TaxTMI 
TaxTMI 
2017 (12) TMI 419
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....rd both sides. Case files perused. 2. Learned representatives inform us at the outset that the sole substantive issue in all five instant appeals is that of correctness of both the lower authorities' identical action disallowing assessee's deduction claimed u/s. 80IB(10) of the Act qua the housing project in the name and style of a society M/s. Saundarya Cooperative Housing Society Ltd. involving the above specific figures; assessment year-wise. We thus treat assessee's first appeal ITA No.1147/Ahd/2011 for assessment year 2000-01 as the lead case. 3. Case records suggest the instant lis to be second round of proceedings before the tribunal. This assessee is a partnership firm comprising of nine partners holding variable share. It came to be constituted w.e.f. 15.10.1999. The assessee filed its return on 23.10.2000 stating nil income after claiming Section 80IB(10) deduction amounting to Rs. 4,66,913/-. The same stood processed on 20.02.2002. The Assessing Officer thereafter formed reasons to believe that assessee's taxable income liable to be assessed had escaped assessment. He therefore issued Section 148 notice dated 18.05.2004. We find the assessee to have shown itself as a c....
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....as its development agreement dated 06.03.2000 entered into with the owner society M/s. Saundarya Co-operative Housing Society Ltd. for developing the impugned housing project. The Assessing Officer framed consequential assessment on 21.12.2009 once again disallowing Section 80IB(10) deduction claim after taking into account the relevant clauses in assessee's above development agreement. He found the above society to be owning the project land in question. The said society had taken all steps to apply for construction claim as accepted in local authorities' action approving the project in question which nowhere indicated assessee's name to be mentioned therein. The Assessing Officer observed that the assessee had come in the picture only by way of the above development agreement which did not indicate any such development activity performed at its behest. 5. It emerges that the assessee had vehemently contended that ownership of project land no more found a valid criteria for the purpose of Section 80IB(10) deduction as per this tribunal's twin decisions in Radhe and Shakti Developers (supra). The Assessing Officer declined the said plea as well. He opined in assessment order that ....
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....e factor for the purpose of raising Section 80IB(10) deduction claim. Learned co-ordinate bench decision settles the issue as under: "3. So far as this grievance of the assessee is concerned, the relevant material facts are as follows. The assessee before us, a partnership firm, is engaged in the business of developing residential housing projects. During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has claimed a deduction of Rs. 49,34,922 under section 80 IB (10) of the Act, but the assessee was not owner of the land on which housing project was developed. It was noted that "the assessee was not owner of the land on which the project was developed and the assessee had not acquired the dominant control over the project. The Assessing Officer was of the view that since the assessee did not own the land, since the necessary approval of the project was taken by the land owners and since the assessee has merely acted as an agent and as a contractor as it has entered into construction agreement with the landowners, the assessee is not eligible for deduction under section 80IB(10) of the Act. Aggrieved, assessee carried the matter i....
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.... (ITA No.1408 & 1409 / PN / 2003 AY 2000-2001 and 2001-02) where 80IA deduction has been denied holding the assessee to have entered into a Works Contract. In this decision in para 54 part of Memorandum explaining the provisions in the Finance bill 2007 has been quoted, relevant portion is reproduced below: ".....Accordingly, it is proposed to clarify that the provisions of section 80-IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Thus in a case where a person makes the investment and himself executes the development work i.e. carries out the civil construction work, he will be eligible for tax benefit under section 80-IA. In contrast to this, a person who enters into a contract with another person (i.e. undertaking or enterprise referred to in section 80-IA) for executing works contract, will not be eligible for the tax benefit under section 80-IA." Thus the Memorandum points out investment also to make a developer eligible for deduction. Hon'ble IT AT Mumbai decision cited above is applicable in the case of the appellant because the appellant has not A made any investment towa....
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....assessee may not have owned the land would be of no consequence. (Emphasis, by underlining, supplied by us) 7. In our humble understanding, therefore, in order to answer the question as to whether the condition precedent for deduction under section 80IB has been satisfied inasmuch as whether or not the assessee is engaged in "developing and building housing projects", all that is material is whether assessee is taking the entrepreneurship risk in execution of such project. When profits or losses, as a result of execution of project 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 assesse has adopted some other business models for the pur....
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....to the projects in question for both the years. 9. It is not even the case of the Assessing Officer that the assessee did not assume the entrepreneurship risks of the housing project. The format of arrangements for transfer of built up unit, and business model of the assessee for that purpose, is not decisive factor for determining eligibility of deduction under section 80 IB (10), but that is all that the authorities below have found fault with. The objections of the authorities below are thus devoid of legally sustainable merits. In view of the above discussions, and bearing in mind entirety of the case, we are of the considered view that the stand of the authorities below, in declining deduction under section 80IB(10) and on the facts of this case, is incorrect. We vacate the same and direct the Assessing Officer to delete the disallowance. 10. Ground no.1 is thus allowed." 9. We take cue from the above settled legal position to now come to assessee's development agreement dated 06.03.2000 with the owner society M/s. Saundarya Co-operative Housing Society Ltd. forming pages 43 to 47 in the paper book. The said agreement sufficiently indicates the assessee/first party to ....
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....rty, till that unit holder will not have direct contact or agreement with second party, and till that they are not the members of the society. First party has full responsibility of the amount transaction of such unit holder, and second, party does not have any liability. (F) As per this agreement first party has all rights to register the unit holder, to collect the amount of the units in their name to give the receipt of amount etc., and second party does not have any liabilities. (G) First Party has full rights to book any person, Firm, company, to make advertisement or handbill or hoardings, neon sign of the scheme or to give advertisement in any local, or national daily weekly or in monthly magazines etc. for the Scheme, But for this expenses will be born by First Party. (H) First party will keep all the agreements, letters, copies of approved plan etc. of the said scheme with them and they have lien over it. (I) Party of the First part appointed as a Developer/Contractor in pursuance of agreement. Second party are not to allow to book any members for the said scheme, party of the Second part is giving the promise that they have not registered and unit holder or no....