TaxTMI 
TaxTMI 
2015 (12) TMI 826
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....ieved by this, the assessee went in appeal before the Commissioner of Income-tax(Appeals), who confirmed the order of the Assessing Officer. Against this, the assessee is in appeal before us. 4. The ld. AR submitted that similar deduction was granted to the assessee in earlier previous year and, therefore, denial of deduction in the assessment year under consideration is not justified. It goes against the principle of consistency and according to him, the orders of the lower authorities to be quashed. He drew our attention to the provisions of sec.80IB(10) of the Act. According to him, the assessee is engaged in the development of property and not engaged in works contract. Being so, the provisions of sec.80IB(10) cannot be applied. He also drew our attention to the Joint Development Agreement(JDA) entered into between the assessee and M/s. Prime Textiles Ltd. dated 17.1.2005. He took us to various clauses of Joint Development Agreement, which reads as follows: a. Taking statutory approval As per clause 2, page 2 of JDA, the development shall be on the basis of a plan to be drawn by the Architect identified by the Developer and approval by Tirupur Municipal Council and such othe....
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.... ld. AR drew our attention to the definition of the words "power of attorney" and submitted that as per Legal Glossary, 2001 Edition at p.253 the words "Power of Attorney" may be defined as a formal instrument by which one person empowers another to represent him or act in his stead for certain purposes. The expression Power of attorney is defined as an authority whereby one is set in the turn, stead or place of another to act for him. According to Longman American Dictionary at pg. 1126 the words "Power of attorney" means the legal right to do things for another person in their personal or business life, or a document giving this right. 4.4 Further, the ld. AR relied on the decision of the Supreme Court in the case of State of Rajasthan v. Nahara (2005) 12 SCC 77, wherein it was held in paras 13 & 52 as under : "13. A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an grant is formally appointed to act for the principal in one transaction or a series of transaction or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is ex....
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....Development (P) Ltd.(2012) 83 CCH 98 (Madras HC) (v) CIT vs. Moon Star Developers 2014 (4) TMI 1042- (Guj H.C) 5. On the other hand, the ld. DR relied on the order of the lower authorities. Further, the ld. DR submitted that the assessee is not the owner of the land and also the plan is not in the name of the assessee. The assessee entered into an agreement with prospective buyers of individual flat along with land lord and received only 14% of the total consideration towards the work carried on by the assessee. This amount is nothing but for the labour contracts undertaken by the assessee. Further, the ld. DR, submitted that the assessee was undertaken works contract and not developed the housing project. The project was conceived and executed by the land-lord and not by the assessee and the flat was sold to independent prospective purchasers by the land lord. According to the ld. DR, Explanation to sec.80IB(10) introduced w.r.e.f. 1.4.2001 is applicable, as the assessee is only undertaking works contract and not entitled for deduction u/s.80IB(10) of the Act. 6. We have heard both the parties and perused the material on record. The provisions of sec.80IB(10) reads as follow....
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....om the municipal limits of these cities and one thousand and five hundred square feet at any other place ; [and] (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed 13[three per cent.] of the aggregate built-up area of the housing project or 13 [five thousand square feet, whichever is higher] ; (e) not more than one residential unit in the housing project is allotted to any person not being an individual ; and (f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely :- (i) the individual or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta; Explanation - For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a w....
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....hich arises is that how to find out the meaning of a word or an expression which is not defined in the Act. It is a settled legal position that ordinarily the meaning or definition of a word used in one statute cannot per se be imported into another as has been held by the Supreme Court in the case of Union of India vs. R.C. Jain (1981) 2 SCC 308. Therefore, the meaning of the words developer and contractor, as put forth before us by the rival parties from other legislations, be they State or Central enactments, cannot be automatically applied in the present context. In order to ascertain the meaning of a word not defined in the Act, a useful reference can be made to the General Clauses Act, 1897. If a particular word is not defined in the relevant statute but has been defined in the General Clauses Act, such definition throws ample light for guidance and adoption in the former enactment. According to s. 3 of the General Clauses Act the definitions given in this Act shall have applicability in all the Central Acts unless a contrary definition is provided of a particular word or expression. On scanning s. 3 of the General Clauses Act we observe that neither the word 'contractor' nor....
