Prime Developers, Tiruppur V. ITO, Tiruppur

ITA 933/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96166 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 19-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: K RAVI
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' # , $ %& BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ ITA NO. 933/MDS/2013 / ASSESSMENT YEAR : 2009-10 M/S. PRIME DEVELOPERS, 110, AVINASHI ROAD, GANDHI NAGAR POST, TIRUPUR 641 603. PAN AAIFP0122G ( /APPELLANT) VS THE INCOME-TAX OFFICER, WARD I(4), TIRUPUR. ( /RESPONDENT) / APPELLANT BY : SHRI K. RAVI, ADVOCATE / RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 19.08.2015 ! / DATE OF PRONOUNCEMENT : 23.09.2015 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 12 .2.2013 FOR THE ASSESSMENT YEAR 2009-10. - - ITA 933/13 2 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO NON-GRANTING OF DEDUCTION UNDER SEC.80IB OF THE I.T. ACT, 1961. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF PROPERTY DEVEL OPMENT. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2009-10 ADMITTING TOTAL INCOME AS NIL AFTER CLAIM ING DEDUCTION OF ` 3,86,83,668/- U/S.80IB OF THE ACT. THE ASSESSING OFFICER DENIED THE DEDUCTION CLAIMED U/S.80IB BY OBSERVING THAT THE ASSESSEE IS NOT A DEVELOPER OF HOUSING PROJECT BUT IT WORKS AS A CONTRACTOR. AGGRIEVED BY THIS, THE ASSESSEE WENT I N APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS), WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAI NST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AR SUBMITTED THAT SIMILAR DEDUCTION WAS GRANTED TO THE ASSESSEE IN EARLIER PREVIOUS YEAR AND, THERE FORE, DENIAL OF DEDUCTION IN THE ASSESSMENT YEAR UNDER CONSIDERATIO N IS NOT JUSTIFIED. IT GOES AGAINST THE PRINCIPLE OF CONSIS TENCY AND ACCORDING TO HIM, THE ORDERS OF THE LOWER AUTHORITI ES TO BE QUASHED. HE DREW OUR ATTENTION TO THE PROVISIONS O F - - ITA 933/13 3 SEC.80IB(10) OF THE ACT. ACCORDING TO HIM, THE AS SESSEE IS ENGAGED IN THE DEVELOPMENT OF PROPERTY AND NOT ENGA GED IN WORKS CONTRACT. BEING SO, THE PROVISIONS OF SEC.80 IB(10) CANNOT BE APPLIED. HE ALSO DREW OUR ATTENTION TO THE JOIN T DEVELOPMENT AGREEMENT(JDA) ENTERED INTO BETWEEN THE ASSESSEE AN D M/S. PRIME TEXTILES LTD. DATED 17.1.2005. HE TOOK US TO VARIOUS CLAUSES OF JOINT DEVELOPMENT AGREEMENT, WHICH READS AS FOLLOWS: A. TAKING STATUTORY APPROVAL AS PER CLAUSE 2, PAGE 2 OF JDA, THE DEVELOPMENT SHALL BE ON THE BASIS OF A PLAN TO BE DRAWN BY THE ARCHITECT IDENTIFIED BY THE DEVELOPER AND APPROVAL BY TIRUPUR MUNICIPAL COUNCIL AND SUCH OTHER RELATED AUTHORITIES. THE FEES RELATED TO THE PLAN APPROVAL TO TIRUPUR MUNICIPALITY, FEES TO TOWN PLANNING DEPARTMENT AND PROPERTY TAX FOR UN SOLD FLATS, WATER CONNECTION DEPOSIT AND UNDERGROUND DRAINAGE CHARGES ARE PAID BY THE DEVELOPER. B. DEVELOPER SHOULD ARRANGE LOAN AND PAY INTEREST AS PER CLAUSE 9 OF THE JDA, THE DEVELOPER TO ARRANGE FOR LOAN AND THE DEVELOPERS SHALL GIVE GUARANTEE FOR PROMPT REPAYMENT OF THE LOAN AND SERVICE INTEREST OF THE SAID LOAN. C. MARKETING AND SELLING AS PER THE CLAUSE 3 OF THE JDA IT IS THE RESPONSIBILITY OF DEVELOPER FOR ADVERTISEMENT AND SALES AND WILL HAVE RESPONSIBILITY OF COLLECTION OF SALE PROCEEDS FROM THE BUYERS. DEVELOPERS SPEND FOR BROACHERS, CREATION OF ART WORK THEME DESIGNING, ADVERTISEMENT AND PUBLICITY, HOARDING EXPENSES AND ALL ADVERTISEMENT EXPENSES. - - ITA 933/13 4 D. INVENTORY CARRYING COST WITH DEVELOPER DEVELOPER SHALL CONSTRUCT THE UN SOLD FLATS ALSO, AFTER CONSTRUCTION, DEVELOPER WILL HAVE RESPONSIBILITY TO BEAR THE CARRYING COST OF THE INVENTORY OF UN SOLD FLATS. 4.1 THE LD. AR SUBMITTED THAT THE CIT(APPEALS) HAS NOT CONSIDERED THE FACT THAT THE ASSESSEE IS INVOLVED I N THE DEVELOPMENT OF THE PROPERTY AND NOT MERELY IN THE E XECUTION OF THE WORKS CONTRACT AND AFTER THE AO HAD GIVEN A FIN DING THAT THE ASSESSEE HEREIN IS INVOLVED IN THE DEVELOPMENT OF T HE PROPERTY FOR THE AY 2007-08 AND 2008-09, HE CANNOT INVOKE TH E EXPLANATION TO SEC.80IB(10) , WHICH IS APPLICABLE O NLY FOR WORKS CONTRACTORS. THE LD. AR FURTHER SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN DISALLOWING THE CLAIM OF THE ASSESSEE EVEN AFTER CONSIDERING THE JDA WHICH IS THE MASTER AGREEMENT AND HAS FAILED TO UNDERSTAND THAT THE ASSESSEE IS A DEVELOPER AND NOT MERELY A CONTRACTO R. 4.2 ACCORDING TO THE LD. AR, THE CIT(APPEALS) HAS ERRED IN CONSIDERING THAT THE OWNER OF THE PROPERTY PRIME TEXTILES LTD. HAD SECURED THE REQUISITE SANCTIONS AND APPROVALS FROM TIRUPPUR MUNCIPAL CORPORATION AND CONCERNED PUBLIC AUTHORITIES ON THE - - ITA 933/13 5 GROUND THAT NO POWER OF ATTORNEY WAS EXECUTED BY TH E OWNER TO THE ASSESSEE. THE LD. AR ALSO SUBMITTED TH AT THE CIT(APPEALS) HAS ERRED IN CONCLUDING THAT A POW ER OF ATTORNEY TO BE EXECUTED BY THE OWNER OF THE PROPERTY AND THE DEVELOPER IS MANDATORY, AS IT IS A CUSTOM IN THE BUSINESS OF DEVELOPMENT. IN THE INSTA NT CASE THE OWNER OF THE PROPERTY PRIME TEXTILES LTD HOLDS 50% SHARE IN THE ASSESSEES FIRM AS A PARTNER . 4.3 THE LD. AR DREW OUR ATTENTION TO THE DEFINITION OF THE WORDS POWER OF ATTORNEY AND SUBMITTED THAT AS PER LEGAL GLOSSARY, 2001 EDITION AT P.253 THE WORDS 'POWER OF ATTORNEY' MAY BE DEFINED AS A FORMAL INSTRUMENT BY WHICH ONE PERSON EMPOWERS ANOTHER TO REPRESENT HIM OR ACT IN HIS STEAD FOR CERTAIN PURPO SES. THE EXPRESSION POWER OF ATTORNEY IS DEFINED AS AN AUTHORITY WHEREBY ONE IS SET IN THE TURN, STEAD OR PLACE OF ANOTHER TO ACT FOR HIM. ACCORDING TO LONGMAN AMERICAN DICTIONARY AT PG. 1126 THE WORDS POWER OF ATTORNEY MEANS THE LEGAL RIGHT TO DO THINGS FOR AN OTHER PERSON IN THEIR PERSONAL OR BUSINESS LIFE, - - ITA 933/13 6 OR A DOCUMENT GIVING THIS RIGHT. 4.4 FURTHER, THE LD. AR RELIED ON THE DECISION OF T HE SUPREME COURT IN THE CASE OF STATE OF RAJASTHAN V. NAHARA (2005) 12 SCC 77, WHEREIN IT WAS HELD IN PARAS 13 & 52 AS UNDER : 13. A GRANT OF POWER OF ATTORNEY IS ESSENTIALLY GOVERNED BY CHAPTER X OF THE CONTRACT ACT. BY REASON OF A DEED OF POWER OF ATTORNEY, AN GRANT IS FORMALLY APPOINTED TO ACT FOR THE PRINCIPAL IN ONE TRANSACTION OR A SERIES OF TRANSACTION OR TO MANAGE THE AFFAIRS OF THE PRINCIPAL GENERALLY CONFERRING NECESSARY AUTHORITY UPON ANOTHER PERSON. A DEED OF POWER OF ATTORNEY IS EXECUTED BY THE PRINCIPAL IN FAVOUR OR THE GRANT. THE AGENT DERIVES A RIGHT TO USE HIS NAME AND ALL ACTS, DEEDS AND THINGS DONE BY HIM SUBJECT TO THE LIMITATIONS CONTAINED IN THE SAID DEED, THE SAME SHALL BE READ AS IF DONE BY THE DONOR. A POWER OF ATTORNEY IS. AS IS WELL KNOWN. A DOCUMENT CONVENIENCE. 52. EXECUTION OF A POWER OF ATTORNEY IN TERMS OF THE PROVISIONS OF THE CONTRACT ACT AS ALSO THE POWER OF ATTORNEY ACT IS VALID. A POWER OF ATTORNEY, WE HAVE NOTICED HEREINBEFORE, IS EXECUTED BY THE DONOR SO AS TO ENABLE THE DONEE TO ACT ON HIS BEHALF. EXCEPT IN CASES WHERE POWER OF ATTORNEY IS COUPLED WITH INTEREST, IT IS REVOCABLE. THE DONEE IN EXERCISE OF HIS POWER UNDER SUCH POWER OF ATTORNEY ONLY ACTS IN PLACE OF THE DONOR SUBJECT OF COURSE TO THE POWERS GRANTED TO HIM BY REASON THEREOF. HE CANNOT USE THE POWER OF - - ITA 933/13 7 ATTORNEY FOR HIS OWN BENEFIT. HE ACTS IN A FIDUCIARY CAPACITY. ANY ACT OF INDIFFERENT OF BREACH OF TRUST IS A MATTER BETWEEN DONOR AND DONEE.' 4.5 THE LD. AR SUBMITTED THAT FROM THE ABOVE PARAGRAPHS IT IS CLEAR THAT A POWER OF ATTORNEY IS A DOCUMENT OF CONVENIENCE AND THE DEVELOPER FOR THE PURPOSE OF APPLYING TO THE STATUTORY AUTHORITIE S FOR THE GRANT OF PERMISSION FOR THE PROJECT ENTERS INTO THIS AGREEMENT. ACCORDING TO HIM, IN THE CASE, THE OWNER OF THE PROPERTY HOLDS THE MAJORITY SHARE IN THE ASSESSEE FIRM AND HENCE THERE WAS NO NEED FOR A POWER OF ATTORNEY TO BE GIVEN TO THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT THE CIT(APPEALS) ERRED IN THE ASSUMPTION THAT ALL THE PERMISSIONS FROM THE MUNICIPAL CORPORATION AND LOCAL AUTHORITY, PLAN APPROVALS AND COMMENCEMENT CERTIFICATE WERE OBTAINED BY THE OWNER OF THE PROPERTY AND NOT THE ASSESSEE, WHO IS THE DEVELOPER . IT WAS CONTENDED THAT IT WAS PAID BY THE ASSESSEE FIRM, - - ITA 933/13 8 WHICH IS GIVEN IN THE FORM OF LEDGER EXTRACTS ALONG WITH DATES OF PAYMENTS MADE ARE AS ANNEXURE C FOR REFERENCE. ACCORDING TO THE LD. AR, THE ASSESSEE IS A DEVELOPER AND NOT MERELY A CONTRACTOR. THUS, ACCORDING TO THE LD. AR, THE ASSESSEE IS A DEVELOPER WHO HAS UNDERTAKEN CONSTRUCTION OF FLATS WITH VARIOUS OWNERS THOUGH THE ASSESSEE IS NOT AN OWNER OF THE LAND. FURTHER, HE RELIED ON THE FOLLOWING JUDGMENTS: (I) CIT VS. RADHE DEVELOPERS (2012) 341 ITR 403(G UJ) (II) CIT VS. SANGHVI AND DOSHI ENTERPRISE (2013) 21 4 TAXMAN 463 (MAD.) (III) CIT VS. MAHALAKSHMI HOUSING 2012-TIOL-951-HC- MAD-IT. (IV) CIT V. CEEBROS PROPERTY DEVELOPMENT (P) LTD.(2012) 83 CCH 98 (MADRAS HC) (V) CIT VS. MOON STAR DEVELOPERS 2014 (4) TMI 1042- (GUJ H.C) 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE LOWER AUTHORITIES. FURTHER, THE LD. DR SUBM ITTED THAT THE ASSESSEE IS NOT THE OWNER OF THE LAND AND ALSO THE PLAN IS NOT IN THE NAME OF THE ASSESSEE. THE - - ITA 933/13 9 ASSESSEE ENTERED INTO AN AGREEMENT WITH PROSPECTIVE BUYERS OF INDIVIDUAL FLAT ALONG WITH LAND LORD AND RECEIVED ONLY 14% OF THE TOTAL CONSIDERATION TOWARD S THE WORK CARRIED ON BY THE ASSESSEE. THIS AMOUNT I S NOTHING BUT FOR THE LABOUR CONTRACTS UNDERTAKEN BY THE ASSESSEE. FURTHER, THE LD. DR, SUBMITTED THAT THE ASSESSEE WAS UNDERTAKEN WORKS CONTRACT AND NOT DEVELOPED THE HOUSING PROJECT. THE PROJECT WAS CONCEIVED AND EXECUTED BY THE LAND-LORD AND NOT BY THE ASSESSEE AND THE FLAT WAS SOLD TO INDEPENDENT PROSPECTIVE PURCHASERS BY THE LAND LORD. ACCORDING TO THE LD. DR, EXPLANATION TO SEC.80IB(10) INTRODUCED W.R.E.F. 1.4.2001 IS APPLICABLE, AS THE ASSESSEE IS ONLY UNDERTAKING WORKS CONTRACT AND NOT ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE PROVISIONS OF SEC.80IB(10) READS AS FOLLOWS : 80IB. (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH, 2007 1031ST DAY OF MARCH, 2008 ] BY A LOCAL - - ITA 933/13 10 AUTHORITY SHALL BE HUNDRED PER CENT. OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CON STRUCTION,- (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED 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 APRI L, 2004 13BUT NOT LATER THAN THE 31ST DAY OF MARCH, 2005, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT IS APPROVED BY THE LOCAL AUTHORITY. (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2 005, WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE 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 BUILDIN G PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY ; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETI ON CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LO CAL AUTHORITY ; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE : PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CL AUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANC E WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF E XISTING 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 MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM - - ITA 933/13 11 THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSA ND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE ; [AND] (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED 13[THREE PER CENT.] OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR 13 [FIVE THOUSAND SQUARE FEET, WHICHEVER IS HIGHER] ; (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL ; AN D (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLL OWING PERSONS, NAMELY :- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILD REN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIV IDUAL IS THE KARTA, (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDI VIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA; EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL AP PLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTR AL OR STATE GOVERNMENT). 6.1 THE CONTENTION OF THE LD. AR IS THAT THE ASSESS EE IS A DEVELOPER AND NOT MERE A CONTRACTOR AND BEING SO, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB( 10) OF THE ACT. NOW, WE HAVE TO EXAMINE AS TO WHETHER THE ASSESSEE CAN BE CALLED AS A DEVELOPER WITHIN THE MEANING OF SEC.80IB(10) READ WITH EXPLANATION I HEREIN ABOVE. THE LD. AR SUBMITTED THAT THE WORK - - ITA 933/13 12 CARRIED ON BY THE ASSESSEE MADE IT A DEVELOPER ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. ACCORDING TO HIM, A DEVELOPER IS A PERSON WHO DEVELOPS THE FACILITY AND SUCH PERSON MAY OR MAY NO T BE A CONTRACTOR. ON THE OTHER HAND, A CONTRACTOR I S STATED TO BE A LEGAL TERM WHOSE RIGHTS AND DUTIES V IS- -VIS CONTRACTEE ARE DETERMINED BY WAY OF LEGAL DOCUMENT CALLED THE CONTRACT. ACCORDING TO THE LD. AR, THE ASSESSEE HAS UNDERTAKEN ALL RISKS INVOLVED IN THE P ROJECT INCLUDING TECHNOLOGICAL INPUTS, ENTREPRENEURIAL INP UTS ETC. BESIDES, THERE IS HEAVY FINANCIAL INVOLVEMENT IN TE RMS OF DEPLOYMENT OF MAN AND MACHINE AS WELL AS ALL MATERI ALS. AT THIS POINT, IT IS PERTINENT TO NOTE THAT THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF HAL LTD. VS. STATE OF ORISSA 5 5 STC 327 (SC) IN WHICH IT HAS BEEN OBSERVED THAT IN A CONTRA CT FOR WORK, THE PERSON PRODUCING HAS NO PROPERTY IN THE THING P RODUCED AS A WHOLE, EVEN IF PART OR WHOLE OF THE MATERIAL USED B Y HIM MAY HAVE BEEN HIS PROPERTY EARLIER. FURTHER, IN ANOTHER JUDGMENT OF THE SUMMIT COURT IN THE CASE OF TAMIL NADU VS. ANAN DAM VISHWANATHAN (1989) 1 SCC 613 IN WHICH IT WAS HELD THAT THE - - ITA 933/13 13 NATURE OF CONTRACT CAN BE FOUND ONLY WHEN THE INTEN TION OF PARTIES ARE FOUND OUT. THE FACT THAT IN THE EXECUTION OF TH E WORKS CONTRACT SOME MATERIAL ARE USED AND THE PROPERTY IN THE GOODS SO USED PASSES TO THE OTHER PARTY, THE CONTRACTOR U NDERTAKING THE WORK WILL NOT NECESSARILY BE DEEMED, ON THAT ACCOUN T, TO SELL THE MATERIAL. IT WAS, THEREFORE, ARGUED THAT THE DEVELO PER IS A PERSON WHO BRINGS IN ADDITIONAL RESOURCES BY WAY OF INVEST MENT AND TECHNICAL EXPERTISE FOR DEVELOPING THE INFRASTRUCTU RE FACILITIES. SINCE THE ASSESSEE HAD SIMPLY DONE A PART OF WORK O F CIVIL CONSTRUCTION RELATING TO THE HOUSING PROJECT, HE ST ATED THAT IT IS NOT ELIGIBLE FOR DEDUCTION. 6.2 WE FIND THAT THE WORDS DEVELOPER AND CONTRAC TOR HAVE NOT BEEN DEFINED IN OR FOR THE PURPOSES OF S. 80-IB (10). THE PRIMARY QUESTION WHICH ARISES IS THAT HOW TO FIND O UT THE MEANING OF A WORD OR AN EXPRESSION WHICH IS NOT DEFINED IN THE ACT. IT IS A SETTLED LEGAL POSITION THAT ORDINARILY THE MEANING OR DEFINITION OF A WORD USED IN ONE STATUTE CANNOT PER SE BE IMPORTED INTO ANOTHER AS HAS BEEN HELD BY THE SUPREME COURT IN THE CASE O F UNION OF INDIA VS. R.C. JAIN (1981) 2 SCC 308. THEREFORE, TH E MEANING OF THE WORDS DEVELOPER AND CONTRACTOR, AS PUT FORTH BE FORE US BY THE - - ITA 933/13 14 RIVAL PARTIES FROM OTHER LEGISLATIONS, BE THEY STAT E OR CENTRAL ENACTMENTS, CANNOT BE AUTOMATICALLY APPLIED IN THE PRESENT CONTEXT. IN ORDER TO ASCERTAIN THE MEANING OF A WOR D NOT DEFINED IN THE ACT, A USEFUL REFERENCE CAN BE MADE TO THE G ENERAL CLAUSES ACT, 1897. IF A PARTICULAR WORD IS NOT DEF INED IN THE RELEVANT STATUTE BUT HAS BEEN DEFINED IN THE GENERA L CLAUSES ACT, SUCH DEFINITION THROWS AMPLE LIGHT FOR GUIDANC E AND ADOPTION IN THE FORMER ENACTMENT. ACCORDING TO S. 3 OF THE G ENERAL CLAUSES ACT THE DEFINITIONS GIVEN IN THIS ACT SHALL HAVE APPLICABILITY IN ALL THE CENTRAL ACTS UNLESS A CONT RARY DEFINITION IS PROVIDED OF A PARTICULAR WORD OR EXPRESSION. ON SCANNING S. 3 OF THE GENERAL CLAUSES ACT WE OBSERVE THAT NEITHER THE WORD CONTRACTOR NOR DEVELOPER HAS BEEN DEFINED THERE IN. THUS, THE GENERAL CLAUSES ACT IS ALSO OF NO ASSISTANCE IN THI S REGARD. GOING AHEAD, WHEN THESE WORDS ARE NEITHER DEFINED I N THE IT ACT, 1961 NOR IN THE GENERAL CLAUSES ACT, THE NEXT QUESTION IS THAT WHEREFROM TO FIND THE MEANING OF SUCH WORDS. T HERE IS NO NEED TO WANDER HERE AND THERE IN SEARCH OF AN ANSWE R WHICH HAS BEEN APTLY GIVEN BY THE SUPREME COURT IN THE CASE O F CWT VS. OFFICER-IN-CHARGE (COURT OF WARDS), PAIGAH 1976 CTR (SC) 404 : - - ITA 933/13 15 (1976) 105 ITR 133 (SC) IN WHICH IT WAS HELD THAT T HE ORDINARY DICTIONARY MEANING OF A WORD CANNOT BE DISREGARDED. 6.3 COMING BACK TO OUR POINT OF ASCERTAINING THE ME ANING OF THE WORDS CONTRACTOR AS WELL AS DEVELOPER, WHIC H HAVE NEITHER BEEN DEFINED IN THE ACT NOR IN THE GENERAL CLAUSES ACT, WE FALL UPON OXFORD ADVANCED LEARNERS DICTIONARY TO FIND O UT THEIR MEANING. ACCORDING TO THIS DICTIONARY 'DEVELOPER' IS A PERSON OR COMPANY THAT DESIGNS AND CREATES NEW PRODUCTS, WHER EAS 'CONTRACTOR' IS A PERSON OR A COMPANY THAT HAS A CO NTRACT TO DO WORK OR PROVIDES SERVICES OR GOODS TO ANOTHER. THE NEW SHORTER OXFORD DICTIONARY DEFINES THE WORD 'CONTRACTOR' AS : 'A PERSON WHO ENTERS INTO A CONTRACT OR AGREEMENT. NOW CHIEFL Y SPEC. A PERSON OR FIRM THAT UNDERTAKES WORK BY CONTRACT, ES PECIALLY FOR BUILDING TO SPECIFIED PLANS'. IN THE LIGHT OF THE M EANING ASCRIBED TO THESE WORDS BY THE DICTIONARIES IT IS OBSERVED T HAT THE DEVELOPER IS A PERSON WHO DESIGNS AND CREATES NEW P RODUCTS. HE IS THE ONE WHO CONCEIVES THE PROJECT. HE MAY EXE CUTE THE ENTIRE PROJECT HIMSELF OR ASSIGN SOME PARTS OF IT T O OTHERS. ON THE CONTRARY THE CONTRACTOR IS THE ONE WHO IS ASSIGNED A PARTICULAR JOB TO BE ACCOMPLISHED ON THE BEHALF OF THE DEVELOP ER. HIS DUTY - - ITA 933/13 16 IS TO TRANSLATE SUCH DESIGN INTO REALITY. THERE MA Y, IN CERTAIN CIRCUMSTANCES, BE OVERLAPPING IN THE WORK OF DEVELO PER AND CONTRACTOR, BUT THE LINE OF DEMARCATION BETWEEN THE TWO IS THICK AND UNBREACHABLE. WHEN THE PERSON ACTING AS DEVELO PER, WHO DESIGNS THE PROJECT, ALSO EXECUTES THE CONSTRUCTION WORK, HE WORKS IN THE CAPACITY OF CONTRACTOR TOO. BUT WHEN H E ASSIGNS THE JOB OF CONSTRUCTION TO SOMEONE ELSE, HE REMAINS THE DEVELOPER SIMPLICITER, WHEREAS THE PERSON TO WHOM THE JOB OF CONSTRUCTION IS ASSIGNED, BECOMES THE CONTRACTOR. THE ROLE OF DE VELOPER IS MUCH LARGER THAN THAT OF THE CONTRACTOR. IT IS NO D OUBT THAT IN CERTAIN CIRCUMSTANCES A DEVELOPER MAY ALSO DO THE W ORK OF A CONTRACTOR BUT A MERE CONTRACTOR PER SE CAN NEVER B E CALLED AS A DEVELOPER, WHO UNDERTAKES TO DO WORK ACCORDING TO T HE PRE- DECIDED PLAN. 6.4 SO, IN ORDER TO BE ELIGIBLE FOR DEDUCTION, THE DEVELOPMENT SHOULD BE THAT OF HOUSING PROJECT AS A WHOLE AND NOT A PARTICULAR PART OF IT, AS HAS BEEN CONTENDED BY THE LD. AR. IT MAY BE POSSIBLE THAT SOME PART OF THE HOUSING PROJECT IS ASSIGNED BY THE LAND LORD TO SOME CONTRACTOR FOR DOING IT ON HIS BE HALF. - - ITA 933/13 17 THAT WILL NOT PUT THE DOER OF SUCH WORK IN THE SHOE S OF A DEVELOPER. 7. IN THE PRESENT CASE, T HE ASSESSEE, M/S. PRIME DEVELOPERS HAS ENTERED INTO A JOINT DEVELOPMENT AGREEMENT (UNREGISTERED) WITH THE LAND OWNER, M/S P RIME TEXTILES LIMITED ON 27.01 . 200 5 FO R DE VELOPMENT OF VACANT LAND TO THE EXTENT OF 3.91 ACRES INTO R NULTI- ST O R IE D R ESIDENTIAL COMPLEX . THE MAIN TERMS O F THE AGREEMENT ARE REPRODUCED AS UND ER :- I) IN C ONS I DERATIO N OF M UT UA L COV E N A NTS H E R E IN C ON T A I N E D , T H E DEVELOPER S H A LL HAVE THE SOLE AN D EXC L US I VE R I GH T TO DEVELOP T HE S ITE DES CRI BED H EREUNDER ( SCHEDULED PROPERTY ) I NTO RESIDENTIAL COMPLEX A ND APARTMEN TS AND PROVID I NG SUITABLE AME NI TIES . (II) THE DEVELOPMENT SHAL L B E O N T H E BAS I S O F A PL A N TO B E D R A W N BY THE AR C H ITEC T I DENTIF I ED BY TH E D E V E L OPE R AND AP PR O VED B Y THE T I RUPUR M UNI C I PA L C O U NC IL A N D SUCH OT HE R R E L A T ED AU T HORITI ES . THE OWNER SHAL L ASS I ST A N D USE A LL L OCA L INF RASTR UCTUR ES A V A IL A BL E F O R OBT A ININ G SUCH REQUIRED APPROVALS. (III) T HE D EVE L OPER SHAL L P R OCUR E PERSONS , EAC H O F W H O M SH A LL PU R CHA S E EARMARKED UNDIVIDED CO- O WNE R S HI P RIGHTS I N THE SCHEDU L ED P R OPE RTY F R OM THE OWNE R AND ENTER I NT O AN A G REEMEN T W I TH THE D E V E L O P E R FOR THE CONSTRUCT I O N OF R ES I DE N T I A L VILL A / A P A RTM E NT/ B UIL D ING IN THE SCHEDULED PROPER T Y O F APPROXIMATE LY AGG R EGAT I N G T O 585 , 0 00 S Q . FT OF FS I . - - ITA 933/13 18 IV) T H E OWNER SHAL L EXERC I SE DEEDS O F CONV E Y A NCE F O R S A LE OF F RA CTION A L INTEREST IN FAVOUR OF THE PARTIES PROCURED BY THE DEVELOPER ACCORDING TO T H E TERMS AND CONDITIONS STIPULATED BY THE DEVELOPER AND DELIVER JOINT POSSESSION TO THE SAID PARTIES WITH A RIGHT T O HAVE A RESIDENTIAL VILLA/APARTMENT/BUILDING CONSTRUCTED BY THE DEVELOPER . V) THE OWNER AND THE DEVELOPER MUTUALLY AGREE O N CONTRACTED PR I CE FOR EAC H SQUARE FEET TOWARDS UNDIVIDED CO-OWNERSHIP RIGHTS AND ON PARKING S L O TS( S ) PURCHASED BY EACH OF THE PERSONS IDENTIFIED BY THE DEVELOPE R SHALL B E A T NOT LESS THAN 14% OF SUCH CONTRACTED PRICE AND SUCH PAYMENT SHA LL B E MADE TO THE OWNER OUT OF THE INITIAL ADVANCE MONEY RECEIVED FROM THE PROSPECTIVE PURCHASERS. VI) THE DEVELOPER UNDERTAKES AND AGREES TO COMPLETE THE . CONSTRUCTION ADHERING TO THE RULES AND REGULATIONS STIPULATED BY THE MUNICIPAL AUTHORITIES AND ADHERE TO THE STIPULATED TIME LIMIT . 7.1 THEREAFTER , T H E OW N ER ( M / S PR I ME TEXTILES LTD. ) O BTAINED THE NECESSARY PERMISSIONS FROM THE L OCAL AUTHORITY FOR CONSTRUCTION OF THE RESIDENTIAL APARTMENTS. THE PLAN WAS APPROVED ON 3.5.2005. AFTER OBTAINING THE APPROVAL , TH E OWNER OF THE LAND SOLD THE UNDIV I DED CO-OWNERSHIP RIGHT IN THE PROPERTY TO VAR I OUS PURCHASERS VIDE REGISTERED SALE DEEDS . CLAUSE ' H IN THE SALE DEED READS AS UNDER : - - ITA 933/13 19 'THE PURCHASER HAS EVINCED I NTERES T I N PURC H ASI N G AN UND I V I DED C O - OWNERSHIP RIGHT IN SCHEDULED ; PROPERTY WHICH , UNDIVIDED S HAR E IS MO R E F UL LY DESCRIBED IN SCHEDULE . B HERETO (HEREINAFTER) REFERRED TO AS SC H EDULE B PROPERT Y IN ORDER THAT THE PURCHASER MAY HAVE CONSTRUCTED FOR HIMSELF/HERSELF AN APARTMENT IN THE RESIDENTIAL COMPLEX PRIME ENCLA V E ' THROUG H M LS P RIME DEVELOPERS (HEREINAFTER REFERRED TO AS THE DEVELOPER )' 7 . 2 THEREAFTER , THE PURCHASERS OF UNDIV I DED , CO- OW N E R SHI P RIGHT IN TH E PROPERTY ENTERED I NTO SEPARATE CONSTRUCTION AGREEMENTS W I TH TH E ASSESSEE, M/S. P R IME DEVELOPERS ON VAR I OUS DATES . THE RELEVANT C LAUSES OF T HE C O N S TR UC TI O N AGREEMENT ARE MENTIONED AS UNDER:- CONSTRUCTION AGREEMENT ' THIS CONSTRUCTION AGREEMENT ENTERED INTO ON THIS THE 20TH DAY OF ' A UGUST, TWO THOUSAND EIGHT. AND BETWEEN PRIME DEVELOPERS ; A PARTNERSHIP FIRM REGISTERED AND HAVING ITS PLACE OF BUSINESS AT 110, AVINASHI ROAD, GANDHINAGAR, P.O., , TIRUPUR 641 603 (TAMILNADU) REPRESENTED BY ITS PARTNER MR . PURUSOTTAM DAS PATODIA AND THE PURCHASER. A THE PROPERTY MORE FULLY DESCRIBED IN SCHEDULE A HERETO BELONGS TO PRIME TEXTILES LTD . (HEREINAFTER REFERRED TO AS THE OWNER) B . THE OWNER WITH THE INTENTION OF DEVELOPING THE SCHEDULE A PROPERTY BY BUILDING OF A HOUSING PROJECT (RESIDENTIAL COMPLEX) HAS AGREED TO MAKE AVAILABLE - - ITA 933/13 20 THE SCHEDULE A PROPERTY TO THE DEVELOPER FOR THE CONSTRUCTION OF APARTMENTS FO R PU RCHASERS ACQUIRING UND I V I DE D CO - OWNERSHIP R IGH T IN SCHEDULE A P R OPER T Y FR OM THE OWNE R . C . PU R SUANT THERETO , THE OWNER HAS SECURED THE REQUISITE SA N CT I ONS AND APPROVALS FROM TIRUPUR MUNICIPA L CORPORATION AND CONCE R NED PUBL I C AUTHORITIES F O R THE LAYOUT OF THE SCHEDULE A P R OPERTY AND BUILDING PLANS FOR THE C O N STRUCTION OF RESIDENTIAL COMPLEX THEREON TO BE KNOWN AS PR I ME ENCLAVE A S PE R T HE PLANS APPROVED BY T H E T I RUPUR MUNICIPALITY V IDE PLANNING PERMISSION N O . F2/51/05 DT . 25.5.2005 AVAILAB LE WIT H T H E OWNERS . C OP Y O F PE R MISS I O N A N D A PPROVED L AYOU T P L AN FROM TIRUPUR MUN I C I PA L CORPORATI ON I S AN N EXE D H E R E T O AS A N N EXU R E ' A ' . D . T H E OWNER H AS OBTAINED THE REQUISITE COMMENCEMEN T C ERT I FICA T E D A T ED 1.6 . 2005 F ROM M L S SANKAR & ASSOC I ATES ARCHI T ECTS & P L ANNERS O F TH E PRO J EC T FOR THE DEVE L OPMENT O F THE SAID RES I DENTIA L C OMP L E X TH ERE IN TO BE KN OW N AS ' PR I ME ENCL AVE . COP Y O F COMMENCE M E NT C E R T I F I C ATE I S A NNE X E D H E R E TO A S ANNE XUR E ' B ' . G . T HE PURCHSER HAS REQUESTED T HE DEVELOPER TO CONSTRUCT / CAUS E T O BE C ONSTRUCTED AN APARTMENT IN THE SAID RESIDENTIA L COMP L EX FO R THE P URCHASER AS DESCRIBED IN SCHEDULE C HERETO (HEREINAFTER REFERRED TO AS SCHEDULE C PROPERTY) ACCORDING TO THE SPECIFICATIONS , TERMS AND CONDITIONS REFERRED TO IN SCHEDULE D AND ALSO WITH A PROVISION OF CAR PARKING SPACE. - - ITA 933/13 21 NOW THIS AGREEMENT BETWEEEN THE DEVELOPERS AND THE PURCHASE R ENTERED INTO WITNESSES AS FOLLOWS : - THE PURCHASER HEREBY APPOINTS THE DEVELOPER AS THE CONTRACTOR AND THE DEVELOPER ACCEPTS THE APPOINTMENT TO CONSTRUCT OR CAUSE TO BE CONSTRUCTED FOR THE PURCHASER AN APARTMENT ON SCHEDULE A PROPERTY AS DESCRIBED I N SCHEDULE-C HERETO AND ACCORDING TO . THE SPECIFICATIONS GIVEN IN SCHEDULE-D HERETO AND AS PER THE APPROVED , PLAN I FOR THE AGREED CONSIDERATION OF ` 26,24,214/- (RUPEES TWENTY SIX LAKHS TWENTY FOUR THOUSAND TWO HUNDRED AND FOURTEEN ONLY) COPY OF TYPICAL FLOOR PLAN FOR THE SAID APARTMENT I S ATTACHED HERETO AS ANNEXURE C . THE DEVELOPER UNDERTAKE AND AGREE THAT THE CONSTRUCTION OF THE SCHEDULE C PROPERTY BY . THE , DEVELOPER FOR THE PURCHASER SHALL BE OF GOOD QUALIT Y MATERIALS AND . CONFORM TO SPECIFICATIONS GIVEN IN SCHEDULE D AND SHALL BE PROPER AND OF ACCEPTABLE STANDARD AND ALSO WITHOUT STRUCTURAL DEFECTS OF ANY KIND. 7 .3 FROM THE ABOVE R ECITALS OF THE CONSTRUCTION AGREEMENT, IT I S C L EA R THAT THE OWNER HAS SECURED THE REQUISITE SANCTIONS AND APPROVALS FROM TIRUPU R MUNICIPAL CORPORATION AND CONCERNED PUBLIC AUTHORITIES FOR THE L AYOUT O F T H E SCHEDULE A PROPERTY AND BUILDING PLANS FOR THE CONSTRUCTION OF RESIDENT I A L COMPLEX THEREIN . THE OWNE R HAS ALSO OBTAINED THE REQUISITE COMMENCEMENT CERTIFICATE DATED 1.6.2005 . IT IS NOTEWORTHY TO MENTION HERE - - ITA 933/13 22 THAT THE DEVELOPER H AS NOT GOT ANY POWER OF ATTORNEY FROM THE OWNER I.E. M/S. PRIME TEXTILES L IMITED . 7 .4 COMING TO THE MER I TS OF THE CASE AS TO WHETHER THE ASSESSEE I S A DEVELOPER OR A WORKS CONTRACTOR , NO DOUBT THERE I S AN UNREGISTERED AGREEMENT F OR DEVELOPING THE PROPERTY BETWEEN THE PARTIES M/S PRIME TEXTILES LTD . , AND THE ASSESSEE FIRM M/S PRIME DEVELOPERS, THE MAIN AC TIVITY OF CONSTRUCTION OF FLATS IS UNDERTAKEN BY VIRTUE OF THE CONSTRUCTION AGREEMENT INTO BETWEEN THE ASSESSEE AND THE BUYERS OF THE UNDIVIDED CO-OWNERSHIP RIGHT IN THE PROPERTY AS A CONTRACTOR. THE AR ONLY HIGHLIGHTED ABOUT THE SO CALLED DEVELOPMEN T AGREEME NT WITHOUT MAKING ANY REFERENCE TO THE CONSTRUCTION AGREEMENTS ENTERED I NTO W I T H VARIOUS BUYERS OF THE UNDIVIDED CO-OWNERSHIP RIGHT IN THE PROPERTY. THE L AND OWNER I . E. M/S PRIME TEXTILES L TD., SOLD UNDIVIDED CO-OWNERSHIP RIGHT IN THE PROPERTY TO VAR IOUS INDIVIDUALS AND THESE INDIVIDUALS IN TURN ENTERED I NTO THE CONSTRUCTION AGREEMENT WITH THE ASSESSEE, M/S. PRIM E DEVELOPERS ON VARIOUS DATES. - - ITA 933/13 23 ENTITY - A 8. THE OWNER OF THE LAND I.E. A WAS EARLIER OWNER OF THE ATL TEXTILES LTD. WHOSE NAME CHANGED TO PRIME TEXTILES AND FURTHER CHANGED THE NAME OF PRIME URBA N DEVELOPERS (I) (P) LTD. THE ENTITY A WAS THE OWN ER OF THE LAND WHO HAVE SOLD THE UNDIVIDED SHARE OF LAND TO V ARIOUS PURCHASERS I.E. TO THE FLAT OWNERS. FURTHER THIS E NTITY I.E. PRIME TEXTILES LTD. HAS OBTAINED APPROVAL FROM THE TIRUPUR MUNICIPAL CORPORATION FOR CONSTRUCTION OF THE FLATS . AFTER COMPLETION OF THE FLAT CONSTRUCTION, A CERTIFICATE FROM THE TIRUPUR MUNICIPAL CORPORATION WAS ALSO OBTAINED IN THE NAME OF PRIME TEXTILES. ENTITY B M/S. PRIME DEVELOPERS T HOUG H C A L LE D DEVELOPER IS ONLY A CONT R ACTOR ACCORDING TO THE ASSESSING 0FFI I CER . THE ISSUE TO BE DECIDED IS WHETHER M/S. P RI M E DEVELOPERS IS A CONTRACTOR OR A DEVELOPE R E NTITLED TO CLAIM UNDER SECTION 80LB O F THE INCOME-TAX ACT. HOWEVER, THE FLAT OWNERS HAVE PURCHASED LAND FROM ' A' A ND HAVE ENTERED INTO A CONSTRUCTION - - ITA 933/13 24 AGREEMENT WITH B I.E. PRIME DEVELOPE R S. 9. FROM THE ABOVE RECITALS OF THE CONSTRUCTION AGREEMENT , IT I S VE RY CLEAR E V EN T HO UGH THE ASSESSEE H AS ENTERED I N T O JOINT DE V E L OPMENT AGREEMENT WITH THE LAND OWNER , T HE . L AND OWNE R I N T URN S OLD THE UN D I VIDED CO-OWNERSH I P RIGHT IN THE PROPERTY T O VARIOUS P R OSPECTIVE BUYERS WHO I N TURN ENTERED IN TO , SEPARATE C ONSTRUCTION AGREEMENTS WITH T HE ASSESSEE AS A C ONTRACTOR. THE AR ' S ARGUMENT THAT THE ASSESSEE I S PR I MAR I LY A DEVE L OPER WHO HA S T AKE N THE DEVELOPMENT WO RK SUC H AS PL ANN IN G DEVE L OPMENT OF TH E P R OPE R T I E S ET C . IS N O T A C LINC HI NG FACTOR IN DEC I D I NG THE I SSUE AS T O THE E LI G I BI L I T Y F O R D ED U C TION UNDER SEC . 801B (1 0 ) O F THE A CT, A S T HE M A I N R EVE NU E EA RN E D BY TH E ASSESSE E W AS IN THE NATURE O F WO R KS CONTRA CTOR BY VIRT UE O F TH E W RI TTE N AGREE M E NTS E NT E RED INTO WI T H VARIOUS OWNERS OF UNDIV I DED CO-OWNERSHIP RIGHT IN PROPE RTY . IT I S R E L E VANT TO MENTION HERE THAT ON SIMILAR FACTS THE TRIBUNAL, INDORE BEN CH I N THE CASE OF M/S SKY BUILDERS & DEVELOPERS VS. I . T.O, WARD 1(1), BHOPAL 1 4 TAXMAN 78 (20 11) CLEAR L Y H E LD THAT WHERE - - ITA 933/13 25 THE ASSESSEE SOLD PLOTS TO RESPECTIVE CUSTOMERS BY REGISTERING A SALE DEED AND THEREAFTER ASSESSEE CONSTRUCTED BUILDING AT AN AGREED PRICE, IT HAD TO BE CONCLUDED THAT ASSESSEE MERELY ACTED AS BUILDING CONTRACTO R A N D N O T AS A DEVELOPER AND, THEREFORE , ASSESSEE ' S CLAIM FOR DEDUCTION UNDER SEC . 80 1B ( 10 ) C O U LD NOT BE ALLOWED. THE FACTS OF THE ABOVE CASE ARE SIM ILAR TO THE FACTS OF THE PRESENT CAS E IN HAND, AS IN THIS CASE ALSO THE LAND OWNER M/S PRIME TEXTILES LTD . SOLD THE UNDIVIDED CO-OWNERSHIP RIGHT IN THE PROPERTY TO VARIOUS PERSO NS AND THE PURCHASER I N TU RN ENTERED INTO AGREEMENT WITH THE ASSESSEE AS A CONTRACTOR. THE RECITALS IN THE CONS TRUCTION AGREEMENT CLEARLY PROVES THAT THE ASSESSEE IS A WOR KS CONTRACTOR. 10. A PERUSAL OF THE ABOVE RECITAL INDICATES THE RE AL INTENTION OF THE ASSESSEE. THE ASSESSEE HAS ENTERE D INTO ONLY A CONSTRUCTION AGREEMENT WITH THE FLAT OWNERS WHICH LEGALLY INDICATES THAT IT IS ONLY ACTING AS A CONTR ACTOR. THE ASSESSEE CAN PRODUCE THIS AGREEMENT BEFORE THE CENT RAL EXCISE/SERVICE TAX AUTHORITY TO SHOW THAT THE ASSES SEE IS - - ITA 933/13 26 NOT LIABLE FOR SERVICE TAX, AS IT IS ACTING AS A CO NTRACTOR AND NOT AS A DEVELOPER. HOWEVER, WHEN THE INCOME-TAX AUTHORITY BASED ON THE ABOVE DOCUMENT, FINDS THAT I T IS ONLY A CONTRACTOR AND NOT A DEVELOPER FOR TAKING A DECIS ION ON SEC.80IB OF THE ACT, THE ASSESSEE STATES THAT IT IS A CONTRACTOR ONLY IN NAME BUT A DEVELOPER IN SPIRIT. THUS, THE ASSESSEE BY JUGGLERY OF WORDS HAS MANAGED TO AVOID PAYING SERVICE TAX TO THE CENTRAL EXCISE AUTHORITIE S, AS IT IS ONLY A CONTRACTOR AND CLAIMS DEDUCTION U/S.80IB AS NOT BEING A CONTRACTOR BUT AS A DEVELOPER. THIS JUGGLE RY OF WORDS AND INTERPRETATION OF THE CONSTRUCTION AGREEM ENT HAS FAR REACHING IMPLICATIONS FOR THE REVENUE. 11. FOR THE SAKE OF CLARITY IN HOLDING THAT THE ASS ESSEE IS ONLY A CONTRACTOR AND NOT A DEVELOPER, WE REITERATE THE FOLLOWING POINT: THE ASSESSEE WAS NOT DENIED THE BENEFIT OF 80IB BY THE ASSESSING OFFICER NOT SOLELY BECAUSE OF THE FAC T THAT HE WAS NOT THE OWNER OF THE LAND. THE AO HAS GIVEN HIS REASONS IN PARA 6.3 OF THE ASSESSMENT WHI CH IS THE ABOVE ACT OF THE ASSESSEE ENTERING INTO AN AGREEMENT WITH THE LAND OWNER IS NOT A GOVERNING FACTOR FOR CLAIMING DEDUCTION UNDER THESE PROVISION S OF THE ACT. WHAT IS THE GOVERNING FACT IS RELATIONSHI P BETWEEN THE FLAT BUYERS AND THE ASSESSEE FOR WHOM H E - - ITA 933/13 27 HAS WORKED AS A CONTRACTOR. HIS ENTIRE INCOME IS T HE RECEIPT FROM THE CONTRACT WHICH IS RECEIVED FROM FL AT BUYERS ONLY AS CONTRACTOR AFTER ENTERING INTO A WOR K CONTRACT. 12. THUS, IN OUR OPINION, THE ASSESSEE IS ENGAGED I N THE CONSTRUCTION WORK OF BUILDINGS AS A CONTRACTOR AND WHEN THE ASSESSEES JOB INCLUDES ONLY CONTROLLING AND DIRECT ING THE WORK OF BUILDING CONSTRUCTION AS PER PLAN AND DESIG N BY THE LAND LORD AND HAND OVER THE CONSTRUCTED FLATS ON BE HALF OF THE LAND LORD TO THE ELIGIBLE FLAT OWNERS WHO HAVE GOT REGISTERED UNDIVIDED RIGHT IN THE PROPERTY. IT IS ONLY PERFORMED THE WORK AS A CONTRACTOR AND THE ASSESSEE S JOB IS NOT INCLUDED DESIGNING THE PROJECT AND SELLING O F THE PROJECT AND THE ASSESSEE WOULD NOT GET ANY SHARE IN THE CONSTRUCTED AREA AND IN THE UNDIVIDED PROPERTY AND THE ASSESSEE CANNOT BE SAID TO HAVE INVESTED ITS OWN MO NEY TO CARRY ON THE PROJECT. SIMILAR VIEW HAS BEEN TAK EN BY THE TRIBUNAL, INDORE BENCH IN THE CASE OF M/S. SKY BUIL DERS & DEVELOPERS VS. ITO IN ITA NO.255/MDS/IND/2010 DATED 17.8.2011 FOR THE ASSESSMENT YEAR 2006-07. SINCE WE HAVE OBSERVED THAT THE ASSESSEE IS A CONTRACTOR, TH ERE IS - - ITA 933/13 28 NO QUESTION OF GOING TO THE MERITS OF THE CASE, AS NON- PRODUCTION OF COMPLETION CERTIFICATE OF THE PROJECT . THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT. THE VARIOUS CASE LAW RELIED ON BY THE LD. AR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE, AS THO SE JUDGMENTS WERE DELIVERED ON ITS OWN FACTS. 13. I N THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED ON WEDNESDAY, THE 23 RD OF SEPT., 2015 AT CHENNAI. SD/- SD/- ( '# $%& ' ) ( ' & ( ) ) (CHALLA NAGENDRA PRASAD) (C HANDRA POOJARI) % '* /JUDICIAL MEMBER '* /ACCOUNTANT MEMBER '% /CHENNAI, +' /DATED, THE 23 RD SEPT. , 2015. MPO* ', -./. /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. 012 /CIT(A) 4. 0 /CIT 5. .3$ 4 /DR 6. $56 /GF.