed by the assessee in support of the claim, it was observed that permission/Rajachitti issued by the local authority, shows that the permission for construction was issued not to the assessee but to the Society which had applied for the same. The permission/rajachitti categorically states that per....
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.... (4) The society has no fund at all. c) The society "Dhan vihar co. op. housing society .Ltd" registered at my residence house address on Date:17/5/2006. But before registration of society I have entered M.O.U./ development Agreement with other co owner (family members) dt.. 15/2/06. Therefore before registration of society. I become developer to develop the scheme. The terms/conditions of said M.O.U./Agreement are as under: .,. . , , 1) Land owner myself and my blood related family members party of the first par. 2) Proposed society (which are to be registered for specific purpose after completion of scheme).There no members as on that date. The formation of society is also by we as a developer and Therefore society has no any real members or society has no land /no fund. It is a part of my activities as developer. 3) Myself as a developer also:- a) The land owner are myself and others three my blood related family members. b) The scheme to be developed by me as developer to claim deduction under section 80IB(10) of the Act. And the proposed society is to be registered only for limited Purpose of maintenances for behalf of future members. c) The proposed society has....
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....e project and my project qualify for deduction under section 80IB( 10) of the act. Therefore you are requested to considered the above all aspect and grant me the deduction of Rs. 11490915/- u/s. 80IB(10)of the act. (5) The MOU/ Development agreement have been executed before registration of society and before the sale deed of land. Therefore registration of society and then after sale deed are part of project work in advance. . ' The society has not purchased land but developer /land lord himself has made future plan to complete the project easily. There were no work contract at all after formation of society. Ever thing is completed oh or before registration of society. (6) As para -16 of recent judgment of I.T.A.T. Ahmedabad in case of M/s Shakti corporation No. (2009) 032 SOT 0438 (Ahmedabad) dated: 7/11/2008. Read together with the judgment of Honorable Supreme; Court in case of Fakirchand Gulati v/s Uppal Agency Pvt. Ltd. 3302/2005 vide order dated 7/8/2008." (d) The AO at para 3.9 to 3.12 of the assessment order examined the bare provisions! of section 80IB(1) and 80IB(10) and emphasized that legislature intention of putting 'and' between 'developing ....
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....ation fees payable to state government since the same is not chargeable from such society. This is further held as inconsistent st^nd to save stamp duty on one hand while income tax on other hand on account of different stand taken for ownership of land before State Govt. and income tax department respectively. At para 3.21 the AO considered the assessee's contention about employment of man, material and finance to take risk and profit and held that by use of the material, he will not become the owner of the whole and he cannot transfer the property. The AO relied on Supreme Court decision in the case of HAL Ltd. vs. State of Orissa (55 STC 327) and Tamilnadu vs. Anandam Vishwanathan (1989) 1 SCC 613. The entire discussion from para 3.9 of the impugned order to para 3.21 was summarized at para 3.22 of the impugned order. On the basis of this the AO at para 3.23 of the impugned order held that the assessee is not eligible for deduction u/s.80IB (10) of the Act for the following reasons: 1. The Assessee is not both developer and builder as required by the provisions of section 80IB (10). Assessee is not a developer because the assessee ;did not conceptualize and own the project ....
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....nd to pay the land cost to the land owner which is the party of the first part. After paying the land cost to the owners the developer is entitled to get profit or loss. The total responsibility of the profit or loss will be of the party of the third part known as Mayur Estate Developer" As the AO has not challenged that the appellant violated any of the conditions stipulated from clause (a) to clause(d) of section 80IB(10) and the appellant as per the terms and conditions of the Development Agreement has to pay the land cost and also to develop the project at his own cost and risk and enjoy the subsequent profit or suffer the loss, in my view it is eligible for deduction. The AO is directed to allow the deduction claimed u/s.80IB(10)." As against Ld. C.I.T.(A) order, revenue prepared appeal before Hon'ble ITAT. and Hon'ble ITAT Ahmedabad 'A1 bench in ITA No. 23/Ahd/2011 for such A.Y. 07-08 vide order dt. 23/07/12 at para 7 held - ^After examining the order of the learned CIT(A) we are of the opinion that the learned CIT(A) has passed the order finding justification only on the issue of ownership of the land based on the development agreement and has unjustly allowe....
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....ined. (m) The Assessing Officer has to examine the size of the plot on which the project is constructed. (n) The Assessing Officer has to examine built-up area of sanctioned unit whether will in the prescribed limit." We find that the lefrned CIT(A) has not looked into these issues as examined by the learned AO while arriving at his decision for granting deduction u/s 80 IB (10) of the Act. Therefore, in the interest of justice, we set aside the order of the learned CIT(A) and remit back the case to the file of ht e learned CIT(A) to pass appropriate order as per law and on merits after considering the guidelines rendered by the Hori'ble Gujarat High Court in the case of Radhe Developers as extracted herein above and after affording sufficient reasonable opportunity of being heard to the assessee. It is ordered accordingly." 4.2 In setting aside issue the CIT(A) allowed the claim of assessee and the same has been opposed before us on behalf of the Revenue. The DR submitted that CIT(A) erred in directing the Assessing Officer to allow the claim of deduction of Rs. 1,14,75,237/- under section 80IB(10). The ld. DR also submitted that CIT(A) erred in law and on facts that t....
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....evelopment agreements entered into by the assessee was over and above the agreement to sell to acquire the rights and domain over the project including land in question. The assessee is entitled to receive the sale consideration and shall accept all the payments from the buyers, the details of the same are placed on record which is not disputed on behalf of the Revenue. AUDA has granted permission to construct 124 residential units and 8 shops in 4817 sq.ft. of land and in the permission for development the name of Chairman/Secretary of Dhanvihar Commercial & Housing Co.Op. society Ltd. is mentioned with address 19, Bhagyodaya Raw Bunglows, RC Technical Road, i.e. address of assessee. Building Use certificate is issued in the name of Chairman/secretary, Dhanvihar Commercial & Housing Co.op. Soc. Ltd. c/o Mayur Estate Developer i.e. assessee's prop. Concern name. When permission for development and Building Use certificates are considered in the light of the development agreements, it would clarify that the property numbers are same as has been mentioned by AUDA and there is no objection from the side of the society. Therefore it was found that the building plans have been sanctione....
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.... incurring total expenditure and received the sale consideration. The assessee satisfied the requirements of provisions of section 80(IB)(10). Moreover once plan is approved by AUDA on papers submitted by assessee and others, it would be deemed approval of construction of housing units in favour of the assessee, more so, when assessee entered into agreements for developing the whole of the property. In view of the above, CIT(A) was justified in granting deduction because assessee has acquired right of developing housing project, incurring total expenditure and taking all risks thereof. There is no infirmity in the order of CIT(A). So we are inclined to uphold the same. 5. In Assessment Years 2008-09 and 2009-10, in first issue the facts & circumstances being identical, so following same reasons we are not inclined to interfere with the orders of CIT(A) who has allowed the claim of assessee u/s 80IB(10) as claimed . We uphold the same. 6. As regards ground no.3 of ITA No.1943/Ahd/2011 for AY 2008-09 the Revenue pleaded that CIT(A) erred in deleting the disallowance of Rs. 27,44,214/- made by the Assessing Officer u/s 40(a)(ia) of the Act. The Assessing Officer observed that TDS de....