TaxTMI 
TaxTMI 
2025 (2) TMI 1574
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.... passed on 30.03.2017 and the present appeal was filed on 12.01.2024. The assessee has mentioned "date of service or communication of order" as 29.12.2023 in Form No. 36 (Appeal Memo) and accordingly claims that the present appeal has been filed within the prescribed period of 60 days. Shri Harsh Malhotra, partner of assessee-firm, has filed an affidavit on Page 146 of Paper-Book of AY 2007-08 / Page 165 of Paper-Book of AY 2009-10, making a solemnised averment that the impugned order was served upon assessee on 29.12.2023 only after making an application. Ld. DR appearing for revenue was directed, vide order-sheet dated 27.05.2024, to verify assessee's averment. Pursuant to this, Ld. DR submitted a report of AO dated 12.07.2024. Ld. DR narrated that the AO has sent despatch register but it does not indicate about service of impugned order. Ld. DR accepts that nothing can be made out from despatch register regarding service of order upon assessee. Further, the AO has stated in his report "As per available records, the CA for Vaishali Developers and Builders has received the order on 29.12.2023". Therefore, the date of service claimed by assessee as 29.12.2023 is not disputed and th....
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....projects namely "Vaishali Nagar" and "Vijay Nagar" because Tax Auditors of the appellant had given one single audit report for the appellant firm and they had not certified the project wise profit and therefore the deduction for the project "Vijay Nagar" could not be allowed to the appellant in-spite of the fact that the project "Vijay Nagar" is fulfilling all the conditions mentioned in the section 80-IB(10). 4. That on the facts and in the circumstances of the case and in law the learned CIT(A) erred in affirming the view of the AO that the project approval certificate, in respect of the project "Vaishali Nagar", was not in the name of the appellant firm and it was in the name of land owners i.e. Shri Hemant Kumar Malaviya. Similarly the completion certificate, in respect of the project "Vaishali Nagar", was also not in the name of the appellant firm but in the name of Shri Hemant Kumar Malaiya, and hence, disallowed the deduction claimed u/s. 80-IB(10) of the I.T. Act by the appellant. 5. That on the facts and in the circumstances of the case and in law the learned CIT(A) erred in affirming the view of the AO that the appellant is not selling any constructed pr....
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....ned CIT(A) be quashed and the exemption as claimed u/s. 80-IB(10) be kindly allowed. 3. That on the facts and in the circumstances of the case, and in law the learned CIT(A) erred in affirming the view of the AO that "the appellant had acted merely as a contractor after selling the plot and not as a developer. Therefore the appellant was not eligible for claiming deduction u/s. 80-IB(10) on the profits claimed from this project". 4. That on the facts and in the circumstances of the case and in law the learned CIT(A) erred in rejecting the claim u/s. 80-IB(10) of the I.T. Act, of the appellant mentioning that the appellant had acted as a contractor and not as a Developer and Builder, for the only reason that the appellant had not registered the sale deeds in favor of the customers for the full value of the units as agreed amongst them. 5. That on the facts and in the circumstances of the case and in law the learned CIT(A) erred in holding the view that "It cannot be said that the appellant firm has derived profit from the business of developing and building housing project as per section 80-IB(10) of the I.T. Act", therefore disallowed the deduction claime....
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....tically transferred to the purchaser without any demur. 2. That the seller firm to the best of their knowledge has already paid all taxes, assessments cesses and other taxes to the dept. concerned and no payment of any kind of such taxes are payable on the date of this deed. In future plot owner shall pay all taxes and dues which is liable to different department. However, if any such dues are found prior to the date of execution of this deed, the seller firm shall be responsible to make such payments thereof to the department concerned. In case the purchaser makes such payments, he/she will have the right to recover the same from the seller firm. 3. That the seller further declare that due to any defect in the title over the plot under reference and it goes away from the title of the purchaser, the seller shall be responsible to repay the total consideration which they receive from the purchaser. C. Consents from Purchaser in favour of seller: 1. That the purchaser will construct building as per standard design approved by any appropriate authority authorised or scheduled by the government for such purpose. In case if the seller firm also doing ....
