2016 (3) TMI 415 - AT - Income Tax

Eligibility for deduction u/s.80IB(10) - claim of deduction was denied by the A.O. mainly for the reason that assessee was not the owner of the land and according to him, the assessee was merely a contractor - Held that - We find that ld. CIT(A) while deciding the issue in favour of assessee and after perusing the development agreement has given a finding that assessee had acquired land from the society at fixed cost and society was not entitled to any further benefits arising from development of the project, all the development and construction of the project was carried out be assessee at its own risk and the assessee had borne all the expenditures, assessee had received entire sale consideration from the buyers of the units as per rates decided by it and assessee has taken full risk of executing the housing project and that the assessee was entitled to all the profit and gains including losses, if any, arising from sale of housing units. He has further given a finding that the facts of the assessee s case were identical to the facts of the case in the case of Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT , which was decided in assessee s favour. Before us, Revenue has not brought on record any material to controvert the findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) - Decided against revenue

Summary

Issues:
Eligibility for deduction u/s.80IB(10) of the Act.

Analysis:
The case involved an appeal filed by the Revenue against the order of CIT(A)- VIII, Ahmedabad, related to the assessment year 2009-10. The appellant, a company engaged in real estate development, filed its return of income claiming a deduction u/s.80IB(10) of the Act. However, the Assessing Officer disallowed the claim, stating that the appellant was not eligible for the deduction as it was not the developer and did not fulfill the conditions laid down in the Act. The appellant was considered merely a contractor for the construction project. The CIT(A) granted partial relief to the assessee, leading to the Revenue's appeal before the ITAT.

During the assessment proceedings, the AO concluded that the appellant was not eligible for the deduction u/s.80IB(10) as it did not own the land, did not conceptualize the project, and was merely a contractor. The CIT(A), on the other hand, found that the appellant fulfilled all basic conditions under Section 80IB(10) and had acquired the land, taken full risk of the project, and received the sale consideration from buyers. The CIT(A) referred to the case of Radhe Developers to support the appellant's claim as a developer-cum-builder.

The ITAT upheld the CIT(A)'s decision, emphasizing that the appellant had acquired the land, borne all project expenses, received sale consideration, and taken full risk of the project. The ITAT noted that the Revenue failed to provide any material to challenge the CIT(A)'s findings. Consequently, the ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s order in favor of the appellant.

In conclusion, the ITAT ruled in favor of the appellant, upholding their eligibility for deduction u/s.80IB(10) based on fulfilling the necessary conditions and acting as a developer-cum-builder in the housing project. The decision highlighted the appellant's ownership of the land, undertaking of project risks, and receipt of sale proceeds as key factors supporting their entitlement to the deduction.