2019 (6) TMI 757 - HC - Income Tax

Deduction u/s. 80IB(10) - project as a whole was not primarily developed and built by the assessee itself - assessee is a contractors executing works contract - HELD THAT - The order passed by the coordinate bench in 2018 (10) TMI 508 - GUJARAT HIGH COURT is in connection with the very same assessee and the issue was also with regard to deduction under Section 80IB(10) and court has held that the assessee had undertaken the development of housing project at their own risk and cost. The owner of the land had accepted the full price of the land. He was therefore not concerned with the successor or failure of the housing project. In such background reference was made to the definition of term transfer under section 2(47) of the Act and held that merely because the land was held by the original owner when the housing development project was executed would not be detrimental to the assessee s claim of deduction u/s 80IB(10). Decided against the Revenue

Summary

Issues:
1. Applicability of Section 80IB(10) of the Income Tax Act.
2. Eligibility of the Assessee for deduction under Section 80IB(10) of the Act.

Detailed Analysis:
Issue 1: The Revenue appealed against the judgment of the Income Tax Appellate Tribunal regarding the applicability of Section 80IB(10) of the Act. The Revenue raised substantial questions of law questioning the eligibility of the Assessee for deduction under this section. The main contention was whether the Assessee, engaged in the development of a Housing Project, was entitled to claim the deduction under Section 80IB(10) despite not primarily developing the project themselves. The Tribunal's decision was challenged based on the percentage of sale proceeds from the project and the level of entrepreneurial and investment risk taken by the Assessee.

Issue 2: The Assessee's claim for deduction under Section 80IB(10) of the Act was initially denied by the Assessing Officer. However, the Commissioner of Income Tax (Appeals) allowed the Assessee's appeal, emphasizing the similarity of facts with previous assessment years and relying on past decisions in the Assessee's favor. The Commissioner held that the Assessee was eligible for the deduction, leading to the deletion of the addition made by the Assessing Officer. The Tribunal dismissed the Revenue's appeal, citing previous decisions favoring the Assessee and confirming the eligibility for deduction under Section 80IB(10).

Additional Notes: The coordinate bench's order in a related case involving the same Assessee reiterated the eligibility of the Assessee for deduction under Section 80IB(10) based on the nature of the housing development activities undertaken. The bench referred to previous judgments and highlighted that the Assessee had undertaken the project at their own risk and cost, meeting the criteria for the deduction. The issues raised in the present appeal were found to be covered by previous decisions of the court, leading to the dismissal of the appeal.