TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 1258
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....um Rehabilitation Authority (SRA) and Pimpri Chinchwad Municipal Corporation ( PCMC) had given the contract work of construction of buildings to rehabilitate the slum dwellers to the assessee by floating tenders. 3) The learned Commissioner of Income-tax (Appeals) erred in not appreciating the fact that the legislative intent was not to allow any deductions to the eligible undertaking if it was given by way of contract and in this case a contractual agreement i.e. Articles of Agreement was signed between the assessee and the SRA for construction of slum and as such the work of slum redevelopment was done as a result of a contract entered into between the assessee and the SRA. 4) The learned Commissioner of Income-tax (Appeals) erred in allowing the 80IB deduction to the assessee without appreciating the fact that the assessee was to be provided TDR on completion of construction work in phases and the assessee did not own the land and he had to abide by the terms & conditions of SRA and PCMC. 5) The appellant craves leave to add, alter or amend any or all the grounds of appeal. 3. The facts of the case as emanating from the records are: The assessee is a promoter and builder. Th....
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....of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) after considering the facts of the case and various decisions on which the assessee had placed reliance as well as CBDT Circular dated 05-01-2011 reversed the findings of the Assessing Officer and accepted the appeal of the assessee. Now, the Revenue is in appeal before the Tribunal assailing the findings of the Commissioner of Income Tax (Appeals). 4. Smt. Divya Bajpayee representing the Department submitted that the Commissioner of Income Tax (Appeals) without verifying the facts of the case has merely accepted the contention of the assessee. The Assessing Officer has given detailed reasons to hold that the assessee is a works contractor and not a developer. The ld. DR submitted that first and foremost requirement to be a developer is that the developer must own a land, whereas, in the present case the land is owned by the Government. Another important fact which has to be considered is the business risk. This factor is also missing in the present case. A perusal of the agreement vide which the contract was awarded to the assessee for construction of a building would show that the assessee has to construct the bui....
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....n at all. Thus, the assessee had taken investment risk. The ld. AR placing reliance on the CBDT Circular No. 5 of 2010 submitted that according to the Circular the objective of tax concession is to provide tax benefit to the person undertaking the investment risk i.e. the actual developer. The Circular further clarifies that any person undertaking contract risk is not entitled to tax benefits. In the present case the assessee had undertaking the investment risk. The ld. AR further submitted that Clause 33.5 of the said Circular has clarified that an explanation after sub-section (10) of section 80IB inserted provides that nothing contained in this subsection shall apply to any undertaking which executes the housing project as works contract awarded by any Central or State Government. The ld. AR further referred to CBDT Notification No. 1 of 2011 dated 05-01-2011 which states that where any scheme for slum development prepared by the Maharashtra Government u/s. 37(2) of the Maharashtra Regional Town Planning Act, 1966 is notified by the Board or any project is approved by the local authority under the aforesaid scheme on or after 01-04-2004 but before 31-03-2008, any income arising ....
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....The assessee has taken all the risks in taking approvals, administration clearances, making transit accommodation for slum dwellers and finally realization of TDRs. The firm has provided further facilities such as electrical lights, fans etc. which were not part of the agreement. In support of his submission, the ld. AR has placed reliance on the decision of B.T. Patil & Sons Belgaum Constructions (P.) Ltd. Vs. ACIT (supra). After analyzing documents on record, we find that the assessee was liable for liquidated damages (Clause 7 of the General Conditions of Contract), if it fails to fulfill the obligations set out in the agreement. The assessee has undertaken financial risk by making investment. It is an undisputed fact that no payments were received by the assessee during or after execution of the projects. The project was executed in lieu of TDR, wherein again the assessee had to make huge investment. In the backdrop of these facts, we do not find merit in the second objection of the ld. DR. 9. In so far as the issue whether the assessee is a developer or contractor viz-a-viz SRA project is concerned, the assessee has placed reliance on the decision of the Mumbai Bench of the ....