The Income Tax Officer, Ward-9(1), Ahmedabad V. M/s. Shri Hari Associates, Ahmedabad

ITSSA 130/AHD/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3383 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K SINGH
• Keywords: Capital asset; Depreciation; Cost of acquisition
• Section: 80IB; 32; 27

Judgement Text

, * ** *MH MHMH MH* ** * IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I. ITA NO.1874/AHD/2011 ASST YEAR 2008-09 II IT(SS)A NO.128/AHD/2014 ASST. YEAR 2005-06 III. IT(SS)A NO.129/AHD/2014 ASST. YEAR 2006-07 IV IT(SS)A NO.130/AHD/2014 ASST. YEAR 2007-08 INCOME TAX OFFICER WARD 9(1) AHMEDABAD / VS. M/S. SHRI HARI ASSOCIATES F/1, TRIMURTI COMPLEX, THAKKAR BAPA NAGAR ROAD BAPUNAGAR, AHMEDABAD I. CROSS OBJECTION NO.196/AHD/14 (IN IT(SS)A NO.128/AHD/14) ASST. YEAR 2005-06 M/S. SHRI HARI ASSOCIATES F/1, TRIMURTI COMPLEX, THAKKAR BAPA NAGAR ROAD, BAPUNAGAR, AHMEDABAD / VS. INCOME TAX OFFICER WARD 9(1) AHMEDABAD ./ ./ PAN/GIR NO. : AASFS 6951 Q ( ! ' / APPELLANT ) .. ( #' / RESPONDENT ) ASSESSEE BY : SHRI V.K. SINGH, SR. D.R. REVENUE BY : SHRI P.M. MEHTA, A.R. $ % & ' ( ) / DATE OF HEARING 09/08/2017 *+,- ' ( ) / DATE OF PRONOUNCEMENT 18/08/2017 . / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 2 - THESE ARE FOUR APPEALS FILED BY THE DEPARTMENT A LONGWITH ONE CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD, D ATED 09/05/2011 FOR ASST. YEAR 2008-09, 26/12/2013 FOR ASST.YEAR 20 05-06, 2006-07, 2007-08. 2. FIRST WE TAKE UP THE GROUNDS OF APPEAL FILED BY THE DEPARTMENT IN ITA NO.1874/AHD/2011 FOR ASST. YEAR 2008-09: I. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW THE ASSESSEE'S CLAIM FOR DEDUCTION OF RS.4,80,58,72 6/- U/S. 80IB(10) OF THE I.T. ACT. II. THE LD. COMMISSIONER OF INCOME-TAX(A)-I, AHMEDA BAD HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CONDITIONS L AID DOWN FOR CLAIMING DEDUCTION U/S.80IB(10) EVEN WHEN THE LAND WAS IN THE NAME OF SOCIETY NAMELY JEEVANDHARA CO-OP. SOCIETY, WHICH ARE SEPARATE LEGAL ENTITY IN THE EYE OF LAW AND THE ASSESSEE ENT ERED INTO THE PROJECT BY A DEVELOPMENT AGREEMENT WHEN THE SOCIETY . THE ENTIRE RESPONSIBILITY TO EXECUTE THE HOUSING PROJECT(S) AN D ABIDE BY THE TERMS AND CONDITIONS OF ITS APPROVAL RIGHT FROM THE INCEPTION OF THE PROJECT(S) TILL ITS COMPLETION RESTS WITH THE SOCIE TY. ASSESSEE WAS JUST A CONTRACTOR OF THE LAND CONSTRUCTING HOUSING PROJE CTS AND NOT A DEVELOPER. III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-L, AHMEDABAD O UGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. NOW WE TAKE UP THE GROUNDS OF APPEAL FILED BY TH E DEPARTMENT IN IT(SS)A NOS.128, 129 & 130/AHD/2014 FOR ASST. YE ARS 2005-06, 2006-07 & 2007-08. I. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 3 - THE ASSESSEE'S CLAIM FOR DEDUCTION OF RS.41,20,113/ - FOR ASST. YEAR 2005-06, RS.99,67,790/- FOR ASST. YEAR 2006-07 & RS .1,72,79,950/- FOR ASST. YEAR 2007-08 U/S. 80IB(10) OF THE I.T. AC T. II. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-L, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE APPROVAL OF LOCAL AUTHORITY WAS COMMON & INCLUDED DEVELOPMENT O F COMMERCIAL AREA RESULTING IN THE PROJECT BEING NOT ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80IB(10) OF THE I.T. ACT. III. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-L, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT WHEN THE APPROVAL OF LOCAL AUTHORITY WAS COMMON, THE EXECUTION OF THE SAME BY DIFFERENT ENTITIES WAS ARTIFICIAL WITH A VIEW TO CL AIM INELIGIBLE DEDUCTION WHEN PROJECT AS A WHOLE APPROVED BY LOCAL AUTHORITY WAS NO ELIGIBLE FOR SUCH CLAIM OF DEDUCTION U/S. 80IB(1 0)OF THE IT ACT. IV. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-L, AHMEDABAD O UGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. LASTLY, WE TAKE UP THE GROUNDS OF CROSS-OBJECTIO NS FILED BY THE ASSESSEE IN CO NO.196/AHD/2014 (IN IT(SS)A NO.128/A HD/2014) FOR ASST. YEAR.2005-06. I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE HELD THAT IT WAS NOT AT ALL A FIT CASE FOR INVOKING THE PROVISION OF SECTION 153A. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) OUGHT TO HAVE HELD THAT DISALLOWANCE U/S.80IB MADE BY ASSESSING OFFICER IS NOT RELATED TO ANY INCRIMINATING MATERIA L OR UNDISCLOSED ASSET FOUND DURING THE COURSE OF SEARCH AND HENCE THE PRESENT ADDITION MADE BY AO IS BEYOND SCOPE OF SECTION 153A. III. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AN D/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS OBJECTIONS EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE SAME. ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 4 - 5. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- A WARRANT OF AUTHORIZATION U/S.132(1) OF THE I.T. A CT WAS ISSUED AND EXECUTED AT THE BUSINESS PREMISES OF VASANI GRO UP AT 25 KRISHNA NAGAR SOCIETY OPP. NARAN CHAMBERS, BAPUNAGAR, AHMED ABAD, AND CERTAIN DOCUMENTS WERE FOUND AND SEIZED ON 10/05/20 06. SIMULTANEOUSLY, A SURVEY OPERATION CARRIED OUT AT T HE OFFICE PREMISES AT F-1, TRIMURTI COMPLEX, T.B. NAGAR, BAPUNAGAR, AHMED ABAD, AND CERTAIN DOCUMENTS WERE FOUND AND SEIZED WHICH BELONGS TO TH E ASSESSEE. ACCORDINGLY, PROCEEDINGS U/S.153A WAS INITIATED ON DATED 20/11/2006 FOR A.Y. 2001-02 TO 2006-07. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON DATED 10/05/2007 DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT FOR RS.41,20,113/ -. 2. DISALLOWANCE OF DEDUCTION CLAIMED U/S.80IB(10): 2.1 THE LAND ON WHICH HOUSING PROJECT HAS BEEN CONS TRUCTED WAS PURCHASED BY THE FOLLOWING HOUSING SOCIETIES FROM M .H. MILLS & INDUSTRIES LTD. SARASPUR, AHMEDABAD. SR NO. NAME OF THE PURCHASES DATE AREA 1. NAVDEEP CO.OP H. SOC LTD. 11/07/20011 3,642 SQ. MTR 2. THE RADHE HOUSING & COMM. 09/04/2001 13,642 SQ.MT R CO. OP SOCIETY LTD. 3. SHREE HARI VILLA CO.OP. HOU. 11/07/2007 14,234 S Q MTR SOC. LTD. 4. NANDANVAN CO.OP. HOU. 11/07/2001 11,314 SQ.MTR SOC. LTD. 5. JIVAN DHARA CO.OP HOU. SOC. 09/04/2001 15,378 SQ. MTR SOC. LTD. TOTAL LAND 68,210 SQ.MTR. ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 5 - 2.2 ON THE ABOVE LAND, A SINGLE HOUSING PROJECT ALO NG WITH A COMMERCIAL COMPLEX HAS BEEN PLANNED AND APPROVED BY THE AHMEDABAD MUNICIPAL CORPORATION. THE BLUE PRINT CLE ARLY ESTABLISHED THE SINGLENESS OF THE PROJECT. HOWEVER, LATER ON, THE PROJECT HAS BEEN ARTIFICIALLY DIVIDED INTO FOUR PAR TS AND CLAIMED TO BE CONSTRUCTED BY FOLLOWING FIRMS OF THE GROUP: (I) M/S. GIRIRAJ CORPORATION (II) M/S. SHREE NAND CORPORATION (III) M/S. SHREE HARI ASSOCIATES (IV) M/S. VASUDEV DEVELOPERS 2.3 IT MAY ALSO BE STATED HERE THAT THE LAND REGIST ERED IN THE NAMES OF SOCIETIES IS ALSO NOT DEMARCATED AND HENCE IT WAS A JOINT OWNER SHIP OF THE LAND. THE BREAKUP OF BUILD UP AREA APPR OVED BY THE LOCAL AUTHORITY AS PER THE BLUE PRINT IS AS UNDER: BUILT UP AREA TABLE COMMERC IAL (IN SQ. MT.) RESIDENTI AL (IN SQ. MT.) TOTAL (IN SQ. MT.) APP. BUILT UP AREA ON CELLAR 3314.00 - 3314.00 APP. BUILT UP AREA ON GR.FLOOR 2985.25 21512.49 24497.74 APP. BUILT UP AREA ON 1 ST FLOOR 1270.94 21348.67 22619.61 APP. BUILT UP AREA ON 2 ND FLOOR 1252.32 - 1252.32 APP. BUILT UP AREA ON 3 RD FLOOR 1204.94 - 1204.94 APP. BUILT UP AREA ON 4 TH FLOOR 780.85 - 760.85 APP. BUILT UP AREA ON STAIR CABIN 188.74 2497.96 2686.70 TOTAL APP. BUILT UP AREA 10977.04 45359.12 56336.16 2.4 THE ASSESSEE HAS ENTERED INTO A DEVELOPMENT AGR EEMENT ON 31/03/2001 WITH JEEVANDHARA CO-OPERATIVE HOUSING SO CIETY LTD. AT M.H. MILL COMPOUND, AHMEDABAD FOR THE DEVELOPMEN T OF LAND ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 6 - SITUATED AT T.P. SCHEME NO.7, FINAL PLOT NO.30 AND SUB-PLOT-B, MITHIPUR BEARING AREA OF LAND 15378 SQ. MTRS. THE A BOVE LAND WAS PURCHASED BY JEEVANDHARA CO-OPERATIVE HOUSING S OCIETY LTD FROM M.H. MILLS & INDUSTRIES LTD. ON 09/04/2001 . 2.5 DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAS STARTED THE INSTRUCTION WORK. THE APPROVAL FROM THE A.M.C. HAS BEEN OBTAINED ON 25/06/2004, AND VARIOUS SUBSEQUENT DATE S IN THE NAME OF SHRI RAJESHKUMAR SAVJIBHAI VASANI, POWER OF ATTORNEY HOLDER OF MANAGING DIRECTOR OF M.H. MILLS & INDUSTR IES LTD, CHAIRMAN OF RADHE HOUSING & COMMERCIAL SOCIETY LTD, CHAIRMAN OF JEEVAN DHARA CO-OP. HOUSING SOCIETY LTD , CHAIRMAN NANDANVAN CO-OP. HOUSING SOCIETY LTD, CHAI RMAN, NAVDEEP CO-OP. HOUSING SOCIETY LTD, AND CHAIRMAN SH RI HARI VILLA CO-OP, HOUSING SOCIETY LTD. THE BUILT UP AREA OF THE PROJECT WAS CLAIMED TO BE CONSTRUCTED BY THE ASSESS EE IS AS UNDER: AREA OF 1 UNIT NO OF UNITS TOTAL BUILT UP IN SQ. MTRS IN SQ. MTRS. TYPE A 138.25 20 2765.00 TYPE B1 138.00 12 1656.00 TYPE C 139.00 16 2224.00 TYPE C 94.32 1 94.00 TYPE C1 139.00 19 2641.00 TYPE C1 81.44 1 81.44 TYPE C2 139.00 15 2085. 00 TYPE C2 88.05 1 88.05 TYPE C6 79.40 9 714.60 TYPE C6 88.05 2 176.10 TYPE C6 139.00 13 1807.00 TYPE C5 138.80 2 277.60 TYPE D 79.16 13 1029.08 124 15639.19 2.6 DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAS SHOWN THE WORK COMPETED OF RS.1,17,72,000/- AS WORK IN PROGRE SS IN THE P& L A/C AND AFTER DEBITING THE DIRECT AND INDIRECT EXPENSES, NET PROFIT OF RS.41,20,113/- HAS BEEN SHOWN. SUBSEQUENT LY, IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S.80IB(10) OF THE ACT AND DETERMINED THE INCOME A S NIL. VIDE ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 7 - QUESTIONNAIRE DATED 22.10.2008, THE ASSESSEE WAS RE QUESTED TO FURNISH THE RETAILS IN SUPPORT OF THE CLAIM U/S 80I B(10) OF THE ACT. IN RESPONSE TO THE ABOVE, THE ASSESSEE HAS FILED IT S REPLY VIDE LETTER DATED 26.12.2008. THE A.R. OF THE ASSESSEE H AS ALSO BEEN HEARD AT LENGTH. THE MAIN CONTENTION OF THE ASSESSE E ARE AS UNDER: .... YOUR GOOD SELVES HAVE ASKED TO JUSTIFY THE CL AIM OF DEDUCTION U/S. 80IB(10) OF ACT WITH SUPPORTING EVID ENCE. IN THIS MATTER, WE SUBMIT HEREUNDER. IN THIS MATTER WE SUBMIT HEREUNDER: 1.1 BEFORE PROVIDING THE DETAILS, EXPLANATIONS, THE ASSESSEE WOULD LIKE TO PROVIDE A BRIEF DETAIL OF TH E SCHEME DEVELOPED BY IT. THE LAND ON WHICH THE PROJECT WAS DEVELOPED BY THE ASSESSEE FIRM IS PURCHASED FROM M. H. MILLS. ORIGINALLY, M. H. MILLS WAS HOLDING A HUGE L AND AT KHOKHRA MEHMADABAD. M. H. MILLS HAVE SUB-PLOTTED TH E SAID LAND INTO FIVE SUB PLOTS. OUT OF THE SAME, JEEVANDHARA COOPERATIVE SOCIETY HAD PURCHASED SUB-P LOT NO. 8 ADMEASURING 15,378 SQUARE METERS OF LAND. THE SOCIETIES HAVE AGREED TO APPOINT THE FIRM AS A DEVELOPER AND HAVE ENTERED INTO A DEVELOPMENT AGREEMENT WITH THE ASSESSEE FOR DEVELOPMENT OF 15,3 78 SQUARE METERS. THE DEVELOPER HAD DEVELOPED A RESIDE NTIAL PROJECT ON THE SAID LAND AND CARRIED OUT THE ACTIVI TIES AS A DEVELOPER. THE DEVELOPER, IN FACT, IS THE OWNER OF THE PLOT, BECAUSE THE PAYMENTS FOR THE PURCHASE OF THE LAND WAS MADE BY THE SOCIETY FORM THE FUNDS PROVIDED BY THE ASSESSEE FIRM, I.E. THE DEVELOPER. THUS, THE SOCIET Y IS SPECIAL PURPOSE VEHICLE [SPV] FOR CARRYING OUT THE ACTIVITIES OF DEVELOPMENT AND BUILDING OF RESIDENTI AL UNITS. M. H. MILLS, WHO IS HOLDING A HUGE PLOT OF LAND, HA D DIVIDED ITS LAND INTO FIVE SUB PLOTS. THE DEVELOPER AND THE SOCIETY HAVE COME TOGETHER FOR ALL THESE FIVE SUB P LOTS AND HAVE AGREED TO DRAW A COMMON DEVELOPMENT OF THE SAM E AND THEREFORE, THEY HAVE DRAWN THE PLANS FOR THE SA ID LAND FOR THE PURPOSE OF APPROVAL BY THE MUNICIPAL AUTHOR ITIES. BY DOING SO, THE DEVELOPER AND THE SOCIETY ARE BENE FITED BY WAY OF HAVING HIGHER F.S.I. AND PUTTING THE COMM ON ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 8 - AREAS AT ONE PLACE, SO THAT THE SCHEMES CAN BE FULL Y DEVELOPED. THUS, THE ON WHICH THE ABOVE SOCIETIES WERE DEVELOP ED BY ASSESSEE AND THE SAME WAS PURCHASED WITH THE HELP A ND EFFORTS MADE BY ASSESSEE. THE LAND WAS PURCHASED AS SPECIAL PURPOSE VEHICLE BY SOCIETIES AND LATER ON, FOR THE PURPOSE OF DEVELOPMENT AND BUILDING RESIDENTIAL UNI TS, IT HAD TRANSFERRED ALL RIGHTS OF DEVELOPMENT TO THE AS SESSEE. THE DEVELOPMENT AGREEMENTS MADE BETWEEN THE SOCIETY AND ASSESSEE ARE ATTACHED HEREWITH VIDE ANNEXURE-1. A PERUSAL OF THE AGREEMENT SHOW THAT THE DEVELOPMENT AS PER LAYOUT PLAN HAS TO BE DONE BY THE ASSESSEE AT I TS OWN COST AND RISK. THE ASSESSEE BEING DEVELOPER CUM BUI LDER OF THE HOUSING PROJECT IS CLAIMING DEDUCTION U/S.80IB. FURTHER, ALL THE REQUISITE CONDITIONS FOR CLAIMING DEDUCTION U/S.80IB HAVE BEEN FULFILLED BY ASSESSEE. THE SAME ARE MENTIONED HEREUNDER IN TABLE FORMAT. SR. NO. CONDITIONS REQUIRE TO BE FULFILL CLAIM DEDUCTION U/S.80IB FULFILLMENT OF CONDITIONS OF DEDUCTION U/S.80IB 1. DATE OF APPROVAL BY LOCAL AUTHORITY RAJA CHITTHI AS PER ANNEXURE 5.2 ATTACHED WITH SUBMISSION OF A.Y.2001-02. APPROVED AMC 2. DATE OF BU PERMISSION AS PER ANNEXURE 5.3 ATTACHED WITH SUBMISSION OF A.Y.2001-02. 3. SIZE OF THE PLOT OF LAND 15378 SQUARE METERS 4. BUILT UP AREA OF EACH RESIDENTIAL UNIT LESS THAN 1500 SQUARE FEET EACH RESIDENTIAL UNIT IS HAVING BUILT UP AREA OF LESS THAN 1500 SQUARE FEET AS PER THE APPROVED SIZE. ASSESSEE HAS SATISFIED ALL THE CONDITIONS LAID DOWN IN SECTION FOR CLAIMING DEDUCTION U/S. 80IB, THE ASSES SEE ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 9 - BEING THE DEVELOPER, IS ENTITLED TO CLAIM DEDUCTION U/S. 80IB FOR THE ABOVE REFERRED HOUSING PROJECT. NOW THE ASSESSEE PROVIDES THE DETAILS AND EXPLANATI ON FOR ITS CLAIM OF DEDUCTION U/S. 80IB HEREUNDER. 2.1 THE LAND ON WHICH THE PROJECT WAS DEVELOPED WAS PURCHASED FROM M. H. MILLS IN NAME OF SOCIETY TO FACILITATE AND SMOOTH FUNCTIONING MEMBERS OF SOCIET Y. THE MAIN PURPOSE OF TRANSFER OF LAND IN NAME OF SOCIETY WAS TO FACILITATE MEMBERS OF THE SOCIETY IN BETTER WAY. HO WEVER THE SOCIETY DOES NOT HAVE ENOUGH FUND FOR PURCHASE OF LAND AND THEREFORE SOCIETY ENTERED INTO AN AGREEMEN T TO SALE I.E. 'BANAKHAT' FOR THE AFORESAID LAND ON 31/0 3/2001 WITH THE ASSESSEE FIRM FOR AN AGREED CONSIDERATION OF RS.1,05,00,000/- AND THE SAID AMOUNT HAVE TO BE PAID/REIMBURSED BY THE DEVELOPER FIRM. THE DEVELOPE R HAS PAID RS.63,65,000/- (RS. 55,15,000/- ON 09/04/2001 RS.8,00,000/- ON 09/04/2001 AND RS.50,000/- ON 10/04/2001) TO THE SOCIETY AT THE TIME OF PURCHASE OF ABOVE LAND. THE ASSESSEE FIRM ALSO ENTERED INTO DEVELOPME NT AGREEMENT WITH THE SOCIETY FOR THE DEVELOPMENT OF H OUSING PROJECT ON THE SAID LAND. BY ENTERING INTO BANAKHAT AND PAYING THE AGREED CONSIDERATION OF LAND THE ASSESSE E DEVELOPER FIRM HAS PURCHASED THE LAND AND BECOMES T HE OWNER OF SAID LAND. THUS THE LAND IS OWNED BY THE ASSESSEE DEVELOPER AND IN ITS POSSESSION FOR DEVELO PMENT OF RESIDENTIAL HOUSING PROJECT AND SALE OF RESIDENT IAL UNITS WITH ITS CONSENT AS CONFIRMING PARTY. 2.2 IT MAY BE NOTED THAT JEEVANDHARA CO-OPERATIVE HOUSING SOCIETY WAS PROVIDED WITH THE FUND BY THE ASSESSEE FIRM AS AND WHEN NEEDED FOR THE REPAYMENT OF LOANS TAKEN BY THE SOCIETY FOR PURCHASE OF LAND AND ANY OTHER PURPOSE. THUS NOT ONLY ARRANGEMENT OF FINANCE , BUT IT LAW AND ON FACTS ALL THE RISK AND REWARDS WERE TRANSFERRED TO THE ASSESSEE FIRM. 2.3 IT IS ALSO STATED THAT JEEVANDHARA CO-OPERATIVE HOUSING SOCIETY WAS ALSO PROVIDED WITH OTHER NECESS ARY FUNDS, AS AND WHEN REQUIRED, UNDER A SPECIAL ARRANG EMENT AGREED BY THE DEVELOPER FIRM. IN THIS BACKGROUND, I T IS ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 10 - STATED THAT DEEVANDHARA CO-OPERATIVE HOUSING SOCIET Y WAS FOR ALL PRACTICAL PURPOSES, CONSIDERED AS A SPE CIAL PURPOSE VEHICLE. IT IS STATED THAT DEVELOPER FIRM HAS EARNED SUBSTANTIAL PROFIT OUT OF AFORESAID DEVELOPMENT ACT IVITIES. HAD THERE BEEN ANY LOSSES IT WOULD HAVE ON THE ACCO UNT OF SOCIETY. IT IS FURTHER STATED THAT LAND OWNERS ARE ENTITLED TO THE COST OF LAND AND THEY ARE NOT ENTITLED TO ANY P ROFIT EARNED BY DEVELOPER FIRM ON DEVELOPMENT. 4. WITH REGARDS TO YOUR GOOD SELVES OBSERVATION THA T LAND ON WHICH AFORESAID PROJECT HAS BEEN DEVELOPED IS OWNED BY AFORESAID SOCIETY, IT IS SUBMITTED THAT OW NERSHIP OF LAND BY THE UNDERTAKING IS NOT A PRECONDITION TO CLAIM DEDUCTION U/S. 801B(10) OF THE ACT. IT IS FURTHER S TATED THAT ON PERUSAL OF THE SPEECHES OF HON'BLE FINANCE MINIS TER AT THE TIME OF INTRODUCTION OF PROVISION ENABLING THIS DEDUCTION AND AT THE TIME OF VARIOUS AMENDMENTS MAD E INCLUDING THE SPEECH, IT CAN BE APPRECIATED THAT TH E CONDITION OF THE OWNERSHIP OF LAND IS NOT INTENDED. EVEN OTHERWISE, HAD THIS BEEN THE INTENTION, THE SAME WO ULD HAVE BEEN SPECIFICALLY MENTIONED IN THE SECTION LIK E OTHER CONDITIONS REFERRED HEREIN ABOVE. 4.1 WITHOUT PREJUDICE TO ABOVE, ASSESSEE STATES THAT BY ENTERING INTO AGREEMENT TO SALE (BANAKHAT), THE SOC IETY HAVE GIVEN POSSESSION OF SAID LAND TO THE DEVELOPER FOR THE PURPOSE OF DEVELOPMENT AND SALE OF RESIDENTIAL UNIT S. BY VIRTUE OF THE BANAKHAT, THE ASSESSEE BECOMES THE OW NER OF LAND HAS OBTAINED THE LAND POSSESSION TOGETHER WITH THE RIGHTS TO DEVELOP AND CONSTRUCT THE PROJECT. ACCORD INGLY, ASSESSEE FIRM HAD BECOME PARTY TO THE AGREEMENT WHI LE TRANSFERRING LAND TO THE ULTIMATE BUYER. ONE OF THE CONNOTATIONS OF TRANSFER IS TRANSFER OF POSSESSION WHICH IS LAWFUL AND VALID. WITHOUT TAKING POSSESSION OF THE LAND, ASSESSEE FIRM WOULD NOT HAVE BEEN IN POSITION TO DE VELOP AND BUILD THE RESIDENTIAL UNITS AT ALL. THERE IS DEFINITELY A DOMINATION OF THE ASSESSEE-DE VELOPER OVER THE LAND TO THE EXCLUSION OF OTHERS IN AS MUCH AS POSSESSION OF LAND IS GIVEN TO THE ASSESSEE BY THE LAND ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 11 - OWNERS TO CARRY OUT DEVELOPMENT ACTIVITIES OF AFORE SAID PROJECT. EVEN ACCORDING TO SECTION 2(47) OF THE INC OME TAX ACT READ WITH SECTION 53A OF TRANSFER OF PROPER TY ACT, THE SAID TRANSACTION IS TREATED AS TRANSFER IN RELA TION TO CAPITAL ASSET AND ASSESSEE BECOMES THE OWNER OF THE LAND. ASSESSEE WOULD FURTHER STATE THAT ACCORDING TO JUDG MENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT (260 ITR 491), ASSIGNING DEVELOPMENT RIGHTS IN A PROPERTY AMOUNTS TO TRANSFER U/S.2(47) OF THE INCOME TAX ACT, 1961 AND HENCE BY DEVELOPMENT AGREEMENT, ASSESSEE HAS BECOME THE OWNER OF SAID LAND. SECTION 2(47)(V) READ WITH SECT ION 53A MAKES THE POSITION VERY CLEAR. THE SAID SECTIONS RE AD: S.2(47) TRANSFER, IN RELATION TO A CAPITAL ASSET , INCLUDES,- (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT, 1882 (4 OF 1882); OR EXPLANATION: FOR THE PURPOSES OF SUB-CLAUSES (V) AN D (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA; SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 R EADS AS UNDER:- 53A. PART PERFORMANCE WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDER ATION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTI TUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAIN TY AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONT RACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREO F, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTIN UES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT AND TH E TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM H IS PART ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 12 - OF THE CONTRACT, THEN NOTWITHSTANDING THAT THE CONT RACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGI STERED, OR, WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESC RIBED THEREFORE BY THE LAW FOR THE TIME BEING IN FORCE, T HE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL B E DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTI NUED POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED B Y THE TERMS OF THE CONTRACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. ' IT IS SUBMITTED THAT CLAUSE (IIIA) OF SECTION 27 OF THE I NCOME TAX ACT, 1961 IS TRANSFERRED AS OWNER IF HE SATISFI ES THE CONDITIONS OF SECTION 53A OF THE TRANSFER OF PROPER TY ACT, 1882. S. 27 FOR THE PURPOSES OF SECTION 22 TO 26 - XXXXXX (IIIA) A PERSON WHO IS ALLOWED TO TAKE OR RETAIN PO SSESSION OF ANY BUILDING OR PART THEREFORE IN PART PERFORMAN CE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), SHALL B E DEEMED TO BE THE OWNER OF THAT BUILDING OR PART THE REOF.' FROM THE PERUSAL OF THE ABOVE SECTIONS IT IS CLEAR THAT PURSUANT TO THE PART PERFORMANCE OF THE AGREEMENT T O SALE IF THE POSSESSION OF THE PROPERTY IS HANDED OVER, I N THE EYE OF THE LAW, THE TRANSFEREE SHALL BE HELD TO BE THE OWNER OF THE PROPERTY. IT IS FURTHER SUBMITTED THAT SECTION 269UA(D)(II) R EAD WITH SECTION UA(F)(II) OF THE ACT ALSO MAKE IT MORE THAN CLEAR THAT WHEN ANY RIGHT IN OR WITH RESPECT TO ANY LAND IS ALTERED BY WAY OF ANY AGREEMENT WHICH HAS EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF SUCH PROP ERTY, SUCH AGREEMENT SHALL BE CONSTRUED AS TRANSFER WITH IN THE MEANING OF THAT SECTION. THE SAID SECTIONS READ: ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 13 - S.269UA (D) IMMOVABLE PROPERTY MEANS- (II) ANY RIGHTS IN OR WITH RESPECT TO ANY LAND OR A NY BUILDING OR A PART OF A BUILDING (WHETHER OR NOT IN CLUDING ANY MACHINERY, PLANT, FURNITURE, FITTINGS OR OTHER THINGS THEREIN) WHICH HAS BEEN CONSTRUCTED OR WHICH IS TO BE CONSTRUCTED, ACCRUING OR ARISING FROM ANY TRANSACTI ON (WHETHER BY WAY OF BECOMING A MEMBER OF OR ACQUIRIN G SHARES IN A CO-OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OF WHATEVER NATURE), NOT BEING A TRANSA CTION BY WAY OF A SALE, EXCHANGE OR LEASE OR SUCH LAND, B UILDING OR PART OF A BUILDING. (F) TRANSFER (II) IN RELATION TO ANY IMMOVABLE PROPERTY OF THE N ATURE REFERRED TO IN SUB-SECTION (II) OF CLAUSE (D), MEAN S THE DOING OF ANYTHING (WHETHER BY WAY OF ADMITTING AS A MEMBER OF OR BY WAY OF TRANSFER OF SHARES IN A COOPERATIVE SOCIETY OR COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ARRANGEMENT O R IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT O F TRANSFERRING OR ENABLING THE ENJOYMENT OF SUCH PROP ERTY.' 4.2 THE ASSESSEE FURTHER STATES THAT AS PER CLAUSE 16 OF DEVELOPMENT AGREEMENT, IS ENTITLED TO RECOVERED FRO M MEMBERS INCLUDES TOWARDS BUILDING CONSTRUCTION, COM MON AMENITIES I.E. ROAD, LIGHT WATER, WATER TANK, WATER LINE, COMMON DEVELOPMENT ETC. ARE INCLUDED IN BUILDING CONSTRUCTION PRICE AND CAN GIVE POSSESSION TO THE PROSPECTIVE BUYERS WHICH SHOWS THAT ASSESSEE WAS IN FULL POSSESSION OF THE LAND FOR THE DEVELOPMENT OF HOUSI NG PROJECT AND HAS CARRIED OUT ALL THE ACTIVITIES OF A COMPLETE HOUSING PROJECT BY TAKING ALL RISKS ASSOCIATED WITH THIS BUSINESS. HERE, ASSESSEE RELIES ON DECISION OF HON' BLE SUPREME COURT IN CASE OF MYSORE MINERALS LIMITED 23 9 ITR 775 WHEREIN TERM 'OWNED' IN S. 32 HAS BEEN GIVE N A WIDER MEANING BY HOLDING THAT IF AN ASSESSEE WAS IN POSSESSION OF A PROPERTY AND HAD ACQUIRED DOMINION OVER IT TO THE EXCLUSION OF OTHERS, HE WOULD BE ENTITLED ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 14 - DEPRECIATION UNDER S.32 IRRESPECTIVE OF THE LEGAL T ITLE. IN THE PRESENT CASE THE 'DEVELOPMENT AGREEMENT AND 'AGREEMENT TO SALE THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS AND CLAIMING DEDUCTION OF PROFITS FROM SUCH HOUSING PROJECTS, THERE IS, DEFIN ITELY, A DOMINION OF THE DEVELOPER OVER THE LAND TO THE EXCL USION OF OTHERS INASMUCH AS POSSESSION OF THE LAND IS GIV EN TO THE DEVELOPER BY THE LAND OWNERS TO CARRY OUT THE CONSTRUCTION ACTIVITY OF THE HOUSING PROJECT. THE A SSESSEE HAS ALSO PAID CONSIDERATION FOR ACQUIRING THE LAND THROUGH AN AGREEMENT TO SALE AND IN VIEW OF THE PROVISIONS OF SECTION 2(47) R.W.S. 53A OF THE TRANS FER OF PROPERTY ACT, 1882, THE ASSESSEE HAS COMPLETELY PERFORMED HIS PART OF THE CONTRACT AND DEVELOPED TH E HOUSING PROJECT AND TRANSFERRED THE FLATS TO THE BU YERS IN VIEW OF AGREEMENT SALE AS WELL AS DEVELOPMENT AGREEMENT HENCE ENTITLED TO DEDUCTION U/S.80IB(10) OF THE ACT. 4.3 IT IS FURTHER STATED THAT AS AGREED BETWEEN DEVELOPER AND AFORESAID SOCIETY, ASSESSEE DEVELOPER IS REQUIRED TO PAY RS.1,05,00,000/- AS TOTAL CONSIDERA TION TO THE EXTENT OF ACTUAL COST OF ACQUISITION OF AFORESA ID LAND TO AFORESAID SOCIETY AND SAME HAS BEEN PAID BY DEVELOP ER THROUGH COLLECTION MADE FROM MEMBERS, WHICH SUGGEST S THAT ENTIRE PAYMENT OF LAND INITIALLY MADE BY SOCIE TY HAS BEEN PAID BY DEVELOPER AND PURCHASER OF RESIDENTIAL UNITS. 5. IN VIEW OF THE LEGAL POSITION AS EXPLAINED ABOVE , SUPPORTED BY VARIOUS JUDICIAL DECISIONS, IT IS STAT ED THAT ASSESSEE IS THE OWNER OF THE AFORESAID PROPERTY AND DEDUCTION U/S. 80IB CANNOT BE DENIED TO IT. 6. AS ASSESSEE HAS SATISFIED ALL THE CONDITIONS STA TED IN SECTION 80IB(10), DEDUCTION CLAIMED IN RETURN OF IN COME CANNOT BE DENIED. IT IS BECAUSE OF ITS EXPERTISE, SPECIALIZATION, FINANCIAL COMMITMENT AND THE INVOLV EMENT, THE AFORESAID HOUSING PROJECT HAS BEEN COMPLETED SUCCESSFULLY AND PROFIT DERIVED FROM SUCH ACTIVITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE AC T. ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 15 - 7. ALL THE DETAILS OF SUCH DEVELOPMENT RIGHTS ARE ENCLOSED HEREWITH. IT IS VERY CLEAR THAT THE SOCIET Y HAS NO INTEREST AT ALL EXCEPT ACTING AS A SPECIAL PURPOSE VEHICLE IN THE PROCESS OF THIS DEVELOPMENT. 7.1 IN FACT THE DEVELOPER FIRM HAS EARNED SUBSTANTI AL PROFIT OUT OF DEVELOPMENT ACTIVITIES. HAD THERE BEE N ANY LOSSES IT WOULD HAVE BEEN ON ACCOUNT OF THE DEVELOP ER. THE SAID CONDITION IS MENTIONED IN PARA NO.16 OF TH E DEVELOPMENT AGREEMENT. WHERE IT IS STATED THAT THE PROFIT OF THE DEVELOPER IS NET AMOUNT OF INCOME AND EXPENS ES EARNED AND EXPENDED BY THE DEVELOPER. 7.2 THE ASSESSEE FIRM I.E. THE DEVELOPER WAS REQUIR ED TO PAY CONSIDERATION FOR SUCH DEVELOPMENT RIGHTS IRRESPECTIVE OF THE FACT WHETHER THE DEVELOPER FIRM IS ABLE TO SELL OUT THE DEVELOPED LAND OR NOT. SO, ALL THE RISKS ARE ON ACCOUNT OF THE ASSESSEE FIRM. ONLY FOR THE CONVE NIENCE OF ULTIMATELY HOLDING THE PROPERTY AND MAINTAINING THE PROPERTY THE SPECIAL PURPOSE VEHICLES ARE RETAINED. IN FACT ALL THE PERMISSIONS AND APPROVALS WERE OBTAINED BY THE DEVELOPER FIRM AND ALL EFFORTS WERE PUT IN BY THE D EVELOPER FIRM AND ALSO LEGALLY BOUND TO DO SO UNDER THE AGRE EMENT. THE FUNCTIONS OF THE DEVELOPER FIRM ARE THAT OF DEVELOPMENT OF ABOVE PROPERTY AND ARE BRIEFLY DESCR IBED AS UNDER: (I) THE DEVELOPER FOR THE PURPOSE OF PLANNING AND EXECUTING THE PROJECT HAS SANCTIONED NECESSARY PLAN S, REVISED THE PLAN, DRAWINGS, SPECIFICATIONS AND MAPS , ETC., AND HAS DONE THE WORK OF PLANNING, CONSTRUCTION AND DEVELOPMENT OF THE SAID PROJECT. (II) THE DEVELOPER HAS APPOINTED THE ARCHITECTS, ENGINEERS, LEGAL ADVISORS, CONTRACTOR AND SUCH OTHE R PROFESSIONALS NECESSARY FOR THE PURPOSE OF IMPLEMEN TATION OF SUCH PROJECT AND HAS BORN THE NECESSARY EXPENDIT URE. THE DEVELOPER HAS MADE ALL NECESSARY ARRANGEMENTS W ITH THE AFORESAID PROFESSIONALS FOR SUCCESSFUL PLANNING , CONSTRUCTION AND DEVELOPMENT OF THE SAID PROJECT. ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 16 - (III) THE DEVELOPER HAS ACCEPTED MONEY FROM THE PER SONS ENROLLED AS MEMBER IN THE PROJECT. (IV) FOR THE PURPOSE OF IN TIME COMPLETION OF THE PROJECT, AS PLANNED AND WITHIN STIPULATED PERIOD, DEVELOPER HAS MADE ALL NECESSARY APPLICATIONS, REPL IES STATEMENTS, WHICH ARE NEEDED, IN THE GOVERNMENT OFF ICES OR MUNICIPAL CORPORATION OFFICES ETC. (V) THE COMPLETE RESPONSIBILITY OF THE PLANNING, AN D THE TOTAL CONSTRUCTION IS RESTED UPON THE DEVELOPER AND DURING THE TIME WHEN THE PROJECT WAS GOING ON, THE COMPLET E RESPONSIBILITY FOR WHATEVER AGREEMENTS EXECUTED UND ER THE PROJECT AND WHATEVER TRANSACTIONS TAKEN PLACE WITH THIRD PARTIES, THE SAME WAS RESTED UPON THE DEVELOPER AND THE SOCIETY WAS NOT RESPONSIBLE. 8. DETAILS OF APPROVAL OF CONSTRUCTION BEFORE THE MUNICIPAL AUTHORITIES: ASSESSEE FIRM STATS AS PER DEVELOPMENT AGREEMENT ENTERED BY IT AND SOCIETY, AS SESSEE DEVELOPER HAD MOVED APPLICATION FOR OBTAINING APPRO VAL TO CONSTRUCT FLATS AS PER PLAN PREPARED BY ASSESSEE FROM AMC AND SUCH APPROVAL WAS GRANTED IN THE NAME OF SOCIETY JEEVANDHARA COOPERATIVE SOCIETY LIMITED', OWNER OF LAND ON THE RECORDS, BY AMC. IT IS FURTHER STATED THAT AT THE RELEVANT TIME, IT WAS NOT CONDITION OF AMC TO INCLUDE NAME OF DEVELOPER AS PARTY OF APPROVAL. 9. DETAILS OF MEMBERSHIP OF SOCIETY AND ALLOTMENT O F HOUSES: IN THIS REGARDS THE ASSESSEE WOULD LIKE TO STATE THAT, IT IS THE DEVELOPER I.E. M/S. SHRI HARI ASSOC IATES BUILDS THE UNITS AS PER APPROVAL OF AMC AND SELL TO THE CUSTOMERS. THE PRICE CHARGED TO THE CUSTOMERS IS SO LELY DETERMINED BY THE ASSESSEE AND THEREBY, COLLECTS TH E CONSIDERATION. THE SOCIETY IS BOND TO ENTER THE SAM E PERSONS AS MEMBERS AS IT IS ONLY SPV AND DECISION T O SALE THE FLAT TO CUSTOMER IS OF ASSESSEE FIRM AND NOT OF SOCIETY. THUS, FROM THE ABOVE CLAUSE, IT IS CLEAR THAT THE D EVELOPER DETERMINES THE PERSONS TO WHOM MEMBERSHIP IS TO BE GIVEN AND THE SOCIETY REGISTERS SUCH PERSON ON THE RECOMMENDATION OF THE DEVELOPER. ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 17 - 10. DETAILS OF THE MONEY COLLECTED FROM MEMBERS OF SOCIETY TOWARDS BOOKING OF FLATS OR HOUSES: THE ASS ESSEE WOULD LIKE TO STATE THAT THE MONEY OF SALE WAS RECO VERED BY IT, FROM THE PURCHASERS TOWARDS PURCHASE OF THE UNITS. THIS IS AS PER THE CONDITION INSERTED IN THE DEVELO PMENT AGREEMENT CLAUSE 16. THE FREE ENGLISH TRANSLATION I S GIVEN HEREUNDER: '............ .THE AMOUNT RECOVERED FROM ME MBERS INCLUDES TOWARDS BUILDING CONSTRUCTION, COMMON AMENITIES I.E . ROAD, LIGHT WATER, WATER TANK, WATER LINE, COMMON DEVELOPMENT ETC. ARE INCLUDED IN BUILDING CONSTRUCT ION PRICE' THIS CLAUSE MAKES A CLEAR PICTURE THAT SUCH COLLECTION OF CONSIDERATION FROM MEMBERS ENTIRELY B ELONGS TO THE ASSESSEE. 11. DETAILS REGARDING VARIOUS CONNECTIONS LIKE ELECTRICITY, WATER, DRAINAGE, ETC: IN THIS CONNECTI ON, ASSESSEE FIRM STATES THAT THE APPLICATION WAS MADE BY THE DEVELOPER I.E. M/S. SHRI HARI ASSOCIATES ON BEHALF OF THE ORIGINAL LAND OWNER AND IT IS THE DEVELOPER WHO IS RESPONSIBLE FOR MAKING PAYMENT OF SUCH ELECTRIC CHA RGES. THE CONNECTION IS IN THE NAME OF SOCIETY JEVANDHAR A CO- OPERATIVE SOCIETY LIMITED AS THE LAND IS OWNED BY SOCIETY. THIS IS AS PER THE CONDITION IN DEVELOPMEN T AGREEMENT UNDER CLAUSE 16 WHICH READ AS UNDER: FOR THIS PROJECT, DEVELOPER WILL MADE NECESSARY APPLICATIONS, APPROVALS, REPLIES OR ANY STATEMENTS IN MUNICIPALITY, AMC OR ANY GOVERNMENT AUTHORITY OR NO N GOVERNMENT AUTHORITY ON BEHALF OF THE SOCIETY FOR W ATER CONNECTION, ELECTRICITY CONNECTION AND OTHER FACILI TIES LIKE TELEPHONE, DRAINAGE ETC THE ENTIRE PAYMENT FOR OBTAINING ELECTRIC CONNECTIO N IS MADE BY ASSESSEE AND SUCH EXPENDITURE IS DEBITED AS PART OF DEVELOPMENT OF BUILDING EXPENSES. 12. DETAILS OF PAYMENTS MADE TO BUILDER: IN THIS CONNECTION, THE ASSESSEE WOULD LIKE TO STATE THAT T HE ENTIRE CONSTRUCTION OF PROPERTY IS MADE BY THE ASSESSEE DEVELOPER; THERE IS NO QUESTION OF SHARE OF ANY PRO FIT. ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 18 - HOWEVER, THE ASSESSEE HAS MADE PAYMENT TOWARDS LABO UR CHARGES, MATERIAL COST AND OTHER COST AS AND WHEN REQUIRED DURING THE COURSE OF PROJECT. 13. DETAILS OF ACCEPTANCE OF FINAL SALE CONSIDERATI ON FROM THE MEMBER AND THE POSSESSION OF HOUSE: THE ASSESSEE WOULD LIKE TO STATE THAT THE ENTIRE SALE CONSIDERATION COLLECTED BY THE DEVELOPER I.E. M/S. SHRI HARI ASSOCIATES AND POSSESSION THEREOF ALSO GIVEN B Y THE DEVELOPER. 14. DETAILS REGARDING APPOINTMENT OF GUARDS/SECURITIES, ETC.: IN THIS REGARDS THE ASSESS EE WOULD LIKE TO STATE THAT RELEVANT MAINTENANCE CHARGES ARE PAID BY THE ASSESSEE TILL THE COMPLETION OF DEVELOPMENT. 15. IT IS FURTHER STATED THAT SHRI RAJESHBHAI SAVJI BHAI VASANI (PARTNER/FAMILY MEMBER OF THE ASSESSEE GROUP ) IS AUTHORIZED PERSON OF SOCIETY TO ACT ON BEHALF OF SO CIETY AND HIS NAME IS APPEARING IN PLAN SECTIONED BY LOCA L AUTHORITY, RAJA CHITTHI, BU PERMISSION AND ALSO IN SALE AGREEMENT. THE COPIES OF ABOVE DOCUMENTS ARE ALREAD Y LIFTED IN EARLIER SUBMISSION....' 2.7 THE REPLY AND CONTENTION OF THE ASSESSEE WERE N OT ACCEPTABLE FOR THE FOLLOWING REASONS: (A) PROJECT HAS BEEN DEVELOPED ON AN AREA OF 15378 SQ. MTS. THE PIECE OF LAND IS OWNED BY THE SOCIETY I.E. JEEVANDHARA CO -OP. HOUSING SOCIETY LTD. THE LAY OUT PLAN HAS BEEN APPROVED BY AMC ON 25/06/2004 AND SUBSEQUENT DATES FOR CONSTRUCTION OF 124 UNITS OF RESIDENCES. THUS, IT IS CLEAR THAT THE ASSESSEE IS NOT A OWNER OF THE PROJECT. (B) THE PROJECT HAS BEEN ARTIFICIALLY DIVIDED INTO FOUR PARTS AND EACH PART IS CONSTRUCTED BY SEPARATE FIRM. IN THIS WAY, FOUR FIRMS NAMELY, SHRINAND CORPORATION, VASUDEV DEVELOPERS, SHRI HARI ASSOCIATES AND GIRIRAJ CORPORATION HAVE CARRIED OUT THE CONSTR UCTION WORK. THE ASSESSEE HAS ALSO ADMITTED THAT PROJECT WAS GOT APPROVED JOINTLY TO GET MORE FSI. ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 19 - 2.8 LEARNED AO FURTHER STATED THAT IN VIEW OF THE A BOVE FACTUAL AND LEGAL POSITION, IT IS HELD THAT THE ASSESSEE IS NOT A BUILDER AND DEVELOPER IN RESPECT OF THE SAID PROJECT AND IN FAC T, IT IS MERELY A CONTRACTOR/AGENT ON BEHALF OF THE HOUSING SOCIETIES AND THEIR MEMBERS. FURTHER, ON ACCOUNT OF COMMERCIAL COMPLEX BEING MORE THAN PRESCRIBED LIMIT ALSO DISENTITLES THE ASS ESSEE FOR ANY DEDUCTION. IN NUTSHELL, CONDITIONS OF SECTION 80IB( 10) ARE NOT SATISFIED AND HENCE THE DEDUCTION OF RS.41,20,113/- CLAIMED UNDER THIS SECTION IS DISALLOWED AND ADDED TO THE T OTAL INCOME OF THE ASSESSEE. DISALLOWANCE OF RS.41,20,113/- WERE MADE AGAINST TH E APPELLANT. 6. AGAINST THE SAID ORDER APPELLANT PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A) WHO PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. 7. WE HAVE GONE THROUGH THE IMPUGNED ORDER AND DOCU MENTS FILED BY THE PARTIES AND HEARD BOTH THE PARTIES. LEARNED D.R . RELY ON THE CIT(A) WHEREAS LEARNED A.R. HAS CITED A JUDGMENT OF OUR CO -ORDINATING BENCHES IN ASSESSEES OWN CASE AND MATTER WAS DECIDED IN FA VOUR OF THE ASSESSEE AND DISMISSED BY THE ITAT IN ITA NO.2707, 2708 & 27 09/AHD/2009 FOR ASST. YEARS 2005-06, 2006-07 & 2007-08 DATED 13/04 /2012, FOLLOWING OBSERVATION AS UNDER: WE FIND THAT THE CIT(A) AFTER ANALYZING THE DEVELO PMENT AGREEMENT, AND THEREAFTER FOLLOWING THE DECISION OF THE AHMEDA BAD BENCH OF THE TRIBUNAL IN THE CASE OF SHAKTI CORPORATION (SUPRA) AND RADHE DEVELOPERS (SUPRA) HAS ALLOWED THE CLAIM OF DEDUCTI ON UNDER SECTION 80IB(10) TO THE ASSESSEE. WE FIND THAT THE CIT(A) H AS GIVEN A FINDING THAT THE ENTIRE RISK FOR DEVELOPMENT OF THE PROJECT WAS TAKEN BY THE ASSESSEE AND THE ASSESSEE WAS NOT PAID REMUNERATION AS CONTRACTOR. THE ASSESSEE PURCHASED THE LAND FOR FIXED CONSIDERATION AND DEVELOPED THE HOUSING PROJECT ON ITS OWN COST, AND THERE WAS NO J OINT VENTURE WITH THE LAND OWNER. THIS FINDING OF THE CIT(A) HAS NOT BEEN CONTROVERTED BY THE DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. FUR THER, NO MATERIAL ITA NO. 1874/AHD/11, IT(SS)A NOS.128, 129, 130/AHD/ 14, CO 196/AHD/14 (IN IT(SS)NO.128/AHD/14) ASST.YEARS 2008-09, 2005-06, 2006-07, 2007-08 & 2 005-06, RESPECTIVELY - 20 - WAS ALSO BROUGHT ON RECORD TO SHOW WHY THE DECISION OF THE TRIBUNAL IN THE CASE OF SHAKTI CORPORATION (SUPRA) AND THE RADH E DEVELOPERS (SUPRA) SHOULD NOT HAVE BEEN FOLLOWED BY THE CIT(A) . IN THE ABSENCE OF THE SAME, WE FIND NO GOOD REASON IN INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS CONFIRMED AND THE GROUND OF THE AP PEAL OF THE REVENUE IS DISMISSED. 8. RESPECTFULLY, FOLLOWING THE JUDGMENT OF OUR OWN BENCH, WE DISMISS THE APPEALS OF THE DEPARTMENT. 9. IN THE RESULT, ALL THE FOUR APPEALS FILED BY THE DEPARTMENT ARE DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/08/2017 SD/- SD/- IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/08/2017 PRITI YADAV, SR.PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. ! ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. /01( $ 2( / CONCERNED CIT 4. $ 2( ( !) / THE CIT(A)-I, AHMEDABAD. 5. 56 7 (%01 , !) 01- , / / DR, ITAT, AHMEDABAD 6. 7 8 9 & / GUARD FILE. # $ / BY ORDER, # 5!( ( //TRUE COPY// %/$ &' ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD