TaxTMI 
TaxTMI 
2017 (2) TMI 168
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....ount of 7 17.35 crores and assessed the income at 7 7,31,07,760/-. Aggrieved, the assessee went in appeal before the CIT(Appeals). 4. On appeal, the CIT(A), after differing from the findings of the Tribunal order in assessee's own case in ITA No.385/Mds/2013 for the AY 2009-10, observed that the assessee is a partnership firm and is in the business of construction/promotions. The partners of M/s. Arihant Heirloom partnership firms are : 1. M/s. Arihant Foundation and Housing Ltd. 2. Shri A.V.Krishnan 3. Shri R. Raghavan 4. Smt. R. Vasanthalaxmi. The CIT(Appeals), further observed that in the partnership deed it is mentioned that the capital of the firm shall be contributed by the partners as per the mutual agreement between them from time to time. But there is no document showing any agreement or transfer of land owned by the individuals in favour of the firm. The land was purchased by the individuals in the year 2005 i.e.7.4.2006. No capital gains were written by the individuals on the gains from the transfer of land. Even assuming that the lands were transferred in the year 2006 on the date of forming the partnership, there ought to be....
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....ly the land by the firm will be pre requisite for getting approval etc. but in this case, the partners have sold the undivided share of land and the firm has only constructed the flats, however, the deduction u/s.80IB(1) is fully claimed by the firm. Even though, the act does not specify owning of land by the undertaking, in general concessions are approved by competent authorities on lands owned by the individuals or undertakings. Approval is obtained in the name of Shri O.P.Madhav only and are not in the name of firm, M/s. Arihant Heirloom. 4.4 According to the CIT(Appeals), Shri O.P.Madhav in the capacity of register power of attorney agent of the three land owners has executed the sale agreements and sale deeds for UDS with the purchaser of the flats. The name of the assessee firm, M/s. Arihant Heirloom appears in the combined sale agreement for undivided share of land and construction as party of the second part, they have agreed to construct the various flats in the complex for the stated consideration to be paid by the purchasers. Therefore, the CIT(Appeals) observed that the assessee firm has never acquired any legally vested ownership rights in the land on which the res....
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.... and confirming the stand of the AO that the specific purpose of business of the firm is buying land, doing construction project on the same. Hence, the assessee is a work contractors and not entitled to deduction u/s.80IB(1) of the Act. Further, the ld. AR submitted that the CIT(Appeals) has erred in confirming the ground of the AO stating that deduction should be allowed only to low cost residential products and not to projects having swimming pools, gyms, tennis courts etc. and hence does not benefit to middle class people and not entitled to deduction u/s.80IB(10) of the Act. 5.1 Further, the ld. AR submitted that the AO was not justified in stating that the partners of the firm have not transferred the land holdings to the firm for adequate consideration, which was confirmed by the CIT(Appeals). According to the ld. AR, the CIT(Appeals) has also erred in confirming that as per the law, it is decided on various judgments of the High Court all over India and by other jurisdictional High Courts in Chennai, it was held that the assessee need not own a land to be entitled to claim deduction u/s.80IB of the Act and treating the assessee as not a land owner and only partners are l....
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....ted the orders of the lower authorities. 7. We have heard both the parties and perused the material on record. 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 Sale Agreement for Undivided share of Land and Construction) entered into between the assessee and Vendors and purchasers dated 30.1.2010. He took us to various clauses of that Agreement. The ld. AR submitted that the CIT(Appeals) has not considered the fact that the assessee is involved in the development of the property and not merely in the execution of the works contract and it was submitted that the CIT (A) cannot invoke the Explanation to sec.80IB(10) , which is applicable only for works contr....
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....menced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008 ; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 13but not later than the 31st day of March, 2005, within four years from the end of the financial year in which the housing project is approved by the local authority. (iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority. Explanation For the purposes of this clause,- (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority ; (i....
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....examine as to whether the assessee can be called as a "developer" within the meaning of sec.80IB(10) read with Explanation I herein above. The ld. AR submitted that the work carried on by the assessee made it a developer entitled for deduction u/s.80IB(10) of the Act. According to him, a developer is a person who develops the facility and such person may or may not be a contractor. On the other hand, a contractor is stated to be a legal term whose rights and duties vis- à-vis contractee are determined by way of legal document called the contract. According to the ld. AR, the assessee has undertaken all risks involved in the project including technological inputs, entrepreneurial inputs etc. Besides, there is heavy financial involvement in terms of deployment of man and machine as well as all materials. At this point, it is pertinent to note that the judgment of the Supreme Court in the case of HAL Ltd. vs. State of Orissa 55 STC 327 (SC) in which it has been observed that in a contract for work, the person producing has no property in the thing produced as a whole, even if part or whole of the material used by him may have been his property earlier. Further, in another judgm....
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....such words. There is no need to wander here and there in search of an answer which has been aptly given by the Supreme Court in the case of CWT vs. Officer-In-Charge (Court of Wards), Paigah 1976 CTR (SC) 404 : -15 - ITA 933/13 (1976) 105 ITR 133 (SC) in which it was held that the ordinary dictionary meaning of a word cannot be disregarded. 7.5 Coming back to our point of ascertaining the meaning of the words 'contractor' as well as 'developer', which have neither been defined in the Act nor in the General Clauses Act, we fall upon Oxford Advanced Learner's Dictionary to find out their meaning. According to this dictionary "developer" is a person or company that designs and creates new products, whereas "contractor" is a person or a company that has a contract to do work or provides services or goods to another. The New Shorter Oxford Dictionary defines the word "contractor" as : "A person who enters into a contract or agreement. Now, a person or firm that undertakes work by contract, especially for building to specified plans". In the light of the meaning ascribed to these words by the dictionaries it is observed that the developer is a person who designs and creates new produc....
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....sessee. The owner of the land, which have sold the undivided share of land to various purchasers i.e. to the flat owners. Further this has obtained approval from Municipal Corporation for construction of the flats. The assessee though called developer is only a contractor according to the Assessing 0ffiicer. The issue to be decided is whether assessee is a contractor or a developer entitled to claim under Section 80lB of the Income-tax Act. However, the flat owners have purchased land from land owner and have entered into a construction with assessee 9. From the recitals of the agreement, it is very clear even though the assessee has entered into agreement with the land owner, the land owner in turn sold the undivided co-ownership right in the property to various prospective buyers who in turn entered into, construction agreements jointly with the assessee as a contractor. The AR's argument that the assessee is primarily a developer who has taken the development work such as planning development of the properties etc. is not a clinching factor in deciding the issue as to the eligibility for deduction under sec. 801B(10) of the Act, as the main revenue earned by the assessee ....