Dy.CIT, Circle-3(3), Hyderabad V. M/s Vertex Homes Private Limited, Hyderabad

ITA 119/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69751 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: INTURI RAMA RAO
• Keywords: Retrospective amendment
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.119/HYD/13 : ASSESSMENT YEAR 2009 - 10 DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(3), HYDERABAD V/S. M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD (PAN AABCV 2364 G ) (APPELLANT) (RESPONDENT) AND CROSS OBJECTION NO.36/HYD/2013 (IN ITA NO.119/HYD/13) : ASSESSMENT YEAR 2009 - 10 M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD (PAN AABCV 2364 G ) V/S. DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(3), HYDERABAD (CROSS OBJECTO R ) (RESPONDENT) ASSESSEE BY : SHRI INTURI RAMA RAO DEPARTMENT BY : SMT. T.H.VIJAYALAKSHMI DR DATE OF HEARING 12.08.2013 DATE OF PRONOUNCEMENT 30.08.2013 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: TH IS APPEAL BY THE REVENUE AND CROSS - OBJECTION BY THE ASSESSEE DIRECTED AGAIN S T THE O R DER OF THE CIT( A) IV HYDERABAD D ATED 14.11.2012 FOR THE ASSESSMENT YEAR 2009 - 10. SINCE A COMMON ISSUE IS INVOLVED, TH E SE APPEALS ARE BEIN G DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. REVENUES APPEAL 2. THE ONLY EFFECTIVE GRIEVANCE OF THE REVENUE IN THIS APPEAL RELATES TO DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION UNDER S.80IB(10) ITA NO. 119 / HYD/201 3 & CO 36/HYD/13 M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD 2 OF THE ACT, AND THE GROUNDS OF THE REVENUE IN THIS BEHALF READ AS FOLLOWS - ( I ) T H E L D COMMISSIONER OF INCOME - TAX(APPEALS) HAS ERRED BOTH ON FACTS AND IN LAW. ( II ) THE LEARNED CIT(A), ERRED IN HOLDING THAT ASSESSEE I S ELIGIBL E FOR DEDUCTION U/S. 80IB(10) DESPITE THE FACT THAT THE ASSESSEE IS NO T THE OWNER OF THE L A ND AS PER THE DEVELOPM E NT A GRE E MENT AND ONLY A CONTRACTOR TO E X ECUTE CONST R UC T ION AND DEVELOPM E NT OF SCHEDULE D PROPERTY. ( III ) TE LEARNED CIT(A) HAS FAIL E D TO APPR EC IATE THAT THE EXPLANATION TO PROVIS I ON S OF SECT I ON 80IB(10) IS INSERTED WITH RETROSPECTIVE EFFECT FROM 01.04.2001 MAKIN G THE ASSESSEE NO T ELIGIBLE FOR DEDUCTIO N U/S. 80IB. 3 . WE HEARD BOTH PARTIES AND PERUSED THE MATERIAL IMPUGNED ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. WE FIND THAT THE ORDER OF THE CIT(A) IN ACCEPTING THE CLAIM OF THE ASSESSEE UNDER S.80IB(10) OF THE ACT, IS BASED ON THE APPELLATE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2008 - 09. IT HAS BEEN BROUGHT T O OUR NOTICE THAT THE SAID APPELLATE ORDER OF THE CIT(A) WAS SUBJECT MATTER OF APPEAL BEFORE THIS TRIBUNAL, AND THE TRIBUNAL VIDE ITS ORDER DATED 22 ND MARCH, 2013 IN ITA NO.979/HY D /2012 FOR ASSESSMENT YEAR 2008 - 09 AFTER CONSIDERING ELABORATE SUBMI S SION S OF THE PARTIES, DECIDED THE ISSUE IN THE FOLLOWING MANNER - 1 0. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. CLAIM OF THE ASSESSEE FOR RELIEF UNDER S.80IB HAS BEEN REJECTED BY THE ASSESSING OFFICER ON TWO COUNTS. THE CRUX OF THE ARGUMENT OF THE DEPARTMENT FOR REJECTION OF THE ASSESSEES CLAIM IN THE FIRST PLACE IS THAT THE ASSESSEE HAS EXECUTED THE WORK ONLY AS A WO RKS CONTRACTOR, AND IT IS NOT A DEVELOPER, SINCE THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY, AND HENCE THE ASSESSEE IS NOT ELIGIBLE FOR THE RELIEF UNDER S.80IB OF THE ACT. THE NEXT REASON FOR WHICH THE CLAIM OF THE ASSE SSEE FOR RELIEF UNDER S.80IB HAS BEEN REJECTED IS THAT EFFECTIVELY NO SALES HAVE TAKEN PLACE DURING THE YEAR UNDER APPEAL, AND IN THE ABSENCE OF ANY INCOME HAVING ACCRUED OR REALIZED BY THE ASSESSEE, NO RELIEF UNDER S.80IB C OULD BE ALLOWED BASED ON NOTIONAL INCOME. 11. THE MAIN CONTENTION OF THE REVENUE IS THAT THE ASSESSEE IS NOT A DEVELOPER AND ONLY CARRIED ON THE WORK OF CONTRACTOR AND BUILT THE RESIDENTIAL COMPLEX. BUT THE QUESTION TO BE CONSIDERED IS AS TO W HO IS DEVELOPING THE PROJECT. CERTAINLY, IT IS NOT THE LANDLORD. ADMITTEDLY, IN THIS CASE, THE LANDLORD APPROACHED THE ASSESSEE ITA NO. 119 / HYD/201 3 & CO 36/HYD/13 M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD 3 AND JOINTLY EVOLVED A SCHEME FOR DEVELOPMENT AND THE ASSESSEE EXECUTED THE WORK OF DEVELOPMENT. THERE IS AN APPROVED PLAN SANCTIONED VIDE PERMISSION FOR CONSTRUCTION FLATS. AGAINST THE CONSTRUCTION UNDERTAKEN BY THE ASSESSEE, THERE IS AN UNDERSTANDING BY THE LANDLORD, FOR PARTING THE OWNERSHIP OF PART OF THE CONSTRUCTED AREA IN PREDETERMINE D RATIO. HAVING JOINTLY DECIDED UPON THE SCHEME OF DEVELOPMENT OF THE PROJECT, EVEN IF THE BUILDING PLAN IS IN THE NAME OF THE LANDLORD, IT DOES NOT DISPUTE THE FACT THAT THE ASSESSEE HAS BEEN ENGAGED AS A BUILDER BY CONTROLLING AND DIRECTING THE WORK O F BUILDING CONSTRUCTION. IF A PERSON WHEN HIS JOB WOULD BE MERELY CONSTRUCTING THE BUILDING AS PER THE DESIGN PROVIDED BY THE LANDLORD AND HANDOVER THE CONSTRUCTED BUILDING TO THE LANDLORD, IT IS ONLY A CONTRACTOR. HIS JOB WILL NOT INCLUDE DESIGNING THE PROJECT AND INCURRING EXPENDITURE ON ITS OWN. IN THE PRESENT CASE, IF THE ASSESSEE AS A DEVELOPER, WHO HAS UNDERTAKEN THE HOUSING PROJECT AT ITS SOLE COST AND EXPENSES TOWARDS WHICH AMOUNT IT SHALL NOT CLAIM AN Y SET OFF FROM THE OWNER AND THE DEVELOPER /ASSESSEE IS ENTITLED FOR A PORTION OF THE BUILT UP AREA WORKED OUT AS PER THE PREDETERMINED RATIO. IF THE ASSESSEE IS ONLY A CONTRACTOR, ITS JOB WOULD BE MERELY CONSTRUCTING TH E BUILDING AS PER THE DESIGN AND PLANS PROVIDED BY THE OWNER AND HANDOVER THE CONSTRUCTED BUILDING TO THE OWNER AND IT HAS NOTHING TO DO WITH DESIGNING AND SELLING OF THE PROJECT