The ITO, Ward-9(1), Ahmedabad V. M/s. Unique City Homes Ahmedabad, Ahmedabad

ITA 2529/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73109 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KAREEL
• Assessee Lawyers: VIJAY RANJAN; HARDIK TRIVEDI
• Keywords: Capital asset; Retrospective amendment; Question of law; Cost of acquisition
• Section: 80HHC; 80IB

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD . . , , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT , JUDICIAL MEMBER ./ I T A NO S . 3018/AHD/2010 & 2529/AHD/2012 / ASSESSMENT YEAR S : 2007 - 08 & 2009 - 10 THE I.T.O. WARD 9(1), AHMEDABAD VS. UNIQUE CITY HOMES AHMEDABAD F/5, VISHAL COMPLEX, NR. DINESH HALL, ASHRAM ROAD, AHMEDABAD P AN : AABFU 7489 E ./ ITA NO. 1194 /AHD/201 1 & CO NO.122 /AHD/201 1 / ASSESSMENT YEAR S : 2008 - 09 THE A.C.I.T. (OSD), CIRCLE - 9, AHMEDABAD VS. UNIQUE CITY HOMES AHMEDABAD F/5, VISHAL COMPLEX, NR. DINESH HALL, ASHRAM ROAD, AHMEDABAD PAN :AABFU 7489 E / APPELLANT / RESPONDENT REVENUE BY : SHRI P.L. KAREEL, SR. DR ASSESSEE(S) BY : SHRI VIJAY RANJAN & SHRI HARDIK TRIVEDI / DATE OF HEARING : 1 8 / 0 3 /20 1 4 / DATE OF PRONOUNCEMENT : 24 / 0 3 /201 4 / O R D E R PER SHRI N.S. SAINI , ACCOUNTANT MEMBER: THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER S OF LD. CIT(A) - XV, AHMEDABAD DATED 22.09.2010, 24.02.2011 AND 22.08.2012 F OR AY S 2007 - 08, 2008 - 09 AND 2009 - 10 RESPECTIVELY. THE CROSS - OBJECTION IS ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 2 FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - XV, AHMEDABAD FOR THE AY 2007 - 08. 2. AT THE TIME OF HEARING , THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THE FACTS AND ISSUE S INVOLVED IN ALL THE YEARS UNDER CONSIDERATION IN THE REVENU E S APPEAL S ARE SIMILAR. HE, THEREFORE, SUBMITTED THAT HE WILL BE MAKING THE ARGUM ENT S IN THE APPEAL OF THE REVENUE FOR THE AY 2007 - 08 WHICH SHOULD BE TAKEN AS THE ARGUME NTS OF THE REVENUE IN THE OTHER ASSESSMENT YEARS ALSO. 3. THE LD. AR OF THE ASSESSEE ALSO AGREED WITH THE SUBMISSIONS OF THE LD. DR. 4. THE SOLE ISSUE INVOLVED IN THE APPE A LS OF THE R EVENUE IS THAT THE CIT (A) ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO ALLOW DEDUCTION U/S 80IB(10) OF THE ACT FOR RS.1,06, 43,571/ - IN THE AY 2007 - 08, RS. 4,08,18,896/ - IN THE AY 2008 - 09 AND RS.74,09,233/ - IN THE AY 2009 - 10 . 5. THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT LAND BEARING SURVEY NUMBERS 329 TO 332 AND 335, 336, 346, 347/A, 347/2, 347/3, 348/1+2, 375/1, 375/2, 350,351,352,353/1, 354, 355, 372/1, 372/2 AND 325 HAVING AN AREA OF 113100 SQ. METERS WAS PURCHASED BY DHARTI VIKAS CO - O PERATIVE HOUSING SOCIETY LTD. THEREAFTER, THE SAID SOCIETY FILED AN APPLICATION AND PLAN BEFORE THE LOCAL AUTHORITY WHO ACCORDED PERMISSION FOR DEVELOPMENT AND CONSTRUCTION OF THE PROJECT TO DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD ON 04.04.2005. 6. THEREAFTER THE ASSESSEE ENTERED INTO A D EVELOPMENT A GR EEMENT WITH THE SAID DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD O N 21.10.2005. AS PER THIS AGREEMENT, THE FOLLOWING TERMS WERE AGREED UPON: - I) THE ASSESSEE WAS GIVEN POSSESSION OF THE LAND FOR CONSTRUCTION OF HOUSING UNITS AS PER THE PLAN, ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 3 II) THE ASSESSEE WAS ALLOWED T O ENROLL PROSPECTIVE BUYERS AS THE MEMBERS ON BEHALF OF THE SOCIETY, III) THE ASSESSEE WAS ALLOWED TO COLLECT THE CONSIDERATION FOR LAND AS WELL AS SUPER - STRUCTURE FROM THE BUYERS ON BEHALF OF THE SOCIETY, IV) THE ASSESSEE WAS ALLOWED TO RETAIN THE CONSIDERATION RE CEIVED FOR CONSTRUCTION AND CHARGE THE LAND COST TO THE SOCIETY. IN OTHER WORDS THE SOCIETY WAS FORMED FOR GROUP HOUSING OF THE MEMBERS AND WAS SUPPOSED TO CONSTRUCT AND TRANSFER THE HOUSES TO THE MEMBERS, V) ACCORDING TO THE DEVELOPMENT AGREEMENT, SINCE THE SOCIETY HAD NO EXPERIENCE OF CONSTRUCTION, THE ASSESSEE WAS ALLOWED TO CONSTRUCT THE HOUSES ON BEHALF OF THE SOCIETY AS PER THE TERMS NARRATED IN THE AGREEMENT ACCORDING TO THE APPROVED PLAN OF THE SOCIETY. 7. THE AO FURTHER OBSERVED THAT ON VERIFICATION OF LAND DOCUMENTS IT IS FOUND THAT THE ASSESSEE IS NOT THE OWNER OF THE SAID LAND AND THAT THE OWNERS WERE M/S. DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD. WHO WAS PERMITTED TO DEVELOP THE LAND BY CONSTRUCTING A H OUSING P ROJECT. THE NAME OF THE ASSESSE E - FIRM NEITHER APPEARS IN THE APPLICATION FORMS NOR ON THE PERMISSION LETTERS OF THE LOCAL AUTHORITY FOR THE H OUSING P ROJECT. 8. THE AO FURTHER OBSERVED THAT PERMISSION ISSUED BY THE LOCAL AUTHORITY SHOWS THAT THE PERMISSION FOR CONSTRUCTION WAS ISSUED I N THE NAME OF M/S. DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD AND NOT IN THE NAME OF THE ASSESSEE. THE PERMISSION CATEGORICALLY STATES THAT THE PERMISSION WAS BEING GRANTED FOR CONSTRUCTION AS PER THE APPROVED PLAN ENCLOSED WITH THE APPLICATION AND IT W AS SUBJECT TO THE RULES AND BY E - LAWS OF GUJARAT TOWN PLANNING AND URBAN DEVELOPMENT RULES, GUJARAT ; AHMEDABAD URBAN DEVELOPMENT AUTHORITY ; GENERAL DEVELOPMENT CONTROL REGULATIONS ETC.. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 4 9. FROM THE ABOVE FACTS, THE AO INFERRED THAT THE ASSESSEE FIRM WAS N OT THE OWNER OF THE LAND AND THAT THE APPROVAL FOR THE PROJECT WAS ALSO NOT RECEIVED IN THE NAME OF THE ASSESSEE. THE DOCUMENTS CLEARLY STATES THAT THE LOCAL AUTHORITY PERMITTED THE OWNER OF THE LAND VIZ. DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD. TO D EVELOP THE HOUSING SCHEME. HE OBSERVED THAT THE ASSESSEE CAME INTO THE PROJECT BY WAY OF DEVELOPMENT AGREEMENT ENTERED INTO BY IT WITH THE LAND OWNER. ACCORDINGLY, ONE OF THE FUNDAMENTAL CONDITIONS, LAID DOWN IN THE PROVISIONS OF SECTION 80IB (10) RELATI NG TO THE APPROVAL OF THE PROJECT WAS NOT COMPLIED WITH BY THE ASSESSEE IN AS MUCH AS IT HAD NOT TAKEN THE APPROVAL FROM LOCAL AUTHORITIES FOR THE DEVELOPMENT AND CONST R U CTI ON OF THE SAID PROJECT. THE AO THEREFORE HELD THAT IT APPEARED THAT THE ASSESSEE WA S NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) AS CLAIMED BY IT. THEREFORE, THE AO ISSUED A SHOW - CAUSE NOTICE DATED 19.11.2009 AS TO WHY THE DEDUCTION U/S 80IB(10) SHOULD NOT BE DISALLOWED. 10. IN REPLY TO THE SHOW - CAUSE NOTICE, THE ASSESSEE SUBMITTED AS UNDE R: - 2.9 IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE GAVE REPLY, THE CONTENTS OF WHICH IS REPRODUCED AS UNDER: 'IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2007 - 2008, THE ASSESSEE HAS BEEN PROVIDING NECESSARY DETAILS, EXPLANATION TO YOUR SATISFACTION. IT WAS DURING THE. COURSE OF SUCH HEARINGS, YOUR GOOD SELF HAS OBSERVED THAT AS PER THE DEVELOPMENT AGREEMENT ENTERED BY THE ASSESSEE WITH THE LAND OWNERS/SOCIETY, THE ASSESSEE HAS CARRIED OUT THE HOUSING PROJECT AS PER S PECIFICATIONS AND PLANS OBTAINED FROM THE LOCAL AUTHORITY. ACCORDINGLY, YOUR GOOD SELF IS OF THE VIEW THAT THE ASSESSEE HAS MERELY ACTED AS WORK CONTRACTOR AND ACCORDINGLY, IN THE LIGHT OF THIS BELIEF AND PRACTICALLY THE EXPLANATION BROUGHT IN UNDER SECTIO N 80IB(10) OF THE ACT W.E.F. 1/04/2001, THE ASSESSEE HAS BEEN SHOW CAUSED AS TO WHY THE ASSESSEE'S CLAIM OF DEDUCTION U/S 80IB SHOULD NOT BE DISALLOWED AS THE ASSESSEE HAS ACTED AS CONTRACTOR AND NOT AS DEVELOPER. IN THIS REGARD, THE ASSESSEE STATES THE AS UNDER: ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 5 2. AT THE OUTSET AND BEFORE WE PROVIDE NECESSARY EXPLANATION AND THROW LIGHT ON THE FACTS OF THE PRESENT CASE, IT IS SUBMITTED THAT WE ARE ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF REAL ESTATE PROJECT. DURING THE YEAR UNDER CONSID ERATION, WE WERE DEVELOPING HOUSING PROJECT NAMED AS; 'UNIQUE CITY HOMES'. NOW WITH REGARD TO YOUR OBSERVATIONS THAT THE ASSESSEE FIRM HAS MERELY CARRIED OUT THE ACTIVITIES AS A WORK CONTRACTOR AND NOT AS A DEVELOPER, WE PROVIDE NECESSARY EXPLANATION AS UN DER; A) AT THE VERY OUTSET, WE WOULD LIKE TO PROVIDE A BRIEF DETAIL OF THE SCHEME, OF 'UNIQUE CITY HOMES' PROPOSED DEVELOPED & SOLD BY US. IN ORDER THAT YOU APPRECIATE THE FACT OF THE CASE, WE WOULD LIKE TO STATE THAT THE SAID LAND ON WHICH SUCH AFORESAID SCHEME WAS DEVELOPED WAS OWNED BY DHARTI VIKAS CO OPERATIVE HOUSING SOCIETY LTD VIBHAG 1(B) AS AGREED AND UNDERSTOOD WITH THE SOCIETY AND THUS THE ASSESSEE UNIQUE CITY HOMES AHMEDABAD HAS MADE NECESSARY PAYMENTS FOR SUCH LANDS EVEN PRIOR TO CARRYING OUT A NY DEVELOPMENT WORK ON THE SAME. MOREOVER, VARIOUS PERMISSIONS HAVE BEEN OBTAINED THEREAFTER BY THE ASSESSEE TO CARRY OUT THE SAID PROJECT AND ACCORDINGLY WE HAVE SECURED EXCLUSIVE RIGHTS IN THESE LANDS F OR THE DEVELOPMENT, CONSTRUCTION AND SALE OF UNITS T O BE CONSTRUCTED ON THE SAID LAND TO BE PURCHASED, BECAUSE IT WAS SPECIFICALLY UNDERSTOOD THAT THE SOCIETY SHALL CONTINUE IN ORDER TO ASSIST FUTURE BUYERS TO MAINTAIN THE HOUSING COLONY IN A PROPER MANNER. THUS, YOUR GOOD SELF WILL APPRECIATE THAT THE SAID LAND WAS PURCHASED FOR THE PURPOSE OF DEVELOPMENT OF HOUSING PROJECT AND DEVELOPMENT, CONSTRUCTION AND SALE OF UNITS TO BE CONSTRUCTED ON THE SAID LAND IN THESE LANDS ARE PART AND PARCEL OF THE ACTIVITY OF THE ASSESSEE FIRM THROUGH EXECUTING SEPARATE DEVE LOPMENT AGREEMENT AND BY PAYING NECESSARY STAMP DUTY THEREON. THUS, YOUR GOOD SELF WILL APPRECIATE THAT THE ASSESSEE HAS BY EXECUTING VALID DOCUMENTS, BEING A REGISTERED DEVELOPMENT AGREEMENT, SECURED AND ACQUIRED THE RIGHTS IN THIS LAND FOR CARRYING OUT D EVELOPMENT WORK AND THUS THE QUESTION THAT THE ASSESSEE HAS CARRIED OUT THE PROJECT AS WORK CONTRACTOR WOULD NOT STAND AT ALL. THUS, YOUR GOOD SELF MAY NOTE THAT THE ASSESSEE HAS CARRIED OUT THE DEVELOPMENT WORK AS A DEVELOPER BUILDER ONLY AND NOT AS WORK CONTRACTOR AND ACCORDINGLY, THE CLAIM OF THE ASSESSEE U/S 80IB OF THE ACT IS ALLOWABLE. AS, CALLED FOR THE TRANSLATED VERSION OF DEVELOPMENT AGREEMENT IS ENCLOSED HERE WITH. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 6 B) A QUICK LOOK AT THIS DEVELOPMENT AGREEMENT WOULD FURTHER CLARIFY THAT THE ASSE SSEE FIRM HAS MUCH PRIOR TO EXECUTION OF DEVELOPMENT AGREEMENT ACQUIRED THE POSSESSION AND CONTROL OF THE SAID LAND BY MAKING DUE PAYMENTS FOR THE SAME FOR CARRYING OUT ACTIVI TIES WHICH WERE NECESSARY FOR T HE DEVELOPMENT AND ALSO INCURRED HUGE EXPENSES LIK E PREPARATION OF PLANS FOR DEVELOPMENT, PLANTATION OF TREES, PREPARE COMMON PLOTS, EXPENSES FOR TAKING CARE ETC. AT OWN COST AND THUS, YOU MAY OBSERVE THAT THE ASSESSEE FIRM HAS CARRIED OUT THE HOUSING PROJECT AS EXCLUSIVE DEVELOPER & SELLER TAKING AL T HE INHERENT RISKS FOR COMPLETING AND SELLING T H E PROJECT. YOUR KIND ATTENTION IS INVITED TO FREE ENGLISH TRANSLATION THE PARA (I) - PAGE 10 OF THE DEVELOPMENT AGREEMENT WHICH READS AS FOLLOW; '............... ...BUT EARLIER TO THIS, DURING THE DISCUSSION SIN CE LAST SIX MONTHS FOR THE DEVELOPMENT OF THE THIS LAND BETWEEN THE PARTY OF THE FIRST PART (ORIGINAL SOCIETY) AND THE PARTY OF THE SECOND PART , AS THE PARTY OF THE FIRST PART HAS STATED AS FAR AS POSSIBLE THE WORK OF DEVELOPMENT WILL BE GIVEN TO THE PA RTY OF THE SECOND PART, AND RELYING ON IT, THE PARTY OF THE SECOND PART HAS MADE HUGE EXPENSES FOR THIS PROJECT AND SINCE THE N AS POSSESSION OF THE LAND WAS WITH THE PARTY OF THE SECOND PART WHICH WAS HANDED OVER BY THE PARTY OF THE FIRST PART, THE PARTY OF T HE SECOND PART HAS MADE EXPENSES FOR WORKS LIKE TAKING ITS CARE, TO PREPARE PLANS FOR DEVELOPMENT, PLANTATION OF TREES, TO PREPARE COMMON PLOT ETC., AT THEIR OWN COSTS AND THE PARTY OF THE FIRST PART SHO WS CONSENT TO THE SAME.....' . FROM THE ABOVE, IT MAY BE APPRECIATED THAT THE ASSESSEE FIRM HAS CARRIED OUT THE PROJECT AT OWN COST AND RISK BY DEVELOPMENT, CONSTRUCTION AND SALE OF UNITS TO BE CONSTRUCTED ON THE SAID LAND PURCHASED AND THE SOCIETY IS A MERE INSTRUMENT TO ENABLE THE SUBSEQUENT BUYERS TO MAINTAIN THE PROPERTY IN AN EASY MANNER JOINTLY. C) ONCE YOUR GOOD SELF WILL APPRECIATE THE ABOVE FACTS, YOUR GOOD SELF WOULD APPRECIATE FROM THE BELOW TABLE THAT THE ASSESSEE HAS DULY COMPLIED WITH ALL THE REQUIREMENT U/S 80(IB) OF THE ACT WHICH IS SUMM ARIZED AS UNDER: ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 7 SR. NO. CONDITIONS SPECIFIED FOR DEDUCTION U/S. 80IB FULFILLMENT OF, CONDITIONS OF DEDUCTION U/S. 8 0 IB 1 DATE OF APPROVAL BY LOCAL AUTHORITY APPROVAL DATE 04/04/2005 2 DATE OF COMPLETION OF HOUSING PROJECT BEFORE 3 1.03.20 10(AT PRESENT THE PROJECT IS PARTLY COMPLETED) 3 SIZE OF THE PLOT OF LAND MORE THAN 1 ACRE 4 BUILT UP AREA OF 1500 SQ FEET FOR EACH RESIDENTIAL UNIT EACH RESIDENTIAL UNIT IS HAVING BUILT UP AREA OF LESS TH AN 1500 SQ. FT. AS PER THE APPROVED PLAN. ALSO IN SUPPORT OF AFORESAID CLAIM OF DEDUCTION U/S 80IB(1 0 ), THE ASSESSEE FIRM HAS SUBMITTED SUBMITS FOLLOWING DETAILS TO ASSESSING OFFICER (I) AUDITED ANNUAL ACCOUNTS FOR THE YEAR ENDED ON 31/03/2007 (II ) AUDIT REPORT INFORM NO. 10 CCB FOR CLAIMING DEDUCTION U/S 80IB(1 0 ) OF THE ACT (IN) APPROVAL OF HOUSING PROJECT APPROVED FROM AUDA (AHMEDABAD URBAN DEVELOPMENT AUTHORITY) (IV) B. U. PERMISSION RECEIVED FROM A UDA ALONGWITH LETTER BY SAID AUTHORITY CLARIF YING THAT FOR SUCH BU PERMISSION CERTIFICATE , DEVELOPER 'IS ASSESSEE FIRM. AS THE ASSESSEE FIRM HAS SATISFIED ALL THE CONDITIONS LAID DOWN UNDER SECTION 80IB (10) OF THE ACT, DEDUCTION UNDER SECTION 80IB(10) CANNOT BE DISALLOWED, THE ASSESSEE STATES THAT THERE IS NO OTHER CONDITIONS, WHICH IS TO BE COMPLIED BY AN ASSESSEE FOR CLAIMING THE DEDUCTION ON PROFITS OF THE HOUSING PROJECT S AND THUS THE CLAIM OF THE ASSESSEE IS VALID. 3 . NOW WITH REGARDS TO YOUR OBSERVATION THAT ASSESSES FIRM HAS ACTED AS MERE W ORK CONTRACTOR AND NOT AS DEVELOPER, HERE THE ASSESSES STATES THAT ALL THE PERMISSIONS AND APPROVAL WERE OBTAINED BY THE ASSESSES DEVELOPER FIRM AND ALL EFFORTS WERE PUT IN BY DEVELOPER FIRM WITH ALL ITS RESPONSIBILITIES AND RISK AS ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 8 DEVELOPER AND WERE ALSO LEGALLY BOUND TO DO SO UNDER THE DEVELOPMENT. A PERUSAL OF THE AGREEMENT WOULD SHOW THAT DEVELOPMENT AS PER LAY OUT PLAN HAS TO BE DONE BY THE ASSESSEE AT ITS OWN COST AND RISK. ALL THE FUNCTIONS OF THE DEVELOPER FIRM ARE THAT OF DEVELOPMENT OF THIS PROPE RTY AND ARE BRIEFLY DESCRIBED AS UNDER: (I)THE DEVELOPER FOR THE PURPOSE OF PLANNING AND EXECUTING THE PROJECT 'UNIQUE CITY HOMES' HAS SANCTIONED NECESSARY PLANS, DRAWINGS, SPECIFICATIONS AND MAPS, ETC., AND HAS DONE THE WORK OF PLANNING, CONSTRUCTION AND DEVELOPMENT OF THE SAID PROJECT AS AND WHEN REQUIRED. II)THE DEVELOPER HAS APPOINTED THE ENGINEERS, LEGAL ADVISORS AND SUCH, OTHER PROFESSIONALS NECESSARY FOR THE PURPOSE OF IMPLEMENTATION OF SUCH PROJECT AND HAS BORN THE NECESSARY EXPENDITURE. THE DEVEL OPER HAS MADE ALL NECESSARY ARRANGEMENTS WITH THE AFORESAID PROFESSIONALS FOR SUCCESSFUL PLANNING, CONSTRUCTION AND DEVELOPMENT OF THE SAID PROJECT. (IIII) THE DEVELOPER HAS ACCEPTED MONEY FROM THE PERSONS ENROLLED IN THE PROJECT. THE PRICE TO BE CHARGED TO CUSTOMERS IS SOLELY DETERMINED BY THE ASSESSEE AND THEREBY, COLLECTS THE CONSIDERATION. ENTIRE SALES VALUE OF A UNIT HAS BEEN SHOWN AS INCOME IN THE BOOKS OF ACCOUNT OF ASSESSEE. (IV) FOR THE PURPOSE OF COMPLETING THE PROJECT, AS PLANNED AND WITHIN STI PULATED PERIOD, DEVELOPER HAS MADE ALL NECESSARY APPLICATIONS, REPLIES, STATEMENTS, WHICH ARE NEEDED, IN THE GOVERNMENT OFFICES OR MUNICIPAL CORPORATION OFFICES, ETC. (V) THE COMPLETE RESPONSIBILITY OF THE PLANNING, AND THE TOTAL CONSTRUCTION IS RESTED U PON THE DEVELOPER AND DURING THE TIME WHEN THE PROJECT WAS GOING ON, THE COMPLETE RESPONSIBILITY FOR WHATEVER AGREEMENT EXECUTED UNDER THE PROJECT AND WHATEVER TRANSACTIONS TAKEN PLACE WITH THIRD, PARTIES, THE SAME WAS RESTED UPON THE DEVELOPER AND THE SOC IETY WAS N O T RESPONSIBLE. (VI) THE ASSESSEE - DEVELOPER HAS CREATED COMMON AMENITIES AND OTHER INFRASTRUCTURE LIKE ROADS, GARDEN, ELECTRICITY, WATER, DRAINAGE, ETC., FOR AFORESAID PROJECT AT THEIR OWN COST THUS, ASSESSEE HAS CREATED A NEW PRODUCT ON THE PLO T OF LAND BY PERFORMI NG AFORESAID DEVELOPMENT WORK. (VII) IT CAN BE SEEN FROM B.U. PERMISSION OBTAINED FROM AUDA, NAME OF ASSESSEE FIRM BEING M/S UNIQUE CITY HOMES AHMEDABAD HAS BEEN MENTIONED AS DEVELOPER ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 9 THE AFORESAID FACTS CLEARLY PROVE THAT ACTIVE E NGAGEMENT IN THE WORK OF DEVELOPMENT OF PROJECT AND SALE OF RESIDENTIAL UNITS IS OF THE ASSESSEE AND NOT OF THE SOCIETY. 3.2 THE ASSESSEE - WOULD FURTHER LIKE TO SUBMIT DICTIONARY MEANINGS OF THE WORDS DEVELOP', 'DEVELOPER' AND 'DEVELOPMENT' FROM VARIOUS D ICTIONARIES AS UNDER: FROM THE RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE, THE FOLLOWING DEFINITIONS CAN BE FOUND: DEVELOP : 1. TO BRING OUT THE CAPABILITIES OR POSSIBILITIES OF; BRING TO A MORE ADVANCED OR EFFECTIVE STATE; 2. TO CAUSE TO GROW OR EX PAND. DEVELOPER: 1. A PERSON OR THING THAT DEVELOPS. DEVELOPMENT: 1. THE ACT OR PROCESS OF DEVELOPING; PROGRESS. SYNONYM - EXPANSION, ELABORATION, GROWTH, EVOLUTION; UNFOLDING, MATURING, MATURATION. FROM WEBSTER DICTIONARY THE FOLLOWING DEFINITIONS EMERGE : DEVELOPMENT: A. TO REALISE THE POTENTIAL OF; B. TO AID IN THE GROWTH OF: STRENGTHEN, DEVELOP THE BICEPS. TO BRING INTO BEING: MAKE ACTIVE (DEVELOP A BUSINESS). TO CONVERT (A TRACT OF LAND) FOR SPECIFIC PURPOSE, AS BY BUILDING EXTENSIVELY. FROM LAW LEX ICON DICTIONARY, THE FOLLOWING DEFINITIONS COULD BE SEEN : DEVELOPMENT: 1. THE ACT, PROCESS OR RESULT OF DEVELOPING OR GROWING OR CAUSING TO GROW; THE STATE .OF BEING DEVELOPED; 2. HAPPENING DEVELOPMENT OF LAND: THE EXPRESSION 'DEVELOPMENT' MEANS THE REALI SATION OF THE POTENTIALITIES OF LAND OR TERRITORY BY BUILDING OR MINING: SADRUDDIN SULEMAN V. J. H. PATWADLEN AIR 1965 BOM 224, 242 (CONSTITUTION OF INDIA, ART. 31) , DEVELOPMENT WORK : THE CONSTRUCTION OF UNDERGROUND MARKET DOES NOT DESTROY THE INTRINSIC CHARACTER OF THE PARK AS A PUBLIC PARK BUT RE - LOCATE AND RE - DEVELOP THE PARK AS A PLACE FOR PUBLIC RECREATION AND AS SUCH THE CONSTRUCTION OF THE UNDERGROUND ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 10 MARKET IS A DEVELOPMENT WORK. CALCUTTA YOUTH FRONT VS. STATE OF WEST BENGAL AIR 1988 SC 436, 439 [CALCUTTA MUNICIPAL CORPORATION ACT (59 OF 1980) S. 353(2) EXPLANATION].' THE AFORESAID DEFINITIONS SQUARELY APPLY TO THE CASE OF ASSES SEE AND ESTABLISH THE FACT THAT IT HAS WORKED AS DEVELOPER OF THE PROJECT AND IT IS ENTITLED TO DEDUCTION U/S. 80IB OF THE ACT. 3.3 THE ASSESSEE FURTHER SUBMITS THAT DEVELOPER MEANS A PERSON WHO MAKES THE THING HAPPEN AND IT IS THE ASSESSEE, WHO BY MOBILIZING AND SYNTHESIZING PEOPLE, PLAN, TECHNICAL EXPERTISE, SUPERVISION, CO ORDINATION AND CONTROL DEVELOPED AND CREATED T HE HOUSING PROJECT, HE HAS UNDERTAKEN TO BEAR ALL RISKS. FURTHER THE ASSESSEE HAS CONSTRUCTED THE RESIDENTIAL UNITS TOGETHER WITH COMMON AMENITIES LIKE ROAD, WATER SUPPLY, ELECTRIC POWER, DRAINAGE CONNECTION ETC. THUS IT HAS CREATED A NEW PRODUCT ON THE PL OT OF LAND, BY PERFORMING THE ABOVE STATED DEVELOPMENT ACTIVITIES. 3.4 THE ASSESSEE FURTHER STATES THAT, IT IS THE DEVELOPER BEING THE ASSESSEE FIRM WHO OFFERS MEMBERSHIP TO MEMBERS AND ALLOTS THE HOUSES TO MEMBERS. THE PRICE TO BE CHARGED TO MEMBERS IS S OLELY DETERMINED BY ASSESSEE AND THEREBY, COLLECTS THE CONSIDERATION. THE SOCIETY IS BOUND TO ENTER THE SAME PERSONS AS MEMBERS AND DECISION TO SALE THE HOUSE TO CUSTOMER IS OF ASSESSEE FIRM AND NOT OF SOCIETY. FREE ENGLISH TRANSLATION OF PARA NO. 24 ON PA GE 24 OF THE DEVELOPMENT AGREEMENT IS AS FOLLOWS: (24) THE PARTY OF THE SECOND PART S HALL DECIDE THE PRICE OF THE PROPERTY TO BE ALLOTTED TO THE ALLOTTEE FOR THE UNITS TO BE CONSTRUCTED ON THE LAND, FUTURE ALLOTTEE, ALONG - WITH THE MEMBERS AND A LLOTTEE, TAKING INTO CONSIDERATION PROPER AND REASONABLE FACTS AND CIRCUMSTANCES FOR THE SAME........' ' IN VIEW OF WHAT IS STATED HEREIN ABOVE, YOUR GOOD SELF MAY NOTE THAT THE ASSESSEE FIRM HAS CARRIED OUT THE W HOLE PROJECT AS DEVELOPER BUILDER FROM THE PURCHASE OF LAND TO THE ULTIMATE D IS POSAL AS A SALE OF FINAL PRODUCT AS EVIDENT FROM THE DEVELOPMENT AGREEMENT. THIS CLEARLY PROVES THAT THE WORK CARRIED OUT BY ASSESSEE FIRM IS NOTHING BUT THE WORK OF DEVELOPMENT OF HOUSING PROJECT AS REFERRED IN SECTION 80 I B(10) OF THE ACT AND THUS, THE SAID ACTIVITY IS ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 11 4. HAVING EXPLAINED THE FACTS THAT THE ASSESSEE FIRM HAS ACTED AS DEVELOPER OF THE WHOLE HOUSING PROJECT, IT CA N BE FURTHE R APPRECIATED FROM THE DEVELOPMENT AGREEMENT THAT THE ASSESSEE FIRM IN ORDER TO SECURE THE RIGHTS IN. THESE LANDS HAS AGREED TO MAKE TOTAL PAYMENT OF LAND TO BE DEVELOPED BY US. ON THAT UNDERSTANDING, THE ASSESSEE FIRM HAD MADE PAYMENT OF RS.3,38,63,000/ - TOWARDS LAND DEVELOPMENT RIGHT AND THIS IS NOTHING BUT THE ACQUISITION COST OF THE LAND. IT IS FURTHER PERTINENT TO NOTE THAT ASSESSEE FIRM. HAS MADE PAYMENT IRRESPECTIVE OF THE FACT THAT IT IS ABLE TO SELL OUT THE DEVELOP L AND OR NOT, WHICH MEANS ALL THE RISKS ARE ON ACCOUNT OF ASSESSEE FIRM. THIS FACT CAN BE APPRECIATED FROM THE REGISTRED DEVELOPMENT AGREEMENT ALSO AND THUS YOU MAY NOTE THAT THE ASSESSEE IS DEVELOPER BUILDER' ONLY WHO HAS CARRIED OUT THE WHOLE H OUSING PROJECT AT ITS OWN RISK. IT CAN ALSO BE SEEN FROM THE AUDITED ACCOUNTS THAT IT HAS NOT CARRIED OUT WORK AS CONTRACTOR OR AT FIXED REMUNERATION BUT RATHER HAS DEBITED PROFIT & LOSS ACCOUNT WITH THE AMOUNT OF LAND RIGHTS PAID TO SOCIETY, LABOUR COST, MATERIAL COST AND OTHER COST INCURRED TOWARDS COMPLETION OF PROJECT AND SHOWN ENTIRE SALE VALUE OF UNIT INCLUDING LAND COST AS ITS INCOME AS WORKED OUT ON THE BASIS OF ACCEPTED PRINCIPLES OF ACCOUNTING. THE ENTIRE PROFIT/ LOSS ARISING FROM COMPLETION OF P ROJECT, AS WORKED OUT AND CERTIFIED BY THE AUDITOR HAS BEEN SHOWN IN ASSESSEE'S BOOKS OF ACCOUNT AND NOT IN THE BOOKS OF SOCIETY. 4.2 ALSO, EVEN FOR A MOMENT WE ASSUME THAT THE ASSESSEE FIRM HAS CARRIED OUT THE WHOLE HOUSING PROJECT AS WORK CONTRACTOR, TH EN, THE ASSESSEE WOULD HAVE RECEIVED A FIXED AMOUNT OF CONSIDERATION/REMUNERATIONS FROM LAND OWNER WHEREAS IN CASE OF ASSESSEE, IT HAS NOT RECEIVED ANY SUCH FIXED AMOUNT AND RECEIVED THE AGGREGATE AMOUNT TOWARDS LAND, DEVELOPMENT AND CONSTRUCTION OF HOUSIN G PROJECTS FROM PERSONS TO WHOM SUCH HOUSES WERE SOLD DURING THE YEAR. HAD THE ASSESSEE WAS DOING THE WORK AS CONTRACTOR OR ON FIXED REMUNERATION, NO COST RELATED FOR COMPLETION OF PROJECT WOULD HAVE BEE N DEBITED IN PROFIT & LOSS ACCOUNT AND RATHER ENTIRE PROFIT & LOSS ACCOU N T WOULD HAVE BEEN SHOWING REMUNERATION RECEIVED FROM SOCIETY WHICH IS NOT THE CASE OF ASSESSEE. IT IS FURTHER PER TIN ENT TO NOTE THAT EVEN WORK IN PROGRESS CARRIED ON IN THE BOOKS OF THE ASSESSEE FIRM IS ALSO INCLUSIVE OF COST OF LAND BE ING PAYMENT MADE TO THE OWNERS OF LAND DEVELOPMENT RIGHT, WHICH PROVES BEYOND DOUBT THAT ASSESSEE HAS CARRIED OUT THE WORK AS DEVELOPER CUM BUILDER. AND ALSO THE FACT THAT THE ASSESSEE HAS THROUGH EXECUTING VALID REGISTERED DOCUMENT AND BY PAYING ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 12 NECESSARY STAMP DUTY THEREON, ACQUIRED THE RIGHTS WHICH BEYOND DOUBTS PROVES THAT THE ASSESSEE HAS CARRIED OUT THE HOUSING PROJECT AS DEVELOPER BUILDER ONLY AND NOT AS WORK CONTRACTOR AS OBSERVED BY YOU. IN VIEW OF WHAT IS STATED HEREIN ABOVE, THAT ASSESSEE IS NOT WORKING ON REMUNERATION FROM THE LAND OWNERS BUT IS WORKING ITSELF AS A DEVELOPER IN ORDER TO EXPLOIT THE POTENTIAL OF ITS BUSINESS IN ITS OWN INTEREST AND, THEREFORE, OPTED FOR ALL BUSINESS RISKS ASSOCIATED WITH THE BUSINESS OF DEVELOPMENT OF REAL ES TATE INCLUDING DEVELOPMENT AND BUILDING OF HOUSING PROJECTS, THEREFORE YOUR OBSERVATIONS ON FACTS THAT ASSESSEE HAS ACTED MERELY AS WORK CONTRACTOR IS FACTUALLY TOTALLY INCORRECT AND PERVESE. 5. THE ASSESSEE FIRM MAY REFER TO THE DECISION OF HON'BLE SUPR EME COURT IN CASE OF GUJARAT INDUSTRIAL DEVELOPMENT 227 ITR 414 WHEREIN APEX COURT CONSIDERING THE MEANING OF 'DEVELOPER' HELD THAT THE WORD 'DEVELOPMENT' APPEARING IN THE PROVISIONS SHOULD BE UNDERSTOOD IN ITS WIDER SENSE AND, THEREFORE, GRANTED EXEMPTION EVEN THOUGH THE GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION WAS ENGAGED IN THE INDUSTRIAL DEVELOPMENT. THE DEVELOPMENT MEANS THE REALIZATION OF POTENTIALITIES OF LAND OR TERRITORY BY BUILDING OR MINING. ACCORDINGLY, IT CAN BE .SAFELY SAID THAT A PERSON WHO UNDERTAKES TO DEVELOP REAL ESTATE BY DEVELOPING AND CONSTRUCTING A HOUSING PROJECT IS AN ELIGIBLE UNDERTAKING; DEVELOPING AND BUILDING OF HOUSING PROJECTS WITHIN THE MEANING OF S. 80 - IB( 10 ) OF THE ACT. IN THE PRESENT CASE IN HAND, THE LANDOWNER HAS NOT MA DE ANY CONSCIOUS ATTEMPT TO DEVELOP THE PROPERTY. THE LANDOWNERS, NO DOUBT, HAVE NOT THROWN THEMSELVES INTO DEVELOPMENT OF PROPERTY. IT IS ONLY THE ASSESSEE WHO IS DEVELOPING THE PROPERTY. THROWING ITSELF INTO THE BUSINESS OF DEVELOPMENT AND BUILDING OF HO USING PROJECTS BY TAKING ALL RISKS ASSOCIATED WITH THE BUSINESS BY ENGAGING ARCHITECTS, STRUCTURAL CONSULTANTS, DESIGNING AND PLANNING OF THE HOUSING SCHEMES, P AYMENT OF DEVELOPMENT CHARGES, OBTAINING NECESSARY PERMISSIONS, APPROVING PLANS, HIRING MACHINER Y AND EQUIPMENTS, HIRING ENGINEERS, APPOINTING CONTRACTORS, ETC. THE DEVELOPER IS NOT WORKING ON REMUNERATION FOR THE LANDOWNERS, BUT DEVELOPER IS WORKING FOR HIMSELF IN ORDER TO EXPLOIT THE POTENTIAL OF ITS BUSINESS IN HIS OWN INTEREST AND, THEREFORE, OPT ED FOR ALL BUSINESS RISKS ASSOCIATED WITH THE BUSINESS OF DEVELOPMENT OF REAL ESTATE, INCLUDING DEVELOPING AND BUILDING OF HOUSING PROJECTS. IN VIEW OF SUCH FACTS, ASSESSEE FIRM IS ENTITLED TO DEDUCTION U/S 80IB(10) AS CLAIMED IN RETURN - OF INCOME. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 13 FROM THE ABOVE, YOUR GOOD SELF WILL THUS APPRECIATE T H AT THE ASSESSEE HAS CARRIED OUT THE WHOLE PROJECT AS DEVELOPER ONLY. THE ASSESSEE FURTHER STATES THAT AS IN CASE OF IT, THERE IS NO FIXED REMUNERATION CONTRACT WITH SOCIETY AND SOCIETY HAS BEEN REWARDED FOR LAND COST HENCE BOTH THE CONDITIONS LAID DOWN IN AFORESAID DECISIONS IS SATISFIED IN CASE OF ASSESSEE AND THEREFORE IT IS ENTITLED TO DEDUCTION U/S. 80IB AS CLAIMED IN RETURN OF INCOME. WE HOP E THE ABOVE EXPLANATION WILL MEET YOUR REQUIREMENT CLARIFY THA T THE ASSESSEE FIRM HAS ACTED AS DEVELOPER ONLY AND NOT AS MERE WORK CONTRACTOR WHICH YOUR GOOD SELF IS OF THE VIEW. WE BELIEVE THAT ONCE THE ABOVE FACTS AND EXPLANATIONS ARE DULY CONSIDERED, IT WILL CLARIF Y THAT THE ASSESSEE IS DEVELOPER BUILDER AND THUS ENTITLED TO CLAIM DEDUCTION U/S 80IB OF THE ACT. 11. THE AO, AFTER CONSID ER ING THE SUBMISSIONS OF THE ASSESSEE, HELD AS UNDER: - 2.10 BEFORE WE EMBARK UPON THE DISCUSSION OF THE PROVISIONS OF THE SECTION AND WHETHER THE ASSESSEE HAS SATISFIED THE CONDI TIONS LAID DOWN IN THE SECTION 80 - IB, IT IS PERTINENT TO GO THROUGH THE WORDING OF THE SECTION AS APPLICABLE TO THE YEAR UNDER CONSIDERATION. IT READS.. DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERTAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTU RE DEVELOPMENT UNDERTAKINGS. 80 - IB. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB - SECTIONS (3) TO [(11), ( 11 A) AND ( 11 B) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIG IBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF A SSESSMENT YEARS AS SPECIFIED IN THIS SECTION. (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SHALL BE ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 14 HUNDRED PER CENT OF THE PROF ITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, , (EMPHASIS SUPPLIED) 2.11 ON AN ANALYSIS OF THE PROVISIONS OF SECTION 80 - IB, IT IS SEEN THAT THE SUB - SECTION (1) PROVIDES THAT THE DEDUCTION SHALL BE ALLOWED IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE FROM THE PROFITS AND GAINS DERI VED FROM ANY BUSINESS REFERRED TO IN SUB - SECTIONS (3) TO [( 11 ), (11A) AND (11B) CALLED THE ELIGIBLE BUSINESS SUBJECT TO THE PROVISIONS OF THIS SECTION VIZ. SECTIO N 80 IB. SUB - SECTION (10) OF 80IB STATES THAT THE AMOUNT OF DEDUCTION UNDER SUB SECTION (1) TO THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF - (A)SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, 2.12 ON A CAREFUL PERUSAL OF THE LANGUAGE OF THIS SUB - SECTION THE FOLLOWING POIN TS EMERGE. WORD 'AND' HAS BEEN USED BETWEEN 'DEVELOPING 1 AND ' BUILDING' HOUSING PROJECT. IN THE FOLLOWING CONDITIONAL CLAUSE ALSO THE WORD 'AND' HAS BEEN USED BETWEEN THE WORDS DEVELOPMENT AND CONSTRUCTION. USE OF THE WORD 'AND' CLEARLY BRINGS OUT THAT BO TH THE CONDITIONS NEED TO BE CUMULATIVELY SATISFIED BY THE ELIGIBLE BUSINESS FOR GETTING THE DEDUCTION. IT INDICATES THAT THE HOUSING PROJECTS SHOULD NOT ONLY BE BUILT BUT ALSO TO BE DEVELOPED BY THE ASSESSEE SO AS TO MAKE ITS INCOME QUALIFY FOR DEDUCTION. 2.13 IN NORMAL PARLANCE IT MAY BE POSSIBLE THAT THESE TWO WORDS ARE USED INTERCHANGEABLY, BUT THE STATUTE USES BOTH THE WORDS SPECIFICALLY WITH 'AND' IN BETWEEN. FROM THE USAGE OF BOTH THE WORDS, IT IS IMPLIED THAT THESE TWO WORDS HAVE DIFFERENT MEANING AND BOTH HAVE TO BE SIMULTANEOUSLY SATISFIED. IT FOLLOWS THAT THESE WORDS HAVE A SPECIAL AND SEPARATE MEANING IN THE GIVEN CONTEXT AND ALSO MEANS THAT THERE IS A SPECIAL CONDITION THAT THE ENTERPRISE MUST BE NOT ONLY A BUILDER BUT ALSO A DEVELOPER. IN OUR CASE THE ASSESSEE CONSTRUCTED THE HOUSES AS PER THE AGREEMENT WITH THE SOCIETY. IT IS TO BE EXAMINED ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 15 AS TO WHETHER THE ASSESSEE HAS DEVELOPED THE HOUSING PROJECT AND WHETHER THE ASSESSEE CAN BE CALLED A 'DEVELOPER' WITHIN THE MEANING OF SECTION 80 - 1 B (10)? 2.14 ASSESSEE IN ITS REPLY HAD SUBMITTED THAT THE HOUSING PROJECT HAD SATISFIED ALL THE CONDITIONS REQUIRED UNDER SECTION 80IB VIZ. (I) THE AREA OF THE LAND IS MORE THAN ONE ACRE (II) BUILT UP AREA OF EACH UNIT IS BELOW 1500 SFT (III) THERE IS NO COMMERCI AL AREA OR IT IS LESS THAN THE LIMIT PRESCRIBED AND (IV) THE PROJECT APPROVAL AND COMPLETION ARE WITHIN THE TIME LIMITS ALLOWED BY THE ACT. CONTENTION OF THE ASSESSEE IN THIS RESPECT IS DULY CONSIDERED. THESE ARE PHYSICAL PARAMETERS WHICH HAVE TO BE SATISF IED BY AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS. AS DISCUSSED IN THE ABOVE PARAGRAPHS, THE POINT IN ISSUE IS N O T THE SATISFACTION OF PHYSICAL PARAMETERS BUT WHETHER THE ASSESSEE IS A DEVELOPER WITHIN THE MEANING OF THE WORD AND CONTEXT OF TH E DEVELOPER USED IN SECTION 80IB. 2.15 THE AMENDED PROVISIONS OF SECTION 80IA WHICH ARE IN PA RI MATERIA WITH SECTION 80IB WERE INTERPRETED BY A LARGER BENCH OF THE ITAT MUMBAI IN THE CASE OF M/S B.T PATIL & SONS BELGUAM CONSTRUCTION PRIVATE LTD IN ITA NOS 1408 & 1409/PN/2003, WHERE IN IT HAS BEEN HELD. '39. WE FIND IT AS AN UNDISPUTED POSITION THAT THE WORDS 'DEVELOPER' AND: CONTRACTOR' HAVE NOT BEEN DEFINED IN OR FOR THE PURPOSES OF SECTION 80 - IA. THE PRIMARY QUESTION WHICH ARISES IS THAT HOW T O FIND OUT 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 ANOT HER AS HAS BEEN HELD BY THE HON 'BL E SUPREME COURT IN THE CASE OF UNION OF INDIA VS. R.C.JAIN [(1981) 2 SCC 308], THEREFORE, THE MEANING OF THE WORDS DEVELOPER AND CONTRACTOR, AS PUT FORTH BEFORE US BY THE RIVAL PARTIES FROM O THER LEGISLATIONS, BE THEY STATE OR CENTRAL ENACTMENTS, CANNOT BE AUTOMATICALLY APPLIED IN THE PRESENT CONTEXT. IN ORDER TO ASCERTAIN THE MEANING OF A WORD NOT DEFINED IN THE ACT, A USEFUL REFERENCE CAN BE MADE TO THE GENERAL CLAUSES ACT, 1897. IF A PARTICULAR WORD IS NOT DEFINED IN THE RELEVANT STATUTE BUT HAS BEEN DEF INED IN THE GENERAL CLAUSES ACT, SUCH DEFINITION THROWS AMPLE LIGHT FOR GUIDANCE AND ADOPTION IN THE FORMER ENACTMENT. ACCORDING TO SECTION 3 OF THE GENERAL CLAUSES ACT THE DEFINITIONS GIVEN IN THIS ACT SHALL HAVE APPLICABILITY IN ALL THE CENTRAL ACTS UNLE SS A CONTRARY DEFINITION IS PROVIDED OF A PARTICULAR WORD OR EXPRESSION. ON SCANNING SECTION 3 OF THE GENERAL CLAUSES ACT WE OBSERVE THAT NEITHER THE WORD 'CONTRACTOR' NOR 'DEVELOPER' HAS BEEN DEFINED THEREIN. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 16 THUS, THE GENERAL CLAUSES ACT IS ALSO OF NO AS SISTANCE IN THIS REGARD. GOING AHEAD, WHEN THESE WORDS ARE NEITHER DEFINED IN THE INCOME TAX ACT, 1961 NOR IN THE GENERAL CLAUSES ACT, THE NEXT QUESTION IS THAT WHERE FROM TO FIND THE MEANING OF SUCH WORDS. THERE IS NO NEED TO WANDER HERE AND THERE IN SEAR CH OF ANSWER WHICH HAS BEEN APTLY GIVEN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ABDULGAFAR A.NADIADWALA VS. ACIT AND ORS. [(2004) 267 ITR 488 (BOM,)] WHEREIN THE HON 'BLE HIGH COURT WAS LOOKING INTO THE MEANING OF THE WORDS 'GOODS' AND 'MERC HANDISE', WHICH ARE NOT DEFINED U/S. 80HHC IN THE CONTEXT OF INCOME TAX ACT, 1961. THE HON'BLE HIGH COURT HELD THAT: 'IT IS WELL SETTLED THAT IN THE ABSENCE OF THERE BEING ANYTHING CONTRARY TO THE CONTEXT, THE LANGUAGE OF A STATUTE SHOULD BE INTERPRETED AC CORDING TO THE PLAIN DICTIONARY MEANING OF THE TERMS USED THEREIN'. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BLE SUPREME COURT IN THE CASE OF CWT VS. OFFICER - IN - CHARGE (COURT OF WARDS), BAIGAH [(1976) 105 ITR 133 (SC)] IN WHICH IT WAS HELD THAT THE ORDIN ARY DICTIONARY MEANING OF A WORD CANNOT BE DISREGARDED. 40. COMING BACK TO OUR POINT OF ASCERTAINING THE MEANING OF THE WORDS 'CONTRACTOR' AS WELL AS 'DEVELOPER', WHICH HAVE NEITHER BEEN DEFINED IN THE INCOME TAX ACT NOR IN THE GENERAL CLAUSES ACT, WE FA LL UPON OXFORD ADVANCED LEARNER'S DICTIONARY TO FIND OUT THEIR MEANING, ACCORDING TO THIS DICTIONARY 'DEVELOPER' IS A PERSON OR COMPANY THAT DESIGNS AND CREATES NEW PRODUCTS, WHEREAS 'CONTRACTOR' IS A PERSON OR A COMPANY THAT HAS A CONTRACT TO DO WORK OR P ROVIDES SERVICES OR GOODS TO ANOTHER. THE NEW SHORTER OXFORD DICTIONA RY DEFINES THE WORD 'CONTRACTOR ' AS : 'A PERSON WHO ENTERS INTO A CONTRACT OR AGREEMENT. NOW CHIEFLY SPEC . A PERSON OR FIRM THAT UNDERTAKES WORK BY CONTRACT, ESP. FOR BUILDING TO SPECIFIE D PLANS'. IN THE LIGHT OF THE MEANING ASCRIBED TO THESE WORDS BY THE DICTIONARIES IT IS OBSERVED THAT THE DEVELOPER IS A PERSON WHO DESIGNS AND CREATES NEW PRODUCTS. HE IS THE ONE WHO CONCEIVES THE PROJECT. HE MAY EXECUTE THE ENTIRE PROJECT HIMSELF OR ASSI GN SOME PARTS OF IT TO OTHERS. ON THE CONTRARY THE CONTRACTOR IS THE ONE WHO IS ASSIGNED A PARTICULAR JOB TO BE ACCOMPLISHED ON BEHALF OF THE DEVELOPER. HIS DUTY IS TO TRANSLATE SUCH DESIGN INTO REALITY. THERE MAY, IN CERTAIN CIRCUMSTANCES, BE OVERLAPPING IN THE WORK OF DEVELOPER AND CONTRACTOR, BUT 'THE LINE OF DEMARCATION BETWEEN THE TWO IS THICK AND UNBREACHABLE. WHEN THE PERSON ACTING AS DEVELOPER, WHO DESIGNS THE PROJECT, ALSO EXECUTES THE CONSTRUCTION W O RK, HE WORKS IN THE CAPACITY OF CONTRACTOR TOO. BUT WHEN HE ASSIGNS THE JOB OF CONSTRUCTION TO SOMEONE ELSE, HE REMAINS THE DEVELOPER SIMPLICITER, WHEREAS THE ' PERSON TO ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 17 WHOM THE JOB OF CONSTRUCTION IS ASSIGNED, BECOMES THE CONTRACTOR. THE ROLE OF DEVELOPER IS MUCH LARGER THAN THAT OF THE CONTRACTOR. I T IS NO DOUBT TRUE THAT IN CERTAIN CIRCUMSTANCES A DEVELOPER MAY ALSO DO THE WORK OF A CONTRACTOR BUT A MERE CONTRACTOR PER SE CAN NEVER BE CALLED AS A DEVELOPER, WHO UNDERTAKES TO DO WORK ACCORDING TO THE PRE - DECIDED PLAN.' 2.1 6 IN THE PRESENT CASE THE A SSESSEE HAS ENTERED INTO AN AGREEMENT WITH THE DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD. FOR CONSTRUCTION OF THE HOUSING PROJECT AS PER THE PLAN APPROVED BY THE LOCAL AUTHORITY FOR THE SOCIETY. THE DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD. IS A L EGAL ENTITY REGISTERED UNDER THE GUJARAT CO OP SOCIETIES ACT, 1961 WITH REG. NO GH 21429 DATED 30.09.2005. UNDER THE PROVISIONS OF THIS ACT, A SOCIETY CAN ENTER INTO FINANCIAL TRANSACTIONS AND OWN LAND. THE DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD. HA D PURCHASED THE LAND AND CONCEPTUALIZED THE HOUSING PROJECT. THE DHARTI VIKAS CO - OPERAT I VE HOUSING SOCIETY LTD. THROUGH ITS SECRETARY/PRESIDENT HAD APPLIED FOR HOUSING PLAN APPROVAL AND GOT THE PERMISSION (RAJACHITTI) TO DEVELOP IN ITS NAME. A PERUSAL OF T HE APPROVAL DOCUMENT REVEALS THAT THE APPROVAL FOR CONSTRUCTION OF THE PROJECT WAS GRANTED TO THE SOCIETY A S PER ITS APPLICATION. THE SOCIETY WAS DIRECTED TO ABIDE BY THE RULES ARID CONDITIONS LAID DOWN IN THE APPROVAL AND IN CASE OF ANY VIOLATION IT WAS T HE SOCIETY WHICH WAS PUNISHABLE THE ASSESSEE BECAUSE OF ITS EXPERTISE IN CONSTRUCTION HAD COME FORWARD TO CONSTRUCT THE HOUSING PROJECT IN ACCORDANCE WITH TO THE APPROVAL RECEIVED BY THE SOCIETY. THE CONDITIONS TO BE SATISFIED BY THE ASSESSEE WERE SPECIFIE D IN THE DEVELOPMENT AGREEMENT ENTERED BY THE ASSESSEE WITH THE SOCIETY. 2.17 AS NARRATED EARLIER, THE DEVELOPMENT AGREEMENT STATES THAT (I) THE PROPOSED LAND WAS OWNED BY THE DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD. AND THE SOCIETY WAS IN CO M PLETE POSSESSION OF THE LAND, (II) THE DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD. GOT A PLAN APPROVED FOR THE DEVELOPMENT OF THE PROJECT, (III) SINCE THE DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD, HAD NO EXPERTISE IN CONSTRUCTION, AND THE ASSESSEE FIRM H AD COME FORWARD TO CONSTRUCT THE PROJECT AS PER THE APP ROVED PLAN AND HAD AGREED TO ABIDE WITH THE OTHER CONDITIONS, (IV) THE SOCIETY HAS GIVEN POSSESSION OF THE SITE TO THE BUILDER ONLY FOR THE PURPOSE OF CONSTRUCTION, (V) ALL OTHER CONDITIONS LIKE ADMISS ION OF PROSPECTIVE BUYERS AS MEMBERS, COLLECTION OF CONSIDERATION FOR THE LAND AND CONSTRUCTION ON BEHALF OF THE SOCIETY, ARRANGEMENT OF FINANCE IF NECESSARY ARE NARRATED IN THIS DEED (VI) IT IS FURTHER NARRATED THAT THIS AGREEMENT IS BEING NEGOTIATED BEC AUSE THE SOCIETY HAD NO ORGANIZED OFFICE AND STAFF WHEREAS THE BUILDER WAS WELL ORGANIZED IN THIS RESPECT. AS DISCUSSED ABOVE DEVELOPMENT AND CONSTRUCTION ARE DIFFERENT WORDS AND HAVE ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 18 SEPARATE MEANINGS. THEREFORE THIS AGREEMENT, THOUGH CALLED A DEVELOPMENT AGREEMENT , I S IN ESSENCE AN AGREEMENT FOR CONSTRUCTION. 2.18 THE ASSESSEE HAS STATED THAT COMPLETE POSSESSION WAS TAKEN BY THE ASSESSEE WIT ALL RISKS AND REWARDS. FOR THIS PURPOSE RELIANCE WAS PLACED ON SOME TERMS OF THE DEVELOPMENT AGREEMENT. HOWEVER I FIND THAT THESE STIPULATIONS ARE ONLY INTENDED TO MAKE THE SOCIETY TOOTHLESS BUT THEY CANNOT CONVERT BY ANY STRETCH OF IMAGINATION AN AGREEMENT FOR CONSTRUCTION INTO A CONVEYANCE DEED IN THE EYES OF THE LAW . THEREFORE, DHARTI VIKAS CO - OPERATIVE HOUSING SO CIETY LTD. REMAINS THE OWNER OF THE LAND AS ALSO THE PROPERTY CONSTRUCTED THEREON, SINCE THE SOCIETY HAS NOT TRANSFERRED THE OWNERSHIP TO THE ASSESSEE, BUT HAS ONLY HANDED OVER TEMPORARY POSSESSION OF THE LAND TO THE ASSESSEE FOR CONSTRUCTION OF THE HOUSES AS PER THE PLAN AND THE AGREEMENT. THE ASSESSEE REMAINS MERELY THE BUILDER WHO HAS AGREED TO CONSTRUCT THE HOUSES. RELIANCE IN THIS RESPECT IS PLACED ON THE SUPREME COURT JUDGMENT IN THE CASE OF K RAHEJA DEVELOPMENT CORPORATION VS STATE OF KARNATAKA [2005 ] 2 STT 178. IN THIS CASE H ON'BLE APEX COURT WAS DEALING WITH KARNATAKA SALES TAX ACT AND THE CLAIM OF THE OWNERSHIP OF PROPERTY BY THE BUILDER BASED ON CERTAIN TERMS OF THE DEVELOPMENT AGREEMENT SO THAT THE TURNOVER TAX WAS NOT APPLICABLE UNDER THAT ACT, THE H ON'BLE SUPREME COURT HELD 'APPELLANTS WOULD NOT BE OWNERS AS ADMITTEDLY THEY DO NOT HAVE ANY REGISTERED SALE DEEDS IN THEIR HAND. THE AGREEMEN T - RELIED UPON BY MR. MEHTA BETWEEN THE APPELLANTS AND THE OWNERS OF THE LAND IS NOTHING BUT A DEVELOPMENT AGR EEMENT. PURSUANT TO SUCH AN AGREEMENT, PLAN WOULD BE GET SANCTIONED IN THE NAME OF THE OWNER OF THE PROPERTY. IT WOULD BE THE OWNER OF THE PROPERTY WHO WOULD THEN EXECUTE A CONVEYANCE DIRECTLY TO THE SOCIETY OF PURCHASERS. ALL THAT THE APPELLANTS HAVE IS P OSSESSORY INTEREST AND A RIGHT TO CONSTRUCT. SUCH RIGHTS DO NOT CONSTITUTE THE PERSON AN OWNER OF THE PROPERTY'. 2.19 THE ASSESSEE ARGUED THAT THEY ALSO APPOINTED THE ARCHITECTS, STRUCTURAL ENGINEERS, ARRANGED FINANCE FOR THE PROJECT WHEREVER NECESSARY AN D TOOK THE RISKS AND REWARDS OF THE PROJECT INCLUDING THE SALE OF THE UNITS TO THE PROSPECTIVE BUYERS. THESE JOBS UNDERTAKEN BY THE BUILDER ARE AS PER THE DEVELOPMENT AGREEMENT BUT ARE NOT VERY - MUCH DIFFERENT FROM THAT OF A CIVIL CONTRACTOR WHO WINS A CONT RACT ;TO BUILD A DAM OR CANAL AND EXECUTES IT AS PER THE PLAN SUPPLIED BY THE PRINCIPAL ACCORDING TO THE TERMS OF THE TENDER DOCUMENT/AGREEMENT OR A WORK ORDER. TO EXECUTE A CONTRACT, THE CONTRACTOR ENGAGES ENGINEERS, ARCHITECTS AND SUPERVISORS, ARRANGES F INANCE FOR CARRYING OUT THE PROJECT AND ALSO TAKES THE RISKS AND REWARDS (INCLUDING THE LOSSES IF ANY) IN THE WORK AND HANDSOVER THE COMPLETED PRODUCT - TO THE PRINCIPAL. THE DEVELOPMENT AGREEMENT IN A CASE LIKE THE PRESENT ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 19 ONE IS A CONTRACT, MORE SPECIFICA LLY A CONTRACT FOR CONSTRUCTION IN WHICH THE PRINCIPAL IS THE SOCIETY AND THE BUILDER IS THE CONTRACTOR WH6 UNDERTAKES TO CONSTRUCT THE PROJECT AS PER THE PLAN GIVEN TO HIM. INSTEAD OF GETTING PAYMENT DIRECTLY FRO M THE SOCIETY FOR THE WORK DONE (INCLUDING THE MATERIAL IN SOME CASES), THE BUILDER GETS PAID BY THE BUYERS AFTER ENROLLING THEM AS MEMBERS OF THE DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD. THE BUILDER HAS, IN ESSENCE, CHARGED THE LAND VALUE TO THE SOCIETY AND RETAINE D THE CONSTRUCTION VALUE AS PER THE TERMS OF THE AGREEMENT. 2.20 IT WAS ALSO ARGUED BY THE ASSESSEE THAT THE SOCIETY WAS CREATED BY HIM AND THE FUNDS WERE ARRANGED BY HIM FOR PURCHASE OF THE LAND . THIS MAY BE FACTUALLY CORRECT BUT IT IS ALSO A FACT THAT THERE IS NO R EGISTRATIO N FEE FOR LAND TRANSACTION FOR SOCIETIES IN THE ST ATE OF GUJARAT AND THEREFORE PURCHASE OF LAND IS INVARIABLY MADE IN THE NAME OF THE SOCIETIES. THUS TO ONE AUTHORITY (THE STATE GOVERNMENT), THE ASSESSEE REPRESENTED THAT T HE SOCIETY WAS THE OWNER OF THE LA ND WHILE TO - ANOTHER (THE INCOME TAX DEPARTMENT) THE ASSESSEE CLAIMED HIMSELF TO BE THE OWNER. AN INCONSISTENT STAND HAS BEEN TAKEN CONSCIOUSLY TO AVOID PAYING STAMP DUTY ON ONE HAND AND INCOME TAX ON THE OTHER . THE FACT IS THAT THE DHARTI VIKAS CO - OPERATIV E HOUSING SOCIETY LTD IS A LEGAL ENTITY CREATED BY REGISTRATION UNDER THE SOCIETIES ACT WITH ALL I TS LEGAL POWERS AND ADVANTAGES. A LEGAL ENTITY CREATED TO TAKE ADVANTAGE OF SOME LEGAL PROVISION CAN NOT BE BRUSHED ASIDE FOR CLAIMING BENEFITS UNDER ANOTHER STATUTE SO AS TO CAUSE LOSS TO THE EXCHEQUER AT BOTH POINTS. 2.21 IN THE INSTANT CASE AS PER THE AGREEMENT, THE ASSESSES HAD PURCHASED THE MATERIAL AND BUILT THE HOUSING UNITS AS PER THE PLAN, BUT IT HAD NO OWNERSHIP ON THE HOUSES, AS THE LAND WAS OWNED BY THE SOCIETY AND THE ASSESSEE HAD CONSTRUCTED THE DWELLING UNITS AS PER THE AGREEMENT ENTERED INTO WITH THE SOCIETY. LOOKING AT THE FACTS FROM ANOTHER ANGLE, THE ASSESSEE IS MERELY A WORKS CONTRACTOR BECAUSE IN A CONTRACT FOR WORK, THE PERSON PRODUCING T HE PRODUCT HAS NO OWNERSHIP IN THE THING PRODUCED AS A WHOLE, EVEN IF PART OR WHOLE OF THE MATERIAL USED BY HIM MAY HAVE BEEN HIS PROPERTY IN THE PROCESS. THE CONTRACTOR GETS THE PAYMENT FOR THE MATERIAL AND THE LABOUR ALONGWITH PROFIT AS AGREED. BY USE OF THE MATERIAL, HE WILL NOT BECOME THE OWNER OF THE WHOLE AND HE CAN NOT TRANSFER THE PROPERTY. RELIANCE IS PLACED IN THIS REGARD ON SUPREME COURT IN THE CASE OF HAL LID. VS. STATE OF ORISSA [55 STC 327 ]AND TAMIL NADU VS. ANANDAM VISHWANATHAN [(1989) 1 SCC 613]. THE ASSESSEE CAN NOT TRANSFER THE OWNERSHIP OF THE HOUSING UNIT CONSTRUCTED TO THE PROSPECTIVE BUYER. THE HOUSING UNIT HAS TO BE TRANSFERRED BY THE LAND OWNER ONLY, IN THIS CASE DHARTI VIKAS CO OPERATIVE HOUSING SOCIETY LTD. THIS IS ALSO CLEAR FROM THE CONVEYANCE DEEDS EXECUTED FOR THE SALE OF UNITS IN THE ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 20 HOUSING PROJECT. THE SOCIE TY HAS TRANSFERRED THE HOUSE (AS TRANSFERO R) TO THE BUYER (THE TRANSFEREE ) AND THE ASSESSEE HAS BEEN INCLUDED IN THE DOCUMENT ONLY AS CONFIRMING PARTY TO AVOID ANY LIT IGA TION IN VIEW OF THE AGREEMENT ENTERED BY THE SOCIETY WITH THE ASSESSEE FOR CONSTRUCTION. 2.22 TO SUM UP - ; (A) THE SOCIETY IS A LEGAL ENTITY AND IT ACQUIRED THE LAND AND HAS TO BE RECOGNIZED AS THE OWNER OF THE LAND. (B) THE DHARTI VIKAS CO - OPERAT IVE HOUSING SOCIETY LTD. GOT THE PLAN FOR THE HOUSING PROJECT APPROVED FROM THE LOCAL AUTHORITY AS OWNER OF THE LAND ON WHICH THE PROJECT WAS TO COME UP. (C) IT IS IMMATERIAL WHETHER THE ASSESSEE APPROACHED THE SOCIETY OR THE SOCIETY APPROACHE D THE ASSESSEE FOR CONSTRUCTION. (D) THE FACT REMAINS THAT THE SOCIETY IS THE PRINCIPAL AND THE ASSESSEE IS A CONTRACTOR SATISFYING ALL THE INGREDIENTS, OF THE CONTRACT AS DISCUSSED AB O VE. (E) THEREFORE, IN THE INSTANT CASE, THE ASSESSEE IS A M ERE BUILDE R WHO HAS ENTERED INTO AN AGREEMENT WITH THE SOCIETY FOR CONSTRUCTION OF THE HO USING PROJECT AS PER THE APPROVAL OBTAINED BY THE SOCIETY FOR CONSTRUCTION ON THE LAND OWNED BY THE SOCIETY. (F) IT. THEREFORE FOLLOWS THAT THE ASSESSEE IS NOT THE DEVELOPER OF THE PROJECT AS IT IS NOT THE DESIGNER, CREATOR AND OWNER OF THE HOUSING PROJECT. (G) THEREFORE, IT IS CLEAR THAT THE ASSESSEE IS MERE BUILDER AND DOES NOT SATISFY THE PRIMARY REQUIREMENT OF THE SECTION THAT THE ASSESSEE MUST DEVELOP AND BUILD A HOUSING PROJECT - . SINCE THE ASSESSEE HAD SIMPLY DONE THE WORK OF CIVIL CONSTRUCTION RELATED TO THE HOUSING PROJECT (AS PER THE AGREEMENT ENTERED WITH THE SOCIETY) THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCT ION UNDER SECTION 80 IB(10) AS PER THE AMENDMEN T BROUGHT TO THE SECTION 80IB BY THE FINANCE ACT 2009 W.E.F . 1.4.2001 WHICH IS REPRODUCED BELOW. EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB - SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTES THE HO USING PROJECT AS A WORKS CONTRACT AWAR DED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 21 2.23 IT IS, THEREFORE, HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB FOR THE FOLLOWING REASONS. 1. THE ASSESSEE IS NOT BOT H DEVELOPER AND BUILDER AS REQUIRED BY THE PROVISIONS OF SECTION 801 B (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 AUTHORITY. 2. THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WITH THE LAND OWNER AND CONSTRUCTION WAS DONE AS PER THE AGREEMENT AND HENCE THE ASSESSEE IS MERELY A CONTRACTOR FOR THE PURPOSES OF CONSTRUCTION OF THE PROJ ECT. 3. THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURCHASER BUT THE SOCIETY HAS EXECUTED THE SALE DEEDS AS A SELLER AND THE ASSESSEE JOINED ONLY AS A CONFIRMING PARTY TO THE TRANSACTION. THIS ALSO PROVES THAT THE ASSESSEE WAS MERELY A CONTRACTOR/ AGENT O F THE 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 THE DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LT D. , WHICH IS A LEGAL ENTITY. 2.24 THUS, THE ASSESSEE HAS FAILED TO SATISFY THE CONDITIONS OF SECTION 80 IB (10). THEREFORE, NO DEDUCTION UNDER THIS SECTION IS ALLOWED. PENALTY PROCEEDINGS U/S 2 71(L)(C) ARE INITIATED FOR FURNISHING INACCURATE PARTICULA RS OF INCOME. 12. BEING AGGRIEVED BY THE SAID ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE CLAIM OF DEDUCTION U/S 80IB(10) TO THE ASSESSEE BY OBSERVING AS UNDER: - 4. GROUND NO.1 IS : ON THE FACTS AND IN THE CIRCUMS TANCES OF THE APPELLANT'S CASE, THE ASSESSING OFFICER ERRED IN DISALLOWING DEDUCTION CLAIMED BY THE ASSESSEE U/S.80IB(10) OF THE INCOME TAX ACT. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT 80IB DEDUCTION WAS DENIED BY THE AO MAINLY ON THE GROUND THAT THE A PPELLANT IN HIS VIEW ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 22 WORKED AS THE CONTRACTOR OF THE HOUSING SOCIETY WHICH IS THE OWNER OF THE LAND AND AS THROUGH THE DEVELOPMENT AGREEMENT THE SOCIETY WHICH IS A SEPARATE LEGAL ENTITY ASSIGNED CONSTRUCTION WORK OF FLATS TO THE APPELLANT. 5. THROUGH WRIT TEN SUBMISSIONS FILED FROM TIME TO TIME WHICH ARE PLACED ON RECORD IT WAS STATED THAT THE APPELLANT WAS GIVEN POSSESSION OF LAND BY THE SOCIETY AS PER DEVELOPMENT AGREEMENT AND THAT THE APPELLANT HAD OBTAINED L AND POSSESSION TOGETHER WITH THE RIGHTS TO DEV ELOP AND CONSTRUCT THE PROJECT FOR WHICH THE APPELLANT PAID A SUBSTANTIAL AMOUNT TO THE SOCIETY AND WHICH WAS DEBITED IN THE P&L ACCOUNT. VIDE WRITTEN SUBMISSION RECEIVED IN THIS OFFICE ON 23.8.2010 IT WAS INFORMED THAT RS.3,42,19,630 WAS PAID AS COST OF OBTAINING DEVELOPMENT RIGHTS AND THIS APPEARS ON THE DEBIT SIDE IN THE P&L ACCOUNT AS LAND RIGHTS OF THE YEAR UNDER CONSIDERATION. COPY OF HDFC BANK ACCOUNT MAINTAINED AT ASHRAM ROAD OF THE APPELLANT FIRM WAS ALSO GIVEN TO SHOW PAYMENTS GIVEN TO DHARTI SAM UDAYIK SAHAKARI KHETI MAN. LTD. PART - 1A (THE CO. OPERATIVE HOUSING SOCIETY) IN FY 2005 - 06. THE LEDGER ACCOUNT OF THE SOCIETY WAS GIVEN IN SUPPORT, WHICH IS ENCLOSED AS ANNEXURE - 1 OF THIS ORDER. BANK STATEMENT OF THE SOCIETY WAS ALSO GIVEN AND IS ENCLOSED A S ANNEXURE - 2 OF THIS ORDER SHOWING THE PAYMENT MADE BY THE APPELLANT RECEIVED BY THE SOCIETY. 6. I T IS SEEN THAT THE AO HAS NOT DISPUTED THAT THE APPELLANT DID NOT FULFILL ANY OF THE CONDITIONS SPECIFIED IN SECTION 80IB(10) FROM CLAUSE (A) TO ( D ) WITH RES PECT TO APPROVALS FROM LOCAL AUTHORITY, COMPLETION OF PROJECT WITHIN THE SPECIFIED TIME LIMITS, ONE ACRE OF LAND CONDITION, 1500 SQ.FT. BUILT UP AREA CONDITION OF EACH UNIT IN THE PROJECT AND THAT OF PERCENTAGE OF CONSTRUCTION FOR COMMERCIAL USE. HIS OBJE CTION IS THAT THE APPELLANT IS NOT THE OWNER OF THE LAND. THIS OBJECTION OF THE AO HAS TO BE SEEN IN THE LIGHT OF THE TESTS LAID DOWN BY HON'BLE ITAT BENCH A AHMEDABAD DECISION IN THE CASE OF M/S.SHAKTI CORPORATION, BARODA IN ITA NO.1503/AHD/2008 IN AY 200 5 - 06. BUT HERE THE APPELLANT HAS BEEN FOUND FULFILLING THE CONDITIONS LAID DOWN IN SECTION 80IB (10) OF THE INCOME TAX ACT AND HAS ALSO BEEN FOUND MEETING THE TESTS LAID DOWN IN HON'BLE ITAT BENCH A AHMEDABAD DECISION IN THE CAS E OF M/S.SHAKTI CORPORATION, BARODA IN ITA NO.1503/AHD/2008 IN AY 2005 - 06 AND AS IT HAD PRACTICALLY PURCHASED THE LAND AND IT BORE THE ENTIRE COST AND RISK OF DEVELOPING THE PROJECT THAT IS WHY IN MY VIEW IT IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) AND THE AO IS DIRECTED TO ALLOW THE SAME. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 23 13. THE LD. DR SUPPORTED THE ORDER OF THE AO AND RELIED ON CLAUSE NOS.12, 16, 19, 22, 25 AND 30 OF THE DEVELOPMENT AGREEMENT DATED 21.10.2005 AND SUBMITTED THAT THE ASSESSEE WAS ACTING AS A CONTRACTOR FOR CONSTRUCTION OF HOUSE PROPERT Y AND WAS NOT A DEVELOPER OF THE PROPERTY WHICH WOULD BE OBSERVED FROM THE READING OF THE ABOVE CLAUSES OF THE DEVELOPMENT AGREEMENT. 14. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A) . HE POINTED OUT THAT AS PER CLAUSE 30 OF THE DEVELOPMENT AGREEMENT DATED 21.10.2005, THE ASSESSEE WAS ENTITLED TO THE ENTIRE SALE PROCEEDS OF THE FLATS CONSTRUCTED IN THE PROJECT WHICH WAS SHOWN BY THE ASSESSEE AS ITS SALE PROCEEDS IN THE PROFIT AND LOSS ACCOUNT. IT WAS THUS SUBMITTED THAT THE ENTIR E PROFIT OR LOSS FROM THE HOUSING PROJECT BELONGED TO THE ASSESSEE AND THE ASSESSEE WAS ENTITLED TO THE RISKS AND REWARDS OF THE PROJECTS. IT WAS THEREFORE HIS SUBMISSION THAT THE ASSESSEE WAS A D EVELOPER AND NOT A C ONTRACTOR. HE FURTHER FILED BEFORE US A CHART COMPARING THE COVENANTS OF THE DEVELOPMENT AGREEMENT WITH THE DECISION OF RADHE DEVELOPERS RENDERED BY THE JURISDICTIONAL HIGH COURT REPORTED AT 341 ITR 403 (GUJ) TO DEMONSTRATE THAT THE FACTS OF THE ASSESSEE S CASE WERE SIMILAR TO THE FACTS THAT WER E BEFORE THE HON BLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS. IT WAS THEREFORE HIS SUBMISSION THAT THE CASE OF THE ASSESSEE WAS SQUARELY COVERED BY THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS IN FAVOUR OF THE A SSESSEE. HENCE, IT WAS PRAYED THAT THE ORDER OF LD. CIT(A) SHOULD BE CONFIR M ED. 15. THE CHART FILED BY THE LD. AR OF THE ASSESSEE IS AS FOLLOWS : - COVENANTS OF DEVELOPMENT AGREEMENT IN RADHE DEVELOPERS ( 341 ITR 403) IN UNIQUE CITY HOMES (ASSESSEE) PARA 25 OF ORDER CLAUSE 3 THE PARTY OF THE THIRD PART IS CONNECTED WITH THE CONSTRUCTION OF BUSINESS SINCE MANY YEARS AND HAS EXPERIENCE OF THE PARTIES OF THE SECOND PART ARE DOING THE BUSINESS OF CONSTRUCTION OF THE LAND. THEY ARE CONVERSANT WITH THE ACTIVITIES OF TO ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 24 CONSTRUCTING RESIDENTIAL HOUSES. MAKE CONSTRUCTION ON THE LAND AND THE CONNECTED ACTIVITIES OF THE DEVELOPMENT OF LAND FOR CONSTRUCTION AGENCIES LIKE PROJECT CONSULTANT ENGINEER, CONTRACTOR, SUB - CONTRACTOR, ARCHITECT, SURVEYOR, ETC. AND THEY ARE A BLE TO EASILY OBTAIN THEIR SERVICES , THESE ADMINISTRATORS ARE WELL KNOWN AND EXPERIENCE AND THEY HAVE STATED THIS FIRM TO DO THE BUSINESS OF THE CONSTRUCTION FOR GETTING PROFIT . (PAGE 5) PARA 25 OF ORDER CLAUSE 4 WITH THE CONSENT OF THE PARTY OF THE FIRST AND SECOND PART, THE PARTY OF THE THIRD PART AS A DEVELOPER AND BUILDER WANTS TO DO A PROJECT/SCHEME OF CONSTRUCTING RESIDENTIAL HOUSES HAVING AREA LESS THAN 1500 SQ. FT. F OR THE MIDDLE CLASS SOCIETY. THE SAID LAND UNDER DRAFT T.P. SCHEME NO. 29 ALLOTTED PROPOSAL FINAL PLOT NO.28/1 TO THE LAND ADMEASURES 55170 SQ. MT. AND THE LAND DESCRIBED IN THIS AGREEMENT BEING 46560 SQ. MTS. PARTICULARS OF WHICH IS SHOWN I N SCHEDULE, IN THE SAME FOR MAKING PLOTS FOR RESIDENTIAL PURPOSE AND FOR MAKING CONSTRUCTION FOR R ESIDENTIAL PURPOSE BUNGALOWS, TENEMENTS, ROW HOUSES, AS PER THE APPROVED PLANS AND FOR DEVELOPING ALL LANDS AND TO ORGANIZE ALL WORK OF CONSTRUCTION, TO COORDINATE, TO SEARCH FOR MEMBERS, TO OBTAIN MONEY ETC. FOR DOING ALL THESE WORKS, THE PARTY OF SECOND PART HAS BEEN APPOINTED AS DEVELOPER . (PAGE 8 PARA 1) PARA 25 OF ORDER CLAUSE 5 THE PARTY OF THE FIRST AND THE PARTY OF THE THIRD PART HAVE EXECUTED ONE AGREEMENT OF SALE ON 18 - 05 - 2000 ACCORDINGLY 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 CONDITIONS WRITTEN THEREIN ARE DECIDED TO BE PURCHASED BY THE PARTY OF THE THIRD PART . THE PARTY OF THE FIRST PART IN THEIR OUTGENERAL MEETING DATED 10.10.2005 PASSED UNANIMOUSLY A RESOLUTION NO. 2 FOR HANDING OVER THIS DEVELOPMENT WORK TO THE PARTY OF SECOND PART AND FOR THIS DEVELOPMENT AGREEMENT, THE SAID PROPOSAL HAS BEEN APPROVED BY THE SAID MEETING AND THE PRESIDENT AND THE SECRETARY ARE AUTHORIZED TO ACT AND MAKE SIGNATURE ON BEHALF OF THE SOCIET Y. THE PARTY OF SECOND PART IN THEIR MEETING DATED 10.10.2005 UNANIMOUSLY PASSED A RESOLUTION NO. 2 AND GAVE AUTHORITY TO SHRI RAJKUMAR K. RAI TO EXECUTE THIS DEVELOPMENT AGREEMENT ON BEHALF OF BEHALF OF THE PARTNERSHIP FIRM. THEREFORE, THE PARTY OF SECOND PART EXECUTES THIS DEVELOPMENT AGREEMENT WITH PARTY OF FIRST PART AND BOTH PARTIES HEREBY MAKE NOTE OF THE UNDERSTANDING MADE FOR THE DEVELOPMENT AND THE TERMS AND CONDITIONS AND DUTIES BY THIS DEED. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 25 PARA 25 OF ORDER CLAUSE 6 IN FACT IN THE PARTY OF THE FIRST AND SECOND PART CONFIRMING PARTY HAVE NO NECESSARY TECHNICAL KNOWLEDGE AND SKILL 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 I NVEST 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 LAND MENTIONED IN SCHEDULE IN SUCH CIRCUMSTANCES TO THE PARTY OF THE TH IRD 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 ALONG WITH CONSTRUCTING AND DEVELOPING ON THE SAID LAND MENTIONED IN SCHEDULE BY THIS AGREEMENT DT.18 - 05 - 2000. THE MEMB ERS OF PARTY OF THE FIRST PART WISH TO GET CONSTRUCT THE HOUSE ON THE LAND BEARING SAID FINAL PLOT NO. 28/1, BUT THE PARTY OF FIRST PART HAS NEVER GOT CONSTRUCTED SUCH TYPE OF CONSTRUCTION OF BUNGALOWS /TENEMENTS ON COMMERCIAL BASIS OR THAT CONSTRUCTION F OR ANY OTHER PURPOSE OF SUCH TYPE HAS NOT GOT CARRIED OUT IN EARLIER POINT OF TIME OR THAT BY BECOMING A MEMBER NO MEMBERS HAVE BEEN OBTAINED FOR SUCH CONSTRUCTION AND IT HAS NO KNOWLEDGE TO ATTRACT THE PERSONS WISHES TO OBTAIN SUCH UNIT OF CONSTRUCTION. THEY ARE NOT KNOWN IN PUBLIC AND MARKET AS PROFESSIONAL OR SUCH TYPE OF WORK. THEY DO NOT KNOW THE SUPPLIERS DEALING IN SUPPLY OF GOODS FOR SUCH CONSTRUCTION WORK AND AS THE SUPPLIERS ARE UNKNOWN THEY MAY NOT HAVE FAITH IN PARTY OF FIRST PART. FURTHER BEC AUSE OF BUSY SCHEDULE OF THEIR RESPECTIVE OCCUPATIONS, THE OFFICE BEARERS AND MEMBERS AND DUE TO LACK OF TIME THE PARTY OF FIRST PART ARE NOT ABLE TO GET OF SUCH BIG CONSTRUCTION ON THE SAID LAND. THE PARTY OF FIRST PART HAS NO ANY EXPERIENCE OF GETTING C ONSTRUCTION DONE. (PAGE 4) PARA 25 OF ORDER CLAUSE 9 THE SAID DEVELOPER CUM BUILDING CONTRACTOR BY DOING DISCUSSIONS WITH THE PARTY OF THE FIRST AND SECOND PART CONFIRMING PARTY, TO BRING THE SCHEME IN REALITY OF CONSTRUCTING HOUSES AND GET THROUGH IT, HA S TO DO CONSTRUCTION ACCORDING TO NECESSARY PLANS, DRAW INGS, SPECIFICATIONS AND MAPS E TC. GO PASSED FROM VADODARA MUNICIPAL CORPORATION. WHATEVER THE DEVELOPER HAS TO MAKE CONSTRUCTION AS A PART OF DEVELOPMENT OF THE SAID LAND, THE PLANS, ELEVATION, SECTIO NS, DRAWINGS ETC. OF THE SAID CONSTRUCTION HAS TO BE GOT PREPARED AND WHATEVER THE MATERIALS THAT HAS TO BE USED IN THE CONSTRUCTION, AND WHATEVER THE SPECIFICATION ARE THERE, IN THAT REGARD AFTER THE DISCUSSION WITH THE ARCHITECT OF THE SCHEME, THE SAME H AS TO BE CARRIED OUT AND WHATEVER IT IS NECESSARY REGARDING THE SAME HAS TO BE OBTAIN FROM THE AUTHORITIES. (PAGE 12 PARA 3) PARA 25 OF ORDER SUB - CLAUSE 1 TO CLAUSE 11 TO APPOINT ARCHITECT ENGINEERS, LEGAL ADVISOR AND SUCH PROFESSIONALS WHOSE SERVICES FOR COMPLETING THIS SCHEME IS NECESSARY AND BY DECIDING THEIR AREA OF OPERATION TO FIX - UP THEIR REMUNERATION AND FEES ETC. AND FOR THAT TO BEAR ALL EXPENSES, TO EXECUTE AGREEMENTS SO THAT THE CONSTRUCTION WORK OF THIS PROJECT CAN TH E PARTY OF SECOND PART HAS MADE HUGE EXPENSES FOR THIS PROJECT AND SINCE THEN AS THE POSSESSION OF THE LAND WAS WITH THE PARTY OF SECOND PART, IT HAS MADE EXPENSES FOR WORK LIKE TAKING CARE, TO PREPARE PLANS FOR DEVELOPMENT, PLANTATION OF TREES, TO PREPARE COMMON PLOTS ETC. (PAGE10 PARA 1) ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 26 BE COMPLETED SUCCESSFULLY. THEY ARE CONVERSANT WITH THE ACTIVITIES OF TO MAKE CONSTRUCTION ON THE LAND AND THE CONNECTED ACTIVITIES OF THE DEVELOPMENT OF LAND FOR CONSTRUCTION AGENCIES LIKE PROJECT CONSULTANT ENGINEER, CONTRACTOR, SUB - CONTRACTOR, ARCHITECT, SURVEYOR, ETC. AND THEY ARE ABLE TO EASILY OBTAIN THEIR SERVICES. (PAGE 5) PARA 25 OF ORDER SUB - CLAUSE 2 TO CLAUSE 11 TO COMPLETE THIS SCHEME AS PER HIS DISCRETION HE CAN GIVEN SUB - CONTRACT, LABOUR CONTRACT ETC. BUT WHILE DOING SUCH APPOINTMENT S IT IS TO BE KEPT IN MIND THAT THE RESPONSIBILITY OF CONSTRUCTION OF THIS PROJECT IS/SHALL BE ON HIM THAT IS ON DEVELOPER CUM CONTRACTOR. THE PARTY OF SECOND PART DEVELOPER THEMSELVES OR WITH ANY OTHER JOINTLY SHALL CARRY OUT THE WORK OF DEVELOPMENT OF TH E SAID PROPERTY UNDER THIS AGREEMENT OR ALL THE PROCEEDINGS CONNECTED TO IT. THE PARTY OF SECOND PART SHALL HAVE RIGHT TO TRANSFER, ASSIGN OR DISPOSE OF IN ANY MANNER, WHOLE OR PART RIGHTS, BENEFITS, OR DUTIES UNDER THIS AGREEMENT, COMPLETELY OR PARTLY TO ANY OTHER PERSON ON ANY CONDITIONS OR WITH UNDERSTANDING AFTER CONSULTING THE PARTY OF FIRST PART . (PAGE 15 PARA 9) PARA 25 OF ORDER SUB - CLAUSE 3 TO CLAUSE 11 THE SAID DEVELOPER CUM BUILDING CONTRACTOR 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 INCIDENT AL 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 DE CIDE THE PRICE OF HOUSES OF THIS SCHEME AND TO EXECUTE NECESSARY AGREEMENTS WITH THE PURCHASERS OF HOUSES. GENERALLY AS PER THE INSTRUCTION OF THE PARTY OF SECOND PART, THE PARTY OF THE FIRST PART SHALL HAVE TO ACCEPT THE PURCHASER OF THE UNIT AS A MEMBER OF THE SOCIETY, BUT WITHOUT THE RECOMMENDATION OF AND TAKING INTO CONFIDENCE THE PARTY OF SECOND PART NO PERSON SHALL BE ENTERTAIN AS MEMBER IN THE SOCIETY. (PAGE 17 PARA 11) PARA 25 OF ORDER SUB - CLAUSE 4 TO CLAUSE 11 WHATEVER THE CONSTRUCTION CONTRIBUT ION AND OTHER CONTRIBUTIONS OR OTHER DEPOSITS ETC. THAT THE SAID DEVELOPERS CUM BUILDING CONTRACTORS SHALL FROM TIME TO TIME DEMAND FROM THE RESPECTIVE MEMBERS BY ISSUING A LEGAL NOTICE AND THE PARTY OF SECOND PART CAN RECEIVE AND ACCEPT THE MEMBERSHIP FEES, CHARGES REGARDING UNIT , LAND FUND, ALLOTMENT FEE, PARKING PLACE CHARGES, MAINTENANCE CHARGES, AND DEVELOPMENT CHARGES FROM SUCH PERSONS OR INSTITUTE IN THEIR NAME ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 27 IN THIS MANNER AS PER THE NOTICE OF THE DEVELOPER CUM BUILDING CON TRACTOR TO THE MEMBER ADMITTED IN SCHEME NOT PAYING THE AMOUNT OUT OF THE DEPOSIT BY DEDUCTING DAMAGES/LOSS REMAINING AMOUNT SHALL BE RETURNED AND TO DELETE THE NAME OF THAT ADMITTED MEMBER THE AUTHORITY SHALL REMAIN WITH THE DEVELOPER CUM BUILDING CONTRAC TOR. REGARDING THIS WHATEVER DECISION THAT IT SHALL BE TAKEN BY THE DEVELOPER CUM BUILDING CONTRACTOR SHALL BE AGREEABLE AND BINDING ON THE PARTY OF THE FIRST PART. OR IN ANY OTHER NAME . (PAGE 21 PARA 18) PARA 25 OF ORDER SUB - CLAUS E 6 TO CLAUSE 11 THE SAID DEVELOPER CUM BUILDING CONTRACTOR AS PER THE SCHEME WHATEVER THE CHANGES HE WOULD DO THEREAFTER IN NATURE OF FINAL SCHEME, THE TERRACE, OPEN LAND, LADDER AND COMMON AMENITIES SHALL BE RECEIVED BY THE MEMBER ENTERING/ADMITTING IN THE SCHEME AS PER THE AGREEMENT HE SHALL RECEIVE THE PROPERTY AND THE DECISION OF THE DEVELOPER CUM BUILDING CONTRACTOR OF ALLOTMENT OF PROPERTY TO THE RESPECTIVE PERSON SHALL BE FINAL FOR THE PARTY OF THE FIRST AND SECOND PART AND SHALL BE AGREEABLE AND BINDING TO THE PERSON REGISTERED AS A MEMBER WITHO UT ANY DISPUTE. THE SCHEME FOR THE CONSTRUCTION ON THE SAID LAND WHICH HAS BEEN PREPARED BY THE PARTY OF SECOND PART TAKING IN CONFIDENCE THE PARTY OF THE FIRST PART, WILL BE BINDING TO THE PARTY OF FIRST PART AND IN FUTURE, THE PERSONS PURCHASING THE UNIT S OF THE SCHEME AND THEIR COMMITTEE. THE PARTY OF FIRST PART GIVES AUTHORITY TO THE PARTY OF THE SECOND PART TO ALLOT THE DIFFERENT UNITS THAT MAY BE CONSTRUCTED UNDER THE SAID SCHEME, ALONG WITH MARGINAL AND OPEN TERRACE, PARKING PLACE, AND ANY PLACE IN T HE SCHEME AND TO TRANSFER THE SAME IN ANY MANNER . (PAGE 14 PARA 8) PARA 25 OF ORDER SUB - CLAUSE 8 TO CLAUSE 11 THAT THE SAID DEVELOPER CUM BUILDING CONTRACTOR IN ORDER TO COMPLETE THE SCHEME IN ORDER STEP BY STEP BUT IN PRESCRIBED TIME PERIOD, THE PARTY OF THE FIRST AND SECOND PART AND ALL THE MEMBERS DESIROUS IN JOINING IN THE SCHEME DEVELOPER CUM BUILDING CONTRACTOR WHENEVER AND WHEREVER THEY NEED THE SIGNATURES AND ADMISSIONS, THEY SHALL HAVE TO GIVE THAT TO THE DEVELOPER CUM BUILDING CONTRACTOR AND IN S PECIAL CIRCUMSTANCES DEVELOPER CUM BUILDING CONTRACTOR IN ORDER TO COMPLETE THE SCHEME IN ORDER STEP BY STEP IN PRESCRIBED TIME PERIOD, SHALL BE ENTITLED TO RECEIVE GENERAL POWER OF ATTORNEY FROM THE PARTY OF THE FIRST AND SECOND PART. FOR THE CONSTRUCTION THAT HAS TO BE CARRIES OUT ON THE LAND, FOR ITS PREPARATION, FOR BEGINNING WITH THE CONSTRUCTION, FOR COMPLETION OF THE CONSTRUCTION, FOR ITS DISPOSAL OF IT, AS PER THE RULES FROM TIME TO TIME IN EXISTENCE, NECESSARY PERMISSION, CERTIFICATE, CONSENT, CONF IRMATION ETC. ARE REQUIRED TO BE OBTAIN FROM SUCH OFFICERS, AND FOR THAT PURPOSE, THE PARTY OF FIRST PART HAS TO GIVE ALL CO - OPERATION AND TO BE HELPFUL TO THE PARTY OF SECOND PART (PAGE 14 PARA 7) ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 28 PARA 25 OF ORDER SUB - CLAUSE 10 TO CLAUSE 11 TO COMPLETE THIS SCHEME IN THE PRESCRIBED TIME PERIOD AND FOR THE PURPOSE OF ADMITTING THE MEMBERS IN THE SCHEME, TO GIVE ADVERTISEMENT OF THE TOTAL OR PARTIAL SCHEME IN LOCAL NEWS PAPER OR TO PRINT OUT ITS BOOKLET, TO PLACE SIGN BOARD, NEON BOARD ON SITE THE RIGHTS A ND AUTHORITIES ARE HEREBY GIVEN TO THE DEVELOPER CUM BUILDING CONTRACTOR. THE PARTY OF SECOND PART FOR ATTRACTING AND FOR INVITING THE PERSONS WHO CAN BECOME PURCHASER, CAN PREPARE ANY TYPE OF PAMPHLET, BROCHURE AND SHALL CONTRIBUTE AS THE PARTY OF SECOND PART THINKS PROPER AND REASONABLE FOR THE CONSTRUCTION THAT IS TO BE CARRIED PUT IN THE SAID SCHEME CAN GIVE ADVERTISEMENT IN MAGAZINE AND DAILY NEWSPAPER AND CAN PUT SIMPLE SIGN BOARD AND NEON LIGHT AND CAN ADVERTISE THE SCHEME IN DIFFERENT WAYS. (PAGE 20 PARA 17) PARA 25 OF ORDER SUB - CLAUSE 12 TO CLAUSE 11 THAT BY THE SAID THE PARTY OF THE FIRST AND SECOND PART HAVE GIVEN ALL THE AUTHORITIES TO DEVELOPER CUM BUILDING CONTRACTOR, FOR COMPLETING THE SCHEME OF CONSTRUCTING RESIDENTIAL HOUSES AND INCIDENTAL WORK THERE TO AND THEREFORE THE SAID DEVELOPER CUM BUILDING CONTRACTOR HAS TO COMPLETE THIS SCHEME AS PER HIS OWN TALENTS, WHATEVER HE DEEMS PROPER AS PER HIS DISCRETION AND DECISIONS. THE ACCOUNTS RIGHT FROM THE IMPLEMENTATION OF THIS AGREEMENT UP TO THE COMPLETION OF THE PROJECT, DEVELOPER CUM BUILDING CONTRACTOR HAS TO MAINTAIN IN HIS OFFICE IN HIS BOOKS OF ACCOUNTS AND IT IS THE LIABILITY AND RESPONSIBILITY OF DEVELOPER CUM BUILDING CONTRACTOR THE PARTY OF THE THIRD PART TO FULLY RECOVER THE CONSIDERATI ON FROM THE MEMBERS. THE PARTY OF SECOND PAST SHALL HAVE TO GIVE EFFECT IN THE BOOKS OF ACCOUNT THE EXPENSES INCURRED BY THE PARTY OF SECOND PART, AUTHORIZED PERSON APPOINTED BY THEM, PAYMENT OF AMOUNT AND EXPENSES AND PAYMENT OF AMOUNT MADE IN REGARDS TO THE SCHEME TO BE CARRIED OUT IN THE SAID LAND INCURRED UNDER THIS AGREEMENT SHALL BE TREATED AS EXPENDED FOR THE CONSTRUCTION SCHEME TO BE CARRIED OUT ON THE SAID LAND. IF IT IS THE WISH OF THE PARTY OF SECOND PART, THEN ALL SUCH EXPENSES AND PAYMENT OF AM OUNT SHALL BE MADE FROM THE SOCIETY. (PAGE 25 PARA 25) PARA 25 OF ORDER SUB - CLAUSE 13 TO CLAUSE 11 AS PER THIS SCHEME DEVELOPER CUM BUILDING 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. THE PARTY OF SECOND PART SHALL DECIDE THE PRICE OF T HE PROPERTY TO BE ALLOTTED TO THE ALLOTTEE FOR THE UNITS TO BE CONSTRUCTED ON THE LAND, FUTURE ALLOTTEE, ALONG WITH THE MEMBERS AND ALLOTTEE, TAKING INTO CONSIDERATION PROPER AND REASONABLE FACTS AND CIRCUMSTANCES. (PAGE 24 PARA 24) PARA 25 OF ORDER SUB - C LAUSE 14 TO CLAUSE 11 THE LAND DESCRIBED IN SCHEDULE BELOW AND THE CONSTRUCTION DONE ON IT, ITS ACTUAL POSSESSION SHALL BE WITH DEVELOPER CUM BUILDING CONTRACTOR TILL THE COMPLETION OF THIS SCHEME AND TILL THE TIME THE SCHEME OF CONSTRUCTION IN THE SAID LAND IS COMPLETE, AND ALL THE AMOUNTS OF THE PROJECTS ARE RECEIVES AND OBTAINED FROM DIFFERENT PERSONS, AND THE PARTY OF SECOND PART GET AND RECEIVE ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 29 MOREOVER TILL THE TOTAL IMPLEMENTATION OF THIS AGREEMEN T ON THE SAID LAND AND THE CONSTRUCTION OVER IT THERE SHALL BE A CONTRACTUAL LIEN OF THE DEVELOPER CUM BUILDING CONTRACTOR. COMPLETE AMOUNT OF THEIR JOB, THE POSSESSION OF THE SAID LAND AND COMPLETE CONSTRUCTION OVER THE SAME SHALL REMAIN COMPLETELY IN POSSESSION OF THE PARTY OF SECOND PART AND PARTY OF SECON D PART CAN MAKE TRANSACTION OF THE PART OR DISPOSE OF OR TRANSFER THE SAME AS THEY THINK PROPER. AS STATED IN THE AFORESAID PARA THE PARTY OF SECOND PART SHALL TRANSFER OR DISPOSE OF THE CONSTRUCTION THAT IS TO BE CARRIED OUT ON THE SAID LAND IN THE MANNER AS THINK FIT BY THEM AND SUCH CONSTRUCTION SHALL REMAIN IN POSSESSION OF THE PARTY OF SECOND PART TILL THE SCHEME IS COMPLETED. TILL THE AMOUNT OF ANY UNIT IS NOT RECEIVED AND RECOVERED, THE PARTY OF SECOND PART WILL HAVE CHARGE AND LIEN OVER SUCH UNIT AN D PROPERTY OF THE SCHEME. (PAGE 27 PARA 31 & 32) PARA 25 OF ORDER SUB - CLAUSE 15 TO CLAUSE 11 WITH THE CONSENT OF THE PARTY OF THE FIRST AND SECOND PART THE SCHEME TAKEN ON HAND ITS LIABILITY OF PROJECT IS ON DEVELOPER CUM BUILDING CONTRACTOR AND THEREFORE DURING THE WORKING OF THE PROJECT IN THIS SCHEME BY THE AGREEMENTS OR OTHERWISE WHATEVER THE TRANSACTIONS ARE ENTERED INTO WITH THIRD PARTIES THE LIABILITY OF THOSE TRANSACTIONS SHALL BE DEVELOPER CUM BUILDING CONTRACTOR AND IN THIS MANNER IN THE AGREEMEN TS WITH THIRD PARTIES THE PARTY OF THE FIRST AND SECOND PART HAVE/SHALL NOT HAVE ANY LIABILITY HENCE ANY SUIT FOR LOSS, DAMAGES OR COMPENSATION ON SITE CANNOT BE A LIABILITY OF THE THIRD PART OF THE FIRST AND SECOND PART. FURTHER IT IS CLARIFIED THAT THE D EVELOPER WILL BE ENTITLED/RESPONSIBLE FOR THE PROFIT, INCOME, OR LOSS OCCURRED FORM THIS PROJECT, I.E. AFTER DEDUCTING THE AMOUNT THAT IS TO BE RECOVERED BY THE SOCIETY FROM WHATEVER THE AMOUNT RECEIVED FROM THE MEMBERS OF THIS PROJECT, THE WHATEVER LOSS O R INCOME, PROFIT OR LOSS WILL BE THE COMPLETE RESPONSIBILITY OF THE DEVELOPER AND SOCIETY WILL NOT BE ENTITLED/RESPONSIBLE FOR THE SAME . IN SUCH WAY, FOR THE CALCULATION OR PROPOSED PROFIT OR LOSS, THE DEVELOPER CAN ADOPT THE ACCOUNTS SYSTEM DECIDED BY THE M AND SOCIETY WILL HAVE TO RAISE ANY OBJECTION (PAGE 27 PARA 30) PARA 25 OF ORDER SUB - CLAUSE 24 TO CLAUSE 11 THE AMOUNT OF TOTAL COLLECTION RECEIVED FROM PERSON BECOMING MEMBER IN THIS SCHEME OUT OF THAT THE AMOUNT SHALL BECOME PAYABLE TO THE PARTY OF THE FIRST THAT IS PAID TO SECOND PART BY THEM AND TO THE PARTY OF THE FIRST SHALL BE ENTITLED TO RECEIVE CONSIDERATION AS PER THE AGREEMENT DT.18 - 5 - 2000 AND AFTER DEDUCTING THAT REMAINING ALL AMOUNT SHALL BE RECEIVED BY THE PARTY OF THIRD PART AS HIS REMUNERA TION.' THIS AGREEMENT SHALL REMAIN IN FORCE TILL THE FULL AMOUNT OF THIS SCHEME AND THE AMOUNT OF UNIT ARE RECEIVED FROM THE PERSONS WHO BOOKED THE UNIT IN THE SCHEME CARRYING OUT ON THE SAID LAND AND THE SAID SCHEME IS FULLY COMPLETED AND ALL THE UNITS AR E DISPOSED OF BY THE PARTY OF SECOND PART AND ALL THE AMOUNTS BEING PAID TO THE PARTY OF THE SECOND PART, THEIR AGENTS, SUB - CONTRACTORS, FINANCIAL. ( PAGE 29 PARA 34) ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 30 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIE S AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF PROFIT DERIVED FROM HOUSING PROJECT RELATING TO DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD WHICH WAS DENIED BY THE AO. THE AO DENIED THE SAID CLAIM OF THE ASSESSEE ON THE GROUND THAT IN HIS OPINION THE ASSESSEE WAS NOT A DEVELOPER OF THE SAID HOUSING PROJECT BUT WAS MERELY A CONTRACTOR. THE OPINION OF AO WAS BASED ON THE FACT THAT THE LAND ON WHICH HOUSING PROJECT WAS CONSTRU CTED WAS OWNED BY DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD AND AT THE TIME OF SALE OF FLATS THE CONVEYANCE DEED WAS EXECUTED BY THE SAID SOCIETY IN FAVOUR OF THE PURCHASER AND IN THE SAID CONVEYANCE DEED THE ASSESSEE WAS MADE A CONFIRMING PARTY. 17. APART FROM THE AGREEMENT ENTERED INTO WITH THE SAID DHARTI VIKAS CO - OPERATIVE HOUSING SOCIETY LTD AND THE ASSESSEE, THE AO ALSO VERIFIED THE APPROVAL PLAN OF THE HOUSING SOCIETY AND OBSERVED THAT THE APPROVAL FOR THE HOUSING PROJECT WAS OBTAINED IN THE NA ME OF THE SAID HOUSING SOCIETY. 1 8 . ACCORDING TO THE AO, AS THE LAND WAS OWNED BY THE HOUSING SOCIETY THE BUILDING CONSTRUCTED THEREON BY THE ASSESSEE BECAME THE PROPERTY OF THE HOUSING SOCIETY AND THEREFORE, EVEN THOUGH THE AGREEMENT BETWEEN THE ASSESSE E AND THE SAID SOCIETY WAS TERMED AS DEVELOPMENT AGREEMENT BUT IN ESSENCE IT WAS MERELY A CONSTRUCTION AGREEMENT AND THE ASSESSEE HAS NO RIGHT TO TRANSFER THE CONSTRUCTED FLAT AND THEREFORE THE ASSESSEE WAS MERELY A CONTRACTOR. 19. ON AN APPEAL AGAINST T HIS ORDER OF THE AO, THE LD. CIT(A) REVERSED THE DECION OF THE AO AND ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB(10) OF THE ACT. THE LD. CIT(A) FOUND THAT THE ASSESSEE PAID RS. 3,42,19,630/ - TO THE SOCIETY FOR ACQUIRING DEVELOPMENT RIGHTS IN T HE LAND AND DEBITED THAT AMOUNT IN ITS PROFIT AND LOSS ACCOUNT. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 31 20. FURTHER, HE FOUND THAT THE AO HAS ACCEPTED THAT ALL THE CONDITIONS SPECIFIED IN SECTION 80IB(10) WAS SATISFIED IN THE INSTANT CASE LIKE AREA OF LAND, APPROVAL OF LOCAL AUTHORITIES, PERIO D OF COMPLETION, SIZE OF EACH UNITS, AND PERMISSIBLE COMMERCIAL USE, ETC. THE ONLY DISPUTE RELATES TO THE OWNERSHIP OF THE LAND AND ON THIS GROUND THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF M/S. SHAKTI CORPORATION, VADODARA IN ITA NO.1503/AHD/2008 IN AY 2005 - 06. THE LD. CIT(A) THEREFORE HELD THAT AS THE ASSESSEE HAS PRACTICALLY PURCHASED THE LAND AND IT BORE THE ENTIRE COST AND RISK OF DEVELOPING THE PROJECT THAT IS WHY IN HIS VIEW IT WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10) AND DIRECTED THE AO TO ALLOW THE SAME. 21. BEFORE US, THE LD. DR SUPPORTED THE ORDER OF THE AO AND CONTENDED THAT ON A READING OF THE AGREEMENT DATED 21.10.2005 PLACED AT PAGE NOS. 161 TO 200 OF THE PAPER BOOK FIL ED BY THE ASSESSEE ENTERED INTO BETWEEN THE ASSESSEE AND THE SAID SOCIETY SHOWS THAT ASSESSEE WAS MERELY A CONTRACTOR AND NOT THE DEVELOPER. HE POINTED OUT FROM CLAUSE 12 OF THE SAID AGREEMENT THAT IT SHOWS THE ASSESSEE HAD NO RIGHT TO SELL THE CONSTRUCTED FLAT. HE ALSO POINTED OUT FROM CLAUSE 16 OF THE AGREEMENT THAT ALL THE WORK DONE BY THE ASSESSEE UNDER THE AGREEMENT WAS DONE BY HIM AS AN A GENT OF THE SOCIETY AND NOT AS A PRINCIP AL AND THE ASSESSEE WAS NOT RESPONSIBLE FOR THE WORK DONE OR NOT DONE UNDER THE AGREEMENT. 22. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). HE RELIED UPON CLAUSE 19 & 30 OF THE AGREEMENT AND CONTENDED THAT THESE CLAUSES SH OW THAT THE ASSESSEE WAS FOR ALL PRACTICAL PURPOSES GIVEN THE POSS ESSION OF THE LAND AND WAS RESPONSIBLE FOR DEVELOPMENT OF HOUSING PROJECT THEREON AND RECEIVED MONEY BY SELLING THE CONSTRUCTED FLATS THEREON AND ALL THE PROFIT AND LOSS ON SALE OF THE DEVELOPED PROPERTY BELONGED TO OR WAS BORNE BY THE ASSESSEE. THUS, THE ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 32 ENTIRE RISK AND REWARDS OF THE DEVELOPMENT OF T HE PROPERTY WAS OF THE ASSESSEE, HOUSING SOCIETY WAS PAID BY THE ASSESSEE ADEQUATE CONSIDERATION FOR LAND AND DEVELOPMENT RIGHTS THEREON AND POSSESSION WAS RECEIVED BY THE ASSESSEE AGAINST THAT CONSIDERATION. THUS THE ASSESSEE WAS THE REAL DEVELOPER OF THE HOUSING PROJECT AND THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 80IB(10) TO THE ASSESSEE. HE ALSO RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF ACIT V. SOMESH WAR DEVELOPERS IN TAX APPEAL NO. 1300 OF 2008, ORDER DATED 11.01.2012 AND POINTED OUT THAT THEREIN THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF K. RAHEJA DEVELOPMENT CORPORATION V. STATE OF KARNATAKA , (2005) 2 STT 178, WAS DULY CONSIDERED BY TH E HON BLE HIGH COURT AND THEREAFTER THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. 23. WE FIND THAT THE RELEVANT CLAUSES OF THE AGREEMENT DATED 21.10.2005 READ AS UNDER: - 12. GENERALLY THE PURCHASERS OF THE UNITS, THE PERSONS WISH TO OBTAIN THE CONST RUCTION, WHO HAVE BEEN RECOMMENDED BY THE DEVELOPER TO GIVE MEMBERSHIP SHALL BE GIVEN MEMBERSHIP ON GIVING CONSENT THAT HE WILL OBEY THE BY - LAWS OF THE SOCIETY FROM TIME TO TIME, REGULATIONS, RESOLUTIONS AND DECISION. BUT THE DECISION OF THE SOCIETY WILL B E FINAL AS TO ANY PERSON SHALL BE ENTERTAINED IN THE SOCIETY AND OBTAIN MEMBERSHIP AND THE SAME SHALL BE CONCLUSIVE AND FINAL AND BINDING TO ALL THE CONCERNED. 16. WITH REGARD TO THE PROJECT THAT HAS TO BE CARRIED OUT IN THE SAID LAND, AND THE WORKS WHETH ER DONE OR NOT DONE IN CONNECTION WITH IT, WRITINGS, MATTER OR ARTICLES DONE ON THE BASIS OF THIS AGREEMENT SHALL BE TREATED AS DONE BY THE PARTY OF FIRST PART AS AGENT OF THE PARTY OF FIRST PART AND THE PARTY OF SECOND PART SHALL NOT BE RESPONSIBLE IN THA T REGARD. 19. THE PARTY OF SECOND PART SHALL HAVE TO COMPLETE THIS PROJECT AS EARLY AS POSSIBLE. THEREFORE, FOR EARLY COMPLETION OF THE SAID PROJECT IN TIME LIMIT, FOR THE PURPOSE OF COMPLETING THE SAID SCHEME FOR THE PURPOSE OF OBTAINING MONEY, IF WHENEV ER THE NECESSITY OF ARISES AND AS FAR AS POSSIBLE, THE PARTY OF FIRST PART GIVES CONSENT AND AUTHORITY TO THE PARTY OF SECOND PART TO MORTGAGE THE LAND AND CONSTRUCTION OVER THE SAME. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 33 22. WITH REGARD TO THE MONEY PAID TO THE PARTY OF SECOND PART FOR PROJE CT THAT IS CARRIED OUT IN THE SAID LAND, THE PARTY OF SECOND PART HAS TO REGULARLY AND PROPERLY MAINTAIN ACCOUNTS AND BOOKS CONCERNING THE SAME AND HAVE ALSO TO MAINTAIN THE ACCOUNTS OF EXPENSES INCURRED. THE PARTY OF SECOND PART CAN OBTAIN SERVICES OF ANY BODY FOR MAINTAINING PROPER AND TRUE ACCOUNTS AND MAINTAINING RECORD AT THE COST OF ASSOCIATION AND CAN ALSO OBTAIN SERVICES OF SUCH PERSON WHO FOR MAINTAINING RECORD OF THE PROJECT THAT IS CARRIED OUT IN THE SAID LAND AND CAN PAY SALARY AND AMOUNTS. THE P ARTY OF SECOND PART HAS TO GET AUDITED AND CERTIFIED SUCH ACCOUNT BOOKS FROM THE CHARTERED ACCOUNTANT. IF THE SAID ACCOUNTS ARE AUDITED AND CERTIFIED BY THE CHARTERED ACCOUNTANT, THEN THE SAME WILL BE FINAL AND BINDING TO ALL THE CONCERNS AND IN THAT CIRCU MSTANCES, THE PARTY OF SECOND WILL BE RELEASED FROM THE DUTIES AND RESPONSIBILITIES FOR ACCURACY OF MAINTAINING SUCH ACCOUNTS AND MAINTAINING THE RECORD PROPERLY AND THEREAFTER THE PARTY OF SECOND WILL BE RELEASED FROM ANY INQUIRY OR CLARIFICATION FROM THE SOCIETY OF THE SCHEME, ITS MEMBERS, PARTY OF FIRST PART OR ANY OTHER IN THAT REGARD. 25. THE PARTY OF SECOND PART SHALL HAVE TO GIVE EFFECT IN THE BOOKS OF ACCOUNT THE EXPENSES INCURRED BY THE PARTY OF SECOND PART, AUTHORIZED PERSONS APPOINTED BY THEM, PAYMENT OF AMOUNT AND EXPENSES AND PAYMENT OF AMOUNT MADE IN REGARD TO THE SCHEME TO BE CARRIED OUT IN THE SAID LAND INCURRED UNDER THIS AGREEMENT SHALL BE TREATED AS EXPENDED FOR THE CONSTRUCTION SCHEME TO BE CARRIED OUT ON THE SAID LAND. IF IT IS THE WIS H OF THE PARTY OF SECOND PART, THEN ALL SUCH EXPENSES AND PAYMENT OF AMOUNT SHALL ME MADE FROM THE SOCIETY. 30. FURTHER IT IS CLARIFIED THAT THE DEVELOPER WILL BE ENTITLED / RESPONSIBLE FOR THE PROFIT, INCOME, OR LOSS OCCURRED FROM THIS PROJECT, I.E. AFT ER DEDUCTING THE AMOUNT THAT IS TO BE RECOVERED BY THE SOCIETY FROM WHATEVER THE AMOUNT RECEIVED FROM THE MEMBERS OF THIS PROJECT, THE WHATEVER LOSS OR INCOME, PROFIT OR LOSS WILL BE THE COMPLETE RESPONSIBILITY OF THE DEVELOPER AND SOCIETY WILL NOT BE ENTI TLED / RESPONSIBLE FOR THE SAME. IN SUCH WAY, FOR THE CALCULATION OR PROPOSED PROFIT OR LOSS, THE DEVELOPER CAN ADOPT THE ACCOUNTS SYSTEM DECIDED BY THEM AND THE SOCIETY WILL HAVE TO RAISE ANY OBJECTION. 24. WE FIND THAT FROM CLAUSE 12 OF THE AGREEMENT, IT CANNOT BE CONTENDED THAT THE ASSESSEE HAS NO RIGHT TO SELL THE FLAT OF THE DEVELOPED HOUSING PROJECT AS CONTENDED BY THE LD. DR. A READING OF THE SAID CLAUSE SHOWS ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 34 THAT THE INTENDING PURCHASER WILL BE RECOMMENDED BY THE ASSESSEE ONLY. ON RECOMMENDATIO N OF THE ASSESSEE THE HOUSING SOCIETY MAY AGREE OR MAY NOT AGREE WITH THE RECOMMENDATIONS OF THE ASSESSEE. WHEN SOCIETY AGREE WITH THE RECOMMENDATION OF THE ASSESSEE, THE INTENDING PURCHASER WILL BE ADMITTED AS A MEMBER OF THE SOCIETY AND TO THAT INTENDED PURCHASER FLAT WILL BE SOLD. THUS, IT IS NOTICED THAT THE INTENDING PURCHASER WILL BE DECIDED ONLY ON RECOMMENDATION OF THE ASSESSEE AND THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAD NO RIGHT TO CHOOSE THE PURCHASER OF THE DEVELOPED FLAT IN THE PROJEC T UNDER CONSIDERATION. 25. FURTHER FROM A PERUSAL OF CLAUSE 16 IT CANNOT BE CONCLUDED THAT THE ASSESSEE WAS MERELY A CONTRACTOR AND NOT DEVELOPER. FROM THE SAID CLAUSE, IT CANNOT BE CONCLUDED THAT THE RISK AND REWARD OF THE HOUSING PROJECT WAS NOT THAT OF THE ASSESSEE. ON THE OTHER HAND, THE CLAUSE NO.30 OF THE AGREEMENT SHOWS THAT THE ASSESSEE IS ENTITLED TO SALE PROCEEDS OF THE FLAT OF THE HOUSING PROJECT UNDER CONSIDERATION AND CONSEQUENTLY , THE PROFIT OR LOSS ARISING FROM THE PROJECT WAS THE PROFIT O R LOSS OF THE ASSESSEE. THUS, FROM THE ABOVE CLAUSE, IT CANNOT BE HELD THAT THE ASSESSEE WAS A MERE CONTRACTOR AND RISK OR REWARD OF THE HOUSING PROJECT WAS NOT OF THE ASSESSEE BUT OF ANY OTHER PERSON. 26. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT T HE ENTIRE SALE PROCEEDS OF THE FLATS OF THE HOUSING PROPERTY IN QUESTION WAS RECOGNIZED BY THE ASSESSEE AS ITS REVENUE AND PROFITS OF THE ASSESSEE WAS COMPUTED ON THE BASIS OF THE SAID SALE PROCEEDS. THUS, WE FIND FROM THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A READING OF THE AGREEMENT AS A WHOLE THAT THE DEVELOPMENT OF THE HOUSING PROJECT IN QUESTION WAS UNDERTAKEN BY THE ASSESSEE, THE ENTIRE RISK AND REWARD OF THE HOUSING PROJECT IN FACT BELONGED TO THE ASSESSEE AND THEREFORE, IN OUR CONSIDER ED VIEW, THE ASSESSEE CANNOT BE HELD AS A CONTRACTOR ONLY AND NOT A DEVELOPER WITHIN THE MEANING OF SECTION 80IB(10) OF THE ACT. OUR ABOVE VIEW FINDS SUPPORT ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 35 FROM THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SOMESHWAR DEVELOPERS (SU PRA); WHEREIN THE QUESTION BEFORE THE HON BLE HIGH COURT WAS AS UNDER: - WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN ALLOWING BENEFITS UNDER SEC.80IB(10) OF THE ACT, WHEN THE APPROVAL OF THE LOCAL AUTHORITY AS WELL AS COMPLETION CERTIFICATE WAS NOT GRANTED TO THE ASSESSEE, BUT TO THE LAND OWNERS AND RIGHTS AND OBLIGATIONS UNDER THE SAID APPROVAL WERE NOT TRANSFERABLE, AND WHEN TRANSFER OF DWELLING UNITS IN FAVOUR OF END USERS WAS MADE BY THE LAND OWNERS AND NOT BY T HE ASSESSEE? 27. THE HON BLE HIGH COURT HAS HELD AS UNDER: - 5. THE CENTRAL QUESTION IS AS TO WHETHER THE RESPONDENT ASSESSEE IS ELIGIBLE FOR THE BENEFIT UNDER SECTION 80IB. AS CAN BE CULLED OUT FROM THE RECORD, BOTH CIT(APPEALS) AS WELL AS THE TRIBUNA L HAD ALLOWED THE DEDUCTION TO THE ASSESSEE RESPONDENT UNDER SECTION 80IB(10) READ WITH SECTION 80IB(1). 6. AS CANDIDLY POINTED OUT TO US BY THE LEARNED COUNSEL, THIS BENCH IN TAX APPEAL NO.546 OF 2008 AND ALLIED APPEALS IN CASE OF COMMISSIONER OF INCOME - TA X VS. RADHE DEVELOPERS DECIDED THE IDENTICAL QUESTION OF LAW ON 13.12.2011. AS THE PRESENT APPEAL ALSO ARISE IN SIMILAR FACTUAL BACKGROUND LEADING TO THE SAME QUESTION OF LAW, INSTEAD OF GIVING INDEPENDENT REASONINGS TO THE QUESTION PROPOSED, RELEVANT FIND INGS ARRIVED AT IN CASE OF RADHE DEVELOPERS(SUPRA) WOULD BE APPROPRIATE TO BE REPRODUCED FOR THE PURPOSE OF DECIDING THE PRESENT APPEAL. 3. IN TAX APPEAL NO.546 OF 2008 (M/S. RADHE DEVELOPERS), THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB(10) O F THE INCOME TAX ACT, 1961 ( THE ACT FOR SHORT) OF RS.24,75,940/ - ON THE PREMISE THAT SUCH INCOME WAS DERIVED FROM THE BUSINESS OF THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY. TO EXECUTE SUCH HOUSING PROJECT, T HE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH VINODBHAI NATHABHAI PATEL (HUF) AND OTHERS AS PARTY OF THE FIRST PART AND HEIRS OF DECEASED AMBALAL MOTIBHAI PATEL AS PARTY OF THE SECOND PART. IN THE SAID DEVELOPMENT AGREEMENT DATED 18.5.2000, THE ASSESSEE WAS REFERRED AS A PARTY OF THE THIRD PART. THE PARTY OF THE SECOND PART REPRESENTED THE LAND OWNERS AND PARTY OF THE FIRST PART REPRESENTED THOSE, WHO HAD PREVIOUSLY ENTERED INTO AN AGREEMENT TO PURCHASE SUCH LAND. UNDER THIS DEVELOPMENT AGREEMEN T, THE ASSESSEE AGREED TO DEVELOP THE LAND BELONGING TO PARTY OF THE SECOND PART ON CERTAIN TERMS AND CONDITIONS. WE WOULD REFER TO RELEVANT TERMS AND CONDITIONS AT A LATER STAGE. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 36 4. ON THE SAME DAY I.E. 18.5.2000, THE LAND OWNERS ENTERED INTO AN AGREEMENT TO SELL THE LAND IN QUESTION TO THE ASSESSEE. THE ASSESSEE WAS DESCRIBED AS PURCHASER AND THE ORIGINAL LAND OWNERS I.E. THE HEIRS OF DECEASED AMBALAL MOTIBHAI PATEL WERE DESCRIBED AS PARTY OF THE SECOND PART OR THE SELLERS. 5. THE ASSESSING OFFICER, HOWEVE R, REJECTED THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE FIRM WAS NOT THE OWNER OF THE LAND. APPROVAL BY THE LOCAL AUTHORITY AS WELL AS PERMISSION TO DEVELOP THE PROJECT AN D PERMISSION TO COMMENCE CONSTRUCTION WERE NOT IN THE NAME OF THE ASSESSEE FIRM. THE ASSESSING OFFICER WAS ALSO OF THE OPINION THAT THE ASSESSEE HAD MERELY ACTED AS AN AGENT OR A CONTRACTOR FOR CONSTRUCTION OF RESIDENTIAL HOUSES. 6. THE ASSESSEE CARRIED TH E MATTER IN APPEAL. CIT(APPEALS) VIDE ORDER DATED 19.9.2006 REJECTED THE ASSESSEE'S APPEAL. CIT(APPEALS) PUT CONSIDERABLE STRESS ON THE REQUIREMENT OF OWNERSHIP OF THE LAND TO QUALIFY FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. HE WAS OF THE OPINION T HAT THE LAND IS INTRINSIC AND INALIENABLE PART OF THE HOUSING PROJECT. NO ASSESSEE, THEREFORE, COULD CARRY ON THE BUSINESS OF UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS WITHOUT OWNING THE LAND. 7. THE ASSESSEE CARRIED THE MATTER FURTHER IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL ( THE TRIBUNAL FOR SHORT). THE TRIBUNAL VIDE ITS IMPUGNED JUDGMENT DATED 29.6.2007 ALLOWED THE ASSESSEE'S APPEAL AND REVERSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES. THE TRIBUNAL BASED ITS ORDER ON TWO ASPE CTS. FIRSTLY, THE TRIBUNAL WAS OF THE OPINION THAT FOR DEDUCTION UNDER SECTION 80IB (10) OF THE ACT IT IS NOT NECESSARY THAT THE ASSESSEE MUST BE THE OWNER OF THE LAND. SECOND ASPECT OF THE TRIBUNAL'S JUDGMENT WAS THAT EVEN OTHERWISE LOOKING TO THE PROVISI ONS CONTAINED IN SECTION 2(47) OF THE ACT, READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT, BY VIRTUE OF THE DEVELOPMENT AGREEMENT AND THE AGREEMENT TO SELL, THE ASSESSEE HAD, FOR THE PURPOSE OF INCOME TAX, BECOME THE OWNER OF THE LAND. THE TRIBUNAL, ACCORDINGLY, ALLOWED THE ASSESSEE'S APPEAL DIRECTING THE ASSESSING OFFICER TO GRANT DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE REVENUE IS, THEREFORE, IN APPEAL BEFORE THIS COURT. 8. SECOND STREAM OF APPEALS LED BY TAX APPEAL NO.733 OF 2009 (M/S. SHA KTI CORPORATION) ARISES IN THE FOLLOWING BACKGROUND. 8.1 HERE ALSO THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 37 80IB (10) OF THE ACT ON THE GROUND THAT THE INCOME WAS DERIVED FROM THE BUSINESS OF THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJE CTS APPROVED BY THE LOCAL AUTHORITY. THE ASSESSING OFFICER DISALLOWED THE CLAIM PRIMARILY ON THE GROUND THAT NOT BEING THE OWNER OF THE LAND, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 8.2 IN APPEAL, CIT(APPEALS) FOLLO WED THE DECISION OF THE TRIBUNAL IN CASE OF M/S. RADHE DEVELOPERS, WHICH WAS BY THEN AVAILABLE. THIS DECISION OF CIT(APPEALS) WAS CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL. REVENUE CONTENDED THAT THE ASSESSEE'S FACTS WERE DIFFERENT FROM THOSE INVOLVED IN THE CASE OF M/S. RADHE DEVELOPERS. THE REVENUE PRESSED IN SERVICE THE DECISION OF THE APEX COURT IN THE CASE OF FAQIR CHAND GULATI VS. UPPAL AGENCIES PRIVATE LIMITED AND ANOTHER REPORTED IN (2008) 10 SCC 345 TO CONTEND THAT FOR AN ASSESSEE TO SEEK BENEF IT UNDER SECTION 80IB (10) OF THE ACT, HE MUST SHOW HIS OWNERSHIP OVER THE LAND IN QUESTION. 8.3 THE TRIBUNAL, THOUGH DID NOT ACCEPT THE REVENUE'S STAND; IN VIEW OF THE DECISION OF THE APEX COURT IN THE CASE OF FAQIR CHAND GULATI VS. UPPAL AGENCIES PRIVATE L IMITED AND ANOTHER (SUPRA), MADE A MINOR DEPARTURE FROM ITS OWN DECISION IN THE CASE OF M/S. RADHE DEVELOPERS. THE TRIBUNAL CONFINED ITS VIEW IN ITS JUDGMENT DATED 7.11.2008 ON THE ASPECT OF THE OWNERSHIP OF THE LAND. CONSIDERING THE TERMS AND CONDITIONS O F DEVELOPMENT AGREEMENT AND OTHER DOCUMENTS ON RECORD, THE TRIBUNAL WAS OF THE OPINION THAT THE BENEFIT OF SECTION 80IB(10) OF THE ACT TO THE ASSESSEE COULD NOT BE DENIED. 8.4 THE TRIBUNAL HELD THAT THE ASSESSEE HAD ACQUIRED DOMINION OVER THE LAND, WHICH HE HAD DEVELOPED BY CONSTRUCTING HOUSING PROJECT INCURRING EXPENSES AND ALSO TAKING RISKS. THE TRIBUNAL, HOWEVER, OBSERVED THAT DECISION IN THE CASE OF M/S. RADHE DEVELOPERS WOULD NOT APPLY IN CASES, WHERE THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR A FIX ED REMUNERATION AND WORKED MERELY AS CONTRACTOR TO CONSTRUCT THE HOUSING PROJECT ON BEHALF OF THE LAND OWNERS. IN SUCH A CASE, AGREEMENT BETWEEN THE ASSESSEE AND THE LAND OWNER WOULD NOT PERMIT THE ASSESSEE TO CLAIM THE BENEFIT. 9. IN THE CASE OF M/S.SH AKTI CORPORATION, SINCE THE ASSESSEE HAD PRODUCED DOCUMENTS ON RECORD, THE TRIBUNAL ACCEPTED ITS CASE FOR BENEFIT UNDER SECTION 80IB(10) OF THE ACT. HOWEVER, IN GROUP OF OTHER CASES, WHICH THE TRIBUNAL WAS DISPOSING OFF BY THE SAID COMMON JUDGMENT, SUCH DO CUMENTS WERE NOT READILY AVAILABLE. THE TRIBUNAL REMANDED THE PROCEEDINGS TO THE ASSESSING OFFICER WITH A DIRECTION THAT THE ASSESSING OFFICER SHOULD LOOK INTO THE AGREEMENT ENTERED ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 38 INTO IN EACH CASE BY THE LAND OWNER AND DECIDE WHETHER THE ASSESSEE HAD IN FACT PURCHASED THE LAND FOR A FIXED CONSIDERATION AND HAD DEVELOPED A HOUSING PROJECT AT ITS OWN COST AND RISK. IF IT WAS SO FOUND, THE ASSESSING OFFICER SHOULD ALLOW THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. ON THE OTHER HAND, IF THE ASSESSING OFF ICER FOUND THAT THE DEVELOPER HAD ACTED ON BEHALF OF THE LAND OWNER AND RECEIVED ONLY A FIXED CONSIDERATION FOR DEVELOPING THE HOUSING PROJECT, THE ASSESSEE WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB (10) OF THE ACT. THIS COMMON JUDGMENT IN THE CASE OF M/S. SHAKTI CORPORATION IS ALSO IN APPEAL BEFORE US AT THE HANDS OF THE REVENUE. WE MAY RECORD THAT THE ASSESSEES HAVE ACCEPTED THE JUDGMENT AND NOT CARRIED THE ISSUE FURTHER BEFORE US. XXX XXX XXX 28. FROM THE ABOVE DOCUMENTS ON RECORD AND TH E STATUTORY PROVISIONS BROUGHT TO OUR NOTICE, IT IS NECESSARY FOR US TO EXAMINE WHETHER THE TRIBUNAL WAS JUSTIFIED IN GRANTING BENEFIT TO THE ASSESSEES UNDER SECTION 80IB(10) OF THE ACT. AS ALREADY NOTED, THE TRIBUNAL IN THE CASE OF M/S.RADHE DEVELOPERS PR OCEEDED ON THE FOOTING THAT SECTION 80IB (10) DOES NOT REQUIRE THAT THE DEVELOPER MUST ALSO BE AN OWNER OF THE LAND AND FURTHER THAT IN ANY CASE, THE ASSESSEE BY VIRTUE OF AGREEMENT WITH THE LAND OWNERS, SHOULD BE DEEMED TO HAVE ACQUIRED OWNERSHIP OF THE L AND IN VIEW OF THE PROVISIONS CONTAINED IN SECTION 2(47) OF THE ACT AND SECTION 53A OF THE TRANSFER OF PROPERTY ACT. TAKING INTO ACCOUNT THE FIRST LIMB OF THE TRIBUNAL'S DECISION, WE NOTICE THAT ERSTWHILE SECTION 80IA OF THE ACT WAS BIFURCATED WITH EFFECT FROM 1.4.2000. THE PROVISION FOR DEDUCTION OF INCOME DERIVED FROM DEVELOPMENT OF HOUSING PROJECT WAS INTRODUCED IN SECTIONS 80IB (1) AND (10) OF THE ACT, WHICH FOR THE PURPOSE OF THESE CASES, AT THE RELEVANT TIME, READ AS UNDER: - 80IB .(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB - SECTIONS(3) TO [(11) AND (11A)]] (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. (10) THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED [BEFORE THE 31 ST DAY OF MARCH, [2005]] BY A LOCAL AUTHORITY, SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, - (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT OR OR AFTER THE 1 ST DAY OF OCTOBER, 1998; ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 39 (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE; AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT - UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY - FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. 29. FROM THE ABOVE PROVISIONS IT CAN BE SEEN THAT SECTION 80IB(10) PROVIDED FOR DEDUCTION OF THE ENTIRE AMOUNT OF PROFITS OF AN UNDERTAKING DERIVED FROM THE BUSINESS OF DEVELOPING AND BUILDING HOUSING PROJECTS WHICH WERE APPROVED BY THE LOCAL AUTHORITY BEFORE THE SPECIFIED DATE. SUCH DEDUCTION, HOWEVER, WAS SUBJECT TO CERTAIN CONDITIONS, NAMELY, THAT SUCH UNDERTAKING HAD COMMENCED DEVELOPMENT AND CONSTRUCTION PRIOR TO A SPECIFIED DATE AND THAT THE PROJECT WAS ON THE SIZE OF A PLOT OF LAND WITH A MINIMUM AREA OF 1 ACRE AND THE RESIDENTIAL UNIT HAD MAXIMUM INBUILT AREA OF 1500 SQ.FEET, (EXCEPT IN CASES OF CITIES OF DELHI AND MUMBAI, WHERE MAXIMUM AREA PERMITTED WAS 1000 SQ.FEET.) 30. THE ESSENCE OF SUB - SECTION (10) OF SECT ION 80IB, THEREFORE, REQUIRES INVOLVEMENT OF AN UNDERTAKING IN DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY. APPARENTLY, SUCH PROVISION WOULD BE AIMED AT GIVING ENCOURAGEMENT TO PROVIDING HOUSING UNITS IN THE URBAN AND SEMI - URBA N 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 PROVIDED IN SUB - SECTION(10) SUCH AS SPECIFYING DATE BY WHICH THE UND ERTAKING MUST 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 LOCATED THEREON. THE PROVISIONS NOWHERE REQUIRED THAT ONLY THOSE DEVELOPERS WHO THEMSELVES OWN THE LAND WOULD RECEIVE THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 31. NEITHER THE PROVISIONS OF SECTION 80IB NOR ANY OTHER PROVISIONS CONTAINED IN OTHER RELATED STATUTES WERE BROUGHT TO OU R NOTICE TO DEMONSTRATE THAT OWNERSHIP OF THE LAND WOULD BE A CONDITION PRECEDENT FOR DEVELOPING THE HOUSING PROJECT. IT WAS PERHAPS NOT EVEN THE CASE OF THE REVENUE THAT UNDER THE OTHER LAWS GOVERNING CONSTRUCTION IN URBAN AND SEMI - URBAN AREAS, THERE WAS ANY SUCH RESTRICTION. IT IS, HOWEVER, THE THRUST OF THE ARGUMENT OF THE REVENUE THAT IN ORDER TO RECEIVE BENEFIT UNDER SECTION 80IB(10) OF THE ACT, SUCH REQUIREMENT MUST BE READ INTO THE STATUTE. WE CANNOT ACCEPT SUCH A CONTENTION. FIRSTLY, AS ALREADY NOTE D, THERE IS NOTHING UNDER SECTION 80IB (10) OF THE ACT REQUIRING THAT OWNERSHIP OF THE LAND MUST VEST IN THE DEVELOPER TO BE ABLE TO QUALIFY FOR SUCH DEDUCTION. SECONDLY, TERM DEVELOPER HAS BEEN UNDERSTOOD IN COMMON PARLANCE AS WELL AS IN LEGAL SENSE CARRY ING A MUCH WIDER ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 40 CONNOTATION. THE TRIBUNAL ITSELF IN THE IMPUGNED ORDER HAS TRACED DIFFERENT MEANINGS OF TERM DEVELOPER EXPLAINED IN DIFFERENT DICTIONARIES, WHICH READ AS UNDER: - A. THE WEBSTER'S ENCYCLOPEDIA UNABRIDGED OF THE ENGLISH LANGUAGE GIVES FOL LOWING MEANING OF THE TERM ' DEVELOPER ' AS: 1. ONE WHO OR THAT WHICH DEVELOPS;2. A PERSON WHO INVESTS IN AND DEVELOPS THE URBAN OR SUBURBAN POTENTIALITIES OF REAL ESTATE. B. OXFORD ADVANCED LEARNERS DICTIONARY OF CURRENT ENGLISH FOURTH INDIAN EDITI ON GIVES MEANING OF THE TERM 'DEVELOPER' AS PERSONS OR COMPANY THAT DEVELOPS LAND. C. RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE THE FOLLOWING CAN BE FOUND. DEVELOP : A. TO BRING OUT THE CAPABILITIES OR POSSIBILITIES OF; BRING TO A MORE A DVANCED OR EFFECTIVE STATE. B. TO CAUSE TO GROW OR EXPAND. DEVELOPER: A. THE ACT OR PROCESS OF DEVELOPING; PROGRESS. B. SYNONYM: EXPANSION, ELABORATION, GROWTH, EVOLUTION, UNFOLDING, MATURING, MATURATION. D. WEBSTER DICTIONARY, THE FOLLOWING DEFINITIONS EMER GE: A. TO REALIZE THE POTENTIAL OF; B. TO AID IN THE GROWTH OF STRENGTH, DEVELOP THE BICEPS, C. TO BRING INTO BEING: MAKE ACTIVE (DEVELOP A BUSINESS) D. TO CONVERT ( A TRACT OF LAND) FOR SPECIFIC PURPOSE, AS BY BUILDING EXTENSIVELY. E. LAW LEXICON DICTIONARY: T HE FOLLOWING DEFINITIONS COULD BE SEEN: DEVELOPMENT A. TO ACT, PROCESS OR RESULT OF DEVELOPMENT OR GROWING OR CAUSING TO GROW; THE STATE OF BEING DEVELOPED. B. HAPPENING. 