The ITO, Ward-5(4), Baroda V. M/d. Siddharth Enterprises, Baroda

ITA 3372/AHD/2009

• Counselvise Citation: 337220514 RSA 2009
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR TEKRIWA LA
• Section: 80IB

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M INCOME-TAX OFFICER, WARD 5(4), BARODA. VS. M/S SIDDHARTH ENTERPRISES, S.NO.341-342, SIDDHARTH PARK, NEAR SAIDEEP NAGAR, B/H AIRPORT, NEW VIP ROAD, BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SAMIR TEKRIWALA, SR.DR RESPONDENT BY:- NONE O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOL LOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN DIRECTING TO VERIFY WHETHER THE DEV ELOPER HAS DOMINANT CONTROL OVER THE PROJECT AND HAS DEVELOPED THE LAND AT ITS OWN COST AND RISK AND IF SO THE DEDUCTION U/S. 80IB (10) OF RS. 49,00,000/- AS CLAIMED BY THE ASSESSEE HAS TO BE AL LOWED. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING TH AT THE APPROVAL FOR DEVELOPING AND BUILDING HOUSING PROJECTS WAS GRANTE D TO THE ORIGINAL OWNERS OF THE LAND AND NOT TO THE ASSESSEE , WHO ACTED ONLY AS AN AGENT FOR EXECUTION OF THE PROJECT, WHICH RIG HTS WERE OBTAINED BY THE ASSESSEE FIRM FROM THE ORIGINAL OWNERS, 3. THE LEARNED CIT(A) ALSO FAILED TO APPRECIATE TH AT THE LAND BEING AN ESSENTIAL AND INTRINSIC PART OF DEVELOPING AND BUIL DING OF A HOUSING PROJECT, APPROVAL IS GRANTED BY THE LOCAL AUTHORITY TO THE OWNER OF ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 2 THE LAND FOR DEVELOPING AND BUILDING HOUSING PROJEC TS THEREON, AND ANY OTHER PERSON, TO WHOM HE ENTRUSTS THE WORKS CON NECTED WITH THE EXECUTION OF THE PROJECT INSTEAD OF TAKING IT U P HIMSELF, CANNOT BE SAID TO BE AN 'UNDERTAKING DEVELOPING AND BUILDI NG HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY' WITHIN TH E MEANING OF SECTION 80IB(10) OF THE ACT. RELIEF CLAIMED IN APPEAL. THE ORDER OF THE CIT(A) ON THE ABOVE ISSUE BE SET A SIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THUS THE ONLY ISSUE INVOLVED IN THE APPEAL IS WH ETHER THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB(10). THE ASSESSEE HAS CLAIMED THAT IT IS A DEVELOPER THOUGH IT IS ENGAGED IN THE CONSTRUCTION. IT HAD CLAIMED DEDUCTION U/S 80IB(10) FOR RS.49,00,000/- ON THE GR OUND THAT IT IS A DEVELOPER COVERED UNDER THAT SECTION. THE AO DISALL OWED THE CLAIM FOR THE FOLLOWING REASONS :- (I) THE LAND IS NOT IN THE NAME OF THE ASSESSEE FIRM AN D THAT OWNERSHIP OF LAND IS AN ESSENTIAL ELEMENT WHICH CAR RIES WITH IT THE RIGHT TO DEVELOP THE LAND AND BUILD HOUSING PRO JECTS THEREON. AO SAYS THAT THE DEVELOPER FIRST SHOULD PURCHASE TH E LAND AND THEN TAKE NECESSARY PERMISSION TO CONSTRUCT. (II) ASSESSEE IN THE INSTANT CASE HAS ACTED MERELY AS AN AGENT FOR COLLECTION OF THE LAND CONSIDERATION ON BEHALF OF T HE LAND OWNER AND A CONTRACTOR FOR THE CONSTRUCTION OF THE HOUSE ON BEHALF OF THE UNIT HOLDERS. (III) THE APPROVAL FOR THE PROJECT IS GRANTED BY THE COMP ETENT AUTHORITY IN THE NAME OF THE LAND OWNER ONLY. (IV) THE ASSESSEE IS NOT A BUILDER OR DEVELOPER BUT A CO NTRACTOR AND THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB . ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 3 3. THE LD. CIT(A), HOWEVER, ALLOWED THE CLAIM FOLLO WING THE DECISIONS OF THE TRIBUNAL IN THE CASE OF RADHE DEV ELOPERS VS. ITO WD 3(2), BARODA NO.2482/AHD/2006 AND IN THE CASE OF IT O VS. SHAKTI CORPORATION IN ITA NO.1503/AHD/2008 AS UNDER :- 4.3 I HAVE CAREFULLY EXAMINED THE FACTS OF THE CAS E AND PERUSED THE ARGUMENTS OF THE AO. THE ISSUE OF DEDUCTION U/S 80I B(10) WAS DECIDED IN FAVOR OF THE APPELLANT AND AGAINST REVENUE BY THE O RDER OF THE JURISDICTIONAL ITAT, IN THE CASE OF RADHE DEVELOPER S VS. ITO WARD 392), BARODA, NO.2482/AHD/2006 A BENCH AHMEDABAD, HOWEVER , THE DECISION WAS PARTLY MODIFIED BY THE SUBSEQUENT DECISION IN T HE CASE OF ITO VS. M/S SHAKTI CORPORATION ITA NO.1503/AHD/2008 DATED 7/11/ 2008 WHEREIN, THE HON. ITAT HAS INDICATED THAT THE BENEFIT UNDER 80IB (10) WOULD BE AVAILABLE IF THE DEVELOPER HAS DOMINANT CONTROL OVE R THE PROJECT AND HAS DEVELOPED THE LAND AT ITS OWN COST AND RISK AND THE BENEFIT WOULD BE DENIED IF THE ASSESSEE HAD ENTERED INTO AN AGREEMEN T FOR A FIXED REMUNERATION AS A CONTRACTOR TO CONSTRUCT OR DEVELO P THE PROJECT ON BEHALF OF THE LAND OWNER. THE AO IS ACCORDINGLY, DI RECTED TO VERIFY THE AGREEMENT AND OTHER DETAILS IN THE LIGHT OF THE DEC ISION OF THE TRIBUNAL IN THE CASE OF M/S SHAKTI DEVELOPERS. THE GROUND IS AL LOWED SUBJECT TO VERIFICATION. 4. BEFORE US, THE LD. DR SUBMITTED THAT ASSESSEE IS NOT THE OWNER OF THE LAND WHICH IS AN ESSENTIAL CONDITION FOR ALLOWI NG THE BENEFIT U/S 80IB(10). ASSESSEE HAS ONLY ACTED AS AN AGENT FOR A ND ON BEHALF OF THE LAND OWNER, THE APPROVAL TO THE PROJECT HAS BEEN GR ANTED IN THE NAMES OF THE LAND OWNERS. BASICALLY HE RELIED ON THE ORDER O F AO. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. DR AND MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE ISSUE IS NOW CO VERED BY THE ABOVE TWO ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 4 DECISIONS REFERRED TO BY THE LD. CIT(A) IN HER ORDE R. SUBSEQUENTLY, THE TRIBUNAL HAS ALSO PASSED AN ORDER IN THE CASE OF M/ S NIKHIL ASSOCIATES VS. ITO IN ITA NO.328/AHD/2010 ASST. YEAR 2006-07 PRONO UNCED ON 25/3/11, WHEREIN THE ISSUE WAS FURTHER CONSIDERED A ND IT WAS HELD AS UNDER:- 20. WHILE INTRODUCING SECTION 80IB(10) BY FINANCE BILL 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 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; ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 5 (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 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:- ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 6 '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, (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.] ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 7 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 WHI CH 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 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:- ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 8 (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 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. ENTIRE 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 CONSIDERE D VIEW AS STATED ABOVE, SOCIETY WAS NOTHING BUT A SPECIAL PURPOSE VE HICLE, A SMOKE SCREEN, FOR REDUCING STAMP DUTY BURDEN OVER THE ASSESSEE. T HE ROLE OF THE SOCIETY CAME TO THE HAULT AFTER PURCHASING OF THE LAND AND HANDING OVER THE POSSESSION TO THE ASSESSEE. IT REVIVED AFTER RECEIV ING THE RECOMMENDATION FROM THE ASSESSEE FOR ULTIMATE SALE OF THE FLATS. I N BETWEEN THESE TWO ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 9 EVENTS, THE SOCIETY WAS NOTHING BUT A SILENT SPECTA TOR AND ASSESSEE WAS IN FULL AND COMPLETE CONTROL OVER THE PROJECT, ITS DEV ELOPMENT AND SALE OF THE FLATS. IT HAD ENJOYED THE PROFITS ARISING FROM THE SALE OF THE FLATS. IF THE SOCIETY WOULD HAVE BEEN A CONTRACTEE IN THE REAL TE RM, MEANING THEREBY THAT ASSESSEE WAS CONTRACTOR, CARRYING OUT ANY WORK CONTRACT, SOCIETY SHOULD HAVE SHOWN THE SALE PROCEEDS AS ITS OWN AND SHOWN THE PROFITS FROM SUCH SALE PROCEEDS BY DEBITING THE PAYMENTS MA DE TO THE CONTRACTOR AGAINST THE SALE PROCEEDS OF THE FLATS. NO SUCH EVI DENCE HAS BEEN PRODUCED BY THE REVENUE. IT IS ALSO NOT SHOWN THAT SOCIETY HAD FILED ANY RETURN OF INCOME SHOWING ANY PROFIT OR LOSS FROM TH E PROJECT. AT LEAST, IT IS NOT ASCERTAINED THAT ANY NOTICE UNDER SECTION 148(1 ) HAS BEEN ISSUED TO THE SOCIETY ASKING IT TO FILE THE RETURN OF INCOME TO DECLARE THE PROFIT EARNED BY IT ON THIS PROJECT. IF ENTIRE FINANCIAL A RRANGEMENTS FROM PURCHASE OF LAND TILL DISPOSAL OF THE FLATS REMAINE D UNDER THE CONTROL OF THE ASSESSEE AND NO PART OF THE SALE PROCEEDS OF TH E FLATS ACCRUED TO THE SOCIETY AS PROFIT, OR AT LEAST NO EVIDENCE HAS BEEN PUT UP IN SUPPORT OF SUCH 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 THE CONTRACTEE BECAUSE ULTIMATELY THE FLATS HAVE BEEN SOLD ALONG WITH THE RIGHTS OVER THE LAND. 7. THUS NOW IT IS SETTLED THAT IT IS NOT NECESSARY THAT ASSESSEE SHOULD BE LEGAL OWNER OF THE LAND. IT IS SUFFICIENT THAT H E SHOULD BE BENEFICIAL OWNER AND HAS TAKEN ALL THE RISKS AND BENEFITS OF D EVELOPING THE PROJECT. A CONTRACTOR ONLY WORKS AT A FIXED PROFIT AND AS PER AGREEMENT BETWEEN THE OWNER OF THE PROJECT AND HIMSELF. THE RISKS AND BEN EFITS GOES TO THE OWNER OF THE PROJECT BUT IN THE PRESENT CASE THE RISKS AN D BENEFITS OF THE PROJECT GO TO THE ASSESSEE AND, THEREFORE, HE IS A DEVELOPE R. THE APPROVAL GRANTED IN THE NAME OF THE LAND OWNER DOES NOT REALLY MAKE ANY DIFFERENCE BECAUSE IT IS NOT PRESCRIBED THAT SUCH APPROVAL SHO ULD ALWAYS BE GRANTED IN THE NAME OF THE ASSESSEE. IT IS SUFFICIENT THAT PROJECT IS APPROVED. AS A RESULT, FOLLOWING ABOVE THREE DECISIONS, WE ALLOW T HE CLAIM OF THE ITA NO.3372/AHD/2009 ASST. YEAR 2006-07 10 ASSESSEE HOLDING THAT IT IS A DEVELOPER U/S 80IB(10 ). AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 7/6/11. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 7/6/11. MAHATA/- 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 2/6/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 3/6/2011 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..