Arihant Heirloom, CHENNAI V. ITO, CHENNAI

ITA 214/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8083 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 05-02-2016
• Court: TRIBUNAL
• Assessee Lawyers: DEVENDRA KUMAR BANDARI
• Keywords: Capital asset; Rule of consistency; Retrospective amendment
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! . '# , $ %& BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ITA NO.214/MDS/2016 /ASSESSMENT YEAR : 2011-12 M/S. ARIHANT HEIRLOOM, 271, ANKUR MANUR, POONAMALLEE HIGH ROAD, KILPAUK, CHENNAI 600 010. PAN AANFA7010K ( /APPELLANT) V. THE INCOME-TAX OFFICER, NON-CORPORATE WARD-10(1), CHENNAI - 34. ( /RESPONDENT) /APPELLANT BY : SHRI DEVENDRA KUMAR BANDARI, CA /RESPONDENT BY : SMT. VIJAYALAKSHMI, CIT /DATE OF HEARING : 16.11.2016 /DATE OF PRONOUNCEMENT : 25.01.2017 ' /O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 17 .12.2015. - - ITA 214/MDS/16 2 2. THE ONLY GROUND IN THIS APPEAL IS WITH REGARD TO ALLOWABILITY OF DEDUCTION U/S.80IB(10) OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D E RETURN OF INCOME FOR AY 2011-12 ON 30.9.2011 DECLARING TOT AL INCOME AT NIL. THEREAFTER, THE ASSESSEE FILED REVISED RETU RN OF INCOME AND CLAIMED DEDUCTION U/S.80IB(1) FOR 17.35 CRORES. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THE ASSESSING OF FICER AFTER CARRYING OUT THE DETAILED SCRUTINY FOUND THAT THE A SSESSEE WAS NOT ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80IB(1) FO R 17.35 CRORES. THEREFORE, THE AO ADDED THE AMOUNT OF 17.35 CRORES AND ASSESSED THE INCOME AT 7,31,07,760/-. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). 4. ON APPEAL, THE CIT(A), AFTER DIFFERING FROM THE FINDINGS OF THE TRIBUNAL ORDER IN ASSESSEES OWN CASE IN ITA NO.385/MDS/2013 FOR THE AY 2009-10, OBSERVED THAT T HE ASSESSEE IS A PARTNERSHIP FIRM AND IS IN THE BUSINE SS OF CONSTRUCTION/PROMOTIONS. THE PARTNERS OF M/S. ARIH ANT HEIRLOOM PARTNERSHIP FIRMS ARE : 1. M/S. ARIHANT FOUNDATION AND HOUSING LTD. 2. SHRI A.V.KRISHNAN - - ITA 214/MDS/16 3 3. SHRI R. RAGHAVAN 4. SMT. R. VASANTHALAXMI. THE CIT(APPEALS), FURTHER OBSERVED THAT IN THE PART NERSHIP DEED IT IS MENTIONED THAT THE CAPITAL OF THE FIRM SHALL BE CONTRIBUTED BY THE PARTNERS AS PER THE MUTUAL AGREEMENT BETWEEN TH EM FROM TIME TO TIME. BUT THERE IS NO DOCUMENT SHOWING ANY AGREEMENT OR TRANSFER OF LAND OWNED BY THE INDIVIDUALS IN FAV OUR OF THE FIRM. THE LAND WAS PURCHASED BY THE INDIVIDUALS IN THE YE AR 2005 I.E.7.4.2006. NO CAPITAL GAINS WERE WRITTEN BY THE INDIVIDUALS ON THE GAINS FROM THE TRANSFER OF LAND. EVEN ASSUMING THAT THE LANDS WERE TRANSFERRED IN THE YEAR 2006 ON THE DATE OF FORMING THE PARTNERSHIP, THERE OUGHT TO BE SOME APPRECIATIO N OF LANDS AND IT CANNOT BE THE CASE OF A LAND VALUE REMAINING THE SAME OVER A PERIOD OF SIX MONTHS. THEREFORE, IT IS CLEA R THAT THERE WAS NO ACTUAL TRANSFER OF LAND TO THE FIRM AND THE INDI VIDUALS ONLY AFTER HOLDING THE LANDS ON WHICH FLATS WERE CONSTRUCTED. 4.1 THE CIT(APPEALS) OBSERVED THAT THE SALE AGREEME NTS AND SALE DEEDS OF THE UNDIVIDED SHARE OF THE LAND TO TH E ULTIMATE PURCHASER OF THE FLATS WERE EXECUTED BY ONE SHRI O. P. MADHAV, WHO WAS DESIGNATED AS POWER OF ATTORNEY AGENT OF TH E THREE - - ITA 214/MDS/16 4 OWNERS OF THE LAND NAMELY SHRI A.V.KRISHNAN, SHRI R . RAGHVAN & SMT. R. VASANTHALAXMI. THOUGH SHRI O.P.MADHAV IS M ENTIONED AS THE REPRESENTATIVE OF THE COMPANY M/S. ARIHANT F OUNDATION AND HOUSING LTD., THE COMPANY HAS NEVER VESTED ANY RIGHTS IN THE LANDED PROPERTY. LAND OWNERSHIP BY THREE OF TH E FOUR PARTNERS IS TOTALLY DIFFERENT FROM LAND OWNERSHIP B Y ALL FOUR PARTNERS. WHEN ONLY THREE PARTNERS OUT OF FOUR OF THE ASSESSEE FIRM ARE THE OWNERS OF THE LAND, IT CANNOT BE SAID THAT LAND IS OWNED BY THE PARTNERSHIP FIRM. FURTHER, NOWHERE IN THE REGISTERED SALE DEED, THE NAME OF THE PARTNERSHIP F IRM, M/S. ARIHANT HEIRLOOM APPEARS. IT IS THE THREE PARTNERS REPRESENTED BY THEIR POWER OF ATTORNEY AGENT AND THE FOURTH PAR TNER, M/S. ARIHANT FOUNDATION AND HOUSING LTD., WHO HAVE SOLD THE UNDIVIDED SHARE OF LAND TO THE CUSTOMER. 4.2 ACCORDING TO THE CIT(APPEALS), IT IS NOT A CASE WHERE THE THREE LAND OWNER PARTNERS HAVE CONTRIBUTED THEIR LA ND EITHER TOWARDS THE CAPITAL IN THE PARTNERSHIP FIRM TRANSFE R THE OWNERSHIP IN FAVOUR OF THE PARTNERSHIP FIRM FOR ADEQUATE CONS IDERATION. THIS FACT IS EVIDENCED BY THE PARTNERS CAPITAL ACCOUNTS WHERE NO SUCH CONTRIBUTION OF LAND WAS SHOWN AS A CAPITAL CO NTRIBUTION. - - ITA 214/MDS/16 5 AS PER THE SALE AGREEMENT, WHICH IS NOT A REGISTERE D DOCUMENT, THE FOUR PARTNERS OF THE FIRMS ARE STATED AS OWNER S OF THE LAND. THE FIRM, M/S. ARIHANT HEIRLOOM IS TO CONSTRUCT FLA TS AND THE PAYMENT FOR THE SALE OF UNDIVIDED SHARE AND CONSTRU CTION ARE RECEIVABLE BY THE PARTNERS AS WELL AS THE FIRM SEPA RATELY, WHICH GOES TO PROVE THAT THE FIRM IS ONLY A WORK CONTRACT OR AND CANNOT BE CONSIDERED AS AN UNDERTAKING ENGAGED IN DEVELOPM ENT OF RESIDENTIAL PROJECT. 4.3 FURTHER, THE CIT(APPEALS) OBSERVED THAT THE FI RM, M/S. ARIHANT HEIRLOOM OUGHT TO HAVE CONSTRUCTED AND SOLD THE FLATS IN ORDER TO BE ELIGIBLE FOR DEDUCTION U/S.80IB(1) OF T HE ACT. FOR THIS PURPOSE ONLY THE LAND BY THE FIRM WILL BE PRE REQUI SITE FOR GETTING APPROVAL ETC. BUT IN THIS CASE, THE PARTNERS HAVE S OLD THE UNDIVIDED SHARE OF LAND AND THE FIRM HAS ONLY CONST RUCTED THE FLATS, HOWEVER, THE DEDUCTION U/S.80IB(1) IS FULLY CLAIMED BY THE FIRM. EVEN THOUGH, THE ACT DOES NOT SPECIFY OWNING OF LAND BY THE UNDERTAKING, IN GENERAL CONCESSIONS ARE APPROVE D BY COMPETENT AUTHORITIES ON LANDS OWNED BY THE INDIVID UALS OR UNDERTAKINGS. APPROVAL IS OBTAINED IN THE NAME OF SHRI - - ITA 214/MDS/16 6 O.P.MADHAV ONLY AND ARE NOT IN THE NAME OF FIRM, M/ S. ARIHANT HEIRLOOM. 4.4 ACCORDING TO THE CIT(APPEALS), SHRI O.P.MADHAV IN THE CAPACITY OF REGISTER POWER OF ATTORNEY AGENT OF THE THREE LAND OWNERS HAS EXECUTED THE SALE AGREEMENTS AND SALE DE EDS FOR UDS WITH THE PURCHASER OF THE FLATS. THE NAME OF T HE ASSESSEE FIRM, M/S. ARIHANT HEIRLOOM APPEARS IN THE COMBINED SALE AGREEMENT FOR UNDIVIDED SHARE OF LAND AND CONSTRUCT ION AS PARTY OF THE SECOND PART, THEY HAVE AGREED TO CONSTRUCT T HE VARIOUS FLATS IN THE COMPLEX FOR THE STATED CONSIDERATION T O BE PAID BY THE PURCHASERS. THEREFORE, THE CIT(APPEALS) OBSERVED T HAT THE ASSESSEE FIRM HAS NEVER ACQUIRED ANY LEGALLY VESTED OWNERSHIP RIGHTS IN THE LAND ON WHICH THE RESIDENTIAL APARTME NTS WERE CONSTRUCTED. THE UNDIVIDED SHARES WERE SOLD BY THE INDIVIDUAL OWNERS AND THE CONSTRUCTION PART WAS UNDERTAKEN BY THE ASSESSEE AS PER ALL THE SALE AGREEMENTS WITH THE PU RCHASER OF THE FLAT. HENCE, ACCORDING TO THE CIT(APPEALS), TH E ASSESSEE FIRM IS ONLY A CONTRACTOR, WHO IS UNDERTAKING THE C ONSTRUCTION WORK ENTRUSTED BY THE FLAT PURCHASERS AS PER THE SP ECIFICATIONS REQUIRED. THEREFORE, IT CANNOT BE SAID THAT THE AS SESSEE FIRM HAS - - ITA 214/MDS/16 7 DEVELOPED AND CONSTRUCTED THE SAID HOUSING PROJECT AS AN UNDERTAKING. 4.5 FURTHER, THE CIT(APPEALS) OBSERVED THAT EXPLANA TION TO SEC.80IB(10) OF THE ACT INTRODUCED IN THE FINANCE A CT, 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2001 CLEARLY PROHIBIT S THE ALLOWANCE OF DEDUCTION U/S.80IB(10) TO WORKS CONTRACTORS. MO REOVER, PURPOSE OF GRANTING DEDUCTION U/S.80IB(10) OF THE A CT IS THAT COST OF PROJECTS BECOMES AFFORDABLE TO THE MIDDLE CLASS PEOPLE OF THE SOCIETY HOW IN THE SCHEME OF M/S. ARIHANT HEIRLOOM THERE ARE LUXURIOUS AMENITIES LIKE SWIMMING POOL, TENNIS COUR T, WELL EQUIPPED GYMNASIUM, STEAM ROOM, BARBECUE PAVILION, GARDEN, GAMES ROOM, PULL TABLE, TABLE TENNIS ROOM, MULTIPUR POSE HALL AND MINIMART ETC. THE COST ON ACCOUNT OF ALL THESE LUXU RIOUS AMENITIES MAKING THE PROSPECTS OF PURCHASING HOUSES BY THE MI DDLE CLASS OR THE LOWER MIDDLE CLASS PEOPLE TO A VERY MINIMAL. THE ASSESSEE TRIES TO TAKE INCOME TAX BENEFIT ON BUILT UP AREA WHERE THE SUPER BUILT-UP AREA PREMISES WERE CHARGED TO TH E CUSTOMERS. THEREFORE, THE CIT(APPEALS) OBSERVED THAT IF THE BE NEFITS OF TAX DEDUCTIONS ARE TO REACH THE DESERVING CLASS OF PEOP LE THEN SUPER - - ITA 214/MDS/16 8 BUILT-UP AREA WHICH HAS BEEN CHARGED TO THE CUSTOME RS BECOMES THE QUALIFYING BUILT-UP AREA FOR THE PURPOSE OF AVA ILING DEDUCTION U/S.80IB(1) OF THE ACT. AND ACCORDINGLY, IN THE SC HEME, THERE ARE FLATS MORE THAN THE SIZE OF 1500 SQ.FT. OF AREA WHI CH MAKES ASSESSEE DISQUALIFIED FOR DEDUCTION U/S.80IB(10) OF THE ACT. AFTER CONSIDERING THE CASE LAWS, CITED, REFERRED AND RELI ED ON BY THE ASSESSEE, THE CIT(APPEALS) CONCLUDED THAT THE ASSES SEE IS NOT ABLE TO SATISFY THE QUALIFICATION CRITERIA TO MAKE HIM ELIGIBLE FOR DEDUCTION OF CLAIM U/S.80IB(1) OF THE ACT AND HE CO NFIRMED THE DISALLOWANCE MADE BY THE AO FOR AN AMOUNT OF 17,40,37,793/- U/S.80IB(10) OF THE ACT. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. AR SUBMITTED THAT [GROUND NO.2 TO LAST] IS NOT JUSTIFIED IN CONCLUDING AND CONFIRMING THE STAND OF THE AO THAT THE SPECIFIC PURPOSE OF BUSINESS OF THE FIRM IS BUY ING LAND, DOING CONSTRUCTION PROJECT ON THE SAME. HENCE, THE ASSES SEE IS A WORK CONTRACTORS AND NOT ENTITLED TO DEDUCTION U/S. 80IB(1) OF THE ACT. FURTHER, THE LD. AR SUBMITTED THAT THE CIT(AP PEALS) HAS ERRED IN CONFIRMING THE GROUND OF THE AO STATING TH AT DEDUCTION SHOULD BE ALLOWED ONLY TO LOW COST RESIDENTIAL PROD UCTS AND NOT TO - - ITA 214/MDS/16 9 PROJECTS HAVING SWIMMING POOLS, GYMS, TENNIS COURTS ETC. AND HENCE DOES NOT BENEFIT TO MIDDLE CLASS PEOPLE AND N OT ENTITLED TO DEDUCTION U/S.80IB(10) OF THE ACT. 5.1 FURTHER, THE LD. AR SUBMITTED THAT THE AO WAS N OT JUSTIFIED IN STATING THAT THE PARTNERS OF THE FIRM HAVE NOT T RANSFERRED THE LAND HOLDINGS TO THE FIRM FOR ADEQUATE CONSIDERATIO N, WHICH WAS CONFIRMED BY THE CIT(APPEALS). ACCORDING TO THE L D. AR, THE CIT(APPEALS) HAS ALSO ERRED IN CONFIRMING THAT AS P ER THE LAW, IT IS DECIDED ON VARIOUS JUDGMENTS OF THE HIGH COURT A LL OVER INDIA AND BY OTHER JURISDICTIONAL HIGH COURTS IN CHENNAI, IT WAS HELD THAT THE ASSESSEE NEED NOT OWN A LAND TO BE ENTITLE D TO CLAIM DEDUCTION U/S.80IB OF THE ACT AND TREATING THE ASSE SSEE AS NOT A LAND OWNER AND ONLY PARTNERS ARE LAND OWNERS, HENCE THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IB OF T HE ACT. ACCORDING TO HIM, ALL THE PARTNERS IN THEIR INDIVID UAL CAPACITY OWNED THE PROPERTY AND THEY JOINED AS PARTNERS OF A FIRM AND FIRM IS NOT A DISTINCT LEGAL ENTITY, APART FROM PARTNERS . HE RELIED ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF MALABAR F ISHERIES CO. VS. CIT IN [1979] 120 ITR 49 (SC). THE LD. AR ALSO SUBMITTED THAT THE ASSESSEE IS A DEVELOPER AND THE SAME WAS - - ITA 214/MDS/16 10 NOT CONSIDERED BY THE CIT(APPEALS), WHICH WAS DECID ED BY THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.385/MDS/2 013. FURTHER, THE LD. AR, RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.385/MDS/13, WHEREIN I T WAS OBSERVED VIDE PARAS 9 AND 10 AS UNDER: 9. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIA LS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE A SSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IB(1) OF THE ACT OR NOT. THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE A SSESSEE UNDER SECTION 80IB(1) ON THE GROUND THAT THE ASSESS EE IS NOT THE OWNER OF THE PROPERTY AND ANOTHER GROUND ON WHI CH THE ASSESSEES CLAIM WAS REJECTED IS THAT THE BUILT UP AREA IS MORE THAN 1500 SQ.FT. THE SAME VERY ISSUE ON WHICH THE ASSESSING OFFICER DENIED THE CLAIM OF THE ASSESSEE CAME BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SANGHVI AND DOSHI ENTERPRISES AND OTHERS V. ITO, 25 5 CTR (MAD) 156, RELATING TO ASSESSMENT YEARS 2005-06 AND 2006- 07, WHEREIN THE HONBLE COURT HAS OBSERVED THAT THE PROVISIONS NOWHERE REQUIRED THAT DEVELOPER WHO ARE THE OWNER OF THE LAND ALONE WOULD BE ENTITLED TO GRANT OF DEDUCTION UNDER SECTION 80IB(1) OF THE ACT, SO FAR AS BUILT UP AREA IS CONCERNED, AS PER SECTION 80IB(1)(14)(A) OF THE ACT, WHICH IS VERY CLEAR THAT THE COMMON AREAS SHOWED TH AT THE RESIDENTIAL UNITS ALONE DOES NOT INCLUDE BUILT UP A REA. IN THIS CASE, IT IS VERY CLEAR THAT THE BUILT UP AREA ALONE HAS TO BE CONSIDERED TO SEE THE THRESHOLD LIMIT OF 1500 SQ.FT . AS OBSERVED BY THE LD. CIT(APPEALS). - - ITA 214/MDS/16 11 10. KEEPING IN VIEW OF THE HONBLE JURISDICTIONAL H IGH COURTS DECISION AND ALSO PROVISIONS OF SECTION 80I B(14)(A) AND BY CONSIDERING THE FACTS AND CIRCUMSTANCES OF T HE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(APPEALS) AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. THE LD. DR, SUPPORTED THE ORDERS OF THE LOWER AU THORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE LD. AR SUBMITTED THAT SIMILAR DEDUC TION WAS GRANTED TO THE ASSESSEE IN EARLIER PREVIOUS YEAR AN D, THEREFORE, DENIAL OF DEDUCTION IN THE ASSESSMENT YEAR UNDER CO NSIDERATION IS NOT JUSTIFIED. IT GOES AGAINST THE PRINCIPLE OF CONSISTENCY AND ACCORDING TO HIM, THE ORDERS OF THE LOWER AUTHORITI ES TO BE QUASHED. HE DREW OUR ATTENTION TO THE PROVISIONS OF SEC.80IB(10) OF THE ACT. ACCORDING TO HIM, THE ASSE SSEE IS ENGAGED IN THE DEVELOPMENT OF PROPERTY AND NOT ENGA GED IN WORKS CONTRACT. BEING SO, THE PROVISIONS OF SEC.80I B(10) CANNOT BE APPLIED. HE ALSO DREW OUR ATTENTION TO THE SALE AGREEMENT FOR UNDIVIDED SHARE OF LAND AND CONSTRUCTION) ENTERED I NTO BETWEEN - - ITA 214/MDS/16 12 THE ASSESSEE AND VENDORS AND PURCHASERS DATED 30.1 .2010. HE TOOK US TO VARIOUS CLAUSES OF THAT AGREEMENT. THE LD. AR SUBMITTED THAT THE CIT(APPEALS) HAS NOT CONSIDERED THE FACT THAT THE ASSESSEE IS INVOLVED IN THE DEVELOPMENT OF THE PROPERTY AND NOT MERELY IN THE EXECUTION OF THE WORKS CONTRACT A ND IT WAS SUBMITTED THAT THE CIT (A) CANNOT INVOKE THE EXPL ANATION TO SEC.80IB(10) , WHICH IS APPLICABLE ONLY FOR WORKS C ONTRACTORS. THE LD. AR FURTHER SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN DISALLOWING THE CLAIM OF THE ASSESSEE EVEN AFTER CO NSIDERING THE ABOVE AGREEMENT AND HAS FAILED TO UNDERSTAND THAT THE ASSESSEE IS A DEVELOPER AND NOT MERELY A CONTRACTOR . 7.1 ACCORDING TO THE LD. AR, THE CIT(APPEALS) HAS E RRED IN CONSIDERING THAT THE ASSESSEE IS NOT OWNER OF THE PROPERTY. THE LD. AR FURTHER SUBMITTED THAT THE CIT(APPEALS) ERRED IN THE ASSUMPTION THAT ALL THE PERMISSIONS FROM THE MUNICI PAL CORPORATION AND LOCAL AUTHORITY, PLAN APPROVALS AND COMMENCEMENT CERTIFICATE WERE OBTAINED BY THE OWNER OF THE PROPERTY AND NOT THE ASSESSEE, WHO IS THE DEVELOPER . IT WAS CONTENDED THAT IT WAS PAID BY THE ASSESSEE FIRM, - ACCORDING TO - - ITA 214/MDS/16 13 THE LD. AR, THE ASSESSEE IS A DEVELOPER AND NOT MER ELY A CONTRACTOR. THUS, ACCORDING TO THE LD. AR, THE ASSE SSEE IS A DEVELOPER WHO HAS UNDERTAKEN CONSTRUCTION OF FLATS WITH VARIOUS OWNERS THOUGH THE ASSESSEE IS NOT AN OWNER OF THE L AND. 7.2 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ER OF THE LOWER AUTHORITIES. FURTHER, THE LD. DR SUBMITTED TH AT THE ASSESSEE IS NOT THE OWNER OF THE LAND AND ALSO THE PLAN IS N OT IN THE NAME OF THE ASSESSEE. THE ASSESSEE ENTERED INTO AN AGREE MENT WITH PROSPECTIVE BUYERS OF INDIVIDUAL FLAT ALONG WITH LA ND LORD AND RECEIVED A PORTION OF THE TOTAL CONSIDERATION TOWA RDS THE WORK CARRIED ON BY THE ASSESSEE. THIS AMOUNT IS NOTHING BUT FOR THE LABOUR CONTRACTS UNDERTAKEN BY THE ASSESSEE. FURTHE R, THE LD. DR, SUBMITTED THAT THE ASSESSEE WAS UNDERTAKEN WORK S CONTRACT AND NOT DEVELOPED THE HOUSING PROJECT. THE PROJECT WAS CONCEIVED AND EXECUTED BY THE LAND-LORD AND NOT BY THE ASSESSEE AND THE FLAT WAS SOLD TO INDEPENDENT PROSP ECTIVE PURCHASERS BY THE LAND LORD. ACCORDING TO THE LD. D R, EXPLANATION TO SEC.80IB(10) INTRODUCED W.R.E.F. 1.4.2001 IS APP LICABLE, AS THE ASSESSEE IS ONLY UNDERTAKING WORKS CONTRACT AND NOT ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. 6. WE HAVE HEARD BOTH THE - - ITA 214/MDS/16 14 PARTIES AND PERUSED THE MATERIAL ON RECORD. THE PRO VISIONS OF SEC.80IB(10) READS AS FOLLOWS : (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 3 1ST DAY OF MARCH, [2008] BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CE NT. OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESS MENT YEAR FROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION,- (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008 ; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2 004 13BUT NOT LATER THAN THE 31ST DAY OF MARCH, 2005, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPR OVED BY THE LOCAL AUTHORITY. (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2005, W ITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION FOR THE PURPOSES OF THIS CLAUSE,- (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLA N OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY ; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORI TY ; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE : PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY - - ITA 214/MDS/16 15 THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RE CONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLAR ED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF ; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FR OM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HU NDRED SQUARE FEET AT ANY OTHER PLACE ; (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED 13[ THREE PER CENT.] OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR 13 FIVE THOUSAND SQUARE FEET, WHICHEVER IS HIGHER ; (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL ; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS , NAMELY :- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILD REN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVI DUAL IS THE KARTA, (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED F AMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA; EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED TH AT 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). 7.3 THE CONTENTION OF THE LD. AR IS THAT THE ASSES SEE IS A DEVELOPER AND NOT MERE A CONTRACTOR AND BEING SO, T HE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(10) OF THE ACT. N OW, WE HAVE TO - - ITA 214/MDS/16 16 EXAMINE AS TO WHETHER THE ASSESSEE CAN BE CALLED AS A DEVELOPER WITHIN THE MEANING OF SEC.80IB(10) READ WITH EXPLANATION I HEREIN ABOVE. THE LD. AR SUBMITTED TH AT THE WORK CARRIED ON BY THE ASSESSEE MADE IT A DEVELOPER ENTI TLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. ACCORDING TO HIM , A DEVELOPER IS A PERSON WHO DEVELOPS THE FACILITY AND SUCH PERS ON MAY OR MAY NOT BE A CONTRACTOR. ON THE OTHER HAND, A CONTR ACTOR IS STATED TO BE A LEGAL TERM WHOSE RIGHTS AND DUTIES V IS- -VIS CONTRACTEE ARE DETERMINED BY WAY OF LEGAL DOCUMENT CALLED THE CONTRACT. ACCORDING TO THE LD. AR, THE ASSESSEE HAS UNDERTAKEN ALL RISKS INVOLVED IN THE PROJECT INCLUDING TECHNOL OGICAL INPUTS, ENTREPRENEURIAL INPUTS ETC. BESIDES, THERE IS HEAVY FINANCIAL INVOLVEMENT IN TERMS OF DEPLOYMENT OF MAN AND MACHI NE AS WELL AS ALL MATERIALS. AT THIS POINT, IT IS PERTINENT TO NOTE THAT THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF HAL LT D. VS. STATE OF ORISSA 55 STC 327 (SC) IN WHICH IT HAS BEEN OBS ERVED THAT IN A CONTRACT FOR WORK, THE PERSON PRODUCING HAS NO PR OPERTY IN THE THING PRODUCED AS A WHOLE, EVEN IF PART OR WHOLE OF THE MATERIAL USED BY HIM MAY HAVE BEEN HIS PROPERTY EARLIER. FUR THER, IN ANOTHER JUDGMENT OF THE SUPREME COURT IN THE CASE O F TAMIL - - ITA 214/MDS/16 17 NADU VS. ANANDAM VISHWANATHAN (1989) 1 SCC 613 IN W HICH IT WAS HELD THAT NATURE OF CONTRACT CAN BE FOUND ONLY WHEN THE INTENTION OF PARTIES ARE FOUND OUT. THE FACT THAT I N THE EXECUTION OF THE WORKS CONTRACT SOME MATERIAL ARE USED AND TH E PROPERTY IN THE GOODS SO USED PASSES TO THE OTHER PARTY, THE CO NTRACTOR UNDERTAKING THE WORK WILL NOT NECESSARILY BE DEEMED , ON THAT ACCOUNT, TO SELL THE MATERIAL. IT WAS, THEREFORE, A RGUED THAT THE DEVELOPER IS A PERSON WHO BRINGS IN ADDITIONAL RESO URCES BY WAY OF INVESTMENT AND TECHNICAL EXPERTISE FOR DEVELOPIN G THE INFRASTRUCTURE FACILITIES. SINCE THE ASSESSEE HAD S IMPLY DONE A PART OF WORK OF CIVIL CONSTRUCTION RELATING TO THE HOUSING PROJECT, HE STATED THAT IT IS NOT ELIGIBLE FOR DEDUCTION. 7.4 WE FIND THAT THE WORDS DEVELOPER AND CONTRAC TOR HAVE NOT BEEN DEFINED IN OR FOR THE PURPOSES OF S. 80-IB (10). THE PRIMARY QUESTION WHICH ARISES IS THAT HOW TO FIND O UT THE MEANING OF A WORD OR AN EXPRESSION WHICH IS NOT DEFINED IN THE ACT. IT IS A SETTLED LEGAL POSITION THAT ORDINARILY THE MEANING OR DEFINITION OF A WORD USED IN ONE STATUTE CANNOT PER SE BE IMPORTED INTO ANOTHER AS HAS BEEN HELD BY THE SUPREME COURT IN THE CASE O F UNION OF INDIA VS. R.C. JAIN (1981) 2 SCC 308. THEREFORE, TH E MEANING OF - - ITA 214/MDS/16 18 THE WORDS DEVELOPER AND CONTRACTOR, AS PUT FORTH BE FORE US BY THE RIVAL PARTIES FROM OTHER LEGISLATIONS, BE THEY STAT E OR CENTRAL ENACTMENTS, CANNOT BE AUTOMATICALLY APPLIED IN THE PRESENT CONTEXT. IN ORDER TO ASCERTAIN THE MEANING OF A WOR D NOT DEFINED IN THE ACT, A USEFUL REFERENCE CAN BE MADE TO THE G ENERAL CLAUSES ACT, 1897. IF A PARTICULAR WORD IS NOT DEFI NED IN THE RELEVANT STATUTE BUT HAS BEEN DEFINED IN THE GENERA L CLAUSES ACT, SUCH DEFINITION THROWS AMPLE LIGHT FOR GUIDANC E AND ADOPTION IN THE FORMER ENACTMENT. ACCORDING TO S. 3 OF THE G ENERAL CLAUSES ACT THE DEFINITIONS GIVEN IN THIS ACT SHALL HAVE APPLICABILITY IN ALL THE CENTRAL ACTS UNLESS A CONT RARY DEFINITION IS PROVIDED OF A PARTICULAR WORD OR EXPRESSION. ON SCA NNING S. 3 OF THE GENERAL CLAUSES ACT WE OBSERVE THAT NEITHER THE WORD CONTRACTOR NOR DEVELOPER HAS BEEN DEFINED THERE IN. THUS, THE GENERAL CLAUSES ACT IS ALSO OF NO ASSISTANCE IN THI S REGARD. GOING AHEAD, WHEN THESE WORDS ARE NEITHER DEFINED I N THE IT ACT, 1961 NOR IN THE GENERAL CLAUSES ACT, THE NEXT QUESTION IS THAT WHEREFROM TO FIND THE MEANING OF SUCH WORDS. T HERE IS NO NEED TO WANDER HERE AND THERE IN SEARCH OF AN ANSWE R WHICH HAS BEEN APTLY GIVEN BY THE SUPREME COURT IN THE CASE O F CWT VS. - - ITA 214/MDS/16 19 OFFICER-IN-CHARGE (COURT OF WARDS), PAIGAH 1976 CTR (SC) 404 : -15 - ITA 933/13 (1976) 105 ITR 133 (SC) IN WHICH I T WAS HELD THAT THE ORDINARY DICTIONARY MEANING OF A WORD CANN OT BE DISREGARDED. 7.5 COMING BACK TO OUR POINT OF ASCERTAINING THE ME ANING OF THE WORDS CONTRACTOR AS WELL AS DEVELOPER, WHIC H HAVE NEITHER BEEN DEFINED IN THE ACT NOR IN THE GENERAL CLAUSES ACT, WE FALL UPON OXFORD ADVANCED LEARNERS DICTIONARY TO FIND O UT THEIR MEANING. ACCORDING TO THIS DICTIONARY 'DEVELOPER' I S A PERSON OR COMPANY THAT DESIGNS AND CREATES NEW PRODUCTS, WHER EAS 'CONTRACTOR' IS A PERSON OR A COMPANY THAT HAS A CO NTRACT TO DO WORK OR PROVIDES SERVICES OR GOODS TO ANOTHER. THE NEW SHORTER OXFORD DICTIONARY DEFINES THE WORD 'CONTRACTOR' AS : 'A PERSON WHO ENTERS INTO A CONTRACT OR AGREEMENT. NOW, A PER SON OR FIRM THAT UNDERTAKES WORK BY CONTRACT, ESPECIALLY FOR BU ILDING TO SPECIFIED PLANS'. IN THE LIGHT OF THE MEANING ASCRI BED TO THESE WORDS BY THE DICTIONARIES IT IS OBSERVED THAT THE D EVELOPER IS A PERSON WHO DESIGNS AND CREATES NEW PRODUCTS. HE IS THE ONE WHO CONCEIVES THE PROJECT. HE MAY EXECUTE THE ENTIR E PROJECT HIMSELF OR ASSIGN SOME PARTS OF IT TO OTHERS. ON TH E CONTRARY THE - - ITA 214/MDS/16 20 CONTRACTOR IS THE ONE WHO IS ASSIGNED A PARTICULAR JOB TO BE ACCOMPLISHED ON THE BEHALF OF THE DEVELOPER. HIS DU TY IS TO TRANSLATE SUCH DESIGN INTO REALITY. THERE MAY, IN C ERTAIN CIRCUMSTANCES, BE OVERLAPPING IN THE WORK OF DEVELO PER AND CONTRACTOR, BUT THE LINE OF DEMARCATION BETWEEN THE TWO IS THICK AND UNBREACHABLE. WHEN THE PERSON ACTING AS DEVELOP ER, WHO DESIGNS THE PROJECT, ALSO EXECUTES THE CONSTRUCTION WORK, HE WORKS IN THE CAPACITY OF CONTRACTOR TOO. BUT WHEN H E ASSIGNS THE JOB OF CONSTRUCTION TO SOMEONE ELSE, HE REMAINS THE DEVELOPER SIMPLICITER, WHEREAS THE PERSON TO WHOM THE JOB OF CONSTRUCTION IS ASSIGNED, BECOMES THE CONTRACTOR. THE ROLE OF DE VELOPER IS MUCH LARGER THAN THAT OF THE CONTRACTOR. IT IS NO D OUBT THAT IN CERTAIN CIRCUMSTANCES A DEVELOPER MAY ALSO DO THE W ORK OF A CONTRACTOR BUT A MERE CONTRACTOR PER SE CAN NEVER B E CALLED AS A DEVELOPER, WHO UNDERTAKES TO DO WORK ACCORDING TO T HE PRE- DECIDED PLAN. 7.6 SO, IN ORDER TO BE ELIGIBLE FOR DEDUCTION, THE DEVELOPMENT SHOULD BE THAT OF HOUSING PROJECT AS A WHOLE AND NO T A PARTICULAR PART OF IT, AS HAS BEEN CONTENDED BY THE LD. AR. IT MAY BE POSSIBLE THAT SOME PART OF THE HOUSING PROJECT IS A SSIGNED BY THE - - ITA 214/MDS/16 21 LAND LORD TO SOME CONTRACTOR FOR DOING IT ON HIS BE HALF. THAT WILL NOT PUT THE DOER OF SUCH WORK IN THE SHOES OF A DEV ELOPER. 8. IN THE PRESENT CASE, THE ASSESSEE, THE ASSESSE E HAS ENTERED INTO A AGREEMENT WITH THE LAND OWNER, FOR DEVELOPME NT OF VACANT LAND INTO THE MULTI-STORIED RESIDENTIAL COMPLEX. 8.1 COMING TO THE MERITS OF THE CASE AS TO WHETHER THE ASSESSEE IS A DEVELOPER OR A WORKS CONTRACTOR, THER E IS AN AGREEMENT FOR DEVELOPING THE PROPERTY BETWEEN THE P ARTIES AND THE MAIN ACTIVITY OF CONSTRUCTION OF FLATS IS UNDER TAKEN BY VIRTUE OF THE CONSTRUCTION AGREEMENT INTO BETWEEN THE ASSESSE E AND THE BUYERS OF THE UNDIVIDED CO-OWNERSHIP RIGHT IN THE P ROPERTY AS A CONTRACTOR. THE AR ONLY HIGHLIGHTED ABOUT THE SO CA LLED AGREEMENT WITHOUT MAKING ANY REFERENCE TO THE CONST RUCTION AGREEMENTS ENTERED INTO WITH LAND LORD OF THE PRO PERTY. THE LAND OWNER WHO WAS REPRESENTED BY M/S ARIHANT FOUNDATIO NS AND HOUSING LTD SOLD UNDIVIDED CO-OWNERSHIP RIGHT IN TH E PROPERTY TO VARIOUS INDIVIDUALS AND THESE INDIVIDUALS GIVEN THE CONSTRUCTION WORK TO THE ASSESSEE. THE OWNER OF THE LAND, WHICH HAVE SOLD THE UNDIVIDED SHARE OF LAND TO VARIOUS PURCHASERS I .E. TO THE FLAT - - ITA 214/MDS/16 22 OWNERS. FURTHER THIS HAS OBTAINED APPROVAL FROM MUN ICIPAL CORPORATION FOR CONSTRUCTION OF THE FLATS. THE ASS ESSEE THOUGH CALLED DEVELOPER IS ONLY A CONTRACTOR ACCORDING TO THE ASSESSING 0FFIICER. THE ISSUE TO BE DECIDED IS WHETHER ASSESS EE IS A CONTRACTOR OR A DEVELOPER ENTITLED TO CLAIM UNDER S ECTION 80LB OF THE INCOME-TAX ACT. HOWEVER, THE FLAT OWNERS HAVE P URCHASED LAND FROM LAND OWNER AND HAVE ENTERED INTO A CONSTR UCTION WITH ASSESSEE 9. FROM THE RECITALS OF THE AGREEMENT, IT IS VER Y CLEAR EVEN THOUGH THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH THE LAND OWNER, THE LAND OWNER IN TURN SOLD THE UNDIVIDED CO -OWNERSHIP RIGHT IN THE PROPERTY TO VARIOUS PROSPECTIVE BUYERS WHO IN TURN ENTERED INTO, CONSTRUCTION AGREEMENTS JOINTLY WITH THE ASSESSEE AS A CONTRACTOR. THE AR'S ARGUMENT THAT THE ASSESSE E IS PRIMARILY A DEVELOPER WHO HAS TAKEN THE DEVELOPMENT WORK SUCH AS PLANNING DEVELOPMENT OF THE PROPERTIES ETC. IS N OT A CLINCHING FACTOR IN DECIDING THE ISSUE AS TO THE ELIGIBILITY FOR DEDUCTION UNDER SEC. 801B(10) OF THE ACT, AS THE MAIN REVENUE EARNED BY THE ASSESSEE WAS IN THE NATURE OF WORKS CONTRACTOR BY VIRTUE OF - - ITA 214/MDS/16 23 THE WRITTEN AGREEMENTS ENTERED INTO WITH VARIOUS OW NERS OF UNDIVIDED CO-OWNERSHIP RIGHT IN PROPERTY. IT IS REL EVANT TO MENTION HERE THAT ON SIMILAR FACTS THE TRIBUNAL, INDORE BEN CH IN THE CASE OF M/S SKY BUILDERS & DEVELOPERS VS. I.T.O, WARD 1( 1), BHOPAL 14 TAXMAN 78 (2011) CLEARLY HELD THAT WHERE THE ASS ESSEE SOLD PLOTS TO RESPECTIVE CUSTOMERS BY REGISTERING A SALE DEED AND THEREAFTER ASSESSEE CONSTRUCTED BUILDING AT AN AGRE ED PRICE, IT HAD TO BE CONCLUDED THAT ASSESSEE MERELY ACTED AS B UILDING CONTRACTOR AND NOT AS A DEVELOPER AND, THEREFORE, A SSESSEE'S CLAIM FOR DEDUCTION UNDER SEC. 80 1B(10) COULD NOT BE ALLOWED. THE FACTS OF THE ABOVE CASE ARE SIMILAR TO THE FACT S OF THE PRESENT CASE IN HAND, AS IN THIS CASE ALSO THE LAND OWNER S OLD THE UNDIVIDED CO-OWNERSHIP RIGHT IN THE PROPERTY TO VAR IOUS PERSONS AND THE PURCHASER IN TURN ENTERED INTO AGREEMENT WI TH THE ASSESSEE AS A CONTRACTOR. THE RECITALS IN THE CONST RUCTION AGREEMENT CLEARLY PROVE THAT THE ASSESSEE IS A WORK S CONTRACTOR. 10. A PERUSAL OF THE ABOVE RECITAL INDICATES THE R EAL INTENTION OF THE ASSESSEE. THE ASSESSEE HAS ENTERED INTO ONLY A CONSTRUCTION AGREEMENT WITH THE FLAT OWNERS WHICH L EGALLY - - ITA 214/MDS/16 24 INDICATES THAT IT IS ONLY ACTING AS A CONTRACTOR. H OWEVER, WHEN THE INCOME-TAX AUTHORITY BASED ON THE ABOVE DOCUMENT, F INDS THAT IT IS ONLY A CONTRACTOR AND NOT A DEVELOPER FOR TAKING A DECISION ON SEC.80IB OF THE ACT, THE ASSESSEE STATES THAT IT IS A CONTRACTOR ONLY IN NAME BUT A DEVELOPER IN SPIRIT. THUS, THE A SSESSEE BY JUGGLERY OF WORDS HAS MANAGED TO AVOID PAYING SERVI CE TAX TO THE CENTRAL EXCISE AUTHORITIES, AS IT IS ONLY A CONTRAC TOR AND CLAIMS DEDUCTION U/S.80IB AS NOT BEING A CONTRACTOR BUT AS A DEVELOPER. THIS JUGGLERY OF WORDS AND INTERPRETATION OF THE CO NSTRUCTION AGREEMENT HAS FAR REACHING IMPLICATIONS FOR THE REV ENUE. 11. FOR THE SAKE OF CLARITY IN HOLDING THAT THE A SSESSEE IS ONLY A CONTRACTOR AND NOT A DEVELOPER, WE REITERATE THE FOLLOWING POINT: THE ASSESSEE WAS NOT DENIED THE BENEFIT OF 80IB BY THE ASSESSING OFFICER NOT SOLELY BECAUSE OF THE FACT TH AT HE WAS NOT THE OWNER OF THE LAND. THE AO HAS GIVEN HIS REASONS IN HE E ASSESSMENT ORDER WHICH IS THE ABOVE ACT OF THE ASS ESSEE ENTERING INTO AN AGREEMENT WITH THE LAND OWNER IS N OT A GOVERNING FACTOR FOR CLAIMING DEDUCTION UNDER THESE PROVISIONS OF THE ACT. WHAT IS THE GOVERNING FACT IS RELATIONSHIP BETWEEN THE FLAT BUYERS AND THE ASSESSEE FOR WHOM HE -HAS WORKE D AS A - - ITA 214/MDS/16 25 CONTRACTOR. HIS ENTIRE INCOME IS THE RECEIPT FROM T HE CONTRACT WHICH IS RECEIVED FROM FLAT BUYERS ONLY AS CONTRACT OR AFTER ENTERING INTO A WORK CONTRACT. 12. THUS, IN OUR OPINION, THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION WORK OF BUILDINGS AS A CONTRACTOR AND WHEN THE ASSESSEES JOB INCLUDES ONLY CONTROLLING AND DIRECT ING THE WORK OF BUILDING CONSTRUCTION AS PER PLAN AND DESIGN BY THE LAND LORD AND HAND OVER THE CONSTRUCTED FLATS ON BEHALF OF THE LA ND LORD TO THE ELIGIBLE FLAT OWNERS WHO HAVE GOT REGISTERED UNDIVI DED RIGHT IN THE PROPERTY. IT IS ONLY PERFORMED THE WORK AS A CONTRA CTOR AND THE ASSESSEES JOB IS NOT INCLUDED DESIGNING THE PROJEC T AND SELLING OF THE PROJECT AND THE ASSESSEE WOULD NOT GET ANY S HARE IN THE CONSTRUCTED AREA AND IN THE UNDIVIDED PROPERTY AND THE ASSESSEE CANNOT BE SAID TO HAVE INVESTED ITS OWN MONEY TO CA RRY ON THE PROJECT. SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNA L, INDORE BENCH IN THE CASE OF M/S. SKY BUILDERS & DEVELOPERS VS. ITO IN ITA NO.255/MDS/IND/2010 DATED 17.8.2011 FOR THE ASS ESSMENT YEAR 2006-07. THE ASSESSEE IS NOT ELIGIBLE FOR DEDU CTION U/S.80IB(10) OF THE ACT. THE VARIOUS CASE LAW RELIE D ON BY THE LD. - - ITA 214/MDS/16 26 AR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CA SE, AS THOSE JUDGMENTS WERE DELIVERED ON ITS OWN FACTS. 13. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMI SSED. ORDER PRONOUNCED ON 25 TH , JANUARY, 2017 AT CHENNAI. SD/- SD/- ( ! . '# ) ( !' # $ ) (DUVVURU RL REDDY) (CHANDRA POOJARI) % &' /JUDICIAL MEMBER &' /ACCOUNTANT MEMBER !% /CHENNAI, (& /DATED, THE 25.01.2017. K S SUNDARAM &)** +,*-, / COPY TO: * 1 . / APPELLANT 3. * .*/0 / CIT(A) 5. ,12* 3 / DR 2. / RESPONDENT 4. * . / CIT 6. 24*5 / GF