TaxTMI 
TaxTMI 
2016 (5) TMI 574
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....w 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 to the Society. Assessee was just a contractor of the land owners constructing 81 residential units of the scheme titled ' Parth Bunglows ' 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. 2. Briefly stated facts as culled out from the records are that assessee is a partnership firm engaged in the business of development and construction of residential houses. In the return of income for Asst. Year 2008-09 was filed on 10.6.2008 declaring total income of Rs.NIL after claiming deduction of Rs. 95,56,579/-. Case was selected ....
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....ion of housing project. Investment in the land, NOC. Charges, plan passing expenses and all other incidental expenses of the housing project were borne by the assessee firm and worked as deemed owner by virtue of right of possession over the land and structure developed on it as per development agreement entered into between the housing society and the assessee. Ld. AR further submitted that assessee firm prepared the plan, got it approved by local authority, engaged architect/structural engineers and made follow ups to complete the housing project in a fair way and further made suitable development of the project for getting all the residential units ready to sell and all the brochures for booking or information were having the name and address of the assessee firm. Ld. AR also submitted that as per development agreement assessee firm has issued receipts, allotment letters, possession letters and all the documents and has fixed the consideration/price with the proposed buyers/customers for the actual users and, therefore, assessee firm cannot be termed just as a civil contractor but in all fairness assessee is a developer of residential housing project and eligible for deduction u....
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....ll other incidental expenses of the housing project borne borne by the assessee-firm. 5. Ownership Deemed owner by virtue of right of possession over the land & structure developed on it as per development agreement -para -5. 6 Brochure Name/addresses/tele no. of the assessee firm is very well appeared in the brochure for booking or information of the housing project is floated. 7 Preparation of plans The assessee firm has prepared the plan/got it approved from local authority, engaged architect/structural engineers and made follow ups to complete the housing project in a fair way. 8 Approval of the plans Solely responsible to get the construction lay out plans approved as designed by it. 9 Execution of Civil work Solely responsible as per development agreement 10 Advertisement The assessee-firm has advertised the project and got booking of the residential units. 11 Acceptance of booking/selling price As per agreement the assessee firm has issued receipts, allotment letters, possession letters & all other legal documents. 12 Responsibility The assessee firm is responsible of every work of the housing project. 13 Authority As per agreement, the assessee ha....
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....customer and the builder-firm shall be executed. The party of the first part shall not be held responsible for any delay in work and / or quality of the work. Each buyer wilt free to inspect the quality of the work and on satisfaction only, the builder-firm shall be entitled for the consideration of the work executed. Alt the risk and control over the housing project would be that of M/s. HARIOM 5. Except as provided in this agreement, M/S. HARIOM CORPORATION is and at all times will be independent builder cum developer. M/S. HARIOM CORPORATION, the party of the other part has to raise fund for the development and construction work on their own. The necessary developmental expenses shall also be borne by the partnership firm. Any Profit/Loss arise on the developmental work of the Housing Project shall belong to M/S. HARIOM CORPORATION. 6. The party of the first part does not retain the right to terminate this agreement prior to the satisfaction of the terms hereof. Upon the occurrence of any breach or default by M/S. HARIOM CORPORATION of any type of the terms, obligations and covenant contained in this agreement, if it occurs, it should be resolved by mutual discussion only.....
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....cted by your honour the AR of the assessee submitted the copy of Mger account of the society appearing in the books of partners. On perusal of the same, it is noticed that partners have paid cash of Rs. 52,000 on 1Z4.2005 and Rs. 3,50,000 (Rs.1,50,000 + Rs. 1,50,000) on 11.5.2005 i.e. the date of purchase of land on which project is developed." After going through rival submissions it is seen that in the remand report the AO has not disputed the land funding argument of the appellant therefore the appellant is found meeting the test of having practically purchased the land, set forth in Hon'ble ITAT decision in the case of Shakti Corporation. 9. Further in the remand report the AO has reiterated the arguments made in the assessment order that the appellant is not the owner of the land because the land owner has applied for housing plan approval and got the permission to develop in their names. To examine these arguments the Development Agreement has to be referred to as stated by Hon'ble ITAT 'A1 bench Ahmedabad in the case of Shakti Corporation wherein in para 16 of the order it has been directed that the Development Agreement should be referred to for concluding....
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....lant has been found fulfilling the tests laid down by Hon'ble ITAT Bench A Ahmedabad decision dated 7.11.2008 in the case of M/s.Shakti Corporation. Baroda in ITA No.1503/Ahd/2008 in AY 2005-06 having practically purchased the land and possessing dominant control over the project, therefore in my view there is no justification in denying the deduction to the appellant. The case laws cited by the AO are not applicable in this case because the appellant actual conceived and developed the housing project at its own cost and risk and is not merely a contractor executing the specifications given. The AO is directed to delete the addition made u/s.80IB(10)." 10. From going through the above discussion, we are of the view that assessee has carried on activities as a developer and not a merely works contractor. However, as regards the question 'that the assessee was not the owner of the land then how he will be eligible to claim deduction u/s 80IB(10) of the Act'. The reply to this question specifically lies in the decision of the co-ordinate bench in the case of Shakti Corporation, Baroda (supra). It was further taken up before the Jurisdictional High Court by the Revenue and was dealt ....
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....t. Combined reading of Section 2(47)(v) and Section 53A of the HC-NIC Page 37 of 42 Created On Tue May 10 11:53:01 IST 2016 TAXAP/546/2008 38/42 JUDGMENT Transfer of Property Act would lead to a situation where the land would be for the purpose of Income Tax Act deemed to have been transferred to the assessee. In that view of the matter, for the purpose of income derived from such property, the assessee would be the owner of the land for the purpose of the said Act. It is true that the title in the land had not yet passed on to the assessee. It is equally true that such title would pass only upon execution of a duly registered sale deed. However, we are, for the limited purpose of these proceedings, not concerned with the question of passing of the title of the property, but are only examining whether for the purpose of benefit under Section 80IB (10) of the Act, the assessee could be considered as the owner of the land in question. As held by the Apex Court in the case of Mysore Minerals Ltd. vs. Commissioner of Income Tax (supra), and in the case of Commissioner of Income-Tax vs. Podar Cement Pvt. Ltd. and others (supra), the ownership has been understood differently in different....
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....in observations. Such observations cannot be seen out of context nor can the same be applied in the present case where we are concerned with the deduction under Section 80IB(10) of the Act. 44. In the case K. Raheja Development Corporation vs. State of Karnataka (supra), the Apex Court considered whether the builder, who was engaged in the development of property and for such purpose had entered into an agreement with the land owner, can be stated to have executed works contract. Such interpretation was rendered in the background of the term "works contract" defined in Section 2(1)(v-i) of the Karnataka Sales Tax Act, which reads as under:- "12. Section 2(1)(v-i) is relevant. It defines a "works contract" as follows: "2.(1)(v-i) 'works contract' includes any agreement for carrying out for cash, deferred payment or other valuable consideration, HC-NIC Page 40 of 42 Created On Tue May 10 11:53:01 IST 2016 TAXAP/546/2008 41/42 JUDGMENT the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property;" It is thus to be seen that under the Karnataka Sa....