The DCIT, Circle-5, Ahmedabad V. M/s. Parshwanath Reality Pvt. Ltd., Ahmedabad

ITA 3451/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51020 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Assessee Lawyers: M G PATEL
• Section: 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.3451 / AHD/2009 (ASSESSMENT YEAR 2006-07) DCIT, CIRCLE 5, AHMEDABAD VS. M/S. PARSHWANATH REALITY PVT. LTD., 50, HARSIDH CHAMBERS, ASHRAM ROAD, AHMEDABAD PAN/GIR NO. : AABCA2802N (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S K GUPTA, CIT DR RESPONDENT BY: SHRI M G PATEL, AR DATE OF HEARING: 15.11.2011 DATE OF PRONOUNCEMENT: 21.12.2011 O R D E R PER SHRI A. K. GARODIA, AM: THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) - XI, AHMEDABAD DATED 09.11.2009 FOR THE ASSESSMENT Y EAR 2006-07. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: THE LD. COMMISSIONER OF INCOME TAX. (A)-XI, AHMEDA BAD HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF R S-A,23,89,356/- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 8 OIB OF THE ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) -XI, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CO MMISSIONER OF INCOME TAX (A) -XI, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. I.T.A.NO. 3451 /AHD/2009 2 2. THE BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NO TED BY LD. CIT(A) IN PARA 3 OF HIS ORDER WHICH IS REPRODUCED BELOW: 3. THE FACTS OF THE CASE ARE THAT DURING THE ASSES SMENT YEAR UNDER CONSIDERATION THE APPELLANT COMPANY ENTERED INTO 'D EVELOPMENT AGREEMENT' WITH KALPTARU PARK MILLENNIUM CO.OP. HOU SING LTD FOR THE PURPOSE OF DEVELOPING HOUSING PROJECT. THE APPELLANT, CLAIMING TO BE DEVELOPER CLAIMED DEDUCTION UNDER SE CTION 80IB(10) OF THE I. T. ACT, 1961 AMOUNTING TO RS. 4, 23,89,356/- ON THE NET PROFIT EARNED BY IT AT RS. 4,53,00,578/-. H OWEVER, AFTER, DISCUSSING THE ISSUE AT LENGTH IN THE ASSESSMENT OR DER AND ALSO RELYING UPON VARIOUS DECISIONS, THE ASSESSING OFFIC ER HAS REJECTED THE APPELLANT'S CLAIM OF DEDUCTION U/S. 80IB(10) HO LDING THAT THE APPELLANT IS NOT A DEVELOPER. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A). BEFORE CIT(A), RELIANCE WAS PLACED ON THE TRIBUNAL DECISION RENDERED IN THE CASE OF RADHE DEVELOPERS VS CIT AS REPORTED IN 113 TTJ 300 (AHD.) AND ANOTHER TRIBUNAL DECISION OF MUMBAI BENCH IN THE CASE OF PATEL ENGINEERING WORKS AS REPORTED IN 84 TTJ 646. LD. CIT(A) HAS OBTAINED REMAND REPORT OF THE A.O. AND IN THE REMAN D REPORT, THE A.O. PLACED RELIANCE ON THE SUBSEQUENT TRIBUNAL DECISION OF AHMEDABAD BENCH RENDERED IN THE CASE OF SHAKTI CORPORATION VS ITO IN I.T.A.NO. 1503/AHD/2008 IN WHICH EARLIER TRIBUNAL DECISION RE NDERED IN THE CASE OF RADHE DEVELOPERS (SUPRA) WAS CONSIDERED AND THREE P ARAMETERS WERE LAID DOWN TO DECIDE THAT WHO IS A DEVELOPER. THE FIRST PARAMETER WAS THAT THE ASSESSEE HAS IN FACT PURCHASED THE LAND FOR A FIXED CONSIDERATION FROM THE LAND OWNER. SECOND PARAMETER IS AS TO WHETHER THE ASSESSEE HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN COST AND R ISK INVOLVED IN THE PROJECT. THE THIRD PARAMETER IS AS TO WHETHER THE ASSESSEE HAS DEVELOPED AND DOMINATE CONTROL OVER THE PROJECT AND ALSO DEVE LOPED THE LAND AT ITS OWN COST AND RISK. ASSESSEE HAS ALSO SUBMITTED A C OUNTER COMMENT AGAINST THE REMAND REPORT AND THEREAFTER, CIT(A) HA S DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND NOW, THE REVENUE IS IN A PPEAL BEFORE US. I.T.A.NO. 3451 /AHD/2009 3 4. LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND REL IANCE WAS PLACED BY HIM ON THE JUDGEMENT OF HONBLE APEX COURT RENDE RED IN THE CASE OF M/S. K RAHEJA DEVELOPMENT CORPORATION RENDERED ON 0 5.05.2005 AND SUBMITTED A COPY OF THE SAME AND SUBMITTED THAT AS PER THIS JUDGEMENT, IT IS VERY IMPORTANT TO SEE AS TO WHETHER THE SALE IS BEFORE COMPLETION OR AFTERWARDS AND IF THE SALE IS BEFORE COMPLETION OF CONSTRUCTION, IT IS A WORKS CONTRACT AND THE ASSESSEE IS NOT A DEVELOPER. IN REPLY, IT WAS SUBMITTED BY THE LD. A.R. THAT THIS JUDGMENT OF HON BLE APEX COURT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THIS IS IN RESPECT OF KARNATAKA SALES TAX ACT AND THE DEFINITION OF WORK CONTRACT I S VERY WIDE AS PER KARNATAKA SALES TAX ACT AND THEREFORE, THIS JUDGMEN T IS NOT APPLICABLE FOR INCOME TAX PURPOSES. RELIANCE WAS PLACED BY HI M ON THE FOLLOWING JUDGMENTS: (A) AMALTAS ASSOCIATES VS ITO 11 TAXMAN.COM 420 (A HD.) (B) ITO VS SARTHI CONSULTANCY PVT. LTD. I.T.A.NO. 7 98.AHD/2009 & 934/AHD/2009. (C) NIKHIL ASSOCIATES VS ITO 12 TAXMAN.COM 76 (AHD - ITAT) (D) ACIT VS SMT. C RAJINI 9 TAXMAN.COM 115 (CHENNAI -ITAT) 5. IN THE REJOINDER, IT WAS SUBMITTED BY THE LD. D. R. THAT THERE IS NO DEFINITION OF WORK CONTRACT IN INCOME TAX ACT AND H ENCE, GUIDELINES CAN BE IMPORTED FORM OTHER STATUTE. IT IS ALSO SUBMITT ED THAT THE DEFINITION IN KARNATAKA SALES TAX ACT IS NOT DIFFERENT. IT WAS S UBMITTED THAT AS PER EXPLANATION TO SECTION 80-IB(10), WORKS CONTRACT IS SPECIFICALLY EXCLUDED AND HENCE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/ S 80-IB. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY BOTH THE SIDES. WE FIND THAT T HE DECISION OF CIT(A) IN THE PRESENT CASE IS AS PER PARA 8.1.2 8.1.5, W HICH ARE REPRODUCED BELOW: I.T.A.NO. 3451 /AHD/2009 4 8.1.2. IN OTHER WORDS THE ISSUE TO BE ADJUDICATED UPON IN THE INSTANT CASE IS WHETHER THE APPELLANT IS A DEVELOPE R AND BUILDER OR WHETHER THE APPELLANT IS A CONTRACTOR FOR WORKS. TH E A. 0. HELD, VIDE PARA 3.28 OF THE ASSESSMENT ORDER AS UNDER :- 3.28. TO SUM UP, A READING OF THE VARIOUS CLAUSES O F THE AGREEMENT ENTERED INTO BY KALPATARU SOCIETY WITH TH E ASSESSEE COMPANY, IT IS CLEAR THAT THE ASSESSEE COM PANY HAS ENTERED INTO ONLY A CONTRACT FOR SERVICES FOR WHICH IT IS BEING PAID IN THE MANNER SPECIFIED IN CLAUSE 15 OF THE SA ID AGREEMENT. THEREFORE, IT CAN NOT BE TERMED AS THE D EVELOPER OF THE SAID HOUSING PROJECT. DEDUCTION UNDER SECTIO N 80IB(10) CLAIMED BY THE ASSESSEE TO THE TUNE OF RS. 4,23,89,356/- IS THEREFORE DISALLOWED LEADING TO AN ADDITION OF RS. 4,23,89,356/- TO THE RETURNED INCOME. IN THE REMAND REPORT ALSO, THE ASSESSING OFFICE R REITERATED HIS OWN FINDINGS ARRIVED AT IN THE ASSESSMENT ORDER. 8.1.3. AS AGAINST THIS, THE APPELLANT VIDE HIS WRIT TEN SUBMISSIONS AND ALSO BY WAY OF ARGUMENTS DURING THE ASSESSMENT OF HEARING PUT FORTH THE CLAIM THAT THEY ARE ACTUALLY DEVELOPERS A ND BUILDERS. THEY CAN IN NO WAY BE TERMED AS A CONTRACTOR OR AGENT. I N SUPPORT OF THEIR CONTENTION, THEY RELIED UPON THE DECISION OF 'A' BENCH, ITAT, AHMEDABAD IN THE CASE OF M/S. RADHE DEVELOPER S 113 TTJ 300 AND ALSO ON THE DECISION OF MUMBAI ITAT IN THE CASE OF M/S. PATEL ENGG. LTD. VS. DCIT (84 TTJ 646). THE LEARNED A.R. RELIED FURTHER ON THE JUDGMENT OF ITAT 'A' BENCH, AHMEDABA D (CAMP AT BARODA) DATED 07-11-2008 IN THE CASE OF ITO VS. M/S . SHAKTI CORPORATION IN ITA NO. 1503/AHD/2008. IN THIS YET-T O-BE-REPORTED CASE (COPY OF WHICH WAS FURNISHED BY THE A. R.) IT WAS HELD VIDE PARA 16 THAT IF THE LAND HAS BEEN BOUGHT BY THE DEV ELOPER AND DEVELOPER HAS ALL DOMINANT CONTROL OVER THE PROJECT AND DEVELOPED THE LAND AT HIS OWN COST AND RISKS, THEY WOULD BE E NTITLED TO DEDUCTION U/S. 80IB(10). IF THE DEVELOPER HAS ACTED ON BEHALF OF THE LAND-OWNER AND HAS GOT FIXED CONSIDERATION FROM THE LAND- OWNER FOR THE DEVELOPMENT OF HOUSING PROJECTS, THE ASSESSEE SHOULD NOT BE ALLOWED DEDUCTION U/S. 80IB(10). IN THE INS TANT CASE THE A. R. CONTENDED THAT THE PURCHASE CONSIDERATION FOR TH E LAND WAS PAID BY THE APPELLANT AND THAT THE CONSIDERATION RECEIVE D FROM THE SOCIETY FOR DEVELOPMENT OF THE PROJECT WAS NOT FIXE D. I.T.A.NO. 3451 /AHD/2009 5 8.1.4 I HAVE CONSIDERED THE FACTS OF THE CASE, THE FINDINGS IN THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE A. 0, VIDE THE REMAND REPORT, THE WRITTEN SUBMISSIONS AND ARGUMENTS OF TH E APPELLANT AND FINALLY THE CASE LAWS RELIED UPON BY THE APPELLANT. I HAVE GONE THROUGH THE AGREEMENT OF DEVELOPMENT ENTERED INTO B ETWEEN THE APPELLANT AND M/S. KALPATARU PARK MILLENIUM CO.OP. HOUSING SOCIETY. THE TERMS OF THE AGREEMENT MAKE IT CLEAR T HAT THE ENTIRE RESPONSIBILITY FOR EXECUTING THE HOUSING PROJECT, I NCLUDING OBTAINING LOCAL AUTHORITY'S APPROVAL; DESIGNING AND BUILDING THE HOUSES; FINANCING THE PROJECT; GETTING THE MEMBERS FOR THE HOUSING PROJECT, COLLECTING THE SALE CONSIDERATION ETC WAS TO BE BORNE BY THE APPELLANT. PROFIT OR LOSS, I.E. THE DIFFERENCE BETW EEN THE RECEIPTS AND EXPENDITURE WAS OF THE APPELLANT AND THE SOCIETY HA D NO RISK WHATSOEVER IN THIS REGARD. I AM OF THE VIEW THAT A. O'S RELIANCE ON CLAUSE 15 OF THE DEVELOPMENT AGREEMENT (QUOTED ABOV E) TO SAY THAT THE APPELLANT IS NOT A DEVELOPER IS MISPLACED. IN FACT, THE SAID CLAUSE MAKES IT AMPLY CLEAR THAT THE ENTIRE FINANCI AL RISK AND THE SURPLUS OR DEFICIT IN THE VENTURE SHALL REST WITH T HE APPELLANT. 8.1.5. BESIDES THE TRANSACTIONS PERTAINING TO THE P ROJECT HAVE BEEN ENTERED IN ENTIRETY IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. THE CO-OP. SOCIETY DID NOT ACCOUNT FOR ANY RECEIPTS OR EXPENDITURE IN CONNECTION WITH THE BUILDING OF HOUSES. IN THESE CI RCUMSTANCES, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT PER FORMED THE ROLE OF A DEVELOPER AND BUILDER IN RESPECT OF THE PROJEC T UNDER CONSIDERATION. BY NO STRETCH OF IMAGINATION THE APP ELLANT CAN BE TERMED TO CONTRACTOR FOR WORKS, MUCH LESS THEY CAN BE TERMED AS AN AGENT OF CO-OP. SOCIETY. IN THE LIGHT OF THE ABOVE DISCUSSION, I HOLD THAT THE APPELLANT IS A DEVELOPER AND BUILDER, ENTI TLED TO DEDUCTION U/S. 80IB(10) OF THE I. T. ACT, 1961. THE ACTION OF THE A. O. IN DISALLOWING THE CLAIM FOR THE SAID DEDUCTION IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. ACCORDINGLY, I DIR ECT THE A.O. TO ALLOW THE APPELLANTS CLAIM OF DEDUCTION U/S 80IB(1 0). 7. IN THE ABOVE PARAS, OF THE ORDER OF LD. CIT(A), WE FIND THAT THE LD. CIT(A) HAS FOLLOWED HE TRIBUNAL DECISION RENDERED I N THE CASE OF SHAKTI CORPORATION (SUPRA). THIS FINDING IS ALSO GIVEN BY HIM THAT PROFIT AND LOSS I.E. DIFFERENCE BETWEEN THE RECEIPT AND EXPENDITURE WAS OF THE ASSESSEE AND THE SOCIETY HAS NO RISK WHATSOEVER IN THIS REGA RD. IN PARA 3.2.2 OF THE ASSESSMENT ORDER, THE A.O. HAS STATED THAT THE BUIL DER WILL BE PAID FOR HIS I.T.A.NO. 3451 /AHD/2009 6 EFFORTS IN THE MANNER PROVIDED IN PARA 15 OF THE AG REEMENT AND ON THIS BASIS, HE HAS CONCLUDED THAT THIS AGREEMENT IS NOT JOINT VENTURE AND IT IS FOR PROVIDING SERVICES BY THE BUILDER TO THE LAND OWNER. WE, THEREFORE REPRODUCE THE CONTENTS OF PARA 15 OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE SOCIETY: 15. THE DEVELOPER/BUILDER SHALL BE ENTITLED TO THE SURPLUS BETWEEN (I) THE GROSS AMOUNTS RECEIVED FROM THE MEMBERS / PURCHASERS TOWARDS ALLOTMENT OF THE TENEMENTS WITH FACILITIES, AMENITIES AND SERVICES FOR THE EXCLUSIVE OR GENERAL USE, OCCUPATI ON AND ENJOYMENT (BEING THE PREMISES OF EVERY DESCRIPTION WHATSOEVER LIKE OPEN LAND, CONSTRUCTED PREMISES, TERRACES, MAR GIN LANDS PARKING SPACES (CONSTRUCTED, COVERED OR OPEN), OTHE R AMENITIES, FACILITIES AND SERVICES OR ANY OTHER). AND (II) THE TOTAL COST CONSISTING OF : A) ALL COST AND EXPENSES FOR THE ACQUISITION OF T HE SAID LAND INCURRED BY THE SOCIETY INCLUDING THE PAYMENT TOWAR DS STAMP DUTY, LEGAL FEES AND OTHER CHARGES AND EXPENSES PAID OR I NCURRED TO BE PAID FOR PURCHASE OR ACQUISITION THEREOF AND ALSO I NCLUDING THE INTEREST PAID AND/OR TO BE PAID ON AMOUNT BORROWED FOR THE SAID PURPOSE AND/OR LATE PAYMENT TO LAND OWNERS FOR THE PURCHASE OF THE SAID LAND. B) THE COST TO BE INCURRED FOR CONSTRUCTION, WHI CH SHALL INCLUDE FOR LABOUR, MATERIAL, ERECTION, INSTALLATION OR CONSTRUCTION OF INFRASTRUCTURES, COMMON AMENITIES FACILITIES AND SERVICES. C) COST AND EXPENSES TO BE INCURRED FOR MAKIN G ARRANGEMENT FOR WATER SUPPLY, DRAINAGE, ELECTRICITY AND OTHE R FACILITIES AND SERVICES TO BE PROVIDED IN THE SCHEME, WHICH SHAL L INCLUDE .THE LAYING OF CABLES, PIPE-LINES, OTHER INSTALLATION CHARGES, SECURITY DEPOSITS, SCRUTINY TEES OR ANY OTHER AMOUNT TO BE P AID OR EXPENSES TO BE INCURRED-' IN ANY FORM WHATSOEVER. COST AND EXPENSES OF' EVERY DISCRETION WHATSOEVER T O BE INCURRED OR PAID FOR OBTAINING APPROVALS OR SANCTION TO THE LAYOUT PLANS, CONSTRUCTION PLANS, REVISED PLANS FROM TALUKA PANCH AYAT OR FROM ANY OTHER CONCERNED AUTHORITY OR AUTHORITIES. COST AND EXPENSES TO BE INCURRED FOR OBTAINING ALL AND EVERY PERMISSIONS, CERTIFICATES, APPROVALS,, SANCTIONS AS MAY BE NECESSARY TO BE OBTAINED FROM ANY AUTHORITY OR AUTHORITIES WH ATSOEVER IN ANY I.T.A.NO. 3451 /AHD/2009 7 OF THE MATTERS OF EVOLVING, IMPLEMENTING AND CARRYI NG OUT THE SCHEME OR GENERALLY UNDER THIS AGREEMENT. THE INTEREST AND OTHER CHARGES REQUIRED TO BE PAID UPON FINANCE THAT MAY BE RAISED OR ARRANGED FROM ANY SOURCE WHAT SOEVER INCLUDING THAT .RAISED BY THE DEVELOPER/BUILDER ITS ELF, AS ALSO UPON ANY INVESTMENTS ALREADY MADE FOR TIMELY COMPLETION OF THE PROJECT. REMUNERATION OR CHARGES TO BE PAYABLE TO THE CONSUL TANTS LIKE ARCHITECTS. ENGINEERS. STRUCTURAL ENGINEERS, CONTRA CTORS, SUPERVISORS, DRAINAGE CONSULTANTS, ELECTRICAL CONSU LTANTS, PROJECT CONSULTANTS ETC. IN ANY FORM WHATSOEVER. ALL COSTS, CHARGES AND EXPENSES OF EVERY DISCRETION WHATSOEVER TO BE PAID OR INCURRED IN ANY OF THE MATTERS RELATING TO THE SCHEME NOT SPECIFICALLY PROVIDED HEREIN, OR BEAR THE DEFICIT I F ANY IN CASE TOTAL COST AS PER CLAUSE (II) ABOVE EXCEEDS THE GROSS REC EIPTS FROM MEMBERS/PURCHASERS AS PER CLAUSE (I) ABOVE. 8. IN OUR CONSIDERED OPINION, THE VARIOUS SUB-CLAUS ES OF THIS PARA OF THE AGREEMENT DO NOT SAY THAT THE ASSESSEE WILL BE PAID CERTAIN FIXED CHARGES FOR THE SERVICES TO BE RENDERED BY THE ASSE SSEE BUT AS PER THIS CLAUSE OF THE AGREEMENT, THE ASSESSEE WILL GET THE SURPLUS OF GROSS REALIZATION OVER VARIOUS TYPES OF EXPENSES TO BE IN CURRED FOR THE PROJECT WHICH ARE ENUMERATED IN THE CLAUSE AS PER SUB-CLAUS E (A)-(H) OF THE AGREEMENT. HENCE, IN OUR OPINION, THE FINDING OF LD . CIT(A) THAT AS PER THIS AGREEMENT ,THE ASSESSEE WAS TO BEAR PROFIT OR LOSS, IS A REASONABLE CONCLUSION DRAWN BY HIM AND IN OUR CONSIDERED OPINI ON, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) BECAUSE TH E SAME IS IN LINE WITH THE TRIBUNAL DECISION RENDERED IN THE CASE OF SHAKT I CORPORATION (SUPRA). 9. REGARDING THE RELIANCE PLACED BY THE LD. D.R. ON THE DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF M/S. K. RAHEJA DEVELOPMENT CORPORATION, WE FIND THAT THIS JUDGMENT IS IN RESPE CT OF CONTRACT OF KARNATAKA SALES TAX ACT AND THE QUESTION BEFORE THE HONBLE COURT WAS AS TO WHETHER THE ASSESSEE IS DEALER & IS LIABLE TO PAY TURNOVER TAX UNDER THE KARNATAKA SALES TAX ACT. AS PER THE FACTS NOTE D BY THE HONBLE APEX COURT, IT IS NOTED THAT THE ASSESSEE CARRY ON THE B USINESS OF REAL ESTATE I.T.A.NO. 3451 /AHD/2009 8 DEVELOPMENT AND ALLIED CONTRACTS. IT IS ALSO NOTE D THAT THEY ENTERED INTO DEVELOPMENT AGREEMENT WITH THE OWNER OF THE LAND AN D THIS ISSUE WAS NOT BEFORE THE HONBLE APEX COURT AS TO WHETHER THE ASS ESSEE IS A DEVELOPER OR NOT. THE DECISION OF THE HONBLE APEX COURT IN THAT CASE IS MERELY ON THIS ASPECT AS TO WHETHER THE ASSESSEE IS LIABLE TO PAY TURNOVER TAX UNDER THE KARNATAKA SALES TAX ACT OR NOT. WHILE DECIDING THE ISSUE, THE HONBLE APEX COURT HAS PROCEEDED ON THE BASIS OF TH E DEFINITION OF THE WORKS CONTRACT IN KARNATAKA SALES TAX ACT. ADMITTE DLY, THERE IS NO DEFINITION OF THE WORKS CONTRACT IN THE INCOME TAX ACT. IT IS ALSO NOTED BY THE HONBLE APEX COURT IN THAT CASE THAT THE DEFINI TION OF THE WORKS CONTACT IN KARNATAKA SALES TAX ACT IS VERY WIDE AND NOT RESTRICTED TO A WORKS CONTRACT AS NORMALLY UNDERSTOOD. IT IS ALSO OBSERVED THAT IT IS A WIDE DEFINITION TO INCLUDE ANY AGREEMENT FOR CARRYI NG OUT BUILDING OR CONSTRUCTION ACTIVITIES FOR CASH, DEFERRED PAYMENT OR OTHER VALUABLE CONSIDERATION. IT IS OBSERVED BY THE HONBLE APEX COURT THAT EVEN IF THE OWNER OF THE PROPERTY ENTERS INTO AN AGREEMENT TO C ONSTRUCT FOR CASH, DEFERRED PAYMENT OR OTHER VALUABLE CONSIDERATION FO R SOMEBODY ELSE, IT WILL BE WORKS CONTRACT. IF THIS DEFINITION OF WORK CONTRACT IS IMPORTED AS IT IS IN THE INCOME TAX ACT, THEN FOR THE PURPOSE O F SECTION 80-IB(10), NOBODY WILL BE ELIGIBLE FOR DEDUCTION UNDER THIS SE CTION BECAUSE IN ALMOST ALL THE CASES, PROPERTIES ARE SOLD IN ADVANCE AND T HE CONSTRUCTION TAKES PLACE LATER AND IN VERY SMALL NUMBER OF CASES, SOME PORTION OF BUILDING IS SOLD AFTER CONSTRUCTION AND THAT TOO IN SMALL PORTI ONS. IN OUR CONSIDERED OPINION, THIS JUDGMENT OF HONBLE APEX COURT RENDER ED IN THE CONTEXT OF KARNATAKA SALES TAX ACT IS NOT APPLICABLE IN THE PR ESENT CASE BECAUSE THE DEFINITION OF WORK CONTRACT IN THIS ACT IS DEFINITE LY VERY WIDE AS EVEN NOTED BY THE HONBLE APEX COURT ITSELF IN THIS DECI SION. IN OUR CONSIDERED OPINION, THE TERM WORKS CONTACT FOR THE PRESENT CASE WILL BE APPLICABLE IN THOSE CASES WHERE THE ASSESSEE WHO IS ENGAGED IN THE I.T.A.NO. 3451 /AHD/2009 9 BUILDING ACTIVITIES IS NOT CONCERNED WITH PROFIT OR LOSS OF CONSTRUCTION OR SALE OF THE BUILDING BUT HE IS ENTITLED TO A FIXED AND PREDETERMINED AMOUNT FOR THE ACTIVITIES OF CONSTRUCTION CARRIED OUT BY I T ON BEHALF OF OTHERS. IF THE ASSESSEE IS ELIGIBLE FOR PROFIT AND LOSS AND NO T FOR A FIXED AMOUNT THEN IT CANNOT BE SAID TO BE A WORKS CONTACT IN OUR HUMB LE OPINION. IN VIEW OF THE ABOVE DISCUSSION, WE FEEL THAT THE ORDER OF LD. CIT(A) DOES NOT CALL FOR ANY INTERFERENCE FROM OUR SIDE. 10. IN THE RESULT, APPEAL OF THE REVENUE STANDS DIS MISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 19/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20/12.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.21/12 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 21.12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.21/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21/12/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..