2016 (2) TMI 489

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....10) of the Act. Subsequently the assessee filed revised return on 12.10.2010 declaring the income again as 'Nil'. The case was selected for scrutiny and the notice U/s.142(1) was issued to the assessee on 24.07.2012 and thereafter, assessment u/s.143(3) of the Act was completed on 30.03.2013 wherein the Ld. Assessing Officer denied the benefit of exemption U/s. 80-IB (10) of the Act. 3.2. The assessee is a partnership firm, constituted vide Partnership Deed dated 29.11.2007. The object of the partnership deed is to develop residential apartments in Noolamburbur village, Chennai. The five partners of the assessee firm are i) Smt. D. G. Lakshmi ii) Shri D.L Madhusudhan iii) Smt. Kasturi iv) Shri Damodharan & v) Shri V.G.Rajendran (who has expertise skill in promotion of residential projects). As per the partnership deed the first four partners who owns land in Noolamburbur village brought land to the extent of 106 cents for development of residential apartments. The fifth partner Shri V.G.Rajendran was to bring in necessary funds to develop the projects. The profit sharing ratio of all the partners of the firm were equal i.e. 20% of the profit each. The first four partners....

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....of the assessee. Consequently all other relevant certificates were also not issued in the name of the assessee therefore it was apparent that the assessee firm had no role in the development of the project. iv) The assessee firm has not produced books of accounts, bills, vouchers in order to verify as to who has actually constructed the projects. All correspondences produced before the Department indicated that M/s.Ishwaraylakshmi Properties Pvt. Ltd., had developed the project. From the above the Ld. Assessing Officer came to a conclusion that the assessee firm had peaked its nose in order to get the exemption U/s.80IB(10) of the Act, though it was not eligible. Accordingly the Ld. Assessing Officer disallowed the claim of exemption U/s.80-IB of the Act to the assessee. 4. On appeal, the Ld. CIT (A) examined the accounts of M/s.Ishwaraylakshmi Properties Pvt. Ltd., and found that it had declared loss and also had carried forward of losses. Therefore he came to a conclusion that the entire transactions has been so arranged by executing a joint venture agreement in order to the claim the deduction under Section-80IB(10) of the Act in the hands of the assessee firm instead o....

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.... only condition with regard to land in section 80-IB(10) is that the project should be on the size of plot of land which has a minimum area of one acre which in the instant case is satisfied since the plot of land is admeasuring 1.06 acres. There is no condition in section 80-IB(10) to state that the land should be owned by the developer. 9. For this proposition attention is invited to the decision of the Hon'ble Gujarat High Court in CIT v Radhe Developers [2012] 341 ITR 403 (Gui) where it has been held that "the assessees were entitled to the benefit u/s.80lB(10) of the Act even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners". 10. The Hon'ble Jurisdictional High Court in CIT v Sanghvi and Doshi Enterprise [2013] 255 CTR (Mad) 156 following the decision of the Hon'ble Gujarat High Court in Rad he Developers referred to supra held as follows: "31. As rightly pointed out by learned Senior Counsel appearing for the assessee, in the decision reported in (2012) 341 ITR 403 (Commissioner of Income-Tax V. Radhe Develope....

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....that the appellant is eligible for claiming deduction u/s.80-IB(10) since the project has been developed by the appellant on its own land. 16. The Assessing Officer has stated that the construction approval has been obtained from CMDA in the name of M/s. Iswaryalaxmi Properties Pvt Ltd and further CMDA vide letter dated 31.12.2008 issued the completion certificate certifying that M/s.lswaryalaxmi Properties Pvt Ltd represented by Thiru. D.L.Madhusudhanan & 3 others has constructed the residential building. 17. In this regard it is submitted that M/s.lswaryalaxmi Properties Pvt Ltd is only the power of attorney holder of the 4 landowners namely Smt. D.C. Lakshmi, Shri. D.L. Madhusudhan, Smt. D.V. Kasturi and Shri.G. Damodharan. The 4 landowners have appointed M/s.lswaryalaxmi Properties Pvt Ltd only as their power of attorney holder and M/s.Iswaryalaxmi Properties Pvt Ltd on behalf of the land owners had entered into the joint venture agreement with the appellant arid has agreed that the appellant would develop the property. 18. It is therefore submitted that though the building plan approval and the completion certificate were issued in the name of M/s.Is....

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....ased to allow the deduction u/s.80-IB(10) as claimed by the appellant." 6. The Ld. D.R reiterated the observations of the Ld. Assessing Officer and the Ld. CIT (A) before us and argued justifying their stand and prayed for confirming their order. 7. We have heard both the parties and carefully perused the materials available on record. From the orders of the Revenue, it is apparent that the Revenue has rejected the claim of the assessee under Section-80IB(10) of the Act only for the reason that, (a) the appellant was not the owner of the land, (b) the building plan approval and completion certificate were not in the name of the appellant, (c) M/s.Ishwaraylakshmi Properties Pvt. Ltd., on who's name the building plan approval & completion certificate obtained was a loss making company having carried forward losses and therefore would not be worthwhile to claim the benefit of Section-80IB(10) of the Act, etc.. Further, the Ld. Assessing Officer though had made remarks in his order that the assessee had not produced bills and vouchers, books of accounts etc., to justify the veracity of its claim, has simply accepted the profit declared by the assessee. This shows that the Ld.....

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....e progress of the project without creating any hindrance or obstruction in the construction activity. Clause 10: The assessee firm has to bear any expenses towards stamp duty, registration fees, any incidental expenses towards sale of undivided interest in land assigned to them or their nominees. Clause 11: The constructed area will be identified and divided between the assessee firm and the owners of the land in a reasonable manner. Clause 12: The assessee firm shall be entitled to all the original documents of the land in order to obtain NOC from the appropriate authorities. Clause 13: After completion of the entire project and sale of the entire flats, an association shall be formed amongst them with rules and bye-laws for the purpose of maintaining common amenities, common areas overhead tank and other common infrastructures. The owners of the land shall also become the members in lieu of the area allotted to them. From the above, it is apparent that the assessee had undertaken to complete the project with all risks attached to the project and accordingly it is eligible to claim the reward also. It is pertinent to mention here that the entire project is developed....