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....tomers, which amounts to sale of residential unit is also not tenable. It may be pertinent to note that the agreement entered with the customers by the appellant was not registered under the Registration Act, 1908. As per the Transfer of Property Act, 1882, the immovable properties can be sold only by a registered instrument as, per section 54 of this Act or as per section 53A known as part performance. However Section 17(1A) of the Registration Act, 1908, makes it clear that w.e.f. 24.09.2001, if an agreement for transfer of an immovable property for consideration is not registered under the Registration Act, it shall have no effect for the purpose of section 53A of the Transfer of Property Act, 1882. The relevant section 17(1A) of the Registration Act reads as under:- "(1A) The documents containing contracts to transfer for consideration any immovable property for the purpose of section 53A of the Transfer of Property Act 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act 2001 and if such documents are not registered on or after such commencement, then they shall have no ....
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....630/- in A.Y. 2007-08." 8. Then, the Ld. AR carried us to the order of CIT(A) upholding AO's order; the same is also re-produced below: "7. It may be noted that the identical issue was involved in immediate preceding assessment years in the case of the appellant. The Ld. CIT (A) had confirmed the disallowance u/s. 80-IB of the Act for the A.Y. 2008-09, 2010-11, 2011-12 holding that the appellant was not entitled for deduction u/s. 80-IB(10) of the Act on this project relying on the decision of the Hon'ble ITAT, Indore Bench in the case of Sky Builders & Developers Vs. ITO-1(1), Bhopal [2011] 14 taxmann.com 78 (Indore). 8. The facts involved in the years under consideration are identical to the facts involved in immediate preceding A.Y. 2008-09, Α.Υ. 2010-11 and A.Y. 2011-12. The appellant during the assessment and appellate proceedings has not been able to bring out any new facts which could dispute the findings of the A.O. that the appellant does not fulfil the conditions as required under the provisions of section 80-IB(10) of the Act. It is evidently clear that the appellant had acted merely as a contractor after selling the plots and not a....
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....orrect facts/evidences of the projects undertaken by assessee as under: (i) Vaishali Nagar project: (a) This project was developed over a land having area of 8.390 acres at Khasra No. 49/4, 49/7 & 49/8, Village-Chopra Kurd, District-Damoh. (b) The land was owned by "Malviya family" but the project was developed by assessee. An idea was conceived to develop a housing project and to materialise this idea, a "Development Agreement" was executed between (i) land-owners alongwith one technical person (all these persons then became partners in assessee-firm), and (ii) assessee-firm. Copy of "Development Agreement" is filed at Pages 139-145 of Paper-Book of AY 2007-08. The important covenants agreed in "Development Agreement" are re-produced below: "This Development Agreement is entered by and amongst: (1) XX (2) XX (3) XX (4) XX Hereinafter referred to as "THE LAND OWNERS" ..... AND Vaishali Developers and Builders, a partnership firm, ......Hereinafter referred as "THE DEVELOPERS" .... AND WHEREAS the land owners owns a piece of Land admeasuring 8.55 acres at Khasra No. 49/4, 49/7 & 49/8 a....
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.... shall obtain the residential use permission from the competent authority within a reasonable time. That immediately after the Execution of this agreement, the developer shall start the Procedure obtaining of residential Use Permission for the said land. 5. That after obtaining of Residential Use Permission, the developers shall get the plans sanctioned from the T&CP Office, Sagar for the development of the said land. The development of land shall mean construction of Houses with all the requisite infrastructure and amenities like road, drainage, water supply, electricity, etc. 6. The development of all the infrastructure facilities on the said land shall be the responsibility of the party of the second part and the party of the second part shall execute all such things on their own cost. Although the permissions/ approvals shall be in the name of the party of the first part, all the costs shall be borne by the party of the second part. XXX 12. That the marketing of the project shall be totally be the responsibility of the party of the second part and party of the first part shall not interfere in this and upon identifying the customers for the p....
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....d party fails to pay the land cost and construction amount within time hereby mentioned above, the second party will have full right and authority to cancel the allotment of the said plot, to change the plot No., to change the plot size, to change the land cost and to change the construction cost. Third party, irrevocably give his/her/their consent to the second party to take such any decision at that moment. Third party also agree that he/she/they will have no right to lodge any complaint or claim for getting the above said plot, at above said land and construction cost, if he/she/they fails to pay the abovesaid amounts within time mentioned above. XXX 7. That, third party will not claim and shall not be entitled for claiming the possession of the House or the aforesaid land, until and unless the instalments of the construction cost are paid regularly upto the last. 8. That the second party will be entitled to hold the title deeds and possession of the land and constructed structure thereon, till the full and final payment of the construction by the third party, and after receiving the full consideration and completing the construction, second party will....
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....upees One lac and thirty seven thousand only) and construction cost is Rs. 6,58,000/- (Rupees six lacs and fifty eight thousand only). The plot cost of Rs. 1,37,000/- is payable before 30th June 2007 and construction cost is payable as per schedule given herewith in clause No. 4. XXX WHEREAS The second party after completing the construction and receiving the full amount of consideration will hand over the possession of the land and the house to the second party. WHEREAS The second party will not claim the title and the possession rights on the said land and the house the full and final payment of construction cost to the first party. NOW THEREFORE THIS INDENTURE BETWEEN PARTIES AFOREMENTIONED WITNESSETH: XXX 3. That the first party has been agreed to construct the building as per plan and the specification attached to this agreement (Map Annexure I and Specification annexure II) and the second party is agree to pay the construction cost of Rs. 6,58,000/- (Rupees six lacs and fifty eight thousand only) as per following schedule: XXX 4. That the second party hereby expressly agreed, that in cas....
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....hat the assessee shall develop project with all requisite infrastructure and amenities like road, drainage, water supply, electricity, etc. at its own responsibility and cost, (vii) that the marketing shall be done by assessee, (viii) that the assessee shall handover possession of ready house to customers. However, in the case of "Vijay Nagar" project, there was no need of executing any Development Agreement since the land belonged to assessee itself. (b) That the assessee sold residential units to customers and for this purpose, "Tri-parti Agreements" were executed in case of "Vaishali Nagar" project and "Bi-Parte Agreements" were executed in case of "Vijay Nagar" project. The covenants of these agreements clearly reveal (i) that the assessee was a developer of project, (ii) that the assessee shall, after completing the construction and receiving full payment of consideration, hand over possession of land and house to buyer, (iii) that the buyer will not claim the title and the possession on the land and house till full and final payment of construction cost, (iv) that the house shall be constructed as per plan and specification, (v) that if the buyer fails to pay the lan....
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....fference in contractorship and assessee's case as is clearly discernible from assessee's facts and this difference was also pointed out to AO during assessment-proceedings, refer Page No. 4 of assessment-order: Sr. Essentials of Contractor Case of Assessee A A Contractor is being appointed by the person who wants to get the work done. Assessee identifies the customers by advertisement, publicity or otherwise. B A Contractor is the person who works for any person and according to the instructions and to the satisfaction of the person appointing him. The assessee does not work as per instructions of the customers, rather the customers agree to buy the house built as per the specification of the assessee, which is being evident from the Agreement entered by the customers which clearly mentions the specification of the house being built up by the assessee. C A Contractor starts the work after his appointment and virtually makes no investment of his own. Assessee had made his own investment in establishing the infrastructure much before he identified the customers and even after executing the sale- deed of plot. The construction work is started by the....
