The ITO, Ward-9(2), Ahmedabad V. M/s. Mahalaxmi Corporation, Ahmedabad

ITA 1171/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9165 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Retrospective amendment; Question of law
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1171,1172&1173/AHD/2012 / ASSTT. YEAR: 2007-2008 AND2008-2009 ITO, WARD - 9(2), AHMEDABAD VS M/S.MAHALAXMI CORPORATION, AKASH GANGA BUNGALOW, B/H. ST.MARYS SCHOOLNARODA, AHMEDABAD. PAN AANFM 7668M ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI MUKESH M. PATEL WITH SHRI JIGAR M. PATEL REVENUE BY : SHRI K. MADHUSUDAN, SR.DR / DATE OF HEARING : 04/01/2017 / DATE OF PRONOUNCEMENT: 20/02/2017 $%/ O R D E R PRESENT THREE APPEALS ARE DIRECTED AT THE INSTANCE OF REVENUE AGAINST THE SEPARATE ORDERS OF THE LD.CIT(A), AHMEDABAD, PASSED ON THE RESPECTIVE APPEALS OF THE RESPONDENT IN ASSTT.YEAR 2007-08 AND 2008-2009. 2. THOUGH THE REVENUE HAS TAKEN NOS. OF GROUNDS OF APPEAL, BUT ITS GRIEVANCE REVOLVES ROUND A SINGLE ISSUE WHERE BY IT HAS CHALLENGE ACTION OF CIT(A) FOR GRANTING DEDUCTION TO THE ASSESSEE UNDER SECTION 80IB(10) OF THE INCOME TAX, ACT. ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 2 3. IN THE CASE OF M/S. MAHALAXMI CORPORATION THE L D. FIRST APPELLANT HAS PASSED THE ORDER ON 28/03/2012 IN A.Y. 07-08. THERE AFTER, THIS ORDER HAS BEEN FOLLOWED IN A.Y. 2008-09. THUS, FACTS ON ALL VITAL POINTS ARE COMMON IN CASE OF M/S. MAHALAXMI CORPORATION. 4. SIMILARLY, IN THE CASE OF M/S. DHANLAXMI CORPORA TION THE LD. CIT(A) HAS MADE IDENTICAL DISCUSSIONS AS WAS MADE IN THE C ASE OF M/S.MAHALAXMI CORPORATION, IN THIS APPEAL ORDER WAS PASSED BY CIT (A) ON 28/03/2012. THE FACTS ACCEPT VARIATION IN THE QUANTUM AND DETAILS O F LAND ON WHICH ASSESSE HAS RAISED THECONSTRUCTIONS ARE COMMON. THEREFORE ALL,T HESE APPEAL ARE HEARD TOGETHER AND I DEEMED IT APPROPRIATE TO DISPOSED OF THEM BY THIS COMMON ORDER. 5. BRIEF FACTS IN THE CASE OF M/S.MAHALAXMI CORPORA TION ARE THAT LAND COMPRISING IN PLOT NO.91 OF THE TPS NO.40 NARODA-II HAVING AREA OF 7,059 SQ. METERS AT NARODA, AHMEDABAD WAS PURCHASED BY THE CO -OWNERS OF THE LAND I.E 1) SHRIISHWARBHAIVALJIBHAI DESAI, 2) SHRIAMRATBHAIV ALJIBHAI DESAI, 3) SMT. LILUBENVALJIBHAI DESAI, 4) SMT. MADHVIBENISHWARBHAI DESAI, 5) SMT. LAXMIBENAMARATBHAI DESAI, 6) SHRIRAJESHBHAIAMRATBHA I DESAI. 6. THE ASSESSEE FIRM HAS CONSTRUCTED HOUSING PROJEC T KNOWN AS AKASHGANGA BUNGALOW PART-II ON THIS LAND AND CLAIME D DEDUCTION UNDER SECTION 80IB(10)OF THE ACT. ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 3 7. THE LD. ASSESSING OFFICER HAS REJECTED THIS CLAI M AND REASONS ASSIGNED BY THE ASSESSING OFFICER ARE BEING SUMMARIZED BY TH E LD. CIT(A) ON PAGE 9 OF THE IMPUGNED ORDER THEY READ AS UNDER. 