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....work of a contractor but a mere contractor per se can never be called as a developer, who undertakes to do work according to the predecided plan. 6.4 So, in order to be eligible for deduction, the development should be that of housing project as a whole and not a particular part of it, as has been contended by the ld. AR. It may be possible that some part of the housing project is assigned by the land lord to some contractor for doing it on his behalf. That will not put the doer of such work in the shoes of a developer. 7. In the present case, the assessee, M/s. Prime Developers has entered into a Joint Development Agreement (unregistered) with the land owner, M/s Prime Textiles Limited on 27.01.2005 for development of vacant land to the extent of 3.91 acres into rnulti-storied residential complex. The main terms of the agreement are reproduced as under:- i) In consideration of mutual covenants herein contained, the developer shall have the sole and exclusive right to develop the site described hereunder (scheduled property) into Residential Complex and apartments and providing suitable amenities. (ii) The Development shall be on the basis of a plan to be drawn by the Archit....
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....separate Construction Agreements with the assessee, M/s. Prime Developers on various dates. The relevant clauses of the construction agreement are mentioned as under:- CONSTRUCTION AGREEMENT 'This Construction Agreement entered into on this the 20th day of' August, Two thousand Eight. AND BETWEEN PRIME DEVELOPERS; a partnership firm registered and having its place of business at 110, Avinashi Road, Gandhinagar, P.O.,, Tirupur 641 603 (Tamilnadu) represented by its partner Mr. Purusottam Das Patodia and the purchaser. A The property more fully described in SCHEDULE A hereto belongs to Prime Textiles Ltd. (hereinafter referred to as the OWNER) B. The OWNER with the intention of developing the SCHEDULE A property by building of a Housing Project (Residential complex) has agreed to make available the Schedule A property to the developer for the construction of Apartments for Purchasers acquiring Undivided Co-ownership right in SCHEDULE A property from the OWNER. C. Pursuant thereto, the OWNER has secured the requisite sanctions and approvals from Tirupur Municipal Corporation and concerned Public authorities for the layout of the SCHEDULE A property and Building Pla....
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....loper has not got any Power of Attorney from the owner i.e. M/s. Prime Textiles Limited. 7.4 Coming to the merits of the case as to whether the assessee is a developer or a works contractor, no doubt there is an unregistered agreement for developing the property between the parties M/s Prime Textiles Ltd., and the assessee firm M/s Prime Developers, the main activity of construction of flats is undertaken by virtue of the construction agreement into between the assessee and the buyers of the undivided co-ownership right in the property as a contractor. The AR only highlighted about the so called development agreement without making any reference to the construction agreements entered into with various buyers of the undivided co-ownership right in the property. The land owner i.e. M/s Prime Textiles Ltd., sold undivided co-ownership right in the property to various individuals and these individuals in turn entered into the construction agreement with the assessee, M/s. Prime Developers on various dates. Entity - 'A' 8. The owner of the land i.e. "A" was earlier owner of the ATL Textiles Ltd. whose name changed to Prime Textiles and further changed the name of Prime Urban Develop....
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....sons and the purchaser in turn entered into agreement with the assessee as a contractor. The recitals in the construction agreement clearly proves that the assessee is a works contractor. 10. A perusal of the above recital indicates the real intention of the assessee. The assessee has entered into only a construction agreement with the flat owners which legally indicates that it is only acting as a contractor. The assessee can produce this agreement before the Central Excise/Service Tax Authority to show that the assessee is not liable for service tax, as it is acting as a contractor and not as a developer. However, when the income-tax authority based on the above document, finds that it is only a contractor and not a developer for taking a decision on sec.80IB of the Act, the assessee states that it is a contractor only in name but a developer in spirit. Thus, the assessee by jugglery of words has managed to avoid paying service tax to the Central Excise Authorities, as it is only a contractor and claims deduction u/s.80IB as not being a contractor but as a developer. This jugglery of words and interpretation of the construction agreement has far reaching implications for the Rev....