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....e Agreements for construction, which indicates that the assessee functioned as a 'contractor' rather than 'builder/developer'. Ld. DR submitted that this situation disentitles the assessee from claiming deduction as held by ITAT, Indore in Sky Builders (supra) relied by AO. 14. We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. The controversy in present case is very narrow and specific. The assessee has claimed deduction u/s. 80-IB(10) treating itself as engaged in the activity of developing and building housing project which the AO has rejected by concluding that the assessee is a mere work-contractor and not a developer/builder. The fundamental facts of the case are such that the assessee developed township projects called "Vaishali Nagar" and "Vijay Nagar" projects. The assessee then obtained necessary permissions from govt. authorities for development of townships which were granted. Thereafter, the assessee approached customers for sale of residential units in the township and the buyers made bookings. The assessee entered into Agreements with buyers fo....
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....essee and also in view of the letter dated 15.12.2008, issued to the ld. Assessing Officer, no certificate was issued to the assessee, therefore, it can be clearly inferred that the assessee is not eligible for deduction u/s. 80IB(10) of the Act. So far as the reliance of the Ld. Counsel for assessee in the case of M/s. D.K. Construction vs. ITO (ITA No.243/Ind/2010, order dated 6.12.2010) passed by the Indore Bench, is concerned, firstly, we find that in this case, the completion-certificate was issued to the assessee clearly mentioning the date of the project but in the present appeal, even till date, no such certificate was issued and secondly, the assessee sold the plots to the respective customers by registering a sale- deed and thereafter the assessee constructed the building on agreed price, therefore, the assessee acted as building contractor and not as a developer, consequently, this decision may not help the assessee. Sometimes, the process of issuance of certificate may take time, therefore, for claiming eligibility of deduction as per Explanation (2) of sec. 80IB(10)(a) of the Act, the crucial aspect is the date mentioned in the letter certifying completion of project. ....
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....than the amount mentioned in the registered sale-deed. The Assessing Officer also observed that the registered sale deed mentions that the plots have been sold at structure level. Thus, the difference of agreed sale price and the sale-deed price is the contract receipts. Accordingly, he held that the assessee is a contractor and not a developer. We have carefully gone through the agreement executed by the assessee with the buyers wherein structure was sold just to enable the buyers to take loan against it. However, possession was to remain with the assessee who alleged to carry out the complete construction of the building thereon as per the approved plan. The relevant clause 17 of the agreement reads as under: "But in that case for all practical purposes the actual and physical possession of the said apartment shall continue to remain with the builders only and the builders shall have a lien over the said apartment until the entire balance payment is made to the builders either by the purchaser or by his/her financer. Therefore, it is clearly understood and agreed by the purchaser that such sale-deed will be executed by the builders only to facilitate the purchaser to get....
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....evenue in the case of Sky Builders (supra), we find that in that case only the plots were sold to the purchasers and not the constructed area. Various documents submitted before us including sanction from the Municipal Corporation and the completion certificate and other documents establish that the registries of the structure were made only to facilitate the housing loan to the purchasers. The initial agreement clearly provided that after receiving the sale consideration, the registration for structure/semi-finished/finished flats/bungalows may be done whenever the purchaser desires. Even after execution of the registration of sale-deed of structure/semi-finished/ finished flats/bungalows, the possession shall remain with the seller till full payment is made. All these facts suggest that the assessee was a developer and it has never worked as a contractor on behalf of the purchasers. We also get support from the decision of the ITAT in the case of Paras Housing (supra) and Vardhman Builders & Developers (supra). Our this view is also supported by the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Radhe Developers (supra) wherein the Hon'ble High Court ha....
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.... search u/s. 132 of the Act to establish disallowance of deduction u/s. 80IB(10). Further, we find that the claim of deduction u/s. 80IB(10) was already a subject matter of regular assessments in preceding years. In the A.Y. 2004- 05 to 2007-08 the deduction was impugned before this Tribunal and the same was decided in favor of assessee and copy of order is placed at PB 438-447. Further, in A.Y. 2007-08, the issue of deduction was disallowed again in proceedings u/s. 147. The matter again travelled before this Tribunal and in ITA No. 472 & 473/Ind/2015, vide order dated 08.01.2019 deduction u/s. 80IB(10) of the Act was allowed. The order has been placed in the assessee's paper book at PB 125-145. Further in A.Y. 2008-09, which is impugned before us, the assessment was completed u/s. 143(3) and the claim of deduction u/s. 80IB(10) was allowed by the Ld. AO (The Assessment order is placed at PB 45-46). Also, in A.Y. 2009-10, the claim was allowed in the assessment u/s. 143(3) by the Ld. AO. The Assessment order is placed at PB 69-70. In A.Y. 2010-11, the issue of developer and contractor travelled to ITAT. The claim was allowed by the ITAT, Indore Bench, Indore and the order....
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.... to the fact that after the completion of construction possession of the residential house is given to the buyers/colonizers. 26. However, the Coordinate Bench Ahmedabad in the case of Green Associates (supra) dealing with the similar issue and identical set of acts and placing reliance on the decision of Tribunal in the case of Narayan Reality Ltd. ITANo.2293/Ahd/2012 and others dated 02.05.2014 held that the assessee is a developer eligible for deduction u/s. 80IB(10) of the Act observing as follows: "We have heard the rival submission and perused the material on record. We find that in the present case the assessee was denied deduction u/s. 80IB(10) by Ld. CIT(A) for the reason that assessee had not sold residential houses in the house project but had sold developed residential plots with construction up to the plinth only and thus the assessee could not be considered as developer of housing project but was a contractor and therefore assessee was not eligible for deduction u/s. 80IB(10) of the Act. we find that on similar facts, in the case of Narayan Reality Ltd. (supra) the issue was decided in favor of the assessee by holding as under: "8. We have h....
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....(P.)Ltd. (2012)24 Taxman.com 194 (Hyd.) 2. Sky Builders & Developers vs. (2011)14 Taxman.com 78 ITO (Indore) 3. M/s.Vardhman Builders ITA No.559/Ind/2010 dated and Developers vs. ITO 09/05/2012 4. Raghava Estates Vs. Dy.CIT ITA Nos.248 & 49/Vizag/2009 dated 04/08/2011. 5.2. He submitted that in the case of Vardhman Builders & Developers (supra) also, the assessee had entered into a separate agreement for sale of land and separate agreement for construction of housing on such land and under these facts, it was held by the Tribunal in that case that merely because of two separate agreements, the claim of the assessee for deduction u/s. 80-IB(10) of the Act cannot be declined if other conditions are being satisfied. 5.3. He further submitted that in the case of DCIT vs. SMR Builders (P) Ltd. (supra) also, the facts were that the assessee had sold flats in a semi- finished stage. In that case, the AO had noted that as per the sale-deed, the assessee-company has sold undivided share of land with super- structure of semi-finished built-up area for a certain consideration. The AO held that thesemi-finished structure has never been considered as....
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..... Hence, the facts of this case are also similar because in that case also, the land was sold separately along with partial and unfinished construction of flats and, thereafter, construction agreement was entered into to carry out the balance construction work and under these facts, it was held by the Tribunal in that case that such agreement for construction to complete the balance work is only an incidental facilitation to protect interest of the parties and therefore, the assessee is eligible for deduction u/s. 80-IB(10) of the Act. Similarly, in the case of Raghava Estates vs. Dy.CIT (supra) on which reliance was placed by the Id.AR of the assessee, the facts are similar. In that case also, the assessee had sold the plots separately and thereafter, constructed the houses and under these facts, the Revenue held that the assessee has to be considered as a mere contractor and, therefore, the assessee is not eligible for deduction u/s. 80-IB(10) of the Act. This goes to show that the facts in that case were identical. In that case, it was noted by the Tribunal that the assessee had chosen to register the plot in the name of the buyer on payment of specified amount in order to achie....