TaxTMI 
TaxTMI 
2022 (10) TMI 343
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....at in assessee's case, there were two separate agreements for sale of plot and construction on the plot and there was no sale of constructed house and thus, assessee had merely acted as a contractor of the unit owner in respect of construction of house and therefore, not entitled to deduction u/s 80IB(10) of the Act because the sub section does not apply to a developer of a plotting scheme or a contractor. 2. On the facts and circumstances in the case and in law, the Ld. CIT(A) ITAT have committed patent error in restricting the profit on sale of unutilized FSA at 10.41% as against 36.87% worked out by the A.O contrary to the judgment of Hon'ble High Court in the case of Moon Star Developers reported in 45 taxmann.com. 181 being ratio decedent". 2.2 On the facts and circumstances in the case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s 80IB of the Act of Rs.76,74,800/- out of Rs.1,06,94,319/- by restricting the disallowance at 10.41% without appreciating that the assessee during the course of appellate proceedings did not furnish the manner of working /arriving the figure of disallowance at 10.41% being profit on sale of unutilized FSI. ....
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....iled by the assessee against re-opening of assessment u/s 148 of the Act has been disposed of by the assessing officer, vide page no. 2 to 5 of assessment order. The order dated 10.11.2017 disposing of the objection filed by the assessee has been duly served upon the assessee. 5. After this, assessing officer has issued notice u/s 142(1) of the Act, dated 05.12.2017 on the assessee, which is reproduced below: "5.1 "Asper the chart submitted by assessee and sanction letter of local authority regarding allocated FSI, assessee is requested to show cause as to why percentage of unutilized FSI should not be treated as 36.87" 5.2 "On examination of the submissions made by you, it is observed that you have claimed deduction u/s 80IB(10) of the Act amounting to Rs.2,90,05,475. All the conditions laid down in section 80IB(10), just as those in section 80IB(3) to 80IB(11)and 80IB(11A) and 80IB(11A) of the Act, have to be satisfied by the assessee referred to Section 80IB(1) of the Act. These conditions are as under: (i) The gross total income of the assessee should include the profits from the business of an undertaking developing and building housing projects. ....
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....he assessing officer noted that point of time (relative to the completion of the constructed asset) when the contract is entered into between the seller and the buyer, was held to be the deciding factor for ascertaining if the contract was a works contract (thus liable to sales tax) or was contract for the sale of immovable property (thus liable to stamp duty and not sales tax). In the case of the assessee, as the assessee has entered into a contract for the construction of house after the sales of land and before construction is complete, it would be a "works contract'. Assessee's status of developing and building housing project as a whole ceases to exist as soon as the assessee transfers the ownership of the plots to the individual plot owners. Thereafter, the assessee entered into agreement with the independent owners of plot of land to construct house on the respective plot as per the plot owner's requirement. Therefore, after selling the plots of land, the assessee becomes an entity which executes the housing project as a works contract awarded by the individual plot owner. As per the explanation to section 80IB(10) : " For removal of doubts, it is hereby....
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....ject developed and constructed by the assessee is eligible for deduction u/s 80IB(10) and that the Ld. AO be directed to allow the claim of deduction u/s 80IB(10) of Rs.2,90,05,475/- as made in the determination of taxable 3.3.1 During the current proceedings the assessee has filed writ submissions, which has been considered carefully. It has contended that the AO has disallowed the claim of deduction u/s 80IB(10) by holding it to be a work contract and assessee is not a developer. It is further stated that it has derived income from the residential housing project which is commenced in the year 2007-08 and deduction u/s 80IB(10) was claimed from the AY 2009-10. Assessee had further submitted that similar disallowances were made by the A.O. in AY 2009-10 and 2011-12 and in appeal the same were allowed by the CIT(A). Copy of appellate orders for AY 2009-10 and 2011-12 were filed by the assessee and has been perused and placed; on record. For AY 2009-10 the issue was contested by the Department before Hon`ble ITAT, Surat and the same was dismissed vide order ITA No.1558/Ahd/2014/SRT dated 19.03.2018. Copy of the said order filed by the assessee is placed on record. The opera....
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....welling units in favour of the end-users was made by the landowner and not by the assessee ?" 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 income group citizens. To ensure that the benefit reaches the people, certain conditions were provided in sub-Section(10) such as specifying date by which the undertaking must commence the developing and construction work as also providing for the minimum area of plot of land on which such project would be put up as well as maximum built up area of each of the residential units to be located thereon. The provisions nowhere required that only those developers who themselves own the land would receive the deduction under Section 80IB(10) of the Act. 31. Neither the provisions of Section 80IB nor any other provisions contained in other related statutes were brought to our notice to demonstr....
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....tion 80IB(10) of the Act thus provides for deductions to an undertaking engaged in the business of developing and constructing housing projects under certain circumstances noted above. It does not provide that the land must be owned by the assessee seeking such deductions. 33. It is well settled that while interpreting the statute, particularly, the taxing statute, nothing can be read into the provisions which has not been provided by the Legislature. The condition which is not made part of Section 80IB(10) of the Act, namely that of owning the land, which the assessee develops, cannot be supplied by any purported legislative intent. (Emphasis supplied)" 3.3.2 In assessee's own case for AY.2009-10 Hon'ble ITAT, Ahmedabad Surat Bench has deliberated on this issue. Order No.1558/AHD/2014/SRT was passed on 19.03.2018. Relevant part of the said order reproduced below: "5. Replying to the above, the ld. Assessee's Representative (AR) submitted that as per decision of Hon'ble Gujarat High Court in the cases of CIT vs. Vishal Construction Company [2013] 35 taxmann. Com 182 (Gujarat), CIT vs. Mahadev Developers [2013] 32 taxmann.com 291 (Gujarat) and Radhe De....
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....the AO does not stand on the merits in view of the decisions of Hon'ble Jurisdictional High Court as respectfully noted above. The conclusion drawn by the ld. CIT(A) is quite correct and we are unable to see any perversity or any other valid reason to interfere with the same. Thus, the same is confirmed. Accordingly, sole ground of the Revenue being devoid of merits is dismissed. "3.3.3 Since the facts and circumstances of the case remains the same as that of A.Y. 2009-10 and 2011-12, respectfully following the orders of my predecessors as I well as of Hon'ble ITAT, Surat, the AO is directed to delete the addition made of Rs.2,90,05,475/-." 10. Aggrieved by the order of ld CIT(A), the Revenue is in appeal before us. 11. Learned DR for the Revenue argued that assessing officer has identified the assessee as a 'Works Contractor", therefore assessee is not eligible to claim deduction under section 80IB(10) of the Act. Therefore, ld DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 12. On the other hand, ld Counsel for the assessee....
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....e assessee defended the order passed by the ld CIT(A). 17. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that this ground deals with the disallowance of claim of deduction u/s 80IB of Rs.1,06,94,319/- being profit earned from sale of unutilized FSI on the ground that the assessee had claimed profit from sale of unutilized FSI of 6151.47 sq.mtr. (i.e. 40.41% of total FSI of 15,219.60 sq. mtr) available for construction. During the course of assessment proceedings with regard to the claim of deduction u/s 80IB(10), the AO has taken an alternative stand by restricting the deduction u/s 80IB(10) in relation to the sale of unutilized FSI relying upon decision of Hon'ble High Court of Gujarat as given in the case of CIT Vs. Moon Star Developers, 45 taxmann.com 181. In this referred case, the assessee developed a housing project and it had filed return of income claiming deduction u/s 80IB(10) on the entire income. The AO noticed that th....