9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (12) TMI 328 - AT - Income TaxClaim of deduction u/s. 80 IB (10) disallowed by AO - CIT(A) allowed the claim - Held that - As decided in CIT Versus Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT section 80IB(10) provides for deductions to an undertaking engaged in the business of developing and constructing housing projects under certain circumstances. It does not provide that the land must be owned by the assessee seeking such deductions - The relevant terms of development agreement are to be examined so as to ascertain the terms on which the assessee was granted right of construction of a housing project & on the basis of the terms and conditions, it has to be ascertained whether it was a work contract or a Development Contract & whether under the agreement the assessee had been given full authority to develop the land & AO has to examine about the profit or loss arising from the said project. CIT(A) has passed the order finding justification only on the issue of ownership of the land based on the development agreement and has unjustly allowed the claim of the assessee - set aside the order of the learned CIT(A) and remit back the case to the file of ht e learned CIT(A) to pass appropriate order - in favour of Revenue.
Issues:
- Disallowance of deduction u/s 80 IB (10) - Ownership of land for claiming deduction - Conditions for claiming deduction u/s 80 IB (10) - Compliance with guidelines for granting deduction u/s 80 IB (10) Analysis: 1. Disallowance of deduction u/s 80 IB (10): The revenue challenged the order of the learned CIT(A) directing the Assessing Officer to allow the assessee's claim for deduction of Rs.1,14,75,237/- u/s. 80 IB (10) of the Act. The Assessing Officer disallowed the deduction stating that the assessee was not both a developer and builder as required by the provisions of section 80 IB (10). The AO argued that the assessee did not conceptualize and own the project, as the land was not owned by the assessee and the approval was not issued to the assessee by the Local authority. The AO concluded that the assessee was merely a contractor for the construction project. 2. Ownership of land for claiming deduction: The revenue contended that the assessee did not fulfill the conditions for claiming deduction u/s. 80IB (10) as the land was in the name of a Cooperative Housing Society and not in the name of the assessee. The revenue argued that the responsibility for executing the project rested with the Society, making the assessee a contractor, not a developer. The revenue highlighted that the assessee had sold the land to the Society, refuting the claim of ownership by the assessee. 3. Conditions for claiming deduction u/s 80 IB (10): The learned CIT(A) allowed the deduction claimed by the assessee based on the terms of the Development Agreement, which indicated that the appellant practically purchased the land. The CIT(A) found that the appellant had to pay the land cost, develop the project at own cost and risk, and enjoy subsequent profit or suffer loss, making the appellant eligible for deduction u/s. 80 IB (10). The CIT(A) directed the AO to allow the deduction claimed by the assessee. 4. Compliance with guidelines for granting deduction u/s 80 IB (10): The Appellate Tribunal found that the CIT(A) had not considered various crucial issues examined by the AO while granting the deduction u/s 80 IB (10). The Tribunal referred to guidelines laid down by the Hon'ble Gujarat High Court in the case of Radhe Developers for granting such deductions. As the CIT(A) did not address these critical issues, the Tribunal set aside the order of the CIT(A) and remitted the case back to pass an appropriate order considering the guidelines and affording a reasonable opportunity to the assessee. The appeal of the revenue was allowed for statistical purposes.
|