1. THE ASSESSEE IS NOT BOTH DEVELOPER AND BUILDER AS REQUIRED BY THE PROVISION 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 LAND AND THE APPROVAL WAS NOT ISSUED TO IT BY THE LOCAL AUTHORIT Y. 2. THE ASSESSEE ENTERED IN TO THE PROJECT BY A DEVELOP MENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREEMENT AND HENCE THE ASSESSEE IS MERELY A CONTRACTOR FOR THE PURPOSE OF CONSTRUCTION OF THE PROJECT. 3. THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURCHASER BUT THE SOCIETIES HAS EXECUTED THE SALE DEEDS AS A SELLER. THIS ALSO PROVES THAT THE ASSESSE WAS MERELY A CONTRACTOR/AGENT OF T HE SOCIETY. 4. AS PER THE AMENDMENT TO SECTION 80IB BY THE FINANCE ACT 2009, A WORKS CONTRACTOR WHO EXECUTES THE WORK AWARDED BY ANY PERSON IS NOT ELIGIBLE FOR THE DEDUCTION U/S.80IB. ANY PERSON INCLUDES IS NOT ELIGIBLE FOR THE DEDUCTION U/S.80IB . ANY PERSON INCLUDES THE SOCIETIES, WHICH IS A LEGAL ENTITY. HE MADE THEREFORE ADDITION OF RS.30,23,880/- 8. ON THE SAME ANALOGY DEDUCTION OF RS.44,38,910/- CLAIMED IN A.Y. 2008-09 ON THIS VERY HOUSING PROJECT WAS DENIED T O THE ASSESSEE. ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 4 9. IN THE CASE OF M/S.DHANLAXMI CORPORATION, THE LAND COMPRISING IN PLOT NO.135 OF TPS NO.2 SURVEY NO.968,964,970,971 AND 10 00 HAVING AREA OF 19,509 SQUARE METER WAS PURCHASED BY SAME SIX INDIV IDUALS AS IN THE CASE OF M/S.MAHALAXMI CORPORATION. THIS FIRM HAS ALSO RAISE D CONSTRUCTIONS AND CONSTRUCTED A PROJECT KNOWN AS AKASHGANGA BUNGALOW IT CLAIMED DEDUCTION OF RS.37,90,980/- UNDER SECTION 80IB(10) OF THE INC OME TAX ACT. THE LD. ASSESSING OFFICER HAS DENIED DEDUCTION BY ASSIGNING THE SAME REASON AS GIVEN IN THE CASE OF M/S.MAHALAXMICORPORATION (EXTR ACTED SUPRA). 10. ON APPEAL, THE LD. CIT (A) HAS RE-APPRECIATED THE FACTS AND ALLOWED THE DEDUCTION IN THE CASE OF BOTH THE APPELLANTS BY PUTTING RELIANCE UPON HONBLE GUJARAT HIGH COURTS IN THE CASE OF M/S. RA DHE DEVELOPERS AND M/S. SHAKTI CORPORATION. 11. BEFORE ME BOTH THE PARTIES HAVE CONCEDED TO THE FACTS THAT THE ISSUES ARE SQUARELY COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURTS IN THE CASE OF M/S.RADHE DEVELOPERS, WHEN THE AO HAS PASSED ASS ESSMENT ORDER, THISJUDGMENT HAS NOT COME AND HE HAS NOT THE BENEFI T OF THE JUDGMENT. 12. I HAVE DULY CONSIDERED RIVAL CONTENTION AND GO NE THROUGH THE RECORD CAREFULLY I FIND THAT THE LD.FIRST APPELLANT AUTHOR ITY HAS MADE LUCIDE ENUNCIATION OF LAW AND FACTS ON THIS POINT. I CANN OT DO BETTER THAN TO EXTRACT THE DETAILS FINDING RECORD BY THE FIRST LD. AUTHORI TY ON THIS ISSUE. THE FINDINGS READ AS UNDER:- 14. CONSIDERING ALL THESE FACTS, I AM INCLINES TO ACCEPT THE CONTENSION OF THE APPELLANT. ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 5 15. (A) HON'BLE GUJARAT HIGH COURT IN ITS LANDMARK JUDGEMENT 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, HON'BLE ITAT'S ORDER DATED 29.6.2007 WAS SUMMARIZED WHEREIN IT WAS HELD THAT F IRSTLY FOR DEDUCTION U/S.80IB(10) OF THE ACT IT IS NOT NECESSARY THAT TH E ASSESSEE MUST BE THE OWNER OF THE LAND AND SECONDLY LOOKING TO THE PROVI SIONS CONTAINED IN SECTION 2(47) OF THE ACT READ WITH SECTION 53A OF T HE TRANSFER OF PROPERTY ACT, BY VIRTUE OF THE DEVELOPMENT AGREEMEN T AND THE AGREEMENT TO SELL, THE ASSESSEE HAD, FOR THE PURPOSE OF INCOME TAX, BECOME THE OWNER 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 WH EREIN HON'BLE ITAT DIFFERENTLY (DIFFERENT THAN M/S. RADHE DEVELOPERS C ASE) HELD THAT CONSIDERING THE TERMS AND CONDITIONS OF DEVELOPMENT AGREEMENT AND OTHER DOCUMENTS ON RECORD, THE ASSESSEE HAD ACQUIRE D DOMINION OVER THE LAND, WHICH HE HAD DEVELOPED BY CONSTRUCTING HOUSING PROJECT INCURRING EXPENSES AND ALSO TAKING RISKS. IT WAS HELD FURTHER BY THE HONBLE ITAT THAT DEDUCTION U/S.80IB(10) OF THE ACT ARE NOT TO BE GRANTED FOLLOWING RATIO OF ORDER OF M/S.RADHE DEVELOPERS WH ERE THE ASSESSE HAD ENTERED INTO AN AGREEMENT FOR A FIXED REMUNERATION AND WORKED MERELYCONTRACTOR TO CONSTRUCT THE HOUSING PROJECT O N BEHALF OF THE LAND OWNER. (C) ON THE BASIS OF FACTS OF ABOVE TWO CASES AND OT HER SIMILAR CASES, HON'BLE GUJARAT HIGH COURT FRAMED FOLLOWING SUBSTAN TIAL 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. 80IB(1) TO ASSESSEE WHEN THE APPROVAL BY THE LOCAL AUTHORITY AS WELL AS COMPLETION CERTIFICATE WAS NOT GRANTED TO THE ASSESSEE BUT TO THE LAND OWNER AND THE RIGHTS AND THE OBLIGATIONS UNDER THE SAID APPROVAL WERE NO T TRANSFERABLE, 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 VARI OUS PROVISIONS OF THE TRIPARTITE AGREEMENT DATED 18.5.2000 IN THE CAS E OF M/S.RADHE DEVELOPERS. OUT OF SUCH PROVISIONS, FOLLOWING CLAUS ES OF THE AGREEMENT ARE IMPORTANT: ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 6 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 P ART (I.E. ASSESSEE) AS A DEVELOPER AND BUILDER WANTS TO DO A PROJECT/SCHEM E OF CONSTRUCTING RESIDENTIAL HOUSES HAVING 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 EXECU T ED ONE AGREEMENT OF SALE ON 18-05-2000 ACCORDINGLY ON THAT BASIS THE RIGHTS OF AGREEMENT OF SALE DATED 7-9-91 AT THE RAT E OF RS.100/- PER SQ.FT. SUBJECT TO OTHER CONDITIONS WRITTEN THEREIN ARE DEC IDED TO BE PURCHASED BY THE PARTY OF THE THIRD PART. CLAUSE-6. IN FACT IN THE PARTY OF THE FIRST AND SEC OND PART CONFIRMING PARTY HAVE NO NECESSARY TECHNICAL KNOWLEDGE AND SKI LL PASS THROUGH THE SAID