2015 (11) TMI 1208 - AT - Income Tax

Eligibility for deduction u/s 80IB(10) - profit from housing projects constructed by the assessee - Held that - assessee is entitled to deduction under section 80IB(10) because the activity of the development has been carried on by the assessee contractor-cum- developer as per the agreement entered into with the land owners. Therefore since the facts and circumstances of the case remain identical and distinguishing facts have not been brought on record by the Revenue of previous AY we respectfully following the orders of coordinate Bench allow the appeal of assessee. - Decided in favour of assessee.

Issues Involved:
1. Eligibility for deduction under section 80IB(10) of the Income Tax Act, 1961.
2. Role and responsibilities of the appellant in the construction and development project.
3. Consistency of the Tribunal's decision with previous judgments in similar cases.

Detailed Analysis:

1. Eligibility for Deduction under Section 80IB(10) of the Income Tax Act, 1961:
The primary issue in this case revolves around the eligibility of the appellant for deduction under section 80IB(10) of the Income Tax Act, 1961. The appellant, a partnership firm engaged in the construction and development of housing projects, claimed a deduction of Rs. 18,07,624/- under this section. The Assessing Officer (AO) disallowed this claim, which was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].

The CIT(A) observed that the appellant's receipts were fixed at the inception of the project, indicating that the appellant functioned as a works contractor rather than a developer. The CIT(A) emphasized that to qualify for the deduction, the appellant needed to bear the risks associated with the project, which was not the case here. The Tribunal, however, noted that similar issues in the appellant's own case for previous assessment years (2002-03, 2003-04, 2000-01, 2001-02, and 2006-07) had been decided in favor of the appellant by the co-ordinate Bench.

2. Role and Responsibilities of the Appellant in the Construction and Development Project:
The appellant argued that it had entered into an agreement with the housing society to carry out development and construction work as per approved plans. The appellant was responsible for various activities, including preparing approach roads, obtaining necessary approvals, raising funds, booking members, fixing rates, and constructing residential units. The appellant maintained complete books of accounts and got them audited, fulfilling all conditions stipulated under section 80IB(10).

The Tribunal noted that the appellant's role was not limited to that of a works contractor. Instead, the appellant was involved from the beginning, including land purchase, obtaining approvals, and completing the construction. The Tribunal highlighted that the appellant's activities were akin to those of a full-fledged developer/builder, thus meeting the criteria for deduction under section 80IB(10).

3. Consistency of the Tribunal's Decision with Previous Judgments in Similar Cases:
The Tribunal referenced its own previous decisions in the appellant's case for earlier assessment years, where the deduction under section 80IB(10) was allowed. These decisions were based on the fact that the appellant had carried out the development work in accordance with agreements and fulfilled all necessary conditions.

The Tribunal also cited the case of Radhe Developers, where it was held that the deduction under section 80IB(10) should not be denied merely because the land was not owned by the developer. The activity of development carried out as per the agreement was considered sufficient for claiming the deduction. This position was affirmed by the Hon'ble Gujarat High Court in the case of CIT vs. Radhe Developers (2012) 341 ITR 403.

In light of the consistent judicial precedents and the facts of the case, the Tribunal concluded that the appellant was entitled to the deduction under section 80IB(10). The appeal of the assessee was allowed, setting aside the orders of the lower authorities.

Conclusion:
The Tribunal allowed the appellant's claim for deduction under section 80IB(10), aligning with previous judgments in similar cases and recognizing the appellant's comprehensive role in the development and construction project. The decision underscores the importance of the developer's involvement and responsibilities in qualifying for tax deductions under the specified section.

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