32. SECTION 80IB(10) OF THE ACT THUS PROVIDES FOR DEDUCTIONS TO AN UNDERTAKING ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTING HOUSING PROJECTS UNDER CERTAIN CIRCUMSTANCES NOTED ABOVE. IT DOES NOT PROVIDE THAT THE LAND MUST BE OWNED BY THE ASSESSEE SEEKING SUCH DEDUCTIONS. 33. IT IS WELL SETTLED THAT WHILE INTERPRETING THE STATUTE, PART ICULARLY, THE TAXING STATUTE, NOTHING CAN BE READ INTO THE PROVISIONS WHICH HAS NOT BEEN PROVIDED BY THE LEGISLATURE. THE CONDITION WHICH IS NOT MADE PART ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 41 OF SECTION 80IB(10) OF THE ACT, NAMELY THAT OF OWNING THE LAND, WHICH THE ASSESSEE DEVELOPS, CANNOT B E SUPPLIED BY ANY PURPORTED LEGISLATIVE INTENT. 34. WE HAVE REPRODUCED RELEVANT TERMS OF DEVELOPMENT AGREEMENTS IN BOTH THE SETS OF CASES. IT CAN BE SEEN FROM THE TERMS AND CONDITIONS THAT THE ASSESSEE HAD TAKEN FULL RESPONSIBILITIES FOR EXECUTION OF THE DEV ELOPMENT PROJECTS. UNDER THE AGREEMENTS, 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 ENROLL MEMBERS AND COLLECT CHARGES. PROFIT OR LOSS WHICH MAY RESULT FROM EXECUTION OF THE PROJECT BELONGED ENTIRELY TO THE ASSESSEE. IT CAN THUS BE SEEN THAT THE ASSESSEE HAD DEVELOPED THE HOUSING PROJECT. THE FACT THAT THE ASSESSEE MAY NOT HAVE OWNED THE LAND WOULD BE OF NO CONSEQUENCE. 35. WITH RES PECT TO THE QUESTION WHETHER THE ASSESSEE HAD ACQUIRED THE OWNERSHIP OF THE LAND FOR THE PURPOSES OF THE INCOME TAX ACT AND, IN PARTICULAR, SECTION 80IB (10) OF THE ACT AND TO EXAMINE THE EFFECT OF EXPLANATION TO SECTION 80IB(10) INTRODUCED WITH RETROSPECT IVE EFFECT FROM 1.4.2001, SINCE SEVERAL ASPECTS OVERLAP, IT WOULD BE CONVENIENT TO DISCUSS THE SAME TOGETHER. 36. WE HAVE NOTED AT SOME LENGTH, THE RELEVANT TERMS AND CONDITIONS OF THE DEVELOPMENT AGREEMENTS BETWEEN THE ASSESSEES AND THE LAND OWNERS IN CASE OF RADHE DEVELOPERS. WE ALSO NOTED THE TERMS OF THE AGREEMENT OF SALE ENTERED INTO BETWEEN THE PARTIES. SUCH CONDITIONS WOULD IMMEDIATELY REVEAL THAT THE OWNER OF THE LAND HAD RECEIVED PART OF SALE CONSIDERATION. IN LIEU THEREOF HE HAD GRANTED DEVELO PMENT PERMISSION TO THE ASSESSEE. HE HAD ALSO PARTED WITH THE POSSESSION OF THE LAND. THE DEVELOPMENT OF THE LAND WAS TO BE DONE ENTIRELY BY THE ASSESSEE BY CONSTRUCTING RESIDENTIAL UNITS THEREON AS PER THE PLANS APPROVED BY THE LOCAL AUTHORITY. IT WAS SPE CIFIED THAT THE ASSESSEE WOULD BRING IN TECHNICAL KNOWLEDGE AND SKILL REQUIRED FOR EXECUTION OF SUCH PROJECT. THE ASSESSEE HAD TO PAY THE FEES TO THE ARCHITECTS AND ENGINEERS. ADDITIONALLY, ASSESSEE WAS ALSO AUTHORIZED TO APPOINT ANY OTHER ARCHITECT OR ENG INEER, LEGAL ADVISER AND OTHER PROFESSIONALS. HE WOULD APPOINT SUB - CONTRACTOR OR LABOUR CONTRACTOR FOR EXECUTION OF THE WORK. THE ASSESSEE WAS AUTHORIZED TO ADMIT THE PERSONS WILLING TO JOIN THE SCHEME. THE ASSESSEE WAS AUTHORISED TO RECEIVE THE CONTRIBUTI ONS AND OTHER DEPOSITS 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 WOULD HAVE THE FULL RIGHT TO INCLUDE NEW MEMBER IN PLAC E OF OUTGOING MEMBER. HE HAD TO MAKE NECESSARY FINANCIAL ARRANGEMENTS FOR WHICH PURPOSE HE COULD RAISE FUNDS FROM THE FINANCIAL INSTITUTIONS, BANKS ETC. THE LAND OWNERS AGREED TO GIVE NECESSARY SIGNATURES, AGREEMENTS, AND EVEN ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 42 POWER OF ATTORNEY TO FACILITA TE THE WORK OF THE DEVELOPER. IN SHORT, THE ASSESSEE HAD UNDERTAKEN THE ENTIRE TASK OF DEVELOPMENT, CONSTRUCTION AND SALE OF THE HOUSING UNITS TO BE LOCATED 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 THE FULL FSI AS PER THE EXISTING RULES 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. EVENTUALLY AFTER PAYING OFF THE LAND OWNER AND THE ERSTWHILE PROPOSED PURCHASERS, THE SURPLUS AMOUNT WOULD REMAIN WITH THE ASSESSEE. SUCH TERMS AND CON DITIONS UNDER WHICH THE ASSESSEE UNDERTOOK THE DEVELOPMENT PROJECT AND TOOK OVER THE POSSESSION OF THE LAND FROM THE ORIGINAL OWNER, LEAVES LITTLE DOUBT IN OUR MIND THAT THE ASSESSEE HAD TOTAL AND COMPLETE CONTROL OVER THE LAND IN QUESTION. THE ASSESSEE CO ULD PUT THE LAND TO USE AS AGREED BETWEEN THE PARTIES. THE ASSESSEE HAD FULL AUTHORITY AND ALSO RESPONSIBILITY TO DEVELOP THE HOUSING PROJECT BY NOT ONLY PUTTING UP THE CONSTRUCTION BUT BY CARRYING OUT VARIOUS OTHER ACTIVITIES INCLUDING ENROLLING MEMBERS, ACCEPTING MEMBERS, CARRYING OUT MODIFICATIONS ENGAGING 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 QUESTION. THE ASSESSEE AGREED TO PAY OFF THE LAND OWNER FIRST BEFORE APPROPRIATING ANY PART OF THE SALE CONSIDERATION OF THE HOUSING UNITS FOR HIS BENEFIT. IN SHORT, ASSESSEE TOOK THE FULL RISK OFEXECUTING THE HOUSING PROJECT AND THEREBY MAKING PROFIT OR LOSS AS THE CASE MAY BE. THE A SSESSEE 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 INSULATED AGAINST ANY RISK. 37. BY NO STRETCH OF IMAGINATION CAN IT B E SAID THAT THE ASSESSEE ACTED ONLY AS A WORKS CONTRACTOR. THE TERMS WORKS CONTRACTOR HAS BEEN RECEIVING JUDICIAL ATTENTION IN SEVERAL CASES IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. GLENMARK PHARMACEUTICALS LTD. (SUPRA), THE BOMBAY HIGH COURT OBSERVED AS UNDER: CONTRACT OF WORK OR A CONTRACT OF SALE 14. THE QUESTION AS TO WHETHER A CONTRACT IS A CONTRACT OF WORK OR A CONTRACT OF SALE IS THE SUBJECT - MATTER OF PRECEDENTS ON THE SUBJECT. THE PRINCIPLES, AS DECIDED CASES WOULD SHOW, ARE WELL DEFINED BUT THE APPLICATION OF THOSE PRINCIPLES TO INDIVIDUAL CASES OFTEN POSES A DIFFICULTY. THE CONSISTENT LINE OF THINKING THAT EMERGES FROM THE DECIDED CASES IS THAT ESSENTIALLY, IN DETERMINING AS TO WHETHER A CONTRACT CONSTITUTES ONE FOR WORK OR IS A CONTRACT OF SAL E, IT IS THE DOMINANT INTEREST AND OBJECT OF THE PARTIES IN ENTERING INTO THE CONTRACT, AS EVINCED BY THE TERMS OF THE CONTRACT, THE CIRCUMSTANCES OF THE CONTRACT ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 43 AND THE CUSTOM OF THE TRADE THAT PROVIDE A GUIDING INDICATOR. THE OBJECT OF THE PARTIES IS OF NECESSITY TO BE DEDUCED FROM THE TERMS OF THE CONTRACT. IN ORDER TO ELUCIDATE THE DISTINCTION WHICH HAS BEEN MADE, IT WOULD BE NECESSARY TO TURN TO SOME OF THE AUTHORITIES ON THE SUBJECT. WHILE DEALING WITH AUTHORITIES IT WOULD BE NECESSARY TO NOTE THAT S OME OF THE DECIDED CASES DEAL WITH ISSUES UNDER SALES TAX LEGISLATION AND MANY OF THOSE JUDGMENTS RELATE TO THE PERIOD PRIOR TO THE ENACTMENT OF THE FORTY SIXTH AMENDMENT TO THE CONSTITUTION. THE TECHNICALITIES OF SALES TAX LEGISLATION, ESPECIALLY AS A CON SEQUENCE OF THE FORTY SIXTH AMENDMENT DO NOT FALL FOR DETERMINATION IN THIS PROCEEDING. THE DECIDED CASES ARE BEING REFERRED TO ONLY WITH A VIEW TO EMPHASISE THE DISTINCTION BETWEEN A CONTRACT FOR WORK AND A CONTRACT FOR SALE. 15. IN GOVT. OF ANDHRA PRADESH V. GUNTUR TOBACCOS LTD., AIR 1965 SC 1396; 16 STC 240, THE SUPREME COURT HELD THAT IN THE EXECUTION OF A CONTRACT OF WORK SOME MATERIALS MAY BE USED AND PROPERTY IN THE GOODS SO USED PASSES TO THE OTHER PARTY. HOWEVER, THE CONTRACTOR WHO UNDERTAKES TO DO T HE WORK WILL NOT NECESSARILY BE DEEMED ON THAT ACCOUNT TO SELL THE MATERIALS. THE SUPREME COURT NOTED THAT A CONTRACT FOR WORK IN THE EXECUTION OF WHICH GOODS ARE USED MAY TAKE ONE OF THREE FORMS. THOSE THREE FORMS WERE ELABORATED AS FOLLOWS( PAGE 1404 OF AIR 1965 SC AND PAGE 255 OF 16 STC): THE CONTRACT MAY BE FOR WORK TO BE DONE FOR REMUNERATION AND FOR SUPPLY OF MATERIALS USED IN THE EXECUTION OF THE WORKS FOR A PRICE: IT MAY BE A CONTRACT FOR WORK IN WHICH THE USE OF MATERIALS IS ACCESSORY OR INCIDENTA L TO THE EXECUTION OF THE WORK: OR IT MAY BE A CONTRACT FOR WORK AND USE OR SUPPLY OF MATERIALS THOUGH NOT ACCESSORY TO TH EXECUTION OF THE CONTRACT IS VOLUNTARY OR GRATUITOUS. IN THE LAST CLASS THERE IS NO SALE BECAUSE THOUGH PROPERTY PASSES IT DOES NOT P ASS FOR A PRICE. WHETHER A CONTRACT IS OF THE FIRST OR THE SECOND CLASS MUST DEPEND UPON THE CIRCUMSTANCES: IF IT IS OF THE FIRST: IT IS A COMPOSITE CONTRACT FOR WORK AND SALE OF GOODS: WHERE IT IS OF THE SECOND CATEGORY, IT IS A CONTRACT FOR EXECUTION OF WORK NOT INVOLVING SALE OF GOODS. 16. IN A SUBSEQUENT DECISION IN THE STATE OF PUNJAB AND HARYANA V. ASSOCIATED HOTELS OF INDIA LTD., AIR 1972 SC 1131; 29 STC 474, THE SUPREME COURT HELD THAT A CONTRACT FOR SALE IS ONE WHOSE MAIN OBJECT IS THE TRANSFER O F PROPERTY IN, AND THE DELIVERY OF THE POSSESSION OF A CHATTEL AS A CHATTEL TO THE BUYER. WHERE THE PRINCIPAL OBJECT OF THE WORK UNDERTAKEN BY THE PAYEE OF THE PRICE IS NOT THE TRANSFER OF A CHATTEL, THE CONTRACT IS ONE OF WORK AND LABOUR. THE TEST IS WHET HER OR NOT THE WORK AND LABOUR BESTOWED END IN ANYTHING THAT CAN PROPERLY BECOME THE SUBJECT OF SALE; NEITHER THE OWNERSHIP OF MATERIAL, NOR THE VALUE OF THE SKILL AND LABOUR AS COMPARED WITH THE VALUE OF THE MATERIAL, IS CONCLUSIVE, THOUGH THESE CIRCUMSTA NCES MAY BE TAKEN INTO CONSIDERATION IN DECIDING WHETHER A SUBSISTING CONTRACT IS A CONTRACT OF ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 44 WORK AND LABOUR OR CONTRACT FOR A SALE OF A CHATTEL. IN SENTINEL ROLLING SHUTTERS AND ENGINEERING CO.PVT. LTD. V. CST, AIR 1978 SC 1747; 42 STC 409 THIS PRINCIP LE WAS REITERATED BY THE SUPREME COURT. IN STATE OF TAMIL NADU V. ANANDAM VISWANATHAN, AIR 1989 SC 962; 73 STC 1, THE CONTRACT IN QUESTION INVOLVED SUPPLY AND PRINTING OF QUESTION PAPERS TO UNIVERSITIES. THE ASSESSEE ENTERED INTO THOSE CONTRACTS FOR PRINTI NG AND THE QUESTION INVOLVED WAS WHETHER THE TAXABLE TURNOVER FOR THE PURPOSE OF THE TAMIL NADU GENERAL SALES TAX ACT, 1959 WOULD INCLUDE THE PRINTING AND BLOCK MAKING CHARGES. THE SUPREME COURT HELD THAT THE CONTRACT IN QUESTION WAS A CONTRACT OF WORK, HA VING REGARD TO THE NATURE OF THE JOB TO BE DONE AND THE CONFIDENCE REPOSED IN THE CONTRACTOR FOR WORK TO BE RENDERED. THE SUPPLY OF PAPER WAS MERELY INCIDENTAL. MORE RECENTLY, IN STATE OF A.P.V. KONE ELEVATORS (INDIA) LTD. [2005] 3 SCC 389; [2005] 140 STC 22, THE ASSESSEE WAS UNDER THE TERMS OF CONTRACT REQUIRED TO SUPPLY AND INSTALL LIFTS TO ITS CUSTOMERS, WHILE IT WAS THE CUSTOMERS' OBLIGATION TO UNDERTAKE WORK CONNECTED IN KEEPING THE SITE READY FOR INSTALLATION. THE SUPREME COURT NOTED THAT UNDER ITS CO NTRACTUAL OBLIGATIONS, THE ASSESSEE HAD UNDERTAKEN THE INSTALLATION OF LIFTS MANUFACTURED AND BROUGHT TO SITE IN A KNOCKED - DOWN STATE AND THE CONTRACT IN QUESTION WAS A CONTRACT OF SALE AND NOT A WORKS CONTRACT. THE DISTINCTION BETWEEN A CONTRACT OF SALE A ND A WORKS CONTRACT FOUND ELABORATION IN THE FOLLOWING OBSERVATIONS( PAGE 26 OF 140 STC): IF THE INTENTION IS TO TRANSFER FOR A PRICE A CHATTEL IN WHICH THE TRANSFEREE HAD NO PREVIOUS PROPERTY, THEN THE CONTRACT IS A CONTRACT FOR SALE. ULTIMATELY, THE TR UE EFFECT OF AN ACCRETION MADE PURSUANT TO A CONTRACT HAS TO BE JUDGED NOT BY ARTIFICIAL RULES BUT FROM THE INTENTION OF THE PARTIES TO THE CONTRACT. IN A 'CONTRACT OF SALE', THE MAIN OBJECT IS THE TRANSFER OF PROPERTY AND DELIVERY OF POSSESSION OF THE PRO PERTY, WHEREAS THE MAIN OBJECT IN A 'CONTRACT FOR WORK' IS NOT THE TRANSFER OF THE PROPERTY BUT IT IS ONE FOR WORK AND LABOUR. ANOTHER TEST OFTEN TO BE APPLIED IS: WHEN AND HOW THE PROPERTY OF THE DEALER IN SUCH A TRANSACTION PASSES TO THE CUSTOMER: IS IT BY TRANSFER AT THE TIME OF DELIVERY OF THE FINISHED ARTICLE AS A CHATTEL OR BY ACCESSION DURING THE PROCESSION OF WORK ON FUSION TO THE MOVABLE PROPERTY OF THE CUSTOMER? IF IT IS THE FORMER, IT IS A 'SALE'; IF IT IS THE LATTER, IT IS A 'WORKS CONTRACT'. TH EREFORE, IN JUDGING WHETHER THE CONTRACT IS FOR 'SALE' OR FOR 'WORK AND LABOUR', THE ESSENCE OF THE CONTRACT OR THE REALITY OF THE TRANSACTION AS A WHOLE HAS TO BE TAKEN INTO CONSIDERATION. THE PREDOMINANT OBJECT OF THE CONTRACT, THE CIRCUMSTANCES OF THE C ASE AND THE CUSTOM OF THE TRADE PROVIDE A GUIDE IN DECIDING WHETHER TRANSACTION IS A 'SALE' OR A 'WORKS CONTRACT'. ESSENTIALLY, THE QUESTION IS OF INTERPRETATION OF THE 'CONTRACT'. IT IS SETTLED LAW THAT THE SUBSTANCE AND NOT THE FORM OF THE CONTRACT IS MA TERIAL IN DETERMINING THE NATURE OF TRANSACTION. 17. IN HINDUSTAN SHIPYARD LTD. V. STATE OF ANDHRA PRADESH [2000] 119 STC 533, THE SUPREME COURT ENUNCIATED CERTAIN PRINCIPLES WHICH WERE DEDUCED FROM THE DECIDED CASES ON THE DISTINCTION BETWEEN THE TWO ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 45 CO NCEPTS. THE SECOND, THIRD AND FOURTH PRINCIPLES LAID DOWN IN THE JUDGMENT OF THE SUPREME COURT, READ THUS (PAGE 545): (2) TRANSFER OF PROPERTY OF GOODS FOR A PRICE IS THE LINCHPIN OF THE DEFINITION OF 'SALE'.WHETHER A PARTICULAR CONTRACT IS ONE OF SALE O F GOODS OR FOR WORK AND LABOUR DEPENDS UPON THE MAIN OBJECT OF THE PARTIES FOUND OUT FROM AN OVERVIEW OF THE TERMS OF CONTRACT, THE CIRCUMSTANCES OF THE TRANSACTION AND THE CUSTOM OF THE TRADE. IT IS THE SUBSTANCE OF THE CONTRACT DOCUMENT/S AND NOT MERELY THE FORM, WHICH HAS TO BE LOOKED INTO. THE COURT MAY FORM AN OPINION THAT THE CONTRACT IS ONE WHOSE MAIN OBJECT IS TRANSFER OF PROPERTY IN A CHATTEL AS A CHATTEL TO THE BUYER, THOUGH SOME WORK MAY BE REQUIRED TO BE DONE UNDER THE CONTRACT AS ANCILLARY OR I NCIDENTAL TO THE SALE, THEN IT IS A SALE. IF THE PRIMARY OBJECT OF THE CONTRACT IS THE CARRYING OUT OF WORK BY BESTOWAL OF LABOUR AND SERVICES AND MATERIALS ARE INCIDENTALLY USED IN EXECUTION OF SUCH WORK THEN THE CONTRACT IS ONE FOR WORK AND LABOUR. (3) IF T HE THING TO BE DELIVERED HAS ONLY INDIVIDUAL EXISTENCE BEFORE THE DELIVERY AS THE SOLE PROPERTY OF THE PARTY WHO IS TO DELIVER IT, THEN IT IS A SALE. IF A MAY TRANSFER PROPERTY FOR A PRICE IN A THING IN WHICH B HAD NO PREVIOUS PROPERTY THEN THE CONTACT IS A CONTRACT FOR SALE. ON THE OTHER HAND WHERE THE MAIN OBJECT OF WORK UNDERTAKEN BY THE PAYEE OF THE PRICE IS NOT THE TRANSFER OF A CHATTEL QUA CHATTEL, THE CONTRACT IS ONE FOR WORK AND LABOUR. (4) THE BULK OF MATERIAL USED IN CONSTRUCTION BELONGS TO THE MANU FACTURER WHO SELLS THE END - PRODUCT FOR A PRICE, THEN IT IS A STRONG POINTER TO A CONCLUSION THAT THE CONTRACT IS IN SUBSTANCE ONE FOR THE SALE OF GOODS AND NOT FOR THE WORK AND LABOUR. HOWEVER, THE TEST IS NOT DECISIVE... 18.A CONTRACT FOR SALE HAS HENC E TO BE DISTINGUISHED FROM A CONTRACT OF WORK. WHETHER A PARTICULAR AGREEMENT FALLS WITHIN ONE OR THE OTHER CATEGORY DEPENDS UPON THE OBJECT AND INTENT OF THE PARTIES, AS EVIDENCED BY THE TERMS OF THE CONTRACT, THE CIRCUMSTANCES IN WHICH IT WAS ENTERED INT O AND THE CUSTOM OF THE TRADE. THE SUBSTANCE OF THE MATTER AND NOT THE FORM IS WHAT IS OF IMPORTANCE. IF A CONTRACT INVOLVES THE SALE OF MOVABLE PROPERTY AS MOVABLE PROPERTY,IT WOULD CONSTITUTE A CONTRACT FOR SALE. ON THE OTHER HAND, IF THE CONTRACT PRIMAR ILY INVOLVES CARRYING ON OF WORK INVOLVING LABOUR AND SERVICE AND THE USE OF MATERIALS IS INCIDENTAL TO THE EXECUTION OF THE WORK, THE CONTRACT WOULD CONSTITUTE A CONTRACT OF WORK AND LABOUR. ONE OF THE CIRCUMSTANCES WHICH IS OF RELEVANCE IS WHETHER THE AR TICLE WHICH HAS TO BE DELIVERED HAS AN IDENTIFIABLE EXISTENCE PRIOR TO ITS DELIVERY TO THE PURCHASER UPON THE PAYMENT OF A PRICE. IF THE ARTICLE HAS AN IDENTIFIABLE EXISTENCE PRIOR TO ITS DELIVERY TO THE PURCHASER, AND WHEN THE TITLE TO THE PROPERTY VESTS WITH THE PURCHASER ONLY UPON DELIVERY, THAT ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 46 IS IMPORTANT INDICATOR TO SUGGEST THAT THE CONTRACT IS A CONTRACT FOR SALE AND NOT A CONTRACT FOR WORK. IN INDIA, THE DISTINCTION BETWEEN THE TWO CATEGORIES IS ELUCIDATED BY THE SALES OF GOODS ACT, 1930. SUB - SECT ION(1) OF SECTION 4 PROVIDES THAT A CONTRACT OF THE SALE OF GOODS IS A CONTRACT, WHEREBY A SELLER TRANSFERS OR AGREES TO TRANSFER THE PROPERTY IN GOODS TO THE BUYER FOR A PRICE. WHERE UNDER A CONTRACT OF SALE, THE PROPERTY IN GOODS IN TRANSFERRED FROM THE SELLER TO THE BUYER, THE CONTRACT IS THAT OF SALE, BUT WHERE TRANSFER OF PROPERTY IN THE GOODS IS TO TAKE PLACE AT A FUTURE TIME, OR SUBJECT TO SOME CONDITION THEREAFTER TO BE FULFILLED, THE CONTRACT IS NOT A SALE BUT IS AN AGREEMENT TO SELL. A CONTRACT OF SALE IS MADE BY AN OFFER TO BUY OR SELL GOODS FOR A PRICE AND THE ACCEPTANCE OF THE OFFER. UNDER SECTION 5(1) THE CONTRACT MAY PROVIDE FOR IMMEDIATE DELIVERY OF THE GOODS OR IMMEDIATE PAYMENT OF THE PRICE OR POSTPONEMENT OF DELIVERY OR PAYMENT OF THE PRIC E BY INSTALLMENTS. IN THE CASE OF STATE OF ANDHRA PRADESH VS. M/S.KONE ELEVATORS (INDIA) LTD. (SUPRA),APEX COURT OBSERVED AS UNDER: - 5. IT CAN BE TREATED AS WELL SETTLED THAT THERE IS NO STANDARD FORMULA BY WHICH ONE CAN DISTINGUISH A 'CONTRACT FOR SAL E' FROM A 'WORKS - CONTRACT'. THE QUESTION IS LARGELY ONE OF FACT DEPENDING UPON THE TERMS OF THE CONTRACT INCLUDING THE NATURE OF THE OBLIGATIONS TO BE DISCHARGED THEREUNDER AND THE SURROUNDING CIRCUMSTANCES. IF THE INTENTION IS TO TRANSFER FOR A PRICE A CH ATTEL IN WHICH THE TRANSFEREE HAD NO PREVIOUS PROPERTY, THEN THE CONTRACT IS A CONTRACT FOR SALE. ULTIMATELY, THE TRUE EFFECT OF AN ACCRETION MADE PURSUANT TO A CONTRACT HAS TO BE JUDGED NOT BY ARTIFICIAL RULES BUT FROM THE INTENTION OF THE PARTIES TO THE CONTRACT'. IN A 'CONTRACT OF SALE', THE MAIN OBJECT IS THE TRANSFER OF PROPERTY AND DELIVERY OF POSSESSION OF THE PROPERTY, WHEREAS THE MAIN OBJECT IN A 'CONTRACT FOR WORK' IS NOT THE TRANSFER OF THE PROPERTY BUT IT IS ONE FOR WORK AND LABOUR. ANOTHER TEST OFTEN TO BE APPLIED TO IS: WHEN AND HOW THE PROPERTY OF THE DEALER IN SUCH A TRANSACTION PASSES TO THE CUSTOMER; IS IT BY TRANSFER AT THE TIME OF DELIVERY OF THE FINISHED ARTICLE AS A CHATTEL OR BY ACCESSION DURING THE PROCESSION OF WORK ON FUSION TO THE MOVABLE PROPERTY OF THE CUSTOMER? IF IT IS THE FORMER, IT IS A 'SALE', IF IT IS THE LATTER, IT IS A 'WORKS - CONTRACT'. THEREFORE, IN JUDGING WHETHER THE CONTRACT IS FOR A 'SALE' OR FOR 'WORK AND LABOUR', THE ESSENCE OF THE CONTRACT OR THE REALITY OF THE TRA NSACTION AS A WHOLE HAS TO BE TAKEN INTO CONSIDERATION. THE PREDOMINANT OBJECT OF THE CONTRACT, THE CIRCUMSTANCES OF THE CASE AND THE CUSTOM OF THE TRADE PROVIDES A GUIDE IN DECIDING WHETHER TRANSACTION IS A 'SALE' OR A 'WORKS - CONTRACT'. ESSENTIALLY, THE Q UESTION IS OF INTERPRETATION OF THE 'CONTRACT'. IT IS SETTLED LAW THAT THE SUBSTANCE AND NOT THE FORM OF THE CONTRACT IS MATERIAL IN DETERMINING THE NATURE OF TRANSACTION. NO DEFINITE RULE CAN BE FORMULATED TO DETERMINE THE QUESTION AS TO WHETHER A PARTICU LAR GIVEN CONTRACT IS A CONTRACT FOR SALE OF GOODS OR IS A WORKS - CONTRACT. ULTIMATELY, THE TERMS OF A GIVEN CONTRACT ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 47 WOULD BE DETERMINATIVE OF THE NATURE OF THE TRANSACTION, WHETHER IT IS A 'SALE' OR A 'WORKS - CONTRACT'. THEREFORE, THIS QUESTION HAS TO BE A SCERTAINED ON FACTS OF EACH CASE, ON PROPER CONSTRUCTION OF TERMS AND CONDITIONS OF THE CONTRACT BETWEEN THE PARTIES. 38. IN THE PRESENT CASE, AS ALREADY HELD THE ASSESSEE HAD UNDERTAKEN THE DEVELOPMENT OF HOUSING PROJECT AT ITS OWN RISK AND COST. THE LAND O WNER HAD ACCEPTED ONLY THE FULL PRICE OF THE LAND AND NOTHING FURTHER. THE ENTIRE RISK OF INVESTMENT AND EXPENDITURE WAS THAT OF THE ASSESSEE. RESULTANTLY, PROFIT AND LOSS ALSO WOULD ACCRUE TO THE ASSESSEE ALONE. IN THAT VIEW OF THE MATTER, THE ADDITION OF THE EXPLANATION TO SECTION 80IB WITH RETROSPECTIVE EFFECT OF 1.4.2001 WOULD HAVE NO MATERIAL BEARING IN 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 DO UBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB - SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT)]. 39. WE MAY NOW MOVE ON TO THE QU ESTION OF OWNERSHIP OF THE LAND. 40. RELEVANT PORTION OF SECTION 2(47) READS AS UNDER: - 2(47): TRANSFER , IN RELATION TO A CAPITAL ASSET, INCLUDES, - (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882(4 OF 1882); OR SECTION 53A OF THE TRANSFER OF PROPERTY ACT READS AS UNDER: - 53A. WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERAT ION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF TH E PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN NOTWITHSTANDING THAT WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHA LL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT: ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08 , 2008 - 09 & 2 009 - 10 UNIQUE CITY HOMES AHMEDABAD 48 PROV IDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. 41. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAD, IN PART PERFORMANCE OF THE AGREEMENT TO SELL THE LAND IN QUESTION, WAS GIVEN POSSESSION THEREOF AND HAD ALSO CARRIED OUT THE CONSTRUCTION WORK FOR DEVELOPMENT OF THE HOUSING PROJECT. COMBINED READING OF SECTION 2(47)(V) AND SECTION 53A OF THE TRANSFER OF PROPERTY ACT WOULD LEAD TO A SITUATION WH ERE THE LAND WOULD BE FOR THE PURPOSE OF INCOME TAX ACT DEEMED TO HAVE BEEN TRANSFERRED TO THE ASSESSEE. IN THAT VIEW OF THE MATTER, FOR THE PURPOSE OF INCOME DERIVED FROM SUCH PROPERTY, THE ASSESSEE WOULD BE THE OWNER OF THE LAND FOR THE PURPOSE OF THE SA ID ACT. IT IS TRUE THAT THE TITLE IN THE LAND HAD NOT YET PASSED ON TO THE ASSESSEE. IT IS EQUALLY TRUE THAT SUCH TITLE WOULD PASS ONLY UPON EXECUTION OF A DULY REGISTERED SALE DEED. HOWEVER, WE ARE, FOR THE LIMITED PURPOSE OF THESE PROCEEDINGS, NOT CONCER NED WITH THE QUESTION OF PASSING OF THE TITLE OF THE PROPERTY, BUT ARE ONLY EXAMINING WHETHER FOR THE PURPOSE OF BENEFIT UNDER SECTION 80IB (10) OF THE ACT, THE ASSESSEE COULD BE CONSIDERED AS THE OWNER OF THE LAND IN QUESTION. AS HELD BY THE APEX COURT IN THE CASE OF MYSORE MINERALS LTD. VS. COMMISSIONER OF INCOME TAX (SUPRA), AND IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. PODAR CEMENT PVT. LTD. AND OTHERS (SUPRA), THE OWNERSHIP HAS BEEN UNDERSTOOD DIFFERENTLY IN DIFFERENT CONTEXT. FOR THE LIMITED PURPO SE OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, THE ASSESSEE HAD SATISFIED THE CONDITION OF OWNERSHIP ALSO; EVEN IF IT WAS NECESSARY. 42. IN THE CASE OF SHAKTI CORPORATION SIMILARLY THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH THE LAND OWNER S ON SIMILAR TERMS AND CONDITIONS. IT IS TRUE THAT THERE WERE CERTAIN MINOR DIFFERENCES, HOWEVER, IN SO FAR AS ALL MATERIAL ASPECTS ARE CONCERNED, WE SEE NO SIGNIFICANT OR MATERIAL DIFFERENCE. HERE ALSO ASSESSEE WAS GIVEN FULL RIGHTS TO DEVELOP THE LAND BY PUTTING UP THE HOUSING PROJECT AT ITS OWN RISK AND COST. ENTIRE PROFIT FLOWING THEREFROM WAS TO BE RECEIVED BY THE ASSESSEE. IT IS TRUE THAT THE AGREEMENT PROVIDED THAT THE ASSESSEE WOULD RECEIVE REMUNERATION. HOWEVER, SUCH ONE WORD USED IN THE AGREEMENT CANNOT BE INTERPRETED IN ISOLATION OUT OF CONTEXT. WHEN WE READ THE ENTIRE DOCUMENT, AND ALSO CONSIDER THAT IN FORM OF REMUNERATION THE ASSESSEE HAD TO BEAR THE LOSS OR AS THE CASE MAY BE TAKE HOME THE PROFITS, IT BECOMES ABUNDANTLY CLEAR THAT THE PROJEC T WAS BEING DEVELOPED BY HIM AT HIS OWN RISK AND COST AND NOT THAT OF THE LAND OWNERS. ASSESSEE THUS WAS NOT WORKING AS A WORKS CONTRACT. INTRODUCTION OF THE EXPLANATION TO SECTION 80IB(10) THEREFORE IN THIS GROUP OF CASES ALSO WILL HAVE NO EFFECT. 43. WE MAY AT THIS STAGE EXAMINE THE RATIO OF DIFFERENT JUDGMENTS CITED BY THE REVENUE. THE DECISION IN CASE OF FAQIR CHAND GULATI VS. ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08, 2008 - 09 M/S. UNIQUE CITY HOMES AHMEDABAD - 49 - UPPAL AGENCIES PRIVATE LIMITED AND ANOTHER (SUPRA) WAS RENDERED IN THE BACKGROUND OF THE PROVISIONS OF THE CONSUMER PROTECTION A CT. IN THE CASE BEFORE THE APEX COURT, THE LAND OWNER HAD ENTERED INTO AN AGREEMENT WITH THE BUILDER REQUIRING HIM TO CONSTRUCT APARTMENT BUILDING ON THE LAND IN QUESTION. PART OF THE CONSTRUCTED AREA WAS TO BE RETAINED BY THE OWNER OF THE LAND. IN CONSIDE RATION OF THE LAND PRICE REMAINING AREA WAS FREE FOR THE BUILDER TO SELL. WHEN THE LAND OWNER FOUND SERIES OF DEFECTS IN THE CONSTRUCTION, HE APPROACHED THE CONSUMER PROTECTION FORUM. IT WAS IN THIS BACKGROUND THE APEX COURT WAS CONSIDERING WHETHER THE LAN D OWNER CAN BE STATED TO BE A CONSUMER AND THE BUILDER A SERVICE PROVIDER. IT WAS IN THIS BACKGROUND THAT THE APEX COURT MADE CERTAIN OBSERVATIONS. SUCH OBSERVATIONS CANNOT BE SEEN OUT OF CONTEXT NOR CAN THE SAME BE APPLIED IN THE PRESENT CASE WHERE WE ARE CONCERNED WITH THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 44. IN THE CASE K. RAHEJA DEVELOPMENT CORPORATION VS. STATE OF KARNATAKA (SUPRA), THE APEX COURT CONSIDERED WHETHER THE BUILDER, WHO WAS ENGAGED IN THE DEVELOPMENT OF PROPERTY AND FOR SUCH PURP OSE HAD ENTERED INTO AN AGREEMENT WITH THE LAND OWNER, CAN BE STATED TO HAVE EXECUTED WORKS CONTRACT. SUCH INTERPRETATION WAS RENDERED IN THE BACKGROUND OF THE TERM WORKS CONTRACT DEFINED IN SECTION 2(1)(V - I) OF THE KARNATAKA SALES TAX ACT, WHICH READS A S UNDER: - 12. SECTION 2(1)(V - I) IS RELEVANT. IT DEFINES A WORKS CONTRACT AS FOLLOWS: 2.(1)(V - I) 'WORKS CONTRACT' INCLUDES ANY AGREEMENT FOR CARRYING OUT FOR CASH, DEFERRED PAYMENT OR OTHER VALUABLE CONSIDERATION, THE BUILDING, CONSTRUCTION, MANUFAC TURE, PROCESSING, FABRICATION, ERECTION, INSTALLATION, FITTING OUT, IMPROVEMENT, MODIFICATION, REPAIR OR COMMISSIONING OF ANY MOVABLE OR IMMOVABLE PROPERTY; IT IS THUS TO BE SEEN THAT UNDER THE KARNATAKA SALES TAX ACT THE DEFINITION OF THE WORDS WORKS C ONTRACT IS VERY WIDE. IT IS NOT RESTRICTED TO A WORKS CONTRACT AS COMMONLY UNDERSTOOD I.E. A CONTRACT TO DO SOME WORK ON BEHALF OF SOMEBODY ELSE. IT ALSO INCLUDES ANY AGREEMENT FOR CARRYING OUT EITHER FOR CASH OR FOR DEFERRED PAYMENT OR FOR ANY OTHER VALUABLE CONSIDERATION, THE BUILDING AND CONSTRUCTION OF ANY MOVABLE AND IMMOVABLE PROPERTY . (EMPHASIS SUPPLIED) THE DEFINITION WOULD THEREFORE TAKE WITHIN ITS AMBIT ANY TYPE OF AGREEMENT WHEREIN CONSTRUCTION OF A BUILDING TAKES PLACE EITHER FOR CASH O R DEFERRED PAYMENT, OR VALUABLE CONSIDERATION. TO BE ALSO NOTED THAT THE DEFINITION DOES NOT LAY DOWN THAT THE CONSTRUCTION MUST BE ON BEHALF OF AN OWNER OF THE PROPERTY OR THAT THE CONSTRUCTION CANNOT BE BY THE OWNER OF THE PROPERTY ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08, 2008 - 09 M/S. UNIQUE CITY HOMES AHMEDABAD - 50 - THUS EVEN IF AN OWNER OF PROPERTY ENTERS INTO AN AGREEMENT TO CONSTRUCT FOR CASH, DEFERRED PAYMENT OR VALUABLE CONSIDERATION A BUILDING OR FLATS ON BEHALF OF ANYBODY ELSE, IT WOULD BE A WORKS CONTRACT WITHIN THE MEANING OF THE TERM AS USED UNDER THE SAID ACT. IT WAS IN BACKG ROUND OF THIS DEFINITION PROVIDED BY THE STATUTE THAT THE APEX COURT CONCLUDED THAT THE AGREEMENT WAS ONE OF WORKS CONTRACT. THE APEX COURT OBSERVED THAT THE TERM WORKS CONTRACT CONTAINED IN THE ACT IS INCLUSIVE DEFINITION AND INCLUDES NOT MERELY THE WORKS CONTRACT AS NORMALLY UNDERSTOOD BUT IT IS A WIDE DEFINITION WHICH INCLUDES ANY AGREEMENT FOR CARRYING OUT BUILDING OR CONSTRUCTION ACTIVITY FOR CASH, DEFERRED PAYMENT OR OTHER VALUABLE CONSIDERATION. THUS THE INTERPRETATION RENDERED BY THE APEX COURT IN T HE SAID DECISION WAS BASED ON NOT THE NORMAL MEANING OF TERM WORKS CONTRACT BUT ON THE SPECIAL MEANING ASSIGNED TO IT UNDER THE ACT ITSELF, WHICH PROVIDED FOR A DEFINITION OF THE INCLUSIVE NATURE. 45. UNDER THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR IN HOLDING THAT THE ASSESSEES WERE ENTITLED TO THE BENEFIT UNDER SECTION 80IB(10) OF THE ACT EVEN WHERE THE TITLE OF THE LANDS HAD NOT PASSED ON TO THE 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 REVENUE THAT OTHER CONDITIONS OF SECTION 80IB OF THE ACT WERE NOT FULFILLED. WE, THEREFORE, ANSWER THE QUESTION IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVEN UE AND DISPOSE OF ALL APPEALS ACCORDINGLY. 7. RESULTANTLY, THIS TAX APPEAL IS ALSO DISMISSED UPHOLDING THE ORDER OF THE TRIBUNAL WHICH IN LIGHT OF THE DISCUSSION HELD HEREINABOVE CALLS FOR NO INTERFERENCE. 28. WE THUS FIND THAT THE ISSUES INVOLVED I N PRESENT APPEALS ARE SQUARELY COVERED BY THE ABOVE DECISION OF THE HON BLE GUJARAT HIGH COURT. WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HON BLE GUJARAT HIGH COURT DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THEREF ORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED FOR ALL THE YEARS UNDER CONSIDERATION. 29. IN THE CROSS - OBJECTION OF THE ASSESSEE THE SOLE GROUND OF CROSS - OBJECTION READS AS UNDER: - ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08, 2008 - 09 M/S. UNIQUE CITY HOMES AHMEDABAD - 51 - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE IMPUGNED ADDITIONS OF RS.39,146/ - CARRIED OUT U/S 41(1) OF THE IT, ACT. 30. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE AO OBSERV ED THAT FOLLOWING PARTY S ACCOUNTS HAVE BEEN CARRIED FORWARD AND NO PAYMENT HAS BEEN MADE DURING THE YEAR. I) ROYAL REMEDIES SERVICES RS.1,791/ - II) R.R. CORPORATION RS.37,355/ - AS THESE BALANCES WERE OUTSTANDING SINCE LONG AS PER LIMITATION ACT THE TIME L IMIT TO FILE SUIT ALSO EXPIRED, THE SAME WERE CONSIDERED AS ONLY BOOK ENTRIES AND ADDITION U/S 41(1) WAS MADE BY THE AO. 31. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT THE ASSESSEE HAS NO CLUE ABOUT THE EXISTENCE AND WHER EABOUTS OF THESE PARTIES. 32. BEFORE US, THE LD. AR OF THE ASSESSEE RELIED ON THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. NITIN S. GARG, REPORTED IN [2012] 22 TAXMANN.COM 59 (GUJ.) ; WHEREIN IN WAS HELD THAT IT HAD NOT BEEN ESTAB LISHED THAT THE ASSESSEE HAD WRITTEN OFF THE OUTSTANDING LIABILITIES IN THE BOOKS OF ACCOUNT. THE TRIBUNAL WAS JUSTIFIED IN TAKING THE VIEW THAT THE ASSESSEE HAD CONTINUED TO SHOW THE ADMITTED AMOUNTS AS LIABILITIES IN ITS BALANCE SHEET, THE SAME COULD NOT BE TREATED AS CESSATION OF LIABILITIES. MERELY BECAUSE THE LIABILITIES WERE OUTSTANDING FOR LAST MANY YEARS, IT COULD NOT BE INFERRED THAT THE SAID LIABILITIES HAS CEASED TO EXIST. THE TRIBUNAL HAD RIGHTLY OBSERVED THAT THE ASSESSING OFFICER WOULD HAVE TO PROVE THAT THE ASSESSEE HAD OBTAINED THE BENEFITS IN RESPECT OF SUCH TRADING LIABILITIES BY WAY OF REMISSION OR CESSATION THEREOF. MERELY BECAUSE ITA NO. 2529 OF 12, 3018 OF 10, 1194 OF 11 WITH CO 22 - AHD - 2011 AYS 2007 - 08, 2008 - 09 M/S. UNIQUE CITY HOMES AHMEDABAD - 52 - THE ASSESSEE OBTAINED BENEFIT OF REDUCTION IN THE EARLIER YEARS AND BALANCE WAS CARRIED FORWARD IN THE SUBSEQ UENT YEAR, IT WOULD NOT PROVE THAT THE TRADING LIABILITIES OF THE ASSESSEE HAD BECOME NON - EXISTENT. 33. THE LD. DR MERELY SUPPORTED THE ORDER OF THE LD. CIT(A). HE COULD NOT SITE ANY CONTRARY DECISION BEFORE US. 34. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE GUJARAT HIGH COURT, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.39,146/ - . THUS, THIS GROUND OF CROSS - OBJECTION OF THE ASSESSEE IS ALLOWED. 35. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED A ND CROSS - OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON MONDAY , THE 24 TH OF MARCH , 2014 AT AHMEDABAD. SD/ - SD/ - ( KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT ME MBER AHMEDABAD; DATED 24 /0 3 /2014 BT* TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD