2012 (3) TMI 470 - AT - Income Tax

Entitled for deduction u/s. 80IB(10) - Held that - We are not inclined to disturb the well reasoned order of the CIT(A), wherein, he has allowed the claim for deduction u/s. 80IB(10) to the assessee firm.

Summary

Issues:
1. Whether the assessee qualifies as a contractor or a developer for claiming deduction under section 80IB(10).
2. Whether the assessee fulfilled the conditions for claiming deduction under section 80IB(10) by obtaining a completion certificate.

Analysis:
1. The appeal was against the CIT(A)'s order for the assessment year 2008-09. The revenue contended that the assessee, a partnership firm engaged in building and development, did not own the land and thus should be considered a contractor, not a developer. The AO noted the project completion and disallowed the deduction under section 80IB(10) due to the absence of a completion certificate. The assessee argued that ownership of the land was not a prerequisite under section 80IB(10) and relied on the development agreement clauses to establish exclusive rights over the project. The AO concluded the assessee was a contractor and denied the deduction.

2. The CIT(A) considered the rights granted to the assessee in the development agreement and the admission of sale proceeds in the P&L account. It was observed that the assessee was not treated as a contractor, as TDS was not deducted from the sale proceeds. The CIT(A) emphasized that section 80IB(10) does not mandate land ownership for developers. Regarding the completion certificate, the CIT(A) referred to precedents where projects approved before 31.3.2005 did not require a completion certificate. The CIT(A) directed the AO to allow the deduction, stating that the conditions were met, and the absence of a completion certificate did not warrant denial.

3. The ITAT upheld the CIT(A)'s decision, dismissing the revenue's appeal. The ITAT concurred with the CIT(A)'s detailed reasoning, emphasizing that the assessee's entitlement to deduction under section 80IB(10) was justified. The ITAT found no grounds to disturb the CIT(A)'s order and upheld the allowance of the deduction to the assessee firm.

In conclusion, the ITAT affirmed the CIT(A)'s decision, allowing the deduction under section 80IB(10) to the assessee firm, emphasizing the rights established in the development agreement and the fulfillment of conditions despite the absence of a completion certificate.