The ITO, Ward-9(1),, Ahmedabad v. M/s. Pramukh Corporation, Ahmedabad

ITA 2249/AHD/2012 | 2008-2009
Pronouncement Date: 28-09-2016 | Result: Dismissed

Appeal Details

RSA Number 224920514 RSA 2012
Assessee PAN REAOF9031S
Bench Ahmedabad
Appeal Number ITA 2249/AHD/2012
Duration Of Justice 3 year(s) 11 month(s) 20 day(s)
Appellant The ITO, Ward-9(1),, Ahmedabad
Respondent M/s. Pramukh Corporation, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-09-2016
Date Of Final Hearing 07-07-2016
Next Hearing Date 07-07-2016
Assessment Year 2008-2009
Appeal Filed On 08-10-2012
Judgment Text
A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI N.K. BILLAIYA ACCOUNTANT MEMBER ./ ITA.NO.2249/AHD/2012 / ASSTT. YEAR: 2008-2009 ITO WARD - 9(1) AHMEDABAD. VS M/S.PRAMUKH CORPORATION PARMESHWAR PARK NR. HARI DHARSHAN PARK NANI CANAL ROAD VASTRAL AHMEDABAD. PAN : AAHFP 63412 G ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI K. MADHUSUDAN SR.DR ASSESSEE BY : SHRI PARIMALSINGH PARMAR AR / DATE OF HEARING : 07/07/2016 / DATE OF PRONOUNCEMENT: 28/09/2016 $%/ O R D E R PER RAJPAL YADAV JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD.CIT(A)- XV AHMEDABAD DATED 4.7.2012 PASSED FOR THE ASSTT.Y EAR 2008-09. 2. SOLITARY SUBSTANTIAL GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN ALLOWING DEDUCTION OF RS.1 24 13 739/- UNDER SECTION 80IB(10) OF THE INCOME TAX ACT 1961. ITA NO.2249/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF DEVELOPING HOUSING PROJECT. IT HAS FIL ED ITS RETURN OF INCOME ELECTRONICALLY ON 28.9.2008 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT OF RS.1 24 13 739/-. IT EMERGES OUT FROM THE RECORD THAT TWO COOPERATIVE SO CIETIES VIZ. PARMESHWAR PARK (VASTRAL) CO-OP. HSG. SOCIETY LTD. AND ASHUTOSH (VASTRAL) CO-OP. HOUSING SOCIETY LTD HAD PURCHASED TWO PLOTS BEARING SURVEY NOS.914 AND 915 COMPRISING AREA OF 9031 SQ.M ETERS AND 9481 SQ.METERS ON 17.12.2004 AND 14.9.2005 RESPECTIVELY. SHRI R.B.PATEL ORIGINAL LAND OWNER HAD APPLIED TO THE LOCAL AUTHOR ITY FOR CONSTRUCTION OF PROJECT ON THE LAND AND THE LOCAL AUTHORITY HAS AC CORDED PERMISSION ON 27.10.2005 TO SHRI R.B. PATEL. ASSESSEE HAD ENTERE D INTO A DEVELOPMENT AGREEMENT WITH PARMESHWAR PARK (VASTRAL) CO-OP. HSG . SOCIETY LTD. AND ASHUTOSH (VASTRAL) CO-OP. HOUSING SOCIETY LTD O N 20.1.2005 AND 20.12.2005 RESPECTIVELY. THE ASSESSEE HAS ACCORDIN GLY DEVELOPED THESE PROJECTS AND CLAIMED DEDUCTION UNDER SECTION 80IB(1 0) FOR THE FIRST TIME FOR THE ASSTT.YEAR 2006-07. A DEDUCTION OF RS.60 8 8 880/- WAS CLAIMED IN THE ASSTT.YEAR 2006-07 AND RS.26 90 852/- WAS CL AIMED IN THE ASSTT.YEAR 2007-08. THESE DEDUCTIONS WERE ALLOWED TO THE ASSESSEE BECAUSE NO SCRUTINY ASSESSMENT ORDER WAS PASSED. R ETURNS OF THE ASSESSEE WERE ACCEPTED UNDER SECTION 143(1) OF THE INCOME TAX ACT. IT IS ALSO PERTINENT TO TAKE NOTE OF THE BASIC CONDITI ONS WHICH WERE REQUIRED TO BE SATISFIED BY A BUILDER OR AN UNDERTAKING TO C LAIM DEDUCTION UNDER SECTION 80IB(10) OF THE ACTS ARE (I) AREA OF THE L AND ON WHICH HOUSING PROJECT IS TO BE DEVELOPED MUST BE MORE THAN ONE AC RE (II) BUILT UP AREA OF WHICH UNIT MUST BE BELOW 150 SQ.FEETS (III) COM MERCIAL AREA MUST BE LESS THAN THE PRESCRIBED LIMIT (IV) PROJECT MUST B E APPROVED WITHIN