Nikhil Associates, Ahmedabad V. The Income tax Officer,Ward-9(1), Ahmedabad

ITA 328/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1794 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA KUMAR
• Assessee Lawyers: P M MEHTA ARS; S N SOPARKAR
• Keywords: Capital asset; Retrospective amendment; Scheme of amalgamation
• Section: 80IB; 27; 37

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM AND D.C.AGRAWAL, AM M/S NIKHIL ASSOCIATES, 4 TH FLOOR, COMMERCE HOUSE, JUDGES BUNGALOW ROAD, BODAKDEV, AHMEDABAD. VS. INCOME-TAX OFFICER, WARD 9(1), AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S. N. SOPARKAR, & P. M. MEHTA, ARS RESPONDENT BY:- SHRI RAVINDRA KUMAR, CIT, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS :- (1) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, THE ORDER PASSED BY CIT(A) IS BAD IN LAW AND DESERVES TO BE CANCELLED AS SHE HAS PASSED AN ORDER WITHOUT CON SIDERING AND APPRECIATING THE FACTS OF CASE OF APPELLANT. (2) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE FOR DEDUCTION U/S 80IB910) OF THE ACT FOR RS.5,86,81,337/-. SHE OUGHT TO HAVE ALLOWED THE CLA IM OF THE APPELLANT. (3) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, THE CIT(A) SHOULD HAVE REALIZED THAT AS APPEL LANT HAS SATISFIED ALL THE CONDITIONS LAID DOWN U/S 80IB (10 ) OF THE ACT, DEDUCTION U/S 80IB CANNOT BE DENIED. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 ITA NO.328/AHD/2010 ASST. YEAR 2006-07 2 (4) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, THE CIT(A) OUGHT TO HAVE APPRECIATED THAT APP ELLANT HAS WORKED AS DEVELOPER AND NOT CONTRACTOR HENCE EXPLAN ATION INSERTED BY FINANCE ACT 2009 W.E.F. 1.4.2001 IS NOT APPLICABLE IN APPELLANTS CASE. (5) IN THE LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE APPELLANT DENIES HIS LIABILITY TO PAY INTEREST. (6) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND /OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECT. IT FILED RETURN OF INCOME ON 31.12.2006 DECLARING INCOME OF RS. NIL CLAIMING DEDUCTION OF RS.5,86,81,337/- U/S 80IB(10) BY FILIN G AUDIT REPORT IN FORM NO.10CCB. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE AO FOUND THAT ONE NAYANKUNJ CO-OP. HOUSING SOCIETY LTD. PURC HASED THE LAND AND WAS GIVEN TO THE ASSESSEE FOR DEVELOPMENT OF A HOUS ING PROJECT. ON DISPOSAL OF HOUSES ASSESSEE SHOWED A PROJECT RECEIP T OF RS.17,04,27,035/-. THE DEDUCTION UNDER SECTION 80IB(10) WAS CLAIMED ON THE GROUND THAT ASSESSEE IS A DEVELOPER AND IT HAS DEVELOPED HOUSIN G PROJECT OF THE SPECIFIC AREA FULFILLING THE CONDITIONS LAID DOWN U NDER THAT SECTION. THE AO, HOWEVER, WAS OF THE VIEW THAT ASSESSEE IS NOT E NTITLED TO SUCH DEDUCTION BECAUSE - (1) ASSESSEE HAS NOT TAKEN ANY APPROVAL OF THE HOUS ING PROJECT FROM THE LOCAL AUTHORITY. SUCH ORIGINAL/REVISED APPROVAL WAS ISSUED BY AUDA ON 10.3.2005 AND 4.1.2006 TO NAYANKUNJ CO-OP. HOUSING SOCIETY LTD. WHICH IS ENTIRELY A SEPARATE ENTITY IN THE EYES OF LAW. (2) ASSESSEE HAS ACTED MERELY AS AN AGENT FOR NAYAN KUNJ CO-OP. HOUSING SOCIETY LTD. (NCHCL FOR SHORT). ITA NO.328/AHD/2010 ASST. YEAR 2006-07 3 (3) THE AO EXAMINED VARIOUS CLAUSES IN THE DEVELOPM ENT AGREEMENT DATED 25.5.2005 AND TOOK THE VIEW THAT - THE TERM DEVELOPER AND BUILDER WOULD MEAN THAT T HE PERSON WHO IS ELIGIBLE FOR THE TAX BENEFIT WOULD BE THE PERSON WHO IS INVOLVED IN THE PROJECT FROM THE PURCHASE OF LAND TO THE SAL E OF THE FINAL PRODUCT, I.E. HOUSES/FLATS. THE ASSESSEE IS NOT THE OWNER OF THE LAND. IT IS FURTHER NOTICED THAT THE ASSESSEE HAS NOT TA KEN THE APPROVAL OF THE HOUSING PROJECT FROM LOCAL AUTHORITY. THE ORIGI NAL AND REVISED APPROVAL OF DEVELOPMENT IS ISSUED BY AUDA ON 10.03. 2005 & 04.01.2006 RESPECTIVELY ISSUED TO NCHCL WHO IS ENT IRELY SEPARATE ENTITY IN THE EYES OF LAW. ASSESSEE FIRM HAS ACTED MERELY AS AN AGENT AND CON TRACTOR AS IT HAS ENTERED INTO CONSTRUCTION AGREEMENT WITH THE LANDOW NER. THE ISSUE INVOLVED IS WHETHER AN ASSESSEE, CARRYIN G ON THE ACTIVITY OF DEVELOPING AND BUILDING HOUSING PROJECTS ON A LA ND WHICH IS NOT OWNED BY HIM BUT BY LANDOWNERS WITH WHOM THE ASSESS EE HAS ENTERED INTO A DEVELOPMENT AGREEMENT, CAN BE SAID T O BE ENTITLED TO DEDUCTION U/S 80IB(10) WHEN THE APPROVAL OF THE PRO JECT IS GRANTED BY THE LOCAL AUTHORITY TO THE LANDOWNER AND NOT TO THE ASSESSEE. (4) FOR GETTING BENEFIT UNDER SECTION 80IB(10) THIS SUB-SECTION SHOULD BE READ ALONG WITH SUB-SECTION (1). IN FACT SUB-SEC TION (10) IS ONLY MACHINERY SECTION WHICH SPECIFIES THE AMOUNT OF DED UCTION WHEREAS SUB-SECTION (1) PROVIDES AS TO WHO IS ENTIT LED FOR DEDUCTION. (5) CLAUSE (II) OF THE EXPLANATION BELOW SECTION 80 IB(10) PROVIDES THAT DATE OF COMPLETION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHORITY. SINCE IN THIS CASE COMPLETION CERTIFICAT E WAS NOT ISSUED TO THE ASSESSEE IT IS NOT ENTITLED TO THE DEDUCTION . (6) FOLLOWING CONDITIONS ARE REQUIRED TO BE SATISFI ED FOR CLAIMING DEDUCTION UNDER SECTION 80IB(10) READ WITH SECTION 80IB(1). ITA NO.328/AHD/2010 ASST. YEAR 2006-07 4 (I) THE GROSS TOTAL INCOME OF THE ASSESSEE SHOULD INCLU DE THE PROFITS FROM THE BUSINESS OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS. (II) THE HOUSING PROJECT SHOULD BE APPROVED BY THE LOCAL AUTHORITY. (III) THE PROJECT SHOULD BE ON A PLOT OF LAND, WHICH HAS A MINIMUM AREA OF ONE ACRE. (IV) THE RESIDENTIAL UNITS UNDER THE PROJECT SHOULD HAVE A MAXIMUM BUILT UP AREA OF 1000 SFT. IN DELHI OR MUMBAI AND O F 1500 SFT. IN ANY OTHER PLACE. FROM THIS READING IT IS CLEAR THAT THERE SHOULD BE COMPLETE IDENTITY BETWEEN ASSESSEE REFERRED TO IN SUB-SECTION (1) AND THAT REFERRED TO IN SUB-SECTION (10). (7) FOR CLAIMING DEDUCTION, A SEPARATE REPORT IN PR ESCRIBED FORM SHOULD ACCOMPANY A COPY OF APPROVAL OF THE LOCAL AUTHORITY FOR CARRYING ON THE BUSINESS AS A DEVELOPER AS REFERRED TO IN SU B-SECTION (10). (8) FOR CLAIMING DEDUCTION U/S 80IB(10) ASSESSEE SH OULD BE THE OWNER OF THE LAND WHEREAS PRESENT ASSESSEE HAS CARRIED OU T THE PROJECT AS A CONTRACTOR OR AS AN AGENT OF THE LAND OWNER WHICH I N THIS CASE IS NCHCL. HE FINALLY HELD THAT ASSESSEE HAS NOT ACQUIR ED ANY DOMINANT CONTROL OVER THE LAND AND IT IS ONLY A CON STRUCTING AGENT FOR THE LAND OWNER. 3. WHEN THE MATTER WENT BEFORE THE LD. CIT(A) SHE C ONCURRED WITH THE AO. THE REASONS GIVEN BY HER ARE AS UNDER :- (1) THE TWO FLATS BUILT BY THE ASSESSEE HAVE THE AR EA EXCEEDING THE LIMIT OF 1500 SFT. ADDITIONAL CONSTRUCTIONS ARE VISIBLE F ROM THE GROUND WHERE TOP FLOORS OF THE FOUR TOWERS CONSTRUCTED BY THE AS SESSEE ARE VIEWED. THEY CLEARLY SHOW THAT AREA EXCEEDS 1500 SFT. (2) PARKING SPACE ALLOTTED TO EACH RESIDENTIAL UNIT IS PART OF FLAT AND IF THEY ARE COMBINED IN THE BUILT UP AREA, IT WOULD EX CEED THE PRESCRIBED LIMIT OF 1500 SFT. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 5 (3) THE ASSESSEE DID NOT CO-OPERATE FOR ALLOWING TH E DVO FOR NECESSARY INSPECTION SO AS TO ENABLE HIM TO SATISFY THAT AREA OF THE FLAT DID NOT EXCEED THE PRESCRIBED LIMIT OF 1500 SFT. (4) EVEN THOUGH ASSESSEE CLAIMS THAT IT HAS PAID TO WARDS ACQUISITION OF COST OF LAND BUT THERE IS NO AGREEMENT OR DOCUMENT TO SUPPORT HIS CLAIM. IT IS SURPRISING AS TO HOW THE HUGE AMOUNT OF RS.1,04 ,30,000/- WAS PAID BY THE ASSESSEE WITHOUT A MENTION IN THE DEVELOPMENT A GREEMENT. (5) DEVELOPMENT AGREEMENT REFERS TO THE PROJECT AS A PROJECT OF THE SOCIETY. (6) CLAUSE (8) OF THE DEVELOPMENT AGREEMENT STATES THAT THE CONSTRUCTION WAS TO BE MADE ON THE LAND OF THE SOCI ETY. (7) CLAUSE (2) OF THE AGREEMENT STATES THAT SOCIETY HAS GRANTED PERMISSION TO THE ASSESSEE UNDER LEAVE AND LICENCE BASIS FOR ENTERING INTO SAID LAND FOR THE PURPOSE OF DOING WORK OF DEVELOPM ENT OF THE SAID LAND. (8) CLAUSE (10) OF THE DEVELOPMENT AGREEMENT STATES THAT THE CONTRACTUAL LIEN OF THE ASSESSEE WILL CONTINUE TILL THE COMPLETION OF THE PROJECT. (9) CLAUSE (14) OF THE DEVELOPMENT AGREEMENT STATES THAT WHATEVER CONTRIBUTION THE ASSESSEE COLLECTS FROM THE MEMBERS TOWARDS THE COST OF THE FLAT, THE SAME WILL BE HANDED OVER OR ADJUSTED AGAINST THE ACCOUNT OF SOCIETY MAINTAINED BY THE ASSESSEE. (10) THE CASE OF THE ASSESSEE IS DIFFERENT FROM THE FACTS IN THE CASE OF RADHE DEVELOPER WHERE ASSESSEE HAD PURCHASED THE LA ND BY VIRTUE OF ITA NO.328/AHD/2010 ASST. YEAR 2006-07 6 DEVELOPMENT AGREEMENT BUT THIS IS NOT THE CASE HERE AS THERE IS NO WRITTEN DOCUMENT OF ANY PURCHASE OF LAND OR TRANSFER OF DEV ELOPMENT RIGHTS. (11) SINCE LAND OWNERSHIP REMAINED WITH THE SOCIETY AND NOT WITH THE ASSESSEE, THEREFORE, COST OF THE LAND OF RESIDENTIA L UNITS COLLECTED BY THE ASSESSEE WOULD GO TO THE SOCIETY AND NOT TO THE ASS ESSEE. (12) THE ASSESSEE HAS, THEREFORE, ACTED ONLY AS A C ONTRACTOR FOR THE HOUSING SOCIETY NCHCL AND THE PAYMENTS TOWARDS CONS TRUCTION OF RESIDENTIAL UNITS AS MADE BY THE MEMBERS OF THE SOC IETY TO THE APPELLANT HAD FINALLY GONE TO THE SOCIETY. THE ASSESSEE HAS I N FACT DEVELOPED THE SOCIETY AS A WORK-CONTRACT AND NOT AS A DEVELOPER. 4. IN RESPECT OF A FEW ISSUES RAISED BY THE AO THE LD. CIT(A) FOUND FACTS CONTRARY TO THE ASSERTION OF THE AO. SHE FOUN D THAT - (1) NECESSARY APPROVAL FOR THE PROJECT HAS BEEN OBTAINE D FROM THE LOCAL AUTHORITIES AND, THEREFORE, THIS REASON FOR D ENYING OF DEDUCTION BY THE AO WAS REJECTED.; (2) THERE IS NO DISPUTE ON THE SIZE OF THE PLOT AS IT I S MORE THAN ONE ACRE; (3) THE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DID NOT EXCEED 5% OF THE AGGREGATED BUILT UP AREA OR 2000 SFT WHIC HEVER IS LESS. 5. AGAINST THIS, THE LD. AR FOR THE ASSESSEE SUBMIT TED DETAILED ARGUMENTS. THE GIST OF THE ARGUMENTS ARE AS UNDER : - (1) THE SOCIETY, NCHCL HAD TRANSFERRED ALL THE RIGHTS O F DEVELOPMENT TO THE ASSESSEE AND ENTIRE HOUSING PROJ ECT HAS BEEN DEVELOPED BY THE ASSESSEE AT ITS OWN COST AND RISK. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 7 (2) THERE CANNOT BE ANY ESTIMATE OF AREA BY MERELY LOOK ING FROM THE GROUND AT THE TOP FLOOR. THE FINDING GIVEN BY T HE LD. CIT(A) THAT AREA OF THE TWO FLATS IS MORE THAN PRESCRIBED LIMIT OF 1500 SFT. IS BASED ON VAGUE AND UNVERIFIED FACTS AND ARE RATHER FANCIFUL. WITHOUT ACTUAL MEASUREMENT OF ANY FLAT IT IS NOT POSSIBLE FOR ANY ONE TO COME TO A CONCLUSION THAT I TS AREA IS MORE THAN 1500 SFT. (3) THE LD. CIT(A) HAS GIVEN A FINDING THAT IF PARKING SPACE IS INCLUDED IN THE RESIDENTIAL AREA THAN AREA OF EACH FLAT WOULD INCREASE THE PRESCRIBED LIMIT OF 1500 SFT. THIS IS LEGALLY INCORRECT AND NOT ACCEPTABLE BECAUSE PARKING SPACE CANNOT BE FOR THE HABITATION OF HUMAN BEING AND ANY AREA SPEC IFICALLY MADE FOR PARKING VEHICLES CANNOT BE PART OF RESIDEN TIAL AREA FOR THE PURPOSE OF CALCULATING PRESCRIBED LIMIT UNDER S ECTION 80IB(10). HE SUBMITTED THAT IT MAY BE POSSIBLE TO P ARK VEHICLE INSIDE THE HABITABLE AREA BUT IT IS NOT POSSIBLE FO R HUMAN TO HABITAT IN THE PARKING SPACE FOR THE VEHICLES. A HA BITAT SPACE IS ONE WHERE HUMAN BEING CAN LIVE, DINE, SLEEP AND DO THERE DAY TO DAY CORUS FOR LIVING. ANY OTHER SPACE WHICH DOES NO T FACILITATE ALL THE ESSENTIAL INGREDIENTS OF LIVING CANNOT BE C ALLED SPACE FOR HABITATION. (4) THE LD. A.R. SUBMITTED THAT IN FACT ASSESSE E HAS SUBMITTED ALL THE DETAILS BEFORE THE AO AND THE LD. CIT(A) ABOUT THE DEVELOPMENT OF THE PROJECT SUCH AS FOLLOWING :- (A) VIDE LETTER DATED 07.08.2009 1. LOCATION PLAN. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 8 2. DIMENSIONED LAYOUT PLAN AS APPROVED BY LOCAL AUTHOR ITY. 3. COPIES OF BUILDING PLAN AS SANCTIONED WITH BUILT-UP AREA CALCULATION OF EACH CATEGORY/RESIDENTIAL UNIT. 4. COPY OF BUILDING USE PERMISSION (COMPLETION CERTIFI CATE) FROM LOCAL AUTHORITY. (B) VIDE LETTER DATED 15 TH SEPTEMBER, 2009 - 1. XEROX COPIES OF TYPICAL FLOOR PLAN OF ALL A, B, C & D BLOCKS. 2. XEROX COPY OF TERRACE BUILDINGS PLANT OF D BLOCK 3. XEROX COPY OF LAND PURCHASE DEED. 4. JUSTIFICATION OF TERRACE AREA. (C) CERTIFICATE OF ARCHITECT MENTIONING BUILT UP AR EA OF HOUSING UNITS AT EACH FLOOR AND SEPARATE WORKING OF BUILT UP AREA OF EACH FLAT. 5. IT IS INCORRECT TO MAKE A CHARGE AGAINST ASSESSEE T HAT IT DID NOT ALLOW INSPECTION OF THE TOP FLOORS TO THE D.V.O . IT IS BECAUSE BY THAT TIME ALL THE FLATS HAD BEEN DISPOSE D OF AND ASSESSEE HAD NO CONTROL OVER ANY OF THOSE FLATS. AL L THE KEYS WERE WITH THE FLAT OWNERS AND EVEN ASSESSEE IF WANT ED, COULD NOT HAVE AN ACCESS TO SUCH FLATS. THE DEPARTMENT WO ULD HAVE APPROACHED THE FLAT OWNERS FOR INSPECTION AND MEASU REMENT OR IT COULD HAVE APPROACHED THE SOCIETY FOR THAT PU RPOSE. AFTER DEVELOPING THE PROJECT AND HANDING OVER THE P OSSESSION TO THE FLAT OWNERS, ASSESSEE HAD NO SAY OR CONTROL OR ACCESS TO ANY OF THE FLATS. 6. MUCH RELIANCE HAS BEEN PLACED ON THE REQUISITION OF LETTER OF ALLOTMENT WHEREIN AREAS OF THE FLATS ARE MENTIONED. THE LD. AR SUBMITTED THAT SUCH REFERENCE TO AREA IS ONLY OF SUPER- BUILT-UP AREA AND NOT THE BUILT-UP AREA AS DEFINED UNDER SECTION 80IB(10). THE DIFFERENCE BETWEEN SUPER-BUIL T-UP AREA ITA NO.328/AHD/2010 ASST. YEAR 2006-07 9 AND BUILT-UP AREA IS THAT BUILT-UP AREA DOES NOT IN CLUDE COMMON AREAS WHICH INCLUDED IN SUPER BUILT UP AREA, SUCH AS COMMON AREAS, STARE CABIN, STARE CASES, ELEVATOR PA SSAGES ETC. 7. BY FINANCE ACT, 2004 W.E.F. 1.4.2005 BUILT UP AREA HAS BEEN DEFINED TO INCLUDE INNER MEASUREMENT OF THE RESIDEN TIAL UNIT AT THE FLOOR LEVELS, PROVISION OF BALCONY AND THICK NESS OF WALLS BUT DID NOT INCLUDE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS AND PARKING AREA OPEN TO AIR CANN OT FORM PART OF BUILT UP AREA AS DEFINED UNDER SECTION 80IB (10). 6. THE LD. AR SUBMITTED THAT IT IS INCORRECT TO SAY THAT THERE IS NO WRITTEN DOCUMENT WITH THE SOCIETY FOR PURCHASE OF L AND FOR WHICH SUM OF RS.1,04,30,000/- WAS PAID. THE FACTS ARE THAT ASSES SEE HAD PROVIDED TO THE SOCIETY A FUND OF RS.50 LAKHS IN ASST. YEAR 2004-05 AND THEREAFTER ALSO FUNDS WERE PROVIDED TO THE SOCIETY UNDER THE SPECIA L ARRANGEMENT BY THE ASSESSEE BEING DEVELOPER. THE TOTAL FUNDS REQUIRED BY THE SOCIETY FOR THE PURPOSES OF LAND WERE ARRANGED OR PAID BY THE ASSES SEE BEING THE DEVELOPER FIRM. THE ASSESSEE HAD ACQUIRED ALL THE S UBSTANTIVE DEVELOPMENT RIGHTS WHICH INCLUDED ALL OTHER RIGHTS FOR A SUM OF RS.1,04,30,000/-. ONCE IT IS NOT DISPUTED THAT ASSE SSEE HAS PAID SUM OF RS.1,04,30,000/- FOR LAND THEN IT IS NOT MATERIAL W HETHER THERE SHOULD BE ANY WRITTEN AGREEMENT FOR THAT PURPOSE AND ONCE THE RE IS NO DISPUTE BETWEEN THE ASSESSEE AND THE SOCIETY AS TO THE COST OF THE LAND, PAID BY THE ASSESSEE THEN IT IS INCORRECT TO HOLD THAT THE ASSE SSEE WAS NOT THE OWNER OF THE LAND. IT IS ALSO MENTIONED BY THE LD. AR THAT A SSESSEE HAD TO PAY ABOVE SUM TO THE SOCIETY IRRESPECTIVE OF THE FACT THAT AN Y FLAT IS SOLD BY THE ASSESSEE OR NOT. SUCH PAYMENT WAS MADE EVEN BEFORE THE START OF THE CONSTRUCTION WORK. EVEN IN THE BOOKS OF THE ASSESSE E THE PAYMENT IS ITA NO.328/AHD/2010 ASST. YEAR 2006-07 10 SHOWN TO HAVE BEEN MADE FOR PURCHASE OF DEVELOPMENT RIGHTS. ONCE BOOKS ARE NOT REJECTED THE ENTRIES IN THE BOOKS AND THEIR DESCRIPTION ALSO CANNOT BE REJECTED. 7. HE SUBMITTED THAT THE SOCIETY HAS GIVEN ALL THE POWERS INCLUDING POSSESSION OF THE LAND TO THE ASSESSEE AND IT HAS E MPOWERED THE ASSESSEE TO DEVELOP THE LAND AND SELL THE UNITS AT ASSESSEE S OWN RISK AND COST. IT IS MENTIONED IN THE RESOLUTION PASSED BY THE SOCIETY T HAT IT HAD ASSIGNED ALL THE POWERS, RIGHTS, RESPONSIBILITIES AND LIABILITI ES INCLUDING POSSESSING RIGHT, DEVELOPMENT RIGHT, COLLECTION OF FEES/CONSID ERATION FROM THE PROSPECTIVE BUYERS AS WELL AS RESIDENTIAL UNIT ETC. TO THE ASSESSEE FOR A LUMP SUM PAYMENT OF RS.1,04,30,000/-. 8. THE LD. AR SUBMITTED THAT BY VIRTUE OF DEVELOPME NT AGREEMENT THE ASSESSEE HAS OBTAINED THE POSSESSION OVER THE LAND TOGETHER WITH THE RIGHTS TO DEVELOP AND CONSTRUCT THE PROJECT AND SUCH COST HAS BEEN THE PART OF THE PROJECT COST DEBITED IN PROFIT AND LOSS ACCOUNT. BY VIRTUE OF THIS AGREEMENT THE ASSESSEE WAS ABLE TO TRANSFER LAND TO THE ULTIM ATE CONSUMER. THE TRANSFER OF THE LAND AND FLAT BY THE ASSESSEE TO TH E ULTIMATE CONSUMER HAS BEEN LAWFUL AND VALID AND HAS NOT BEEN CHALLENGED B Y ANY ONE SO FAR IN THE COURT OF LAW. 9. THE LD. A.R. ALSO SUBMITTED THAT THE ASSESSEE DE VELOPER HAD DOMINANT OVER THE LAND TO THE EXCLUSION OF OTHERS I NASMUCH AS POSSESSION OF THE LAND HAS BEEN GIVEN TO THE ASSESSEE BY THE L AND OWNERS TO CARRY OUT DEVELOPMENT ACTIVITIES OF THE AFORESAID PROJECT. ON CE THE POSSESSION OF THE LAND IS HANDED OVER TO THE ASSESSEE AND PAYMENT THEREOF IS MADE TO THE SELLER THEN AS PER SECTION 2(4) OF THE IT ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT, THE SAID TRANSACTION IS T REATED AS TRANSFER IN RELATION TO CAPITAL ASSET AND ASSESSEE WOULD BE THE OWNER OF THE LAND. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 11 10. THERE IS IN FACT NO MATERIAL WITH THE AO OR THE LD. CIT(A) TO HOLD THAT ASSESSEE HAS ACTED ONLY AS A CONTRACTOR AND NO T AS A DEVELOPER. IN FACT THE ASSESSEE HAS DEVELOPED THE HOUSING PROJECT BECA USE OF ITS EXPERTISE AND SPECILIZATION IN THIS FIELD TO THE EXCLUSIVE DO MINANT CONTROL OVER THE LAND. 11. IN ADDITION TO ABOVE, THE LD. AR SUBMITTED FOLL OWING SPECIFIC POINTS IN SUPPORT OF THE ARGUMENTS THAT HE IS ONLY A DEVEL OPER AND NOT A CONTRACTOR :- (I) AUDA VIDE ITS LETTER DATED 30/12/2008 HAS CLARI FIED THAT THE IN THE PROJECT, APPROVAL GRANTED ON 10/03/2005, DEVELOPER IS NIKHIL ASSOCIATES. (II) THE DEVELOPER HAS APPOINTED THE ARCHITECTS, EN GINEERS, LEGAL ADVISORS AND SUCH OTHER PROFESSIONALS NECESSARY FOR THE PURPOSE OF IMPLEMENTATION OF SUCH PROJECT AND HAS BORNE THE NE CESSARY EXPENDITURE. THE DEVELOPER HAS MADE ALL NECESSARY A RRANGEMENTS WITH THE AFORESAID PROFESSIONALS FOR SUCCESSFUL PLA NNING CONSTRUCTION AND DEVELOPMENT OF THE SAID PROJECT. (III) FOR THE PURPOSE OF COMPLETING THE PROJECT AS PLANNED AND WITHIN STIPULATED PERIOD, DEVELOPER HAS MADE ALL NECESSARY APPLICATIONS, REPLIES, STATEMENTS, WHICH ARE NEEDED, IN THE GOVER NMENT OFFICES OR MUNICIPAL CORPORATION OFFICES, ETC. (IV) THE COMPLETE RESPONSIBILITY OF THE PLANNING, A ND THE TOTAL CONSTRUCTION IS RESTED UPON THE DEVELOPER AND DURIN G THE TIME WHEN THE PROJECT WAS GOING ON, THE COMPLETE RESPONSIBILI TY FOR WHATEVER AGREEMENTS EXECUTED UNDER THE PROJECT AND WHATEVER TRANSACTIONS TAKEN PLACE WITH THIRD PARTIES, THE SAME WAS RESTED UPON THE DEVELOPER AND THE SOCIETY WAS NOT RESPONSIBLE. (V) THE APPELLANT DEVELOPER HAS CREATED COMMON AMEN ITIES AND OTHER INFRASTRUCTURE LIKE ROADS, GARDEN, ELECTRICITY, WAT ER, DRAINAGE, ETC. FOR AFORESAID PROJECT AT THEIR OWN COST THUS, APPEL LANT HAS CREATED A NEW PRODUCT ON THE PLOT OR LAND BY PERFORMING AFORE SAID DEVELOPMENT WORK. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 12 (VI) THE FIRM HAS GOT PRINTED BROCHURE FOR ADVERTIS EMENT OF SCHEME AT ITS OWN COST. NAME OF THE FIRM ONLY (WITHOUT REFERE NCE OF THE SOCIETIES) HAS BEEN REFLECTED ON THE BROCHURE. (VII) THE DEVELOPER HAS ACCEPTED MONEY FROM THE PER SONS TO WHOM HOUSING UNITS ARE SOLD. THE PRICE TO BE CHARGED TO CUSTOMERS IS SOLELY DETERMINED BY THE APPELLANT AND THEREBY, REC EIVES ENTIRE CONSIDERATION OF SALE FROM SUCH PARTIES. ENTIRE SAL ES VALUE OF A UNIT HAS BEEN SHOWN AS INCOME IN THE BOOKS OF ACCOUNT OF APPELLANT. IT IS SUBMITTED THAT ENTIRE RISK AND RESPONSIBILITIES OF SALE IS ON NIKHIL DEVELOPERS AND IF THERE IS LOSS IN SUCH TRANSACTION , IT IS ON ASSESSEE. THE CIT(A) HAS FAILED TO APPRECIATE THAT EVEN IN S ALE DEED EXECUTED, IT HAS BEEN UNAMBIGUOUSLY STATED THAT DEV ELOPER OF PROJECT IS APPELLANT FIRM AND NOT SOCIETY. (VIII) OBTAINING THE B.U. PERMISSION WAS ALSO THE R ESPONSIBILITY OF APPELLANT DEVELOPER, NIKHIL ASSOCIATES. IT CAN BE S EEN FROM APPROVED PLAN FROM AUDA ISSUED ON 21.02.2006, AT TH E TIME OF ISSUING B.U.PERMISSION, WHEREIN THE NAME OF THE DEV ELOPER IS MENTIONED AS NIKHIL ASSOCIATES WHICH PROVE THAT ENTIRE DEVELOPMENT ACTIVITY IS CARRIED OUT BY APPELLANT. 12. FINALLY THE LD. AR POINTED OUT THAT THERE IS DI FFERENCE BETWEEN DEVELOPER AND CONTRACTOR. HE SUBMITTED THAT THE CON TRACTOR WOULD RECEIVE A FIXED REMUNERATION FROM THE CONTRACTEE AND ALL TH E RISKS AND BENEFITS FROM THE PROJECT WOULD GO TO THE CONTRACTEE. IN CAS E OF DEVELOPER ONLY THE DOMINANT CONTROL OVER THE LAND IS NECESSARY. IT IS NOT NECESSARY THAT DEVELOPER SHOULD BE ACTUALLY THE OWNER OF THE LAND. HE SHOULD HAVE DOMINANT CONTROL OVER THE LAND. ALL THE RISKS AND B ENEFITS ATTACHED WITH THE PROJECT WOULD BELONG TO THE DEVELOPER AND IT WO ULD BE HIS RESPONSIBILITY TO DISPOSE OF THE FLATS GIVING RISE TO PROFITS AND LOSS TO THE DEVELOPER ONLY. ONCE ASSESSEE SATISFIES THESE MOST IMPORTANT CRITERIA IT CANNOT BE HELD THAT ASSESSEE IS NOT THE DEVELOPER B UT WAS ONLY A CONTRACTOR. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 13 13. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT LA ND ON WHICH HOUSING PROJECT WAS CONSTRUCTED WAS NEVER PURCHASED BY THE ASSESSEE. THE TITLE OF THE LAND REMAINED WITH THE SOCIETY. TH E ASSESSEE NEVER PRODUCED ANY ALLOTMENT OR TRANSFER LETTER INDICATIN G AS TO WHAT WAS THE AREA OF EACH FLAT. IN FACT SUCH TRANSFER LETTERS IN DICATED THAT TRANSFER OF THE FLAT WAS BY THE OWNER OF THE SOCIETY TO THE PURCHAS E OF THE FLATS. SIMILARLY THE ALLOTMENT LETTERS TO THE ULTIMATE PURCHASER WAS ISSUED BY THE SOCIETY AND NOT BY THE ASSESSEE. THE OWNERSHIP OF THE FLATS NEVER CAME WITH THE ASSESSEE. NO EVIDENCE WAS PRODUCED TO SHOW THAT THE RE WAS ANY TRANSFER OF FLATS TO THE ULTIMATE PURCHASER. IN RADHE DEVELO PERS IN WHICH CASE ASSESSEE HAS RELIED, FLATS WERE IN FACT HANDED OVER BY THE DEVELOPER TO THE ULTIMATE CONSUMER. THE RIGHT OVER THE FLATS NEVER A CCRUED TO THE ASSESSEE. THE ASSESSEE DID NOT PRODUCE ANY COMPLETION CERTIFI CATE IN ITS NAME. IN FACT ASSESSEE WAS ONLY A RECOMMENDING AUTHORITY AND NOT THE OWNING AUTHORITY. ENTIRE SCHEME WAS FRAMED FOR EVADING STA MP DUTY. THE ASSESSEE IN FACT HAD DEVELOPED THE SOCIETY FOR THE PURPOSES OF EVADING STAMP DUTY. FURTHER TITLE OF THE FLATS WAS NEVER WI TH THE ASSESSEE. THERE WAS NO LEGAL RIGHT OF ASSESSEE EITHER OVER THE LAND OR OVER THE FLATS. IN FACT EVEN AFTER COMPLETION ASSESSEE HAS NOT GIVEN ANY ME ASUREMENT OF THE FLATS. UNLESS THE ASSESSEE DESIRES, EVEN THE OWNERS OF THE FLAT COULD NOT HAVE BEEN ALLOWED ANY ENTRY. THEREFORE, ASSESSEE WA S NEITHER THE OWNER OF THE LAND NOR OF THE FLATS. IT WAS ONLY A CONTRAC TOR WHO BUILT THE FLATS FOR THE SOCIETY, HANDED OVER THE DE FACTO POSSESSION TO THE SOCIETY WHICH IN FACT SOLD THE FLATS AND REALIZED THE MONEY. 14. REGARDING PARKING SPACE LD. DR SUBMITTED THAT P ARKING SPACE IS INTEGRAL PART OF RESIDENTIAL UNIT. IT IS PRIVATELY USED LIKE RESIDENTIAL UNIT. IT IS AN EXTENSION OF RESIDENTIAL PORTION WHERE BELONG INGS OF THE ASSESSEE ARE KEPT. IF BELONGINGS OF THE ASSESSEE ARE KEPT IN THE MAIN HOUSE THEN FOR THAT ITA NO.328/AHD/2010 ASST. YEAR 2006-07 14 REASON THE HOUSE DOES NOT CEASED TO BE RESIDENTIAL HOUSE. SIMILARLY WHEN CAR IS PARKED IN THE PARKING SPACE THEN IT DOES NOT CEASE TO BE PART OF RESIDENTIAL HOUSE. THERE IS ALWAYS SPECIFIC PARKING SPACE FOR THE FLATS. 15. IN REPLY TO ABOVE SUBMISSIONS OF LD. DR, THE LD . AR SUBMITTED THAT ASSESSEE HAD COMPLETE DOMAIN OVER THE LAND AS WELL AS BUILDING. IT HAS ALL THE RIGHTS TO RECOVER THE DUES FROM THE FLAT OWNERS . EVEN IN AUDA RECORD ASSESSEE IS SHOWN AS DEVELOPER. HE DREW OUR ATTENTI ON TO PAGES 124 TO 125 OF THE PAPER BOOK IN SUPPORT OF HIS ARGUMENTS T HAT ASSESSEE IS SHOWN AS DEVELOPER IN AUDA RECORD. EVEN BUILDING PLANS AR E IN THE NAME OF ASSESSEE WHICH ARE EVIDENT BY PAGES, 115, 118, 123 OF THE PAPER BOOK. IN ANY CASE MATTER IS COVERED BY THE DECISION OF TRIBU NAL, AHMEDABAD BENCH IN THE CASE OF RADHE DEVELOPERS AND SHAKTI CO RPORATION. SO FAR AS PARKING SPACE IS CONCERNED IT IS NOT A SPACE FOR AN IMATE LIVING BUT ONLY FOR STORING INANIMATE OBJECTS LIKE CAR. FURTHER COST OF THE LAND IS PAID BY THE ASSESSEE AND IS ACCOUNTED FOR. SALE PROCEEDS OF THE FLATS ARE ALSO TAKEN INTO ITS ACCOUNT BY THE ASSESSEE. THE EXPENDITURE I NCURRED IN CONSTRUCTION OF FLATS IS DEBITED IN SUCH ACCOUNTS, AND THE BALAN CE IS SHOWN AS PROFIT OF THE ASSESSEE. THUS ENTIRE PROFIT AND RISK IS OWNED BY THE ASSESSEE AND SOCIETY HAS NOTHING TO DO WITH THE PROFITS OR LOSS ASSESSEE WOULD HAVE INCURRED. ASSESSEE COULD NOT BE CALLED TO BE CONTRA CTOR BECAUSE IT IS NOT WORKING ON FIXED AMOUNT OF REMUNERATION OR FIXED AM OUNT OF PROJECT COST. THE SOCIETY HAS NOT BORNE ANY PROFIT OR RISK ATTACH ED WITH THE DEVELOPMENT OF THE PROJECT. IT IS ASSESSEE WHICH HA S SELECTED THE PURCHASERS OF THE FLATS AND RECOMMENDED TO THE SOCI ETY AND THE SOCIETY HAS ISSUED THE AUTHORITY/MEMBERSHIP LETTERS TO SUCH PURCHASERS. IN FACT IT IS MERELY A FORMALITY WHICH THE SOCIETY HAS DONE ON BEHALF OF THE ASSESSEE AND FOR THAT REASON ALONE ASSESSEE CANNOT BE TERMED AS CONTRACTOR OR IT CANNOT BE SAID THAT PROFITS ATTACHED WITH THE PROJE CT BELONGED TO THE ITA NO.328/AHD/2010 ASST. YEAR 2006-07 15 SOCIETY. HE DREW OUR ATTENTION TO PAGES 193 & 194 O F THE PAPER BOOK SHOWING A CERTIFICATE FROM AUDA WHEREIN THE ASSESSE E IS SHOWN AS A DEVELOPER. SUMMARIZING HIS ARGUMENTS, LD. AR SUBMIT TED THAT AN ASSESSEE WOULD BE A DEVELOPER IF IT HAS DOMINANT CONTROL OVE R THE LAND EVEN THOUGH LEGAL OWNERSHIP MIGHT NOT HAVE PASSED TO IT AND SEC ONDLY ALL THE BENEFITS AND RISKS ASSOCIATED WITH THE PROJECT IS BORNE BY T HE ASSESSEE. A PERSON WOULD BE A CONTRACTOR IF LEGAL AS WELL AS DOMINANCE OVER THE LAND IS WITH OTHER PERSON AND NOT WITH THE ASSESSEE AND RIGHT AN D RESPONSIBILITY ARE CONFINED TO CONSTRUCTING THE PROJECT AT A CERTAIN C OST FIXED AS PER AGREEMENT. THE RIGHT OF DISPOSAL OF THE PROJECT AND ASSOCIATED PROFITS AND LOSS WOULD BELONG TO OTHER PERSON I.E. CONTRACTEE. THE PROFIT OF THE CONTRACTOR IS CONFINED TO PROFIT ARISING FROM CONST RUCTION AND NOT FROM PROFIT ARISING FROM SALES OF THE FLATS. 16. IN FINAL SUM UP LD. DR SUBMITTED THAT - (1) CONDITION LAID DOWN UNDER CLAUSE (C) OF SECTION 80IB(10) IS NOT SATISFIED. (2) AS PER DEVELOPMENT AGREEMENT CONSTRUCTION IS TO BE MADE BY THE SOCIETY, ASSESSEE HAS TO ACT ONLY ON LEAVE AND LICE NCE BASIS, THE COLLECTION MADE FROM MEMBERS I.E. ULTIMATE PURCHASE RS IS TO BE HANDED OVER TO THE SOCIETY OR ADJUSTED. IT HAS DEVE LOPED THE PROJECT ONLY AS A CONTRACTOR OF THE SOCIETY WHICH IS A SEPA RATE ENTITY. (3) THE ASSESSEE IS NOT THE OWNER OF THE LAND, IT H AS NEVER PURCHASED THE LAND. (4) THE SOCIETY IS IN DOMINANT CONTROL AS IT HAS PU RCHASED THE LAND, IT HAS APPOINTED THE ASSESSEE AS A CONTRACTOR AS PER A GREEMENT, IT HAS ISSUED ALLOTMENT LETTER TO THE ULTIMATE PURCHASERS, THE ASSESSEE HAS NEVER TRANSFERRED FLATS TO THE ULTIMATE PURCHASERS AND FINALLY THAT ASSESSEE HAS ONLY ACTED AS RECOMMENDING AUTHORITY. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 16 17. WE HAVE CONSIDERED ALL THESE SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW ARGUMENTS OF LD. DR AND LD. CIT(A) ARE NOT TENABLE. IT IS QUITE APPARENT THAT ASSESSEE HAS MADE LEGAL ARRANGEMENTS WHEREBY SOCIETY IS ONLY A VEHICLE FOR REDUCING THE STAMP DUTY ON PURCHASE OF THE LAND. WE ARE INFORMED THAT IF LAND IS PURCHASED BY THE SOCIETY IT HAS TO INCUR VERY LOW OR NOMINAL STAMP D UTY WHEREAS IF ASSESSEE AS SUCH PURCHASES THE LAND IT HAS TO PAY H EAVY STAMP DUTY. KEEPING ALL THESE ASPECTS IN MIND WE HAVE TO EXAMIN E VARIOUS EVENTS THAT HAVE TAKEN PLACE INCLUDING AGREEMENT BETWEEN THE AS SESSEE AND THE SOCIETY AND TO SEE WHAT IS THE DE FACTO SITUATION. IT IS UNDISPUTED FACT THAT IT IS THE ASSESSEE WHO HAS PAID THE MONEY FOR PURCH ASE OF LAND TO THE SOCIETY WHICH HAS ON ITS PART PURCHASED THE LAND IN ITS NAME. IT HAS ENTERED INTO THE AGREEMENT WITH THE ASSESSEE FOR DEVELOPING THE PROJECT AND HANDED OVER COMPLETE POSSESSION OF THE LAND TO THE ASSESSEE AND HENCE ALSO GIVEN AUTHORITY TO DISPOSE OF THE FLATS TO THE PROSPECTIVE BUYERS, RECEIVE MONEY FROM SUCH BUYERS ADJUST IT AGAINST TH E MONEY GIVEN TO THE SOCIETY FOR PURCHASE OF LAND, RECOMMEND NAMES OF TH E BUYERS TO THE SOCIETY WHICH IN TURN HAS ISSUED MEMBERSHIP LETTERS . THE SOCIETY HAD IN FACT NO FUNDS OF ITS OWN TO PURCHASE THE LAND AND N O CONTROL OVER SELECTION OF THE ULTIMATE PURCHASERS EXCEPT ACTING ON THE REC OMMENDATION OF THE SOCIETY. THE RELEVANT CLAUSES FROM THE AGREEMENT BE TWEEN THE SOCIETY AND THE ASSESSEE