2013 (11) TMI 61 - AT - Income Tax

Whether legal title necessary for the developer to get the benefit of deduction u/s 80IB of the Income Tax Act - Deduction u/s 80IB of the Income Tax Act Held that - As per the development agreement and facts of the case the assessee had taken full responsibility for execution of the said development project. The assessee has been given full authority for execution of the said development project including development of the land and construction of residential units. The assessee had engaged professionals such as architect for designing architectural work. The assessee had also enrolled the members and collected the consideration from the buyers of the residential units. The assessee had also paid cost of the land to the Societies including stamp duty and had taken possession of the land for construction of the project. As per the decision of the Hon ble Gujarat High Court in the case of Radhe Developers supra the legal title is not required for getting benefits u/s 80 IB (10) of the Act. The assessee was deemed owner of the land u/s 2 (47) of the Act. The assessee had borne all the cost of construction including materials and the receipt was not fixed for the contractor. The assessee is a developer and builder of housing project Decided against the Revenue.

Summary

Issues:
1. Interpretation of deduction u/s 80 IB (10) of the Act
2. Conditions precedent for claiming deduction u/s 80 IB (10)

Analysis:
1. The revenue's appeal challenged the CIT(A)'s order allowing deduction u/s 80 IB (10) of the Act amounting to Rs.4,62,69,270, which the Assessing Officer had disallowed. The main contention was whether the assessee fulfilled the conditions for claiming the deduction, particularly regarding ownership of the land and being both developer and builder. The AO argued that the assessee was not the owner of the land and was merely a contractor for construction, thus not meeting the requirements under section 80 IB (10). The AO disallowed the deduction based on these grounds. However, the CIT(A) allowed the claim after considering the development agreements and concluded that the assessee had taken full responsibility for executing the project, including construction and development activities. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee had control over the project, bore all construction costs, and was deemed the owner of the land under section 2(47) of the Act. The Tribunal ruled in favor of the assessee, dismissing the revenue's appeal.

2. The cross objection raised by the assessee supported the CIT(A)'s decision. The Tribunal found that since the revenue's appeal was dismissed, the cross objection became redundant and was also dismissed. The Tribunal's decision was based on the assessee's fulfillment of the conditions for claiming deduction u/s 80 IB (10), as demonstrated through the development agreements, control over the project, and assumption of all construction costs. The Tribunal's ruling highlighted the assessee's role as a developer and builder in the housing project, leading to the dismissal of both the revenue's appeal and the assessee's cross objection.

This detailed analysis of the judgment showcases the interpretation and application of the relevant legal provisions concerning the deduction u/s 80 IB (10) of the Act and the conditions precedent for claiming such deduction, ultimately resulting in the Tribunal's decision in favor of the assessee.