Appeal Details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 6656 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-05-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Assessment Year
2007-2008
Appeal Filed On
21-02-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO. 520/AHD/2011 A. Y.: 2007-08 M/S. SAFAL ASSOCIATES, TOP FLOOR, SARTHIK ANNEXE, BESIDE FUN REPUBLIC, SATELLITE, AHMEDABAD VS THE INCOME TAX OFFICER(OSD), RANGE -9(2),VASUPUJYA BUILDING, OFF ASHRAM ROAD, AHMEDABAD PA NO. ABFFS 8813 D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. SOPARKAR, AR RESPONDENT BY SHRI K. K. VYAWAHARE, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XV , AHMEDABAD DATED 22 ND DECEMBER, 2010, FOR ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUND: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANTS CASE, THE ORDER OF THE LEARNED CIT(A) IS BAD IN LAW AND DESERVES TO BE CANCELLED AS SHE HAS PASSED AN ORDER WITHOUT CONSIDERING AND APPRECIATING THE FACTS OF CASE OF APPELLANT. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE FINDING OF THE ASSESSING OFFICER THA T THE APPELLANT FIRM IS NOT ENTITLED TO DEDUCTION U/S 80IB (10) OF THE INCOME-TAX ACT. ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 2 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE FINDING OF THE ASSESSING OFFICER THA T BUILT UP AREA OF RESIDENTIAL UNIT FOR THE PURPOSE O F SECTION 80IB (10) INCLUDES OPEN TERRACE. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) ERRED IN OBSERVING THAT APPELLANT FIRM HAS DEVELOPED AND CONSTRUCTED RESIDENTIAL PROJECT ON LANDS HAVING SURVEY NUMBERS WHICH DO NOT FORM PART OF THE DEVELOPMENT AGREEMENT. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT ENTIRE DEVELOPMENT OF HOUSING PROJECT WAS CARRIED OUT STRICTLY AND EXCLUSIVELY ON THE SURVEY NUMBERS WHICH FORM PART OF RELEVANT AGREEMENT WITH SOCIETIES. 2. THE FACTS NOTED IN THE IMPUGNED ORDER ARE THAT T HE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND CONSIST OF THE FOLLOWING PARTNERS: (I) SAFAL INFRASTRUCTURE PVT. LTD. 50% (II) SAFAL CONSTRUCTIONS PVT. LTD. 25% (III) RAJESH BRAHMBHATT 12.5% (IV) RUPESH BRAHMBHATT 12.5% IT WAS INFORMED THAT THIS WAS THE FIRST YEAR OF CLA IM OF DEDUCTION U/S 80 IB(10)OF THE IT ACT. IT WAS STATED THAT THE DEDUCTI ON HAD BEEN CLAIMED ON THE PROJECT NAMED SAFAL PARIVESH, SITUATED AT MOUJE VILLAGE VEJALPUR, TALUKA CITY, DISTRICT AHMEDABAD ON THE LA ND ADMEASURING 17938 SQM OF AREA. IT WAS INFORMED THAT THERE WERE 324 UNITS CONSTRUCTED IN THE PROJECT, FOR WHICH THE ASSESSEE FIRM ENTERED INTO TWO DEVELOPMENT AGREEMENTS BOTH DATED 27 TH MAY,2006 WITH TWO ASSOCIATES NAMELY (1) SHERIN COOPERATIVE HOUSING SO CIETY LTD. AND ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 3 (2) JAI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD . VIBHAG -6. IT WAS INFORMED THAT ONLY ONE DEVELOPMENT PERMISSION D ATED 18 TH JULY, 2006 WAS RECEIVED AND ONLY ONE BU PERMISSION DATED 14 TH MAY, 2008 WAS RECEIVED. PERUSAL OF THIS PERMISSION SHOWED THA T PERMISSION HAD BEEN GIVEN TO JAI VAISHNODEVI COOPERATIVE HOUSING S OCIETY LTD. THE DETAILS OF THE SAME ARE DISCUSSED IN THE IMPUGNED O RDER. THE RETURN OF INCOME WAS FILED AT INCOME OF RS.9,73,23,693/- I N WHICH DEDUCTION WAS CLAIMED ON THE ENTIRE AMOUNT WHICH WAS DENIED. THE AO CONSIDERING THE EXPLANATION OF THE ASSESSEE HELD TH AT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80 IB (10) OF THE IT ACT ON THE FOLLOWING REASONS:- (1) BUILT-UP AREA OF EACH OF THE UNIT NUMBERS 1201 IN BLOCKS A, B, C AND D OF HOUSING PROJECT IS MORE THA N 1500 SQ. FT. (2) THE ASSESSEE IS NOT BOTH BUILDER AND DEVELOPER AS REQUIRED BY THE PROVISIONS OF SECTION 80 IB (10) OF THE IT ACT BECAUSE THE ASSESSEE DID NOT CONCEPTUALIZED AND OWNED THE PROJECT IN AS MUCH AS THE ASSESSEE IS NOT THE OWNER OF THE LAND AND THE APPROVAL WAS NOT ISSUED TO IT BY AUDA. (3) THE ASSESSEE ENTERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WITH THE SOCIETIES AND DONE THE CONSTRUCTION AS PER THE AGREEMENT. HENCE, ASSESSEE IS MERELY IS A CONTRACTOR FOR THE PROJECT. (4) THE ASSESSEE HAS NOT SOLD ANY UNIT TO THE PURCH ASER BECAUSE THE SOCIETIES HAD EXECUTED THE SALE DEEDS A S ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 4 SELLER AND THE ASSESSEE WAS CONFIRMING PARTY TO THE TRANSACTION. THEREFORE, THE ASSESSEE WAS MERELY A CONTRACTOR/AGENT OF THE SOCIETIES AND (5) AS PER THE AMENDMENT TO SECTION 80 IB OF THE IT ACT BY THE FINANCE ACT, 2009, A WORKS CONTRACTOR WHO EXECUTES THE WORK AWARDED BY ANY PERSON IS NOT ELIGIBLE FOR DEDUCTION U/S 80 IB OF THE IT ACT. DE DUCTION WAS ACCORDINGLY NOT ALLOWED TO THE ASSESSEE. 3. THE MATTER WAS AGITATED BEFORE THE LEARNED CIT(A ). THE LEARNED CIT(A) CONSIDERING THE SUBMISSION OF THE ASSESSEE I N THE LIGHT OF THE FINDINGS OF THE AO REJECTED THE CLAIM OF THE ASSESS EE. THE DISCUSSION OF THE LEARNED CIT(A) ON THE ISSUE AND FINDINGS TOG ETHER IN PARA 5 TO PARA 28 IN THE IMPUGNED ORDER ARE REPRODUCED AS UND ER: 5. GROUND NO.2 PERTAINS TO THE DISALLOWANCE OF DEDUCTION OF RS.9,73,02,426 U/S. 80IB (10) . PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT AS PER REASONS SUMMARIZED IN PARA 3.37 OF THE ASSESSMENT ORDER THE AO DENIED THE DEDUCTION ON THE GROUND THA T THE APPELLANT WAS NOT BOTH A DEVELOPER AND A BUILDER. T HAT IT WAS NOT THE OWNER OF THE LAND AS APPROVALS FOR CONSTRUCTION ETC. WERE NOT GRANTED BY AUDA TO IT. T HAT IT WAS MERELY A CONTRACTOR WHO DID CONSTRUCTION WORK A S PER THE AGREEMENTS WITH THE LAND OWNERS - THE SOCIETIES . THAT THE ASSESSEE HAD NOT SOLD ANY UNIT TO THE PURCHASER BUT THE SOCIETIES HAD EXECUTED THE SALE DEEDS. THAT THE ASSESSEE WAS MERELY A WORKS CONTRACTOR. IN SUPPORT OF DISALLOWANCE ON THE GROUND THAT THE ASSESSEE IS A W ORKS CONTRACTOR THE AO HAS RELIED UPON HON'BLE SUPREME C OURT DECISIONS MENTIONED BELOW: 1. HAL LTD. VS. STATE OF ORISSA (SC) 55 STC 327 ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 5 2. TAMILNADU VS. ANANDAM VISHWANATHAM 1 SCC 613 MOST IMPORTANTLY THE FIRST REASON WHICH HAS BEEN MENTIONED FOR DISALLOWANCE BY THE AO IS THAT THE ASSESSEE EXCEEDED 1500 SQ. FT. BUILT-UP AREA LIMIT FOR WHICH REFERENCE WAS DRAWN BY THE AO TO PARA 3.12 OF THE ASSESSMENT ORDER. 6. THROUGH WRITTEN SUBMISSION DATED 20.7.2010 IT WA S STATED THAT THE APPELLANT HAD OBTAINED POSSESSION O F THE LAND AND DOMINANT CONTROL AS IT HAD MADE PAYMENT OF RS. 1,02,08,853 (SHERIN COOPERATIVE HOUSING SOCIETY LTD.) AND RS.30,76,675(JAI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD.) TO THE 2 SOCIETIES FOR ACQUIR ING DEVELOPMENT RIGHTS. IT WAS STATED IN THE STATEMENT OF FACTS THAT IF THE APPELLANT HAD NO INTENTION TO PURCHASE LAND FROM SOCIETIES AND IT WAS ONLY A CONSTRUCTION CONTR ACTOR, AS ALLEGED BY THE ASSESSING OFFICER, IT WOULD NOT H AVE MADE SUCH HUGE PAYMENT TO SOCIETIES, EVEN BEFORE TH E CONSTRUCTION WORK OF HOUSING UNITS WERE COMPLETED A ND SHOWN AS EXPENDITURE IN PROFIT AND LOSS ACCOUNT. IT WAS STATED THAT THE APPELLANT HAD BORNE THE ENTIRE LABO UR COST, MATERIAL COST, AUDA CHARGES, ARCHITECT FEE, ELECTRI CITY CHARGES, SITE EXPENSES, INTEREST EXPENSES ETC. AND HAD SHOWN THE SALE VALUE OF UNIT AS ITS INCOME. THAT TH E APPELLANT DID NOT WORK ON FIXED REMUNERATION FROM T HE LAND OWNERS BUT AS A DEVELOPER BEARING ALL THE BUSI NESS RISKS ASSOCIATED WITH THE BUSINESS OF DEVELOPMENT O F REAL ESTATE. 7. DEDUCTION U/S.80IB (10) CAN BE AVAILED OF ONLY W HEN THE CONDITIONS STIPULATED FROM CLAUSE (A) TO CLAUSE (D) OF SECTION 80IB (10) ARE FULFILLED BY ANY APPELLANT. L ET US SEE WHETHER THESE CONDITIONS ARE FULFILLED OR NOT. CLAUSE 80 IB (10) (A) STATES THAT A DEDUCTION OF 100% OF PROFITS CAN BE TAKEN BY AN UNDERTAKING DEVELOPING A ND BUILDING HOUSING PROJECTS IN CASES WHICH HAD BEEN APPROVED BY A LOCAL AUTHORITY ON OR AFTER 1.4.2004 BUT WHICH HAVE BEEN COMPLETED WITHIN 4 YEARS FROM THE E ND ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 6 OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION STATES THAT THE DATE OF COMPLETION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WH ICH THE COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHO RITY. IN THIS CASE DEVELOPMENT PERMISSION IS DATED 11.7.2006 WHICH HAD BEEN GIVEN TO THE SECRETARY, JAI VAISHNOD EVI COOPERATIVE HOUSING SOCIETY LTD. VIBHAG-6 AND OTHER S AND BU PERMISSION IS DATED 14.5.2008 AND HAS BEEN GIVEN TO THE CHAIRMAN, JAI VASHNODEVI COOPERATIVE SOCIETY LTD., VIBHAG-6. HERE IT WOULD BE PERTINENT TO REFER TO THE OBSERVAT IONS OF THE AO IN PARA 3.6 OF THE ASSESSMENT ORDER WHEREIN HE HAS STATED THAT THE DEVELOPMENT PERMISSION WAS ONLY IN THE NAME OF VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD. VIBHAG -6. HE HAS STATED THAT NO PROOF OF PERM ISSION IN THE NAME OF SHERIN COOPERATIVE HOUSING SOCIETY L TD. WAS FURNISHED IN THE APPELLATE PROCEEDINGS WHEN ASK ED THE LD. ARS STATED THAT THE WORD USED IN THE DEVELO PMENT PERMISSION IS JAI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD. VIBHAG-6 AND OTHER. ACCORDING TO THEM THIS WORD OTHER INCLUDED SHERIN COOPERATIVE HOUSING SO CIETY LTD. IN MY OPINION THIS EXPLANATION DOES NOT SUFFIC E SPECIALLY WHEN THE ORIGINAL JAI VAISHNODEVI COOPERA TIVE HOUSING SOCIETY LTD. HAD BEEN SUB-DIVIDED INTO SEVE RAL PARTS AND IT IS WITH PART 6 THAT THE APPELLANT IS DEALING (PLEASE REFER TO THE COMMENTS IN PARA 3.3 OF THE ASSESSMENT ORDER. THERE IS PART-7 ALSO. SHERIN COOPERATIVE HOUSING SOCIETY LTD. IS AN INDEPENDENT SOCIETY THE WHEREABOUTS OF WHICH HAD NOT BEEN EXPLA INED. THE DEVELOPMENT PERMISSION IS NOT IN SHERINS NAME, AND COMMON SENSE INTERPRETATION OF THIS WORD OTHER IN THE PERMISSIONS IS THAT IT MIGHT INCLUDE THE OTHER PART S OF JAI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD. THE POINT IS SHOULD THE DEVELOPMENT AGREEMENT ENTERED WITH SHERIN COOPERATIVE HOUSING SOCIETY LTD. BE TREATED AS A VALID AGREEMENT WHEN THIS SOCIETY'S NAME DOES NOT ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 7 APPEAR NEITHER IN DEVELOPMENT PERMISSION NOR IN BU PERMISSION. 8. INTERESTINGLY BU PERMISSION DATED 14.5.2008 BEAR S SEVERAL SURVEY NUMBERS OF LAND WHICH FIND NO MENTIO N IN THE TWO DEVELOPMENT AGREEMENTS DATED 27.5.2006 ENTERED BY THE APPELLANT WITH THE TWO COOPERATIVE HOUSING -SOCIETIES FOR CONSTRUCTION OF THE RESIDENT IAL UNITS. 