TaxTMI 
TaxTMI 
2016 (3) TMI 1490
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....rojects. The return of income was filed on 31/10/2007 declaring a total income of Rs.23,34,800/ -. The assessment was completed u/s. 143(3) of the Act vide order dated 16/12/2009 fixing the total income at Rs.76,52,478/ -. In the scrutiny assessment, the Assessing Officer had disallowed the claim of deduction u/s. 80IB amounting to Rs.42,60,841/- stating that the assessee had not fulfilled certain conditions prescribed for claiming the benefit of deduction u/s. 80IB. The relevant observations of the Assessing Officer for denying the benefit of deduction u/s. 80IB is as follows :- "The said assessee company has claimed deduction under section 80IB of Rs.42,60,841/ -. During the assessment proceedings, the following factual and legal defects are noted from the details/explanations submitted for such claim of deduction: firstly, the said assessee has not complied fully and satisfactorily the provisions of Rule 18BBB alongwith Form No. 10CCB for example, the said F.10CCB is not signed by the appropriate accountant and not submitted by due date of filing of return u/s. 139(1) of IT Act. Secondly, assessee has not submitted any copy of approval and completion certificate from appropria....
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.... approvals by the local authority are also different for all the three blocks. The same is true for the occupancy/completion certificate where the completion of each block is given on the different dates. In view of these conditions under clause (b) of section 80-IB for having the size of a plot of land which has a minimum area of 1 Acre is not satisfied. In addition to this, once the project is in the name of Managing Director of the company, it cannot be said that the project is being undertaken by the assessee as a builder and hence explanation to section 80-IB comes into the picture. In view of the mention in the audit report as also pointed out by the Assessing Officer, the assessee is actually taking up civil contract work/work contract from its Managing Director and on behalf of the individual flat owners and, therefore, in terms of this explanation 10 also, the assessee is not eligible for deduction u/s. 80-IB. It is seen that assessee himself has not claimed deduction u/s. 80IB in the subsequent year i.e. in the A.Y. 2008-09. Also for the A.Y. 2009-10 it is seen that no claim u/s. 80IB has been made as according to the assessee they were no eligible profits. In this conn....
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....istered in assessee's name. Contention of the Revenue was that in order to claim deduction under S.80-IB(10) the assessee must be the owner of the land on which the housing project is constructed. It was held that there is no such condition in the provisions of s. 80-IB(10). The above ITAT decision was affirmed by the Gujarat High Court in the case of CIT vs. Radhe Developers reported in 341 ITR 403. In Saroj Sales Organisation vs. ITO (2008) 115 TTJ 485 it was held that even the sub developer is eligible for deduction u/s. 80IB. Where an undertaking developing and building housing project is engaged as a sub-developer and all the sanctions are obtained by the developer, the sub-developer would be eligible for the deduction. 4.3.2 The High Court of Karnataka in the case of the Commissioner of Income-tax, Central Circle vs. Shravanee Construction (I.T.A. No. 21/2009 - 2003-04 and I.T.A. No. 422/2009 - 2004-05) held that to claim deduction u/s. 80IB(10), if the land owner, Developer and Builder are different, a Memorandum of Understanding between the land owner and the assessee and a joint development agreement between the assessee and the builder is sufficient. 4.3.3 The sec....
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....Viswas Promoters (P.) Ltd. vs. Assistant Commissioner of Income-tax T.C. (Appeal) Nos. 1014 of 2009, 857 of 2010 & 190 to 192 of 2012, W.A. No. 471 of 2010, it is held that in the case of a composite housing project, where there are eligible and ineligible units, the assessee can claim deduction u/s. 80IB (10) in respect of eligible units in the project and even within the block, the assessee is entitled to claim proportionate relief in the units satisfying the extent of the built-up area. 4.3.5 The fourth contentions of the CIT(A) is that the assessee is actually taking up civil contract work/work contract from its Managing Director and on behalf of the individual flat owners and, therefore, in term of this explanation 10 also, the assessee is not eligible for deduction u/s. 80IB(10) is factually incorrect. The assessee "Kalpaka Builders Pvt. Ltd." is a builder/developer and has already developed many housing projects including "Kalpaka Gardens". The assessee company has single handedly developed the project "Kalpaka Gardens". The Managing Director of the company has not entrusted any civil work to the company. If the Managing Director had entrusted civil work to the company, th....
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....ble revenue expense and being not expended or, laid out, wholly and exclusively, for the business purpose. So the said expense of Rs.865000/- is disallowed and added back to income." 5.1 On further appeal, the CIT(A) confirmed the findings of the Assessing Officer. The relevant observation of the CIT(A) reads as follows: "7.3 I have gone through the assessment order and the submissions of the assessee. It is seen that it is one time compensation paid to different people and Residents Association for getting obstruction on the construction of building removed. In addition to this, the amounts were paid to some other people's flats to whom damage was being caused by the assessee's project. I agree with the stand of the Assessing Officer that such payments of compensation cannot be treated as revenue expenses as they are one time payments and hence the Assessing Officer is correct in disallowing the same. " 5.2. Aggrieved, the assessee is in appeal before us. The Ld. AR reiterated the submissions made before the CIT(A). On the other hand, the Ld. DR supported the orders of the income tax authorities. 5.3 We have heard the rival submissions and perused the material on reco....
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.... in a commonsense way having regard to the business realities. 5.3.1 In the case of Associated Builders and Land vs. Department of Income Tax in I.T.A. No. 5439/Mum/2009 for the assessment year 2006-07, the ITAT, Mumbai held that an amount of Rs.13,48,260/- spent by the assessee, a partnership firm, carrying on the business of builders and developers of property, to construct alternative accommodation for the sitting tenant Mr. L.B. Kathare is a REVENUE EXPENDITURE. In the above case considered by ITAT, Mumbai, main intention of the firm was to develop plots of land for residential/commercial purposes but due to various problems attached with the said plots, the firm could not start the development activities even after getting the possession of the plot in the year 2000. The expenditure was incurred with a view to settle the claim of the said tenant which could have put to the assessee to a great advantage. In order to relocate the tenant, who did not vacate the plot and the project development, was not making any headway, it became necessary to relocate the tenant for whom a RCC structure was got built by the assessee. The assessee spent Rs.13,48,260 for the construction of t....