DATED 20 TH MARCH, 2005 ARE REFERRED TO AS UNDER (IN THIS AGREEMENT NAYANKUNJ CO-OPERATIVE HOUSING SOCIETY LT D. IS REFERRED TO A PARTY OF THE ONE PART AND THE ASSESSEE IS REFERRED TO AS PARTY OF THE OTHER PART). (2) THE PARTY OF THE OTHER PART, FOR THE PURPOSE OF PLANNING AND EXECUTING OF THE SAID PROJECT ON THE SAID LAND, WIL L GET SANCTIONED THE NECESSARY PLANTS, DRAWINGS, SPECIFICATIONS AND MAPS, ETC. AND WILL DO THE WORK OF PLANNING, CONSTRUCTION AND DEVE LOPMENT OF THE ITA NO.328/AHD/2010 ASST. YEAR 2006-07 17 SAID PROJECT AND IN THIS MANNER, THE SOCIETY GRANTS PERMISSION TO THE PARTY OF THE OTHER PART, UNDER LEAVE AND LICENSE BA SIS, FOR ENTERING INTO THE SAID LAND FOR THE PURPOSE OF DOING THE WOR K OF DEVELOPMENT OF THE SAID LAND. (3) IN THIS MANNER, AS STATED ABOVE, FOR THE PURPOS E OF PLANNING, CONSTRUCTION AND DEVELOPMENT, BOTH THE PARTIES HAVE AGREED TO THE BELOW MENTIONED TERMS AND CONDITIONS, AS PER WHICH THE PARTY OF THE OTHER PART WILL DO ALL THE WORKS AS DETAILED BE LOW. (1) TO APPOINT/TO GET APPOINTED THROUGH OTHERS, THE ARCHITECTS, ENGINEERS, LEGAL ADVISERS AND SUCH OTHER PROFESSION ALS, WHOSE SERVICES ARE NECESSARY FOR THE PURPOSE OF IMPLEMENT ING THE SAID PROJECT, TO DECIDE THEIR SCOPE OF WORK, TO DECIDE T HEIR FEES, REMUNERATION, ETC; TO BEAR ALL THEIR NECESSARY EXPE NSES, TO EXECUTE THE NECESSARY AGREEMENTS WITH THEM, FOR THE PURPOSE OF SUCCESSFULLY PLANNING, CONSTRUCTION AND DEVELOPMENT OF THE SAID PROJECT. (2) FOR IMPLEMENTING THE SAID PROJECT, IT WILL BE ENTITLED TO GIVE SUB-CONTRACT, LABOUR CONTRACT, ETC. AS PER ITS OWN REQUIREMENT AND WISHES BUT AT THE TIME OF GIVING SUCH APPOINTMENTS, IT WILL HAVE TO BEAR IN MIND THAT THE TOTAL RESPONSIBILITY FOR PLAN NING, CONSTRUCTION AND DEVELOPMENT OF THE SAID PROJECT WILL REST UPON IT I.E. THE PARTY OF THE OTHER PART. 3(A) THE PARTY OF THE OTHER PART WILL HAVE TO EXPLA IN PROPERLY TO THE EXISTING MEMBERS OF THE SOCIETY AND BY GUIDING THEM IN A FAIR MANNER, AND WILL HAVE TO OBTAIN THE NECESSARY CONTR IBUTION FROM THEM. BESIDES, THEY WILL HAVE TO RECOMMEND TO THE S OCIETY FOR ENROLLING OF THOSE PERSONS, WHO ARE OTHER THAN THE EXISTING MEMBERS, AND WHO WISH TO JOIN THE PROJECT AND WISH TO OBTAIN RESIDENTIAL UNITS AND FLATS HAVING AREA AS PER THE PLANS. BEFORE RECOMMENDING THE NAMES OF SUCH PERSONS, THE PARTY O F THE OTHER PART WILL HAVE TO INQUIRE COMPLETELY ABOUT SUCH PER SONS. 3(B) THE PERSONS DESIROUS OF ENROLLING IN THE PROJE CT WILL BE ADMITTED ON RECOMMENDATION OF THE PARTY OF THE OTHER PART IN TH E MANNER AS STATED ABOVE AND IT WILL BE THE RESPONSIBILITY OF T HE PART OF THE OTHER PART TO THOROUGHLY EXPLAIN THE PROJECT OF SOCIETY T O SUCH PERSONS. 3(C) THE PARTY OF THE OTHER PART WILL HAVE TO ACCEP T MONEY FROM SUCH PERSONS ENROLLED IN THE PROJECT BUT IN ANY CIRCUMST ANCES, IF THE LOAN ITA NO.328/AHD/2010 ASST. YEAR 2006-07 18 IS RECEIVED ON THE NAME OF THE SOCIETY THEN IN THAT CASE SAID AMOUNT WILL HAVE TO BE PAID BY THE PARTY OF THE OTHER PART . 3(D) THE PARTY OF THE OTHER PART, IN THIS MANNER, W ILL HAVE TO KEEP A RECORD OF THE PERSONS ENROLLED IN THE PROJECT. 3(E) THE PARTY OF THE OTHER PART WILL HAVE TO GIVE THE NECESSARY INFORMATION AND PROPER GUIDANCE TO THE PERSONS ENRO LLED IN THE SAID PROJECT, FOR THE PURPOSE OF GETTING LOAN AGAINST TH E RESIDENTIAL UNIT. 3(F) THE PARTY OF THE OTHER PART WILL HAVE TO GIVE TO THE PERSONS ENROLLED IN THE PROJECT OF SOCIETY, THE NECESSARY INFORMATIO N AND PROPER GUIDANCE FOR THE PURPOSE OF ABIDING BY THE RULES AN D REGULATIONS AND BYE-LAWS OF THE SOCIETY. 4. THE BELOW MENTIONED WORKS AND FUNCTIONS ARE ALSO INCLUDED IN THE RESPONSIBILITIES AND DUTIES OF THE PARTY OF THE OTH ER PART AS THE DEVELOPER OF THE SAID LAND, WHICH THE PARTY OF THE OTHER PART HEREBY AGREES AND ACCEPTS TO ABIDE BY:- (1) TO GET THE NECESSARY PERMISSION FOR THE PURPOSE OF DEVELOPMENT OF THE SAID LAND, FROM THE COMPETENT OFFICER AND TO PR EPARE PROGRESS REPORTS AT EACH STAGE OF PROGRESS; AND TO MAKE APPL ICATIONS. (2) TO APPOINT REGISTERED ARCHITECTS/ENGINEERS AND STRUCTURAL DESIGNERS AND AT EVERY STAGE TO GET FROM THEM THE CERTIFICATE S TO THE EFFECT THAT FOR THE PURPOSE OF DESIGNS AND ITS CONSTRUCTION, TH EY HAVE PREPARED THE DETAILED DRAWINGS WITHIN THE SCOPE OF AND AS PE R THE PROVISIONS OF GENERAL DEVELOPMENT CONTROL REGULATIONS AND TO P RODUCE SUCH CERTIFICATES FROM TIME TO TIME BEFORE THE COMPETENT OFFICER. (3) TO APPOINT A REGISTERED SITE SUPERVISOR ON THE SITE OF DEVELOPMENT PROJECT. (4) TO OBTAIN FROM THE REGISTERED SITE SUPERVISOR, THE GUIDELINES FOR THE PURPOSE OF OBTAINING QUALITY OF CONSTRUCTION. (5) TO HELP TO THE MAXIMUM POSSIBLE EXTENT, THE SIT E SUPERVISOR IN DISCHARGING HIS RESPONSIBILITIES. (6) THE DEVELOPER WILL HAVE TO GIVE CERTIFICATES TO THE EFFECT THAT THE CONSTRUCTION OF THE DEVELOPMENT PROJECT IS MADE AS PER THE DESIGNS, ITA NO.328/AHD/2010 ASST. YEAR 2006-07 19 DETAILED DRAWINGS AND SPECIFICATIONS GIVEN BY THE A RCHITECT ENGINEER AND STRUCTURAL ENGINEER. (7) TO REGULARLY PRODUCE BEFORE COMPETENT OFFICER, THE PROGRESS REPORTS AND NECESSARY CERTIFICATES. (8) IF IN ANY CIRCUMSTANCES THE DEVELOPER IS RETIRE D FROM THE AGREEMENT OR IF HIS APPOINTMENT IS SUSPENDED THEN IN THAT CAS E, IT WILL HAVE TO BE INFORMED IN WRITING TO THE COMPETENT OFFICER OF AUDA. (9) IF BECAUSE OF ANY REASON, THE REGISTERED EXPERT S ARE RELIEVED FROM THEIR JOBS, THEN IN THAT CASE, IT WILL HAVE TO BE I NFORMED IN WRITING TO THE COMPETENT OFFICER OF AUDA. (10) DURING THE EXECUTION OF THE PROJECT, THE DEVEL OPER SHALL NOT MAKE OR GET MADE, ANY CHANGE IN THE SANCTIONED DRAWINGS OF THE PROJECT, WHICH CHANGES ARE AGAINST THE INSTRUCTIONS OF ARCHI TECTS/ENGINEERS, SITE SUPERVISORS, CLERK OF WORKS OF STRUCTURAL ENGI NEERS AND THE DEVELOPER SHALL BE HELD TOTALLY RESPONSIBLE IN CASE ANY CONSTRUCTION OF THE PROJECT OR ANY OF ITS PART BEING UTILIZED AG AINST INSTRUCTIONS OF SPECIFIC PERMISSION FOR ITS USE. (11) WHERE EVER THE REGISTERED CONSTRUCTION CONTRAC TOR OR SITE SUPERVISOR IS NOT APPOINTED OR THERE IS NO NECESSITY OF THEIR APPOINTMENT, THEN IN THOSE CIRCUMSTANCES THE DEVELOPER WILL BE RESPON SIBLE TO DISCHARGE SUCH FUNCTIONS. (12) THE DEVELOPER WILL BE ENTITLED TO PUBLISH THE LIST OF ONLY REGISTERED EXPERTS ON THE SITE AND SAVE AND EXCEPT THOSE, NO N AMES CAN BE PUBLISHED BY THE DEVELOPER ON THE SITE. 5. THE DEVELOPER, PARTY OF THE OTHER PART WILL BE E NTITLED AND AUTHORISED, IN CASE OF NECESSITY, TO MAKE TEMPORARY FINANCIAL ARRANGEMENTS FOR THE PURPOSE OF IMPLEMENTING THE PR OJECT INCLUDING GETTING FINANCE FROM ANY FINANCIAL INSTITUTION, BAN K OR SHROFF OR PRIVATE PARTIES, TO EXECUTE FOR AND ON BEHALF OF TH E SOCIETY ANY PROMISORY NOTES, RECEIPTS, HUNDIES, MORTGAGE DEEDS AND OTHER NEGOTIABLE INSTRUMENTS. AND IF NEEDED, THE SOCIETY SHALL EXECUTE A POWER OF ATTORNEY IN FAVOUR OF THE PARTY OF THE OTH ER PART FOR THE SAID PURPOSE. THE PARTY OF THE OTHER PART WILL BE S OLELY RESPONSIBLE FOR REPAYMENT OF THE PRINCIPAL AMOUNT, INTEREST AND OTHER RELEVANT EXPENSES FOR THE LOAN TAKEN BY PARTY OF THE OTHER P ARTY. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 20 7. THE PARTY OF THE OTHER PART FOR THE PURPOSE OF C OMPLETING THE SAID PROJECT AS PLANNED AND WITHIN THE STIPULATED PERIOD , WILL PRODUCE ALL APPLICATIONS, REPLIES, STATEMENTS OR WHATEVER FORMS AND OTHER PROCEEDINGS, THAT ARE NEEDED IN THE GOVERNMENT AND SEMI- GOVERNMENT OFFICES, MUNICIPAL CORPORATION OFFICES A ND COURT OF LAW AND OTHER PLACES AND THE PARTY OF THE OTHER PAR T SHALL BE RESPONSIBLE FOR THE SAME AND FOR THE SAID PURPOSE, IT IS HEREBY BEING GIVEN THE AUTHORITY AND POWER. IN SPITE OF THIS, IF IN FUTURE, ANY NEED ARISES OF GIVING A SPECIFIC POWER OF ATTORNEY, THEN IN THAT CASE, THE SOCIETY WILL HAVE TO GIVE THE SAME IN FAVOUR OF THE PARTY OF THE OTHER PARTY. 8. THE SAID PARTY OF THE OTHER PART WILL BE AUTHORI SED TO RECOMMEND FOR ALLOTMENT TO THE MEMBER, WHATEVER CONSTRUCTION THAT IS MADE ON THE LAND OF THE SAID SOCIETY, AS PER THE PROJECT AN D THE SAID PARTY OF THE OTHER PART SHALL ALSO BE AUTHORISED TO RECOMMEN D AND ALLOT FOR USE, THE LAND THAT REMAINS OPEN AFTER DEDUCTING THE CONSTRUCTION MADE UPON THE TOTAL LAND OF THE SOCIETY. IN THE SAM E MANNER, AS PER THE SAID PROJECT, THE SAID PARTY OF THE OTHER PART SHALL ALSO BE AUTHORISED TO RECOMMEND AND ALLOT TO ANY MEMBER, AL L THE RIGHTS FOR USAGE OF WHATEVER TERRACE OR OPEN SPACE THAT COMES INTO EXISTENCE IN THE PROJECT. 10. PARTY OF THE OTHER PART SHALL HOLD THE PHYSICAL POSSESSION WITH IT, OF THE LAND AS WELL AS WHATEVER CONSTRUCTION IS PUT UP ON THE SAID LAND, TILL THE COMPLETION OF THE PROJECT AND FURTHER, TIL L THE AGREEMENT FOR THE LAND AS WELL AS CONSTRUCTION UPON IT IS NOT COM PLETELY EXECUTED, THE CONTRACTUAL LIEN OF THE PARTY OF THE OTHER PART WILL CONTINUE. 18. THUS READING OF ABOVE CLAUSES OF THE AGREEMENT CLEARLY INDICATES THAT ASSESSEE HAS BEEN MADE DE FACTO OWNER OF THE E NTIRE LAND AND PROJECT TILL IT IS HANDED OVER TO THE MEMBERS AFTER RECEIPT OF NECESSARY SALE AMOUNT AND RECOMMENDING THEIR NAMES TO THE SOCIETY FOR ISSUING MEMBERSHIP LETTERS. IT IS NOT A CASE WHERE SOCIETY HAS ENTERED INTO AN AGREEMENT WITH THE ASSESSEE TO CONSTRUCT THE PROJEC T AT A PARTICULAR COST OR AT A PARTICULAR RATE WITH RESPECT OF AREA CONSTRUCT ED HAVING ESCALATION CLAUSE, WITH OR WITHOUT PENALTY CLAUSE AND RETAININ G WITH IT THE RIGHTS TO DISPOSE OF THE FLATS, AND ENJOY THE BENEFIT OF PROF IT OR LOSS. WE ARE ITA NO.328/AHD/2010 ASST. YEAR 2006-07 21 CONVINCED THAT SOCIETY IS FORMED ONLY AS A SPECIAL PURPOSE VEHICLE FOR SAVING STAMP DUTY OR OTHERWISE BUT SO FAR AS THE CO NTROL OVER THE LAND, PROJECT AND SALES IS CONCERNED IT REMAINED WITH THE ASSESSEE. NOW UNDER THESE FACTS IT HAS TO BE EXAMINED WHETHER ASSESSEE WOULD BE DEVELOPER OR A CONTRACTOR. THIS ISSUE HAS BEEN ELABORATELY DISCU SSED BY THE TRIBUNAL, AHMEDABAD BENCH IN RADHE DEVELOPERS VS. ITO (2008) 23 SOT 420 (AHMEDABAD). PARA 30 THEREOF HAS CLEARLY DEFINED WH O SHOULD BE THE DEVELOPER. IT READS AS UNDER :- 24. FURTHER, THE MEMO CONTAINED IN FINANCE BILL, 19 99 HAS EXPLAINED THE PROVISIONS BROUGHT BY THE LEGISLATURE WITH EFFE CT FROM 1-4-2000 AND THE SAME READS AS UNDER: TAX INCENTIVE FOR PROMOTION OF HOUSING.LIBERALIZA TION OF TAX HOLIDAY TO APPROVED HOUSING PROJECTS. UNDER SECTION 80-IA OF T HE INCOME-TAX ACT, PROFITS OF APPROVED HOUSING PROJECTS WHERE THE DEVELOPMENT AND CONSTRUCTION COMMENCES ON OR AFTER 1-10-1998 AND IS COMPLETED BY 31-3-2001 ARE FULLY DEDUCTIBLE. THE CONDITIONS NECESSARY FOR CLAIMING THE BENEFIT ARE T HAT THE APPROVED HOUSING PROJECT SHOULD BE ON MINIMUM AREA OF ONE ACRE AND S HOULD HAVE DWELLING UNITS WITH A MAXIMUM BUILT-UP AREA OF 1,000 SQ. FT. IT IS PROPOSED TO MODIFY THE EXISTING BENEFITS TO PROVIDE THAT IN AREAS OTHER THAN THOSE FALLING IN AND WITHIN 25 KMS. FROM THE MUNICIPAL LIMITS OF DELHI AND MUMBAI, THEB UILT-UP AREA OF DWELLING UNITS MAY BE UPTO A MAXIMUM LIMIT OF 1,500 SQ. FT. INSTEA D OF 1,000 SQ. FT. AT PRESENT TO MAKE THEM ENTITLED FOR BENEFIT. THE BUILT-UP AREA F OR AREAS FALLING IN DELHI AND MUMBAI AND WITHIN 25 KMS. OF THE MUNICIPAL LIMITS O F BOTH, HOWEVER, SHALL REMAIN THE SAME. THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1-4-20 00, AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2000-01 AN D SUBSEQUENT YEARS. 25. THE PROVISIONS OF SECTION 80-IB(10) THUS ARE SO UGHT TO PROVIDE THAT FOR APPROVED HOUSING PROJECT, THE PROFITS ARE FULLY DEDUCTIBLE IF THE PROJECT HAS THE BUILT-UP AREA FOR THE CITIES OF DELHI AND M UMBAI, AND THE AREA WITHIN 25 KMS. FROM THE MUNICIPAL LIMIT THEREOF DOE S NOT EXCEED 1,000 SQ. FT. AND FOR OTHER PLACES THE BUILT UP AREA OF RESID ENTIAL UNIT DOES NOT EXCEED 1,500 SQ. FT. A PROVISION IS ALSO MADE WHERE BY ANY UNDERTAKING OF AN INDIAN COMPANY, WHICH IS ENTITLED TO DEDUCTION U NDER THIS SECTION IS TRANSFERRED, BEFORE THE EXPIRY OF THE PERIOD SPECIF IED IN THIS SECTION, TO ANOTHER INDIAN COMPANY IN A SCHEME OF AMALGAMATION OR DEMERGER (A) ITA NO.328/AHD/2010 ASST. YEAR 2006-07 22 NO DEDUCTION TO BE ADMISSIBLE UNDER THIS SECTION TO THE AMALGAMATING OR THE DEMERGED COMPANY FOR THE PREVIOUS YEAR IN WHICH THE AMALGAMATION OR THE DEMERGER TAKES PLACE; AND (B) THE PROVISIONS OF THIS SECTION TO APPLY TO THE AMALGAMATED OR RESULTING COMPANY AS TH EY WOULD HAVE APPLIED TO THE AMALGAMATING OR DEMERGED COMPANY AS IF THE AMALGAMATION OR DEMERGER HAD NOT TAKEN PLACE. 26. THE SUB-SECTION (10) RELATING TO HOUSING PROJEC T WAS AMENDED FROM TIME TO TIME. FIRSTLY, BY FINANCE ACT, 2000, WITH E FFECT FROM 1-4-2000 EXTENDING THE OUTER LIMIT FOR COMPLETION OF THE HOU SING PROJECT ON OR BEFORE 31-3-2002 AS AGAINST 31-3-2001 ORIGINALLY EN ACTED. THIS SUB- SECTION WAS AGAIN AMENDED BY FINANCE ACT, 2003 REMO VING THE TIME-LIMIT FOR COMPLETION OF THE PROJECT MEANING THEREBY THAT FOR THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05, THE ASSESSMENT YEARS WITH WHICH WE ARE CONCERNED, THERE WAS NO OUTER TIME-LIMIT FOR COMPLETION OF THE PROJECT. THERE HAVE BEEN CERTAIN FURTHER AMENDMENTS IN THIS SECTION BY FINANCE (NO. 2) ACT, 2004 WITH EFFECT FROM 1-4-2005 , BUT WE ARE NOT CONCERNED WITH THESE AMENDMENTS INSOFAR AS ALL THES E APPEALS ARE CONCERNED. THEREFORE, WE ARE NOT DEALING WITH THE S AME. 27. A BARE READING OF THESE PROVISIONS OF SECTION 8 0-IB(10), AS THEY STOOD IN THE YEARS UNDER CONSIDERATION, THE REQUIREMENTS FOR CLAIMING DEDUCTION FOR HOUSING PROJECTS ARE THAT (I) THERE MUST BE AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT; (II) SUCH HOUSING PRO JECT IS APPROVED BY THE LOCAL AUTHORITY; (III) THE DEVELOPMENT AND CONSTRUC TION OF HOUSING PROJECT HAS COMMENCED ON OR AFTER 1-10-1998; (IV) THE HOUSI NG PROJECT IS ON A SIZE OF A PLOT OF LAND WHICH HAS MINIMUM AREA OF ON E ACRE; AND (V) THE RESIDENTIAL UNIT DEVELOPED AND BUILT HAS A BUILT UP AREA OF 1,000 SQ. FT. IF IT IS SITUATED IN DELHI AND MUMBAI OR WITHIN 25 KMS OF MUNICIPAL LIMIT OF THESE CITIES AND 1,500 SQ. FT. AT ANY OTHER PLACE. THERE IS NO OTHER CONDITION, WHICH IS TO BE COMPLIED BY AN ASSESSEE F OR CLAIMING THE DEDUCTION ON PROFITS OF THE HOUSING PROJECT. 28. THE CONTENTION OF THE REVENUE AUTHORITIES THAT TO CLAIM DEDUCTION UNDER SECTION 80-IB(10), THERE IS A CONDITION PRECE DENT THAT THE ASSESSEE MUST BE OWNER OF THE LAND ON WHICH HOUSING PROJECT IS CONSTRUCTED HAS NO FORCE. WE DO NOT FIND ANY SUCH CONDITION AS APPEARI NG IN THE PROVISIONS OF THE SECTION EXTRACTED ABOVE. A PLAIN READING OF SUB -SECTION (10) OF SECTION 80-IB REVEALS AND MAKES IT EVIDENT THAT THERE MUST BE AN UNDERTAKING DEVELOPING AND BUILDING A HOUSING PROJECT AS APPROV ED BY A LOCAL ITA NO.328/AHD/2010 ASST. YEAR 2006-07 23 AUTHORITY. IT DOES NOT HAVE ANY FURTHER CONDITION T HAT SUCH DEVELOPMENT AND BUILDING OF THE HOUSING PROJECT SHOULD ALSO BE ON A LAND OWNED BY AN ASSESSEE UNDERTAKING. IT MIGHT BE TRUE THAT THE LAN D BELONGS TO THE PERSON WHO HAS ENTERED INTO AN AGREEMENT WITH THE ASSESSEE TO DEVELOP AND BUILD HOUSING PROJECT BUT ON A PERUSAL OF THE AGREEMENT A S NARRATED ABOVE, IT IS EVIDENT THAT THE DEVELOPMENT AND BUILDING WORK HAS BEEN CARRIED OUT BY THE ASSESSEE IN PURSUANCE OF A TRIPARTITE AGREEMENT AND IT IS NOT BY THE LAND-OWNERS. THEREFORE, THE MERE FACT THAT THE LAND OWNER AND THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT , ARE TWO DIFFERENT ENTITIES WOULD NOT MAKE ANY DIFFERENCE. THE DEDUCTI ON WOULD BE ELIGIBLE TO THE PERSON WHO IS DEVELOPING AND BUILDING HOUSIN G PROJECT AND NOT TO THE MERE OWNER THEREOF. 29. IT IS ALSO THE CASE OF THE REVENUE THAT THE ASS ESSEE WAS A MERE CONTRACTOR DEVELOPING AND BUILDING HOUSING PROJECT AND, THEREFORE, IT COULD NOT BE A DEVELOPER. WE FAIL TO UNDERSTAND AS TO HOW SUCH A SITUATION COULD EMERGE. A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON IS NO DOUBT A CONTRACTOR. HAVING ENTERED INT O AGREEMENTS WITH LANDOWNERS FOR DEVELOPMENT AND BUILDING THE HOUSING PROJECT, ASSESSEE WAS OBVIOUSLY A CONTRACTOR BUT IT DOES NOT DEROGATE THE ASSESSEE FOR BEING A DEVELOPER, AS WELL. THE TERM CONTRACTOR IS NOT ESSENTIALLY CONTRADICTORY TO THE TERM DEVELOPER. AS STATED ABOV E, IT IS THE UNDERTAKING THAT DEVELOPS OR BUILDS THE HOUSING PROJECT THAT IS ENTITLED TO DEDUCTION IRRESPECTIVE OF THE FACT WHETHER THAT IT IS THE OWN ER OR NOT OR WHETHER IT IS THE CONTRACTOR THEREOF. THE REQUIREMENT FOR CLAIMIN G DEDUCTION IS THAT SUCH AN UNDERTAKING MUST DEVELOP AND BUILD HOUSING PROJECT, BE IT ON THEIR OWN LAND OR ON THE LAND OF OTHERS AND FOR WHI CH A TRIPARTITE AGREEMENT HAS BEEN ENTERED INTO FOR DEVELOPMENT AND BUILDING HOUSING PROJECT; OR BE THE ASSESSEE A CONTRACTOR FOR DEVELO PING AND BUILDING HOUSING PROJECT OR AN OWNER OF THE LAND. 30. WHAT IS THE MEANING OF THE TERM DEVELOP, DEVELO PER, DEVELOPING, DEVELOPMENT, WE CAN FIND THE ANSWER IN CERTAIN DICT IONARIES, INCLUDING THE LAW DICTIONARY. ( A ) THE WEBSTERS ENCYCLOPEDIA UNABRIDGED DICTIONARY OF THE ENGLISH LANGUAGE GIVES FOLLOWING MEANINGS OF THE TERM DEVELOPER AS : 1. ONE WHO OR THAT WHICH DEVELOPS; ITA NO.328/AHD/2010 ASST. YEAR 2006-07 24 2. A PERSON WHO INVESTS IN AND DEVELOPS THE URBAN OR SUBURBAN POTENTIALITIES OF REAL ESTATE. ( B ) OXFORD ADVANCED LEARNERS DICTIONARY OF CURRENT ENGL ISH FOURTH INDIAN EDITION GIVES MEANING OF THE TERM DE VELOPER AS PERSON OR COMPANY THAT DEVELOPS LAND. ( C ) RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE, THE FOLLOWING DEFINITIONS CAN BE FOUND : DEVELOP : ( A ) TO BRING OUT THE CAPABILITIES OR POSSIBILITIES OF; BRING TO A MORE ADVANCED 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 EMERGE : ( A ) TO REALIZE THE POTENTIAL OF; (B) TO AID IN THE GROWTH OF : STRENGTHEN, DEVELOP THE BICEPS (C) TO BRING INTO BEING : MAKE ACTIVE (DEVELOP A B USINESS) (D) TO CONVERT ( A TRACT OF LAND ) FOR SPECIFIC PU RPOSE, AS BY BUILDING EXTENSIVELY ( E ) LAW LEXICON DICTIONARY, THE 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. 31. THE SUPREME COURT IN THE CASE OF GUJARAT INDUST RIAL DEVELOPMENT (SUPRA), CONSIDERING THE MEANING OF DEVELOPER HEL D 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 ENGA GED IN THE INDUSTRIAL DEVELOPMENT. THE DEVELOPMENT MEANS THE R EALIZATION 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 PRO JECTS WITHIN THE ITA NO.328/AHD/2010 ASST. YEAR 2006-07 25 MEANING OF SECTION 80-IB(10) OF THE ACT. IN THE PRE SENT CASE IN HAND, THE LANDOWNER HAS NOT MADE ANY CONSCIOUS ATTEMPT TO DEV ELOP THE PROPERTY EXCEPT ENSURING THEIR RIGHTS AS LANDOWNER SO THAT T HE SALE VALUE OF THE LAND COULD BE REALIZED TO THEM AS PER THE TERMS OF AGREEMENT TO SALE AND THE DEVELOPMENT AGREEMENT. THE LANDOWNERS, NO DOUBT, HAVE NOT THROWN THEMSELVES INTO DEVELOPMENT OF PROPERTY. IT IS ONLY THE ASSESSEE WHO IS DEVELOPING THE PROPERTY. THROWING ITSELF INT O THE BUSINESS OF DEVELOPMENT AND BUILDING OF HOUSING PROJECTS BY TAK ING ALL RISKS ASSOCIATED WITH THE BUSINESS BY ENGAGING ARCHITECTS , STRUCTURAL CONSULTANTS, DESIGNING AND PLANNING OF THE HOUSING SCHEMES, PAYMENT OF DEVELOPMENT CHARGES, OBTAINING NECESSARY PERMISSION S, APPROVING PLANS, HIRING MACHINERY AND EQUIPMENTS, HIRING ENGINEERS, APPOINTING CONTRACTORS, ETC. NO DOUBT, THE PERMISSION HAS BEEN OBTAINED IN THE NAME OF THE REGISTERED LANDOWNERS, BUT THE SAME HAVE BEE N OBTAINED BY THE ASSESSEE-FIRM THROUGH ITS PARTNERS WHO ARE HOLDING POWER OF ATTORNEY OF THE RESPECTIVE LANDOWNERS. IT IS A FACT THAT THE AS SESSEE IS A DEVELOPER AND NOT A CONTRACTOR AS HELD BY THE LOWER AUTHORI TIES. THE DEVELOPER IS NOT WORKING ON REMUNERATION FOR THE LANDOWNERS, BUT DEVELOPER IS WORKING FOR HIMSELF IN ORDER TO EXPLOIT THE POTENTI AL OF ITS BUSINESS IN HIS OWN INTEREST AND, THEREFORE, OPTED FOR ALL BUSINESS RISKS ASSOCIATED WITH THE BUSINESS OF DEVELOPMENT OF REAL ESTATE INCLUDIN G DEVELOPING AND BUILDING OF HOUSING PROJECTS. AS PER THE PROVISIONS OF SECTION 2(1)(G) OF REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE ACT (27 OF 1996), THE TERM CONTRACTOR MEANS A PERSON WHO UNDERTAKES TO PRODUCE A GIVEN RESULT FOR ANY ESTABLISHMENT, OTHER THAN A MERE SUP PLY OF GOODS OR ARTICLES OF MANUFACTURE, BY THE EMPLOYMENT OF BUILD ING WORKERS OR WHO SUPPLIES BUILDING WORKERS FOR ANY WORK OF THE ESTAB LISHMENT; AND INCLUDES A SUB-CONTRACTOR. 32. IN THESE CIRCUMSTANCES, IN OUR OPINION, THE ASS ESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80-IB(10) AS IT HAD DEVELOP ED AND BUILT THE HOUSING PROJECT; IT HAD STARTED CONSTRUCTION AFTER 1-4-1998; THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM A REA OF ONE ACRE AND THE MAXIMUM BUILT-UP AREA OF THE RESIDENTIAL UNITS IS NOT MORE THAN 1,500 SQ. FT. THE PROPERTY BEING SITUATED IN BARODA, A CI TY OTHER THAN DELHI AND MUMBAI. 33. IT MAY ALSO BE BORN IN MIND THAT DEDUCTION IS N OT EXCLUSIVELY TO AN ASSESSEE BUT TO AN UNDERTAKING DEVELOPING AND BUILD ING HOUSING PROJECT, BE IT DEVELOPED AS A CONTRACTOR OR AS AN OWNER. THI S FACT IS EVIDENT ON THE ITA NO.328/AHD/2010 ASST. YEAR 2006-07 26 BARE READING OF SUB-SECTION (1) OF SECTION 80-IB, S UB-SECTION (2) OF SECTION 80-IB, WHICH PROVIDES THAT THIS SECTION APPLIES TO AN INDUSTRIAL UNDERTAKING WHICH FULFILS ALL THE FOLLOWING CONDITI ONS VIZ. . . . AND SUB- SECTION (12) WHICH ALLOWS THE DEDUCTION TO THE AMEN DED (SIC) OR RESULTING COMPANY IN CASE OF AMALGAMATION OR DEMERGER OF THE ORIGINAL UNDERTAKING WHICH HAD STARTED DEVELOPING AND BUILDI NG THE HOUSING PROJECT. FOR THE SAKE OF CONVENIENCE, SUB-SECTION ( 12) OF SECTION 80-IB IS REPRODUCED HEREUNDER : (12) WHERE ANY UNDERTAKING OF AN INDIAN COMPANY WH ICH IS ENTITLED TO THE DEDUCTION UNDER THIS SECTION IS TRANSFERRED, BEFORE THE EXPIRY OF THE PERIOD SPECIFIED IN THIS SECTION, TO ANOTHER IN DIAN COMPANY IN A SCHEME OF AMALGAMATION OR DEMERGER. (A) NO DEDUCTION SHALL BE ADMISSIBLE UNDER THIS SE CTION TO THE AMALGAMATING OR THE DEMERGED COMPANY FOR THE PREVIO US YEAR IN WHICH THE AMALGAMATION OR THE DEMERGER TAKES PLACE; AND (B ) THE PROVISIONS OF THIS SECTION SHALL, AS FAR A S MAY BE, APPLY TO THE AMALGAMATED OR THE RESULTING COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING OR THE DEMERGED COMPANY IF THE AMALGAMATION OR DEMERGER HAD NOT TAKEN PLACE. 34. EVEN IF THAT IS SO REQUIRED, THE ASSESSEE IN TH E PRESENT CASE CAN ALSO BE SAID TO BE THE OWNER OF THE LAND AS IT HAD MADE PART PAYMENT TO THE LANDOWNERS DURING THE FINANCIAL YEARS 2000-01 AND 2 001-02 FOR AN AMOUNT OF RS.56 LAKHS, AND TAKEN THE POSSESSION OF THE LAND FOR DEVELOPMENT AND BUILDING THE HOUSING PROJECT AND SA TISFY THAT CONDITION AS WELL OF BEING THE OWNER OF THE LAND IN VIEW OF P ROVISIONS OF SECTION 2(47)(V) OF THE ACT. WHEN THE ASSESSEE HAS TAKEN ON THE POSSESSION OF IMMOVABLE PROPERTY OR RETAINED IT IN PART PERFORMAN CE OF A CONTRACT OF A NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER O F PROPERTY ACT, 1882 IT AMOUNTS TO TRANSFER UNDER SECTION 2(47)(V), WHICH R EADS AS UNDER : (47) TRANSFER, IN RELATION TO A CAPITAL ASSET, I NCLUDES, (I)TO (IVA)** ** ** (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 ITA NO.328/AHD/2010 ASST. YEAR 2006-07 27 35. SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 18 82 REFERRED TO IN THE AFORESAID SECTION OF THE INCOME-TAX ACT, READS AS U NDER : 53A. WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CO NSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM OR ON H IS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFE R CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN P ART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE O F THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO P ERFORM HIS PART OF THE CONTRACT, THEN NOTWITHSTANDING THAT THE CONTRACT, THOUGH REQU IRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR, WHERE THER E IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING I N FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL B E DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMI NG UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANS FEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESS LY PROVIDED BY THE TERMS OF THE CONTRACT : PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OR A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF T HE CONTRACT OR OF THE PART PERFORMANCE THEREOF. 36. IN VIEW OF ABOVE PROVISIONS OF THE TRANSFER OF PROPERTY ACT, VIS-A-VIS, THE INCOME-TAX ACT TO GET THE CORRECT IMPORT OF SEC TION 80-IB(10) OF THE ACT WE HAVE TO READ ALONG WITH SECTION 80-IB(1) OF THE ACT WHICH ALSO DOES NOT PROVIDE FOR ANY CONDITION THAT THE ASSESSE E SHOULD BE OWNER OF THE LAND. THE RELEVANT PROVISIONS OF SUB-SECTION (1 ) OF SECTION 80-IB, READ AS UNDER : 80-IB. DEDUCTION IN RESPECT OF PROFITS AND GAINS F ROM CERTAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE D EVELOPMENT ITA NO.328/AHD/2010 ASST. YEAR 2006-07 28 UNDERTAKINGS.(1) WHERE THE GROSS TOTAL INCOME OF A N ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUS INESS REFERRED TO IN SUB-SECTIONS (3) TO (11) AND (11A) (SUCH BUSINESS B EING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE A LLOWED, 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. 19. FURTHER WHO SHOULD BE DEVELOPER HAS BEEN DISCUS SED BY HON. SUPREME COURT IN GUJARAT INDUSTRIAL DEVELOPMENT COR PORATION VS. CIT (1997) 229 ITR 414 (SC) WHERE IN PARA 7 THEREOF THE ISSUE HAS BEEN DISCUSSED. THE TRIBUNAL IN RADHE DEVELOPERS CASE H AS REFERRED TO THAT JUDGMENT AND HAS OBSERVED AS UNDER :- 31. THE SUPREME COURT IN THE CASE OF GUJARAT INDUS TRIAL DEVELOPMENT (SUPRA), CONSIDERING THE MEANING OF DEVELOPER HEL D 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 ENGA GED IN THE INDUSTRIAL DEVELOPMENT. THE DEVELOPMENT MEANS THE R EALIZATION 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 PRO JECTS WITHIN THE MEANING OF SECTION 80-IB(10) OF THE ACT. IN THE PRE SENT CASE IN HAND, THE LANDOWNER HAS NOT MADE ANY CONSCIOUS ATTEMPT TO DEV ELOP THE PROPERTY EXCEPT ENSURING THEIR RIGHTS AS LANDOWNER SO THAT T HE SALE VALUE OF THE LAND COULD BE REALIZED TO THEM AS PER THE TERMS OF AGREEMENT TO SALE AND THE DEVELOPMENT AGREEMENT. THE LANDOWNERS, NO DOUBT, HAVE NOT THROWN THEMSELVES INTO DEVELOPMENT OF PROPERTY. IT IS ONLY THE ASSESSEE WHO IS DEVELOPING THE PROPERTY. THROWING ITSELF INT O THE BUSINESS OF DEVELOPMENT AND BUILDING OF HOUSING PROJECTS BY TAK ING ALL RISKS ASSOCIATED WITH THE BUSINESS BY ENGAGING ARCHITECTS , STRUCTURAL CONSULTANTS, DESIGNING AND PLANNING OF THE HOUSING SCHEMES, PAYMENT OF DEVELOPMENT CHARGES, OBTAINING NECESSARY PERMISSION S, APPROVING PLANS, HIRING MACHINERY AND EQUIPMENTS, HIRING ENGINEERS, APPOINTING CONTRACTORS, ETC. NO DOUBT, THE PERMISSION HAS BEEN OBTAINED IN THE NAME ITA NO.328/AHD/2010 ASST. YEAR 2006-07 29 OF THE REGISTERED LANDOWNERS, BUT THE SAME HAVE BEE N OBTAINED BY THE ASSESSEE-FIRM THROUGH ITS PARTNERS WHO ARE HOLDING POWER OF ATTORNEY OF THE RESPECTIVE LANDOWNERS. IT IS A FACT THAT THE AS SESSEE IS A DEVELOPER AND NOT A CONTRACTOR AS HELD BY THE LOWER AUTHORI TIES. THE DEVELOPER IS NOT WORKING ON REMUNERATION FOR THE LANDOWNERS, BUT DEVELOPER IS WORKING FOR HIMSELF IN ORDER TO EXPLOIT THE POTENTI AL OF ITS BUSINESS IN HIS OWN INTEREST AND, THEREFORE, OPTED FOR ALL BUSINESS RISKS ASSOCIATED WITH THE BUSINESS OF DEVELOPMENT OF REAL ESTATE INCLUDIN G DEVELOPING AND BUILDING OF HOUSING PROJECTS. AS PER THE PROVISIONS OF SECTION 2(1)(G) OF REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE ACT (27 OF 1996), THE TERM CONTRACTOR MEANS A PERSON WHO UNDERTAKES TO PRODUCE A GIVEN RESULT FOR ANY ESTABLISHMENT, OTHER THAN A MERE SUP PLY OF GOODS OR ARTICLES OF MANUFACTURE, BY THE EMPLOYMENT OF BUILD ING WORKERS OR WHO SUPPLIES BUILDING WORKERS FOR ANY WORK OF THE ESTAB LISHMENT; AND INCLUDES A SUB-CONTRACTOR. 