TaxTMI 
TaxTMI 
2016 (8) TMI 314
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....2,527/- by denying the claim of deduction u/s.80IB(10) of the Act. Aggrieved by the order of the Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who decided the appeal in favour of assessee vide order dated 29/03/2012 (in Appeal No. CIT(A)-XV/ITO/9(1)202/10-11). Aggrieved by the order of the ld.CIT(A), Revenue is in appeal before us and has raised the following grounds:- 1). The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow the Assessee's claim for deduction of Rs. 88,72,527/- u/s. 80IB(10) of the I.T. Act. 2). The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in holding that the Assessee fulfills the conditions laid down for claiming deduction u/s.80IB(10) even when the land was in the name of Shailbhadra (Satellite) Co.-Operative Housing Society Ltd., which is a 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 com....
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....uction u/s.80IB(10) of the Act it is not necessary that the assessee must be the owner of the land and secondly looking to the provisions contained in Section 2(47) of the Act read with Section 53A of the Transfer of Property Act, by virtue of the development agreement and the agreement to sell, the assessee had, for the purpose of Income tax, become the owner of the land. (B) At Para 8.3 & 8.4., it considered Hon'ble ITAT Order dated 7.11.2008 in the case of M/s.Shakti Corporation wherein Hon'ble ITAT differently (different than M/s.Radhe Developers case) held that considering the terms and conditions of development agreement and other documents on record, the assessee had acquired dominion over the land, which he had developed by constructing housing project incurring expenses and also taking risks. It was held further by Hon'ble ITAT that deduction u/s.80IB(10) of the Act are not to be granted following ratio of order of M/s.Radhe Developers where the assessee had entered into an agreement for a fixed remuneration and worked merely as contractor to construct the housing project on behalf of the land owner. (C) On the basis of facts of above two cases and other si....
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....es of fixed area and in this manner to admit the respective member in the scheme or at the time of admission of such member as per the scheme the fixed amount of contribution of construction and other amounts and incidental expenses that the admitting members shall have to pay as admission fees the receipt of deposit or a clear receipt of amount contribution shall have to be given, moreover the Developer cum Building Contractor has given full right and authority also to decide the price of houses of this scheme and to execute necessary agreements with the purchasers of houses. Clause 11(11): That the said Developer cum Building Contractor as per this scheme, whatever construction he shall do on the land described in Schedule shall be authorized to allot to the respective member and also out of this land deducting the constructed land and deducting the land of margin and passage whatever excess land that shall remain then Developer cum Building Contractor shall have right to allot that land. Clause 11(13): As per this scheme Developer cum Building Contractor has given incidental lump sum estimate of price for the residential houses to be constructed but as per the step-stage wis....
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.... the money and issue receipts to the members. Same way, you can remove all obstructions that may come during the period of making the develop it. Clause-10: From the date of this Agreement, you, the Party of the Second Part is bound to pay tax, land revenue, special cess etc. in the offices of the Vadodara Municipal Corporation, Government, Semi Government and whatever tax, land revenue, education cess, special cess, etc. are outstanding prior to be the date of this Agreement, the same are and shall be paid by us, the party of the First part as a land owner." (F) After considering the provisions of section 80IB(1) and 80IB(10) in respect of question of ownership of land being an essential condition for deduction u/s.80IB(10) of the Act, Hon'ble Gujarat High Court at para 30 held that - "30. The essence of sub-Section (10) of Section 80IB, therefore, requires involvement of an undertaking in developing and building housing projects approved by the local authority. Apparently, such provision would be aimed at giving encouragement to providing housing units in the urban and semiurban areas, where there is perennial and acute shortage of housing, particularly, for the middle....
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....r execution of such project. The assessee had to pay the fees to the Architects and Engineers. Additionally, assessee was also authorized to appoint any other Architect or Engineer, legal adviser and other professionals. He would appoint Sub-contractor or labour contractor for execution of the work. The assessee was authorized to admit the persons willing to join the scheme. The assessee was authorised to receive the contributions and other deposits and also raise demands from the members for dues and execute such demands through legal procedure. In case, for some reason, the member already admitted is deleted, the assessee would have the full right to include new member in place of outgoing member. He had to make necessary financial arrangements for which purpose he could raise funds from the financial institutions, banks etc. The land owners agreed to give necessary signatures, agreements, and even power of attorney to facilitate the work of the developer. In short, the assessee had undertaken the entire task of development, construction and sale of the housing units to be located on the land belonging to the original land owners. It was also agreed between the parties that the a....
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.... the assessee. Resultantly, profit and loss also would accrue to the assessee alone. In that view of the matter, the addition of the Explanation to Section 80IB with retrospective effect of 1.4.2001 would have no material bearing in the cases on hand. We may recall that the said Explanation introduced by Finance (No.2)Act, 2009 provided as under:- [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 works contract awarded by any person (including the Central or State Government)]." (J) Finally after considering the ratio of various case laws relied on by Revenue, at para 45 and 46 Hon'ble Gujarat High Court concluded that- "45. Under the circumstances, we are of the opinion that the Tribunal committed no error in holding that the assessees were entitled to the benefit under Section 80IB(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. 46. We find that it is not even the case of the Revenue that ot....