TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 670
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....separate legal entity in the eye of law and the Assessee entered into the project by a development agreement with the Society. The entire responsibility to execute the housing project and abide by the terms and conditions of its approval right from the inception of the project till its completion rests with the Society. The local Authority had granted permission for development and construction of the project to the Society, Assessee was just a contractor of the land owners constructing residential units and not a developer. 3). On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad ought to have upheld the order of the Assessing Officer. 4). It is therefore, prayed that the order of the Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad may be set-aside and that of the Assessing Officer be restored." 3. Briefly stated, the material facts are like this. During the course of reassessment proceedings the Assessing Officer noted that the land bearing survey number 994 and 995 having an area admeasuring 19784 sq. yard was purchased by Manohar Co-op. Housing Society Limited, Ahmedabad on 29.12.2000 for a consideration of....
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....ched the assessee for construction. The fact remains that the Society is the principal and the assessee is a contractor satisfying all the ingredients of the contract as discussed above. In the instant case, the assessee is a mere builder who has entered into an agreement with the Society for construction of the housing project as per the approval obtained by the Society on the land owned by the Society. The assessee is not the Developer of the project as it is not the designer, creator and owner of the housing project. Therefore, it is held that the assessee is mere builder and does not satisfy the primary requirement of the section that the assessee must develop and build a housing project. Therefore, the assessee is not eligible for the deduction under section 80IB(10). In the instant case as per the agreement, the assessee had purchased the material and built the housing units as per the plan, but he had no ownership on the houses, as the land was owned by the society and the assessee had only constructed the dwelling units as per the agreement entered into with the Society. Looking at the facts from another angle, the assessee is merely a works contractor because in a contr....
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..... The Assessing Officer noted that the investment in land was, in fact, made by the assessee. He was also of the view that the assessee was owner of the land by virtue of development agreement and the agreement itself. He then discussed the judgement of Hon'ble Gujarat High Court in the case of CIT vs. Radhe Developers [(2012) 341 ITR 403 (Guj)] and held that the fact of the assessee's case being identical with the case dealt by the Hon'ble Gujarat High Court, the assessee deserves deduction under section 80IB(10) of the Act. The Assessing Officer is aggrieved and is in appeal before us. 5. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We find that it is not even in dispute in the present case that the risks and rewards of the housing project in question were borne by the assessee, before us. The only reason for declining deduction under section 80IB(10) is stated to be that the land ownership and approval by local authority are not in the name of the assessee. In the light of these facts, we find that the issue in appeal before us is squarely covered by the decision dated 7t....
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....ject as such, belong predominantly to the assessee, the assessee is obviously taking the entrepreneurship risk qua the project and is, accordingly, eligible for deduction under section 80IB(10) in respect of the same. The assumption of such an entrepreneurship risk is not dependent on ownership of the land. The business model of "developing and building housing projects" by buying, on outright basis, and constructing residential units thereon could probably be the simplest business models in this line of activity, but merely because there is an improvisation in the business model or because the assessee has adopted some other business models for the purpose of developing and building housing project does not vitiate fundamental character of the business activity as long as the risks and rewards of developing the housing project, in substance, remain with the assessee. It is difficult, if not altogether impossible, to visualize all the business models that an assessee may use in this dynamic commercial world even as, in substance, the fundamental character of the business remains the same, but certainly such modalities or complexities of business models cannot come in the way of eli....