20. WHILE INTRODUCING SECTION 80IB(10) BY FINANCE B ILL 1999 W.E.F. 1.4.2000 THE MEMORANDUM EXPLAINED THE PROVISIONS AS UNDER :- 24. FURTHER, THE MEMO CONTAINED IN FINANCE BILL, 1 999 HAS EXPLAINED THE PROVISIONS BROUGHT BY THE LEGISLATURE WITH EFFE CT FROM 1-4-2000 AND THE SAME READS AS UNDER: TAX INCENTIVE FOR PROMOTION OF HOUSING.LIBERALIZA TION OF TAX HOLIDAY TO APPROVED HOUSING PROJECTS. UNDER SECTION 80-IA OF T HE INCOME-TAX ACT, PROFITS OF APPROVED HOUSING PROJECTS WHERE THE DEVELOPMENT AND CONSTRUCTION COMMENCES ON OR AFTER 1-10-1998 AND IS COMPLETED BY 31-3-2001 ARE FULLY DEDUCTIBLE. THE CONDITIONS NECESSARY FOR CLAIMING THE BENEFIT ARE T HAT THE APPROVED HOUSING PROJECT SHOULD BE ON MINIMUM AREA OF ONE ACRE AND S HOULD HAVE DWELLING UNITS WITH A MAXIMUM BUILT-UP AREA OF 1,000 SQ. FT. IT IS PROPOSED TO MODIFY THE EXISTING BENEFITS TO PROVIDE THAT IN AREAS OTHER THAN THOSE FALLING IN AND WITHIN 25 KMS. FROM THE MUNICIPAL LIMITS OF DELHI AND MUMBAI, THE BUILT-UP AREA OF DWELLING UNITS MAY BE UPTO A MAXIMUM LIMIT OF 1,500 SQ. FT. INSTEA D OF 1,000 SQ. FT. AT PRESENT TO MAKE THEM ENTITLED FOR BENEFIT. THE BUILT-UP AREA F OR AREAS FALLING IN DELHI AND MUMBAI AND WITHIN 25 KMS. OF THE MUNICIPAL LIMITS O F BOTH, HOWEVER, SHALL REMAIN THE SAME. THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1-4-20 00, AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2000-01 AN D SUBSEQUENT YEARS. 21. SUB-SECTION (10) WAS AMENDED FROM TIME TO TIME. THE LAST RELEVANT AMENDMENT WAS MADE BY FINANCE ACT, 2004 W.E.F. 1.4. 2005 WHICH ITA NO.328/AHD/2010 ASST. YEAR 2006-07 30 MODIFIED THE DEFINITION OF BUILT-UP AREA WITH WHICH WE ARE CONCERNED AND WITH WHISH WE WILL DEAL SUBSEQUENTLY. THE CONDITION S REQUIRED TO BE SATISFIED FOR AVAILING DEDUCTION UNDER SECTION 80IB (10) ARE - (I) THERE MUST BE AN UNDERTAKING DEVELOPING AND BU ILDING HOUSING PROJECT; (II) SUCH HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; (III) THE DEVELOPMENT AND CONSTRUCTION OF HOUSING P ROJECT HAS COMMENCED ON OR AFTER 1-10-1998; (IV) THE HOUSING PROJECT IS ON A SIZE OF A PLOT OF LAND WHICH HAS MINIMUM AREA OF ONE ACRE; AND (V) THE RESIDENTIAL UNIT DEVELOPED AND BUILT HAS A BUILT UP AREA OF 1,000 SQ. FT. IF IT IS SITUATED IN DELHI AND MUMBAI OR WITHIN 25 KMS OF MUNICIPAL LIMIT OF THESE CITIES AND 1,500 SQ. FT. AT ANY OTHER PLACE. 22. A PLAIN READING OF SECTION 80IB(10) REVEALS THA T THIS DEDUCTION IS AVAILABLE TO AN UNDERTAKING WHICH IS DEVELOPING AND BUILDING HOUSING PROJECT AS APPROVED BY A LOCAL AUTHORITY. IT DOES N OT LAY DOWN ANY FURTHER CONDITION THAT SUCH DEVELOPMENT OF HOUSING PROJECT SHOULD ALSO BE ON THE LAND OWNED BY THE ASSESSEE UNDERTAKING. IN OTHER WO RDS AN ASSESSEE CAN DEVELOP A HOUSING PROJECT EVEN ON THE LAND BELONGIN G TO ANOTHER PERSON IF HE ENTERS INTO AGREEMENT WITH THE ASSESSEE TO DEVEL OP AND BUILD SUCH HOUSING PROJECT. A PERUSAL OF THE AGREEMENT OF THE SOCIETY AND NCHSL WITH THE ASSESSEE CLEARLY INDICATES THAT THE SOCIET Y HAS ENTERED INTO AN AGREEMENT WITH THE ASSESSEE TO DEVELOP THE HOUSING PROJECT ON THE LAND IN THE NAME OF THE SOCIETY TO BE HANDED OVER TO THE AS SESSEE FOR CARRYING OUT THE DEVELOPMENT. THE TRIBUNAL, A BENCH, CHENNAI I N ACIT VS. C. RAJINI [2011] 9 TAXMANN.COM 115 (CHENNAIITAT) IN I TA NOS. 1239/MDS/2008 AND 1666/MDS/2007 PRONOUNCED ON DECEM BER, 10, 2010 HELD THAT A DEVELOPER AND BUILDER IS NOT REQUI RED TO BE OWNER OF THE LAND ON RECORD FOR THE PURPOSE OF DEDUCTION UNDER S ECTION 80IB(10). WHAT IS REQUIRED TO BE SEEN IS THAT ASSESSEE SHOULD BE D E FACTO OWNER OF THE ITA NO.328/AHD/2010 ASST. YEAR 2006-07 31 LAND. THE TRIBUNAL, CHENNAI BENCH IN THE CASE OF C. RAJINI (SUPRA) OBSERVED IN THIS REGARD AS UNDER :- 7. FROM THE ABOVE DISCUSSION, WHAT IS REQUIRED IS THAT IF THE ASSESSEE IS A BENEFICIAL OWNER OR TO PUT IT IN A LEGAL TERM IF SHE IS A DE F ACTO OWNER OF THE LAND, ANY DEVELOPER BECOMES ELIGIBLE FOR THIS DEDUCTION. IT IS NOT AT A LL NECESSARY THAT THE DEVELOPER SHOULD BE A DE JURE OWNER OF THE LAND. IT IS QUITE POSSIBL E TO DEVELOP THE PROPERTY WITH CONSENT OF THE OWNER. IT TRANSPIRES FROM THE PERUSA L OF THE RECORDS THAT ASSESSEE WAS DE FACTO OWNER OF THE PROPERTY WHEN THE ENTIRE ALLO TMENT PROCEDURE WAS EXECUTED BY HER ONLY. IT WAS THE ASSESSEE WHO INCURRED ALL THE EXPENSES CONNECTED WITH THE DEVELOPMENTS OF THE PROPERTY RIGHT FROM FILING APPL ICATION FOR PLANNING PERMISSION AND PAYING NECESSARY FEES FOR THE SAME. THE MARKETI NG OF THE SITE WAS ALSO DONE BY THE ASSESSEE THROUGH ADVERTISEMENT, ETC. WE HAVE CA REFULLY PERUSED THE AGREEMENTS AND OTHER RELEVANT DOCUMENTS. WE ARE CONVINCED THAT THIS IS NOT, AT ALL, A WORKS- CONTRACT. 23. SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL, CHENNAI BENCH IN ACIT V. M/S SASHWATH CONSTRUCTIONS PVT. LTD. IN I.T.A. NO. 1069 (MDS.)/2008 FOR THE ASSESSMENT YEAR 2005-06 DATED 25 FEBRUARY, 2009 , WHEREIN IT WAS HELD AS FOLLOWS:- 'IN OUR OPINION IT IS NOT SINCE QUA NON FOR A DEVEL OPER TO BECOME THE DE JURE OWNER OF THE LAND. IT IS QUITE POSSIBLE TO DEVELOP THE PROPERTY WITH THE CONSENT OF THE OWNER. IT TRANSPIRES FROM THE PERUSAL OF THE RE CORDS THAT THE ASSESSEE WAS THE DE FACTO OWNER OF THE PROPERTY, AS THE ENTIRE ALLOT MENT PROCEDURE WAS EXECUTED BY THE ASSESSEE COMPANY ONLY. WE HAVE NOTED THAT THE A SSESSEE DID INCUR ALL THE EXPENSES CONNECTED WITH THE DEVELOPMENT OF THE PROP ERTY. APPLICATION FOR PLANNING PERMISSION WAS ALSO MADE BY THE ASSESSEE. NECESSARY FEE FOR THE SAME WAS PAID BY IT. ROAD FORMATION WAS ALSO DONE BY THE ASSESSEE. BESIDES, FOR MARKETING THE FLATS THE ASSESSEE DID ADVERTISE THE PROPERTY ALSO. WE HAVE PERUSED THE REASONINGS ADDUCED BY THE COMMISSIONER (APPEALS ) IN THE IMPUGNED ORDER. IN OUR OPINION HE TOOK A CORRECT VIEW IN THE MATTER AN D HIS ORDER CALLS FOR NO INTERFERENCE ON THIS COUNT. ACCORDINGLY WE UPHOLD T HE SAME.' 24. NOW WE REFER TO SECTION 80IB(10) SO AS TO FIND OUT WHETHER THE CONDITION OF LEGAL OWNERSHIP OF THE LAND IS AN ESSE NTIAL INGREDIENT UNDER THAT SECTION. SECTION 80IB(10) READS AS UNDER :- [(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UND ERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 3 1ST 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 YEA R FROM SUCH HOUSING PROJECT IF, ITA NO.328/AHD/2010 ASST. YEAR 2006-07 32 (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DE VELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APP ROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, O R, IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRI L, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. [(III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN A PPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2 004 [BUT NOT LATER THAN THE 31ST DAY OF MARCH, 2005], WITHIN FIV E YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY.] EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUIL DING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETI ON CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND W HICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CL AUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DEC LARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AR EA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FR OM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HU NDRED SQUARE FEET AT ANY OTHER PLACE; AND (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMME RCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED [TH REE PER CENT OF THE ITA NO.328/AHD/2010 ASST. YEAR 2006-07 33 AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR [ FIVE THOUSAND SQUARE FEET, WHICHEVER IS HIGHER];] (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUS ING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUS ING PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS, NAMELY:- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHIL DREN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDI VIDUAL IS THE KARTA. (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA.] EXPLANATION - FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY T O ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTR ACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNME NT).] 25. AS OBSERVED ABOVE, ONLY FIVE CONDITIONS ARE NEC ESSARY FOR CLAIMING DEDUCTIONS UNDER SECTION 80IB(10). APART FROM THESE FIVE (A) TO (E), ONE MORE CONDITION HAS BEEN LAID DOWN IN THIS SECTION. IF ASSESSEE FULFILLS THESE CONDITIONS IT BECOMES ENTITLED FOR THE DEDUCT ION. IN THE PRESENT CASE, IT IS UNDISPUTED FACT THAT MONEY FOR PURCHASE OF LA ND WAS GIVEN BY THE ASSESSEE TO THE SOCIETY AND THEREAFTER LAND WAS HAN D OVER TO THE ASSESSEE FOR DEVELOPMENT OF THE PROJECT. THUS ASSESSEE IS A DE FACTO OWNER OF THE LAND AND EVEN AS PER PROVISION OF SECTION 53A OF TH E TRANSFER OF PROPERTY ACT ASSESSEE WOULD BE OWNER OF THE LAND AS FIRSTLY IT HAS PAID THE CONSIDERATION AND SECONDLY IT HAS THE POSSESSION OF THE LAND. IN ANY CASE, LEGAL OWNERSHIP OVER THE LAND HAS NEVER BEEN ANY RE LEVANT CRITERIA FOR ALLOWING OR NOT ALLOWING DEDUCTION UNDER SECTION 80 IB(10). WHAT IS NECESSARY IS THAT ASSESSEE SHOULD HAVE COMPLETE CON TROL, DOMINANCE AND RIGHT TO CARRY ON THE PROJECT AS SANCTIONED BY THE LOCAL AUTHORITY, SUCH AS AUDA IN THE PRESENT CASE. THEREFORE, WE REJECT THE ARGUMENTS OF THE ITA NO.328/AHD/2010 ASST. YEAR 2006-07 34 REVENUE THAT ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80IB(10) MERELY BECAUSE ASSESSEE IS NOT THE LEGAL OWNER OF THE LAND . 26. THE OTHER ARGUMENTS OF THE DEPARTMENT ARE THAT AUTHORITY LETTERS/MEMBERSHIP LETTERS WERE ISSUED BY THE SOCIE TY AND ASSESSEE HAD ONLY CONTRACTUAL LIABILITY, SALE PROCEEDS WERE ADJU STED AGAINST THE PURCHASE PRICE OF THE LAND; THE ASSESSEE IS ACTING ONLY AS A RECOMMENDING AUTHORITIES ETC. ARE NOT RELEVANT CRITERIA. THEY AR E INDIVIDUAL CLAUSES OF THE AGREEMENT BETWEEN THE SOCIETY AND THE ASSESSEE. ENT IRE AGREEMENT HAS TO BE READ AS A WHOLE AND ITS EFFECT HAS TO BE SEEN BY READING ALL THE CLAUSES OF THE AGREEMENT TOGETHER. IN OUR CONSIDERED VIEW A S STATED ABOVE, SOCIETY WAS NOTHING BUT A SPECIAL PURPOSE VEHICLE, A SMOKE SCREEN, FOR REDUCING STAMP DUTY BURDEN OVER THE ASSESSEE. THE ROLE OF TH E SOCIETY CAME TO THE HAULT AFTER PURCHASING OF THE LAND AND HANDING OVER THE POSSESSION TO THE ASSESSEE. IT REVIVED AFTER RECEIVING THE RECOMMENDA TION FROM THE ASSESSEE FOR ULTIMATE SALE OF THE FLATS. IN BETWEEN THESE TW O EVENTS, THE SOCIETY WAS NOTHING BUT A SILENT SPECTATOR AND ASSESSEE WAS IN FULL AND COMPLETE CONTROL OVER THE PROJECT, ITS DEVELOPMENT AND SALE OF THE FLATS. IT HAD ENJOYED THE PROFITS ARISING FROM THE SALE OF THE FL ATS. IF THE SOCIETY WOULD HAVE BEEN A CONTRACTEE IN THE REAL TERM, MEANING TH EREBY THAT ASSESSEE WAS CONTRACTOR, CARRYING OUT ANY WORK CONTRACT, SOC IETY SHOULD HAVE SHOWN THE SALE PROCEEDS AS ITS OWN AND SHOWN THE PR OFITS FROM SUCH SALE PROCEEDS BY DEBITING THE PAYMENTS MADE TO THE CONTR ACTOR AGAINST THE SALE PROCEEDS OF THE FLATS. NO SUCH EVIDENCE HAS BEEN PR ODUCED BY THE REVENUE. IT IS ALSO NOT SHOWN THAT SOCIETY HAD FILE D ANY RETURN OF INCOME SHOWING ANY PROFIT OR LOSS FROM THE PROJECT. AT LEA ST, IT IS NOT ASCERTAINED THAT ANY NOTICE UNDER SECTION 148(1) HAS BEEN ISSUE D TO THE SOCIETY ASKING IT TO FILE THE RETURN OF INCOME TO DECLARE THE PROF IT EARNED BY IT ON THIS PROJECT. IF ENTIRE FINANCIAL ARRANGEMENTS FROM PURC HASE OF LAND TILL ITA NO.328/AHD/2010 ASST. YEAR 2006-07 35 DISPOSAL OF THE FLATS REMAINED UNDER THE CONTROL OF THE ASSESSEE AND NO PART OF THE SALE PROCEEDS OF THE FLATS ACCRUED TO T HE SOCIETY AS PROFIT, OR AT LEAST NO EVIDENCE HAS BEEN PUT UP IN SUPPORT OF SUC H CLAIM WE ARE UNABLE TO HOLD THAT ASSESSEE ONLY ACTED AS WORK CONTRACTOR . IN A CASE OF WORK CONTRACTOR THERE HAS TO BE SOME PROFIT OR LOSS TO T HE CONTRACTEE BECAUSE ULTIMATELY THE FLATS HAVE BEEN SOLD ALONG WITH THE RIGHTS OVER THE LAND. 27. THE NEXT ISSUE WHICH HAS BEEN TAKEN UP BY LD. C IT(A) IS THAT THERE IS A VIOLATION OF CLAUSE (C) OF SECTION 80IB(10). T HERE ARE TWO ASPECTS OF THIS ISSUE ONE IS THAT THERE ARE TWO FLATS AT THE TOP FLOOR WHICH WHEN LOOKED FROM THE GROUND APPEARED TO HAVE LARGER SIZE THAN 1500 SFT AND OTHER IS THAT IF AREA OF PARKING SPACE IS INCLUDED THEN AREA OF EACH FLAT WILL BE MORE THAN SPECIFIED LIMIT OF 1500 SFT. IN OUR CO NSIDERED VIEW BOTH THE ASPECTS ARE FALLACIOUS. WITHOUT ACTUAL MEASUREMENT NO ONE CAN COME TO THE CONCLUSION THAT AREA OF THE FLAT IS MORE OR LES S THAN THE SPECIFIED LIMIT. EVEN STANDING AT THE DOOR OF THE FLAT ONE CANNOT ES TIMATE CORRECTLY AS TO WHAT IS THE AREA. THEREFORE, IT IS NOT ACCEPTABLE T HAT SOME BODY IS STANDING AT THE GROUND AND LOOKING AT THE TOP OF THE MULTIST ORIED BUILDING COULD CONCLUDE THAT AREA IS MORE THAN 1500 SFT. WE HAVE N O HESITATION TO SAY THAT THIS REASON IS RIDICULOUS. IN FACT REVENUE OUG HT TO HAVE IDENTIFIED THE ACTUAL OWNERS OR PURCHASERS OF THE FLATS, ISSUED SU MMON TO THEM WITH A COPY TO THE ASSESSEE AND THE SOCIETY, CARRY WITH TH EM THE DVO AND TAKE THE MEASUREMENT OF THE FLATS. WE AGREE WITH THE ARG UMENTS OF THE LD. AR OF ASSESSEE THAT ONCE POSSESSION OF THE FLATS ARE H ANDED OVER TO THE ULTIMATE PURCHASERS, IT HAS NO RIGHT TO ENTER INTO THE FLATS, THEREFORE, REQUIREMENT OF THE REVENUE CANNOT BE COMPLIED WITH UNLESS OWNERS/POSSESSORS ARE ALSO ISSUED NECESSARY NOTICES /SUMMONS. THUS THIS ARGUMENT OF REVENUE IS REJECTED. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 36 28. THE SECOND ARGUMENT IS THAT IF PARKING SPACE IS INCLUDED THEN TOTAL AREA WOULD EXCEED SPECIFIED LIMIT. IN OUR CONSIDERE D VIEW THIS REASONING ALSO CANNOT BE ACCEPTED. PARKING SPACE CANNOT BE PA RT OF HUMAN INHABITATION. IT IS A SPACE FOR STORING INANIMATE O BJECTS SUCH AS CAR. IT CANNOT BE A SPACE FOR SLEEPING, RESTING, DINING/COO KING ENJOYING TV/RADIO OR CARRYING OUT OTHER NECESSARY DAILY CORU S. PARKING SPACE IS ONLY AN APPENDIX TO THE FLAT I.E. RESIDENTIAL UNIT AND IT CANNOT BE ITS INTEGRAL PART. ONE MAY HAVE A CAR AND MAY PURCHASE A CAR PARKING SPACE ALONG WITH FLAT. ONE MAY NOT HAVE A CAR AND HE MAY NOT PREFER TO PURCHASE CAR PARKING SPACE. IF HE HAS A CAR, HE MAY PREFER T O KEEP HIS VEHICLE ON THE ROAD IN VIOLATION OF LOCAL LAWS. IN ANY CASE IT IS NOT SHOW THAT PURCHASE OF PARKING SPACE AS WELL AS FLAT WAS A COMBINED SELLIN G UNIT AND NO OPTION WAS AVAILABLE TO ANY PURCHASER EITHER TO PURCHASE F LAT AND NOT TO PURCHASE THE PARKING SPACE. EVEN WHERE PARKING BECOMES INTEG RAL PART OF SALE PROPOSITION IT CANNOT BE EQUATED WITH A RESIDENTIAL UNIT. ITAT MUMBAI BENCH IN ITO VS. SASIKLAL N. SATRA (2006) 280 ITR ( AT) 0243 HELD THAT RESIDENCE MEANS A BUILDING OR A PART OF THE BUILDIN G ONE CAN DRINK, EAT, AND SLEEP. A PARKING SPACE DOES NOT ENABLE AND IT C ANNOT ENABLE A PERSON TO COOK, EAT, DRINK SLEEP AND DO OTHER DAILY CORUS. THEN IT CANNOT BE AN INTEGRAL PART OF RESIDENTIAL UNIT. THEREFORE, WE CA NNOT ACCEPT THIS ARGUMENT THAT AREA OF THE PARKING SPACE SHOULD BE C OMBINED WITH AREA OF THE RESIDENTIAL UNIT SO AS TO WORK OUT THE TOTAL AR EA FOR THE PURPOSE OF FINDING OUT WHETHER IT EXCEEDS SPECIFIED LIMIT. IN ANY CASE WHAT SHOULD BE THE BUILT UP AREA HAS ALREADY BEEN DEFINED IN THE A CT. THEREFORE, CONCEPT OF BUILT-UP AREA CANNOT BE EXTENDED TO OTHER ITEMS NOT MENTIONED IN THE DEFINITION OF BUILT UP AREA. BUILT UP AREA HAS BEEN DEFINED IN THE ACT UNDER SECTION 80IB(14) AS UNDER :- ITA NO.328/AHD/2010 ASST. YEAR 2006-07 37 SEC. 80IB(14) FOR THE PURPOSES OF THIS SECTION,- [(A) BUILT-UP AREA MEANS THE INNER MEASUREMENTS O F THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NO T INCLUDE THE COMMON AREAS SHARE WITH OTHER RESIDENTIAL UNITS;] THIS CLAUSE WAS INTRODUCED BY FINANCE ACT (NO.2) 20 04 W.E.F. 1.4.2005. THUS IT WOULD BE APPLICABLE TO THE FACTS OF THE PRE SENT ASST. YEAR WHICH IS 2006-07. IMPACT OF THIS AMENDMENT HAS BEEN CONSIDER ED BY ITAT MUMBAI BENCH IN THE CASE OF ACIT VS. SHETH DEVELOPE RS (P) LTD. (2009) 33 SOT 277 (MUM). IT HAS BEEN HELD THEREIN THAT THI S AMENDMENT IS EFFECTIVE FROM 1.4.2005 ONLY. RELEVANT PORTION FROM THAT JUDGMENT IS GIVEN AS UNDER :- THE DEFINITION OF BUILT-UP AREA SAYS BUILT-UP ARE A INCLUDE PROJECTIONS AND BALCONIES. THE ACCEPTED RULES OF INTERPRETATION FOR AN INCLUSI VE DEFINITION AS ELUCIDATED BY THE APEX COURT IN THE CASE OF CIT V. TAJ MAHAL HOTEL AIR 1972 SC 168 IS THAT IF THE WORD INCLUDE IS USED IN AN INTERPRETATION CLAUSE, IT M UST BE CONSTRUED AS COMPREHENDING NOT ONLY SUCH THINGS AS IT SIGNIFIES ACCORDING TO T HEIR NATURE AND IMPORT, BUT ALSO THINGS WHICH THE INTERPRETATION CLAUSE DECLARES THA T THEY SHALL INCLUDE. SO, NORMAL MEANING OF BUILT-UP AREA, BUT FOR THE DEFINITION IN CLUDING PROJECTIONS AND BALCONIES, WOULD DEFINITELY EXCLUDE THE LATTER. EVEN ACCORDING TO THE ASSESSING OFFICER HIMSELF, BUILT-UP AREA AS NORMALLY UNDERSTOOD IN COMMON PARL ANCE MEANS AREA ENCLOSED WITHIN THE EXTERNAL LINES OF THE EXTERNAL WALLS. TH EREFORE, THERE CAN BE NO DOUBT THAT PRIOR TO THE INTRODUCTION OF THE DEFINITION CLAUSE, AFORESAID BUILT-UP AREA WOULD NOT INCLUDE PROJECTIONS AND BALCONIES AS NORMALLY UNDER STOOD. THE QUESTION AS TO WHETHER THE DEFINITION CLAUSE, MENTIONED ABOVE CAN BE DEEME D AS RETROSPECTIVE, WAS TO BE ANSWERED AGAINST THE REVENUE. NUMBER ONE, THE ENACT MENT ITSELF CLEARLY SPECIFIES THAT CLAUSE WILL HAVE EFFECT FROM 1-4-2005. NUMBER TWO, IT IS NOT A PROCEDURAL SECTION BUT A DEFINITION SECTION, WHERE AN ENLARGED MEANING IS GIVEN TO THE TERM BUILT-UP AREA AND SUCH ENLARGED MEANING WOULD NOT HAVE BEEN IN TH E REALM OF UNDERSTANDING OF ANY PERSON PRIOR TO ITS INTRODUCTION AND THE ASSESSEE W OULD HAVE GONE AHEAD WITH ITS RESPECTIVE PROJECTS BASED ON A COMMON UNDERSTANDING OF THE TERM BUILT-UP AREA. THUS, THE ENLARGED MEANING, IF GIVEN A RETROSPECTIV E EFFECT, WILL DEFINITELY AFFECT THE VESTED RIGHTS OF AN ASSESSEE. THEREFORE, THE DEFINI TION HAD ONLY PROSPECTIVE EFFECT FROM 1-4-2005. EVEN OTHERWISE, THE REVENUE WAS PRECLUDED FROM TAKING THE PLEA THAT SUCH DEFINITION WAS HAVING RETROSPECTIVE EFFECT FOR THE SIMPLE REASON THAT THE ASSESSING OFFICER HIMSELF HAD ACCEPTED IT TO BE ONLY PROSPECT IVE. ITA NO.328/AHD/2010 ASST. YEAR 2006-07 38 ONCE THIS DEFINITION IS EXHAUSTIVE THEN NO FURTHER ITEMS CAN BE TAKEN INTO ACCOUNT TO WORK OUT BUILT-UP AREA. THUS BUILT-UP AR EA WOULD INCLUDE FOLLOWING ONLY :- (1) INNER MEASUREMENT OF THE RESIDENTIAL UNIT AT TH E FLOOR LEVEL. (2) AREA PROJECTION AND BALCONIES. (3) THICKNESS OF THE WALLS. IT EXCLUDES FROM MEASUREMENT, COMMON AREAS SHARED W ITH OTHER RESIDENTIAL UNITS. THEREFORE, NOTHING MORE SUCH AS PARKING SPACE OR COMMON AREAS COULD BE INCLUDED TO WORK OUT WHAT IS BUILT UP AREA. SINCE CLAUSE (A) OF SECTION 80IB(14) IS A DEFINITION SECT ION THEN NO FURTHER CONCEPT CAN BE INCLUDED EXCEPT WHAT IS PROVIDED THE REIN. 29. AS A RESULT, WE HOLD THAT ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) AS A DEVELOPER. ACCORDINGLY, THE A PPEAL FILED BY THE ASSESSEE IS ALLOWED. 30. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 25/3/11. SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 25/3/11. MAHATA/- PRO NOUNCED IN THE OPEN COURT. SD/- SD/- (D CA) (BS) AM JM ITA NO.328/AHD/2010 ASST. YEAR 2006-07 39 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 1/2/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 21/2/ 2011/15/3/11 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..