2012 (4) TMI 749 - AT - Income Tax

Summary

Issues Involved:
1. Rejection of deduction claimed u/s 80IB(10).
2. Approval of the housing project in the name of a partner.
3. Development activities undertaken by the assessee.
4. Agreement with house purchasers.
5. Composite nature of activities.
6. Completion certificate.
7. Applicability of section 17(IA) of the Registration Act.
8. Consideration of written submissions by CIT(A).

Summary:

1. Rejection of Deduction Claimed u/s 80IB(10):
The assessee, a partnership firm engaged in civil construction, claimed a deduction of Rs. 1,11,55,537 u/s 80IB(10) for the assessment year 2007-08. The AO rejected this claim, stating the assessee was merely a contractor and not a developer, and the CIT(A) confirmed this decision. The Tribunal noted that the assessee had undertaken a housing project named Vardhman Green Park and had applied for a completion certificate, which was issued later.

2. Approval of the Housing Project in the Name of a Partner:
The Tribunal held that the approval of the housing project in the name of a partner does not disqualify the assessee from claiming the deduction u/s 80IB(10), provided other conditions are met.

3. Development Activities Undertaken by the Assessee:
The AO contended that the assessee only sold plots and constructed houses as per buyers' requirements, acting as a works contractor. The Tribunal emphasized that the deduction u/s 80IB(10) is available to developers who undertake infrastructure development. The case was remanded to the AO to verify the infrastructure facilities developed by the assessee.

4. Agreement with House Purchasers:
The assessee entered into agreements with purchasers, stipulating that possession of the plots would remain with the assessee until full payment. The Tribunal found this arrangement did not hinder the claim for deduction u/s 80IB(10).

5. Composite Nature of Activities:
The Tribunal noted that the assessee's activities should be viewed as composite in nature, involving both development and construction, qualifying them as a developer rather than a contractor.

6. Completion Certificate:
The assessee applied for a completion certificate on 29.11.2007, which was issued on 6.6.2009. The Tribunal referred to a previous decision, stating that the crucial factor is the date mentioned in the completion certificate, not the date of issuance. The matter was remanded to the AO to verify the completion date.

7. Applicability of Section 17(IA) of the Registration Act:
The Tribunal dismissed the CIT DR's argument that the assessee was not the owner of the land after registration, stating that the modus operandi adopted by the assessee did not affect the claim for deduction u/s 80IB(10).

8. Consideration of Written Submissions by CIT(A):
The Tribunal did not find merit in the CIT(A)'s observation that the written submissions were not considered judiciously and objectively.

Conclusion:
The Tribunal restored the matter to the AO for fresh consideration, directing the AO to verify the infrastructure facilities developed and the completion date of the housing project. The appeal was partly allowed for statistical purposes.