9. FOR INSTANCE DEVELOPMENT AGREEMENT DATED 27.5.2006 SIGNED WITH JAI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD. VIBHAQ - 6 MENTIONS IN THE SCHEDULE FOLLOWING SURVEY NUMBERS: 794/1 ADMEASURING 1152. SQ. MTRS . 957/P ADMEASURING ABOUT 4654 SQ. MTRS. AND SURVEY NO.938 ADMEASURING ABOUT 5969 SQ. MTRS. TOTALLY ADMEASURING ABOUT 11,775 SQ. MTRS. DEVELOPMENT AGREEMENT DATED 27.5.2006 SIGNED WITH SHERIN COOPERATIVE HOUSING SOCIETY LTD., VIBHAG-1 MENTIONS IN THE SCHEDULE FOLLOWING SURVEY NUMBERS (GIVEN BELOW IN THE ORDER MENTIONED IN THE SCHEDULE ): SURVEY NO.888 ADMEASURING ABOUT 5770 SQ. MTR., SURVEY NO.803/1/3 ADMEASURING ABOUT 1214 SQ. MTR. SURVEY NO. 779 ADMEASURING ABOUT 5868 SQ. MTR. SURVEY NO.817 ADMEASURING ABOUT 2929 SQ. MTR. TOTALLY ADMEASURING ABOUT 15781 SQ. MTR . MOUJE, VEJALPUR, TALUKA CITY AHMEDABAD. ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 8 IT IS FURTHER MENTIONED IN THE SAME AGREEMENT THAT SCHEDULE-1 REFERS TO SURVEY NO.937 ADMEASURING ABOUT 6586 SG. MTR. BUT PERUSAL OF DEVELOPMENT AND BU PERMISSIONS SHOW THAT NO DEVELOPMENT AGREEMENTS HAD BEEN ENTERED INT O WITH RESPECT TO CERTAIN SURVEY NUMBERS ON WHICH THE APPELLANT HAD CONSTRUCTED RESIDENTIAL UNITS AND HAS CLAIMED 80IB(10) DEDUCTION. THE POINT WILL GET CLAR IFIED IN THE FOLLOWING PARAGRAPH. 10. AS PER DEVELOPMENT PERMISSION DATED 18.7.2006 GIVEN BY AUDA TO THE SECRETARY, SHRI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD. VIBHAG - 6 AND OTH ERS DEVELOPMENT PERMISSION TO CONSTRUCT THE RESIDENTIAL UNITS WAS GIVEN FOR LAND ADMEASURING 32.550 SQ.MTRS.(THIS IS THE MEASUREMENT OF LAND GIVEN IN THE DEVELOPMENT PERMISSION COMPRISING FOLLOWING REVENUE SURVEY NUMBERS: 896, 885/1, 935, 933 AND OTHERS (NO BU PERMISSION IS FOR THIS NUMB ER 933) ANNEXURE TO THE DEVELOPMENT PERMISSION MENTIONS FOLLOWING REVENUE SURVEY NUMBERS: 896, 885/1, 935, 937 IP, (NO BU PERMISSION IS FOR THIS NUMBER 937, I T IS FOR 937 / 5) 807, 794 /1 957, 779, 938, 888 / P 817, ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 9 895, 794/2, 803 /1/ 3 937/P & OTHERS. BU PERMISSION DATED 14.5.2008 GIVEN TO CHAIRMAN, SHRI JAI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD. VIBHAG-6 MENTIONS THE FOLLOWING REVENUE SURVEY NUMBERS: 937 / 5 PAIKI, (THOUGH DEVELOPMENT PERMISSION HAD BEEN TAKEN NOT FOR 1/5 TH PART OF THIS LAND BUT FOR FULL 937) 938 794/1, 779, 896, 885 /1, 935, 807, 817, 895, 794/2 803 /1/3, AND 957 /1 . 11. THOUGH DEVELOPMENT PERMISSION SHOWS REVENUE SURVEY NUMBER 933 BUT NO BU PERMISSION HAS BEEN GIVEN WITH RESPECT TO CONSTRUCTION ON THIS 933 . DEVELOPMENT PERMISSION IS FOR 937 BUT BU PERMISSION IS FOR 1/5 TH PART OF 937 ONLY . 12. FROM PARA 8 AND 9 ABOVE IT IS CLEAR THAT REVENU E SURVEY NUMBERS OF LAND WHICH HAD BEEN ENTERED INTO BY THE APPELLANT THROUGH TWO DEVELOPMENT AGREEMENTS DO NOT MENTION FOLLOWING SURVEY NUMBERS OF LAND ON WHI CH THE APPELLANT HAD CONSTRUCTED RESIDENTIAL UNITS AND HAS CLAIMED 801B DEDUCTION: ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 10 1 THERE IS NO DEVELOPMENT AGREEMENT WITH RESP ECT TO LAND SURVEY NO, 896. 2 THERE IS NO DEVELOPMENT AGREEMENT WITH RESPE CT TO LAND SURVEY NO.885 /1. 3 THERE IS NO DEVELOPMENT AGREEMENT WITH RESPE CT TO LAND SURVEY NUMBER 935, 4 THERE IS NO DEVELOPMENT AGREEMENT WITH RESPECT TO LAND SURVEY NUMBER 807. 5 THERE IS NO DEVELOPMENT AGREEMENT WITH RESPECT TO LAND SURVEY NUMBER 895. 6 AND THERE IS NO DEVELOPMENT AGREEMENT WITH RESPECT TO LAND SURVEY NUMBER 794/2. 13. FURTHER IN SURVEY NO, 957 / P BU PERMISSION IS WITH RESPECT TO 957 / 1 , NOT 957 IP MENTIONED IN THE AG REEMENT WITH JAI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LT D. VIBHAG - 6. ALSO THERE IS NO DEVELOPMENT AGREEMENT WITH RESPECT TO LAND SURVEY NUMBER 937 / 5 PAIKI THOUGH THIS NUMBE R OCCURS IN FULL THAT IS 937 IN THE DEVELOPMENT PERMI SSION BUT ONLY 175 TH PART OF IT IS MENTIONED IN THE BU PERMISSION AS 937 / 5. 14. THUS AS PER THE DETAILS GIVEN IN PARA 12 AND 13 ABOVE THE BU PERMISSION DATED 14.5.2008 DOES NOT MATCH WI TH THE LAND SURVEY NUMBERS GIVEN IN THE TWO DEVELOPMENT AGREEMENTS DATED 27.5.2006 ENTERED BY THE APPELLANT FOR CONSTRUCTION WITH THE TWO COOPERATIVE HOUSING SOCIE TIES - JAI VAISHNODEVI VIBHAG - 6 AND SHERIN. 15. THE DEVELOPMENT PERMISSION DATED 18.7.2006 IN GUJARATEE AND ITS ENGLISH TRANSLATION PROVIDED BY THE APPELLANT IS ENCLOSED AS ANNEXURE 1 OF THIS ORDER. THE BU PERMISSION DATED 14.5.2008 IN GUJARATI AND ITS ENGL ISH ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 11 TRANSLATION PROVIDED BY THE APPELLANT IS ENCLOSED A S ANNEXURE 2 OF THIS ORDER. 16. AS PER DETAILS GIVEN FROM PARA 7 TO 15 ABOVE IN MY VIEW THE APPELLANT VIOLATES CONDITION 80IB (10)(A). IN A NUTSHELL THE POINTS ARE AS UNDER: 1 NO PROOF OF DEVELOPMENT PERMISSION OR BU PERMISSI ON .GIVEN BY THE LOCAL AUTHORITY WAS FURNISHED IN THE NAME OF SHERIN COOPERATIVE HOUSING SOCIETY - ONE OF THE TWO SOCIETIES WITH WHICH THE APPELLANT ENTERED INTO DE VELOPMENT AGREEMENTS AND CONSTRUCTED THE COMPLEX AS PER AUTHO RITY GIVEN BY THE RESPECTIVE HOUSING SOCIETY ON THE SPEC IFIC LAND SURVEY NUMBERS MENTIONED CLEARLY IN THE SCHEDU LES OF THE TWO DEVELOPMENT AGREEMENTS BOTH DATED 27.5.2006. 2 THERE IS NO BU PERMISSION FOR LAND REVENUE SURVEY NUMBERS 933 AND FOR 937 / 5 IN THE LAND IN QUESTION . 3 THE BU PERMISSION DATED 14.5.2008 DOES NOT MATCH WITH THE LAND SURVEY NUMBERS GIVEN IN THE TWO DEVELOPMENT AGREEMENTS DATED 27.5.2006 ENTERED BY T HE APPELLANT FOR CONSTRUCTION WITH THE- TWO COOPERATIV E HOUSING SOCIETIES - JAI VAISHNODEVI VIBHAG - 6 AND SHERIN. THE DEVELOPMENT AGREEMENTS DO NOT MENTION REVENUE SURVEY NUMBERS 896, 885 /1, 935, 807, 895, 794 12 BUT THE APPELLANT HAS CONSTRUCTED UNITS WITHOUT THE FUNDAMENTAL AUTHORITY. 4 THE APPELLANT DID NOT FUND THE PURCHASE OF THE SU RVEY NUMBERS 885/1, 935, 807, 895, 79412 AND CARRIED OUT CONSTRUCTION WITHOUT OWNING THE LAND, WITHOUT FUNDI NG THE COST , WITHOUT AUTHORITY FROM THE COOPERATIVE HOUSI NG SOCIETY AS THEY DO NOT FIND MENTION EVEN IN THE TWO DEVELOPMENT AGREEMENTS. (THIS POINT HAS BEEN ELABORATED FROM PARA 25 TO 28 BELOW) . 17. NOW LET US SEE WHETHER THE CONDITION STIPULATED IN CLAUSE (C) OF SECTION 80IB(10) IS FULFILLED BY THE APPELLANT. ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 12 CLAUSE (C) STATES THAT THE RESIDENTIAL UNIT SHOULD HAVE A MAXIMUM BUILT-UP AREA OF 1500 SQ.FT. THIS SECTION W AS INTRODUCED FOR THE BENEFIT OF LOWER INCOME GROUP TO FACILITATE THEM TO OWN SMALL HOUSES / FLATS WHICH T HEY COULD AFFORD. 18. THE AO HAS OBSERVED IN PARA 3.8 OF THE ASSESSME NT ORDER THAT THE ASSESSEE HAS VIOLATED THIS CONDITION - 80LB(10)(C) - BECAUSE ON 12 TH FLOOR IN BLOCK NUMBERS A, B, C & D FLAT NUMBERS 1201 IN EACH BLOCK HAD ADDITIONA L SPACE IN THE FORM OF INDEPENDENT TERRACE. THE AO NO TED THAT THE ASSESSEE HAS SOLD EXCLUSIVE TERRACE RIGHTS TO THE MEMBERS THROUGH THE SALE DEEDS. ACCORDING TO THE AO THE ADDITIONAL SPACE PROVIDED WAS ACTUALLY IN THE N ATURE OF BALCONIES FOR EXCLUSIVE USE OF THE BUYERS OF THE FL AT NUMBER 1201 IN BLOCK NUMBERS A, B, C & D. 19. FOR THE PURPOSE OF VERIFICATION THE CASE WAS RE FERRED TO THE DVO U/S.131 (1)(D) THROUGH THIS OFFICE LETTE R DATED 11.8.2010. AFTER SEVERAL REMINDERS THE DVO (SHRI A. K. SILEKAR) RESPONDED THROUGH LETTER DATED 8.10.2010, WITHOUT COMMENTING UPON THE POINT RAISED BY THE AO THOUGH A COPY OF ASSESSMENT ORDER WAS ALSO SENT TO HIM THROUGH THE AFOREMENTIONED LETTER. THEREFORE ANOTHE R LETTER DATED 12.10.2010 WAS SENT TO THE DVO ASKING THE DVO TO INFORM U/S.131(1)(D) THE INDIVIDUAL AREA OF THE PRIVATE TERRACES ATTACHED TO THE RESPECTIVE FLATS O R ANY OTHER FLATS IN THE PROJECT - SAFAL PARIVESH. THE ATTENTION OF THE DVO WAS ALSO DRAWN TOWARDS THE COMMENTS OF THE AO WITH RESPECT TO THE PRIVATE TERRACES. 20. AGAIN AFTER SEVERAL REMINDERS THE DVO RESPONDED THROUGH HIS LETTER DATED 23.11.2010 (ENCLOSED AS ANNEXURE 3 OF THIS ORDER) STATING THAT ON INSPECTION ADDITIONS WERE FOUND IN CONSTRUCTION WHICH IN HIS V IEW HAD BEEN DONE BY THE BUYERS OF THE FLAT. HE ALSO INFORM ED THAT HIS OFFICE HAD WORKED OUT AREA OF FLAT NUMBER 1201 OF BLOCKS A, B, C AND D ALONG WITH OPEN PRIVATE TERRAC ES FOR WHICH HE ENCLOSED AN ANNEXURE. ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 13 21. THE DVO LETTER DATED 23.11.2010 ALONG WITH ITS ANNEXURE WAS MADE AVAILABLE TO THE APPELLANT VIDE T HIS OFFICE LETTER DATED 23.11.2010, ALSO THE EARLIER LE TTER DATED 8.10.2010 WAS MADE AVAILABLE TO THE APPELLANT. IN RESPONSE THE ID. AR RESPONDED THROUGH LETTER DATED 30.11.2010 STATING THAT THE BUILT-UP AREA LIMIT OF 1500 SQ.FT. WAS NOT EXCEEDED BY THE APPELLANT BECAUSE TE RRACE COULD NOT BE CONSIDERED AS PART OF BUILT-UP AREA OF UNIT AS THERE IS A DIFFERENCE IN TERRACE AND BALCONY. TERRA CE IS OPEN TO SKY AS AGAINST WHICH BALCONY IS AT PRINCIPA L LEVEL OF MAIN APARTMENT AND IS COVERED ON TOP AND IS USAB LE BY OCCUPANTS. IT WAS ALSO STATED THAT OUT OF SO MANY RESIDENTIAL UNITS CONSTRUCTED THE AO FOUND BUILT-UP AREA LIMIT OF 150 0 SQ.FT. EXCEEDING ONLY OF 4 UNITS BY FICTIONALLY INC LUDING TERRACE AREA. HON'BLE ITAT MUMBAI, NAGPUR AND KOLKATA BENCH DECISIONS WERE CITED IN SUPPORT OF TH E CONTENTION THAT THE DEDUCTION TO THE ENTIRE PROJECT SHOULD NOT BE DENIED AND IT SHOULD BE ALLOWED WITH RESPECT TO THE BALANCE QUALIFYING UNITS. WITH RESPE CT TO ADDITIONS NOTED BY THE DVO IN THE FLATS IT WAS STAT ED THAT THE CONSTRUCTION WAS MADE AS PER THE APPROVED PLANS AND ONCE THE UNITS WERE SOLD THE APPELLANT IS NOT RESPONSIBLE. IT WAS ALSO STATED THAT THE ADDITIONS / ALTERATIONS WERE MADE BY THE BUYERS OF THE UNITS ON LY WHICH WAS CONFIRMED BY THEM TO THE DVO. 22. AFTER GETTING VERIFICATIONS MADE BY THE DVO OF THE PRIVATE TERRACES ATTACHED TO THE FLATS IN THE PROJE CT IT IS CLEAR THAT FLAT NUMBERS 1201 IN VARIOUS BLOCKS (A, B, C AND D) EXCEEDED 1500 SQ.FT. BUILT-UP AREA LIMIT. TH E MEASUREMENTS IN SQUARE FEET LIFTED FROM THE DVO'S ANNEXURE ENCLOSED AS ANNEXURE 3 OF THIS ORDER ARE REPRODUCED BELOW: 'AREA STATAMENT OF PRIVATE TERRACES ATTACHED TO THE FUVT NO. 1201 ('SAFAL PARIVESH' AHMEDABAD) ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 14 BUILT-UP AREA OF FLAT NO. 1201 IN SQ.FT. AS PER MEASUREMENT S. NO FLAT NO. BIO CK FLOOR LEVEL FLAT AREA ADDITIONAL EXTENDED PRIVATE OPEN TERRACE TOTAL NO. AREA (SURROUNDED BY 3 FEET HIGH PARAPET WALL AND 6 INCH THICK) 1 1201 I A I I TWELFTH 1453.11 326.59 1115.31 2895.01 SQ.FT 2 1201 B TWELFTH 1453.11 326.59 1115.31 2895.01 SQ.FT. 3 1201 C TWELFTH 1453.11 141.67 1300.23 2895.01 SQ.FT 4 1201 D TWELFTH 1453.11 326.59 1115.31 2895.01SQ.FT SD/- (ER.A.K. SILEKAR) DISTRICT VALUATION OFFICER INCOME TAX DEPARTMENT, AHMEDABAD.' 23. ALSO IN MY OPINION THE DEFINITION OF BUILT-UP A REA GIVEN IN THE SECTION 80IB(10) INCLUDES 'BALCONIES AND PROJECTIONS' IN THE BUILT-UP AREA AND THEREFORE A PRIVATE TERRACE WHICH IS AT THE FLOOR LEVEL OF THE APARTMEN T AND HAS BEEN SOLD BY THE APPELLANT TO THE INDIVIDUAL BUYER AND IS IN HIS EXCLUSIVE POSSESSION WAS RIGHTLY INCLUDED IN TH E BUILT- UP AREA OF THE FLATS. IT IS ALSO IMPORTANT TO REMEM BER THAT THERE HAD BEEN ADDITIONAL CONSTRUCTION IN THE FLATS AS OBVIOUS FROM THE TABLE ABOVE, AND IT IS COMMON KNOWLEDGE THAT SUCH ADDITIONAL CONSTRUCTION COULD N OT HAVE TAKEN PLACE WITHOUT THE EXECUTION OF THE SAME BY THE CONCERNED BUILDER. THEREFORE IT IS CLEAR THAT T HE APPELLANT VIOLATED CONDITION (C) OF SECTION 80IB(10 ). ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 15 24. THE RELIANCE OF THE APPELLANT ON HON'BLE ITAT B ENCH 'G' MUMBAI DECISION IN THE CASE OF SHETH DEVELOPERS PVT. LTD. (33 SOT 277) (MUM) (2009) DOES NOT HELP THE APPELLANT BECAUSE AS PER PARA 18 OF THIS DECISION I T HAS BEEN HELD THAT BALCONY WOULD NOT FORM PART OF THE B UILT-UP AREA PRIOR TO 1.4.2005, WHICH IS NOT APPLICABLE IN THE PRESENT CASE. 25. WITH RESPECT TO RELIANCE OF THE APPELLANT ON HO N'BLE ITAT DECISIONS OF FOR THE PLEA THAT IT SHOULD BE AL LOWED PRO-RATA DEDUCTION ON THE QUALIFYING UNITS THE PLEA IS NOT TENABLE BECAUSE THE APPELLANT HAS BEEN FOUND HAVING CONSTRUCTED UNITS ON THE LAND SURVEY NUMBERS - WITHOUT OWNING THE LAND OR FUNDING ITS PURCHASE AND WITHOUT ANY DEVELOPMENT AGREEMENTS ENTERED BY IT WITH THE TWO COOPERATIVE HOUSING SOCIETIES. EVEN AS PER STATEMEN T OF FACTS (PAGE 6) FILED WITH THE APPEAL THE FUNDS WERE PROVIDED BY THE APPELLANT TO THE TWO SOCIETIES FOR ONLY FOLLOWING SURVEY NUMBERS: SURVEY NO. OF LANDS AMOUNT RS. SHERIN 803/1/3 779 888 1,02,08,853 817 937 ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 16 JVC 938 957 /P 794/1 30,76,675 PAGE 5 OF THE STATEMENT OF FACTS STATES THAT THE APPELLANT'S PARTNERS FUNDED THE TWO SOCIETIES FOR PURCHASE OF ADDITIONAL LAND AS UNDER: SURVEY NO. OF LANDS AMOUNT RS. JVC 938 24,67,640 957 IP 6,76,210 SHERIN 803/1/3 9,61,890 779 9,61,890 817 10,16,890 937 40.69.520 26. IT IS CLEAR THAT THE APPELLANT DID NOT FUND THE PURCHASE OF CERTAIN LAND REVENUE SURVEY NUMBERS ON WHICH IT CARRIED OUT CONSTRUCTION WHICH ARE: LAND REVENUE SURVEY NUMBER 885 /1, RS NUMBER 935, ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 17 RS NUMBER 807, RS NUMBER 895 AND RS NUMBER 79412. 27. AS THE APPELLANT DID NOT FUND THE PURCHASE OF THE AFOREMENTIONED REVENUE SURVEY NUMBERS IT D ID NOT PRACTICALLY PURCHASE THE AND IS THUS FOUND VIOLATING THE TESTS LAID DOWN BY HON'BLE ITAT BENCH 'A 1 DECISION DATED 7.11.2008 IN THE CASE OF M/S. SHAKTI CORPORATION, B ARODA IN ITA NO.1503/AHD/2008 IN AY 2005-06 WHEREIN HON'BLE ITAT HELD THAT THE DEVELOPMENT AGREEMENT SHOULD BE REFERRED TO AND WHERE IT IS FOUND THAT THE ASSESSEE HAD PRACTICALLY PURCHASED THE LAND AND ACQUIRED DOMINAN T CONTROL THE DEDUCTION SHOULD BE ALLOWED. THIS IS OF COURSE SUBJECT TO THE FULFILLMENT OF THE CONDITIONS STIPUL ATED IN THE STATUTE IN SECTION 80IB(10). IN THIS CASE THE APPEL LANT IS NOT FOUND FULFILLING THE CONDITION STIPULATED IN CL AUSE (A) OF SECTION 80IB(10) AS IT CARRIED OUT CONSTRUCTION ON LAND WITH RESPECT TO WHICH IT HAD NOT ENTERED INTO ANY AGREEM ENT WITH THE TWO HOUSING COOPERATIVE SOCIETIES. THE LAND REVENUE SURVEY NUMBERS ARE : 957/1 93715 PAIKI, 896 885/1 935 807 895 794 12 IT WOULD BE NOT OUT OF PLACE TO MENTION THAT THE TH EN DVO VIDE HIS LETTER DATED 13.9.2010 REQUIRED THE APPELL ANT TO MARK PLOT MEASUREMENTS ON THE LAY OUT PLAN ON WHICH THE RESIDENTIAL UNITS HAD BEEN CONSTRUCTED, BUT NO SUCH PLAN WAS GIVEN TO THE DVO OR TO THIS OFFICE WHICH SHOWED CLEAR CUT SURVEY NUMBER FOR THE VARIOUS BLOCKS OR UNITS CONSTRUCTED IN THE PROJECT. ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 18 THE APPELLANT IS ALSO FOUND VIOLATING THE CONDITION STIPULATED IN CLAUSE (C) OF SECTION 80IB(10) WITH R ESPECT TO 1500 SQ.FT. BUILT-UP AREA LIMIT AS OBVIOUS FROM THE VERIFICATIONS MADE BY THE DVO LISTED IN PARA 15 ABO VE. 28. THE ADDITION MADE BY THE AO DENYING THE DEDUCTI ON U/S.80IB(10) OF RS. 9,73,23,693 TO THE APPELLANT IS UPHELD AS IT HAS CONSTRUCTED FLATS ON LAND BEARING REVENUE SURVEY NUMBERS WHICH WERE NOT OWNED BY IT NEITHER FUNDED N OR AUTHORIZED FOR CONSTRUCTION THROUGH ANY DEVELOPMENT AGREEMENT WITH THE TWO COOPERATIVE HOUSING SOCIETIE S. NOT JUST THIS THE APPELLANT DID NOT HAVE ANY BU PER MISSION FOR LAND REVENUE SURVEY NUMBER 933 ON WHICH IT HAD CARRIED OUT CONSTRUCTION AND CLAIMED DEDUCTION AND IS THUS FOUND VIOLATING THE CONDITION STIPULATED IN CL AUSE(A) OF SECTION 80IB(10) AS CLARIFIED IN PARA 16 ABOVE. ALS O BECAUSE CERTAIN FLATS AS MENTIONED IN PARA 22 ABOVE HAVE BEEN FOUND EXCEEDING 1500 SQ.FT. BUILT-UP AREA LIMI T FOR WHICH THE APPELLANT IS FOUND VIOLATING THE CONDITIO N STIPULATED IN CLAUSE (C) OF SECTION 80IB(10). 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE H AS SUBMITTED THAT THE ASSESSEE HAS ENTERED INTO DEVELOPMENT AGRE EMENTS WITH JAI VAISHNODEVI COOPERATIVE HOUSING SOCIETY LTD. (IN SH ORT JVCHSL) PB- 80 TO 91 ON DATED 27-5-2006 AND ALSO WITH SHERIN CO OPERATIVE HOUSING SOCIETY LTD. (IN SHORT SCHSL) ON DATED 27- 5-2006 PB 93 TO 104 OF THE PAPER BOOK FOR DEVELOPMENT AND CONSTRUCT ION OF RESIDENTIAL PROJECT KNOWN AS SAFAL PARIVESH AND UNDER SUCH AGRE EMENTS, THE ASSESSEE HAS PURCHASED SUBSTANTIVE DEVELOPMENT RIGH TS WHICH INCLUDES ALL OTHER RIGHTS FOR RS.30,76,675/- AND RS .1,02,08,853/- RESPECTIVELY AND THE SAME IS NOTHING BUT LAND AND O THER COSTS INCURRED BY THE SOCIETIES AT THE BEHEST OF THE FIRM AND THE SAME HAS ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 19 BEEN DEBITED IN THE PROFIT & LOSS ACCOUNT AS EXPEND ITURE WHICH IS SHOWN IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSE E PB 141. THE ASSESSEE HAS ALSO ENTERED INTO AGREEMENT TO SELL TH E LAND WITH THE SOCIETIES AND SUCH FACTS WERE ALSO STATED TO THE AO AT PARA 2.3 OF THE ASSESSEES SUBMISSION ON RECORD AT PAGE 18 OF THE A SSESSMENT ORDER, AS WELL AS IN THE STATEMENT OF FACTS FILED B EFORE THE TRIBUNAL AT PAGE 5. THESE DOCUMENTS ARE ALREADY ON RECORD OF T HE AO. THE DEVELOPMENT AGREEMENTS ENTERED BY THE ASSESSEE WERE OVER AND ABOVE THE AGREEMENT TO SELL TO ACQUIRE THE AFORESAI D FULL RIGHTS AND DOMAIN OVER THE LAND. THE ASSESSEE FILED COPY OF TH E CONFIRMATION ACCOUNT OF THE SOCIETIES FROM THEIR BOOKS OF ACCOUN TS AS WELL AS CONFIRMATION BY THEM ALONG WITH COPY OF THE BANK ST ATEMENT OF THE ASSESSEE FOR PAYMENTS MADE FOR DEVELOPMENT RIGHTS R EFERRED TO ABOVE AND THE BANK STATEMENTS OF THE SOCIETIES FOR RECEIPT OF SUCH AMOUNT VIDE PB 160 TO 173. THEREFORE, THE ASSESSEE HAS TAKEN OVER ALL THE RISKS AND REWARDS ASSOCIATED WITH FOR DEVEL OPMENT OF THE HOUSING PROJECT AND PURCHASE OF SUBSTANTIVE DEVELOP MENT RIGHTS INCLUDING LAND COST. THE LEARNED COUNSEL FOR THE AS SESSEE REFERRED TO THE CLAUSES FROM THE DEVELOPMENT AGREEMENTS ENTERED WITH THE SOCIETIES ACCORDING TO WHICH THE LAND IS DESCRIBED IN THE SCHEDULE AND THE ASSESSEE HAD UNDERTAKEN THE ENTIRE DEVELOPMENT OF THE HOUSING PROJECT FOR THE PURPOSE OF WHICH IT WAS TO APPOINT ARCHITECT AND CONTRACTORS FOR EXECUTION OF THE WORK AND TO MAKE C ONTRACTS WITH THEM, TO OBTAIN PERMISSION FROM THE COMPETENT AUTHO RITIES AND ALL THE COST INCLUDING LABOUR AND MATERIALS HAVE TO BE INCU RRED BY THE ASSESSEE. THE ASSESSEE THROUGH THE SAID DEVELOPMENT AGREEMENTS WAS TO PROVIDE FUNDS TO THE SOCIETIES FOR PURCHASE OF THE DEVELOPED ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 20 LAND. THE ASSESSEE IS DECLARED AS DEVELOPER IN THE AGREEMENTS WHICH WILL HAVE RIGHTS TO DEVELOP THE BUILDING AND SELL THE SAME. ALL THE DEVELOPMENTS IN THE BUILDING AND SALE RIGHTS AR E VESTED UPON THE ASSESSEE. ALL COSTS AND RISKS WOULD BE BORNE BY THE ASSESSEE WITHOUT INTERFERENCE FROM THE SOCIETIES. THE ASSESSEE AS A DEVELOPER CAN SELL THE RESIDENTIAL UNITS AND SHALL BE RESPONSIBLE FOR THE PROFIT/GAINS/SURPLUS OR LOSS/DAMAGE/DEFICIT ETC. TH ROUGH THE SAID AGREEMENTS THE SOCIETIES SHALL NOT FURTHER CREATE A NY MORTGAGE OR CHARGE TO ANY OTHER PERSON. THE ASSESSEE AS A DEVEL OPER SHALL GET THE PERMISSION FOR CONSTRUCTION AND THE SOCIETIES S HALL JOIN THE DEVELOPER FOR SUCH APPLICATIONS AND APPROVAL SHALL BE OBTAINED FROM AUDA. THE ASSESSEE WOULD BE ENTITLED AS A DEVELOPER OF THE SALE PROCEEDS ON SALE OF THE RESIDENTIAL UNITS IN THE PR OPERTY IN QUESTION. THE SCHEDULE OF THE LAND BEARING THE SURVEY NUMBERS HAVE BEEN MENTIONED AT THE END OF THE DEVELOPMENT AGREEMENTS. THUS, THE ASSESSEE HAS INCURRED ALL THE EXPENDITURE FOR COMMO N FACILITIES AND COMMON DEVELOPMENT LIKE LIGHT, WATER SEWERAGE, BORE WELL ROADS ETC. THE ASSESSEE HAS ALSO RECEIVED ON ITS RIGHTS THE SA LE PROCEEDS FROM THE PERSONS TO WHOM HOUSING UNITS ARE SOLD. COPIES OF THE BUILDING PLAN SANCTIONED BY AUDA ARE FILED AT PB-121 TO 136 THROUGH WHICH SANCTION IS GRANTED TO CONSTRUCT 324 RESIDENTIAL UN ITS. THE SAME IS DATED 18-7-2006. HE HAS SUBMITTED THAT IN THE PERMI SSION FOR DEVELOPMENT BY AUDA THE NAME OF ONE OF THE SOCIETIE S AND OTHERS ALONG WITH THE NAME OF THE ASSESSEE IS MENTIONED AN D ADDRESS OF THE SOCIETY IS ALSO MENTIONED. HE HAS SUBMITTED THAT TH E WORD OTHERS ALONG WITH THE NAME OF JVCHSL ALONG WITH ADDRESS OF THE ASSESSEE IS MENTIONED, THEREFORE, PERMISSION IS GRANTED TO D EVELOP 324 ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 21 RESIDENTIAL UNITS. PB -131 TO 136 IS THE ANNEXURE A ND DETAILS OF THE FLATS TO BE CONSTRUCTED. PB 105 IS THE CERTIFICAT E FOR USE IN THE NAME OF JVCHSL BY AUDA FOR THE SAME AREA AND FOR THE SAM E CONSTRUCTION OF 324 FLATS. HE HAS SUBMITTED THAT SI NCE THE AREA AND RESIDENTIAL FLATS CONSTRUCTED BY THE ASSESSEE ARE T HE SAME AND TALLY WITH THE SANCTION PLAN, THEREFORE, EVEN IF NAME OF THE ASSESSEE IS NOT MENTIONED IN THE CERTIFICATE OF USE, IT WOULD BE IR RELEVANT AND THE AO CANNOT DENY DEDUCTION U/S 80 IB (10) OF THE IT ACT. HE HAS FURTHER SUBMITTED THAT SINCE IN THE PERMISSION FOR DEVELOPM ENT PB 121 PERMISSION IS GIVEN IN THE NAME OF PARENT SOCIETIES AND THE NAME OF THE ASSESSEE IS ALSO MENTIONED AND THE INCOME FROM SALE OF 324 FLATS HAS BEEN OFFERED IN THE RETURN OF INCOME, THEREFORE , NON-MENTION OF NAME IN THE CERTIFICATE OF USE WOULD NOT BE RELEVAN T. HE HAS FURTHER SUBMITTED THAT PRICE TO BE CHARGED FROM THE CUSTOME R IS SOLELY DETERMINED BY THE ASSESSEE AND ALL SALE CONSIDERATI ONS HAVE BEEN RECEIVED BY THE ASSESSEE WHICH HAS BEEN SHOWN AS IN COME IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN THE PRESENT C ASE THE ASSESSEE DEVELOPER IS ALONE RESPONSIBLE FOR PROFITS/GAINS/SU RPLUS/LOSS IF ANY ARISING OUT OF THE SAID HOUSING PROJECT. THE ASSESS EE HAS ACQUIRED DOMINANT RIGHT OVER THE LAND AND DEVELOPING HOUSING PROJECT TAKING ALL RISKS AND THE LAND HAS BEEN PRACTICALLY PURCHASED B Y THE ASSESSEE AS PER THE DECISION IN THE CASE OF SHAKTI CORPORATION AND BECAME OWNER OF THE LAND AND WAS NOT MERELY WORK CONTRACTOR. HE HAS SUBMITTED THAT THE FACTS OF THE ASSESSEE ARE SQUARELY COVERED BY THE RECENT DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF M/S . AMALTAS ASSOCIATES VS ITO IN ITA NO.2401/AHD/2010 DATED 21- 01-2011. COPY OF THE SAME IS FILED AT PB-307. HE HAS FURTHER SUBM ITTED THAT BUILT-UP ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 22 AREA OF THE RESIDENTIAL UNITS AS PER THE 4 SALE DEE DS PB- 181 TO 269 AT PAGE 196, 218, 239 AND 262 OF THE PAPER BOOK IS BEL OW 1500 SQ. FT. WHICH IS SUPPORTED BY POSSESSION-CUM-DECLARATION LE TTERS OF DEVELOPERS FILED AT PB-295 TO 298. WITH REGARD TO A DDITIONAL CONSTRUCTION, HE HAS SUBMITTED THAT ENTIRE CONSTRUC TION OF THE UNITS REFERRED TO ARE MADE BY THE DEVELOPER AS PER THE AP PROVED PLAN AND ONLY ON THE SAME BASIS, IT HAS OBTAINED BUILDING US E PERMISSION FROM AUDA. IT IS VERY CLEAR THAT IT WAS BELOW 1500 SQ. F T. AFTER GIVING POSSESSION, THE FLAT OCCUPANTS MIGHT HAVE MADE ADDI TIONS WHICH ARE ALSO CONFIRMED BY THE DVO IN HIS REPORT PB-293 AN D FOR THAT MATTER THE ASSESSEE IS NOT RESPONSIBLE. EVEN, THE OWNERS O F THE FLATS HAVE GIVEN CONFIRMATION WITH REGARD TO THE FACT THAT ADD ITIONAL CONSTRUCTIONS HAVE BEEN MADE BY THEM AFTER RECEIVING POSSESSION F ROM THE ASSESSEE COPIES OF WHICH ARE FILED AT PB -300 TO 30 6. THEREFORE, ADDITIONAL CONSTRUCTION CARRIED ON BY THE OCCUPANTS CANNOT BE TAKEN AGAINST THE ASSESSEE. EVEN THE AREA OF OPEN TERRACE CANNOT BE INCLUDED IN BUILT-UP AREA WHICH IS ALSO DECIDED BY THE ITAT AHMEDABAD BENCH IN THE CASE OF M/S. AMALTAS ASSOCIA TES (SUPRA). HE HAS SUBMITTED THAT THE NAME OF THE ASSESSEE IS M ENTIONED AS SELLER WITH THE SOCIETIES IN THE SALE DEEDS COPIES OF WHICH ARE FILED AT PB-181 ONWARDS IN WHICH COMPLETE DETAILS AND HISTOR Y OF DEVELOPMENT MADE BY THE ASSESSEE HAVE BEEN MENTIONE D AND IN THE SALE DEEDS ALSO THE AREA OF RESIDENTIAL UNITS HAS B EEN MENTIONED AND THAT PRICE HAS BEEN MADE TO THE ASSESSEE AS A DEVEL OPER. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMIT TED THAT SINCE THE RESIDENTIAL UNITS HAVE BEEN CONSTRUCTED AS PER BUIL DING PLAN SANCTIONED AND THE BUILT-UP AREA WAS LESS THAN 150 0 SQ. FT. AND ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 23 POSSESSION IS GIVEN TO THE PURCHASERS ON RECEIPT OF THE ENTIRE SALE CONSIDERATION, THEREAFTER THE ASSESSEE IS LEFT WITH NO RIGHT IN THE PROPERTY. HE HAS SUBMITTED THAT THE WORD OTHERS I N THE SANCTIONED PLAN IS RELEVANT. PB-274 IS THE BROCHURE ISSUED BY THE ASSESSEE FOR DEVELOPMENT OF THE RESIDENTIAL SCHEME IN ITS NAME. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT EVE N WITH REGARD TO ISSUE OF DISCREPANCY OF SURVEY NUMBERS AS MENTIONED IN THE APPROVAL AND BU PERMISSION ISSUED BY THE AUDA AND DEVELOPMEN T AGREEMENTS, HE HAS SUBMITTED THAT AUDA VIDE ITS APP ROVAL DATED 18- 7-2006 PB-121 HAS GRANTED BUILDING PERMISSION FOR 3 24 RESIDENTIAL UNITS AND ON THE SAME BASIS THE ASSESSEE HAS DEVELO PED HOUSING PROJECT FOR 324 RESIDENTIAL UNITS. IT WAS FURTHER S UBMITTED THAT ON COMPLETION OF HOUSING PROJECT, THE ASSESSEE HAS REC EIVED BUILDING USE PERMISSION ON 14-5-2008 (PB-105) FOR 324 RESIDE NTIAL UNITS DEVELOPED BY THE ASSESSEE. IN THE BUILDING USE PERM ISSION, IT HAS BEEN CATEGORICALLY MENTIONED THAT THE DEVELOPMENT W ORK IS AS PER THE TERMS AND CONDITIONS STIPULATED IN THE DEVELOPMENT PERMISSION. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS DEVELOP ED HOUSING PROJECT ON SURVEY NOS. 794/1, 957/P, 938 OF JVCHSL AND ON SURVEY NOS. 779, 937/P, 888/P, 817 AND 803/1/3 OF SCHSL AN D OTHER SURVEY NUMBERS MENTIONED IN THE DEVELOPMENT PERMISSION ISS UED BY AUDA ARE NOT BELONGING TO THE SOCIETIES REFERRED TO ABOV E BUT BELONG TO OTHER SOCIETIES TO WHICH THE ASSESSEE HAS NOT CONCERN AND EVEN NO DEVELOPMENT AGREEMENT OR AGREEMENT TO SELL WAS ENTE RED WITH THE OTHER SOCIETIES. HE HAS CLARIFIED THAT INSTEAD OF SURVEY NO.937/P INADVERTENTLY IT IS WRITTEN AS 933. A DETAILED SYNO PSIS WITH REGARD TO THE DISCREPANCY IN THE SURVEY NUMBERS IS FILED THRO UGH WHICH IT IS ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 24 CLARIFIED THAT THE DEVELOPMENT AGREEMENTS CONTAIN T HE SCHEDULE OF PROPERTY/SURVEY NUMBERS (PB-91 AND PB-103A) WHICH M ATCH WITH THE ORIGINAL SANCTION PLAN (PB-118). HE HAS FURTHER SUB MITTED THAT ORIGINAL DEVELOPMENT PERMISSION WAS RECEIVED BY THE ASSESSEE FOR VARIOUS SURVEY NUMBERS OF WHICH TOTAL LAND MEASURED TO 3255 0 SQ. M., HOWEVER, THE ASSESSEE HAS NOT ENTERED INTO DEVELOPM ENT AGREEMENT IN RESPECT OF ALL THE REVENUE SURVEY NUMBERS. HE HA S SUBMITTED THAT ORIGINAL DEVELOPMENT PERMISSION RECEIVED FOR VARIOU S SURVEY NUMBERS RECEIVED JOINTLY BY THE ASSESSEE FIRM ALONG WITH CE RTAIN OTHER PARTIES AND OUT OF TOTAL LAND OF 32550 SQ. M., THE ASSESSEE INTENDED TO DEVELOP ONLY LAND MEASURING 17938 SQ. M. (11704.22 SQ. M. PLUS 6233.78 SQ. M) OF THE LAND ONLY AND REST OF THE LAN D BELONGED TO SOME OTHER PARTIES. THE DETAILS OF LAND DEVELOPED BY THE ASSESSEE AND OTHERS IS ALSO MENTIONED IN THE WRITTEN SYNOPSIS CL ARIFYING THE POINT RAISED BY THE LEARNED CIT(A). HE HAS, THEREFORE SUB MITTED THAT THERE IS NO DISCREPANCY AS IS NOTED BY THE LEARNED CIT(A) . HE HAS SUBMITTED THAT SINCE THE ASSESSEE CLAIMED DEDUCTION OF THE HOUSING PROJECT CONSTRUCTED ON THE LAND MEASURING 17938 SQ. M. WHICH IS ALSO MENTIONED IN THE SALE DEEDS, THEREFORE, THERE IS NO DISCREPANCY AT ALL. HE HAS, THEREFORE, SUBMITTED THAT SINCE THE ASSESSE E SATISFIED ALL THE CONDITIONS LAID DOWN U/S 80 IB (10) OF THE IT ACT, THEREFORE, THE ISSUE IS SQUARELY COVERED BY THE DECISION IN THE CASE OF M/S. AMALTAS ASSOCIATES (SUPRA). HE HAS FURTHER SUBMITTED THAT S INCE THE ASSESSEE CLAIMED DEDUCTION WHICH IS BENEFICIAL PROVISION PRO VIDED UNDER THE IT ACT FOR DEVELOPMENT OF HOUSING UNITS, THEREFORE, LI BERAL APPROACH HAS TO BE ADOPTED WHILE CONSIDERING THE ABOVE ISSUE. HE HAS RELIED UPON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE C ASE OF BAJAJ ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 25 TEMPO LTD. VS CIT, 196 ITR 188 AND CIT VS SOUTH ARCOT DIST. CO- OPERATIVE MARKETING SOCIETY LTD., 176 ITR 117. HE HAS ALSO SUBMITTED THAT IN ALTERNATE, PRO-RATA DEDUCTION MAY BE ALLOWED TO THE ASSESSEE AND RELIED UPON THE ORDER OF THE ITAT, NAG PUR BENCH IN THE CASE OF ITO VS. AIR DEVELOPERS, 122 ITD 125 (NAGPUR ). 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS NOT PURCHASED THE SAME LAND AS PER ORDER OF THE LEARNED CIT(A), T HEREFORE, NO RISK IS CONVEYED TO THE ASSESSEE AND DECISION IN THE CASE O F SHAKTI CORPORATION (SUPRA) WOULD APPLY IN THE CASE OF THE ASSESSEE. HE HAS SUBMITTED THAT SINCE DEVELOPED AREA EXCEEDED THE PR ESCRIBED LIMIT, THEREFORE, BUILT UP AREA WAS MORE THAN THE LIMIT PR ESCRIBED U/S 80 IB (10) OF THE IT ACT. THEREFORE, THE ASSESSEE WOULD N OT BE ENTITLED FOR DEDUCTION EVEN ON PRO RATA BASIS. HE HAS SUBMITTED THAT LIBERAL INTERPRETATION OF THE PROVISIONS OF LAW CAN BE APPL IED WHERE THERE IS A DOUBT ABOUT THE LANGUAGE OF THE STATUTE AND RELIED UPON THE DECISION IN THE CASE OF PANDIAN CHEMICALS LTD. VS CIT 262 IT R 27. HE HAS ALSO RELIED UPON THE ORDER OF THE ITAT CHENNAI BENC H IN THE CASE OF ACIT VS VISWAS PROMOTERS (P) LTD. 126 ITD 263. THE LEARNED DR FURTHER SUBMITTED THAT SINCE BUILT UP AREA OF 4 FLA TS WAS EXTENDED BEYOND 1500 SQ. FT., THEREFORE, THE ASSESSEE WAS RI GHTLY DENIED EXEMPTION U/S 80 IB (10) OF THE IT ACT. THE LEARNED DR SUBMITTED THAT THE DISCREPANCY IN THE SURVEY NUMBER WHICH IS EXPLA INED NOW MAY BE REFERRED TO THE AO FOR FURTHER VERIFICATION. ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 26 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. WE FIND THAT ALL THE ISSUES NO W RAISED IN THE PRESENT APPEAL ARE ALREADY TAKEN INTO CONSIDERATION AND DECIDED BY ITAT AHMEDABAD BENCH IN THE CASE OF M/S. AMALTAS ASSOCIA TES VS ITO (SUPRA) IN WHICH EARLIER DECISIONS OF THIS BENCH IN THE CASES OF M/S. RADHE DEVELOPERS AND SHAKTI CORPORATION (SUPRA) DEC IDED BY ITAT AHMEDABAD BENCH HAD ALREADY BEEN TAKEN INTO CONSIDE RATION. COPY OF THE SAME IS FILED AT PB-307. THE FINDINGS OF THE TRIBUNAL IN THE CASE OF M/S. AMALTAS ASSOCIATES (SUPRA) FROM PARA 6 TO P ARA 12 ARE REPRODUCED AS UNDER: 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. SECTION 80IB(10) READS AS UND ER: 80-IB. DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERTAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS.--(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB-SECTIONS 3(3) TO (11), (11A) AND (11B) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. XXXX XXXX XXXX XXXX (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 27 PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, 2008 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT . OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVAN T TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008 ; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING 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 COMPLETION 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 WH ICH HAS A MINIMUM AREA OF ONE ACRE : ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 28 PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF ; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMB AI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE ; AND (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT. OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHEVER IS LESS. XXXXXX EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB- SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). 7. THE DEFINITION OF BUILT-UP AREA IS PROVIDED IN SECTION 80IB(14) (A) OF THE ACT, WHICH MEANS THE I NNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR L EVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREAS ED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. BEFORE PROCEEDING FURTHER, IT WOULD BE RELEVANT TO MENTION THE FACTS CONSIDERED IN THE CASE OF RADHE DEVELOPER S AND SHAKTI CORPORATION (SUPRA) DECIDED BY THE ITAT, ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 29 AHMEDABAD BENCHES. IN THE CASE OF RADHE DEVELOPERS (SUPRA), THE ASSESSEE CLAIMED DEDUCTION UNDER SECTI ON 80IB(10). HOWEVER, THE AO DISALLOWED THE CLAIM ON THE GROUND THAT (I) THE ASSESSEE WAS NOT THE OWNER OF T HE LAND, AND (II) EACH APPROVAL WAS ALSO NOT IN THE NA ME OF THE ASSESSEE AND IT HAD ACTED MERELY AS AN AGENT/CONTRACTOR FOR CONSTRUCTION OF RESIDENTIAL HO USE. THE CLAIM WAS DENIED TO THE ASSESSEE. THE TRIBUNA L CONSIDERED THE AVERMENTS AND MATERIAL ON RECORD AND HELD AS UNDER: 27. A BARE READING OF THESE PROVISIONS OF S. 80- 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 PROJECT IS APPROVED BY THE LOCAL AUTHORITY; (III) THE DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT HAS COMMENCED ON OR AFTER 1ST OCT., 1998; (IV) THE HOUSING PROJECT IS ON A SIZE OF A PLOT OF LAND WHIC H 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 AN D 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 FOR CLAIMING THE DEDUCTION ON PROFITS OF T HE HOUSING PROJECT. 28. THE CONTENTION OF THE REVENUE AUTHORITIES THAT TO CLAIM DEDUCTION UNDER S. 80-IB(L0), THERE IS A CONDITION PRECEDENT 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 APPEARING IN THE PROVISIONS OF THE SECTION EXTRACTED ABOVE. A PLAIN READING OF SUB-S. (10) OF S. 80-IB REVEALS AND MAKES IT EVIDENT THAT THERE MUST BE AN UNDERTAKING DEVELOPING AND BUILDING A HOUSING PROJECT AS APPROVED BY A LOCAL ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 30 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 AS 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 LANDOWNER AND THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT, ARE TWO DIFFERENT ENTITIES WOULD NOT MAKE ANY DIFFERENCE. THE DEDUCTION WOULD BE ELIGIBLE TO THE PERSON WHO IS DEVELOPING AND BUILDING HOUSING PROJECT AND NOT TO THE MERE OWNER THEREOF. 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 ABOVE, IT IS THE UNDERTAKING THAT DEVELOPS OR BUILDS THE HOUSING PROJECT THAT IS ENTITLED TO DEDUCTION IRRESPECTIVE OF THE FACT WHET HER THAT IT IS THE OWNER OR NOT OR WHETHER IT IS THE CONTRACTOR THEREOF. THE REQUIREMENT FOR CLAIMING 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 WHICH A TRIPARTITE AGREEMENT HAS BEEN ENTERED INTO FOR DEVELOPMENT AND BUILDING HOUSING PROJECT; OR BE THE ASSESSEE A CONTRACTOR FOR DEVELOPING AND BUILDING HOUSING PROJECT OR AN OWNER OF THE LAND. THE WORD DEVELOPMENT MEANS THE REALIZATION OF POTENTIALITIES OF LAND OR TERRITORY BY BUILDING OR ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 31 MINING. ACCORDINGLY, IT CAN BE SAFELY SAID THAT A PERSON WHO UNDERTAKES TO DEVELOP REAL ESTATE BY DEVELOPING AND CONSTRUCTING A HOUSING PROJECT IS AN ELIGIBLE UNDERTAKING; DEVELOPING AND BUILDING OF HOUSING PROJECTS WITHIN THE MEANING OF S. 80-IB(10) OF THE ACT. IN THE PRESENT CASE IN HAND, THE LANDOWNER HAS NOT MADE ANY CONSCIOUS ATTEMPT TO DEVELOP THE PROPERTY EXCEPT ENSURING THEIR RIGHTS A S LANDOWNER SO THAT THE 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 ASSESS EE WHO IS DEVELOPING THE PROPERTY. THROWING ITSELF INT O THE BUSINESS OF DEVELOPMENT AND BUILDING OF HOUSING PROJECTS BY TAKING ALL RISKS ASSOCIATED WIT H THE BUSINESS BY ENGAGING ARCHITECTS, STRUCTURAL CONSULTANTS, DESIGNING AND PLANNING OF THE HOUSING SCHEMES, PAYMENT OF DEVELOPMENT CHARGES, OBTAINING NECESSARY PERMISSIONS, 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 BEEN OBTAINED BY THE ASSESSEE FIRM THROUGH ITS PARTNERS WHO ARE HOLDING POWER OF ATTORNEY OF THE RESPECTIVE LANDOWNERS. IT IS A FACT THAT THE ASSESSEE IS A DEVELOPER AND NOT A CONTRACTOR AS HELD BY THE LOWER AUTHORITIES. 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, OP TED FOR ALL BUSINESS RISKS ASSOCIATED WITH THE BUSINESS OF DEVELOPMENT OF REAL ESTATE INCLUDING DEVELOPING AND BUILDING OF HOUSING PROJECTS. AS PER THE PROVISIONS OF S. 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 SUPPLY OF GOODS OR ARTICLES OF ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 32 MANUFACTURE, BY THE EMPLOYMENT OF BUILDING WORKERS OR WHO SUPPLIES BUILDING WORKERS FOR ANY WORK OF THE ESTABLISHMENT; AND INCLUDES A SUB- CONTRACTOR. IN THOSE CIRCUMSTANCES, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER S. 80-IB(10) AS IT HAD DEVELOPED AND BUILT THE HOUSING PROJECT; IT HAD STARTED CONSTRUCTION AFTER 1 DAY OF APRIL 1998; THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE AND THE MAXIMUM BUILT-UP AREA OF THE RESIDENTIAL UNITS IS NOT MORE THAN 1,500 SQ. FT . IT MAY ALSO BE BORN IN MIND THAT DEDUCTION IS NOT EXCLUSIVELY TO AN ASSESSEE BUT TO AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT, BE IT DEVELOPED BY A CONTRACTOR OR BY AN OWNER. THE ASSESSEE, IN THE INSTANT 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 2001-02 FOR AN AMOUNT OF RS. 56 LACS, AND TAKEN THE POSSESSION OF THE LAND FOR DEVELOPMENT AND BUILDING THE HOUSING PROJECT AND SATISFY THAT CONDITION AS WELL OF BEING THE OWNER O F THE LAND IN VIEW OF PROVISIONS OF S. 2(47)(V). WHEN THE ASSESSEE HAS TAKEN ON THE POSSESSION OF IMMOVABLE PROPERTY OR RETAINED IT IN PART PERFORMANCE OF A CONTRACT OF A NATURE REFERRED TO I N S. 53A OF THE TRANSFER OF PROPERTY ACT, 1882 IT AMOUNTS TO TRANSFER UNDER S. 2(47)(V). IN THE INSTANT CASE THERE WAS, DEFINITELY, A DOMINI ON OF THE DEVELOPER OVER THE LAND TO THE EXCLUSION OF OTHERS INASMUCH AS POSSESSION OF THE LAND IS GIVEN TO THE DEVELOPER BY THE LAND OWNERS TO CARRY OUT TH E CONSTRUCTION ACTIVITY OF THE HOUSING PROJECT. THE ASSESSEE DEVELOPER HAS COMPLIED WITH ALL THE CONDITIONS AS PROVIDED UNDER S. 80-IB(10) OF THE AC T, SO AS TO CLAIM DEDUCTION. THE ASSESSEE HAS ALSO ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 33 PASSED ON THE PART CONSIDERATION FOR ACQUIRING THE LAND THROUGH AN AGREEMENT TO SALE AND IN VIEW OF THE PROVISIONS OF S. 2(47) R/W S. 53A OF THE TRANSF ER OF PROPERTY ACT, 1882, THE ASSESSEE HAS COMPLETELY PERFORMED HIS PART OF THE CONTRACT AND DEVELOPED THE HOUSING PROJECT AND TRANSFERRED THE FLATS/TENEMENTS TO THE BUYERS IN VIEW OF AGREEMENT TO SALE AS WELL AS DEVELOPMENT AGREEMENT. IT SHOWS THAT THE ASSESSEE WAS IN FULL POSSESSION OF THE LAND FOR THE DEVELOPMENT OF HOUSING PROJECT AND HAS CARRIED OUT ALL THE ACTIVITIES OF A COMPLETE HOUSING PROJECT BY TAKING ALL RISKS ASSOCIATED WITH THIS BUSINESS. THE ASSESSEE IS ENGAGED IN COMPLETE INFRASTRUCTURE INCLUDING ENGAGING ARCHITECTS, STRUCTURAL CONSULTANTS, DESIGNING AND PLANNING OF T HE HOUSING SCHEMES, PAYMENT OF DEVELOPMENT CHARGES, OBTAINING NECESSARY PERMISSIONS, ON BEHALF OF THE LANDOWNERS, GOT THE PLANS APPROVED, HIRING OF MACHINERY AND EQUIPMENTS, HIRING ENGINEERS, APPOINTING CONTRACTORS, ETC. AS DISCUSSED ABOVE AND IN VIEW OF THE CASE LAW OF THE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. (SUPRA), WHEREIN IT HAS BEEN CATEGORICALLY OBSERVED AS REGARDS TO OWNERSHIP THAT ANYONE IN POSSESSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINION OVER THE PROPERTY AS WOULD ENABLE OTHERS BEING EXCLUDED THEREFROM AND HAVING THE RIGHT TO USE AND OCCUPY THE PROPERTY AND/OR TO ENJO Y ITS USUFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDINGS THOUGH A FORMAL DEED OF TITLE MIGHT N OT HAVE BEEN SALE AND DEVELOPMENT AGREEMENT , THE ASSESSEE HAS ACQUIRED DOMINION OVER THE LAND TO THE EXCLUSION OF OTHERS AND HE HAS COMPLETED THE PROJECT ON TERMS AND CONDITIONS LAID DOWN UNDER S. 80-IB(10) OF THE ACT, TO CLAIM DEDUCTION ON THE PRO FIT DERIVED FROM CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT. THERE IS NO EXPLICIT CONDITION ENUMERATED IN S. 80-IB(10) OF THE ACT AS REGARDS TO REQUIREMENT OF OWNERSHIP FOR THE CLAIM O F ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 34 DEDUCTION. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LEGAL PROPOSITION LAID DOWN BY THE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. (SUPRA), WE HOLD THAT THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION ON THE PROFITS DERIVED FROM CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT. 8. IN THE CASE OF SHAKTI CORPORATION (SUPRA), THE ASSESSEE CLAIMED THE DEDUCTION UNDER SECTION 80IB(1 0). THE AO DISALLOWED THE ASSESSEES CLAIM ON THE GROUN D THAT IT WAS NOT THE OWNER OF THE PROPERTY; THAT THE PERMISSION WAS NOT GRANTED IN THE ASSESSEES NAME A ND THE APPROVAL FROM THE MUNICIPAL CORPORATION WAS IN THE NAME OF THE ORIGINAL LAND OWNER AND NOT IN THE NAME OF THE ASSESSEE. THE TRIBUNAL CONSIDERED THE AVERMENT AND THE MATERIAL ON RECORD AND ALLOWED THE CLAIM OF THE ASSESSEE AND IT WAS HELD AS UNDER: IN THE INSTANT CASE, THERE WAS NO AGREEMENT TO SHARE THE CONSTRUCTED AREA. THIS AGREEMENT RELATES ONLY TO PURCHASE PART OF THE LAND FROM THE LANDOWNE R BY THE ASSESSEE FOR A PREDETERMINED CONSIDERATION. ALL THE RESPONSIBILITIES FOR CARRYING OUT THE CONSTRUCTION, PERMISSION, NA, NOC, LEGAL PROCEEDINGS AND THE RESULTS OF THE DEVELOPMENT LIES WITH THE ASSESSEE. THE FIRST PARTY IS ONLY TO CO- OPERATE THE ASSESSEE IN CARRYING OUT THE DEVELOPMENT AND ALSO TO EXECUTE THE DOCUMENTS WHENEVER IT IS REQUIRED BY THE DEVELOPER. THE ASSESSEE HAS ALSO HANDED OVER THE PHYSICAL POSSESSION TO THE BUILDER FOR CARRYING OUT THE DEVELOPMENT OF THE PROJECT. THE LANDOWNER DOES NOT HAVE ANY RIGHT, INTEREST, TITLE IN THE DEVELOPMENT SO CARRIED OUT EXCEPT TO THE EXTENT HE HAS TO RECEIVE THE CONSIDERATION FROM THE ASSESSEE. THE ASSESSEE IS ENTITLED TO PUBLICIZE THE PROJECT, PRINT BROCHUR ES, ETC., AND CAN SELL THE PROJECT AT ITS OWN RIGHT. AL L THE EXPENSES HAVE TO BE INCURRED BY THE ASSESSEE FOR CARRYING OUT THE CONSTRUCTION, ETC. THE LANDOWNER ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 35 HAS TO DO NOTHING EXCEPT TO THE EXTENT HE HAS TO RECEIVE CONSIDERATION FROM THE ASSESSEE. HIS MOTIVE IS NOT TO DEVELOP, CONSTRUCT OR CARRY ON THE BUSINE SS AS A BUILDER OR DEVELOPER. PRACTICALLY NO RIGHT IN THE LAND REMAINS WITH THE OWNER. FOR WHOLE PRACTICAL PURPOSE THE ASSESSEE ACQUIRED DOMINANT RIGHT OVER THE LAND AND HE CAN DEAL WITH THE LAND IN THE MANNER IN WHICH HE MAY LIKE. THUS, THE TERMS AND CONDITIONS ENTERED INTO, IN OUR OPINION, GIVE ALL DOMINANT CONTROL AND RIGHTS OVER THE LAND TO THE ASSESSEE. THE ASSESSEE, IN OUR OPINION, WILL BE CONSTRUCTING THE BUILDING AT ITS OWN COST AND WILL REMAIN THE OWNER OF THE BUILDING AT ITS OWN WITHOUT ANY INTERFERENCE FROM THE LANDOWNER. THE LANDOWNER DOES NOT HAVE ANY RIGHT TO SHARE THE BUILDINGS. THE AGREEMENT DOES NOT ENVISAGE THAT THE ASSESSEE WILL BE WORKING AS A CONTRACTOR OR AGENT ON BEHALF OF THE LANDOWNER. THE AGREEMENT CANNOT BE REGARDED TO BE THE JOINT VENTURE OR COLLABORATION AGREEMENT. IT IS, IN OUR OPINION, THE AGREEMENT FOR THE SALE OF THE LAND FOR A DETERMINED CONSIDERATION UNDER WHICH THE ASSESSEE IS ENTITLED TO DEVELOP THE PROJECT ON THE SAID LAND AT ITS OWN COST IN THE MANNER IN WHICH HE MAY DECIDE. THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS IN THE CASE OF RADHE DEVELOPER S & ORS. (SUPRA) AND, ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE HAS ACQUIRED THE DOMINANT OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED THEREIN. WE MAY MENTION HERE THAT, IN OUR OPINION, THE DECISION IN THE CASE OF RADHE DEVELOPERS & ORS. (SUPRA) WILL NOT APPLY IN A CASE WHERE THE ASSESSEE HAS ENTERED INTO THE AGREEMENT FOR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE HOUSING PROJECT ON BEHALF OF THE LANDOWNER. THE AGREEMENT ENTERED INTO IN THAT CASE WILL NOT ENTITLE THE DEVELOPER TO HAVE TH E DOMINANT CONTROL OVER THE PROJECT AND ALL THE RISKS ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 36 INVOLVED THEREIN WILL VEST WITH THE LANDOWNER ONLY. THE INTEREST OF THE DEVELOPER WILL BE RESTRICTED ON LY FOR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RENDERING THE SERVICES. THE DECISION IN THE CASE OF RADHE DEVELOPERS & ORS. (SUPRA) HAS NOT DEALT WITH SUCH SITUATION. THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF RADHE DEVELOPERS & ORS. (SUPRA) CANNOT BE APPLIED UNIVERSALLY WITHOUT LOOKING INTO THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE DEVELOPER ALONG WITH THE LANDOWNER. IN THE CASE OF THE ASSESSEE, SINCE IT HAD FILED COPY OF THE DEVELOPMENT AGREEMENT AND CRUX OF THE AGREEMENT WAS THAT THE ASSESSEE HAD PURCHASED THE LAND AND HAD DEVELOPED THE HOUSING PROJECT AT ITS OWN, THE ASSESSEE WOULD BE ENTITLED TO THE DEDUCTION UNDER SECTION 80IB(10). 9. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE TERMS OF THE AGREEMENT FOR HOUSING PROJECT (PB 62). ACCORDING TO WHICH, THE RESPONSIBILITY OF THE ASSES SEE HAVE BEEN ANALYZED IN SUCH MANNER THAT THE PLANNING , SANCTION OF PLAN, WORK OF CONSTRUCTION, DEVELOPMENT OF THE PROPERTY, LABOUR ENGAGEMENT SHALL HAVE TO BE DONE B Y THE ASSESSEE IN RESPECT OF THE DEVELOPMENT OF THE PROPE RTY IN QUESTION. IT IS FURTHER PROVIDED THAT THE ASSESSEE SHALL PROVIDE PARTIES/MEMBERS TO WHOM SALE IS TO BE MADE BY ENROLLING THE MEMBERS. THE ASSESSEE SHALL ACCEPT A LL THE PAYMENTS FROM THE MEMBERS/BUYERS. THE LEARNED COUNSEL FOR THE ASSESSEE FILED DETAILS OF THE SALE PROCEEDS RECEIVED FROM THE PARTIES OF 110 UNITS IN THE ASSES SMENT YEAR 2005-2006 AND 2006-2007. IT WOULD SUPPORT THE CASE OF THE ASSESSEE THAT THE ASSESSEE RECEIVED ENT IRE SALE CONSIDERATION FROM THE MEMBERS/BUYERS AFTER COMPLETION OF THE DEVELOPMENT AND BUILDING HOUSING PROJECT. AGREEMENT FURTHER PROVIDES THAT THE ASSES SEE SHALL PROVIDE PAYMENT FOR CONSTRUCTION, ENGAGE ARCH ITECT, ENGINEERS/SITE SUPERVISORS AND SHALL ALSO OBTAIN AL L PERMISSION FROM THE AUDA. THE ASSESSEE SHALL MAKE ALL FINANCIAL ARRANGEMENTS FOR THE PURPOSE OF IMPLEMENT ING HOUSING PROJECT AND SHALL EXECUTE ALL DEEDS IN THIS BEHALF. ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 37 THE AGREEMENT FURTHER PROVIDES THAT THE ASSESSEE SH ALL RECOMMEND THE NAMES OF THE MEMBERS FOR ALLOTMENT AN D LAND SHALL REMAIN OPEN FOR CONSTRUCTION FOR THE ASS ESSEE AND THE ASSESSEE SHALL HAVE ALL RIGHTS FOR USING OF ALL THE TERRACE AND OPEN SPACE IN ANY MANNER. THE AGREEMEN T FURTHER PROVIDES THAT AFTER IMPLEMENTATION AND COMP LETION OF THE PROJECT, WHATEVER PROFIT/SURPLUS OR LOSS/DEF ICIT TO THE ASSESSEE OUT OF THE PROJECT WILL REST WITH THE ASSE SSEE AND THE ASSESSEE SHALL BE RESPONSIBLE AND LIABLE FO R ALL THE LOSSES SUFFERED FOR THE COMPLETION OF THE PROJE CT AND THE ASSESSEE SHALL COMPENSATE IN THIS BEHALF. THE AGREEMENT FURTHER PROVIDES THAT THE ASSESSEE SHALL INCUR ALL EXPENSES FOR COMMON FACILITY LIKE, LIGHTS, WATE R, SEWERAGE, LIFT, BORE-WELL ETC. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF THE AGREEMENT TO SELL D ATED 12-8-2003 THROUGH WHICH THE ASSESSEE PURCHASED THE PROPERTY IN QUESTION THROUGH AGREEMENT TO SELL FOR CONSIDERATION OF RS.3 LAKHS AND ALSO FILED COPY OF THE LEDGER ACCOUNT AND BANKING STATEMENT OF THE ASSESSE E AS WELL AS OF THE SOCIETY TO SHOW THAT THE AMOUNT OF S ALE CONSIDERATION OF RS.3 LAKHS IS TRANSFERRED IN A SUM OF RS.2.50 LAKHS AND RS.50,000/- FROM THE ASSESSEE AND WAS RECEIVED BY THE SOCIETY IN THEIR ACCOUNT. IT W OULD THEREFORE PROVE THAT THE ASSESSEE MADE THE PAYMENT OF SALE CONSIDERATION OF THE PROPERTY IN QUESTION THRO UGH BANKING CHANNEL. THE DETAILS OF THE AMOUNT RECEIVE D AS A SALE PROCEEDS FROM THE MEMBERS/PROPOSED BUYER IS AL SO FILED TO SUPPORT THE CONTENTION OF THE ASSESSEE THA T THE ASSESSEE RECEIVED ENTIRE SALE PROCEEDS IN ITS BOOKS OF ACCOUNTS WITH ALL RIGHTS TO USE PROFIT AND LOSS. P B-130 IS THE REPLY FILED BEFORE THE LEARNED CIT(A) TO EXPLAI N THE ABOVE POSITION THAT THE ASSESSEE PAID SALE CONSIDER ATION TO THE SOCIETY. THE LEARNED COUNSEL FOR THE ASSESS EE ALSO REFERRED TO THE QUERIES RAISED BY THE CIT(A) IN THI S REGARD WHICH IS PROPERLY EXPLAINED BY THE ASSESSEE. THE A BOVE FACTS WOULD PROVE THAT THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL WITH THE SOCIETY FOR CONSIDERATIO N. ALL THE RESPONSIBILITIES FOR CARRYING OUT THE CONSTRUCT ION, PERMISSION AND DEVELOPMENT OF THE PROJECT LIE WITH THE ASSESSEE. THE REAL OWNER OF THE LAND WAS ONLY TO C O- ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 38 OPERATE WITH THE ASSESSEE IN CARRYING OUT THE DEVELOPMENT AND ALSO TO EXECUTE NECESSARY DOCUMENTS WHENEVER REQUIRED BY THE ASSESSEE AS A DEVELOPER. THE REAL OWNER HAS ALSO HANDED OVER THE PHYSICAL POSSES SION TO THE SOCIETY AS A BUILDER FOR CARRYING OUT THE DEVELOPMENT OF THE PROJECT. THE LAND OWNER DID NO T LEFT WITH ANY RIGHT, INTEREST OR TITLE IN DEVELOPMENT WH ICH WAS CARRIED OUT BY THE ASSESSEE. THE ASSESSEE WAS ENTI TLED TO ENROLL THE MEMBERS FOR SELLING THE UNITS WITHIN ITS OWN RIGHTS. ALL THE EXPENSES HAVE TO BE INCURRED BY TH E ASSESSEE FOR CARRYING OUT THE CONSTRUCTION ETC. T HE MOTIVE OF THE REAL OWNER WAS NOT TO DEVELOP, CONSTR UCT OR CARRYING OUT ANY BUSINESS AS A BUILDER OR DEVELOPER AND PRACTICALLY NO RIGHT IN THE HANDS OF THE REAL OWNER IN THIS BEHALF. WITH ALL INTENTS AND PURPOSES, THE ASSESSE E HAS ACQUIRED DOMINANT RIGHT OVER THE LAND AND THE ASSES SEE COULD DEAL WITH THE LAND IN THE MANNER IN WHICH THE ASSESSEE MIGHT HAVE LIKED. THE TERMS AND CONDITIONS ENTERED INTO BETWEEN THE ASSESSEE AND THE SOCIETY A S PER THE DEVELOPMENT AGREEMENT AND AGREEMENT TO SELL PROVIDED ALL DOMINANT CONTROL AND RIGHTS OVER THE L AND TO THE ASSESSEE AND THE ASSESSEE WOULD BE DEVELOPING A ND CONSTRUCTING THE HOUSING PROJECT AT ITS OWN COST AN D WOULD REMAIN OWNER OF THE BUILDING WITHOUT ANY INTERFEREN CE FROM THE LAND OWNER. THE AGREEMENT IN QUESTION DID NOT PROVIDE THAT THE ASSESSEE WOULD BE WORKING AS A CONTRACTOR OR AGENT ON BEHALF OF THE LAND OWNER. T HE AGREEMENT IN QUESTION WOULD NOT BE REGARDED TO BE T HE JOINT-VENTURE OR COLLABORATION AGREEMENT. IT WAS T HE AGREEMENT FOR SALE OF THE LAND FOR DETERMINED CONSIDERATION UNDER WHICH THE ASSESSEE WAS ENTITLED TO DEVELOP THE HOUSING PROJECT ON THE SAID LAND IN ITS OWN COST AND IN THE MANNER IN WHICH THE ASSESSEE MIGHT HAVE DECIDED. THE AUTHORITIES BELOW REJECTED THE CLAIM OF THE ASSESSEE, BECAUSE, ORIGINALLY, THE ASSESSEE WAS AUTHORIZED TO CONSTRUCT 94 RESIDENTIAL UNITS, BUT A S AGAINST THE AGREEMENT, LATER ON, THE ASSESSEE CONSTRUCTED 1 10 UNITS. HOWEVER, WE FIND THAT THERE IS BAR TO CONST RUCT MORE FLATS OR UNITS BY THE ASSESSEE IN THE GIVEN FA CTS OF THE CASE. IT IS A MATTER BETWEEN THE LAND OWNER AN D THE ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 39 ASSESSEE. ONCE SANCTION PLAN IS APPROVED BY THE MUNICIPAL AUTHORITIES ON THE PAPERS SUBMITTED BY TH E REAL OWNER, IT COULD BE DEEMED APPROVAL OF CONSTRUCTION OF HOUSING FLATS IN FAVOUR OF THE ASSESSEE, MORE SO, W HEN THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL WHOL E OF THE PROPERTY. SO THE OBJECTION OF THE AUTHORITIES BELOW THAT THE ASSESSEE CONSTRUCTED MORE FACTS IS NOT SUSTAINABLE IN LAW. THE ABOVE FACTS, IF CONSIDERED IN LIGHT OF DECISION OF THE ITAT, AHMEDABAD BENCHES, IN THE CASE OF RADHE DEVELOPERS AND THE SHAKTI CORPORATION, WE ARE OF THE VIEW THAT THE ISSUE IS NOW COVERED BY THE AB OVE DECISION OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE, BECAUSE, THE ASSESSEE HAS ACQUIRED DOMINION RIGHT O VER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISK INVOLVED THEREIN. THE CRUX OF THE MATTER WOULD BE THAT THE ASSESSEE HAS PURCHASED THE LAND AND HAS DEVELOPED T HE HOUSING PROJECT AT ITS OWN COST, THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE WILL BE ENTITLED FOR DEDUCTI ON UNDER SECTION 80IB(10) OF THE ACT. 10. THE ASSESSEE FILED DETAILS OF BUILT UP AREA OF ALL 110 UNITS OF THE RESIDENTIAL FLATS AT PAGE NO.52 AND 53 OF THE PB TO SHOW THAT THE BUILT UP AREA WAS LESS THAN 150 0 SQ.FEETS. HOWEVER, THE DVO REPORTED IN HIS REPORT (PB- 46) THAT CONSIDERING THE OPEN TERRACE IN FRONT OF P ENT- HOUSE ROOM AT 6TH FLOOR WHICH IS ANALOGOUS TO BALCONY/VERANDAH, THEN BUILT-UP AREA IN THIS MANNER WILL MEASURE MORE THAN 2500 SQ.FEET TO 2600 SQ.FEET APPROXIMATELY. IT IS THEREFORE A CASE SET UP AGAIN ST THE ASSESSEE THAT THE OPEN TERRACE IS ANALOGOUS TO BALCONY/VERANDAH AND IF IT IS INCLUDED IN THE DEFIN ITION OF BUILT-UP AREA, THEN IT WOULD EXCEED THE PRESCRIBED LIMIT. THE DEFINITION OF BUILT-UP AREA MEANS INNER MEASURE MENT OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL INCLUDIN G THE PROJECTIONS AND BALCONIES AS INCREASED BY THE THICK NESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. THE LEARNED COUNSEL FOR THE ASSESSEE PROVIDED FROM DIFFERENT DICTIONARI ES THE DEFINITION OF BALCONY WHICH READS AS UNDER: ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 40 1. (ARCH.) A PLATFORM PROJECTING FROM THE WALL OF A BUILDING, USUALLY RESTING ON BRACKETS OR CONSOLES, AND INCLOSED BY A PARAPET; AS A BALCONY IN FRONT OF A WINDOW. ALSO, A PROJECTING GALLERY IN PLACES OF AMUSEMENTS; AS, THE BALCONY IN A THEATER. [1913 WEBESTER] 2. 1): AN UPPER FLOOR PROJECTING FROM THE REAR OVER THE MAIN FLOOR IN AN AUDITORIUM 2): A PLOTFORM PROJECTING FROM THE WALL OF A BUILDI NG AND SURROUNDED BY A BALUSTRADE OR RAILING OR PARAPET. SOURCE : WORD NET (R) 2.0 3. 1(ARCH.) A PLATFORM PROJECTING FROM THE WALL OF A BUILDING, USUALLY RESTING ON BRACKETS OR CONSOLES , AND INCLOSED BY A PARAPET; AS A BALCONY IN FRONT OF A WINDOW. ALSO, A PROJECTING GALLERY IN PLACES OF AMUSEMENTS; AS, THE BALCONY IN A THEATER. SOURCES: WEBSTERS REVISED UNABRIDGED DICTIONARY (1913). 11. WHEN THE ABOVE MEANING OF BALCONY IS TAKEN IN TO CONSIDERATION WITH THE DEFINITION OF BUILT-UP AREA AS PROVIDED IN THE ACT, IT IS CLEAR THAT FINDING OF TH E AUTHORITIES BELOW ARE NOT SUSTAINABLE IN LAW. IT IS AN ADMITTE D FACT THAT THE OPEN TERRACE IN FRONT OF PENT-HOUSE WAS CONSIDERED AS BALCONY/VERANDAH. THE OPEN TERRACE I S NOT COVERED AND IS OPEN TO SKY AND WOULD NOT BE PART OF THE INNER MEASUREMENT OF THE RESIDENTIAL FLOOR AT ANY F LOOR LEVEL. THE DEFINITION OF BUILT-UP AREA IS INCLUS IVE OF BALCONY WHICH IS NOT OPEN TERRACE. THE DVO HAS CONSIDERED THE OPEN TERRACE AS ANALOGOUS TO BALCONY/VERANDAH WITHOUT ANY BASIS. THEREFORE, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING T HE CLAIM OF THE ASSESSEE BY TAKING THE OPEN TERRACE AS BALCONY/VERANDAH. THEREFORE, THE ASSESSEE HAS COMP LIED ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 41 WITH ALL THE REQUIREMENTS OF SECTION 80IB (10) OF T HE ACT IN THIS REGARD. MOREOVER, THE ITAT, NAGPUR BENCH IN T HE CASE OF AIR DEVELOPERS (SUPRA) HAS HELD AS UNDER: IN VIEW OF THE DECISION OF THE KOLKATA BENCH OF TH E TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. V. DY. CIT (IT APPEAL NO. 1595 (KOL) OF 2005, DATED 24-3-2006], WHICH WAS SQUARELY APPLICABLE TO THE INSTANT CASE, IT WAS TO BE HELD THAT IF THE ASSESSEE HAD DEVELOPED A HOUSING PROJECT WHEREIN THE MAJORITY OF THE RESIDENTIAL UNI TS HAD A BUILT-UP AREA OF LESS THAN 1500 SQ. FT., I.E. , THE LIMIT PRESCRIBED BY SECTION 80-IB(10) AND ONLY A FE W RESIDENTIAL TRAITS WERE EXCEEDING THE BUILT-UP AREA OF 1500 SQ. FT., THERE WOULD BE NO JUSTIFICATION TO DISALLOW THE ENTIRE DEDUCTION UNDER SECTION 80- IB(10). IT WOULD BE /AIR AND REASONABLE TO ALLOW TH E DEDUCTION ON A PROPORTIONATE BASIS, I.E. ON THE PRO FIT DERIVED FROM THE CONSTRUCTION OF THE RESIDENTIAL UN IT WHICH HAD A BUILT-UP AREA OF LESS THAN 12500 SQ. FT ., I.E. THE LIMIT PRESCRIBED UNDER SECTION 80IB(10). IN VIEW OF THE ABOVE, THE AO WAS TO BE DIRECTED THAT I F IT WAS FOUND THAT THE BUILT-UP AREA OF SOME OF THE RESIDENTIAL UNITS WAS EXCEEDING 1500 SQ.FT., HE WOULD ALLOW THE PROPORTIONATE DEDUCTION UNDER SECTION 80-IB(10). ACCORDINGLY, THE APPEAL OF THE REVENUE WAS TO BE DISMISSED AND CROSS-OBJECTION OF THE ASSESSEE WAS DEEMED TO BE PARTLY ALLOWED. THEREFORE, IN THE LIGHT OF THE DECISION OF THE ITAT , NAGPUR BENCH, THE AUTHORITIES BELOW SHOULD NOT HAVE REJECT ED THE CLAIM OF THE ASSESSEE AT LEAST ON ALTERNATE CONTENT ION THAT THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION UNDER SECTION 80IB(10) ON PRO-RATA BASIS. NO OTHER POINT WAS CONSIDERED AGAINST THE ASSESSEE FOR REFUSING RELIEF UNDER SECTION 80IB(10) BY THE AUTHORITIES BELOW. SINCE WE HAVE HELD ABOVE THAT THE OPEN TERRACE IS NOT PART OF BALCONY/VARANDH THEREFORE ACCORDING TO THE SUBMISSI ONS OF THE ASSESSEE, THE BUILT UP AREA OF THE ASSESSEE WAS WITHIN THE PRESCRIBED LIMIT. THEREFORE, THERE IS N O NEED TO ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 42 GIVE FURTHER FINDING WITH REGARD TO ALTERNATE CLAIM OF THE ASSESSEE. CONSIDERING THE FACTS OF THE CASE, IN THE LIGHT OF THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT THE AS SESSEE FULFILLED THE CONDITIONS AND REQUIREMENT OF THE SEC TION 80IB(10) OF THE ACT, THEREFORE, THE CLAIM OF THE AS SESSEE FOR DEDUCTION SHOULD NOT HAVE BEEN DENIED BY THE AUTHORITIES BELOW. WE ACCORDINGLY, SET ASIDE THE O RDERS OF THE AUTHORITIES BELOW AND DIRECT THE AO TO GRANT DE DUCTION TO THE ASSESSEE UNDER SECTION 80IB(10) OF THE ACT A S CLAIMED BY THE ASSESSEE. 12. IN RESULT, THE ASSESSEES APPEAL IS ALLOWED. 7. WE HAVE EXAMINED THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE DECISION IN THE CASE OF M/S. AMALTAS ASSOCIATES (SUPRA) AND FIND THAT THE ASSESSEE HAS SATISFIED ALL THE REQUIREMENT S OF SECTION 80 IB (10) OF THE IT ACT IN THE MATTER. THE LEARNED COUNS EL FOR THE ASSESSEE REFERRED TO THE TERMS OF THE DEVELOPMENT AGREEMENTS EXTENSIVELY DURING THE COURSE OF THE ARGUMENTS FOR THE HOUSING PROJECT PB -80 TO 104 WITH BOTH THE SOCIETIES FOR DEVELOPMENT AND CON STRUCTION OF RESIDENTIAL HOUSING PROJECT AND IT PROVIDES THAT TH E ASSESSEE HAS PURCHASED ALL SUBSTANTIVE DEVELOPMENT RIGHTS WHICH INCLUDES ALL OTHER RIGHTS FOR CONSIDERATION OF RS.30,76,675/- AND RS.1 ,02,08,853/-. THE SAME IS ALSO DEBITED IN THE PROFIT & LOSS ACCOUNT O F THE ASSESSEE. THE SALE CONSIDERATION IS NOT DISPUTED AND THE CONFIRMA TION OF THE SOCIETIES FROM THEIR ACCOUNTS, COPIES OF THEIR BANK ACCOUNT AND COPY OF THE BANK ACCOUNT OF THE ASSESSEE AND LEDGER ACCO UNTS FROM THE ACCOUNTS OF THE ASSESSEE HAVE BEEN FILED ON RECORD. IT IS ALSO CLAIMED THAT THE ASSESSEE HAS ALSO ENTERED INTO AGREEMENT T O SELL THE LAND WITH THE SOCIETIES ON 23-5-2006 WHICH IS MENTIONED IN THE SUBMISSION OF THE ASSESSEE REPRODUCED IN THE ASSESSMENT ORDER AS WELL AS IN THE ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 43 STATEMENT OF FACTS FILED BEFORE THE TRIBUNAL. THE D EVELOPMENT AGREEMENTS ENTERED INTO BY THE ASSESSEE WAS OVER AN D ABOVE THE AGREEMENT TO SELL TO ACQUIRE THE AFORESAID 4 RIGHTS AND DOMAIN OVER THE LAND IN QUESTION. ACCORDING TO THE DEVELOPMENT AGREEMENTS IT WAS THE RESPONSIBILITY OF THE ASSESSEE FOR PLANNING, SA NCTION OF THE BUILDING PLAN, WORK OF CONSTRUCTION, DEVELOPMENT OF THE HOUSING PROJECTS ALONG WITH ALL EXPENDITURE TO BE INCURRED BY THE ASSESSEE FOR DEVELOPMENT OF THE PROPERTY IN QUESTION. THE ASSESS EE IS ALSO ENTITLED TO RECEIVE THE SALE CONSIDERATION AND SHAL L ACCEPT ALL THE PAYMENTS FROM THE BUYERS. THE DETAILS OF THE SAME A RE FILED ON RECORD TO SHOW THAT EVEN IN THE SALE DEEDS THE NAME OF THE ASSESSEE IS MENTIONED ALONG WITH HISTORY AS TO HOW THE PROPERTY HAS BEEN DEVELOPED BY THE ASSESSEE AS A DEVELOPER AND THAT T HE ENTIRE SALE CONSIDERATION IS RECEIVED BY THE ASSESSEE. THE LEAR NED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT AUDA HAS GRANTED P ERMISSION TO CONSTRUCT 324 RESIDENTIAL UNITS IN 65310.22 SQ. M. OF LAND AND IN THE PERMISSION FOR DEVELOPMENT THE NAME OF ONE OF THE S OCIETIES AND OTHERS AND SAFAL ENGINEERING ASSOCIATES, 4 TH FLOOR SHARTHIK ANNEXE, NR. FUN REPUBLIC SCHOOL, AHMEDABAD IS ALSO MENTIONE D. THE ADDRESS MENTIONED IN THE PERMISSION FOR DEVELOPMENT IS OF THE ASSESSEE AND THE WORD OTHER IS ALSO MENTIONED WHI CH IS NOT APPRECIATED BY THE AUTHORITIES BELOW. THE BUILDING USE CERTIFICATE IS ISSUED IN THE NAME OF ONE OF THE SOCIETIES AS PER T HE TERMS OF THE PERMISSION FOR DEVELOPMENT FOR THE SAME AREA AND FO R THE SAME NUMBER OF RESIDENTIAL UNITS. WHEN THE PERMISSION FO R DEVELOPMENT AND BUILDING USE CERTIFICATES ARE CONSIDERED IN THE LIGHT OF THE DEVELOPMENT AGREEMENTS, IT WOULD CLARIFY THAT THE P ROPERTY NUMBERS ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 44 ARE SAME AS HAS BEEN MENTIONED BY AUDA AND THAT THE RE IS NO OBJECTION FROM THE SIDE OF THE SOCIETIES. THEREFORE , IT IS CLEAR THAT THE BUILDING PLANS HAVE BEEN SANCTIONED IN RESPECT OF T HE LAND ACQUIRED BY THE ASSESSEE THROUGH THE AGREEMENT TO SELL AND T HE DEVELOPMENT AGREEMENTS IN QUESTION. THE DETAILS ON RECORD SUPPO RTS THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAS UNDERTAKEN THE E NTIRE DEVELOPMENT OF THE HOUSING PROJECT FOR WHICH THE PL ANS WERE APPROVED AND PERMISSION TO USE WAS OBTAINED IN RESP ECT OF THE SAME PROPERTY IN QUESTION, THE ASSESSEE INCURRED ALL THE EXPENDITURE FOR DEVELOPMENT OF THE HOUSING PROJECT AND RECEIVED THE ENTIRE SALE CONSIDERATION FROM THE BUYERS. IT WOULD, THEREFORE, PROVE THAT THE ASSESSEE UNDERTAKEN TO DEVELOP THE BUILDING HOUSING PROJECT IN QUESTION. THESE FACTS WOULD SHOW AND PROVE THAT THE ASSESSEE MADE THE PAYMENTS OF SALE CONSIDERATION OF THE PROPERTY IN QUESTION AND THE DETAILS OF THE SALE PROCEEDS RECEIVED FROM THE BUYERS HAVE ALSO BEEN MENTIONED IN THE TOTAL SALE PROCEEDS IN THE BO OKS OF ACCOUNTS OF THE ASSESSEE. THE FACTS OF THE CASE AND EVIDENCES O N RECORD WOULD PROVE THAT THE ASSESSEE ENTERED INTO DEVELOPMENT AG REEMENTS AND AGREEMENT TO SELL WITH THE SOCIETIES FOR CONSIDERAT ION. ALL THE RESPONSIBILITIES FOR CARRYING OUT CONSTRUCTION, PER MISSION AND DEVELOPMENT OF THE PROJECT LIE WITH THE ASSESSEE. T HE REAL OWNER OF THE LAND I.E. SOCIETIES WAS ONLY TO CO-OPERATE WITH THE ASSESSEE IN CARRYING OUT THE DEVELOPMENT AND TO EXECUTE NECESSA RY DOCUMENTS WHENEVER REQUIRED BY THE ASSESSEE AS A DEVELOPER. T HE SOCIETIES HAVE HANDED OVER PHYSICAL POSSESSION OF THE LAND TO THE ASSESSEE AS A DEVELOPER FOR CARRYING OUT DEVELOPMENT OF HOUSING PROJECT. THE SOCIETIES WERE NOT LEFT WITH ANY RIGHT, INTEREST OR TITLE IN THE ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 45 DEVELOPMENT WHICH WAS CARRIED OUT BY THE ASSESSEE. THE MOTIVES OF THE SOCIETIES WERE NOT TO DEVELOP, CONSTRUCT OR CAR RYING OUT ANY BUSINESS AS A BUILDER OR DEVELOPER AND PRACTICALLY NOTHING WAS LEFT WITH THEM. FOR ALL INTENT AND PURPOSES, THE ASSESSE E HAS ACQUIRED DOMINANT RIGHTS OVER THE LAND AND THE ASSESSEE CAN DEAL IN THE LAND IN THE MANNER IN WHICH THE ASSESSEE MIGHT HAVE LIKE D. THE TERMS AND CONDITIONS ENTERED INTO BETWEEN THE ASSESSEE AND TH E SOCIETIES AS PER THE DEVELOPMENT AGREEMENTS PROVIDED ALL THE DOM INANT CONTROL AND RIGHTS OVER THE LAND TO THE ASSESSEE AND THE AS SESSEE DEVELOPED AND CONSTRUCTED THE HOUSING PROJECT AT ITS OWN COST AND WOULD REMAIN OWNER OF THE BUILDING WITHOUT ANY INTERFERENCE FROM THE SOCIETIES. THE DEVELOPMENT AGREEMENTS IN QUESTION DID NOT PROVIDE THAT THE ASSESSEE WOULD BE WORKING AS A CONTRACTOR OR AGENT ON BEHALF OF THE SOCIETIES. THE AGREEMENTS IN QUESTION WOULD NOT BE REGARDED TO BE THE JOINT VENTURE OR COLLABORATION AGREEMENT. IT WA S THE AGREEMENTS UNDER WHICH THE ASSESSEE WAS ENTITLED TO DEVELOP TH E HOUSING PROJECT ON THE LAND ON ITS OWN COST AND IN THE MANNER IN WH ICH THE ASSESSEE MIGHT HAVE DECIDED. THE AUTHORITIES BELOW REJECTED THE CLAIM OF THE ASSESSEE BECAUSE OUT OF 324 UNITS, 4 RESIDENTIAL UN ITS HAVE BUILT UP AREA IN EXCESS OF 1500 SQ. FT., ON TWO GROUNDS THAT ADDITIONAL CONSTRUCTION HAVE BEEN CARRIED OUT AND IF OPEN TERR ACE AREA IS ADDED THE CONSTRUCTED AREA IN REGARD TO ALL THE SAID 4 FL ATS, TOTAL AREA IS IN EXCESS OF 1500 SQ. FT. THE ASSESSEE FILED COPIES OF 4 SALE DEEDS AT PB- 181 TO 269 OF THE PAPER BOOK IN WHICH THE CONST RUCTED AREA BY THE ASSESSEE WAS BELOW 1500 SQ. FT. WHICH IS SUPPOR TED BY POSSESSION-UM-DECLARATION LETTERS OF THE DEVELOPERS FILED AT PB-295 TO 298 OF THE PAPER BOOK. ACCORDING TO THE ASSESSEE TH E ENTIRE ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 46 CONSTRUCTION OF THE UNITS REFERRED TO ARE MADE BY T HE DEVELOPER AS PER APPROVED PLAN AND ONLY ON THAT BASIS BUILDING USE P ERMISSION HAS BEEN GRANTED WHICH WAS BELOW 1500 SQ. FT. AFTER GIV ING POSSESSION ON SALE TO THE OCCUPANTS, THE OCCUPANTS MIGHT HAVE MAD E SOME ADDITIONS WHICH ARE ALSO CONFIRMED BY THE DVO IN HI S REPORT PB-293. THEREFORE, THE ASSESSEE WOULD NOT BE RESPONSIBLE FO R THE LATER DEVELOPMENT AFTER RECEIPT OF SALE CONSIDERATION. EV EN, THE OWNERS OF THE FLATS WHO HAVE PURCHASED THE RESIDENTIAL UNITS FROM THE ASSESSEE HAVE GIVEN CONFIRMATION FOR RAISING ADDITIONAL CONS TRUCTION AFTER RECEIVING THE SALE CONSIDERATION BY THE ASSESSEE. C OPIES OF THE CONFIRMATIONS ARE ALSO FILED IN THE PAPER BOOK. THE REFORE, ADDITIONAL CONSTRUCTION CARRIED OUT BY THE SUBSEQUENT FLAT OWN ERS CANNOT BE TAKEN INTO CONSIDERATION AGAINST THE ASSESSEE FOR N OT COMPLYING WITH THE PROVISIONS OF LAW. WITH REGARD TO ISSUE OF INCL USION OF OPEN TERRACE IN THE BUILT UP AREA, THE ISSUE IS CONSIDERED IN DE TAIL IN THE CASE OF M/S. AMALTAS ASSOCIATES (SUPRA) AND IT WAS HELD THA T THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE BY TAKING THE OPEN TERRACE AS BALCONY/VERANDAH. IT WAS , THEREFORE, HELD THAT OPEN TERRACE CANNOT BE INCLUDED IN THE BUILT U P AREA. WITH REGARD TO THE DISCREPANCY OF SURVEY NUMBERS MENTIONED IN T HE APPROVAL AND B. U. PERMISSION ISSUED BY AUDA, LEARNED COUNSEL FO R THE ASSESSEE EXPLAINED THAT THERE WAS INADVERTENT MISTAKE IN ENG LISH TRANSLATION AND IF THE ORIGINAL IS TAKEN INTO CONSIDERATION NO DISCREPANCY IS NOTED. THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT DEVELOPMENT PERMISSION WAS RECEIVED FOR VARIOUS SURVEY NUMBERS WHICH WAS JOINTLY RECEIVED BY THE ASSESSEE ALONG WITH OTHER P ERSONS FOR A GREATER AREA BUT THE ASSESSEE WAS GRANTED PERMISSIO N TO CONSTRUCT IN ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 47 17938 SQ. M. OF AREA FOR 324 RESIDENTIAL UNITS ONLY . THE SURVEY NUMBERS OF THE LAND IN QUESTION MATCH WITH THE DEVE LOPMENT AGREEMENTS ETC. AS IS CLARIFIED BY THE LEARNED COUN SEL FOR THE ASSESSEE. IN BRIEF, THE SAME ARE MENTIONED AT PB-91 , 95 AND PB- 103A. SINCE THE APPROVAL OF THE DEVELOPMENT WAS GRA NTED FOR 324 RESIDENTIAL UNITS AND ON THE SAME BASIS BUILDING US E PERMISSION IS GRANTED FOR 324 RESIDENTIAL UNITS DEVELOPED BY THE ASSESSEE WHICH WERE AS PER THE TERMS AND CONDITIONS STIPULATED IN THE DEVELOPMENT PERMISSION AND THAT THERE WAS NO OBJECTION FROM THE SIDE OF THE SOCIETIES, WE DO NOT FIND ANY DISCREPANCY FOR ANY S URVEY NUMBER FOR CONSTRUCTION OF THE PROPERTY IN QUESTION. WE MAY AL SO NOTE HERE THAT THE COMPETENT AUTHORITIES WOULD NEVER GRANT PERMISS ION TO RAISE CONSTRUCTION WITHOUT VERIFYING THE SURVEY NUMBERS/P LOT NUMBERS OF THE PROPERTY IN QUESTION. THE COMPETENT AUTHORITIES ALW AYS VERIFY THE AREA OF THE PROPERTY ALONG WITH THEIR TITLE NUMBER BEFOR E GRANTING PERMISSION FOR RAISING CONSTRUCTION IN THE PROPERTY . MOREOVER, THE AO HAS NOT MADE OUT ANY CASE IF THE ASSESSEE RAISED CO NSTRUCTION IN OTHERS PROPERTY. EVEN IF, THE CONTENTION OF THE DE PTT. IS ACCEPTED THAT THE ASSESSEE RAISED CONSTRUCTION IN SOME OTHER AREA/SURVEY NUMBER, BUT NOBODY CAME FORWARD TO OBJECT TO THE RA ISING OF THE CONSTRUCTION BY THE ASSESSEE IN THEIR PROPERTY. THE HUGE HOUSING COMPLEX CAN NEVER BE RAISED IN A DAY OR IN A NIGHT, IT WOULD TAKE LONG PERIOD, THEREFORE, THERE WOULD BE BOUND TO BE OBJEC TION FROM THE OWNER OF THE LAND IF THEIR LANDS HAVE BEEN ENCROACH ED BY THE ASSESSEE. HOWEVER, THE AO HAS NOT MADE OUT ANY SUCH CASE AGAINST THE ASSESSEE. MOREOVER, REQUIREMENT OF SECTION 80 I B (10) OF THE IT ACT IS THAT THE ASSESSEE HAD UNDERTAKEN DEVELOPMENT AND BUILDING ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 48 HOUSING PROJECT WHICH IS APPROVED BY THE LOCAL AUTH ORITIES AND THAT CONSTRUCTION COMMENCED AND COMPLETED WITHIN THE STI PULATED PERIOD WITHIN THE PRESCRIBED AREA. THE POINTS RAISED BY TH E AUTHORITIES BELOW ARE IRRELEVANT AS AGAINST SPECIFIC REQUIREMENT OF S ECTION 80 IB (10) OF THE IT ACT. THE CLAIM OF THE ASSESSEE FOR DEDUCTION HAS BEEN DISALLOWED ON IRRELEVANT CONSIDERATION WHICH HAS NO T BEEN PROVIDED UNDER THE ABOVE PROVISIONS. THE LEARNED COUNSEL FOR THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE DISCREPANCY IF ANY NOT ED BY THE AUTHORITIES BELOW WITH REGARD TO THE SURVEY NUMBERS . IT IS NOT IN DISPUTE THAT THE ASSESSEE BEING A DEVELOPER CONSTRU CTED THE HOUSING PROJECT AS PER THE DEVELOPMENT AGREEMENTS BY INCURR ING TOTAL EXPENDITURE AND RECEIVED THE SALE CONSIDERATION. TH EREFORE, THE ASSESSEE IS ABLE TO SATISFY THE REQUIREMENT OF SECT ION 80 IB (10) OF THE IT ACT. WE MAY ALSO NOTE THAT ONCE PLAN IS APPR OVED BY AUDA ON PAPERS SUBMITTED BY THE ASSESSEE AND OTHERS, IT WOU LD BE DEEMED APPROVAL OF CONSTRUCTION OF HOUSING UNITS IN FAVOUR OF THE ASSESSEE, MORE SO, WHEN THE ASSESSEE ENTERED INTO AGREEMENTS FOR DEVELOPING THE WHOLE OF THE PROPERTY. THEREFORE, OBJECTION OF THE AUTHORITIES BELOW, THE NAME OF THE ASSESSEE IS NOT MENTIONED IN THE PERMISSION OR SURVEY NUMBERS ARE DIFFERENT, ARE NOT SUSTAINABL E IN LAW. THE FACTS OF THE CASE, IF CONSIDERED IN THE LIGHT OF THE DECI SIONS OF ITAT AHMEDABAD BENCH IN THE CASES OF RADHE DEVELOPERS, S HAKTI CORPORATION AND M/S. AMALTAS ASSOCIATES (SUPRA), WE ARE OF THE VIEW THE ISSUE IS NOW FULLY COVERED IN FAVOUR OF THE ASS ESSEE FOR GRANT OF DEDUCTION U/S 80 IB(10) OF THE IT ACT BECAUSE THE A SSESSEE HAS ACQUIRED DOMINANT RIGHT OVER THE LAND AND HAS DEVEL OPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING AL L RISKS INVOLVED ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 49 THEREOF. THE CRUX OF THE MATTER WOULD BE THAT ASSES SEE HAS ACQUIRED THE LAND IN QUESTION AND HAS DEVELOPED THE HOUSING PROJECT AT ITS OWN COST AS PER THE REQUIREMENT OF SECTION 80 IB (10) O F THE IT ACT. THEREFORE, WE ARE OF THE VIEW THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION U/S 80 IB (10) OF THE IT ACT. AS REGARDS ALTERNATE CONTENTION OF THE ASSESSEE WITH REGARD TO PRO RATA DEDUCTION, THE ISSUE IS ALREADY DECIDED IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/ S. AMALTAS ASSOCIATES (SUPRA) BY FOLLOWING THE DECISION OF ITA T NAGPUR BENCH IN THE CASE OF AIR DEVELOPERS (SUPRA), THEREFORE, THE AUTHORITIES BELOW SHOULD NOT HAVE REJECTED THE CLAIM OF THE ASSESSEE AT LEAST ON ALTERNATE CONTENTION THAT THE ASSESSEE WOULD BE ENT ITLED FOR DEDUCTION U/S 80IB (10) OF THE IT ACT ON PRO RATA BASIS. HOWE VER, WE HAVE HELD THAT THE EXTENSION OF THE 4 UNITS IS NOT DONE BY TH E ASSESSEE AND THAT OPEN AREA IS NOT PART OF BALCONY/VERANDAH, THEREFOR E, ACCORDING TO THE SUBMISSION OF THE ASSESSEE, THE BUILT UP AREA OF TH E ASSESSEE WAS WITHIN THE PRESCRIBED LIMIT, THEREFORE, THERE IS NO NEED TO GIVE FURTHER FINDING WITH REGARD TO ALTERNATE CLAIM OF THE ASSES SEE. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DEC ISIONS, WE ARE OF THE VIEW THE ISSUE IS FULLY COVERED IN FAVOUR OF THE AS SESSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. AMALTA S ASSOCIATES (SUPRA) AS IS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE. WE ARE OF THE VIEW THAT ASSESSEE FULFILLED THE CONDITI ONS AND REQUIREMENTS OF SECTION 80 IB (10) OF THE IT ACT, THEREFORE, THE CLAIM OF THE ASSESSEE FOR DEDUCTION SHOULD NOT HAVE BEEN DENIED BY THE AUTHORITIES BELOW AND DIRECT THE AO TO GRANT DEDUCT ION TO THE ASSESSEE U/S 80 IB (10) OF THE IT ACT AS CLAIMED BY THE ASSESSEE. ITA NO.520/AHD/2010 M/S. SAFAL ASSOCIATES VS ITO (OSD) RANGE- 9, AHMEDA BAD 50 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19-05-2011. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 19-05-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD
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