2014 (9) TMI 1244 - AT - Income Tax

Deduction u/s.80IB(10) - legal relationship between the assessee and the end user of units was that of work contract - HELD THAT - The undisputed facts in the present case are that the assessee-form sold the plots to various persons and after the sale is complete the assessee constructed residential tenements thereon. It is also not disputed that two separate agreements were executed by the assessee-firm. The case of the assessee is that it has developed the housing project and it has borne all risks and reward arising therefrom. Merely because the land was sold and the houses were constructed would not debar the assessee from claiming the deduction u/s.80IB(10) of the Act in view of the judgement of Hon ble Jurisdictional High Court rendered in the case of CIT vs. Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT . Also decided in M/S. SATSANG DEVELOPERS VERSUS ACIT CIRCLE-2(2) BARODA 2014 (5) TMI 184 - ITAT AHMEDABAD assessee was entitled to the benefit u/s 80-IB (10) even where the title of the lands had not passed on to the assessee and in some cases the development permissions may also have been obtained in the name of the original land owner - ownership of land is not a necessary condition for claiming the deduction u/s 80IB(10) - Assessee has acquired dominant control over the land Assessee is responsible for incurring all the expenses and taking all the risks involved - Assessee is not a contractor - Decided in favour of assessee.

Summary

Issues:
- Deduction under section 80IB(10) of the IT Act allowed by CIT(A)
- Dispute over the legal relationship between the assessee and the end user of units

Analysis:

1. Deduction under section 80IB(10) of the IT Act allowed by CIT(A):
- The Revenue appealed against the order of the Ld. Commissioner of Income Tax(Appeals) regarding the deduction under section 80IB(10) of the IT Act for Assessment Year 2009-10.
- The Assessing Officer disallowed the deduction, but the CIT(A) allowed it based on the judgment of the Gujarat High Court in the case of CIT vs. Radhe Developers.
- The Revenue argued that the assessee's role was that of a contractor in a works contract, distinct from the CIT(A)'s interpretation.
- The assessee contended that it fulfilled all conditions under section 80IB(10) and cited relevant judgments supporting their claim.
- The Tribunal noted that the assessee sold plots and then constructed residential tenements, maintaining that the deduction was valid under section 80IB(10) as per the Radhe Developers case.
- Referring to similar cases and judgments, the Tribunal upheld the CIT(A)'s decision, finding no contrary ruling by higher courts.

2. Dispute over the legal relationship between the assessee and the end user of units:
- The Revenue argued that the relationship between the assessee and the end user was that of a work contract, not qualifying for the deduction.
- The assessee, a partnership firm engaged in Housing Project Development, defended its position by stating it met all conditions for the deduction.
- The Tribunal examined various agreements and facts, concluding that the assessee's activities aligned with the requirements of section 80IB(10) as per relevant judgments.
- Citing precedents and specific case details, the Tribunal rejected the Revenue's arguments and upheld the CIT(A)'s decision in favor of the assessee.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal interpretations, and the final decision rendered by the Tribunal.