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2015 (9) TMI 645 - AT - Income TaxEntitlement to claim of deduction u/s.80IB(10) - disallowance of claim - Held that - The AO has allowed the claim of the assessee for deduction u/s.80-IB(10) of the Act for assessment pertaining to the AY 2006-07, wherein also the AO also allowed the claim of the assessee of deduction u/s.80IB(10) of the Act. Facts are identical and project is also same and the Revenue has not pointed out as to how the claim that was allowed in earlier years and under the same facts and circumstances would be disallowable in the year under consideration. It is settled position of law that every year is an independent year, however, the rule of consistency is to be adopted by the Revenue authority while framing the assessment. In the present case, the Revenue has not brought out any new material on the basis of which a different view has been taken for the year under consideration. The construction of any agreement cannot be different in two different assessment years, therefore the orders of the authorities below rejecting the claim of deduction u/s.80-IB(10) of the Act cannot be confirmed, more particularly in the light of the judgement of the Hon ble Gujarat High Court rendered in the case of CIT vs. Radhe Developers reported at (2011 (12) TMI 248 - GUJARAT HIGH COURT ) - Decided in favour of assessee.
Issues:
1. Dismissal of appeal by CIT(A) for deduction u/s.80-IB(10) of the IT Act. 2. Determination of the Assessee as contractor or developer for housing project. 3. Failure to consider total investment made by the appellant in the housing project. 4. Rejection of deduction u/s.80-IB(10) by AO. Issue 1: Dismissal of appeal by CIT(A) for deduction u/s.80-IB(10) of the IT Act: The Assessee's appeal against the CIT(A)'s order was directed towards the disallowance of the claim for deduction u/s.80-IB(10) of the IT Act for AY 2007-08. The Assessee argued that the CIT(A) erred in not properly appreciating the facts and submissions made during the appellate proceedings. The Assessee contended that the claim for deduction was legitimate and should have been allowed. Issue 2: Determination of the Assessee as contractor or developer for housing project: The core issue revolved around whether the Assessee should be considered a contractor or a developer for the housing project. The AO disallowed the claim under section 80IB, stating that the Assessee did not fulfill the requirements to be considered a developer as per section 80IB(10). The authorities found that the Assessee was more of a contractor than a developer, as the construction was carried out as per an agreement with the landowner, and the Assessee did not own the land or receive approvals directly from the local authority. Issue 3: Failure to consider total investment made by the appellant in the housing project: The Assessee argued that the total investment made in the development of the housing project was not properly considered by the authorities. The Assessee highlighted the substantial investment made, exceeding 75%, and emphasized the risks undertaken by the Assessee in the project. The Assessee sought recognition as a developer based on the investment risk undertaken, citing Circular No.5/2010. Issue 4: Rejection of deduction u/s.80-IB(10) by AO: The AO disallowed the claim for deduction u/s.80-IB(10) based on various reasons, including the Assessee not being both a developer and builder as required, and the Assessee being considered a works contractor executing the project based on an agreement with the landowner. The AO's decision was upheld by the CIT(A), citing non-compliance with conditions stipulated in the Act and failure to furnish necessary approvals and plans. In the detailed analysis, the Tribunal considered the arguments presented by both parties. The Assessee relied on past assessments where the claim was allowed, emphasizing the consistency principle in tax assessments. The Tribunal noted that the Revenue did not provide new material to justify disallowing the claim in the current year. The Tribunal also highlighted the lack of findings on remuneration and risk-bearing aspects by the authorities below. Ultimately, the Tribunal allowed the Assessee's appeal, deleting the disallowance made by the AO under section 80-IB(10) of the IT Act. The decision was based on the Assessee's fulfillment of conditions as per past assessments and legal precedents, overturning the earlier rulings of the AO and CIT(A).
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