2015 (4) TMI 1325 - AT - Income Tax

Deduction u/s 80IB(10) - Disallowance of claim as assessee was acting as a contractor for the owner of the plots of land on the ground that the sale deed for land was executed in favour of the purchaser of the plots and purchaser of the plots have entered into construction contract for construction of units - HELD THAT - Tribunal in the case of Narayan Reality Ltd. 2014 (5) TMI 221 - ITAT AHMEDABAD wherein the Tribunal has held that no disallowance can be made for deduction under section 80IB(10) by treating the assessee as a contractor and not developer. We therefore following the above decision of the Tribunal set aside the order of the CIT(A) and delete the disallowance of claim of deduction under section 80IB(10) of the Act. Thus this ground of appeal of the assessee is allowed.

Summary

Issues:
Appeal against CIT(A) order disallowing claim under section 80IB(10) of the Act.

Analysis:
The appeal was filed against the Commissioner of Income-Tax (A) decision to disallow the deduction under section 80IB(10) of the Act. The CIT(A) disallowed the deduction on the grounds that the assessee acted as a contractor for the owner of the land plots. However, the assessee argued that they should be considered a developer, not a contractor, citing a Tribunal decision in a similar case. The Tribunal held that the issue of disallowance of deduction under section 80IB(10) was in favor of the assessee, as the assessee was eligible for the deduction. The Tribunal referred to various cases where similar situations were considered, emphasizing that separate agreements for land sale and construction do not disqualify the assessee from claiming the deduction under section 80IB(10) if all other conditions are met. The Tribunal found no merit in the Revenue's objections and allowed the deduction for the assessee under section 80IB(10) of the Act.

The DR supported the CIT(A) order, but the Tribunal found that the issue was already decided in favor of the assessee by a previous Tribunal decision. The Tribunal set aside the CIT(A) order and deleted the disallowance of the claim under section 80IB(10) of the Act, allowing the appeal of the assessee. The Tribunal's decision was based on the principle that the assessee, despite separate agreements for land sale and construction, qualified as a builder or developer and was eligible for the deduction under section 80IB(10) of the Act.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the assessee's activities qualified for the deduction under section 80IB(10) of the Act, despite the separate agreements for land sale and construction. The Tribunal's decision was based on previous rulings and established principles regarding such cases.