AND IT WILL NOT GET ANY SHARE IN THE CONSTRUCTED AREA. IN THE PRESENT CASE, IF THE ASSESSEE IS HAVING RIGHT OVER A PORTION OF THE CONSTRUCTED AREA AND ALSO A SHARE IN THE UNDIVIDED PROPERTY, CANNOT BE CALLED A MERE CONTRACTOR. BEING SO, IN THAT EVENT, THE ARGUMENT THAT THE ASSESSEE IS A MERE CO NTRACTOR ANDNOT A DEVELOPER, CANNOT BE VALID. THE ONLY THING WE HAVE TO SEE IS THAT THE CLAIM OF DEDUCTION U/S. 80IB(10) IS TO BE GRANTED TO THE ASSESSEE TO THE EXTENT OF ITS SHARE AND THERE CANNOT BE DOUBLE DEDUCTION ON THE SAME PROJEC T, ONCE IN THE HANDS OF THE LANDLORD AND AGAIN IN THE HANDS OF THE ASSESSEE AS A DEVELOPER. IN OUR OPINION, ON THIS COUNT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT IF THE ASSESSEE INVESTED ITS OWN MONEY AND CARRIED ON THE PROJECT IN ITS ENTIRETY ON ITS OWN, PROVIDED LAND - LORD HAS NOT CLAIMED CORRESPONDING DEDUCTION IN RESPECT OF THE SAME PROJECT. IN OTHER WORDS, THE ASSESSEE SHALL ENSURE THAT IT ITSELF HAS CARRIED OUT ALL ACTIVITIES IN CONNECTION OF DEVELOP MENT OF HOUSING PROJECT AND NOT CARRIED OUT THE WORK MERELY AS WORKS CONTRACTOR ON BEHALF OF THE LANDLORD. IN THAT EVENT ALSO, THE ASSESSEE WOULD BE ELIGIBLE FOR RELIEF UNDER S.80IB OF THE ACT ONLY IN RESPECT OF THE PROFIT FROM EL IGIBLE HOUSING PROJECT. 12. FURTHER, OWNERSHIP OF LAND IS NOT A CRITERIA OR REQUIREMENT FOR THE BUILDER OF A HOUSING PROJECT, WHICH OTHERWISE SATISFIES, I.E. ON PHYSICAL PARAMETERS, INCLUDING AS TO ITS APPROVAL AND COMPLETION, THE CONDITIONS OF S.80 IB(10), IS BY NOW WELL - SETTLED. ONE OF THE EARLIEST DECISIONS IN THIS BEHALF IS OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF THE CASE OF RADHEY DEVELOPERS V/S. ITO (2008) 23 SOT 420 (AHD.), WHICH HAS BEEN AFFIRMED BY THE HONBLE HIGH COURT. IT HAS BEEN HELD IN THAT CASE, THAT IF THE ASSESSEE HAS UNDERTAKEN THE DEVELOPMENT OF HOUSING PROJECT, AT ITS OWN RISK AND COSTS, ASSESSEE CANNOT BE DENIED THE DEDUCTION UNDER S.80IB(10) OF THE ACT. BEING SO, WHAT THE ASSESSING OFFICER HAS TO EXAMINE IS WHETHER THE ASSESSEE HAS ITA NO. 119 / HYD/201 3 & CO 36/HYD/13 M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD 4 CARRIED ON THE DEVELOPMENT OF HOUSING PROJECT CUMULATIVELY WITH THE ACTIVITIES OF PLANNING, DEVELOPMENT AND MAINTENANCE, FINANCIAL INVOLVEMENT, DEFECT CORRECTION OF THE CONTRACT EXECUTED BY THE ASSESSEE ITSELF. IN THE EVENT, THE ASSESSEE ITSELF HAS CARRIED ON THE DEVELOPMENT OF HOUSING PROJECT ALONGWITH DEVELOPMENT AND MAINTENANCE, FINANCIAL INVOLVEMENT, DEFECT CORRECTION OF THE CONTRACT DURING THE WARRANTY PERIOD, THEN SUCH CONTR ACT HAS TO BE CONSIDERED AS A DEVELOPMENT OF HOUSING PROJECT EXECUTED BY THE ASSESSEE AND THEREBY ENTITLING THE ASSESSEE TO DEDUCTION U/S. 80IB OF THE ACT. 13. NOW THE OTHER OBJECTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS TH