THE ITA NO.2249/AHD/2012 3 PRESCRIBED TIME LIMIT AND (V) PROJECT MUST BE COMP LETED WITHIN PRESCRIBED TIME LIMIT. AS FAR AS FULFILLMENT OF TH ESE CONDITIONS IS CONCERNED THE LD.AO HAS NOT DISPUTED. HIS AREA OF DISPUTE IS THAT THE ASSESSEE WAS NOT A DEVELOPER. IT WAS ONLY A CONTRA CTOR BECAUSE HE DID NOT OWN THE LAND. THE REASONS GIVEN BY THE ASSESSE E ARE BEING SUMMARIZED BY THE LD.CIT(A) ON PAGE NO.5 OF THE ASS ESSMENT ORDER. THEY READ AS UNDER: 1. THE ASSESSEE IS NOT BOTH DEVELOPER AND BUIL DER AS REQUIRED BY THE PROVISIONS OF SECTION 80IB(10). ASSESSEE IS NOT A DEVELOPER BECAUSE THE ASSESSEE DID NOT CONCEPTUALIZE AND OWN THE PROJECT IN AS MUCH AS THE ASSESSEE IS NOT THE OWNER OF THE LAN D AND THE APPROVAL WAS NOT ISSUED TO IT BY THE LOCAL AUTHORIT Y. 2. THE ASSESSEE ENTERED INTO THE PROJECT BY A DE VELOPMENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREEMENT AND HENCE THE ASSESSEE IS MERELY A CO NTRACTOR FOR THE PURPOSES OF CONSTRUCTION OF THE PROJECT. 3. THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PUR CHASER BUT THE SOCIETIES HAD EXECUTED THE SALE DEEDS AS A SELLER. THIS ALSO PROVES THAT THE ASSESSEE WAS MERELY A CONTRACTOR/ AGENT OF THE SOCIETY. 4. AS PER THE AMENDMENT TO SECTION 80IB BY THE FINANCE ACT 2009 A WORKS CONTRACTOR WHO EXECUTES THE WORK AWAR DED BY ANY PERSON IS NOT ELIGIBLE FOR THE DEDUCTION U/S 80IB. ANY PERSON INCLUDES THE SOCIETIES WHICH IS A LEGAL ENTITY. IN THIS WAY THE LD.AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE FOR GRANT OF DEDUCTION UNDER SECTION 80IB OF THE ACT. 4. ON APPEAL THELD.CIT(A) HAS MADE A DETAILED ANAL YSIS OF THE FACTS AND CIRCUMSTANCES AND ARRIVED AT A CONCLUSION THAT THE ASSESSEES CASE IS FULLY COVERED BY THE DECISION OF THE HONBLE GUJARA T HIGH COURT ITA NO.2249/AHD/2012 4 RENDERED IN THE CASE OF CIT VS. RADHE DEVELOPERS 3 45 ITR 403. THE LD.CIT(A) HAS MADE ANALYSIS OF THE DEVELOPMENT AGRE EMENT AND DEMONSTRATED AS TO HOW THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO THOSE BEFORE THE HONBLE HIGH COURT. THE FINDING R ECORDED BY THE LD.CIT(A) READS AS UNDER: 6. I HAVE PERUSED THE FACTS OF THE CASE AS ENUMERAT ED BY A.O. IN THE ASSTT. ORDER. I HAVE ALSO PERUSED THE SUBMISSIO N AND CONTENTION OF THE APPELLANT INCLUDING THE CASE LAWS RELIED ON. AFTER CAREFUL CONSIDERATION OF FACTS SUBMISSION AND CONTENTIONS OF BOTH A.O. AS WELL AS APPELLANT I AM INCLINED TO ACCEPT THE CONT ENTION OF THE APPELLANT THAT ALL THE ELIGIBILITY CONDITIONS AS RE QUIRED U/S 80IB(10) OF THE ACT ARE NO. 10 CCB FOR ITS CLAIM U/ S 80 IB(10) OF THE ACT. THE A. FULFILLED. THE APPELLANT WAS IN POS SESSION OF AN ELIGIBLE AND VALID CERTIFICATE FROM THE CHARTERED A CCOUNTANT IN THE FORM O.'S MAIN CONTENTIONS FOR DISALLOWANCE AS MENT IONED IN PARA 2.23 DOES NOT HOLD GOOD NOW AFTER THE RECENT JUDGME NT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS (SUPRA). IMPORTANT OBSERVATION AND FINDING OF HON'BLE GUJARA T HIGH COURT CAN BE SUMMARIZED AS FOLLOWS: (A) HON'BLE GUJARAT HIGH COURT IN ITS LANDMARK JUDG EMENT DATED 13.12.2011 IN THE CASE OF RADHE DEVELOPERS SHAKTI CORPORATION AND OTHERS VS. CIT AT PARA 4 AND PARA 5 ILLUSTRATE THE BASIC FACTS OF THE CASE OF M/S. RADHE DEVELOPERS. AT PARA 7 HO N'BLE ITAT'S ORDER DATED 29.6.2007 WAS SUMMARIZED WHEREIN IT WAS HELD THAT FIRSTLY FOR DEDUCTION U/S.80LB(10) OF THE ACT IT IS NOT NECESSARY THAT THE ASSESSEE MUST BE THE OWNER OF THE LAND AND SECO NDLY LOOKING TO THE PROVISIONS CONTAINED IN SECTION 2(4) OF THE ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT BY VIR TUE OF THE DEVELOPMENT AQREEMENT AND THE AQREEMENT TO SELL TH E ASSESSEE HAD FOR THE PURPOSE OF INCOME TAX BECOME THE OWNE R OF THE LAND. (B) AT PARA 8.3 & 8.4. IT CONSIDERED HON'BLE ITAT ORDER DATED 7.11.2008 IN THE CASE OF M/S.SHAKTI CORPORATION WHE REIN HON'BLE ITAT DIFFERENTLY (DIFFERENT THAN M/S.RADHE DEVELOPE RS CASE) HELD THAT CONSIDERING THE TERMS AND CONDITIONS OF DEVELO PMENT ITA NO.2249/AHD/2012 5 AGREEMENT AND OTHER DOCUMENTS ON RECORD THE ASSESS EE HAD ACQUIRED DOMINION OVER THE LAND WHICH HE HAD DEVEL OPED BY CONSTRUCTING HOUSING PROJECT INCURRING EXPENSES AND ALSO TAKING RISKS. IT WAS HELD FURTHER BY HON'BLE ITAT THAT DED UCTION U/S.80IB(10) OF THE ACT ARE NOT TO BE GRANTED FOLLO WING RATIO OF ORDER OF M/S.RADHE DEVELOPERS WHERE THE ASSESSEE HA D ENTERED INTO AN AGREEMENT FOR A FIXED REMUNERATION AND WORK ED MERELY AS CONTRACTOR TO CONSTRUCT THE HOUSING PROJECT ON BEHA LF OF THE LAND OWNER. C) ON THE BASIS OF FACTS OF ABOVE TWO CASES AND OTH ER SIMILAR CASES THE HON'BLE GUJARAT HIGH COURT FRAMED FOLLOW ING SUBSTANTIAL QUESTION OF LAW: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE APPELLATE TRIBUNAL WAS RIGHT IN LAW IN ALLOWING DED UCTION. U/S.80IB(10) R.W.S. 801B(1) TO THE ASSESSEE WHEN TH E APPROVAL BY THE LOCAL AUTHORITY AS WELL AS COMPLETION CERTIFICA TE WAS NOT GRANTED TO THE ASSESSEE TAUT TO THE LANDOWNER AND T HE RIGHTS AND THE OBLIGATIONS UNDER THE SAID APPROVAL WERE NOT TR ANSFERABLE AND WHEN THE TRANSFER OF DWELLING UNITS IN FAVOUR OF TH E END-USERS WAS MADE BY THE LANDOWNER AND NOT BY THE ASSESSEE?' (D) AT PARA 25 HON'BLE HIGH COURT CONSIDERED VARIO US PROVISIONS OF THE TRIPARTITE AGREEMENT DATED 18.5.2000 IN' THE CASE OF M/S.RADHE DEVELOPERS. OUT OF SUCH PROVISIONS FOLLO WING CLAUSES OF THE AGREEMENT ARE IMPORTANT: CLAUSE-4. WITH THE CONSENT OF THE PARTY OF THE FIRS T (I.E. LAND OWNER) AND SECOND PART (I.E. SOCIETY) THE PARTY OF THE THIRD PART (I.E. ASSESSEE) AS A DEVELOPER AND BUILDER WANTS TO DO A PROJECT/SCHEME OF CONSTRUCTING RESIDENTIAL HOUSES H AVING AREA LESS THAN 1500 SQ.FT. FOR THE MIDDLE CLASS SOCIETY. CLAUSE-5. THE PARTY OF THE FIRST AND THE PARTY OF T HE THIRD PART HAVE EXECUTED ONE AGREEMENT OF SALE ON 18-05-2000 A CCORDINGLY ON THAT BASIS THE RIGHTS OF AGREEMENT OF SALE DATED 7-9-91 AT THE RATE OF RS.100/- PER SQ.FT. SUBJECT TO OTHER CONDIT IONS WRITTEN THEREIN ARE DECIDED TO BE PURCHASED BY THE PARTY OF THE THIRD PART. ITA NO.2249/AHD/2012 6 CLAUSE-6. IN FACT IN THE PARTY OF THE FIRST AND SEC OND PART CONFIRMING' PARTY HAVE NO NECESSARY TECHNICAL KNOWL EDGE AND. SKILL PASS THROUGH THE SAID SCHEME TO ARRANGE FOR C ONSTRUCTING RESIDENTIAL HOUSES HAVING AREA LESS THAN 1500 SQ. FT. FOR THE MIDDLE CLASS SOCIETY AND ALSO HAVE NO FINANCE TO IN VEST AS PER THE SIZE OF SCHEME AND TO REGISTER THE MEMBERS FOR THAT REQUIRED ALERTNESS AND SKILL BEING ABSENT THEY THEMSELVES AR E NOT IN A POSITION TO PLACE A PROJECT OR SCHEME ON THE LAND M ENTIONED IN SCHEDULE IN SUCH CIRCUMSTANCES TO THE PARTY OF THE THIRD PART OVER AND ABOVE THE RIGHT TO PURCHASE THE RIGHTS OF AGREE MENT OF SALE ON DT. 18-05-2000 THEY HAVE ALSO DECIDED TO GIVE ALL R IGHTS ALONG WITH CONSTRUCTING AND DEVELOPING ON THE SAID LAND MENTIO NED IN SCHEDULE BY THIS AGREEMENT DT. 18-05-2000. CLAUSE 11(3): THE SAID DEVELOPER CUM BUILDING CONT RACTOR IS AUTHORIZED TO ADMIT THE PERSONS WHO ARE WILLING TO JOIN IN THE SCHEME TO GET THE HOUSES OF FIXED AREA AND IN THIS MANNER TO ADMIT THE RESPECTIVE MEMBER IN THE SCHEME OR AT THE TIME OF ADMISSION OF SUCH MEMBER AS PER THE SCHEME THE FIXED AMOUNT OF CONTRIBUTION OF CONSTRUCTION AND OTHER AMOUNTS AND INCIDENTAL EXPENSES THAT THE ADMITTING MEMBERS SHALL HAVE TO PAY AS ADMISSION FEES THE RECEIPT OF DEPOSIT OR A CLEAR RECEIPT OF AMOUNT CONTRIBUTION SHALL HAVE TO BE GIVEN MOREOVER THE DEVELOPER CUM BUILDING CONTRACTOR HAS GIVEN FULL RIGHT AND AUTHORITY ALSO TO DECIDE THE PRICE OF HOUSES OF THIS SCHEME AND TO EXECUTE NECESSARY AGREEMENTS WITH THE PURCHASERS OF HOUSES. CLAUSE 11(11): THAT THE SAID DEVELOPER CUM BUILDING CONTRACTOR AS PER THIS SCHEME WHATEVER CONSTRUCTION HE SHALL DO ON THE LAND DESCRIBED IN SCHEDULE SHALL BE AUTHORIZED TO ALLOT TO THE RESPECTIVE MEMBER AND ALSO OUT OF THIS LAND DEDUCTING THE CONSTRUCTED LAND AND DEDUCTING THE LAND OF MARGIN AND PASSAGE WHATEVER EXCESS LAND THAT SHALL REMAIN THEN DEVELOPER CUM ITA NO.2249/AHD/2012 7 BUILDING CONTRACTOR SHALL HAVE RIGHT TO ALLOT THAT LAND. CLAUSE 11(13): AS PER THIS SCHEME DEVELOPER CUM BU ILDING CONTRACTOR HAS GIVEN INCIDENTAL LUMP SUM ESTIMATE OF PRICE FOR THE RESIDENTIAL HOUSES TO BE CONSTRUCTED BUT AS PER THE STEP-STAGE WISE DEVELOPMENT OF THE SCHEME AND AS PER THE CHANGES DEVELOPER CUM BUILDING CONTRACTOR IS AUTHORIZED TO REVISE THE ESTIMATE AND THAT SHALL ALWAYS BE AGREEABLE AND BINDING TO THE MEMBERS. CLAUSE 11(16): THE PARTY OF THE FIRST AND SECOND P ART HAVE HANDED OVER ALL THE RESPONSIBILITIES OF THE SCHEME TO THE DEVELOPER CUM BUILDING CONTRACTOR SO AT PRESENT TO THE PARTY OF THE FIRST PART AS PER RULES AND REGULATIONS HE IS GETTING F.S.I BUT IN FUTURE IF CHANGES TAKE PLACE IN RULES AND REGULATION OF F.S.I IN SUCH CIRCUMSTANCES OTHER THAN THE PRESENT SCHEME ON THE LAND IF SPECIAL CONSTRUCTION IS ALLOWED THEN FOR SUCH ADDITIONAL WORK OTHER THAN TOTAL CONSTRUCTION MADE AS PER RULES AND REGULATIONS BY GETTING PASSED THE PLANS FROM VMC. VADODARA TO DO THE CONSTRUCTION ALL THE RIGHTS AND AUTHORITIES SHALL BE WITH DEVELOPER CUM BUILDING CONTRACTOR AND THEREAFTER ALSO WHATEVER F.S.I. RIGHTS SHALL REMAIN THAT ALSO AS PER THIS AGREEMENT SHALL BE WITH THE PARTY OF THE THIRD PART. (E) AT PARA 27 HON'BLE HIGH COURT CONSIDERED VARIOU S PROVISIONS OF DEVELOPMENT AGREEMENT IN THE CASE OF M/S.SHAKTI CORPORATION. OUT OF SUCH PROVISIONS FOLLOWING CLAUSES OF THE AG REEMENT ARE IMPORTANT: 'CLAUSE -1: THAT THE PARTY OF THE SECOND PART ( ASS ESSEE) SHALL UPON OBTAINING ALL NECESSARY PERMISSIONS OVER THE S AID LAND SUCH AS NA NOC DEVELOPMENT PERMISSION RAJACHITHTHI P ERMISSION ITA NO.2249/AHD/2012 8 FOR PASSING PLANS TITLE CLEARANCE ETC. FOR MAKING THE CONSTRUCTION AND ERECT AN APARTMENT IN THE SAME CAN ORGANIZE SH OPS OFFICES FLATS AND TENEMENT SOCIETY AND CAN ENGAGE