SCHEME TO ARRANGE FOR CONSTRUCTING RESIDENTIAL HOUSES HAVING AREA LESS THAN 1500 SQ.FT. FOR THE MIDDLE CLASS SOCIETY AND ALSO HAVE NO FINANCE TO INVEST AS PER THE SIZE OF SCHEME AND TO REGISTER THE MEMBERS FOR THAT REQUIRED ALERTNESS AND SKILL BEING ABSENT THEY THEMSELVES ARE NOT IN A POSITION TO PLACE A PROJECT OR SCHEME ON THE L AND MENTIONED IN SCHEDULE IN SUCH CIRCUMSTANCES TO THE PARTY OF THE THIRD PART OVER AND ABOVE THE RIGHT TO PURCHASE THE RIGHTS OF AGREEMENT OF SALE ON DT.18-05- 2000 THEY HAVE ALSO DECIDED TO GIVE ALL RIGHTS ALON G WITH CONSTRUCTING AND DEVELOPING ON THE SAID LAND MENTIONED IN SCHEDULE B Y THIS AGREEMENT DT.18-05--2000. CLAUSE 11(3):THE SAID DEVELOPER CUM BUILDING CONTRA CTOR IS AUTHORIZED TO ADMIT THE PERSONS WHO ARE WILLING TO JOIN IN THE SC HEME TO GET THE HOUSES OF FIXED AREA AND IN THIS MANNER TO ADMIT THE RESPECTI VE MEMBER IN THE SCHEME OR AT THE TIME OF ADMISSION OF SUCH MEMBER A S PER THE SCHEME THE FIXED AMOUNT OF CONTRIBUTION OF CONSTRUCTION AND OT HER AMOUNTS AND INCIDENTAL EXPENSES THAT THE ADMITTING MEMBERS SHAL L HAVE TO PAY AS ADMISSION FEES THE RECEIPT OF DEPOSIT OR A CLEAR RE CEIPT OFAMOUNT CONTRIBUTION SHALL HAVE TO BE GIVEN, MOREOVER DEVEL OPER CUM BUILDING CONTRACTOR HAS GIVEN FULL RIGHT AUTHORITY ALSO TO D ECIDE THE PRICE OF HOUSES OF THIS SCHEME A TO EXECUTE NECESSARY AGREEMENTS WITH THE PURCHASERS HOUSES. CLAUSE 11(11): THAT THE SAID DEVELOPER CUM BUILDING CONTRACTOR AS PER THIS SCHEME, WHATEVER CONSTRUCTION HE SHALL DO ON THE LA ND DESCRIBED IN SCHEDULE SHALL BE AUTHORIZED TO ALLOT TO THE RESPEC TIVE MEMBER AND ALSO OUT OF THIS LAND DEDUCTING THE CONSTRUCTED LAND AND DED UCTING THE LAND OF MARGIN AND PASSAGE WHATEVER EXCESS LAND THAT SHALL REMAIN THEN DEVELOPER CUM BUILDING CONTRACTOR SHALL HAVE RIGHT TO ALLOT THAT LAND. ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 7 CLAUSE 11(13): AS PER THIS SCHEME DEVELOPER CUM BUI LDING CONTRACTOR HAS GIVEN INCIDENTAL LUMP SUM ESTIMATE OF PRICE FOR THE RESIDENTIAL HOUSES TO BE CONSTRUCTED BUT AS PER THE STEP-STAGE WISE DEVELOPM ENT OF THE SCHEME AND AS PER THE CHANGES DEVELOPER CUM BUILDING CONTRACTO R IS AUTHORIZED TO REVISE THE ESTIMATE AND THAT SHALL ALWAYS BE AGREEA BLE AND BINDING TO THE MEMBERS. CLAUSE 11(16):THE PARTY OF THE FIRST AND SECOND PAR T HAVE HANDED OVER ALL THE RESPONSIBILITIES OF THE SCHEME TO THE DEVELOPER CUM BUILDING CONTRACTOR SO AT PRESENT TO THE PARTY OF THE FIRST PAR 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 ADDIT IONAL WORK OTHER THAN TOTAL CONSTRUCTION MADE, AS PER RULES REG ULATIONS BY GETTING PASSED THE PLANS FROM VMC. TO DO THE CONSTRUCTION ALL THE RIGHTS AND AUTHORITIES WITH DEVELOPER CUM BUILDING CONTRACTOR