AT THE ASSESSEE HAS NOT PRODUCED THE COMPLETION CERTIFICATE, AND, AS SPECIFICALLY NOTED BY THE ASSESSING OFFICER, THE ASSESSEE HAS NOT EFFECTED ANY SALE OF FLATS DURING THE YEAR AND RELIEF UNDER S.80IB(10) CANNOT BE CONSIDERED BASED ON NOTIONAL/ESTIMATED INCOME, REALIZABLE ON FUTURE SALES AT AN INDEFINITE POINT OF TIME. IT WAS PLEADED BEFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION ME THOD. THIS METHOD IS RECOGNIZED BY THE INCOME - TAX ACT FOR DISCLOSING THE PROFIT IN THE CASE OF A BUILDER. THE PURPOSE OF GRANTING DEDUCTION U/S. 80IB(10) IS TO PROMOTE HOUSING PROJECTS. IF WE ACCEPT THE PROPOSITION OF THE DEPARTMENT THAT THE DEDUCTION U/S. 80IB(10) HAS TO BE GRANTED ONLY A TAX PAYER WHO FOLLOWS ONLY 'PROJECT COMPLETION METHOD' IT LEADS TO AN ABSURD SITUATION AS THE DEVELOPER WHO IS FOLLOWING PERCENTAGE COMPLETION METHOD IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT THOUGH ALL OTHER REQUIREMENTS OF THE SECTION BEING FULFILLED. IT WOULD TANTAMOUNT TO DENIAL OF VALID EXEMPTION FOR WHICH AN ASSESSEE IS ENTITLED. NO ONE CAN PASS SUCH A ANOMALOUS DICTUM WHILE DEALING WITH A LEGAL PROBLEM. THE TRIBUNAL BEING FINAL FACT FINDING AUTHORITY SHALL KEEP IN MIND AN OVERALL SITUATION, FACTUAL AS WELL AS LEGAL, SO THEREUPON BRINGS A DICTUM OUGHT TO BE LEGALLY SUSTAINABLE IN THE EYES OF LAW. IN THE PRESENT SITUATION, THE REVENUE IS TAXING THE PROFIT ON PERCENTAGE COMPLETION METHOD BUT SUGGESTING TO GRANT DEDUCTION ONLY ON COMPLETION OF THE PROJECT. IF THE STAND OF THE REVENUE IS ACCEPTED, THEN ONLY ON COMPLETION OF PROJECT AN ASSESSEE WOULD BE ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. IN THAT EVENT, AN ANOMALY SHALL ARISE AS TO HOW AND WHEN THE TAX SHOULD BE CHARGED. THIS IS NOT IN TUNE WITH THE SCHEME OF THE ACT, TO FIRST TAX AN INCOME IN A PARTICULA R YEAR AND GRANT DEDUCTION ON THAT VERY INCOME IN A DIFFERENT LATER YEAR I.E., ON COMPLETION OF THE PROJECT AS WAS CANVASSED BY THE DEPARTMENT. THE ACCEPTED PRINCIPLE IS THAT THE YEAR OF THE ASSESSMENT OF INCOME AND CONNECTED DEDUCTION SHALL FALL IN THE SAME ASSESSMENT YEAR. IF THE REVENUE IS TAXING THE PROFIT IN THE YEAR UNDER CONSIDERATION ON THE GROUND THAT THE ASSESSEE IS ADOPTING 'PERCENTAGE COMPLETION METHOD' THEN THE NATURAL COROLLARY SHOULD BE THAT THE CONNECTED DEDUCTION O UGHT TO BE GRANTED SIMULTANEOUSLY IN THIS YEAR OR THE OTHER METHOD OF COMPUTATION IS THAT THE REVENUE MUST NOT TAX THE PROFIT OF THE PROJECT YEARLY ON THE BASIS OF 'PERCENTAGE COMPLETION METHOD' BUT TAX THE ENTIRE PROFIT ON COMPLETION OF THE PROJECT BY APPLYING 'PROJECT COMPLETION METHOD'. ITA NO. 119 / HYD/201 3 & CO 36/HYD/13 M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD 5 14. IN THE PRESENT CASE, THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITY AFTER 1.4.2004, I.E. ON 30.3.2007 BY MUNICIPAL COMMISSIONER, KUKATPALLY MUNICIPALITY. BEING SO, THE PROJECT HAS TO BE COMPLETED WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY, VIZ. 31.3.2011. THUS, A PROJECT CAN HAVE A SPAN OF NOT MORE THAN 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH IT HAS RECEIVED APPROVAL. EXPLANATION UNDER CLAUSE (A) ONLY SPECIFIED HOW TO RECKON THE DAY OF APPROVAL AND DATE OF COMPLETION. IT WOULD NOT MEAN THAT THE A SSESSEE CAN HAVE THE BENEFIT OF SECTION 80IB(10) ONLY IN THE YEAR OF COMPLETION OF THE PROJECT, ESPECIALLY SO, FOR AN ASSESSEE NOT FOLLOWING PROJECT COMPLETION METHOD FOR ACCOUNTING ITS INCOME. IF OTHERWISE INTERPRETED, IT WOULD BE EQ UIVALENT TO FORCING AN ASSESSEE TO FOLLOW A PARTICULAR METHOD OF ACCOUNTING, WHICH WOULD NEVER HAVE BEEN THE INTENTION OF LEGISLATION. INTENTION WOULD ONLY HAVE BEEN THAT FOR THE PROJECT AS A WHOLE, THERE SHOULD BE CERTIFICATION FROM THE RELEVANT AUTHORITY PROVING THE COMMENCEMENT AND COMPLETION, AND NOT THAT A COMPLETION CERTIFICATE SHOULD BE THERE IN EVERY YEAR OF THE PROJECT SPAN. THE CERTIFICATIONS ARE FOR ENSURING THAT THE PROJECT SPAN DOES NOT EXC EED THE PRESCRIBED PERIOD AND NOTHING MORE. OF COURSE, IF SUCH PERIOD EXCEEDED THE PRESCRIBED LIMIT, REVENUE AUTHORITIES WOULD BE WELL WITHIN ITS RIGHTS TO WITHDRAW THE CLAIMS ALREADY ALLOWED, FOLLOWING THE PROCEDURE PRESCRIBED UNDER THE ACT. THUS, THE ASSESSING OFFICER NEED NOT INSIST ON THE COMPLETION CERTIFICATE IN THE ASSESSMENT YEAR UNDER APPEAL, GOING BY THE HARMONIOUS INTERPRETATION OF THE STATUTORY PROVISIONS. OUR VIEW IN THIS BEHALF IS FORTIFIED BY THE DECISI ON OF THE COORDINATE BENCH IN THE CASE OF KURA HOMES P. LTD. V/S. ITO(ITA NO.216/HYD/2010) DATED 21.9.2012, RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE. 15. THIS VIEW HAS ALSO BEEN TAKEN BY CBDT IN ITS INSTRUCTION NO. 4 OF 2009 DATED 30.6.2009, PARAS 2 TO 4 OF WHICH ARE REPRODUCED HEREUNDER: '2. CLARIFICATIONS HAVE BEEN SOUGHT BY VARIOUS CHIEF CITS ON THE ISSUE WHETHER THE DEDUCTION UNDER S. 80IB(10) WOULD BE AVAILABLE ON A YEAR - TO - YEAR BASIS WHERE AN ASSESSEE IS SHOWING PROFIT ON PARTIAL COMPLETION OR IF IT WOULD BE AVAILABLE ONLY IN THE YEAR OF COMPLETION OF THE PROJECT UNDER S. 80 - IB(10). 3. THE ABOVE ISSUE HAS BEEN CONSIDERED BY THE BOARD AND IT IS CLARIFIED AS UNDER : (A) THE DEDUCTION C AN BE CLAIMED ON A YEAR - TO - YEAR BASIS WHERE THE ASSESSEE IS SHOWING PROFIT FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. (B) IN CASE IT IS LATE AND IT IS FOUND THAT THE CONDITION OF COMPLETING THE PROJECT WITHIN THE SPECIFIE D TIME - LIMIT OF 4 YEARS AS STATED IN S. 80 - IB(10) HAS NOT BEEN SATISFIED, THE DEDUCTION GRANTED TO THE ASSESSEE IN THE EARLIER YEARS SHOULD BE WITHDRAWN. ITA NO. 119 / HYD/201 3 & CO 36/HYD/13 M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD 6 4. THE ABOVE INSTRUCTION WILL OVERRIDE EARLIER CLARIFICATION ON THIS ISSUE CONTAINED IN MEMBER (R.)'S D.O. LETTER NO. 58/MISC/2008/CIT (IT & CT), DT. 29TH APRIL, 2008 AND MEMBER (IT)'S D.O. LETTER NO.279/MISC/46/ 2008 - ITJ DT. 2ND MAY, 2008.' FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE IS ENTITLED FOR RELIEF UNDER S.80IB(10) OF THE ACT, ON YEAR TO YEAR BASIS, IF IT HAS BEEN FOLLOWING PERCENTAGE COMPLETION METHOD FOR THE PURPOSE OF RECOGNIZING THE INCOME IN RESPECT OF A LONG TERM PROJECT ELIGIBLE FOR DEDUCTION UNDER S.80IB(10) OF THE ACT. IN THAT EVENTUALITY, SINCE INCOME IS RECONGISED ANNUALLY EVEN IN THE ABSENCE OF THE COMPLETION OF THE PROJECT, OBVIOUSLY, COMPLETION CERTIFICATE FROM THE CIVIC AUTHORITIES WOULD NOT BE AVAILABLE BY THE END OF EACH YEAR, AND CONSEQUENTLY, FURNISHING COMPLETION OF CERTIFICATE BY AN ASSESSEE CANNOT BE A PRE - REQUISITE FOR CLAIMING DEDUCTION UNDER S.80IB(10) OF THE ACT. 16. IN THE LIGHT OF THE FOREGOING DISCUSSION, IT HAS TO BE CONCLUDED THA T IT IS ONLY AN ASSESSEE, WHO IS A DEVELOPER AND NOT A CONTRACTOR, WHO WOULD BE ELIGIBLE FOR DEDUCTION UNDER S.80IB(10) OF THE ACT; AND FURTHER THAT SUCH RELIEF COULD BE GIVEN ON YEAR TO YEAR BASIS, IN CASE THE ASSESSEE IS FOLLOW ING PERCENTAGE OF PROJECT COMPLETION METHOD FOR RECOGNIZING THE INCOME FROM A LONG - TERM PROJECT, WITHOUT INSISTING ON THE COMPLETION CERTIFICATE OF THE CIVIC AUTHORITIES WHICH COULD BE EXPECTED ONLY ON THE COMPLETION OF THE PROJECT AND NOT ANNUALLY. WE DO NOT HAVE COMPLETE DETAILS ON RECORD TO DETERMINE THE STATUS OF THE ASSESSEE, VIZ. WHETHER A DEVELOPER OR A CONTRACTOR, IN RELATION TO SADGURU KRUPA PROJECT, AND THE ALLOWABILITY OF DEDUC TION UNDER S.80IB OF THE ACT TO THE ASSESSEE FOR THE YEAR UNDER APPEAL. WE ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER OF THE CIT(A), AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSING OFFICER TO R E - EXAMINE THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER S.80IB(10) OF THE ACT AFRESH, AFTER BRINGING ON RECORD ALL THE REQUISITE MATERIAL ON RECORD. THE ASSESSEE SHALL ALSO BE GIVEN ADEQUATE OPPORTUNITY TO BRING ON RECORD THE RELEVANT MATERIAL TO SUBSTANTIATE ITS CLAIM FOR DEDUCTION UNDER S.80IB(10) LF THE ACT. THE ASSESSING OFFICER SHALL ACCORDINGLY PASS APPROPRIATE SPEAKING ORDERS REDECIDING THIS ISSUE IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF RADHEY DEVELOPERS, REFERRED TO BY THE TRIBUNAL IN ITS DECISION EXTRACTED ABOVE, AS POINTED OUT BY THE ASSESSEE HAS BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT VIDE DE CISION REPORTED AT 341 ITR 403, A COPY OF WHICH HAS BEEN FURNISHED BY THE ASSESSEE IN THE PAPER BOOK. ASSESSEE HAS ALSO RELIED UPON AND FURNISHED BEFORE US COPIES OF THE DECISIONS OF THE MADRAS HIGH COURT IN THE CASE OF CIT V/S. SANGHVI AND DOSHI ENTERPR ISES (214 ITA NO. 119 / HYD/201 3 & CO 36/HYD/13 M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD 7 TAXMAN 463) - MAD AND OF THE COORDINATE BENCH OF THE TRIBUNAL IN KURA HOMES PVT. LTD. V.S. ITO (ITA NO.216/HYD/2010). IN THIS VIEW OF THE MATTER AND CONSISTENT WITH THE VIEW TAKEN BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE - EXAMINE THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER S.80IB(10) OF THE ACT AFRESH, AFTER BRINGING ALL THE REQUISITE MATERIAL ON RECORD. THE ASSESSEE SHALL ALSO BE GIVEN ADEQUATE OPPORTUNITY TO BRING ON RECORD THE RELEVANT MATERIAL TO SUBSTANTIATE ITS CLAIM FOR DEDUCTION UNDER S.80IB(10) OF THE ACT. THE ASSESSING OFFICER SHALL ACCORDINGLY PASS APPROPRIATE SPEAKING ORDERS REDECIDING THIS ISSUE IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 4 . IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. CROSS OBJECTION OF THE ASSESSEE 5. EFFECTIVE GRIEVANCE OF THE ASSESSEE IN ITS CROSS OBJECTIONS RELATES TO DISALLOWANCE OF ITS CLAIM FOR DEDUCTION IN R E SPE C T OF COMPOUNDING FEES OF RS.1,00,948 PAID TO GHMC UNDER BUILDIN G R E GUL A TION SCHEME. 6. WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. IT IS THE CASE OF THE ASSESSEE THAT COMPOUNDING FEES PAID TO GHMC IN TERMS OF BUILDING REGULATION SCHEME IS NOT IN THE NATURE OF PENALTY, AND IT IS VERY MUCH ALLOWABLE AS A DEDUCTION IN THE COMPUTATION OF INCOME, AND ACCORDINGLY BECOMES PART OF THE BUSINESS PROFIT ELIGIBLE FOR DEDUCTION UNDER S.80IB OF THE ACT . WE FIND MERIT IN THIS CONTENTION OF THE ASSESSEE. IT IS NO DOUBT TRUE THAT THE COMPOUNDIN G FEE IS PAID FOR DEVIATION FROM APPROVED PLANS, WHILE CARRYING OUT THE CONSTRUCTIONS BY THE ASSESSEE. BUT IT IS ONLY COMPENSATORY IN NATURE AND IT HAS BEEN COMPUTED AND PAID IN ACCORDANCE ITA NO. 119 / HYD/201 3 & CO 36/HYD/13 M/S. VERTEX HOMES PRIVATE LIMITED, HYDERABAD 8 WITH A SCHEME PROMULGATED BY THE GOVERNMENT UNDER RELEVANT STATUTE. THAT BEING SO, SUCH COMPOUNDING FEE CANNOT BE SAID TO BE PENAL IN NATURE. WE ACCORDINGLY ACCEPT THE CLAIM OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO GRANT APPROPRIATE RELIEF. ASSESSEES GROUNDS IN THE CROSS - OBJECTION ARE CONSEQUENTLY ALLOWED. 7. IN THE RESULT, WHILE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES, ASSESSEES CROSS - OBJECTIONS ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30.8.2013 SD/ - SD/ - (SAKTIJIT DEY) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED/ - 30 TH AUGUST, 2013 COPY FORWARDED TO: 1 M/S. VERTEX HOMES PRIVATE LIMITED, PLOT NO.8/B NIZAMPET ROAD, KUKATPALLY, HYDERABAD 2 DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(3), HYDERABAD 3 COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD 4 COMMISSIONER OF INCOME - TAX V, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S