ARCHITECT IF REQUIRED CAN PREPARE PLANS AND OBTAIN THE OCCUPATION CERTIFI CATE COMPLETION CERTIFICATE CAN GET THE REVISED MAPS PR EPARED AND FOR WHICH THE COMPLETE POWERS ARE GIVEN TO THE PARTY OF THE SECOND PART. CLAUSE-4: THE PARTY OF THE SECOND PART DEVELOPERS C AN REGISTER THE MEMBERS FOR THE NEW CONSTRUCTION THAT MAY BE MA DE OVER THE SAID LAND/PROPERTY CAN ISSUE RECEIPT TO THE MEMBER S CAN ISSUE ALLOTMENT LETTER TO THE MEMBERS CAN EXECUTE THE AG REEMENT TO SALE CAN HAND OVER THE POSSESSION CAN EXECUTE TRIPARTIT E AGREEMENT BUT THE ENTIRE RESPONSIBILITY FOR THE SAME SHALL BE THAT OF THE PARTY OF THE SECOND PART. CLAUSE-7: THAT FOR THE HOUSES SHOPS FLATS ETC. TH AT ARE TO BE CONSTRUCTED OVER THE SAID LAND FOR WHICH THE PARTY OF THE SECOND PART IS TO REGISTER THEM AS MEMBERS AND CAN UPON EX ECUTING AGREEMENT TO SALE ETC. ACCEPT THE MONEY AND ISSUE R ECEIPTS TO THE MEMBERS. SAME WAY YOU CAN REMOVE ALL OBSTRUCTIONS THAT MAY COME DURING THE PERIOD OF MAKING THE DEVELOP IT. CLAUSE -10: FROM THE DATE OF THIS AGREEMENT YOU T HE PARTY OF THE PART IS BOUND TO PAY TAX LAND REVENUE SPECIAL CES S ETC. IN THE OF THE VADODARA MUNICIPAL CORPORATION GOVERNMENT SEM I IMMINENT AND WHATEVER TAX LAND REVENUE EDUCATION CESS SPECIAL CESS ETC. ARE OUTSTANDING PRIOR TO BE THE D ATE OF THIS AGREEMENT THE SAME ARE AND SHALL BE PAID BY US TH E PARTY OF THE FIRST PART AS A LAND OWNER. (F) AFTER CONSIDERING THE PROVISIONS OF SECTION 80I B(1) AND 80IB(10) IN RESPECT OF QUESTION OF OWNERSHIP OF LAN D BEING AN ESSENTIAL CONDITION FOR DEDUCTION U/S.80IB(10) OF T HE ACT HON'BLE GUJARAT HIGH COURT AT PARA 30 HELD THAT - '30. THE ESSENCE OF SUB-SECTION (10) OF SECTION 80I B THEREFORE REQUIRES INVOLVEMENT OF AN UNDERTAKING IN DEVELOPIN G AND BUILDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY. A PPARENTLY SUCH PROVISION WOULD BE AIMED AT GIVING ENCOURAGEMENT TO PROVIDING ITA NO.2249/AHD/2012 9 HOUSING UNITS IN THE URBAN AND SEMIURBAN AREAS WHE RE THERE IS PERENNIAL AND ACUTE SHORTAGE OF HOUSING PARTICULAR LY FOR THE MIDDLE INCOME GROUP CITIZENS. TO ENSURE THAT THE BE NEFIT REACHES THE PEOPLE CERTAIN CONDITIONS WERE PROVIDED IN SUB -SECTION(10) SUCH AS SPECIFYING DATE BY WHICH THE UNDERTAKING MU ST COMMENCE THE DEVELOPING AND CONSTRUCTION WORK AS ALSO PROVID ING 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 W OULD RECEIVE THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT.' (G) FURTHER CONSIDERING VARIOUS CLAUSES TERMS AND CONDITIONS OF DEVELOPMENT AGREEMENT IN BOTH THE LEADING CASES VIZ . M/S.RADHE DEVELOPERS AND M/S.SHAKTI CORPORATION HON'BLE GUJA RAT HIGH COURT AT PARA 34HELDTHAT- '34. WE HAVE REPRODUCED RELEVANT TERMS OF DEVELOPME NT AGREEMENTS IN BOTH THE SETS OF CASES. IT CAN BE SEE N FROM THE TERMS AND CONDITIONS THAT THE ASSESSEE HAD TAKEN FULL RES PONSIBILITIES FOR EXECUTION OF THE DEVELOPMENT PROJECTS. UNDER THE AG REEMENTS THE ASSESSEE HAD FULL AUTHORITY TO DEVELOP THE LAND AS PER HIS DISCRETION. THE ASSESSEE COULD ENGAGE PROFESSIONAL HELP FOR DESIGNING AND ARCHITECTURAL WORK. ASSESSEE WOULD EN ROLL MEMBERS AND COLLECT CHARGES. PROFIT OR LOSS WHICH MAY RESUL T FROM EXECUTION OF THE PROJECT BELONGED ENTIRELY TO THE A SSESSEE. IT CAN THUS BE SEEN THAT THE ASSESSEE HAD DEVELOPED THE HO USING PROJECT THE FACT THAT THE ASSESSEE MAY NOT HAVE OWNED THE LAND WOULD BE OF NO CONSEQUENCE.' (H) AT PARA 36 THE HON'BLE HIGH COURT EXAMINED THE EFFECT OF EXPLANATION OF SECTION 80IB(10) INTRODUCED WITH RET ROSPECTIVE EFFECT FROM 1.4.2001 AND HELD THAT - '36. WE HAVE NOTED AT SOME LENGTH THE RELEVANT TER MS AND CONDITIONS OF THE DEVELOPMENT AGREEMENTS BETWEEN TH E ASSESSEES AND THE LAND OWNERS IN CASE OF RADHE DEVELOPERS. WE ALSO NOTED THE TERMS OF THE AGREEMENT OF SALE ENTERED INTO BET WEEN THE PARTIES. SUCH CONDITIONS WOULD IMMEDIATELY REVEAL THAT THE O WNER OF THE LAND HAD RECEIVED PART OF SALE CONSIDERATION. IN LI EU THEREOF HE HAD GRANTED DEVELOPMENT PERMISSION TO THE ASSESSEE. HE HAD ALSO ITA NO.2249/AHD/2012 10 PARTED WITH THE POSSESSION OF THE LAND. THE DEVELOP MENT OF THE LAND WAS TO BE DONE ENTIRELY BY THE ASSESSEE BY CON STRUCTING RESIDENTIAL UNITS THEREON AS PER THE PLANS APPROVED BY THE LOCAL AUTHORITY. IT WAS SPECIFIED THAT THE ASSESSEE WOULD BRING IN TECHNICAL KNOWLEDGE AND SKILL REQUIRED FOR EXECUTIO N OF SUCH PROJECT. THE ASSESSEE HAD TO PAY THE FEES TO THE AR CHITECTS AND ENGINEERS. ADDITIONALLY ASSESSEE WAS ALSO AUTHORIZ ED TO APPOINT ANY OTHER ARCHITECT OR ENGINEER LEGAL ADVISER AND OTHER PROFESSIONALS. HE WOULD APPOINT SUB-CONTRACTOR OR L ABOUR CONTRACTOR FOR EXECUTION OF THE WORK. THE ASSESSEE WAS AUTHORIZED TO ADMIT THE PERSONS WILLING TO JOIN THE SCHEME. TH E ASSESSEE WAS AUTHORISED TO RECEIVE THE CONTRIBUTIONS AND OTHER D EPOSITS AND ALSO RAISE DEMANDS FROM THE MEMBERS FOR DUES AND EXECUTE SUCH DEMANDS THROUGH LEGAL PROCEDURE. IN CASE FOR SOME REASON THE MEMBER ALREADY ADMITTED IS DELETED THE ASSESSEE WO ULD HAVE THE FULL RIGHT TO INCLUDE NEW MEMBER IN PLACE OF OUTGOI NG MEMBER. HE HAD TO MAKE NECESSARY FINANCIAL ARRANGEMENTS FOR WH ICH PURPOSE HE COULD RAISE FUNDS FROM THE FINANCIAL INSTITUTION S BANKS ETC. THE LAND OWNERS AGREED TO GIVE NECESSARY SIGNATURES AG REEMENTS AND EVEN POWER OF ATTORNEY TO FACILITATE THE WORK OF TH E DEVELOPER. IN SHORT THE ASSESSEE HAD UNDERTAKEN THE ENTIRE TASK OF DEVELOPMENT CONSTRUCTION AND SALE OF THE HOUSING UNITS TO BE LO CATED ON THE LAND BELONGING TO THE ORIGINAL LAND OWNERS. IT WAS ALSO AGREED BETWEEN THE PARTIES THAT THE ASSESSEE WOULD BE ENTITLED TO USE THE FULL FSI AS PER JHE EXISTING RULES AND REGULATIONS. HOWEVER F UTURE RULES BE AMENDED AND ADDITIONAL FSI BE AVAILABLE ASSESSEE W OULD HAVE THE FULL RIGHT TO USE THE SAME ALSO. THE SALE OF THE UN ITS ALLOTTED BY THE ASSESSEE IN FAVOUR OF THE MEMBERS WOULD BE APPROPRI ATED TOWARDS THE LAND PRICE. EVENTUALLY AFTER PAYING OFF THE LAN D OWNER AND THE ERSTWHILE PROPOSED PURCHASERS THE SURPLUS AMOUNT WOULD REMAIN WITH THE ASSESSEE. SUCH TERMS AND C ONDITIONS UNDER WHICH THE ASSESSEE UNDERTOOK THE DEVELOPMENT PROJEC T AND TOOK OVER THE POSSESSION OF THE LAND FROM THE ORIGINAL O WNER LEAVES LITTLE DOUBT IN OUR MIND THAT THE ASSESSEE HAD TOTA L AND COMPLETE CONTROL OVER THE LAND IN QUESTION. THE ASSESSEE COU LD PUT THE LAND TO USE AS AGREED BETWEEN THE PARTIES. THE ASSESSEE HAD FULL AUTHORITY AND ALSO RESPONSIBILITY TO DEVELOP THE HO USING PROJECT BY NOT ONLY PUTTING UP THE CONSTRUCTION BUT BY C ARRYING OUT VARIOUS OTHER ACTIVITIES INCLUDING ENROLLING MEMBERS ACCEPTING MEMBERS CARRYING OUT MODIFICATIO NS ENGAGING ITA NO.2249/AHD/2012 11 PROFESSIONAL AGENCIES AND SO ON. MOST SIGNIFICANTLY THE RISK ELEMENT WAS ENTIRELY THAT OF THE ASSESSEE. THE LAND OWNER AGREED TO ACCEPT ONLY A FIXED PRICE FOR THE LAND IN QUESTI ON. THE ASSESSEE AGREED TO PAY OFF THE LAND OWNER FIRST BEFORE APPRO PRIATING ANY PART OF THE SALE CONSIDERATION OF THE HOUSING UNITS FOR HIS BENEFIT. IN SHORT ASSESSEE TOOK THE FULL RISK OF EXECUTING THE HOUSING PROJECT AND THEREBY MAKING PROFIT OR LOSS AS THE CASE MAY B E. THE ASSESSEE INVESTED ITS OWN FUNDS IN THE COST OF CONSTRUCTION AND ENGAGEMENT OF SEVERAL AGENCIES. LAND OWNER WOULD RECEIVE A FIX PREDETERMINED AMOUNT TOWARDS THE PRICE OF LAND AND WAS THUS INSUL ATED AGAINST ANY RISK.' (I) AFTER CONSIDERING THE HON'BLE BOMBAY HIGH COURT JUDGEMENT IN THE CASE OF CIT VS. GLENMARK PHARMACEUTICALS LTD . (2010) 324 ITR 199 UNDER THE HEAD 'CONTRACT OF WORK OR A CONTR ACT OF SALE' AND HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF S TATE OF ANDHRA PRADESH VS. M/S. KONE ELEVATORS (L)LTD. AIR 2005 SC 1581 THE HON'BLE GUJARAT HIGH COURT AT PARA 38 HEL D THAT - '38. IN THE PRESENT CASE AS ALREADY HELD THE ASSES SEE HAD UNDERTAKEN THE DEVELOPMENT OF HOUSING PROJECT AT IT S OWN RISK AND COST. THE LAND OWNER HAD ACCEPTED ONLY THE FULL PRI CE OF THE LAND AND NOTHING FURTHER. THE ENTIRE RISK OF INVESTMENT AND EXPENDITURE WAS THAT OF THE ASSESSEE. RESULTANTLY PROFIT AND L OSS ALSO WOULD ACCRUE TO THE ASSESSEE ALONE. IN THAT VIEW OF THE M ATTER THE ADDITION OF THE EXPLANATION TO SECTION 80IB H RETRO SPECTIVE EFFECT OF 1.4.2001 WOULD HAVE NO MATERIAL BEARING IN E CAS ES ON HAND. WE MAY RECALL THAT THE SAID EXPLANATION INTRODUCED BY FINANCE (NO.2)ACT 2009 PROVIDED AS UNDER:- [EXPLANATION- FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY T O ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTR AL OR STATE GOVERNMENT)].' (J) FINALLY AFTER CONSIDERING THE RATIO OF VARIOUS CASE LAWS RELIED ON BY REVENUE AT PARA 45 AND 46 HON'BLE GUJARAT HI GH COURT CONCLUDED THAT- ITA NO.2249/AHD/2012 12 '45. UNDER THE CIRCUMSTANCES WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR IN HOLDING THAT THE ASS ESSEES WERE ENTITLED TO THE BENEFIT UNDER SECTION 80IB(10) OF T HE ACT EVEN WHERE THE TITLE OF THE LANDS HAD NOT PASSED ON TO T HE ASSESSEES AND IN SOME CASES THE DEVELOPMENT PERMISSIONS MAY ALSO HAVE BEEN OBTAINED IN THE NAME OF THE ORIGINAL LAND OWNERS. 46. WE FIND THAT IT IS NOT EVEN THE CASE OF THE REV ENUE THAT OTHER CONDITIONS OF SECTION 80IB OF THE ACT WERE NOT FULF ILLED. WE THEREFORE ANSWER THE QUESTION IN FAVOUR OF THE ASS ESSEE AND AGAINST THE REVENUE AND DISPOSE OF ALL APPEALS ACCO RDINGLY.' THE FACTS OF THE APPELLANT ARE IDENTICAL WITH THE C ASES DEALT BY HON'BLE GUJARAT HIGH COURT. EVEN THE CONTENTION RAI SED BY THE AO ALONG WITH RELIANCE OF VARIOUS JUDICIAL AUTHORITIES ARE IDENTICAL. THEREFORE FOLLOWING THE RATIO OF HON'BLE GUJARAT HI GH COURT IN THIS CASE THE DISALLOWANCE AND THEREBY ADDITIONS M ADE BY THE AO IN THE CASE OF THE APPELLANT ARE NOT JUSTIFIED AND DIRECTED TO BE DELETED. APPELLANT GETS RELIEF OF RS.1 24 13 739. OTHER GROUNDS RELATED TO CHARGING OF INTEREST U/S. 234B OF THE ACT IS THEREFORE CONSEQUENTIAL IN NATURE WHILE IN RESPECT OF INITIATION OF PENALTY U/S.271(1)(C) OF THE ACT IS P REMATURE TO BE ADJUDICATED HENCE DISMISSED. 6. BEFORE US THE LD.DR RELIED UPON THE ORDER OF TH E AO WHEREAS THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER O F THE LD.CIT(A). 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. A PERUSAL OF SECTION 80IB(10) WO ULD INDICATE THAT IT PROVIDES DEDUCTION AT THE RATE OF 100% OF THE PROFI TS DERIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR FOR T HE DEVELOPMENT AND BUILDING OF A HOUSING PROJECT. IT PUTS CERTAIN CON DITIONS VIZ. PROJECT AREA MUST BE COMPRISED IN ONE ACRE OF LAND BUILDING ARE A OF THE FLAT MUST NOT BE MORE THAN 1500 SQ.FEETS. COMMERCIAL AREA MUST B E LESS THAN ITA NO.2249/AHD/2012 13 PRESCRIBED LIMIT. THE PROJECT SHOULD BE APPROVED W ITHIN THE PRESCRIBED TIME LIMIT AND IT SHOULD BE COMPLETED WITHIN THE PR ESCRIBED TIME LIMIT. THE PROJECT IS TO BE APPROVED BY THE LOCAL AUTHORIT Y AND ITS COMPLETION CERTIFICATE HAS ALSO TO BE ISSUED BY THE LOCAL AUTH ORITY. AS FAR AS THESE CONDITIONS ARE CONCERNED THE LD.AO HAS NOT RAISED A NY DISPUTE IN THE PRESENT CASE. THE LD.AO WAS OF THE VIEW THAT DEDUC TION UNDER SECTION 80IB(10) OF THE ACT ADMISSIBLE TO THE DEVELOPER AND NOT CONTRACTOR WHO CONSTRUCTED BUILDING ON FIXED PERCENTAGE OF REMUNER ATION. FROM THE ANALYSIS OF THE DEVELOPMENT AGREEMENT HE INFERRED THAT THE ASSESSEE ACTED AS A CONTRACTOR NOT AS A DEVELOPER. HIS REAS ONING IS BASED ON TWO CIRCUMSTANCES VIZ. ASSESSEE NEVER BECAME OWNER OF THE LAND AND THUS IT HAS NOT ACQUIRED DOMINANT CONTROL OVER THE LAND. T HE SECOND REASON WAS GIVEN THAT THE ASSESSEE HAS NOT GOT APPROVAL FROM T HE MUNICIPAL AUTHORITY. IT WAS MR.R.B. PATEL WHO WAS THE ORIGI NAL OWNER. 8. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES W E HAVE NOT ONLY GONE THROUGH THE ORDER OF THE CIT(A) WHO HAS LOOKE D INTO THESE ASPECTS BUT ALSO PERUSED AGREEMENT ENTERED INTO BY THE ASSE SSEE WITH BOTH THE COOPERATIVE SOCIETIES. COPIES OF THESE AGREEMENT S ARE AVAILABLE ON PAGE NOS.27 TO 52 OF THE PAPER BOOKS. PERUSAL OF S OME OF CLAUSES VIZ. 4.4 5.3 9.1 6.6 AND 10.3 WOULD INDICATE THAT THE ASSESSEE HAS DOMINANT CONTROL OVER THE PROJECT. IT HAS TAKEN ALL THE DEC ISIONS FOR DEVELOPMENT OF THE PROJECT AND RISK AND PROFIT ARISING OUT OF T HE PROJECTS WOULD BE BORNE BY THE ASSESSEE. THE ASSESSEE WAS AUTHORIZED TO HOLD LAND DEVELOPMENT OF THE PROJECT. IT WAS ALSO AUTHORIZED TO REMAIN IN POSSESSION TILL SCOPE AND PURPOSE OF HOUSING PROJEC TS ARE ACHIEVED AND AMOUNTS TO BE RECOVERED FROM THE MEMBERS ARE RECEIV ED. THE ASSESSEE ITA NO.2249/AHD/2012 14 WAS ENTITLED TO ADVERTISE THE PROJECT AND ALSO ENRO LL NEW MEMBERS. AFTER MAKING A DETAILED ANALYSIS OF THESE ASPECTS WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS NOT COMMITTED ANY ERROR WHILE APPRECI ATING THE FACTS OF THE CASE. THE LD.CIT(A) HAS RIGHTLY PLACED ITS REL IANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN HOLDING TH AT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80IB(10) OF TH E ACT. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A). ACCOR DINGLY APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 28 TH SEPTEMBER 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER