PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA 3 V. GREEN ASSOCIATES

R/TAX APPEAL No. 1199 of 2018

AI Insights

The case revolves around the Principal Commissioner of Income Tax, Vadodara 3 appealing against the decision of the Income Tax Appellate Tribunal, which allowed Green Associates a deduction under Section 80IB(10) of the Income Tax Act. The core issue was whether Green Associates could be considered a developer of a housing project, eligible for deductions, despite not being the primary developer and having sold residential plots with construction only up to the plinth level. The Tribunal had previously ruled in favor of Green Associates, treating them as developers, which was contested by the Revenue. The High Court dismissed the appeal, referencing a similar case with the same assessee where the Tribunal's decision was upheld.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 361552 (HC-GUJARAT)
• Appeal Type: High Court cases
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Department
• Assessment Year: 2010-2011
• Other Referred Cases: Commissioner of Income Tax vs. Radhe Developers
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: VARUN PATEL
• Keywords: Assessment Year; Deduction; Developer; Housing project; Income Tax; ITAT
• Section: 80IB(10)

Judgement Text

"C/TAXAP/1199/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 1199 of 2018 ============================================================== PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA 3 Versus GREEN ASSOCIATES ============================================================= Appearance : Mr. VARUN K.PATEL, Advocate for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ============================================================== CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 8th October 2018 ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue has filed this appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad “B” Bench, Ahmedabad [“Tribunal” for short] dated 13th February 2018. The following questions are framed for our consideration:- [A] “Whether on the facts and in the circumstances of the case, the ITAT has erred in law and on facts in allowing the assessee the deduction under Section 80IB [10] of the Act after treating the assessee as a developer of the Housing Project even though the project as a whole was not primarily developed and build by the assessee itself and the assessee has sold merely the residential Page 1 of 4 Downloaded on : Wed Jun 04 12:20:17 IST 2025 Uploaded by P.B.TALREJA(HC00154) on Mon Oct 08 2018 2018:GUJHC:40328-DB NEUTRAL CITATION C/TAXAP/1199/2018 ORDER plots and rest of the work has been completed by it as a contractor of the plot purchasers, rendering it ineligible for deduction under Section 80IB [10] of the Act?” [B] “Whether on the facts and in the circumstances of the case the ITAT has erred in law and on facts in allowing the assessee the deduction under Section 80IB [10] of the Act by ignoring the fact that 70% of the sale proceeds of the project were the work contract receipts and no entrepreneurial and investment risk was taken by the assessee in respect of the project and therefore it cannot be held that the project as a whole has been developed and build by the assessee so as to make it eligible for deduction under Section 80IB [10] of the Act as a developer of the Housing Project ?” Counsel for the Revenue candidly pointed out that in case of this very assessee for the earlier assessment year, Tax Appeals No. 1154 and 11545 of 2018 raising similar questions came to be dismissed. Following observations may be noted from the order dated 17th September 2018, dismissing such appeals. Page 2 of 4 Downloaded on : Wed Jun 04 12:20:17 IST 2025 Uploaded by P.B.TALREJA(HC00154) on Mon Oct 08 2018 2018:GUJHC:40328-DB NEUTRAL CITATION C/TAXAP/1199/2018 ORDER “3. The respondent is engaged in the business of housing development. For the assessment year 2010- 11, the assessee had claimed deduction in respect to the income arising out of such activity under section 80IB (10) of the Income Tax Act. The Assessing Officer disallowed the claim mainly on the ground that the assessee was not the owner of the land and the approval of the project was not in the name of the assessee. The issue ultimately reached the Tribunal where the Revenue also contended that the assessee had not sold the residential spouse in the housing project but had sold the residential plots with construction upto plinth level. The assessee therefore cannot be considered as a developer of a housing project but was mere a contractor. The Tribunal followed its earlier judgment in case of similar assessee and confirmed the decision of CIT (A) allowing the claim. 4. Various issues arising out of the claim of different assesses under section 80IB(10) of the Act came to be thrashed out by a Division Bench judgment of this Court in case of Commissioner of Income Tax vs. Radhe Developers, reported in 341 ITR 403. The Court took note of various development agreements executed by the assessee in favour of individuals claiming that they had been engaged in the activity of housing development. Revenue's contention, that the nature of activities carried on by the assessees would only qualify them to be the contractors executing works contract, was also considered. It was held that Page 3 of 4 Downloaded on : Wed Jun 04 12:20:17 IST 2025 Uploaded by P.B.TALREJA(HC00154) on Mon Oct 08 2018 2018:GUJHC:40328-DB NEUTRAL CITATION C/TAXAP/1199/2018 ORDER the assessee had undertaken the development of housing project at their own risk and cost. The owner of the land had accepted the full price of the land. He was therefore not concerned with the successor or failure of the housing project. In such background, reference was made to the definition of term “transfer” under section 2(47) of the Act and held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee's claim of deduction under section 80IB(10) of the Act.” In the result, this Tax Appeal is also dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 4 of 4 Downloaded on : Wed Jun 04 12:20:17 IST 2025 Uploaded by P.B.TALREJA(HC00154) on Mon Oct 08 2018 2018:GUJHC:40328-DB NEUTRAL CITATION "