TaxTMI 
TaxTMI 
2018 (1) TMI 977
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....and held by assessee. The assessee received Rs. 9,62,83,200/- from the joint venture and claimed deduction of the entire income u/s. 80IB(10). The Assessing Officer declined the benefit of deduction to the assessee on the premise that deduction u/s. 80IB(10) is available only to an undertaking engaged in developing and building house project subject to fulfillment of conditions laid down in sub-section (10) of section 80IB. The assessee has only provided land and the constructions activities were taken care of by Brahma Builders. Since, the assessee is not builder and developer the assessee is not eligible to claim deduction u/s. 80IB(10) of the Act. Aggrieved by the assessment order dated 27-12-2011, the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) after analyzing the facts of the case and by placing reliance on the various decisions holding the owner of land to be eligible for claiming deduction u/s. 80IB(10) accepted the claim of assessee. Now, the Revenue is in appeal before the Tribunal assailing the order of Commissioner of Income Tax (Appeals). 3. The Revenue has raised following grounds assailing the o....
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.... case where the assessee has transferred the land to Brahma Builders and received consideration in lieu thereof. The assessee has derived profits from the housing project that qualifies for deduction u/s. 80IB(10) of the Act. The ld. AR asserted that the assessee is a developer and the land on which housing project „Emerald County‟ was developed was held by the assessee as stock-in-trade. The ld. AR pointed that Brahma Builders had claimed deduction u/s. 80IB(10) in respect of their share of profits i.e. 68% of the proceeds arising on sale of flats. The assessee has claimed deduction u/s. 80IB(10) on its share i.e. 32% of the sale proceeds of the flats. 4.1 The fact that the assessee is one of the constituent of joint venture has not been disputed by the Department. It is also an admitted fact that both the constituents of joint venture have shared gross receipts from sale of flats. No income is offered in the hands of joint venture. Both the constituents of JV have disclosed income in their respective hands and has claimed deduction u/s. 80IB(10) of the Act, accordingly. Both the parties to the JV were acting on principle to principle basis. The ld. AR submitted tha....
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....d agreement the assessee constructed flats with a total built up area of 2,40,000 sq. ft. for the members of the society on the said land. On the remaining land admeasuring 4,63,103 sq. ft. housing project „Emerald County‟ was developed by joint venture Brahma Skyline. 7. It is not disputed by the Department that Brahma Builders have claim deduction u/s. 80IB(10) in respect of their share of profits arising from sale of flats in the housing project „Emerald County‟. The Assessing Officer raised objection in granting the benefit of deduction u/s. 80IB(10) to the assessee primarily for the reason that the assessee is not a developer and builder. The objection raised by the Assessing Officer was overruled by the Commissioner of Income Tax (Appeals) by observing as under : "3.4.1 The appellant firm has thus constructed the residential portion meant for the members of the society and has incurred expenditure thereon as per the terms of agreement which clearly indicate the role of the appellant to be that of a builder and developer in the development of the property in terms of agreement with Kausur Baug co-op Hsg. society Ltd. Thus the appellant after....
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.... been sold the appellant along with Bramha Builders both are referred to as promoters and this has been signed by the respective representatives of both the developers. The supplementary agreement dated 02-02-2007 between the appellant and Bramha Builders specifies that in case of any cancellation of booking, the refund shall be granted in the same ratio of 68:32 by the respective parties. Moreover, the copy of the commencement certificate, completion / occupancy certificate for the project has been obtained by the appellant firm which is in the name of one of the partners. The copies of some of the court orders filed by the appellant indicates the appellant firm to be an independent party represented by its partner and has been equally held responsible for any action to be taken against the complainant. Moreover, the Maharashtra Ownership of Flats Act, 1963 is also seen to have recognized the concept of joint ownership and dual promoters relating to ownership of flats as is evident as per sec 2(c) which defines the term promoter as " a person who constructs or caus.es to be constructed a block or building of flats or apartments for the purpose of selling some or all of them to oth....
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....and and thus, complied with all other conditions, which have to be fulfilled before claiming benefit under Section 80IB(10) of the Act. The builder has invested the money in the construction. It is after completion of the building in terms of the agreement, the assessee was given 22% share of the building area. It is after sale of the built area, in terms of Section 80IB (10), the assessee is claiming deduction. As is clear from the joint development agreement, the undertaking of developing and building housing project was jointly undertaken by the assessee and the builder. Therefore, in respect of the residential units numbering 211 in all, the persons who undertook this undertaking are entitled to the benefit of Section 80IB(10) of the Act in proportion to the share to which they are entitled to in the built up area. 9. In that view of the matter, the contention of the revenue that the assessee did not undertake any developmental or building activity and therefore, he cannot individually claim the benefit has no substance. That is not the requirement of law. Keeping in mind, the object with which this provision is introduced when all persons who have made investments in ....
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.... appellant and M/s. Bramha Builders are the two members of the JV which was formed for the development of the property and both the parties agreed to share the gross receipts and not profits of the JV in the ratio of 32:68. Thus the material on record point out that the JV was a conduit and the actual work was done by the individual members and no expenditure was incurred by the JV, but by the individual members. Moreover the share in gross revenue and the relevant related expenditure incurred have been recorded in the books of account of individual members of the AOP and the resultant profit/loss offered to tax by the members of the AOP by individual members. Thus the contention of the appellant that there has been no loss to the revenue as a result of the above method of sharing gross revenue prima facie appears to be acceptable. The aforesaid fact also becomes apparent if the joint development agreement (JV agreement) is perused, it reveals that the two members were working together on principle to principle basis and were jointly and severally liable for the project. It is also noticed that in the clause of the terms, it has been pointed out that no party is agent of each other....