AND THEREAFT ER WHATEVER F.S.I. RIGHTS SHALL REMAIN THAT ALSO AS AGREEMENT SHALL BE WITH THE PARTY OF THE THIRD PART. (E)AT PARA 27 HON'BLE HIGH COURT CONSIDERED VARIOUS PROVISIONS OFDEVELOPMENT AGREEMENT IN THE CASE OF M/S.SHAKTI C ORPORATION. OUT OF SUCH PROVISIONS, FOLLOWING CLAUSES OF THE AGREEMENT ARE IMPORTANT: CLAUSE -1:THAT THE PARTY OF THE SECOND PART ( ASSES SEE) SHA LL UPON OBTAINING ALL NECESSARY PERMISSIONS OVER THE SAID L AND SUCH AS NA, NOC DEVELOPMENT PERMISSION, RAJACHITHTHI, PERMISSION FO R PASSING PLANS, TITLE CLEARANCE, ETC. FOR MAKING THE CONSTRUCTION A ND ERECT AN APARTMENT IN THE SAME, CAN ORGANIZE SHOPS, OFFICES, FLATS AND TENEMENT SOCIETY AND CAN ENGAGE ARCHITECT IF REQUIRED, CAN PREPARE PLANS AND OBTAIN THE OCCUPATION CERTIFICATE, COMPLETION CERTIFICATE, CAN GET THE REVISED MAPS PREPARED AND FOR WHICH THE COMPLETE POWERS ARE GIVE N 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 MADE O VER THE SAID LAND/PROPERTY, CAN ISSUE RECEIPT TO THE MEMBERS, CA N ISSUE ALLOTMENT LETTER TO THE MEMBERS, CAN EXECUTE THE AGREEMENT TO SALE, CAN HAND OVER THE POSSESSION, CAN EXECUTE TRIPARTITE AGREEME NT, BUT THE ENTIRE RESPONSIBILITY FOR THE SAME SHALL BE THAT OF THE PA RTY OF THE SECOND PART. CLUASE-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 ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 8 TO REGISTER THEM AS MEMBERS AND CAN UPON EXECUTING AGREEMENT TO SALE ETC. ACCEPT THE MONEY AND ISSUE RECEIPTS TO THE MEM BERS. SAME WAY, YOU CAN REMOVE ALL OBSTRUCTIONS THAT MAY COME DURIN G THE PERIOD OF MAKING THE DEVELOP IT. CLAUSE-10:FROM THE DATE OF THIS AGREEMENT, YOU, THE PARTY OF THESECOND PART IS BOUND TO PAY TAX, LAND REVENUE, S PECIAL CESS ETC. IN THE OFFICES OF THE VADODARA MUNICIPAL CORPORATION, GOVERNMENT, SEMI GOVERNMENT AND WHATEVER TAX, LAND REVENUE, EDUCATIO N CESS, SPECIAL CESS, ETC. ARE OUTSTANDING PRIOR TO BE THE DATE OF THIS AGREEMENT, THE SAME ARE AND SHALL BE PAID BY US, THEPARTY OF THE F IRST PART AS A LAND OWNER. (F) AFTER CONSIDERING THE PROVISIONS OF SECTION 80 IB(1) AND 80IB(10) IN RESPECT OF QUESTION OF OWNERSHIP OF LAND BEING AN ESSENTIAL CONDITION FOR DEDUCTION U/S.80IB(10) OF THE ACT, HON'BLE GUJARAT HIGH COURT AT PARA 30 HELD THAT '30. THE ESSENCE OF SUB-SECTION (10) OF SECTION 80 IB, THEREFORE, REQUIRES INVOLVEMENT OF AN UNDERTAKING IN DEVELOPING AND BUI LDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY. APPARENTLY, SUCH P ROVISION 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 PROVIDE D IN SUB-SECTION(IO) SUCH AS SPECIFYING DARE BY WHICH THE UNDERTAKING MU ST 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 LOCA TED THEREON. THE PROVISIONS NOWHERE REQUIRED THAT ONLY THOSE DEVELOP ERS WHO THEMSELVES OWN THE LAND WOULD RECEIVE THE DEDUCTION UNDER SECT ION 80IB(10)OFTHEACT.' (G) FURTHER CONSIDERING VARIOUS CLAUSES, TERMS AND CONDITIONS OF DEVELOPMENT AGREEMENT IN BOTH THE LEADING CASES VIZ . IWS.RADHE DEVELOPERS AND M/S.SHAKTI CORPORATION, HON'BLE GUJA RAT HIGH COURT AT PARA 34 HELD THAT- '34. WE HAVE REPRODUCED RELEVANT TERMS OF DEVELOPM ENT AGREEMENTS IN BOTH THE SETS OF CASES. IT CAN BE SEEN FROM THE TER MS AND CONDITIONS THAT THE ASSESSEE HAD TAKEN FULL RESPONSIBILITIES FOR EX ECUTION OF THE DEVELOPMENT PROJECTS. UNDER THE AGREEMENTS, THE ASS ESSEE HAD FULL AUTHORITY TO DEVELOP THE LAND AS PER HIS DISCRETION . THE ASSESSEE COULD ENGAGE PROFESSIONAL HELP FOR DESIGNING AND ARCHITEC TURAL WORK. ASSESSEE WOULD ENROLL MEMBERS AND COLLECT CHARGES. PROFIT OR LOSS WHICH MAY RESULT FROM EXECUTION OF THE PROJECT BELONGED ENTIRELY TO THE ASSESSEE. IT CAN THUS ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 9 BE SEEN THAT THE ASSESSEE HAD DEVELOPED THE HOUSING PROJECT. THE FACT THAT THE ASSESSEE MAY NOT HAVE OWNED THE LAND WOULD BE O F 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 TE RMS AND CONDITIONS OF THE DEVELOPMENT AGREEMENTS BETWEEN THE ASSESSEES AN D THE LAND OWNERS IN CASE PFRADHE DEVELOPERS. WE ALSO NOTED THE TERMS OF THE AGREEMENT OF SALE ENTERED INTO BETWEEN THE PARTIES. SUCH CONDITI ONS WOULD IMMEDIATELY REVEAL THAT THE OWNER OF THE LAND HAD RECEIVED PART OF SALE CONSIDERATION. IN LIEU THEREOF HE HAD GRANTED DEVELOPMENT PERMISSION TO THE ASSESSEE. HE HAD ALSO PARTED WITH THE POSSESSION OF THE LAND. TH E DEVELOPMENT OF THE LAND WAS TO BE DONE ENTIRELY BY THE ASSESSEE BY CON STRUCTING RESIDENTIAL UNITS THEREON AS PER THE PLANS APPROVED BY THE LOCA L AUTHORITY. IT WAS SPECIFIED THAT THE ASSESSEE WOULD BRING IN TECHNICA L KNOWLEDGE AND SKILL REQUIRED FOR EXECUTION OF SUCH PROJECT. THE ASSESSE E HAD TO PAY THE FEES TO THE ARCHITECTS AND ENGINEERS. ADDITIONALLY, ASSESSE E WAS ALSO AUTHORIZED TO APPOINT ANY OTHER ARCHITECT OR ENGINEER, LEGAL ADVI SER 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. THE ASSESSEE WAS AUTHOR ISED TO RECEIVE THE CONTRIBUTIONS AND OTHER DEPOSITS AND ALSO RAISE DEM ANDS FROM THE MEMBERS FOR DUES AND EXECUTE SUCH DEMANDS THROUGH LEGAL PRO CEDURE. IN CASE, FOR SOME REASON, THE MEMBER ALREADY ADMITTED IS DELETED , THE ASSESSEE WOULD HAVE THE FULL RIGHT TO INCLUDE NEW MEMBER IN PLACE OF OUTGOING MEMBER. HE HAD TO MAKE NECESSARY FINANCIAL ARRANGEMENTS FOR WH ICH PURPOSE HE COULD RAISE FUNDS FROM THE FINANCIAL INSTITUTIONS, BANKS ETC. THE LAND OWNERS AGREED TO GIVE NECESSARY SIGNATURES, AGREEMENTS, AN D EVEN POWER OF ATTORNEY TO FACILITATE THE WORK OF THE DEVELOPER. I N SHORT, THE