2014 (4) TMI 30 - HC - Income Tax

Disallowance of deduction u/s 80IB(10) of the Act Works contractor - Development and construction of housing project - Whether the Tribunal is right in upholding the decision of CIT(A) of deleting the additions made on account of disallowance of deduction claimed u/s.80IB(10) of the IT Act Held that - The decision in Commissioner of Income-tax Versus Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT followed - Section 80IB(10) provides for deductions to an undertaking engaged in the business of developing and constructing housing projects under certain circumstances - It does not provide that the land must be owned by the assessee seeking such deductions - from the terms and conditions that the assessee had taken full responsibilities for execution of the development projects and have not acted only as a works contractor. For the purpose of income derived from such property, the assessee would be the owner of the land for the purpose of the Act - the title in the land had not yet passed on to the assessee - the Tribunal committed no error in holding that the assessees were entitled to the benefit u/s 80IB(10) of the Act even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners thus, the assessees were entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners Decided against Revenue.

Issues Involved:
1. Whether the ITAT was right in upholding the decision of CIT(A) of deleting the additions made on account of disallowance of deduction claimed under section 80IB(10) of the IT Act, despite the assessee not owning the land.

Issue-Wise Detailed Analysis:

1. Ownership of Land for Deduction under Section 80IB(10):
The primary issue was whether the assessee, engaged in the development and construction of a housing project, was entitled to a deduction under section 80IB(10) of the Income Tax Act, despite not owning the land. The Revenue argued that the land was not in the name of the assessee and that building construction permission was issued in favor of the landowner. However, the Tribunal followed the decision in CIT v. Radhe Developers, 341 ITR 403, which established that ownership of the land is not a condition precedent for developing a housing project under section 80IB(10). The Court observed:

"Neither the provisions of Section 80IB nor any other provisions contained in other related statutes were brought to our notice to demonstrate that ownership of the land would be a condition precedent for developing the housing project."

The Court emphasized that the term "developer" has a broad connotation, encompassing various roles beyond mere ownership. It cited definitions from multiple dictionaries to illustrate the comprehensive understanding of a developer, who may not necessarily own the land but undertakes the entire development process, including design, construction, and sale.

2. Interpretation of Statutory Provisions:
The Court reiterated that while interpreting a taxing statute, nothing can be read into the provisions that the Legislature has not explicitly provided. The Court stated:

"It is well settled that while interpreting the statute, particularly, the taxing statute, nothing can be read into the provisions which has not been provided by the Legislature."

The Court noted that the relevant terms of the development agreements showed that the assessee had full control and responsibility over the project, including financial arrangements, professional engagements, and risk management, thereby qualifying as a developer under section 80IB(10).

3. Legal Precedents and Judicial Interpretations:
The Court also referred to the case of Mysore Minerals Ltd. vs Commissioner of Income Tax and Commissioner of Income-Tax vs. Podar Cement Pvt. Ltd., where ownership was understood differently in various contexts. For the purpose of deduction under section 80IB(10), the assessee satisfied the condition of ownership, even if it was deemed necessary.

4. Distinguishing from Other Cases:
The Revenue cited the Supreme Court's decision in Larsen & Toubro Ltd v. State of Karnataka, which dealt with the definition of 'works contract' under the Karnataka Sales Tax Act. The Court found this reference irrelevant to the current case, which focused on the Income Tax Act and the specific provisions of section 80IB(10). The Court noted:

"We do not find any reason to deviate from the decision in the case of Radhe Developers (supra)."

Conclusion:
The Court concluded that the Tribunal committed no error in holding that the assessee was entitled to the benefit under section 80IB(10) of the Act, even where the title of the land had not passed to the assessee and in some cases, the development permissions were obtained in the name of the original landowners. The Tax Appeal was dismissed, affirming the Tribunal's decision.

Final Order:
The appeal by the Revenue was dismissed, and the decision of the Tribunal was upheld, allowing the assessee the deduction under section 80IB(10) of the Income Tax Act.

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