ASSESSEE HAD UNDERTAKEN THE ENTIRE TASK OF DEVELOPMENT, CONSTRUC TION AND SALE OF THE HOUSING UNITS TO BE LOCATED ON THE LAND BELONGING T O THE ORIGINAL LAND OWNERS. IT WAS ALSO AGREED BETWEEN THE PARTIES THAT THE ASSESSEE WOULD BE ENTITLED TO USE THE FULL FSI AS PER THE EXISTING RU LES AND REGULATIONS. HOWEVER, IN FUTURE, RULES BE AMENDED AND ADDITIONAL FSI BE AVAILABLE, THE ASSESSEE WOULD HAVE THE FULL RIGHT TO USE THE SAME ALSO. THE SALE PROCEEDS OF THE UNITS ALLOTTED BY THE ASSESSEE IN FAVOUR OF THE MEMBERS ENROLLED WOULD BE APPROPRIATED TOWARDS THE LAND PRICE. EVENT UALLY AFTER PAYING OFF THE LAND OWNER AND THE ERSTWHILE PROPOSED PURCHASER S, THE SURPLUS AMOUNT WOULD REMAIN WITH THE ASSESSEE. SUCH TERMS AND COND ITIONS UNDER WHICH THE ASSESSEE UNDERTOOK THE DEVELOPMENT PROJECT AND TOOK OVER THE POSSESSION OF THE LAND FROM THE ORIGINAL OWNER, LEA VES LITTLE DOUBT IN OUR MIND THAT THE ASSESSEE HAD TOTAL AND COMPLETE CONTR OL OVER THE LAND IN QUESTION. THE ASSESSEE COULD PUT THE LAND TO USE AS AGREED BETWEEN THE ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 10 PARTIES. THE ASSESSEE HAD FULL AUTHORITY AND ALSO R ESPONSIBILITY TO DEVELOP THE HOUSING PROJECT BY NOT ONLY PUTTING UP THE CONS TRUCTION BUT BY CARRYING OUT VARIOUS OTHER ACTIVITIES INCLUDING ENROLLING ME MBERS, ACCEPTING MEMBERS, CARRYING OUT MODIFICATIONS ENGAGING PROFES SIONAL AGENCIES AND SO ON. MOST SIGNIFICANTLY, THE RISK ELEMENT WAS ENT IRELY THAT OF THE ASSESSEE. THE LAND OWNER AGREED TO ACCEPT ONLY A FIXED PRICE FOR THE LAND IN QUESTION. THE ASSESSEE AGREED TO PAY OFF THE (AND OWNER FIRST BEFORE APPROPRIATING 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 BE TH EASSESSEE INVESTED ITS OWN FUNDS IN THE COST OF CONSTRUCTION AND ENGAGEMEN T OF SEVERAL AGENCIES. LAND OWNER WOULD RECEIVE A FIX PREDETERMINED AMOUNT TOWARDS THE PRICE OF LAND AND WAS THUS INSULATED AGAINST ANY RISK.' (I) AFTER CONSIDERING THE HON'BLE BOMBAY HIGH COUR T JUDGEMENT IN THE CASE OF C1T VS. GLENMARK PHARMACEUTICAL LTD. (2010) 324 ITR 199 UNDER THE HEAD 'CONTRACT OF WORK OR A CONTRACT OF SALE' AND H ON'BLE SUPREME COURT JUDGEMENT IN THE CASE OF STATE OF ANDHRA PRADESH VS . M/S. KONE ELEVATORS AIR 2005 SC 1581, THE HON'BLE GUJARAT HIGH COURT AT PARA 38 HELD THAT - '38. IN THE PRESENT CASE, AS ALREADY HELD THE ASSES SEE HAD UNDERTAKEN THE DEVELOPMENT OF HOUSING PROJECT AT ITS OWN RISK AND COST. THE LAND OWNER HAD ACCEPTED ONLY THE FULL PRICE OF THE LAND AND NOTHIN G FURTHER. THE ENTIRE RISK OF INVESTMENT AND EXPENDITURE WAS THAT OF THE ASSESSEE . RESULTANTLY, PROFIT AND LOSS ALSO WOULD ACCRUE TO THE ASSESSEE ALONE. I N THAT VIEW OF THE MATTER, THE ADDITION OF THE EXPLANATION TO SECTION 801B WITH RETROSPECTIVE EFFECT OF 1.4.2001 WOULD HAVE NO MATERIAL BEARING I N THE CASES 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 TO ANY UN DERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL 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 HIGH COU RT CONCLUDED THAT- '45. UNDER THE CIRCUMSTANCES, WE ARE OF THE OPINIO N THAT THE TRIBUNAL COMMITTED NO ERROR IN HOLDING THAT THE ASSESSEES WE RE ENTITLED TO THE BENEFIT UNDER SECTION 80IB(10) OF THE ACT EVEN WHERE THE TI TLE OF THE LANDS HAD NOT PASSED ON TO THE ASSESSEES AND IN SOME CASES, THE D EVELOPMENT ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 11 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 RE VENUE THAT OTHER CONDITIONS OF SECTION 80IB OF THE ACT WERE NOT FULF ILLED. WE, THEREFORE, ANSWER THE QUESTION IN FAVOUR OF THE ASSESSEE AND A GAINST THE REVENUE AND DISPOSE OF ALL APPEALS ACCORDINGLY.' 16. THE FACTS OF THE APPELLANT ARE IDENTICAL WITH T HE CASES DEALT BY HON'BLE GUJARAT HIGH COURT. EVEN THE CONTENTION RAI SED BY THE AO ALONG WITH RELIANCE OF VARIOUS JUDICIAL AUTHORITIES ARE I DENTICAL. THEREFORE FOLLOWING THE RATIOOF HON'BLE GUJARAT HIGH, COURT IN THIS CAS E, THE DISALLOWANCE AND ADDITIONS MADE BY THE AO IN THE CASE OF THE APPELLA NT ARE NOT JUSTIFIED AND DIRECTED TO BE DELETED. APPELLANT GETS RELIEF OF RS . 30,23,880/-. 17. 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 PREMATURE TO BE ADJUDIC ATED HENCE DISMISSED. 18. 18. IN THE RESULT THE APPEAL IS PARTLY ALLOWED 13. THE LD. DR DID NOT BRING ANY CIRCUMSTANCE OF T HE FACT TO MY NOTICE WHICH CAN DEMONSTRATE THAT LD. FIRST APPELLANT AUTH ORITY HAS APPRECIATED THE FACTS IN AN ERRONEOUS MANNER OR AS ERRED IN PLACING RELIANCE UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURTS. THE REASONS ASSIGNED BY THE ASSESSING OFFICER AND NOTICED IN THIS ORDER HAVE N OT BEEN APPROVED BY THE HONBLE HIGH COURTS FOR DENYING THE BENEFIT ON GRO UND THAT THE ASSESSE DID NOT DEVELOP THE PROJECT AS DEVELOPER RATHER WORKED AS A CONTRACTOR. IT CAN BE INFEREDFROM THE MATERIAL AVAILABLE ON RECORD AND DI SCUSSED BY THE LD. FIRST APPELLANT AUTHORITY, THAT ASSESSEE HAS DEVELOPED TH E PROJECT AS DEVELOPER. 14. THUS TAKING INTO CONSIDERATION THE FACTS AND C IRCUMSTANCES I DO NOT FIND ANY MERITS IN THESE APPEALS, THESE ARE DISMISS ED. ITA NO.1171,117&1173/AHD/2012 ASSTT. YEAR2007-2008 AND 2008-2009 12 ORDER PRONOUNCED IN THE COURT ON 20 TH FEBRUARY, 2017 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER TRUE COPY AHMEDABAD; DATED 20 /02/2017 $% & ''() *$)' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A) 5. $%& '' , / DR, ITAT, 6. &)* + / GUARD FILE. $% + / BY ORDER, ,/ - ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD